Secrets to Raising Capital with Dr. Thomas Powell

All right.

On today's episode, we interviewed Dr. Tom Powell, who's a friend of Casey's and really a serial entrepreneur, has seen a lot, done a lot, has raised equity, has had successful businesses, has had, you know, failures in terms of exits. Right. And kind of up and down the spectrum. And, you know, we ultimately ended up talking through what it's like to kind of face adversity, have tenacity. Right. Even getting out there and, you know, what, going and getting a law degree later in life, going and suing the sec. Right. And kind of working through some. Some of your fundamental beliefs and pushing them along. And so, Kasey, what were some of your takeaways?

A very special interview for me because, you know, I admire Tom. I. I've worked for Tom. I've. He's was an investor in one of my startups. A lot of advice along the way, you know, but he prioritizes his. His enjoyment of life. So 100 days on the ski slopes, right? Then he comes back and goes to work and still highly productive in what he does. But I will tell you, this is a story of resilience, and it's about being an entrepreneur and just seeing it all the way through. And Tom seen the up and downs, and he's an investor. And just all the things that I think of being an entrepreneur, that's who I represent.

Yeah.

No, and the thing that I kind of respect, and we ended up actually talking about this offline outside the podcast, is just, you know, his commitment to the things that he cares about. Right. He said a quote that I never heard, which is, don't prioritize your calendar, said calendar your priorities. Right. So really, you know, being able to kind of work through that and, you know, while you're still doing the whirlwind of being an entrepreneur. Right. And again, Tom's other big stick is really who, not how. Right. So really focus on who do you bring in? How do you kind of start to push things along and have leverage of people's other experience?

And so we jumped into raising capital. So this is a big one.

All right. Yeah. So this one's not any one specific set of topics, but really a bunch of life tips and tricks. So get it going.

Welcome to the M and A Launchpad podcast with your host, Casey and Ferris with Equity Launchpad. On this podcast, you will gain insights on acquiring, investing in, and selling profitable businesses in the lower to middle market. Whether you're a business owner, investor, or spying entrepreneur at Equity Launchpad, we will provide you with the knowledge, guidance and capital to navigate the world of mergers and acquisitions.

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Hey, Tom, welcome to show first.

Thank you, Kasey, Great to see you.

Yeah, Tom, so excited to have you a part of this.

I've heard a lot of things about you. You know, I know you're a good friend of Casey's and looking forward to kind of getting to meet you and get to know you.

So.

And he's a mentor. And this guy's. This guy's a legend in my book.

Tom, tell us what makes you a legend. Give me a little bit of a background on yourself to the audience.

Well, it's probably only in Casey's mind because my parents are both passed away, so, you know, you've got to have one friend out there in the world. But my background, briefly. I started my first business when I was 12 and it was like most entrepreneurs, it was out of necessity. You can't get a job when you're 12. Back in the 70s, was it cutting grass or no?

Because my first business, I was also probably 11 or 12, and it was a company called Kid probably and it was us kids cutting grass.

So nice. I love that. Mine was Macau. I still actually have the business cards from that point. Now it was cutting grass but also taking care of pets and then shoveling sidewalks. We live in the Sierras, so we get a lot of snow. And Macau stood for millions are coming our way. I had started listening to Earl Nightingale and Jim Rohn. Not the sportscaster, but the professional speaker at the time and some others. So I had been turned onto that because I was really poor. I Lived in a breezeway between a garage and a house. And my parents were out of my life at that point, so my oldest sister was raising me. So that transitioned into a couple different times in corporate America, being recruited by them from my entrepreneurial position. And the biggest one was Wells Fargo bank. In the 80s, at the transition time during the Reagan administration, banks were deregulating or being deregulated. So they needed to learn how to be more entrepreneurial. And I was fortunate to get in at the right time at Wells. Can read about the story not of me personally, but of that time in the book Good to Great. And that helped me launch into what was and has continued to be essentially our business model since 1992, which is where we bring capital to business entrepreneurs and help them build their ideas into something that hopefully is a great exit and sometimes isn't. Sometimes it is in any way. We always learn.

That's how Tom and I met. So I met Tom. He signed up on Energy Funder's website back in. It would have been 2015. And it went on to a journey of following up with him for the next 12 months until we decided to meet in person and he ended up being one of our elite investors in our Series A round.

Yep, that was great. And that was great exit, right? So you always count the exits, which is something that I have learned. And I go back to a story of ages ago. We built a company, a national mortgage bank. Bank that I had acquired part of it in the 90s, early 90s, and in the early 2000s, I got an offer from a large bank for $35 million and we valued it at $100 million that we were on track to be valued at, right? And one of my entrepreneurial friends who was the first private satellite launch company back in the 90s called Rotary Rocket, he and I are standing in the hotel, I remember exactly where I was in Boston, and I told him about the offer and I said, yeah, I just turned them down. He said, you know, whenever you turn somebody down, that's what you just bought your company for. And he goes, what you want to do is you want to exit. And then you take that exit and you go to the next win and the next win and the next win. And so when that company exited finally and I wrote a check for $6 million because, yes, 2008 happened, right? So yeah, I had $102 million in personal guarantees when that happened. I've never forgot that experience of going from a 35 million dollar check exit and having the hubris to say, no, it's worth 100 million. So whenever we make our investments, we also start off with the entrepreneur. It's like, in this scenario, are you going to be willing to take the check? Because if not, we've got to write that, and we do anyway, into our exits.

That's a great point, Tom. So one of the things you and I've talked about over the years, and I think even Ferris and I have shared, it's like, you know, when people say what is the best time to sell?

Right.

And it's like when you get an offer and. Right. And we all want more, we want this number. But in your career you've seen a lot of exits, a lot of sales, a lot of things. And usually when someone makes an offer, it's probably a good time to maybe sell. Right.

It's a good time to consider it. And you know, Candice and I, my oldest daughter, are out buying up some real estate right now in various times. And we make the offers and you make money on the buy, not on the sell. Right. And for an entrepreneur, that's really important to understand that concept because entrepreneurs tend to give away their equity in. And I know you guys are talking at some point about the capital raising and things that people go out and do, but that capital stack structure is very, very important, how they structure that first round of capital for their ownership position. Because it's the same thing as when you go in and buy a piece of real estate, doesn't matter how much you improve it. That first buy was really where the value was and then adding value to it. So throughout that process, you need to pay attention or any of the entrepreneurs need to pay attention to that. And when someone makes an offer, there's two things going on. It's either it's a great offer and you should exit and take that to your next successful thing. Especially as a serial entrepreneur, if it's a horrible offer, you start looking at the market and see if you're in the state of a falling knife. Because sometimes a horrible offer means we're headed towards a downfall and people don't see it yet. And that's also a good time to exit is get out before it costs too much. Yeah.

And I think the other thing to add to that too though, is sometimes just take some chips off the table. Right. Like I've learned that, you know, back to the first business, you know, I had the.

Grass cutting business and then, you know, that grew and I had this small software company in high school and, you know, I had Extra money. And I started investing in stocks and quickly, like, burned a lot of money in stocks, realizing that, A, it's about day trading and B, take some wins off the table. And so that's shifted my mindset in life. And, you know, even if you believe in a business, ask yourself, how do I exit partially, right. Take some risk off of the table, and some guys will go all in, bet the whole farm on it, right? And yeah, some guys get heavily rewarded for it, but like you said, Tom, some guys also get the other end of the stick, right? And so, you know, you could have made out with 100 million, but also you end up putting in 6 million. So that's a problem. And so, yeah, you know, that's where we like to coach up some of our sellers on, hey, rolling equity. Right, sure. You believe in the business, you think it might be worth more. How about you put your money where your mouth is? We'll put money where our mouth is. And let's buy you for this. You keep 30% in and let's grow it.

So I think Casey was. Well, you were definitely around at the time we were doing this deal. I don't know if you knew the intricacies of the deal, but we put $1 million into a fintech company that was out of Virginia. And about three years later, a group came in and offered us our buyout at that point. And so we were able to take our cash off with a return. And we didn't go to the C round with them. This was in the B round that we got bought out. But what ended up happening was we got all of our cash out and then we stayed within or in the deal with warrants. And so we made our return that we wanted to have in that instead of going for the big win on that scenario because we knew the market was volatile. And as we said at that point, we said, it's really frothy. So for us, it was great to get the risk, as you said, Ferris, off the table.

And.

And now all of a sudden we're playing with house money.

And then one of the wind that happened to that business is still move forward and you miss out the big win or you feel good about. We did.

No, I feel great about what we did. It had its trials and tribulations. It was huge valuation and then huge crash and then correction and then finally a small, little, teeny, tiny exit and the entrepreneur made nothing right. We got our money out. We got a little bit of kicker at the end, but it was great because we Also were able to reposition the money and that's why we like early stage financing in our case. So we go in post, you know, friends and family, pre A, in many cases we want post revenue. We can be pre profit in those scenarios and in that case we don't mind exiting at an A or a B round scenario as long as we've got our returns because then we can go redeploy that capital and we usually stay in for a portion of it to take the upside.

So really quick, since I don't have as much of the background, right, like explain to me your business, right? You are raising money from who you are deploying it into what and how is it being deployed, right? Is it lp? Is it, you know, sounds like it's debt? I mean what is I just for the listeners to kind of understand it.

So it started in 92 in a debt structure initially with what we would called a sal, a shared appreciation loan. So you'd get in there, you get your coupon and then at the end of the day if the thing does really well, you take that money off the table right. Now there's all sorts of other ways that they articulate this in today's world and, and have a different ways to do the notes. But generally we go in and I had left the bank rates had been falling from 18%. I mean customers had 18% CDs, right? So they're rolling into a 12% CD and they're pissed. I mean could you imagine having a 12% five year CD today? Right. So they're pissed. And it was the first really downturn in the market that I had gone through as an adult. So this is 91. California went through a recession mostly partly because there was a consolidation of a number of banks at the time. And also there's several billion dollars worth of real estate that was performing, but not performing. We saw an opportunity there, me and a couple of other friends because we had these very wealthy today, what would be termed as a high net worth, you know, family office type scenario. But family offices wasn't a thing back then. There was no such thing as a family office really. So they pulled money from high net worth investors and put those into a fund. We would generally go in as a manager of the, the LP side and we'd have usually. And so if it went in as a debt, we'd go in as a debt position which would be first off usually tie up the IP from a standpoint of having a, you know, if the deal blows up, we get Whatever IP they have, they're collateralizing against the ip. Yeah. And that's. That's the scenario that grew into various other things, things that we should have never gotten into, which is a great learning experience. Right. So we learned that not only should, you know, get out over your skis. I am a big skier. Right. So you get out over your skis because you have success in this area, think you can go do something else, and that ends up being poor. Where we've mostly made our money at the end of the day is we buy up distressed debt. So when you get into markets, you find either a distressed property, a distressed company, distressed debt, somebody's made an investment in company, and we buy up the shares in that scenario and come in and reposition it because we have a strong team on management. I think Kasey could talk to that still. We bring in the systems, the structure, we find out the who's, and we help companies or whatever that entrepreneurial venture is doing to fix that piece.

Can you give an example?

Yeah. We're. Right now we're involved in a cannabis company in the state of Nevada. And so in doing that, it's got some cash flow, it's got a couple retail stores and, and a grow. So it has a. You know, the other part of it is I always like something that has a protective moat. So when you have licenses in a certain space, that keeps competitors out. So we looked at that and said, okay, they're not managing the retail side enough. They are not, as we looked at the numbers, they're not tracking their sales and they're not managing their people towards having gains in the sales. Typical retail management stuff. Now, I know very little about cannabis specifically, but I know a decent amount about retail and we know about retail investing and. But the most important part was we brought in the team members and the consultants that knew about cannabis grow and cannabis retail. And so we're looking at a multiple. You know, it won't be a huge exit at the end of the day, but we'll probably have a 5 or 6x exit.

Huh.

I toured that property.

Yeah, you did, yes.

It was pretty. It was pretty amazing. I mean, I was blown away with what they were doing and. Oh my. I mean, I was blown away with the facility. It was pretty cool.

And so just so I understand it though, so that's a company that was distressed.

No, they weren't distressed. They needed. They needed growth capital.

Got it. So you came. So you gave me. You raised equity from high north individuals. You deploy in as the growth Capital and it got deployed in as what to buy into the company or was it debt on the company with a equity kicker? I mean how did you guys structure that?

The second part was a debt with an equity kicker that matches what the equity returns are. So we're actually not on, we're in the capital stack that we're pre exit value for our principal return and then we're given our coupon along the way which is also pre equity exit for us in that scenario. Got it.

It's pretty neat when I, when I learned about the business, I mean that they know cannabis, they don't know business. So now Tom comes to the table, brings capital know how of business.

And similar what we're doing at equity Launchpad.

Yeah, absolutely. Same concept, right? But I guess, you know, and that's why I'm trying to understand the difference, right, the nuance there because like in our world we are buying the business, right. We are the majority shareholder. We're not a note or nothing else. Right. We can make the decisions to do what we want. Right. In your model, you're kind of almost, hey, structured as dead. And I guess as part of the deal though, you're saying we get management control to go get this where we need it.

We get managed, we get management input in early days. And if we find that they take our advice or they, you know, not our advice, if they, if they continue to grow the company and do that, then we're making our returns. We're pretty much hands off scenario other than taking a seat on the board and having a voice in the growth. And there's a kind of space that we live within on that and say these are acceptable returns. Hope you're not having the acceptable returns. We're going to insert ourselves a little bit more into the company or a little bit more or a lot more. And then eventually if we need to, we'll make a management change and if we need to, we'll buy out the equity shares if we need to have control. But in most cases we've written into our documents that we have control without having to do the second part of buying out any equity. But there are times that we see that, that people start seeing that the adage of it's always darkest before, before the sun comes up in running businesses. Oftentimes it's like you're three days away from bankruptcy and then boom, you know, you get this huge exit that is, you know, this unbelievable thing that happened because it's cash flow that changes those things or it's an infusion of cash or whatever else is going on. So that's somewhat the space that we live in.

So Tom, one of the things I think that, that, you know, that you've brought to me taught me a lot about because I was early in my stages of raising capital at Energy Funders and really being able to talk to you. When you gave me 15 to 20 minutes of your time, it was all about, hey, this is what you need to do. This is raising capital. Now you've, you were fortunate to write a training on raising capital. You've had a chance to be a part of the Harvard, you know, group on raising capital.

So talk to a lot of our listeners because the people that are listening to this, you know, they are looking to buy that company and they're going to have to raise a, you know, they're going to have to raise the equity that they're going to put into the business and they've got to talk to these investors. I mean, there's a lot they've got to do around raising capital. So your thoughts?

Well, you know, Casey and you worked with Ferdy at our group, right? So I use Ferdie as a great example of this. And he, he has a business out there called Asset Class, which is great business and going. And years ago he took a class for me and my mentor who we've been business partners now for, you know, multiple decades and his name is Bill Fisher. So Bill and I created this program called Six Secrets of Raising Early Stage Capital. And we then put together a program and it was our former.

EVP at Wells Fargo that went to become the chair or the dean at the B school at Stanford, asked Bill to put together this three day workshop, one of these executive workshops at Stanford. So, you know, kind of a big name school of already who knows how to raise capital. So we systemized it down to a handful of things and those are the six secrets, as we call it. And when we marketed that class, everybody who wanted to take the class wanted to know roughly secret three or four, which is how do you find the right investors? And so in the three day workshop, do you know what we spent most of the, that's what they came in for. Do you know what we spent most of the time working on? No idea how to explain your story?

That's what I was gonna totally guess that I'm gonna say. How do you tell, how do you give a pitch? I mean, that's, it's all about the story. That's, it's just no investor wants to Invest in a deal where, hey, the returns are 20%, but there's not a.

Story, like no story to it. And most entrepreneurs talk about the solution. They don't talk about what problem they're solving. And so the biggest thing for your listeners to this program is until you can articulate the problem that you solve, you can't attract the right investors. And by that, what I mean is the best marketing. If you read Joe Polish or do anything with Genius Network and understand what's out there for marketing, the best marketing attracts the right client and repels the wrong client. So don't care. Don't try and be the friends of everybody in the world. Be very specific about who you want. And when you're looking for investors, it's exactly the same thing. So the presentation should be about what problem are you solving? And then you go find out who already recognizes that this is a problem that needs to be solved and they want to put money into solving this problem. So you don't need to convince people that cancer needs to be solved. If you can find the person that has lost a loved one or has had cancer and survived it and says, I want to have better research in there, that's the person to be reaching out to that has money. But just because they've got a billion dollars doesn't mean they're going to be investing in your project.

Yeah, no, I mean, we, we, we almost learned that kind of tangentially. Same point, though. You know, we, we've raised hundreds of millions of dollars on real estate, right. All of our raise has been about, hey, here's this deal, here's the story, here's the location, here's what we're going to make it better, et cetera, et cetera. Well, then we got ambitious and like, hey, let's go create a pref equity fund where we're not going to tell which deal it is because we don't know the deal. Right. We're raising the money in advance and we thought would be very successful. And it turns out, even though the investors are only investing because of us, Right. They are back in the jockey. It's like, it just seemed like the investors wanted to be able to think that they're investing in a deal in an area that they think has an upside or, you know, they wanted to hear the story in advance. It wasn't like, hey, we're going to buy properties in the United States that we can deploy prep in a safe position. That didn't matter. It's, they want to know that it's a deal in Atlanta. It's got these operational deficiencies. We're going to make it better and have a whole story that they can side with. And, you know, we learned the hard way that people want to be able to, even if it's like, psychological, they want to think they got to choose what they, what their investment went into, and they're compelled by that story.

So, yeah, you know, first, it is interesting, these very large REITs that people have money invested in are mostly invested through their retirement plans or other. Right? So these are large funds collecting up money from other funds that have been collected that are already raised. And they're talking about coupons out there. Or it's, you know, it's. It's an insurance company that's put some money into that reap because they need to clip a coupon. So it looks like that's a great idea. Right. So all these big deals can come in and find it. But for most of your retail investors, they want boots on the ground. They want to understand what it is, because most of them didn't make money in what you're doing. They made money somewhere else, and they need to make a return on that money. So they want to know that you know it and they touch those boots on the ground. So it's the Chrome business, right? You want to know who was in that business? How did you bring the management team? How did they get to do that? And why would I want to be in there? Well, I can go see it. It's tangible. That's what we've seen.

And then we go, hey, let's go raise a bunch of money to go buy a bunch of companies. People are like, oh, hold on.

They want to know, I want to be in the water business. I want to be in the Chrome plating business. I want to be in a software business. Right. They, whatever they're compelled by.

Yeah. And that really gets to one of the other parts is that. And Casey knows this. So I have a love, hate, hate, love relationship with the sec. Right. So we're actually in the ninth Circuit right now for a constitutional lawsuit against the SEC for a first and fourth amendment violations by the sec. That does not say that I don't believe that there should be regulation on securities both at the state level and at the federal level. But what it says is they can't overreach what was set up by our founders, because at the base of this country, we're not a religious freedom country, We're a rights to economic and free enterprise country. Our founders were all entrepreneurs, right. In some level. And so they wanted to have that freedom of economics. And so the ability to raise capital and put them in these LPGP scenarios has, it's over restricted right now. And so what you guys are doing is great because you're bringing those investments to people in a space that is highly regulated and yet you've got a good format for how to do that, which is great.

Now, I mean, we see a lot of what we're doing is kind of getting investors exposure to Main Street. Right. I mean, historically people didn't know how to get into these kinds of investments. Right. So people, you know, and again, my background software, all my friends at Microsoft, all they know is dump all the money, go buy an index fund. And you know that that's, that's it, that's what you're getting. That's your life, that's your retirement, which.

The gains are off of seven stocks principally on that index fund. Right. So, yes, you've got, you've got a whole index deal, but it's still right back to basically the fangs that are.

Making all the growth is all it's worked out. So.

Talk about concentration.

So Tom, and just kind of going back to, you know, so one of the things over the years you and I've talked about is, you know, the ability to raise capital. One, but two, we've also, you and I were actually, before I joined Ferris and Ben in partnership, you know, you and I were talking about going out acquiring small businesses. Right. We were talking about this together in 2021 when I was working with you at your family office.

Yeah.

And we talked about this and it was one of the leaps that we were going to do. But you know, you and I had that conversation about, hey, you know, you've got those friends that you grew up with that their family has just had, you know, these businesses that have paid lineages of, or at least generational income. You know, so a large part of our listeners and the people that we're dealing with, you know, they're out looking for legacy businesses for people that are 20, 30, 40 years, you know, old. And they're going to come in and they're going to buy the business and, and it's going to have some more predictability of income and revenue.

Yeah, I love the space you're in and I love what you guys are doing. I think that it's a huge opportunity, as Casey and I have said, you know, identifying opportunities out there. And part of it is, is the, you know, I have A research doctorate. So some of the things that I say it's quantified because I've actually got data and then other times it's just a gut feeling and this is kind of that, that ancillary information. So I ski a lot and I ski a lot with a bunch of older people that have made really great livings, usually first generation businesses. And it's amazing how many 60 and 70 year olds that have had a wonderful life and put their kids through college and their grandkids through college and the kids don't want to be in the business at all or they tried in the business, but they don't want to be in the business anymore or they can't get along with the siblings or whatever. They're so, so many different things that go in there and the entrepreneurs, and many of them are men, but there's also a fair amount of female entrepreneurs out there too that are in their 60s that have built these businesses and they're sitting there and they're looking and they're, they don't necessarily need an exit. They've got a cash flowing business and they're like, but they're like, but what do I do when I pass away? This thing is a living breathing entity and it's going to die. Because what ends up happening is if there's not, if there's not someone to be the entrepreneur or at least the owner within that business, the management team will not succeed over a long period of time. So you know, it's just it that is a critical piece and it's multi trillions of dollars that is going to transfer wealth over the next decade, maybe two decades. Right. I had this, what an opportunity.

Yeah.

So Tom, how many of these businesses are you sending our way now? You know, I need to get out there, go skiing. I mean, you know, like you're already the compelled person. I don't even have to explain it to you already understand the problem with.

I've been seeding Tom to raise this $50 million fund for equity Launchpad. So we go out and take over the raise the blind pool fund.

If I know this is how Casey does it is is he slowly drips on me, brings me back in, he talks to me and I will tell you this. So, so go, go back to and Faris. I'll answer your question, but go back to one of the things that an entrepreneur raising capital needs to do is they need to understand this won't be their only rodeo. So they need to stay in touch with their sponsors, meaning not the sponsors of the actual fund. But their sponsors are like those people that put the stickers on the, you know, the rodeo bronc riders shirt and that sponsor is their lifeblood for all their future ventures. Because they don't, they don't do it just because they're always going to get a win. If you're a real serious investor, you understand there's wins and there's losses. But if that cowboy doesn't stay in touch with me, I don't invest with him again. Meaning if they're only giving me the sunshine and hey, we're going to win, we're going to win, we're going to win. And they don't bring me the challenges and tell me when it's going to fail or what's going on, I don't invest again with them. But if they do and they stay with that and they've shown integrity, we'll do many deals with them because it's like they're learning as they're growing.

Yeah, I mean, happens, right? And you know, investors aren't idiots. I mean, they, they get it, they can get behind it. And it's about how do you solve it? And to your point, I mean, I always tell people that are looking to raise money, you don't raise money whenever you have an opportunity. It's all the homework you did well before then. Then an opportunity shows up and then you're really just closing the raise. Right. That's not, you know, and if you're, if you start you're going out there pitching once you have an opportunity, you didn't maintain that relationship, that rapport, you know, as an investor, it's like, well, is this guy really aligned with me in terms of we're a partnership or is this guy just using me for my money and you know, hoping for the best?

So.

And I will first, I will tell you this again, not every investor is aware of that. There's so many investors that come in and blindly make an investment, they think, they understand it and they think there's a guarantee. And so, you know, you want to guarantee, you go buy a Treasury, second go put it in the bank. But those are the two guarantees or an insurance company type scenario with buying it, but, you know, whole life policy or something, you get some guarantees in there, but in investing it's not a guarantee. It's not the wild west all the time, but it is, there's not a guarantee.

I mean, it's about, for investors, you got to understand risk adjusted returns.

Right.

It's all about the risk adjusted part, people just fixate on the returns part and you know I see that in real estate. I mean we present a brand new deal in a great pocket is very different than a deal that's completely distressed and we're going to have to go, you know, turn the whole property dump millions into the capex and there's a lot that can go wrong. Our capex prices can go up. Right. We could struggle to get at least up. I mean there's just a million different things and people almost look at the bottom line and make their investment based on that instead of understanding the rest of that story.

So yeah, yeah, I've had a chance over the last decade now to have watched Tom build some pretty amazing things, invest into a lot of things and I've always watched you really keep your cool, your calm, you're steady because they're not always winners. Right. And it's been pretty phenomenal but you know, just kind of in, in as we move to the next I want to, I want to talk about the tenacity and what it takes to be an entrepreneur because those are some of the big things that a lot of our listeners are new to entrepreneurship. They think they're going to buy a company and it's going to solve all their problems and what's going to happen is every bit of problems are going to pop up. So Tom, you know you went through a pretty big battle of on your, on some of your investments then you decided to go back to law school or go to law school and now you are fighting the sec. So give us, I mean this is probably, this is one of the best stories. I mean like this is a, I not just saying this is an amazing story but just in a quick snapshot here, tell our listeners about what you're doing and what's happened.

Well, I'll just give you a little bit of background on that. So and for Ferris, you don't know me, Casey knows the story a little bit but I was a horrible student and because I made money early in my career by the time I was in high school I was making way more than the teachers were so I didn't see a reason to actually go to school. And so I had two passions which was running the business and going scheme. So my sister who was raising me was really surprised and still says to this day she can't. She, you know when she went to graduation she wasn't sure that I was getting my degree but you know, my diploma and so fast forward I didn't get My undergrad degree until I was in my 30s. I now have way too many degrees for most people's pleasure about that. But I, you know, I have an mba, I have a graduate from Harvard. I went on to get my doctorate at Northeastern Pritzker Law School. And so in. The reason for that was after I went into business and made some money, I decided that I want to go back and find out why things work or why they don't work and try and learn those things. So in that I was battling the sec. They had come in because we had some ancillary people that were raising capital that stepped on somebody's toes in one of the states. And then that led to a long term investigation in the oil and gas arena, which then led to us agreeing to a settlement with the SEC without ever going into a full investigation or anything else along those lines. But in over four years we had produced over 80,000 documents. Not 80,000 pages, 80,000 documents showing what was going on with this and following and believing the civics that I learned over my lifetime and believing in the system. And it really wasn't about that. They were looking for a pound of flesh. So we were the biggest group that had flesh. Right. So I was the, the 800 pound gorilla in the room. So we said we took the settlement. Now initially it was a, a really large offer that the SEC wanted to settle for and it ended up being a $50,000 settlement. That may be $75,000 settlement after four years. Right. So the number of lawyers that they put in the room is just for one meeting was the $50,000 or $75,000, whatever it was, that really piqued my interest as to how law really works. So we've spent tens of millions of dollars on lawyers. Sometimes we find really good ones, sometimes we find really bad ones. We find a lot of times litigators on the other side are just throwing stuff against the wall and you have investors. So decided to do my doctorate in law and policy at Northeastern. And initially I was going to do it on administrative law. And my wife, fortunately for me, said, you know, maybe don't pick something that you're going to be pissed off about all the time. And so I ended up doing my dissertation on workforce housing, which was great, something that I'm passionate about. But I still did the research in the constitutional law on the law side. And that led us to file the lawsuit against the sec. And again, it's been picked up and we're backed by some really, really, really large names. The NCLA being One of them. And they bring that constitutional law issue to the forefront about how our government is to behave. We forget that we don't need to get permission from the government. The government needs to get permission from us. The people. They only have the power. Even the administrators only have the power because we the people give them the power. It's we the people in order to form a more perfect union. Right. Is the whole preamble. And we need to remember that.

Huge. And so things are progressing, and, man, it's just a huge inspiration. You did that, man.

And what's the lawsuit for exactly? I mean, what's kind of the.

The.

The argument being made?

Well, so it's a very simple lawsuit, which is really critically important. If you watch any of the things that get to the Supreme Court, and we're hoping that this will get to the Supreme Court and the outcome of that will be, if we win, the SEC will possibly, and especially with the administrative change, look at it and make changes to what they do in their policies. That's great. We won at, you know, the federal court level and at the ninth Circuit, and that's great. What is possible, though, is, is that the SEC wins, and then we'll have to take it to the next level, which would be the Supreme Court. The issue is the First Amendment is the right of free speech. What people think in most cases is it's free speech. Between the three of us sitting here in this room, I can say whatever I want. I can say, hey, Casey, you are a handsome man, or I can say something else totally. Because I have the right to make free speech. That's not what the founders talked about. What they wanted to make sure of is that you could speak out always against the king and never have retribution. So it's the right to speak out. And when you sign a settlement with the SEC for the last 35 years, when you sign that settlement, the SEC, just like Harvey Weinstein says, you can't tell anybody how you got abused in this room and how we pushed you up against the wall and how we promised to take everything away from you and your family. You can't tell people that you are gagged forever, ever, in talking about the SEC in a bad light. And that is not constitutional.

Awesome.

Freedom of speech, baby. I love it.

Stick it to them.

Got to.

No, it's. It's not even about sticking it to them. It's about standing up for our rights. Right. So. And. And it's. And it is critically important because we don't have free enterprise if we don't have freedom of speech.

No, I completely agree. I mean, because you don't know what else goes on behind closed doors. Right. If you're not able to speak about it, I mean, you know, you may be agreeing to something because you were kind of forced into it and you realize everybody else has done that. And so now you know, are we actually controlling our destiny or not?

So, yeah.

Tom, we're going to jump into some personal questions here. We've got three of them that we're going to throw at you. But our rocket round. It's called our rocket round. We ask all of our guests three questions. So our first question, I think I know the answer, but I'm going to ask it anyways. What do you like to do in.

Your free time besides ski? I'm gonna add that little.

Oh, now that's a killer.

Yeah, I love spending. I love spending time with my grandchildren, regardless what we're doing, but mostly what it is that I love to be outside. So I live in the Sierra Nevadas. It is a great place. I've lived in many places, worked all over the world, and this is still one of the most beautiful places. So my wife and I did 29, 29 the last several years, which is hiking up the equivalent of Everest in 36 hours and do those at various ski resorts. And then this year, we did a three back to back to back marathons. A total of 80. I think it was 83 miles in three days. 16, 000 vertical feet in the Sierra Nevadas. So other than being in skiing now, I ski generally a little more than 100 days a year. And that is my passion. And most people would tell you it's my first love.

I've not heard how you doing 100 days.

But he does. I'm telling you, man, I've not heard of 29.

29, 29. I summited Mount Rainier. I did a lot of mountain climbing. I love mountain climbing, but running is.

Like, oh, so unbearable for me.

Awesome.

You know how many marathons I done before these? 3. Backtrack. So it's Thursday, Friday, Saturday, marathon each day. You know how many marathons I've done in my life before that? Yeah, exactly. Zero.

No, I just. Yeah, I. One day I'll do one day I'll do at least a half marathon. So we'll see. All right, next question. Most memorable moment in your business journey.

One of the ones that I use over and over and over again is the one with Rick, where, you know, I go back to that scenario, which Is he said, you know, you just bought your company for $35 million. And so at the end of the day, you know, but there's everything from getting that first check to having that huge downturn to being able to survive something saying, I'm still standing. So there's so many great memories about being in business and so many, you know, what people would deem as bad memories. But there's, there's, you know, Strategic Coach is one of the greatest things I could ever tell an entrepreneur to join. And I've been a member of Strategic Coach with Dan Sullivan for almost a quarter of a century. This is, this year is a quarter of a century for me. And in that, he says, you know, he has, he has a bunch of tools that you can use as an entrepreneur, and it is. One of them is the transformation. So it's. When it's the experience transformer or transformation. Experience transformation, you can look it up. Great tool. And it's every time you go through something, whether it's a good outcome or a bad outcome, you sit down and you write what you learned. Yeah. So what were the good parts were the bad parts? And so that's been a big part of my transition over all of my life and for the last quarter century is each time we go through these things, it's neither good nor bad. You know, it is just is. And what do we learn from it?

Awesome. You're probably, I think, the third person in the past three months to push Strategic Coach on me. And Catherine from, you know, she's one of our listeners. Catherine from the Coach. She calls me every week, and I, I have not answered her, but. But I, you know, I think someone had given her my number as a potential fit for that. So. But I've heard great things about it.

Yeah. Dan Sullivan is an amazing person. And I'll just, I'll just say this, that 25 years ago, you had to show your tax returns and they had like three levels, so you had to make a quarter million, half million, or a million to get put into whatever category you're going to be in at that time. And Dan always said the million, the people making a million are much easier to coach than the people making a quarter million because the people that make making a quarter million think they know it all. And the people that make a million a year know they know nothing. And they need to surround themselves with the who's that know something. And so that has been a great piece all the way through.

So that leads us to our third final question. What is your favorite tool or resource.

Ope other people's experience. So it's painful to learn all the lessons yourself. And we just don't live long enough. So there's someone that loves what you hate or what you're not good at. And so in building businesses, you need to find the people that love what they do as much as you love what you do and collect that, that team. And they don't have to always be employees. A lot of times they're not, but it's the other people. And Dan again, back to Dan Sullivan. He co authored a book called the who, Not How. So this isn't just a push for Strategic Coach, but there's so much things that get out of it.

I didn't realize it was the same guy that wrote that book that does Strategic Coach. Interesting.

Yeah. So the other one is Genius Network. I got to tell you, any, any of the people out there, and Casey, I invited you to that, to the event in next November. I'll invite you again. But the Genius Network is something to check out because it's, it's phenomenal, especially when in learning a number of different things. But get, get around the hose every time you need to solve a problem, you don't have to necessarily think about how to solve that problem. You need to think, who knows who's already solved this problem and how can I get them now?

So that piece of advice has led me to, to come to Ben and Ferris and say, hey, let's talk about buying companies. Because I was wondering, pondering, and you even said it to me, you said who, not how. And you said it multiple times. And I was like, that's right. I got to find the guys that know to do the things that I'm not great at. To let me go do the things that I am great at.

Yep, huge.

Well, Tom, definitely love all the knowledge and I'm still a little disappointed in Casey that we haven't gone out and skied with you. Although I'm, you know, just full awareness I'm going to snowboard, so I might get in your or, you know, so we can't pick an all ski mountain. But you know, definitely got to come out there and ski with you here sometime soon.

So I do, I do board, but I am a far better skier than I am a border. So. And I don't. Although my son in law, my oldest son in law would probably tell you differently. I don't pick on snowboarders anymore. I just, it's the difference between like mountain bikers and and roadies. Right. And so I do both. And it was always kind of funny. It's like, you know, you know, if you've got a. Two mountain bikers in a car, who's driving and the answer is the police officer. Right. So. And you have these kind of jokes back and forth. So skiers do the same with snowboarders. But I'm, I'm a much more refined person other than I'd say, you know.

Since we're talking about biking, you know, I'm a mountain biker. I'm guessing you're the roadie.

I'm both, yeah.

All right.

Yeah.

Perfect.

Tom, real quick. How, how can somebody get out to you? How can they reach out to you if they wanted to get some information?

Information.

I know you've got a podcast. You've got a lot of things. How can they stay in contact?

You know, the, the podcast is called the PAL perspective. The easiest way is just, my name is thomasjpowell.com and you can find the website on there and read a little bit about the things that we're involved in. We, we are relatively quiet and private and don't have a big advertising thing out there at various pieces, but the people that know me know me and you know, I'm always on LinkedIn as well. So. Thomas J. Powell, just follow the name.

Perfect.

Love that in the show notes.

Tom, thanks so much as always. Your friendship has been unbelievable. Appreciate you very much and thanks for being here.

Definitely see you here sometime soon.

You got it. Take care. Ciao.

Thank you for listening to the M and A Launchpad podcast. If you've enjoyed today's podcast and would like to support us, please leave us a rating and review after you listen. If you're looking for guidance on your next business acquisition or sale capital to support your next business transaction or to invest in a private Equity opportunity, visit equitylaunchpad.com to learn more and to connect with our team. If you know of an individual who would be a great guest for the show, head over to equitylaunchpad.com nominate, where you'll have the chance to refer yourself or someone else to be a guest on our show. I'm Casey Minshew and I look forward to talking with you next week.