402 Kristian Marquez On The Deep Wealth Podcast

Jeffrey Feldberg: [00:00:00] Kristian Marquez is the founder, president, and CEO of Finstrat Management. Finstrat is an outsourced financial department services firm that provides accounting, finance, and reporting services for B2B SaaS companies, investors, RIAs, and VCs.

Before founding Finstrat, Kristian held a variety of executive and management positions, including a pivotal role in taking Inovolin from an early start up to a multi billion IPO. Inovolin is a leading provider of cloud based solutions that empower data driven healthcare. Earlier in his career, he held a number of senior roles in accounting and investment management services, and also served as an officer in the United States Marine Corps.

Kristian graduated with a Bachelor of Science in General Engineering from the United States Naval Academy, and has been a chartered financial analyst charter holder since 2004.

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Well, Deep Wealth Nation, welcome to another episode of the Deep Wealth Podcast. And we have a fellow entrepreneur in the house, not just any entrepreneur, a very special one, a thought leader, a fellow podcaster, you name it, we're checking off all the boxes. But Deep Wealth Nation, let me ask you this. Are you looking to get an edge, but perhaps you're [00:04:00] short on resources, people, strategies, insights that work?

Well, put that on pause because you're going to walk out of this episode a whole lot better than coming in right now with what we have, what we're going to be talking about. So Kristian welcome to the Deep Wealth Podcast. It's an absolute pleasure to have you with us. And I'm always curious because there is a story behind the story for everyone.

So Kristian what's your story? What got you from where you were to where you are today?

Kristian Marquez: Well, Jeffrey, thank you so much for having me. Super excited to be on the podcast and given an opportunity to provide a little bit of background and what I've learned over the decades and share that with your audience. So, my background, a Service Academy graduate. Naval Academy ended up studying actually engineering of all things which at the time made sense because at least when I was in school Navy was consistently ranked best engineering undergrad programs in the country.

good sense. But after I, wrapped up my career in the military, I decided to pursue investment analysis. A lot of parallels, just good with numbers but frankly just [00:05:00] knew I wasn't going to be an engineer. And so, made the transition in the civilian life and realized I just enjoyed dissecting companies and looking for opportunities.

Ended up pursuing a professional license, it's called the Chartered Financial Analyst, CFA charter holder. In simplest terms, it's gold standard for investment analysis not only in the U. S., but in the world. In fact, maybe one of the few professional licenses that are recognized by the majority of countries for purposes of licensure, and ended up getting hired as a financial analyst for an Annapolis, Maryland based company that proved to be fortuitous In terms of my experience, so, spent nine years of what is today known as a Novolon.

I was employee number eight, so effectively call it seed so early stage. And then a year before I left, the company IPOd for $4.4 billion, and I just was really fortunate in that I had a material hand in, in [00:06:00] growing that company. Before I left, I was a general manager, VP had responsibility for about a third of the company's top line and was actually had a material hand in building out an intra business.

While I was with Inovilon this was right when Obamacare came into the market we were in the right place in the right times in terms of healthcare predictive analytics and clinical interventions, and took this intra business from zero to 80 million plus in top line in the course of two years.

And had a hand in product development, ops, sales and marketing and proved to be just a phenomenal learning experience of what it takes to scale a company. And an industry as no difficult as healthcare. By the way, our end users were predominantly payers. So think United, Aetna, the Blues very demanding customers.

But had a pep in my step. decided to move on, co founded a telemedicine company with two physicians, another great story in there ended up raising two and a half million pre [00:07:00] revenue but never got the company off the ground I didn't come up with the expression, win or learn, I never lose, but there's a tremendous amount of truth in that.

I learned a ton specifically what not to do with an early stage company. And so after we closed the doors on the telemedicine company, I founded the company that I run today, Finstrat Management. Finstrat provides fractional chief financial officer, accounting, finance, and reporting services to early stage investor backed companies.

Companies and started the company Jan 2017. At the time I was wearing a CFO hat myself but we're very fortunate. We've experienced a tremendous amount of growth and today, I spend my time in the ivory tower being, the proverbial CEO guiding and executing on the company strategy to bring best in class accounting, finance, and reporting.

To the country's early stage ecosystem.

Jeffrey Feldberg: Wow. Quite the story there, Christian. I love that journey. And firstly, thank you so much for your service and putting that sacrifice in for all of us. Really appreciate [00:08:00] that on behalf of Deep Wealth Nation. A heartfelt thank you for that. I'm wondering, coming out of the services, did that really influence or change your trajectory as you went into the business world?

Kristian Marquez: It's very good question. Again, I've been asked this before. I would say yes, I think there's two parts. Part number one is just being pragmatic. My experience has been that uh, yep, you know, there's, there's a limited amount of time and resources. And so there's an emphasis on prioritization.

But also the market is going to reward somebody's ability to say, hey, there's a lot of things to do but these are the things that we were going to focus that are aligned with our strategy. And so I took that from my time in the military and I've applied it to my business experience and it is absolutely, my experience it has a positive impact.

I think the other one is leadership. I think maybe. I'm not the best person. I think I somewhat take it for granted in so much as I'm, my opinion is I'm a decent leader in so much as people seem to be willing to follow me. And I would [00:09:00] measure that in terms of staff retention. I've been really fortunate.

Amazing. Able to work with some incredible people over my career, and the feedback I generally get is we enjoy working with you, and I, I'd say, it's by design I very much, my leadership is rooted in the golden rule treat people as you would have them treat you.

I would tell you another big part of that is I find is a reoccurring theme. It's just giving people the benefit of the doubt. I find that there are employers out there, Who, for better or for worse, they're just exclusively focused on their bottom line, not appreciating that yes, sometimes you have to make difficult decisions, but you know, you absolutely have to take into consideration.

The person, the appreciation that they have a mortgage, they have car payments. They have an entire life that they have to manage and there's dependency. And so, yeah, sometimes you have to make difficult decisions, but my sense is that when you can connect with people your team on an individual level and really get to know them that absolutely makes a difference.

When it comes time to ask them to follow you,

Jeffrey Feldberg: Yeah, some [00:10:00] great insights there, Kristian and I'm wondering because you've been really on both ends of the spectrum, you've been involved in a multi billion dollar exit, and then on the flip side, and thank you for being so open and vulnerable with us, you're involved in a venture that didn't quite see the light of day, and you had to shut that down, and we've all been there as entrepreneurs.

I'm wondering, from the successful exit to the one that didn't work, were there some takeaways that you took from each one that you put into your, really your formula on a go forward basis in terms of how you now run your companies, what you're doing, what you're not doing?

Kristian Marquez: Absolutely. I would tell you on the success side there's a tremendous value in understanding your market. But also an appreciation that there's few constants and one that I'm acutely aware of is change. And so, I. If you look today, or I made reference that when we started this predictive analytics company when I was with Innovalon, we were one of the first companies to market.

And that, first mover advantage absolutely had a hand in our success. [00:11:00] But if we look today in that same space, what was originally maybe three service provider, service providers in the space is now dozens.

And so, very objectively, if you're still approaching the market in the same manner, when you have that amount of competition, I mean, some companies and some industries, may have a monopoly or something that resembles a monopoly, but I would tell you that's the exception.

And so the site appreciation that, yes, I'm going to be focused on providing value. And there are a lot of different levels on there. One of them being, scope of services, features, functions, and pricing.

Just, hey, things aren't always going to be the same, and you have to be cognizant of when to make changes.

And that served me well, not just being myopic and saying, well, it's been this way in the past. It's always been this way. That's not been my experience. From a failure perspective, the telemedicine company provided phenomenal lesson. So I mentioned I was Navy, my two co founders phenomenal gentlemen, [00:12:00] but really sharp as two.

Both were Ivy League undergrad, very successful physicians, arguably, there were a lot of brain cells in the room. And logically, we deduce and a market offering that we thought was a no brainer, but at the end of the day, we were totally off base because nobody was willing to give us money what we had built.

And so I had a realization that all the logic in the world doesn't make a difference unless someone's prepared to hand you cash for what you're selling. And so this idea of. Hey, know your market. And the only way I think you can really know your market is go talk to people, actually talk to your potential clientele and be direct, say, Hey, this is my solution.

This is what I think. Would you give me money for this?

please just don't tell me what you think I want to hear. You won't hurt my feelings, but you know, we're going to make some real business decisions here based on what you told me. And I, I think had I done that it would have been a materially different, Outcome.

And so today, [00:13:00] whenever I talk to an entrepreneur who has a, hey, Kristian I have this brilliant idea. So I don't doubt your idea is brilliant. Like the storm for telemedicine we were doing might've been successful during the pandemic, 

Created an end of the company years before then.

But it doesn't matter what we think. It really matters what the market's willing to pay.

So just this idea that you must be connected with your market, you must understand your buyers. Yeah. I encourage everyone to have a, just an ongoing, constant dialogue. And that's kind of the fun part of it too.

It's I feel like so many times, at least I know I get distracted. There's no shortages of information, read, people mine for my attention, but you know, having conversations like these, I mean, it's, I wish they happened more often. And so any, anyone out there who's interested in, or responsible for selling, running the company to the extent that you're not already engaging your buyers, I encourage you to do so.

Jeffrey Feldberg: Words to the wise, it's interesting and very similar to your experience, Kristian with my e learning company, Embanet, which I started in my parents attic. You and I were talking [00:14:00] about that offline and I had no money, no experience, no team, really had no idea what I was doing, no business being in business.

Yet, we were successful. On paper, we should have failed every which way, but to your point, talking to the customers or prospective customers, hearing what they're saying, speaking to the people who said no, or why did you say no? How could we have won the business? What didn't we do or what should we have done?

And really putting that into the mix, post exit, I now had the team, the capital, the experience. Similar to you, started a healthcare company, that's a whole other episode, failed miserably. And it's a good thing I had a nine figure exit because we lost some zeros on that one. It was myself and my business partner from the e learning company.

But to your point, it was, in my case, anyways, this wasn't you at all, but for me, it was, I had this huge ego. I know better than everyone else. Everything I touch has got that platinum touch. It's going to all work out, but really never spoke to anyone. It wasn't a passion of mine. And looking back now, it's something that was.

Coming to me. It was deserved because I didn't do all the right things [00:15:00] or have the right motivations. I was chasing the money, not the passion in that particular instance. So I hear you loud and clear on that and Deep Wealth Nation, take note. Are you chasing your passion or are you chasing the money? Do the passion.

Things usually work out better that way. But so Kristian let me ask you this because you have a really interesting mix with Finstrat. You're helping the B2B SaaS companies. You're working with investors and VCs. Now, for that side of the market, we have some incredibly smart people. The smart money is there, yet they're having some challenges, otherwise you wouldn't be there.

So, from what you've seen in working with these companies and what's now begun to have your company out there and really successful, generally speaking as entrepreneurs, what are we not seeing that you and the Finstrat team see and ultimately come in and help us with?

Kristian Marquez: It's a really good question. And so probably make sense is to start with a little bit of background.

And I would start with. Portfolio Management. So you know, as I like to explain to my kids, there's always the seen, but there's [00:16:00] also the unseen. And, I think there's value in understanding what takes place underneath the surface, because it will Influence decisions, whether it's business or personal.

And so, you know, in the world of risk management excuse me, portfolio management, risk is an absolute crucial part that any portfolio manager and advisor should be discussing with their clients. And so I'll oversimplify it, but basically the idea is, hey, you have money, we're going to invest it. And what we're going to invest it in is really important.

One of those decisions though, the investments need to match your risk profile. Are you conservative or do you like taking a lot of risk? And your time horizon meaning are you going to invest in something because you need to be liquid in six months because you're preparing to buy a house?

Or are you 30 plus years away from retirement? And hence we can tie your money up in an investment that may generate a bigger yield, [00:17:00] but it's less liquid and you're not going to see your money anytime soon. And so these are the types of questions that, that money managers have with their clients. Now go back to 2022 and the federal reserve starts to raise interest rates.

And so effectively taking us away from what was, arguably a zero interest rate policy or near zero interest rate policy. And now all of a sudden, you can generate bigger return in other parts of the market. And so if you're someone who has a portfolio, that's relevant because if you can now earn the same amount of return by taking less risk, why wouldn't you? And this is important. It's important because especially in the world that I live in, arguably it's risky. These are brand new businesses, some of them are pre revenue, but even the ones that are generating, two million plus they still have a long ways to go years before there's an exit.

And so, if you think of the dynamics of how the early stage space has historically worked, most [00:18:00] companies, not all, but most companies are raising funding, equity financing sometimes debt, sometimes they're bootstrapped. But that equity financing has to come from other investors and, predominantly in my space is venture capital. The unseen part that I think a lot of founders don't realize is that, it's not like venture capital, a venture capitalist shows up and says, hey, I have a pool of money. They've raised that money from their investors. And this kind of comes full circle now. Those investors are saying, okay, hey I now have a lot more options.

I could arguably take or generate the same return, but with less risk. Why would I continue to put money in a venture capital fund? Or because rates are higher because it's creating this cycle of less financing we're not seeing IPOs as much. And so there's less liquidity.

So now my time horizon is expanding within the venture capital space. And so. You end up in the scenario where the additional options, the longer liquidity [00:19:00] timelines are making venture capital investors pause and it's having downstream effects on the founders who are now finding that they can't as readily raise capital as they could before the Fed started raising rates.

And so if you appreciate what's taking place underneath the surface. Now you have to ask yourself, well, a lot of founders pre, pre raise were saying, hey, I'm just going to spend for growth. And I'm not even profitable, but that's okay because the money's there and I'm going to go raise more in a year or two years.

Well, that's no longer the case. And it's not to say that there aren't companies who aren't raising, there are, and any given day dozens of companies are closing, but just the terms have changed. And so you're you're now seeing investors becoming very particular. They need to see a certain amount of growth.

They need to see a financial profile that at least shows Break even the growth is tepid and as a founder at least in this environment until things change [00:20:00] You absolutely have to have that appreciation and it means you're gonna your spending habits are going to change maybe you don't spend as much money on product development or sales and marketing or general and admin expense because The financing may not be there and you may be dependent on Becoming break even yourself In order to ensure that you can keep the lights on and get to the next point, I think even more important than that is just an appreciation, especially in the space is you just may not have a company that is fundable by a venture capital.

If you don't have that growth, because now that my sense is that VCs are. Finding it more challenging to raise capital. They absolutely have to look for companies that can generate at least a three X return for their investors. And it comes back to growth and the ability to keep the lights on for the amount of time it typically takes.

To create a 3x return.

Jeffrey Feldberg: So for the entrepreneur out there in Deep Wealth Nation, what would you say to them, Kristian in terms of what would be some perhaps red flags that they should be looking for or [00:21:00] perhaps challenges that they should be looking for? Hey, things aren't going the way that they should be, we're going to need some help.

Even to the point where why don't we reach out to Christian and team, we'll get some of that expert insight and advice and help us miss that road bump. What would be some early warning signs?

Kristian Marquez: Yeah, so I would say in the simplest terms, it's the old, you can't improve what you can't measure. And I say that again, being very practical 99 percent of the financials that we inherit when we onboard a new client are a mess. And it's not a question, really, of whether they are, it's just a degree.

And I acknowledge I'm biased, but, these are companies that are doing, nearly 10 million worth of revenue, yet their financials just don't make any sense. so, uh, you know, quick step back, accrual accounting, recognizing revenue when it's earned, expenses when they're incurred, as compared to cash accounting, which recognizes revenue and expense when it hits the bank. All things being equal, if you have a real company on your hands, you're going to want to [00:22:00] prepare the financials on an accrual basis. It's going to give you the best insight into your performance. what we consistently see is, at best, this hybrid cash accrual preparation of the financials, and notwithstanding, a chart of accounts aren't appropriately set up, expenses are not appropriately classified, no one's ever reconciled any account on the balance sheet and all of this has downstream effects on understanding cash flows, on putting together a meaningful budget, putting together scenarios for forecasting purposes.

And so a long way saying first and foremost, it's just ensuring that the financial house is in order so that you're in a position to at least start making decisions that are informed by what's taking place. And so, that's number one, having an accurate yard stick. Two would then be, all right, now that I do have an accurate set of financials what do I do with it?

And so, this is where financial planning and analysis Where the value of a chief [00:23:00] financial officer can yield tremendous insights into not only what's taking place, but what steps should be taken to improve performance. And, it's funny if you think back to our, conversations we may have had with our parents or teachers when we were in high school, when am I ever going to use algebra.

I mean, this is it. I mean, there are so many different ratios and performance metrics that can be calculated. it. But ultimately, at the end of the day, it's an algebraic formula, and if we want to see a particular outcome, we can literally say, okay, what happens if I adjust this variable? So an example would be, one of the metrics we measure is a return on customer acquisition cost.

Meaning for every dollar I spend on acquiring a customer, how many dollars in value does it create for me? Usually we want that to be a positive number. Sometimes it's, believe it or not, it's not, for sure, some clients before they start working with us. But let's say it's between an ROI of, three to five and someone says, Well, hey, I really want to get this [00:24:00] number up.

And so great, what are the things that we can do when you start to realize that your levers are increase your pricing close bigger clients to increase your average revenue per account, decrease the amount of money that you're spending on sales and marketing. And ultimately just really start to appreciate that, in order to get some place.

You can do it, but you have to understand what's taking place with the business. And once you do, then you can start CFO worth their salt will start telling you what levers need to be adjusted to get you there. And long way saying, I mean, that's probably our, value proposition.

It's what I'd call fix it once, but also assisting businesses, increase their enterprise value, leveraging FP& A.

Jeffrey Feldberg: It's so interesting out there. One of the myths that we come across, Kristian when we're working with entrepreneurs in our ecosystem here at Deep Wealth, they'll go into our 90 day Deep Wealth Mastery Program, and they really have three focuses. Number one, how do I grow my profits today? Well, number two, I'm preparing for an exit or liquidity event.

It could be two years away. It could be 22 years away. [00:25:00] And then while I'm at it, how do I craft a post exit life where I actually find my happily ever after? And I'm not like Jeffrey, who That made more mistakes post exit than he did pre exit. Again, a whole other episode. One of the myths that we come across, and I'd love for you to speak to Deep Wealth Nation about this very directly.

The myth is we are too small to have a fractional CFO, nevermind a CFO. We're too small to have someone like Christian and team to come in today. We are pre revenue or we've only been at it for a few years. When I get a little bit longer down the road, I'm We'll think about it. For that listener, can you share with them why they should rethink and perhaps illuminate a different path for them, the right path?

Kristian Marquez: I think it's a great question. And probably one that doesn't get often, or asked often enough whenever I have this conversation with entrepreneurs, I say, your number one job is just to kind of going back to what I said with the telemedicine company, validate that you actually have a business on your hands.

And, don't allow your ego to take a hit. If [00:26:00] you find out that you don't, I'd rather find out sooner rather than later so that I can move on to my next company or my next project. And so what that translates to practically is, Hey, can you get to a million dollars in revenue with what you're bringing in the market?

And if so, how quickly, you know, if you really have something, A winner on your hands, I'd argue you should be able to get to a million in revenue no later than two years. Sooner the better. But what that translates into is working towards something that looks like product market fit. you can exchange product for service.

But, the idea is first million dollars, you're just validating, hey, do I have something on my hand that the market is willing to spend money on? And then call it two million dollars. Now I'm starting to get something that I can consistently generate. Revenue, and I call this out as milestones is because my opinion is if you're just starting out, all of your resources should really be spent on making sure if you're selling a product that it's squared away and then sales with some [00:27:00] marketing.

As compared to a lot of mistakes I see people make, hey, I need to go spend a lot of money on lawyers. I need to go spend a lot of money on all of these other service providers. You know, It's kind of like, hey, I need to go to Staples and get my business cards and my stationery. It's like, no, no, no don't, don't do any of that.

Go sell, make sure people are willing to give you money. It's fine if, your corporate paperwork and your financials actually are kind of ugly. Because none of that matters if you don't have a company. And so, said another way, I think it's okay that someone doesn't have access to really sharp individuals in the beginning.

But once you start to hit, let's call it 2 million, and you realize you do have a business, then yeah, I mean, it's never been less expensive to start a company. you have the ability to outsource so many non core functions today. There was a English economist in the 1800s David Ricardo came up with this idea of comparative advantage.

Today, a lot of very successful companies have adopted this model, Apple, Ikea, [00:28:00] take your pick. But basically the, in simplest terms, the idea is you answer for yourself is what is that one thing that I do the best? And then I'm going to outsource everything else.

And so if you think of Apple's claim to fame is not the iPhone, the actual phone itself.

They don't make them. It goes to Foxconn, which is outsourced. It's the IP behind the design. And so, if you look on their boxes, what does it says? Designed with love in California. Same with Ikea. Ikea doesn't make any of their own, furniture, but they design everything and they hold that IP.

So if you think about that concept another analogy that I like to use, imagine a surgeon who can type faster than their secretary. It doesn't make sense for them to prepare any paperwork. They're going to make a lot more money with a scalpel in their hand and their OR.

And so as a business owner, I, I say the same exact thing, really, what should your focus be? Your focus should be product development and sales market. And after that, I'd argue outsource everything less, because you'll also increase your runway, because now you can [00:29:00] minimize the amount of expense that you incur, whether that's accounting, that's legal, it even goes so far as to say dev work.

There's no shortage of nearshore and offshore teams who are very competent. And then in time, if you reach 50 million, 100 million dollars, and you realize that there are core components of your business that have to be in house, fine. Bring them in. But today I know multi billion dollar companies that are still outsourcing their dev work.

And so you really just have to look at your business in particular and say, what is it about this company that needs to be W 2'd and if it doesn't, let me go find the best in class service providers to support me.

Jeffrey Feldberg: It's really interesting, Kristian because what you're sharing and the circles that you're in for most entrepreneurs, they don't have access to that. So yes, you're working with the entrepreneurs, but you're also working, I'm going to call it the smart money, as I talked about earlier, but also investors, whether it be family offices or venture capital or everything else in between the two of those.

So, you're sitting at the table with them, for someone in Deep Wealth Nation, who an exit is many years [00:30:00] down the road, and you don't know what you don't know. One of my favorite rhetorical questions, how can you master a game you've never played before? Because building a business is very different than ultimately exiting and selling that business.

And so for that entrepreneur who's saying, yeah, you know what, our financial controls are fine. Our reports are fine. Our KPIs are all good. What is it that the investors that you're working with, what are they not seeing when they're looking at companies to either invest in or possibly even a full buyout?

What are they walking away from the table? Well, if this company only had A, B, C, and D, or if they wouldn't have done, G H I N J, we would have gone through with this deal. What would be some of those things that you're seeing?

Kristian Marquez: So my sense is it really boils down to two things. It's just top line growth and cash management or how efficient are they with their capital. And so a way to think about it is, if a company goes off and raises a million dollars. How long does it take them to create a million dollars in revenue?

If it takes them under a year, you can argue they're capital efficient. If it takes [00:31:00] them more than a year, you can say, well, you're not too capital efficient. And so it kind of comes back to what I was saying before. Most investors are investing in a company with an expectation that it's going to return them a certain amount of money.

People have written about 10 x. I wanna see a unicorn. I only invest in unicorns, but, well, no one has a crystal ball. That there are strategies you can employ to increase your odds. And I'm happy to talk about that as well. But, you know, it's just this idea that your profile, if I'm an entrepreneur, the profile of my company is going to have to.

Demonstrate to an investor that yes, the potential exists that in the next one to five years, you're going to achieve a certain return. Now the other part of that though is, and this I find is actually doesn't happen either is literally saying that in a conversation with a potential investor.

So acknowledging, hey, I understand if you give me your money, you're looking for a potential return. Let me tell you how I'm going to do it. And so I think this kind of, [00:32:00] this is a little dovetail here, but this kind of comes back to valuations. One of the questions we should answer is, well, how do we measure whether or not I'm 3x ing or 10x ing your money?

the way that takes place. Generally speaking, it's going to be a multiple of revenue, multiple of gross profit or multiple of EBITDA. And so you have to be in possession of a forecast. That is based in reality. So, hey, look at this. I have 10, 000 percent growth over the next year.

No one's getting 10, 000 percent growth or very few exceptions for people who are getting 10, 000 percent growth. Maybe if you're open AI and you have first mover advantage and you've created a phenomenal product, but you know, most investors are savvy enough to say, okay, your projections here are disconnected from reality.

100 percent growth, 200 percent growth, I can believe 300 percent growth, but do I really expect you to, get this asymptotic growth that no one else is seeing? No. And so, having a forecast that's grounded in [00:33:00] reality absolutely makes a difference. The other part of that too is you have to appreciate there are going to be investors out there who are going to discount whatever you say, even if it is grounded in reality.

Because they're going to say, yeah, every single forecast I've ever seen is just super rosy, but that's just the way they need to be. So I'm going to take a haircut of 10, 20%. But you know, I'd say it's this idea of, yes, you just need to have a company on your hand that resembles you. that's something that's investable, but also an appreciation that if you're going to have a conversation like this with your investor, that put yourself in their shoes, appreciate that.

They need to see a return that's going to be based on a future valuation that gets them at least 30X, if not more, on that money they're putting into your company.

Jeffrey Feldberg: Deep Wealth Nation, I hope you heard that because as you heard, the world does not revolve around us. And as Christian is sharing, it's really all about person across from the table.

What's their experience? What are they seeing? What are they doing? Do you have the right KPIs? Do you have the right reporting system? Do you have the experience? And Kristian this is something where you and the [00:34:00] team will come in and I would imagine really catapult a company light years ahead in terms of looking at the KPIs, the kinds of reports, having that accountability that can Put them more towards high growth as opposed to just doddling their way along and doing what they've always been doing.

Thoughts about that?

Kristian Marquez: Yeah, I mean, ironically, last night I was at a, as an event, and I had the opportunity to speak with a gentleman who runs the state of Montana's investment. to talk about is the due diligence process. It consists of a board of investment professionals but one of the things we were talking about is their due diligence process.

And I specifically asked, I said, will you co invest with other entities when you find something you like? And they said, yes. I said, will you ever allow them to lead the due diligence? He said, no. We will always. Dive into the investment opportunities that we're putting money into.

Now, should we borrow should we expect all investors to borrow a page from the state of Montana? No. I mean, because there's an investment strategy out there where, people like to call it spray and pay. Spray and [00:35:00] pray, where you're just going to cut a lot of little checks, And hope something sticks to the law.

And that's an approach. I personally don't subscribe to it, but there are investors who do that. But it really just gets to the heart of that, what does the due diligence entail? Well, they're looking at the management team. They're looking at objective numbers. They're looking at controls, especially as the company starts to get to 50 million plus in revenue, there is an expectation that there are policies and procedures in place that are going to safeguard the company's assets.

I'm sure if we were to go look at Fortune 500 companies, we could probably spend a year reading the policies and procedures that they have in place, depending on what department we're taking a look at. So, this broader appreciation that, you know, yeah, when you're starting off, you get a lot of leeway not having infrastructure, but as time goes on mean, you just have to, but the company also benefits.

you want to create businesses that scale, that create the same reproducible outcome in terms of product to [00:36:00] service. And the way you do that is creating policies and procedures that people on your team, when you hire, because of your growth can follow. my sense is that, semi sophisticated, sophisticated investors, they're looking for that.

Because they want to know that their money is going to be safe, especially when you hear stories of fraud. it doesn't happen too often but they're still fiduciaries, they have a responsibility to their shareholders. In this case, the residents of the state of Montana, but that same concept exists, through every state in the union every professional money manager who's out there deploying capital on behalf of their owners.

Jeffrey Feldberg: once is too much when it comes to fraud or something happening and you certainly don't want to be on the other end of that. Kristian I'm wondering, before we go into wrap up mode, are there any trends that you're seeing that's going to really change the future, we'll call it financial management, in terms of what you're doing, broadly speaking?

It could be AI, it could be compliance, it could be other kinds of things. What would you want us to know?

Kristian Marquez: That's a good question. I'd say broadly I'm very bullish on artificial intelligence. And I'm not a [00:37:00] doomsayer. I don't, think it will replace AI as a software program. I don't think we'll replace anybody's jobs in so much as if anyone who's been using AI realizes you still have to review everything that it spits out.

I think the more salient takeaway is that the impact that AI is having on productivity. is material. And if we just look at the, how you measure the wealth of nations, productivity, generally, historically speaking, it's counted by the amount of people that are in the country which is a proxy for productivity aI is materially expanding what we can accomplish in a workday. And so, in that regard, I think it'll continue to be a win in the sale of every single industry where there's an intersection. Now, as it relates to accounting and finance what I was saying a moment ago holds true here. You could write.

So, there's a lot of great programs that automate elements of accounting and finance, but you still need [00:38:00] someone to check all the work. I don't know how you can avoid that. you know, let's revisit this conversation in 10, 20, maybe 50 years, and maybe my tune will change.

at the moment, I don't think so.

I'll give you a case in point. for those of your listeners who use Intuit's QuickBooks online there's a page where they'll post transactions that hit a bank or a credit card, and they'll even make suggestions as to who they think the vendor is and which account it goes to.

And if you do that, you'll know they don't always get it right. There's similarity between vendor names, or it'll default to. An account it might have used in the past, it's no longer appropriate, so there's no avoiding, at least today, this idea that, yeah, it's great to minimize the amount of time it takes to do the work, Because you can eliminate some steps, but you still need someone to check it.

And so what does all that mean practically? I mean, really, we're talking about speed, the ability to close the books faster. And the only reason why you would want to do that is because you want to understand what your performance looks like sooner. But the only [00:39:00] reason you'd want to understand your performance looks like sooner is because you're willing to make decisions.

And so it's just really a question of, hey, what are the things that our business more quickly? That said, I've always been in to course correct month to month? Presuming you have a good strategy in place, I'd argue no. I mean, you can look at your CRM and just see whether or not you're closing deals, to see whether or not you're on track for your budgeted revenue numbers. but you need to read and if you have a good handle on your cash profile which you can do separate of a close as well Do you really need to understand the full picture of your company, week sooner? I mean, sometimes, sure. If you're at an inflection point in the business, I can absolutely see the value in that.

And we'll do that. And we'll help clients close more quickly if we know they're coming up on a financing or a potential acquisition. And that performance is going to have an impact, but I would say on average, the books closing within, three business days versus seven in the long run will not have a memory business.

So I think in the long run it'll reduce [00:40:00] costs because there will be less humans in the loop for purposes of the accounting and finance. I would say if anything, the real. The real prospect of AI is the ability to infer insights into what can be done. But you're still going to need a financial analyst to validate what you see, because we still see hallucinations in the data and it requires someone to validate what it's saying.

Jeffrey Feldberg: Kristian so much there for the listener who's hearing you say hallucination, AI, never heard of that. What are you talking about? What would a hallucination mean? Can you give an

Of that? 

Kristian Marquez: just an error in, in what could spit out. If you wanted to go see for yourself you can Google, typical hallucinations. They'll give you questions that you can ask Claude or ChatGPT, and you'll see that it'll spit out the wrong answers. They're a handful of questions that people have realized they just have fun trying to trick.

Not even a trick, just trying to figure out how accurate the logic is in these LLMs. And we're not there yet. You'll see that they still make mistakes.

Jeffrey Feldberg: [00:41:00] there you have it, Deep Wealth Nation, still not there. Always double check. AI, as terrific as it is, is not perfect. It has some of the challenges that are going to go along with it. Trust but verify, as Ronald Reagan always would say in something that, you know, we That we hold near and dear here at Deep Wealth.

Well, Kristian let me ask you this. We're about to go into wrap up mode. Sadly, there's so many different areas that we could have gone into, but we are bumping up against some time. And at Deep Wealth, it's our tradition where every guest, I have the privilege, the honor to ask the same question. It's a really fun question.

I'm going to set this up for you. Imagine now it's the movie Back to the Future. And, in that movie, you have that fabulous DeLorean car that can take you to any point in time. So, it's tomorrow morning, and, Kristian you look outside your window, not only do you see the DeLorean car, it's curbside, the door is open, it's waiting for you to hop on in.

This is the fun part. You're not going to go to any point in your life. Kristian as a young child, a teenager, whatever point in time it would be, what are you telling your younger self in terms of life lessons or life wisdom, or, hey, Kristian do this, but don't do that? What would that sound [00:42:00] like? 

Kristian Marquez: You know,

It's interesting. My first thoughts were to go back to watch the pyramids getting built. But if I have to,

Jeffrey Feldberg: huh. Uh Huh.

Kristian Marquez: if I was going to go back to my younger self. in simplest terms, I'd say go for it swing hard I have a um, amazing kiddos my youngest daughter is 21, she's a senior in college.

We have conversations around entrepreneurship and one of the things that I see in our conversations is I see with other entrepreneurs, it's just not an appreciation that nobody is operating with perfect information that's just the world we live in. we don't have a crystal ball and that shouldn't prevent us from pursuing our dreams or our visions of how we think the world should be. And so, what I would say to my younger self, if you can imagine it, it's possible. for anyone who's listening, if you ever had I'm not saying throw caution to the wind per se. So I'll have to, there's. I like to say the seven P's, proper prior planning prevents piss poor performance.

There's a lot, there's a tremendous amount of value going into doing your homework and planning. [00:43:00] But, at some point you have to pull the trigger. People have written books on I forget, I think it's Robert Ringer Ready, Fire, Aim. Apologies, Robert, if I'm, whoever, or the author, if I'm getting it wrong.

But the idea is that, hey, fine, do some prep, but also just go for it. And see what you figure out because, the journey is part of the experience. It's not always the outcome and who knows what you find, even if, especially in the world of entrepreneurship, obviously you want to find something someone's willing to give you your money.

But the other thing I don't think people realize is amazing people who really care in my experience seem to be the exception. And a lot of people, whether it's a consumer or a business, I think recognize that. And so when you find somebody who really cares and is really willing to do a great job, opportunity just continues to pop up in front of them because people want to do business.

with that person. And so if you can just start something and pour your heart into it, and as you pointed out earlier, money is how we keep score. Really just focus on delivering [00:44:00] something that people love. Everything will work out and you'll have no shortage of things to do with your time.

Jeffrey Feldberg: Terrific advice, and actually, it's really a full circle, you're right, of how we started earlier. We were talking about chasing the passion and doing something that really ignites you as opposed to following the money. It's usually the other way around, follow the passion, the money tends to follow with that.

And Kristian before we wrap up, a listener, they have a question. They want to learn more about what you and the team are doing, maybe even bring you and the team into the company. Where would be the best place online to find you and speak with you?

Kristian Marquez: so the company's website is uh, if you just want to Google Finstrat, F I N S T R A T management you'll find our website. If you want to go direct to the website, it's finstratmgmt. com. Or if you want to send me invite to connect, just mention the podcast. You can find me. It's Christian with a K.

You've seen the show notes. Marques and, happy to have a conversation of how we could potentially be a service.

Jeffrey Feldberg: And Deep Wealth Nation, it doesn't get any easier. It's all in the show notes. It's a point and click to the [00:45:00] Finstrat website, to Christian's podcast. It's all there. Well, Kristian it's official. Congratulations. This is a wrap. And as we love to say here at Deep Wealth, may you continue to thrive and prosper while you remain healthy and safe.

Thank you so much.

Kristian Marquez: Jeffrey, thank you again for having me on. I genuinely enjoyed it. 

Jeffrey Feldberg: So there you have it, Deep Wealth Nation. What did you think? 

So with all that said and as we wrap it up, I have another question for you.

Actually, it's more of a personal favor. 

Did you find this episode helpful? 

Have you found other episodes of the Deep Wealth Podcast empowering and a game changer for your journey? 

And if you said yes, and I really hope you did, I have a small but really meaningful way that you can actually help us out and keep these episodes coming to you.

Are you ready for it? 

The dramatic pause. I'll just wait a moment. Drumroll, please. Subscribe. Please subscribe to the Deep Wealth podcast on your favorite podcast channel. When you subscribe to the Deep Wealth Podcast, you're saving yourself time. Every episode automatically comes to you, and I want you to know that we meticulously craft Every one of our episodes to have impactful strategies, [00:46:00] stories, expert insights that are designed to help you grow your profits, increase the value of your business, and yes, even optimize your post exit life and your life right now, whatever you want that to look like.

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So all that said. Thank you so much for listening. And remember your wealth isn't just about the money in the bank. It's about the depth of your journey and the impact that you're creating. So let's continue this journey together. And from the bottom of my heart, thank you so much for listening to this episode.

And as we love to say here at Deep Wealth, may you continue to thrive and prosper while you remain healthy and safe. 

Thank you so much. 

God bless.