How I Use My Following For Investment Deals | Ft. Josh Richards & Griffin Johnson

You've proven yourselves by the amount of followers you have. Those are valuable in a way that so many people don't understand. You get up in the morning, you're no longer number one; your investors are number one. You're down here, and until they get their money back and then some, you're still down here. And people say that's outrageous. I mean, why am I giving you 9.8 of the company? I said, "Because I'm Mr. Wonderful and you're not."

So, let's talk about what happened in the last year. Basically, you're a monster on TikTok, and now you have a fund that you're managing. Keep passing—how the hell did that happen?

For me, from the beginning of time, I've been a hustler and an entrepreneur. Like, I was a 12-year-old kid that was playing sports and every time I went to my tournaments, I had a hockey shirt company. So I was bringing like hundreds of t-shirts and selling them to the other teams. I was like having a social media account for my businesses as well when I was like 12 or 13. I just found something so interesting about Instagram and how you could have these videos go viral.

So I would make sports accounts and then sell through my sports accounts the merch. Then I would start a lacrosse company, dyeing mesh, wax coating it so like kids' sticks wouldn't start performing inconsistently when it rained outside. So it was just always something that I was really passionate about. And then when I had the opportunity to come out to LA for the first time, I met Michael and we started talking about the industry.

I just have done a tour with Griffin, completely got ripped off. The tour manager ran away with the money. I got like 750 bucks; I think Griff might have got a thousand dollars. The tour made over a million. I'm sitting here seeing my friends get ripped off, myself, and how this industry has no one protecting. There's no WME, CAA, UTA signing TikTokers like they are today.

So we decided to go found TalonX, which was the management company that went and signed a hundred top TikTokers. My entire goal and mission there was to finally bring a sense of safety to the social media world within TikTok.

So your structure, what you've done now, is you know to say, "Okay, if I'm going to monetize this, if I can build it into a business, I'm going to play by the mainstream rules." You got an agent, you have a fund with compliance, you've got people investing in it. One thing I would say though for guys your age, you take dough from people—that's a whole new thing. That's a huge responsibility because for all the optimism you've got, fund management's real tough, there's no question.

But you do have an advantage. You know where to deploy capital in a very, very early stage just on what you know is going on out there, given that you're... and do you do what you do. But I've been doing this for a long time and what I've learned is it's very sobering. You get up in the morning, you're no longer number one; your investors are number one. You're down here, and until they get their money back and then some, you're still down here.

And then after they've got their money back, you're still down here because you're raising more money exactly right next month. So you're now going to be subservient for the rest of your lives in a cool way because not many people get to run a fund, but you ain't number one. You get it, right?

No, 100. This is serious. This is work. If they think you know something they don't know, they're putting their trust in you too, right? So you need to earn that. You just show them that you respect that as well.

Here's how the conversation goes for me: you may want to think about this. "Hi Kevin, would you put half a million dollars in my deal if we're just starting out here? Here's what it looks like. Why do you want 500,000 from me? Oh, well, we really like to tap into your social base and all the investors you have already, all around the world."

I said, "Yeah, that sounds good." They say, "Well, our last round was 5 million free money." I said, "Oh, that's interesting." They said, "Well, you want to do it?" I say, "No. Here's what I'm going to do. I'm going to make you an offer. You don't have to take it, but you can think about it, and I don't negotiate. You're going to give me 12 and a half percent of the founders' shares." I said, "Give me—all right, for free," and they're going to be locked up over a long period of time because I'm going to insist that we work together for at least three years.

So I'm happy to go into a lock-up. Then, every round that you raise at whatever market valuation it is, I will participate. I will fund my pro-rated position of my 12 and a half shares. And why is it 12 and a half? Because after the option pool is put in place for the employees, it's going to drop down to 9.8, which is just under 10, which is a very good place to be.

Here's my filing prospectus. All right, point of view: you own those shares because of who you are. I own them. And people say that's outrageous. I mean, why am I giving you 9.8 of the company? I said, "Because I'm Mr. Wonderful and you're not." Fifty percent of the time, I close that deal, and I don't close it if I don't get it because what I want is to work hard for the next three years to build that business up in a way that no one else can do, in a way that no one else can do what you guys can do.

Because if you're going to really trade your notoriety, fame, and followers, you've got to get paid for it. That's how you're really going to monetize. So next time you're negotiating a deal, think of what I just said because then it's implicit—you're going to help them out with your notoriety and your followers, but you're getting paid for it, and you're willing to stay the long term.

Now, other people may listen to this and say, "That's outrageous, Kevin." I said, "No, no it isn't. You see me do it all day long on Shark Tank over and over again because I know my value. I'm confident in my value. I know what I've done." You know who sells this deal to everybody? Not me. It's all the CEOs I invested in. I said, "Go talk to one of my 20, 30 companies. Ask them if I've delivered on the value. Don't take it from me; talk to them. That's power."

You've proven yourselves by the amount of followers you have. Those are valuable in a way that so many people don't understand because in a consumer goods or service businesses, which is what you guys are doing, you can say, "Look, I'm going to be transparent. I'm a huge shareholder; I'm totally transparent. I own a big piece of this company because I believe in the product. I use the product, I drink the product, I eat the product, and I do the model."

You gotta move to is my model. You gotta steal this idea and run with it. You will do far better fifty percent of the time. Also, know the other fifty; your major shareholders and your alignment is total. I mean, you're completely in sync with everybody.

Now, they'll cry about the 9.8 for one night, then you're in business. So you get the 9.8 percent, right? Like, what are you doing with your following with that company? Is it like it's not just posting and stuff, right? Like for us, usually they just want to like post like, you know, whatever—"Hey, we're using this," or like, "Hey, here's this article, guys go check it out," or like they want us to like promote the TikTok or the Instagram so it gets followers.

But like, what do you do and how do you use your leverage? Well, what I do is I say, "Look, I'm a founder now. My interests are aligned. I want this company to be successful." I've locked myself up for years with the founder because when you take the company out, you have to tell other shareholders, "Look, these founders' shares are not tradable, okay? Their founders' shares and they're locked up are going to be released to all of us that get them over a long period of time." This is after the company goes public even. You're not trading because your interests are long term.

But I don't just tweet and I don't just post and do LinkedIn articles. I really get aggressive. I hit the airwaves. I go out there and I saw you book meetings on—you know, you're out on business cable. That's cool, but you added a lot more of that. I hit every media outlet saying, "This company I'm a founder in, and here's why."

If you're just going to be an investor and you're not going to use the power of your social media, it's cool. Go into a round, do whatever. But if you're being a partner and you're going to use your leverage in your platform, you believe in the product and the mission—9.8, baby, for you. Your followers know that you came from the world of business, and so they expect that from you a little bit more for us.

So we almost have this job at the same time of naturally implementing this and like putting it into our fans' heads in a way that's not going to be annoying. Yeah, but what's happening here is your entertainment social media following is merging with investors' interest in tapping what you know and they don't know.

You have to start thinking a little differently because you're going to be a player on every platform. You have to be. If you're going to manage money, you've got to be on... we talked about LinkedIn, you talk about these other platforms, and actually all over television, radio, print—places you haven't gone yet in terms of heavy saturation because you're promoting what you believe in and what you invested in.

You constantly have to be testing your assumptions. Once you're running money, constantly asking yourself, "Was I right? What's changed? Do I pivot?" That's all going to happen to you. But you always come from a base that other people don't have, and everybody's giving you money for one singular reason—what do they know that I don't know?

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