The Best Opportunities for Cannabis Investors and Entrepreneurs Right Now

cody shirk cannabis investing

A firefighter out of college, Cody Shirk’s expertise in finance is self-taught.

Today he’s a full-time investor and the founder of Explorer Equity Group (EEG), a global alternative asset manager that works to capitalize on investment opportunities off-the-beaten-path.

With investments in industry household names including Kush Bottles and Regulated Solutions, Cody’s latest non-mainstream investments lie in – you guessed it – cannabis.

In this episode, Cody shares his insights on the future of cannabis and advice for both entrepreneurs and investors looking to break into the industry.

Follow Cody at https://www.explorerequity.com/canna

Key Takeaways:

– Cody’s background in investing and how he came to start Explorer Equity Group and Explorer Partnership

– Ongoing propaganda against cannabis and how the industry is working to improve public perception

– The cannabis businesses Cody has invested in thus far, including Kush Bottles and Regulated Solutions

– What Cody looks for when investing in cannabis businesses and his advice to startups seeking funding 

– Cody’s outlook on startup investment and the price of cannabis over the next 1-2 years

– Asia and South America’s developing economies and the exciting investment opportunities within

– Cody’s tips on how entrepreneurs should go about approaching investors as well as ways investors can determine the best entrepreneurs to get behind

To learn more, visit: https://www.explorerequity.com/canna

Read Full Transcript

Matthew: Hi, I'm Matthew Kind. Every Monday look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. Now, here's your program.

Today we're going to talk with a cannabis investor who has a global perspective and has some tips for investors on how to find diamonds in the rough and for startups looking to raise capital. I am pleased to welcome Cody Shirk to the program today. Cody, welcome to "CannaInsider."

Cody: Hey, Matt. Thanks for having me. Really happy to be here.

Matthew: Give us a sense of geography, where are you sitting today?

Cody: Today, right now I am in Palm Beach, Florida, which is actually it's freezing cold today. And you know, you think it's sunny and warm here always but it's cold this morning. But there's big wave so today is gonna be a good day.

Matthew: It seems like a lot of the capital from the northeast and from California is moving to Palm Beach County. I know I just read about like Tony Robbins moving there or he's moved there. And also, a lot of hedge funds moving there. You've seen a lot of that?

Cody: Yeah. It's funny you mentioned that, I'm actually from LA. I just moved to Florida, earlier in the year, early in 2018. So I'm an LA native, and that's where my heart is. But man, it is much more attractive to be doing business in Florida. And when I went to get my new driver's license in the Florida DMV, the lady who was processing all my paperwork, she laughed and said, "Huh, you know, you're one of, I don't know, 100 today that has come from either California, Illinois, New York, New Jersey, so you're completely right, there are a lot of people moving down here.

Matthew: It's amazing how these migrations happen. I read a book a few years back called "The Fate of the States" by a former Wall Street analyst name Meredith Whitney, and she described how this phenomenon was gonna happen. People would flood out of these high tax, over-regulated states, and seek shelter elsewhere. Do you think that some of the high tax and high regulation policies are gonna migrate with the people? Or are they the very people that don't want it to come?

Cody: I think it's both. Human nature is for people to be capitalists. They want what's best in their life, and they wanna get rewarded for the work that they do. That's regardless of any political affiliation. That's how people operate. And you can see that with the way people migrate from one country to another, or from one state to another. So people will go where they're treated best, and hopefully, states and countries will try to accommodate people to attract them there. And when countries don't treat their people right, you know, everyone will leave and we can see that happening in many places throughout the world. Like Venezuela is a perfect sample. Everyone's leaving because their country is in crisis. You have other places like Singapore, Hong Kong, you know, Florida where they are treating their residents fairly, with low taxes and a healthy business environment. And that's why people are moving to those places.

Matthew: Good point. And I also know that, you know, more about Puerto Rico being one of those destinations. And we'll get into that in a minute. But first, give us a high-level overview about yourself and what you do?

Cody: Sure. So I am a co-founder of Explore Equity Group. And we are a private equity and venture capital firm investing in a variety of different markets. And I'm also the co-founder of a social, a private social and investing group called The Explorer Partnership. And basically, that's a group of people from around the world that come together. And we have events really almost all over the world every couple months to check out new investing opportunities and experience the culture, see some weird things and have fun together.

Matthew: Oh, that sounds like a lot of fun. I think I'd really be into that. I like to travel the world and see weird things. So that sounds like my cup of tea. Perfect. So, Cody, tell us a little bit about your background and journey and how you got to this point, as an investor, world traveler, and also someone interested in cannabis.

Cody: Yeah, so my track record or my history is totally not traditional, in terms of the finance world. I was actually a firefighter out of college, didn't really know what I was doing after college like a lot of people, I think, and became a firefighter, it was a great job. I learned that if I worked really hard, I could become an accredited investor, which basically means I worked as much overtime as I possibly could. And then on my days off, I would travel. I would try to get on any cheap airline flight that I could find and travel the world. While I was traveling, I was doing this mostly to surf because I'm a surfer, and I always wanted to check out everywhere in the world. Everywhere I could go, I love exploring. And while I was traveling, I started finding all these great opportunities with real estate and companies and these are all things outside of the U.S. and my mind was just blown, I went wow, there's so many cool things going on outside of the US and in areas of the world you never would have thought of.

And so I started to invest here and there, little things, you know. Buy a small piece of land here, check out a company. I'm always doing all this. I was writing about it on a blog, and I was doing this because somebody recommended, they said, "Hey, Cody, you should be writing everything that you're doing, not so much to tell everyone about everything you're doing but more to keep track for yourself, to make notes and to keep track so you can look back a year or two from now and see where you've gotten and also to remember where you've been."

And through this process of writing everything down, people started to look at what I was doing and then going, "Hey, Cody, I wanna join you." And I was like, "Well, I don't really want you to join me. I don't want to be traveling with weird people." But this started happening more and more and I started meeting a lot of great people, and I said, "You know what? This is probably a great opportunity to increase my investment odds to pool capital together from like-minded people. And that's what we started to do. We started to create SPVs and an investing syndicate, which is Explorer Partnership and we started investing all around the world and had different opportunities.

So from there, cannabis obviously came up. As a firefighter, I saw a lot of pretty...a lot of things that you wouldn't wanna see. I was on an ALS rig, which is Advanced Life Support. So I was, you know, running a lot of calls from everything from full arrest[SP], to murders, to everything you can think of. And you see a lot of alcohol and drugs. And I'm talking hard drugs, and you realize, whoa, alcohol and all these other things, especially pharmaceuticals are so dangerous, and they're just so...you can't believe that all those things are legal. And then you see cannabis, which is really one of the most harmless things ever. And that's illegal. I was just...it was such a weird thing to me.

So through traveling, I started seeing a lot of cannabis involved in cultures outside of the U.S. How it was this nonchalant thing that was just part of everyone day's life, and, you know, whether they're old, young, students, whatever they were, people would use it all over the world. And it was just like, what is going on here? So as legislation started to change in the U.S, I said, "You know what, this is insane to not get involved. And this is such a good opportunity. It's only a matter of time until this is a part of everyone's life and I need to get involved in this." So that's kind of my background, my journey, how I started to get involved with cannabis.

Matthew: Yeah, that is interesting. And, you know, it seems so inevitable to me too. But if you haven't tried it, that propaganda was just so effective. I mean, I cannot even believe how effective it was, like generations were convinced that it was the devil and I just think like, "Wow, if that propaganda was that strong and that effective, like what...is there anything else out there that as a society we believe in double-digit percentage, that's totally not true." So I wonder about it. It's hard enough.

Cody: Yeah, I forget the quote. I think it's made by Einstein. It's the ability to hold conflicting points of view at the same time and try to basically argue against any opinion that you have. And for any investor or anybody who likes to think to themselves or read, that's a very difficult skill, is to question what you believe in. And it's very important for investing because you can get stuck on some idea. And you could be totally wrong if you're not asking those questions that conflict with your point of view. And cannabis is a perfect example. Especially in the U.S. and most of the world because there's been this drug war that's a massive failure. We've been taught that drugs are evil, you know, people die, all these horrible things. And, we've never taken the time to take a step back and actually question that and say, "Is cannabis really deadly? How much...like what are the problems that are being caused by it? Is this real or is this some type of story that's made up?" And I think people are starting to question that narrative that they've been taught, and it's clear with public opinion, especially in the U.S that it's flipping so fast and it's not because people all of a sudden discovered something new. It's that, you know, the tidal wave of sentiment is changing and a lot of their herd, I might say, like the sheeple are trying to...are now changing their mind just because they're realizing, "Oh, I wasn't taught, I wasn't taught this narrative. So I guess I'll just change my mind now," even though they never really dug into it.

Matthew: Right, right, right. Well, Cody, tell us what cannabis businesses or startups you invested in, to date?

Cody: Yeah so we've invested in five different companies so far. A couple of them are I guess quasi-household names, Kush Bottles, Prohbtd, Regulated Solutions, Heally, Kellock's Peak[SP], what else have we done? Those are our main positions where we are writing a check of usually half a million or larger, and those have been done so far through our investing syndicate. We'll be launching a fund in a couple months, which we can talk about a little later, but we believe that we are very involved in the cannabis spaces. I personally have been investing since about 2012. And I've been traveling the world looking at almost any company and any grow that you could possibly think of, in countries that you didn't even know existed, let alone with growing cannabis. So yes, we believe we're very connected within the cannabis industry.

Matthew: So when you look at these investments, you wrote checks for, what impressed you about these companies in retrospect?

Cody: Yeah, so one of the things that I noticed when I first started looking at cannabis companies is that they...a lot of them, and this is a couple years ago, were run by cannabis industry insiders and that may sound like a good thing but I discovered that it was actually a bad thing in a lot of scenarios, because you have a lot of people that were creating companies that were previously operating in the black market, which means that they were doing illegal things previously and with their new companies they were also not really doing everything up to par. So one of the most important things that we've been looking for is operators that are either doing everything by the book, 100% legal, crossing all the T's, dotting all their Is, or we're looking for entrepreneurs that have come from other industries, whether it be a regular entrepreneur from a non-finance background or someone from a real financial banking background. We look for those types of people who are leading companies to be successful.

Matthew: Okay. And what's your thoughts about investing in companies that grow cannabis?

Cody: We're totally agnostic to that. We don't mind investing in companies that touch cannabis. Clearly, there's more risk there, but the risk can be mitigated with understanding what the product is, who the team is, what their forward path is. Again, there is risk in the sense that you're subject to government laws. But as we all know, there's an unstoppable shift in the way legislation is moving, and we firmly believe that it's just a matter of time. So for now, it's just a matter of really getting aligned with the right teams that are not going to do anything crazy in the midterm and just hold their path and be ready for one last change.

Matthew: Now, do you have any ideas on where the price of cannabis is headed in the next year or two?

Cody: It's a great question. We don't mind investing in companies that touch cannabis. But we try to avoid any companies that profit directly from growing cannabis. So what that means is that if a company is just growing cannabis, and they're just selling the flower, we believe that cannabis prices will be crashing down. It'll become a commodity just like corn, wheat or hops for beer. And if you think of any beer company, if you wanna invest in it, you would probably invest in a brand or a company, you wouldn't invest in a farm that grows hops. Now, that's a generalized opinion. There's clearly high-end growers that provide great products that are, you know, for the higher end market and there's niche opportunities, but in general, believe the price is going down. One of the epiphanies I had, I think this was in 2012 or 2013, I was in Colombia. I spent a lot of time down there and we were touring some flower growers. I'm not talking about cannabis flowers, I'm talking about actual flowers that go in a vase. And Columbia's one of the world's top exporters for fresh cut flowers. And what they're doing is they're changing over these huge, huge farms over to cannabis. And they already have the infrastructure to grow everything. They have all these carts, they have workers, they have facilities, they have everything built out. All they have to do is literally change over the seeds of what they're growing. And they're currently doing this.

So when I saw this, I said, "Oh my God, these farms are massive." They have free water, because it rains every day. They have free sun, because they're close to the Equator, so their seasons are much more calculated. And they don't have the massive power bills that all these greenhouses have in North America and anywhere else that's cold. So I started seeing these farms and I said, "Oh, my God, this is only just a matter of time until this becomes a commodity, with the prices going down." You cannot compete with a producer that has, you know, free sunlight and free water. You just can't do that unless you're at a super high-end market. So we believe in general that the cannabis price will be going down.

Matthew: Well, the only place where that might be an exception is where states require it grown in their jurisdiction. But I think for every place else you're right, I mean, why wouldn't you want super high-quality low price, you know. That's why I look at a state like Massachusetts or Illinois and I think, wow, this is gonna kind of become like an oligopoly or something like that because it's so highly regulated that the price is gonna stay up." And I could be wrong about that, but that's what when I look at a highly regulated market that's what I see. And then the states or countries that open up to imports do exactly like you're saying and the price will drop precipitously.

Cody: You're absolutely right. And to be fair, we acknowledge that as well. The states, especially in the U.S. still continue to be regulated. And even if or when it becomes federally legal, that will still probably be the case where states have a tight grip on who gets licenses, who's allowed to grow, who's allowed to sell, you know. Vertically integrated companies will be, you know, we'll have a moat around the licenses that they have. And that will for sure, be the mid-term trend and how long that lasts, we're not sure. But like you said, for the major growers and the companies that are importing cannabis from other countries, it'll be a race to the bottom on the pricing. But for the midterm, absolutely right. It's a licensing play right now. And how long those states and countries will keep a grip on how they regulate everything is anyone's guess. But I guess like we started the interview off, it's a matter of who is gonna treat consumers and businesses the best and that's where people are gonna flock to.

Matthew: Yeah. As we look out of the year ahead, how do you see the landscape of investing and startups changing?

Cody: Well, this is a...I don't wanna be negative here, but I think I'm gonna try to take a realistic approach. You know, we're in the 10th or 11th year of one of the longest bull market runs in modern financial history. If you look at anything that's cyclical, which is basically everything in life, whether it's the seasons, or the tides, or the weather, or the way birds migrate, everything's cyclical, and we can say the same thing about the markets. We are going to have a market correction. When it will happen, nobody knows. Are we in there right now? Maybe. So that's going to affect the broader market as well as the cannabis market. So what's gonna happen for the, you know, the startup world and for entrepreneurs is gonna be really tough coming up, but that's a good thing too, because that shakes out the industry, it really shakes out who's not really serious, it cleans out the companies that aren't providing any value, and it is good in the long run because it makes the industry much stronger.

Matthew: Now, when you put your investor hat on and you're looking at startups or entrepreneurs, how do you look at the marketplace? Like when 10,000-foot view, you're looking down all these cannabis entrepreneurs, how do you kind of sort them or categorize them or get an idea of how you wanna invest in them?

Cody: It's a great question. I think that anybody investing in the cannabis space right now will have a similar answer because the truth is that we just don't know. This industry is so young, we don't have a lot of data to say this is right or this is wrong, and we see people coming from all walks of life into the cannabis industry right now. We invested in a company called 1906, the CEO is Peter Barsoom. He was a COO of Ice, which runs with the NASDAQ. He is, you know, he's a graduate of Princeton. He is, you know, the iconic guy that, you know, is from the finance world, and to see him come to the cannabis space, there is his big question mark thinking, "What the heck is he doing here?" But it ends up, he's a great CEO. He's the perfect guy to lead a company.

At the same time, you have people that are 22-years-old, fresh out of college and starting companies in the, you know, high-end cannabis, luxury space. And you go, "What do these guys know about business?" Well, turns out, they know a lot, because they don't have that jaded mindset about cannabis and they're very creative. So, to pinpoint who's a perfect person is pretty tough. But I think just like any investing world, you just look for the entrepreneur that kind of has that X factor that has this, you know, really positive attitude, a can-do effort and they just work their butts off.

Matthew: Now, outside of North America, do you think there's a thirst to invest in cannabis?

Cody: Absolutely. You know, we travel a lot, I travel probably too much. And it's a topic that comes up all the time and people are looking at Canada and the U.S. and a lot of investors still have a question mark over their head. They don't really know what to think of the industry just because they don't know enough about it. But a lot of other investors it's so clear to them, they know what is going on and they want to invest. And they are, you know, licking their chops to try and get some in into the U.S. market. That said I'm a huge fan of the U.S., however, the U.S. is unattractive for foreign investors because of a lot of tax laws and a lot of reporting issues. So in the midterm, I think investors are looking very excitedly from outside but they are also being very patient.

Matthew: Now, you travel around the world a lot, just like me, and you're seeing a lot of different things. How do you see the world changing, and what are maybe some misperceptions listeners might have about what's going on in Asia and how the economy there is developing and the tech sector is developing, versus maybe thoughts we had about Asia in decades past?

Cody: Yeah, that's a great question. And it's a hot topic right now because of the conflict with the U.S. and China and Russia. It's hard to generalize something because of all the misinformation and accurate information that we get. But the truth is that Asia will become the largest economy in China, specifically. What we get fed from the news and what we see a lot is just not true, what's going on the ground. Are there internal financial issues there? For sure. There's a lot of problems that will get shaken out over the years. And just like any company or country that's growing, there's gonna be a lot of hiccups along the way. But for people who have traveled to Asia, specifically to China and cities like Shenzhen, or Beijing, or Shanghai, when people actually go there and use the public transportation, when they walk into restaurants when they walk down the street, they're blown away. It is unbelievable. Shenzhen is a great example, their public transportation it blows you away. It's brand new, it works perfectly. It's on time, it's clean. You can walk down the sidewalks, everyone's nice, and you think, "What? I'm in a communist country, what's going on here?"

When it comes to cannabis, you know, Asia is kind of two extremes. There are some Asian countries you can't have any drugs and there's a severe penalty for having it. On the other hand, cannabis is a part of a lot of Asian culture and countries like Thailand and now South Korea are looking to legalize cannabis. So there's a lot of opportunity there. And, you know, Asia specifically is very interesting for all markets.

Matthew: And you also enjoy South America and feel like Colombia is overlooked. I've been to Medellin and really enjoyed it, but haven't traveled outside there. Can you talk a little bit about what you think is going on there?

Cody: Yeah, Latin American, in general, is just an incredible culture. It's very family-oriented. And when you travel there, you just feel comfortable and you feel like you're having fun. Columbia specifically, it's got a bad rap because of the drug war and everyone knows about that. I'm sure if anybody is listening and you're interested in cannabis you've probably watched Narcos on Netflix. And the truth is, is that I actually have a lot of friends that live in Medellin and Cali, and actually have an apartment in Cali. And one of my best friends who lives in Cali, his wife who grew up there said it was actually worse in Cali than the show depicts. So that's terrifying to think about. But here's the thing, is that that's over. Yes, they still have a lot of problems there, but the drug war is over in that sense. Specifically cannabis, it's a non-issue in Colombia right now in terms of people using it. The, you know, police officers don't even worry about it, they just walk by it.

Columbia is extremely inexpensive for anybody who's holding U.S. dollars. So going there it's a great way to have a European style vacation on a, you know, very inexpensive budget, and the lifestyle is great. And from a cannabis perspective, there is a lot of really exciting things going on there. It's like I mentioned before, they have great weather and the perfect agriculture environment. So I think we'll see a lot of stuff coming out of Columbia.

Matthew: Yeah, agreed. And they also speak an extremely clear form of Spanish, which is great if you only speak a little bit, or you wanna learn. So I like to get into the details a little bit, too. We've kind of went general, if you were to pick one or two investment opportunities, maybe in Asia or South America right now, that excites you the most, what would you say those are?

Cody: I think from a personal standpoint, real estate is very interesting in Latin America, specifically, Colombia. People, in general, are very hesitant to invest in real estate outside of their home country, because they assume that a foreign government will steal your land or take your property. And the truth is that that's just false. Yes, there are instances where that happens. But in general, property rights of other countries are just as, if not stronger than, you know, Canada or the U.S. or European countries. So the is a great opportunity now to invest in real estate in Latin America, extremely low prices still, and you can rent them out for a relatively high yield. We have a place in Colombia that gets in mid-teens yield and there's capital appreciation and we get to go use it anytime we want. So it's a great excuse to invest there. Asia, I'm not a big fan investing in real estate, they have different land hold laws. But in Asia, there are unbelievable companies coming out of there every day in the VR, you know, tech space that I mean, the honest truth is that they are surpassing the U.S. and the Western world when it comes to tech. And a lot of it is just not really looked at right now.

Matthew: Now, they have capital control, so how do you invest in some place like China? Does it have to be done through Hong Kong or how does that work?

Cody: Yeah, great question. Yes, the short answer is, yes. We invest in companies that are domiciled in a jurisdiction such as Hong Kong. Even though they may be doing a lot of work in China, there's a lot of issues. Obviously, there's currency issues, there's translation issues, there's cultural issues, and there's a lot of times it's difficult to translate that into a clean business transaction. So we look for companies that are domiciled in a jurisdiction that we feel comfortable in.

Matthew: Another upside with Hong Kong, their dollars pegged to the U.S. dollar fixed rate. So you don't have to worry about the currency exchange risk, although there's always the risk of uncoupling. But it's been pretty steady to date.

Cody: Yeah, but there's an argument for a lot of people that if they uncouple it, the Hong Kong dollar will actually be more strong or stronger than the U.S. dollar. So yes, it's kind of, in my opinion, it's a great investment for almost zero downside risk with upside potential because like you said, it's pegged to the U.S. dollar for now. If they decide to unpeg it, Hong Kong is much better positioned than the U.S. from a financial standpoint. So the Hong Kong dollar conceivably would be a much more desirable currency to hold than the US dollar.

Matthew: That's interesting, and there's definitely free marketplace still Hong Kong. Hope it just stays that way.

Cody: Yeah, it's definitely, you know, gives people wide eyes when they go there and see the way everything's going on. There's more pressure coming from China, but still, it's a great place to do business.

Matthew: Okay, and what about Puerto Rico? I don't know how many listeners are aware or maybe they've heard about but there's some huge incentives for Americans to move there and enjoy better tax rates and different things. Could you talk about that a little bit?

Cody: Yeah, I'm not an expert here, even though I spent a lot of time down there and spend a lot of money on lawyers and figuring everything out. But there's a huge opportunity for somebody who wants to move there and has a business that's exporting services from Puerto Rico. Basically, how it works is if you move there and have a business that exports services, you pay a 4% tax rate for yourself. And then any capital gains that you have, you pay zero percent on. So, and obviously, there's a lot more details to that. But that's generally how it goes. And from a comparison to the federal, U.S. federal tax rate, it's not even close. So if you run a business where you're doing something online, where you're exporting services, you have to live in Puerto Rico for more than six months out of the year, but it could be six months and a day and you qualify because you'd be a resident of Puerto Rico. So there's a tremendous opportunity, especially for somebody who's maybe younger and doesn't have a family with no extra baggage, they could move there for a couple of years, make a lot of money and then go off and do their own thing wherever they want to go.

Matthew: Yeah, and if you're maybe like a cannabis royalty company or somebody that has a business that could qualify to live there for a part of the year and enjoy those tax rates that are codified by the U.S. then that would be a huge advantage, I would think. I mean...

Cody: Oh, yeah, it's massive. And remember, it's a tropical island in the middle of the Caribbean. So the actual cannabis environment there is, you know, there's a lot of potential there as well. And the other thing is that there's this thing called opportunity zones in the U.S., which basically means that you can take any investment money that you have, that you are subject to a capital gain on and you can invest in certain zones throughout the U.S., and your capital gain is basically you don't pay capital gains for many years. So it's deferred. The entire island of Puerto Rico is an opportunity zone. So you could literally go anywhere in Puerto Rico and buy real estate and your capital gains would be deferred. The other thing is it doesn't have to be real estate, you can have a company in an opportunity zone as well and any investment money that goes into that company also qualifies for the opportunities zone which means any capital gains would be deferred.

Matthew: That's incredible.

Cody: Yeah, there's a huge opportunity in Puerto Rico. But I mean, I don't wanna pretend that it's a perfect place because there's still a lot of problems going on down there. And it is technically part of the U.S., but it is certainly got...you know, there's other issues going on down there. So it's not a total paradise.

Matthew: Yeah. But is it evolving into like a mini-Singapore you think, over the next 10 years or 20 years?

Cody: I would like to think that. I would definitely like to think that. There's some areas in San Juan that are very nice and provide a great lifestyle. There's other areas in San Juan that you probably don't wanna go. So hopefully, they're able to develop into something that's similar to Singapore, you know, my fingers are crossed, but we'll see if they get there or not.

Matthew: And for entrepreneurs that are listening and thinking about the best way to talk with an investor, can you give some suggestions on how best to approach investors and how to talk with them in a way that, you know, is transparent, builds the right expectations, but also, you know, intrigues investment?

Cody: Yeah. I think this conversation or this question could go into a two-hour-long talk. But I think there are some general things to look for if you're an entrepreneur. The first thing is that as an entrepreneur, whatever you're presenting to an investor, you have to look through the investor's eyes. So the investor is looking to make money. At the end of the day, that's what they're looking to do. Yes, they're looking to create, you know, great businesses and help people change the world and create great products, but they're also looking to make money. That's what how, you know, the wheels turn and that's what allows investors who want to the next venture. So if you can position your opportunity or your company and through the eyes of the investor, you have a much better chance of appealing to that investor and having a second talk.

The other thing is that just be up front, you know, entrepreneurs, those that are very experienced know how to approach investors, they know what information to provide, and they know how to get a meeting or a phone call. Those who have not done it before, it's very tempting to want to lead investors on or have multiple phone calls. But really that's a turnoff for a lot of investors because you're just wasting their time. You wanna get the right information in front of the investor's face, right away, so the investor can say yes, no or let's talk more, instead of trying to lead them down some path that's, you know, frustrated the investor down the entire way.

Matthew: Any other turn-offs that you've experienced where you said wow, that just left a bad taste in my mouth to kind of sidestep that.

Cody: Yeah, actually, we just had an experience with a company, a cannabis company that would...which I won't mention, but a lot of, not a lot, but some entrepreneurs will create a sense of urgency for investors, they'll say, "Oh, our round's closing, we've already raised this amount of money or so and so has committed, if you don't commit by the end of this week, you know, you're out." And that's that sales tactic of trying to pressure investors into placing money. And any good investor, first of all, knows what's going on and they're not gonna fall into that trap, but second of all, it's a huge turnoff. If you are looking at a company to invest in and then you realize the CEO or whoever's raising money is pressuring you with sales tactics, it's a huge turnoff. And you realize that hey, why are these people, you know, doing this. Their companies should be able to stand on their own two legs and attract investors on their own, they shouldn't have to make this weird sales tactic. So I've noticed that a lot lately and it's a huge turnoff.

Matthew: Yeah, and how about for investors because one question I get a lot is especially via email is that I want to invest but I'm not sure which founders to believe in and what they're telling me and I'm not, you know, it's just that it all sounds good but I don't know if it is good and what should they look to avoid so they can, you know, make a good decision?

Cody: Yeah, you know, it's funny you...that question is interesting because when I started investing in my early 20s, when I was doing it all my own, I was out in the world making a lot of mistakes. And I lost a lot of money. I can't even tell you how many mistakes I made. But a lot of people wanna put professional investors up on a pedestal. You graduated from Ivy League school or you did this or you did that. So you must know something more than me about investing. But investing is really simple. It's really, really simple. You find a company that, if it makes sense or sounds like they have a good product, then you go forward and you go, "Okay, what are the entrepreneurs about, oh, who's leading this company?" And then you get a gut feeling about who this person is. But those two steps of finding the company and then introducing yourself to whoever's leading the company, is exactly like any other scenario in life. Like if you were at a barbecue with your friends or with your family and you met one of the neighbors and the neighbor is just a total jerk or they give you a bad feeling. It's the same exact thing in an investing world and it totally applies. We all, regardless of our background, have something in our DNA that tells us this person's good, this person's bad, they're lying to me, they're truthful. And you can use those same gut feelings to really vet which companies are the best and what people are doing the right things.

And the same thing goes with companies. You can look at a company go, "Wow, that product works or I don't understand that product." And if you don't understand something, or you think there's too many steps along the process or just something you're not interested in, do not be afraid to pass, just say no. If you don't understand it, and you're, hopefully, the target and your customer don't invest in it. So I would say overall for investors is just keep it simple. It's really not that tough of a process. It just requires a lot of digging, a lot of asking questions and just really spending time with entrepreneurs really get to know who they are.

Matthew: What about for a startup founder that's like, "Hey, you know, maybe Cody or someone else passed on investing in me," but they circle back around and say, "Hey, would you give me feedback around it as advice about how I did, you know, what your concerns were, now that the pressure is off and the round's closed or I know you're not interested." Do you welcome that type of thing and try to contribute that way or how does that work?

Cody: 100%, 100%. Any entrepreneur that's successful, typically, goes on to have other successful ventures. So, you know, most great entrepreneurs are not one-hit wonders, they have multiple successes. So let's say there's a young entrepreneur that contacts me or somebody else and I or somebody else passes on that opportunity. Well, maybe it was a mistake for me to pass it but I wanna know what's going on with the company later on down the road. I wanna see what their success is. And even if it was a failure, I enjoy seeing the journey of people developing companies because they learn every step of the way. And maybe they have two or three failures and then the third or fourth one is a success because of all the things they learned previously. So for any entrepreneurs staying in contact with investors is so important and even if they pass on you don't take that personal or anything like that. Just think okay well they're not ready now, I'll make sure to keep them in a list, I'll reconnect with them in a couple months, update them with what we're doing and you never know what will happen. And that's just like friendships, I guess like going back to keeping it simple.

We have that scenario all the time. You may see somebody, you know, every couple weeks at some restaurant you pass by, and then you see them more and more and you kind of warm up to them, get to know them and you feel more comfortable with them, it's the same thing in the investing world.

Matthew: Yeah, well, Cody, I'd like to ask a few personal development questions to help listeners get a better sense of who you are personally. With that is there a book that's had a big impact on your life or your way of thinking that you'd like to share?

Cody: Oh, I hate this question because I read a lot. I love a lot of books so I don't like to pinpoint one, but I'm gonna do a couple. So just bear with me. Pretty much any book by Napoleon Hill, and the kind of self-help books, like for example, "Think and Grow Rich," and they're cheesy if you think about it, just "Oh, Think and Grow Rich," but for somebody who maybe didn't grow up in a very successful family or environment you typically have an assumption that other people are better than you or you're not allowed to go work in certain industries. But that's just not the case, it's always your mindset. So a lot of being successful whether you're an entrepreneur or investor or whatever, it just is your mindset. You think I can do this, go do it. Just a matter of putting one foot in front of the other and doing it. So I like any of the Napoleon Hill books because they really simplify things and make you think, "Yeah, I am that guy, why don't I just go do that and be successful." And then I'll mention one other book, it's "The Creature from Jekyll Island," and it's a...

Matthew: The gateway drug to all monetary theories. It's really interesting, yes.

Cody: I think that's such a must-read for anybody who is investing or even likes or cares about money. It is man, talk about questioning what you've been taught in your past and putting some perspective on the financial world.

Matthew: Yeah, that's a real one. And back to Napoleon Hill there and that book "Think and Grow Rich," there are some edits made to that book where they didn't include, the editor didn't wanna include everything that he wrote because it was a little controversial, but you can find some of the edited pages on the internet. And he talks about kind of like the metaphysical aspect of positive thinking and goal setting and these things, and he comes at it from, I wouldn't say a new age point of view, because that theme really didn't exist back then. But it almost has that flavor to it, which is kind of interesting, interesting also that they edited it out, because it was too, you know, I don't know, metaphysical.

Cody: Yeah, I've actually read that version and you're totally right, and it's kind of applicable to the cannabis world just because I think a lot of cannabis enthusiasts are able to have interesting introspects about their life and perspectives about what's going on, and that book really hits, you know, hits a lot of points that deep down inside you identify with, but you're like, "Wow, why haven't I ever read this before? How did nobody ever articulate this to me?" And that's why I like the book. A lot of its, you know, a lot of people like to skim over, but there are some really good points in his books I like.

Matthew: Me too. So Cody, what is one thought that you have that most people would disagree with you on? Doesn't have to be specific to the cannabis industry.

Cody: Well, I always get critiqued about investing outside of the U.S. or investing outside of Western countries. So anytime I say, "Oh, I'm traveling, you know, wherever, Colombia or Chile or you know, Hong Kong or Indonesia, people will say, "Oh, you're crazy. Why would, you know, invest anything there, you're gonna lose all your money. And there is a, you know, people are jaded to think that wherever they're from, is the best and everywhere else is dangerous and you're in, there's no opportunity there. So a lot of people disagree with me about this stuff. And I think it's just because they haven't looked, they haven't gone out there. So there are opportunities around every corner. And that applies to every industry including cannabis. You just have to look, you just have to go and hear it for yourself. And like I said before, it's very difficult to hold an opinion with two conflicting viewpoints. How do you balance that? And I don't know the perfect way, but you just got to go out there and do it. So I would encourage anybody to just, you know, not be afraid to step outside your box, look at other opportunities even if you disagree with them and just take a hard look at them.

Matthew: Great answer. Cody as we close, how can listeners learn more about you, your travels, your investor groups and so on?

Cody: Well, the best way is just to contact me. You can go to explorerequity.com/canna and we're having something there so people can reach out. But we do meetups, really almost every month throughout the world. We've done them in London, Hong Kong, Singapore, Italy, Vegas, New York, San Francisco, I mean, literally everywhere. And it's a great opportunity to meet myself and our team face-to-face. We don't like to do business with anybody, unless we've met them face-to-face, shook hands with them. Not only does it create trust for our investors and for our partners, but for us. We don't wanna do business with anybody that we don't trust. And I think that's something that's been lost in the digital age, is having that face-to-face interaction. So we place a huge importance on that. So we really encourage anybody to reach out to us and we'll make time to meet people.

Matthew: Great. Well, Cody, thanks so much for coming on the show and educating us and good luck to you on all your travels for the rest of 2019.

Cody: Thanks, Matt. Hope to see you somewhere in the world.

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