266. Mornings With Scott – Live! – SPACs

n you all right live on Facebook LinkedIn YouTube X Instagram I think we are good to go as I'm logging on here I'm listening to story about Bombardier and the uh the spacecraft let's get rid of that Banner pause so I'm listening the story about Bombardier and and the three-hour Tour on the SS minow spacecraft where they've abandoned these these uh these uh astronauts on the International Space Station and nasau officially announced is that they are going to uh get Elon musos SpaceX to go pick them up in February so they'll be stuck there for about six months when they thought they were just going for whatever a few days or a week and uh Bomer's releasees they're going to work on the root causes the root causes of the problem if you ever hear anybody anybody talk about root causes in the middle of an emergency you know what they really wanted what's really going on there is they they know the problem and they know the solution but they don't have the political will to admit it and go fix the problem so they want to change the narrative they want to change the narrative to something about root causes which is entirely uh subjective there is no objective answer to that whatsoever at least in the short term in the middle of the emergency that you're in um when you ever you hear root causes what you should really be hearing is BS okay should we get started yeah we're live everywhere welcome everybody to mornings vcot the best damn business show for medium and small businesses on the planet shout out to organic Chef Heather who is listening to us on Instagram I hope everybody had a great weekend this is for one is for you organic Chef Heather science alert science alert science alert science alert reports that eating seaweed may slow down or prevent Parkinson's disease according to a 2024 study that was just a brand new study researchers found that the antioxidants in the seaweed seaweed which is often used and soups and salads and Asian Cuisine and in my house it's it's in a little package that you open up and my kid pulls out uh seaweed that is so disgusting it may protect our neurons from free radicals to prevent this uh Parkinson's disease so if you see me shaking during the show you know what I have not been doing David saxs onx part of the Allin pod do you know David saaks do you listen to the all-in Pod what a great what a great podcast uh on uh business uh big business global economic events politics it's um it's an interesting show with some good personalities it's very it's very fun while sax himself is a well-known entrepreneur investor technology executive um he's a VC he was part of the the founding group he's part of that PayPal Mafia PayPal Mafia as they call it in Silicon Valley posted on x party affiliation is now entirely correlated this is political party affiliation affiliation is now entirely correlated with trust in the mainstream media when they talk about the mainstream media in the US they're talking about basically all of the media except for foxes is what they use that term for in the US so think of the network CBS ABC MBC uh CNN MSNBC as the cables that would be the mainstream median and your trust in them according to the sax post of which there is a chart supporting it is uh is that depending on your party affiliation you you trust in this media Republicans realize it's propaganda everything in the news Independents are on the path to realizing its propaganda uh Democrats are the people still plugged into the Matrix according to David Sach so he he provides a chart which I'm not going to bother to try to show you on this live stream here but the bottom line is 73% of Democrats have trust in mass media 73% I'm shocked by that number I guess I'm not shocked I kind of know that but it still just blows my mind that anybody could be believing in the media Independence way down to 36 36% Republicans at 10% uh 10% of Republicans believe in mass media you know our and 73% of Democrats our division is not over issues in this country or in any country I don't think it's over the issues we have much more that binds us together than that divides us our division is who's still plugged into the Matrix as David Sachs puts it and who has broken free it's really incred incredible do you remember I've been telling you I've been telling you on this show that all data is fake right we've talked about that a few times well so is the news all news is also fake it's just narrative driven and not just the political news like you know the political news is fake and you've got these hoaxes that are being being sold to uh largely to Democrats because 73% of Democrats believe in the political news but it's more than that all news is the same including this is the best damn dig business show on the planet for medium and small businesses including news geared towards you in the medium and small business sector have you ever heard of the Gman effect g- MN Gelman effect or the Gelman amnes Amnesia effect according to my notes Here a concept to describe cognitive phenomena where people recognize the inaccuracies in the things that they're experts in and don't recognize the inaccuracy in things they are not experts in and so I'm just going to sit notes because they're boring but the bottom line is says Gelman fellow was Murray Gelman was or Gman was a or is I think was though a physicist with a particular expertise in something something important and when he would read hey ion thanks for joining when he would read the um uh something in the news that related to his field of expertise he would immediately recognize that it was that it was wrong that it had a bunch of I don't want to use the word misinformation but just technically wrong directionally wrong everything wrong when he was reading about things that he knew about yet at the same time he believed everything else that he read in the news that is the galman effect and that is our brains at work it is a uh recognized cognitive phenomena okay and I don't think it's a phenomena I think it's entirely to do with confirmation bias but we don't need to dive into that early on a Monday morning on August 26th in the middle of summer so I will tell you this though that back in my early Corporate Finance days so I was at uh KPMG uh Toronto at that time and uh if you're from outside of Canada in Canada they have very very strong mid-market Corporate Finance restructuring business valuation practices it's not like that in every jurisdiction they don't do it in the accounting firms but in Canada they sure did so some of the top shops uh in the country for sure and my early days as a young young professional as a junior uh let's call this the early 90s so I was working on some very very large uh m&a merger and acquisition selling business files and restructuring files that were relevant to the news the business news of the day and so I would read about my work in National newspapers sometimes I read about my work in international newspapers for example I was the uh the lead kid let's say the lead Junior on the second largest the restructuring of the second largest residential developer um in California uh so I was I was uh put up in um in uh Newport Beach in Newport Beach in my mid-20s or however old I was and had a pretty pretty good time working on that file but I I I'm distracted so you you read about yourself in the newspaper yourself being the files that you work on and I had one main conclusion over many many many many many news stories in all newspapers and my conclusion was that the story was a two weeks late two weeks late at a minimum that was the best case scenario it was not timely information it was always late and it was always wrong always and I don't mean like got some details wrong I mean fundamentally wrong I mean if I was relying on that information to do a trade I would have traded the opposite way if I known the actual truth that was the best case scenario from there it would just get worse but it was two weeks late and it was wrong yet what I found myself doing in my young ignorant plugged into the Matrix ways is I'd be reading the newspaper and I'd say oh I just did this deal this information is wrong and then I'd go to the very next article and I'd sit there and read it as if it was the Bible I did that for years and then one day I thought what am I doing what am I doing obviously this is all just late and it's all just wrong and then I went for years like decades without reading any more business news at all ever again and had a very successful career while doing that I've been reading the news lately mostly for you because I try to draw lessons and and you know uh whatever I can that I think to be accurate you'd be shocked how often in the morning I'm preparing for this show and oh wow this story is really cool really interesting and then I stopped from I got like that can't be true that just can't be this is just made up this minut and then I try to look around I try to fact check it a little bit I don't know what's true I don't know what's not true you just need to use the smell test the is this too on the nose and so I pass on so many things just because I worry whether it's true or not and I try to focus on things that probably are true like there's probably astronauts stuck on the International Space Station because Bombardier can't get its act together and uh the three-hour tour has turned into months and months and we'll continue to do so until Elon goes to rescue them have I mentioned that I've developed a business course to help you raise Capital earn profit for your midmarket and smaller business I've been talking about that right and it's on pre-sale right now oh I forgot to put it in the link so you can't find the link right now but we will put the link in um everywhere when we're done here but if you are live and you want to look it up go to the Scott Sinclair uh backmy shopify.com the scuss and cair backmy Shopify .c and as I said we'll put the link in the notes uh after that so what we have going on right now so the first module is released September 15th which is coming up quick uh but there's a pre-sale going on right now huge pre-sale discounts for the for the whole course there'll be eight modules on different topics all of it is intended to help you earn more profit raise business capital and it'll be as I said eight modules which means eight visit videos supporting uh workbook materials um Etc and and you get all of that you get all of that at a discounted pre-sale price and that expires this week it expires August 31 we're at the August 26th today the price right now is $299 299 USD and for that you get all eight modules as they released starting September 15th for module 1 and then what a month thereafter with their supporting workbooks and for each for each uh sorry with that whole purchase not for each you get a free 30 minute virtual free coaching session with me uh so we'll jump on Zoom you can ask any questions you want about anything preferably business but you can do it about anything and I will give you I will give you a coaching session on that and that is a probably 5 00 value right there and you're only paying $2.99 for that if you if you're not familiar with my coaching sessions go to the winning momentum podcast on YouTube look up free coaching sessions in fact we are doing episode 266 right now of that podcast and episode 255 265 so the previous episode uh which was not a live stream is in fact a free coaching session number three with this particular entrepreneur and you can learn a lot of things in there so the pre-sale the pre-sale um is ending this week and the first module that is released September 15th is called Embrace change why we all resist Improvement and what to do about it and I just finished the script over the weekend fine tuned that it it is awesome it's awesome was a lot of work it's awesome and so hopefully it'll be shooting that this week later this week uh or early the week after the and I told you when the release date but in this first module you're going to learn about kpis key performance indicators um both for operating um uh so net income profitability and for cash flow you're going to use how learn how to use the kpis as a benchmark for Change and as an alarm clot to smack you upside the head so that you know when you need to change your organization you're going to learn about continuous Improvement and AB testing not just marketing but operationally you you're going to learn two new Concepts in management thinking that I have created and I have used throughout my career you won't find them anywhere else uh including the one that I call a meta system of change so actually a hack to make sure that you're continuously improving your business all the time increasing your profitability like I said I'm going to shoot this this week and then I need to finalize the supporting materials and what you need to do is go to discussing CLA backmy shopify.com and you need to go buy that this week it's really cheap and then next week the price is going up the value is insane Rabbi movitz Rabbi movix on leakedin you can look them up uh m o wz is a venture capital family office investor as I can put it that way he's a significant sophisticated investor that has been a follower of uh this show in its various derivations uh in the past I'm not sure if he still listens every day but he certainly has in the past and in fact I have spoken with him because he is a listener and um he's a good guy I think he has extraordinary extraordinarily high integrity and smart and is uh using his family office investment uh vehicle to try to change the way that Americans invest in Tech deals that are good for Humanity for example uh he has a nuclear energy deal that I should be learning more about in fact I would like to have Rabbi movitz on the show uh so that we could together do a deep dive into nuclear energy which I think is an answer to a lot of the world's problems anyways uh you can look up up on LinkedIn you can connect with him there and he issued a in a sense a press release on LinkedIn that says it's exciting for me to share this news that uh synergist Holdings which is his investment vehicle or one of them their portfolio company us Rare Earth LLC is going public via spack SPAC spack spack is a acronym for a special purpose acquisition uh vehicle that's not true at all because it's not V probably special purpose acquisition company when I met with uh he says when I met with founder I'm going to skip their names because they're diff difficult for me to pronounce live on the air here and you can go read as release anyways on LinkedIn became clear to me that we had a winner Prospect as early stage investors we were deeply involved in the understanding of rare Earth elements and critical minerals uh and we fully recognize the immense value proposition that can be established with these with these uh products uh it was a long and difficult Journey that required significant effort and P PA s that's the nature of VC investment right if you're if you're investing in something has a super highrisk profile it's a long and AR uous arduous arduous Journey I'm just waking up I'm finishing my coffee here and so it's hard for me to pronounce more uh syllables of words of more than one syllable at the time sorry just checking my Instagram here at the time the greater investment Community overlooked the potential of rare elements um and the other products making it difficult to attract interest or Capital but we believed in the Strategic importance of these sectors these sectors are really the driving force in um clean energy in clean energy you can't have electric vehicles and growth in other electric uh products without these Rare Earth elements and so this is the commodity side which is often thought of the dirty side of the clean energy movement and so this makes a lot of sense Beyond investing we engage heavily in policy development public awareness uh Congressional Outreach to shape key discussions where Advocates and Educators um all the things that you want from your investment uh if they have a skill if the investor has a skill set in doing that that helps out uh tremendously at this point the company's well established and the returns for early seed investors are nothing short of remarkable those who bought uh 2.5 million shares at 30 cents each that would have been the initial seed round 750 Grand invested or about to see an approximate 30X exit a 30 times ex exit so they'll be making $22.5 million in just 5.5 years compared that Roi it's not even close to traditional Investments if someone took out a cash advance to secure a 225% annual return on their 750 $750,000 so now see this is where Rabbi muskovitz loses me I like this guy a lot I'm not picking on you I'm not picking on you but I don't like the idea of taking what is a portfolio play from a wealthy individual and looking at the Returns on that and translating into something that you and I could be doing well maybe not me uh because I could do more portfolio play but but that a typical angel investor ought to be doing what he's saying here is if you take out go borrow on your home cash advance it says and then you invest that you get a 20 25% annual return on 750 Grand it would grow to 1.9 to 2.3 million over the over 5.5 years okay so it it doubles it doubles or more almost triples okay but what he did he oh it says for further comparison if you put 750 into the S&P at an 8% annual return you get 1.1 million at after 5 years or in a strong real estate deal he says at 10.5% we grow to roughly $1.2 million but here here and then he says he's making 30X okay but here's the problem the problem is if you put it into the S&P at an 8% return you're almost not guaranteed but almost by the way don't take Financial advice from me I'll tell you how I think about things I tell you what I do to make a living I tell you why I think my career has been uh successful and how I go about stuff but I am not an accredited financial adviser at a personal level for you and so go talk to your own advisers I'm just going to take you through some math if you invest in the S&P which over the long term is 8% um according to Rabbi muskovich then that's pretty much guaranteed there's going to be ups and there's going to be downs and it's true we could have a you know a massive uh we could have a nuclear war and the S&P going to go to zero there's all sorts of risks that could happen but for the most part over the long term you're going to hit this this this return number on an S&P you pretty much know that for sure if you put it into the quote unquote strong real estate deal maybe in the short term it goes down a little bit which doesn't happen very often but maybe it can go down a little bit but over the long term you're going to get this capital gain uh growth in the real estate that's just what has happened unless you had a terrible Buy on the way in which almost do you know anybody that's lost their shirt on their house on their on their personal residence nobody does nobody does you can have dips you can be forced to get out you can have you know maybe you bought something with environmental damage or whatever in some obscure case but for the most part everybody if you can afford to buy a house everybody makes money on their house and I don't want to talk about opportunity costs and I could have taken this equity and I could have done that and blah blah blah everybody makes money in their house it's almost a one for one so to compare those returns to a VC style risk to financing a startup and getting massive Returns on that one selected portfolio investment is misguided I believe okay and I'm not picking on revi mus as I said from the beginning and I've said it now for the third or fourth time I like him a lot I think he's full of Integrity I think he's a smart guy I just caution I just push back on this a little bit so listen the typical VC model is is say if you have 10 Investments okay two of them are going to be this 30X knock it out of the park return okay two of them are going to go bankrupt and six of them are just going to bump along and never maybe you get your money back all right maybe you get your money back so when you look at the one investment or the two Investments That knock it out of the park like this particular deal you need to take that into the context that you wouldn't have got that deal if you hadn't have funded all 10 of them because if you could just pick the one that works that's what you would have done but you didn't because it's a portfolio game at that risk level understand so you got to make a bunch of deals to get that portfolio math working for you and what you can't do is pick one deal out of that portfolio and say look how awesome that is it's better than the S&P the S&P and the real estate deal are pretty much over the long term going to generate the returns you don't have to be smart you just need to buy an index fund and sit there and historically it's going to work out for you not true as an angel investor the smart VCS the smartest people in the world the David Sachs I don't know his portfolio uh personally I don't know him personally uh but the David Sachs of the world the the Silicon Valley feces the rabbi moscovitz who issued this release the smartest people in the world out of 10 Investments are going to be right and have the Home Run 20% of the time two out of the 10 Investments so how are you going to do what are the odds of you picking if you're just doing one deal if of picking the one that's going to be a home run well the odds are very low they're like 20% if you're as good as the VC by the way how many deals did the VC not fund before they even before they even got to the portfolio right they receive they receive hundreds of business plans probably every day probably every day I was listening some VCS the other day talking about the staff they have on hand and the feeder system the qualification system they receive let's say 100 business plans every day and they go through them they go through them and they end up they end up selecting some to build this portfolio which we're just notionally saying is 10 companies of which two will succeed okay the 20% success rate is on the ones that they qualified all right if you're an angel investor and you get to the point where you're seeing hundreds of business plans I mean it's it's a 2% success rate if it's a well it's even less than that because it's 100 a day it it's you have very little chance of picking of picking the right deal to generate these returns okay now now um Rabbi musk's returns are still fantastic even when you adjust the portfolio at those rates I think I did some math on that and uh you know instead of instead of this 600% return you adjust for the portfolio losses that you might expect you get down to like 120% it's still fantastic it's fantastic but the chest my only point is you start comparing this to putting your money into an index fund which you know for a fact is going to grow over time the chances of you being successful the chances of you being successful in this VC deal is is is pretty small uh unless you have a portfolio you have to have the portfolio that's the way that business works by the way what are the special purpose acquisition companies uh spaxs okay so this is a us design program we have similar ones in Canada they're called ccpcs Canadian control private corporations I just want to disclose up front I have not looked at that legislation uh and program for probably five to seven years so whatever I say I might be out of date but we have these it's it's what you might call you if you're in the business you've heard of a shell deal which is you have a a a public company and you either set up this public company as a newco so it's completely clean it has no business at all it has no assets it has no liabilities all it has is a management team uh or a management person and a board of directors and then it raises some money okay and it holds that money in trust uses a little bit to pay its management team and its Audits and its listing fees Etc and it holds that money and it raises the money for the sole purpose of going out to find a private company to buy to roll in as they say to vend into this public company and when they do that transaction the the private company shareholders become the control block the majority shareholders depending on the amount of money but the control block shareholders of this public company which had no other business so it's really a backdoor way for uh private companies to go public and it's sort of a formulaic way for investors such as uh yourself if you're in the investment side of the audience here to to invest in the special purpose vehicles or a ccpc and you get in cheap like uh rabbi moskovitz did and then and then you you rely that's what I'm trying to say on the directors the management team to go out and find the right deal okay to write private company to vend in this thing so that's uh what a spack is I'm running out of time we'll do we'll do some more maths someday on how these ventin works because it's kind of interesting I will say this when you sell your public company sorry your private company when you rolled it into a a shell a public company shell whether that be a spa a ccpc or some old Mining Company uh shell which is often done or some old soon to be some old AI uh company shell as the AI Bubble Burst when you roll in you don't get a bunch of cash out I haven't looked at the specifics of this deal with Dr muskovitz uh sorry I keep saying Dr Rabbi musis but I would suggest to you although it is completely legitimately a trigger for valuation which is what he is saying it's not really an exit because you don't get to as a private company roll into this public company vehicle get a bunch of cash and retire no no no what you get is shares in the public company and have an opportunity to build thereafter so it's a it's a share for share exchange it's you're probably restricted in other words you're not even allowed to Shell your shares uh for however many years depending on what jurisdiction you're in and so it's not really an exit but it is true that it is a trigger to do evaluation that is fair game this has been mornings with Scott I hope you all have a great day let's have a great week if you are so find on Facebook LinkedIn YouTube X Instagram follow give me a like send some comments and as I said on that course the pre-sale ends today we'll be putting the link in the notes for you uh so you can get there but is the Scott Sinclair backmy shopify.com talk to you tomorrow 8:30 a.m. mountains