Creative Entrepreneurship and Investment Wisdom with Patrick E. Donohue

Embark on a wealth-building adventure with Patrick E. Donohue, the valuation virtuoso and Hill Capital Corporation's pioneering founder, as he lays out the roadmap to amassing riches in business and in real estate. Our shared stories of youthful business escapades set the stage, reinforcing the age-old wisdom that an asset's true worth is what a buyer is ready to fork over. Patrick's dual expertise in fundraising and investing brings a unique perspective to the art of the capital raise, advocating for the kind of simplicity in pitches that resonates with investors. You'll find yourself nodding along as we dissect the anatomy of a successful investment deal and underline the necessity of trust and emotional resonance in the business world.

It's not all dollars and deals, though; in this episode, we also shine a light on the community-centric side of entrepreneurship. Through initiatives like One Million Cups and the Entrepreneurs' Organization, we foster relationships that often bloom into fruitful partnerships, such as the one with Mercury Mosaics.  Whether you're a seasoned entrepreneur or just taking the first steps in the business arena, this episode promises invaluable insights into the multifaceted world of securing investments and cultivating enduring business relations.

Onward!

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Transcript

Speaker 1: 0:00

This is the Legacy Wealth Code podcast helping you build long-term wealth and a lasting legacy through real estate investing, tax strategies and motivational stories from some of the most successful and influential people out there. Here are your hosts real estate investor and entrepreneur, michael Notbohm, and real estate investor and attorney, andrew Hoek.

Michael Notbohm: 0:22

Hey guys, welcome back to another episode of the Legacy Wealth Code podcast. My name is Michael Notbohm, here with my partner and crime, Andrew Hoek. Hey guys. So happy New Year to everyone. We've got a. We're excited to have a guest today Patrick E, entrepreneur and valuation expert. He's a chartered financial analyst, a published author.

Michael Notbohm: 0:42

He's been a become a trusted investor, stock analyst, and advisor. The, founder of the Hill Capital Corporation, supports emerging growth companies, offering unique insights and into the finance and business dynamics One of the things that I thought was super cool. I'd love to chat, obviously during the podcast today about the million cups initiative that you're a big part of. So excited to have you on here. Welcome and happy New Year.

Patrick Donohue: 1:09

Thank you, Michael. It's nice to see you and Andrew today, happy to share insights with you and your audience.

Michael Notbohm: 1:15

I think your angle and your expertise is a little different than what we typically have on the podcast. We're excited to chat with you. So you've got a proven track record on capital raising and hopefully we can kind of tie it back in some way to real estate. But tell us a little bit about your background and kind of where you are today and what you're doing.

Patrick Donohue: 1:34

Sure, my background and what I'm doing today started at a very tender age. When I was six years old, I had a lemonade stand with my cousin, and I always was fascinated with selling things and really captivated by the idea that everything has a value. And so at a young age, I did probably what a lot of kids did, maybe collected, you know, baseball cards and so on and so forth, but I always found that fascinating and that's what took me on my journey to helping build an online brokerage firm, getting into an investment banking and today running an investment fund.

Michael Notbohm: 2:13

That's awesome. So I remember reading that in your bio and it was sent over to us and I laughed.

Michael Notbohm: 2:18

I was like I feel like you're kind of my brother from another mother here, because I my first job or business rather was I was in the sixth grade and we used to go to Sam's Club. I grew up in Wisconsin, so Sam's Club was like 30 minutes away from a small town called O'Connor walk and I would buy nuclear warheads and crybabies and sell them to my classmates and of course I'm buying it bulk right, the Sam's Club model and I remember thinking I feel like I'm so far ahead of my time. I had a notebook with who was buying what and I would give them an incentive based on how many nuclear warheads they bought. And my parents have said we knew very young that you would definitely be in the in the business realm for the rest of your life, and so I read that and I thought it was pretty funny to hear.

Patrick Donohue: 3:06

Well, that's awesome, michael, because I did the same thing, but in elementary school we would get in a lot of trouble if we had candy, so I would buy the, but we wouldn't get in trouble if we had cough drops. And so, if you remember, the lungs cough drops taste more like candy. They don't taste like medicine. So I'd buy the lungs cough drops and buy the bag of 30 for a buck and sell them for 10 cents.

Michael Notbohm: 3:31

That's great. So, you had a very healthy class. I mean, what could go wrong?

Patrick Donohue: 3:36

Exactly right. Yep cherry lawns, those are worth the way to go.

Michael Notbohm: 3:40

Yeah, I laughed because I saw that and I was like this is you know the same type of thing. I did baseball cards as well, and you know, when you talk about value, the thing that my dad always told me because I remember opening packs and I would say, dad, look at this, I got a Cal Ripken. You know, golden boss, blah, blah, blah, it's worth $200. And you would say, mike, it's worth how much somebody will pay you for it. And that was a valued belittle that you could pretty much carry forward for the rest of your life.

Patrick Donohue: 4:06

Well, that's what I think is funny. I wrote a whole book about valuation, but like, that is how valuation really boils down to. It's like what is somebody actually going to really pay you for it and what? What's the cash that's going to change hands for that thing? Because we can talk about valuation all day long. It doesn't matter until it trades hands.

Michael Notbohm: 4:23

So we'll look at cars right. The Corvette came out 70 grand if you wait until it's ready, but you can go to the, to the dealership, and they'll they'll sell you one for 150 right now. Right, you know it's then it's worth 55 the next year, but they don't think about that.

Patrick Donohue: 4:40

Exactly.

Michael Notbohm: 4:41

So let's chat a little bit about capital formation, some of the strategies that you've implemented in your career. I know that now you've got your own real estate I mean your own investment fund but you did capital raising at some portion of your career, so talk a little bit about that.

Patrick Donohue: 4:57

Sure, well, my experience around capital formation comes from all sides. As an entrepreneur, I've started a couple of businesses and I've raised money. I've raised money for for Hill Capital Corporation to bring our LPs together, our investors together for Hill Capital Corporation, and now today, as an investor, we have entrepreneurs coming to us seeking investment, and so literally day in and day out, we're having people approach us and pitching us to invest in their businesses, and so that's where my experience comes around capital formation and you know there's a lot of content out there about like the perfect pitch deck and so on and so forth, but I have some kind of unique insights on how people can think about these things to keep it simple and be successful and not get caught up into too many details that I think are largely distracting.

Andrew Hoek: 5:51

Patrick, can you touch a little bit. I think a lot of people, especially in the real estate industry, when they're starting out, maybe looking at syndication style deals, are thinking capital raise through friends and family, thinking outside that box a little bit. What do you think are some suggestions or tips to say how do you maybe take that to the next level, not just friends and family, and now you're actually looking at outside sources for capital?

Patrick Donohue: 6:16

Well, the biggest piece that all investors really need is a magnetic vision.

Patrick Donohue: 6:22

I call it a magnetic vision, but a vision of where it's going to go, and the reason I put the qualifier of magnetic on there is that it has to attract.

Patrick Donohue: 6:32

And so, in real estate, if somebody is going to go to market and say they're putting together a portfolio of, say, storage units or whatever the case may be, but they have a vision of what this could be over time and what it's ultimately going to be, that's what's going to attract people as investors to them.

Patrick Donohue: 6:49

Now they can get away with air quotes, get away with being a bit sloppy with friends and family, and that's always the challenge when you go out to sources of capital, external capital, outside of your immediate network. That's where things really have to be polished up and that's where that magnetic vision has to stand on something beyond just the vision of the founder. It has to have some proof in the putting around examples of what else is in the marketplace, of what has been done, comps, and have it kind of modeled out of what it can actually look like, because those external sources of capital can't rely upon just their word alone. They're going to need some due diligence materials that are going to really help kind of solidify what that vision can be and help that investor reduce how they're thinking about the risk-reward ratio, because they're always trying to reduce the risk that of that vision actually happening.

Michael Notbohm: 7:52

So you're analyzing a lot of different businesses, not just one sector, right? So, as you're having people come to you with their pitch, what are the things that pretty much everybody should have, regardless of the industry?

Patrick Donohue: 8:09

What everybody needs to have is they need to build reputation as quickly as possible. There are two things that move money it's emotion and it's the trust. So trust and emotion are absolutely key. So when somebody meets somebody, they need to establish the emotional hook and trust as quickly as possible. Now, trust takes time, but there are things that people can do to build trust where they may have experience in an industry or things that they can speak to to start to build that foundation of trust. Earlier on in the conversation or when they get to meet, the emotional hook can be a bit easier.

Patrick Donohue: 8:51

So I always think about like, when I see like medical devices. We invested in a company called Cytotherics that's making human liver cells. Today, if a human being loses their liver, they're dead. There is no way to put them on support because the liver is one organ still today we don't have a lot of solutions for. So Cytotherics can pull on heartstrings when they're talking to investors because what they're literally doing will save lives as their technology builds and develops. So that is a great example. Now in real estate that might be where people are working on affordable housing and can pull some emotional strings around. Hey, we're doing things that can really help people become first time home buyers or whatever the case may be, but whatever people can do to have that emotional hook and then build and support that level of trust, because that's the two things that are going to move money at the end of the day.

Andrew Hoek: 9:47

How do people typically get to you? Are they getting referred in or are you guys advertising out? What does that look like?

Patrick Donohue: 9:54

Our business is nearly 100% word of mouth, and so there are conferences that we will sponsor, but that's more because we're going to attend and to meet people. But most of the time when people are coming to us, it's going to say hey, andrew suggested that we meet each other and I'll have an initial conversation, we'll have some exchange and go from there. So that's the vast majority of it. And if you think about it within venture capital in that world, the vast majority of the business that happens there is word of mouth. You're not seeing people out there advertising and so on and so forth. That's really not the fit. This is very much a people game. Like all capital formation, it's all about the people. The fintech thing, I think, is kind of overblown and overrated, because, yes, we can use some technology to help with making capital, getting the underwriting process more efficient, but at the end of the day, we need to build relationships with the people who are going to be executing the business plan, and so that's a really important element to this.

Michael Notbohm: 11:01

So you don't have an AI robot that's beating with them first. Right now, like everybody you know, I laugh because it's like every time you turn the TV on, ai is doing this and AI is doing this, and I mean, I'm an advocate of it.

Patrick Donohue: 11:15

Yeah, a lot of ways, but I guarantee anybody here's this podcast or you refer to us we're going to have a real conversation.

Patrick Donohue: 11:26

We want to communicate with people and get to know them, because the other part of like what we do is that if it's not a fit today that's why you guys mentioned one million cups when we started we do a number of things to support organizations, like one million cups in EO and we're part of angel groups and so forth we refer people to other sources of capital or networks that can be supportive to them, but we always have the meeting because if it's a not fit for us, we help them find where it may be a fit, because it may be a fit someday, a mutual fit, for us. And we've had a number of investments, like a recent investment in a custom tile manufacturer, mercury Mosaics, where we met Mercedes four years ago and we stayed in touch with her and as she built and executed her vision, it became a better fit for us to be an investment partner with her, and so we always white glove relationships on the front end.

Michael Notbohm: 12:22

That's awesome. I mean, it's definitely got to be a rewarding thing. Obviously, you know I definitely want to go into more detail on the one million cups thing, but just in general, you know, when you meet with people maybe it isn't a fit today or they're just not ready yet. I'm sure you know the guy, Alex Hermosi, if you've ever read any of his stuff.

Michael Notbohm: 12:42

Unfortunately, I haven't, I'm going to Okay, so he shares a very similar vision in that he's willing to give away a lot of stuff for free where people would say, why are you doing this? And his thought process is because I want to invest once. Once I help you get to that two to five million annual revenue, then I can come in and really help you scale it to 50 or 100 million. I can't help you before that, but I'll give you all the tools for free to hopefully get you to that point, and it sounds like you guys are pretty much in alignment on that. I think it's definitely a very rewarding way to do it.

Patrick Donohue: 13:18

Very much. Oh yeah, it reminds me of GoGiver you'll give first, but yeah, very much the mindset of just being a good person in the community, being helpful wherever we possibly can, because even if there are a fit, I mean we just have capacity constraints. Anybody who runs an investment fund does you know, for every 50 companies I look at, I can literally only do you know four or five of those deals. There's only so much my team and I can process either way. So we always want to be helpful for wherever we can.

Michael Notbohm: 13:48

So what does that look like for you guys? Are you basically the custodian of a fund and then you're underwriting it and bringing it to your co-investors, or what does that setup look like?

Patrick Donohue: 14:00

Yeah, it's all committed capital. So all of our investors are individuals. So that's also an important point that we like to highlight, because we're not managing institutional money. So when we invest in these businesses we very much have a vested interest because it's our money and in making sure that these businesses can grow. So they definitely. We are and see ourselves very much as partners with these companies. So those are some really key pieces to this.

Patrick Donohue: 14:29

When a company comes to us, when we give them a term sheet and we say that we are good to put in a half a million or a million dollars, we're good for that. Right up through closing they don't need to worry about anything. We have to get through our due diligence items and so forth. But when we take that to our investment committee, they're double checking, making sure that we've done our work as the managers. But we're pretty much locked and loaded to be able to close that investment as long as there's no red flags or any issues, because the capital is committed.

Patrick Donohue: 15:00

So that's very different because there are groups like angel groups like we're members of Go For Angels, where it's a 100 people call it that are actively investing in early stage businesses. But that's a situation where somebody comes in, pitches and has to convince all the individuals to write checks that would go into what they call like a special purpose vehicle or whatever the case may be, to invest in that business. That's a very different model. That's not Hill Capital. Hill Capital is a dedicated fund to is $25 million and we're doing half a million to a million dollars per investment.

Andrew Hoek: 15:37

Patrick, what was the name of that Gopher Angels?

Patrick Donohue: 15:40

Gopher Angels? Yeah, because it's out of the University of Minnesota, so the Golden Gophers.

Andrew Hoek: 15:45

Oh, got you Okay.

Patrick Donohue: 15:46

The founders of it called it Gopher Angels. It was actually. There's a lot of angel funds now, but back in the day the founders also a graduate of Thunderbird that had a similar angel program, so that's how the name Gopher Angels.

Andrew Hoek: 15:59

Interesting. Yeah, I was wondering where that came from. But yeah, but Gopher.

Patrick Donohue: 16:02

Angels, by the way, invest all over, just not Minnesota, but that is I got you, yeah.

Andrew Hoek: 16:06

Well, that's a. That's such a good message, and so I have a two-part question for you, because one of the things that we always focus on it's so great to hear about the successes, but I think everybody learns just as much from the failures, right? So tell us a little bit. You know in your, in your capital raising days, what are some things that you did at the beginning that you look back on now and you're like man, I really should have never done that, or something that you'd say I learned so much from this experience. You got anything that jumps out like that.

Patrick Donohue: 16:35

Yeah, well, I'll just share one my personal failures around fundraising and I don't know. It was very, very painful and I don't know if I would say I would do it differently because what came out of it is extremely positive. But in the early days of Hill Capital Corporation we went to market as what they call a BDC, a business development company, which is an SEC registered entity, and a lot of background and like why and how that all came to be. But I spent the first two and a half years going out there in raising Hill Capital as a business development company, as a BDC, and drained my family's life savings, a lot of my personal time not being paid, so on and so forth, took a step away from a very lucrative career, very, very difficult and that was a failure. But I knew going into it it was a high risk of failure because what I was trying to do was very unique. What we were doing as founding shareholders of the BDC at the time was very, very unique. But it was well worth trying and so, at the end of the day, the reason, the biggest issue there is that it's a structural issue, because you have to file with the SEC and, by definition, there's time constraints because all of a sudden your filing will go stale and you got to update it. So there's legal costs and all sorts of professional expenses and stuff like that that go into it.

Patrick Donohue: 17:58

So very time consuming, painful process but the net result was very positive because we had a beautiful community put together through that whole process.

Patrick Donohue: 18:09

So when we did pull together Hill Capital Corporation in a more traditional sense bringing just together individuals and not under the BDC construct we had a built in community of hundreds, if not thousands, of people that already knew of us and were supportive of us. And that's where we got a lot of our initial deal flow, because people knew we were raising a fund and so when it came time to make investments in businesses, we had a lot of nice, warm referrals and the ability to start looking at deals right away. So there's the good and the bad of it and I think that's what everybody at the end of the day that's going through a capital formation process will find, because there's going to be failures and those are actually really good because you'll learn through that process. You get that feedback and you keep moving and keep moving ahead and it's just part of the game. You have to get a lot of knows to get that ultimate yes.

Andrew Hoek: 19:07

That's again what a great message. What about stuff that you've invested in? Give us a couple of favorites. I don't know what your confidentiality requirements are of anything, but give us some of your favorites that you're invested in or have invested in the past.

Patrick Donohue: 19:22

First off, all of our portfolio companies are right on our website at hillcapitalcorpcom, so if anybody hears something or wants to see the logo or click through to see it. The first business that I would like to chat about is the Mercury Mosaic, the custom handmade tile, because it's something very unique and different. She's making tile in Northeast Minneapolis all by hand, and you think about like tile being a commodity product. You can go to Lowe's and Home Depot and so forth and buy tile for a couple bucks a square foot. Her tile is $30 to $50 a square foot, but it's art, it's beautiful. So you've got high-end coffee shops and high-end athletic department stores that have her mosaics in their stores and she's got some of the who's who of clients out there. She's doing a very large installation at the Whitney Museum right now, and so that's a really unique investment opportunity. And the reason why we invested in Mercedes and in her business, mercury Mosaics, is because she is launching a new custom handmade mosaic kit called the Mosaic Candy Shop, where people can get upcycled pieces of tile and build their own mosaics for wall art at their home or place of business. And it really is her, as an artist wanting to get back to her roots, about teaching others, about her love for her art, and so that is a business that is very unique and I like to talk about just because it's something very different than the traditional technology, saas-based businesses, and we have those in our portfolio as well.

Patrick Donohue: 21:12

The other one that comes to mind because I just, literally before we got on this podcast, was chatting with them is a company called Foreverance, very unique. They make custom made ceramic urns and these urns have been made for some of the who's who's of celebrity In our hometown. I live not too far from Paisley Park, home of Prince. When Prince passed away, there was a lot of coverage about the urn that Foreverance made, which is a replica of Paisley Park that holds Prince's Ash is now at display at Paisley Park, and so that's a very unique business as well.

Patrick Donohue: 21:52

And Pete Sari and his team very unique entrepreneurs where they had a vision to be able to take 3D printing which many years ago was this new thing coming to market? Take that technology, make 3D printed ceramic urns that are high value to customers that want to forever memorialize what they do. So if you think about rock stars, they have the guitars, or Stone Temple pilots had that hat made for one of the guys that died. A number of car affectionate models that have their cars that they absolutely love. If they have a big car collection that they get their favorite car made as a custom urn so when they pass away. So it's pretty neat, pretty unique company as well.

Michael Notbohm: 22:41

So it's kind of cool to hear because, you know, just going back to when we first started the conversation, you know, as you're analyzing these businesses, one of the things you said is have a vision, and you can clearly tell that both of those companies had, you know, some much bigger vision for what they wanted it to be than what it was right then. But I'm sure on the on the back end, they also had the fundamentals that made it a sound investment for you and your team, reducing your risks. I think it's a balance of both, because there's a lot of people that have great ideas and there's no actual foundation of how you pull this off. So I think it's important to have both.

Patrick Donohue: 23:19

Yeah, that's exactly right, Michael. I mean what what Mercedes and had at Mercury Mosaic and Pete has at Foreverance is that they had an established business that's operating and so when we invested, we knew that they can continue to build upon what they've already done well, versus if it was a startup. That's where we're making referrals to our friends that run accelerator groups like Generator and others. We're saying we in, we refer them to one million cups like go and utilize more those accelerators because they're they're set up to help companies are or entrepreneurs that have an idea and get it through the idea phase. We're not. We're investing in businesses that have a couple million of revenue and want to take it to five or 10 million.

Michael Notbohm: 24:01

That's our bread and butter and what a perfect segue into what exactly is a million cups.

Patrick Donohue: 24:08

You know, kind of give us the the nuts and bolts of how it works and and what the initiative is well, I actually have my one million cups coffee cup right here that Kauffman Foundation sent to me for being an organizer. But one million cups was started by Kauffman Foundation, which is the largest foundation in the United States, if not the world dedicated entrepreneurship, based out of Kansas City. And the Kauffman Foundation, as the story goes about 12 years ago they, they they're a couple billion dollars. They manage is all about supporting entrepreneurs. And so one of the employees partners at the Kauffman Foundation said well, if we're all about entrepreneurs, why I don't we invite a couple of entrepreneurs in and have a cup of coffee with them and learn about what they're working on and see how we can support them? And so that's how the concept was born. And so throughout the United States there's around 201 million cup groups or chapters, and each one of those are in various cities and kind of have their own own flavor.

Patrick Donohue: 25:14

But we all have one thing in common it's all volunteer. There's really no checkbook. It's a very simple, safe place for entrepreneurs to come and share their story. Every Wednesday at 9 am, we have one or two entrepreneurs come in share their story about what they're working on, and we ask one simple question what can we as a community, do for you and so, and then that allows everybody in the room to start talking about what can we do to support that entrepreneur?

Patrick Donohue: 25:46

And so they're typically coming to say, look at, I'm working on this, I'm building this and, you know, test my app, or I need investors, or I need help on this IP issue. I don't understand. And so then people can say I'll meet this IP attorney or, here, come to one, or come to go for angels, and, you know, pitch your idea to maybe get some angel funding and we can help them with the things that they need. And so that's why I love one million cups and I founded one million cups in my hometown, which is in Eaton Prairie, minnesota. I had exposure at other one million cup groups, but I got one going in my backyard because I'm such a believer in the model, because it's very simple, straightforward and just helpful for entrepreneurs and, by the way, there's there's number of them in in Florida and elsewhere too so, yeah, I was gonna say we'll have to look that up, andrew.

Michael Notbohm: 26:33

It actually. Yeah, andrew and I met in a in a B&I chapter. I don't feel familiar with B&I but, um, and it was great, you know. I mean, obviously we have a, you know, strong partnership. We've been investing in real estate now for the last five years or so.

Michael Notbohm: 26:49

You know part of it for us was like the you have to go and have coffee twice a week with people that you really have. Like there was a hair loss lady and it's like I don't know that many people losing their hair and I. But the model that you have, where it's like come to a, you know, come to a meeting, there's not this high pressure of how many referrals are you bringing this week. I think that's what kind of steered us away over, you know, over time. It's just like I don't have. I don't have a lot of people that are losing their hair and if I did, I'd feel awkward referring them to you because you know it's kind of like a touchy subject. But that, you know, the hair loss lady is just one example. But the, the model that you're talking about, where you're presenting, you know, one or two featured other for newers every week.

Patrick Donohue: 27:33

Is is pretty awesome right, and a number of the people that attend one million cups um have or have been, uh, members of a B&I and B&I has its place. You know, I always think it's like really good for like the local owned you know salon or liquor store, whatever the case may be where it's kind of like, hey, let's you know swap, you know referrals and so forth. But, um, but for a lot of entrepreneurs that are starting a, an app, you know, like one million cups is the best bit for them and so you know.

Patrick Donohue: 28:04

So for each their own, and we need a number of resources in our community, and so one million cups is really good for entrepreneurs that need to get plugged in and get going. So what?

Michael Notbohm: 28:14

are the things I was gonna say. One of the things that we teach is that you know, as you become a real estate investor, it's important to, it's important to approach it as if it's just a regular business. Right, there's profit and loss, there's, you know, payroll, there's all the elements that a normal business has, and I think sometimes that gets lost in translation, but one of the things I know that you speak about frequently is essential knowledge for entrepreneurs in a simplified fashion. So you know what are a couple of those key takeaways that every entrepreneur really should, you know, have in their arsenal.

Patrick Donohue: 28:49

That's a big question because there's a lot to being an entrepreneur and a successful business owner and in every asset or every you know thing that's producing income at the end of the day is a business and it needs to be properly managed. Now some are more simple than others and so on and so forth, but there do need to be processes in place. I think I learned the hard way, like a lot of entrepreneurs where you know, as I became an entrepreneur I thought, oh, I know and I get this stuff and so forth. And then I'm a member of EO Entrepreneurs Organization in EO Minnesota and when I joined I was in their accelerator group which is for sub one million revenue companies and it goes through primarily Vern Harnish's scaling up curriculum, but also Gino Wickman and Traction and other EOS the entrepreneurial operating system and other things.

Patrick Donohue: 29:42

But my personal experience being a money person, a finance person, I'll never forget to go into my first money day which was all about accounting and finance and so forth, and I went in there with the attitude of like I know and I get of all of this stuff, and went there and Greg Crabtree was speaking and Greg is wonderful. He wrote a book called Simple Numbers, big Profits. And I sat there and I was like throughout the day I'm like, oh, oh, oh, no, no, no, no, no. Like I just realized I was the cobbler's kid, I was not doing all the things I needed to do to be a successful entrepreneur, like invoicing. I hate invoicing, I hate accounting. I hate, you know, I love finance. Finance is forward-looking, accounting is backwards-looking. And so I started realizing this stuff. I'm like, oh my gosh. And so that's when I realized I have a lot to learn, and so what I would encourage everybody is to say you know, keep these things simple. You know, move forward, get the things that you need, but you have to keep in mind that everything has to be a process. You have to have these things documented and in place.

Patrick Donohue: 30:51

Finance is a prime example of that. Every business, like real estate and so forth, you need to have proper books and records. You need to document how much cost is going into this project and what kind of profits can we expect, and when is money moving back and forth? It needs to be documented Now. It doesn't need to be overwhelming, and they don't need to get the latest and greatest high-end accounting software to do it, but they do need the systems in place to be able to track these things efficiently.

Patrick Donohue: 31:21

That's what I like to really speak to is to help people keep things crisp and clear, about making sure that they're focused on the things that are going to be the operating system that can build their business, so that they don't get hung up where all of a sudden, something comes out of left field and wipes them out.

Patrick Donohue: 31:40

Because that's the flip side of this If things aren't documented and things aren't done systematically, something someday will pop up and unfortunately, a lot of times for entrepreneurs and things that can wipe them out. Because if they didn't properly account for the cost that went into a real estate project and all of a sudden something comes up and a bill is due and they don't have the cash, it could be game over and they're all of a sudden find themselves in a bankruptcy. That's the things I like to make sure entrepreneurs really understand is, take these things very serious, make sure you got the processes in place and you're documenting all this type of stuff so you can stay in the game, because that's, at the end of the day, the biggest value driver. It's the least sexy, right, but survival that's the number one thing to creating value, because if you can't survive, you can't build something extremely valuable. So you got to make sure you got the house in order to be able to build.

Andrew Hoek: 32:33

That's. I mean, it's so cool to hear your story, patrick, and I go back to where we started a little bit earlier, at the beginning of the podcast, and you're talking about being an entrepreneur at the age of six years old and you've really found a way, I think, to harness that in such a cool fashion, because you have your hands and so many different things, you're getting to see so many different entrepreneurial pursuits and I mean what a passion driver and you can see it in the way that you speak about it. So that's really cool.

Patrick Donohue: 33:03

I do love it because I've, as an entrepreneur myself, I just I really resonate with anybody who's taking financial risk to build something, whether it's buying a portfolio properties or launching a new app or making handmade tile. The journey of entrepreneurship is something I just have a deep amount of respect for, and in one is support wherever I can, and that's why I'm here today chatting with you guys.

Andrew Hoek: 33:30

Well, and it's so cool to see you giving back through the million cups and, you know, offering, obviously, to talk with people even if they're early on in their endeavors, and I mean that's such a rewarding experience to be able to do that.

Patrick Donohue: 33:42

So yes, well, as Warren Buffett says, you know you're doing well when you get up every morning and dance to work, and that's what I do, yeah.

Michael Notbohm: 33:51

I can tell that about you. So, and honestly, hopefully we can stay in touch because, you know, just looking at the topics that you sent over when we first began chatting about doing the podcast, there's definitely plenty more that we can chat about in the future, so we'd love to have you back on at some point and discuss some of the other stuff that you have to share with everyone.

Patrick Donohue: 34:11

Yes, yes, I would enjoy that. Yeah, because there's a lot there. I mean, some of these topics can be a whole conversation onto itself, the things like value and valuation, how to think about building value. So, yeah, happy to be helpful, however I can.

Michael Notbohm: 34:25

Well, we really appreciate you coming on today and hopefully we'll see you again here in the future.

Patrick Donohue: 34:30

Excellent. Thank you, Michael, Thank you Andrew.

Andrew Hoek: 34:32

Thank you, patrick.

Michael Notbohm: 34:33

All right, this has been another episode of the Legacy Wealth Code podcast. Until next time onward.

Speaker 1: 34:38

Thank you for joining us for another episode of the Legacy Wealth Code podcast. If you enjoyed this episode, click subscribe now and never miss an episode Until next time onward.