Frame Control: The Psychology Behind Every Investor Conversation — Oren Klaff

Joshua: 0:00

good day, everybody. Welcome to the Investor Relations Podcast. I want to introduce you to a new friend. I've known him for a long time through the work that he's done and the books that he's created. But we've recently connected and we've we've had a lot of conversations about investors and investor relations and and how to communicate. So I want to introduce you to Oren Klaff. He's he wrote a few books that you might have read about or or heard about. Pitch Anything and Flip the Script. Oren, welcome the show, man.

Oren: 0:25

Hey, I appreciate the invite.

Joshua: 0:27

Yeah. Absolutely. So let me ask this question. You've raised a bunch of money and you you've done a lot of deals. You're a deal junkie. You you love the world of business. Like tell me about like your your your start in the world of working with investors because you've written the books on it, but I want to kind of get the origin story of like the first investor that you worked with and and then how did you find out that you had a knack for communications?

Oren: 0:53

Look, I think I found out I had a knack for communication by finding out that I didn't have a knack for communication. And

Joshua: 1:02

Yeah.

Oren: 1:02

and and being like impressively bad at it and going, hey, this this is a a h something I need to fix. and then I had a software company many, many, many years ago. And we the the the company was growing before before internet so called nineteen ninety six, nineteen ninety seven, an actual C D rom shipping software company. I know your listeners are going, why am I listening to this olden times guys? But this happens today as well. Revenue, you know, was climbing, but we needed, you know, revenue was outstripping income, and we just needed an injection of capital. And I went around to all the usual suspects, and venture capital wasn't really a growing, you know, hadn't really turned the corner. It was very niche in the Bay Area, Atherton, Woodside, you know, the the Palo Alto, and you know, very niche. niche to that area. So it wasn't widespread venture capital everywhere, especially in Southern California. Needed capital. And everyone was like, keep going, keep going. Like this is an amazing business. You have a real software company. And they're like, send over Financial, send over ProForma, send over the business plan, you know, send over the management team, the Orc chart, you know, the competitive set, the TAM, Sam, PSOM. I didn't know any of that stuff. I was just a mark, you know, I was just an engineer with good marketing that had a software company. And so and then I started literally reading books like what's a SAM, what's a Sam, what's a Tom, what's an adjustable market, what's a pro forma, and making all that stuff. If I couldn't do it fast enough, and we effectively ran out of money, it wasn't a collapse, you know, we just sunseted the business over time. We just didn't have the money to grow it. And and so that created a wound in my heart. I'm like, and for f for the last 25 years, 30 years, I've just I've been looking to fill that. Empty hole in my heart of not being able to raise money. So everything is about how do you talk to investors, right? How do you how do you solicit money but not beg for money? How do you, you know, how do you get money? How do you close? What's the difference between a high net worth investor and an accredited investor, non-accredited investor, a private equity group, a venture capital firm, you know, a pre-public. I've talked to everybody in every position, a syndicator, a sponsor, in every back corner. of every slimy, non-slimy, institutional, as you have part of the capital markets. And I feel like I understand it as well as anybody. And and so that's how it got started is from really not being good at it and and and wanting to be the the best.

Joshua: 3:24

Yeah. Man, so cool. Love the journey. And y you were reading books. Could you remember any of the original books that you read and you're like, how to raise capital one one? You're like, This is terrible. Like, whoa. Bring us back to those days.

Oren: 3:36

I think a lot of it was sort of the swim with the sharks era to you know, Tony Robbins, you know, touched around the space. there, you know, e everything most of the stuff around capital came out of venture capital, which was early, early, early stage.

Joshua: 3:50

Yeah.

Oren: 3:51

That here's the thing that I consider to be insightful. I think that stuff is obvious. But capital raising, which maybe is investment banking. or banking or merchant banking or f r founder. Like there's no you don't go to school for capital raising. It's not a career. So you right. And so what happens is you go to school for law. Like, hey, I am go, you know, a lot of people go in there altruistically. Like, I'm gonna defend the law. I'm gonna defend the constitution. I'm gonna get behind defendants. I'm gonna make something happen. this is very, you know, interesting. I'm going to help form how the law evol like there's a there's a purpose. You get into medical because, you know, the the Hippocratic oath, I'm gonna help people. you get into mathematics, right? Because you you know, there's interesting things and you wanna you wanna plumb The untouched air, you get into physics, you know, because things have not been discovered yet. Where is all this dark matter? It's everywhere, but nowhere. You only get into investment and finance, right? So finance is not really banking. It it is a very conservative, non-risk taking, you know, you're sort of heading over to CFO and you're heading into a it's above accounting, but it's certainly below banking work, finance. And so there's no career for and investment banking doesn't have the altruism about it. And I'll wrap up here. It's only about money. It's how you win points in investment banking is making money. And it is a it is a career where you meet unfortunately, you know, characters in the game who have who have stripped away sort of all other meaning in their life but money. You get the Wolf of Wall Street and Jordan or or whoever. And so it is fraught. w for a young person, it is fraught with moral turpitude being in banking and capital raising. And it it it's a very messy, there there's no real path to it. You don't go study it. It's it's something that I think most people back into out of some level of desperation.

Joshua: 5:46

Yeah, that's super interesting. I think that wound in your heart. I mean that that's that's interesting how you you know, we talk about finance, we talk about swimming with sharks, we talk about all of these things, and then you mentioned kind of like this wound in my heart that has led me to then become good at it, write a book about it, write a few books about it, and now you you know, you're doing it to an incredible level, you know, across the world. you mentioned something

Oren: 6:10

The can I I want to add one thing. The problem with

Joshua: 6:12

Yeah, go for it.

Oren: 6:13

this is you can become too good at it. And so you can raise

Joshua: 6:15

Okay, explain.

Oren: 6:16

money for things that should not have money. So if you can so focus on basically this is pickup for money. Right? And and you can people become very good capital raisers. many times they haven't developed the other side of themselves, the value system, the friendships. the they're the long lasting relationships and they're and you know they they're raising money for things that maybe shouldn't have ever received any capital at all. There are thirty-five thousand Kickstarters, something like that. Two you've ever heard of, I think we talked about it. Peloton and Exploding Kittens. Okay. You know, and and tons tons of those, you know, maybe three, four, five thousand raised money and went, you know, so there are platforms, there are people, there are systems that raise money for things that should not have capital. And so it is a it's a it's a power that you have to like Spider Man and Batman and all you know, all these these superpowers that have a dark side as well.

Joshua: 7:18

So the dark side of raising capital is when you get really good at it, the the need is always there. Everyone always needs money. So when you get really good at raising capital, people are reaching out to you and they're saying, Hey, raise money, raise money. You almost have to develop this like like no mechanism where you're just like, No, no, no, no. Say no to ninety nine percent because most deals, as we know, don't deserve capital. Is that right?

Oren: 7:42

The the the ideas, so h here's how you can think about this if you're listening in. Good products are not necessarily good companies, and good companies are not necessarily good investments. And so not should this power wall, should this API, you know, should this fintech, should the product exist? Maybe, probably, okay. But that is not the decision. that's not where the decision stops to raise capital. Then you say, can this be a good company? And now you're into leadership, right? Are these guys, should these guys have money? Right? And then, you know, this is the question, like FTX, right? Is this a compelling idea? Yes. Should these people have money? And that one's really interesting, right? Because it turned out to be a good investment. You know, they they, to my understanding, I haven't run the spreadsheet. But if you run all the investments out, they were having anthropic and the investments worked out. So so if you have that three-body test, which is Is this a good product? yes for FTX, right? Is this a good company? No. Right? The leadership, the management, the org chart, the structure, the cat the financial controls, the governance, the you know, the leadership, no. Is this a good investment? Yes. So one of the legs of the stool is missing. Is this a good company? And so you've you've got to have all three. Is it a good product? Is it a good company? And is it a good investment? And that is what makes it worth raising money for.

Joshua: 9:04

Yeah. So as a you know, capital raiser, you're you're getting approached all the time because, you know, th there's an endless need for capital. So you have to run the you had to learn the other side of the house. You said, you know, like yes, you could get really good, but there's a dark side to that. You have to learn the value side, the product, the company, the is it a a good investment? Like where did you learn that piece? Like you raised money for a crap company or you you know, you you you you saw behind the scenes and you're like Whoa, we've got to slow the breaks down a little bit here. But like kind of that realization that hits, and especially for a guy who gets, you know, like as an investment banker myself, I get paid when I do a transaction, when I raise capital.

Oren: 9:44

Right.

Joshua: 9:45

Right. So like getting into those kind of things is is very interesting. And that's how to build the long term relationships, value added relationships and a value system. Kind of walk me through that and teach me what you've learned.

Oren: 9:55

So the I'll you know, I'll start with the end. And the end is to know but to not yet have done is to not yet know. These to know but to not yet have done is to not yet know. This is very experiential. If you listen to the interview by I think it's Dario, the CEO of Uber. Like his career path is so logical. Like, how do you become the CEO of Uber? It it's so like it's just checkers. He did this, and he did this, and they grow this, and he ran a company and it scaled. He combined two. He's in finance, then he went into banking. He loved operations, meeting people, scaled operation. You know, they did some MA, took over, you know, a two hundred person group, scaled that to four hundred people, sold it. And it's just so such a logical, you know, career path for For him to be in that position. But he did finance, he did MA, he got into management, he was in technology, he was in a fund. And so he touched all different pieces of that and and and that gave him the capability to move into something like an Uber. And and so experience. with the raising of the capital, but also being seeing how it's deployed. And I'm gonna go back to something you said, how it's deployed, how it's being used, you know, how's that creating value? and I have two interesting points. and and is it doing, is it working in the American system of finance? So we had a guy here from Italy, and and you know he wants to start a couple companies and grow and move. He's c got a couple hundred million dollar business in Italy and he's moving I don't want to give away names but but he's moving wants to open some distribution in the United States. He's like, yeah, I'm gonna open one, then I'm open a second one, then open a third one. Gro I'm like that that's not how it works in America. The American system of finance It's not like it was in the 70s or 80s. Now, investors will let you create an SPV or a box that's insulated from your, you know, your credit and your track record and your balance sheet and the capital you have. And it's and they'll give you money to go do a business, right? But you have to move fast, right? You have to take market share, you have to open quickly, you have to execute rapidly, you have to create, you know, revenue growth. They pay for growth, or they want you to die, which is okay. Lose the money. But but lose it running hard. And and so you know, that's the American system of finance. So seeing money deployed into that system with professionals and going, all right, that that's the experience. And I'll I'll sort of wrap it like this. The American system of finance wants to see the exact same thing built over and over and over and over and over. What's different? Is the what the product is and and what the value proposition is. But they don't want to see anything else different. There's no new org chart. There's no new company values. There's no new, you know, what is accelerated growth, right? Accelerated growth that people pay top dollar for is sort of a 2x, a 3x, and a 3x. You want to know how you get a 20 times forward you know, eBIT.trading multiple, two X. 3x, 3x in terms of growth. you know, you're not you're not going into a a a 50, 60, 75 million dollar round without a CFO in place. That CFO has a very specific background. CEO variable, but a board is gonna look very consistent. The American system of finance wants to stamp out license plates, okay, that look the same. Now, this one's Arizona, this one's California, this one has Wales on it, but it wants the same thing. So once you experience that thing. Right? Governance, management team, financials, ability to produce financial, board packets, a pro forma that has assumptions that that can reasonably exist in the real world, the ability to project out a couple quarters, even as a private company, you know, to reality, a clear c you know, clear-eyed understanding of the competitive set, of the the ability to describe the holes in the business. and you know investor communication it wants all of that and then you can be creative as anything on the product and the value proposition. So that is what money raising is about.

Joshua: 14:04

But first, you have to get that frame.

Oren: 14:06

Yes. So so that's what the experience is. What does the finance system want to pay for?

Joshua: 14:13

So the job in the world of capital raising, investor relations is to find out what does the finance world want to pay for? What do

Oren: 14:20

Correct.

Joshua: 14:21

they want to invest in? And then you're working through the mind of and the value proposition to the investor when pitching. But you have to understand the value, essentially the product, company, and investment in their eyes, because the value is in the eyes of the holder and they have the gold, right?

Oren: 14:38

So the investors want to invest in the product, right? They want the flying car, they want the the the self-driving ta you know, Robo Waymo taxi, they want a surfboard with a propeller underneath it, they want you know, a pill that you know you swallow, you know, and it has a little camera in it and it finds a cancer, you know, and then the second pill follows it and it shoots lasers at the cancer, and then you poop it all out. Like they want the value proposition. So, but the the there is a second product which is called the financial product. And if you wanna be at you know in if you wanna be in the American system of finance, you're allowed to fail. on the product side over and over and again. But you cannot fail. there's some exceptions, right? So if you invent a verb like the WeWork guy, you get to try a couple times. All right. But for most part, you can fail on the product side because that's America. Innovation worked pretty good for dad, you know, they said an Iron Man, right? And you know, and we're we're anyway, we're doing it again. so innovation is is number motivation in the American system. What you cannot innovate is in what is a financial product. So you have to be so so raising money today is about you know raising hard, do doing a great job, getting investors emotionally excited, being honest with them about the product, but that many of them will not require you to build a financial product. You have to self-regulate. And that is where when you raise money, the deals fail. When you fail to self-regulate yourself, but because the investors will require you to build a good product, because they'll scream bloody murder, right? If you go, you know, this is a flying car and it doesn't fly. you know, just spins around and crashes and then, you know, the just that that will be so you can but but they're

Joshua: 16:26

Bad.

Oren: 16:27

not able, they're not CFOs, right? They're they're they're investing to allow you and I wanna wanna go back to being an investment banker. They're they're you know, to allow you to build the molecule, allow you to build the software, allow you to build the AI, the flying car, the self-driving car, the, you know, whatever, the the the self-cleaning toothbrush, whatever it is. It's they're giving you the money so you do that and they're trusting you to do that. But they don't know, they don't understand the financial product. Cause because think about it. So I don't want to get over technical, but what are you selling them? You're selling them a piece of paper, right? Here.

Oren: You give me $100,000. Here's a piece of paper that you cannot sell for $100,000. All right. You just bought paper, right? A tranche in our capital stack. And then my job is to go do two things: 17:00

make this paper more valuable than you paid for it. And number two, to put it in a market where there's some liquidity for that paper.

Oren: 17:21

And I don't think investors could articulate it in that way, right? But if they could talk to you and they understood it, they'd say, listen, man, go make this paper five times more valuable than I paid for it, and then go find me some people who can legally buy it from me

Joshua: 17:36

Bye, right.

Oren: 17:37

at that price. That is your job. And then then if they said that, then you would have some oversight and you'd have on on building a financial product. Not just the self-cleaning toothbrush. So and and I want to go to back to one other thing. Investment banking, if you get into it as a young guy like yourself, super young, it's it's frustrating because you are raising money for companies and the products, right? And then and then either the investor didn't get what they wanted or the company you know had had issues and you're just you're just the broker, right? You're the intermediary. And you and you're like, hey, I didn't invent, like you came to me, right? I didn't invent the molecule. I didn't write the movie script. I didn't build the the, you know, I didn't, I didn't decide to do a community of 3D printed houses, right? I didn't you know create the you know the the keyboard that you just type in the air, you know, and it follows your fingers. Like you you came to me and said, there's a giant market for this. we're you know, what we're gonna market it like hell, we're gonna execute. Then I found the investors. You know, and I made a million eight or I made a million five or I made twenty-five million or I made a hundred thousand dollars. I I did my job, but but this is sort of the issue with being in investment banking, which you and I talked about, is you're you're in the middle.

Joshua: 18:55

Yeah.

Oren: 18:56

and you didn't invent the molecule, and you didn't decide that you wanted that asset in your portfolio. You just presented both sides to each other as honestly as you possibly could.

Joshua: 19:08

Yeah. So there's you know, there's some levels of of famili familiarity, right? So like I've my some of my background in emergency services or technology or health and fitness or fill in the blank, right? So like I I have a general knowledge of certain industries. When it comes to raising capital, what if you're like working in an industry you know nothing about, right?

Oren: 19:29

Mm. Awesome.

Joshua: 19:31

You know investors.

Joshua: And you know kind of what they're looking for, and they might be an expert in it, and you know something that looks cool, but you have no clue what it is, but you've been asked to broker a relationship. So I love your your reasoning about this about yes, you are a middle person. So let's just say I'm a middle person with absolutely no understanding of what that product actually is: 19:32

quantum physics, quantum computing. I can't spell it, I can't write it on the board, but I know that there's a need for it, and the government defense companies are willing to pay a lot of money for it.

Oren: 20:01

Sure.

Joshua: 20:02

What say you, sir?

Oren: 20:03

To to to help a company raise money. So this is, I mean, a lot of capital raisers are inside the company. Company needs

Joshua: 20:09

For sure.

Oren: 20:10

money, and that was me. That's you know, I it was my company, but somebody here has to raise money, you know, and I put my hand up and run to the front. So typically the archetype, the character type of somebody who raises capital is somebody you ever play paintball? So so

Joshua: 20:25

yeah. Yeah.

Oren: 20:26

there's two kinds of people play paintball, right? typically my partners run to the back. Right. And they're like, you know, lobbying, sitting behind a crate, lobbying shots up. They're, you know, they're they're you know, they're firing from the from the Omaha, you know, battleship 30 miles offshore. Right. No nothing's gonna touch them. and then I want the engagement, right? It's the flame that burns the brightest, burns the shortest. But I run to the front, you know, where the action is. And so I try and, you know, do the best I can for my team, take the most amount of, you know, get the highest body count. before I b you know before I get clipped from the front. And so capital raisers tend to be people who want action on the front lines. And they go, if it you know, if it and and in their mind is a script running going, if it's going to be, it's going to be me. The other thing, you know, if we're doing, you know, sort of cliche poems, you know, as part of this this interview, you know, there there's one I read many years ago which I love. In all the towns, in all the cities, there are no statues of committees. In all the towns and all the cities, there are no statues of committees. So typically I find capital raisers come for a situation where the board is meeting and they have plans and they're going, and it's just it's not happening. And they're going, This this is not gonna happen by committee. Somebody has got to go make this happen on the front lines in direct contact and in somewhat conflict with the actual capital market. And so then they go, okay, what what tools of war do I need to be in that front line of combat? Well, you know, w w whether it's trial by error or you learn from, you know, insight. And today, you know, like the Claude will just tell you what you need, but you need a pro forma, right? You need a management team. You need a addressable market, you need a value proposition, you need a position, you know, between a competitive set, you need a capital efficient business model, in other words, you know, technology where you you need margin and you need to be able to project growth based on assumptions in an assumption you know driven spreadsheet. So you need all those things, right? That used to take 400 or 600 or a thousand hours to make. now you can have claude. Do it for you and I think you'll find if you have Claude do it for you, it now takes six hundred, a thousand or two thousand hours to make because

Joshua: 22:42

Yeah.

Oren: 22:42

somebody somebody you still even if Claude does it for you, you have to you have to stand behind it and you have to understand it. So it does no benefit for Claude to make it for you because you don't understand it. I ask you one question about it and you fold up. You know, you fold up tents and run away. So you it's not just the making of it, but you have to understand it. Then you have to take that. and put it in front of investors. All right. So in answer to your question, you need some materials because you can't just go in, it's not karate empty hand. You know, you you have to have things. So number one, you need the things that are gonna be required of you to be in that conversation. Number two, you need some basic understanding of those things. What are the assumptions that drives the pro forma? Why is your management team gonna be able to execute on this market? And what are the holes in this management team that you will readily admit to that you still have to add? Like the basics, okay, and value proposition of the product. So now you got the bases covered.

Joshua: 23:41

Yeah.

Oren: 23:41

Then the third thing, and this is an interim step, every single management team that brings in a capital raiser or or you know you're on the team and they're asking you to raise capital, they fetishize cold leads. Right? Go find us somebody that's never heard of us, never wanted to hear of us, is is busy with their day, go break down the door, introduce the deal to them, get them excited about it. You know, get them into diligence and get them to write a check. Okay. for a new capital raiser, what they're being done is being assigned the most difficult job in the world, right? Which is finding about capital and and and engaging in conversation with no relationship. So that's where I excel, right? And that's what I became named n known for, right? Is like the just just walking in, taking over a room, getting them excited about the deal. And having you know everybody you know leave and go in, I don't know what happened, but we're doing that deal. I have a great story, you know, we're w on this. we were at, I don't want to name the firm, but like I would say top three venture firm in the world historically over time since the early 80s, in every single deal from Yahoo on Ford you ever heard of. And and I pitched, I I wrote it in the book. I I wrote it in, Flipped the Script, so I don't want to repeat the story there, but. I'm not sure I wrote this part, but we were sitting in the room and the guy came in, he goes, I don't know what just happened, right? I was but we've decided to do the largest amount we've ever done in a single deal, and we don't do these kinds of deals. Like they're not in our mandate, and the team th they're like, I don't know how this even happened, but we're we're just shocked. You guys got the deal. And so that's that you know, that's my job is cold, right? But but I'm I dedicated my life to that, you know, from the wound. If you're new to this, they've assigned you like the hardest job in the world. The the easier job is w you know people in your immediate area, you know, connections, relationships, one

Joshua: 25:39

Right.

Oren: 25:40

step of removal, right? The reason that seems so hard to do is When when you have when you're meeting somebody cold, you're making a cold presentation, like you can mess up royally, you can embarrass yourself, you can, you know, give a bad pitch. It's a learning environment, right? And you leave and you're like, and and it it's it's isolated. So the impact of that is is the consequences are very low. When you now go give that presentation into a warm relationship environment, you're carrying a lot of baggage with you, you know, or potential harm. That's why people are afraid of it. So when you you have to have belief in what you're doing is the right thing to do. You guys, the the company is doing things from a mer you know of high merit with high integrity, it's a high probability, not that it's gonna work out, but that you're gonna make that your team is the best team, you're gonna make the hardest effort, nobody is distracted. So when nobody wants to open up their role decks.

Joshua: 26:41

Yeah.

Oren: 26:41

in the immediate warm area, which is the easiest place to raise money, it's because there are some missing pieces to the program. Cold traffic, or or you know, you could call w you know, non-relationship introductions, like that is that is na he you need deal team six. That is heavy, experienced combat.

Joshua: 27:02

Yeah. It it you brought up a really cool point and I'd like to dig into this a little bit. You know, like if back in the day of Amway they would draw these circles on the board, who do you know? Tell me about your ten relationships

Oren: 27:09

Mm. Yeah.

Joshua: 27:12

and let's hit this warm market, you know, you know them. I've

Oren: 27:14

Yeah.

Joshua: 27:14

got a business thing. I remember my parents they had the the board that sits in their, you know, living room and dry erase, right? That seems like it would be, you know, easier but harder for the the mindset of what if I what if it doesn't work? What if this thing fails? Then it's a friendship, a relationship that gets burnt. With a cold one, I could screw up the pitch.

Oren: 27:34

Mm-hmm.

Joshua: 27:35

I could I could I can mess up and I don't have that deep relationship. So it's it's harder to go cold in terms of like you have to knock down the door, you have to present and all that. But I would argue that it's also hard to go to someone that you know, like and trust, they know where you live and look in them in the eyes and raise capital because they're gonna go, Are you gonna give me my money back? And you're like, I don't know. And and that, you know, that I would like to say yes, but we're there's no guarantees in the world of investing. So both are hard. You've mastered the art of cold, walking in a room, you've never met the person, draw the frame, create the intrigue, Flip the Script, like you've you've become a master of that. What about the warm circle, the friends, the deep relationships, the long term

Oren: 28:17

Here's

Joshua: 28:18

stuff?

Oren: 28:18

here's I I think here's the practicality of it. Here's a practical. So you go, people say, hey, you go to your accountant, you go to your lawyer, you go to your bank, and you say, Can you introduce me to people? All right. So I I want to take away the idea that, I might lose my money. Just assume for a minute that these are, you know, that there's there's a class of people who are like, yeah, I'm looking for things to I I just, you know, made a bunch of money. I'm looking for some cool stuff to invest in. 250,000. A million, a hundred thousand, you know, like have a range that I just want to put it in something. So those those people are okay putting the money out. You don't have to tell them they know that it's a flying car, they know that it's a super drug, you know, they know that it's a 3D printed house, you know, they know that it's your you're opening a bar, you know, downtown, right? Like they can get a million dollars by you know, mistake. It's hard to make that money. So assume for a moment they're okay with the risk, because that's a that's a different conversation. How do you reprioritize risk for people? We we can have that on a different day. But assume that people are okay with the risk. The problem is just traffic is is warm, you know, warm leads because you only know s so many people in your village, right? So you go to the accountant and go, hey, could you introduce me to some people? You know, accountant has hundred and thirty, hundred and fifty clients if he would just open up his book to, you know, all and he knows who has money and who does it and he's capable. If he w accountant would just open up the book. The lawyer knows, you know, who's paying him $1,800 an hour for securities work. If he would open up his book, right? the issue is if the accountant introduces you to, you know, one of his clients or one of his friends, and you take up an hour, an hour and a half, it's a bad pitch, you're following up like crazy, it's a little bit creepy, you're ankle biting, you make the accountant look bad.

Joshua: 30:05

Hm.

Oren: 30:05

And so then the accountant has burned, you know, one of his good relationships on you. So the the way I do it is I make the pitch, you know the you know, the presentation short, you know, 20 minutes fun, interesting, exciting, insightful, you know, worth seeing again. I I gave a presentation 20 minutes long, you know, and to a small group that I got introduced to and they and they start clapping, right? I was there in person. And the g and and the guy who's on the head of the investment committee is like, What are you guys doing? And they're like, that was amazing. Right? Like, no, we don't clap to like our capital presenters. Like, we ask them tough questions and like we don't have any questions. That was awesome. And then they go, Can you do that again? Right? We want to get George and Susan in here, right? And

Joshua: 30:48

jee, yeah.

Oren: 30:49

right. And I'm like, sh sure. They're like, Can you do it again, but longer? Right? We want to get a couple more people in here. I w I wanna see that again. That is where you want to be with the presentation where people going, I wanna see it again. and and and now we're on this, like I do online presentations. I'll open up, I go to the Zoom, and it is for cold traffic, and you know, we run ads and everything for a capital presentation. I give the presentation, then I go to a Zoom and I look at the Zoom faces, and there's like 10 or 12 people who are already investors in the deal. I'm like, Billy, what are you doing here? Right?

Joshua: 31:21

Yeah.

Oren: 31:22

Betsy, why are you here? And they're like, I love this. Like, I could watch this over and over again. I'm like, you're messing up, or like our traffic, we don't know

Joshua: 31:28

Yeah.

Oren: 31:28

what to pay for traffic now. You keep coming to the presenter like. I just love it. I can see it over and over again. And so that is how you move through your warm environment. And we can talk about what is inside that pitch that is delightful, that is interesting, that is fun to watch. And so now your accountant, and now we get into Pitch Anything, your accountant makes himself look better to his clients by introducing you. Hey. I have this guy, Joshua, young guy, he's got this incredible story. He's so fun, right? I want you to just give him 20 minutes. He's gonna show you to whether you do it or not, you're gonna love him, and it's a great story. And then, and then you know, you give the presentation, and then the client comes back, the accountant, and he goes, Do you have any more people like Joshua in your world? Send him over. I love that guy. That is how you penetrate or distribute or or get range. Through your warm traffic. So, what is in that pitch we could talk about, but that's what that's how it actually works, right?

Joshua: 32:29

Yeah. Yeah, it's super cool. Now the books, Pitch Anything, Flip the Script. Is there an evolution in terms of as you go up the market in terms of capital raising to qualify purchaser, family office, institution? Is there is there different like an evolution of investor relations and capital raising throughout the different capital stack?

Oren: 32:50

So I think Pitch Anything, let me just for for people more familiar with it, Pitch Anything opens up a world that you didn't know existed. Imagine, you know, you're going to your closet. It's a chilly day. You're going to grab a sweater. You grab the sweater and you see like a little knob back there and you're like, what is this? And you pull it up, and you pull the knob, and a trap door opens, and it's fucking Narnia back there. Lions and flying ships and magic spells. And you're like, what in the world? And you go in there and there's like a magic. That's Pitch Anything. It it introduces you to a magic world that you didn't know existed. And then Flip the Script is how to navigate that world. what to say in that world. You know, when you meet a dragon, when you meet a king, when you meet a queen, a prince, a jester, a unicorn, what to say to all the characters that inhabit this magic world. So that's how to think about the two books. Pitch Anything introduces you to a world you probab you know a a s a a world of psych psychology and characters you didn't know were happening beneath the surface in every deal. And then Flip the Scripts, what to say to those characters when you start to Interface with them now that you know that they're there. and and so the other thing is, you know, I would give you you know one word, Theranos. All right. Very interesting. not Thanos, that's Thanos, but the Infinity Glove. Theranos is

Joshua: 34:06

Like that guy? No, just kidding. Just kidding.

Oren: 34:12

the blood doping, you know, miracle technology company that, you know, raised a billion dollars and it was Elizabeth Holmes, and now she's in jail. Right. And so a lot of people will say, hey, you know, framing, frame control, idea, idea control, narrative, storytelling, story composition, structure of a story, you know, works for like at the lower level like at the Y combinator level, 'cause it's all about story, maybe at the venture level, you know, Sequoia, True Ventures, that kind of thing, it's all story. But if you look, you know, Theranos and you talk about using your powers for good or evil, you know, they raised money. From the most stayed institutions, from the most people most capable of underwriting, the, you know, the people who are most incentivized to protect the reputation. And because they really took the limits of integrity, values, community, family, church completely off what they were willing to do in business. And that's what I was talking about. When you strip away what you're willing to do. And you and you do stand in proxies for family, but you have no family. You use you use stand words, use words and fake deeds and fake information around church, and around community, around friendship, around you know, education, around connections. And when you start to fake all that stuff, in a in a trusted environment, you know, people there there is a there's a the There's a psychological thing in the mind, or but it's actually biological. So if you look around you, whatever room you're in right now, I think you and I talked about this. You the the desk and the wall and the floor and the door, things that don't move, your mind doesn't remap those every one second or millisecond or five seconds. It just it says the door is not moving, the wall is not moving, the floor is stable. It doesn't spend energy remapping those things all the time because the floor is not gonna go anywhere. And that's why When you walk up, you know, sometimes and and you know, you hit your leg on the edge of a desk, you're like, what happened? Well, I mean a lot of time if that desk could just move like a fraction, you know, of an inch out of the way. Your your mind assumed it was somewhere else and just tried to wrap yourself around it. and and so we map reality of the stuff that's not supposed to move or the stuff that's supposed to be stable. And that happens in the story environment as well. So when somebody says, I was at Stanford University. This was my professor. This is who the first investors were. You know, Bill Gates, you know, has put money in. you know, Jeff Bezos has put money in. And so the mind does, doesn't investigate those things in that environment. It says those are, that's a floor, Bill Gates, that's a floor. Jeff Bezos, that's a wall. Stanford University, that's a desk. And it doesn't investigate those things and remap it. because it doesn't want to do the heavy lifting of the work. And so if you fake those things, strip away integrity, and you can raise money in these incredibly advanced, sophisticated environments if you're willing to go to that level of, you know, either criminality or complete abdogation of every moral code that exists in finance.

Joshua: 37:17

So how do you spot that, right? So part of my

Oren: 37:19

Mm.

Joshua: 37:20

job is being able to sift out the bad, right?

Oren: 37:24

Yeah.

Joshua: 37:25

And spot those things before I even present it and say no, right? Like, hey, not a fit, we're moving on. So what are some signals of of spotting those kind of things? Have you seen the show Mentalist? I there's a really cool show that like the

Oren: 37:36

Yeah, yeah, very cool show.

Joshua: 37:39

the guy reads brain you know, like it it it's cool, but I like I I I was thinking through that while you were Talking because I am a man of integrity. I am a man, I'm a family dude. I want I want my kids to like grow up to respect me and love me and I I care about my community. If that means me taking a hit, I'm gonna take the hit. Like I I won't go sell something I don't believe in, right? I'm gonna do my best to to make sure that is. But I've been tricked before, Oren. Like I've been I've been deceived before. And my job as broker in relationships, which are the most important thing here in this world. How do I get better at deciphering, determining and like there's a word discerning those kind of things?

Oren: 38:17

a very, very fixed, a very opinion rich, fixed view on this stuff. The number one way is proximity, spending time with someone. We had a CEO, we spent a lot of time with him. We went took him to Starbucks, right? no, with the Starbucks, there wasn't a Starbucks in Europe, so it was in downtown Encinitas. And I'll never forget this. And he's like, hey, I'd like some cinnamon and then Encinitas, if you're in Southern California on the coast, like the coffee shops here are they could be like purists, right? So this particular wasn't this one, but a different coffee shop, like it's just like how they are. I'm like, hey, I will take a drip coffee, with a and with two ad shots. And they go, No. Right. You can have the right. We're not gonna put shots in coffee. I'm like, okay, dude, I'll take a drip coffee and a like a double espresso, right? And they go, No. I'm like, what do you mean no? They go, We know we know what you're gonna do with it, right? And we don't

Joshua: 39:04

We know what you're gonna do. Right.

Oren: 39:07

support that, right?

Joshua: 39:08

Yeah.

Oren: 39:08

And so that's it's the very d maximalists on you know, the purists on coffee. So we're in one of those coffee shops. And he goes, Do you have cinnamon? And they go, We don't have cinnamon. And he goes, You must have cinnamon. Like what kind of coffee shop doesn't have cinnamon like every Starbucks I've ever been to has cinnamon. They're like, This is not a Starbucks. We're in downtown Incinitas. You know, and the guys working at these coffee shops, the guys, you know, a surfer, twenty-six years old. sh probably should not be working at a coffee shop, but whatever, he's paying his way while he's surfing. Who knows what? But it's not good, you know, to be working in a coffee shop twenty-six, twenty-seven years old. You just don't have your shit together and you're you're still y you know, it it it's not great. But this is not somebody that you need to be abusing you know, for cinnamon. And then and then

Joshua: 39:51

Yeah, right.

Oren: 39:52

he just went on to be like, Well okay, what kind of coffee shop doesn't have cinnamon? And they're they're like, this one doesn't. Like we don't have it. We're not gonna have it. And so the way that, you know, he railed against this guy and treated him, you know, we're working on a deal where the guy's gonna come out with eighty million bucks and he's treating, you know, twenty eight, seven year old kid, twenty six, twenty seven year old kid clearly doesn't have their life together you know, for cinnamon. So you could see how people behave under just in the normal w world, so you get to spend time with them and see,

Joshua: 40:19

Yeah.

Oren: 40:19

you know, if their values align with yours. And by the way, like I think I in order for you to say, does this person values align with mine? Like you have to understand what your values are. So you know, I do a little exercise, you know, during the I have 120 here, I'll point Joshua, like what are your values? Let's try that. What are your values? Go ahead.

Joshua: 40:37

Mm-hmm. it's a great question. Yeah, reap and sow. It I I have it on my LinkedIn if people want to like read through. You're supposed to have three to five values, but like mine are a little bit more. It's about relationships. It's about like ownership. I'm trying to think through all the I should I should remember those. But it's about working together, relationships long term. My job is to love God, love people. Like that that's my existence here on the earth, and that's what I'm I'm for. My job is in the capital markets, re helping people. accelerate business through capital and through media, right? So like that's my game.

Oren: 41:07

Great. So so some some good thinking, I would argue. You know, there's some additional work, you know, we could do. And I I I run a little workshop on this for in finance. I'm not a motivational speaker. Matter of

Joshua: 41:17

Yeah.

Oren: 41:18

fact, most of my speeches I open up and I go, Hey, who is ready for the universe to finally recognize the efforts you've been making and make a million dollars show up in your account and be more like this? Right. And then and then you go, who is

Joshua: 41:28

Yeah, right.

Oren: 41:30

you know, who is ready finally for you know, for for all the strife. And efforts and and you know and and combination of willpower that they have had for the universe to have recognized that and allow the breakthrough to happen. Everybody raise their hands. I go, then you came to the wrong damn seminar. Tony Robbins is over there. I don't do any of that. If you're not motivated, if you're not motivated enough here to be in finance and go raise some capital, you came to the wrong place. So so values. I ask that question. you know, a lot of people, you know, if I if I just Pull them and go, are your values? They go, well, I have to think about it. I'm like, what you have to think about your values?

Joshua: 42:07

Right.

Oren: 42:07

We got some work to do. And then a lot of people will say, you know, be good to people, you know, be kind, don't covet your neighbor's wife. I'm like, no, you're reading me the Bible. Those are not your values. All right.

Joshua: 42:17

Yeah.

Oren: 42:18

What are your so in order to get good at the thing you asked, you know, is is this a good deal? I I don't know. Like you have to figure out deeply what What are your values? And that that allows you to have frame control. Because if somebody is operating outside of your values, right, you can say, Hey man, that just doesn't work for me. I could make money here, you know, we could get rich, my we could live in a mansion, we could get a place in Hawaii, but Soft lies the head on the pillow of a clear conscience. And

Joshua: 42:49

Yeah.

Oren: 42:49

and and I'm just not gonna do it, but that requires a lot of understanding of what your limits are. And I'm gonna get into capital raising. Once you understand what your limits are. Where you have actual boundaries. Now you can have a stomach and a gut and a moral center. And when you see the clients or the sellers or the buyers or whoever doing something that is outside your value system. Then you say, Hey man, what are you doing? I don't understand it. Now give you a perfect example and that will that will give you control for free. Because either they come back into alignment with what you understand to be good and holy by your definition, or they stay outside of it and you get rid of them.

Joshua: 43:39

Right.

Oren: 43:39

We I have a friend of mine and he said, Look, I've made this sale, it's a multimillion dollar sale. He works for a software company. And and he says, you know, we've been working on it for six weeks with their management team, grinding on specification, grinding on pricing. We got it all down, we have a scope of work, everybody's agreed to it. And the you know, we're we're in the final meeting and the The CEO who we've never talked to, right, never had any understanding that he was involved in this process in any way, shows up and he goes, Hey, we love this, we're really excited about working with you, but we need a 30% discount off of this price. And and you know, it's just a shock. We we would broke away from that meeting, we said we're gonna get back together. What do I do? I go, It's very simple, right? You say, Hey, you know, John Smith. Excellent performance. I get it. Like this works for you all the time, right? Your team, like grinds with a vendor, you get a price, you walk in, the the final boss nobody's ever seen with the pen of approval, and you're like, we only get this 30. And then people are like, that's ridiculous, 30%, but they agree to a 12%, you know, and it always works for you. And that's why you do it. I mean, it's some goofy shit, and it's not working here, but I get it why you do it. Now, and and it's not like we we've been working for six weeks. Right, on with your team, no one's ever mentioned you. Right. And and I mean, there is a possibility, like this is actually who you are. I'm assuming it's not, but if it is, you need to tell me. Right? Because what'll happen is we'll see this every time. You guys want something, you want to up the scope, you wanna add something, you wanna make a change order, you're gonna be coming in with this goofiness, right? And we don't work with goofy. So just tell me, what is it? Like you you always, you know, you're all this is who you are, right? You're always gonna be showing up this way and it's gonna be a nightmare that I wish I never got involved with. And so I'm just gonna do us all a favor and say, this is not happening, or this kind of a thing you do to try and get some extra, you know, points off, but and and and we all just recognize it's cool, but it's not working here. Which is it? And if they say, I what's what's wrong with it? Of course I'm always gonna ask for 30% off. Even if you get 30% off, I'm gonna like you you only you never get what you don't ask for.

Joshua: 45:51

Right.

Oren: 45:51

Right? The Charles Karas negotiation manual in the back of a in the in the back of a you know airline seat that they used to have in the magazines, right? The negotiate, you know, you only get what you ask for, except for when you ask for too much, you ruin the relationship. Like And you know, do you understand, John Smith, what it's gonna take us to deliver on this contract? Like when we sign this, if you have the impression like we're going back and opening a bottle of champagne and woo, we won an account. No, right? This is a competitive environment. We bid against this. We we'll be negative for a year. So if you're telling me I gotta be negative margin on this account for a full year, and I have to put up with that stuff, and I'm gonna see this ankle grinding, like. No thanks. I have other things to do, right? If you're really like a cool company, this is something you do at the beginning, you don't know, you know, get you a couple points, you want the best deal possible, just tell me I understand and let's move forward. Which is it?

Joshua: 46:47

Mm.

Oren: 46:47

And if they say this is how we are, we're always gonna do this, then it's free. You go, and this is you know, this is back to how do I tell? You call people out on the truth. Or your truth. Now the truth and your truth are a little bit different. the the you know that we and we we can talk more about that, but being in proximity of people and seeing how they behave against a normative value system and against your value system. And number two,

Joshua: 47:16

Yeah.

Oren: 47:17

realigning them. Joshua, why are you doing that? This guy's 27 years old. It's in a doing the best he can to serve you the best cup of coffee ever made. on earth and he's doing it with like v with verve and style and integrity and your entities and you're grinding him on the so what what joy is it in

Joshua: 47:34

Yeah.

Oren: 47:35

winning you know a game that you've already already won like where's the joy here in just calling people out right and and if he's saying like fuck it I just want cinnamon like take me to like then then you go all right this is a just a failing of human character And I'm gonna see this all and then and then your alarm bells can go on, right? And then you you continue to look for it. But but I'll give you another example.

Joshua: 47:55

But you can see it as it is. Yeah.

Oren: 47:59

So the answer the answer you're looking for is call people out when you see them outside of the box that you have defined. It's your box. I'm on a call, third call, towards a three million dollar financing in the current deal I'm in. They got the CEO, they got the COO, they got a VP of finance, and now they get the the partner is online. So they get on it and the the n the the new guy is a partner. I've been on calls with the other guys. Partners on, I'm talking, you know, we're going over stuff.

Joshua: 48:29

He's on his phone. For you just listening in, he's playing on his phone. We're running through a scenario here.

Oren: 48:33

On his phone, yeah, if you're just listening on his phone and I go, hey Joe, what is this guy doing? Right? And they're like, Who? I'm like, this guy on the phone, like what is he doing here? Because my value system, it might not be yours.

Joshua: 48:45

Yeah.

Oren: 48:45

Is and and they go, we're we're super busy and we have a th you know, something happening or we have a closing. I go, listen, I'm busy too, right? But I turn my phone on mute so I could be here fully present. To work with you guys, right? If this and if this is not important enough that you can set aside your phones, come together for 20 minutes to advance it, then I'm out because people are always gonna be on their best behavior at the beginning. And if this is the partner, I'm gonna have to work with him. He can't even be fully present on the intro call. This to me is a nightmare. What is really going on?

Joshua: 49:19

Yeah.

Oren: 49:19

Okay, I understand it. Emergencies happen. Just say I have an emergency. Whatever, I totally understand. I miss calls. I have emergencies. I'm on the I go to Bank of America. I'm on a three hundred million dollar decision committee. I'm not like, excuse me, this is my pool guy. You know, he wants to add more pH, but like this my son's this has happened to me. My son's school never calls. Like they call his mom. Like I don't know why they would be calling me, but I gotta answer this because you know, it's a twelve year old boy. So just you know, this is important to me, I'm fully present, but I gotta answer this once in a lifetime thing. And they go, okay, hey, no problem. Right? so so you know, what is this guy doing on the phone? Is this are you guys on this call with this new partner trying to figure this out, or you know, what w what is it? Can he focus?

Joshua: 50:02

Yeah.

Oren: 50:03

And they never heard that before. They're like right, like

Joshua: 50:05

Yeah.

Oren: 50:06

who talks like that? I'm like, motherfuckers, I talk like that. Like I'm three million dollars, you're gonna be an investor in a significant investor in this company forever. I'm hyper vigilant on how you guys think about the world. W how you know, what you think is important, what you think is not important, how what you do. Of course I am, right? If we're gonna be involved together, we wanna at least at the beginning Have an alignment on what is important, right? And and so they go, hey, we're so sorry. Joe's just finishing up a call, running a little bit late. He wanted to get on there. I'm like, cool, I understand, right? I'm just I'm sensitive to that. And they go, We understand. And and that is getting people into alignment. But there's there's the first time you do this, especially with somebody much more powerful than you, it's amazing because typically they apologize, right? And I'd much rather start a call with somebody who has all the power. They have the money, they have the checkbook, they have the decision making. I have the I have the ticking time bomb in my hand, right? The financing. If if the financing doesn't happen, boom, right? The hurt locker. The bomb goes off, you know, and I may not have my bomb suit on. I have the ticking time bomb, they don't. So they have the power, they have the time, they have the status, they have the control. They have the easygoing attitude. They right. They they have no nothing. And so I don't want that low status position. I want them to take me seriously. You cannot have somebody take you seriously by going, you need to take me seriously.

Joshua: 51:34

Come on, guys. Take me serious. Yeah, it's true. Yeah.

Oren: 51:36

Please, come on, can you please pay attention? Right? You you and I know we're running short on time, but we're getting to capital raising like actual specifics, but you get people taking you seriously by being a busy, you know, fun, interesting, creative, but also serious person. And that you know, the way I do it is I just call people out on weird stuff that they're doing. Who does Weird stuff. Right? The guys with the power, the guys

Joshua: 52:02

Everyone. Yeah. Yeah.

Oren: 52:05

with the time, the guys who are playing around, the guys who, you know, feel like they have all the control. They do weird stuff. And I just go, why you doing that weird stuff? I don't understand. And they go, and they go, I'm sorry. And then you go, okay, good. No problem. But I'd rather have them apologize to me and bring them down to this is serious conversation and we're peers, right? Than me supplicating to them and them feeling like they have you know control over me.

Joshua: 52:29

Yeah. All right. Oren, th this is this is fun. Here's what I here's what I think will be on our next conversation. I we're meeting later today to to discuss some stuff. But I think what I think people really need to like hear is this the core values, right? Like they need to have that solid. They need to be able to spend enough time like I didn't, being able to rattle that off quickly, three to five. Conviction and confidence, right? But I think that a lot of times life happens and one of those three legged stools gets a kink in it, right? So you're walking around and people who are good can f can spot that a thousand miles away. So I think that's gonna be on some of our future conversations when it comes to investor relations, dealing with investors, working with the public. But we're out of time. Where could people go to connect with you and learn more about what you're working on, Oren?

Oren: 53:18

I think if you go to orenklaff.com or pitchanything.com, those are ways to get some information on how you know, more of the specifics of how you actually do this stuff. And and so, you know, if I if I leave you something, if you're a new capital raiser, and if I leave you one thing, the there is only one opening to a conversation. about capital with something someone. Any other opening is just a flag on the play and a foul as we get into the football season. And it is things are changing very rapidly and this market and a new market is emerging almost faster than any entrant can get can you know can take market share. I'm gonna tell you how things are changing in this market and the old companies are just you know becoming in essence like you know mp3.com or Xerox or the VHS tape or st a movie seating before it got into stadium, right? Things and and and I'll almost open that. If you remember when movie seats were flat and you had to like peer over the person in front of you, when stadium seating was installed, it put the entire flat seat industry out of business in two years. All of it. And things are changing in data centers and AI and accounting and blood and medical devices and medicine and pharmaceutical and fintech and you know meme tech and media and you know everything market that same way. Start with things are changing and a technology and a part of the business is dying because a new technology is being introduced and that is the beginning of every presentation.

Joshua: 54:58

Super cool. Ladies and gentlemen, thanks for listening in. there's I think there's gonna be more of these conversations. I think I think you guys are gonna really enjoy this. if you have questions for our guests, their contact information will be in the show notes. But if you'd like to learn more about specific topics within investor relations, capital raising, relationships with investors, man, I'd really like to hear it. The investor relations podcast.com is a quick place to Fill out a form, or you could find us on LinkedIn. All that contact information will be in the show notes. Till then, we'll talk to you all on the next episode. Cheers, guys.