4th Industrial Revolution (Industry 4.0) – Economic Evolution

Fantastic. But yeah, thanks everyone for joining, jumping in here. And yeah, just to kick off, so this is part of the Prepare for VC event series. So, you know, at Prepare for VC, we have a community platform where you can chat, connect with other founders, investors, partners, and we're running a series of events also showcasing other community events that are going on and really providing a place to get all the resources you need.

Okay, why don't we get started?

So first of all, has anyone added any new ideas to the script document?

Yeah, so to get anything you need in one place, we offer a community, a 16-week accelerator program, as well as direct, you know, one-on-one Program or project-based support for all the startups in our community. And just going to play a quick introductory video. And then, you know, we can dive in. I'm really excited for, for Ryan and Mike here, featured presenters, and, you know, talk about a really interesting topic on the Fourth Industrial Revolution and, you know, how we can all set our businesses up for to navigate successfully, you know, all the technological changes and be prepared for what's ahead of us. So just gonna play this quick intro video on, on what we're building at Prepare for UC.

I know that's tough.

It's tough.

Jason, I think it— I'm not sure if this is just my screen, but I'm lagging on this.

Oh, okay.

Um, here we go, we're good now.

Sounds good. Yeah, so we're offering, you know, service-based support, a community program, accelerators from idea to innovation here, and really, you know, activating a way to connect with all the right people at the right time to continue to grow your business. And just a quick intro. I'm going to highlight or put Mike and Ryan up in the spotlight here and, you know, have them kick off the presentation here. And again, we can keep it interactive. Like, I'll be monitoring the chat as well, so feel free to introduce yourselves, like share any, you know, anything about the companies you're working on or, you know, LinkedIn, other messages there, and any questions you guys have along the way. Um, you know, we can monitor that and, um, you know, build them in as well. So yeah, I'll let you guys take it away here.

Fantastic. Thank you, Jason. I appreciate the time, and it's, um, uh, great to, uh, great to present, and I'm excited. We're really passionate about this topic. Um, I think it's a very disruptive and something that as we're growing our businesses and growing our wealth, really important to take a look at. kind of the evolution that's happening high level in our economy, in society. So we'll take you through some of that today. I think it's great, Jason, if we can keep this collaborative, high level. If there's any questions— there's not a ton of folks on this call, so any questions, if you want us to slow down, speed up, feel free to interject, and we're happy to kind of shape this around the way that would be best for you folks.

Yeah, no, I agree. And I want to start by saying, Tino, Ken, Joseph and Perry, thanks for, uh, hopping on. Jason, thanks for hosting us. Um, you know, Mike and I are super excited about this topic. And with that, I'm going to share my screen. And can everyone see the presentation? Okay, I got some thumbs up. Trying to, uh, trying to manage everything here. Um, Okay, cool. Well, again, this is pretty much what Mike and Jason intro'd us in doing is, you know, obviously growing your business and wealth in an accelerating future, everything in which we're going to cover today. And feel— please feel free to, you know, stop us if you do have any questions on any slides we bring up, and we'll go from there. And with that, Mike will kick us off.

All right.

So high level, I'll spare you a lot of the details. Most of my career I've worked in financial estate and business planning for Fortune 500, Fortune 100 companies. Spent some time as an entrepreneur myself, so I'm passionate about entrepreneurship and I kind of understand building a business, starting a business, and what that takes. I am also a certified exit planning advisor, so a lot of the value acceleration work that we'll talk about in here is from that program. I'll spare you some of the other details here, but Ryan, go ahead.

Yeah, so again, at a high level, financial planner, work very closely with Mike and his firm doing a lot of business development and strategy, goals and strategy, exit planning, and also succession planning. Background is relatively the same. But really what, you know, a lot of our collaboration is in this presentation is around is understanding the why and how behind business planning and kind of what that future and acceleration looks like. So some of the objectives and, you know, agenda that we're going to go over today at a high level is the Fourth Industrial Revolution, economic evolution, and basically what we're looking into as our next normal. Value maturity and acceleration, really what it means to a personal and business wealth degree. And then, you know, the third thing is practical steps, you know, kind of the how-tos on how to build wealth and not only, you know, building wealth, but what that— the value and what the next normal is going to bring. And then basically what our scope is in today is a 4th Industrial Revolution and economic evolution underway now, so that we have an understanding of what the next normal looks like. That's basically what we're covering and basically taking a deeper dive into what this 4th Industrial Revolution actually means.

Yeah, at a high level, so just trends to look for in 2021 and beyond. If you can click through this a little bit, Ryan. So this is some McKinsey research. If you notice, for the global economy, one of the number one things that we're looking at is the Fourth Industrial Revolution accelerates in business and society. In business, supply chains rebalance. We'll talk a little bit about that. A real emphasis on a green recovery. And in society, governments tackle rising debt and stakeholder capitalism comes of age. So we'll start to look at some of these things individually and try and make sense of why McKinsey identifies these as some of the biggest things to look for in 2021 and beyond. And that'll give us a good foundation to understand how you start to kind of build value, build wealth in that new environment, that new framework. So Ryan, if you can just click through to the next slide, please, for me. So for start, and you don't have to click all the way through this all at once, Ryan. So just for start, high level, I think it's really important to understand where we're coming from so you can totally, you can grasp where we're headed in society here. This was an agricultural economy for thousands of years, right? We were never able to break free from the growth constraints of what people could consume, what they could eat mostly, and what they could produce by their hands until Industrial Revolution 1, where we broke through these growth constraints, right? And income accelerated. We started to industrialize. We broke through from the production constraints of an agricultural economy. Ryan, you can keep clicking through. here now. So with that, we started consecutive iterative development. We, you know, invention of electricity, which prompted the assembly lines, mass production, and eventually computers were created, semiconductors, the information age. So these are iterative, they build on each other. And what you'll notice is that with each one of these, the acceleration of income per person, it's exponential, right? One thing to note is that there were several countries, actually China included. So you see Asia excluding Japan, China missed the first 3 industrial revolutions and they were stuck still in this agricultural economy. They never broke through. So they were never able to partake in all this upside that we built the United States on. So the United States was built by being the dominant players in these first 3 industrial revolutions. I think that's really important as we understand how the magnitude of the 4th. Ron, you can click. So yeah, another thing, I mean, GDP per capita in 2019 is at $65,000. So you can see the rapid acceleration here in income per person. Um, go ahead, Ryan.

Yeah, and, and to, you know, build off of that, in 2016, the World Economic Forum publicly coined the phrase Fourth Industrial Revolution, starting the exponential nature of scope, scale, and complexity meant that the transformation would unlike anything humankind has ever experienced. A few quotes that Mike and I, you know, on forums that we follow is, we stand by the brink of a technological revolution in that we fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike any other that mankind has ever experienced before. And we are now in the early stages, if not already here, of the 4th Industrial Revolution, which is bringing us together in a digital, physical, and biological system.

Yeah, so looking at this 4th Industrial Revolution, I think it's really important to understand what a general-purpose technology is and how impactful the previous general-purpose technologies were. So GPTs are these technologies that can affect an entire economy, an entire society, at a global, individual, national level. They have the ability to drastically alter the total framework with which we live in. If you think about steam, if you think about electricity and electric being all around us today, the internet itself. Blockchain and artificial intelligence are both considered general purpose technologies. They're comparing AI to the new electricity. So I think when you can really grasp the significance of these previous transformations, you can understand the impact that electricity had on our economy, that the internet had on our economy. You can start to crystallize in your mind the impact that the 4th Industrial Revolution is going to have on our world and over a pretty short period of time here. So 4th IR, some things to look at: smart factories, smart infrastructure, autonomous systems, right? AI, IoT, which is Internet of Things. And it's really disrupting every industry. So again, if you think about AI being electricity and you think about the impact that electricity has on our society over a period of 5, 10, 15 years, you should look for AI to have a similar impact in in our world. So I think this is a major transformation, and it's really important that we grasp the significance of, of these past transformations as we're thinking about the world that's presenting.

One of the big things here is really, you know, honing in on the scope of that this does have an impact on the range of industries. What we've seen in past industrial revolutions is that it's only really focused on one or two What Mike and I are seeing is, you know, there are basically correlation between all 5 of these, and these are also broad industries. And, you know, looking at what Mike had just mentioned, electricity is the new AI and fossil fuel is the new data. And that's kind of the industrial shift that we are seeing. One of the unique things that we wanted to illustrate to the group today As well as, you know, any business owner is really using a case study to showing— to basically show how this use is being deployed in this type of industry.

Yeah, I think it's really important just to note that previous industrial revolutions were really focused on mechanization of industry and factory output, right? This, this 4th Industrial Revolution really does impact and disrupt every industry. So it's something that we should really kind of be aware of. McKinsey and Company is doing a lot of research on Lighthouse Factory. What this is, is an advanced factory that's leading the way in the adoption of the 4th IR technology at scale today. 15 new sites have been added, so there's, you know, 70 sites total that they had looked at.

I mean, these—

there's new sites coming online every day where they're using artificial intelligence, robotics, and IoT together to really engage new business models and start to unlock capacity, create measurable growth, and do so sustainably, because now we can start to measure the impact. If we can take into account all stakeholders, we can start to measure the impact and really understand where to improve business. So I'll give you an example. It's kind of atypical. It's a steel plant. You wouldn't think a steel plant being super high-tech. They integrated their plant with thousands of instruments and sensors where they started to really unlock all this data. And they doubled down on what works. You know, they scaled it across the entire business model, and the net result is they, you know, they impacted net earnings— or excuse me, EBITDA— by 2 to 3 percentage points, which doesn't sound like a lot, but at scale and across an entire economy, those are massive gains, particularly in an area where we are already starting to really operate efficiently with robotics. So a couple of examples of how not typically you would think of a steel plant really starting to unlock capacity with AI and all other Fourth Industrial Revolution technology. So we've got a general understanding of the transformation that's underway as it relates to this Fourth Industrial Revolution. That's a massive, massive, massive transformation that's going to fundamentally alter society at a total level. But we also have an environment presenting in this geopolitical economic environment that we haven't really had since, frankly, the Cold War, where you have 2 major powers. So this bipolarity that are starting to vie for global dominance. The Regional Comprehensive Economic Partnership was signed on November 15th, 2020. It's a new trade deal that's going to shape global politics and economics. 2.2 billion people, 30% almost of global trade, 30% of economic output. It's a massive trade deal that's going to start to that's going to further this bipolarity that we're already seeing present. So China's starting to make some other policy moves to play into this. They attracted $163 billion of multinational investment last year. It's more than any other country. And they did open their market to foreigners, foreign investors, their capital market, that is, who invested $900 billion in what was described as a landmark shift for global finance. So post-World War II, the United States was 40% of GDP. We were the power in the world. That is no longer necessarily the environment that we have presenting over the next 10, 20 years, and it's something that we should really look at. And Ryan, if you can click through a couple other things. So this is supply chains rebalance. So multinational reshoring of production looks unlikely. We're not going to see, you know, bring all production back to the United States, but security and resilience are looming larger in decision-making. We'll get into this a little bit, but supply chain resilience and security are some of the considerations under ESG investing in the social considerations. So just something that we should be aware of. Just look at this growing bipolarity and some of the policy that— and the environment to shift over the next 20 years, much different than it's been.

Yeah, to that point, the growing bipolarity in a geopolitical and our economic environment, basically what the Made in China 2025 is, is part of the CCP strategy, is the ambition to monopolize and essentially dominate the Fourth IR, just like the US did with the first 3. We highlighted this earlier where China did miss out on a part of the first 3 revolutions, and they realize that this one they aren't, you know, behind the 8-ball on. Um, $300 billion of investment pre-pandemic, uh, money went into this, and about a $1.4 trillion goal through 2025. Um, evidently this is a direct investment into these companies, not broad-based stimulus where 25% of it makes it easier to Easier way into the domestic economy.

Yeah. I mean, if you think broad-based stimulus, the fiscal stimulus that we have, $1.9 trillion, what percentage of that makes its way into the hands of the companies and the individuals that they're trying to help? Right. So this is direct investment into these companies, very different than a broad-based fiscal stimulus package.

Correct.

A couple of other things I think are really important for us to understand in our own environment here, which are going to play a big role in the future environment, you have the monetary policy, which is central banks, Federal Reserves, money supply. Fiscal policy is government taxes, direct stimulus, things of that nature. So high-level monetary policy, there was a change that's going to allow inflation to run more on its own while the Federal Reserve doesn't have to hike interest rates. So they've said they're going to keep interest rates near zero through 2023, but inflation itself is going to run a little bit more on its own. And then in the fiscal policy side, I think it's really important to kind of recognize the level of debt that we've taken. And Ryan, if you could click through one more slide here, it's going to show you governments tackle rising debt is a big issue that's presenting in 2021 and beyond. So kind of accelerating that long-run fiscal instability and likely subsequent increases in taxes. So if you look at where we were at World War II and the Great Recession, we were at World War I level prior to the Great Recession. Ryan, if you click through a couple more times. It took us about 30 years to get to the World War II level. We've accelerated to World War II level of debt in about 12 years. This is the projections from the Congressional Budget Office. I'm not— I don't— Ryan, if you go back, I'm not anticipating that our debt continues to accelerate this way. The current policy is going to sunset in 2025. And I would tell you that additional measures are likely to prevent our long-run fiscal situation from continuing to deteriorate. So if you're looking at your personal financial planning, It's incredibly important to think about diversification in terms of tax treatment to hedge any long-term risk of an increase in taxes. And then we also kind of have, again, coming back to this automation, this economic evolution, I mean, this— the workforce migration that goes along with this Fourth Industrial Revolution, 85 million jobs displaced by 2025, 97 million created. 50% of the global workforce could potentially need reskilling around automation, robotics, AI, high-performance computing, analytics. I mean, that's a major, major skills deficit. They're calling for governments, corporations, individuals, NGOs, non-governmental organizations to all partner in this because of how big of a need it is to upscale and reskill our total economy based on this transformation. And so that pairs also with an evolution in our actual economic model, sustainability and ESG. So we need a different economic model, a shift along the lines of the 2 shifts in the 20th century, which was Keynesianism, which was big government. Ryan, if you could keep clicking through. So we had big government, which came in response to World War I, Great Depression, World War II, where relying on the government was a big part of wellbeing. And then you had this pushback against that towards neoliberalism, free markets, deregulation, unwinding all that big government. This new economic environment that's presenting, we need a shift in the system along the lines of those 2 transformations. It's going to start with a value shift, and we'll talk a little bit about kind of what that new economic environment that we're coming into looks like. So a new narrative, a new corporate framework, right? We need a new environment. We need a new economic environment is the narrative, right? So let's take a look at what that is. Sustainable finance. This is Goldman Sachs' 70-page report where they label sustainable finance as the imperative and the opportunity. Harvard Business Review, it's time to end slash-and-burn capitalism. And I share this on here just to kind of get an understanding of the narrative and the rhetoric that's going around. And you've probably seen a lot of this, net zeros, We need to remake our economy and society. So Ryan, if you could keep clicking, stakeholder capitalism comes of age. In 2019, 181 CEOs from Fortune 100 and Fortune 500 companies met and they signed this petition to remake the corporate purpose towards this stakeholder capitalism, away from just shareholders driving everything to taking into account customers, employees, suppliers, communities, and shareholders. So When we say we need a shift in the economic system along the lines of the shifts in the 20th century, this is the new corporate framework that is going to drive our ability to be successful as business owners over the long run. And that's top-down. So that's your top-down corporate framework. And then bottom-up, if we can take a look at the investing trends that go with this massive transformation, when you get these shocks in society, And in our economic system, when you get a shock like the financial crisis in '08, it changes the way people think, right? So Ryan, keep clicking through. You had the shock in '08, it changes the way people think. Maybe this cap— this form of capitalism isn't working as well as we thought it was. So you have an acceleration in sustainable investing. What I would say is Corporate Business Roundtable is remaking the corporate purpose right around here in 2019. You get another one of these massive shocks to the system. Ryan, if you keep cooking through, Ryan.

I would—

I'm not in the business of telling you where and guaranteeing where things are going. We're kind of in the business of kind of guiding you based on what we understand to be somewhat, you know, mostly true. I would urge you to take a look at sustainable investing. It's where the world is going. And that's environmental factors, social factors, and governance factors in a corporation. So Ryan, if you can keep clicking through. A green recovery, right? So you've got the remaking of the corporate purpose, you've got 2 shocks to the economic system, and you've got governments focusing on stimulus packages that are green, green, green all the way. So if we're going to be net zero by 2050, we still have a long way to go. There's a lot of track left. This is something that's very, very important, I think, And growing wealth in this new environment.

Yeah, when Mike talks about, you know, top-down and investing trends, basically the, the roundtable was set by the corporate purpose, and the trends are evidently, you know, taking care of the bottom-up filtering mechanisms. People that are— when they're looking at it over the long run, not taking this into the new framework has significant policy risk as well as, you know, risks that we talked about today, economic risk as well as business risk. Some of the, the factors of this economic evolution is, you know, presented on the screen. We don't have to dive too deep into them, but it's something to be aware of. And then one of the highlights that we wanted to emulate today is the value maturity and, you know, business acceleration. There was a lot that we covered. Obviously, we want to, you know, scale this back to a 10,000-foot view. And, you know, the research analysis that we put into this— if anyone has any specific questions regarding anything that we just covered, we'd be more than happy to connect after the fact. But we wanted to provide foundational understanding first and where we've been and what we've seen. And then basically pivoting to what the next normal wear forecasting looks like and understanding what value maturity acceleration really means into business and personal wealth.

Yeah. So better understand— let's better understand business valuation. What drives value? What drives multiples? So we're talking about how to enhance value and create transferable business value.

Right.

So I'm a huge believer in beginning with the end in mind. It's habit 2 in Steve Covey's 7 Habits of Highly Effective People. anyone wants to check it out. But begin with the end in mind. Most people build a business with the intention of creating a transferable business asset that they can harvest the value from at some point. You don't build a business expecting to never unlock the value that you're bleeding over for 80 hours a week, right? We get into business to build a business and harvest value. So I would say begin with the end in mind, build a business that eventually can thrive without you, and build a business with the intention of building a transferable and harvestable business asset. So, 5 main stages to look at both on personal wealth and business wealth: identify, protect, build, harvest, and manage value, right? It always starts with identify. You can't plan for it if you don't know what it is. I always say identify your wealth, identify what you have today, and identify your wants— where you want to go in the future. Once you have that foundation, you can start to really look at, all right, how do we move forward from here? Which the first step is to protect because You have to protect what you have before you start to grow, because growth for the sake of growth can actually destroy value. Reckless growth destroys value if you haven't protected your foundation. So identify, protect, and now you can start to build. You can start to build value. Oftentimes in a business, you're going to go back and forth between build and protect. You may do— you may fund an expansion, protect what you have.

Right?

Dial in the model, get it operating efficiently again, and then build more. So you kind of will cycle back and forth between build and protect, which is why this is under one umbrella here. And at some point, you're going to move on to harvesting the value that you're creating. And this stage is where you actually liquidate all or a portion of the value that you've created over, over years. Really important to plan for this. There's, there's many different ways to harvest it, to transfer it. which should be largely driven by your goals and objectives as an owner. But at some point, you're going to harvest the value, and then you're tasked with managing this value that you've unlocked from your business. Really important to have a plan there. I would kind of— I would— one thing I think, Ryan, that's really important as a business owner is don't go from working 80 hours a week with purpose running your business to retired at the beach house. It's a recipe for regret. So having a plan for your next act and managing your value towards that future for yourself is really important. We put this in here specifically for this group. The economic environment in our society is becoming so competitive. Growth is so competitive and so fast moving that having an understanding of the growth phases as a founder is helpful in predicting and anticipating what's gonna come, right? So you're in the founding phase, it's a very different needs and wants and objectives than the scale-up phase where you rapidly build out your team, which is very different than the strategic growth phase where things start to slow down and you look at how to create additional value or exit. Just something to think about. Maybe you can kind of picture where your startup and your business may lie in these— in this range. But I would just tell you that between founding phase and when you scale up and build a team, life becomes very different as an entrepreneur when you start to add all kinds of different human beings with wants, goals, and objectives of their own into this scenario. So things change. And it's really important to have someone on your side who kind of understands and can help you anticipate that environment. So look really quickly at the profit gap. And Ryan, if you could just click back once as well. So the last— no, no, go ahead. Yeah, right there. Just so that the first top part is up but not the bottom. So profit gap, value gap, wealth gap. So let's look at— these are 3 companies that are all producing $30 million in top-line revenue. top line sales, that is. One of them is worth $10.8 million, the other one's worth $31.5 million. It's like 3x almost or 3x acceleration in value. And why is that? So on the low end here, this company's operating at 2.7 of earnings. And as such, the market is willing to pay less for it because it's not as healthy of a business. There's other things that are going on here, but this business is less healthy, so you're willing to pay less for it. I'll pay less times of earnings for that business. On the high end, if this is a best-in-class company, I might pay 7.5 times earnings for this business. It's a healthier company. I feel more comfortable extending myself like that. There's less risk. So when you have higher earnings times a higher multiple that people are willing to pay for it is where you get that rapid value acceleration. And first thing to do is kind of figure out where you lie in those range of multiples. If you don't understand how your business is stacking up against the competition, It's kind of hard to figure out and how to plan for that. But once you've figured out where your business operates compared to some of the other businesses, you can start to look at these value drivers. At the time of sale, there is what we call 3 legs of the steel stool on the buy side and the sell side that come into account. You don't really have to think about that for now. We'll kind of focus on these 4 Cs in a second, but just know that there's a myriad of other factors that go into this. But you're really going to get your value acceleration by focusing on these value drivers that we'll talk about in a second, these 4 C's.

Yeah, and, and, you know, as we highlighted in the beginning of the presentation, it's really the how and the why behind, you know, the business valuation and a high-level understanding of what this next norm actually means. Um, what Mike and I want to really discuss is how you can take action on some of these things in the 4 Cs specifically to not only, you know, know what's coming, but to accelerate enterprise value within this next normal.

Yeah, so 4 Cs, these are big. Value acceleration occurs right here for the most part. Again, there's all kinds of other factors that go into this at the time of sale. But just high level, while you're building your business, if you can start to think about these components that affect your value, you're going to be in a better position. So human capital, structural capital, social capital, customer capital. In human capital, learn about this stakeholder capitalism that we were talking about earlier and start to embody this in the way that you treat your employees and you kind of conduct and operate your business. I'm not going to tell you to start upskilling and training people, but understand that there's this massive migration in skills and labor force that's coming. Just make sure that if you know you're doing whatever you can to support your workforce in terms of the skills, skills gap and retraining. And then we really want to focus on attracting and particularly retaining your key talent in this environment. We have a little bit of a gig economy presenting where you're going back to the old way of being paid for your skill set, like think the cobbler that was paid for making shoes or the software developer that works for 3 companies and is doing consulting work. So understanding that shift and really attracting and retaining, particularly retaining your key talent and making sure that you're training and upskilling them on an ongoing basis to meet these needs. If you can demonstrate that and if you can demonstrate a system for that and it's transferable, the value of your business is going to go up. Same thing with structural capital. So these are actually— these are assets, intellectual property, structure, processes, systems, trade secrets. A big one is having a documented client acquisition model, right? If you can demonstrate that you can obtain new business and new clients without your daily involvement as an owner, and someone can buy that asset and take over that same operating system and continue to obtain new clients, that value of that asset is substantial. And conversely, why would someone pay for a business if it can't continue to obtain new clients without you as the owner. There's no value in that business if it can't live and thrive without you. So the big thing is understanding this, documenting it, making sure that you have systems in place and that they're transferable, and you've built this with the intention of being able to at some point transfer that value that you're creating.

Yeah, and on the, the same forefront of, you know, structural capital And hand in hand, social capital is, is really large as well. And a lot of, you know, the people on the call and other individuals, as brand recognition is, as we're seeing, is, is a really, you know, a monumental shift into what we're looking at as a, you know, having massive value in our economy. You know, really thinking about having a large following on social media, on these new digital platforms, as a well-known brand, you know, the value is going to create itself. from this, you know, the social standpoint, um, and really, you know, pivoting into, you know, that social capitalism is really where we see a lot of value. And then, you know, obviously the lifeblood of anyone's business, um, you know, anyone on this call and any entrepreneur, is, is customer capital, right? So it's, it's ensuring that, you know, no customer represents 10 to 15% of your business.

Yeah, more than— right, you don't want to represent any— that's kind of your threshold, right?

If they start representing more than 10 to 15%.

If you have someone that's worth 50, that represents 50% of your business, if that's a relationship that you had as an owner, you're in trouble, right? So sorry, Ryan, I didn't mean to cut you off there, but—

No, no, it was, it was a perfect dovetail in. I, uh, I was just gonna say, you know, what we're seeing is the shift is if one client is living off of one brand or one customer, you know, that, that really is, you know, gonna deviate away from you know, the shift into what we're seeing within the business impact and business valuation. You know, if you look at it, we're not going to be able to really crystallize the vision of the next step and the next wave of what we're seeing if, you know, 40 to 50% of, you know, one asset is in one category. So, you know, great point.

Yeah, it's the same thing. Diversification, diversification in terms of tax treatment, diversification in terms of investments, diversification in terms of your customer base, right? Do you have recurring revenue? Is it all transactional? Are you billing upfront? Are you chasing people around for a year to actually secure that collection? Do you have contracts? Are they just MOUs or purchase orders? All those things, the stickier the business is, the more recurring the revenue is, the more diversified your customer base is, there's massive, massive value to someone that's going to acquire that business if you could demonstrate a healthy, healthy client base. And yeah, great point. I saw Jason chime in here. I mean, fantastic point. A lot of times in sales, it's a, it's a larger organization that's looking for a synergistic play to pick up your, your operating asset. If they can pick up all that structure, or maybe you have some trade secrets and you're doing it better than they could, and they can buy that structure and apply it to the rest of their model and And 10x it. So great point, Jason. And just the more that you have it documented and it's tangible and it's transferable, your value is going to go up. So if we look here, you can get to— I mean, if you just— even if you just have really solid financials and it's just you grinding as an owner and you're grinding it out, you're still going to be in the low end of the range of multiples if your business is highly dependent on you. Because why would I buy that if I buy it and you're not there anymore? and you can't develop business without you, why would I buy that? There's transference risk. So conversely, if you're focusing on these intangibles, it's all transferable and documented and it thrives without your daily involvement as the owner and it's in a strong, attractive industry and it's ready to sell, you're going to have a best-in-class business and it can result in multiple factors in terms of the value that people will pay. And I mean, if we saw the example, it's $10.8 million versus $31 million in that example. There's a massive, massive upside in selling your business if you can demonstrate that it's transferable and that all the things that we spoke about, someone can buy that from you and continue to operate that asset without missing a beat. And then, so just, I mean, how do we— this is a lot of information, right? Like, this is— the world's changing like crazy, right? You know, there's these 4 C's. So there's a lot, there's a lot that's changing. The way to start, I mean, it's discover, design, align, right? Discover, discover your wealth, identify what you have, identify what you want, crystallize your vision, figure out where your business is today and where your personal wealth is. Design a strategy to go and pursue some of these things that we spoke about. Align your values, align the impact you're trying to accomplish. And then you want to make sure that your advisors are talking There's a lot of moving pieces here. We prefer to integrate professional advisors. If everyone's integrated and everyone's working on behalf of you, working for you, and we're all working together, you're going to have a better outcome. So discover, design, align. First step is always discover. So I would encourage you to figure out where your personal wealth is today, figure out your exposure to kind of ESG sustainability, sustainable investing, and Crystallize your vision and figure out where you're going. Really important to understand where you're going. It's kind of hard to get there if you don't know where you're going. So, and any— with that, I know there was a lot of information. Do we have any questions, thoughts? I saw Joe said some good information, really helped to further strategy in the future. 10% or lower, I will keep this in mind. Great.

I think that was really good. Um, yeah, I was just gonna say, you know, any questions can either be in the chat or if anybody wants to unmute and ask, um, you know, we can do that as well. Um, but yeah, no, I think you— that was a really good presentation. Um, you know, and especially like as a startup, you know, a lot of our group is founders of businesses, uh, then, you know, it might seem— yeah, it might seem like, you know, if you get a 5x or a 7x, like it's not a huge difference, but, you know, when you look at the numbers behind it Makes a pretty big difference on the sale there. And, you know, anything you can do to boost that value is, you know, definitely worth implementing. Looks like there's a question from Joseph here.

Joseph, so it says, I believe you mentioned that clean energy is a good future market. Yes, I would absolutely. Now, what is the clean energy? That's where you start to— right. I'm not sure, Joe, is there Was that— is it a question like, am I— do I think that clean energy is a good future market?

Yes, sir. I, uh, Jesse, you don't mind if I talk?

Yeah, please.

Okay. Uh, yes, I just— one, thank you very much for your— and you too, Ryan. I just don't want to exclude you. Uh, thank you for a wonderful presentation. I must admit, most of it went right over my head. I tried to understand as much as I can, try to focus in. But I do believe that you mentioned up to 2050, there are some— if you have a sustainable business or going into that sector, as you said, from McKinsey's, these are some of the sectors that you really want to try to invest or be a part of. for the future growth of the economy. And I just want to, just to make sure that's what you meant by, from your presentation.

Yeah, I think we were looking at this more from a lens of twofold. As a business owner embodying the sustainability and sustainable practices in your business. is going to help you in the long run stay in favor, right? Because your business meets those long-term sustainability goals. So twofold, if you can start to incorporate just like some of the practices of stakeholder capitalism and learn about it, and then look at sustainability and start to learn about that and how other people in your industry maybe are applying that in your business, that, that would be one. As a business owner, how do I incorporate some of that into the way that we operate and And then conversely would be on the investing side, and not just clean energy, but all things related to ESG investing, environmental, social factors, and governance factors. So Ryan, if you can go back up to the slide, keep going. Sorry, it's the one with the ESG factors, number 18. So these ESG criteria, it's actually environmental, social, governance. So some of it's climate change related, carbon related, but a lot of it also transitions into that stakeholder capitalism, executive pay, board issues, supply chain. So it's ESG investing is kind of a screening framework that we use to filter out negative things in a portfolio. So if a business isn't meeting the sustainability objectives, or a business doesn't have enough representation on its board, it will get screened out and no longer show up in a portfolio. Why I think that's really important over the long run is that means access to capital, because high level, if we're starting to screen out these areas of— or these businesses that don't embody these things, this is public markets right now, but it's going to trickle down, I think, into every part of business. So So at some point, baseline, having access to capital, being able to operate in our economy, you're going to want to take into account the new stakeholder capitalism, which is sustainability, but it's also board representation and diversity. And it's also purpose and vision. And what are you actually solving? Is it adding value, long-term value in society alongside profit?

I think the big thing to go off that too is, like you said, you know, Joseph, it's— there was a lot here, you know, there's 27 slides of data research, you know, you really can't build something on the first day. Like, you know, the reason why we had 4 top— or evidently 3 topics with a kind of a 4th intertwined in each— is there's a lot to go over. Right, you know, we're, we're happy to cover anything with anyone at any point because there's— every business is at a different stage. This is just general knowledge of, you know, pillar 1, pillar 2, pillar 3, because, you know, it's building towards, you know, that same framework that we're seeing in other, you know, revolutions that, that have occurred in the past. So I think there's, you know, a lot to go over there.

So when you look at this slide, you know, the slide that's up on the screen now, do you guys view the value discussion, you know, and where that multiplier is, like, as there's a baseline, you know, say there's a baseline and being, being, you know, sustainable company. Or any of these other categories adds to the value, or is it if you don't have this, it detracts from the value?

I think, yeah, that's a great question.

I mean, it ends up being the same, but how do you pick and frame it? No, it's a great question.

It's a great question. So I would tell you that where we are today, you can get away with being a value destroyer in society. People are still investing heavily into oil. Oil's not going anywhere in the short run. So So I would say that right now, focusing on these things is going to be a value driver as it relates to the human capital management in particular. So embodying— right now, you can drive value in your organization by focusing on stakeholder capitalism and figuring out how to tie that into your organization. That's going to drive value in your 4 Cs for sure. But also long-term, like there's, again, Social capital. If you're proving that you're a purpose-driven business that produces positive output in society, that's social capital, right? That's going to drive your long-term value up in your company. Absolutely. And I would say, I think right now you're probably not destroying value per se, but I would tell you that in terms of when we looked at attractiveness and readiness, as part of value. How attractive is it to buy an oil-producing company today? It was a lot more attractive 20, 30 years ago than it is today to buy oil. So yeah, you're going to start destroying value over the long run, but I'm not telling you that everyone has to go embody sustainability in their business right now. Just start learning about this and start to understand maybe how some other people in your industry Sounds good. Great question.

Great answer.

Jason, do you mind if I ask another question?

Go for it.

Yeah, Mike or Ryan, as you pointed out, if a founder somehow departs the organization, what could happen to the organization. So you're saying that the founder— because I'm at the beginning stage, I'm still on the ground, not even takeoff, my wheels are not off the ground yet— but you're— what you're trying to point out is that each process that I go through, I should have it documented. So if some— if I ever depart, somebody can just jump right in and say, okay, these are Joe's steps. This is how Joe made this successful, whether it be in manufacturing, whether it's sales, whether it's accounting, whether it's, you know, networking. Just have it written down. This is my step 1, 2, 3. And you're saying if this was part of the business strategy, that would go better in the long run?

Yeah. So, and again, it doesn't have to be like when I get into the office every day, I put my keys down and then I like Right? It doesn't have to be those like, like really small, small details, but your secret sauce, right? If, if there's a specific way that the problem that you're solving, if you've hacked how to do it and you can just improve that in my 5-step process— I mean, what industry are you in, if you don't mind me asking?

I'm— what I'm trying to do is build an automated renewable energy mobile, uh, Infrastructure for the replacement of electric vehicles, both flying aerial vehicles like drones and, you know, regular vehicles like on land, like cars.

Yeah. So for you, it seems to me that a lot of that is going to be kind of secret sauce IP related and probably not necessarily just IP, but also mechanically, like your structure, your assets. I mean, are you building a software system to do that? Are you building a physical system to do so?

Physical. It's, like I said, it's a mobile unit, about 20 foot long was my first one. And then of course we're going to expand it to 40 and longer as needed.

So as you— so that's fantastic. And it sounds like there's a ton of tremendous inherent intangible necessarily value in there as you start to acquire clients, right? As you— any policies and procedures, things of that nature, you want to demonstrate that you have that written, documented. And if there's any specific intellectual property that goes along with it, you want to make sure it's secured, things of that nature. So I would say you don't have to go step 1, 2, 3 for every single minute detail, but if it's secret sauce that Some that, that allows you to be better than the competition. You just want to make sure that if something happened to you or if you weren't there, is that able to continue to operate the same way? And documenting it and having it built into a transferable system is the way to do that. So, you know, you have the people that say like, I don't know how I get business, I just do it, I'm the best salesperson in the world. Right? Like, how'd you build your business? I'm just the best salesperson in the world. Well, that— why would anyone buy that business if you're the best salesperson in the world and no one else can do it as well as you, right? But if you can say that I built this amazing energy revolutionary system that's going to change the world, and oh, by the way, I figured out how to get— how to find clients, and I figured out how to monetize this, and it's fully secured and the IP is there and it's all mine and it's right here, here are the keys, it's ready to drive. There's nothing else you have to do, right? That's a more transferable asset than someone has to come into your business and then figure out how you did what you did, right? They shouldn't have to figure it out. They should be able to plug right into your system and it continue to operate. And these are over the long run. I mean, in the founding phase, It's really helpful to think about the 4 C's because they're value drivers over the long term and building a business that way is super helpful. But you're as a founder and you're still, you're still in validating your product phase, right? And go into market. So use this as a framework to think about over the long run. But as you're validating your product, you don't necessarily have to document every single thing that you're doing. If that makes sense. Question: When do we abandon Earth's economy and start to focus on air planet training? Thoughts on it? Seems like it's not ready, but long-term potential seems big.

Oh.

I think the space economy is a unique opportunity. What is it? I think Morgan Stanley said by 2030, it's a— it's right now it's worth $350 billion market cap. By 2030, it'll be a trillion. Like we'll have hotels in space by 2028, I think. Right. So super interesting. And it just proves to you that continuous innovation of capitalism that we were talking about can kind of go in places you don't anticipate. But I think ARK's a little dangerous, Ken. I'm not here to provide investment advice on this call, but there's, I think, some challenges with ARK and how quick they grew and how much capital they're trying to deploy for a relatively new industry. Cool.

Um, no, I think, uh, yeah, if you guys want to put up your contact, contact slide again. Um, and yeah, Mike and Ryan are in our community as well. So, um, yeah, feel free to, feel free to chat on the platform or, you know, ask any questions. Um, and I think, yeah, no, this is a great, great presentation here. We'll share the Recording as well. And, um, I appreciate everybody coming on and, you know, all the great questions, uh, and answers here as well.

All right, thanks, Jason. We really appreciate you having us. And feel free to reach out if you have any questions, um, you want to talk through any of this stuff. Feel free to give us a call or shoot us an email, and we'll— we're happy to schedule some time.

Good, thank you, Jason.

Sounds good.

And thanks for the questions too. I know I'm sharing my screen, so it's tough for me to look, so Mike fielded all of them. But, you know, I think we'd be happy to carve off any time with any one of you. You know, this is something we're really passionate about, so, you know, we're happy to dive in together.

Sounds good. Yeah, thanks again. And yeah, everybody on here, you know, we have a couple other events lined up. Definitely check out the events tab on our Prepare for VC page as well. And, um, yeah, reach out if there's anything, uh, you know, we can help with.

Awesome, thanks so much.

Thanks everyone, have a great night.