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11 Wealth Management from Venture Capitalist, Paul Seid

Steve Seid & Kurt Dupuis
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The Whole Truth Podcast Episode 11

Steve Seid:
And welcome everyone to the Whole Truth in the Bay Area, California. I am Steve Seid and I am joined by my esteem cohost from Atlanta, Georgia, Mr. Kurt Dupuis. Kurt, how are you today, sir?

Kurt Dupuis:
I am doing pretty well, my friend. Finer than frog hair as a former boss used to say.

Steve Seid:
Wow, that's one of those Southern things that I probably could never understand.

Kurt Dupuis:
You don't even know what those words mean, do you?

Steve Seid:
I actually don't know what those words that you just said were. I have no idea.

Kurt Dupuis:
Well, let me explain it. Let me educate you. You see, frogs don't have any hair on them. So I'm doing finer than that.

Steve Seid:
Oh wow. We had frogs in New Jersey and we didn't have... that's a pretty good saying. I like that.

Disclosure:
The views expressed herein are those of the participants and not those of Touchdown Investments.

Steve Seid:
We're going to lead with a segment that will be recurring. Kurt and I read and discuss an article on a relevant topic. We talk about the positives, the negatives, adds some things, some commentary, have a little fun with it. Today's article is from US News on niche marketing.

Kurt Dupuis:
Can we also do like a drunk history segment where we drink and talk about articles? Can we add that to the segments too?

Steve Seid:
There you go.

Kurt Dupuis:
Then we're going to be joined by Paul Seid, a successful entrepreneur and venture capitalist, and might be related to Steve as well. We talk to Paul about lessons learned from decades of running his successful business. And we also talk about the challenges of financial professionals working with entrepreneurs. It's really, really great to have him on. And finally, we conclude with our Costanza corner, which involves Jim from The Office.

Kurt Dupuis:
A few other points to learn more about us and listen to past episodes, visit touchstoneinvestments.com/thewholetruth. You can expect new episodes to be released at least every other Tuesday. And as always, you can reach out to us at thewholetruth@touchstonefunds.com for any reason, including getting added to our distribution list. If you haven't already, please consider subscribing on Spotify, Apple podcast, Stitcher, or wherever you get your podcasts. Without further ado, let's get into our article on niche markets.

Steve Seid:
The title of this article is How Financial Advisors Can Choose Their Niche. And this article is April 8th, 2019, so slightly dated, but not too bad. What I'll do is I'll start actually going down and reading the article relatively quickly and then Kurt and I will just kind of talk about it and we'll see how this goes. You can't be everything to everyone, nor should you want to be if you've chosen a career as a personal financial advisor. In a world of over 7.5 billion people, standing out is not only an art form, it's essential, especially if you're self employed. Clients have more than 300,000 financial advisors to choose from in the US alone, according to Cerulli. And now thanks to Robo-advisors, the competition is even steeper.

Steve Seid:
Why should they come to you when they could get their financial planning taken care of sitting on a couch? I disagree with that premise right in front. In most cases I don't think the Robo market has intersected with the target market of advisors today. That probably comes in the future more, but I think Robo is less of a problem than what many people think that it will be. But what's your take on that?

Kurt Dupuis:
Totally agree. And I use one of... I mean, I use two of my best friends here in Atlanta as an example. One is a nerd. He sells software. He is comfortable with that space. He has a Robo. My other good friend is a business owner. His finances are complicated. He likes a personal touch. He's also a really good referral source for his financial advisor. He would never consider going Robo. So I just think like everything else, it's like discount brokerages back in the '80s and '90s. They're going to find their market. There's definitely a market for that. But I think people need to think of ways to stay ahead of the curve to insulate their businesses. I mean, when you think about the demographics of the people that have money, which are baby boomers, they're less comfortable with technology, less of a threat. But that doesn't mean it's always going to be that way.

Steve Seid:
Yeah. I think that the value above a Robo advisor of most really good financial advisors is so clear to me. It's almost crazy to think that-

Kurt Dupuis:
It's laughable.

Steve Seid:
Yeah. It's crazy to think that you could be substituted by that. I just don't think you can. And I think on the investment side, and we're not allowed to talk investments on this show, but I will just say this. The Robo advising and those kinds of auto all work fine until you hit a bear market and they have no one to talk to and they have no one to figure it out because all that stuff just looks backwards.

Kurt Dupuis:
Because you can't control for the behavioral aspects, which are significant in investing.

Steve Seid:
But ultimately what draws and retains clients is knowing that you can serve their finances better than any other financial advisor out there. Clients want niche advisors with curated expertise designed just for them. And advisors should want new clients within their niche. So now we're to get into how to choose your niche. Now, a lot of this, Kurt, I would think is pretty natural like where some advisors are just involved in a particular niche and that becomes easy. But I've also seen advisors create it from scratch. I mean, what do you think of that?

Kurt Dupuis:
Well, that's going to be, let's get existential on it. Do you pick your niche or does your niche pick you?

Steve Seid:
Yeah, that's a good point. That's a good point. It could come from both ways. I should just say you should be really interested in the niche; like sometimes accidental niches that you don't care about that much could be problematic. But I think if you're involved with that community and you believe in it, I mean, it could be something that's just a wonderful relationship for you all around.

Kurt Dupuis:
And some niches will be more of a target-rich environment, right? If you're trying to market yourself to professional water polo players, you could be really good in that community, but I just don't know how many of those there actually are.

Steve Seid:
Exactly. But you can choose to choose a niche. You can choose it. If you just decide; it takes work, it takes target and it takes effort, but you can choose it. It doesn't have to be something that's so natural. You want to go down the route of niche marketing, there are ways to do it. Okay. So how to choose your niche. The article goes on.Understand why you need a niche. That item one seems a little ridiculous to me, but okay, fine, we'll go with that. Look at your current book of business for inspiration, consider your local demographic, build off your personal experiences and expertise. Turn your passion into a niche.

Kurt Dupuis:
So, we have a tool that really just looks at common characteristics that would help someone develop a niche. What sort of affiliations do you have? What sort of professions do your clients have? And we sort of color code it and it creates a quilt graph of where your niche is.

Kurt Dupuis:
It's a really cool exercise because people might have some intuitions like, "Oh yeah. Well, I'm part of this country club. That's my niche." It's like, well, yeah, but have you ever actually looked to see what percentage of your clients come from that? Have you looked the last five years how many new clients you've actually gotten from that niche? Because if the answer is zero, it's not really a niche. So, the goal here is to start helping people think about what their niche is, how they can find a niche.

Steve Seid:
All right. Let's continue on with the article, why you need a niche. So whether you call it a "niche" or a "neesh," the important thing is you need one to be a successful financial advisor. I have to tell you, I hate that language. I hate that language. When someone gets there and says, you need to, need to do it. Of course you don't need to do it to be a successful financial advisor. I don't know why people write that language. I don't.

Kurt Dupuis:
It reminds me of one of my favorite Star Wars quotes. “Only a Sith speaks in absolutes.”

Steve Seid:
There you go, yeah.

Kurt Dupuis:
So, if think something has to be this way or that way…yes, I agree - the world is gray, not to get philosophical here.

Steve Seid:
When I read an article that says so and so needs to do X, Y, and Z, I'm immediately turned off from it because no one has to.

Kurt Dupuis:
Well, it's also like the seven things you need to do to get clean cuticles or whatever. I don't know, whatever the topic is. It's not seven things. It's not three things. It could be a hundred things. That's the way our world works.

Steve Seid:
But this is, it's funny we're trying to be coaches and consultants and all those things to the financial advisor community. And there are others out there that do this, right? This is how we're going to be a bit different because we're not going to use stuff like that. There are many reasons we're going to be different. But when you hear one of us say that you need to do this, call us out on it please.

Kurt Dupuis:
Well, and to be clear, I will come out with a post on LinkedIn or something that says, the three things you need to know. I am going to do that.

Steve Seid:
You're going to do that. All right. Well, call me out on on it anyway because we have low expectations for Kurt. All right. So specialization is how financial advisors can differentiate themselves from the competition when it comes to their profession. Instead of just being one of the financial advisor herd, you can stand out as one of the few who have wings instead of wool. Potential clients who are looking to fly will know with one glance that you are the financial advisor for them. Look at that. Look at that wording there in that paragraph. But I think the point with niche is made there in a very long winded way is that going where every single other financial advisor does and just being a generalist, there's really not much... I mean, you can differentiate, of course there are things you can do. But if you're laser focused on a particular area, which is what a niche is, the opportunity for differentiation is much larger. Do you agree?

Kurt Dupuis:
Yeah. I mean, queue the fairies and the Hallmark music, but there's tons of things about each one of us that make us unique. I think that's all finding a niche is, is both internally your personality and your experience, but also externally the groups that you associate with. There are synergies in there. Just go find those. So, end: hallmark commercial.

Steve Seid:
Yeah. And you could think about how much better you can serve versus a generalist. So you're someone who's a part of a specific community, you're involved in what they do. You know the community. You know the ins and outs. And so you, at some point, bring up business in an appropriate way. And then all of a sudden comes some generalist who is not part of that community. You're going to have such a major advantage in that particular case. That's how I think about it.

Kurt Dupuis:
That's it.

Steve Seid:
The caveat, of course, is that anyone who doesn't want to fly probably won't choose you as their financial advisor. Wow. But it comes down to quantity versus quality, or prospects versus long-term clients. You can market yourself to every prospect in the world, but chances are only a small percentage of them will actually become clients. By focusing on a smaller, targeted group, you can hone your marketing. While reach won't be as wide, your actual conversion rate will likely be much higher. That's probably right. Your conversion is probably higher.

Kurt Dupuis:
That feels right. That feels I'm going to go with the thumbs up.

Steve Seid:
Man, I'll tell you what. This is some language they use in this article. With financial advisor niche, you can also refine the products and services you offer, and this is what I was talking about before. At Vimvest, a goal-based financial planning application, they chose to specialize in millennial investors. Having this focus has allowed them to concentrate on creating products and services that meet a specific need, says blah, blah, blah, blah, blah person. I'm going to push back on the article there. I don't think millennials is a niche market. Do you?

Kurt Dupuis:
No. Well, first of all, who would want to target millennials? I mean, geez, this person has to be out of their mind. They are clearly a sociopath. But no, that's a target market.

Steve Seid:
It's not narrow enough. It's not narrow enough.

Kurt Dupuis:
It's like, well, I want to target people with money. Great. That's super general and not helpful.

Steve Seid:
I find that even when people think they're narrowing it down, sometimes they don't. Let me give you an example. A client says, "I want to focus on the medical community." That's still not narrow enough. It's going within that and saying, "I want to be the financial advisor that these type of oncologists go to." The more narrow that you can get, the better you're going to be able to target for that particular niche.

Kurt Dupuis:
The more nichey it gets.

Steve Seid:
The more nichey. There you go. I think we're just making up words.

Kurt Dupuis:
I remember having this conversation with a guy one time, and this came up, niches came up. And boy, with utter confidence he told me, he was like, "Yeah, my niche market is people 58 to 65 with a million dollar or more in assets." And I was trying to gently say, it's like, "No, that's..." First of all, every advisor would say that. So that's not specialized at all. But that's more of a target market. Of course you want pre-retirees and retirees because they have liquid assets. But guess what? The 30 other people in your office want that too.

Steve Seid:
My niche market is going to be humans, if that's cool with you.

Kurt Dupuis:
Not specific enough Seid.

Steve Seid:
Okay. So how do you go about getting a niche? Often your specialization will come naturally, says this person. If you already work with lot of clients nearing retirement, for example, you can use that as a launching point to build a specialization as a financial advisor who works with near-retirees. Again, I disagree with that.

Kurt Dupuis:
Let me hit you with something. What I referenced a little bit earlier about the guy that said he was basically looking for pre-retirees and retirees, I do have a client who specializes in a single town in a single retirement community. He is the go to guy in that one community. And it's a big development. They actually have a few different locations nationwide. He's trying to get into the other developments as well. That is a niche. He's not just saying generally I want 60 year old people with money. It's like, I own this one. I mean, I think he has like a third of all the people in his development are clients or something. Something that is pretty impressive and there's thousands of units here. So, it's a really good spot for him.

Steve Seid:
Yeah. Your local demographic can also point you to a lucrative niche. For instance, advisors who work in an area where the core demographic is employed by a single company, you could develop a business working for retirees of that specific company. You could befriend an HR person at the company to learn about the benefits, such as retirement plans, that are offered.

Steve Seid:
If your current book of business isn't already pointing you toward a given niche, think about your own experiences and expertise. This person says, "It was very personable for me." Her experiences helped share and give her a better understanding of the needs and challenges faced by women in transition. So in this case, she was focusing on women in transition, which I think that's probably better, but I think it could still get even more narrow.

Kurt Dupuis:
Yes.

Steve Seid:
You could also turn a passion into your niche. And this is what I mentioned before. If you're passionate about helping immigrants improve their quality of life, make it your niche. If you're already involved in your local school district, you can target your services toward its employees. That's what I was mentioning before. For me, there's particular things that my wife and I are involved in a lot of animal charities. Again, I'm not a financial advisor, but if I was, you can rest assured-

Kurt Dupuis:
That would be your world.

Steve Seid:
I would target that and I would target that because that's what I'm doing anyway. So why not learn how to serve that community. It's only natural, right?

Kurt Dupuis:
Let me put you on the spot. What would be my natural ecosystem or niche if I were a financial advisor?

Steve Seid:
You have to answer that, don't you? How could I answer that for you? Tell me.

Kurt Dupuis:
Well, I don't because-

Steve Seid:
LSU? I mean, that's a big thing.

Kurt Dupuis:
LSU would be my jam. If you're an LSU fan within a hundred miles of me, look out. It'd be some combination of LSU like Gun and Garden magazine subscribers that have small children since that dominates so much of my life. That would be my three-pronged niche.

Steve Seid:
Kurt and I keep throwing out these ideas like, these are stuff that we're directly involved with now. But the truth is, let's say we started a business and our first six clients had a couple of commonalities. It doesn't have to be something that we're in today. The point is, it's just something where you can really dig in, take action, get involved with that community. So it doesn't have to be something that's super natural to you although it helps obviously.

Kurt Dupuis:
This is a thinking exercise to help narrow your focus. I don't think it matters if you've been in this business 30 years or three months. Thinking through a small market where you stand the best chance of success makes some sense. And if you've been in the business a long time thinking through what your current book looks like would be a valuable exercise. But if you're three months in the business thinking about the types of folks that would be good clients where you speak the language and have similar values, that would be an appropriate exercise as well. So all this is is narrowing the funnel.

Steve Seid:
Yeah. Well, there's some FAs we get asked all the time, like you guys help with financial advisors and different challenges, I just want to grow, right? And so, oftentimes there's different strategies that we can talk to them about, but some people are at a point where they're just, there's no low hanging fruit. They just got to grow. It's almost like starting from scratch. They built this up, but they're at a plateau. There's no low hanging fruit. Starting from scratch again, what do I do? This is the topic that we often bring up, at least I do, more often is like, okay, let's start talking about niche marketing, right? I don't know if you feel the same way.

Kurt Dupuis:
Absolutely, because there's kind of two approaches. And I think you said kind of internal or external. Internally, we do a ton around practice analytics and where is that low hanging fruit. And we are deeply entrenched in that world. But we don't have all those tools at every different firm. So if you're looking at outside and say, "Wait, what's your marketing strategy?" Very few people have a marketing strategy. But more importantly, who are you going to do said marketing to? This is the first step in that process. Again, just narrowing down the universe.

Steve Seid:
So I'm going to skip a couple of paragraphs and get to towards the end, how to market yourself to a niche market. Once you've chosen the shingle you want to hang out, it's time to paint it so it attracts the right notice. How about that metaphor, Kurt?

Kurt Dupuis:
Oh, beautiful analogies here.

Steve Seid:
One way to advertise your expertise is with relevant designations. The financial industry is littered with certifications and credentials, from CFPs to chartered financial analysts. FINRA lists 193 professional designations on its website. Some designations are what we call football fields, meaning they cover a broad array of subjects, but never in terrible detail, says blah, blah, blah, blah, blah. Other designations are oil wells, meaning they cover only a few subjects, but do so at great depths.

Kurt Dupuis:
Is it just me or is this not talking at all how to market yourself to a niche. It's talking about designations, which have little to do with this.

Steve Seid:
Yeah. I think the point they're trying to make, and I'm going to stop reading from here because I don't think they're making their point well, is like, if you could get some designation that targets that market. Think about like for divorcees, there's something that you can get to target that.

Kurt Dupuis:
That's the only one I can think about it. Are there others?

Steve Seid:
Yeah, it becomes harder. The answer is I don't know. So I think to me, if your niche is as narrow as Kurt and I are suggesting, then that whole idea of certifications is probably not going to be something that you do for a particular niche.

Kurt Dupuis:
But heck, there's 193 of them out there. So maybe there is one that's appropriate. We just don't know about it.

Steve Seid:
Let me sum up here because this article, I'm going to be honest, went off the rails on this. This was a fluffy piece. We wanted to pick an article about an issue-

Kurt Dupuis:
You're welcome America.

Steve Seid:
You're welcome everyone. Kurt and I wanted to read this just to share with you how smart we actually are, that we can make fun of an article. No, but the point up top and the purpose of the article was very valid. That niche marketing is one of the best ways that we can think of to grow your business. It's not going to be for everyone, but a lot of the really good advisors that are out there are doing this well. And those are the advisors that are growing faster than what the industry is as a whole. Again, not everyone, but a good portion are doing this and we thought it was worth bringing up.

Kurt Dupuis:
I see this in the same vein as developing your personal value proposition. We talk about PVPs. It's the cocktail party where someone asks you, "Hey, you're a financial advisor. What's your niche?" You should have your answer down pat because you've thought about it. Same with your personal value proposition. If you meet somebody at a cocktail party, can you, in 30 seconds, tell someone in a very impactful yet succinct way what you do.

Steve Seid:
Yeah.

Kurt Dupuis:
Okay. So I hope you've enjoyed our discussion. If you have articles that you'd like to address or discuss on the podcast, send those over to us at thewholetruth@touchstonefunds.com. Up next, our interview with Paul Seid.

Steve Seid:
And welcome everyone. We're really excited for our interview guest today. He is Paul Seid, who also happens to be my uncle. But more than that, he's a successful entrepreneur, angel investor, venture capitalist, and so much more. Uncle Paul, thank you for joining us today.

Paul Seid:
It's absolutely my pleasure.

Steve Seid:
All right. So let's just jump right into it. And the reason we wanted to have Paul on the show today, we going to want to get across a couple of things. First. He is a very successful entrepreneur. So we want to talk to him about running a business, some of the things that he's learned over time. We also want to talk to him about the industry that he spent a long time in, which is the dental industry. And thinking about that as a potential niche for financial advisors to consider. And finally working with ultra high net worth clientele. So those are our three objectives for the interview today. So let's just jump right into it. And maybe Paul, you can give us just a little bit of your history. How did you start the business? Give us some of the background. If you can, summarize.

Paul Seid:
Yeah. I was raised in a lower middle class family that dipped into poverty when my father went into bankruptcy in Queens, New York. I barely got through high school and college, which means that you don't have to be educated to be an entrepreneur. And never did finish my Master's program. After college, I had a couple of quick jobs that I got fired from within six months. And then I went to work for the Burroughs Corporation, which is Unisys now. And they taught me simple accounting and sales, which proved invaluable to me thereafter.

Paul Seid:
What happened is one day in September, around my 23rd birthday, I woke up, this was 1971, and decided that I should be in business. The only problem I had was all I had was $2,500 to my name, so I didn't care what business it was. It just had to cost $2,500 down. The first business I looked at was concrete pumping. That was $100,000 to get into it, so that went out of the way. And then I came across this little dental company, which was doing $90,000 a year in sales at the time. The fellow who owned it had died. The widow was trying to sell it. Nobody wanted to buy it because they were afraid of FDA problems which were involved with it. But since I had never even heard of the FDA, it didn't really matter to me. And we negotiated a price that was $2,500 down and I was in the dental business.

Steve Seid:
That's so funny. How come you struggled so much in school? What was it about that caused you to struggle?

Paul Seid:
Well, I think it's pretty much that I had ADD and staying fixed on whatever the teacher was working on was not really something that I was into. But from reading later on, I found out that many, many entrepreneurs have ADD, and it's actually an advantage because they can switch from one subject to another easily.

Steve Seid:
You bought this business, $2,500 was your only criteria, which is kind of funny. So then you bought it, then what?

Paul Seid:
So then it was myself. I didn't have any money to pay anybody because my whole $2,500 went into that. But there was a fellow working there that the widow had hired. He was a pharmacist from Thailand. So I kept him on and then I had to hire, once the business got going a little bit, I hired what they called a secretary in those days. I guess you call them an admin now. What I would do is I would pay them every Friday. Then I hired another fellow because I needed more help. And every Friday I would run a poker game to try to win back the money that I paid, which was successful since they weren't very good poker players. So that's the way I survived. Off of obviously a very small base, I built the business up over the course of, I think I owned it for I guess it was about 37 years. And we had a compound growth rate over 37 years of over 16% with only one acquisition along the way. So when I sold it, it was doing about 50 million in sales.

Steve Seid:
What specifically was the business? We talked about it was in the dental, but what'd you guys do?

Paul Seid:
Originally almost the whole business manufactured certain small pharmaceutical products, which is where the FDA came in, for dental use in their offices plus other different chemicals. And then over the years I expanded it to include more chemical-based products. Plus then we started to buy innovative licenses or actually pick up the distribution for innovative products. So we bought and resold. And by the time I sold it, we were manufacturing about 55% of what we sold. We were doing resales of about 45% of what we sold. So, the business grew quite nicely. And some of these companies, I would buy an interest in so that I guaranteed the delivery to us, and various and sundry other things, but almost all in the dental field. And then probably in the last five or six years, we branched out into the beginnings of hospital sales, specifically of infection control products. And that's actually brought me into some of the businesses I'm in today. So gave me some knowledge of those businesses. But it was a fun run.

Kurt Dupuis:
Yeah. You sold the business after, what a stretch, with a 16% CAGR over that long.

Paul Seid:
Yeah. I sold it to a company called the Dentsply, which is the largest company in dental field. Stroke of luck. I was looking to sell the company. They were looking to buy what was a middle-sized business in the dental industry. There were only three companies available that they had on their horizon and two of them weren't for sale. So, I was a willing seller and they were a willing buyer. I had decided, in the summer of 2006 I had seen serious economic problems coming to our country. So I made a decision in the summer of 2006 to sell the company and hired an investment banker who was also a friend of mine.

Paul Seid:
We found the two major companies in the dental field. We went to one and I didn't like somebody I would have to work with. So we went to the other one, which was Dentsply, and they were just happy as can be that I showed up on their doorstep. I sold it. I closed in July of 2007. And about 20 days later, the first of the hedge funds started to fail. Later that year, Lehman went down and you know the rest of the story. So if I had waited a year, I would've gotten half the multiple of my EBITDA. And I do a lot of reading on economics and things of that nature. I'm a politics and economics junkie. So I do a lot of reading in that area and it was just clear as a bell to me that things were going to collapse.

Steve Seid:
See, very few people had that view in 2006. We’ve got to be careful on this podcast on getting too much into investments. But I'm curious, what were some of those things in '06 that jumped out to you?

Paul Seid:
Well, I mean, credit was a problem. It was an obvious, obvious problem - as it is today. It was not sustainable. I knew that if the credits collapsed, then everything else would collapse with it. There was just too much money floating in areas that they shouldn't be floating. So, it was just clear.

Kurt Dupuis:
Can you tell us about the transition from selling your business to getting into venture capitalism?

Paul Seid:
You know the way I always put it is, that if I didn't do what I was doing, I would be a gardener because I love to see things grow. And it was just my nature to do this sort of thing over the course of the years that I ran my company. I probably bought, sold, invested in 15 to 20 companies in Asia and Europe and the Americas, both continents of the Americas, because I just liked it.

Paul Seid:
And not all of them were successful, but a bunch of them were and it worked out very well. So it was between loving to do this and my wife telling me that I better figure out what I'm going to do when I retire because I'm not going to hang around her. I got into something that I really love to do, which was investing in small startups and whatnot. So I did that in a bunch of different ways. I had been putting small amounts of money with a private equity company and I expanded that. I knew my personality was, and this is what all entrepreneurs have to be. They have to be risk takers. If you're not a risk taker, you can't be an entrepreneur.

Paul Seid:
But I was too much of a risk taker. So what I did was I took about a third of the money after I paid my taxes and whatnot and put that into bonds. And that way I guaranteed my income for life. And with the rest of the money I started investing. So I started with this private equity firm. I invested with a company that buys multi-family housing. I started an account with Morgan Stanley, I bought into a startup, a private equity firm. Yeah, those are pretty much the things I did initially, over the first few years.

Paul Seid:
And additionally to that, I looked at companies that I loved the technology and I invested in them. One had to do with technology logistics in the trucking field. Another one was a heart device that hopefully will get FDA approval next year. I have a robotics company that I'm the CEO of in the medical field, things like that. It didn't matter what the business was. I just had to fall in love with the technology after looking into it.

Kurt Dupuis:
Well, so back to when you were running your business, and I'm sure you learned enough to fill many mahogany rooms filled with books. But if you had to narrow it down, what are some of the really important lessons that you learned along the way?

Paul Seid:
The single most important lesson I learned is I'm not the smartest guy on earth, and there are a lot of people around that are very good at things that I'm not very good at. So, I looked to hire people that were really, really good in the things they could do, whether it be finance or marketing or in the manufacturing side, things of that nature. And technology was very important to me always. I was always a believer that you had to reinvest 1 to 2% of your sales into advancing your technology. Which was great because when Dentsply bought us out, they actually, even though they were 40 times larger than us, when they bought us out, they ultimately went to a variant of the technology that we were using in our distribution and our business running and manufacturing areas. So, I thought it was a nice feather in our cap.

Paul Seid:
But the other thing is I'm a big believer in personal relationships. Knowing the people you're doing business with, to me, is a big advantage as opposed to just running your business by emails and things of that nature. So I traveled all over the world to see my customers and/or suppliers or regulatory people, governmental people in the various countries to see what their regs were. And that was very important to me. Really important is you have to be unafraid of losing. Some things you do just don't work out and will cost your money and anguish and things like that. But the important thing is when you lose, you need to learn from what caused it, what caused you to lose. Then you just get up, keep going. You pretend you're rocky. You just shake it off, brush the dirt off and keep going forward.

Paul Seid:
The last thing is I think your instincts. Instinct carries me a long way. Goal orientation is important. You have to know where you're going, what you want to do, how you want to get there. So planning is uber important. I guess those are the important things I learned over the course of time. And that's nothing, I didn't say anything original there. It's just that's what it takes.

Steve Seid:
Yeah. There's so much in there to unpack. The next question we wanted to throw your way was, what were some of the biggest challenges? Was it the failures along the way? I mean, what did you find most challenging about running a business for that long?

Paul Seid:
The truth is I loved it. There were challenges along the way that were serious. Ultimately, the FDA and I did not see eye to eye. They wanted things done in a certain way and I had issues with that. And the European Union, their regulatory bodies. We worked through those things. There were times when, for instance in the crash around 2000. I was margined and when the crash came, I had serious problems coming up with the cash to cover those margins. So, I never went into margin purchasing ever again.

Paul Seid:
And today I'm the same way. I don't like to use margin. I'll use a business loan if there’s a requirement, but personally, I don't have any mortgage on the houses I have. I just don't believe in that. So, a couple of times I got slammed down. But again, you just figure out why you got slammed down and fix it and keep going. It's just the way it is. And as far as risk taking, which is the heart and soul of an entrepreneur, you have to learn to control it. And that's what I did when I took a lot of my money from the sale of my business, I put it into bonds so that I guaranteed my income.

Paul Seid:
And I learned that lesson actually at a blackjack table in Atlantic City when a fellow was supposed to pick me up. We were going for dinner. We were having a sales meeting there, and I was up about 8 to $10,000 at 6:00 PM when he was supposed to pick me up and he didn't show up. And instead of turning away from the table, I sat back down. He showed up 10 minutes later, I was down a couple of thousand. And I said, "That's about the stupidest thing I've ever done in a long time." So I learned to control my risk taking after that and learned to walk away. I found out I wasn't invulnerable. Those are the things that I had to learn to do.

Steve Seid:
So you sell your business in '06, closes right before the financial crisis. What was it like for you almost the day after you sold your business. Did you take time off? Did you start and say, "Okay, I'm going to start sitting on Boards." What was that like immediately after, because that's a huge lifestyle change?

Paul Seid:
Oh, no. No, no, no. I had my marching orders from my wife, “Find something”. So it was not, even I could think about taking a vacation-

Steve Seid:
It was right back to it.

Paul Seid:
... I had to go out and find some things. And look what I did, right back into it. And the truth of the matter is I was going into something I loved and to this day love. So it was not that difficult. And the things I brought to the table with other companies or being on Boards was, I had a lot of experience and I could share that with companies. I didn't necessarily, for instance, I was on the Board of a company that made a device for repairing heart disease. I didn't know anything about that, but I could tell them about setting up sales forces in Europe and I could tell them about running businesses and, again, a lot of instinctive stuff that I did.

Paul Seid:
And as a sidebar to that, I got into mentoring young people because I love to do that. I always love to do that. I was a Big Brother years ago in the Big Brother Big Sister program. And I just always loved that sort of thing. I guess a couple of years ago, a couple of young fellows asked me some questions and I gave them some answers and they turned to me and said, "How do you know all this stuff?" And I said, "Well, I know all this stuff because I'm old and I've seen this stuff 40 years ago." There's nothing original. Nothing is new under the sun. Technologies may change and things like that, but not a lot of things aren't governed by certain laws of business. So that was one of the things that got me into all of this stuff because I just loved to do it. It was easy, it was an easy transition for me. I don't think it took me a month before I started getting involved in all this stuff.

Kurt Dupuis:
Well, Paul, I was wondering if we might be able to pivot. I don't know how much Steve has told you about our podcast and what we're hoping to accomplish with it. But the main audience is folks in the wealth management world and really we're trying to develop a platform and a community to talk about things that are going on in wealth management. So, it sort of begs the question, how did you find your financial advisor, assuming that you have one?

Paul Seid:
I have more than one. The way I found them was through references from friends that were successful in their field or I had seen the operation of specific financial advisors over the course of time and I used their knowledge to piggyback on and start. And some of them I started in a small way and grew, some of them I started in a much larger way and kept it stable. But it was almost exclusively through references from business friends that I respected and would follow their advice. 

Kurt Dupuis:
And these are other business owners or are you talking about like investment bankers and accountants and folks like that?

Paul Seid:
One came from my investment banker, one came from my accountant, one came from a friend where I started in a small way with them and then grew much, much larger. All people I respected. I didn't take any flyers with this sort of thing. That would be a foolish thing to do.

Steve Seid:
Yeah. Why use multiple? Let's start there. I want to cover a couple of things. One, why you use multiple advisors? And what was it about, after you met with them, you got suggested these people, what were you looking for? Because sometimes it's not easy working with entrepreneurs; like you have run a business, certainly have a view on the markets. I know there's lot I just asked you there, but I'm wondering if you could address those couple of things.

Paul Seid:
Well, first of all I'm a smorgasbord kind of guy. I like different things. You can see it in my investments and whatnot. I don't believe that anybody has the single answer to unlimited growth and I wanted different things. As you said, entrepreneurs are highly opinionated people. Just ask my wife.

Steve Seid:
And like smorgasbord apparently.

Paul Seid:
You don't have to agree so quickly. Each investment, of course, you have to make a decision whether you wanted to do it or not. So I had plenty of input into what I wanted to do and what I liked. So that's pretty much how I handled it.

Steve Seid:
Yeah. There's a couple of different things I want to make sure we capture before we conclude the interview. The first is the dental business. We talked a lot about you being an entrepreneur, but I'm wondering if you could talk about the dental business broadly, because I always understand it to be a much more lucrative business than the medical industry. I mean, talk about the dental business then and now, and some of the pieces of it, if you will.

Paul Seid:
In the early part of it, dentists were doing okay. And then starting like in the '80s and especially in the '90s and more so today than ever, they really started to make money. Today, if you have a kid and you get them into dentistry, that's a pretty damn good career. So the distributors who we sold to, because we sold on a wholesale level, they were making money. They were averaging as a distributor over 30 points, 30% margins where in the medical field, it was a quarter of that.

Paul Seid:
And because they were all making money, the manufacturers could make money. So, it was really a very lucrative business for a very long time. And it was kind of a backwater to the medical industry. People stayed there. There were a lot of family owned businesses originally.

Paul Seid:
But over the course of time, even though it became much larger, it's significantly larger today obviously than it was back then. It's much more corporate now. Margins are thinner now. There was also, a change was there were 90 or 100,000 single practitioners back then. Today there's large groups that take up a decent percentage of business and they're growing like crazy.

Paul Seid:
So they're pressuring margins ferociously. So it's not as nice a business as it was then and growth isn't there like it was, either top line or the bottom line like it was then. A lot of the family owned businesses, my own included, were bought out and like myself, the entrepreneurs left the industry. So corporate executives. So it was a better business then than it is now.

Steve Seid:
All right. So there's a lot we covered here today. And Paul, I want to thank you so much for your time. It was a joy as always. So Paul Seid, I really want to thank you for being on the show today. We really appreciate it.

Paul Seid:
Okay. It was my pleasure. Bye-bye.

Steve Seid:
All right. So there was a lot there, let's sum up. Most of what we discussed were insights from running a business. So what were some of those insights? Being an entrepreneur is about taking and managing risks. Don't be scared to fail. If you aren't failing at all, you probably aren't pushing yourself. Fail quick, learn something, get back up. I thought that was really interesting from him. Surround yourself with people who are good at things you're not. A good example is I've been working on hiring decisions with a member of our community, and we are creating the job responsibilities precisely using this approach.

Steve Seid:
Third takeaway, invest in technology. If you're at the big wirehouse, which many of our audience members are, you're always getting new technology thrown your way. Look into that stuff. Take advantage of it. Lastly, goal orientation. Planning. Sounds super simple, but I know financial professionals that do annual planning, then it goes on the shelf. Really, really think about creating goals, action plans, things of that nature; really important.

Steve Seid:
Then we got into the idea of working with entrepreneurs. Take away one. They're highly opinionated. They're likely to be more challenging than most clients, but you can create a balance between their input and your advice. And remember, all people still want to be led. Paul talked about variety. Not all eggs in one basket. A lot of ultra high net worth people are like that. But there's still the opportunity for you to provide the full solution, and that's your challenge. But here's the thing. You know it's most beneficial to have all your assets in one place for planning purposes so you can get there. And finally, when you successfully work with an entrepreneur, capture those stories, those insights. Think through and be able to communicate them because like any niche, relevant and powerful examples are how you resonate and differentiate. And despite having strong opinions, there's immense opportunities to add value with people like Paul.

Kurt Dupuis:
So we've mentioned a few takeaways, but that might be the most important one from this episode, identify a type of client you want to go after: entrepreneurs, niche markets, et cetera, and develop relevant stories precisely to that audience. And we're happy to help with that. So send any of those kinds of questions to us over at thewholetruth@touchstonefunds.com. We can help you craft those stories, internalize them, create elevator pitches, all of that, which can ultimately help you get in front of the types of prospects and close them when you do get in front. Next up is the Costanza Corner. This is the Whole Truth, stick with us.

Steve Seid:
All right, welcome back everybody. We're going to do our Costanza Corner right now. And Kurt, I think you're up.

Kurt Dupuis:
In these work from home times and lots of bits of information coming at us fast, it's been particularly difficult, I think, to separate the wheat from the chaff and find good news. But there is a hot video circulating, and hot as in viral not in the other kind of hot, with John Krasinski, who is Jim from The Office who started a network in his office that's very poorly produced, it's almost comical, called SGN, Some Good News. So I guess the idea is that he had his daughters make a logo for SGN. He gets up in a suit and tie behind a screen and just shares videos of positivity that are going on around the world. So the first few minutes are dedicated to healthcare workers around the world that are on the front lines of fighting the Coronavirus. And it's just, it was just fun. In typical Jim fashion, a smirk and a smile and some good news and having a wife that works in the healthcare field right now, I found it very uplifting.

Steve Seid:
That's fantastic. I'm going to look at it as soon as we get off. But I think it's much needed. I mean, we have this segment because we want to provide you with uplifting things. You turn on the TV, it's the ratio of negative to positive is overwhelmingly negative. And that's what this whole segment is about. So I will check that out, everyone out there should. We're going to conclude here. Thanks everyone for listening. This is the Whole Truth. We'll see you next time.

Kurt Dupuis:
You can find the Whole Truth and subscribe for free on Apple podcasts, Spotify, or your favorite podcast app. We'd love it if you took the time to rate and review the show on Apple podcasts. It helps others find the show. And for more episodes of the Whole Truth, go to www.touchstoneinvestments.com/thewholetruth. That's touchstoneinvestments.com/thewholetruth, all one word.

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