011: Exit Planning: How to Turn Your Start-Up Equity into an Alternative Investment Portfolio

Litan Yahav (00:00:00) - Taking all those things into consideration, we decided the acquisition was good for us because it was both cash and equity and the parent company, we got a percentage from the top line revenue. We maintain an autonomous company. What happened in the acquisition was that I continued to manage the company. We had full autonomy. We just at the end of the month would send an email to our parent company, say, right, this month, we need this amount of money and they just transfer it. So it was a really easy life.

Christopher Nelson (00:00:29) - Hello and welcome to episode number 11 of Tech Careers and Money Talk. I'm your host, Christopher Nelson. I've been in the tech industry for 20 plus years, and after climbing my way to the C-suite, working for three companies that have been through an IPO and investing my way to financial independence, I'm here to share everything that I've learned with you and introduce you to others that can help you along the way. Today we are talking with Litan Yahav. Litan is a serial founder who built and sold a company for a great equity payday and now also spends a lot of his time as an alternative investor.

Christopher Nelson (00:01:07) - I want to make sure and dig into this interview, you know, what are the things that helped him grow his career, that helped him get this company to an exit? And then how is he taking the responsibility of being his own wealth manager today? I want to ask him a lot of very detailed questions. And really in this within how is he building tools for other people today in tech to be able to manage their money as well? I'm excited. Let's get into this. 

All right. I'm excited to introduce everybody to Litan Yahav. Litan is a serial founder. He founded Segoma in 2012, which is a 3D imaging company around diamonds. He ended up getting it acquired by Artnet, which is a fascinating story, and then went on to found Vyzer. Vyzer is an investment management platform for individuals that can manage your traditional investments along with your alternatives. And this is so important to many of us who invest in alternative investments. I'm excited to dig into his story today. Welcome, Litan.

Litan Yahav (00:02:10) - Thanks, Chris.

Litan Yahav (00:02:11) - Excited to be here.

Christopher Nelson (00:02:13) - Well, great. Well, you know, like everybody else on the show, I love starting with origin stories. And yours is so interesting because you had this career as a naval officer. Then you were, you know, doing a lot of sailing and then boom, all of a sudden you're a startup founder. That's how it reads on LinkedIn. But I would love to hear a little bit more of, you know, how you discovered technology and decided to go find a company.

Litan Yahav (00:02:37) - Yeah, sure. Yeah. The background is important. So. So first of all, I'm. I live in Israel, but I was born in the States, in Los Angeles. And when I was nine, my parents took me and my brother on a trip around the world because a good friend of his passed away and packed us up, then home schooled us, and our first stop was Israel. 

Christopher Nelson: Wow. 

Litan Yahav: And my mom, my mom told my dad, You can go wherever you want.

Litan Yahav (00:03:00) - I want to raise my kids here. My mom's American, by the way, my dad's Israeli, and she wanted to move us here. And so we've been here ever since. I went to school in Tel Aviv, then got drafted into the Navy. For those who don't know, in Israel, military service is mandatory. So everyone after high school gets drafted, men go. Used to go in for three years, women and for two now they do a little less. I got drafted into the Naval Academy and was in the Navy for six years as a naval officer on warships and sort of always had this entrepreneurial spirit, I guess even before the Navy was like I was, you know, trying to teach myself to code a little HTML, stuff like that, trying to build the websites and and during the Navy, I always say think outside the box. And, and so I've always had this sort of pull towards, you know, building stuff and solving problems. So after the military, six years in the Navy, every Israeli finishes, the military goes traveling.

Litan Yahav (00:04:01) - So when traveling for like 6 or 7 months in South Central America, got back and went to school, studied law and business, and during that worked as a sailing instructor because sailing navy makes sense and totally. And during this during school, my then girlfriend, now wife and her sister, we built and founded a tutoring school. We had teachers that came to work for us and we had kids come in and pay us to learn and get tutored. And that was my first real experience of entrepreneurship, like actual entrepreneurship. We did raise money, but it was like we all put in some money and, you know, dealing with hiring people and renting a space and firing people, which. Just like anecdotal. It was like for me being in those positions where you're out of your comfort zone, like we had to fire one of the employees and was like, I want to do it because I want to experience it. It's a shitty situation, but I want to experience it. So when I do it in the future, I'll actually grow and do it better.

Litan Yahav (00:05:09) - So anyway, that was my first experience as an entrepreneur. And then we can dive into the rest of it. But that's sort of like going to school and during school. Met amazing people and was part of the Sam Zell entrepreneurship program at the end of the school during that time.

Christopher Nelson (00:05:26) - Yeah. I read an article that you wrote recently on that. So what was the impact? Because sometimes I do think that specific programs can have deeper impacts on people. What did that Sam Zell program for entrepreneurship mean? What was the impact that it had on you?

Litan Yahav (00:05:45) - So first of all, Sam Zell, who recently passed, I think a month ago, the dean of this Israeli college approached him, Sam Zell, like 25 years ago. And like every billionaire, he came and I asked him, well, can you. Can you donate money to the school? And we'll build a building and put your name on it. And Sam and this has a lot about the person.

Litan Yahav (00:06:09) - It's like, I don't want a building in my name. I want to do something that's more profound. It's more controversial. And so he said, How about we build a program which helps high achievers? Yeah, build something big, either leadership positions or entrepreneurial stuff. And he did the same type of program as he did in Israel and two other colleges in the US as well. So there are three programs that are funded by Sam Zell that are built to. Sort of as a launchpad for entrepreneurship. And so this program was basically I heard about it before even going to school, and I heard that this specific school had that program. And it's the last year of studies from all faculties at this college. 20 people get into this year long program of founding a business looking for an idea to build teams formation validation ideation all the Asian words and and yeah and the sky's the sky's the limit and so that was super powerful also because meeting amazing people, learning really important stuff and also a lot of push and drive to actually doing a leg work.

Litan Yahav (00:07:25) - And so it was an amazing, amazing experience. And I can dive into that like just for a whole hour about, yeah, we.

Christopher Nelson (00:07:33) - Could, we could. And so and so, you know, I wanted to touch on that because I think many people, right, especially getting into startups, there are multiple programs around and I think what you highlighted there and the things that I'm hearing in common around those programs are they give you the skills, but they focus on execution. Okay, how do you fail fast? They do things that may be a little different than what you learned in normal school. Well, okay. You don't want to fail your exams fast, right? But arguably, in entrepreneurship, you want to fail fast, learn, and iterate. And then. So did that give you the momentum when you came out of school that then you started focusing on Sigma and looking for those opportunities.

Litan Yahav (00:08:15) - And so this happened within the program. So at the beginning of the program, it's like 20 people.

Litan Yahav (00:08:20) - First week is all right, You have to form teams of 2 to 4 people and then within like two months you have to have an idea that you want to execute. And so you start just like researching the world and finding where are the opportunities, where are their problems to solve inefficiencies. And we found the diamond industry to be a very inefficient old fashion industry.

Christopher Nelson (00:08:41) - Fascinating.

Litan Yahav (00:08:42) - And, and yeah. And so essentially we started the whole ideation phase and, and validation phase within the Zell program. And at the end of the year, it's a year long program. We, we, we flash out to the US to meet with a bunch of interesting people and VCs. Like we had lunch and dinner with Warren Buffett. It was it was it was an amazing experience. And and at the end of the year, it's like hopefully most people continue with the business ideas or actual businesses they founded throughout the year. And so at the end of that year, we were four guys working on this thing together.

Litan Yahav (00:09:18) - Two of us decided we wanted to continue building it. Two other guys decided they wanted to do other stuff and that's fine. We're still really good friends. And so me and my co-founder after school ended, we're like, All right, what do we do now and how do we take this thing off the ground? And we just went all in and just continued meeting with people. And that's also a whole story we can dive into. But that's sort of like the whole program itself was the facilitation for the diamond business, but the actual work of building it happened after we finished, when we just went all in on it.

Christopher Nelson (00:09:52) - Right. And so at that point in time when you were thinking, did you do any of the, you know, ideas around startup companies and now you're a founder equity owner, building wealth. Was that a part of the mindset or was that something that just sort of came along with your entrepreneurial spirit to go solve problems?

Litan Yahav (00:10:14) - So I guess my answer is that I've always had the spirit of trying to solve problems with technology.

Litan Yahav (00:10:20) - And I think what these types of programs help do is focus, understand, like you said, like focusing on what needs to be done right. And on iterating fast, not building a product until you feel like this is what the product needs to be, that you need to build. Like a lot of people go ahead and go and build out and write a bunch of lines of code, right? And then they go and look and then they go and look for if there's a market for this, Right? But you learn, right? You learn the right way of doing things like let's first validate the market. Let's do the minimum viable product before writing any kind of line of code to make sure that this is something that people would actually buy. And so I think those are things that are perfected in this type of I won't call it an incubator, but this type of entrepreneurship program.

Christopher Nelson (00:11:11) - And so tell me a little bit about the size and scale of what you grew sigma to be.

Litan Yahav (00:11:19) - Yeah. So before even I'll dive into that, but just to put things in the context, right? So when we started Sangoma, which is the three D image diamond thing, we interviewed a lot of people within the diamond industry and everyone in the industry said this is something that no one will use. Right? Just to put that into context, because it's a very old fashioned industry where people are used to trading diamonds, very old fashioned, flying around the world with diamonds, man. Like, it's a crazy way that, like, we always tell the story about these diamond exchange buildings with the highest level of security you can imagine. But once you enter them, you go like 50 years in time. So old fashioned, like long hallways with doors, with handwritten notes saying, I'm looking to buy, I'm looking to sell these in these types of diamonds. And then brokers walking down these hallways with suitcases full of diamonds, knocking on doors and going in and out and people flying around the world with diamonds.

Litan Yahav (00:12:19) - And it's just like crazy. And we said, like, that doesn't make any sense. Why would n't you, you know, take a diamond, photograph it very high with very high resolution, a high precision tech and send an image of the diamond to someone who wants to buy it on the other side of the world. And presenting this solution to an old fashioned diamond dealer. He's like, no, I want to smell the diamond. I want to see the light. And we're like, Shit, how do you convert? How do you convey that? What he just said, it's an actual technology. And but on the other hand, you have these kids of these diamond dealers which were born with iPhones in their hands and all we need is looking for tech and so we really had this deep belief that if we deliver, then people will use it. And and we we ended up building this type of microwave machine where you put a diamond in it, photographs it from hundreds of different angles and create a 3D image, which you can then just send a link to and someone on the other side of the world can look at that interactive image and buy the diamond or ask to send a diamond for inspection or even buy it based on that image.

Litan Yahav (00:13:30) - And that ended. And our belief was that this would be a very big play for the B2B trade. So traders around the world would trade diamonds. We never really believed that any consumer would buy a diamond based on our images because you'd see everything like you'd see a diamond all over your screen with all the imperfections within it. And we're like, Well, no consumer is going to buy a diamond based on this. And so, I mean, I'm saying that it's because one of our initial investors was this online e-commerce platform for selling diamond engagement rings. And they wanted to use this tech on their website. Um, and, and the negotiation about how they would do it and what type of exclusivity they receive was really under the belief that we said, well no one's going to really, if they want it, fine, our business is going to be a B2B business. Anyway, long story short, it grew to be the main business and we ended up establishing diamond laboratories like photography laboratories and all the diamond exchanges in the world, which are basically five main locations in the world.

Litan Yahav (00:14:31) - And what happened was we'd have these machines in our offices in Israel and India and Hong Kong and Belgium in the US, and diamond dealers would bring us their diamonds. We'd photograph them and put them on our website. Those diamond dealers would then send a link to those images to their buyers and whatever in the world, and based on the image they buy or not. And so it became a standard, a fast forward, the same company that invested in us, bought us and turned out to be the situation where we'd photograph every single diamond almost in the world. So when we left in 2018, after three years of earnout, we were doing 7000 diamonds a day. So basically photographing almost every diamond in the world. And today there are almost no diamonds in the world. It doesn't go through our tech. And so that's the law.

Christopher Nelson (00:15:21) - Wow. Yeah. And how many employees did you have at the end?

Litan Yahav (00:15:27) - 250.

Christopher Nelson (00:15:28) - Okay. No, So that's not I mean, talk about a scalable company with tech, 250 employees photographing, you know, all the diamonds in the world.

Christopher Nelson (00:15:36) - I mean, that's got to be some nice, you know, efficiency that you're getting from the product.

Litan Yahav (00:15:42) - So so, yeah, but the main reason is that most of the diamonds are actually manufactured and polished and photographed in India. Not many people know this, but like I'd say 95% of our business was in India and we had an operation in Hong Kong and in Belgium and in New York and in Israel as well. And now there's also in Botswana and places all over the US. But essentially most of the work is in India. And so we had employees working there 24 over seven with a whole lot of intensity. Yeah. Just photographing is not just photography. You imagine someone bringing you a diamond, ensuring that there's a diamond in the small pocket and then there's a whole.

Christopher Nelson (00:16:21) - It's a chain of custody. My understanding is that it's a chain of custody. You're essentially creating a complete validation of what that product is in your right photograph is obviously too light. That's something we can comprehend.

Christopher Nelson (00:16:36) - But my understanding is, if you're validating it from end to end and that it's probably now part of a security cycle now, too. Okay. Now we have this evidence of what everything is to go from place to place.

Litan Yahav (00:16:49) - Yeah. Yeah. So anyway, so that's sort of the, the, the story.

Christopher Nelson (00:16:54) - Well, but part of the Sigma story too. I mean, I think from a career perspective, as you went from a co-founder to a CEO, you know, you're negotiating then an acquisition. I mean, I mean, that was something I'm sure they didn't you didn't get a chance to learn in the Sam Zell program. I mean, you had to figure some of that stuff out. And that's something that, you know, I think in this concept of tech careers and money, like I'd love to hear a little bit about how did you evolve to become the CEO and then how did you start thinking and and planning for that exit? And no, it was the right time.

Litan Yahav (00:17:32) - So we founded the company and I decided that I was going to be the CEO. My co-founder was going to be COO, and we convinced the tech guy to join us, full time co-founder, quit his job and join us. And so that was sort of the origin of the CEO aspect of it, which wasn't something mythological. It's like that's how it turned out, right?

Christopher Nelson (00:17:53) - Almost like.

Litan Yahav (00:17:54) - And work. Well, it worked well. I mean, you know, I'm also American and my English and I'm more sort of external, my other co-founders, more internal. And so it worked really well. And then fundraising was a process throughout, you know, establishing a company, maintaining a company. At some point, our investor was again, at the same company that invested and was also the one that acquired us. So it's not the conventional play of the VC startup world, but it was an interesting play out because when we raised money and then like two and a half, three years in, we got approached by our investor saying, listen, we want to acquire the whole company.

Litan Yahav (00:18:41) - And, and we're like, Well, we need to think about it. And yeah, so the whole negotiation part here was interesting. And also, you know, we need to go through another round of financing. And so we met with other investors to see about raising money and at the same time had this acquisition on the table. And there's always a question if this acquisition is the right time and if we can, if we can create or capture more value, and if post acquisition, it'll be fun for us to continue to operate the company. And so after taking all those things into consideration, we decided the acquisition was good for us because it was both cash and equity and the parent company. And we got a percentage from the top line revenue and we maintain a sort of an autonomous company. So what happened in the acquisition was that I continued to manage the company. We had full autonomy. We just at the end of the month would send an email to our parent company, say, all right, this month we need this and this amount of money and they just transfer it.

Litan Yahav (00:19:50) - So it was a really easy life like the and we also thought that this was like a synergy because. If we become the same company, we have a chance of becoming something a lot bigger, a lot bigger than if we were each of us on our own. And it worked out well because a few years down the road, our parent company was acquired by a huge public company. And so it turned out really, really, really, really nice and. The funniest thing is that the parent company raised around financing and the investor that was going to invest. Define an ultimatum that they'll only invest in the parent company if they acquire us. And we only obviously learned that after the fact. And maybe if we knew that, they could have given us more leverage. But, I mean, it was a good deal. I can't complain.

Christopher Nelson (00:20:40) - Right. Right now. I think that's always interesting. It sounds like there were a lot of levers there that turned that into a big win win.

Christopher Nelson (00:20:49) - You got cash. So you had the ability to say, let's derisk this. We have, you know, all of our investment of time, sweat equity in there. Now we can take some of that off the table. You get shares then in this new parent company. So you're incented to continue to drive. And it sounds like there was also a top line revenue split. So then as managers, let's keep growing the company. Yes, we want to make sure all the diamonds in the world are imaged by this particular piece of technology. And then.

Litan Yahav (00:21:19) - And yeah, go ahead. And also, you know, and also it was sort of like golden handcuffs because we also really got really nice salaries and it was really easy and comfortable and like so yeah, it is.

Christopher Nelson (00:21:31) - And so and so for, for many of us that work in technology and we have these exits, whether it's IPO, you know, acquisition on whatever level it may be, you know, when all of a sudden we go overnight from, okay, is there's this theoretical value to these shares to all of a sudden now I'm getting this big transfer in the bank.

Christopher Nelson (00:21:52) - What was that? What was that like for you?

Litan Yahav (00:21:56) - It was exciting. It was overwhelming. But it was a really good feeling. Like we started this thing that was a total idea, a long shot that everyone told us that the chances of us succeeding are close to zero. And then there's a windfall of it. And that's just a really good feeling. It also gives you a boost of confidence as an entrepreneur.

Christopher Nelson (00:22:19) - Right? Right. It gives you a boost of confidence that you you know, and I think talking to to other people that I know that are serial founders that grow companies to acquisition, once you understand that motion, once you understand what all of that, you know, looks looks like from a numbers perspective, from a product fit perspective, know what, know what it feels like to actually go through that. Then all of a sudden that process becomes a little bit easier.

Litan Yahav (00:22:48) - It's still really hard, but I think you put things into perspective, right? That's it.

Christopher Nelson (00:22:51) - Yeah. Yeah. I mean, maybe. Maybe that was the wrong word. It doesn't, it's not that it gets easier, but you know what? You know, it's almost that sense of flow or the sensation where, you know, when you're on the right track, like you're able to with this innate sense of being able to understand how you're navigating the company because you understand what feels right. But you're right, the fuel to all of that, the fuel to grow in each startup company is a lot of hard work. I mean and it's yeah, can be excruciating from a lot of different perspectives. I don't want to skirt that.

Litan Yahav (00:23:25) - I mean thinking about how you build a company when you're single versus building a company when you have a wife and three kids. Yeah, that's like it's like, wow, it was so easy.

Christopher Nelson (00:23:34) - Oh, yeah, yeah, I know. When you're, when you're single and you can throw all your hours at your career and burn the midnight oil, it's great.

Christopher Nelson (00:23:41) - And then when you try to do that and you're getting woken up at 2 a.m. because you know your wife's like, you got to go take care of that kid. Yeah, that's brutal. There's no doubt about that. Well, I think, you know, we're at this, you know, the halfway point, really of the episode. So I want to take a quick break and I want to come back and I want to start talking about, you know, post post acquisition, how you really then took a break and started focusing on alternative investments. So we'll be right back. Okay. And we are back with Latanya, and we left off where your company got acquired. You've gotten a nice payday. You've done the earnout. Now you're on break. Now all of a sudden you have a lot of wealth that you need to manage. What were some of the first steps that you took to start saying, okay, how do I actually start leveraging this to work for me?

Litan Yahav (00:24:39) - So first off, get approached with the PR around an acquisition.

Litan Yahav (00:24:43) - You get approached by a bunch of people offering to manage your money, offering to sell you a financial product. This means something or another and it is a bit overwhelming. And us being entrepreneurs also like risk. We're like, Well, we can do part of this on our own. We're good. And we also know enough people that have done similar situations that have been in similar situations. And so it's like, all right, we we. So we didn't make tens of millions in this exit, but we made enough. Yeah. And we wanted to continue to grow it, right? And so when you want to continue to grow it, you want to take more risks than just put it in an ETF or just put it in some sort of stock bond allocation. And for us, and we live in Israel and the thing about Israel is that every second person here does real estate, private equity investing. Oh, wow. The joke. The joke is that if you have $50,000 free cash, you're going to go buy an apartment in Berlin you've never seen before.

Litan Yahav (00:25:36) - That's like, wow. Because you know, because you know a guy who knows a guy who does it, right? And so you start meeting with people that either sold companies or either are in that world of private investing. And during the time, you know, the cash had to sit somewhere and you got approached by different private banks and we ended up putting money in one of these private banks here in Israel. And the funny story is three months later, they kicked us out of the bank because we took all of our money and we invested it elsewhere because we didn't want to invest it in and into the products. We just deployed capital mainly abroad in the US and in Europe with people that we grew to know and trust and decided that was the route for us. And, there were different things we did in the private alternative investing world that we liked more than we liked and learned a lot about leverage, which now is a bad word. But back then it was really good . It was a good world.

Litan Yahav (00:26:35) - It was a great word.

Christopher Nelson (00:26:36) - Yeah. When it was low cost of leverage. Yeah. So you brought up a really interesting point. So there's more. It sounds like there's more of a culture of looking at private equity versus there is in traditional. And so for everyone here listening here in the United States and abroad too, but traditional investments here in the United States are our stock market, the bonds, certificates of deposit, CDs, any money market account. Those are things that are going to be overseen by the SEC, You know, the Securities and Exchange Commission. There's a series of rules. They're very liquid productized. Anything outside of that is considered alternative investment. And the main one that many people know is real estate. We all love real estate. The reason is that in real estate here in the United States anyway, I'm not sure where the tax treatment is overseas, but you basically get paid for ways, right as they are. You get the cash flow off the property, you actually get depreciation.

Christopher Nelson (00:27:36) - So that helps you on your taxes. You can get appreciation, the property can increase in value. And then also depending on how the debt structure, you can also be getting equity pay down. So you're actually somebody else's is paying into the equity that you're getting to own more of. And so from your vantage point, you saw, okay, let's start then taking more risk, deploying things into private equity. How did you start learning? What was your path to learn to underwrite or to vet operators?

Litan Yahav (00:28:08) - Really simple. At the beginning it was basically, well, this person screwed me over or won't they? And, and and you know, the best way for me to vet that was how like the level of trust that I have with this person. So they're either a really good friend of mine or a really good friend of a really good friend. That was like the first off the bat path to decision making for us. And again, because we're in Israel, it's pretty easy to find those people that you can trust.

Litan Yahav (00:28:35) - The risk for their experience might be a different type of risk, but we ended up doing that. And so like the first two investments we did were actually buying two single family homes in Ohio, okay? And these were two single family homes in Ohio. And the idea was to rent them out and have a property manager. We did not see these properties. We've never visited them. Like, I didn't really care about pictures or anything. All I wanted to know is that this is a person I trust. The numbers make sense and we bought those two properties and at the same time we also invested in a few syndications. So those syndications that we can dive into. But that's like private equity real estate where you just put in cash. It's totally passive, right? And these single family homes, they were. I don't know. It was a shit show and you can bleep that out if you want, but it was a shit show. And so they were just like a lot of work not generating the returns we expected.

Litan Yahav (00:29:31) - And at the same time, these syndications are like, we'd get like clockwork every quarter. We get distributions. They were overperforming. They were about like it was outperforming the single family homes. And we're like, Why would you want to do this? You work so hard on phone calls with property managers and tenants and the municipality. It's not performing as we expected. Taxes are hard. Let's just put more money into the syndications as opposed to this stuff and that just continues to grow. And we only managed to get rid of these single family homes like two years ago.

Christopher Nelson (00:30:02) - Wow. Yeah. And so I think what Litan is drawing out here is that this is active versus passive investing. Active investing is where you directly own an asset and you have to then bring in the team, the managers, whatever. And remote active investing is really hard and even active. Investing in your backyard can be hard because the question is how many phone calls are between you and the broken toilet, honestly? Right.

Christopher Nelson (00:30:29) - It's like that versus, you know, the real private equity, the real passive investing is then investing in syndications where everybody pulls their money together to buy a single asset. Or there's also very efficient private equity funds and you get the same benefit. You get those same four benefits that were articulated before as an owner, but you are a limited partner. Your liability is only limited to the dollars that you put into that deal itself.

Litan Yahav (00:30:58) - So yeah, go ahead. I have this, I have this sort of for me, it's I look at the investing strategy for me as there's passive and active, that's like one, one sort of line on the side of the chart and then there's risk in return. Right? So yeah, and it's always a matter of like how much you want to be passive versus how much risk return you're looking for, right? And for me, I want to be as passive as possible, but with the high risk, with high risk return. And so for me, that was like, where can I be as passive as possible with high risk return, private private equity real estate investing for me was a solution.

Litan Yahav (00:31:33) - There's even more passive, like with lower risk return. Oh yeah. Which is like, you know, I like publicly traded REITs, for example, and there's more active with higher risk return, which is active real estate like the extreme being Airbnbs, for example. Right. And so we put yourself on the spectrum of Why don't want to be super, I want to be passive with relatively high risk return. And that was the asset class for us.

Christopher Nelson (00:31:57) - And then how did you so as you started maturing as an alternative investor, what other you know, so your first active investments were single family homes. What were your first syndications? Multifamily?

Litan Yahav (00:32:11) - Yeah. Multifamily value adds syndications. I think the first one was in, I don't remember somewhere in Florida. The second was in Atlanta. And this is like, you know, simple multifamily value add place.

Christopher Nelson (00:32:26) - And where did you then diversify your portfolio from there, whether that's geographically or different asset classes.

Litan Yahav (00:32:34) - It was always about the operator for me, the GP.

Litan Yahav (00:32:37) - Right. How do we find more people we can trust who have other deals? It didn't really matter the deals, just the numbers needed to match. And then it turned out to be what we invested in. Uh, developing deals in the US, some in Europe as well, because he wanted to diversify from a currency perspective. We want US dollars in euros. And so there was more multifamily, more development stuff, development of building flips or land development or apartment flips. So it was, it was a lot of, a lot of those types of deals with different operators. Just finding the people we can continue to trust that delivered well. And then within those operators, there are people that we also learned a lot about. Like what even a definition of these syndicators is like there's a capital raiser, there's an operator, there's a syndicator. And and, you know, then there's the vertically integrated syndicators there. There's so much terminology within the world of private and private investing that it took us time to sort of learn the ropes and get more familiar with all the terminology and stuff like that.

Christopher Nelson (00:33:42) - It is. And I mean, this is where I mean, I think sort of, you know, now sort of coming back out, right? I think as when you go through these exits, you get this wealth and all of a sudden now I'm a high net worth individual. I want to now have a portfolio that's in traditional investments, but I want to start playing with alternatives. If you know, I think I heard you say the same thing where I want my traditional portfolio to be automatic. I don't want to have to manage that because I want to spend the time managing my alternative investments, because for me, that's where the cash flow is. That's where the greater reward is, that's where the greater tax benefits are. I want to spend my time there. And I think that's what I I heard you say as well, is that's where you're seeing the real opportunity is from an understanding and knowing your portfolio. And the reason I think many people don't do it, at least here in the United States, they either don't know about it or it's challenging, like it takes some work to get into.

Litan Yahav (00:34:43) - The biggest challenge and I just want to clarify, it's not the time. I don't want to put more time in. I want to put more cash in. I don't want to and, you know, when it becomes too much time, that's why we built the current company. But I think that the biggest hurdle that people find in private investing in general, is finding people they can trust. That's the biggest challenge, right? You know, people are like, well, how do I find a good operator? Well, what if they what if they're lying? What if they screw me over? That's the biggest problem that people face.

Christopher Nelson (00:35:14) - I think you're right. I mean, because the thing is, when in any relationship, you have to put in time. I mean, I know, you know, I'm I'm going through a vetting right now and I've been watching this particular team operate for probably 14 months, watching him get in their reports, jump on the phone, ask him what they're doing, because, you know, I'm going in cold to this group.

Christopher Nelson (00:35:38) - They came and they gave me the sales pitch look great, But if they're willing to answer my questions, take time. We get some meetings and I'm watching how they operate, how transparent they are, those things like that's what it takes sometimes, especially if you're thinking about deploying, you know, hundreds of thousands of dollars of my own money and maybe even other people's money, too. You know, those things take time. And you have to be patient.

Litan Yahav (00:36:04) - Totally. It's like that's what people I've seen recently have been growing into connecting with similar people, similar individuals, communities like investor communities, these forums, groups connecting with people that have that experience, that have done it before.

Christopher Nelson (00:36:23) - Yeah. Well, and that's actually I think a great thing too, is that there are a lot of groups, there's a lot of like minded individuals that then it goes back to that chain of trust that you were talking about earlier. As I get to know, you know, an investor and we start sharing results and not that we always talk dollar amounts, but we'll talk about what was our cash on cash, what was our IRR and what was the relationship with the different operators.

Christopher Nelson (00:36:53) - Then we're going to start investing as a PAC, investing as a team, because I'm definitely going to follow that chain of trust as far as I can.

Litan Yahav (00:37:04) - Because reputation is everything right and people will not ruin their reputation within these groups.

Christopher Nelson (00:37:09) - It's true. It's very, very true. So now as you're growing as this alternative investor, all of a sudden you realize that managing this stuff on a bunch like 100 different spreadsheets is brutal. And you see another opportunity. Walk us through how did your, you know, passion for investing and then to your point, not wanting to take a ton of time off lead to this second company?

Litan Yahav (00:37:38) - So like I mentioned, for me it was passive. Remember passive versus risk return. At some point a few years in, we did like 20 something deals and I got an email and I was like, Oh shit, when did I invest with this guy and how much I invest? It's a good problem to have. Like it just became a mess.

Litan Yahav (00:37:55) - It became a whole job of managing the interactions, managing the cash flow. The tax documents just became hard for us and like we didn't make enough money to have a family office or stuff like that. And. Right. And so you're like in between building a crazy spreadsheet, working hard to update, tracking down cash flows, tracking down documents, and we're like, Well, there has to be a solution for this. And so we built ourselves a piece of software. We hired an engineer. And we said, All right, this is what we need. Let's start building it for us and start to automate that process of aggregating all our information, all the emails, the documents, the bank accounts, the cash flow transactions, like all that, and then a bunch of friends around us wanting it as well. We're like, Wait, there might be a whole business here. And, you know, I spoke with a bunch of people around the world trying to understand what's out there, how people solve this problem and found that there isn't a real good solution for them.

Litan Yahav (00:38:47) - And so we decided to take what we built for ourselves. Raise money for it and turn it into a whole new business. And that's what Visor is. What we're working on today turned out to be. We founded a company like two and a half years ago, and it's based on our own problem solving our own money.

Christopher Nelson (00:39:04) - Well, and I and sometimes I don't. I think that there's no better problem to solve than something that you understand intimately. And I know that this is a huge problem because many of these personal finance managers, if you will, are just laser focused on traditional investments and they do not serve the alternatives. Where Vyzer for me becomes this complete solution because it's so easy to then plug in whatever, you know, brokerage account you may have and just suck that in immediately and understand what that is. But you can also then be putting in, you know, individually held real estate. You can be putting in, you know, private equity funds or hedge funds and other things. It really gives you that full view versus I think pre visor for me was always, you know, I'm half in a tool and then I'm half in spreadsheets and it's just frustrating.

Litan Yahav (00:40:02) - Exactly. And yeah, and it grows, right? It doesn't say static. It's like a dynamic spreadsheet and it grows hopefully over time.

Christopher Nelson (00:40:10) - Yeah, it does. You know, as you have exits and those types of things. And so tracking that stuff, it's important for people to understand again, you know, because I actually think going back to your diamond example, when you walked into the diamond industry and you're like, Hey, there's all this high security, then you go behind the doors and it's 50 years in the past. Real estate's really like that, too. I mean, I think it's now starting to accelerate with all of the technology that's coming towards it. You know, I think it started arguably with a lot of the property management software, but there's still a lot of great companies that are executed very well from a real estate perspective, but their processes and their systems are really, really outdated.

Litan Yahav (00:40:59) - 100%. Yeah. And when you invest in these deals, you also get username and passwords to a bunch of these different investor portals.

Litan Yahav (00:41:06) - Right? And each of them has a different portal. And just like, it's just like, it's, it's, it's, you need to bundle it up again because it's become unbundled like they say. And you know the startup world, right?

Christopher Nelson (00:41:19) - Yeah. No, no, it really, really has. It's created some sprawl. And I know it's something that people really, really struggle with. So where do you think what's. What do you think the outlook is now for? You know, in this high interest rate environment, what's your personal outlook on the private equity market?

Litan Yahav (00:41:44) - I think that over the years the past that's even ten years were. Unbelievable and will not repeat. That's the way I did. What happened was sort of abnormal, the normal is when interest rates come back to where they're supposed to be. Right. Interest rates are not supposed to be 0%. They're supposed to be around 3 or 4 or 5%. And so a lot of operators that came out over the past ten years will not survive this upcoming period because they're used to easy, easy times.

Litan Yahav (00:42:17) - That's why I say, like, I think that the way deals were vetted, the numbers people took into account the loan to asset values were out of proportion. Refinances which people think we're supposed to happen won't happen as planned. Right. And add on top of that, it's a lot harder to fundraise. It's a lot harder to fundraise now because even though people are still sitting on cash, the alternatives, just for example, the zero zero risk interest rates, you know, 5%. Like. It's hard to convince someone that will give you 8% annual cash on cash at higher risk and people might not want to. So I think the whole play that was around over the past ten years is going to change. You also see a lot of operators now moving from a single deal model to a fund model. Yes, for various reasons, But it's a different type of fundraising and a different type of allocation. And the play now is also there's always going to be good properties to buy. There's always going to be distressed, there's always going to be people who need to sell.

Litan Yahav (00:43:27) - So there's still going to be opportunities. But I only think the best operators are going to survive this upcoming. Downturn over the next year or two.

Christopher Nelson (00:43:35) - So now, yeah, I agree with you. I think some of these rate locks start to expire and people who you know, there were a lot of people being very, very aggressive in 21 and 22. Just thinking that these tailwinds are in thinking that the tailwinds were going to continue and then also thinking that rates wouldn't climb as fast as they did, nobody saw that coming. So as these rate locks start to expire, and I think there is going to be a cycle, as you know, we're starting to see it now is if you've seen some of these Houston deals that have, you know, now gone bankrupt and have been distressed and a lot of investors are losing money, people are going to say, well, wait, I can get five. I mean, I saw on rates the other day, you can get like 5 to 5 right now in like a high yield savings account.

Christopher Nelson (00:44:23) - Okay. Tell me what that is going to be. Now, you're saying I might get two and a half points more to be in this real estate deal? Like, help me understand that risk. I do think I do align with you in the sense that I think that, you know, really robust outfits are going to continue to do well and we're going to get the opportunity to see the herd being thinned and understand who we want to invest with. So I think that's a good thing. But I definitely think that we're still in for some headwinds ahead.

Litan Yahav (00:44:54) - For sure. Totally. Yeah. Yeah. Interesting times. Interesting times ahead.

Christopher Nelson (00:45:01) - Well, I want to thank you so much, man. And as we transition out, we always end up with a little bit of a fire around. I'm going to fire off A55 questions here. You know, some skills that sort of help you keep moving forward. So how do you keep learning?

Litan Yahav (00:45:18) - A lot of podcasts, listening to podcasts and educating myself and also listening, reading books and that Segways maybe into another question, but sort of one of the books that I've value the most over the last few years that I've read is Never Split the Difference by Chris Voss about negotiation.

Litan Yahav (00:45:38) - Yeah, I mean, that's an amazing book. And so I always surround myself with people that are smarter than me.

Christopher Nelson (00:45:46) - Yeah, that's great because they will always keep challenging you and you're going to be thinking about what was just said in the room. That's a great one. If you know, you are the founder of a startup. I know you're working really hard across different international hours. What do you do to recharge?

Litan Yahav (00:46:04) - So I have three kids. And even though kids don't really help to recharge, I do feel like when I get home before they go to sleep and enjoy, you know, some time with them before just absorbing, like, why, why do we do what we do? Because for me, it's also obviously to build something that brings value to other people, but also because I want to spend time with my family and kids and experience stuff. And so the time with them is sort of like it fills me up. And also I try to do some mindfulness and meditation stuff.

Litan Yahav (00:46:34) - I did the Wim Hof stuff for, for some time, cold showers and breathing exercises because there is a lot of stress, right. That you need to relieve it. And so those are the things I do and I try to take some vacations here and there. Not a lot, but those are things that sort of fill me up. So like the other week we were on this founders sailing trip, just a bunch of founders going sailing and it was amazing. It's one of those things I look for the entire year.

Christopher Nelson (00:47:03) - And so did they let you drive the boat?

Litan Yahav (00:47:06) - I was one of the skippers.

Christopher Nelson (00:47:08) - Oh, you were okay. I figured as much, you know?

Litan Yahav (00:47:11) - Yeah.

Christopher Nelson (00:47:13) - So we've heard about your growth and growing these different companies. What soft skills do you think has helped your career the most?

Litan Yahav (00:47:23) - Creativity and an out-of-the-box approach, I'd say. And I'm super stubborn, so that can help another. But you know, we're driven to win.

Christopher Nelson (00:47:38) - Wow, that's great, man.

Christopher Nelson (00:47:41) - What has been the best return on your time invested?

Litan Yahav (00:47:49) - This might sound like I'm repeating myself previously, but I feel like the time I spend with my family is the biggest investment I can put in. Yeah.

Christopher Nelson (00:47:57) - Yeah. It fills you up. It does. It really does. And so what's been the worst money or investing advice you ever received?

Litan Yahav (00:48:10) - Yeah. So for me, it's like when I saw the company. People came and said, Well, you give us the money and we'll put it in a managed brokerage account and let's take some loans against that. And part of the money I did and put it at this leveraged that at an interest rate that fluctuates now over time. So that was bad advice to believe that the interest rates would stay low back then. Leverage over leverage on. Yeah.

Christopher Nelson (00:48:43) - Yeah, yeah. I mean, it's just so interesting when. Yeah, when you go through those, those sudden wealth moments and people come out of the woodwork and they come at you with all this advice, it's really hard to know.

Christopher Nelson (00:48:56) - It's so hard to know what to do. So that's where I think getting into some of these communities, understanding what other people have done and this is exactly why this podcast is here. So where can people learn more about you and Vyzer?

Litan Yahav (00:49:12) - You can reach out to me. litan@vyzer.co, our website, via Facebook, Twitter, LinkedIn. I'm super available, happy to chat, happy to answer any questions I can. I can. I can bring value to.

Christopher Nelson (00:49:24) - Great. Let's get those links and we'll put those in the show notes. I want to thank you so much for joining us today Lleyton and thank you everybody for listening. This is tech careers and money talk and remember where a brand new podcast so please follow us where you listen Apple, Google, Spotify, you name it, we're there. And we would also ask that you please leave us a review. Let us let us know what you found valuable in today's podcast. And then please share this with everybody. You know, I know there's so many technology employees who want to have this conversation about career and money, and this is the place we're having it.

Christopher Nelson (00:49:58) - Thank you very much.