032: Big Tech, Entrepreneurship, and Portfolio Building Strategies

**LeSean Smith** (00:00:00) - A friend of mine. She said, hey LaSean, we're working on this secret project at Microsoft. We'd love for you to come back and join us. I came back at about $35 on the Microsoft price, the ability to earn money in Big Tech. I think a lot of times folks just underestimated the absolute dollar amount. I made more money over the years at my time at Microsoft than that initial seven-figure exit that I made selling my little mobile app company.

**Christopher Nelson** (00:00:31) - Welcome to Tech Careers and Money Talk. I'm your host, Christopher Nelson. We want to understand how we go from building equity in technology companies to our exit. For many of us, the exit means many different things, but we need to see examples. We need to see examples of what success really looks like in a personal exit. I'm excited to introduce you today to LaSean Smith. LaSean is a technology employee who's worked for larger companies like Microsoft and Amazon, and he is exited, financially independent to run a micro company. This is a set of companies that he is the owner operator of.

**Christopher Nelson** (00:01:16) - And their main metric is cash flow. He wants to see that cash flow increasing year over year so that he can make more investments, and they also can provide a living for himself. Today. We're going to talk in the first half of the show about what were the skills that he built in tech companies to allow him to make this transition to running a micro PE firm? Second half of the show, you're going to want to stick around for us. We're going to break down the components of this business, how he built it, how he runs it, and how he operates it today so that you can really have clarity on how you can go from equity to exit. Let's go talk with LaSean now. Okay. Thanks for joining us here today. I am so excited to introduce you to LaSean Smith. LaSean Smith is the founder and managing principal of Kaga, but he started his career in Big Tech. Like many of us, I'm talking Microsoft, Amazon, Deloitte and built a lot of skills to then transition into this business that he now owns and allows his financial independence.

**Christopher Nelson** (00:02:25) - An interesting point is he started his career as an entrepreneur, ten years old, on the playground selling Chick-o-Sticks. Welcome, LaSean.

**LeSean Smith** (00:02:34) - Hey, Christopher. Great to be here. And for folks who don't know, Chick-o-Stick is this kind of peanut butter-y, um, kind of candy. So anyone with allergies will want to stay away, but, uh uh, I figured, hey, sugar sales. So I learned some of the basics of consumerism early on.

**Christopher Nelson** (00:02:52) - Well, and it's so interesting that you know, when I, when I read your story, read your background, you were so entrepreneurial growing up, but you made the decision to start your career in big Tech. I'm curious why that was, why you decided to move to Big Tech instead of creating something of your own early on.

**LeSean Smith** (00:03:10) - Yeah, well.

**LeSean Smith** (00:03:12) - Maybe before and after aren't the best words for me to describe it. And it's really been kind of this windy journey. And so I had attempted to start other businesses before that and really didn't have the right operational muscle.

**LeSean Smith** (00:03:27) - I have, you know, pretty good product instincts. And technically, you know, I was pretty strong. But, you know, I was that guy out there building the product, hunting for the customer. And so I had the whole kind of pyramid inverted and, you know, wasn't validating the market properly, wasn't sorting out the go to market, like I was doing everything backwards. Right? And I was like, well, um, you know, I can write a great piece of software that, you know, dot, dot, dot no one wanted. And so what I found was the, you know, folks that I respected started to find their way into some of these larger companies. And, you know, I would get opportunities. And eventually it worked out where, you know, kind of that icky guy, something that was, you know, quite interesting to me that I could add value to. I got energized by, um, and we can get into this maybe later in the conversation.

**LeSean Smith** (00:04:14) - Not only was that great from a skill stacking standpoint, but it actually, you know, connected me and helped me learn how to think about money. And so I don't believe those two are decoupled. And so I always, you know, try to, you know, bring this into the story in that it wasn't just like, oh, I got this job, I learned this skill, I started the business. Um, you know, it was kind of this expansionary thing that, um, was, you know, happened very organically. I didn't have a master plan. I was very fortunate to have a great set of coaches, mentors and sponsors. And really, the only thing I can take credit for was, you know, I kept showing up.

**Christopher Nelson** (00:04:53) - And I think that's very insightful where, you know, you know your weaknesses, you know where you need to fill a gap. And there is such a big opportunity in big tech that I feel gets a bad rap sometimes. Many people think, well, the real work is being done on the startup side.

**Christopher Nelson** (00:05:11) - However, I found that I had an entrepreneurial spirit. But there were so many things I didn't know, and I knew that I was going to work for Big Tech. My first role was at Accenture, and I got the opportunity to be in a lot of different environments, a lot of different company environments, seeing how businesses worked. And that to me was, again, this exhaust that you get from working in these larger companies is you get this on the job MBA and understanding how business works at the same time as your skill, stacking your technical and soft skills as well. That I think is really valuable. I'm curious, what were, you know, as you started transitioning, you know, going from I know my, my strengths to now participating in larger tech. How did that skill stacking work for you?

**LeSean Smith** (00:06:03) - Yeah. So if we use AI-like frameworks to kind of put some context to the conversation, the best triangle is that PwC has a kind of business experience technology. And I like that because, you know, a lot of what I've learned has been in different disciplines, and I've tried to figure out ways to kind of fuse them together.

**LeSean Smith** (00:06:22) - Um, and so if I think about the business side of things, uh, again, I just really was green on how to really think about going to market and scaling. I had a, you know, um, a fear that I've coached folks on that I got over pretty early on selling. So I was like, all about the selling part of this, right? So you're like, Throw LaShawn in a room, put him on a plane. Like, like all good. Um, and so even later into my career, I would get these kind of side jobs in, you know, in corporate America where, you know, I was effectively doing, you know, tech sales to the C-suite, they would just kind of pawn me off to like, hey, you put the shot in the room. He'll kind of figure that out. So I was pretty good there. But the actual kind of sales operation process, you know, how to manage your funnel, both high touch and low touch.

**LeSean Smith** (00:07:06) - So the marketing side as well, it was just like a random hodgepodge bag of activities. And like, I just really needed to see what great looks like to start pulling that together. Um, the other piece of people was, you know, I could write, you know, a JD that I copied from a peer. And it's like, all right, this looks pretty good. Um, it's just like, all right, let's just go out and hire folks. But to really look at what a ton of the talent pipeline process looks like, how to write, you know, an amazing job description. You know, bespoke one offs. You know, not that you're copying, pushing it so far on the limit that someone in PR or someone else might say you're giving too much of the background. Our competitors are going to be reading these job descriptions to do competitive intelligence, to really make folks feel like, okay, they took the time. I understand what this is also to get people to opt out of that process.

**LeSean Smith** (00:07:58) - Uh, one of the things that was really great during my Amazon experience was kind of the rigor of the interview process and how you kind of rethink the idea of, uh, you know, kind of multiple board based interviews, um, especially bringing folks outside of the hiring chain into the process where those folks don't have anything to lose, to say, not inclined on an interview. Right. Um, they're just like, I'm here to hold the bar for our hiring practices and how you can, you know, kind of bring those all together. One quick anecdote that was very helpful in that process was, uh, the tool that we use to provide your feedback, uh, you cannot see the vote. Everyone had a thumbs up or thumbs down, uh, and all the notes for whatever leadership principles you were interviewing on, you didn't see the vote or the notes of the other interview folks on the panel until you submitted yours. Uh, and so it's almost this, like, game theory thing where you're just like, ah, what do I put here? And it forces you to to tell the truth, or at least just to be more thoughtful and say, all right, I'm not going to go with the group.

**LeSean Smith** (00:08:59) - Think you know what? What is my real feedback? So those are all things there. And then just practically on the technical side, um, you know, how to think about, you know, distributed systems and to kind of build technology and teams. Uh, you know, it's funny, when I see a college hire show up with a computer science degree and they go into a tech role, uh, kind of their first job out of college and so many just, you know, need to get their interpersonal skills up or, you know, really understand the hygiene and the implementation of maybe how, you know, source control is managed in a certain company because it's not so much about the tools and the tech. It's a bunch of humans saying like, okay, am I empowered to make this change myself? Is there a committee that needs to review? You know, there's all these things that are really about human interaction and all of that was goodness, um, that I took from that.

**LeSean Smith** (00:09:52) - The very brief counter to that set of experiences is, you know, many times, especially at large established companies, not just big tech. What you see is folks are nervous. You know, I had a buddy who worked at Coke and I said, what's your real job? He's like, don't break sprite. Um, because like, you know, you're measuring your wins and basis points, like everything is so, you know, you're at scale. And so many times there is a very, very high level of risk aversion. Uh, I used to call them the no police. You know, the lawyers would show up, you know, some compliance officer would show up and, you know, all well-intended. But they had been incentivized to slow things down. And I like to say that, you know, large companies move in months and years. Um, you know, a well-run startup is, you know, a growth startup should be running in weeks. Uh, and if you're very early stage, you know, idea to precede maybe even seed, you need to be running an hour like you have to move fast.

**LeSean Smith** (00:10:53) - And so that's the thing that I've tried to learn to remind myself to do the opposite of the big tech. But the list of what I learned is much deeper than the things not to do well in.

**Christopher Nelson** (00:11:07) - And to recap that I think that that's very. Interesting because what you learn there and the takeaways are super valuable for people who are operating startup companies. And I'm curious how, you know, we'll talk a little bit later how this maps to what you're building now or have built now. But you talk about understanding where you had your zone of genius like you were in the sales, but the operations part, you didn't understand that, and you have a chance to see a pattern of what success looks like. And I think that that is so valuable. If you see that 2 or 3 times, if you see the people, processes and tools that come together to make something successful, a successful process work that's going to be stamped in your memory for a very long time, then it's how do I hire correctly? How do I look beyond the textbook? Okay, yes, I will put out a job description.

**Christopher Nelson** (00:12:03) - Somebody applies. But if I if you put more effort in up front and you're truly running it like a, uh, candidate magnet where you want to attract the candidates, you want you want to push away the candidates that that you don't want all of those things when you go to start your own company and you just have those two things alone, superpowers, then you get this experience that says, now I also understand at scale what it looks like when you get to very large distributed companies, distributed systems, and, you know, there's some fragility. There's also, um, you know, some value in that. But then how do you scale that back and say, what do I need to do if I am a smaller, uh, you know, medium sized company, startup company, or seed company? All of those lessons are really important for us to digest here, because that's what's going to allow us to work for larger companies and then to scale ourselves in building other things that we want later.

**LeSean Smith** (00:13:03) - Yeah, 100%. And something you said there that is worth underscoring. Um, sometimes I feel there is this inclination for folks to believe small companies don't need to scale big companies. Everything is scale is scaling. And I've seen so many times where, you know, some really smart technical architect is over building something at a big company that has no business ready to scale because you haven't validated and gotten to the right place. And people are again, you know, they're driving toward their incentives and they're like, all right, our OKRs or some set of goals say that we need to get this metric by this target, by this date. Uh, and so that means, of course, we need all this redundancy. Of course we need all these microservices. Of course, of course, of course, of course. And it's like, stop it. You could run this thing on a single node server, make sure the customer wants to give us money for this, and then we'll go figure out what to change.

**LeSean Smith** (00:13:52) - And invariably what happens, as you know, um, what you built is not what they exactly wanted anyway. And so a lot of times all that premature optimization doesn't really help. And so I really have tried to embrace this idea that, you know, your customer will tell you when it's time to kind of get into the scaling stage. Um, it's tempting to do that when you have, you know, a larger set of resources which can sometimes be a curse when you're inside of a large, well-funded organization.

**Christopher Nelson** (00:14:21) - Well, and this demonstrates to me why leadership and having broad oversight of what's happening in the broader tech community is important to bring that home. And being able to say we need to be nimble now, we don't need to be scaling. I just see that, uh, you know, pervasive throughout technology, that good leadership is critical to understand how to make, uh, business decisions that are best for the customers.

**LeSean Smith** (00:14:47) - Yeah, totally.

**Christopher Nelson** (00:14:48) - So. I'm curious WI with your experience in Big Tech, did you start getting an understanding? You know, you worked for Microsoft, you work for Amazon, you started seeing, oh, owning shares.

**Christopher Nelson** (00:15:00) - Being part owner in these companies was something that was beneficial to you. Understanding the equity component oh 100%.

**LeSean Smith** (00:15:07) - So I'll go through this quickly, but I think the chronological flow is helpful. I've started four plus businesses. I'll give you one of the pluses. But for businesses where I was the operator prior to the company I run now, the first was an agency, I just kind of gave up and I was like, oh my goodness, this is really hard. I do not want to be in this business. So basically just shut it down. Uh, the second was a, uh, SMS to a large stadium screen, um, marketing tech software where we were kind of working with brands to say, hey, we're going to give you all these phone numbers when you sponsor, you know, this campaign inside of a stadium. And the tech was actually pretty good. We, uh, we hit, landed, you know, MLB, um, NBA, like we had we had done some some made some real progress with that.

**LeSean Smith** (00:15:56) - Uh, that one ended up as a, um, as an aqua hire. Uh, and so it wasn't, you know, it wasn't the worst business, but, uh, it was like, oh my goodness, we're going to need this crazy sales team. And like, every football city, um, I was like, all right, this is more of a sales company than it is a technology company. Um, I worked on a, um, a money transfer system, and again, we underestimated the biz dev. This was before Western Union would go into high risk places. And, you know, all the banking and regulatory issues, like, it was like, all right, LaShawn, you're doing dumb stuff. So there were plenty of these. Uh, I started a mobile enterprise company that would connect, um, backends like SAP and other things, uh, to, to iOS, uh, uh, kind of development, uh, in the early days of the iPhone.

**LeSean Smith** (00:16:46) - And that was the company that I sold. And we just kind of found this kind of arbitrage window where, you know, sales teams and other folks needed to get this data. And, and, you know, kind of today, which sounds laughable. You know, you'd have like some Rest API, get a token and off you go. We built a whole company around the inefficiency of that because folks were so frightened, you know, that like, you know, this data leak leakage would like have their data all over the place. And so everything was kind of like batch data warehouse processes where it's like, you know, two days ago was the most recent sales data you could get. And we say like, oh, we could do this in real time. And it was like magic. Uh, so that was the first, the first exit. But the reason I run through those is, um. You know, all of those were, you know, lechon coming from a place of.

**LeSean Smith** (00:17:32) - I think I have the right idea. I'm going to go give this a shot. But there is no clear strategy. Even the one that worked, I can't take any credit. Again, I just kept showing up. But here's the punchline. Back to your question. When. When I exited that last company, I did all sorts of things wrong. You know, fortunately, we didn't have any outside capital when we sold. And so it was a good outcome for the company. But, you know, my tax strategy was all broken. You know, we close the deal toward the end of the year. So I didn't even have time to learn on how I could reposition and maybe get some offsets or, you know, get some accelerated depreciation with another asset, like all the basic 101 stuff, that someone will sit you down. It's like, all right, you're going to have a bunch of money in your bank account. You should probably go, you know, get some experts to help you get ready.

**LeSean Smith** (00:18:22) - Um, I just did all of that wrong. Uh, another thing is I really disliked, um, you know, kind of being in handcuffs on not being able to build. And I didn't have the right discipline. And so I broke my earnout. Uh, and so, you know, there was money left on the table, so there's all sorts of things that were, um, really kind of, you know, unforced errors on my part where it was just like I just fumbled the ball. And in spite of all of that, this is what I love about tech, the tailwinds of the industry, you know, the way cash flows. Like I still made out really well. Right. And so in spite of not knowing you can still win like that to me, is like the thing I get excited about. And just a quick anecdote, when I started that business, I was a boomerang at Microsoft. And so that means I was there. I left to start a company, and then I ended up coming back.

**LeSean Smith** (00:19:14) - And I'll tie this all to your question because it's very relevant. Um. I had about a quarter million dollars in shoes and I was like, stressing out because I was pretty young. And so I was like, goodness, this is like a quarter million dollars of unvested, you know, shoes. When I leave, this is just this just gone. And when I finally found the courage, I was like, I had the conviction like, this is going to work, LaShawn. Like, like we're going to, we're not going to do the dumb stuff we did last time. You know, we're going to figure out this sales motion. Um, you know, we're going to go pre-sell and get all the right, you know, kind of contracts in place earlier in the process. Um, before we start writing code. So all of those, those lessons, uh, you know, I did, but I was still terrified of giving up this relatively small amount of money. And it was funny, I was talking to my CPA a few months into the business that I started after I left, and I said, is this the right amount of cash in the account? And it was almost $800,000 in the bank account.

**LeSean Smith** (00:20:11) - And it was like I had this moment. I was like, oh my goodness. I was so stressed over this small, tiny bit of money. And now just, you know, our working capital, um, you know, for this bootstrapped software company was, uh, you know, was, you know, a couple, you know, 2 or 3, uh, magnitudes, uh, bigger than that. So anyway, that was an interesting kind of transition. But when I decided to, uh, go back into big tech, um, the reason I was trying to think, you know, I had a mentor who said, hey, listen, um, if you have something that you're really convicted around and you're going to really stick to it, um, like, you know, I can't tell you what to do, but if not, you should probably go hang out someplace where you can be energized, you know, add some value. Um, and you're not being tempted to do reckless things with your capital.

**LeSean Smith** (00:21:00) - And I was like, all right, I'm gonna listen to this person. Somebody I trust, uh, been a friend for many years who had been very successful. And so a friend of mine that I knew, uh, she said, hey, listen, we're working on this secret project at Microsoft. We'd love for you to come back and, uh, uh, join us. And at this point, I knew a lot more about how to structure the contracts. I knew a lot more on how to think about leveling, you know, so many different things. But the real punchline was, um, I structured a really, really healthy, um, stock package. And, uh, you know, for folks who know the history of big tech, uh, I came back, uh, at about $35, uh, on the Microsoft price. Um, and so and then, you know, there's I think there was at least one split during that, during that window. But, um, the ability to earn money, you know, in big tech, like, to your point, I think a lot of times folks just underestimate it.

**LeSean Smith** (00:21:58) - And if you look on the, um, the absolute dollar amount, I actually made more money over the years at my time at Microsoft, then, you know, that initial seven figure exit that I made, uh, selling my little mobile app company, um, and, and that's the thing, right? When I talk to folks, many times, people are like, oh, this LaSean, you know, he sold his company. They never say, hey, this is LaSean. You know, he worked as an engineering leader and he, like, made some money at this corporation. Right. But but when you look at the actual numbers, uh, you know, getting that timing right, uh, was really critical and just putting a bow on this story, um, you know, the way I've leveraged big tech in general, um, has been looking for these technology inflection points where you get to whether you're an individual contributor and a manager or, you know, an executive, you get to show up at the party where no one knows what what the answer is.

**LeSean Smith** (00:22:52) - And, you know, it's kind of Peter till 0 to 1. Um, I love that space because if you grind, you move with conviction. You show clarity and you iterate quickly. You will just iterate to the answer faster than anyone you know, any of your peers, and you will be rewarded. And so there's a whole lot of goodness. And that's just been kind of my playbook, um, you know, kind of bouncing back and forth between these learning from both sides of the fence.

**Christopher Nelson** (00:23:18) - There's a lot to unpack there, but I think first and foremost, so many people think the money is in the early stage startups, and they pass over the fact that if you're slow and steady for big tech number one, you're going to be taking dollars off the table in years where, you know, the startups, there's no liquidity. So you think about the time value of money. There's an opportunity there to, you know, start building a financial fortress. I also really enjoyed your specificity around looking for inflection points, because there are different times.

**Christopher Nelson** (00:23:52) - Even right now, you think about AI. AI is a very interesting inflection point to start inserting yourself into companies where in those specific companies, non AI companies, they don't know the answer and they're looking for people that can have conviction, iterate quickly in a direction and roll up some things with clarity. I think there's a lot of interesting opportunities in big tech today.

**LeSean Smith** (00:24:14) - Totally.

**Christopher Nelson** (00:24:16) - So you and I were talking earlier about the fact that we get into big tech and it is easy to get comfortable to maybe lose some vision to, uh, you know, be sleeping in our silk sheets, as they say, and then but then you start getting a desire to to move on and really understand well, what's next for you. At what point did you start realizing my time? And maybe it isn't a clarity of my time in Big Tech is done, but it's I there's something else out there for me, and I want to graduate into what's next. What was that like for you?

**LeSean Smith** (00:24:53) - Yeah.

**LeSean Smith** (00:24:54) - I mean, since I've, I've. You know, I look at this not as a fork in the road. That never changes. And there are more seasons. I look at it. What's my skill stack, what's my interest level, and where are these opportunities? And this is where, you know, I have a technical background why I really embrace sales and finance. And like that's been kind of the thing for me even today. That's kind of the reason I do the job that I do, because I love the opportunity to be able to move through all three of those. But whatever, you know, someone who's listening might, might see it as their unique skill stack. I think you have to take that into consideration. So, you know, if someone has something hyper unique, it's like, don't dismiss that. It's like, oh, I have this weird skill or this strange experience or, you know, I speak this language that, you know, maybe isn't, you know, considered like a global business language.

**LeSean Smith** (00:25:49) - Like, don't discount any of that stuff, like go sit in a room and figure out how do you kind of pull this together and, and, you know, just like you might do with a product where you're doing problem story fit, you're trying to do kind of your founder's story fit or you're, you know, kind of employee story fit to kind of figure out how all these pieces work together so you can inspire people and they understand, like, oh, this is what Christopher is amazing at. And when you, you know, are making yourself that one of one, there's just so many, you know, opportunities in general, but people don't know how to value you. And so that to me is magic. Right. Um, the you know, is, you know, I like to tell folks, you know, when we talk about kind of working, I know, at least in the US, a lot of Western countries, you know, like, how much do you make is like one of these weird taboo things that's either, you know, it's it's embarrassing to ask or, you know, it's kind of crude, like, you know, we don't talk about those types of things, but just just from a practicality standpoint, you know, somebody who makes $150,000 at a company and someone who makes $950,000, like they are not at the same financial velocity, but we might all say like, oh, there's six figure earners, right? Like it's like this boolean, like one bucket of people.

**LeSean Smith** (00:27:04) - And so this idea that there are so many ways for you to take your skill set and, and go and leverage it, I think is important. But also once you start turning that skill into dollars, just having clarity on kind of where you're at on your journey, I think is so, so important because, you know, you know, no offense to some of the folks who are early in their career who maybe they've made their first million dollars. Like when I made my first million, it was amazing. It was transformative, right? And I thought I had it all figured out. And I'm like, okay, there are so many seasons to this. Um, and so those folks are like on TikTok and YouTube telling folks like, I found the secret. And it's like, you know, it's like one of those things, if you've ever been to a fancy hotel where, you know, you think you're at the top floor, and then you find out the penthouse actually has its own elevator.

**LeSean Smith** (00:27:55) - Um, there's also always another door and so we're all leveling up in this game and, uh, yeah, just be really cognizant of the current season. Uh, and I'm sure, you know, many of the principles that that you teach on just kind of basic financial wellness is also part of this, uh, this journey.

**Christopher Nelson** (00:28:12) - Well, this journey and, and I think for many of us, LaShawn, we're trying to understand that many of us didn't come from money. I know I didn't come from money. Then all of a sudden you step into it. Then it's it's two things. It's how do I manage it responsibly, you know, not go out and be, uh, you know, some sort of, you know, multimillionaire cosplay because we all know that you can lose it just as fast as you make it. Yep. And then and then it's how do we start transitioning this into a, you know, combination? I call it a portfolio lifestyle where I have some of my dollars working for me.

**Christopher Nelson** (00:28:48) - I'm also now taking my skill stack, and I'm leveraging it to create multiple streams of income to then create to support a lifestyle that I want to live. Okay. I want to have more time with my sons. I want to have geographic independence. As you know, these are some of the things that are important to me. But that's where I think people in technology understand going back to your story, which I think is really relevant to when you focus on skills, you also then are aware and understand the money and all the time being focused on business. How do you run and operate a business? Right? You can then get to a point where you say, okay, now how do I translate that into what's next for me? How do I graduate from a single full time employer into now running a portfolio of things?

**LeSean Smith** (00:29:41) - Yeah. And oh go ahead. Yeah.

**Christopher Nelson** (00:29:43) - No no no I, I'm interested in your thoughts on that.

**LeSean Smith** (00:29:46) - Yeah. Well I was, I was tying it back and making sure we, we close the loop on your previous question because these are connected once you kind of, you know, hit whatever your version of finance.

**LeSean Smith** (00:29:56) - Dependencies. I think psychologically a lot of things change. Right. And so, um, you know, I like when I, when I'm coaching or mentoring folks around their business, you know, someone you know may have aspirations of creating a unicorn, someone else, like, we want to get to $100 million of, you know, top line somebody else's, like, you know, I just want to make a half $1 million a year. Like, everybody has different goals. It's all good. Um, I don't look at lifestyle business as a pejorative. I like living life in style. Sounds amazing. I like. Like that sounds pretty fantastic. So anyway, um, for me, when I have observed kind of an undeniable trend, uh, you may be familiar with the Matt Ridley's book The Rational Optimist, uh, which, you know, is, you know, the punchline is look for a unique point of view where the rest of the world is looking at things through the lens of pessimism.

**LeSean Smith** (00:30:51) - And you see it, you know, through the lens of optimism, but you're also being rational. You're not just some pie in the sky. Your timing's off, or your capital stack is, like, wonky. Like you really see something that you believe others don't see, but you see it in a positive light. Um, and there's this example after example he gives on king of the economic upside when you can take that approach. And that's just been my inflection point. You know, web 1.0. Web 2.0. I worked at this company, you know, that young people won't know called Motorola for a few years. That was my first product manager job after my MBA. And, you know, through all of those hops, um, you know, I was like, all right, mobile. I mean, the reason I went back to Microsoft is to work on this product that we created called HoloLens, which was a mixed reality AR VR platform. And so one team is working on hardware, another and OS, and I was working on the app stack and own product strategy there.

**LeSean Smith** (00:31:45) - And through that it's like, all right, now you know the Apple Vision Pro is coming out next quarter. And I got like years of information in my head from jobs many, many moons ago, um, for all of that stuff. And so when it comes time to, you know, look at a batch of companies who are like, we're building B2B apps on top of Apple Vision Pro. I'll get it wrong plenty of times, but my batting average is going to be way higher than other people because I understand the 3D, you know, real time rendering art pipeline. I understand the thermal issues, like there's all these things, you know, fatigue of having, you know, a computer on your face. Um, you know, there's, you know, you're not going to be on social media doing news and things like this. It's going to be a productivity focused type tool. And that's just one anecdote of all of these pieces. And so when I look at things like Gen AI, um, you know, it all connects, right? Because when I worked on HoloLens, I ended up managing a computer vision team.

**LeSean Smith** (00:32:42) - And then that really got me deep into AI. And so while I'm not an expert at LMS, I have a really good handle on understanding artificial intelligence, or at least how we're applying it today. And so all of those things start to compound. And so I'm a really big believer that when you can see these trends, these megatrends that are going to have huge tailwinds, like whether you go employee route or you go operator, you know, business owner route. Um, if you figure out your ability to be right often, um, you know, that's actually a leadership tenet at, at at Amazon, um, that you're, you're right a lot. Right. That's actually the name of the leadership tenet. Um, that's really, really powerful because a lot of technology, regardless of, you know, how you show up and what vehicle you're you're you're kind of generating money. Um, it's about timing. Like, we can all be, you know, you know, you know, technologists and talk about the future, but it's like, okay, what quarter, what year, what decade does it hit like? That's where the money's at, right? We're all right if you give us a 50 year horizon.

**LeSean Smith** (00:33:44) - So anyway, I just wanted to come back to say, like for me, the impetus was like seeing this undeniable moment where it was like, oh my goodness, this next wave is so, so magical. And, you know, I kind of figure out, like, where can I create the most leverage? And once you've kind of hit financial independence, I just think the psychology shifts on how you look at that, what time horizon you're willing to play and how risky does it feel? Uh, and for me, this is not a risky move at all because I have that conviction.

**Christopher Nelson** (00:34:16) - Well, I think because you have the conviction, you have the skills, and you've obviously built enough businesses to understand also how it works. And I think this is a good transition point for us to start leading into the second half of the conversation. What I observe for people who work in big Tech or even people who work in startups, they take them through IPOs and they generate wealth and they honestly have enough wealth to become financially independent, financially independent, meaning they could rely on that wealth to transition into something else.

**Christopher Nelson** (00:34:48) - They would arguably need some cash flow for it, but they don't have it presently. They struggle with this. They struggle with it. Okay, how do I now turn this? What I have my wealth or how do I. You know, maybe I haven't ventured out and been my own entrepreneur. How do I transition it? This is why pattern recognition, understanding what you're doing, what you're building, I think is really important. And I want to go to the second half of the show. I want to go and do a bit of a, a deep dive, a bit of a, you know, reverse engineering into how you built Kaga, which is a micro PE company of multiple businesses that I think some of you acquired, some of you built because. As we get into tech. Number one, when you are working in big Tech, it can burn you out, right? There is a, a lifestyle, a 24 by seven. You're plugged in great rewards, but eventually it needs to stop.

**Christopher Nelson** (00:35:43) - I think for your physical and mental health and understanding how you transition to something is really important. So we're going to dig into CAGR and all that stuff. In a few minutes. We're going to be right back. Just hold on. All right. We are back here with LaShawn Smith and LaShawn runs CAGR Investments. CAGRr is a micro PE firm that's made up of how many companies are you holding now?

**LeSean Smith** (00:36:08) - Uh, for companies I've written 12 checks. I can talk more about how we're doing a roll up right now, but all of those have not been successful, so we can get into that as well. But for companies and, uh, again, the learning process that we talked about on the employee side, you know, I've been learning as well on the investment side as well.

**Christopher Nelson** (00:36:27) - Well, let's talk I mean, I think first and foremost, let's start off with what is the thesis that you have for kegger because it sounds like it's I know I've read it. So it's very clear, very succinct.

**Christopher Nelson** (00:36:37) - What would you say the thesis is for CAGR?

**LeSean Smith** (00:36:40) - Yeah. So at its core, you know, my belief is audience and automation are key pillars to the future of, uh, you know, digital and software businesses. Uh, I'm starting to, to look at local B2B home services and some kind of, you know, what folks might call boring businesses and figuring out how those levers, uh, get incorporated as well. Um, but most simply, you know, I look at anything that's going on at the macro level, uh, on the, on the sell side, you know, the the levers around customer acquisition, um, continue to get out of hand. And so you have, you know, price makers in the form of alphabet and meta on advertising. And I just think paid advertising is a very dangerous kind of foundation, uh, to drive your business. And then on the sales side, you know, when you get to any meaningful scale, you know, you know, I'll stick to SAS because that's an area where I know, I know pretty well.

**LeSean Smith** (00:37:36) - Um, at a certain point, your sales, you know, mechanism starts to bump up against the world class engines, right? You're selling against a sales force or what have you. And so folks do all sorts of things. They try to partner, they hit their marketplace. They, you know, we're in competition. But at some point, you know, Microsoft, Oracle or Salesforce or someone's going to have a better sales motion than you. And this is why you see a lot of those tuck-in acquisitions happen over the years. It's like, okay, um, you know, like we could build this to 500 salespeople and we're not going to sell our product, which actually may be better than some of these engines. And so, um, the counter to me, to that is, you know, folks finding ways to continue to optimize a traditional high touch, uh, sales funnel or to really figure out how to operationalize a low touch funnel. And that's what I believe is, uh, is a huge unlock for these smaller businesses, um, much more challenging to do at scale.

**LeSean Smith** (00:38:29) - Uh, but if someone says, hey, you know, you know, there's a business and this is going to cap out at 10 or 20 million in the top line, I believe it's a very human driven brand. Um, you know, with content marketing, organic marketing really is the unlock for these, and you can't rush it. And this is, you know, kind of tied to the capital type. This is why I don't think they're very good fits for VC. Um, you can't blitz scale your way with this process. You know, sometimes it can take, you know, months and months. It can take a year and a half for, you know, you start seeing some benefits there. And so you really need this patient capital to go pull that off. And so audiences the first pillar automation on the back end. And just being very efficient the way I like to describe it more more more actually is I'm trying to um, run async companies. Right. And I found that to be the descriptor that can help because if I generically say automation or something like that, it can just be used in so many, so many ways.

**LeSean Smith** (00:39:29) - Um, but we see what happens when you have a remote first organization that says, hey, we don't need everybody at this stand up on this one time of the day, um, where, you know, somebody is up at, you know, some odd hour of the day, and then the other person is like, like, how can we change? Right. And so the idea of, I mean, we do a ton of, you know, video loom type recordings, so we don't need meetings. Uh, we're writing first culture. So, you know, you write it down so you're not freestyling in the course of a meeting. You're not thinking of the ideas on the fly. And so there's a bunch of these kinds of best practices. But the real kind of investment thesis there is, if you can build an async company, you can start to decouple all of the strenuous points across the kind of the big beats of sales, delivery and support. And so I'm just on a mission to look for those types of companies.

**LeSean Smith** (00:40:21) - More specifically, I'm in the process of a small roll up, uh, to service small businesses kind of throughout their value chain. So how do they start? Grow and sell. Um, you know, if you've ever worked with, you know, an investment banker who's going to go help a company, you know, sell, and they go work with a small business? Many times the small business isn't sophisticated. Um, or the deal is too small for the right type of investment banker to pay attention to them. So basic things like their data room, their sim, uh, that's their confidential information memorandum. Like all the stuff it takes where you like. I put years in this business. I got it to the right place. Now I'm ready to go, you know, get this this check. Um, I've learned a lot through this process on, you know, how do you, you know, not just grow, but sell the business. And so what I'm doing right now is rolling up a set of, uh, small tools and software plays to help folks do more DIY on this so they don't always have to get priced out of the market because, you know, they're they're a small sub, $50 million deal that a traditional bank won't, won't pay attention to.

**LeSean Smith** (00:41:24) - And so that's the lane. It's audience and automation. And it's really focused on you know, helping you know, these smaller businesses uh, start grow and sell themselves. And there's all sorts of interesting conversations that spill out of that. But much of it is a contrarian view that says you don't have to grow a massive business to win. Um, you just need to be very cognizant of your capital stack. Um, because the more of that pie you own, you know, there's that saying that I hear VCs, some of my friends say, well, listen, you know, do they want to own a, you know, a big slice of 0% or a small slice of 100%? Um, and it's like, sure. Like, yes, mathematically. But most of those, you know, folks who are going down the VC path, um, you know, it's not going to hit their third, fourth or fifth try. Right? And so that's a 15, 20 year journey that you're committing to.

**LeSean Smith** (00:42:17) - And if you just look at the cash on cash, there's so many ways to just make more predictable money. Um, not getting on that. You know, that hamster wheel. And so I just look at it, you know, call back to our early part of the conversation as a another path. Uh, not the path, but another path. Uh, and, uh, so as you hear me talking about this, it's not just what I do. I'm also kind of beating the drum to kind of drive awareness that this is another lane that people can consider.

**Christopher Nelson** (00:42:44) - Right.

**Christopher Nelson** (00:42:45) - And so it's really because I know you're focused on automation. That is its attention. Was that the first one?

**LeSean Smith** (00:42:52) - Uh, audience and automation. Yep.

**Christopher Nelson** (00:42:54) - Audience and automation. And then you're looking to buy these high cash flowing businesses. So you're creating a portfolio where you're spending your time and effort, but it's also kicking off significant cash flow. Then I read that right. That's correct. Yeah.

**Christopher Nelson** (00:43:08) - And that I think is so important for people to understand because, you know, it goes back to, you know, one of the things when you talked earlier about the rational optimist, I think there's there's two things that I've observed, and this is where I'm trying to bring data to the table, is when it comes to working for tech equity, so many people look through the lens of startups and say, oh, the only way you can make money is through startups, because that's what the media talks about the drama, the ups, the downs, the failures, the successes. When it's like, no, let's actually look at the boring equity of working for larger companies. And then it's also the same thing in portfolios. People get stuck in their portfolios because the majority of technology employees that I know earn their wealth in 1 or 2 companies, they have probably 60 to 60% of their portfolio. Is that single or two stocks, which is incredibly risky, or the rest is in the market and some is in venture, where again, they're in this whole venture mindset that says, okay, I'm trying to get 2 or 3 things to hit.

**Christopher Nelson** (00:44:11) - I mean, going through, uh, you know, this interest rate rise and seeing, you know, asset prices come down and, you know, some a lot of, uh, you know, startups failing. I've seen a lot of people get crushed by this.

**LeSean Smith** (00:44:24) - The markdowns are going crazy right now. 80 $0.90 on the dollar.

**Christopher Nelson** (00:44:28) - Right.

**Christopher Nelson** (00:44:28) - Verses to your point, if you look at these, this, you know, contrarian thinking, I think of, you know, Cody Sanchez, people like yourself are saying, let's go buy these boring, high cash flowing businesses, anchor your portfolio in that and move. You know, and I'm not saying that you have to liquidate everything else, but I'm saying, how do you actually move a portion over there and create this as a business that you operate? And so I'm curious to understand for kegger, you know, what is your current role and what are some of the businesses that you're spending time on right now?

**LeSean Smith** (00:45:02) - Yeah.

**LeSean Smith** (00:45:02) - So the part I just want to underscore that you said that's very important is as you look at this, you want to not only have the right assets, but you want to figure out what the right allocation is for your destination and your path.

**LeSean Smith** (00:45:18) - Right. And so I, I don't preach a way like, you know, I don't have a system. Um, what I've learned is I will get myself in trouble if I invest in certain things before. I invested full time. I had done a number of angel deals and my first vintage. I got really fortunate because I just invested alongside other people. I had enough sense to say, well, let me go with some folks who are pretty smart at this already. And, you know, those are really tiny checks, right? You know, those early angel checks are, you know, 25, 50, $100,000. So these aren't these aren't big money checks, but you need to have a couple million, two, $3 million set aside because you need to have a good chunk to write those initial checks and have a little more for pro-rata if you're really going to get serious about it. Right. Um, and, and so when I what I, what I learned from that is number one, I looked at a lot of deals, right.

**LeSean Smith** (00:46:10) - To get to 30 some odd checks. You have to look at a lot of deals to get to that level of throughput. And I found it was like, all right, listen, you have to know yourself. And I got really excited about the ideas, like, I'm going to be a super angel and I'm going to be the best advisor. And like many of these cases, I did get advisor shares in addition to the check. Um, and, uh, you know, I'll have a couple of board seats and like, you know, I just told myself this crazy story. And really, at the end of the day, um. When there's something on fire and there is value to add, you know, folks will give you a call and say, hey, I'm thinking through this, this thing, but you're not in the mix, right? You're, you're, you're the phone, a friend. And so I found that it was too far away from the making.

**LeSean Smith** (00:46:58) - It's like, no, like I'm not at the stage where I want to be that hands off. Um, at the same time, you know, I didn't want to go back to big tech and be in those situations where, oh my goodness, I'm in some, you know, weekly, monthly, quarterly business review of one of my peers. And, you know, he's a nice guy, but I don't really care about his business. I want to focus on my things. And, you know, like all the meeting overhead and other things that happen. And so I knew that wasn't the way. Um, and so the reason I put those as kind of the starting points is I don't have a passive business at all, right? I don't run Holdco. Uh, the reason I don't, you know, I love that word, you know, and it's kind of like simplicity, but for the most part, it really a Holdco means that every operator has, like, is running these businesses, you know, without, you know, any type of interaction.

**LeSean Smith** (00:47:50) - And, uh, while I've, I've tried that, I found where I'm both most energized and where I can be most helpful is where I'm on the hook for setting up a lot of the process. Uh, and I'm effectively the coach. Right. So there's still somebody who owns that track, but it's more akin to how I would be a manager of managers inside of a big company. Um, and, you know, there's some checks and balances. So I'm not in the approval flow for work getting done. But I am part of the strategic kind of driving, um, of these businesses. And then I'm using phantom shares, which, uh, for folks who aren't familiar with that, um, it's an old concept that has kind of found, uh, you know, new life. It's a type of profit sharing where you let folks participate in the distributions of a cash flow centric business based upon some set of incentives. But if they quit, then they go back to the pool and you get to relocate them so you don't end up with some wonky cap table.

**LeSean Smith** (00:48:48) - Um, and so I really love those types of tools. And what I'm attempting to do is, um, really be thoughtful about, um, who are the folks who have a gap that doesn't need to be fixed. Right? So that's another thing we think about leadership. It's like, well, you have these gaps and I'm more of the strengthsfinder type person. It's like, okay, like let's not be egregious with your gaps, but let's lean into what really makes you solid. So, um, some of the businesses that I have that, you know, are pretty pedestrian. One is a visual identity firm. Um, and it's like, well, people could go get a logo off of fiber for 25 bucks. And, and, you know, consistently, uh, the guy who runs that, you know, he's doing 15 to $20,000, uh, branding projects. And the reason it's like, you know, they're not chasing down a customer who, um, you know, needs a $100 logo.

**LeSean Smith** (00:49:41) - Um, they're chasing down folks who need a 50 or $100,000 package. And it sounds very cost competitive because of how they deliver that. Uh, and so that business with the right sales machine, like, it just prints money. It's not a big business. It's not massive, but it's highly, highly profitable. Um, another example is that I bought a small, um, web app development shop. Those are a dime a dozen, right? There's like, how would you even survive in that world? And I just made a small tweak and said, you all aren't going to do any more of these, these kind of trivial, um, uh, just kind of web apps because a lot of these kinds of SaaS apps are just kind of Crud apps anyway, right? They're just forms over data, uh, and reposition them to conversational products. And so their product design company and they only focus on this current wave of conversational products. And so folks are trying to figure out how to incorporate, you know, anthropic or open AI or some type of Lem into my business? Uh, and so there's just a clear lane, right? And so these are not meant to be in this current wave.

**LeSean Smith** (00:50:42) - Businesses that will, you know, survive 15, 20 years. I know that, um, but the cash that's throwing off, you know, from those companies, um, helps me kind of cycle it into the next wave of ideas. Uh, and as I said, I'm really passionate about this idea of helping small business owners move through the full life cycle. And now that there's more cash to play with, I'm looking at some of these, uh, traditional things outside of tech, um, you know, like home services, construction trades and what have you that have kind of a local moat because, you know, I'm here in Seattle, you know, there's somebody in Saint Louis who could just copy my business. All good. I don't have a plan to go to Saint Louis. Um, and, uh, there's all sorts of goodness if you can take the audience and automation and then apply it to those types of businesses as well. And again, all of this stuff is connected. You know, all that goodness that I learned at a big company can now be applied to how we run our goal setting, how we do strategic prioritization.

**LeSean Smith** (00:51:40) - Um, how? We do our experimentation plan. That's one of the things that I learned at Amazon that was very powerful. On setting financial budgets for your experimentation. So it's like, all right, what's your experimentation cadence? All right. Weekly. How much are you willing to spend on experiments in either lost revenue, cloud costs, employee time? There's all sorts of attributes here that you can calculate, um, over the next 90 days. And you might say, all right, we're willing to spend, you know, at our tiny little companies, we might spend 80,000 on experiments. You know, when I was at a big company, we might say we're going to spend $12 million, you know, on an experiment for two weeks, and you go a B test or multivariate test and you write these things like hypotheses. You say, we hypothesize that X and then you know what you're going to do based upon outcome A, B or C. Uh, and when you write like that, all I have to do is show up for a 45 minute weekly business review and do a one on one with the operator, and then off they go, you know, and I can I believe I can scale to about 6 or 8 of those.

**LeSean Smith** (00:52:41) - And so I just love these types of approaches where you're taking the best ingredients from all these different, um, you know, environments and kind of making this fusion dish of a company.

**Christopher Nelson** (00:52:52) - Right? I mean, this to me is where you've taken your skill stack that you've developed so well, and now you're, you're focusing it at these, these different companies, you know, generating cash flow that then becomes essentially this self-perpetuating machine. And and it's focused on cash flow, which I think is, to me, having a, a portion of your portfolio that's that's kicking off some good healthy cash flow is just I mean, what I've seen is I've been studying the portfolios of the ultra wealthy is you need to have a healthy portion of cash flow to be able to maintain and reinvest as you go forward, just having growth only, um, just, uh, you know, creates a lot of risk.

**LeSean Smith** (00:53:32) - Yeah. And tying that, I do think it's important. I think your audience will understand this to also think about your tax strategy in all of this.

**LeSean Smith** (00:53:42) - And so when you're, when you're when this stuff is this cash is getting thrown off, I'll just give you a little structure, a little insight to how my business is structured. I have, uh, what, you know, legally looks like a Holdco, even though I have a pretty active role in much of this work. Um, where all of these initial baseline, um, deals get parked and that's. So they just look like departments, right? And so all of that can be crossed collateralized. Um, and so the CPA knows how to go chunk this out, but it's no different than, you know, uh, a big company having, you know, you know, consumer business and a B2B business or, you know, what have you. We're just a little baby version of that. Um, and then when something gets to, uh, enough cash or some other legal reason, um, when it gets spun out, it's, it's, it's own entity, usually a subsidiary of that.

**LeSean Smith** (00:54:30) - And, uh, but the beauty of all of this is that a lot of that cash can even compound inside of the company. And then when you need to make a distribution, you know, figure out what you're going to do. Um, I found that while I love real estate, uh, I have to be an LP in real estate, like, because, like, when I, when I first sold my company, I did Christopher. I did all kinds of crazy stuff. I invested in movies. Don't do that. Um, I mean, I was fortunate that some of these things, uh, did. Well, uh, but it was really more of a, the outcome of cirp and all of this, like cheap money floating around that the streamers were just buying everything that showed up, uh, because they had, you know, they had cheap money. Uh, and so that's not a, you know, a reliable business plan. Uh, I built two spec homes, uh, and again, like, just super random things.

**LeSean Smith** (00:55:22) - Right. Uh, and what I found was, uh, like, I need to stay in my lane. I know how to make digital products, like, that's my thing. And so my kind of investment strategy is very, very simple. I have a fair amount of my net worth locked up in my investment vehicle. I still have, uh, uh, you know, a decent size of my shoes that I haven't moved into, uh, an ETF or some type of index because I believe in, you know, a company like Microsoft or Amazon, and I think it has some, some more way to go. But really, the bulk is just, uh, I have some T-bills for my short term. I have a bucket of cash, and I have, you know, uh, decent amount of money in VTI, like, like, this is the most simple, you know, again, not financial advice, but like, the most simple, basic thing. And then I have, um, uh, four pieces of real estate that throw off a little bit of cash, but they're fully managed, like, I like, I'm horrible at anything related to, you know, the operational element of real estate.

**LeSean Smith** (00:56:26) - And so anyway, I say that to give some broad strokes of how I've structured my system and what I found is, um, if I want exposure to, say, real estate, I need to be an LP. I need to give somebody else some money and just say, like. That's your life professionally that you're doing like go be great at that. And then I'm going to focus here instead of thinking like, hey, that's interesting over there. What you got, Christopher? Um, maybe I could partner with you, like. No, LaShawn, stop doing all of that stuff like that. Just that just gets me into trouble.

**Christopher Nelson** (00:56:56) - Well, and I think that's, uh, such a wise, you know, self observation that you've made. Because as we transition from full time employment to what I call, you know, the portfolio lifestyle, you're just really, truly managing your portfolio. You need to have certain sections that are on automatic so that you are letting experts do those things, because our passion and our joy is going to be spending our time operating the things that give us the juice, right.

**Christopher Nelson** (00:57:27) - The things that give us that feedback that activate our zone of genius. And I have definitely seen people tripping over their own shoelaces because they want to have control in all aspects, and that ultimately weighs them down. And it's, you know, the same adage as if you're in a corporation and you're trying to have too much control over your team, you're never going to be successful because you're not moving to your zone of genius. You're trying to do everything you know in half measures.

**LeSean Smith** (00:57:53) - Yeah.

**Christopher Nelson** (00:57:54) - Totally 100%.

**Christopher Nelson** (00:57:57) - So.

**Christopher Nelson** (00:57:59) - Um.

**Christopher Nelson** (00:58:01) - So what's.

**Christopher Nelson** (00:58:01) - What's the future right now for CAGR?

**LeSean Smith** (00:58:05) - Yeah. So we are going to roll out this new brand, uh, early part of next year. And again, you know, think about. Companies. You know, let's take a financial, you know, fintech product like Wealthfront. Um, what they, what they find early on in almost all of these is like, okay, we could do robo investing, but now we need to do this other thing.

**LeSean Smith** (00:58:27) - And like, you know, you start to tack on all of these pieces. And so my focus, uh, you know, for 2024 is really to start finding all the gaps for, um, uh, for kind of the small business journey and determining where to partner and where to buy. Um, because some of these, you know, are regulatory, um, you know, or, you know, I don't I'm not going to buy a, um, a white label bank. Right. There's all these neobanks out there. Um, you know, that's a silly thing. So that's going to be more of a partnership. Um, but then there's other things where it's clearly, you know, it should be part of, of the fold. And the goal is really to figure out how to, how to, you know, fill all those gaps. So I'm doing what's called a, um, an outcome based community. Uh, and my, the community here are small business owners and the, the transformation of the outcome that I'm banking on is the belief that financial independence through business ownership is, you know, a huge, uh, you know, predictable way in spite of all the wonkiness in the economy for folks to, to, you know, get a fee without a ton of permission.

**LeSean Smith** (00:59:33) - And so that's where I'm going to continue to focus. And, uh, along the way, I just love to talk to anyone who is on their journey as an entrepreneur, especially if they're looking at smaller businesses, because I can pattern, match. I learn things, you know, conversations like spark ideas. And so I'm out here just continuing to kind of figure out, how do I fill this? Uh, and we don't have a ton of time for this, but I'll give you a quick anecdote on how I look at the market. Um, I have the simple definition of a market. A market is a group of individuals who share a problem that's painful, recurring, and is, um, uh, you know, quite pervasive. Right. And ideally, if it's a great market, it also is a group of folks who have the willingness to pay for that. Uh, and I try to, uh, to validate that as early in the process as possible. So while, you know, I still, I do very few incubation type deals.

**LeSean Smith** (01:00:29) - Um, the beauty of acquiring a company is you figure out if there is a market there, right? Like, you know, you just go look at them you get access to their stripe account and their bank account, and you can go see how durable our, you know, is, is this money. Um, and so as I'm going through, I'm also trying to figure out, um, is there any shift in behavior or regulatory issues or technology pieces that are going to allow different segments or industries of these small businesses to survive and thrive in a different way? So, you know, for better or worse, you know, people, you know, I don't mess with FNB like food and beverage or restaurants, like, I don't know how to add value. Customer cash flows are very brittle. Um, but there are all sorts of things that are core to our economy, especially at the local level. And I'm just super, super interested in how we can reinvent some of those. And so whether you know, somebody has a crawlspace company or a roofing company, um, I just like there's untapped opportunity there for these to be economic engines.

**LeSean Smith** (01:01:31) - Uh, and just, you know, you know, just a finer point on that. If you look at what the folks in groundworks are doing down in San Diego, um, they started as a PE firm, uh, the, the investor, the GP shifted to becoming an operator to go run this business. And they do foundation repair. Right. So it's a pretty vanilla business. And, uh, the last public number I heard, uh, this is a private, uh, PE obviously, um, was $800 million top line a year, right. Fixing foundations. Right. Um, and, and there are all of these businesses that, uh, you know, are in that range where you could do, you know, tens, in this case, hundreds of millions of dollars, and you're never going to be, you know, in the media, no one's going to know your name. Like it's all good. Um, but you're really kind of driving this, this real economic engine and just going full circle.

**LeSean Smith** (01:02:23) - I love this idea of getting your personal finances in order, you know, grow the gap, de-lever yourself, you know, working in tech. Um, then use that money when you're ready to either buy a company or figure out a way to de-risk starting a company. And then I like the base ten approach. Go make $2, then 20, then 200. And, you know, and eventually, to me, the psychological point for a lot of folks is once they have a couple hundred grand in their bank, Charlie Munger used to say 100 grand. Um, you believe it can work? Um, I believe when you have that next zero, you're at $2 million. Now. You're like, okay, I have enough breathing room, and, uh, you can kind of like, you know, kind of move with intention. And then there, from there, you know, you're kind of in the club and it's just, you know, kind of time to get to work.

**LeSean Smith** (01:03:10) - So these are all the things that are energizing me and keeping me excited. And the goal is. Is really to, um, not only kind of make money, but do it for a customer base that I really love.

**Christopher Nelson** (01:03:22) - And that's so important that we leverage everything that we've learned and the opportunities we have now to really make an impact. And I'm, you know, a huge subscriber to that as well. And especially right now there is that, you know, we're in the middle of this great transition of wealth right from the baby boomers to the next generation. And people talk a lot about assets. The reality is there are a lot of businesses right now. And I just saw one in my hometown of Oroville, California. There was a, uh, you know, it was a, uh, sporting store. But behind them they also had a business where they, uh, sold a lot of, uh, reloading shell equipment, and they didn't have anybody to pass it on to.

**Christopher Nelson** (01:04:03) - And so, you know, it was a thriving, successful business, part of that community that probably could have gone on for years. They ended up shutting it down. Yeah. You know, selling.

**LeSean Smith** (01:04:11) - Many times. Um, there's a fence company that's closing down, um, not too far from me. And, you know, it's like fences. So it's like, like, like, what is this? And the reason the business did so well was the big box stores, you know, the Home Depots, Lowe's, what have you. Um, they don't have enough stock or specialty components. And so there's this still this, this, you know, really practical gap. And, uh, yeah, they're likely going to be shutting it down just because they can't find a buyer to kind of kind of keep that going. And these are not complex businesses, you know. You know, how you think about, you know, all your add-ins and valuing the business. Sometimes the owner is not properly accounting for their contributions.

**LeSean Smith** (01:04:51) - That's why they have, you know, metrics like seller discretionary earnings and other, um, kinds of evals. But once you actually normalize and see how much cash is actually kind of spilling out of these companies, there are plenty where, um, you know, if you're great at hiring the right people, there's enough cash to pay them. Uh, and then you're forced depreciation or however you're going to drive up the value of that business doesn't have to be reinventing it or totally changing things. A lot of times it's just these small tweaks, uh, that really transform things.

**Christopher Nelson** (01:05:20) - Right? And many times for us in technology, it's bringing, bringing technology.

**LeSean Smith** (01:05:25) - Yeah, yeah.

**LeSean Smith** (01:05:26) - And it doesn't have to be sophisticated. Um, I know we're, we're going tactical and kind of abstract in this conversation. So hopefully folks are keeping up as we zoom, as they say. But one of the things that, you know, I've been guilty of, uh, as someone who knows how to make things, I'm like, oh, we'll build an internal piece of software for that.

**LeSean Smith** (01:05:44) - And it's just like, dumb, like, don't do that. Um, and so when I look at some of the current batch of AI tools, um, you know, we'll put the more technical tools to the side. But even simple things like Microsoft Copilot, you know, it's $10 for a Microsoft 365 license, $35 for a copilot license, and for $45 a month. Um, you now have given that team member basically their own assistant. And, you know, like, these are the things that I feel operators should really be looking into. There's the switching costs, obviously, for getting in and out of these tools. And so that has to be factored in. But that's a big deal. And there's so much of this goodness where it's just like, okay, um, you know, is there just a spreadsheet where you already have your data, just have your, your team members talk to that data like that? You don't need a custom, expensive workflow tool. That's a $45 a month solution.

**LeSean Smith** (01:06:35) - And I'll put an asterisk. Um, I believe that this next wave of, uh, software products for business are also going to be disrupted on the business model side because computers have gotten so cheap. You know, we talk about GPUs and AI and all these types of things, but the actual cost to run a basic SaaS, uh, product has plummeted. And so we know how to build these tools. They've gotten much, much cheaper. And I actually think that per user, pricing is going to be under duress over the next few years. And that's an opportunity for investors because the, you know, the beauty of the resilient, um, you know, recurring revenue of SaaS, it's like, you know, maybe one of the second best business models of all time. And what's lovely about that for folks is that you can collateralize it like, you know, some type of annuity stream, but I believe even that's going to be attacked because there's smarter ways to build. And so if you're an investor or you're a builder, um, don't just think about, you know, what the tech is doing.

**LeSean Smith** (01:07:37) - What's the new latest language, you know, large language model. But like, how can the same product that people already have on their PNL? Um, how can you make a 50% better version that you sell for $0.10 on the dollar? I mean, this was the whole Google business model when they went, uh, with, uh, with paid ads as they competed with, you know, broadcast television and print, they said, listen, we're, we're we're way cheaper, like, like orders of magnitude cheaper. And so, you know, I'm just using SAS as an example, but I think we're going to see some price compression on some of these things. And that's also an investment opportunity.

**Christopher Nelson** (01:08:12) - Truly, truly. Well I have a feeling. That you and I could keep jamming on this all day, but, uh, no. Thank you so much for sharing with us. You know your journey. You know the skill-stacking everything you learn and how you've translated that into kegger. I want to end up doing a special fire round because I know that you subscribe to stoic philosophy.

**Christopher Nelson** (01:08:31) - So we got five questions around stoicism that we're going to throw your direction here. So how does stoicism influence your approach to entrepreneurship?

**LeSean Smith** (01:08:41) - Uh, I'll give you two quick things there. First, I love to say move without permission. And so I'm always looking for opportunities where I do not need a gatekeeper to move forward, focus on what I can control. Uh, the second half of that is I like to start from the end. Part of stoicism says keep the end in mind and then work your way back. We know that. But many times we don't operationalize our lives through that lens.

**Christopher Nelson** (01:09:06) - And it's so important we really do. So, uh, can you get an example of a challenging business situation that stoicism helped navigate that adversity?

**LeSean Smith** (01:09:17) - Well, there's so many. But, you know, in the spirit of a kind of a lightning round, you know, I'll say. Yeah, first, the principle is focused on execution. Right? So, um, I found myself time and time again getting caught up in, you know, the latest tech, the newest thing, like, look at this prototype that I built over the weekend, everyone.

**LeSean Smith** (01:09:37) - Isn't it so magical? And if you. I'll go to another Matt Ridley book. We called him out earlier with The Rational Optimist. He has a more recent book called How Innovation Works, and he talks about the flows of inventors who rarely benefit from the economic, you know, uh, kind of, uh, upside. Um, doesn't mean you shouldn't be an inventor, but just look at history, uh, innovators take that prototype or that invention and they go figure out how to sell it, how to make it cheaper, how to, you know, drive awareness. Uh, and a lot of what happens in tech, especially in large tech companies, is you're part of the innovation system. And sometimes, you know, a company might say, oh, you know, Oracle didn't build that. They just sold that or stole that or, you know, and there's all this language happening. But I don't think folks really understand there's a taxonomy here. And the inventor class is different from the innovation class.

**LeSean Smith** (01:10:32) - And the innovation class is different from the operator class. And so what I had to learn was many times I was misplaced in what position the business was in. And I should have been in the operator class trying to take someone else's innovation and just selling it, operationalizing it for a specific customer. And I was over here trying to invent something, and it's no wonder it didn't work. Um, the, uh, you know, the company I was talking about with the, uh, the SMS to stadium, that's a great example where, like, we built some really cool tech and, uh, you know, real time. There's all these things back in the day where you didn't have enough cellular coverage. And we figured out all these, these redundancy hops and, like, technically is very interesting. Um, but at the end of the day, what we should have done is figured out. All right, can we operationalize this sales engine? Uh, and we didn't do that. And so, you know, just focusing on execution, I think is really important to figure out. Do you really want to be an inventor, an innovator, or an operator? None of those are wrong.

**LeSean Smith** (01:11:33) - But make sure you move with intention.

**Christopher Nelson** (01:11:36) - That's great.

**Christopher Nelson** (01:11:37) - What, uh, what stoic practices do you incorporate into your daily routine?

**LeSean Smith** (01:11:43) - So two things right now. Just now, you know, that controls how you react. That's something that I'm always reminding myself of. Uh, someone prompts you with something, how am I going to act more tactically and maybe actionable for the audience if I practice, uh, calendar journaling pretty religiously. And the short version of this framework is you go through your calendar 2 to 4 times a day, and you have things that you booked on your calendar, but sometimes you actually spent that time a little differently. The meeting ended early, and you called yourself learning and you watched an educational video on YouTube. You said you were going to, uh, go write this memo, but, you know, you took a longer, you know, lunch break. And this is not about hustle culture or like squeezing out every inch, um, you know, kind of drop productivity.

**LeSean Smith** (01:12:31) - Um, what it's about is treating your time budget the same way you treat your bank account budget. Right. So when you log in to your bank account, you see how much money you have. I say when you log in to your calendar, you see how many minutes you have to spend that week. And how can you be very intentional? And the punchline of this tactic is you go back. I do it in 15 minute increments, and I go refactor everything I did. And the point of the exercise is not to show anybody or to publish it, but it's to say, LaShawn, you said your destination. What you want to accomplish in the next quarter year decade is x. I have it written down, and then you spent your time here and I'm checking myself, holding myself accountable throughout the day. And so I love this framework because you don't have to buy a new piece of software. Um, you don't have to be obsessive as LaShawn and do 15 minute increments. You could do 30 or 60.

**LeSean Smith** (01:13:20) - Uh, and you don't have to keep the streak. My streak has been going on. The current one is about two and a half years since I logged into my life in 15 minute increments. But do it for, you know, like a detox, do it for a week or 30 days and you'll see, like, all right, I probably shouldn't have watched this extra three hours of Netflix this week. And again, no judgment, right? Right. Just ask yourself, what is your destination? And if you're violating your own stated destination, then maybe you want to spend your minutes in a different way.

**Christopher Nelson** (01:13:49) - Wow, that's very, very powerful. I like that. Um, what advice would you give to tech employees or entrepreneurs who are interested in the stoic approach?

**LeSean Smith** (01:14:00) - I think the big one is, don't pay attention to status. Uh, Navarro talks a lot about this. Uh, but it's just something that I really have to, uh, remind myself because it's easy to get drawn in that game.

**LeSean Smith** (01:14:15) - Um, as you kind of go along the way, a very, very simple way to state this is don't pay for TechCrunch articles.

**LeSean Smith** (01:14:22) - And.

**LeSean Smith** (01:14:22) - And like, like people will understand the same, you know, like Forbes is probably another good one where, you know, if somebody wants to cover your startup because you're doing something great, like fantastic. But when you raise funds, uh, let's say your venture back, you know, company, um, you know, many times are going to connect you with a publicist, and that PR firm is going to say, we're going to help make you famous, and we're going to go get some coverage for your company. And a lot of these placements are paid or pseudo paid. And it feels good to see so and so just raised X million dollars. And guess what? Your customers don't read TechCrunch. Um, and so just getting your head out of the social reinforcement of LinkedIn and these other places where, where all of us live and we see each other and we're trying to compare each other and it's like, oh, my buddy just, you know, raised X million.

**LeSean Smith** (01:15:10) - I remember this real story. I know this is Lightning Round, baby. Super quick. Buddy of mine raised $15 million for his startup. And we had ideas at a similar time. And I was just like, like sulking almost. I was like, good for him. Like, just like one of my best friends. And I was like, right? I was like, man. But he raised 15 million. I mean, it was basically a $15 million seed round. So like, this is a meaningful, you know, seed round, right? Um, and like super sharp people with pedigree. So this, you know, I'm not surprised that this happened. But then I'm like, well, where's my $15 million for this idea? And like you got to look inward. Uh, focus on what you can control and so, so much of this stuff is just, um, just ignoring status. And I think status is a proxy of our measuring where we are in our journey.

**LeSean Smith** (01:15:53) - And remind yourself that you're in competition with yourself.

**Christopher Nelson** (01:15:57) - Wow. It's really powerful.

**Christopher Nelson** (01:15:59) - Um, and so what do you think are the key benefits overall of just embracing this that you felt, you know, being in business, being in tech.

**LeSean Smith** (01:16:07) - So the name of my company is Major Investments. You know, compound annual growth rate. And I really believe compounding is magic. And so I didn't pick a financial metric just because it's like, oh, this is all about money. I believe we can compound our personal development, our relationships with each other. And if you really look at operationalizing how you show up day to day, um, you know, that kind of gets 1% better every day. To me, that is magic. And we know that compounding is exponential when you really commit in that manner. And so I always say like, I got to get back to the making. I have a North Star. That is six words, three sentences, know thyself, make things stay free.

**LeSean Smith** (01:16:49) - And that is really driven by these stoic principles to make sure that I'm focusing on LaShawn and not everything else that might be happening around me.

**Christopher Nelson** (01:16:58) - That's so good.

**Christopher Nelson** (01:16:59) - Well, LaShawn, I can't thank you so much. I can't thank you enough for the time. I appreciate you being here. And, uh, we'll see you next time.

**LeSean Smith** (01:17:07) - Great to hang.

**Christopher Nelson** (01:17:08) - Thanks.

**Christopher Nelson** (01:17:09) - Thank you so much for listening to today's episode. I just have one ask. Please go to TechCareersandMoneyNews.com. Yes, TechCareersandMoneyNews.com and subscribe to our new newsletter. That's where you can get weekly information on how to grow your career, build wealth and meet your financial goals. Thank you.