Anyone in business for the next 30 years had better learn accounting.

[00:54]

"Well, my my hidden uh tool is my son and the team that I have and my family. I have a truly entrepreneurial family and uh they really really understand dad's got to have his thing and travels quite a bit"

[14:44]

"I tell people if you're going to be in Spain for the next 30 years, you better learn Spanish. If you're going to be in business for the next 30 years, you better as hell learn accounting."

[17:42]

"When you raise a million dollars on a $20 million, that doesn't mean you're worth 20 million. Stop. Okay. Make sure you understand that the only time that you're really drinking it is at a closing and a check is being passed and wired funds."

Full transcript

Kevin is the chairman and CEO of McGovern Capital, a single family office which serves as an investment strategy and licensing principle and adviser to global businesses. Through McGovern Capital and its affiliates, Kevin has co-founded over 25 companies, six of which have become world category leaders, and he's been principal in over 15 global joint ventures doing business in over 80 80 countries. Um, one of the reasons we are having Kevin on stage today is just that he has helped found and scale a few companies to over a billion dollars in revenue. Uh, like I think Soie Beverages was was one of those.

Um, and so I'll uh take the other mic now Kevin but uh if you want to explain anything else about your bio you want to add for context as I get seated that'd be great. So um what else about your bio or background would you like to share with the room that maybe I didn't mention uh when introducing you? Well, my my hidden uh tool is my son and the team that I have and my family. I have a truly entrepreneurial family and uh they really really understand dad's got to have his thing and travels quite a bit and I I always love touh tell people that the first priority of my life is my family.

Uh but you know really I think of the companies that I'm involved with as in some ways children and uh you know I have an extended family. I'll never forget asking Jim Draper how many kids do you have? And he said four. I said no. How many kids do you have? And he had 700.

And uh so anyway I I've had a lot of children and I really enjoy working with entrepreneurs in a big way. Awesome. We had the uh pleasure of interviewing Tim uh Draper for billionaires.com. We'll try to get him on stage one day here as well. So, um, so how have you done multiple billion dollar plus deals, um, while others are rightfully proud of doing a million or $10 million size deals?

Like what's the the number one difference maker if you could maybe spill the beans on that? You know, when you're assessing an opportunity, uh, large opportunities are not necessarily more complex than small opportunities. Uh, and we always want to look at things and say, is this a trend or is it a fat? We have a expression in McGovern Capital called catch the current, make the wave.

If the wave is existing already, it's too late. And I'm People sometimes ask me, you know, who's your who your leaders and idols, Rat Dant being one of them, but Wayne Gretzky, we skate to where the puck will be. And what's happening today, what's hot today is too late for you to do. What you need to do is you need to figure out what's happening tomorrow because it's going to take you time to get there.

So really look at things that are compelling, trendy, and also what you can do to shortcut the the skate to where the puck will be. Yeah. Awesome. I think uh Gary Vee says something similar that like if you're always chasing that recent trend, you'll just be behind the herd. So you need to focus on future sandbox and spend a decade building that so when the herd comes, you're already very well positioned in that space.

Learn how to say no too, Richard. I mean, you know, often what I'll do is is instead of just saying absolutely no, I'll try to refer people to people that may understand it more. But for me, you know, we have a series of gurus. I teach quite a bit, as you know, in Cornell and MIT and Stanford.

And I don't just take the students are just one thing. The professors are great resources for gurus. They're not necessarily entrepreneurs, but they're great factfinders and they're great information people. So, I use them quite a bit. So, I know you have an amazing network, um, one of the biggest ones probably in this room. So, how much is the teaching and doing executive education or business courses?

Does that get you hyperconnected to a lot of these families or how did you build such a Totally. You know, my son says, "Dad, why are you all these family office conferences? You know, we we got companies to run, we got this, we got that. And I said, I meet people like you and like the people in this audience.

And quite frankly, when I speak at family offices or I speak at universities, it it it gets me into sovereign wealth funds, it gets me into, you know, I I teach at Tal in Saudi Arabia and that's a great entree into the hierarchy of PIF in Saudi, right? Makes sense. For example, right? Great. Um, so you said seven months ago on stage that all of business is pattern matching, right?

If something's working, you do 10 times more of it. It's not working, maybe try to fix it once or twice and then you delete it, right? So, um, can you talk a little bit more about that? How you stay objective? Um, because sometimes if you put a lot of energy into something, you kind of almost emotionally have this like kind of sunk cost, but you're kind of tied to it sometimes.

So, how do you stay objective on cutting things out and going 10x on what's working? Buffett has some great expressions. Some I agree with, some I don't. He's a lot smarter than I'll ever be. But the one I really like the most is cut your losers early and ride your winners. And you know, it's really not easy, but you have to learn whether it's people that are in your life, whether it's investments, etc.

You have to learn how to cut your losers early. And in in business is the same way. And why your winners? When you have a winner, keep investing in it. Keep pushing it hard, keep doubling up, tripling up, etc. As you know, I'm involved in one company with uh it's a replacement for all plastics.

I've written three checks and I I soft equity, hard equity. I am pumping it. I am putting money in, etc. I'm really, you know, I I'm pumping my winners. It's very simple. Right.

Got it. Um, so how do you get an audience with some of these groups that turned into billion-dollar brands? Were they so small when you approached them it was easy or were they already big and kind of the hot thing and and had everybody trying to partner with them? Your reputation is everything. So fortunately we built a reputation.

We vet our deals and there's not a chance that I'll bring it bring a deal to somebody in Singapore or and we do a lot of business in Asia and the Middle East. Not a chance. If I see a slight dent, they're the first people to know about it. Our reputation is much more important than our balance sheet.

And I know you've heard it a hundred times, but some people live by it and some people don't. So, I'm really into when I tell people about a deal, I'll tell them the warts that are involved and the hairs that are involved, and they build trust with me because they know that I'm going to tell you everything that I know about it, and I will vet it first and I won't waste your time. How much um in-person due diligence? How many months of due diligence does that look like before you start bringing it to some of your close partners?

We're slower than most. I remember the old dotcom area make a decision today. Sorry, we're not making a decision today. Uh we take longer and as far as we're concerned, you know, we want to make sure that we are really confident and if somebody wants to rush us, we just say no and we move on. The real people realize that we can bring a lot more to the table than capital.

And so we take our time and we do our due diligence carefully and we go to people that are a lot smarter than we are about different categories and we iterate. I chaired science at Cornell as a as a as a trustee and scientists love that word. You tell them in your conversation iterate and they go yeah he knows what he's doing. Iteration is you know all these different points and find a straight line.

So iterate on your deals, check it out with a number of people, and listen to all these people, and you'll form your straight line about your opportunity. Got it. Great. Um, what about any tricks on getting a hold of uh sovereign wealth funds, billion-dollar plus family offices, publicly traded companies? That's something that could be life-changing if someone in here just gets, you know, a joint venture with one publicly traded company.

When you meet people, don't worry about their business. Worry about their person. Find out a little bit about how many children they have. Find out about what they really love. And you know what? You build a relationship.

You know, the number two guy Pif when he came to Miami for the tennis tournament and said, "Justine and I would love you to come up and enjoy tennis together." Singapore when when the head guy at tennis act when his daughter went to school at NYU, his wife Suang gave my phone number in case of emergency. I'm not bragging, but they trust me and the personal relationship. Learn the secretar's name, the wife's name, the children's name, and the dog's name.

And when you start out the conversation, don't ask how their business is doing. Ask how their family is doing. How is your wife Julie doing? How's your family doing? And learn to be personal with people. It really, really makes a difference.

You seem to be naturally pretty good at that. Do you keep organized notes on some of these details or I just have a really good memory for it? Both. I have notes on, you know, I really do keep notes carefully and I want to remember the personal side. And there's no way, Richard, you're going to remember it all.

And so, yes, before I go to a different country, etc. I check my notes and I check the people that I'll meet with and I remember their their children's names, etc. Yes. Got it. Okay. Um, what's Don't forget the whole concept is, and you've already talked about it, relationships, relationships, relationships, right?

Great. Yeah, for sure. Um, so what's the most painful, costly lesson that you want to kind of get into everybody's heads here today so they don't have to learn it the hard way that you've not mentioned yet? You know what? I I I my worst experience was a company that I allowed the entrepreneur to uh hire the financial people and then they tried to hire the accountants.

And you got to know your numbers and you got to be familiar with your numbers. And as an investor, make sure that you have a very close contact with the people that that cover the purse. And so I don't want to meet just the CEO. I want to meet the CFO. And I want to meet the individual team members on an individual basis.

And I want to make sure that I know that those numbers are being prepared by the team and not just by the CEO. I did get, you know, fooled a little bit on this particular company and I wound up having to go in, fire the CFO and work with the CEO as best I could even though I wanted to get rid of him. And about a week before closing, I found somebody to buy the company. It was one of my worst chapters.

And I called the CEO of the other company. I said, "I just fired the CEO. He was putting a gun to my head about it." He said, "I'm so happy. We would have fired him the day after closing." That was a close call and I will tell you, do the do the right thing and it will pay off and it will work out.

Got it. So, um, when people approach you and since you speak so often, you probably have, you know, lots of emails coming in all the time, pitches. If it's not through a referral and not a name you recognize, what stands out to you? What do you notice first, look at first? Any suggestions on that referral? You know, I used to hate it when I I was a deals lawyer in Greenwich, Connecticut, and I used to hate that all these venture capitalists was like a hail hail club that they only dealt with each other.

But you know what? The person who refers it to me is really important to me. Really important because I know that my dear friends just like I I will not refer to Richard or somebody unless I vetted it carefully and to be honest with you many days in a year and you just don't have time to look at things cold turkey and also you need to know what categories you're good at as you talked about yesterday and what categories you're not good at. We're not good at software.

I don't believe that much. I I think software is very difficult to have a sustainable business in. Everybody has a different opinion. I like hardcore. What we do is engage in disruptive and typically patented technologies that have a global need. We want to make sure that we have some proprietary rights and that we can really execute based on those proprietary rights into a joint venture or otherwise.

Got it. Uh what are some of the trends that you're tracking now if you don't mind sharing that like that you can say publicly or that you're really most excited about? So you've seen me reach into my left pocket but I got to tell you something. If you're an entrepreneur and you're not carrying your product with you or you're not spending half your time thinking about your product, you're the wrong person for that company.

I tell people you got to have a CPO in a company. And they say, "What's a CPO?" And I say, "Chief Passion Officer." The person who's blind, you know, have the right reasonable people surround them. So, this is a substitute for all plastics. It's going extremely well.

It's made from sugarcane waste. Okay. And Walmart is using it for poop bags to start because you can flush it. Uh Subway is using it for sandwich because you can put it in your dishwasher and it's sugar in the water. Amazon is using it for shrink wrap. And now my job as I'm chief of international strategy for most of my deals is to bring it around the world.

The other ones we're working on is we have a complete treatment for uh air conditioning gas and it cuts your electrical bill by 20 to 50%. Next we're working on a hydrogen box. You do it, you literally contain in a suitcase. And the Pentagon called me on that one and I'm working on the commercialization of it. And last, we're working on rare earth and I'll be in Korea in June, as I told you, announcing a pretty big deal with Vietnam.

But rare earth is so important to this country. Also, you got to be a patriot, Richard. This is so needed for this country. So, work on deals that you truly feel your heart as well as your brain can be involved in. And if you see me on a plane, Richard, and you don't see some articles about what I'm working on in my briefcase or in my then you're not going to see me that way.

I'm always reading about my categories and trying to figure out what's going on in that vertical, what's good and what's bad. Yeah. Interesting. Sometimes while running this investor club, we see some things and I think that is unbelievable and that's going to be worth $100 million or it's totally untrue and fake and it's going to be a waste of my time.

One or the other, right? It's going to be binary. Can you talk about that for a second? If you do dilig diligence and you know more about that market than your entrepreneur, you they got a problem and X marks the spot. And I love the the CEO who says, "I don't know the numbers, but my CFO does.

See you later, folks." You know, I told you, Richard, a couple times, life is pattern recognition. Okay? If your spouse is frowning, correct it. If your spouse is smiling, do it more. Okay?

Whatever the hell it is. Okay? If if you got to know your numbers. I tell people if you're going to be in Spain for the next 30 years, you better learn Spanish. If you're going to be in business for the next 30 years, you better as hell learn accounting. Okay?

And you got to know your numbers. And you got to have a dashboard. And a CEO that doesn't know what's going on with his or her business on a daily if not weekly basis is going to lose. It's like a ship. You know, it slightly goes off, you can correct it. If it goes way off, you got a real problem.

So, you got to know, you got to pattern recognition is so important, right? For sure. Um, what's a a million-dollar insight that has nothing to do to do with what we've said so far in this interview that would provide massive value to investors here in the room? I I wrote down a couple of them, but probably the most important one is pillow partners.

If your entrepreneur gets home on a Saturday night at 8 o'clock, which they should expect to do, and that pillar partner says, "Keep going. We have a piece of the rock. We love the CEO. Everything's cool." And you go for it, honey. You got a winning company.

When that entrepreneur gets home at 8:00 on a Saturday night, why are you working for that jerk? What do you What's in it for you? You have a losing company. Second of all, some of the companies that I've been involved with have been absolute rocket ships. We have co-founded six category of world leaders. Not one.

So was my first. Yes, skincare was our biggest. Okay. We we brought AHAs to the world in 80 countries. But the bottom line is you have to learn to plateau a little bit. I know Michael velocity is important.

I got it. Okay. But you also need to know when you're going like this, you need to know when to go like that for a short period of time. I said to my partner in plastics, Vinnie, this past week, Vinnie, we need to plateau. The orders are piling in. We're building a 250,000 foot facility in Florida.

We're on shoring, etc., but we got to now consolidate what we're doing because we got to understand where's our next plateau and keep adjusting that business plan each plateau. You can get lost in it. And sometimes that rocket ship, if it's going that hot and the and and it starts flaking off scales, you're going to lose. You're on thin ice.

And one thing you need in all the time is cash is fuel. So make sure you have plenty of cash. And and if we overs subscribed on round day in the last two weeks, okay, I said, Vinnie, take a little bit more. Okay, make sure you got the fuel for that rocket ship. You you never really have enough.

I remember in the old Serby days, we had a ball at 18%. That was really tough on the cash flow, but we had to do what we had to do. So make sure you have a lot of fuel for that rocket ship. Was there another million-dollar insight that you want to share at the room that you wrote down in a bullet point or two?

Let me just say sorry. Take your time. Uh well, I I will tell you that uh you know the old the old expression, this is not new, missionaries versus mercenaries, but what I tell the entrepreneurs, especially young entrepreneurs, don't drink your Kool-Aid. When you raise a million dollars on a $20 million, that doesn't mean you're worth 20 million.

Stop. Okay. Make sure you understand that the only time that you're really drinking it is at a closing and a check is being passed and wired funds. Don't drink your Kool-Aid. And you know what? I I have to This is the most important message of the day for at least for mine.

We had a motto in our family office, catch the current, make the wave. We've been involved in a lot of different trends, but we've changed a little bit. Maybe because I'm a little older. Okay. And I heard this from somebody else. And all of you with this great net worth out here, I want you to listen to two words and I didn't make it up.

What our motto now is is success to significance. So everything we do, we try to impact mankind as well as our balance sheet. So take take do things that really will impact people not just your company your community your country and and and your globe. You just find that uh you're genuinely more passionate excited about that and then everyone you talk to is more excited because of the good cause or what is there anything else you want to add to that on on what made that big change?

Just on on joint ventures you asked me you know what do you do about joint ventures? I you know the first joint venture situation I set up was for the doctors who invented alpha hydroxy acids. The women here would know what it is but men have no idea what I'm talking about. Uh I brought it to 80 countries and it was in 40% of all skinincare products in the world.

But what I did for the doctors is I said they said where are you going to bring it? What are you going to do? I'm going to say I said I'm going to create a chart channels of distribution areas of distribution and applications. And what we're going to do is we're going to organically generate capital through licenses and joint ventures.

Often you don't need to go to investors. Think about what multiple applications you have your product. The old one I always talk about in classes. Sell the pet business. Okay? Now nowadays the pet business is so big.

Maybe that's one of the last ones you do, but give away a category. Give away a license in a category that you don't feel is so essential and build your capital that way non-dilutively. So, we've done that over and over again. And that's what I teach at all these different schools. They call it the McGovern Grid is break up your applications, your products, and your areas of distribution and find out where you can have organically generated capital, right?

I think that's amazing advice because you need to figure out the business model anyways. So, getting revenue acceleration, spending your energy on that versus raising capital and now you lost part of your company. Um, the other thing I see often is people raising way too much money. I know you need to raise enough to have cash flow, but they say, "Oh, I need to raise $20 million."

It's like, "Well, do you need 20 million now?" Like, no, you only need two to three million now, and you can raise later at a higher valuation. I love these these early stage businesses. They're a $20 million valuation. I say, "Raise your couple million, get going, and then start raising your your valuation realistically, right?" You know, take it in pieces, milestones, whatever it is.

Right. For sure. Uh what about when it comes to setting up the joint ventures? You've negotiated a lot of these. You've probably learned things to do and not do. What are one or two components that are kind of black belt level deal negotiation terms that would help people here in the room?

Define the field. You know, break it apart into different applications as I said, but make sure when you're giving the license to somebody that you define what field it is. You know, in other words, if they only work in in two countries, don't give them five countries. Give them the two countries. I did a deal with Avon and I said, "Where do you where are you going to launch this and where are you going to bring it?

Will stage it. Okay. But another one that people don't think about, Richard, and and this really is important. When you give a non-exclusivity to somebody, you can't give exclusivity exclusivity to anybody else. So, be really careful. I call it white whales.

I say we have to wait to bring it to the white whales. Okay? And what the white whales are are the global companies. And you cannot you you cannot bring it to a global company if you've given away segments of the world. So sometimes you got to be a little bit more patient, particularly with patented technologies. You got to be a little bit more patient and wait it so you can go to a L'Oreal or you can go to an Apple or or Microsoft and give them the world or as large an applications as possible.

So be very careful. Non-exclusive opportunities can really hurt you, believe it or not. Right. Makes sense. Uh, one of my mentors, Sergeant Thomas, has raised over a billion dollars in private equity and he, uh, mentored me really early on in the industry. And so, um, one of our latest VIP data AI tools is a billion dollar plus partner AI tool.

We took all of our data, narrowed it to billion dollar plus balance sheet companies, corporate, venture capital, publicly traded, etc. And so we have that now um, in the portal for those that want to use it. But my question is related to what tips do you have for actually landing those, finding those, getting their attention? You know what it's like to get pitched all the time.

Obviously, you work through referrals. You have a big network, but what other strategies could you give people here in the room related to that? Know the person on the other side of the call or the visit. Prepare and figure out where their aha will be. Give you an example. We started out with this plastic dealer talking to huge family offices in Latin America, etc.

Then we had a conversation with a plastic manufacturer in Saudi. Within 15 minutes, he got it. The family office was very nice, you know, they were very powerful, but they needed to really understand it. How are we going to distribute, etc. That plastic manufacturer, let me tell you something, he got it in an instant. Tell me what the deal is.

Forget about it. I got it completely. So you really need to assess who is the person you're talking to and what are their buttons and what why they would be more efficient for you to deal with them. So now I'm dealing with plastic manufacturers around the world as opposed to in some cases family offices but more plastic manufacturers by the way that love you saw we can make the resin and substitute it for all plastic manufacturing so we don't break up the supply chain which is huge and all these all these manufacturers are really worried single use ban on plastics is now in 35 countries and it's going all over the world so those people are really worried about their business and petroleum is the PVA that's in all your plastics We replace that petroleum with sugar cane waste.

Right. I think as as more people learn that we all have a a credit card worth of plastic inside of our bodies and micro and nanoplastics. I think that credit card company in the world is in Texas and they're talking about making their plastic cards from our uh sugarcane waste. Awesome. Yeah, congrats. That's great.

So um you know unique from everything else we've covered so far. What's so powerful that if you are known for something in business or a skill um or capability, what would be like the one superpower you would say you've developed um that others could aspire to here in the room? Did he make a difference when he was here on earth? Did he make a difference?

And was he respected by people all over the world? That's it. Period. Respect and make a difference in your life. One individual, 10 individuals, a million individuals make a difference. One of my favorite, if I may, Richard, if I have two two seconds more, I was speaking at Cornell Med School.

I'm very active at Cornell. I love Cornell. They gave me a full scholarship. I'll never forget it. And they had an interview with me and then I spoke and then this young man walked up and he said, "You know, I had a youth like you. My dad died at 11.

My mother was handicapped. I had three jobs when I was 12, 13." He said, "I had a background like you." And he said, "I really loved hearing about it, but I'm not an ivy like you people, you know, whatever." And I said, "What are you doing here?" He says, "I'm a posttock."

Posttock and you're not worried about whether you're an Ivy or not? Who cares? Okay. So, I looked at him and I said, "You don't look down on everybody, do you?" I said, "What do you mean look down?" I said, "The more you carry, the stronger you get.

You don't look down on them, do you?" He smiled. The more you carry, the stronger you get. So don't think about what you don't have. Don't think about your past. Think about today.

And to be proud of who you are and what you what you've accomplished. Awesome. Um, so my last question is related to, you know, I often tell investors and anyone raising capital, if you can source deals first exclusively and at a better valuation, you know, your balance sheet will probably compound. And, you know, investors want to see the people they invest in are sourcing things exclusively and at better valuations.

Usually. Um, so you teach, you speak at events, you have a reputation. Is there anything else related to sourcing these types of exciting deals first or anything related to sourcing deals and opportunities that you want to share with the room? One of our I guess special sources is that we really can bring you around the world and entrepreneurs nowadays.

I mean, I used to uh lecture on behalf of Arthur Anderson on joint ventures. And I used to say that company and career knows what you're up to. So, make sure you understand that you got to keep improving yourself. So, when we talk to people, we say, "We're not only going to help you grow your company, we're going to bring you around the world and we can do it and we have done it and let us show you what we've done and let us show you what we can do for you."

And that's very appealing. So that's sort of like a special sauce, if you will, is that we truly are international and we truly can bring it to a lot of places in the world that a lot of entrepreneurs don't have any access to. Great. Yeah. My take away from that is that um when you show strategic value, you can provide to others.

Then they're motivated to show you deals first. And if they know what that expertise is, they'll know when the right pattern is like, "Oh, this is a great deal maybe for Kevin. Let me refer that to Kevin." And if you come to mine first, then you get to see the the sugarcane glove maybe before the other family office who would love to have helped on the deal, but you're known to be strategically super helpful.

For example, I got a call three four weeks ago from the Pentagon and he said, "We we have a technology that we're bringing into the military, but we promised to help him with commercial and you're the guy. So meet this person." And he had an amazing technology, but you know, I'm getting Thank God. You know, maybe in 20 years I'll get to know even more.

Uh as a person that can commercial I think on a global scale. Awesome. Was there anything in your notes there you wanted to share before we we finish up here? Uh you know I have so many you know different uh little things but you know I got to tell you something when I when I do go around the world the thing that I love most is to meet really successful people because most of them are more grounded than than a lot of people think.

We are all so human and the more we learn about the world and ourselves, we realize that we all are children of God. And you know what? When you're talking to people, don't look up and don't, you know, be in awe. They're human beings just like you. And treat them like a human being. And believe me, your relationships will really grow that much more.

So, you know, the older you get, the wiser you get, okay? But at the same time understand that, you know, we're all striving to do something different, etc., etc., but we're also human and Richard. Awesome. Great. Thank you. Let's give Kevin a big round of applause.

Thank you.