Transcription
In this episode, we are going to be doing a deep dive onto building a fund, fund launches, and then we took a little bit of a sidetrack on the right [music] mindset to grow your business and grow your future. So guys, stick around.
>> Hey, this is Bridger Pennington, Chris, Cody Hoffine, Cory Giri, Alex Gala, >> Clay Rock, Matt Bowaro, [singing] >> Tanisha Spencer, [music] >> David Old, Drew Hitchcock, and you're listening to the Investor Semester podcast with Jeremy Davis.
Welcome to the Investor Semester podcast, where the nation's best investors come to level up their game. I'm your host, Jeremy Davis. And whether you're locking up your first deal or you're scaling with creative finance, I am here to bring you real conversations, real strategies, and the exact playbook that the top investors are using right now. Most of our listeners are already inside the private community, but if you're not there yet, just go to investorsemester.com to join. And now for the show.
Richard Pennington is the founder of two investment funds, which is Fund Launch, an online incubator that's helped over a 100,000 students start funds managing nearly about five billion, that's with a B, dollars in assets. He's on the mission to make fund management accessible to everyone, no matter what their background may be. So guys, let's welcome Bridger Pennington to the podcast. What's up, man? How you doing?
>> Wow, you're pretty good at those intros, man. Well done. Uh, it should be a fun call today, though. We can talk funds, finance, how to build them, how to start them, how to scale them. Should be pretty fun. So, I'm happy to be on, Jeremy.
>> Awesome, bro. Um, so I know you and I met. We we made our first introductions at a speaking event here in Utah. Uh, surprisingly enough, Utah does actually have some pretty good speakers every so often. So, we had like, uh, Brandon Turner and David Green from Bigger Pockets. We had you speak. Like, it was a really cool event. So, you and I, we sat in the green room for a while and we talked about how we can collaborate and how we can work with each other. And um a funny story, you came in for one of my meetups here in Salt Lake and this is the first time this has ever happened and uh first time for you and first time for me in the middle of your incredible presentation. I mean you can't I think your slideshow is like 300 different slides on everything the audience needs.
>> Can I tell can I tell this this take it? >> I'm presenting at Jeremy's event. We're having I think it's going great and Jeremy decides to pull the plug on the whole deal. All the power goes out.
>> Oh, yeah, that's what it was.
>> It like went out.
>> I uh I guess I I guess I was that bad. So if anybody else speaks at Jeremy's event, be on be on the lookout. He might just pull the entire plug on the And then he said he gets on stage like, "Hey, let's just cut for dinner." I'm like halfway through my presentation. He's like, "Hey, let's just you know what? Let's kill the power." He hops on stage. He's like, "Hey, you know what? Let's just go to dinner."
>> I'm hungry. That's what happened. That's what happened. It's fine. It's whatever. I know I wasn't that good, but uh and I and I respect it. If someone's not a good speaker, you just cut the power and you send everyone to dinner. That's
>> Listen, I forgot my giant hook at home. You know, the one from the side of the stage where I'm supposed to just, you know, put it over 15 feet and drag you off. Uh but no, the power went out. I did not pull the plug for the record. Uh a breaker.
>> You want a real story of what happened though? So, I I don't even know if you know this. I uh I was, if I remember correctly, I was on stage speaking. the slides kind of went halfway out because it was on this big LED board which is pretty cool actually. The slides like half the LED panels go out. So, and I we kind of talk about, hey, the LED's out, but and so the the IT guy comes out to fix it, but I'm still going. So, I'm just like, hey, don't look at the slides anymore. They're going to work on them. I'll just So, I go in the crowd. I start working with the crowd and stuff and I'm, you know, I don't know, making jokes, doing whatever. And then I get back on stage and I see the IT guy come out on stage. There's like a power box on the stage and he literally grabs it and goes and just turn like he power boxed the entire event like right in front of me. He was right there. He was probably 5t away from me and then the whole thing dies and then he turns around. He's like, "Oh, shoot." Like he didn't I guess he didn't realize that was going to happen when you hit it was like one of those big switches that you move, you know? Anyways, and I I thought that was I've never seen an IT guy like literally come on stage and just like literally nuke the core power like all the switch breakers just turned them all off. I thought it was pretty crazy. So anyways, and you handled it well. I think we handled it actually turned out to be a really good event. We ended up doing with people. It actually turned out being well. So
>> you think I handled it well? My anxiety, my blood pressure was through the roof. I'm sitting here going like, "What do we do? What do we do?" We're like, "Let's break for food. I that's all I can do right now." So, but no, you you were awesome. Thank you again for that. So, all right, uh, back on track. Tell us about how you got started in this. I want to hear like, you know, what got you into funds? What was your background? Um, yeah, I think that's really important to understand that while you focused on this early on and this has become your specialty, a lot of people in real estate and a lot of investors in general can also start their own funds. And so, I want to hear kind of how you started and keep going.
Yeah. Well, I'll tell you the very quick story and then you can we can double click on if you want, but I I anyways people can go look up the whole story on online or whatever. But the quick story is this is I grew up in Utah in a normal household, entrepreneurship household. My dad drove a car with a dent in the door. Nothing special. I went on I served a two-year church mission for my church. I went to Taiwan. I spoke Mandarin Chinese.
>> Nice.
>> And I always I always tell people now it's like, "Hey, uh, you know, like everything is easy after trying to do that." uh like selling religion doortodoor in another country in a foreign language like any anything after that capital raising is easy after that like you know anything which actually gives you we can talk about that if you want but I did two years of that came home I was very ambitious I started six businesses my first two years of college I started Chinese touring business I wholesaliled two houses for my real estate people I built websites for people I did all the above my dad finally grabs me he's like Bridger you're kind of like a chicken with your head cut off go meet with my business partner this guy can really help you out I go to his business partner's house. He lives in this g huge, gorgeous mansion. My, again, I come from a normal household. My dad drives kind of a crappy car. This guy drives really fancy cars, lives in a big house. I sit down and we start to talk about life and business and career. And I ask him, "How did you get all of this?" Like, "What did you do?" And he goes, "Bridger, in my 20s, I was a lot like you. I tried a bunch of businesses. I actually had decent success." Because then I figured out the secrets of the ultraw wealthy, the ultra wealthy families of the world. They send their kids to the best universities. Sometimes they cheat to get them in. Like we've seen that in the news before. They then want them to go work in the fund space, the world of private equity, hedge funds, venture capital, real estate funds, or come back home and run the family office. This is what the wealthiest families in the world do. The number one category of billionaires because you guys have heard the number one category of millionaires is real estate, right? Most millionaires are made out of real estate. The number one category of billionaires is investment fund or fund management or you could even call it just private equity as the number one category of billionaires per Forbes. And he said, "I figured this out years ago." And he goes, "We started a fund. We got in the space at the time. They were managing an $8 billion family of real estate funds." Uh that is about two times bigger than Cardone Capital is today to put into perspective. Uh that was years ago. Today their funds, my dad's now retired, his partner's retired. Their funds now are they're I think they're over 48 billion dollar. So that's 10 times bigger than Cardone Capital to give you a perspective of how big these these are multi mostly multif family funds. I was pretty enthralled. I was like, "Wow, you got to tell me more about this, you know, teach me and can you be my mentor?" He goes, Bridger, you know, go talk to your dad. your dad knows way more about than I do, you know. And I said, "No, my dad's kind of broke and poor." And as I come to find out, he goes, "Me and your dad are making about the same amount of money." And my chin drops to the floor. I I am like, "What? Like, are you kidding me? Like, you and my dad, you guys are making the same amount of money?" He's like, "Yeah, yeah, we're doing we're equal business partners in this thing." So, I I go to my dad's house. I'm like, "Dad, what's going on? Like, why haven't I been able to order a soda at Chipotle for the past 10 years? Cuz it's too expensive. We never go on family vacations, you like we're very frugal in our household and yet you're managing an $8 billion family of real estate funds. Anyways, uh my dad kind of smiles and laughs and he's he's just like, "Hey, I you know, I'm more conservative with my money the you know, my partner is more flippant and spends his money." But yeah, we we run these big funds. So, long story short, my dad started to teach me about investment funds. Uh, I was 22 years old. I started to learn how funds are built, how they're put together, how they're structured. Um, like anything in life, once you learn something, you start to recognize that thing around you. So, I started to recognize opportunities that where you could build a fund. Um, and by the way, all a fund is, for people that don't know what a fund is, all a fund is is a pool of money. Investors are putting money into that pool. A fund manager like me or you are going to draw from that pool and then we're going to go and make investments essentially on behalf of the investors. And whenever those investments make money, we split the returns. This is like one of the oldest business models in the world. It's not that complex. It's like, hey, let's go buy this building. Okay, everyone put money together and we'll go buy the building and we'll manage it. Whenever the building makes money, we'll split the returns. That's all we're talking about. It's really not that complex. Um, that would be a real estate fund. A hedge fund is the same thing, but you're just buying stocks and bonds and futures contracts and crypto. Hey, let's get money together. Let's go buy some stocks. uh venture capital, let's put some money together and let's go invest into early stage startups. Private equity, let's put some money together and let's go buy private equity or privately held businesses. Let's go buy some businesses. It's really not that complex. And we've now helped people launch hundreds of these. I currently run a hedge fund about a an eight figureure hedge fund. I also run a $27 million private equity fund.
>> Um
>> and so I run two funds. I've I've we've helped hundreds of people launch. They're not that it's not that complex. They're running all about the same. Anyways, so I started to learn about this. Um, uh, at 22 years old, I started, I'm like, I'm going to launch a fund. I had a great idea. I was working in I was in college working internship at the internship. I thought we could do loans for people that were coming through this this business. I put the business together. I put the fund together. I started to go out. I I'm like, crap, I got to raise money now. Who's going to give me money? So, I go and pitch my dad. I'm like, my dad's apparently rich. I guess he's got tons of money. I'm going pitch my dad. Why not? So, I go pitch my dad. Uh, lovingly my dad says, "No." And he says, "If I invest in your fund, it would ruin the experience of you raising money on your own. You need to go learn this lesson on your for yourself. If I invest in your fund, this will be a crutch that you'll never be able to recover from."
>> I love that.
>> So, he says, "No." And by the way, for eight years, never invested in a single deal, property, project, anything I'd done. Uh, but was a great mentor and coach. and he walked me through how to put stuff together. Was not on my cap table, was not on our board, nothing. Just was a background mentor. I went out, I said, "Okay, I'm going to I'm going to hit the streets. Let's do this." So, I went out and raised a whopping $49,500 >> when I was 22 years old, which is just teeny, right? That's about as small of a fund you could possibly build, but
>> it was enough to get started. We actually launched this little micro fund. We were doing these short-term loans. Uh, we got a 64% rate of return to our investors, which was phenomenal. Uh, we then dovetailed that into a second fund. And
>> can I ask real quick what what was that first fund invested in?
Hey guys, let me pause you real quick. I just wanted to take a quick moment to remind our audience about our private community, the investor semester. And right now, if you are listening or watching this episode, for just $1 to check it out, you're going to get access to a nationwide network of investors and the opportunity to partner with me and my team directly in your wholesale and your creative finance deals. You'll also get weekly live education, the tools and the contracts we use in the business, and the ability to buy and sell your deals without fighting the stupid Facebook algorithms. Go to investormester.com and sign up. And now back to the show.
We were doing loans, so short-term, they're essentially debt consolidation loans. They were four to $10,000 a loan. They would they would last two to three months. We were consolidating debt. uh people were going and getting other loans they could pay us back for an interest rate kind of a short-term uh
>> personal loan.
>> Um, the second fund we same strategy we we raised and deployed millions of dollars out of that strategy. So we were turning about I would call two to four million dollars of loans a year.
>> Uh, we were doing hundreds of deals. Um, it went pretty well. We then had a competitor come and buy us. We actually exited that business which is pretty cool.
>> From there uh we were like man this worked well. Like this is awesome. And then my I didn't mention my brother is also an investment funds attorney. So I have a dad that ran a big fund. I now ran a fund at 22, 23, 24 years old. My brother also was an investment funds attorney. So we said, what if we came together and taught more people about this world? And so we started with a small podcast and then turned into a bigger podcast. Then we started a small course that grew and grew. We we now have had over a 110,000 people take one of our programs online, which is just crazy to me. Absolutely crazy. Uh, we've launched now over 300 funds, like you mentioned, $4.7 billion reported client AUM. We have a full incubator now uh that helps people launch funds. Um, anyways, it's it's been pretty uh it's been pretty cool to be a part of it. And then I've launched two more funds since then. So I run a like I said before a crypto fund. We manage about 25 million in crypto and then that's equity raised and then $27 million of equity raised in a uh uh GP stakes fund. So two separate funds there. I'm still in the game. I like to say this by the way. I am an active business operator. I run my business every day. I am by no means at the end of the tunnel like I exited my business for $5 billion. Now I'm sharing my like I'm just sharing I'm part I'm in the journey right now. I'm 30 years old. I'm in the journey. We've been doing this for eight years, nine years now. Uh, we are in the game actively. So I'll share what has worked for me so far. But uh that will continue to grow as we continue to build and scale.
>> I love that, dude. All right. So, to the audience right now, I want to preface something really quick. I know that when people have a limited mindset, they they hear your story and they hear that your dad was there to help you, your brother was there to help you, and you were, you know, you know, handed a golden spoon, so to speak. I want you, if you are having that thought right now listening to this podcast or watching this podcast, I need you to eliminate that entirely because that's the reason that I actually have Bridger on this podcast in the first place. I am bringing Bridger to you guys. If you have any desire to work around funds, I want you to look at him as dad, right? And I want you to think about it in this sense because for me when I started off in this business, I was like, "Oh, all the people that come from wealth, they, you know, have one up on me. I'm never going to be that successful." Or when I talk about deals that I do where I'm like, "Yeah, I borrowed $250,000 for a flip that I made, you know, six six digits on." People go, "Oh, I wish I had a friend that would lend me that money." And I say, "Well, you can. like you just have to focus on networking, focus on this this business and essentially being in the right rooms. And so, first of all, you know, thank you for the backstory on that. Now, I want to kind of focus
>> Well, I'll double click on that, too. The the reason we started all this was because of that exact reason. I recognized the uniqueness of the position I I had. Now,
>> one of the best gifts my dad ever gave me was not giving me money.
>> There are plenty of wealthy kids that do nothing with their life, right? And I think it's because parents give them so much money and it's and one of the best gifts my dad ever gave him was not giving us money, not being involved.
>> But he was a great uh coach and I live in Utah. None of us went to Ivy League schools. We didn't work on Wall Street. My dad grew up in North Las Vegas. Uh barely got into college. Anyway, he has a great rags riches story as well. But uh, you know, you look at that and I and then so we said, "What if we could help more people do this?" That's the whole reason we started Fund Launch was to democratize Wall Street. So, if you're like, "Man, I wish I had a dad like Bridger did." Well, sweet. Guess what? I have filmed like hours and hours of content with my dad teaching me all the stuff that he taught me and I just give it to you and we have him speak at our events and I have my brother and we bring in like we have like 15 to 20 other people that come in and like teach and like make this whole incubator so that you can have the same hive mind that I had when I was 22 years old. Like it's that's what we built Fund Launch on was the mission statement of can we democratize Wall Street?
>> Can regular people that live in Utah that didn't go to Ivy League schools do this? And it was like yes, we I proved the model that it worked and now we've proven it with hundreds of other people. Can we prove it maybe with with you or someone like you as well? And so that's the whole purpose. So it's like I understand the uniqueness of the position I've been given and we have now compounded that to more people. So, I wouldn't take me maybe take my dad as a dad or my brother as a brother because they're all involved. They all do our content together. Like, we're all there helping more people do this.
>> I love that. All right. So, um let me ask you this question. Out of tens of thousands of people that you've helped start a fund. What would you say you started with debt consolidation, what would you say the most popular beginner fund would be for an investor? Whether in real estate, I'm assuming majority are probably in the I'm a millionaire in real estate and now I want to become a billionaire in funds. So what's the first step?
>> Great question. I I'll correction. We we have I we've helped hundreds of people launch funds, not tens of thousands launch, but we've trained over 100,000 people.
>> Got it.
>> I would say uh couple things. A fund is meant if you have a good business or a good investment. Big caveat, a good business or a good investment and the only thing stopping you is money. The only thing stopping you is money. a fund is an amazing vehicle for you. Now, if you got a crappy business, then I don't want to work with you. If you got a crappy investment, it doesn't work. If you have a good business or good investment, you bolt on a fund and it allows you to scale. Um, a couple, you know, we help about 45% of our people that come to us are doing real estate. So, we talk about that and then a number another another group is doing hard money lending or lending. We have and we have across the gambit. Let's talk real estate, though, since that's most your audience. Um,
>> I'll tell a quick story. So, and this I think this is a very I think a lot of you will feel this. Uh, a couple years ago, I went to bid on a duplex just me and my wife. Let's, hey, let's buy some rental properties with our own money. We go, we show up, they have an open house. Uh, we put a full price offer in at I think it was about $450,000 for a duplex. They received 18
>> fullpriced offers.
>> Seven of them were patch offers. And of the seven, five of them were over asking price. This is back in the in the previous cycle when rates were low. Right.
>> Right. It's like, dang. You know, like everyone in their dog can bid on a $450,000 apartment complex. It's very competitive. Okay. Uh one of my mentors, their fund, they were bidding on a $100 million apartment complex. Guess how many biders there were?
>> Two,
>> right? Then somebody else.
>> Yep.
>> And I'll actually break this down for you. They bid the other. It was a syndicator. They were syndicating capital together. So they were pulling cap together in a one-off deal. My mentors group was a fund. The syndicator bid at $100 million. The fund bid at 94 million. Guess who won the deal? The fund at 94 million. The seller took a $6 million discount. Why? Well, shorty of closed. A fund already has the money to go. Like, we can close in three to four weeks. The syndicator needed six months. The fund already had bank financing set up, had everything ready to go, has a reputation of closing. The seller want was willing to take a $6 million pay cut because of shortity of closing a fund. Furthermore, there's less competition, so you can get more alpha on these deals. I like I like to share another example with real estate people. Um, how many of us have gone and bid on a property and someone else overpaid? We think they bid us up and they they won the property. And then we go back and we go, "Ah, they overpaid. They're idiots. I I ran the proforma. I ran the M." And uh they overbid. They're idiots. They're dumb. They don't know what they're doing. Are they really idiots? Or maybe they're not playing the same game that me and you were playing. See, on our pro fora, yeah, it didn't make sense. But when you're a big institution, all of us, we're borrowing money at what, six and a half%. They're borrowing it at five and a half or or five and a, you know, five and three/4ers. Their debt service is way cheaper. We had a guy in our group, he was he went from flipping four houses a year to 72 houses the next year. When he flips 72 houses in one year, his average cost per house flip goes down because he can hire the same painter, the same construction guy, and they give him bulk discounts. And so he can overpay for properties that other people can't pay for because it still pencils for him. Furthermore, there's large groups out there uh in 2022, I believe in one in seven homes were purchased by Wall Street. 2023 is one in five. 2024, I think it was one in three homes were purchased by big firms on Wall Street. what they are doing. They're overpaying because they're pulling together a hundred million of single family homes and they're selling it for $125 million to somebody else because there's a there's a bulk premium you can charge to someone someone else in the market and you go,
>> "Oh, they're not playing the same game that me and you are playing when we're bidding on our little duplex, you know, downtown." Furthermore, some groups, you know, only use there's a lot of options out there to build a deal.
>> You know, some groups only like to use debt. They only use hard money lending. Some groups only like to use equity.
>> Like, I just raise money from equity from investors and I put that into a deal. Other groups only like to use seller finance. I only do seller finance. And I think some of us, we get pigeon holed into one of these categories, seller finance or just debt or just equity, when in reality, the best deals, the best deal makers, the people that have scaled the most, they always use a mix of all three. And they sometimes they lean more on seller finance for one deal and more on debt for another deal and more on equity for another deal, depending on what pencils for the deal. And so what I guess I'm telling your audience is uh to think bigger especially in real estate when you use these tools of let's use those three seller finance debt and equity together potentially in a fund structure. You can have economies of scale. You can do larger deals that actually pencil better. You can get better terms from banks. Uh, there's a lot of new doors and opportunities that open up to you. And furthermore, there's less competition as you scale. That's the reason why most successful people in real estate end up one day running a fund. Almost all of them. The the natural progression is they start in their with their own money. They then start syndicating deals and then they end up running a fullout fund. Why? Because it's the it just the math maths really really darn well if you use that progression. And so, uh, I that's what we're I I'm getting on a tangent here, but we're talking about stats that that amount of scale and where you end up in a real estate as a real estate operator.
>> So, all right, I want to use me as a case study. Okay. I I've done more deals than I can count from a single family perspective, right? And I would say that that's small potatoes in comparison to what you do. I fix and flip. I wholesale, seller finance, subject to all the fun things. And if you're listening to the audience right now, this is probably why you're here, to learn more about how to become an investor. But I will admit that there's many times that I go, man, I would love to go to a larger asset class. I would love to go to either commercial or industrial or again move towards a fund. And you're right, all of my mentors, they all move towards running a fund eventually. And so, but with that, I'll admit that there's a fear. And I think that a lot of people probably feel this way in the beginning as well, is that I'm going into something bigger. It's going to be more overwhelming. I've got to run the numbers better. But I I also understand I've been told many many times that there might be a few small tweaks you have to make. But overall, if you understand marketing, if you understand how to find the deal, if you understand how to, you know, uh prospect out there and find what your target is supposed to be, that's the biggest challenge. But then once you find the asset and you find the seller that is willing to let it go at a discounted rate, or in your case, it maybe doesn't have to be that discounted because you're able to overpay. um you know, what's the next step for the mindset like what would you say and talk to me? you know, talk through me to the audience what would be the next steps that I'd be looking for to get out of the single family properties and move into something bigger
>> well I'd ask you a question Jeremy how did you learn how to do single family properties how'd you get so confident at doing single family properties
>> by making a lot of mistakes and fixing those problems but no to your answer um I brought in a mentor I brought in a many many mentors um you know some of them did the the the right thing they taught got me in the right way. Some of them were eh, you know what, a subpar product, but ultimately speaking, I did it once. I learned by proof of concept. And the the deal that I did was in Gary, Indiana. Uh, it was a three bed, two bath, single family home that I bought for $2,200. Uh, yeah, 2,200. And then I I wholesaliled it for $6,600. So I made $4,400 on my very first deal. But I purposely chose Gary, Indiana because it was a lay down city. It was so easy to get a deal there because nobody wanted to own properties there. It was a a war zone. And so by getting that proof of concept, I then came back home, focused on Utah, grew my assets, grew my skill set, and got bigger and bigger and bigger until eventually I'm spending a lot of money on marketing and closing up a lot of deals. And so again, that's the progression that I teach. But now it's where do I pivot to the next step to level up my game?
>> Well, I would say if I just summarized, you've you had a mentor. You had some of the dumbest before. You You did make some mistakes. You tried. I'm sure it was super scary doing that first closing. Like I I think everyone's first closing on any deal is always like, "Am I doing this right? Am I where do I sign?" Like it's just it is freaky.
>> Uh, you call this a And now Jerry like you're super confident. You're like, "Oh man, I could drop me off anywhere. I can get a deal. Like I'll get it done." Like because you've done it.
>> Yep.
>> The same It's this confidence curve. The same thing is true for multif family assets or commercial assets or a a thousand used in an apartment complex. There are mentors that have done that before. There's an education gap that's got to be filled. There's an educ there's a a relationship gap with banks and and partners that you had to bring in. There's a new learning curve that happens just like the same learning curve it took to start doing single family homes. And so what I push some people, it's not for everybody, but if you want to scale, and I think Jeremy, I think you would, you're the guy, you're the type of guy that would want to do that. I push people to do it again, lean in again. A lot of fear comes from the unknowns. And now fear for you has you're I think very confident now because of how much knowledge you have of the space.
>> The same thing is true with let's say running a large real estate fund. As you gain more knowledge and experience, your fear decreases, right? Because it's there's more confidence in the space. So for someone to level up, I would implore them to do a similar strategy. Find somewhere where you have and not just a good deal, but a phenomenal deal. A deal that's like we've looked at this thing 15 different ways and there's a very small probability that we lose. Secondly, I would say educate yourself on this new game. The game of maybe it's funds or single asset funds of building out one deal at a time. How to get partners and use banks and larger financing partners. Maybe find a mentor in the space to work with you and then do a and maybe you take a smaller cut. You take a small percentage, but you you work with other partners that gave you a lot of experience on how to do a, you know, a 75 unit apartment complex on a one-off deal. Boom. And now you gain that knowledge. It's the same thing happened before. And you gain and you and then you do a couple of those, you start building a track record as a oh, okay, we yeah, we're actually getting pretty good at 75 unit apartment complexes. We've done five of them now. Shoot, we should do a fund and do 20 of these. And then you scale to that next level. So, I think the the growth curve continues to happen as I guess what I would tell somebody.
>> When you're raising capital, you also mentioned you're bringing in partners that that might have skill sets that you do not possess yourself. I'm assuming those are your GPS, right?
>> Usually, yep.
>> Okay. And explain that. Break that down. LPGP for the uh people listening.
>> Yeah. Generally, the fund structure, this is for single asset funds or large funds. They use a general partner limited partnership structure. I I highly recommend that structure versus some guys just throw together like an LLC like, "Hey, we're doing an LLC. Just put some money in." Uh, those can get wonky. They have operating groups. I I tell people to use the GPL structure. It's an amazing structure. Use the structure. Like so you have a general partner is the fund managers. The limited partners are the investors and then they invest into the fund which is the limited partnership. So on the general partner side, that's the managers. Um, you know, again, we my my whole mantra is like I want to play the long game. Can I play this game very well in the long term? Building a I want to build a firm, a team that can really scale big. Uh, I know some people, especially in real estate, like love the idea of like I'm just and which is fine. You can do that. I have plenty of friends like they just do one they're just themselves. They're they're a soloreneur. They just do one-off deals. For me, I I wanted to play a little bit bigger. And I looked at a lot of these mentors. I take Grant Cardone. Grant Cardone has run Cardone Capital for 16 years. That's a long time.
>> 16 years. The first couple years of Cardone Capital, I mean, they weren't doing much. But then he compound, he slowly kept building the team. They compounded. They kept getting bill. Look at Warren Buffett. 99% of Warren Buffett's wealth was made after 65 years old.
>> Right? It's crazy. this long game. If we're going to dedicate our lives to something, which is pretty much any career that you're in, you're probably going to dedicate your life to. If you're going to make any amount of money, you might as well dedicate your life to something that can be very long-term and very big. And I think fund management is that way. So, back to real estate, like if I'm in your shoes or someone else who's in the real estate category, I'd say, "Okay, you know, I'm in this game. I'm going to start building partners and teams and relationships cuz I one day want to be running a massive multi-billion dollar real estate empire. And uh so to do that, I might take a little bit smaller cut today. I'm going to bring in different partners. We just brought in a partner for fun for our our private equity firm. He ran Tvest. Uh, his name is Troy. They're on their uh, their last fund. Get this. Actually, they raised uh, they were trying to raise $750 million. Decent sized fund. It's private equity fund. They raised, they didn't raise 750 million. They raised $1.4 billion and they raised it in about four weeks. Wow. I mean, that's crazy to raise 1 point overs subscribe that much in four weeks. And he he joined our he's now retired. He joined our team just a few months ago. And he's like, "Let me show you how I did it." And he this is they it took them a decade
>> sure
>> to get to the point where they can raise a $1.4 billion dollars in four weeks but it took him a decade of building right to get to that point. But that idea I think that's where the biggest players on earth play. Whatever person you look up to in real estate that's what they're playing in
>> that's the game and they have they've set the groundwork I guess to do that is what I'm saying. And guys, this is a really really great point about um the mindset shift that you might actually have to be making right now currently that real estate and funds and everything that's that makes you a lot of money is not a get-richqu, right? You're you're not going to be going viral and you know, Hakua girl makes money and then obviously, you know, crashes and burns. Uh, this is this is a long-term investment and and real estate in general, even single family properties. I know that the portfolio that I own today, multi-million dollar portfolio, is not going to be the portfolio that I own in 10 years. It's going to be sold. It's going to be put into a 1031. It's going to be put into larger asset classes, whatever that may be. I know that this is not my endgame. And the same thing goes for funds. Like he's just, you just said yourself, raising over a billion dollars in less than four weeks. I knew right away when you were telling me that. It's not like they just went on Facebook and went into a Facebook group and said, "Hey guys, we're looking for $1.4 billion or whatever the amount was." No, they had a stable of investors that they had been working with for a decade that they've been getting great returns. They give their money back. They put their money back into the next project. And and that's where it compounds. And so, you have to remember guys, the biggest best investors, the people that you look up to the most, they started 10 years before you even believe they even started.
>> I love what you said there. There is no shortcut. The long way is the shortcut because the shortcut will never get you there. Anything that's worth doing in life is the quote unquote long way. But that's the that is the shortcut of life. Furthermore, I love the quote of people overestimate they can do in one year and underestimate they can do in a decade. Literally any of us could be billionaires a decade from now. You look at any of these billionaire stories, you look back a decade prior, they were like an just a regular Joe and they found something and they went into it and uh we can do a lot in a decade or two. A big mantra we have at our company, I have a lot of relatively young partners. I'm 30 years old. My other partner's 29. My other partner's 25. We keep telling ourselves, play the long game. Keep compounding. Don't burn bridges. Don't just jump for a shortcut. We really try to invest in relationships in people. And can we if we can keep this thing going, man, we will be in a great spot eight years from now, 12, 15. And I you might say, "Wow, that's a long time away." Well, I'm 30. That's when I'm 45 years old. is when I'm that's 15 years from now.
>> And when you're 45, 15 years from there is when you're 60. 60 is still really young, by the way. And then 15 years from then is 75, which is still I think by the time we're we're going to have some pretty good anti-aging stuff. We might be living a long time on this earth. Like I said before, Warren Buffett, 99% of his wealth was created after he was 65 years old, after quote unquote retirement age. Um, I think a lot of a lot of us don't realize how long it takes. And furthermore, I I'll can I share my concept around work? That's a
>> this is your platform, bro. Go.
>> I think for a long time, I worked to avoid work. I was like, okay, my goal is to make as much money as possible in the quickest period ever so that I will have plenty of money, which I think is a still it's a fine thing to do, so that I don't have to work anymore, right? And we, a lot of us try to avoid work. But most of our life sometimes is spent avoiding work, trying to text and get out of doing some work, right? We're trying to not do that type of work. Finally, about last year, I had this realization. I had a mentor uh sold his company, you know, top of the world hundreds of millions of dollars and was suicidal 8 to nine months later. And I thought about that a lot. And I think if you even go if you're biblical or go back to I don't know even Adam and Eve the first commandment God gave to Adam and Eve was to go and work until the ground. Uh, most religions talk about work. If you're not religious you can go to secular things where humans are just generally happier when we work. Now, if I define work in a broad sense, okay, my definition of work is more broad. Work is doing something to improve yourself or people around you. Uh, you can work on your golf game. You can work on your garden. You can work on your charity. You can work on your business. You can work on your kids. There's a lot of work. But I correctly defined work is something that we're doing actively. I then said I'm number one, I'm happiest when I'm when I'm working. When my pill my head hits the pillow at night when I'm just exhausted, those are my happiest days. You know, like and I was like, huh, there's something amazing about the human condition that humans are just meant to work. You put a bunch of dudes on a trip somewhere, like they're going to find a way to like, you know, they play pickle ball, golf, they're going to do like they're going to do something, you know, like humans just you put them in any state, they end up figuring out a way to work because humans are most happy when they work. So, I've had to back to mindset tell myself work is good. I am the happiest when I work and I am going
To work until the day I die. Now, I hope I don't work for money or need money until the day I die. But I'm going to be working on something until the day I die.
Now, furthermore, I might be working I don't need money, but I want to grow a mission or a business or with money as well. But falling in love with the work. When you talk to all these founders and all these, you know, people that reminisce on their life, they always go back to the the good old days were the days when they were working the hardest, right? They reminisce about the days when they were in that small, you know, business center and they're working and grinding, making phone calls, that's what everyone reminiscences about when they're old.
And so instead of trying to avoid work, why don't we lean into it? And furthermore, if I'm going to work my whole life, well, I probably should work on something that's meaningful and something that can it can play long term. And I'm not going to just try to get some little hack or like some little side hustle or some little shortcut. How about I work on something that's actually meaningful and actually can be big one day? And if I compound enough years could be huge. And wow, how much life satisfaction does that give me?
And so about a year ago, I shifted my brain. We were trying to sell Fund Launch. We got an offer to sell for $40 million and $27 million. And I finally shifted my brain like, what am I going to do if I sell this business? I love this business. I love what I'm doing. Money's nice. I already have money, though. Let's see how good we can get. Can I achieve excellence in my field, in my craft? That mindset has changed me like crazy. And then you couple that with the mindset of, well, what if I ran a big fund and was a steward of capital. That's a pretty good business model to be in long term and and then how do I achieve that and be in the pursuit of something great? That is amazing.
I I want to if I if you don't mind, I want to stack one thing on top of that. I think if I were to rephrase everything you just said, I would say the human condition doesn't enjoy work. They enjoy building. They enjoy building a skill set. They enjoy building. Like for me, I'm not going to keep chipping away at the same rock unless I know that I'm getting towards a goal, right? And and so what I see for a lot of my students is when they work, they work on things that don't generate revenue. And I think that if there's one more thing that I would just add to that is that guys, designing your business card is fun. I get it. It makes you feel like you're working. But one thing that Bridger, you know, got into is he said, he's like, I I tried my hardest to get out of doing work or or get out of, you know, the money-making activities. And that's something that I call like a delegation death spiral where you yourself when you're starting this off, you should be focused on generating revenue, doing the things that are the most uncomfortable early on because that's going to be what's building your business versus again designing business cards isn't really moving the business forward.
But um to you know what what Bridger is essentially saying is be uncomfortable for a little while because the the longer you're uncomfortable for the longevity will extend further and further out years and years and years to come. And eventually there's going to come a point where you don't have to be on those uncomfortable sales calls. You don't have to be the one talking to a seller that's telling you to f off and die over the phone, right? That's going to be someone else you hire. And and that's like again to your point, dude, work is something that the the human condition is built around, but I think building is what we love. I think building >> Yeah. the six basic human needs, the last two are growth and contribution. >> There you go. >> When we feel like we're growing and we're contributing, we feel 10 times alive. That's when we feel the most alive, right? And so I I think that's a great definition.
And I'll actually add on to take the opposite of that of what you just shared. It is incredibly frustrating when you're starting out like what do I do? And I love what you just said. Focus on making money, which I like. Focus on income, generating things. There's a thousand things we can be busy at but not be effective at. And one of the I think one of the hardest parts for me was starting businesses was you're you are building and running in a direction. And half the time you don't even know if you're running in the right direction. And you think you're like, I I'm building this thing in a direction and I'm all alone. I have nobody here and it's just me in my basement and I'm going and I and I'm wasting all this time and you feel like like well should I shift and go somewhere else >> like you know and you're you're I used to lay up at night and have analysis paralysis all I couldn't go to sleep. I'd be up my brain was just firing like what should I do? What should I do? And for a long time, I felt like I was wasting time. But maybe I would hit like, you know, have you ever seen that meme where you're the the guy chiseling and the diamonds are just beyond the little chiseling thing? And I'm like, well, maybe I'm close to the diamonds or maybe I'm just digging in the totally wrong direction. And that's a very hard thing to be in. I don't know if I have a good answer for that.
sides. I wish I could have gone back and told myself that even if you're rowing in a terribly wrong direction and you end up this business ends up quote unquote failing two years from now, you don't go back to zero. You never go back to zero. You've left the shire. You like and all the lessons you have learned by leaving the Shire, you take with you into your next business. And so you're actually never going back to zero. You're not wasting time even if the business quote unquote fails. The amount of the what you learn between your ears, the the mindset shift, the way you hire employees, the actual tactics and skills of business you developed in that is why you move much faster than the second one and the third one and the fifth one and and I I did six businesses my first two years of college. The first business it took me about a hundred hours to build a website. By the fifth business, it took me about 30 minutes to build a website and have a landing page and like take payment and stuff, you know, just there's just this time gap. And so I uh back to to summarize all this back, you're actually not like being in this pursuit by itself, you're still progressing even if the quote unquote thing doesn't work out right away right now.
>> Yeah. Um, there is one thing I will say that I make the most amount of money in whatever I do when I have a mentor guiding me in that direction. And it it's funny you say like even if you're rowing the boat in the in the completely wrong direction, at least you're rowing in one direction. >> And and you'll eventually, you know, even if you're doing something dumb, Blockbuster Blockbuster made a lot of money for a period of time, but they were rowing in the wrong direction when technology shifted, right? So, it's when you're, you know, building a fund or doing real estate. Um, when you have a mentor that has done what you are doing and they did it years before and they're still in the game, it not only gives you the confidence to keep going, but it also gives you a again it gives you a proof of concept that I know like for me, I'll be totally straight with you. If I were to build a fund and not if when I decide to build a fund, I'm going to be going to you. I know that for a fact because I know that you know what, I'm not going to waste my time in thinking to myself that I can do this alone. It's uh the um what is it? The tuition of life is a lot more expensive >> than just working with a mentor. And so it's again bringing you on Bridger. It's >> I I know I wanted to talk about funds because that's literally what you specialize in, but you have built out so many different businesses and you've helped so many different people achieve a level of success that I haven't even gotten to yet that your mindset and what you bring to this podcast has been fantastic so far.
>> Well, yeah, I I uh I love what you said there. Mentors have been huge for me. I I actively seek out mentors and find actually as you're talking about that, I'm like, I got to find like this next I have a couple things we're working on. like I got to find this next tier of mentors that can help me on these new things. Um advisers, mentors, mastermind groups, whatever you want to call it. Uh I've paid for a number of mastermind groups. I've I've I still I'm still in them. I still grow. I still add new ones. Like I actively try because you know there's a lot to learn out there in business. And can we I like defining in business by the way. There's there are definite skills in business. I didn't realize that for a long time. I used to think people kind of got lucky andor people like oh they just happened into this thing and like oh they're just good at that like I didn't realize there are actual skills of business just like a basketball player develops a skill like there are skills of sales there are skills of people management there's skills of recruiting there are skills of uh incentivizing a team properly there's a skill of setting a vision like there's and I used to think like those are just like esoteric fluffy things, but there are actual skills of business and there are people who have done incredible work at this in the past and they write books and some of them hold mastermind groups and some of them like they're happy to tell you all of it for free andor a small price compared to what you would, you know, make from there. So, I've I'm grateful for mentors that I've had as well.
>> Yeah. Uh guys, if there's going to be one skill in business that you need to focus on, hiring. Uh, I'll tell you that right off the bat that if you Let me say this. I am a sucker for giving away equity too quickly to people that I believe that I need. Um, being a CEO being, you know, being the owner of the business, it can be lonely. Um, you're by yourself. You don't really know which direction to go and you love bouncing ideas off people that are of equal level to you. When you're talking to your employees or your executive assistant, it's hard because they're going to always say yes. They're never going to say slap you across the face and be like you're being a stupid idiot. That that their job is to say yes to you. And so what I would tell you guys right off the bat is while while you are building your business regardless of what you're doing. If you're listening to this podcast right now, focus on the next person you want to hire, the next thing you want to delegate, focus on not giving away equity, but actually going through the trenches of doing the interview process. And I know this is again it's a little side tangent, but again when you're talking about skills, the hardest thing for people to learn is is leadership.
And it's for me, I came from financial poorness with my family. My parents never taught me anything about leadership. Like I had no idea. I worked a bunch of like nineto-ive jobs in my earlier years and I was always working for the corporations. And I' I'd tell you this, the the hardest mental shift that I've had to make becoming a CEO and running multiple businesses and doing all these deals is leadership is, you know, taking ownership of mistakes. Everything that goes wrong in your business is your fault, guys. It's not somebody else's. If another employee that you hire steals money from you, you hired the wrong person. It wasn't that they became a thief. It's because you worked with the wrong person. And so, um, Bridger, I I'll tell you this. We talked a little bit about funds in the beginning of this episode and I obviously want to do a deeper dive at a later episode. I would love to have you come back. Um, this has been what started as tangible advice on how to build a fund became such a a stronger mindset conversation that I'm going to probably put you as being like one of the first episodes cuz I think that everybody needs to hear this that regardless if you're building a fund or not, it's about investing in yourself for the long term. And like that is the mindset that you have to do to begin become good at investing. So thank you.
>> Well, yeah. And I and I'm happy to I love going action like actionable steps. We end up just getting on a tangent there, but >> we can go actionable steps of like building a fund, structure, raising capital. Like there's a lot of tangible uh things there as well. So anyways, appreciate you having me on though. Really fun.
>> Absolutely, man. What What's a way that people can get in touch with you?
>> We have now posted most of our stuff for free. We used to just have courses and things like that. Most of it is for free now. So I'll give you some free stuff that we just have for people that if they want to go deeper. So fundlaunch.com fundaunch.com has a free course on there. We have other stuff we help implement for paid but free courses. Furthermore, alt street is a little button on there. You'll see alt ltst like alt street alternative street. Uh that's there's 10 full mini courses filmed with top fund managers around the country. We flew to New York and did a masterclass style videos. They are completely free. So Alt Street is completely for free. We want to democratize and help more people understand funds. My I have a class there. My dad, you me I mentioned my dad. My dad has a full class on there for free on the internet right now. You can go learn from my dad on altre.com. We have a bunch of other great fund management along there. So if that's a good spot for we also have YouTube, we do a lot of on there as well. So YouTube under bridger pennington fund launch and altreet all free content. We used to have paid courses for a thousand or $2,000. We've essentially given all of that away for free now. We just give everything for free. We want to educate the masses. If people want help implementing their fund, great. That's paid. We can help implement your fund and build it with you. Have lawyers and people, but like education. Right now, we are just like, give it away for free. We want more people to learn about this. So, there you go.
>> Absolutely amazing, bro. Well, again, I want to thank you for being on the podcast, guys. You've been listening to Bridger Pennington on the Investor Semester podcast. Please do not forget to subscribe, leave a fivestar review, and feel free to share this episode with your friends if you got any value. We're going to see you guys on the next episode, but until then, keep grinding, keep making offers, and for God's sake, call your leads. We'll see you guys next time.