Levi Benkert of Harbor Capital - Can’t get a permit? Just drive to the Prime Minister’s Palace - The Michael Girdley Show Episode 35

Hey, Michael here. Welcome to the Michael Girdley Show, episode number 35. Today I spent a bit over an hour talking with my buddy Levi Bankard out of Austin. He runs a real estate private equity fund and firm called Harbor Capital. We talked about some pretty cool stuff. It was just like the best lunchtime conversation I could ever have with somebody hiring architects overseas. Talked about his experience doing that. Talked about whether it's okay to be in it for the money, his experience running a beef and cattle company in Ethiopia and going to the Prime Minister in order to get a permit for it. And then our outlook in future on America and spoiler alert, we are both optimists. So feel very good about the long-term future of America. And it was really cool talking to him. So here's the episode. I hope you enjoy it as much as I enjoyed making it. Thanks, Levi. Thanks for being here, man. I'm so excited to talk with you today. It's going to be a ton of fun, especially with all the stuff you've done in your life. So thanks for being here.

Oh man, this is awesome. I'm a little bit giddy here. Excited. I've been looking forward to this.

Well, that makes two of us. Mirko, our editor, looks 100% relaxed. So two out of three ain't bad.

That's good.

So I wanted to talk about something you tweeted about the other day, which is super cool. Which is that, you know, you own a property and you tweeted that you were working with an architect in the Ukraine. Is that right? Yeah. So like, first of all, what kind of project is this that the architect in the Ukraine is working on?

So we bought a house in Wimberley, which is about an hour outside of Austin, and use it as an Airbnb vacation rental. Bought it, it was a disaster, like basically gutted it, took about a year. We've got a contractor guy that him and his two sons go out there, his two adult sons, and they just work on it. And it's been this really fun project, but we got to a point where we needed to, we were going to add like a new, like kind of like an outparcel suite. And then also now adding a little tiny house down the road. And so I got on Upwork, posted the job out there and got an architect that came in. So this lady from, I don't even know how to pronounce her name, but I, published the link to her bio in Upwork. She's from Ukraine. She literally just left. I've been like asking her throughout this whole process, like, so like, are there like bombs dropping right now? Like, what's going on? She left, like she's in Poland right now, but, you know, wants to go back home. But for $25 an hour, one of the better, I mean, I've worked with architects. I've spent several hundred thousand dollars on architects before to design, you know, multifamily buildings for me. She ranks pretty high up there in terms of responsiveness, understands what I mean, comes back to me with new ideas. We shouldn't put the window there, we should move it over here. And so we're building now this new project is a little 500-square-foot tiny house with a 200-square-foot kind of garden that's actually going to be in some walls. So it'll be totally private. There'll be a hot tub and a little outdoor queen-size bed mattress out there and outdoor shower. Very, very fun little space. And I've got it all done for what, $600 or something? Compare that to what you'd pay for an architect in the US.

If you can get one to like work on your job, right? Because they're so busy. Yeah. So, so is this in the, you know, we have in Texas, we have cities and then the counties. So counties are unincorporated land, cities are incorporated land that overlay the counties. So, which I guess there's even worse, like you go to Ohio and stuff, they have like townships where you have to worry about cities, townships, county, like Like I was like, how do you guys keep this straight? Is this why everybody keeps leaving? My wife did not think that was funny.

I'll say this, this is far enough out to where like a friend bought some guns out there and we shot them out, shot them into the side of a tree and no one's anywhere around. And so we're, we're far enough out. We're not inside the city or anything. And so yeah, we're, we're not getting permits or we're just kind of doing this out, you know, rogue on our own.

But because that was my first question, because typically like if you're going to get inside the city limits in one of these cities, or in some counties in Texas, you have to go get the permit. You have to get permits, you have to get your plans approved and do plating sometimes and all that kind of stuff. But it sounds like you're so far out that it's the parts of Texas where they're just like, okay, yeah, do it, do whatever you want and then call us if you have any problems.

Although I'll say I've done this before where you hire an overseas architect and then you get somebody local, either an engineer or an architect, to stamp your drawings and they'll go through them and kind of make them their own, make a couple little tweaks. But, but all that back and forth process, you can do with somebody that's a lot more basically affordable and needs the work. And especially with everything going on in Ukraine, I felt really good about supporting somebody over there.

So, okay. So the process was you go on there and you said you just made an Upwork job posting for architectural plans. And then, so like what, what kind of posting did you have to put together?

I mean, I'll pull it up. It took me all of 2 minutes. I posted almost nothing. I said, I said, we're going to build a less than 500 square foot tiny home. And looking for an architect. And then when you go through Upwork, you can basically say US or overseas. And I just said, I don't even want anyone from the US to apply. And so then I got 25 proposals or so that came through and just, you know, went through and picked the best. And some of them are real wild. Like there was a guy from Greece that submitted a proposal and it looked like we wanted to build a house in Greece, which is not exactly what we wanted to do. Although, Those are cool. You know, some kind of interesting ones. And then this one was like, oh wait, she actually knows what she's doing. Like she's done some really, she sent pictures over. She's done some like what would be in the US multimillion dollar houses, very like forward thinking design stuff. It's awesome. Yeah.

I mean, this is like everyone I know and we do a lot of the editing for the podcast here off of Upwork people. So like, Mirko finds people on Upwork and we work with them. It shocks me how bad of a business, like I looked up the financials for Upwork. I just pulled them up again because I'm a shareholder and I'm like, why isn't this a better business? Like it just still blows my mind that they're not making more money because everybody, it's one of those things where it's like everybody's using this, but like they're not making any money. Like really, it really confuses me.

They did a rollup a while back. They bought a bunch of smaller players.

Yeah. Yeah, they bought, uh, Elance was their big competitor, and now they own the market. But their total revenue for the trailing 12 months was $530 million. Like, that's just— for a publicly traded company, it's just such a tiny number. Like, I'm just— yeah, I'm still blown away. Like, how are you guys losing money at this business? Like, it's just— I don't get it.

I don't. I honestly have no problems with the platform itself. Some jobs I've posted, I've gotten some pretty low quality. I've kind of learned what works and what doesn't on there. I've looked for writers and I don't know, maybe I just don't know how to look for it, but I've struggled to find anybody really good to help with writing projects on there. But design, like we did a yard a while back and had a pool kind of layout and the whole yard done. And somebody from, I think she was in Poland, did it and it was phenomenal, like just incredible. And it's $200 versus $3,000 in 6 months. And this is typically, I mean, this whole project with this lady, Posted a picture of it. I mean, this started 5 or 6 days ago. I had some ideas of what we wanted to do and my wife and I've been kind of going back and forth, but I get these images, we sit there and sketch them. We'd like pull them up on an iPad and write, you know, mark it in red and then send some notes and send it back and it comes back all ready to go.

Yeah, dude, that's so cool. I need to do that. Like, I think it's so smart.

I'll tell you that, that Airbnb project has been really fun. We paid 618 for it. On 10 acres, put in $300,000 remodeling it. So we're at just over $900,000 total. Then got it appraised at the end of that, got it appraised for $1.3 million. So we were able to refinance out everything we had in. So we're back up to no money in and we're averaging $15,000 a month in rentals. That's without the tiny house done. So it's going to go up from there.

So maybe this is a good place to go. Like I am getting my, like, it's taken me a while to get my head around the, like, Like, well, let me give you some background. I come from a family that bought real estate, paid off the debt, and then we just owned the real estate. Like, that was it. And a lot of that was because it was owner-occupied stuff. But like, you know, there's elements of my family that own a lot of real estate, zero leverage on the stuff, right? And that's because some of them are like, you know, not wanting to have any risk whatsoever. But like this whole, the whole thing where you like go buy a piece of real estate for a million bucks. Add $200K worth of value to it, and then you talk an appraiser into valuing the whole thing at $2 million. Like, right, like it kind of sounds like sorcery, right? Um, and then you borrow all that money. So like, you know, my initial reaction— and maybe I'm just outing myself as a total like, yeah, this is why you don't do real estate, you noob— um, but my, my initial reaction is, you know, you have to pay that back, right?

Like, um, that's hilarious. I, I actually, I I actually think we could sell it today for over $1.3 million. I think the appraiser was a little conservative. And so to me it's like, hey, I've got $400,000 worth of equity sitting here. And it was a 10-month project. It wasn't like we just went in there and put some paint carpet in. The floors had to be gutted and paved a quarter-mile-long driveway. It was hardly accessible to begin with. So there's a good bit of upgrade that happened there. Yeah, but still, we're in this thing at a, at a, you know, 3-point-something percent interest rate on a 30-year term fixed rate. Like, this is real estate I want to own, and we're getting 3 times the amount in income what the mortgage is.

So it sounds like an amazing deal. Have you done a pain-in-the-ass factor adjustment to this? And maybe to you it doesn't seem like a pain in the ass. To me it seems like, oh, what a pain in the ass this place would be. Like, I know somebody's going to break the toilet on a Tuesday and I got to drive up there because my handyman's out of town. Like, like, how do you think, how do you think about the pain in the ass adjustment factor? Your, your returns adjusted by pain in the ass factor, like, how do you think about that? Or is this just, you just like it so much?

Uh, so my wife is an incredible designer. So to start with, like, she's dealt with, you know, I kind of came in and did kind of parts of negotiating with the, the paver and, you know, different things like that. But this, this has been her baby and her project and The whole thing would have been way too much of a pain in the ass for me because I just wouldn't want to be spending that much time on it. But she absolutely loves it. And so there's kind of that factor of like the dynamic in our relationship and how she just loves— like she did the Culture Index recently and she got the— is it Craftsman, Worksman? I forget what the— yeah. And she, you know, she just loves these like kind of hands-on projects. And so that was one of those for her. If she's not home, I know she's driven out there and she's like sanding a floor out there, doing something fun. So that said, the kind of ongoing management of it is also something she handles completely. So certainly not no effort, but very little. I mean, it's a couple hours a week. Nothing's been broken that anyone broke. There were a couple of things like the hot water heater leaked and a few little things that happened just because it's new construction. You know, those first 3, I think it was 3 or 4 stays, something small broke on each one of those, but no one's broke anything yet. We've had like 14 different guests so far.

So, uh, we'll wait to wait till I reserve it.

Yeah, that's right.

Kids out, kids, bring your skateboards, we're going to Mr. Baker's house.

That's right. Oh man. Yeah, it's quite, it's pretty close to you too, right? Wimberley's not far from San Antonio.

Well, yeah, you described it wrong. The house is not an hour outside Austin. It's actually 50 minutes outside of San Antonio. So there you go.

There you go.

So, so it sounds like it's actually like this place is kind of perfect because you made sure that this thing's going to be very profitable. You knew how to structure it, you know, to do all the kind of debt financing and that sort of thing. But your wife is actually the one that's brought in like a lot of the sweat equity. She's— she finds joy in this, it sounds like. I mean, you talked about her like going out there working with— I know people like that stuff. Personally, like, I can't stand it, but like, Kudos to her.

Yeah, absolutely. Yeah, it's like the ultimate cheat code is having a wife who loves that kind of stuff.

So what do you see as the risks? Like, what is the, you know, as you guys thought about underwriting this deal, like what, um, and I know you're the only LP, so like, as you underwrite the deal for yourself, like, what do you think are the risks? Are there macro risks? Are there like micro risks? Like, could they like there's brushfires or things happening in the neighborhood or changing in ordinances? How'd you guys think about quantifying the risk reward for this deal?

It's not within the city, so legal risks are not nearly as much as if you're inside a city, the city might just get mad. And there's a, I can't remember the name of it. I think it's Kingsland, a lake town outside of Austin that just completely said no short-term rentals whatsoever. And now if you go on Airbnb, there's a bunch of people who have them on there and there's a city council or city group that comes and tries to knock them down and stuff. But technically they're illegal out there. We're out here. I mean, because it's not within an incorporated city, it doesn't matter, or that's less of a risk. Honestly, I mean, we knew we could turn around and sell it. There was so much sweat equity built up. That it was like, hey, we could turn a $400,000, $350,000 profit a year doing this thing. It's fine. We didn't know the rental market. That was one entirely because we've never done this before. Obviously, I do. We've talked about this a lot. I do industrial real estate in my day job, so I can tell you any market and what's going to happen there and how much tenant risk could exist. Basically, we went and looked on AirDNA and PriceLabs and all these websites that kind of aggregate all the rentals in an area, and it gave us numbers. Those were wildly off on the low side. Like we've been substantially as much as 50% higher in terms of rentals, which again, I'll attribute that to my wife and the design she did out there. And you know, and then we're constantly tweaking like which pictures should be the front one. It's kind of this fun little like geeky side project we're doing. But yeah, you know, it matters. Like when the summer came around, we said like change the title to like a, you know, summer oasis. We put a swimming pool in, so it's got a pool and kind of like make it feel like, oh, this is the appropriate place to rent for this time of year. But it just looks good. Design, design is the key.

Yeah. So I mean, do you think this kind of fits into the idea that at least on Airbnb and VPRO, like if you put out a premium product, like it's, it seems to be that's still the end of the market where it's really worth your time to make it super nice because people will just pay an extra $100 to stay at someplace that's nicer versus the—

I don't think nice is the key as much as well designed. People aren't scrolling for, you know, a, a whatever, a, a bathtub with jets or some— I'm trying to think of an example of something that you would get in like a fancy hotel. What they're scrolling for is the clawfoot bathtub with some, you know, mural behind it that just looks amazing. This house is actually built out of hay bales. It was literally constructed with stacks of hay bales that then they put stucco over. And so then we use that in the marketing, like, come stay in a hay bale house, super insulated walls, really cool design. It's something different. So people are looking, I've learned people are looking for experiences more than kind of quote unquote standard luxury. Yeah.

Are there any— and this just came to mind— are there any REITs coming along and buying out portfolios or aggregating a bunch of individual listings like that?

I've certainly heard people talking about it, but I don't know yet. I haven't heard of anything yet.

Yeah. I mean, it'd be really interesting from a stabilized cap rate perspective. What's kind of a rough number of what you're what your expectation is for this year, if you don't mind asking to do that.

I have to do that math in my head.

So, well, you said you're making $10,000 a month on a $320,000— or no, you said a $330,000 investment, right?

Well, yeah, yeah. It's kind of this stabilized cap rate. So I mean, really, I'd put $925,000 is our all-in cost after it was remodeled.

Yeah.

And then if we're making $10,000 a month, so that's a 14%, 15% cap rate. But again, you're discounting the sweat equity down to zero.

So sweat equity down to zero. And then that's, that's net of property taxes and all that stuff, which I guess is pretty small because you're out in the counties.

Yeah, but very small.

So let's say you're getting a, let's say a 10 or a 12 cap right now. Like, it seems like somebody with a really cheap cost of capital could come in and start to buy these up at, you know, 6, 7 caps and you might be really happy.

And even with property taxes and all expenses, I think we're better than a 12. But yeah.

Yeah. So let's say 15 and maybe they pay you an 8 or a 9 or a 10 and maybe run a little— no offense to y'all, but because they're more professionalized, they could maybe run a little bit better like the Vacasos and folks like that too.

A little leaner. Yeah. Yeah.

Yeah.

I don't know. Yeah.

Just business ideas while you wait.

That's right. I think what eats you is the cost of like places like that are going to have to hire, you know, we've got our guy that did all the construction. I call him up on the Sunday and he's like, yeah, sure, I'll head out there and see what's going on with the hot water heater, you know, and charges me $100 for that. That would be $300 if you cost, you know, if you call somebody out of the phone book. Yeah.

Well, and that's why, like, you look at like kind of there's that company Vacasa.

Have you seen them? Yeah.

Yeah. Another one is AvantStay, A-V-A-N-T-S-T-A-Y. I know about these companies because I've stayed in some of their properties. But, you know, that's why I think they've clustered around high-demand, supply-constrained markets. So like Park City, Telluride type, you know, Crested Butte, Vail type things where people, you know, they're, they're not building anymore. And so you don't have to worry about a bunch of supply coming on the market. But they can have that economies of scale, like right there to where it's just like, okay, like we're going to have our 2, 2 staff members and they're always available type deal. So maybe that's the right answer. You have to cluster to do that.

The other key is the— I'll shout out to them. It's Hill Country Housekeepers, a company that we found out there. Just happened to be the first one that we ended up working with. They're fantastic. I mean, they link to our calendar. They show up the day after somebody leaves. They take pictures of everything. If somebody broke a wine glass or something, they send us a picture. We've got all that stock. So in the garage, there's stocks of extra of everything, but they'll let us know, One of them broke or something, but I mean, they leave it, it looks brand new every time they're done and leave. And we pass that, pass that through entirely to the printer. So that works well.

My buddy has a cleaning, he has an Airbnb here in San Antonio and he was telling me his cleaning service actually charges him a percentage of the gross for the stay. Oh, like they don't, it's not the, the, the, it's like the fee gets lumped into his, what money he makes. And so they're like, yep, it's 30% and we handle everything. And I don't know, he seemed pretty happy with it. Maybe his Airbnb doesn't pay as much.

They probably do the communications as well, which we don't. Yeah, we do that, or my wife does that.

I think these guys, he said they don't. He said they just do make ready.

Oh, really? Okay. Just the cleaning. Okay. Yeah, I was going to say that rate. I've heard of companies that do everything for 30%, but it sounds like Yeah, well, I think maybe if you're down, I know where his Airbnb is.

It's probably not priced where yours is priced. It's a cottage like in the backyard of a not so nice neighborhood. So he's like, yeah, he's like, yeah, Girdley, like my Airbnb is doing really well. And I was like, what do you mean by that? He's like, well, it's covering my mortgage and my property taxes like every month. Like I'm basically living in my house for free. Just letting some, some chumps stay in the backyard like 80% of the night. And he's an extrovert, so he thinks it's the best thing ever.

It's great. Yeah, he comes out there with a glass of wine, 9 o'clock. Hey, you want to hang out?

Yeah, no, well, and his job doesn't require him to actually work that hard, so he's like super, super stoked.

He's—

it's the best thing ever.

The other, the other hack on that is PriceLabs. It's— I don't know how it's so cheap. We pay $20 a month and then they They look, are constantly looking at levels of everybody else that's renting and change our prices accordingly. And so I would have, when we started, I thought this thing would be, you know, $500, $600 a night and it's on the busy weekends, it's pricing up to $2,000 a night and it completely handles all of that.

So it's crazy how your average person doesn't under— they're so used to hotels, right? Where it's like, oh, it's either $150 or $250 a night and it's like, No, when the Final Four comes to town, it should be $1,500 a night and you're going to get it. And it's pretty, it's pretty astounding. But it takes that software sometimes to like break through people's barriers and actually do it. So would you recommend somebody does this? Like, do you think it's, do you think it's for everybody or do you think you guys are like a special case?

Yeah, I don't know that it's for everybody because I think I would absolutely hate this if my wife didn't love it as much as she does and have the personality fit to be able to do this. So I don't know, it's kind of case dependent. I don't know. I, it would be tough if you did this as your day job and tried to have 6 or 7 of these. And there's a couple of guys on Twitter that are doing it and seem like they're doing well. Honestly, it seems like a hair on fire business to me, and I hate those kind of businesses.

So do you think there is a danger that more and more supply comes online to where the gold rush for the property owners kind of ends at some point? Or do you think that just the nature of real estate where it's so specialized, you'll always be able to kind of have outsized returns if you have the right property in the right place and that sort of thing?

Yeah, I mean, I've always, years ago I had a private equity fund that invested in my business and when I met with the principal, he told me, look, all markets normalize eventually. And that saying has stuck with me. At the time he was investing in a property in Ethiopia that I was doing, which was like We were showing these like, we'll do a 38% IRR. And he was like, that's great, but all markets will normalize eventually. Like if it's that profitable, other people will come and they will invest in this. And I think that's got to be the case over time. It has to normalize, which again, it's all about standing out. I feel like very few people are able to make something that's really special. I did see, I went yesterday or a couple days ago, I was on Airbnb and looked and there's a new property in Dripping Springs that just came up. Somebody must have spent $500,000 on the yard on this property. It had bocce ball and pickleball and outdoor bowling and outdoor chess, but it was all in this like turf, but different colored turf. And I mean, it was like half a football field worth of different outdoor games. And then the inside of the house was special built as well. So I mean, this thing was literally designed— it's $2,500 a night or something. It was literally designed for like groups of 15 to 20 people, you know, girls trip, guys trip, like this is where you go. And I'm curious how good they're doing. I mean, it was like it had just listed.

So you want me to go trash it for you or what? Yeah, we'll talk about that offline.

Yeah, we need to see.

Yeah, I'll be over there. I'll take care of those guys.

That's right. That's right.

So we made some, we made some topics to talk about before. Today, you know, because this is a serious podcast, we do a lot of prep. Um, so one thing we've talked about a lot, um, on Twitter at least, that I thought it'd be good to talk about here, and you gave it a 9 out of 10 rating, most of interesting, 10 being the most interesting, was the question, is it okay to be in it for the money? And I was like, oh, let's talk about that. So are you okay talking about that now?

Yeah, I'm okay talking about it. It's interesting because I literally stole this from another, um, I think you found this and put it on here because I tweeted about it recently and I found it from you. So we're just literally going in a very small circle because I found it on, I think it was episode 31 or something where you talked about it with a guest where you guys were talking about like that, that over and over we are told that you have to have some kind of altruistic mindset or mission in order to be— I think you called them missionaries, which I love that. Description of that kind of people or that kind of business that for many years. So long story, but I basically lost everything in 2008, had an enormous real estate crash. I owned a bunch of properties in Northern California, which got hit one of the worst markets to get hit in the country, lost everything. And my wife, again, the rock star of our marriage, was like, hey, let's go do something different and better for a change. You drove me crazy trying to make money so much. Let's go do something different. And it literally, like, I just became this shell of a person because it was tough to lose my and my investors' money. And so thankful for the investors who's, it's funny, one of them is flying into Austin tomorrow and I'm going to meet him who lost money then and still invests in my deals. All that to say, we ended up moving to Ethiopia for a number of years and we went over there to start an orphanage. We kind of had this deep, dive down the rabbit hole of the altruistic. Like, there's— you're not doing that for the money. There's no— there's nothing like self-aggrandizing about doing that. Like, it's just a grind. It's really hard. And super proud of what we did. There's a couple hundred kids that we were able to take out of the orphanage and like nasty orphanages and put them in. You know, we would like basically hire widows from the community and start these new families. And a bunch of these kids are like graduating from college now and like Amazing, amazing. But then after that, tried to do these businesses that blended everything together. It was like, okay, how do we create jobs for people who couldn't have them while also trying to make money? And I felt like it just was this push and pull that never really resolved itself. And I got to a point where I was like, you know what? I'm not ashamed anymore. I'm going to say it like it is. I'm here to make money. And I want to do good with that money in the world, but the business is a business. Yeah.

Yeah. It's interesting. One, one experience I had with this was, you know, I was so involved in a company that had a bunch of folks who were especially younger, who were very mission-driven. And, you know, at a certain point, like I saw us as kind of the owners and management, like kind of like not talking about making money or like talking about like big monetary goals. And, um, then that went on for like maybe 6 to 9 months and we didn't make any money and we were working really hard and we were like, okay, forget that. Like, and we're just like, if everybody leaves, cause we're going to start talking about making money. Like they just need to, they can leave. Right. Like I'm not going to, I'm not going to pussyfoot around the whole thing because, you know, because of that, like this company exists for its stakeholders and a primary stakeholder is the shareholders and this shareholder is sick of being broke. Like, that's the way, and everybody was just kind of fine with it. I think there was an unnecessary level of fear around it. And I don't know why I had that fear. I just don't understand it in retrospect.

Well, and it's interesting. I feel like, folk, if you start to focus on like, hey, this is what we do with this portion of our lives. We're here to like build a successful company that's a legacy and also really like be generous with our employees and people that we work with. That's a virtuous cycle, right? The more that you take care of your employees, the more they take care of the business and that flywheel gets going and, you know, or the snowball goes down the mountain and gets bigger and bigger. I feel like if we're all like, you know, basically like we're not allowed to be honest about the fact that we're doing that, then you basically don't know what your flywheel is and you end up doing other things that aren't helping the main goal. Yeah.

Well, does it, does it reach a point where, I mean, it seems like there are a spectrum of being in it for the money, right? You can be in it for the money, but you're doing it like sacrificing ethics, treating people poorly, you're immoral. Um, scummy, I think is another, another thing like, you know, like those are all kind of problems.

That's interesting.

But you could be in it for the money, but there's like that kind of middle ground where it's like, no, this is not a charity, but also this is not like a get rich quick scheme or like a fly-by-night, any of that kind of stuff I talked about. And maybe that's what people associate with it. Like, they're just like, oh, you're in it for the money, that means you're gonna screw me over 50 bucks. Like, no, I'm not gonna do that. Like, I'm gonna play the long game here.

Yeah.

So I don't know, we're, we're violently agreeing. Maybe we can find someone to come on the next podcast who's like, no, this needs to be about changing the world.

And it's like, that's right. Oh, I, I did see, so that thread we talked We talked about it a little bit and Sean Sweeney jumped in, who's a developer in Minnesota, right? Minneapolis. There you go. In Minneapolis, does these gorgeous, gorgeous buildings. And he came in and was like, hey, there are much easier ways to make money than what I'm doing. And I would be doing that if that's all I was doing. I don't disagree with him. And I, but at the same time, I feel like what he's maybe missing in that is the like, yeah, you build gorgeous buildings and great places for people to live. And guess what happens when you go to try to raise money on your next deal or go to a bank and get on debt financing for your next deal, they're going to do it. And so, you know, it's all again that virtuous cycle.

It's actually, you know, I've been spending a lot of time in like private equity and banking type worlds, you know, where the stakes have, are pretty big, right? You know, doing 8 and 8 and a half figure deals, right? And it's just like the people that gravitate to that are the people that aren't interested in being, say, business brokers, right? Or lenders, the main street lenders. Like these are people that are just like, okay, this is how it's going to be. Like, yeah, how are we making some money here? Thank you. Bye. Like, and it's kind of refreshing, you know? It's that very Wall Street mentality. And I'm just like, this is so pleasant. Like we don't have to talk about like rainbows and unicorns. It's just like, we want to take the money from this pile, create a bunch more money, and then put it into this pile that happens to have my bank account in it. Like, it's just like, oh, Like, you guys are so nice.

Although there's a— to, to kind of go back to your argument of, is there a line? I had a call today with a new potential private equity fund that wanted to invest in our deals, and they presented an offer to us of a 90/10 split, meaning they, as the equity, get 90% of the deal. We would get 10, and then a 9% preferred return on their money. And, you know, and they're like, but don't worry, there's a hurdle. As soon as you give us a 25% return, Then we'll start to like share the equity more with you.

Yeah.

I was like, you have crossed the line. Like, like our typical is a 70/30 over a 6 CRAF. Yeah. But with no hurdle, like it's just, you know, we get 30% of the deal and the investors get 70%. Like the money, you know, money is the money, but man, these guys had gone way over it. Yeah.

Well, I, it's kind of one of the rules where like if somebody flies in on our private jet to come visit you, you really should know why they're in a private jet and you're not. Like, that's, that's the thing. I, um, or you meet with some of the private equity folks and you look down, you're like, I think those are $4,000 shoes. And then they make you an offer and you're like, okay, I know why those are $4,000 shoes.

That's right.

It's like, like everything. Uh, so I think we're violently agreeing you should be in it for the money, but you shouldn't sell your soul. Is that kind of where we ended up on this? Yeah.

Yep, that's right.

All right, don't, don't tell Twitter this. I think we'd have a problem.

Good one.

Uh, so the other thing we put here that I want to talk to you about is, and I think people will be really interested in it because I am too, fundraising tricks and techniques. And you gave that a 10. I think it's also your most— is it your most popular Twitter thread ever? I don't know, it's like in the top, top 5 though.

Yeah, I know, my 14 Simple Cheat Codes was like— I use that Tweemax. Do you use that?

Uh, I use, uh, Typefully for writing tweets.

Okay. Okay. So Tweemax is like a little, you know, it's a, it's a plugin on the side. And so whenever I look at, like, when I look you up, I can see. Yeah. What?

Not that you're asking my input. This is a really good thread. Like the content is amazing. The copywriting is the key to unlock this to like an amazing place. Like, I think this, if you rewrite this with really good copywriting, I think this thread would kill because it got 7,000. 720 likes or so.

720.

Yeah, yeah, like, uh, it looks like a wall of text. People on Twitter, they don't read the wall of text.

That's true. Yeah, when did I post this one? October of 2021.

October '21.

Yep. I, I literally think I did this one on my phone and just sat down and like banged it out.

So you wrote this on your phone? Holy cow. Yep, I was somewhere I'm in a Signal chat with a bunch of other folks who write threads, and they were blown away when I told them when I write threads, I revise them 4 or 5 times. They were just like—

Oh, really?

Yeah. They're all millennials, so they don't edit anything. I was like, "Are you crazy? Do you know what my English teacher would do to me if I didn't revise these things 5 times?" No, this one, I mean, I literally sat down and wrote it and hit publish.

So I definitely, this is what I need to do because I stopped doing threads a while ago. I need to go back and take the old ones and like clean them up and make them good.

Somebody, there's still such a business opportunity for somebody to do a high quality Twitter agency that can do threads. Like very few, you know, there's people that can write the random brand crap for you or one-liners. Like those are super, you know, that's totally doable, but those don't grow accounts. Like if you want to grow your follower account and get more people, You know, through your funnel, like it's all about the threads and the Venn diagram of people who can think through and think deeply enough and cohesively to do a good thread and then copyright it well so that it works.

Like it's just very little overlap.

Yeah, it's so hard, but I feel like you could teach that to people because like, look, I'm not a very good writer and I'm kind of a doofus. Like I totally figured out how to do this and a couple of times I've gone somewhat viral. But I mean, then today my thread was totally terrible, so it is what it is. Yeah, I got like 180 likes, like, gimme.

Did you? Oh, ouch.

Whatever.

Oh my gosh. Yeah. Yeah. So this was a really fun one and I love this idea of basically like fundraising with integrity and transparency. And so for instance, our decks, I think it's pages 3 and 4 on our decks are what we don't like about this deal. Almost always the what we don't like about the deal is bigger than what we do like about the deal section. And so we try to just go over the top because the fact of the matter is there is no perfect investment, right? Unless in hindsight you can say, yeah, I made a 50% IRR on that one. That was great. Looking forward, there are variables and unknowns, and we like to say that our position Our best position is standing next to investors, looking at a deal together and talking about whether or not this is a good fit. And what might be a good fit for us as a GP might not necessarily be a good fit for an LP. And so we try to just be clear and upfront and say, hey, here's all the things that we think could go wrong. I think our last one had a war in Ukraine section in it. It's like, hey, this is a variable. We don't know how this is going to play out, but that could be bad, and we want to just be honest about that up front, you know, the things you don't control.

So there's— every good deck for positioning investment has— unless it's a startup, because there's no risk in investing in startups, um, but every good deck, every good deck for an investment has, you know, a risks section, right? You talk about here are the known risks, and then here's what we're planning on doing with them. And good potential investors ask that. So is your like section where you say, here's what we don't like about the deal, do you put in, is it risks plus other stuff you don't like, like qualitative aspects or quantitative aspects?

The best way I've heard the section you're talking about called is risks and mitigating factors. So it's people saying like, here's the risk and here's what we're doing about it. We will talk about it, but I've found when I've written decks like that, I hate putting in sections where it's like, here's a risk and we can't do anything about it. We're a deer in the headlights, right? Like we just don't know what we can do. And so I've tried to be really careful to include everything, even things like, you know, interest rates are going up. Nobody really can tell you what exactly that's going to mean other than it's not good for real estate, right? Cheap debt helps like juice real estate returns. More expensive debt means that there are less buyers in the market. And so we just go in and say like, hey, instead of telling you what the future's going to hold, we're going to show you how we modeled how bad we think it could get and where we got that data for how bad we think it could get. And you can make a decision.

I dig it. You know, I do, maybe I have a difference of opinion on kind of those tail risks, tail risk things. Like, like I've done it before where people are like, okay, this is a leveraged buyout. Like what happens if interest rates go to 20%? I'm like, I hope you have a bomb shelter. Like, like, there's sometimes I don't, you know, that's, that's my answer to that. Like, and it came up at the Berkshire Hathaway annual meeting, uh, by the way, you should totally go to this at least once in your life if you haven't gone. It's a hoot.

Um, oh my gosh, I felt like I went with you. I was following along all day. That was fun.

It was the— well, I mean, you know, you know me, I'm like kind of a nerd about generational differences. And like, I'm sitting there listening to these two guys, and one is Warren is 91, Charlie Munger is Vice chairman is 98 and like, like literally within the first 45 minutes, the guys start talking about the 98. Yeah.

Oh my gosh.

Unbelievable. Well, he ate at least 4 pounds of peanut brittle during the day on the stage. It was just like the whole time he was just pounding it, pounding peanut brittle. But anyway, these guys, these guys grew up, these guys grew up through the Great Depression. Their, their formative years as young professionals were dealing with Red Scare and the threat of nuclear war. And like, these are like, you know, and like Charlie served in World War II, like he had a gun, like in World War II, like those, those type of people, they're not around that much anymore. But like literally within 45 minutes of being there, we spent a half an hour of them talking about the insurance risks associated with nuclear war. Like I was like, this, this is out there. Like this is totally out there because for me it was like, this is that, this is very generational. These are. Great Depression people that like penny pinch save. They don't trust the financial systems. Everything's super conservative. And like Red Scare, Cuban Missile Crisis was their formative years. Like we're seeing this like 60 years later in these guys. It was crazy. It was crazy cool to watch as a kind of student of human psychology.

No, that's interesting.

That, and there were fewer Lambos than I expected.

Yeah, I bet. It doesn't seem like a place to flaunt your Lambo for sure.

And then I've, I went out on Twitter actually. I looked to see if there's some other kind of conferences like that that are shareholder meetings that are kind of educational. And a couple people came back with ideas of other ones that are similar. The interesting thing is every suggestion that I heard back was a company somehow associated with Omaha. It's very interesting. So one was an insurance conglomerate called Markel that you can see their building from the Berkshire, like meeting, and the other one was a company called Boston Omaha, which is one of the partners is in Omaha, the other one's in Boston, and their office is in Omaha. So it was pretty neat to see kind of that Midwestern ethos, but it's only like in these couple other companies is what people came back with.

That's interesting. One of our items is this own the bad things that happen. I feel like that's something that investors do really poorly is you basically, you know, updates are like you throw up your arms and like, you know, we—

who—

no one could have seen this coming. So therefore— and so my quote in there is, is we underestimated the potential for tornadoes in the area. Like, they own it, right? We didn't know this, this, this. Either way, we planned it wrong. We should have had a bigger buffer capital available. Yeah. Yeah.

I mean, I think there's a danger of this. I've seen younger GPs whether in real estate or in general. Like, yes, communicate well, be transparent, but like at a certain point, like, you know, your LPs don't need to know every time you fart. You know, like there's this idea of, okay, if the sausage making is going to happen, like, don't, you know, don't bring them in the kitchen. That's not their job. So that's one of the things I do, and I try not to do it in a disingenuous way, but it's like, we had a discussion about something material with one of the deals we put together and there was like the idea of like, okay, well should we go tell the LPs about this? I was like, don't tell the LPs about this yet. Like we, we, if there's nothing real here, when there's something real, then we call them and they, when there's a real action for them. But otherwise, like they will, they pay us to make the sausage, you know, they don't want to be in the kitchen with us. So it's not, your mom is not here.

So I had a, a co-founder in a business that I started that was— he didn't think the LPs needed to know anything. And so there was a constant tension between us where I wanted to explain to them what's going on and be honest, like, hey, we have a problem and we don't yet have a solution. And he would delay, like, he was the one responsible. I was kind of, I wasn't the one, that wasn't my main business. He started it and I was kind of helping him out, but had put capital in it and stuff. He would delay sending out investor updates for months. You know, it was like we're supposed to send quarterly updates and he would skip a whole quarter and wait till the next quarter because he didn't know, he didn't have a good way to tell them what was the bad thing that was happening. And I remember that business ended up folding. And I just remember the like anger that those investors had at him of like, why didn't you tell us all this? And he is like, well, what were you going to do about it? And it's like, Oh man. Yeah. So that one is ingrained really deep in me and I lean way more on the side of overdisclosure. We're just talking about it. We're talking about everything. So far it hasn't bitten me.

I don't think I'm arguing to do what your partner did, right? But if there's things that are like, only share stuff that is material that you feel like, okay, if I was an investor, I really would want to know this. But yeah, and frankly, the only time I wouldn't send out a quarterly update is we forget or we just— Yeah. It's like, oh, we forgot to send out a Q2 quarterly update. Update what's going on. Um, yeah, that's something there. Um, so one of the things I wanted to talk to you about in this thread, you talked about don't be greedy. General partners, so people raising funds who take too much in fees and promote, which is their, the general partner's share of the gains, they risk getting blacklisted. When the market is good, you get away with it. When the market turns, you don't want to be stuck having to go back and change your structure to investors. They don't forget. The investors don't. So I guess what's interesting about that, and my question for you is how do you know when somebody's being greedy? What does that mean in practice? What is the test for that?

I mean, honestly, a lot of it's just benchmarking, right? The market kind of moves in synchrony.

It's interesting.

Like I said, I talked to that private equity fund today that wanted to invest in us and wanted a 90%. I'm like, yeah, you're not getting any of our deals with that. If it was 2010 and they called me with that deal, it'd have been like, okay, let's talk. Let's, we need to get the deal done and there's no other capital in the market. And so it kind of, it's, I don't think that the best way to answer that question is with a certain benchmark of terms and oh, it's gotta be above this or below this. I think it's more like where is it in relation to everything else that's going on in the market right now? Yeah.

I do think there's an inverse of this, which is yes, be generous, like one of the smartest things I've seen done, and I've kind of started to use this elsewhere, is, you know, what Chris Powers— I saw on his website, like, they're, you know, real estate GP, Class B industrial, like very, very similar. They—

there's—

that's the best thing about real estate. Like, it's not as— it's not competitive, like, as competitive as, like, software is. Like, I love that about it.

It's not a great— I can— I could always, always get advice from him when I reach out. Yeah, even though sometimes we bid on the same building.

Well, yeah, yeah. So, but like there's a big thing on his website where it's like, hello, Mr. Real estate broker. Like, were you going to get paid 3%? How would you like 4%? Send me the deal. And like, you know, it's, it's like that's kind of like the yes, be generous inversion of the don't be greedy thing where it's like more and more when I'm working with intermediaries, like I'm like, how do I become this intermediary's favorite customer? Like, how do I be the first person they pick up because they know there's an extra 10% or 20% or 50% commission for them? And when the sweet deals come along, they're going to call me first. I don't know, what do you have? Do you have thoughts about that? Do you think it's stupid?

No, that totally makes sense. I, I absolutely agree. I think there's just kind of generosity all around, right? There's a bunch of stakeholders, there's brokers, there's investors, there's banks, there's equity partners, you know, there's all these different kind of people. And if you're generous on all fronts, which I feel like you and I had this conversation about your Twitter, I asked you like, why are you spending so much effort on this? Like, what's wrong with you? Like, I don't— I didn't honestly— and I still don't know that I fully understand your answer, but your answer was that like when you put good things out in the world, it comes back to you. Over time, it's like, yeah, but to a point, right? Like, you're putting a lot of good things out in the world, which are really helpful, by the way, and I'm super thankful for that. But like, you know, how much does this come back to you? I feel like it's that same philosophy though. If you're generous with everybody, a broker's going to pick up the phone and be like, all right, I got a really good deal and I thought of you first. Yeah. And it doesn't necessarily have to be just a structured, like, hey, because you're going to get a extra 0.25% out of this deal. Sometimes it's just these guys were great to work with and generous and, you know, took care of me when it was a gray area. They leaned towards me instead of towards themselves.

Yeah, do it again. Yeah, I mean, I think it's— I don't know, I could try again on the Twitter explanation if you want, or we could move on to a different topic.

But no, I want to hear it because I still— I still wonder because I'm doing the math and you're spending some hours every week on Twitter.

Yeah, so if you think about what I do, here's how I think about it. If I think about what I do as a flywheel of incubating companies, helping them grow up, and then supervising them as a board member slash investor and being there when they need me, like that flywheel is a real flywheel that happens, right? And like giving on social media, being out there and somewhat building in public and like creating lots of content that's helpful to other people, it is an accelerating force for that flywheel. It makes every little aspect of that easier, better, and happen at a bigger magnitude. And so you say there's the obvious stuff, which is like, I'll see more opportunities. Or if I want to hire like the associates, like I just hired two associates, it was like super easy. Like I read a tweet and then like I get 150 applicants and a lot of them are really good. Or like by having to force myself to sit down and articulate a point that maybe is kind of nebulous in my brain, but articulate that in a way that's very clear so it can be consumed by lots of people and copywritten well, like that makes me a better thinker. So like, that's, that's the thing there. And so, you know, what's hard for people is you don't see, you see that all that giving because it's one-to-many, but you don't see the one-to-one that's coming back this way. Right.

Like, so, right, right, right. Yeah, that's true. That's interesting.

We syndicated a deal, you know, for our software deal that we did last fall. Like we raised all the money in 3 weeks. Like an ungodly amount of money for software. And like, um, you know, there were people that invested who never talked to me before, and I still haven't talked to them, but they feel like they know me. And it's like, okay, that's great. And then the other thing that happens, which you also don't see, is the people I work with, they read and watch all this content. So like, it's actually not only like, like external, but it's internal as well, to where Starting 3 years ago, I started to get feedback that the people I work with feel like they know me more as a person than they did before social media. It's crazy.

Yeah. Yeah. That's interesting.

Yeah. Does that sound like a better answer? Okay. I'll sell a course. Fine.

Yeah. I'm doing that.

Um, Mirko, Mirko, get working on that course. $1,500, whatever it is, we're selling it.

It makes me think of like, can you imagine if you had like 4 really high productive people and you all worked in the same room every day? Like you would end up working really well together as a team and like you could get a lot done. I mean, obviously there'd be some other problems, but it's almost like you're inviting people into the room to watch you a bit and kind of just pick up on how you're working. And it's like, oh, I really trust this guy. Yeah. We're doing a We're buying a $28 million deal in Katy, Texas right now and raising $13 million of equity to buy it. And oh, we're just about there. We're going to have this one full pretty quick. I've done one phone call with an investor. Everybody else knows us well enough, which I have to attribute a lot to Twitter and feels comfortable. Many of these people I've never talked to are like, sure, here's a $250,000, $500,000 check. You know, and a lot of them are repeat investors, but a lot of them are new too. And they're not, you know, I'm happy we're open. It's like, great, love to do a phone call with you if you want to. But people are like, no, no, I'm good. I have everything I need. Let me— when can I wire money in?

Repeat customers are the best. So I want to loop back. So you had the private equity guys show up, but it sounds like they didn't even fly in in their $4,000 loafers and offered to buy you a steak.

No, no, this was a Zoom call. Pitch.

So somewhere, somewhere there is a private equity investment committee that got together because some associates showed up and said, okay, here's what we need to do. We need to devote more money to, to real estate. And, uh, and it gets to the investment committee and the big boss goes, 20%? We're not paying these guys 20%, we're paying them 10%. And now some poor MBA student fresh out of Harvard Business School is stuck going to send term sheets to guys like you. And it ruined your life. So that's how that all went down. It's all fun and games till it gets to the investment committee.

What's sad is listening to them sit there and pitch why it's bad for us to work, to syndicate. They're like, it's so much work what you're doing. And you're having, you know, you're having hundreds of phone calls. They're basically telling me everything that's not true about how hard it is for us to raise money.

And it's like, well, you're like, I click this button right here and then the money shows up 3 weeks later. It's pretty cool, huh?

I don't even need you guys, right?

So how long, how long into the conversation did they wait to have a price discussion with you, or did you not approach them?

It was about 25 minutes in before we got there. I asked and they were like, yeah, we'll circle back to that. And then waited, waited till later and then brought that up.

So it only cost you 25 minutes.

Okay.

I was worried.

Yeah, it's true. I feel bad. I like totally, totally checked out. You know that thing where all of a sudden you're like finding you're on email for the rest of the call because I was like, this is so bad. These terms are terrible. Um, and what we're— the reason why we're even having those conversations is because we're, we're ramping up and we're nearing $100 million bought in the last 12 months. Yeah. And, and we want to, to basically continue this growth trajectory. And I see, you know, there's risks with the kind of public-facing fundraising. I could say something and get canceled. The, you know, market, these people could get spooked for one reason or another. And we need some of those kind of relationships built so that we basically kind of have a little bit more of an, you know, an insurance policy or durability in place.

Yeah, it's interesting. Sometimes you, I think you end up in a place where some sellers want to know you have that big relationship, right? They're like, oh, tell us what big name you have backing you. Do you have Blackstone or Red?

I don't know.

I'm not a real estate guy. As you know, um, fireworks and software peddler. Um, then sometimes when they're like, they want to see that, like the banker or the broker wants to see that, I'm like, you know, that's riskier than me going out and raising this $500,000 at a time from 20 different people. Like, it's much lower risk there because you don't know what can happen with this big fund. Like, the big boss shows up and suddenly decides they want to capture all the value, and it doesn't make any sense at all for you to keep working for them. But it's just this weird kind of idea where people associate big brand names with, you know, likelihood to close. And it's like, no, no, it's actually the opposite. This is much more risky if you want me to be doing it this way. So true.

And then you end up with board fights. I brought, it was a business I was involved in that had a big private equity fund that invested $20 million into the business, and they had these negative consent rights on CEO, CFO, you know, the top 3 or 4 roles in the company. Well, you know, at one point, the, the, like, I was kind of one of the founders. I wasn't running the business, but it became clear that the CEO needed to go. And so we sat down with him and said, hey, we're going to let you go. These guys literally denied the firing. This private equity firm did and said, you can't let him go because he's our, he's the guy that's like feeding us all the data in the background. And so you have to keep him. And so, I mean, this business suffered for like a year with this CEO that knew we wanted him out, stayed in that position, drove everything into the ground. And that investor, you know, that investor was like thinking they were doing good, but I mean, they were— yeah, terrible situation.

It's really yucky.

Yeah.

And you see that stuff always where like the— if people don't observe the chain of command or you have these like fatted calves that are living inside the organization. Like, it's just created— creates so much turmoil. And, um, yeah, that's why, like, I'm just like, I'm Mr. Chain of Command, Mr. Hierarchy. Like, like, I just like— that's the way I follow it. It works for the military, it worked for the Roman legions. Like, let's do it unless you have a better idea. Like, this is not a kindergarten, right? So one thing, one thing I want to talk to you about, because everybody on Twitter was like, tell us about how you started a beef company in Ethiopia and got permitted for that and all that stuff. Because I went out, I went out on Twitter and I said, look, you're really underrating the power of getting like a permit or anything out of bureaucracy done by just like showing up at their office and being like—

Sitting in the office, yeah.

Yeah, hey, my boss says I can't leave until I get this permit, so, uh, here's some donuts and I'll be out here. Like, by the way, I've done that like 10 times. One time it totally backfired and we got on like a hit list from the bureaucracy. So you gotta kind of be careful with this technique. Yeah. They went after us for like 2 years until they got mad at somebody else. I was like, thank God.

Oh my gosh.

Yeah.

Yeah.

Don't piss off a bureaucracy in government. They'll come after you. So anyway, you're in Ethiopia.

I mentioned earlier, I mentioned earlier, we moved to Ethiopia to start this nonprofit orphan care organization, got it up and running and basically felt like we needed to stay because it was still hiring a team and like there was still a lot of work. Work to do, but it was no longer a full-time position. We also needed a work permit in order to stay in country because you couldn't get them under a nonprofit. So we were kind of doing this like tourist visa thing where we'd leave and come back to Ethiopia and then was like, hey, we need a work permit, we're going to stay. And so one of the things that I had observed was that these local farmers had a ton of cattle. I mean, just these guys, like, you know, a local family would have like 100 head of cattle. Yet, I mean, I literally talked to a guy whose daughter had died because he didn't have $6 to pay for her medicine. And he had, I mean, he couldn't even tell you a number because the guy couldn't count, but I could see, show me his cattle and there's probably 110 cattle there. And those, meanwhile, Ethiopia is close to the Middle East, which they don't eat pork. They eat a lot more beef than most other countries do. And Good luck growing cattle, doing a cattle farm in Dubai in the middle of the desert. It's not going to work. And so they're importing beef from South Africa and Brazil into the Middle East, Qatar, Saudi Arabia, UAE, all these Middle East, North African countries. And so it was like, wait a minute, there's two components here that could come together. And so I got this thing up and running and then passed it off to somebody else who ran it. It was actually the business that had that private equity fund that ended up being such an issue to deal with. But I, you know, so it was this idea of like, we can take these local farmers and we can give them an international market by being the kind of link between them. All we needed to do was build a beef feedlot, grow our own corn, build a slaughterhouse processing facility, you know, just some easy tasks. But before we could even think about doing that, we needed land. And so picked a piece of land that the government owned that they were using as a research facility. It was 8,000 acres. So it was literally, uh, it was like 9 miles around of fencing that we had to build once we eventually got this land. I went to like all the local offices and like just through a bunch of government bureaucracy and nobody would, nobody could do anything. Nobody had any decision power. And so I was like, what about the Prime Minister? Like certainly he could make decision, right? Like, gotta be, he's the top dog. And so I went to the palace, was like up at the top of the hill in Addis Ababa. You could see we drove by it every day and I was like, I mean, literally works right there. Like, I'm going to go find the guy. And so I found there was like around the back, there was a security entrance gate and you was like a parking lot and you could just park there. And so I went and put this whole package together that was like branded with our logo and materials and stuff. And went into this guard gate, like security room and was like, I need to see the Prime Minister. Like, that's not how it works. Like you don't just get to see the Prime Minister.

Yeah.

And I was like, yeah, but I, but I have something for him. They're like, we'll give it to him. You know? And I was like, oh, it's fine. You know? Like, and so anyway, I ended up coming back. I think it was 12 days straight and just spending hours and hours. I wasn't like in the palace or anything. I was literally just in this little security guard shack with two security guards, and my car was parked over there in the parking lot. And I would just show up again, and I changed the letter every time. I would rewrite this letter like, I know you've seen this before, but let me just tell you a little bit more about the story. Apparently, he was getting these. And so one day I came and they were like, hey, he wants to see you. I literally got there and he was like, come on in. And so went and got to meet him, and he was like, we're going to make this happen. I see how this, this like business is going to benefit the country. It's going to bring foreign exchange. I mean, there's all these reasons why the country needed this business anyway. And he gave us the land. It took like another 2 months to get through the bureaucracy, but he literally gave me the phone number of his like right-hand man that sat in the office next to him. And so I had this fixer. And so anytime I'd run into a problem, I'd call this guy. He'd get the prime minister to tell somebody something and we'd get through another hurdle, another hurdle, another hurdle. And so put up 9 miles of electric fence around the property and started growing corn. I had to first have enough feed. And so started growing hundreds and hundreds of acres of corn, got all the feedstock set, and then started buying young cattle and raising them. And yeah, at one point it was exporting like, it was like $7 or $8 million a month worth of beef in to the Middle East.

That's awesome.

All by, by airplane is incredible. Would go like these Ethiopian Airlines jets, it would go underneath, you know, in the cargo area.

But I, you know, I've watched YouTube videos of these guys, like these Westerners that go to Africa, and they're like, okay, we're going to be like entrepreneurs in Africa, it's a wild, wild west out here. And you just see them do all this crazy stuff, like UN contracts, incredible. Build this, like, you know, build housing villages for— yeah, I guess you, you told me about doing that for the, for the, um, Department of State people. Like, just all this crazy stuff. It's just got to be the craziest place to do that. One time, one time I watched a video of these guys. They were Americans and they got a UN contract, like, in Zimbabwe or something, like, most of the way up the continent, um, maybe in Ethiopia. And the UN contract required them to bring, like, these two different models of trucks up. And like the whole journey is like the 4 months it took these guys to get the trucks from South Africa, because they were beaters, and drive them all the way up to wherever this contract was. And like at one point they were like fixing a flat with a banana. Like literally, like there's a technique where like if you have a flat, you take it, you take some bananas and you put it in the tire and you drive the truck and it'll fix your flat for you. Like just crazy stuff. Like, like I was like, how do you fix a flat with a banana? They're like, oh yeah, you know, it's all on YouTube. So yeah, yeah. With that note, we are coming up on time. You asked Twitter for questions for us to talk through on this. And evidently they interpreted that as questions you would ask me. But do you want to talk through some of these?

Yeah, I mean, who cuts your hair? That's obviously a good one.

Me, I got, I have a, So I don't know if you've seen it, but I mean, you're similarly hairstyle to me, but I actually have, there's a special style of battery-powered clipper that has guards on it and you can just do like this. It's a rounded blade. And yeah, I just do that like every month or so. And you see this.

You mentioned it. You mentioned that thing online. So I bought one. I have one of those because of you. So Remington something or other.

Yeah. Yeah. I've had the same one for like forever, but you do, you do full-on razor. Like No hair whatsoever, right?

I do. Yeah, I tried that for a little while and I like just— yeah, I do a razor. I do it in the shower like every 3 days or something. It takes like a minute and a half. Like, it's incredibly fast. I would— I wouldn't care.

I used to do full, like, shave down to skin, and I like just having like a bare minimum of hair. I don't know why. I think I look hotter. That's my—

that's the point. Have you funded any immigrant entrepreneurs?

Uh, yes. Yeah, sure.

Yeah.

Mexicans, Indians, Pakistanis, you know, that was back more in my VC days, which I'm still involved in. But yeah, for sure. They're the best. Love immigrants. Estonians. We did some Estonians once. They were great. Super good.

Awesome.

Maybe you should answer this one. I'm curious what you and Michael see the US economy going to in the next 5 to 10 years. Dalio, Munger, and others seem to think we are heading towards zero for the US dollar. What do you think?

I mean, having spent time, at one point I went through and did a list of all the countries that I have started entities in. Some are just to do some offshore tax shelter for different investments around the world, and some were like actually going there. Like I set up offices in Dubai and Tanzania and Rwanda, Uganda, different European countries, like all over. I am extremely bullish on the US just financial system and economics. And we have a certain level of kind of political discourse, which is cringey and certainly goes across some lines in my opinion. But I don't think I would bet against America in a long shot. I mean, yeah, there's no reason to bet against America.

I mean, an interesting lens to look at America is just to go at, like you would look at a business, like what are your unfair advantages? Like what, what moats do you have around your business, business from this? And like people really discount how gifted America is being a homogeneous country of its size where everybody speaks the same language with like these very sophisticated systems across banking, law, like insurance, like all these things where venture capital is another example, real estate, private equity, just, I mean, all of that, all of that highly honed, continually improved stuff over the past 300 years. And then you put that all in a country with the largest oil reserves in the world, bracketed by two very docile neighbors in Mexico and Canada, and with two giant oceans on either side of it, and some of the greatest farmland in the world, like all in one place. Like that is just like, How can you bet against the dollar if I just described a country to you and you'd be like, "Tell me about this country." Would you buy their currency? Hell yeah, you'd buy their currency.

Absolutely. Absolutely.

I know everybody thinks the dollar is going to suck, but give me a break. We printed— how many trillions of dollars did we print and the economy, we've only had inflation this bad? Think how amazing that is. People are like, "Oh, we have 8% inflation." I'm like, Could you believe we only have 8% inflation? We printed like a 40 bazillion dollars. Like, it's only 8%? Like, you're crazy. Like, that's amazing.

It's true. You know, the other thing, I worked in Germany for a while. Culturally, there's a lot of countries that their default is, that's not the way it's done. Where I feel like in America, the default is, oh, we're going to learn a new way. Like, this is interesting. This is novel. I haven't heard this one. Let's see how this one works out.

Absolutely.

You know, there's a bunch of things worked into American culture, that kind of Puritan work ethic. And, you know, again, not all perfect, certainly has its flaws. There's some things I would love to change, but overall, I think we're built for economic growth and ingenuity and creativity.

So the funniest thing is you can make these entire arguments to somebody who's like one of these Debbie Downer types. And then, by the way, if we have any listeners named Debbie, I apologize. But like, yeah, anyway, the, uh, but like you explain it to them and then they'll go, well, what about all that stuff? They go, yeah, we're still screwed. And I was like, what are you talking about? Like, I just don't like, like I have friends like this and I'm like, are you kidding me? Like, if you, you are so wrong not to be a long-term optimist about America. Like, I just, just blows my mind. Yeah, dude. Well, Well, this was awesome.

We go through cycles, right? We go through ups and downs, and we very well could go through another one, and that's also fine.

So I do have to tell you, I'm about to go from this, which was a ton of fun and amazing. So thank you for giving the time to me and talking to me about stuff. I did learn a lot, and the beef thing is fascinating. I now have to go to the opposite of this, which is on a call with a bunch of lawyers. So thank you. Thank you. I appreciate it. We'll get this published. And yeah, so, um, so I'll record an intro here in a second, but Where can people find you? They can find you at harborcapital.com, right?

And on HarborCap.

HarborCap. Okay.

HarborCap.com. And my email is levi@harborcap.com.

And there are places there where if people are interested in investing with you, they could do that as well, get on the newsletter and see deals that you're sending out.

Yep. And then Twitter @LeviJames here. I'm there all the time. Trying to put good out in the world and see what comes back to me.

Uh, man, you're doing great. You're doing great. Well, thanks again for being here. Appreciate being a friend.

We'll talk to you so much fun.