Speaker 1 0:00

Hi everyone, welcome to another episode of Beyond the Case. This is a podcast where global leaders from Howard Business School's OPM community join in a personal capacity and they share the real lessons, life principles, mental models that go behind building enduring companies and successful lives. My guest today is Tiz Gambekorta. He is from OPM64, a fellow OPMer. Great to connect with you, Tiz. How are you?

Speaker 0:29

Good, thank you. Thank you for having me on the podcast, Sohin. It's such a great initiative. Thank you.

Speaker 1 0:35

Tiz, do you want to take a moment just to introduce yourself, talk a little bit about your background so the listeners know who you are, where you're coming from?

Speaker 0:42

Sure. I am OPM64 for units one and two. Most likely will end up doing Uni 3 with OPM65, and I'm very much looking forward to that, although in 64 we had an amazing cohort. I am, as the name suggests, originally Italian, but also have from Venezuela, which is a country that has come into the headlines quite a bit recently. I've been traveling the world most of my life. The countries I spent most of the years were the UK, Italy, Cyprus, Poland, and now I split my time between London and Thailand. From a business standpoint, I started my first career in investment banking as a portfolio manager and trader. I had about a billion dollars of assets under management. So I was an institutional investor. I was investing other people's money. And that was kind of my first goal in life. I studied financial mathematics. And then I very quickly realized that it wasn't giving me much fulfillment. At the age of uh 23, I had a very stable life, a relatively well-paying job, great career prospects, a great relationship. And I very quickly realized that I was way too young for that and that I wanted to achieve more in life. The reality is that for those who have been in the finance/slash investment banking world, they all sound like great careers on the outside, but on the inside, it's in many cases a very well-paid but still a corporate job. So I took a sabbatical year, I did some more traveling. And after about a 10-year period within that environment, I decided to start a business. I always felt very entrepreneurial. No one in my family, or direct family at least, is an entrepreneur. I knew I wanted to start a business, but I didn't know what business to start. So by coincidence, I started in my living room. I had this, let's call it a vision that I knew how to invest other people's money and understood investments. I had gotten great returns. And so I thought, well, wouldn't it be great if I can share some of that knowledge that I acquired at some of the highest levels in finance? Wouldn't it be great if I can share that with the retail, let's say the everyday investor? And so that's how I started publishing content back in the days of what's called blogging around investing and trading. And that very quickly grew quite a large audience. And I realized that from a business standpoint, the highest ROI wasn't so much as on the side of the production of the content, but the distribution of the content. So over a period of about uh 10 years, it became from an investing education business, it became an investing distribution business, which is what now unis.io, which is our main brand, and Pareto Publishing, which is the company, are they mostly a media platform who what they do is they uh distribute and amplify financial content across all of the United States for publicly listed companies and any company who wants to target a network of high net worth individuals? They have a database of about four million people and um it's become an advertising platform now.

Speaker 1 4:04

Got it. Um and so you started as an operator, later moved into investing, correct? So what motivated this transition and how do you think your operator experience benefited you to shape the way that you invest today?

Speaker 4:18

Yes, uh, in so many ways. So, how did the transition happen? I realized that I am a reasonably good founder. I'm quite good at getting things from zero to 100. I have made a lot of mistakes along the way. However, I realized that other people were better at running and scaling the business than me. So, from a pragmatic standpoint, the the return on investment or the return on unit of energy or time for me was declining. I had the sense of urgency and responsibility of an entrepreneur, but probably most of us are entrepreneurs, we are not necessarily always the most patient people. So that sense of urgency that helped the business grow in the first few years is now starting to hurt me. And also from a personal standpoint, I wasn't enjoying it anymore. I could still do the job of a founder, I could still manage a team, I could still talk to clients, but it wasn't kind of what I would do on a day-to-day basis. Now, for example, I very get involved with the business, and when I do, it's mostly talking to key clients or on very strategic decisions. That's what made it transition. I think it's it's a component of entrepreneurial maturity and also a very personal realization, and I've always had this in my head of the fact that life is short. And I feel, well, you know, how long can I do this for? Do I want to enjoy more of my life? Do I want to travel more, spend more time with my family? And so I realized that it was a good time to take a step back. Coincidentally, we had hired a fantastic CFO, uh CEO, a fantastic CEO, and so he took over the business. And um, that also helped me in my transition from operator to investor, in the sense that most so most investors go straight into an investing career, and most operators at some point will fund a business, exit the business, and then either start a new venture or become investors themselves. I have it allows me to have very interesting eye-to-eye conversations with operators, with founders, with COs of some of the businesses we invest in. However, for me, I feel it's a great combination because I also have 10 years of investment banking. So I can talk the finance language and I can also talk the operator language. Am I the only person to have this kind of combination? No, but it certainly helps in the fund operations.

Speaker 1 6:48

So speaking as a fund manager and the fact that you're also a VC now, how should someone think about investing the money in general? And what principles would you use if you had to build a portfolio for yourself today?

Speaker 7:00

So, okay. I will okay, in full disclosure, I run a defense, technically a defense dual use venture capital fund. So we are very specific in terms of which sector we invest in, which is dual use, which geography, which is mostly the United States, and what kind of technologies do I use. If kind of I take a step back and look at my broader fund management experience, now it's become very narrow, very specialized, also as a function of some of the events that are happening in the world. But if I take a step back, there is a big thing to keep in mind here, in my opinion, which is a risk appetite and the age of the individual. Personally, I have always been a very, very conservative investor. For me, risk comes before return. And I'm also very conscious about diversification. How do I invest uh my money? And and I've been fairly happy. Uh in some cases, very happy with with the returns, but overall it's worked out well. For liquidity, and and this is not investment advice, for liquidity, I would say probably 40-50% in liquid stocks. I am a big fan of ETFs. I am a big fan of you know index ETFs. They have very low fees, they're very liquid, and historically, you know, over 10, 20, 30, 50 years, uh in the stock market in different shapes and forms, has returned um you know, really good returns, risk adjusted. I would I also have a big chunk of my wealth in real estate. Not necessarily because I think it's the highest returning asset in the world, but it's very stable. If you get the right investments, it can generate a very good yield. And generally speaking, of course there are exceptions, but it's it's an asset that tends to hold its value and keep up with inflation. If nothing else, I see my real estate portfolio in a way as my retirement sum. The liquid stocks I can buy and sell as I wish if I need cash, for example. But the real estate is quite illiquid, but it's it's very, in my opinion, safe. Maybe a 5 to 10% into venture capital, private equity, because these are this is the asset class that can generate, you know, 2x, 3x, 5x, 10x returns over, you know, a number of years. That's where I think the age comes into play. If you are, you know, a relatively young person, you can afford to take these risks. Um even if you're if you're middle-aged, you know, I think that's where the the bigger returns in a portfolio will come, in my opinion. However, there's a liquidity aspect, which is which is why I say 5 to 10%. And then of course we have Bitcoin and gold, etc. etc. I'm a big fan of gold. I don't look too much at the the day-to-day volatility. I think about I have about 10% uh across different instruments and and whatnot, about 10% of my portfolio in gold. The the thing that I don't like about gold, unlike other assets, is that it doesn't pay a dividend at all. It doesn't pay any income. You know, for example, if you invest in bonds, there's coupons. If you invest in most equities, there's some kind of dividend. In real estate, there is income and on and on. Gold and Bitcoin don't pay any income. So that's kind of the asset class. I'm giving kind of very kind of generic percentage numbers because it really will depend then on the specific individual. Bonds I like to keep maybe at 10%. Uh it's kind of mostly a macro interest rate play. Um, usually not too much of a macro player. Uh I would rather focus on specific trends that are happening in the world. For example, defense now, AI, of course, we've had similar trends many years ago with other innovations. If we talk about strategies, I like to enter as many as possible of these positions, especially in the public markets through options. Now, without getting too technical, for those who are familiar, a lot of these positions, these stocks, these ETFs, you can enter through the sale of a put option. And the added, it gets a little bit complicated. You may have to get some kind of special training permissions, whatever from your broker, depending on where you're based. The key thing is you can pick up some additional yields, some additional income just to enter the position. Now you don't have direct control of the timing. Uh, but if if you're like me and you know I make you know six to twelve month um investments in in in public markets minimum, not a lot longer. I'm totally okay with having with you know entering a position this month or next month. So sold-put options are, in my opinion, an extra way to pick up yield or or buy the asset at a lower price. Also, I'm a very big fan of uh covered positions. So covered calls on either stocks or ETFs. These are strategies that are a bit more advanced that allow the investor to pick up additional income, additional yield from just holding the position. For example, you could buy picking up a random name, Tesla stock, and because you're bullish, so you want to expect the price to increase, you can also sell on a regular basis, and regular could be weekly, monthly, quarterly, even yearly in some cases. You could sell call options, which is a special financial instrument against the stock, which will get you an additional income on that position of Tesla stock that you already own. Now, of course, you're giving up a little of the upside if the stock goes up. However, it guarantees you an additional income if the stock stays sideways or even goes down. Anyway, this is kind of at a high level, and to summarize, I would say uh a combination of public markets for liquidity, not necessarily for the highest returns, private markets, private equity, some venture capital investments for some of the highest returns, although the timelines can be longer and liquidity is not as good as the private as the public markets. And some commodities, Bitcoin, although technically not a commodity, gold, etc., as an inflation hedge, real estate for the income, and for, in my opinion, the retirement side of things. And in terms of strategies, I'm very much a passive investor in the public markets. So public markets meaning listed equities, like the New York Stock Exchange. In terms of strategies, if you can, if you have the time, use options to generate additional income, either with a put or a call. And the kicker is that in some cases there are already pre-packaged ETFs that you can buy on the stock market that will actually implement these strategies for you. So, for example, one of the positions that I have, the underlying index, is maybe paying half a percent, less than 1% blended dividend, which is very low because they're mostly technology and growth stocks. But if you overlay the strategy, in this case through an ETF that's doing all the work for me and I have no vested interest in this, this ETF is generating returns of about 11, 12% per year. So it can 10x the return. Of course, it's a different risk profile, uh, but I think they're worth considering and worth some having some different strategies in your portfolio.

Speaker 1 14:51

Great. And what kind of return, if any, are you looking from for from these uh investments you make? Number one, annually. Number two, are you looking for a certain amount of cash flow on an ongoing basis in the form of dividends or interest rate? The interest earnings. And uh number three, how do you look at tax rates? You know, because you said your stock investments have a horizon of six to twelve months, but some of the other dividend paying investments will probably be taxed at uh your regular gains. So I'm just curious about these uh thinking points.

Speaker 15:26

Yes. And in fact, you know, so you know, I think that the taxation aspect is probably one of the most uh overlooked uh uh topics in in in any or in most investing conversations. So to your point, uh am I looking at uh specific income targets or percentage returns? No. Um because I am not at retirement age just yet, and I have you know a fairly not only active lifestyle, but also active professional life. So my companies generate, thankfully, more than enough uh cash flow to fund my lifestyle. Um so my concern at this point in life, and this may change in the future, is just to optimize the risk-to-return ratio. Also from a taxation standpoint. So, from a taxation standpoint, and here is where it can get very complicated very quickly. It depends where you're based as an individual, whether you're investing through a company, whether you're investing through some other structure. Um, it's kind of it's difficult to comment. Um thing that I can say with a reasonable amount of certainty. Well, two things. One, look into taxation very deeply across all the investments that you do. I do this exercise regularly, and every time I'm surprised how much things can be optimized, or where there's like, you know, am I being taxed, you know, the double taxation rate on this particular investment because the bank forgot to apply a double taxation agreement, especially if you if you're an international investor like me. So difficult to comment because there's so many variables. Also, what I have found from my experience, and this is kind of a very blanket rule of thumb, if I don't have any specific cash flow or income needs on a monthly basis, typically it sounds a bit weird, but dividend-paying structures that have an accumulation payout structure tend to win. In other words, I prefer to buy a basket of dividend-paying stocks either within an ETF wrapper or standalone and have some kind of structure in there, either with the broker or with ETF, where the world automatically reinvest the dividends. It creates compounding, and uh as we all know, compounding is one of the wonders of the world. So if if I can kind of give a generic uh you know, kind of idea or concept here is is is reinvest as much as you can.

Speaker 1 18:07

Got it. And then how does you mention real estate is about five or ten percent? I I don't recollect what number you said.

Speaker 18:13

I'm I'm more heavily weighted on real estate and probably maybe around 15-20%.

Speaker 1 18:17

Uh does real estate kick in a depreciation benefit for you?

Speaker 18:21

No, unfortunately. Most of my real estate is in the UK. Okay. And things work differently.

Speaker 1 18:26

Okay. Great. Wow, that's very uh thorough in terms of how you approach your uh investment journey. You sort of touched on uh your your BC hat as well and what's happening geopolitically uh today and how that affects the defense vertical, the defense sector. Could you take maybe a minute or two just to share your thoughts on how you see the future of that particular sector evolving from the vantage point that you sit at, given the geopolitical mess that we're seeing today in the world?

Speaker 18:57

From if we look at the world today, there's you could argue, if you open most newspapers, you will find two big investment themes. One is AI, and one is difference. The big difference between the two is that AI is something that most of us can relate to and we use on a daily basis. Defense is more of an obscure thing. We read the headlines about conflicts and whatnot, but it's it's a much more unstructured environment. What do I mean? So for AI, you know, anyone, any entrepreneur these days can start their own company, vibe coding, you name it, etc., etc., um, and start their own AI venture. Defense is it's typically there's always a physical element, there is a technological or patent element, there is uh a fact of which distribution channels are you plugging in, whether it's you know defense, governments, et cetera, et cetera. So it's it's it's a lot more complex, and there are some very, very big players in that space that are very well established. How do I see things changing? So two things. One, both on the North American side as well as in Europe, with different degrees of success, the governments are trying to accelerate this process of buying innovation from new companies or startups. And so that's helping us as a fund. Procurement cycles that were were previously very, very difficult and very, very long, now they're a little less difficult and they're a little less long. It's still a battle. But I think we're we're we're heading in the right direction. And this is something I wrote about um a few days ago. There is a there's a change, in my opinion, in how conflicts are being fought. We used to have, generally speaking, a handful of very expensive war machines, for lack of better words, being fighter jets, but technologically very advanced. What's now changed with drones is the fact that a relatively inexpensive piece of kit a drone can fairly easily bring down a very expensive war machine, say a fighter jet. So there are two things here. One, these very expensive machines have become a lot more susceptible to to risk in general to being taken down by a multitude, thousands of drones that are very inexpensive. So it's making these machines less viable as a weapon of war compared to kind of drone to drone technology. So we're going from a stage of you know, a handful of very expensive machines to thousands and tens of thousands of quite dangerous and inexpensive machines. So then the question is now not who can develop the latest technology, that's still important, but now. Now the question has become who can develop thousands and tens of thousands of drones, for example. But it's not just about drones. I think one of the big things that is being overlooked in the fence is anything that's anti-drone and jamming technology. We are seeing, you know, the the um in the US, the DOD just launched a marketplace for basically drones. I think the next battle will be fought on the jamming technology. It's basically what cybersecurity was 10 or 20 years ago. Now there's a lot of of these flying objects around. Those who will really have the edge is those who can combat them, who can prevent them from reaching their target. It's relatively easy to launch them in the air. It's quite difficult to intercept them or jam them. I think that would be the next frontier in the Fed. Um and that's one of the things that we as a fund are are focusing on now. This kind of jamming technologies, to put it very broadly.

Speaker 1 23:09

Got it. Um you're also a member of the entrepreneurs organization. What's been one of your biggest takeaways from EO and how has that community influenced the way that you think and operate as an investor, as an entrepreneur?

Speaker 23:23

Okay. Yes, I I think I can I can kind of um split this up in in three points. So the biggest takeaway number one is how to be, which was a very new thing for me. Um in my first career as a fund manager, I was an employee, I had people working for me, and I had a boss. So the authority and reporting line was very clear. The boss eventually had the last word. Neo, it's this very interesting community of all business leaders, all founders or business owners of some description, and there are no authority lines. So everyone is on the same level. So my first takeaway is you probably have heard the expression of how to be a leader of leaders, how to lead other people when there isn't that inherent, you know, authority line that probably you have, I have as a founder in my company. Eventually, if I'm the founder, you know, I will end up having the last word in most cases. So, how one, how to be a leader of leaders, and that's very, very interesting. And my second takeaway is it's truly through this concept of forum, which is a highly kind of structured and confidential place where most EO members meet on a monthly basis. How it's it's basically learning without making the mistakes. It's having a sense of comfort that, hey, I'm having this issue as a founder or as an investor, or I'm having this issue with a company I invested in, or an investor, or whatever it is. And hey, you know, I'm not the only person with this kind of problem. Right? It it's you know, there is this saying that you know it's lonely at the top. Well, it helps not to feel lonely. It helps having that sense of community and sharing experiences. There is also this concept of experience share, which I found fantastic. Technically, you know, it's it's it's discouraged, sometimes forbidden, to give advice. But all we can do as EO members is to share our experience in a similar situation or as close as we can get. And that's that's I find very valuable. As an investor, what have I learned from EO? Um I'm not at that stage, and I kind of have gone in a slightly different path. So I exited my my marketing platform company, not financially, but I hired a CEO and the company runs itself now. But I've I've truly kind of I've lived this through it myself. Is once I exited the business, then it kind of at the beginning I thought, oh my God, this is a first problem, a first world problem. But then I I found myself in those shoes, which is okay, now I've exited my company. What do I do with my life? And there's a lot of people who are in that phase within EO. And that's also a very, very interesting perspective on things.

Speaker 1 26:18

And now you're doing the OPM program at Harvard. Um, can you talk about what inspired you to consider the program and what your experience has been like till date?

Speaker 26:27

So the the experience overall, fantastic. What inspired me to do the program was not what I ended up getting out of the program. I technically never studied business. My first degree, even though it was a degree in economics, we studied a lot of microeconomics, microeconomics, accounting, law, et cetera, et cetera. But I never really did an MBA. So I wanted, I saw this program as some kind of you know executive MBA, which to a certain extent it is, but the biggest value that I found from OPM is is the people in the room. As I say, you learn as much from the people within the classroom as you do from the case studies. And I think that's that's absolutely true. And that's one of the reasons I love the title of your podcast, Beyond the Case. I think that the value, as much value at least, is beyond the case. And it also made me realize that, and this is what helped my transition from operator to investor, is that we as founders, or certainly me as a founder, I was the ceiling to my business. For example, I took a lot of the case studies, I brought them into what used to be at the time my uh my main company, which is the marketing platform company. I shared those case studies with the management, the CEO, et cetera, et cetera. And then they internalized those learnings. And so it made me realize that wow, I was the ceiling to this. If I can transfer some of the knowledge, they can do this on a much bigger scale.

Speaker 1 27:53

Um, Tiz, is there a book that you've read which has inspired you and changed the way that you think about business, about life?

Speaker 28:01

Many. When I was a teenager, and probably this is a book I would recommend to teenagers for those who have children, How to Win Friends and Influence People. Uh, you know, by now I think fairly basic concepts for those who are in the business world, but for a teenager, it it really changed my life. I think there's a lot of books on productivity, and I have to confess that I never truly managed to get fully on board with any of those methods. I feel that, and this is not a book, or well, if there is a book I haven't read it, that the environment makes everything for me, and then discipline, if the environment is right, is almost like a spare tire. So if I can have the right habits, the right working environment to be productive, then I will be productive without thinking about it. So simple things like not having to think about, you know, administrative tasks, not having to drive, not having to think about food, very basic things like that. Um another book that I read that also changed my life, but this is more of a philosophical approach. I think it's the five regrets of the dying people. Don't quote me on the exact title. It's a story of a nurse who worked in a in a in a hospital, so she effectively accompanied people, old people to death. And it made me realize that I I very much live in the fast-forward like 40 years from now. And so it made me realize, it helped me realize what's truly important in life. Family, friends, being present in the moment. And I feel once we've covered the basic necessities and we've reached a certain amount of success in life, whatever that is, then it's important to really focus on what matters in life more than a number in the bank.

Speaker 1 29:56

Very well said. My last question for you is if you could speak to a younger version of yourself today, is what advice would you give him now that you know what you know over the last couple of decades?

Speaker 30:08

Three things. One, so from a business standpoint, I bootstrapped my first company. And whilst I was also very lucky and it was successful, I wouldn't say it was a mistake, but I think the better way of doing it would be to raise capital. Not just from a financial standpoint, money in the bank, but also investors who come in, and they usually can teach you a thing or two to say the least. And now I'm sitting on the other side of the fence with the fund, and I and I see exactly that. You know, we we don't just provide capital, we provide market access, connections, introductions, advisory, etc. So that's the first thing. The second thing is I would not pursue again a career in investment banking. It was a very high-profile, sexy thing to do at the time. And I'm not saying again it was a mistake, but I think going straight into entrepreneurship would have been more fun, more exciting, more fulfilling, more money, everything. The third thing I feel is to feel uh to live a more fulfilling life. And I know it sounds quite generic. I've always been a fan of the saying which goes along the lines of you know, would you rather regret having done something or regret not having done something? And I would pick I would rather regret having done something. So pursue crazy missions more aggressively. Urban exploration is something that I that I love doing. And so I would say pursue big things much earlier in life.

Speaker 1 32:04

Great. Thank you, Tiz. What a wonderful conversation, and I'm sure there's a lot of takeaways here. So I appreciate your time.

Speaker 32:09

Thank you, Sogin. This was such an interesting conversation, and uh again, congrats for what you're doing and and getting everyone together in within the OPM community. Um, you know, I I we have some amazing people in this program, and I feel that if we can all share our thoughts, we can all grow together and co create. Absolutely.

Speaker 1 32:30

Appreciate your time, Tiz. Thank you.

Speaker 32:32

Thank you.