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S2E7 – Bill Militello: From Wall Street financial advising to capital infusion. Bill Militello is a USMC veteran and entrepreneur. We had a fascinating discussion about his days as an equity trader on Wall Street, to growing his financial advising business that he sold, to now running other ventures that include capital for startups and other businesses. You will learn a lot from this episode!

Aaron  00:05
I’m Aaron Spatz and this is The Veterans Business Podcast. A podcast centered around the stories of US military veterans and their adventures in the business world following their time in service, its stories of challenges and obstacles and an inside look at how veterans find their life’s work, their purpose, and their post-military lives.

Welcome to The Veterans Business Podcast. I’m so, so, so excited that you’re here. Thank you for taking the time to tune in. If you’re listening to the show in audio form, whether it’s Apple or Spotify, one, please subscribe. That way, you’re in the know of whenever we have a new episode aired. And also, for those of you that are listening and not watching, the show is actually available to view on my YouTube channel. So please be sure to check that out. It’s been a blast to do actual real interviews where we can virtually see people.

I’m so excited to announce and introduce our guest today. Bill Militello is a veteran Marine officer served as a SIGINT (Signals Intelligence Officer) during his five years of service. He commissioned by way of the US Naval Academy. So sorry, bill, you know, we’ll just move on. And he has an MSBA from Boston University. Bill spent time in New York City as an equity trader and has since been on an entrepreneurial journey where he has started and sold at least one company. We’ll get more details on all that here shortly. He’s a founder of Militello Capital and co-founder of Localvest. Bill, sincere pleasure. Thank you so much for agreeing to be on the show.

Bill  01:39
Oh, thank you, Aaron. It’s my pleasure. Thanks for having me.

Aaron  01:42
Absolutely. Yeah. So, no, just so obviously take us through your path into the military. What did you do? And of course, what motivated you to leave and go to work in New York?

Bill  01:55
Yeah, sure. Well, again, thank you. And maybe we’ll start in the beginning and really what my motivation was to join the military and to go into the Marine Corps. And really, so I’m 51 and I graduated high school in 1987, went and enlisted in the Navy for a year and then got picked up to go to the Naval Academy. But, you know, I guess my journey started really, I think, around eighth grade, 1983 in the Marine Corps barracks bombing in Beirut. And I saw that on TV and quite frankly, it pissed me off. And so that was it. I applied to one school and after two tries, I got in and knew that I wanted to go into the Marine Corps. Yeah. So that’s what happened.

Aaron  02:55
Wow. Wow. I think you’re the first I’ve ever met that was motivated by the Beirut barracks bombing. That’s quite incredible.

Bill  03:08
You know, it made an impact and, you know, I’m sure, just like there’s plenty of guys and ladies out there that were motivated into the service after 9/11. You know, that’s a little past my time, but you know, there are these moments in history that get young folks moving in one direction or another, and that’s what it did for me. And I knew that the military is a young man, young woman’s game. And so I wanted to do it. I wanted to do it, obviously when I was young, did it, and we grew up outside of New York City, kind of a stone’s throw from the World Trade Center. And in fact, I went to high school in Jersey City, New Jersey and I’m on my commute with all the Wall Streeters on the number 14A bus every morning. I’d see the sunrise between the Twin Towers every morning in high school. And I knew that I eventually wanted to go into financial services, but I thought I would start my career off by serving in the Marine Corps. And so I did that and then there was the transition into financial services and then eventually, you know, an entrepreneurial venture in financial services.

Aaron  04:26
Yeah, no. So I was looking at your background. So you, if I remember right, so after you separated from the Marine Corps, then you, I believe, I mean, did you go to work in Wall Street as a trader?

Bill  04:37
I did. There was about a one-year gap before that where I worked for a very successful financial advisor, financial planner. And that was kind of like my transition. My wife and I like to refer to this as before transition assistance and all the programs that exist for veterans, right? So I like to refer to my transition is more of a flaming reentry into society.

Aaron  05:06
That’s a great visual.

Bill  05:07
What’s that? I’m sorry.

Aaron  05:09
No, I was just like, that’s a great visual.

Bill  05:12
Well, yeah, it wasn’t fun, right? And back then, back in the late 90s, mid-90s, the programs didn’t exist. And so you know, you were wearing a uniform one day and the next day you weren’t. You know, you had a badge to get into the building one day and the next day you weren’t. So you just went out there and you just started swimming and stay afloat. And so, yeah, I did a year with a very successful financial advisor, taught me a lot, knew that eventually I wanted to make my way up to Wall Street. And so I knocked on lots of doors, talked to lots of veterans who were really the ones that kind of helped you get your foot in the door and eventually landed a job as an equity trader. And so that was my first job on Wall Street.

Aaron  06:07
Yes. I mean, share with us. For those, including myself, that are not well-versed in that world, I mean, what did all that involve?

Bill  06:15
Well, it was a lot of fun, right? And it was also the late 90s. So kind of all the stories are true, but we won’t go into those here on this channel. And it was a tough job. I think you’re particularly well suited to do that job coming from the Marine Corps. You have to make a lot of decisions and very quickly, and some of them are good and some bad, and you know, if you make a bad decision, you just make another decision, right? So those are kind of the great skills or qualities of a trader. And so yeah, I came aboard the firm back when it was past the top. And so we were now, I guess, in the decline in the NASDAQ. It was past the 5,000. We’re on the backside of that. So officially, we’re in a bear market. And then you said Wall Street was kind of a wounded bear at the time. And then of course, you know, 9/11 happens. And you know, that was a pretty traumatic event and Wall Street changed after that as well. But you know, trading, for people who liked that fast-paced action and that immediate gratification of seeing the result of your decisions is a ton of fun. It was a ton of fun. And I’m really glad I had that experience.

Aaron  07:53
I’m sure you learned a ton in that process. I mean, I can’t imagine some of the things you saw.

Bill  08:00
Well, you know, I did learn a lot, but I will say that I did reinforce a lot of the things that they teach in the Marine Corps. They taught us at the Naval Academy, you know, things that you just know as a veteran and it reinforced some things around integrity, right? And how to treat people. And so certainly, financial services has some of the finest minds in the world. And you know, some of the greatest people I’ve ever met and also some of the worst people I’ve ever met. And you know, when there’s a lot of money involved, really, you see people do things in a way that you wholeheartedly disagree with and runs contrary to all your values.

And, you know, for those that were great examples, I’ve relationships to this day. And for those that weren’t, you know, the parts that I didn’t like, you know, the stories are true, that there were people that had the mentality that, hey, broker made money, house made money, two out of three ain’t bad, right? And that just never said, you know, I never really felt anything, but I don’t have an opposition to that philosophy. And that really set me up to be quite frank for my next two jobs. When I saw that and I resisted that, it only made me think like, hey, I want to do something very different than that mentality.

Aaron  09:40
Yeah, no, that’s awesome. That’s just a massive way to open your eyes to that world and get a fire hose of experience and see the good, the bad, and the ugly. I’m sure it just reinforced to you that we need – I’m not saying they’re all like that. They’re not immoral abstaining people. I mean, there’s good and bad in every industry, right?

Bill  10:05
Yes, correct.

Aaron  10:06
But it just helped you reinforce your own, like, it forced you to come to terms with your own values, right? It forced you to come to terms with like, okay, everything that I was taught, everything that I learned, and it was just forced onto me as a Marine officer, but then just who you are obviously. But it really opened your eyes because there’s an opportunity inside of that, right? Because you’re seeing things, you’re approaching things differently than most people do. And so, obviously, I think that’s fantastic.

Bill  10:39
Well, thanks. I think everybody and every veteran would probably approach things the same way as I did that, you know, when the opportunity presented itself, which was right after 9/11, and there was massive layoffs and I was part of those layoffs. It was a scary time, right? But it was perfect timing at this as well. I took a job as a consultant to the Securities and Exchange Commission for about a year and a half, two years. And I felt really good about bringing my SIGINT analytical schools skills plus my knowledge of Wall Street and how money worked and moved and the various motivations of the financial players and helped build cases for the SEC. And then eventually hung out a shingle to start my own registered investment advisory firm, which I didn’t want to work on a commission-based model. I wanted to kind of be on the same side as my clients. And so that’s when I started Piedmont, my first company, and where I was a fee-only fiduciary to my clients. And that was really born out of my desire to do something very different than the Wall Street model.

Aaron  12:02
No. Well, you took the next question right in my mouth. So we were exactly where we’re headed. So yeah, tell me the story behind Piedmont. What motivated you to get that going? How long did it take you to get going to where you’re able to swim?

Bill  12:17
Yeah. So, you know, it was like everybody, every other entrepreneur’s journey. I’m sure mine was no different. It was a side hustle for a little while, while I got some things together, but I didn’t take a paycheck for 18 months. And you went out there and you know, put on my tie and my suit and shine my shoes and my hair was a little darker and a little shorter back then. And I’d go out and give my presentations in front of high-net-worth individuals, unpaid all. And for some reason, I’d be able to get in front of these folks and give my presentation, whatever, buy them lunch, buy them a coffee, buy them a glass of wine and talk to them.

And they’d they said, “Wow, Bill, you know, you’re an impressive young man and I like your background and thank you for your service. But I already have a guy. I’ve already got a guy.” And so you know, you hear that enough times and the bills are piling up there and you extinguish your personal savings. And you got a couple of car payments, a mortgage, a baby at home and another one on the way, and you start to feel the pressure. And it probably not unlike every entrepreneur who started a company.

Aaron  13:44
So, I mean, you got me hanging on the edge of my seat now. So what happens next, man?

Bill  13:49
What’s next is the traditional way of like, hey, showing them my pie chart, right? Here’s my asset allocation model and seeing if they want to buy it and open up an account with me. That wasn’t working. You know, I was a spectacular failure at getting them to open accounts with me. And really, it was out of frustration and feeling like I turned into a professional visitor for a living, that I was like, my God, you know, what am I doing? I was usually pretty calm and cool in front of people and I think I just lost my patience a few times. And I just said, “What would it take for you to open an account with me?”

Aaron  14:30
Oh my god.

Bill  14:30
Let’s just bottom line this, people.

Aaron  14:33
You finally said it. You finally said it.

Bill  14:35
What is it? So I was like, come on, let’s do some truth telling here. You can BS me all day long and pat me on the hat head and thanked me for my service, but that isn’t going to – I can’t bring that ‘thank you’ to the grocery store, right? And to be perfectly honest, I can remember like it was yesterday. I know it was a while ago here we talking, a long time ago now.

Aaron  15:05
It was just a couple of days ago.

Bill  15:06
A couple of days ago. I don’t know, 15 years ago or so. But I remember that meeting and the guy kind of pushed back in his chair from the table and just said, “Show me a deal.” I said, “What do you want me to do? Research a stock for you, a mutual fund? What is it that you want me to do?” And he goes, “No. How did I make my money?” I go, “You…” In this case, this guy was an architect builder. You know, certainly had a nice little business with his architecture design business. But really, he did it in real estate. You know, “Oh, you build homes, you flip them, you have an apartment building, you made some money on that. You had a land deal, but it’s real estate.” And he goes, “Exactly. Show me a deal like that.” I said, “Oh, okay. I had no idea. I mean, I want you to open an account with me at fidelity. And I’m going to buy some mutual funds for you, right?” And he says, “No. Show me a deal like that.”

And so I went out. I had nothing else to do, right? It’s not like I had a lot of money to manage. And I found him a deal. And I said, “Hey, here’s an apartment project that’s almost complete. They need some money. You want to take a look at it?” And he goes, “Yeah. Go get these questions answered.” I’d run back and forth over the course of maybe a month or two and get these questions answered. And I was happy because I was kind of learning. And again, my business was wasn’t exactly on fire.

And then finally, I got all those questions answered and we met at a Starbucks on a Sunday, which, again, I was getting pretty good at being a professional visitor. And I said, just kind of offhand that I was like, “Okay. Well, I got all your questions. What do you want to do?” He says, “I think I’m going to put 400 grand in this deal.” What? For real? And I mean, I didn’t get a commission on it or anything, but I called up the guy and I called up the developer and put the two of them together.

And you know, so I learned a couple of things there, right? One is I learned his process of diligencing real estate deals, right? Commercial real estate deals. I also realized what most high-net-worth people are. And they’re not managers at Fortune 1000 companies, they’re entrepreneurs, right? That’s how they made their money. And so as a financial advisor, I needed to talk entrepreneur to these guys in order to get them to listen. And they want to make money the same way that they made their own wealth. And if you can help them by going out and bird-dogging deals for them, then they’ll invest.

And then what I found out next, which what helped my financial advisory practice is that after they were in the first deal, the next question was: So you have any more deals? The first couple of times I said, “No, that’s not my business. I just open accounts for mutual funds.” And I smartened up, right? Former Marine. So it took me a couple of times. But eventually, I was like, of course I do. But you know, it’d been imprudent of me as a fiduciary to show you any more deals without really having a better understanding of your total financial picture.

Aaron  18:35
Nice.

Bill  18:36
And so they were like, “Well, what do you want to do? You want to see my statement, my brokerage statements? What do you want to do?” And I said, “Yeah, I want you to send it to me.” Well, after saying it, it would show up two days later in a FedEx package. You know, it’d be the 80-page Morgan Stanley statement and I’d go through it and show them where they could save some money or they might be able to improve their returns. And I’d meet with them and show them.

Aaron  19:02
Wow.

Bill  19:03
And I would say, “Well, what do you want to do?” And I said, “Do you want to open an account?” And they said, “Yeah. Just don’t go backwards.” So they had no expectation of making money from the stock and the bond market. They just wanted access to more deals. They wanted to bird-dog more deals. And so that was what led me to creating Militello Capital.

Aaron  19:27
Okay. Wow. But was there ever a point where then you became a part of that transaction?

Bill  19:33
Well, that’s why I created MC. I created Militello Capital to be like a joint venture private equity firm where I would aggregate my wealth management clients into what we’ll call SPV (special purpose vehicles) for the sole purpose of investing in these deals. And so then instead of me working pro bono, which I had for a number of years, I would at least be able to charge a management fee and a carried interest in some cases.

Aaron  20:01
Wow. Wow. That’s an incredible story. I can’t imagine what that was like you’re doing all the due diligence and work for this guy and there’s wondering like, okay, I mean, what does the end result look like? And I like what you said how you got to speak entrepreneur to other entrepreneurs and speak in the language that they understand. And so with that kind of newfound knowledge, what did that do for you then going forward in your business?

Bill  20:34
It changed my life. It changed my life. As soon as I realized that most people, if you come at this as a financial advisor, which I was, I’m no longer, but you know, I was to break into the business. I was trying to grow my book of business and earn a living doing this. And when you realize that nobody ever dollar cost average their way to $10 million investing in mutual funds, that they all want the big whale, right? Everybody wants the big accounts, but they’re fishing in the wrong pond or they’re speaking the wrong language, right? They’re speaking Mandarin when they should be speaking Cantonese, right? They think they’re doing it, but they’re not.

And so once you focus on entrepreneurs and if you’re first-generation wealth, you never had money, you’ll hit it off with people who were first-generation wealth, you know, the entrepreneurs, small business owners. And again, you don’t approach them as a financial advisor. You approach them as an entrepreneur and you start talking to them in terms of wealth creation and risk and they just resonate with that. They just resonate with this idea that, hey, I could get a market rate of return by myself. I can go buy an index fund. I don’t need a financial advisor to do that. But if I want wealth creation, now I got to go with somebody who’s going to go find me deals that I understand. And so my business exploded in a good way from that.

Aaron  22:16
Good thing.

Bill  22:16
The good explosion.

Aaron  22:17
Right. Yeah. We don’t want stuff burning to the ground. Most certainly.

Bill  22:22
Yes, sir.

Aaron  22:23
No, that’s a wow. That’s a huge takeaway. I think you’re the first person I’ve met that made that observation. And so I’m just thinking about different industries, about how we should approach, you know, if you’re in a B2B type of business or, I mean, I guess in your example, you’re like in this hybrid model of like B2B and B2C.

Bill  22:47
Correct. You’re absolutely correct.

Aaron  22:47
Consumer is the business.

Bill  22:48
Yes. And so that was really interesting. And yeah, it was really interesting. It was a lot of fun. And eventually, I decided that, hey, I was having a lot more fun creating deals and finding them and talking with entrepreneurs, whether it’s startups, technology companies, or real estate deals. Those are the types of folks that I’m really starting to enjoy.

Aaron  23:24
No. So, I mean, obviously, fascinating, fascinating journey that you’ve been on and then you’re taking the learnings and the things and just the realizations and the lessons learned, and you just kind of rolling them forward into, like, what’s next. So what did that do for your business then? I mean, like you said, the business blew up. It was just starting to just really get traction, but how did that happen? Was it like he referring other business to you? Or now that you understand you need to speak entrepreneur at entrepreneur, your rate of closing deals now just went through the roof because you’re speaking in different languages?

Bill  24:03
Yeah. You were sort of in the mix now, right? You were in the mix of very happy wealth management clients who were high net worth. They run in circles that have other high-net-worth friends. You were getting referrals; you were doing deals with folks. And not everybody has all their money in real estate. Doesn’t have all their money in their company. And so you’re finding business that way. And you know, it got really busy. And as I said, really, I was very busy and then I’m not afraid of hard work as any veteran, but I became pretty, pretty burnt out running two companies, what it turned out the base. So I thought it was time to really focus on deals. And I did that for a number of years and still have it and still do some. But I think after investing in, I think, 41 companies, about 100 transactions on the private operating company side, dozens of real estate deals, most of which were in the eight-figure range, I think, really, I hit the pause button and I said, “Gee.”

You know, the toughest part for me, because we didn’t go out and find the real estate deals, right? Militello Capital’s gas in the tank. We were equity. And so we would conduct diligence on the deal along with the operator and they would operate the business. But still when we did business with multiple operators and like I said, dozens of private operating companies, but I think really the toughest part for me was telling an operator or telling an entrepreneur no. And of course, especially a veteran entrepreneur because I can see the fire in their eyes. I can see the fire in their belly, like, you know? And now I was that guy who was telling them no, right? And that didn’t sit well with me.

And, you know, and I’m very sympathetic to the cause of the entrepreneur. And there was only a finite amount of money that I could put to work, right? And so I didn’t need to say no. And I realized from experience on both sides of the table how very hard it is for an entrepreneur to raise money for their company or for their real estate deal. It’s the outside of the Marine Corps or is a veteran and serving in uniform, it’s probably the toughest job. And unfortunately, it comes with the territory if you want to do want to grow a business or you want to scale it, you’re going to need some outside capital to gas in the tank. And so I felt really bad about that. And I was like, gee. And the way that I handled that was, you know, hey, talk to Bob or Sam or Sally or Harry or something. And, you know, I’d make introductions for them because I felt so bad telling them no, right? And it wasn’t because it wasn’t a good deal. It’s just, hey, we had a finite amount of capital. If it was a bad deal, I’d tell them that too. But for the good deals, I really try to help them out. And that has its limits too, Aaron.

And so, you know, I created Localvest with John Bracken. I co-founder. Very, very brilliant technologist, who’s the co-founder of evite.com. Maybe you used it to have a birthday party at one time, right? Invite people to a birthday party or holiday party. So we created Localvest really to connect the right investor to the entrepreneur, right? Sort of like a match.com for connecting capital to the entrepreneur. And so, again, what we found out and why raising capital is so difficult and why it’s so easy for some and so almost impossible for other people, it comes down to their network, right? And so we’d like to say or have come to this conclusion that one of the determinants of an entrepreneur success is a function of the size of the wallet of their network.

And veterans are at a particular disadvantage because for years, they’ve put themselves in an environment where people really don’t work for money, right? You get a paycheck twice a month, but you know, nobody’s getting rich in uniform, right? And so the people that you’ve surrounded yourself with, your trust circle, the size of that wallet is really limited. And so, you know, that people write checks into private deals, whether it’s your startup, your company, if you want to start a franchise, you need equity, right? You want to buy real estate deal, you need equity. You need people who know you, trust you, like you, respect you, who will write a check. An I call that check trust capital, right?

And so really, your pond that you’re fishing from for that trust capital as an entrepreneur is pretty finite, right? It’s friends and family, people that know you, trust you, like you. And really, if they don’t have any money, you know, you’re screwed. And you can go to the accelerators that exist, and there’s very good ones that teach you about entrepreneurship and this very good incubators and even governmental programs and things like that. They’re wonderful, but there’s a gaping hole in every one of those places and it’s called capital, right? And it’s gas in the tank. You can have a great indie sport, Indy race car or NASCAR, but if you don’t put gas in the tank, it’s not going.

Aaron  30:52
That’s true. Yeah, that’s true.

Bill  30:55
We need money. And so that’s really what it comes down to is that we created Localvest because we needed to enlarge the size of that pond for trust capital. And we do it through this concept called investor groups that were analogous to say, private Facebook groups or private LinkedIn groups. And those groups are organized. They’re self-organized just like Facebook and LinkedIn based on affinity, based on investment interest, based on location. You know, there’s multiple veteran groups that have formed on Localvest and, you know, it’s free to do so just like it is on LinkedIn and Facebook. But the difference is that this is purpose-built. Localvest is a plat platform purpose-built to help investors and investor groups evaluate private investments in a compliant manner, right? It’s not crowdfunding, it’s kind of matchmaking. And so that’s really how one of the ways I’m trying to give back.

Aaron  32:09
Man, that’s amazing. No, I love it. Well, because they’re very real problems to solve, right? Like I’ve heard it said through other people that have walked the ground miles in front of me. I’m cherry-picking from past episodes that I’ve recorded. I’m just kind of blending them all into one right now, but you know, the concept of understanding that there is a problem to solve. I mean, you and I learned it as Marine officers is don’t fall in love with your plan, right? I mean, we’ve got that drilled into our heads. Don’t fall in love with your plan. The reverse of that, the opposite position of that is really to fall in love with the problem and then get creative with what the solution may be and trust that the solution’s there. But if you stay problem focused, then you’ll eventually iterate through enough ideas to find a great solution. I mean, it sounds like, I mean –

Bill  33:09
You eventually will, right? If you stay the course and there’ll be those days where on the desk behind me, I’ve been sitting in this chair in this office for a little over 14 years. And there was plenty of times in the early days that my head was down, my forehead was down on the desk behind me and tears were coming out of my eyes. You know, I’m not too proud to tell you that, where I didn’t know what to do next. And I felt like the world was coming in around me. And I think that that’s a journey that all entrepreneurs take is that the lows are pretty doggone low. The highs are amazing, right? But as you were saying about don’t fall in love with the plan, I was explaining to my 15-year-old son yesterday, I was like, “Listen, you know, there’s a saying in the Marine Corps that if everything’s going according to plan, it’s an ambush.”

Aaron  34:14
That’s good.

Bill  34:14
So, you know, always keep your guard up, right?

Aaron  34:15
That’s good. That’s really good. Walk us through the transaction then for Piedmont. Because you sold that, right?

Bill  34:24
Yes. The book I transitioned it to a financial advisor, right? And I had two Piedmont’s. I had one that’s a wealth management firm and which I sold. And then also I had a 401(k) consulting business that I sold in 2011. So had those two transactions. And yeah, so started four companies, sold two.

Aaron  34:48
So I mean, for those – I’ve never done that before. I mean, so give us a little bit insight as to what is the – I mean, so we’ve talked quite a bit now. I feel like at least, you know, just the startup and the aha moments, the breakthrough moments, right? But what does that look like then when you’re getting… how do I ask? Like for me, I think I’m more fascinated by what led you to the decision that you wanted to sell, right? And then walk me through that. But then also walk me through how did that even happen, right?

Bill  35:23
Sure. So the first transaction was in 2011. And to be perfectly frank, everything was going great with the business and it was an ATM machine. And sometimes I regret selling it, but as you said, I started companies and now I was like, gee, I’ve never experienced the sale of a company before and I’ve got one to sell. Let’s see what happens. And so it was an odd situation. Because like I said, it was a 401(k) consulting business who was a registered investment advisor. And so I went to various – I don’t know if you care to hear this story or not.

Aaron  36:03
Please, no, absolutely. Please.

Bill  36:06
I went to a bunch of business brokers that were in the business of valuing RIA as registered investment advisory firms and finding buyers for them. And so there were business brokers, right? They would call themselves investment bankers, but let’s just call the business brokers. And I went to them with this business and they said, “People don’t buy. People don’t buy other 401(k) consultant business. You’re gonna have a very, very tough time.” Okay. I’m going to have a tough time.

I said, “Oh, and by the way, when I sell it, I’m not selling the book or the assets, I’m doing a stock sale. I’m selling the company.” And they’re like, “Nobody’s ever going to buy a corporation, right? Because they don’t want the liabilities associated with the corporation. They want to buy the book, right? They want the contracts.” And I said, “Well, that’s the way I’m going to do it.” They’re like, “Man, you’re in a minority. You’re just not never going to get this deal done.” And I was like, “Oh, yeah. There’s one more thing.” I said, “I’m only selling 90% of the company.” Why only 90%? I said, “Because I got a business partner that owns the other 10% and he doesn’t want to sell, he wants to go along with it.” And back then, I didn’t have sophisticated tag-along, drag-along rights in my corporate, you know, in my documents. So he’s got to go with the company. So I’m only selling 90% and they said, “This will never sell.” I had like 50 bidders.

Aaron  37:47
Oh my gosh.

Bill  37:48
Yeah. And I really had my choice and one guy I really liked and we sat down and he wanted to build a 401(k) business and he owned a bank at a small community bank down south. And that ended up falling through. He just couldn’t get his partners to agree. And then I sold it to somebody else who it was exactly what they were looking for and they paid a nice price for it. And I think that I sold it to a former corporate executive, this woman. And she was so successful with it. She subsequently sold again.

Aaron  38:26
Oh, wow.

Bill  38:28
So yeah, I’m actually proud of that. I’m proud that I sold something that a value that actually increased in value over time through her efforts. And that she was able to sell that.

Aaron  38:42
So explain to me why was this guy so adamant, the first guy you’re talking about that that was never going to work because all your caveats, right? But all of a sudden, I mean, you got people lining up to do a deal. And so I’m generally curious because, again, I don’t know this world as well as you do, obviously. So help me understand that. Why would I buy a business with there’s no book of business coming with it? So am I buying your systems?

Bill  39:14
Well, you’re buying the business and the book was in it, right? I was selling the corporation, the stock, and inside of it was the book.

Aaron  39:25
Oh, okay. Okay. Got it.

Bill  39:25
But I wasn’t going to extract the book, put it into their business and then dismantle my corporation.

Aaron  39:31
I see. Okay. Yep. That makes total sense now. Okay. Got it. Got it.

Bill  39:35
I just wasn’t going to go through those steps. It was just going to be too laborious.

Aaron  39:39
I see.

Bill  39:40
And then if they wanted to buy a company, I mean, gosh, you know, pick up the Wall Street Journal. There’s companies that are bought and sold every day. I’m like, why couldn’t it be mine?

Aaron  39:50
Right. That’s awesome. That’s awesome. What advice would you have then for those that may be listening or watching this? You know, there’s probably a few audiences, right? There’s the career professionals that are listening to this that wants to start a business, but they just haven’t done so yet. And then you’ve got the other group that is on the journey, maybe very early into that journey. So what advice would you have for those people when it comes to starting a business?

Bill  40:19
I think maybe the former group. Listen, there’s a lot of resources out there especially as a veteran and, you know, and it’s overwhelming, right? And so, you know, take your pick and your knowledge is going to go way up. I think those that are already on the journey, quite frankly, I’ve made the offer for years that, you know, a veteran has a question, I get people connect to me on LinkedIn, you know, former Marines or whomever, other veterans, and, you know, hey, can I pick your brain for 30 minutes? And I feel, again, you know, I want to help them. And so I do.

But really, the way I don’t know everything about everything, right? I have a narrow expertise and my expertise lies in raising capital and knowing the puts and the takes of raising capital, the laws, the regulations, the how’s, how to kind of create a deal, right? And I think that there is a gaping hole in need in the marketplace to help veterans better understand that process, but coming to the table with clean hands, not coming to the table and saying, “Oh, and by the way, my broker dealer can do it for 10% commission.”

And so recently, I created a group with some other veterans called 10X Vets. And, you know, it’s a meetup. It’s an online meetup. And lots of people, lots of veterans from lots of walks of life and different areas of business come there. But in particular, I lead what we call a circle and it’s called the Capital Circle. And I’m really passionate about this part of my life, my business life, in leading the Capital Circle at 10X Vets. Because we have three goals to help those veteran entrepreneurs, business owners, people in real estate, people in venture, who raising capital is a part of their business.

And so, you know, my three goals. One is to increase people’s knowledge base, right? And so what’s exciting to me when talking to somebody is not the first 30 minutes that we have a conversation. It’s taking that 101 level conversation to use the college coursework analogy or metaphor. Taking that 101 level conversation, but over time growing into a 401 level conversation. So now everybody’s operating at a 401 level and their knowledge has increased dramatically.

So that’s goal number one. The second goal is in this trust circle, in this circle of implicit trust among veteran entrepreneurs, is for people to bring their deals. Not in a shark tank way, right? Not in a, hey, let me beat the crap out of you and tell you how stupid you are demean you. No. But everybody who’s part of the circle has a different expertise. It may be underwriting cars or real estate deals. It may be something else in general contracting. You know, certainly, I bring some things to the table. And so if you have a question, if you want to bring your deal to this circle, then we’ll evaluate it and you up your game, right? You up your game and you do it surrounded by people who only want to see you succeed. And then certainly that’s occurred.

And then the third is when people have a real need. They have a capital need and say, “Gee, I’m raising a million bucks for this apartment deal that I’m doing. And I’m in closing’s ten days from now. And I’m short of a hundred grand.” And you bring the deal. And you bring the deal to this trusted group and they might be able to bring assets. They might be able to bring their network to the table to help you fund it. They might be able to bring an investor to the table to help. You might write the check yourself, right? Because you know the deal, you trust the operator, right? Because you’re really betting the jockey and not necessarily the horse, which is I think really the secret sauce or the magic of a veteran entrepreneur is that you really do bet the jockey because they’ll find a way up the hill, Aaron, right? You know, that’s what’s so magical about a veteran entrepreneur. They’re going to find their way up the hill no matter what.

Aaron  45:38
That’s true. Love it. No, I love that. You touched on it briefly and we talked about it just really lightly, but just real quick. Share with us again what you’re currently up to and how people can find you?

Bill  45:53
Sure. So I’m doing two things, right? I’m the co-founder and CEO of localvest.com. And you could find me at my email address: bill@localvest.com. And just as it sounds. LOCALVEST.com. So bill@localvest.com. And that’s a free platform for investors and investor groups. And we’re seeing lots of veteran investor groups’ form there to evaluate private deals and to really help the veteran entrepreneurial community connect to capital. Okay. That’s very important.

So that’s what I do most of the time. And then I’ve got co-founded this group really to bring the how to the table and the network to the table of it’s called 10X Vets. 10, the number 10X and Vets. And that’s really about how to 10X your game, how to 10X your business. Because you can 2X your business, you could 3X your business through efforting, right? We’re not shy about working hard, right? I’ve never met a veteran who’s really shy about working hard and you can 2X your business, or 3X your business that way, but you can’t 10X your business that way. You’ll die, right? You need resources, you need strategies, you need help. And that’s what’s 10X Vets is about and from there are these circles that are created – these business or functional area circles, whether it’s B2B or recruiters circle, or an e-com circle or financial advisors. I happen to lead the Capital Circle, right?

And so, if anybody, any veteran entrepreneur, has capital raising as a central part of their business, then they should consider coming to one of our meetings, one of our Zoom meetings and checking it out. And I shared with you the goals that we have there. So just email me at bill@localvest.com and I’ll direct you in whatever way you need help.

Aaron  48:07
No, well, I can’t thank you enough, Bill.

Bill  48:12
Thank you, Aaron.

Aaron  48:12
Yeah. No, I really, really appreciate the insights. This is absolutely fascinating. I love your approach, and you know, just thank you for sharing really openly about some of the struggles and some of the challenges that you went through. I just think it’s incredibly encouraging because you realize, I mean, everybody’s been through those early days too, you know, and then obviously on the capital raising side of that too, is like, you know, you have very unique perspective there. So if there’s anything else that you wanted to share, if there’s any final parting thoughts, parting shots, by all means, this is it.

Bill  48:55
Well, I mean, first, Aaron, thank you for what you’re doing for the veteran community. It’s a tremendous service. You know, keep going. Keep going. We need more of these things. We need to coalesce the veteran community, the veteran entrepreneur community, business community. It’s 20 million strong and, you know, we should be doing business with one another. And I guess, and I’m not sure who I’m speaking to when I say this, but I feel like I should, that I think some of the biggest mistakes I made leaving the military is I ran up to Wall Street and I ran away from the military and the veteran community. Because I thought I wanted nothing to do with the DOD after getting out and I wanted to prove that I can do it on my own and not fall back on that nor the community.

And that was a mistake. That was a mistake because what I found out is that civilians who weren’t veterans, they just think differently, right? And what I appreciate about my friends who are veterans, my business associates who are veterans, is that, you know, they come with these three qualities of intelligence, integrity, and grit. And every time I’ve been disappointed in business, it’s usually from somebody who’s not a veteran and they’re missing one of those things and it’s usually integrity, right? And sometimes it’s grit. And veterans have those three qualities, Aaron, in spades. And we need to do more to what you’re doing – to coalesce this business community and help one another out.

Aaron  50:51
Beautifully said. No, once again, thank you, Bill.

Bill  50:55
Thank you, Aaron. It’s been my pleasure, real honor. Thanks for having me.

Aaron  51:01
So Bill and I had some offline conversation after we thought we were done and it was really terrific. So I want to go ahead and roll that for you now. But I want to explain it to you before you listen. That way, you understood why it was all of a sudden we jump in. So take a look. It’s just one of those things when you’re getting started. You’re either going into a service industry or that’s already has – there’s already a ton of companies doing a similar business. So you know, how do you differentiate, right?

Bill  51:32
Yeah. Well, I used to tell financial advisors, how do you ask them the same question? How do you differentiate yourself? And you know what I heard 300 times? I’m a fee-only. I’m a fee-only fiduciary that gives great service. I said, “Well, if everybody’s differentiator is the same three things, it’s not a differentiator.

Aaron  51:54
Yeah. Wow.

Bill  51:56
I said, “You need to pick something else.” Those are table stakes. Those are not differentiators, right? People expect great service. People expect you what? Oh, you’re a fiduciary. Like what’s the alternative? You’re going to steal from me? You’re going to like to me? Come on! You talk to people and they look at you like, you know, I don’t know.

Maybe I was trying too hard. I don’t know. And then fee-only. I’m like, listen, fee-only is great. That’s what I went into after seeing the commission-based model on Wall Street. But listen, if it’s financial advisors, fee-only is no longer a differentiator. One, because every RIA is doing it. But number two is that I saw the writing on the wall five, six, seven years ago when Merrill Lynch and Morgan Stanley and all the big broker dealers all went fee-only, right? And now they’re giving away commissions. So everybody’s fee-only. They’re like, but we’re a fiduciary. I’m like, okay. Point out that word to me in the Investment Advisers Act of 1940 or the Securities and Exchange Act, the ‘33 and ’34. Show me that word. It doesn’t exist.

Aaron  53:21
Wow.

Bill  53:22
It doesn’t exist.

Aaron  53:23
Wow.

Bill  53:22
So basically you’re saying, my guy’s a thief who charge, right? And I made a bad decision. I’m like, you guys have lost your minds and like, you’re going to get killed by UBS and Merrill Lynch and Morgan Stanley, JP Morgan. And guess what? They’re eating their lunch now.

Aaron  53:44
What was the differentiator then for those guys, for people?

Bill  53:51
Well, back in the day when RIA started, it was fee-only was the model, right? Fee-only that, hey, I’m never going to sell you anything. We’re just going to do a percentage of assets under management. I’m a fiduciary. You know, that played well. You know, maybe better service because they were making more money per client and they were guaranteeing their income, this annuity stream that they’d collect every month or every quarter, then they wouldn’t have to have 300 clients. They could have 40 or 50 or 60 clients. And so they would provide better service. And so that was a differentiator. But what has happened over the last 30 years is massive fee contraction.

I gave a presentation in Tampa about six, seven years ago to RIAs and I talked about fee contraction. I said, “Yo. That first job out of the Marine Corps when I went to work for a financial advisor. I said he was charging 2% a year. And I was like, and what is it today? Well, seven years ago, it was like 1%. It’s less than that now.” And he goes, “Man, when I got started in 1990, it was 3%.” I said, “Okay. So it’s been 3%. And now it’s like a half a percent.” So, you know, that model has not come down by accident. It’s coming down by the massive amount of competition for those accounts. It’s basic economics, right?

And so eventually, as we talked about earlier, is that to get beta, to get a performance relative to the stock market, it should effectively cost you nothing. Because I can buy an ETF. I can buy a Vanguard mutual fund. I can do whatever it is. And for eight basis points in my product, I can get a beta of one. Now, how do you differentiate yourself then? If market returns less fees or free, how do you differentiate yourself? And in my opinion, there’s less than a handful of ways of doing it. You can have an accounting firm and you could do this as a side, as a party business. So you’ve got access to your 500 tax returns a year. You’re going to pick up some of that money. You are an estate planning attorney or your dad is an estate planning attorney, or your a have a massive insurance business, you know, PNC business, life business, whatever. And so you’ve got access to all of these people and you’ve got some relationship with them and you can turn them into wealth management clients.

That’s been done. So if you don’t have any of those three things, there’s only one thing left. Lead with the deal. Go after high-net-worth business owners and show them private deals in the same way that they grew their wealth. They built apartment buildings, show them an apartment building deal. They made their money in technology, show them B2B, SaaS startup. Get them access to well-vetted deals. Or else you’re going as a financial advisor, you’re kind of going to be on this decline curve. And the only thing – sorry for yammering.

Aaron  57:29
No, this is awesome.

Bill  57:30
But the economics of that, the only reason why these hundred thousand financial advisors haven’t gone out of business yet is that, you know, we’ve been in a 13-year bull market. I mean, the Dow bottomed at 6,600 in March of 2007.

Aaron  57:54
Wow.

Bill  57:54
2008, 2007. And let’s see. In February, pre-COVID, it hit 29,000 and change. So you’re talking a four and a half fold increase for doing nothing, right? Four and a half fold increase. So yeah, you can survive a 50% cut in your fees when the market goes up 4X.

Aaron  58:25
Right. But what happens when it comes down?

Bill  58:26
What happens when it comes down?

Aaron  58:28
Yeah. Wow.

Bill  58:33
You know, they’re dead. They just don’t know it yet. Like they jumped off a 20-story building and they’re passing by the 10th floor and they think they’re flying and they’re not. And you tell them that, and they get all pissed off. But I’m like, listen, I’m just trying to save your life because your book’s going to be worthless.

Aaron  58:55
Yeah. I mean, I’m laughing about it because the visual is hilarious, but the reality of it is really sad. I mean, really.

Bill  59:05
So now you know why I sold my business?

Bill  59:08
Yeah.

Bill  59:10
You know, sell when there’s bidders, right? You might never pick the top and that’s okay, but you don’t want to chase it down. Never chase the market.

Aaron  59:26
Holy cow. I so enjoyed this interview. I love Bill. Just the way that he approaches things, the way that he explained just every aspect of his journey, of the entrepreneurial journey. Because man, what a, what, what a crazy, crazy path he’s been on. The one thing that really jumped out at me, and I think and I hope it jumped out at you and there’s a ton of takeaways from this, by the way. I mean, again, I say this after every episode. Go back and watch or relisten to this because there are always some just amazing nuggets of info.

But the one that I think you saw how it unlocked his business when he was speaking the language of entrepreneur to another entrepreneur and he even went a step further than that and being contextual to whatever that entrepreneurial space was. So if they’re a real estate person, he’s speaking real estate language in the form of an entrepreneur to another entrepreneur, which I thought was phenomenal. And so I’m curious what your feedback is on that and what your thoughts are.

So that was one takeaway, but there were several. The other one was, you know, one of the biggest determinants of success being a function of the size of your network’s wallet. And so he’s talking about how, yeah, we can 2X and 3X our own companies, obviously if we work hard and we continue to do a really, really good job. But if you’re really wanting to 10X or more your company, it’s going to require more fuel. And I love the race car picture there that he used. But I mean, that’s great. That’s a great visual.

So anyway, I just want to thank you so much for sticking around, for watching, for listening. It means the world to me. I love being able to produce this podcasts for you and I love the community that we’ve started. And so thank you so much for tuning in. Again, please subscribe. And I would be honored if you just tell your friends, post about this on social media. It’s a great way to get the word out so you can tag me. But get the word out if you’re actually enjoying the show. So anyway, so appreciative of you. Thank you so much and see you next week.

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