Jeremy Weisz 3:36
And, you know, you all talk a lot about giving first and providing value, what are some of the ways that you’ve done this and thought about it throughout your, your career?
Ron Diamond 3:47
Well, it’s different, I think, you know, I’m 57. So I think when you’re, you look at life through a different lens, I think when you’re younger, so I didn’t look at life through the same lens I do today. And I would. I did things a lot differently. I’m more myopic. When I was younger. I don’t know when there wasn’t a turning point or something. But um, I just realized that if you’re going to so many people are looking to receive to take to get stuff. And so few people are going to give, and I you know, I remember one story, there was somebody who’s like, I was talking to him on the phone, and like, I’ll hook you up with those people. And I introduced him with those two people. And he called me up. He’s like, I can’t believe you introduced me to them. I’m like, why I told you I would like Yeah, but everybody says they wouldn’t. They don’t. And I think the problem is that we live in a society where everyone wants to get and at the end of the day, I’m not only altruistic, I mean, everybody’s looking to get myself included. But in order to get you need to give and there’s a term called a go getter. There’s also a term called a Go Giver, and a go giver. it’s somebody who’s really going out out of his way to figure out ways to help people, and it will come back in spades. I can’t tell you how. But it always does. Um, so my, how I’ve worked probably for the last 20 years, is, usually when I do something that benefits somebody without any thought of how it’s gonna impact me, somehow, someway, somewhere, it helps me down the road. It just does. I can’t explain it. But it does.
Jeremy Weisz 5:33
Funny, because there was a group call that was recorded, and they were, they were asking you, How do you connect with these family offices and, and you were giving them advice on, you know, giving, making introductions, and you said something that was, I thought interesting, you said, even if I have an amazing deal for them, I don’t present it right away at all, like, I just want to deliver as much value as possible and not even presented off the bat at all.
Ron Diamond 6:06
Right? Look, there’s always going to be great deals, I mean, there’s always a fantastic deal that you need to be in. But at the end of the day, what I’ve done, how I’ve built my business, I’ve just surrounded myself with people that are smarter than me in various areas that I can trust implicitly. And if you surround yourself and you delegate, and if you surround yourself with people that are smarter than you in various areas that you trust, implicitly, good things happen. So that’s really how I built my business, just surrounding myself. And I did that, um, you know, I’m now doing it. I’m on the family office initiative at Stanford University. Again, it just, I’m figuring out ways where you could add value, and then value comes back, it comes back to you.
Jeremy Weisz 6:47
One of the things that you’ve talked about to in his family office space being a bit fragmented in providing value that way, can you talk about that fragmentation? How you’ve kind of helped to solve it?
Ron Diamond 7:02
Well, I don’t know that I solved it. And we’re trying to solve it at Stanford. But what we’re what’s happening is that family offices in general, are fragmented, inefficient, and siloed. So when you hear the term family office, everyone thinks of something different. I was giving a lecture at Stanford, I had $5 billion family offices, and a podium and I said, What’s the family office? And why did you create it? And they were five totally different answers. And none of them were wrong. And none of them were right. They were just different answers. And that’s the theory with this industry. So if you think about it, family offices, there’s roughly 17,000 family offices in the world. And again, that’s a ballpark. There’s roughly $10 trillion in capital, there’s 65 trillion coming downstream from the baby boomers, the next gen in the next 15 years. So this market will be bigger than the private equity and venture capital markets combined. Having said that, I’m most of the money, people who’ve got family offices, many of them, not all of them, but most of them are inefficient, fragmented, and siloed. Because think about it, where do they make their money, they sell beanie babies, they sold guest jeans, they sold Giorgio perfume, five hour energy chain of gas stations and they have a liquidity event, it’s a completely different skill set to do that, which is great than to take a half a billion, grow it to a billion nice by all the kids do some wealth transfer, do some philanthropy and grow the acid base. So you’ve got huge amounts of capital in what I call in general, very inefficient hands. And the family offices, all of a sudden, they you know, if 68% of family offices started since 2000, and half of those started since the crash of 2008. It’s a new phenomenon. And since 2008, until today, everything’s gone up private equity, venture capital, real estate, Bitcoin, I don’t care what you invested in it worked. And family offices right now have one hand on their ear and one hand on their wallet, because everyone that that’s where the money is. And the problem is that they just want to be able to talk to other families without being sold, they want to get real advice. So, so many service providers, and again, it’s there’s nothing wrong with being a service provider for anything, but they want to sell them insurance, they want to sell them real estate, they want to sell them to the private equity fund, they want to sell more to their hedge fund, they want to sell them to their with their whatever it is, and they just need to, they need to slow down because the model doesn’t work. I mean, only 20 What people don’t fully understand is only 25% of family offices make it to the second generation can make it to the third and five make it to the fourth. So the whole model like everyone wants to be found in the office, it doesn’t work. So what we’re trying to create at Stanford is an ecosystem whereby we can help. We’re not gonna We’re not a panacea, but where we can help these families network and collaborate in an area where they’re not being sold product and people in Don’t people don’t have other ulterior agendas.
Jeremy Weisz 9:53
To me when you say those numbers Ron, I feel like they should be bigger, like the transfer Wealth. That percentage why, how? Why is it so small? And how can it people increase that
Ron Diamond 10:07
65 trillion is that small? It’s the largest transfer of wealth in the history of the world.
Jeremy Weisz 10:12
I mean, the 5%, like you’re saying, you know, yeah, that small, like, you know, third generation, right? Yeah.
Ron Diamond 10:21
So the reason is several fold, because what happens is when somebody has has a liquidity event and sells their company, what do they want to do? They want to invest in a cool cannabis deal, or private equity or venture capital real estate deal? What should they do? Talk to an estate planning attorney. Because without an estate without proper planning, nothing else makes, it doesn’t matter. You can make more money planning than you can investing people don’t fully understand that. So the family offices that fully get it, they they’re really in bed with their family, with their estate planning attorney this very first second third thing you need to do is get it structured. Without the proper structure, we flip the foundation of a house, it’ll fall apart. And I think the reason is people are so focused on creating alpha, which is fine making investments. And that’s what I do trying to find make money in private equity or venture capital real estate. But they have to have the structure down first. And they don’t, they’re very myopic, and they don’t think about it long term. And the money is relatively new, because this industry, again, it goes back to the rock way past Rockefeller and Vanderbilt. But most of the family office industry is the way most of your listeners have heard it has been in the past 20 years. So it is new. And people are focusing on making money relevant, taking a step back and figuring out how do I make it in things like succession, next gen impact investing philanthropy, the soft skills? Those are the skills that really help not just picking up the best private equity deal?
Jeremy Weisz 11:45
Yeah, so they’re focused on the the sexy, making money and not the foundational pieces. You mentioned estate planning, what are some of the other foundational pieces that you’re like, Listen, before we go down this avenue, I’ll find you the best cannabis deal out there, you need to put these things in place?
Ron Diamond 12:01
Well, I think I always start with the estate planning attorney, because you need that as a structure. The estate planning attorney needs to be working closely with the accountant. So you really you what you really need to do is, once you have had a liquidity event, you have to you’re a quarterback or you’re a conductor. And as a conductor, you don’t have to know all the tax laws or all the accounting laws are all these different rules. But you do have to know how everything works together. And what I tell people, once they have like 30 vendors look, you got you are now the conductor, your estate planning attorney knows a lot more about you than estate planning, your accountant and a ship. Your accountant knows a lot more about you than accounting. But you need to figure out how things work together. And you’re quarterbacking it and if you don’t quarterback it and you let them lead, then the estate planning attorney is gonna be fighting with the accountant, the accountant can be fighting with this person. It’s Your Game, and you have to grow this like a business. So most of the people who are family offices who’ve created the wealth, they built a business. Now, when you sell your company and you’re worth a lot of money, in order to make it work, you have to sound the office, it is a business, it’s not, I’ve got a lot of money now I’m just gonna invest, you can do whatever you want with it. But if you want it to last 234 generations or further, you have to think think further long. So yeah, that’s the main, that’s the main thing I focus on with people.
Jeremy Weisz 13:27
So I’m going to liquidity event, we’ll call it the liquidity event team, someone should have the state planning, they should have a account of everyone’s you know, communicating together. And then also someone who helps run the investments
Ron Diamond 13:41
even before the liquidity event. So this is a problem. So all these people, they’re really good at making widgets, right. So they’re good at making widgets, and they sell their widget company. But what they should have done and they didn’t know about this, because they’ve got blinders on, as they should have talked to their estate planning attorney probably a year before they even signed an LOI. Because once you sign an LOI, you set a value valuation of it. And then you can’t do a lot of the things that you can do with this current valuation the estate planning attorneys can do. So in theory, what you want to do is educate these people before they even have a liquidity event. That’s where you can get maximum value. Nine out of 10 times what happens is people sell their company say, Okay, now I’m wealthy now on do estate planning. Well, it can help you, but they could probably do one quarter of what they could have done. Had you spoken to them prior to your LOI? I
Jeremy Weisz 14:28
love that. Yeah, and one of the things you talk about is with investment piece, it’s not even always looking at making the most amount of money, but there’s a legacy piece as well. Can you talk a little bit about that?
Ron Diamond 14:42
Well, look, I think that right now, you know, we’re, you call it a bubble. I don’t know what you call it. All I can tell you is these valuations are insane, right? I mean, you look at private equity venture capital. I mean, people think stupid money for companies. This will not continue forever. How long? I don’t know. And the government can’t afford the print. Money forever. So this was like, you know, I don’t think this can last. So I think that what families need to do is figure out, what do they do really well. And what do they like to do. So let’s say they made their money in real estate, fine, they handled the real estate, but then outsource the other stuff, the venture capital, that’s not what they know, the private equity, the candidate, whatever it is, outsourced, the stuff you don’t know, or you’re not that good at, keep in line, focus on what you do know. And you really best that and grow it that way. And the biggest I think impediment, many of these families have, truthfully is the ego of the founder. And once you can get the ego, you can transcend the ego. And you can look at it from the standpoint of, you know, yes, this guy knows more about me than private equity. It’s not that he’s smarter than me just that he’s been doing it, then thanks to the work. So it’s interesting. But when people say, well, who’s your biggest competitor? Oftentimes, I’ll
Jeremy Weisz 15:53
say it’s you. They want to do it themselves.
Ron Diamond 15:56
They want to do it themselves. And they’re, you know, you could be good at something. I’m like, Look, when you built your business. Did you do were you in charge of sales? No, I had the best sales day. So why are you going to do this any different. So it’s just the way you look at it. And it’s got to be looked at like a business. But if it’s looked at like a business, you can really scale it. And it’s fun. Because again, there this is so new. And right now everybody’s trying to get into the family offices business, because that’s where all the money is. So banks are setting up family observations. Bench, counting from the trennis set up law firm, they’re setting up, they’re all sitting up, because that’s where the money is. And at the end of the day, it’s your only in the second inning. And I think my belief, my thesis, it Stanford is that I believe that his family offices, his private equity and venture capital disrupted the public markets in the early 80s. Because it was a better model. Family Offices are starting to and will ultimately disrupt the public market. They’re the private equity and venture capital, because private equity and venture capital become an AUM game, they just try to aggregate as much money as possible. And they’re making the money in the 2%, not necessarily the 20%. So there’s an inherent conflict of interest and what family offices have something called patient capital, and patient capital, meaning they’re not incented to flip a company every three to five years, like the private equity and venture capital firms are. So there’s much better alignment of interest. And when I go back to everybody, I always say, let’s look at alignment of interest. What if there’s alignment of interest, that everything can work out the end, without alignment of interest, somehow, somewhere along the line, something’s gonna fall apart. And that’s what happened with private equity and venture capital, still huge markets. And I’m still a huge proponent of the industries. But in many instances to the entrepreneur, your partner is much better off being a family off sort of private equity or venture capital firm.
Jeremy Weisz 17:43
Run rifampin fascinating is the different divisions of your company. And I’d love to hear about the evolution of services. Can you talk about whether certain ones that came first with divisions and the rest? came later? How did the how did it evolve into the different divisions?
Ron Diamond 17:59
Well, first was investing because that’s what I did. And that’s what I knew how to do. But then as I started learning what family offices were doing, and then I kind of took a step back and realize that only 25% are making it the second journey. Why is that? So? One of the things I found was, you know, philanthropy is really important. Not all but most family offices are philanthropic, some are extremely philanthropic. And, you know, my North Star is no, my, my father passed from prostate cancer at 57, which is how old I am. When my first boss was Michael Milken. When Milken went to jail, he developed prostate cancer. And when he got out of jail, rather than spending 100 million bucks at the, into the American Cancer Society, he built it like a VC fund. So people like you and me, and all the male listeners will die with, but not all prostate cancer primarily because of Michael Milken. So I don’t think you can run a charity exactly like a business. And when you look at what Gates did for vaccines, but you can run it more business like so my North Star is figuring out ways to take these family offices, these entrepreneurs who’ve created these huge companies take this skill set, and use it to solve some of the real world problems that climate education be a part of, or whatever it is, and I think that we can do.
Jeremy Weisz 18:01
I love that. Yeah, and sorry about your dad. That’s, that’s, uh, you know, thinking about the North Star in general for anyone is is really an important thing to do. Um, last question, Ron, I want to also before I ask people to where people can find out more online, where should we point people to learn more about you?
Ron Diamond 19:38
You know, I don’t really, um, I appreciate that. I mean, look, I’ve got a website and in LinkedIn, but I’m, I’m not really looking for people to reach out to me so much. I know that if I can add value, I’m fairly busy with everything that I’m doing right now. Um, so you know, they could go
Jeremy Weisz 19:57
to your podcast page, listen to some of your podcasts and No, no.
Ron Diamond 20:00
My producer would be killing me when he um, so yeah, I’ve got a podcast. The website is Diamond Wealth Strategies.
Jeremy Weisz 20:08
Thank you. Yeah. Go to Diamond Wealth Strategies you go on YouTube and type in Ron Diamond Diamond strategy. He’s got some amazing content out there. In addition to to this last question, Ron, you know, you are about giving, when I hear you talk you are about, you know, really connect helping connect people, I’d love for you to talk about TIGER 21 your role there and kind of what you’ve learned through TIGER 21.
Ron Diamond 20:34
I never heard of TIGER 21. Five years ago, I was approached by a member three years ago, and then I never followed up. And then about two years ago, I was asked to be the chair. I’m pytor 20. One’s an incredible organization. And I again, I’d never did YPO or Vistage because I didn’t understand it. I even though a lot of my friends were in it when I was younger, and they loved it. I just thought, Okay, I know I do fairly well, I don’t need to tell everybody how well I do. And that’s kind of what I thought those organizations were and I was completely wrong. TIGER 21 is great, because it’s a peer to peer network. And I never understood the value of peer to peer networks, but they’re phenomenal. And what they do is nobody has an agenda, you’ve got fit, you know, I’m really good at this. But I suck at these four things. Well, maybe some of these other people can help me with the four things that I’m not very good at. And so what TIGER enables me to do is to work. It’s like a personal board of advisors. And it enables me to talk to people knowing they don’t have an agenda. They’re not really trying to sell me insurance or trying to get me to invest in the real estate fund. They’ve got my best interest at heart. And you’ve got people that are that care about each other. And it’s mind boggling. When you get beyond the surface. You know, I’ve got a for the, for my meetings, I’ve got the picture of the iceberg. People see the 5%. Okay, you live in a nice house, you belong to a country club, whatever it is, but they don’t see the 95% what we talked about a tiger is a 95%. And that’s most of it. And you’d be shocked about all these successful people who’ve gone through bankruptcies who’ve gone through divorces whose kids have gone through rehab, who are going through major health issues themselves. And by talking about it, it’s cathartic and it’s helpful, but it has to be done in a safe environment. So that’s why I’m a huge fan of TIGER
Jeremy Weisz 22:18
Ron only the first one thank you everyone checked out despite run shying away from it go to die. I’m kidding with you talking about DiamonWealthStrategy.com. Learn more. There is a podcast page check him on YouTube. And you know, just think about Ron, I want everyone to think about what’s your north star and some of your what you talk about giving giving others and helping others accomplish what they want. So, Ron, thank you so much.
Ron Diamond 22:46
Thank you for having me.
