Episode #196 – Learning To Raise Funding and Manage Risk with Jeb Altonaga, Part 1

As an investor, your ability to manage risks can make or break your business.

Most investors forget the fundamentals of risk management and only evaluate risks after the deal is closed.

This can lead to disaster and maybe even bankruptcy.

The good news?

You can master risks by protecting your upside.

This is a superpower if you master it.

In this episode, Jeb Altonaga from Clearglass Capital Partners joins me to reveal how to manage your risk in your real estate business.

Listen now.

Show highlights include: 

  • How to quickly create unique ideas to build wealth for yourself and your family ([7:45])
  • The immigrant “hustle mentality” that helps you succeed in business ([8:00])
  • The “Leap Frog” technique that lets you scale your investing business (while managing the downside) ([12:45])
  • 2 common mistakes most investors make when managing risks ([17:00])
  • The “Grit” formula for handling and overcoming failure ([20:45])

To connect with Jeb Altonaga, please visit:  https://www.clearglasscap.com/

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group

Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

Read Full Transcript

You're listening to the REI Marketing Nerds podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords Nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition and live a freer, more awesome life. And now your host, Dan Barrett.

(00:41): All Right. Hello and welcome to this week's episode of the REI Marketing Nerds podcast. As always, this is Daniel Barrett here from AdWords nerds.com. And look, if you are looking to get more leads online to find more deals for your real estate investing business, you know where to go, it's AdWords nerds.com. Jump on a free call with my team. We will help you put together an online marketing strategy for your market. All right, folks, this week I have got a burner of an interview for you. I'm talking to Jeb Alga now, if you don't know Jeb, he runs Clear Glass Capital Partners. They help companies raise funding. And what is so fascinating about Jeb is one, he's got this really incredible analytical mind, really deeply thought about risk and risk management. He's got this deep financial services background that's just really, really fascinating. But on top of that, he combines all that with this real kind of skill for telling stories and simplifying down complex ideas.

(01:47): Part of this comes from his personal background, which is incredibly varied. He's lived all over the world. He's been doing business in all sorts of different cultures. The guy is fascinating. I had such a fun time talking to him, and I know you are going to have a fun time listening. So without any further ado, let me get into my interview with Jeb Alga. All right, what's up with Daniel Barrett here? And I am here with Jeb Alga. Jeb, how are you? We were just talking about pronouncing your day, but I feel like I still screwed it up. I try my best. Welcome to the Showman. I'm so happy to have you. Thanks, Dan. That was actually better than any teacher I ever had in school, so kudos to you for that. Still a little jet lagged after arriving from Sydney this past weekend. But last night was my first full night of sleep without being up from midnight to three in the morning, binge watching Netflix until I was tired again.

(02:45): So, oh my God, you are definitely gonna be the one. Remind me, I'm gonna ask you about jet lag strategies and stuff like that because we were just talking about, you have this really cool sort of background. You've been traveling the world, living in all sorts of different places, doing all kinds of different things. Today you are the founder over at Clear Glass Capital Partners. If you're listening to this, you wanna go check out Jeb stuff, you can check it out@clearglasscap.com. So let's start at Clear Glass and then we'll kind of work our way backwards. So for when, if you don't know somebody, you're trying to explain to them what you do, what the company's all about. Typically tell'em basically a strategic marketing and advisory shop that helps emerging in boutique fund managers or even business entrepreneurs that are looking to raise capital to be able to expand their business or increase their deal flow and are kind of off the radar for majors the big investment banks that kind of do this on an institutional basis for well pedigreed guys that are coming out of big shops like Citadel or Tiger Global or things like that.

(04:01): And just coming from a small shop, I found that it was hard to have a voice and get people to listen. And so I thought that was a good niche and focused on not necessarily the little guy, but the ones that are need to punch above their weight and build some strategic relationships there and fight the good fight. And I think that's what it takes. So yeah, that's, that's us in a nutshell. One of the things I really love about you, and one of the things reasons I really wanted to have you on the show is you are this really unique combination of really analytical thinking with also the importance of being authentic and telling a good story and these kind of core marketing concepts. So let's kind of go back a little bit. Let's talk about your origin story. What got you into finance specifically?

(04:54): Because clearly there's a lot of different ways you could have gone. Why this particular industry? So very unconventional in a way. Financial services is where I've been since I got out of college. And apologies if I say uni or drop some kind of traditional queens English references. You can Google it and it'll come up if you don't understand it. But yeah, I was in LA not really focused, organized, loved skating, loved surfing, snowboarding. I wasn't thinking or focused on career given the fact that parents weren't really tertiary educated. They didn't have college degrees, so it wasn't a major focus in my household. There was more old school migrant family values, stuff like that, that was promoted. And so I had an uncle that had married my dad's sister and he was an executive at one of the larger investment banks. And he was always just in my ear chatting with me about what I wanted to do and things like that.

(06:00): And so given his tenacity and perseverance in trying to make sure that I was focused, he must have seen something was there. That is how I felt into financial services. And being a serial entrepreneur, to be honest, even while I was working in various industries within the financial services mind frame I was also doing entrepreneurial things like living in an apartment with three other roommates, still dorm style, two people in a room, you're saving money. I was buying multi-family buildings across North Hollywood, and I had a total of three of them with some other partners that were in various real estate type industries like appraisers and mortgage brokers. And so that was one start. Another one was when I was doing bankruptcy restructuring banking work, we had come across wholesalers in the mobile communication space. And so they were reselling lines for at and t, those sprint, et cetera.

(07:03): And I started, since we were working as bankers and doing a bankruptcy restructuring for them, you kind of saw the ins and outs of the commission schedules and stuff like that. And so when two of my buddies had gotten laid off, I brought them the idea and we opened up a cell phone store in Torrance, California on Pacific Coast Highway. And it was when Nokia was hot and everybody wanted to keep changing the face plates and all of that kind of stuff. And so besides the accessory, we were also selling lines and earning a commission that way. And we were the first store within a five or 10 mile radius. And then I think within two years there was 15 stores around us. We could tell how that story went, but it just goes to where my thoughts have always been financial services, educating myself about how to deliver value and extract value from investing, but then also being an entrepreneur and coming up with crazy ideas to try to be independent and build wealth for yourself and the family. There's so much I wanna talk about just that process of doing so many different things even early on. But let's go back a little bit and talk about, you mentioned the sort of immigrant family values that were instilled in you rather than the classical Hey, everybody in your family went to college and you're coming from generational wealth or whatever. So first of all, where did your family originally immigrate from and how do you think that informed your childhood or the values that you bring into your professional life today? Yeah, no, so to give some context there and break out the violin, I don't need to stop .

(08:43): I have, I'll go, I'll go get in. My father is of English, British descent, first generation in the states. However, I didn't grow up around my father. He was genius, level, smart. I believe his IQ, speaking to his siblings who I'm now very close with was somewhere like 1 64, something like that, which I know is way up on the scale, but never really focused. I have for context four sisters with four moms, one older, two younger. So that kind of gives you an idea of where my father was and was not in my life. My mom's side of family. And this is where when, you know, talk about context and that family value, they were of Spanish or basks descent to be specific within Spain, but two generations in the Philippines. And so having a little bit of the Filipino heritage along with the Spanish culture migrants to the US as the typical migrant story goes hard working one, a better life for their kids, willing to work whatever hours, do whatever jobs and really focus on building that career for their kids.

(09:58): So we had that. And then that was my mom's parents. My grandfather became a regional manager for a life insurance company. He did fairly well. My grandmother stayed at home with me while I was growing up and then did factory work and things like that during that time when we actually had manufacturing here in the States and it was in vogue. And then my mom, again, just to kind of write on the sob story, was a serial addict. So she was in and out of, she was always in my life. But I think her and I have a relationship that resembles more of a sibling relationship than a mother son type. And to this day, I mean we're still very cool, we're still very close, but people are always surprised when I introduced her as my mom. Cuz there must be that vibe that she's treated more like a sibling than you would a parent.

(10:51): And so that's how that family dynamic I think came around very, very close to my grandfather's and my grandmother's siblings as well, and the cousins and uncles and aunts that came off of that. And we were always at each other's houses. There was always obviously holiday parties for Easter, Christmas, new Year's, et cetera, as well as just random weekends. We seem to always be together. So there was a lot of family value there as well as just guidance them making sure that they wanted you to be successful and take what they struggled to come from a third world country to the states and really champion that mantle for the pain that they did and the comfort they left from being back in their home country to come here and forge a new life for us. So that's kind of the background on that I think.

(11:45): Yeah, mean that's really fascinating and it really strikes me too, that extended family network is so important to so many people's stories. And it's something that I think in a lot of people who have been in the states for a long time, it seems to become less important over time. There's just a smaller of extended family group. So I am super curious, you come from this really fascinating background, lots of mixed of cultural influences, but like you said, some difficulty there, right? Interpersonal difficulty or instability, whatever you wanna call it. So I'm curious why you think you ended up getting into these industries? So financial services, real estate, even starting opening up this cell phone store. These are to me, as someone who, who's not in those industries, what I hear when I hear those things is you are willing to take on risk for the upside opportunity.

(12:48): But what strikes me is you could spin your background story and come out of that saying, no, I have to be conservative. I've gotta protect what I have. It would be easy to come out of that, afraid to make those leaps. So I'm curious what you think either in your background, your personality of drove you to be able to make those jumps, make those leaps. When you saw those opportunities, why do you think you were able to make those decisions? Look, I don't think I've spent enough time on any shrinks couch to have wear. That's what this is. You can write this off on your insurance, it'll be fine accounts. But I think my thought, and I thought about this significantly from time to time when you go on holidays and you take time to actually smell the the air and take a little bit of a breather as you meditate on what you wanna do next, et cetera, that is something that's crossed my mind many times.

(13:45): And I think it's fight or flight, right? It's either, you know, go 150 miles an hour or you go 10. I think it's part of those tales that people that come from backgrounds that would not be traditional end up. And I could have either been a school teacher and very conservative and never did anything that was on the risk curve or I did, I went full on and just, I embrace everything that risk has. And I think it's just that mix of personality and the fact that I've always just been very ambitious. I've probably had a head for not wanting to listen to authority. So the more somebody says you couldn't do this, I was like, well, the more so I'm going to push and show you that I can. And one of the things that I think my wife has always mentioned to me and friends and other family members is there's nothing that they've ever seen me put my mind to that I couldn't accomplish.

(14:46): And even if it took longer than someone else or a lot of fighting, it was the perseverance and the grit that you're gonna stick it out no matter what. I had a trainer in Hong Kong that was up from Brazil, and he used to tell my wife that he would train me as hard as he did just to see where my breaking point was . And he said, he will not break. I feel like he will just die of a heart attack before he'll stop just to prove a point that you can't break him. So , I think that's just the personality is I will not quit. That led me to that. As well as just exploring. I love to explore and is I see opportunities, I explore how we could take advantage and be part of that opportunity. And I think having great mentors, bosses across the financial services spectrum, my uncle who was married to my dad's sister wasn't even a blood relative that first took me under my wing.

(15:43): And then my dad's youngest sibling who I've grown into a really good relationship with, and he is also in the real estate business. He's the CEO of a home developer after being a partner at an accounting firm and a CFO of a major home builder. So I had positive influences around me from time to time, and they've rotated, but also the strong family values. And I think just a very outgoing, curious personality. It was just the right chemistry of mix of all of these variables that came together and spit out this when it could have been completely different. Yeah, I love the I'd rather have a heart attack on the mat than yeah, I wanna think that of myself. I'm not sure what happens when I get there, but it kinda strikes me as something they always say in mixed martial arts, right? It's like, oh, that person got a real dog in them, right?

(16:42): Yeah. It's like that sense of feeling, willing to fight. So I, there's so many things I wanna ask about and there's so many really fascinating things in your background, but you do have experience in the hedge fund world, this financial services world. So I am always so curious about how people in your position think about risk. So let me ask this in a kind of different way. What do people like me, so people without formal financial training, without a lot of analytical background, what do people like me get wrong about risk? Either personal risk, professional risk, however you wanna tackle that question. What are the mistakes people make and how they think about risk in general? Yeah, no, it's a great question and we could go through many rabbit holes, but I feel two that really stand out. One is being, I guess truthful about timeline with the risk you wanna take and how long you're willing to put yourself out there on that risk spectrum.

(17:49): Is it a six month risk tolerance? Is it a 12 month? Is it a 10 year? And then really staying true to that. I think that's one of the major things that we get wrong is not understanding the timeline that we have for a specific risk taking activity that we wanna put ourselves out there for. And the second is thinking that we can match the tolerance in the approach that professionals that have been doing what we're trying to take on for much longer than we have. So if I think about go to hedge fund investments or just generally investing in the market, and I have friends and we talk about this all the time, they think, they're like, oh, we can buy this stock. I wanna buy that stock. And I go, okay, then they go, what do you do? And I go, I index.

(18:38): And they're like, what do you mean you index? But you're in the industry, you're the guy. Yeah. They're like, yeah, why aren't you buying this stock and that stock? And I go, because I see, when I sat in a hedge fund, I see guys looking at companies for 80 hours a week. That is their job. And they still get it wrong. You have a full-time job that you go to for 40, 50 hours a week, whatever. You have a kids, you have a dog, you gotta walk, you running on the weekends, whatever it is. I go, you are giving it one to two, maybe 10 hours a week on your investment portfolio and you think that you are going to beat them. I go, it just doesn't align. So I think realities of what your risk is, and there's something about, I'm not saying you shouldn't think about your own portfolio and play with it, but I think you gotta swim in your lane.

(19:29): If you're someone who works in an industrial capacity, let's say you work at GE and build jets, I don't know, then if you stuck to looking at industrials where you know, have a lot of experience in that makes sense, but don't think you could buy financials and you're gonna look at technology companies and things like that. It's just not within your degree of experience. Let the professionals do it. Right. And then if you mirror the honesty of self-awareness and you can align timeline to what your risk parameters are for how long you're thinking about some of these risky activities, whether it be investing or learning a new sport or being a mixed martial artist or whatever it is I think having those two things probably is the right recipe for success. And we can't get it right. I mean, it's a constant ebb and flow, but I think those are the two main things that in my experience in life on earth now that I'm getting up there, have taught me.

(20:37): And I think it's finally setting in now that I'm getting into my late forties that I wish I would've known and thought about when I was in my mid twenties and taking those big risks and failing and failing. And also I think not caring about the failures and what everybody else is gonna say. I think that's another big component as well. We're so worried, and I know probably more so at least for myself, when I was much younger, what other people thought than what I thought internally. And I was trying to make sure other people had a more positive outlook of what I thought of myself than just thinking about it internally. And once I flipped that and I thought about just what's gonna make myself happy and how am I gonna define my success? And if I fail, as long as I get up, I'm satisfied, and then I'd learn something from it.

(21:27): When I took that mentality, I think the world just opened up and the eyes were clear as opposed to being foggy and the clarity that comes with having that mindset was much better. Yeah, I mean, it strikes me as one of my favorite things about doing this podcast. So you get to talk to all these different people and you start to pattern match the things that they say that come up over and over again. One of those is being okay with failing. Literally the last episode I did with Michael Menez, you talked all about failing and being able to just come back and persevere, like you said, also a guy with wrestling background. So it's like that kind of metaphor holds true. Hey guys, hope you enjoyed part one of this episode. It's just too good to limit to one show. Join us next week to hear the rest.

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