Hey, now welcome to another edition of the inside BS show. My name is Dave Lorenzo, and today we're talking about raising money. We're talking about capital and we're talking about private equity.

You wondered about private equity. I get questions about it all the time. I've got just the guy to help us understand that my guest today is Brett Hickey.

He's the founder and CEO of star mountain capital. He's based in New York city, and he's going to help us understand private equity. He's going to tell us about his background and how he got into private equity, and he's going to give us the inside BS on raising money, whether you should go to private equity or not go to private equity, how you should do it, what people in private equity want to hear from someone who's got the next big thing.

Please join me in welcoming Brett Hickey to the inside BS show. Brett, thanks for joining us today. I really appreciate you being here.

Pleasure, Dave. All right. So the first thing we got to talk about is unrelated to business at all.

I got to hear about the, the intensity of being a competitive speed skater. Now you weren't just competitive, you were really good. You were part of the Canadian national team.

If I have that right, tell me, tell me about the intensity involved in preparing and competing at that level. It's gotta be all consuming. Yeah, it was, uh, during college I was on the Canadian national training team and prior to that was a gold medalist in, in speed skating and had set a national record as well.

I guess as I look at business and being a founder of a business in particular, I think the grit and the tenacity that one needs to be successful on average, I say on average because some people you see out there get strike, get struck by lightning and get lucky. But if you look at the probability weighted averages, most people that have built great success have had a lot of challenges on the way and therefore you need grit, you need tenacity, you've got to be willing to push through and figure out ways to accomplish your solutions. Especially if you have something that is quasi innovative, that means that you have to educate people into new businesses, new situations, that's naturally going to have more headwinds.

And so while speed skating may not seem like a direct correlation to running a private investment firm on wall street, as I reflect and think about my own children, I think that grit and the work ethic in fact is quite a critical ingredient. Now I'm fascinated by what it takes to be at the, at the top of, at the, at the absolute pinnacle of someone's game, whatever their field is. Whether they're the number one basket weaver on earth or, you know, they, they run an investment firm or, you know, they're a champion speed skater.

Explain to people, and then we'll translate this to business, explain to people what the practice regimen is like to be an elite athlete, right? To be a gold medal athlete. Explain the practice regimen because most regular people, you know, we turn on sports on TV and we just see people competing at a championship level. And I think a lot of people take that for granted.

Explain what a training regimen looks like to get to that level in any sport. Yeah, it's a, it's a great question, Dave. It's pretty intense and requires a lot of focus.

And I guess you could say sacrifice and why I don't definitively say sacrifice is because I think to be an elite athlete, you have to have passion and drive. And therefore, I didn't really feel like I was sacrificing things. Now you do need to be willing to make cognizant trade-offs as far as training, focus, how you live the rest of your life that needs to be consistent with your mental and physical goals and wellbeing to avoid injury, to stay driving hard, especially if you're going to be competing, you know, at an intense level and training year round.

And so in general, I think the key is really creating a highly structured life and environment. For example, I worked on the oil drilling rigs for a year to pay for college and then have the objective of going to the Olympics while also going to college because I knew in speed was going to be a substantial career coming out the other side. And during that time, I tried to make my life as condensed as possible, which is sort of interesting in a parallel to today in a, I hope it's a post COVID world, but in the world we've all just gone through for the past couple of years, for those of us that have been fortunate enough to create a very condensed yet highly functional environment, it's awesome.

And I had the same thing in college where my life was very tight living in Calgary, where they had the Olympic training team post the 1988 Olympics, you know, I had my college, my work, I had to still do some part-time weekend bartending and things like that. And your training where you train twice a day on average long training sessions in the weekend, but it was fun, especially in Calgary, in the Rocky mountains, your off season training, you know, going for bike rides in the mountains, it was awesome. Yes, you're going for four or five, six hour rides, which sounds like a lot.

But again, if you have passion and you love it, I think that's really the key to, you know, business and sports is finding things you're very passionate about and driven. And then it's not so much work. It's just about balancing all of your objectives together, which I would say having a family of three kids and whatnot now, that's actually a lot harder than when you're just able to be a very selfish athlete in the sense that you don't have other people, at least in my case, I didn't have other people I needed to look after.

Yeah, no, no, I certainly appreciate that. And you know, you're 100% right, being a dad is the toughest job you're ever going to have. Tell me a little bit about the intensity and how you have to kind of modulate your intensity around other people that you work with, because you don't work with, I mean, maybe you do, but I don't think you work with other championship caliber folks, right? Athletes.

So you have a different gear, you're wired differently than probably most of the people you're going to come into contact with in business. How do you take the best of that and use it without like burning these people out, without absolutely killing them, because they don't have that gear. They can't go to that level.

How do you handle that? It's an interesting question and observation, Dave, and I'll give it a few pronged approach, and they all somewhat interlate, but are yet very different. So first off, in the industry that I'm in within private equity, thankfully, this industry attracts a lot of very driven, very intense, very intelligent, capable people. And so I'm fortunate to have business partners and colleagues that are for the most part, very driven, quite high intense people, probably not quite as intense on average as I am, and certainly not every single one.

So you can't treat everybody the same way. And what I've learned, some by trial and error the hard way, and some by listening and studying and others by learning, because I started my first private investment firm when I was 25 years old, and I left Solace with Barney, and I'm 43 now. So over that period of time, I've learned a lot.

And in my early days, Dave, I was not good at harnessing it. That's the honest reality. Everything was full throttle.

I wasn't married then. I didn't have kids working 12 to 15 hours a day. No problem.

Get after it. People can't handle it. They're weak.

And that's just the mentality and attitude that I sort of had and drove forward with. And what you find is that you break a lot of glass, and it's not ultimately constructive. And so upon reflection, that's something I've always tried to do in life is reflect and learn, partially because I came into the world of finance from a small town in northwestern Canada, and oil rigs and speed skating wasn't directly correlated to my learning in Wall Street.

And therefore, I've always been trying to understand this world, the world I'm in, the world I'm looking at, and reflect and evaluate. And so over time, I did a few things with that, Dave. One, I found professional organizations, including the Young Presidents Organization, or YPO, which I joined about 14 years ago, a program where I got to live on campus with about 150 CEOs from around the world at Harvard Business School.

They did over three consecutive modules, split over three years from 2009 to 2011, where we were working on our businesses, talking about our businesses, and being very open and honest with one another about challenges we were facing, deficiencies we felt we had. And so part of that is I did a lot of leadership learning and training. So having a business finance and accounting undergraduate degree, working in investment bank and working in private equity, very good at numbers, very good at analytics, but I never really had any management training.

And so I said, I need that. That's something that will benefit me, let me get into an environment where I can focus on that with other CEOs, where we're focused on leadership, we're focused on being honest and transparent with one another with our challenges. And that really reshaped how I looked at life and how I looked at my role and how to try to best optimize value, which I'm not perfect at still by any means, but I think I've gotten a lot better at and I'm continually working on evolving and really being the best that I can.

And part of that is being very situationally aware, aware of who you're working with, how you're dealing with people. For example, I used to be very quick and very short with people because I didn't have a lot of time. I didn't feel that I was being rude.

That wasn't my intent, but as you can imagine, it can come across that way. So that's something you have to balance. So how do you deal with that? A lot of it is I don't answer calls directly.

I have other people assist with a lot of follow up and I've created a great support system, which I'm incredibly grateful for and thankful for, that helps me operate and manage so that I get to spend my time in a best and highest use, generally also with very high octane driven people, which is very satisfying to me. And I have a great team that helps support the other functions. But I also really had to get rid of the other things in my life that would create stress, dealing with little minutiae things that can consume a lot of time, negatively impact your energy.

I've always been a big feeler around energy. My wife says I'm sensitive that way. So that's fine.

I guess I'm okay being sensitive, but I like positive energy. I like enthusiasm. I like drive.

I like figuring out how do we get this done, not giving you all the excuses and reasons we can't get it done. But let's figure out how we can get it done. If it's a good plan and it makes sense, let's start talking about solutions and ways to overcome obstacles.

So I think that awareness, the training and the structuring, the life is really probably the three pillars, Dave, of how I've tried to learn to harness my energy. I'll give you one last funny little maybe example for you, just for your listeners here is something more intimate. So Monday morning staff meetings for a very intense driven person, those can be frustrating.

I'm like, let's get after it. Hop on, be ready to talk what you're going to talk about, what you're going to talk about, cut to the chase, don't have a lot of, um, ah, you know, so all that filler language, which given your industry, you know that better than anybody and bring that, you know, that intensity would make it frustrating for me, for myself, right? Nobody else's fault, but for my own. So instead of blaming other people, I said, well, what can I do different? How can I change? How can I adapt? So every Monday morning I do yoga.

I have an instructor come over and that helps base me and get me ready. Sometimes I do triathlons and sometimes I'll actually be on my trainer in my basement gym, you know, listening to and watching on our big screen going through all our content. And I find that's also relaxing for me because I'm exercising, not highly intense, just aerobic sitting on the bike, but I'm watching, I'm focused.

I'm not distracted by other things. And I find by doing that I'm less agitated because now I feel like I'm kind of accomplishing two things at once. And I found that actually be more productive than if somebody wasn't getting right to the point quickly.

I'd find myself wanting to multitask and then I'm not focused and that's not good. So it's a bit trial and error, but you try things, you figure out what works. And those have been some things lately that have really helped me a lot.

I think be more effective in learning to manage my own energy and control that. All right. Great explanation.

Now let's talk about, let's take it, let's fast forward through your career, past your time working for other people into founding your own firm, right? How does that, everything that you just described, that level of intensity, the drive to be the best, how does that have an impact on how you kind of captain your ship now? How you decide what you're going to invest your, first your time in doing your diligence to make sure that, you know, these investments are good ones for you. And then how you select what you and your firm are going to get behind. How does that, you know, the way that you've been, the way that you've developed and the way that you've mentored yourself over the years, how does that have an impact as to the decisions you make for yourself, for your, you know, your partners, the investors and the businesses that you work with? It's a great question, Dave.

I come at it from a few different angles and it relates partially back to coming into the world of investing unbiased, very naive, unknowledgeable and unbiased. And so not thinking I knew everything about anything, my whole focus has always been, let me research it, let me try to figure it out, then let me tackle it. And it's actually interesting.

While I run often, I listen to podcasts and a couple of the ones recently, one was Steve Schwartzman, the founder of Blackstones audio book. And then also Ray Dalio, who had founded or who founded Bridgewater and listening to their journeys. And I've always enjoyed listening to and meeting and getting to know other CEOs in any different ways that I can.

And it's interesting listening to them because a little bit similar in how Ray Dalio approaches things, very data-driven decisions. And same with Steve Schwartzman, both of those gentlemen have set tremendous goals and built tremendous businesses. And they start really with a business plan and then work their way backwards and evaluate and make sure, at least in my interpretation of it, is making sure that they've got a great plan before they head into execution mode.

And one of the things that I find a lot of people often do is they feel like they're shortcutting things by just starting to execute and get after things really quickly without really doing as much research perhaps up front as they should. Figure it out, research it. Is this a good plan? Is this a good strategy? If so, what's the right team? What's the right structure? How to build and manage that.

So for example, at Star Mountain Capital, there's certain industries we just don't invest in because they're more volatile industries. They're hard to get right. We put risk into two categories.

Risks we think we can do something about if the risk or risks occur and then risks that we don't think we can do anything about such as changing the price of oil and gas, as may be topical in today's volatile environment. If I was biased, and this is how a lot of people are, I could say, well, I've worked on the oil drilling rigs for a year. I have relationships.

I grew up in an oil-heavy and energy-heavy environment in northwestern Canada. I have other relationships I can draw upon. But when you look at the data, you find a lot of volatility.

I'm not suggesting you can't make money in that sector. It just means you have to be aware of the amount of volatility within it. And so Star Mountain's approach and my approach to somebody who's all in, financially, I have the vast majority of my net worth still to this day invested in my business and my funds.

And the focus is really trying to have the highest probability outcome possible of your desired results and the lowest probability possible of the results that you don't want. And that has really worked out well for us at Star Mountain Capital over time where we set strategy, we bring data. And then through that, we've been able to develop a team of great people, great people with industry expertise, credit investing expertise to think about the downside, private equity expertise, operating expertise to grow companies.

With the right plan, you can then develop the right team. And it may sound somewhat obvious, but I find in general that if you really do deep research and you stress test and you're open and honest with other people that you're stress testing with, and then you re-evaluate it. Because some things that made sense 10 years ago don't make sense today.

Some opportunities are stronger. We have offices in India. We have a ton of custom built technology that made a lot of sense for us when we founded Star Mountain Capital in 2010 to do.

And so I think it's always re-evaluating and having the courage and willingness to re-evaluate your business as well and how you're investing there for, and looking for other people that want to be hyper aligned, hyper focused and very data and analytically driven. Not just, yes, this generally makes sense or don't worry, I've done this a hundred times and I'll just wing it and no problem. I always like to say to people, if it's no problem, you've done it so many times, it should be very easy for you to have a nice, clear, simple blueprint that we can set goals and measure goals with.

And that's what's always given me comfort. I'm not somebody that thinks he can time the markets or be smarter than everybody else, but if you get your business plan right and get your team right and then align the interests, we share our investment interests and the profits of our investing day with a hundred percent of our employees, which is roughly 55 full-time people and 40 operating partners. And that alignment of interest, having people rowing in the same direction as our team and our investors is I think really a critical component of long-term success.

That's terrific. A hundred percent. That's impressive.

Talk a little bit about, Brett, exactly what you guys do. So there may be some people listening, some people watching who they don't understand about, I mean, they would be better if you explain to them how the oil drilling rig you worked on worked than if you tried to explain how private equity works. So do us a favor now, take a couple of minutes and explain in layman's terms exactly what it is Star Mountain Capital does.

Yeah, and I feel for everybody that the amount of jargon in this industry can be tough. So in very simple terms, Star Mountain invests money into privately owned businesses, not startups, but companies that are established and are looking to grow. We invest in businesses generally that have between approximately $20 million and $200 million of annual revenues, and they're across a broad range of industries.

What we're focused on helping these businesses do as a value-added investment partner is just like our own business, helping them think about what's their best end business plan, where do they want to get to, and then work your way backwards, both with thinking about the type and amount of capital to best suit their needs, and then the type of strategic advice, relationships, and other things that we can bring to them from our trademarked collaborative ecosystem to help drive incremental value for their business. When you boil that down, that's reasonably straightforward. Now you get into, well, what type of capital are we providing them? We at Star Mountain have come up with what we call a flexible capital solution approach, so we don't have to stuff the proverbial square peg into a round hole, right? We're able to do loans where we can lend them the money, we can do a minority equity investment where we buy a minority interest of their business so they still control their company, or we can buy controlling interest in their company.

Maybe they go from CEO to chairman and still own 30% and we buy 70%, or any hybrid thereof. So we can really sit down and get to understand them, understand what they want to do personally with their lives, and then understand the business's opportunities and try to come up with the right package and the right solution for them to grow their business. And then similarly, we do that with our investors.

When investors are saying, well, here's what they want to achieve, we say, well, based on that, here's the different type of structures that can best give you a higher cash yield or more protection or more long-term capital gains and really matching and marrying those worlds as a specialized private investment firm in what people call from a jargon perspective, the lower middle market. Hope that's helpful in breaking it down into more simplified terms, Dave. No, that's great.

That's terrific. Now, here's what I'd like you to do. I'd like you to first to think about the answer to this, but I know what's going through the minds of the people who are listening, people who are watching now, and we really need the inside BS on this.

When you found your firm, do you first come up with the big idea and then go out and find the big idea and then look for investors? Or do you go out and raise money first and then marry it up with exactly what the investor's goals are and what you and the team figure is going to provide the best return for the investors? So chicken or the egg, I want you to give us that answer in just one minute because I need to remind folks that we are brought to you by Sandrowski Corporate Advisors. So for over 35 years, Sandrowski has been helping people with business valuation, litigation support, forensic accounting, and risk management. They're not just an ordinary CPA firm.

You've heard me talk. If you listen to the show, you watch the show at all. You've heard me talk about them before.

Here's the deal with Sandrowski. One of the things I really love about what they do is they will customize their approach to tax mitigation based on you and your long-term strategy. So if you're a high net worth individual and perhaps you're liquidating a portion to your company, maybe you're selling a part of your company to Brett and you get a windfall of $100 million, let's say, you need to know what to do with that $100 million.

And I'll tell you what, it's not even going to be cold in your safe or in your vault before people are pitching investments to you. Well, Sandrowski can do this for you. They can help you set up what's called a family office.

Now, a family office is simply a business that's set up to help you manage your wealth. And one of the things a family office can do for you is they can take pitches for investments for you. And depending upon what you decide you want to invest in, they can help you put them into buckets, evaluate it based on risk, and then help you when you're ready to engage with someone like Brett to invest your money.

Sandrowski has done this for years and years. In fact, they've written a book on family office management and they can help you if you're a high net worth individual. Now, I realize we're talking to maybe the upper 1% of the upper 1% of the population.

So what can Sandrowski do for the average business owner? Well, they can mitigate your tax risk as well. Have them come in, have them take a look at your books, have them look at your corporate structure. And if you're planning on selling your business anytime in the future, at least after a five-year window, Sandrowski can potentially use what's called the Qualified Small Business Exemption to help mitigate some of the taxes that you'll pay when you get the windfall from selling your business.

Either way, whatever you're doing, if you're an entrepreneur, you're a business owner, you need to talk to them. Give them a call at 866-717-1607, 866-717-1607. Sandrowski Corporate Advisors is a CPA firm with a different perspective.

We're also brought to you by My Revenue Roadmap Guide. Listen, if you're a professional, you're a CPA, you're an attorney, you're an engineer, you're a consultant, and you wanna build your book of business, I've got a business development plan for you. Go to revenueroadmapguide.com, revenueroadmapguide.com. Enter your contact info.

You'll be able to download the same guide I use with my clients. You can customize it for your practice, for your professional services firm. It's my gift to you for listening to the show, for watching the show.

Go to revenueroadmapguide.com. Get your Revenue Roadmap Guide right now for free. We're speaking with Brett Hickey. He's the founder and CEO of Star Mountain Capital.

If you wanna reach him, you can call his office at 212-810-9044, 212-810-9044. His website and his email address is down in the show notes. Okay, Brett, chicken or the egg? I know it was kind of a, it was a false dichotomy, I can imagine, but you can go ahead and explain the answer to the question that I asked you.

Investment first or capital first? What do you do? Yeah, it's a great question, which there isn't really a silver bullet answer to. I'll give you my view as a starting point, and I actually think that in this case, it's both. So when we started Star Mountain Capital as a trademarked business, the focus for us was really trying to solve problems.

There was two primary problems and then one tertiary problem that we looked to solve. The first two were how do you bring, and very similar to where Sandrowski and some of your other sponsors are bringing different value, which I agree, that there's a lot that smart folks that way can assist with in estate planning and tax planning, but is to focus on how do we bring these high-quality established private, small and medium-sized businesses, not startups, but the U.S. economy, roughly 50% of GDP are within companies that generally have under 100 million annual revenue. So how do you bring half of the U.S. economy to investors in a way that doesn't have to be one size fits all? If you're an investor and you're wanting capital protection and a bunch of higher cash yield on your money in a less correlated manner, well, you can be thinking about a lending product.

If you're looking at businesses that you can buy at a more attractive valuation that can be then hopefully built and sold at a higher value to take advantage of the long-term capital gains and that return appreciation, that's a different product. Those are different types of structures. If you're a big institution and you need to do that in a very diversified manner, highly risk managed and so forth, it's hard for you to access half of the U.S. economy.

So given how big that market opportunity is, we said at Star Mountain, if we can create the engine to optimize finding, evaluating, investing in and managing these businesses and create different types of products and solutions for investors so they can select what best fits them, now all of a sudden we are providing to a large base of institutional and qualified high net worth investors the opportunity to invest into a massive market segment that we believe has the opportunity to systematically generate better absolute and risk adjusted returns. So that's a huge opportunity. If you're the other end of that spectrum and you're the business owner, how do you get access to the larger capital markets? How do you get access to large market services, relationships, knowledge, investment banking support and so forth? Because the bigger investment banks and consultants of the world, most of that world doesn't interface with smaller businesses because it's too labor intensive, it's too time consuming.

So how can you build an engine and build a business that can solve those equations in a way that's aligned? Those were the key things really for Star Mountain. And then the third one is, and this is a little bit less so today, but my view always had been that you can have a highly energized, a very creative, a very transparent, hyper aligned interest investment model in the finance industry that's very long-term oriented. And I believe that that could be built.

And we believe we have built that where we've won best places to work three years in a row by pension and investments and by cranes, for example. And so we really do think about being team centric, client centric, which is our investors and then customer centric, which in our case is the business owners. Those of course, all sound very obvious, but it's like, how do you solve it? What's the right approach? What do you do first? And ultimately the answer to the question is we focused on what do investors most want? What did they least have access to? And we started with mostly that higher yielding product with aging demographics and low rate environments.

There's a lot of people that want safer, less correlated and higher yielding assets and opportunities. So that became the biggest systematic opportunity that we focused on as we then developed the rest of our business plan, Dave. Oh, that's terrific.

And Brett, how do you go out and then find businesses that are a good fit? Do you, I mean, now you're established. Do you sit back and just wait for people to come pitch you? Or do you have people out there who are, you know, just scouring different industry sectors and going, all right, here are the top five. Well, these three, they don't have the same values as us.

These two might, let's go evaluate these two. And then maybe you pick one of those two. How does it work? Yeah, it's what you last guessed there, Dave, is we're out there scouring, beating the bushes, looking for opportunities.

I think it's very important that businesses never get complacent because that's when you make mistakes. That's when you take things for granted. And I hope that Starmount Capital never takes anything for granted, which I certainly don't believe we do today.

And that's really a big part of the DNA and the nexus that we're always focused on constantly improving everything that we do. We have people local in over 20 cities across the United States that are all aligned with us and focused on finding, evaluating, working with, and adding value to high quality business owners. And then we have centralized, underwriting risk management systems based in our New York City headquarters to help drive and bring that large market value and expertise on a localized basis with these investors.

There's a lot more complexity beyond that. But there's a lot of engagement with many business owners, thousands of them every year that we then selectively find 50 or so that we think are the highest quality, best matches for a week and bring to the table. If we can't help them, we try to find other people that we can refer them to as well that might be a better suit for their business, the industry they're in.

All right, now, you mentioned at the outset that there are certain industries that you don't generally operate in. Are there some where you might have, say, a bias where you think, hey, listen, we understand these industries really well, we understand risk really well across all industries, but we understand these handful of industries really well? Or is it a conscious effort not to pigeonhole yourself into specific industries? Yeah, I guess it's a hybrid is the answer. There are certain industries that we don't invest in, we don't have expertise dedicated towards because of their cyclicality and volatility.

So we knock out those industries, commodities, energy, real estate would be a few examples. There are then other industries that we elect not to invest in, cannabis, tobacco, alcohol, things of that nature. Some of our alignment from an ESG perspective doesn't fit with those industries.

So there are a few different reasons that we just say, we're not gonna spend any time there. And I think that's actually really important in any business, especially investing, is knowing what you're gonna be great at. And to be great at certain things, I think you need to be realistic that there's other things you can't be great at.

So for example, I don't even personally invest any of my money in the public markets. The sectors we invest in, this is where I invest, this is where we focus, this is where we build our talent or expertise in and so forth. And that starts to become very much a reinforcing philosophy then, because you get really deep with a lot of experience and a lot of cadence and a lot of intel and insights into various sectors.

So we like various transportation logistics businesses that are more nichey. For example, a peanut hauling company, very basic niche, recession resilient, low correlated to the larger markets. On the other end of the barbell, we have businesses and things like telehealth that when you think about the end industry, you're looking for industries that are stable and or growing, where you can either help them grow organically or you can find acquisition opportunities where you have very fragmented industries that are easy to consolidate on a relative basis.

And just by function of making three or four businesses that are smaller, a bigger company, that bigger company now is in a market segment that's more competitive, that drives for higher valuations. And so that's again, a systematic opportunity of growing a company where you can invest at what we believe to be a better valuation, grow it to a higher valuation. And what you get therefore is a lower risk target investment in the potential for a higher return.

And so those are the end sectors. Education would be another example on top of healthcare, business services. So actually quite a large segment of the US economy, we do invest in 60% of it, I would guess.

And then about 40% of it is just not our expertise and we don't do it given our desires. That's great. That's great.

Thank you for that. Now, I want you to give advice to business owners, not specific to you and your firm, just generalized advice. I don't want to violate any securities laws or anything here.

But to the business owner who is not thinking about an exit strategy, but may want to partner with a firm like yours to grow, let's say, what should they be thinking about? What should they be doing two, three, five years before they come to you to talk about having your company, your firm invest in them? Developing your business plan, Dave, is one of the most important things and making it an agile business plan that you can continue to iterate on. And thinking about all key aspects of your business, from your customers to your team, to your inputs, your costs, your suppliers, your vendors. Within that, a few key things to call out is you want as long a term of contracts as you can generate.

You want as diverse and stable of revenue base as you can generate, as high growth as you can generate. And then when you think about concentration risks, look at every part of your business, from your team to yourself to suppliers. Do you have risks there? Do you have supplier risks? Do you have vendor risks? What if something happens to them? How do you identify risks? And when you're really small, of course, you have to try to get through to get profitable.

And that's hard. And that's why the failure rate for startups is so high. And that's partially why Starmount Capital doesn't invest in startups that way.

Generally, the minimum annual revenue for us to look at a business is 15 million of annual revenue. As you get your business bigger, what I would highly recommend is not only that active ongoing business plan, but you're constantly thinking about where are the risks, not just opportunities, because what my view having invested in the private markets now for roughly 20 years is rarely are businesses like the old hockey stick, but the best ones are up into the right, but in the shape of an S. And so what that means is you want to mitigate the risks, capitalize on the opportunities, rinse, repeat. So building your business to be defensive, to be stable, thinking about succession planning, I'm a little bit biased because I lost my mother to cancer when she was very young at the age of 39.

And so for myself, having a family dependent on me and being all in on my business, which I know many entrepreneurs are, that because you often have to at the beginning, I now choose to because I love what we do and find the risk reward very compelling. But I needed to build a business that if something happened to me, my children, my family, my investors, my team, many of whom are some of my best friends would be taken care of and will be protected. So thinking about risks, including your own risks, that's a reality.

That's probably one of the things that as you get bigger, the businesses take for granted. And once you've built something of real value, protecting it is not only valuable on its face, but if you think about a business that's safer is more of highly valued. And here's an easy example.

If you're investing in a US government 10-year treasury bond expecting a 1.7 or 8% return, or you're investing in the S&P 500 and expecting a maybe 6, 7, 8% long-term return, those are different risks. And you're buying both, right? You put a dollar into each of them. Well, the safe one, you're expecting a lower return.

It's therefore more highly valued. So if you can make your business safer, it's actually worth more. It's worth more to an investor.

That's something that's perhaps a little bit less obvious, Dave. No, that's terrific. I love that.

I love that analogy. And I thank you for sharing that because I think it's going to open a lot of people's eyes because everybody's just looking at how I can make money today, how I can show growth, what's my EBITDA, and how can I grow my EBITDA. But taking into account that, yes, that growth is important in a way that mitigates your risk to the extent that you've driven the risk down as low as it could possibly be.

If you've got the growth with the low risk, that's a really valuable business. And what you said really brought that out. That's a great, great takeaway.

Thank you. All right, Brett, I want you to take a minute and think about three things we should take away from our time together. We covered a lot of ground here.

Think about three things that you want folks to take away from our time together. While you're doing that, I'm going to remind people once again that we're brought to you by Sandrowski Corporate Advisors. So we talked a little bit about tax mitigation and the work Sandrowski does in that area earlier.

I want to talk to you now about business valuation, but not just business valuation or asset valuation the way you would normally think about it. Let's look at it in the perspective of a litigation event. So we have a lot of attorneys that listen to the show, that watch the show.

You're in a litigation event and you're fighting about what something is worth. And you've got your expert and they've got their expert. Your expert does not only have to get the valuation perfect.

They don't have to just get the valuation right. They've got to be able to explain what they did and how the valuation was developed. And they've got to explain it in a way that a judge or perhaps even a jury could understand it.

And this is critical because before you get to a judge or a jury, there's going to be depositions. And then as they're on the stand, there may be cross-examination. So you don't just need somebody who can crunch the numbers.

You need somebody who can crunch the numbers and break it down in a way that is very easy for people to consume. That's where Sandrowski comes in. For 35 years, they've been helping lawyers and law firms with litigation matters.

And they've been helping with business valuations and then testifying to the valuations that they've done in a way that's so simple. I mean, my lawyer friends hate when I say this, but it's so true. It's so simple.

Even a judge can understand it, okay? Judges, they don't know about math. They don't know about business. Your CPA, the person who's the valuation expert has to explain it very simply.

If you need help with litigation support, with business valuations, I want you to call Sandrowski at 866-717-1607. 866-717-1607. Sandrowski Corporate Advisors, they're a CPA firm with a different perspective.

I also want you to think about the Revenue Roadmap Guide. It's my gift to you for joining us today. Go to revenueroadmapguide.com. That's a website, revenueroadmapguide.com. Enter your contact info.

Get the same guide I use to help my clients grow their business. You can go get it now. It's my gift to you for watching and listening to the show.

All right, we're speaking with Brett Hickey today. Brett is the founder and CEO of Star Mountain Capital. If you want to reach out to him, you can call him at 212-810-9044.

212-810-9044. We also have all of his contact info, including his firm's website down in the show notes. All right, Brett, what are the three things we should take away from our time together today? Great.

I'll give you five, actually. The first one is better to email. Over-delivering.

You're over-delivering right from the beginning. Okay, go ahead. The first one is we want to help at Star Mountain Capital as many people as we possibly can, but just like all of you, we're limited with time.

So the best thing you can do to reach out to us is email is a lot easier than calling us and just be as pointed as possible. Every email gets looked at. Every email gets read.

We want to try to help, but we're just limited on time. So the more things are punching to the point, the higher the value that we can try to help. And if it's not something we can help with, we're always trying to find somebody to refer you to.

So that's one as a throwaway. So now here's the four takeaway things. So I'll over-deliver by one for you.

The first thing, and I think this applies to founders or employees. Find things that you're passionate about and find other passionate, high integrity people to work with. Most things aren't going to be an overnight success.

I know we read about them in the Wall Street Journal and things of that nature. That is an extraordinarily low probability. Most people will need grit, tenacity, drive, and sticking to it to make things create real long-term differentiated wealth.

Related to that, if you think what you're doing is innovative, you will face challenges. Because you have to educate people of new products or services and things of that nature. So expect that it will be challenging.

Expect to take no's. Expect things always take a lot more time and effort, which relates back to why you need such a passionate, driven, loyal team to work with in whatever capacity you are, employee, founder. Second is, and I'm a very big focused person on people, is align interest.

If you're going to a firm with great people, you should want to work with people who want to align your economic interests. And if you're the founder, you should want to align economic interest. I think the way I built Starmount Capital is in my financially selfish best interest to give equity to everybody because I want them treating this as their business to protect capital for themselves and our investors and myself and my family.

And that has worked out very well. It's a basic principle, especially in today's day and age where there's a remote workforce and whatnot. If people are aligned and they're motivated together, the probability of them acting away in a way consistent that you want is higher.

Third, and we talked about this before with Dave, is spend time on your business plan, making sure that it is dynamic and iterative. A couple elements of that are to make sure your business plan thinks about short-term, medium-term, and long-term. If everything is long-term oriented, maybe you have a higher risk of bankruptcy.

If everything is short-term oriented, you probably won't create real long-term value in certain things that are longer-term investments. And then lastly, and it's interrelated to your business plan, is spend the time to invest in systems, technology, and risk management. It will pay dividends long-term as you integrate that into your business plan.

It is worth having the transparency in the systems to make your business safer, which is also more value. So you kind of get a two for one if you do it right. All right, way to go, Brett.

Thank you for that. I appreciate it. And our listeners and our viewers appreciate it too.

We've been talking to Brett Hickeys, the CEO and founder of Star Mountain Capital. You can email him. We'll put his email up on the screen for you.

He prefers email and his company prefers email. Make it short and to the point. Nobody needs a story.

We wanna know what you need and why you need it. You can send your email to Brett. We're gonna put it up on the screen.

It'll be right there for you now. Brett, thank you so much for joining us. It was a pleasure and an honor to have you with us today.

Thank you, Dave. Wish everybody well. All righty, folks.

That'll do it for this episode of the Inside BS Show. We'll see you right back here again tomorrow. Until we meet again, here's hoping you make a great living and live a great life.