Host James Baer of CMBG Advisors, Inc. and Baer, Negrin & Troff LLP

Welcome to the Puck Venture Capital and Beyond, a show that explores the evolving landscape of the venture capital world. We'll have candid conversations with today's VCs and entrepreneurs who are shaping those changes. I'm Jim Behr, Managing Partner at Behr, Negron and Troff, and President of CMUG Advisors. This podcast brings change makers to the table to discover the inner workings behind the decision making strategies, and ultimately to how they got to where they are today. We're a real incubator, and I think that you're gonna see very creative things, especially, continue to come out of LA.

Hi. I'm Caitlin, one of the producers of the Puck. I'm also an associate at BNT and a restructuring officer at CMG. Today, we're gonna be doing something a little bit different. We are going to be showcasing Jim Baer, our host.

We wanted to take this opportunity to really dive into who Jim is and get to know you a little bit better. So why don't we get started? Hi, Jim. Hi, Caitlin. In the same way that you usually start with your interviews, why don't we start a little bit from the beginning?

Give us a little bit of your background. Well, I am in Los Angeles native, and I grew up in Brentwood, which was a little farming community when I was there. And started out in public schools, but then had the fortune to go to Crossroads, which was a small school back in the seventies. My mom was a little bit ahead of her time. She went back and got her masters in psychology, and she traded modern art, and she was willing to send me to an alternative school in 1974, which was kind of ahead of its time, so to speak.

I think that I always was kind of a seeker. And when I went to Crossroads, the headmaster was a guy named Paul Cummins. And he also was a little bit of a hippie and probably at the time, you know, in his thirties and I was 15 year old kid, and we hung together. I mean, this was one of those things where because it was the first graduating class, he would actually get involved, and he had this whole vision, and he wanted to reform public school. So he took this kid that wanted to play football and was into sports and everything else, and he started talking about Robert Frost.

And we started hearing all this stuff in the seventies, and going on backpacking trips and retreats and doing all sorts of active listening and so forth. It just kind of created this environment where you questioned authority, you wanted to be seeking, you wanted to take that road less traveled because it made all the difference. It just fit my personality. It's just wanting to do it my way. Well, and that's interesting because Crossroads is a very artistically based school or at least it is now.

I don't know if it was at that time as well. But I'm wondering what made you decide to go into the field of law, which is a little more buttoned up than you might have expected coming from such a kind of alternative background. I always was a little bit of country and a little bit of rock and roll. Meaning, yes, I was very interested in finance and I was interested in business, but I also, like I said, grew up with a mother who was in a modern art, and I did a lot of backpacking, and I did a lot of hiking and horseback riding. And my father was a very right brained guy that did PR.

His claim of fame was he represented the Academy Awards for ten years. He was very creative. And so, I had a grandfather who was like, the only way to be successful in life, kid, is to get a law degree. And then I had a mother who was studying psychology and asking me how did I feel all the time, and talking about anxious attachment and separation anxiety. And so, I kinda grew up in both worlds where I had the Lincoln Continental on the one hand and wanting to be a successful lawyer, but then I had the other side of it which was, you know, how do we make the world a better place and hang out with artists.

Cool. So you follow this path into law school, and from law school, did you then decide to go into the field of corporate law? Did you dabble in other areas? What brought you towards that specific field? When I went to law school, it was partly to please my grandfather, and it was partly because it just seemed less intimidating to me than getting a business degree, because I wasn't a math guy.

I was more logic and strategy. And so, I didn't have any interest in being a litigator. I just was interested in business. And so, I actually talked to a couple entrepreneurs who were very, very successful, and they said, kid, if you're going to law school, you're not much of an entrepreneur. But if you go to law school, and then you do really well, and you get a job at a good law firm, life's all about who you know.

And so it's kinda like, okay, I'm gonna go to law school, I'm gonna focus on business, and we'll see where the river takes me. And so where did it take you? So I'm going to law school. I'm thinking about how I wanna do business. I'm doing some real estate deals on the side, But I end up doing really well, which surprised me because I was not somebody that likes school particularly.

But all of a sudden, I was in this element where there was arguing and logic and strategy, and I loved all that. So I did very, very well. And so I interviewed at firms, and at first, it took me a while, and then I end up getting two offers. One from Gibson Dunn and one from Music Peeler. And I didn't even know what Gibson Dunn was or Music Peeler was because I really had very little interest in law per se.

And so, the next thing you know, I get a job at Gibson Dunn and Crutcher, and it's not what I expected. So I rode that way for a while. Yeah. You dove right then. As someone who's worked with you for a very long time, I know that your experience at Gibson Dunn, I think, had a large impact on who you are and the level of expertise that you bring to the table and professionalism.

Were there any particular nuggets of wisdom that you took away from that experience working there? How long were you there, by the way, as well? So I was there nine years. When I left Gibson Dunn, I don't know that I really knew at the time what lessons I was gonna take away from there because it was really the only business I had ever worked at. I mean, I'm sure I'd worked at thirty one flavors when I was a kid, and I'd clerked other places.

But in terms of my life, my perception of what business was, working at Gibson Dunn was it for nine years. And then I left Gibson Dunn and went to another national law firm, and then I founded another law firm. And I've moved around and done different things in my career. So you form impressions with things, just like people say capitalism is the worst system in the world till you look at the alternatives. Gibson Dunn was a tough place.

They have a unique way of teaching, training, retaining, and treating clients that is a area of expertise and excellence, and a focus on quality that I have not seen in very many other environments. But I also think that part of the culture at Gibson done is what historically has made this country what it is because of their work ethic and their focus on quality. From a life balance perspective, it wasn't really something that was gonna work for me, but it was an amazing experience. In specific examples, as a young lawyer, you know, we were told when we were meeting with a big client that was upset about something and anxious because they were being sued or they were being attacked in a hostile takeover otherwise, that we shouldn't pretend their problems didn't exist. We shouldn't minimize them, and we shouldn't be arrogant about it.

But it was fair to recognize that part of our role was to be confident, to express confidence, and to create a safe environment to work on those, quote, problems. An example would be that when the client would come in with this very sky is falling challenge that they were describing as this terrible problem, that you could reframe it as a challenge, and you could say, look, you've come to the right place. This team will work on these issues. You raise very, very good issues, and we will come back to you with some suggestions and a solution. Just that reframing is something that's always stuck with me.

Another example is something that always stuck with me was a man by the name of Frank Wheat, who wrote the Wheat Report and was a commissioner of the SEC, and was a bigger than life character, and just a great humanist who started the Alliance for Children's Rights. But just was one of my mentors and was an amazing guy. Even though he had a heart of gold, he could be tough. And so I can't remember if it was because I misspelled somebody's name or it was because I was writing a letter to somebody he wanted to teach me. But he basically, in a very intense way, said, you do not spell someone's name wrong, Jim, because people notice.

We all have an ego. And if you're gonna address somebody, you better get their name right because that's the one thing. You can't unring a wrong bell. Do not get that wrong. Check it once, twice, three times.

Am I clear? Now he's also the same person who, when Brad Schwartz and I, his two young lawyers, were working with him on a public offering for a company that had to comply with certain SEC rules that he wrote. We literally said to him, because there was something going on. We said, Frank, you can't do that. It violates such and such act.

And he goes, that can't be right. You just do it. And we said, well, but Frank, let me show you the statute. That's the dumbest statute I ever heard. Whatever.

Okay. But he was just an amazing guy. And and when you work with people like that, you hope that you take some of that away with you. Yeah. I mean, he sounded intense, but a good person and very attentive to detail.

So you mentioned a little bit before that you hopped around to a few different law firms and ended up starting your own firm. What kind of was the impetus that brought you to that decision? What prompted you to hang your own shingle in the world? Going back to that dichotomy between the artist and the lawyer, there always was this tug in me in terms of reading books on securities law and reading contracts and reading Tolstoy. There always was this part of me that wanted the time to immerse myself in non legal things.

So whether or not it's skiing or whether or not it's reading literature or going to my kids' plays, or meet you know, my kids' baseball games. It was starting to become a thing for parents to go to kids' games, but it's changed a lot. The work life balance issue was not really a thing in the eighties. I mean, I came up in the era of Reagan, you know, more was better. And there was this race to work, work, work.

If you were leaving the law office at five or 06:00, people would say, what are you taking the afternoon off? Two or three years in a Gibson Dunn, I learned how to meditate, because one of the lawyers there was this guy named Bob Corey that wrote this book on meditation. And so I always wanted kind of this work life balance. I was always intense. I always worked hard, but I wanted to work in different areas.

I wanted to be a balanced person in that. I wanted to know law really, really well, but I also wanted to know other things well. And I wanted to make money doing really high quality work. And so it's like, well, how do you make that work? I talked to big law firms and said, hey, listen, can I do really high quality work and bring my business over and build twelve hundred hours?

And the answer is, how do you think that's gonna make the other partners feel? It was clear that if you wanted to do really, really high end sophisticated work, but also go to your kids baseball games or be home for dinner Yeah. It was gonna be tough to do. So because of my interest in venture capital and middle market stuff, it was like, look, I'm not gonna find an environment. I've gotta create it.

Yeah. And I think that what you're saying about the intensity of big law firms now where people are working twelve hour days consistently, and there's a sort of grind culture even in, like, startups as well, still exists. But there is also kind of a pull now to bring work life balance more onto the table. I know that that's a topic that is really important to you, and we are constantly talking about that at work and trying to offer high quality services while still offering work life balance for your employees. But what do you think it really takes to build a great company with top quality while helping to maintain work life balance for your employees and for yourself.

There's no easy answer for it. I think a lot of people are looking for that. But what are ideas that you have had to manifest that? You have to decide what you wanna be. At the end of the day, I think when you think about airline pilots, you don't want an airline pilots necessarily just focused on work life balance so much as you wanna focus on flying that airplane.

To say you want work life balance, you gotta really ask yourself, what does that mean? Okay? If you're doing sophisticated restructuring work at CMBG, or you're doing sophisticated legal stuff at BNT, you can have a work life balance until you're blue in the face. But when a client needs something done, and or you're working in restructuring, and you've gotta deal with an angry creditor, or you're selling those assets, you're gonna be at best temporarily out of balance. Okay?

You're gonna be going 60 miles an hour. That's the reality. At least if you're gonna work in an environment that I'm involved in where I'm trying to have the quality of Gibson done, you cannot do that going 30 miles an hour in the fast lane. It just doesn't work. You have to be a very smart superstar person.

You have to be willing to do what it takes to get that particular deal done, and then guess what? You take some time off, or you get somebody to cover for you. For instance, at one firm, let's say, you're working on three things at a time at 60 miles an hour, we maybe work on two things at a time at 60 miles an hour. Right. There's the ideal in life, and then there's reality.

And if you look at polarization today, one of the challenges we have is we wanna have open borders and let everybody come in, or do we wanna have closed borders and let nobody come in? Those are extremes. That's easy to do. But let's compromise. Let's figure out how do we make money.

Because here's the deal, if you're attracting really good smart people, you have to pay them a fair wage. And if they essentially can go make a lot more money somewhere else and maintain that lifestyle balance, they would do it. So the reality is they can't. And so you have to be honest to people and you have to say, okay, look, what are the trade offs? You're gonna work hard here.

This is the structure for it, but you can't lie to people. You can't have wishful thinking. You've gotta really build it, and they will come. Meaning, you're not trying to be all things to all people. Yeah.

And I think that you're touching on interesting point, which is that there really isn't one size fits all when it comes to work life balance, and that's a question for each individual to define for themselves. Something that I would consider work life balance might be different than from you or somebody else. And so, you know, I think the important thing is having the communication that you're fostering that level of communication at your companies to let people know that this is something that's important to you, and then to find a way that works for everyone to achieve that level of work life balance because it might mean something different for everybody. And as you say that, we have a lot of companies out there that talk about environment. So for instance, if you're Uber, Right?

If you invest in Uber, you can make all this money with this amazing capitalistic company, but we're giving jobs to all these gig workers, and we're creating this flat environment where everybody can do their own thing. But then the question is, are your employees really making a fair wage? What does work life balance mean? Does it mean that you work not that hard and everybody else works really hard or they don't work hard, but then, quote unquote, you underpay them? I mean, at the end of the day, a team has to have something where everybody feels that they're treated fairly, and there has to be open communication.

When I talk about work life balance, it's also creating an environment where people are treated like human beings. You know, this whole PPP thing, and we're paying people to stay employed. I think the character based capitalism, seeing your business more as a family, That doesn't mean you're carrying people, but you're bringing the best out in people and you're being honest with them. I think that things are out of balance, and so I think trying to create an environment where it is fair. When we look at CEO pay and we look at minimum wage, it's just out of whack.

And so if your company is going to be long term successful and cares about also not destroying the global economy, there has to ultimately be fairness or it's gonna get torn down. Yeah. That's an important point. Amazon is a good example of that where Bezos is making billions of dollars and his employees are barely making minimum wage. And the other point that you made about how balance does sometimes get out of whack and then it comes back into balance, I think that's also really important.

It's never always going to be status quo. It's a pendulum that moves back and forth and that it's trying to work back towards that center, but also respecting the fact that when things get really, really busy, we have to step up. That's really interesting to me. You did talk about your restructuring company. Let's go back into that.

So you opened your law firm, and then you decided to open another company. Let's talk about what that company is and what it does and why you decided to start it. I love being a lawyer, but when people describe me as a lawyer, they describe me as a guy with good strategy, good negotiation ability, good common sense. But I was never somebody that like to sit at a table and write contracts rate hours. I could do it, but other people can do it better.

And so, I realized that my real ability as a lawyer was in this consulting strategy, ability to get things done. And so, people would come to me with these troubled companies back in 2000 and 2001, when the dot coms blew up, and then in 2008. And they would say, Jim, we have this mess. What do we do? And so I would introduce them to people that would help them with a bankruptcy, or a restructuring, or an assignment for the benefit of creditors.

And they would always inevitably keep me involved, and as a strategist or otherwise, I would guide the company through a bankruptcy, or I would guide them through a restructuring, or I would guide them through an ABC. But the glory, so to speak, was going to the companies that were officially doing the work, but I was actually very much involved. One of the things I learned at Cat and Mutian was that they had a lending practice, and they had a bankruptcy practice. And the theory was, it was essentially contrarian. So when people were doing lending work, they were making money.

But then when they hit a recession, the bankruptcy group would step in. I was always kind of an entrepreneurial lawyer. We lived through the o one downturn because we were crafty and we figured out a way to stay lean and mean, and we restructured. And so when I saw this opportunity to say, I'm a venture capital lawyer, and I'm doing corporate work. But when there's a downturn, I can also now do the restructuring work.

I saw it as a complimentary, contrarian way to synergistically balance it out. I started CMG advisors. At the time, I didn't really expect it to set the world on fire, but I had this skill set. I figured when when people would come to me, I could guide them through this. One thing led to another and I started getting these restructuring deals and these ABCs.

It was basically lawyers that I had worked with, investment bankers that I worked with. They would bring me these deals and I always would do a great job. All of a sudden, I started getting bigger and bigger and more complex deals, and it was like, let's hire more people, let's start writing some articles. A few years ago, we really stepped it up, and we started going out to conferences, and we started getting bigger and bigger and more sophisticated deals, and I just was having fun. First of all, I was working with really smart people.

It makes me better. I've got this team. We've essentially been able to continue to do some legal work at the b and t side. But on the strategy stuff, more and more, people are saying, hey, we have this lease we have a challenge with, or we have this bank we're having a challenge with. And so I can do the strategy and the negotiation and all that stuff.

It's been a lot of fun for me. What would you consider your wheelhouse industries? What industries have you worked the most in? For BNT, that's mostly corporate, so more on the restructuring side. Where do you think your expertise really lies?

The harder I work, the luckier I get. If I had an idea, I was like, oh, we're gonna do just technology ABCs or restructurings. Because I was a technology lawyer originally. And so, our first ABCs, I thought we're gonna be a lot of technology deals. And we do a lot of software and other technology deals, and we're very good at marketing software and selling off technology companies.

Whether or not it's because we do deals up north, and we do deals all over the country in Southern California, We've done a lot of food deals for instance. I have no idea why, but once we did a couple, then people would find out we have this expertise. So we got a bunch of food type deals. We've done apparel, a lot of health care. Now, some of that is because I was a lawyer for a hospital for seven years, and so I understand health care.

We've done manufacturing deals. It's pretty much a cross section, but if I had to say how it happened, it was really just being at the right place at the right time, and then we built this expertise. Yeah. Okay. So let's shift gears for a minute and talk about the current climate, which is COVID.

Now that we have the vaccine on the horizon, there's some glimmer of hope, but the world has changed immensely over the last year. I'm curious how you would say COVID has affected your work in terms of adapting to remote work. Has that been a challenge for you? How do you feel like that has affected the team? There's a couple of things that we can unpack.

You started by talking a little bit about, I think, the world more in general, but really how we as a firm have dealt with COVID. It's fascinating because we, very early on, as restructuring people, we were confronted with this problem. It's like, how do we as a firm work together? We expected that we were gonna need to hire new people because we expect to be busier and we have hired new people. We got on a Zoom.

Well, if you would ask me fifteen minutes before COVID, if I knew what Zoom was, I think the answer is no. And if I had, I would have invested in it. Okay? Me too. So all of a sudden, it's like, what are we doing?

I really don't even remember how we first decided we were gonna use Zoom. It just kinda organically happened. And then, I guess, from my consulting days, and from my dad in PR, I realized that communicating and having something stable, and that you could count on was important. I just said, look, we're gonna have an hour meeting everyday at 11:00. Five days a week, rain or shine, whatever.

And I have to tell you, I am more than happy to go back into an office environment, but I got adults working for me. There isn't a single person that I think has taken advantage and done less in COVID than before COVID. If anything, I think people are more united and focusing and working together. I'm not delusional during the 11:00 call. Sometimes when we're talking about one thing or another, or people zoned out a little.

I'm sure. But when people need to focus, they focus. And it's been a consistency that I think has worked well. And then we kinda have breakout sessions, and I think we've done really well at it. Yeah.

I mean, I think both consistency and communication has definitely been key. It's funny. I think the transition has been seamless. I don't think that anything has really dropped as a result of it, and I think it's a testament to our team, but also the work that we're doing, I think, is able to be done this way, which has been great. Transitioning to a more broad question of COVID, tell me what your thoughts are in terms of PPP, how you think that has been affecting the economy for better or for worse, you know, what are your thoughts on that?

I may be a little bit of an outlier here. I was an econ major. I was a child of the seventies and eighties, and so inflation in the seventies scared the heck out of people. Watching the government print all this money has been really interesting over the last twenty years. From a macro perspective, I have real concerns about what the world has been doing with this, and the issue there is how do we get off of it.

Now, bringing that down into the business world segment, it still applies. Because at the end of the day, businesses are having to borrow money and raise money and do business in a 0% interest rate environment, which is a not normal environment that can't go on forever. There is unlimited credit right now. You have to be creative. You have to be assertive.

But whether or not you have the right lawyers, okay, or whether or not you have the right team in place, PPP money, CARES Act money, bank money, in my entire life, credit has never been this easily available between bankruptcy and assignments for the benefit of creditors, every other alternative out there. Companies are staying in business easier and longer than I've ever seen before. I don't think that will end well because at some point, it's gotta be cleaned out. The government has created this imbalance. It's created this illusion that you can continue to throw trillions of dollars into an economy, and that life will go on.

Well, I do ABCs and restructurings for a living, and at some point, it does not end well. We're in this environment right now where we've got all these bubbles, we've got all these companies out there, and some of them are coming to us and saying, we got a landlord that's now kicking us out. We have this bank loan that's coming due, and we are absolutely seeing an upturn in bankruptcies and restructurings and otherwise. But with all the moratorium and all these things going on, what we've done is kick the can down the road. Again, using a real life example, I was looking to invest in a house in Las Vegas as an investment.

Because I have a friend that lives there and he's very bullish long term on that market. By the way, I'm not giving anyone any investment advice here. I was all set to go and buy a house in Vegas a month ago, and our broker literally said, you're out of your mind. I won't let you do it. And I'm like, well, why?

I mean, you know, the market in LA is crazy hot, and the market in Vegas is pretty hot. Why shouldn't I buy a house in Vegas right now? And he said, Jim, there is 40% of these homeowners who have not been paying their mortgage or their rents. And when that ends, there's gonna be tons and tons of foreclosures, and that has got to have downward pressure on houses in Vegas. Now, I'm not smart enough to figure in all the inflation issues and everything else, but unless there's a fire, when you've got people that have not paid their rent or mortgages from a business perspective or home perspective for a year.

When the merry-go-round stops, it's gonna be painful. So from a restructuring perspective, I'm trying to plan for that. I've seen all the good that's come out of this, because it's allowed companies to stay in business much longer. But then the downside of that is what happens when that money stops flowing, when the credit card comes due. Well, and to the extent that, say, there was somebody listening that had a business and they received PPP money, and they can foresee that they're going towards the direction of insolvency.

You're not advising, obviously, but are there any thoughts that you have that people should take into consideration in a situation like that? And maybe not even necessarily that they're insolvent, but that they are barely afloat, and they could go either way. I think that when you have a cough and it won't go away and you're a heavy smoker, you should go see a professional and hope that it's okay, but not bury your head in the sand. When you are running low on cash, it's a scary situation. It's easy to believe that it's all gonna work out fine.

What I would say to anybody that's struggling, and it doesn't have a clear pathway to liquidity, is find a professional, somebody that you trust, have a confidential conversation, and recognize that whether or not it's a bankruptcy, or an adequate restructuring, or an ABC, you have a lot more leverage than you might think. But planning and getting ahead of it is much better than waiting until the tsunami hits you. And I find that a lot of times people are ashamed to even ask the question, or they're going so fast, they can't even stop to know that there is a question. The reality is whether or not it's a lease that you're in over your head on or it's a bank or otherwise. There are alternatives if you surround yourself with the right people.

And you just said that you've never seen a time where credit was more easily available. If somebody that was looking for more liquidity went towards the direction of trying to get more credit, would you say that that would be one option for them, or is that something that you would not recommend? If you have a profitable business or the hope of a profitable business, and you have realistic projections, and you can lock in ten year money for sake of argument at the rates that are out there right now, you'd be crazy not to do it. The challenge is when equity is cheap as well, do your projections support paying any interest payments? The question is, is it a high growth business?

Is it a cash flow business? They can afford to pay off the debt? Home prices may be really high right now, but when you can borrow thirty year money at the rates that you're gonna get, and we're printing as much money as we are right now, it's likely that we're gonna have inflation at some point. You know, at least in my lifetime, I've never seen interest rates like this. I mean, I grew up in an environment where people were doing mortgages at 12%, and now you can get a thirty year fixed rate loan at two, three, 4%.

In the business world, I'd say the same thing. If you can make the payments and you have a business plan, it's a great time to borrow money. So in terms of 2021, do you have any predictions? Do you have any thoughts on where you think things are going? Is it just such an unprecedented time that it could go either way?

Do you have any thoughts on that? I believe that what served me well is to expect the unexpected. Black Swan events are not predictable. COVID's a perfect example. You know, we weren't really thinking this was gonna happen and or if it was gonna happen, we had it covered, and then it's boom.

Is a certain complacency do you have, where it kinda catch you off guard? We've just kind of assumed we can survive for a long time in this low interest environment. And at some point now, interest rates are going up. Well, am I smart enough to say whether or not the Fed's gonna keep them down or not? Whether or not it's a war somewhere or a supply chain interruption or a meteor, the reality is the system has to be able to adapt to unexpected things.

And I think the challenge that we have as a country right now is that I grew up and we grew up in an environment where you borrowed money under Keynesian economics in bad times, and then you paid it back in good times. Well, we borrowed money in bad times and in good times, and we haven't paid it back. In my opinion, you know, there's kind of a judgment day that's coming around that. When the Chinese came out the other day, they said, for instance, we're in a bubble. A lot of people are talking about the everything bubble, whether or not it's crypto, whether or not it's the Nasdaq, whether or not it's real estate.

I would say today that when people are getting PPP money and COVID money and checks, and they're opening up Robinhood accounts and buying stocks, and they have no idea what PE ratios are, and then they're buying cryptocurrency because they're told it's gonna go to a million dollars. But the reality is they're talking about using it as a currency to buy things when it's volatile as it is, and it's $10 a transaction. So how are you gonna buy a cup of coffee with it? The world is insane. So from my perspective, we are in a everything bubble, and it's gonna come down.

Now, I'm not smart enough to tell you when, but you can go back and listen to this someday. Okay? This is gonna be ugly when the air comes out of this bubble. Yes. They're gonna try to land a seven forty seven on a small runway, and they're gonna try to have a soft landing, and the market's been coming down the last couple of weeks, and the Federal Reserve has not stepped in.

And so what they're hoping for, in my opinion, is it's gonna come down in a more balanced way. But I've read an awful lot about bubbles, and I'm not aware of a single one that came down smoothly. Look, I'm double down. I'm a restructuring guy. Okay?

I'm all in. I got the best team, and I'm building for the future because don't bet against America. I mean, we are an amazing country, and Warren Buffett has always said, as long as there's family formations, we're gonna do fine. Do not bet against America. But by the same token, we're gonna have an earthquake, and we're gonna rebuild, but we're gonna have a bump at some point in the next few years, in my opinion.

And it may be sooner than people expect. And it'll be interesting to see if it's just in America or how far the ripple effect goes, if it's gonna be worldwide because COVID hit the whole world and a lot of countries are being affected by it in different ways. I think you raise a very good point, which is when we were looking at the housing crisis, it started in America, but it affected the whole world. And this time, I've been listening to what, for instance, the British are saying about this, and what the Germans are saying about it, and what the Chinese are saying about it. They're all talking about bubbles.

The reality is, there's a lot of psychology to this. Right? A very famous person said, that he wanted to come back as a bond broker. Why? Because bonds are considered the more sophisticated than stocks.

Stocks like to buy stocks, buy stocks. But bonds are kind of, you know, the more sophisticated money. And so when rates start going up, you're supposed to listen. There's definitely talk among people around the world that we are nearing the end of our ability to print money with impunity. I would venture to say, hopefully, that it will be more worldwide, because if we're the only ones continuing to break the rules, then we really have a problem.

At least if we're all in it together, we'll all hopefully work together to dig out of it. Yeah. I hope so. We will. Look what happened in Germany.

I mean, Germany made this mistake in the twenties. You know, it did not end well. And so, Germany was much more worried about inflation when all this happened. Bernanke was a student of the depression, and so he said, we're gonna print money, and Germany went the other way. They tried to keep us in check.

Right? They were afraid of printing too much money, and we were afraid of printing not enough money. Everybody's kinda now forgotten all that, and we're just printing money. At the end of the day, neither works well. You can't print too much, and you can't not print enough.

And so, I think this time, it's kinda the third time's a charm. You know, we had the League of Nations, the United Nations. We're gonna get there, but, oh, you mean we have to live within our means? Yeah. We probably should.

Okay. So this podcast is all about LA and showcasing LA and the VCs in LA. I mean, we interview a lot of different people, entrepreneurs, and VCs outside of LA too, but what we really wanna do is showcase how awesome LA is. From your perspective, where do you think the uniqueness of the LA ecosystem comes from? What do you think LA has to offer for entrepreneurs, VCs, all that?

So when I started out as a VC lawyer in the late nineties, there really was a small small venture community here, and up North, they came down, they started small law firms, then they left. What I've seen happen is, it's kinda like the first rung, and then we had the o one correction. But what's happened in the last ten, fifteen years has just been remarkable. LA has become its own ecosystem. It's got kind of the best of both worlds, because like a younger sibling, it can watch what the older sibling did, and kind of copied and do better.

You've got this situation where we always had entertainment down here. We always had Caltech, and we always had UCLA, and we always had USC, and we always had these great institutions, and we always had great infrastructure, and we had great weather, but we didn't have the companies. And what's amazing over the last ten years is that more and more successful companies have grown out of LA. They've spawned other companies out of LA, and because things got so out of balance up North, and things have gotten so expensive up North, now, we have an easier time attracting people because of the quality of life, because of the prices, because of the supply and demand issue, that it's actually easier to launch a company down here and build talent than up North. And so, there's this incredible dynamic energy that's built up in LA, where we've got unique access to things like aerospace.

We've got unique access to entertainment. There's this creative energy that comes out of that because there's a left brain component and a right brain component going back to the artistic and the legal thing. Up North has always been incredibly left brain, incredibly vibrant, and very creative right brain Steve Jobs for God's sakes. There's always been brilliant creativity up north as well. Absolutely.

But you've now got really, really smart left brained people down here mixing with the crypto and the entertainment people and the sports people, the scientists. And so as a melting pot, LA has got a lot to draw on. What I would say about building anything is when you bring people together that have different opinions and creativity, you can build something unique. And so I think LA has got a more diverse group of people and industry, and I think you're seeing some really creative stuff get spawned out of LA because of it. We're a real incubator, and I think that you're gonna see very creative things, especially, continue to come out of LA and Southern California.

Yeah. Yeah. I mean, it definitely seems that way. In the short period of time that I've been involved with you and this podcast and really looking at the venture capital world, there's been enormous growth, and it seems like it just keeps on going. It's great.