363: Know, Like and Trust is Not Enough

Buck: Welcome back to the show, everyone. Today my guest and what formula podcast will he’s been on before. His name is Travis Smith and he started a really interesting business. It’s called Tribe Vest. He was a founder and CEO, Tribe Vesey, and he’s been on it. He was on the show. Gosh, this was like ages ago because it’s like if you mark COVID is a period in time, sort of like B.C., right? So this is like before COVID. Right. B.C. And Travis, welcome back to the program.

Travis: Thank you. Great to be here. Buck, Always look forward to this. You know, believe it or not, I was probably pre-COVID and then I did come in on during COVID. And so this is my third.

Buck: Oh, it is our third time.

Travis: So does that put me in rare company or not?

Buck: Yeah, pretty rare.

Travis: Pretty rare. Okay. All right.

Buck: I think Jorge Newbery been on, like seven times. You know, Robert Kiyosaki, He’s been on three times, so that’s pretty good company.

Travis: I’ll take that. I’ll take that any time. I’m on the same list as him. I’m going to.

Buck: Go. There you go. So what’s going on? Tell me what’s going on with. So, first of all, like, you know, when you have new listeners every month. So I think it’s a it’s a good idea to back up and and explain what Tribevest is. What was the idea behind it, the inspiration and all that.

Travis: Absolutely. You know, I can even look at my different times where I was a guest on this show and think about it in stages almost. But, you know, if you go back to to 2019, we had built out the the banking and collaborative infrastructure for the private investing world. And we marketed it very broadly, very broadly. And you could come on to our platform and file your LLC in any of the 50 states.

You you could configure your operating agreement in minutes. You opened up an FDIC insured business bank account. Everybody signs and ratifies the operating agreement. Everybody lands on says this for group investing. We’ve made group investing safe, easy and transparent. All the members of the partnership land on the on a dashboard full transparency. Everybody can see the banking activity, all the documents, the records, you name it. That’s all the transparency.

Buck: Just to back up, though, the the large of the big picture is, okay, you’ve got these assets that might have a you know, and for our group, of course, it’s accredited investors, but sometimes there are people who do sophisticated no matter picture and all that kind of stuff. You have an offering typically in a private offering. And the minimums are not, you know, a couple thousand dollars. They’re probably, gosh, at least 25 grand and most of the time 5000 grand. The concept here that I recall, which I think is really useful one is for people who don’t want to you know, you may not have that much to invest in a given year. You may have only couple that a couple of hundred thousand dollars. And if you’re in stuff that with minimum investments of 100,000 might only gives you an opportunity to invest in two things in a whole year. And so what you’re doing is you’re creating teams and you’re saying, okay, we can come in at a minimum together. So instead of that $50,000 minimum, we may have, you know, five guys or gals come in and they each put in, you know, $10,000 into that deal. So their money goes along a longer way in terms of diversification of of investments. Did I did I kind of summarize that reasonably well?

Travis: Yeah, absolutely. Again, like going back to the very beginning, we marketed our platform very broadly and we still do. And what was cool about that is people were coming on to the platform, forming partnerships, pulling their tribes and doing all sorts of things active investing, flipping houses, short term rentals, you know, long term rentals, getting into art, collectibles, you name it. And then, you know, really in 2021, it became so clear that limited partners, passive investing into real estate syndication was a real sweet spot for Tribevest Teacher. And and how you how you broke it down was exactly right you know a lot of these thresholds to get in the minimum thresholds 25 that’s the lowest more more and more we’re seeing 50 we’re seeing 100 K 250 K and and so it becomes smart, become smart. And you think about it, you know, it’s not just because I can’t write that check is because I want to get into more deals, right? I want to diversify. I want to I want to get into a new sponsor I maybe haven’t worked with before. I want to get into a new asset class. So, no, I don’t care who you are. Kind of writing that 50k check into a new whatever. It’s hard. So yeah, these, these groups in our technology made that so easy. So easy. And that’s and that’s what we’ve done. We made partnering business, doing business with partners so easy. Yeah, it feels like a transaction.

Buck: You know, we certainly have, you know, within our investor group, again, it’s a credit investor group. We have people who’ve who have kind of gotten together and who are, you know, investing as various tribes. And one one thing I noticed too, on that is that like if there’s something that seems especially interesting to somebody, they may have they may double down, they may say, okay, I know my tribe is going to invest in this, but I want a little bit more exposure. And so they’ll do it. So it has a lot of versatility. Do it right. There’s just and I guess the the thing is organize in in such a way, presumably where you’re voting what you’re going to you know you what you’re going to invest in, it also creates an opportunity for, you know, people to come together and discuss these investments. Have you found that to be a, you know, feedback on that to be good?

Travis: Yes, absolutely. It it’s not just about pulling capital. And, you know, there’s a number of reasons why our tribes are small. They’re they’re not more than 15 people because you are operating as a as a business partnership. So, you know, manageable number of partners. But there really is that human element to this. It’s not just about stacking capital, which is important, but it’s about leveraging each other’s network. It’s about finding confidence in each other. It’s about leveraging each other’s expertise. This is an area where I’m especially knowledgeable, where I have experience. So that ability to be a mastermind, to pull that collective know how that group think so powerful and what you see as you see more people investing in more deals with more efficiency, more efficiency.

As you know, as you know, a lot of accredited investors, there’s a lot of them. Most most of them, I’d say like 90% of them have never invested in a present in a private deal. Why is that? And it’s because they don’t understand it. They’re not they don’t have that access. They don’t have that network. It’s unfamiliar to them. So they keep going back to the stock market. And we know how that we know how that story ends. So these tribes are pulling in a lot of new accredited investors into the market. And and as you know, when people go to your conferences and, you know, they learn things that things are unlocked, right? And then they go back home and we all feel this obligation to share this good news and New way of thinking with people. Yeah, and what a better way to do that than with the tribe.

Buck: So one of the one of the challenges, I think people in this arena, this, you know, alternative asset arena have is that it’s a very lonely world and in the sense that like, you know, you could you could try to convert your neighbors and your family or whatever. But, you know, people have very personal views and personal finance. And a lot of times, you know, the brainwashing is so pronounced. The conventional wisdom of Wall Street and all that, it’s very tough to break through. So all that is to say sometimes it’s difficult to find colleagues who might want to form tribes together. So do you have any solutions for that?

Travis: Yes. So, yeah, and I. You’re friends with my friend Jim. Jim Pfifer? Yeah. Who introduced me to you originally and is, you know, head of the left Field investors community. And together we’ve coined kind of what we call is community personal finance. And to understand community personal finance, you need to understand conventional personal finance, right? That’s, you know, maybe what we learn in school or what we learn from our parents very much comes from a place of scarcity. It’s not a bad thing. But, you know, spend less than you make and save more than, you know, Don’t outlive your savings, right? Make sure you die before you you run out of money. And it’s a very mature market, too. It’s there’s a ton of technology. There’s 6000 financial advisors out there. You’re talking to an ex financial advisor here.

So it’s just what you’re used to. And then when you go into alternative investing and Bitcoin drives me nuts, they call it alternative investing, but the alternative investing is real assets, real things like where you live, where you where you eat, where you shop, all those things. And but to get into those, you need to be able to invest in the private assets as private investments. And again, just the way things have been regulated and everything else. Now, those are hard to find. In fact, they’re so hard to find. You’re not they’re not allowed to be marketed, but you have to find somebody to introduce you to them. And so you are just touching on it, Just you know how hard it is. I mean, it once you kind of get over the threshold, it’s not that hard. Yeah, but it’s so hard to get an alternative, I guess.

Buck: I guess the question of is, okay, you’ve got these tribes right and right. The alternative asset investors are on an island, right? I mean, like we have wealth formula network within our group, which is, which is a way for people to talk about personal finance who are of like mind in the alternative asset space. And that that’s very useful because I think one thing that we can see in our group generally is that like there’s not a lot of people that we necessarily like our friends with and stuff like that who would do this with us, right? So the question I have for you is say you want to do this sounds really interesting. Travis signed me up, but I don’t have any friends to do this with. So have you guys found a way to match people who don’t know each other and maybe give them an opportunity to to meet and find out if they have a similar interest, that kind of thing?

Travis: Yeah, great question. So there’s a number of ways we’re doing this. I mean, first, we’ve been really careful and intentional to be a neutral third party, so you’re never going to find us, you know, you’re not going to find a deal on our platform. We’re not going to be making any recommendations. So we really are a utility, a platform that’s very useful out in the market. By the way.

Buck: I just want to point out that that is extremely that’s extremely important because I think the problem with, you know, where you’re standing is the the potential for abuse is huge, right? Like of directing people to various investments because, you know, maybe there’s commissions involved or something else like that. And I like the fact that you’re so neutral. But I do think that there’s also I wonder if there’s ways to, you know, have gatherings and stuff like that or whatever to, you know, introduce people, just let them meet each other, you know?

Travis: Absolutely. And that is that is happening. And again, in true nature of kind of our position of not being influential and keeping that neutral status, we’re seeing it happen on the platform and off the platform in communities in these communities like yours. I mean, look, you may or may not know this, but last time we were on here, we gave, I think, a $50 a discount to any listeners that wanted to start a tribe. And over the last 18 months, there was over 70 people, 70 tribes that came in and exercised that discount. And we had to stop it.

Buck: We just from.

Travis: The start of it, there was just that was that was specific to wealth formula that we offer your your audience. So and we are we’re learning that. Why did you have to stop it?

Buck: Because of 50.

Travis: Of 50 bucks? Well, we were just trying to figure out, you know, was was it being you know, were other people kind of finding it and sharing it and everything else? And we wanted to if we were going to offer it, we wanted it to be specific. But nonetheless, a pretty big number of your community has met in your in fact, Jim came to your conference. Matt Ryan’s the guy you know. Well.

Buck: Jim and Ryan were part of my community before they became I think before they started their community. So I think they met through us.

Travis: They did. And and they formed a tribe. So. And they formed a tribe after your conference, right? Well, before they started their community. Yeah. So anyway, I just I’m just calling out that we’re finding more and more ways to integrate with these communities. So I’ll tell you how open tribes come in. So there’s kind of two new developments in terms of services that Tribevest is, is is again, it’s not a new product. It’s just another layer of service because we understand the market a little better. And one of them is these communities. When a community is group thinking a deal or you know that in a deal together or being pitched a deal, well, the community can actually open up a tribe and you think about it as a little bit of a is a soft commit process. Right? So, you know, the minimum to get in is 50 K Let’s open up an open tribe where the minimum is say 15 K or 10-K and and now and now you can join that tribe as a member, as an active member of that tribe. The operating agreement is is all about pulling the collective capital, which is your ownership in that business. Is this partnership tribe and you’ve all agreed to in fact, you’re going to vote on it. We’re going to vote on deploying it to this deal that we’re all excited to get into. But at the amount we want.

Buck: Right. Let me ask you this, because if you’re talking about like larger tribes, like community based tribes or something like that, and a group like mine, if it did, it probably like end up being like $100 million. And, you know, these But the point the question I have for you, though, is that you’re boy that that starts getting into like sexy questions if you’re having huge groups and huge amounts of money and and what is your what is your take I know you’re a former you know, Wall Street type money manager and are probably, you know, pretty good at it following these directions. But like is there is there at what point does this potentially become an SCC regulated type activity that needs to be filed and that kind of thing?

Travis: Yeah. I mean, so we’ve gotten really simple and clear on this. For example, even though it’s a bigger community, right? The tribe itself is only going to have 15 members or less.

Buck: Okay. Got it. So is that is that the rule in general? Is there something about that?

Travis: The key here the key here is that each member of the tribe is a active owner, an active member in there. So, you know, you have to kind of think, well, at what point is this model being stretched too far? And, you know, we don’t even want to come close to that. Yeah. Yeah. We just want to say, Hey, are the origins of Tribe S is about how to leverage your your network and to do more things with people you know, like and trust. Right. And you can do that with 15 people and then, and then you can form there could be another tribe, There could be another tribe. There could be a deal. The tribes, each unit is is certain. So we’re certainly, you know, and look, the market in those communities appreciate those best practices and those guardrails to how do you do this. So that’s you know, the question was, hey, how are you helping people that don’t have a tribe do this? Well, we’re we’re helping we’re working with these communities. And the communities can kind of say, hey, let’s open up and open tribe. And and if someone wants to participate in this deal, we can do it at a lower amount.

So that’s that’s another one. And then and then the other way we’re doing it, which I’m really excited about, we’re just learning a ton about. But, you know, we saw that limited partners coming together to hit the minimums or just to invest together into these these deals was a great fit for Tribe. And now we’re seeing some of those same people or that are really good at finding and qualifying deals like they put a lot of time into this They’ve built relationships with the sponsors and then they’ve uncovered or have negotiated new tiers of investing, right? So if I write a 50 K check, I mean at this level or finding out that there is a different tier where you get different terms or a a different class of share and and that comes when you say, Hey, what if we wrote a single check for $1,000,000? What if we wrote a single check for $5 million? And that’s super exciting because there’s a lot of these people out there, there’s a lot of people out there, and you think what we do for a buck is all the back up. Nothing we do is sexy either. I think that’s the other thing that we’ve gotten real comfortable with.

Buck: Did you guys do a credit card or something like that?

Travis: No, no, no. Credit check. Your bank does have a debit card if you want it. But yeah, it’s it’s nothing sexy. It’s we help you form a business in the right way. We file that with the secretary of state. We follow that with the secretary of state. We open up your business bank account. We make it really easy to do capital contribution onto our platform.

We help you wrangle those cats, right? And put those capital in, and then we y you can wire one check to the sponsor. And the sponsor loves it, right? Because it’s one investor, one one distribution quarter, whatever it is, one K, one. And we take that distribution for all the back end. We do the distributions to all the members based on their ownership percentage of the business.

We take that K1 and we do all the K1 for each of those members. So we’re doing all that back office heavy lifting stuff that all of a sudden people are like we if I didn’t have to worry about all that and how I was going to do it, we can do a lot of these and that’s what happened. It was, was people were doing like one, two, three, four, five. And then when it came time to do quarterly distributions, they were like, Oh, this is a lot of work. I can’t do more than five tribes or, you know, K1s coming. I can’t do more than five, five tribes now with open tribes. And for this specific application, investing into a single deal, into a real estate syndication, we will do those quarterly as an admin, we’ll do quarterly distributions per your operating agreement and our service level agreement. When a K1 comes in, we’ll take care of that for you and process your K1 and distributed to all your members so you can see how now I can go from five where that was manageable to 10 to 15 of these and, and people are building a business around this. This is a service that.

Buck: When you get a K1, are you getting it. So are you getting, are you sending out basically combined K1s? How do how does that work? I’m a little confused because you’ve got like a company and that company is getting a bunch of K1 and then so are you combining those essentially because they’re part of the company’s revenue and then distributing one single K1 to each investor from that tribe? Is that essentially it or.

Travis: That’s right. That’s right. Well, and and just to simplify it a little bit, in this instance, we are talking about a tribe that is doing one deal in this case. So one one tribe doing one deal. And that’s how we can wrap these services around it in a really understood. Yeah, we can do it. But you think about that K1 coming in absolute that is revenue into the business. The distributions and then that K1 shows that revenue and then the business partnership, the tribe that’s on our platform that’s theirs they own it will do that service for them. So we’ll take that K1 with our CPA. We of course in there is all everybody’s ownership percentage and from that we distribute those, those K1. And, and as you know, those are, those are little things that Yeah, people don’t think about, but when you’re doing them you’re like oh this exactly work.

Buck: So what obviously so what are the costs involved to if people want to participate?

Travis: So our platform is still there for anybody to use. Right. And it’s $348 a year just for the subscription. That’s okay. Well, okay, so we’ll add on. So in an ad hoc way, you’re doing it yourself. The $348. Right. And that includes the dashboard, includes your onboarding, helps you configure the rules. The bank account is open interest bearing bank account. FDIC insured your cap table to be configured, your document management, all that $348 a year. So what are the additional costs?

Well, you still need to file an LLC, so that’s $99. If you’re in Ohio, say if you want to here as a registered agent where $150 a year, then we’ll be your registered agent for you. If you want to do automatic report, report filing with the state. So some states require a state filing fee, we can do that for you. And I made way for another $150 a year. Yeah. And then taxes. So k we just were really excited. We just launched our K1 services. Before this you had to kind of go off our platform and use your own CPA. And now we’ve partnered with a CPA firm and what’s cool is we’re leveraging. And they, and it’s us so we’ve made that real turnkey. So those are, those are kind of like doing it on your own great way to do it. And now with these open tribes we can offer all these services and turnkey this for $150 for the first year per member per member and then $100 per member every year after that.

Buck: So that’s okay. All right.

Travis: Got it. All the way to dissolution, like, well, even more once that once the deal is exited, we will dissolve it and everything else.

Buck: Well, okay, that, I mean, this is interesting stuff, Travis. Where can we where can people learn more?

Travis: They can learn more at try BestBuy.com. You can go to try BestBuy.com forward, slash open tribes to kind of learn more about that, especially if you’re interested in being a champion and as we call it, champions that are looking to leverage the power of their network to get into bigger deals. So that would be a great one. And then we’ll have to reactivate. So maybe on the show notes here, we’ll reactivate your earlier means. You could I mean, I’ve never heard somebody turning off a promotion because it was too successful. Travis we need to have a talk about there’s not really great business practice. I mean.

Travis: It’s very good point. Yeah. My CFO is like, what is who what is this promo code? Everybody’s using?

Buck: And there you go. And basically screwed me. Not yet, anyway. All right, well, listen, what’s so what is that? What is is going to be reactivated here. What’s the code?

Travis: It’s called Buck 50.

Buck: Buck 50. I love it. Kind of like.

Travis: Like 50 cent.

Buck: Right. Like, but buck 50.

Travis: If I was I think you originally came up with it because you like the sound.

Buck: I do. See. I’ve forgotten everything that kind of doing done to shows, I think. All right. Well, great. And again, what was the site date again for us?

Travis: Try BestBuy.com. Okay. And again on with the the the special landing page for you guys. Let’s put it in the show notes.

Buck: Yeah. Yeah, sure, sure. Absolutely. Buck 50. All right, Travis, thanks for coming on. And I’m sure we’ll we’ll have you again before we have Robert Kiyosaki on so that you can take a lead there.

Travis: Man. What how what a thrill that would be.

Buck: All right. Okay. Take care. We’ll be right back.