Brian Jue is the COO of Stony Hill Advisors, a full-service brokerage firm connecting sellers of privately owned businesses with qualified buyers. We discuss the foundations of a productive networking group, how to build your ideal life after selling your business, and the friction points to expect when buying or selling a business.
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Cultivate a Networking Group with Brian Jue
Our guest is Brian Jue, a serial entrepreneur and the COO of Stony Hill Advisors, a conglomerate of merchant banking and advisory businesses that help business owners prepare for and realize lucrative exits. Brian, welcome to the show.
Thank you, Steve. It’s a pleasure to be here.
It’s exciting to have you on the show. I don’t think we had a merchant banker yet on the show. I am sure actually we did not. So I’ve got some good questions. I’m curious about that, what you do. But before we get there, please share your entrepreneurial journey with our audience, how do you get involved with Stony Hill?
Okay, I’ll do my best to answer that. Let’s see, I think you can say being an entrepreneur and an investor is in my blood. My great-grandfather and grandfather immigrated here to the United States and they were very instrumental in helping develop aspects of San Francisco. Chinatown and other businesses outside of San Francisco as well. In fact, my grandfather opened the first flower store in San Francisco right around, I think it’s right after the earthquake I believe, is when it happened.
And he was a part of the, in the community, always investing in people’s small businesses, helping people. And I grew up, we would go there every weekend and it’d be around that. And it was just, I just thought it was the greatest thing. And I have to say, I admired him. And my father, you know, he tried so many things, went through, he persevered, he had a lot of jobs.
And eventually he became one of the founders of Yellow Cab San Francisco and he got to pursue his entrepreneurial journey and he did really well and he then became kind of an investor and I saw that. I mean, my father was one of these guys. I mean, he participated in Apple’s IPO, Marvel. I mean, I go on and on and on. I remember one time that he was on the phone with Howard Schultz of Starbucks when Starbucks had just gone public.
And it was just one of those guys, he would just do it and go for it. And so all that permeated with me. Now, in college, I actually had several businesses, but I was thinking of going to law school. I was trying to get to the next level, right? And I was interning with a judge and the judge said to me at one point, he said, Brian, why do you want to become an attorney? And Steve, I had no good answer. He said to me, you know what, you’re good at business, negotiating, all that type of stuff.
Follow that path and hire attorneys when you need them. So I followed that path. Now I did think that I was going to go get an MBA and I was going to go to UCLA Anderson’s executive program and all that. But then I got offered a I was in the sports and entertainment industry. I should correct that I was putting together deals with a lot of athletes, funding them, putting together member bilia deals, licensing, that type of thing.
I got this offer from a German venture capital fund to manage and run their operations here in the United States. And it wasn’t something that I thought I could do, to be honest with you. I was just, wow, this is just, it’s a lot, but I decided let’s do it. I took it on and this was like right around when the dot com boom was happening. And now I got a chance to elevate my entrepreneurial journey. Because when I was having all these businesses in college, someone said to me, he said to me, Brian, you will never be a large success.
And of course that pissed me off, right? But the reason why he goes, you think too small, you’re just in small businesses, you need to go bigger. You need to be bigger than that. And that kind of stuck with me, not as advice, but more like I was trying to prove to the world that I could. Working with the Sherman Venture Capital Fund was just the turning point of my career.
One of the things that we did was figure out a way to look at some of the portfolio companies that might not be huge, massive successes, but still find an exit for them, whether that be acquisition or whether that be a small IPO. And that’s kind of how I started down this path and it just kind of grew from there. We took one of our companies public. I was CEO of the company.
So I was a young 28, 29 year old CEO of a publicly traded company. And that was a massive experience. I was, unfortunately, our investment bankers were in the towers and I was traveling there frequently. The last time I was there was maybe two or three weeks before 9-11, but I got to experience New York now because I’m a California guy. I’m a native San Franciscan, so I’ve been around Silicon Valley, Southern California, New York, and all that.
Now, one of the things that we did, we have a partner in C2C private investment company, and we have several publicly traded companies. One of them, we wanted to see and pursue a model we had been working on for years that we had helped clients with part of it. We’d done some of it ourselves. We had failures, some successes. So we put this all together trying to figure out a way to amplify the successes we had, mitigate losses and things that went wrong. And our belief was is, hey, the M&A business is where we need to be.
And so we acquired Stony Hill Advisors as a portfolio company. It’s been around, when we acquired it, it had been around for over 12 years. It was based primarily in the Northeast with some offices and reps in other parts in the country. And our goal was to expand it either organically or through acquiring other M&A firms on top of it. And so we did put together a consolidation plan, basically to consolidate the consolidators. And we’re doing both right now. And we’re growing. We’re all across the United States and getting bigger.
All right. So you acquired Stony Hill. You are basically in the business of helping businesses prepare for sale. You started with your own portfolio companies and now you are doing it for others. And you’re investing in some companies, you’re advising others. So we can talk more about this whole investment banking, merchant banking scene, but before we go there, I’d like to talk about your framework. And in our prequel, we talked about networking, that you have been a successful networker, and some people are good at networking, others not so much. So what is your recipe? How do you make networking productive and how does it help you get clients and build business?
Oh, you know, that’s an age-old great question, right? And I’m going to be, is it okay if give you a long answer Steve that short type of ties into the business.
Sure we might edited it but, Yeah absolutely go ahead.
I apologize I know I can be long winded. So in any kind of deal type transactional business, right? Deal flow is everything. And deal flow can be, I’m not talking about getting on LinkedIn 10, 10 quick pitches a day for this startup or that startup unsolicited. I’m not talking about that. I’m talking about quality companies that have, if it’s early stage, it’s got a proof of concept or if it’s later, it’s revenue profitable.
And the thing is, you often have all kinds of middlemen along the way, right? And so how do you get there first? How do you get to be the first opportunity? And that’s meeting people, boots on the ground, referrals. So right now, I think on LinkedIn, everybody’s inundated no matter what industry you’re in with lead generation. I can get you this, I can get you that.
But one, and the lead generation people are gonna kill me, but here’s the predominant flaw in that model is that if times are getting a little tougher and they are harder it’s harder right now and everybody gets and hires lead generation folk and then everybody then is attacking the same base there’s only so many people so many businesses so many potential clients for whatever you do right and so that they’re crushed and so what do you do with it? I just delete them.
I see all these emails, oh, they can do this, that, this. You just delete it because you know that it’s really not going to be effective. And what is effective, though, is that face-to-face, boots-on-the-ground approach. And it’s something that that’s why we’re expanding across the United States, is we want that deal flow first. So as a part of with everybody that we bring in, we’re working on some aspects to help them network, help them connect.
And for me, I’m using, or a lot of it’s, we’re using our experience, our experience as individuals. And mine in particular, you know, I have a pretty big LinkedIn base and, you know, people over the years before, before it got really popular to have followers and a large connection base, people would say to me why do you have so many LinkedIn connections? Why? You can’t possibly know all those people or have met them and I don’t.
However of the 30,000 almost 30,000 connections I have, I can honestly say that I have spoken to met or just even been around the proximity maybe even like a not met them directly, but they were at a conference or heard me speak somewhere or something like that for probably about a third of the people that I have in my connection. So let me give you an example And I have someone that I just I’m just about to put a LinkedIn post about him, but we connected in 2016 in different parts of the country.
It was in a Raleigh Durham, the research triangle area that’s just booming. And I was, I’ve been in Southern California for years and I was thinking about expanding, doing some things out there in North Carolina. So I looked for leaders in the area and I reached out to them and we connected and we had some conversation. However, I just go, you get busy and just doesn’t happen, right? Doesn’t happen. So now fast forward to 2022.
I’m spending more time in that area because of some business interests, some things that we wanted to do in the area and expand in the area. We believe that it’s growing, right? So I start going to all the networking meetings out there. Now, most of those are useless for me. I’m running across people that, you might meet some nice people, things like that, but from a business point of view, I don’t need a music teacher. I don’t need another real estate agent. I don’t need another wealth advisor.
However, you still go to these things sometimes because, especially when you’re new to an area or maybe you don’t know a lot of people, you’ll find somebody that you connect with. And I did. I found someone that, albeit completely different industries, albeit, you know, there’s no business, direct business correlation you could think of for what he was doing, what I was doing. However, we connected and we like each other.
So we just started talking. And he invited me out for a beer. We get along. And he said, Hey, listen, I’m a part of some of these networking groups that aren’t like actual networking groups, but they’re, I call them cultivated. It’s where you invite maybe a dozen or less, never more than a dozen. Cause then it’s too many, but maybe six, seven, eight people. people tends a great number to a lunch or something like that. And now a lot of people think they have to sponsor these things. And sure, you look great.
And if you’re sponsoring it, but then you’re making it more of a corporate thing. Right. You’re making that more of people are thinking you’re going to be a pitch. So if it’s not like that and just say, hey, we’re all getting together. And then you just tell front, wherever you go, go somewhere nice, tell the waiter, wait person, that, hey, we’re all picking up our own tab, right? Now there’s no pressure. Now there’s no, it’s like a first date. There’s no pressure if no one’s paying your way.Networking is about making real connections, not just accumulating contacts. The key is face-to-face interactions, building relationships, and being open to opportunities that may arise over time. Click To Tweet
Okay. So, Brian, so you call it the cultivated group framework, or we call it a cultivated group framework. So how do you go about actually creating this? Scott, is there a process for creating a group like that?
So yes, you the best way to do it is to look at who you know in the area, who would not necessarily conflict, because sometimes you just want to avoid that at first. I mean, sure, wealth advisors can get along with each other, real estate agents can get along with each other. But if you’re not trying to work in that specific industry, it’s better to spread it out in itself.
To give you an idea of how this all works is, I was invited by this gentleman, and it turns out the person that was throwing, that was bringing everybody together for this event, was this gentleman that I had met over LinkedIn in 2016. So now here it is, seven years later, we meet in person, and that’s why you, that’s how you can use LinkedIn as a tool, but you don’t rely on it, because if you rely on it, that’s hard too. But now you have that personal connection, and since then, we’ve become friends, he’s been an incredible referral source for us, and eventually we’ll find something that we can do to work together.
But that’s the other part, is when you do have these groups, you have to look at it from not just, what’s everybody going to give me or do for me, but what can I do for them? What kind of connections can I give them? I might not benefit from it, right? But it’s a good back and forth, it’s a good show of…
So how do you strategize? So you say that it’s important to start with the people and then avoid competitors, so obviously you don’t want any conflicts in the group. How do you put this group together and then how do you engage with them? What is your process?
Okay, so the way I do is I’ll invite people like we talked about, a diverse group of people. However, because it’s not an open public networking group and you’re not posting somewhere and saying, oh, come here. Now, here comes the cultivation part. So you see how people interact. I mean, so if you’re the host, you actually maybe just want to chat here and there, but you don’t want to get into a deep discussion with everybody.
The best way that it’s one of the flaws that I see people that host networking events do is they engage with somebody and ignore everybody else. If you’re the host you can’t do that. If you’re the host you have to put people together, introduce them, hey Steve, meet John, John meet Dave, that type of thing. Give a little introduction, break the ice for them and let them start talking.When hosting networking events, avoid engaging deeply with one person. Introduce and facilitate connections. Identify those who fit and add value. Avoid individuals who hijack or rudely interrupt conversations. Click To Tweet
Now this is where you see who fits and who doesn’t fit. If you see people that are being just, and of course networking is not easy, and there’s people that are introverts, extroverts. I’m not saying that if the person’s an introvert, you don’t invite them again. However, you can see when someone is, the difference between someone being standoffish and an introvert, or someone that might be too gregarious and acts like they know everything when they don’t.
Those are two people that you don’t want that type because they convolute everybody else’s discussions. If you have somebody there that takes over the conversation and tries to talk to all ten people it doesn’t work. The other person that you don’t want and I know for any of you networkers you know who I’m talking about is the person that if you and I, Steve are having a conversation and someone comes in breaks into the conversation rudely turns his back or her back to you to get in front of me because they want to talk to me or vice versa those are the people you don’t want those people either they don’t work and because generally people don’t like those people right so hijack the conversation. Absolutely.
So the next time you do it, you don’t invite that person, but someone that you may have liked, that you thought was a good connection to everybody, you would assume that maybe they know other people like them. So I like to see you first time, right? So I say, Hey, see, I’m doing another one of these in two weeks. If you know somebody that would fit really well with the group, invite them. So now that’s how you become and create a referrals. You grow it, however you’re still limiting how many people are gonna be there, but you can at least.
And even if someone’s good, you might, they obviously they can’t come to all of them or you might not invite them to this one, but another one. So this is where obviously having some form of contact manager is gonna help you out. I’m not saying that you have to, you know, be using Salesforce or something like that, but something to help you keep track.
So is this an informal approach? So you keep varying the members of the group or you are endeavoring to create some kind of a continuation of members? And then you just drop and pick members whenever you see fit? How does it fit?
That depends on your goals, right? Depends on what your goals are. Now some people are trying to cultivate a higher end, really good groups of people that are at a certain level business wise that, and I’m not talking about being a part of this stage or B and I, I’m not talking about something like that, or that’s a whole different ballgame, right? I’m talking about something that you’re doing for yourself, right? You’re not worried about charging fees or anything like that.
If you wanted to put together a specific type of group, then you have to certainly involve others. You know, it’s a kind of group meeting situation. But what I’m talking about here is something that’s totally unstructured informal, the only structure that may have is that you’re keeping track of when it’s doing. Now, that said, you can’t feel like you’re taking ownership of this because it’s informal. So if someone in the group says, hey, Brian is out of town this Friday, but you guys want to get together, you can’t have like FOMO, you can’t have thin skin and say, hey, wait a minute, guys, you’re doing it without me you can’t do that because it’s an informal type of thing.Cultivating a group is about being a connector, fostering opportunities for others, and appreciating the value each member brings. Networking is about building relationship capital. Click To Tweet
Okay that makes sense. So basically the idea is that you cultivate a group of valuable contacts you bring them together you’re the connector so they got to appreciate the opportunity that’s going to increase your relationship capital that you are this kind of person who can bring people together, who can help each other. And then, you know, it’s a fluid group, but you try to keep most of the members coming together on a regular basis. So that sounds great. So let’s switch gears.
So that’s the cultivated group framework that’s great for building business. And in investment banking, relationships are paramount and referrals are the way that’s the most effective to build opportunities. So let’s talk a little bit about small to medium-sized business investment banking these days. How is the market evolving and how do you guys avoid conflicts of interest between your advisory and investment operations? So the example here is let’s say someone comes to me or comes to you, Brian, and they want you to advise them and then how are you going to make sure that you represent the interest of this client but if that’s a good target investment target for you then you also give yourself the chance to have the first opportunity to maybe have a proprietary transaction. Does that even work? How can you handle this kind of conscience?
That’s a great question Steve and to be honest with you have battled with for decades since I’ve been involved in this industry. If you lead with, I’m the investor, then that’s the only thing that the potential client is going to think about is, or if you’re presented that way, right? If you’re presented as the investor only, that’s the only thing they’re going to be thinking about. And on the flip side, if you are just presenting yourself as a service provider, a consultant, things like that, then you are competing with a lot of people.
These days, there’s a lot of people of the remnants of the boomer generation, the generation below it, millennials now. Millennials who were all in corporate jobs are being phased out for the next generation, right? Because corporate, they don’t keep people anymore, right? So you have all types of consultants out there that you’re competing with, and if they don’t understand that you have maybe more to offer, well, that’s doing yourself a disservice as well.
So we’ve experimented with this countless times, and where we are now, what we decided to do, is we basically have three primary things that we do. We have our private investment company, but we’re not advertising that, we’re not marketing it. We have Stony Hill Advisors, which is the intermediary, the merchant bank, as you would say, the M&A firm. And what we did is we created a new division in Stony Hill Advisors called the Stony Hill Group.
The Stony Hill Group is going to be our marketing arm, where we’re engaging with sales professionals across the United States, that are calling on businesses not for the exit, but for the service, but being open that we help with the exit as well, that our services are designed to help a business get the resources it needs to drive revenue, grow profitability, and position itself for an exit, increase efficiencies, all those types of things. And we’re seeing that works. That is working because now a company sees, okay, well, then when I’m ready, I’ve got a trusted relationship.
Because when we first acquired the M&A firm, we did some tests, right? Marketing tests. And it’s almost impossible to time when someone wants to exit their business with your marketing message. Lead generation doesn’t work. Marketing, we try, we know. We have a marketing firm, it doesn’t work. But by becoming their service advisor, then you get that trusted relationship, right? And so that’s how we’re approaching things. Now, in regards to potential conflict about what we may wanna acquire or not acquire, what we do is we basically treat ourselves as just another potential source. And we just lay it out like we would with any other potential acquirer or merger or whatever opportunity we might find for our clients that are looking for an exit. So, we just have basically several options. This is one that you could go with the affiliate of Stony Hill Advisors.Positioning the advisory firm as a service provider allows for a trusted relationship to develop, opening the door for potential exits when the business is ready. Click To Tweet
Okay. So basically when you say service advisors, then is it exit preparation? Is it marketing services? What kind of services are you providing other than investment banking services, if any?
Well, one of the hardest things to do in any kind of advisory as a company. OK, you know, my my experience, I’ve seen it all done at all, not just as a investor advisor, but as part of the company as well as an entrepreneur. And what happens when you’re the entrepreneur and let’s say you, you have the, well, you hire a fractional CFO, you think she’s great, right? And then you hire a fractional CMO. And you think he’s great. However, if they’re conflicting and let’s say you have an attorney and account as well, and everyone starts, everyone’s got their own special interests in mind. It’s very rare that you can place multiple consultants from different sources and everyone’s going to agree. Right.
They wouldn’t be aligned in many cases.
So that’s the difference that we bring, because any of our service providers that we bring in, whether they’re a direct employee of Stony Hill Advisors, whether they’re a 1099 consultant that we use exclusively, or whether they’re someone that we bring in as an outside source to assist, they understand that the client is ours and that we’re working together as a goal. And we’re working together as a goal because we’re going to work together for everybody. And if we find any piece in there that does not and starts recommending other places and other things outside of our firm then they just don’t work with us again.
Well actually this is very true when I ran my own investment banking firm it was really important that we convince the clients to allow us to bring in an attorney who would be a transaction experience attorney. So often the client wanted their own attorney or their attorney was pushing themselves into the deal. They had no idea about how to do any transaction and they often frustrated the transaction or they didn’t want the client to sell the company in the first place because they thought they would get fired. So they sabotaged the deal. That could turn into a nightmare.
And that happens all the time.
Yeah, it happens all the time.
When we’ve worked just as an investor or acquirer or something like that, right? We’ve had that happen too many times, which is why we’ve created this model. So yes, I hear you say that.
The other thing that happens is that if the seller, let’s say you’re the investor or you’re advising the seller and there’s another investor, and if the investor brings in a very high-powered attorney, then you have to have a similar attorney because otherwise, often the high-powered attorney will essentially try to steamroll the less experienced one which then becomes defensive and frustrates the business. So there are many, many situations where attorneys can really screw this up.
But anyway. And just some quick advice there for your listeners and everything out there is when it comes to a lot of the financial documents, private placements, all that type of thing, they’re all using the same library. Most of it’s boilerplate. And to give you an example, once upon a time, we had an attorney, great attorney, high-powered attorney just like you said, Steve, you know, cost us $50,000 for all the documents, things like that. We reused that same thing. Ten years later, we engaged him again. He saw the documentation. He goes, well, I got to redo all the documentation. It’s going to cost you $75,000. And or whatever the number was, right? And one of my partners said, you know, that’s the exact same document that you created years ago. And he was like, oh, right. And ended up just making some edits for a fraction of what he was looking for. Well, it does happen too.
So, Brian, our time is close to the end, but I want to ask something that I’m personally very curious about. So, one of the things I teach to my clients, and I help them kind of make their businesses viable so that investors would be attracted to it, is that they should pursue their ideal life. So it’s not just about selling their business, but what are they going to do afterwards? So the business is really a vehicle for them to take themselves from where they are to their ideal lives. So here’s my question for you. I mean, you help a lot of businesses sell, you invested your board businesses from entrepreneurs. So what kind of idealized did you see these entrepreneurs migrated to? Can you give examples or have you seen like different scenarios where people sold their business and they transitioned to do and which was much more fulfilling for them?
Sure. I’ve seen it all kinds of things. Almost every set of circumstances though, when they get the exit, it takes some time off. Travel, you know, just relax, maybe do some modifications to the home, those types of things. Catching up on aspects of life that may have not got as much attention when they were in the grind as an entrepreneur. Now, what happens though is, and sometimes it depends on the size of the exit, I’ve seen people that have extremely sizable exits that become what we call a ghost. And that means they completely disappear.
Their social media is scrubbed, only the closest people know where they are, they just go vacation. Or I know one gentleman, he and his wife literally go from cruise to cruise to cruise. They just cruise the world. They don’t even have a residence anymore. Now they have some permanent addresses. So when they hit that dock and port, they get their mail, right? But they’re just cruising around. And when actually, when you get down to it, the cost for them to do that is, it’s pretty good, it’s well done.
Because what they did is they take, you take whatever you get in your exit, right? And sometimes some people make the mistake of spending that capital, but the smart ones will have engaged. I’m sure you tell your clients this, an exit planner or a wealth advisor that understands this, and they tuck that money aside and they live off the interest. They live off the gains.Maybe it’s not compounding, but that’s what they-
Or they live off the tax savings. So if you’re a perpetual traveler and you’re not spending, you have three different places that you spend your life or time or you travel around, then essentially you stop being a tax resident in any specific place and that can save you money.
Absolutely. The other thing is that those that don’t like that, they get bored with that and they need that something to do that business and they just, they’re that entrepreneur of them is just there. We see a lot of them become, actually go into M&A. We have multiple people that are M&A advisors with us that have had previous exits. And now they can maybe not be in the same kind of grind, right, because they have a little bit of something behind them, or they keep going. So we see that. We see often become, they become angel investors, advisors. We see that a lot. That’s also very common. And or in terms of coming to get some that just re-engage and whether they re-engage and get into a new business where they’re going 110% or they start using their, what they’ve learned and be a part-time or even absentee owner in their venture. So, you are kind of seeing all of the above.
So people who basically take a break and rebuild parts of their lives that perhaps they neglected, like remodeling their homes and get a second home in Florida or something. Then you have the people who just want to have fun and they travel and maybe they save some taxes. And then you have people who become advisors of other companies, they leverage their experience or they become investors, you have the money and some of the money they invest in other companies and leverage their experience. Or I’ve seen that as well, that someone saw their business, they took some time off, they came back, start another business and in three or four years, they actually were better than the original business they saw, then they became a competitor after their long-compete expired. So, all right, Brian, a very interesting conversation. So if our listeners would like to connect with you, learn more what you do, how they can maybe do business with you, where should they go? What do you recommend they check out?
You know, I think the best thing is LinkedIn, actually. Go to LinkedIn, look me up, reach out. I can’t connect with everybody because I’m at them. They have a maximum connection level, but you can follow me. You can follow me and when you ask to connect, you can send me a message and I’ve got it. And also I have a phone number posted on my LinkedIn profile that people can send me texts and reach out to me that way as well.
Sounds good. So Brian Jue, the CEO of Stony Hill Advisor so you can find him on LinkedIn and connect with him, follow him, and check out the group of co-global companies that he is running, and you’ll see it being very, very interesting. Brian, thanks for coming and sharing your journey and your experience. The Cultivated Group Framework is pretty cool for building available connections. And for those of you listening, stay tuned. Every week we come with another entrepreneur and they share their unique framework with you and with us. Thank you.
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