xhv8mzw7ge79waga35o97s2wbzpfr6 Growing a Business: Value Add through Relationships and Partnerships

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Mike Bingham

– Blue Diamond Capital –

For more information contact:

bluedicap.com or

michaelb@bluedicap.com

  Video Length: 45 min

Growing a Business: Value Add through Relationships and Partnerships

- Mike Bingham, Co-Founder & COO, Blue Diamond Capital

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Background:

Michael Bingham co-founded Blue Diamond Capital in 2007. Mr. Bingham serves on the board of several  for profit entities including Edge Homes, Emergency Essentials, PEG Development. Mr. Bingham is a  Certified Public Accountant (CPA) with over twenty years of investment management, merger and  acquisition, financing, operations management, investor relations, real estate  development and corporate governance experience.

At Blue Diamond Capital, Mr. Bingham is intimately involved in managing multiple aspects of the portfolio companies including the acquisition, financing, equity raising, corporate strategy development  and disposition. The portfolio includes assets in publicly traded securities, private equity  and real estate investments.

Mr. Bingham brings vast experience to Blue Diamond Capital and has helped the company navigate and thrive through the tough economic environment during which Blue Diamond Capital was started. During Mr. Bingham’s tenure, the equity of the company was tripled through profitability of the company’s assets. Mr. Bingham has increased the sales and profitability of the company every year since the company’s first full year in 2008. During his tenure, sales have increased 9500% from 2008 to 2015.

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0:00 
Thank you. So I hope everybody can hear me, I do not do this for a living. So you're going to have to forgive me. I am and I am a natural inborn introvert, and I am comfortable in a group of two. So you guys really I mean, I, if I focus right here, maybe this will be good. But anyway,

 

0:26  
appreciate the opportunity. Steve bond called me one day and asked me if I would speak and, and I thought, I don't have anything to add, but

 

0:37  
to sure what the heck So, so we talked about a little bit about what I would talk on and and I said, you know, one of the recurring themes for me this last 10 years is is just value creation through partnership. And, and so I'm going to talk a little bit about that. But before we get started, I always like to start off. I talk a little

 

1:00  
bit about world events and talk a little bit about politics. So I want I want to get started off and, and one of the interesting things, I read a ton, I read a ton of news, and I came across a study recently and I, and this isn't, I don't care where you, you stand politically, but this study kind of took me back. And so I wanted to just show you a little bit of this study. So this was a Texas a&m study, and it talked about the best president ever. And,

 

1:27  
and one of the surprising things is that in this Texas a&m study, Obama was rated the fifth best president and Donald Trump was the fourth and I thought, are you kidding me? This can't be true, there is no way. So I had to dig into the study. And, of course, you know, tied for first Abraham Lincoln, George Washington, I mean, who, who can argue with that everybody loves the father of our country and on a state.

 

1:56  
Thomas Jefferson, tied with 14 other presidents for second

 

2:02  
FDR with 24 presidents for third place.

 

2:07  
Jimmy Carter and Donald Trump came in fourth. So Donald and Jimmy and then Obama came in at fifth. So, you know, I think there's some credibility.

 

2:18  
So anyway, um,

 

2:21  
another note that I just want to make on our country and, and somebody said this to me and, and, and again, I don't care what political party you come from, but we live in the greatest nation. When we have opportunities like we have and the freedoms like we have, despite all the strife we have.

 

2:43  
We still can can walk out our door.

 

2:50  
So,

 

2:52  
so let me I hate intros. But just so you know who I am. I'm going to get a little bit of history about me. So I was raised on a dairy farm.

 

3:00  
This is what it looked like every morning when I woke up, except it was dark.

 

3:04  
And, you know, the best things in my life for my family, and what I've learned throughout my life, and, and those are things that I'm

going to carry with me and, and

 

3:18  
Anyway, those are things that are important, crucial to me. And then mistakes and all and I made lots of them.

 

3:26  
And and this is this is something a recurring thing that I always share with people. Don't look back at your mistakes and say, Gosh, I wish I had and I wish I had your mistakes, who make you who you are today. And you'll make lots of mistakes in the future.

 

3:42  
And you'll learn from those and you'll become better. If you get buried in your mistakes. That's when when you lose sight of what's important. So learn from your mistakes.

 

3:53  
So here's my my history. So, coming to this conference. I know there's a lot of entrepreneurial blood here.

 

4:00  
A lot of you are self starters, your investors.

 

4:05  
And you've gone out and built businesses and you're pushing for yourself. I didn't start that way. I actually am a CPA, I'm on the risk aversion scale I started over here, which is never take a risk. And this side where you're like, whatever the deal is, let's get it done today. I'm over on this side of the scale, and I've had to pull myself over this way. But I've been able to evolve through some of the partnerships and relationships that I have today. And that's an we're going to talk a little bit about that and those that have influenced my life and have made my life better.

 

4:44  
So I started Ian, why if you know anybody knows where that is, it's a CPA firm. A great learning ground.

 

4:52  
From there, I went to a company that was owned by a private equity group, they were one of my clients. And I learned the reason I went there was

 

5:00  
Because

 

5:03  
the guy that was the CFO there, I recognized, he was brilliant. I thought, Man, I can learn from this guy. And so that first position I took was, it wasn't necessarily about the money, but it was about what I could do for myself. And I think a lot of times when you're starting out in any business or whatever, you're starting out, and

 

5:24  
I think a lot of times we get caught up in how much money can we make, what can we do? And I think a lot of times, the trick is, when you start out, figure out who you can learn from, that's, that's where you can, those that have tried that path before can help you avoid some of the mistakes. And and so that's where I left then I went to this, this little company that was a Yellow Page company, and, and this was in 2003. So the internet's around how many people read

 

6:00  
Look at phone books anymore. And I was I thought, gosh, this is

 

6:06  
Is there much I could learn there. I got in and it was a total mess was a total mess. But what had happened is these prior two positions that I had worked with,

 

6:18  
put me in a position where I could add value and I jumped in. We basically went in and restructured reorganize the business and looked at it differently and started cutting out everything that was bad. And started looking at everything that we were doing. That was incredible. And we built this business up and every year we were there, we increased sales. We were just growing it. And so finally in 2007, a private equity firm. And if you can believe this in 2007, a private equity firm paid a nine figure deal for a Yellow Page company and bought us out. And the guy that I went in business with is a serial entrepreneur and he's one of the mentors

 

7:00  
In my life, he is one of the guys that pulled me over to the other end of the scale. And he said, okay, we've done this, let's go build some businesses. Let's go do this. And so

 

7:13  
that's how we got started at Blue Diamond. And that's where we are today. So today, Blue Diamond, we manage about 500 million in assets. It's a lot of different areas. And you can see, here's the founders, Mark and Debbie

 

7:29  
and their family I've worked with them the last 14 years and, and we've done some incredible things together and and at the very end, I'm going to talk a little bit about them and some of the some of the things I've learned from them. But here it everybody always talks and you think okay,

 

7:47  
everybody's an overnight success. I don't know how many of you are from the valley but qual tricks just got paid $8 billion. everybody's like, weren't they just started, like, two three years ago. I mean, where did that come from?

 

8:00  
But nobody knows the story of what it took to get there. And I think a lot of you are probably living that same story. You're starting out small you're building. And you may be questioning why is this not an overnight success? Well, life is not an overnight success.

 

8:19  
Nobody had heard about this phone directories company really until 2007. And then it was like, wow, where did they come from? Well, he started at 1971. And it took him nearly 40 years to build this up. And that was his business for 40 years. This is the business today. And this is you know, this is a small piece of it. Today we were the sixth largest commercial builder in Utah. We have over 30 hotels for major brands. We have 2300 multifamily units. We have 76 total entities

 

8:57  
retail convenience store

 

9:00  
Industrial, we're in 10 States and Western Canada. And so,

 

9:06  
and all of this real estate is stuff that kind of built up over time. And if you look at it, you'll notice 2008 is when we started in the real estate. And actually, and I'll talk a little bit, we actually started in a three or four, but in a smaller scale, some of the worst years to start so you can make money, even in tough times.

 

9:29  
So, I call this my I love looking at pictures of real estate, some people call this

 

9:39  
these are pictures of our projects. So this is this is a hotel in Anchorage that's under construction.

9:47  
This hotel, survived a seven plus earthquake. That just happened. And just last week, I got a text and a news story. Hotel master

 

10:00  
Blaze Anchorage, Alaska. My immediate thought was, Oh, no. Luckily it was not ours, unfortunately for them, but luckily, so so we've survived some things with this hotel. This is a state bridge down in Phoenix, Arizona.

 

10:18  
This is an apartment project here in Murray.

 

10:23  
This is a Park City hotel that we've got. And then if any of you look just over the horizon, you'll notice the Zions Bank building. So these are just some of the projects that we've got that just wanted to give you an example. So this is this is, again who we are and in I want to talk about the topic is building through partnerships. And none of what we've done

 

10:53  
has been stuff that we've done on our own. I we've not done a single deal in the last

 

11:00  
Seven or eight years without partners. We've had partners on every single deal.

 

11:06  
And there's a reason why.

 

11:10  
And that's, that's really what I want to talk about is is the value of partners so you can see

 

11:17  
who we've worked with. Now, before we talk about partners, I'm going to how many of you have heard about our opportunity zones?

 

11:26  
Okay, so, Steve told me, I could put a little plug in for one of the things we're working on. So here's my five minute commercial. I'm going to talk a little bit about opportunities zones. If you've not heard about opportunities zones, I would encourage you to go do some research.

 

11:46  
So this was tax legislation that was created December 22 2017.

 

11:51  
newest tax legislation. And it was this this opportunity zone piece of the legislation. Most people know there's this time

 

12:00  
tax cut. And there's these credits for businesses. But a segment of it is opportunity zones. And it was almost like the real estate industry drafted this whole code section and said, this is what we're going to do. And it doesn't necessarily apply just opportunity zones. It applies to real estate applies to businesses.

 

12:23  
But it's an incredible opportunity. So there's the code section. Just if you Google for one for O, O z, if you're

 

12:33  
if you like to read something and put your sleep at night, that's the tax code. I'm a CPA. So these are the things that I write read for excitement.

 

12:42  
Each state so in an opportunity zone, basically there's some favorable tax treatment. And what you're allowed to do in an opportunity zone is you are allowed to take a game that you've recognized

 

13:00  
And you can invest it in something in an opportunity zone. If you invest in a project and opportunity zone, you defer having to pay that tax on that game.

 

13:12  
And you can defer it for up to 10 years.

 

13:17  
And

 

13:19  
if you hold it for five years, you only have to pay taxes on 90% of the game. If you hold it for seven years, you'll have to pay taxes on 85% of the game.

 

13:30  
Now, you say okay, that's great, but I got 1031 pounds if I do a 1031 I never have to pay taxes. If I continue to hold those. You're right.

 

13:40  
difference between a 1031 and opportunity zone. In an opportunity zone. You only have to invest your game in the new project. Your basis goes in your pocket and you can do whatever with it.

 

13:55  
reason they did that was they knew people would have to pay taxes at some point.

 

14:00  
So they said, How are we going to give them money to pay taxes? Well, if we give them their basis back then they can pay taxes out of that. But it's a 1031. If you sell something at 1031, you have to replace 100% of it.

 

14:15  
So, each state one of the things, as you look at opportunities zones to understand is each state was basically the governor of the state said,

 

14:25  
they were given the ability to go in and designate qualified opportunities zones, the states that were run better, the governor's really put a lot of thought into this. They they named, they designated better opportunities zones, the opportunity zones had to meet certain criteria. But some of the governor's went in and said, Okay, this meets this criteria,

 

14:53  
but it's close to getting developed, whereas other people just names these

 

15:00  
These poor low income areas and just say, okay, that's an opportunity. So well, some of these zones doesn't matter the tax benefit. They're not going to get redeveloped anytime soon. And so on a state by state basis, there's there is different quality of opportunities zones, there better opportunities zones, and there's

 

15:21  
less qualified opportunity or opportunity zones that aren't as good an opportunity. Now, it isn't just real estate, you can go and do a business. So for an example, a grocery store, if you go put a grocery store, if there's an empty bill, you put a grocery store and an opportunity zone. It's a business it's not real estate, you can qualify and there's a benefit.

 

15:43  
But again, the legislation was really slanted towards real estate.

 

15:48  
Some are better than others. And one of the things to note

 

15:53  
values in most of these areas that are opportunities zones, people are ready this is known

 

16:00  
But the values have already increased. So if you own property and opportunity zone and you didn't know about this,

 

16:08  
guess what, you just got a bonus potentially?

 

16:12  
If you look at investing in opportunity zone,

 

16:15  
you're going to have to go through and say, Does this make sense? Because some of these values have already increased. And you can't and the economics even with the tax break may not make sense. Now, I didn't share with you the biggest benefit of the opportunity. So the biggest benefit is the deferrals nice and recognize and part of the game not having to recognize part of the gains nice. But if you hold that replacement investment, so let's say we, we took a million dollars, we put it in an opportunity opportunity zone.

 

16:49  
And to qualify, you've got to double your money up. So you've got to do something that improves that area. So now you had to put another million plus one. So now we're in at 2 million in $1.

 

17:00  
If that

 

17:04  
if that product that you now have $2 million in if you sell it for $5 million after 10 years

 

17:12  
no tax

 

17:14  
no tax on that new investment. And so

 

17:21  
here's where some of the opportunities zones are throughout the US.

 

17:26  
And you know, here's here's a graph and and if you google this, this is on CNBC just kind of shows the value creation after 10 years, just by being an opportunity zone. And this assumes $100 so so there's there's some real opportunity there. Now if you want to if you want

more information, okay, this is this the sales pitch, we are doing an opportunity zone fun.

 

17:54  
Rachel or Jamison can give you more information. And if you don't necessarily view

 

18:00  
Want to just educate yourself? We've set up a website, right here, opportunities zones, one on one. There's a lot of websites out there. But if you if you go and look at that website, we will we have a lot of information that websites educational, it's not a sales pitch, you can put your information at the bottom if you want more information, but that allow you to educate yourself on an opportunity. So if you are a real estate investor, you should know this. Okay.

 

18:30  
And

 

18:32  
I may take some q&a if I run out if I get done fast enough, we can talk a little more about this. So I want to talk about partnerships and and kind of the core of my presentation. So most most of you probably are familiar with this partnerships, LLC fees and LLC fees from a tax code are treated like partnerships. It's the most popular entity it gives

 

19:00  
There's so much freedom. So

 

19:03  
they're tax like a partnership. They have limited liability like a corporation. And

 

19:11  
you've have flexibility to move assets. So we love having these because we can move assets around without creating tax. So you can bring additional investors in, you can create a subsidiary, move the asset down, bring other investors in, they get it, you get some of the appreciation, but there it's a real advantage. And, and so this isn't, this is an aspect of what I'm talking about. But this isn't a core of what I want to talk about. But I wanted to cover this just being a CPA, so and then I love the flexibility to adjust economics. So you can use these a lot of times in, in estate planning your family planning. So let's say you want to pass some income or some assets or cash flow on to other generations. What do you do create an LLC

 

20:01  
Create a partner's profits interest, and then LLC and you and you can give it to family members. And then they get a portion of the of the profit that gets generated from that. And it allows you that they'll be taxed on it, but it allows you to be able to kind of move assets.

 

20:20  
And somebody's going to pay the gain on it, right? It's either going to be you, but if you want to pass it on to the next generation, you give them a Prophet's interest that passes the gain on to them. They pay the tax, but now it's out of your estate. So there's a lot of flexibility. And you can do preferred returns, priority returns, that kind of stuff. So, so that's the CPA side. Now I want to talk about

 

20:47  
the value of partnerships. And

 

20:52  
so, and I'm going to talk about some experiences that I've had over the last 10 years and

 

21:00  
I think the first thing when you do when you enter any kind of partnership is to know who you are, know what you bring to the table. Okay? And in that partnership with Mark, Mark was he is a serial entrepreneur. He's a driver. he's a he's a pusher. I'm very detailed, I'm analytical, turned out to be a great partnership, because he's always pushing and always the brakes. And have you thought about this? What about this? Let's get the details done. Let's do this. And it was something that I recognized within myself. It was like, Okay, this is who I am.

 

21:40  
And here are my problems. Here's my strengths, here's my weaknesses. So what I would encourage you is to do a self assessment

 

21:48  
and say, okay, where are my strengths? What can I do? What do I know how to do?

 

21:55  
And what are my weaknesses and how can I find

 

22:00  
Somebody else that can compliment me. And that has been the key to our success. And that's why we enter partnerships is because we find people that can add value.

 

22:13  
And we add value to them, they add value to us, and we build this together.

 

22:20  
Okay, now there's some keys to this, you've got to know you've got to know yourself. So how do you do that? A self assessment. The other thing I would encourage you to do, how many of you have mentors?

 

22:32  
raise hands, okay.

 

22:34  
If you don't have mentors, find mentors.

 

22:38  
And a true mentor is somebody that cares about you and cares about the outcome.

 

22:45  
There's somebody willing to give you advice

 

22:49  
and be brutal

 

22:52  
because they care about you and they want your best outcome and those people a lot of times are hard to find. But they're in the

 

23:00  
valuable. So you've got to find those mentors. And and I will tell you, if you find those in business, it'll jump you two steps ahead. And one of the things I've found in life is that people are good natured, they want to help others. And if you go out and you seek, you'll find these people that will help you in your life and they will be mentors and they will allow you to get further than you then you could on your own. So

 

23:29  
self assessment, learn from others. Okay.

 

23:35  
Chief want in life is somebody who will make us do what we can. So again, this is this is talking about mentors. And then I for years and years, I was preparing this yesterday and I always thought this was Jim Rome. Does anybody know who Jim Rome is? So I would always quote Jim Rome. I'm like, I'm not sure why he said that on the radio. He's just a sports guy, but I agree with you. So I lift up the quote to

make sure I

 

24:00  
had it right. And it's Jim Rome. So he's not on the radio, but still a good guy. But he said, We are the average of the five people we spend the most time with. So again, thinking about those mentors, who if if somebody can add something to us into our life, we should interact with them. Because we naturally will gravitate towards those we spend time with and to, towards those that we interact with. And so learning from others is critical.

 

24:34  
So I want to tell you about an example. So I'm going to get into war stories because I know everybody loves stories. So in 2009, when the whole world's crashing down and everything's horrible,

 

24:48  
a guy called me up and he said, hey, I've got this 10 acre property.

 

24:54  
It's an old Walmart. The car business is horrible. I'm a car dealer. I'd buy

 

25:00  
This Walmart, and I'm running used cars out of a car business. I'm old and worn out. I hate this. And so it was this 10 acre site.

 

25:11  
And it had this 75,000 square foot building on it. There was the old Walmart, tons of parking. I mean, you just look at that just tons of parking. And he started at $4 million. And, like, I have no idea what to do with this.

 

25:28  
I don't know what I can do with this. And so I just, Dave, I'm not interested. And he just kept dropping the price finally got the price down $2.7 million.

 

25:40  
And I'm sitting there thinking, Okay, that's $40 a square foot.

 

25:45  
I know I can build it for that. But I don't know what to do with it.

 

25:50  
So I thought, it's an opportunity. We got to do it. We got to buy it. So of course marks like, buy it. We gotta buy this. We want this. Let's

do it.

 

26:01  
And so I had had a meeting and here's the building. I mean, you can see kind of ugly and this is this is actually after we started some renovation but it was nothing special the parking lot you look at it had a fair amount of cracks, potholes, it nothing, nothing pretty look

at. And I remember I met with this guy right here. And he

 

26:25  
he was pitching a retail center to me. And he was saying, hey, I've got this deal. This is an Alpine Utah Harman's is going to go there. This is going to go there. We're gonna put banks. And I remember looking at I think, yeah, I just don't know. I just don't know. But the thing that I was so impressed is he knew his stuff.

 

26:47  
He knew who would fit there. He knew why they wanted to be there. He knew how much space. I mean, he just knew his stuff. And of course, he's a developer. So you know in 2009 he didn't have

 

27:00  
A lot to do. But he's he's out there work and trying to build something. And I was like, man, he really knows what he's what he's doing and and I met his two sidekicks. And at this point, his company is like, 10 people. And he's just trying to figure out enough work to even pay those 10 people. So he can I call them back up and I said, Hey, Cameron,

 

27:27  
you talked to me, you met me. I don't know if you remember me. But there's this deal. I don't know what to do with. And he said, Let's go look at it. And so we went and walk the site. And

 

27:41  
we're walking on the roofs. I'm up there literally checking hv AC units, just to make sure I know which ones work, which ones don't. And he walks over to me says, Okay, here's the deal. This is what we're going to do. We're going to do this. We're going to do this.

 

27:55  
We're going to sell this space. We're going to build out new space.

 

28:00  
Here, and and we're going to fill this up. So we paid 2.7 for it. Within six months,

 

28:09  
we had sold this space right here, the cow rants for $2.5 million.

 

28:15  
And we were in everything else $200,000.

 

28:19  
And we still hold this asset today, we built it from 75,000 square feet to 110,000 square feet. And we've turned over one tenant.

 

28:33  
And we've received

 

28:36  
multiples of our money out of it. But the trick to this deal was the fact that I had these guys here, who had done it before, who knew what they were doing, and came in and gave us really good advice on how to do it. And so

 

28:56  
whenever you're doing stuff in real estate,

 

28:59  
find people

 

29:00  
would have done it before you and in the same in the same token, those who are following behind help them because you never know when they're going to be that person helping you. Okay?

 

29:13  
So that's four story one there's a picture

 

29:19  
great asset. Okay, learn from your mistakes. So

 

29:25  
not everything is going to go right. If if you're a real estate investor, long term, you're going to have something go wrong and and we've had plenty go wrong. I have a good friend sitting here on the front. He runs nine car dealerships. We own a car dealership that I absolutely hate. We're just getting killed and I'm like clean out do we do this? So we didn't we on that one. I didn't reach out to him early enough, but you're going to make mistakes. And I'm going to tell you about one of them. So we either park so this is this was one of our first real estate deals.

 

30:00  
So this is it. We bought this in 2006 this was in Heber City, Utah, and a group came to us and brought this deal and it was it was farmland. And it was going to be developed out for 238 lots. And the, the the pitch back then when we were early on, it was an emotional sale. So the guy that that brought the deal into us, and he eventually became a partner on it came in and was just like, you know, this is going to be incredible he was blowing up is one of the fastest growing communities. And you know, we were going to be rich. So we went into we did this first face. So we bought the entire project for $8 million.

 

30:51  
Then we put three to 4 million in improvements here. Us debt, everything. got it done.

 

30:58  
finished it

 

31:00  
within six weeks, we had sold out phase 1.8. In the original purchase for and the improvement sold out phase one for 10 million bucks. So we had 10 million and

 

31:11  
I thought, whoa, yeah, we're going to make a ton of money. So here's phase two and three. So what do you do when you just sold 91? Lots in six weeks? Will course you build 138 of them? Why not? Let's go double down. So we took out another loan for $4 million. So we're into the 6 million bucks and we're thinking this is going to be incredible. And Richmond America who bought out some of the first lots gave us this Li

 

31:43  
and you're sitting there going on? We Yes, we are so smart. We've just scored. We've won. And they gave us this Li for $24 million. Of course we're

 

31:57  
fairly inexperienced in building lots that Point.

 

32:01  
How many of you how binding is an ally?

 

32:05  
Yeah, it's not very binding. So we go do the improvements. We finished the improvements in May of 2008.

 

32:14  
What do you think Richmond America was?

 

32:18  
Hello, is that Richard America? Hello, nobody's returning my phone calls and awesome. We got these lots. And, you know, if I had done a little bit of math again,

 

32:30  
here's the number and this is hindsight. But if I done this math, this data was all available. Heber city 5000 total units 10 years before 3000. You just do the math 181 units a year. Well, how many of you guys know any city in in anywhere that sells all of the units in their own town? It doesn't happen. You have four or five or six or seven competitors in any community. We've done the simple math. We obviously wouldn't

 

33:00  
have done phase two. So we made a huge mistake. And then to compound it, the FDIC takes over the bank has our loan. And now I'm dealing with the FDIC. And they're like, yeah, we want our money.

 

33:16  
I'm okay. I'm not sure where your money where to get your money. We have lots. What I don't know what to do here. And, and so this was a huge mistake we had made. And here's another truth that I've learned in every mistake there is.

 

33:37  
There's an opportunity on the other side.

 

33:40  
In everything that goes wrong. There's something to learn, and there's something to be gained. So what happens? Well, I had known this guy right here. Gordy Jones.

 

33:55  
Gordy was a home builder.

 

33:58  
They had built townhomes and cedar

 

34:00  
hills, they had had a landslide come down, knock out their townhomes essentially shut down their home building business.

 

34:10  
They started a new home building company. They had some mentors that have been home building for years. Those guys come to them and they say, and this is 2006. It's going to get ugly, it's going to get bad. Get out, get out, get out. So they immediately started selling everything. And they didn't get rid of everything. But they sold a lot. And then Gordy is the way Gordy tells me the story he said for the next two years, I was curled up by my desk in the fetal position just rocking. And, and and so I knew Gordy during that time period.

 

34:48  
And

 

34:50  
one of the things we figured out was we couldn't sell lots. We couldn't give away lots.

 

34:57  
But there were people who still want on homes.

 

35:00  
If you could build a home cheap enough,

 

35:03  
you could still sell homes. You could still sell homes.

 

35:08  
And so we formed a partnership. We started a new entity called edge homes. Edge sold two homes in 2009.

 

35:19  
Two homes november of 2009 we just squeaked them in.

 

35:25  
In 2010 we sold 103 homes 2011 we sold 193 homes 2012. We sold 335 homes, and it just exploded because we were willing to

actually get out of the fetal position and go and build homes. Didn't make a ton of money.

 

35:48  
You know, we we were scraping by. But we built this brand where people all sudden said, hey, these guys are building homes. They're doing a pretty good job cost wise. It's great.

 

36:01  
We started building beautiful communities like this. And last year, edge became the number one home builder in the state of Utah. And it started with two homes. And so and it started with a mistake that we made that we thought was fatal.

 

36:20  
But we just kept scrapping and and we turned it around. So learn from your mistakes.

 

36:29  
Okay?

 

36:31  
This The other thing I would say is Believe in yourself. All three of these names on this list are people that I have a ton of respect for people, I've done business with people I respect. All three of these people have said this very thing to me.

 

36:47  
top one, when we were dealing with the Yellow Page company, one of the private equity firms came to me and because the books were such a mess when I inherited it

 

37:00  
They let go of the CFO. And I'm sitting here as the controller and I'm thinking, Okay, here's an opportunity. I went through, created a budget, send it over to him and I said, I'm, I'm in the running. I want to this is my job. Let me take this job. And the the private equity guy called me back says, Hey, Mike, we love you. We love what you're doing. You're great in everything. You're not a CFO. You're just not a CFO, believe me. We work with a lot of companies. You're not a CFO. And it was like, oh, here I am. This is my career path. And somebody tells me

 

37:37  
that isn't you

 

37:41  
know, the guy I really respect. So while I was at Liberty Safe.

 

37:47  
The guy worked for and I learned a ton from was Gary Bochy. The company went through

 

37:55  
the.com recession and because they're making

 

38:00  
Gun safes, it's really discretionary product, obviously sales drop off. And so we have to go through three or four or five rounds of restructuring. Not very fun. I mean, it's tough. And Gary sees the writing on the wall, and he goes and finds another position. So again, I throw my hat in the ring, hey,

 

38:24  
and they come back to me and they said, you know, the board.

 

38:29  
They didn't they were frustrated with Gary and they just see you as Gary Jr. So

 

38:35  
we're not gonna, we're not going to give you that opportunity. And then current guy, I'm work with Mark being. If he calls you an entrepreneur, that is the best thing he can call you. That is like him saying, You are the pinnacle. And he reminds me all the time. I'm not an entrepreneur.

 

38:56  
And everything all these guys said there's an element of

 

39:00  
truth in it.

 

39:02  
But guess what,

 

39:05  
that doesn't prevent me from using my talents, my skills, and what I have and what I can do to grow and build and develop. So you're going to have a lot of people who are going to be naysayers about whatever you're doing.

 

39:19  
Take the what they say, take the element of feedback and work on it, but then use this as a motivation to go and show them and build on it.

 

39:30  
Okay.

 

39:34  
I believe we've always got to have a partnership with a higher power. I believe that if we put our hand our life in the hand of God,

 

39:44  
He will take us where we need to go.

 

39:47  
And he'll put us in a path that will make us better.

 

39:50  
And so I'd encourage you to partner

 

39:53  
with whoever is your God

 

39:56  
and rely on a higher power

 

39:59  
because

 

40:00  
It'll make you a better person. And then it'll give you better more purpose in what you do. So partner with a higher power

 

40:10  
and then allow others to help. Now we've done all of the things that I've talked about, but it's truly a week. It's not me.

 

40:20  
It's not mark.

 

40:23  
It's, it's the team.

 

40:26  
And what you have to recognize is that you need others to build this.

 

40:34  
Whether it be your spouse, whether it be the people you employ, whether it be your legal partners.

 

40:43  
You can't do this on your own. You've got to build with others, and you need to recognize that and you need to give them credit and you need to share in the gain and in the opportunity. So don't ever forget that there is no

 

41:00  
Nobody

 

41:01  
that has been successful out without relying on others and you may not call them partners, you may call them employees you may call them whatever. But nobody is successful alone.

 

41:14  
Okay.

 

41:17  
One of the things I really believe in is building a brand.

 

41:23  
And I always carry around with me $2 bills

 

41:28  
and

 

41:30  
two bought $2 bills. These are always in my wallet. I have somebody my desk and they signify something different to me. Okay. Everywhere you go, you can get these right. Every cash register every wallet. Well, what's unique about a $2 bill, these are unique. You can you get them yeah, you can get them. You have to ask for their double the value and they're extremely were so they add value when they're in your pocket.

 

42:00  
So that's kind of a symbolism for me.

 

42:04  
We are building value for others. And that is the key to success. When you think about it, when you think about the fig process, what is the value, we're building homes, you're building housing for people, you're building a value there for somebody else. It's the same with any other business. And when you build value for others, when you stop focusing on what's going in your pocket, and start focusing on what you're adding to other people, that's when there's there's true synergy and that's when there's true value creation. And, to me, the $2 bill kind of symbolizes that because when you build value for others, when you double what they get what you give them double what they give you, you create value for yourself. And and this is a piece of advice I would give you on when you choose partners.

 

42:58  
If your partner doesn't

 

43:00  
recognize the value in you.

 

43:02  
Maybe you need to think about and reconsider that partner. But if you add value all the time, and you're dealing with the right people, they'll recognize that and they will build value for you over time.

 

43:15  
And I and I look at my life. And I'm, I believe I'm evidence of that, because I'm just a farm boy from northern Utah, that has had success because I always looked at, how can I help them? How can I help them? How can I help them and that has come back to me.

 

43:35  
You're not merely here to make a living. You were here in order to enable the world to live more amply, with greater vision, with fire spirit of hope and achievement. You are here to enrich the world and you impoverish yourself. We forget that Aaron, what I would encourage you to do is have a higher purpose. One of the things that I totally respect with about mark and Debbie is that Davis

 

44:00  
to higher purpose, everything they build everything they make,

 

44:05  
goes to charity goes to foundation.

 

44:08  

Mark, I've known him and I've seen him through all these these deals his wealth has has just blown. But he hasn't changed who he is. Because his value was I've got to give back. And he identified three areas he gives back education, healthcare, wildlife conservation, every dollar we make, goes into those causes. And so when you have a higher purpose, a higher

 

44:35  
value that you're adding back to it makes what you're doing. purposeful, meaningful and, and, and it and it rallies the team around that purpose. Everybody wants to give back. Everybody wants to be build something bigger than themselves.

 

44:51  

I'm going to end with that quote.

 

44:54  
Well, I'm not going to end with that quote, but there's the quote, I love it. Teddy Roosevelt, look it up. You're always going to have critics who tell you

 

45:00  
Can't be successful. Stay in the arena and then remember why you're doing it. This is my family. And this is why I do it

 

45:10  
is

 

45:12  
to build a better life and a better opportunity for them and

 

45:18  
identify your higher purpose. So, thank you

– Fourplex Investment Group –

IREI SUMMIT 2019