S4E21 – LaSean Smith – The Top 5 Business Ideas for 2024

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Key Timecodes

• (00:58) – Show intro and background history
• (04:02) – Deeper into his background history and business model
• (14:04) – Understanding his big business success
• (17:02) – Understanding his strategies
• (21:25) – Commercial break
• (22:15) – Deeper into his business strategies
• (29:27) – In what kind of companies did he invest in today
• (43:33) – Guest contacts

Transcription

[00:00:00.000] – Intro

Hey this is Sean Tepper, the host of Payback Time, an approachable and transparent podcast in building businesses, increasing wealth, and achieving financial freedom. I’d like to bring on guests to hear authentic stories while giving you actionable takeaways you can use today. Let’s go.

[00:00:18.020] – Sean

My next guest is a private equity investor who shares a story of four business adventures: three failures and one success. Now, with the success, a little spoiler alert, he sold the company for a low seven years. He walks through what the business model was and how he got there, but he also talks about what he did with the money and maybe some not so smart choices, which is fun in itself. But then we lead up to what I would say is the most important part of the episode, where he talks about five hot business ideas for 2024, and he gives a reason why behind each. So if you’re an entrepreneur looking to start a business, this episode is packed with some really good ideas. All right, let’s dive in. Please welcome LaSean Smith. LaSean, welcome to the show.

[00:00:59.610] – LaSean

Hey, Sean. How are you doing? Great to be here.

[00:01:01.860] – Sean

Yeah, doing well. How about you?

[00:01:03.850] – LaSean

I’m well. I’m here in mid sunny Seattle. This is the time of year where folks imagine Seattle to be very gloomy, and it actually is. But this is when I get a lot of work done. So I love this time of year.

[00:01:17.750] – Sean

Heads down, I hear you. When you got bad weather, we just flipped from ’60s to ’30s overnight, it seemed like. So here we go. Winter is here.

[00:01:26.560] – LaSean

Yeah, get to it. But anyway, why.

[00:01:29.250] – Sean

Don’t we dive in here? Tell us about your background.

[00:01:32.020] – LaSean

Yeah. I’ll start at the top and then go back. I run an investment firm called Kager Investments. It stands for a compound annual growth rate. So for the finance nerds out there, they’ll understand that term. It’s really just a culmination of what I like to call me tasting the buffet. I’ve had a windy road in my profession, started as a software developer, moved into user experience design. After business school, I worked as a product manager. Those are different roles within the software development process on how you bring together a piece of software to life. What it taught me was a lot about number one, evaluating opportunities, because when you are building something new, is it new because of the technology, a regulatory change? Is there actually some customer behavior that shifted? We try not to build things because the technology is shiny and new, but actually because there’s some demand there. The other piece is when you’re building the Peter Taylor book 0-1, when you’re building that version zero to version one, there are so many other broken things and systems and support structures that are not in place that if you’re a systems based thinker, you’ll quickly start to build a toolkit.

[00:02:43.710] – LaSean

Through all of those experiences at a certain time, I would leave corporate America, go off and start a business. I did that four times. Two businesses failed horribly. One was an aqua hire. That’s a term for when you basically sell the company for break even to keep the team employed. The fourth actually had a decent exit. Part of the learning there is just you got to keep trying, you got to keep showing up. But what I do today is try to take all of the pieces that I’ve learned through that and try to find interesting companies to either acquire or to incubate. And my thesis is around audience and automation. I look for businesses that can benefit from organic or content marketing, paired with some process automation. So there’s ways to get rid of the paper, ways to reduce the human inefficiency. And we can get into more detail on what some of those things mean, but there’s an unlimited number of opportunities out there for folks looking at some of the small neck of the woods where I live. I always like to get out there, beat the drum, and let folks know my path, my option may not be the best for you, but I want to make sure that you know that it is an option.

[00:04:02.160] – Sean

Sure. Awesome. Well, we’ll dive into your private equity model here in a second. I want to back up and I want to learn about that… So four companies, and it sounds like two were failures, two were a success? Yeah.

[00:04:17.020] – LaSean

Well, I don’t know if the Aquohire is a success, but at least it wasn’t like we burned all the cash. Got you. I’ve also done a fifth. I wasn’t the founder, but I was an early-stage executive and CTO at a venture-backed startup, also learned a ton there. But a lot of these things are just that, right? Expensive tuition. Yes. And it’s like all of these things create optionality and just like any option as an instrument, it’s not worth anything if you don’t exercise it at some point in the future. So you got to keep showing up to the plate and retrying. I think part of my success has just been that EDIC, Double-year failure rate, double-year success rate.

[00:05:00.480] – Sean

Yes, indeed. Okay, so let’s go back to that fourth company that was a success. Let’s dive in a little bit. What business model was it?

[00:05:08.820] – LaSean

Yeah. So let’s hit the four quickly. The first was an agency. When it got really hard, I was like, Oh, crap. I’m spending so much time one-to-one on the sales process, the delivery piece, and support. I was like, Crap, this is not a business I believe I can sustain. And so I effectively just gave up on that business. The second business was a software company, and I was sold that I could do consumer better than anyone else. And so we attempted to build a music service, and we did really great on the biz devs. So we got some well-known musicians and recording artists and tapped into some relations I had through friends and family. And we solved that part. And the tech actually was not bad as well, but we had grossly underestimated our customer acquisition costs, our CAC. And so the cost to get people on this platform was just impractical, and so that flamed out. The third was, this was the Aquahire deal. We built a piece of software to connect SMS to large stadium screens. And so if you think about, this is a long time ago, it’s still a valuable thing.

[00:06:26.750] – LaSean

You have a captive audience at a football, baseball, basketball game, and you are trying to get them more involved. A lot of these stadiums, even today, don’t have great Wi-Fi, but they have enough coverage now where text messages works pretty well. And so we would work with a creative agency to create some type of visual participation. And it’s like, if you look to the screen, such and such, and we’d give away signed sneakers from one of the players at a big college game. One time we gave away a Harley Davidson motorcycle. Folks were like, Oh, I really want to participate. They would see their participation in real time. The numbers will be moving based upon who’s in the audience is responding over these text messages. But the real business model was the sponsor for those would get the whole CRM of the SMS database. They get this captive audience that they can retarget. The fundamentals of that business was quite sound. We had some decent folks. We had an MLB team. We had a few college stadiums. We had, I think it’s Crypto now at the time, it was called the Staples Center in L.

[00:07:41.350] – LaSean

1. We had landed some decent size customers and spaces, but we realized like, All right, this is going to be like a three-person sales team in every region. For folks out there who are doing local marketing, one of the hacks they say to start with is just go look at the football cities. Look at the cities that have a major football team, and directionally, that’s going to help you size out where there’s probably enough people density to sort out these types of businesses. We’re like, All right, well, crap. We’re going to need 30, 40 of these regional footprints. That means we’re going to staff up to 120 people. We started to look at this and said, This isn’t a technology company. This is a sales company. We’re like, Crap. We ended up selling that to an agency that was… They had a whole swath of other services they were trying to sell to some of these sponsors, and they saw this as a great wedge. That was a good lesson on really understanding the dynamics of the business. Then the last company that I started was a mobile enterprise app company. This was in 2011, so it’s been a while.

[00:08:55.180] – LaSean

What I learned from those other missteps was really how to think about the end goal. I went to this business like, All right, how do I sell this thing? Or, How do I get this to cash flow very quickly? I was like, Well, one are the two options. There is no in-between. We’re not going to try to get on the VC train and keep this thing alive with hopes and dreams. And the unique insight, and I believe all businesses to try to find this, if anyone’s aspiring to go start something, to have something that is unique, I believe it is Matt Ridgeley. He wrote the book The Rational Optimist. And it’s an interesting take. And the summary really is for many folks out there, you want to have a contrarian view to the future that is both rational and optimistic. When you combine all of those three, that’s where the value can be unlocked. You want to see the world differently than everyone else, but not through a pessimistic lens. You’re trying to see the world through some optimistic lens, but you’re not just some crazy dreamer. You’re still a rational, pragmatic approach to it.

[00:10:04.840] – LaSean

I went in this business, hopefully keeping some of those ideals in place. What I found that unique insight was, at the time, the iPhone had been out for about four years, but no one had really figured out how to connect it to these big enterprise backend. So if someone gets a big paycheck for a big company, they might have that process through software like SAP or something like that. And we figured out how to take these big, heavy enterprise software systems and tie them to a mobile phone. And then we built a few little toolkits. And so sales teams love this because we were able to, sometimes in days, definitely in weeks, build these mobile apps where the sales team could have real-time access to their inventory. Really what set us up for success is we landed some really large companies, a couple of what would now be fintech companies, one of the largest semiconductor manufacturers. They had used this for sales enablement to say like, All right, you want to buy X amount of these chips. How many do we really have? We had some rudimentary forecasting models built in. They could just whip out their phone and see this.

[00:11:12.890] – LaSean

It was like a no-brainer. And so as this market started to mature, folks looked around and said, Who’s in this space? Who are we competing with? And we were definitely punching above our weight. And at a certain point, some companies looked around and said, Wait, hold on. Why is this little 16-person company in Seattle, Washington, have an exclusive with some of these large names? And when the first deal starts showing up, I realized if we didn’t say yes to one of these, some are actually going to step on us. And so I knew we didn’t have a ton of runway. So even though the business was in good shape, I saw structurally in the industry, we didn’t have a real moat. So we sold the company. Anyway, I’ve learned through that process, I’ll give you one bonus. After that exit, I had some cash and I tried a bunch of different things. I’ve invested in multiple independent feature films. I’ve done a couple of spec homes. I’ve all sorts of asset classes where I’ve tried to learn. But one of the ones I did was I started a salad shop here in town. Here’s LaShane, software guy.

[00:12:24.620] – LaSean

I’m like, I got this figured out. I’m going to help people eat healthier. I’m going to build this cool spot. I don’t really count this as one of my businesses because I wasn’t the operator. I was the capital and the strategic vision. But I share this story because it’s one of the ones I’m most proud of. We started this business, and I’m like, I’m going to have amazing branding. I have a pretty good taste for that. Our branding or in-store experience was amazing. Our signage, we had beautiful photos, menu design was really well done, tech stack. I’m like, We’re going to have the best loyalty program. I had done all the things. And what got me was how grossly I underestimated how hard it was to forecast things with high spoilage. Salad dressing goes bad. Romaine lettuce goes bad. It’s hard to get folks who don’t have a stake in the business to always show up on time. I had to shut it down. One of my proud artifacts is on my hard drive is a screenshot I took from the Yelp page, and it says the name of the business was Fine Salads. It says Fine Salads, and then at the bottom, it says Permanently Closed.

[00:13:34.620] – LaSean

You’ve probably seen one of these where the business no longer exists. It seems silly, but every once in a while, I just go pop up and look at that and be like, Yep, that’s what happened. Those have been some of the journeys along the way. That one wasn’t super painful. It actually taught me a lot. Now, as I look and do diligence on deals, a lot of what I learned there helps me quickly suss out if I believe a cash flow or revenue stream for a business is durable.

[00:14:04.610] – Sean

Yes, love. Great experience. Thanks for doing the rapid-fire timeline of these different ventures, because I’m the same way. If people want to go through, okay, what were your failures? Buckle up. Here we go. We go one by one. Can I ask this mobile app enterprise company, can you share what you sold it for?

[00:14:23.420] – LaSean

Yeah. The company was called One Plane. We sold it. There was an earnout. The actual ticket price was five million, but we sold it for three million dollars, but we had no investors. For some folks, they said, Well, that’s just a tiny little exit. I had left Microsoft to start that. This is another interesting story, I think, for folks who are struggling to figure out should they go and do this. We had, as myself and two folks I had worked with in the past, I had the capital, I had the idea, but these things never work without others who help you out. I had about a quarter million dollars in restricted stock units. These are RSUs or stock grants that you’ll many times get at these corporations that had not invested. When I was quitting, I had so much stress because in my brain, I was like, I’m leaving $250,000 on the table. And it just seemed like all the money in the world. It was probably about month four or so I had pinged my my CPA, my bookkeeper, and I was like, Is this cash flow right? Because we had a couple of deals, and so I knew the size of the deals, but sometimes these big companies, they don’t pay you on time.

[00:15:39.980] – LaSean

You can see the paper number, but the cash flow number is a different number. I said, Is this number right? She said, Yeah, that’s right. They paid at the top of the… It was a net 45, and they paid in seven days. Anyway, there was like $700 something thousand in the bank account. My brain was like, I was over here stressing over this quarter million dollars that I was leaving on the table. And in hindsight, four months later, it was just so silly how I had this scarcity mindset and wasn’t really leaning into like there was all this potential. And I was keeping myself down by not taking action. And I’m not saying people should just go out and squander, burn in the hand. But what I’m saying is like for me, I had slowed myself down because I was afraid to take action. And once I actually took that true bias fraction and moved with some intention, things changed. A few things on that deal is while that was a relatively, again, for acquisition standards, relatively small deal because there’s no investors, the liquidity was great. Two things that I did wrong: number one, I didn’t have a tax strategy in place.

[00:16:54.470] – LaSean

I paid some crazy taxes on that deal.

[00:16:57.690] – Sean

You didn’t go into.

[00:16:58.670] – LaSean

Real estate? Okay. Well, you’re saying what did I do with the money?

[00:17:03.080] – Sean

Well, my first strategy would have been try to prevent Uncle Sam from getting a big cut. Let’s go into some syndicates, some real estate.

[00:17:12.130] – LaSean

Large properties. Yeah. One of the things is, first, I just didn’t have a strategy at all. I knew some of the asset classes I wanted to move into. But the second is where the deal landed. I should have pushed the deal out to the top of the calendar year, so I had more time to go restructure and potentially find another deal to offset those. Maybe it would have been some type of accelerated depreciation with some other asset class. But I was just all over the place on not knowing how to structure. I was like, All right, yeah, there’s going to be like two and a half million dollars in my bank account in a few days. My brain was like, Let’s go. The other piece is I didn’t last on the earnout, so I wasn’t allowed to compete in a certain space, and I had a certain term that I had to sit out of the game. That was really the core structure of that deal, whereas I couldn’t go rebuild this type of company for a certain time period. I just was getting antsy. There was all sorts of things. I would have restructured that earn out very differently now.

[00:18:21.200] – LaSean

And in hindsight, everything worked out. I ended up being a boomerang, as they call them in corporate America. I went back to Microsoft and I took all those lessons. And this is, I think, something else that can be helpful for folks. I came in with a fair amount of leverage because that wasn’t enough money from that exit to retire, but that was enough to give me some breathing room on what I wanted to do next. And so I made all my demands for that. And I structured my employee contract to really be option and stock heavy. And I came in on that deal at, I think, $35, $38 on Microsoft stock price. We know where that’s at now, and there’s also a split in there. I made much more money just going back to corporate America than that exit. But it all is connected. I don’t have the courage to make the demands. I don’t know the right way to structure that employment contract. I don’t know any of these things. If I don’t both have the courage and feel like I have enough leverage to say this is why I’m going to show up, and had a fantastic run there.

[00:19:30.130] – LaSean

And then through that space, I did do some of these other things and experiments that I talked about. And now I’m much more risk-averse and structured on how I tackle things. But I got all these samples at the cocktail party of these different ways that I could attempt to move. And I tried to find the right balance of I need the intellectual stimulation, but I’m also not trying to just go chase the reckless deals. Yeah.

[00:19:56.450] – Sean

I want to jump into what you invest in a moment, but I just have to poke fun a little bit. You wanted to sample with ways to lose money: movie.

[00:20:05.110] – LaSean

Industry, restaurants. Oh, my goodness. The crazy part is while my background and my family structure, we didn’t have a ton of financial literacy, wasn’t something that I was well-guarded on. But over time, I started figuring out and I got lucky with some great mentors and sponsors who helped me avoid some really more dangerous mistakes. But for those examples, it wasn’t that no one told me that those are super risky. It was my arrogance. I was like, I can do this better than anyone else. That was the silly part. What I have come to realize is my wins largely have been a point of two things. One, I just kept showing up. That’s something that I think others can replicate. But two, I just showed up in industries that had these major tailwinds that were going to work regardless. I was misplacing my confidence, thinking like LaShun did some of that. Where we play, that’s one of the famous Warren Buffett stories I think is so critical. It’s not just how smart are you, what’s your system, how do you network, what customer problem are you solving? It’s like, are you just getting in the right boat?

[00:21:18.800] – LaSean

If you pick the wrong one mathematically, it doesn’t matter what you do, you may be at a disadvantage.

[00:21:24.410] – Sean

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[00:22:23.540] – LaSean

Yeah, no, these are all independents, but we have done multiple deals. So the interesting thing about film finance, this is something that I’ve now learned. Again, once you get these reps, I love thinking about all these asset classes. I haven’t done collectibles or fine art or anything like that. But I now have learned how the Clearport works and how people use art to do write-downs through estate sales and transfers. But for films, two things for folks who are based in the US, and again, I’m not saying you should do this. This is very risky investments, but it might spark ideas for your industry or what you do. Number one is take a look at the tax code. In the US, what happened years ago is there were other countries that start saying, Come over to our country and we have a replica of these blocks in New York City, or we have a replica or what have you. Vancouver, BC, and Canada was one of the big ones to kick this out. There was this Hollywood flight that was happening. The IRS and the federal government passed this rule called Section 181. What it allowed for was accelerated depreciation for both LPs and GPs, but primarily for LPs who are investing in film productions.

[00:23:39.590] – LaSean

And the way it would work was… And there’s two crazy things. I still don’t know how this was written into law, and it’s been tried a couple of times, I think in the Obama years and the Trump years, there was like, Are we going to take this thing down? And it keeps surviving. I don’t know who’s lobbying for 181. Maybe it’s some Hollywood folks. But when you put a dollar in, you are allowed to fully depreciate that dollar as long as one shot has been filmed for the project. So the project does not have to be completed. It doesn’t even have to come out. This is just crazy. Really? This is a really crazy rule and you’re allowed to depreciate every dollar you put in. And the way this works is it’s an offset to your other passive income streams. So you don’t get to take that dollar and get your dollar back. What you get, let’s say if you’re at a 37 % tax rate, you will get a 37 % discount. It’s almost like donating to a nonprofit, right? Yes. There’s a cap. The tax math is very similar. And you get that 37 cents in that tax year.

[00:24:45.960] – LaSean

Really, what you’re putting in is 63 cents on the dollar in that production. Off the bat, you’ve now softened the economic structure of these deals. That’s something I learned that’s really, really powerful. Then you can tax other local tax strategies. Louisiana, Georgia, they have additional things that you can keep stacking these deals. If you structure it properly, many times you can be at about 50 cents on the dollar for your production. This is how most rational, financially-informed film producers or television shows are actually produced. No one saying like, My cousin or my niece has this great idea. I’m just going to give them some money and let’s hope it’s a hit. No, there’s a whole tax strategy that’s really critical here. The second thing that’s really interesting about this is the ability to do co-finance deals. What will happen is you can do a spec film, like you might build a spec house. It’s just as it sounds. It’s highly speculative. You would probably go to zero. What happens is if you do a co-finance film, if you structure the deal properly, you say, Hey, I am going to produce this project with these stars in it, and it’s going to be done about this time.

[00:26:05.990] – LaSean

There’s all sorts of legal wiggle room on the buyer side, that’s the distributor or the streamer. On like, creatively, if you give us some stuff that’s bad or it’s just full of offensive content. There’s all these outs that don’t give you a bulletproof guarantee, but that contract is effectively collateral that you can then go use to raise funding. What you say is we’ll front the first half, you front the post-production and any of the marketing. That’s a strategy where you have to go do the business development to have the relationships with the direct buyers. This isn’t like going through a sales agent, but this is a really interesting way to go structure these deals. You see this in real estate and other assets where you look at the capital stack and it’s like you have your GPs, your LPs, your mezz debt, your preferred debt. The capital stack looks very similar. Anyway, the punchline for this is, did multiple of these. I’ve done six of these. Two of them, films have not come out because this is like two and a half years ago. This is the other thing that is just like, Goodness, these things take a long time.

[00:27:14.090] – LaSean

They do. But one was a deal with Netflix. It’s a children’s film called Fearless, and did really good on the window there. And another is called Venus as a Boy. Really proud of that one because we tried the film circuit, which is the film festival circuit, which could be really tricky. And that one was a film that landed in Tribeca and did really well in the circuit there. And that film was sold to Hulu. And so you can make these types of deals work. The reason I would advise most people to stay away from this asset class is it’s too permission based. I got so lucky so many times in my life where it’s just like the timing was the reason it won. I sold my mobile app company, my enterprise company. Because of the timing, there was a little window. The only credit I can give myself is like, I’m paying attention to trends and the timing, but I can’t guarantee that I was there at the right time. Right now, because we’ve moved out of Zerp and we’re in a place where debt is so much more expensive, that film approach isn’t going to work because the streamers and everyone, they have much more leverage.

[00:28:26.450] – LaSean

They might give you a deal that is less attractive. They might want to stretch out the cash flow. There’s all sorts of things that they can use to extract more value out of you because they have more austerity that they are following. The idea of there’s all this cheap money, let’s go make a movie and then sell it to some big streamer, it’s not something that you can replicate when interest rates are high. Anyway, that’s the story on that little side thing. But I’ve experimented with all these things and learned a ton of pieces. What I love about this randomness is even though I don’t believe most folks should follow a path like that, investing in films, there’s so many things that apply to just a traditional deal flow. A lot of this, again, is like when you do enough of these deals, your brain starts to pattern match. It doesn’t matter if you go into PropTech or agriculture or local B2B services, you’re like, Oh, a lot of this stuff carries from industry to industry, small company to large.

[00:29:27.610] – Sean

Right on. You see the formula that works. At the same time, you know, because I’ve been involved in a lot of different types of businesses and work for some larger companies as well. I know the edge cases on, Hey, what’s a scalable business? What’s a business I do not want? I had an agency as well in the 2000s, learned, Wow, this is not a scalable business model. As my revenues increase, so do my liabilities, my payroll. Totally. Very difficult. But yeah, this is a good segue into what companies do you invest in today?

[00:29:58.960] – LaSean

Yeah. One of the things I found was through all of that randomness is I need to follow the type of businesses that don’t just mathematically make sense but are true to how I get energized. I have a personal North Star that is six words, three sentences: know thyself, make things stay free. This is just top of mind when I’m saying yes to a meeting, when I’m committing to do any business travel, anything that’s using my minutes or my money, I am trying to say, Am I violating my own personal constitution of those three sentences? The first one is I have to know myself, and I don’t want to be in a business that is against my values, obviously, but also where it’s going to drain the energy from me. One of the things I really disliked about working in corporate America was I’d be on all these meetings with peers and other things. They’re like, Why am I in this meeting? It wasn’t like the people weren’t nice or what have you. It’s just I didn’t care about the problem or their customer. At a certain point of seniority, you’re not working on the same thing as the person next to you.

[00:31:09.850] – LaSean

They’re in a total different business because you’re all running your own business lines. I just did not enjoy spending my time that way. The second is I like to be close to the making of things. There’s that great Peter drugger quote, The management consultant. The purpose of a business is to create and keep a customer. There’s nothing else. Basically, what I took out of that, and I’ve reminded myself, is you make things and you sell things. Everything else, not to knock the lawyer or the HR professional or whatever, they’re there to manage risk or people friction or all these other pieces because you are trying to aggregate labor at scale. But at the core, the two functions that matter, and if you don’t handle, you will go out of business, is somebody has to sell the thing and somebody has to make the thing. I realized for me, while I really love marketing, a lot of parts about go-to-market, I started off as a software developer, and the power there is like you can have an idea in your brain, type on a keyboard, and the factory of the laptop spits a widget out. That is just really empowering to my brain.

[00:32:22.570] – LaSean

So that’s make things. Then the last is just stay free. One of the reasons I have not raised a ton of capital from LPs is the fiduciary duty that comes when you raise or the hedge fund, a VC firm, PE firm, those are 10-year relationships that you’re committing to. Even if you don’t keep raising your assets under management and you’re just like, All right, I’ve raised maybe a couple hundred million over two or three funds, you still got to wind that thing down. You still may have board seats. There’s all this work that happens. You can’t just say, You know what? I’m excited about some new technology. I’m going to go chase this other thing. Here’s my two-week notice. I’ve learned enough from these other experiences, deals that I did as an angel investor. That’s a whole other angle that I spent some time there. To realize you have to take these relationships seriously. And for me, the freedom to move around and change my mind is very important. And so what I do now is every year, this is the window, the season, in Q4, I spend time looking at different themes. Maybe we can hit some of these before we wrap up on what I think are ideas where there’s some opportunity.

[00:33:38.230] – LaSean

It doesn’t mean I’m going to invest in everyone, but it’s really something for me to say like, Okay, I’m going to give myself permission to go look at new things. For the next year, I’m going to stay locked in focused on that thing. But I give myself permission to go look at something new every year, and that keeps me energized and refreshed, which is very different from folks who they have a certain capital stack that they have to allocate, and the SEC is going to come a knock in if they don’t do right by their LPs. That’s a way you can make a lot of money. That’s not a path for me.

[00:34:15.090] – Sean

Right. Well, let’s dive into that. What are some of the themes that are jumping out for 2024?

[00:34:20.280] – LaSean

Hold up. I got the list open here. I have five buckets here. Again, this is not a top-down analysis. We looked at every trend, and there’s a lot of anecdotes and personal pieces. I believe that your talent stack, what you’re good at, what your interests and values are, and where you have an unfair advantage, maybe it’s your network or something else, is very important. My list of things, there’s definitely a macro lens, but it’s focused on some of the areas where I feel like I can add some value. But the first one is aging in style. This is a very unpopular thing to talk about out loud. We know all of the boomers and now even Gen Xers are starting to… They’re hitting ’50s, ’60s, ’70s. We talk about this wealth transfer that’s going to occur where all these Gen Z and Millennials are going to get all of this cash that these boomers have. The insight, the unique insight here is these boomers aren’t trying to go out not in style. They’re like, I don’t want to go to this raggedy nursing home. I don’t want to not try this longevity practice. They’re spending more and more of their money, and they’re not going to put this on TikTok and say, Let me show you how I’m living my best life.

[00:35:39.990] – LaSean

One, that’s not how they generally move. But two, the social norms will penalize someone who in an economy that is unstable and there’s a lot of folks who aren’t doing well. You don’t want to show yourself at some wellness retreat for $8,000 a week where you’re just like, Getting my 65-year-old self tuned up. There’s this whole shadow market of folks that are still both motivated and have the cash to spend. The numbers are mind-boggling. I was at a Four Seasons over the summer, and their sales people followed up and they said, Hey, LaShane, we’ve noticed you’ve been staying at our hotels, and blah, blah, blah. We’d like to share some more about this opportunity for this new product that we’re selling. I’m like, All right, this is a sales call. Maybe I can learn something from the sales call. I probably won’t buy what they’re selling. But they were pitching me on a Four Seasons airline trip. I won’t get into the details of the thing, but it’s basically some branded Four Seasons plane, and they take you to all these exotic places to their hotels. Over the course of 14 days, you get this amazing experience.

[00:36:51.040] – LaSean

The punchline is you got to buy at least two tickets, and each one is $160,000 to start. You’re at 260 % on this thing just to start, and it’s like a buck 80 for the package you would really want. It’s $360,000. It’s just crazy numbers. I said no. I was like, Yeah, I’m not interested in that. But I did a little digging after that sales call. I’m like, Who is actually buying this? It is these older folks who they have these bucket list experiences and they have a ton of cash and the asymmetry and who has these big buckets of cash is just really fascinating. The other part of that is longevity. It’s not that they want to take expensive vacations or they want to buy their empty nesters and now they want to buy really nice houses. The side part in real estate is service-based residents for these seniors are exploding. They want to live in Ritz Carlton or Four Seasons branded residence. They don’t want to mow the lawn. They don’t want to do any of this stuff. They’re willing to pay a two, three. Here in Seattle, the Four Seasons, the HOA is $5,000 a month for the H-like these crazy numbers.

[00:38:04.710] – LaSean

You’re like, Who has the money for this? These boomers. There’s a percentage of them that have done very well in life, and they’re going to give money to their kids and grandkids, but they are going to live in style. But anyway, the longevity piece is a huge thing, and there’s all sorts of new preventative ways to make sure you’re keeping yourself in better condition. We see the Bryan, Thompson or Bryan Johnson folks who… That’s the guy from Braintree who spends, I think, $2 million a year on his longevity. I’ve seen that. I have multiple friends who spend ten grand a month on their personal longevity. To me, it’s crazy. Anyway, I’m going to spend more time on that one just to give you details. Each of these buckets have a ton of layered insights. But this one is there are folks who have high motivation, they’re facing their mortality, and they have huge sums of cash. Because they’re in the latter stages of their life, they move this money to bonds or to cash or some cash equivalent. It’s not even like it’s locked up somewhere that’s not liquid. They could just write these checks.

[00:39:17.320] – LaSean

That’s an interesting insight. Any new business or even public companies that are trying to accommodate these folks who are aging in style, that to me is a really interesting space. I’ll go through the others more quickly. Govtech B2G, as we increasingly are attacked by various macro and social issues, we have more variability and values, and we have to figure out how everybody comes to get together. I think technology is going to be really key to that. As AI starts to put pressure on productivity and maybe job loss comes out of that, I think the government, I wish they wouldn’t, but they’re going to have to get involved in some place, otherwise we’re going to have rights in the street and safety issues and what have you. It’s not just like, Oh, you should build SaaS for the government. I think there’s a whole class of B2G investments, and it goes on the social safety side of things, the education, health side of things, maybe even housing, all the way to DOD and defense. We’re seeing companies like Androl and Palantir and others who are more on that side. When you look at this whole piece, it’s just like this is a bucket where it’s been underserved, and if you follow a dual use technology model, so companies that they’re building a product for the government, they can also be repurposed for private sector, I think there’s a lot of potential there.

[00:40:46.020] – LaSean

Proptech, we know there’s a shortage in construction labor, and I’m very bullish on folks who are trying to figure out how to retrain folks who have maybe moved out of that space or train new folks who are like, I don’t want to do physical labor. I just want to be famous on TikTok. You got to figure out how to get these folks involved. And I think you’re going to have to add technology to allow them to work more efficiently because you won’t have enough people. And immigration policy is likely going to also impact this. And so we’re just not going to have enough humans to get this thing sorted. So PropTech is a big one. I talked about solopreneurs. I’m very bullish in that there’s a new class of tools that are going to allow people from zero to 20 employees punch way above their weight. I’m not just saying folks who, not to knock this, people who have maybe information or coaching businesses, but folks who actually can start delivering services in a meaningful way without being burnt out as solopreneurs because they can automate so much of the sales, delivery, and support pillars.

[00:41:54.370] – LaSean

Then the last is virtual creators. This is something I learned from my time in the entertainment industry. And I believe there’s going to be a new class of… There’s going to be a celebrity disruption. There’s going to be a new class of influencer. There’s going to be a new range of Mickey Mouse. And there’s a great chart on the web that I’ve gone back to a couple of times that looks at the top media franchises grossing. It includes merch, includes box office, home video, all the revenue streams. And when you look at it, there’s very few live-action on the list. I think Star Wars is five or six or somewhere there. Harry Potter is on there. But the number one is Pokemon. Number two is Hello Kitty. You think about this and you’re like, Oh, my goodness. Another interesting one is Spiderman is almost as big as Marvel. They’re in the same slot. They’re touching each other. And the reason Marvel has this crazy box office number, but Spiderman has this massive merch number. And the reason I’m so bullish on this is if you talk to people about this topic at Linn, you will get a polarization very quickly.

[00:43:03.700] – LaSean

Not investors, but people who like, Would you buy a lunchbox or would you buy a sweatshirt or would you buy a movie for your kid that has one of these fake creators, virtual IP characters on them. The polarization is so extreme. I’ve learned when I hear that polarization, there’s money to be made because there’s going to be folks who are like, I want the traditional way. I want to preserve the artist’s craft. And other folks are like, No, I want a hyper-personalized experience where my kid can watch a movie that says their name in it. When I see that polarization, I know there’s some economic opportunity. Anyway, that’s the big buckets, and hopefully that maybe can spark some ideas for folks.

[00:43:43.290] – Sean

I love it. Thanks for giving the rundown here. That might even be the title of the episode. We’ll see. But we got to wrap up here because we’re running toward the top of the hour. I’ve got my next meeting. But real quick here, where can the audience reach you?

[00:43:55.770] – LaSean

Yeah, well, two things. If folks actually have a business where they are looking to sell, I buy relatively small businesses. Typically, if the deal is under $10 million, but at least $500,000 in EBITDA, give me a shout. You can hit our group email at grow@cagr. Com. And then if you just want to chop it up, maybe ask a question or just talk about any of these topics offline, you can find me on LinkedIn. And it’s L-A-S-E-A-N-S-M-I-T-H, just my full name. I’m happy to reach out. Dms are open and I’m pretty good at replying there.

[00:44:31.390] – Sean

Awesome. Well, thank you so much for your time, Sean. This is great.

[00:44:34.660] – LaSean

Great to hang out, Sean. Take care.

[00:44:36.320] – Sean

All right. Let’s see you. Hey, I’d like to say thank you for checking out this podcast. I know there’s a lot of other podcasts out there you could be listening to, so thanks for spending some time with me. And if you have a moment, please head over to Apple Podcast and leave a five-star review. The more reviews we get, especially five-star reviews, the higher this podcast will rank in Apple. So thanks for doing that. And remember, this show is for entertainment purposes only. If you heard any stocks mentioned on this podcast, please do not buy or sell those stocks based solely on what you hear. All right, thanks for your time. We’ll see you.