The Niche Asset Class Beating Private Equity & Venture Capital with Yuen Yung – EP 238

Justin Donald: What’s up, Yuen? Good to have you on the show.

Yuen Yung: Hey! What’s up, Justin?

Justin Donald: Well, I’m glad that we could make our next meetup not a diner meetup. I had a lot of fun at 24 Diner. It’s like one of Austin’s staples, and you and I had a great time catching up. But our conversation was so good, I was like, we have to get you in front of our audience. You are so much fun.

Yuen Yung: Oh, it’s funny. You’re too kind. Thanks.

Justin Donald: And it’s also been fun planning a really cool event around the ESPYs this year. That could be a fun thing to kick the conversation off with because you brought an opportunity to me since you knew that I had been speaking to a lot of pro athletes and kind of teaching, sharing my story, getting them access to my book and many of our resources, like our vetting deals courser and a few others. And so, you had suggested, hey, I run this event literally the day before the ESPYs kickoff. So, a lot of the athletes are already there. It’s in the hotel they’re staying at. And I would love someone to co-run it with me. And so, of course, I’m a heck yes. But I’d love to hear you talk about it a little bit.

Yuen Yung: Yeah. So, I’ve been working with athletes and working with folks in that realm for quite a while. When I was a financial advisor, we had several athletes as clients, and that’s kind of where it started. But I really took an interest in really trying to figure out how to help them, because what I learned was, even though we kind of see it as this, oh, my gosh, they’re athletes, they’re stars, right? And you see them on TV and all this really cool stuff. What you find out is that on the back end, there’s not a lot of support and help for them, especially after the game.

Justin Donald: That’s right.

Yuen Yung: During the game, they’re still kind of coveted and a lot of people cater to them, but man, once they’re done with that game, it’s almost like they’re forgotten, and then they just don’t have the training or the ability to figure out, how do they get through the majority of the rest of their life, right?

Justin Donald: That’s right, yeah, because it’s really Chapter 1 versus a lot of people think like, this is my career. No, actually this is the first step or phase of your career. And most athletes, the vast majority have to reinvent themselves. They can’t be a pro athlete for life.

Yuen Yung: Yeah, that’s right. Yeah, most of them, by the time they’re retired, they’re in their like late 20s, early 30s. It’s not even like, they’ve gone on for like 20, 30 years like we do in the business world. Physically, it is just too demanding. So, when they’re done, they’re still very young and it’s like, so what do they do with themselves, right? And how do they keep the income going? How do they make life happen, right?

Justin Donald: Totally. It’s so funny. Part of me, I’m wrestling right now with a series of questions that I want to ask you, and part of me is like, I want to follow your story and kind of go chronologically. And then the other part of me is like, you have such a cool backdrop and perspective having been in financial services, you sold that practice. And it’s not the only business you’ve sold. In fact, I mean I really do want to get into your first business and being on Shark Tank, but I feel like your perspective is going to be really a wonderful one because you’ve been in financial services, but the way you invest today is not like you did when you were in financial services.

Yuen Yung: That’s right, that’s right.

Justin Donald: You went big in real estate. You went big in franchising. You had your own restaurant at one point in time. Today, you have your family office that you manage. And I know it is different than the way most people are taught to invest. So, maybe we start there, and then we can unpack more of your story.

Yuen Yung: Well, it’s interesting. So, when you first start, you’re a young guy and you don’t know any better, right? So, I went to UT here in Austin, got a finance degree, and I thought I was hot stuff, right? I was like, yeah, I’m going to take the world by control and now I’ve got a finance degree. I’m going to tell everybody how to invest in stocks and bonds, right? That was my whole thought process. I was going to be a stock jock, right? And you get out into the world and you start realizing that you’re young and you really don’t have the experience. And so, now you had to keep learning.

And so, over that course of time, not only did I continue to learn, I became a CFP, a CMHC, and all these different things to just keep building my knowledge of how big and vast the world of investing really is. And what I learned over that time period is there’s a big difference in wealth preservation versus wealth growth and acceleration. And the mindset behind those timeframes is very different. And so, then I started lending that to what I did for myself, right, and in that practice.

And so, about 13 years into building a wealth management practice, I made a U-turn, so to speak, and decided, you know what? I’m going to learn about franchising because you hear about people making great wealth in the franchise world. And so, we built our own franchise, grew our own franchise, and did that. And then it was like, okay, now after the franchise is sold, now what? And it was like, you know what? I heard people make really good money in real estate. And I was like, okay, let’s figure out how to get into the real estate world, right?

And so, I got into the real estate world for a while and still own a lot of real estate, but that just became part of the overall. And then I was like, you know what? I’m an entrepreneur at heart, and so, man, how do I get into the entrepreneurial world? And so then, decided like, oh, my gosh, why don’t I back entrepreneurs? And so, now I’m going through all that and now we’ve backed 22 entrepreneurs, all kinds of different companies and industries. And you got another 30, 40 to back. So, that’s been kind of where I’m at. And I don’t think much about it other than every day, I wake up and I’m like, okay, who are we going to help and how are we going to make this happen?

Justin Donald: I love it. That’s a great story. So, we could take a lot of paths here. You had your path on just traditional financial services. We’ve got the path of real estate. We’ve got the path of franchising. I think before we dive into any of these, I would love to know, like what do you see as the major differences in how you invest today versus how you were taught to teach people to invest back when you were in the financial industry?

Yuen Yung: That’s a great question, and there’s a lot of pieces to that one, right? So, when I first came into the industry in the traditional method of, and I’m dating myself here a little bit, right? So that was back in the days where mutual funds had loads. You would pay like 5% to get into a mutual fund.

Justin Donald: So crazy.

Yuen Yung: Which is crazy to think about today, right? But back then, that was like very normal. And the good ones like, boy, they even charged more than 5%. So, it was kind of amazing how that world had kind of come together. But when you think about that world, it was very much a linear way of, I wouldn’t even call it building wealth. It was a linear way of saving money to get your life goals done. So, it was all about, hey, you need to save 300 bucks a month for your kids’ education. You need to put away a thousand dollars for your retirement. And let’s look at all the different vehicles that’ll get you there. And then everything went into really public-type markets, right? There was no conversation around, what we call alternatives today. And what I found was really a lot of the wealth was really should be built there, not actually in the public markets.

Justin Donald: That’s right.

Yuen Yung: And we can talk about the nuances in my philosophy on that, but the way– so over time what you learned was there’s these concepts and ideas of systematic risk versus unsystematic risk, right? And you learn about diversification, but they didn’t teach you that there’s a whole world of diversifying outside of public markets as well, right? And so, that’s really kind of what led me into the path of where I am today doing private equity, because what I realized was real enterprise value and wealth was generated really on the alternatives and private side, the real estate, the private equity, right, building businesses and that sort of thing. And so, that’s kind of where it took me. Not that I don’t have any stocks and bonds, I do, and I’m not super happy after the last couple of days. But really, now the majority of real investing is really done through the alternative side.

Justin Donald: Yeah, I love hearing that perspective because I’ve been talking about this for probably seven years now, maybe even a little longer. And I mean, specifically alternative investments, I’ve probably been talking about for 15 years. But what’s interesting is you have this turmoil right now with the stock market and tariffs and everything that’s going on, yet we have alternative investments that are really just unaffected, right? At least in the short term, we’ll see how the long term plays out, but I anticipate that we’re probably not going to see a whole lot there.

And one of the things I like about alternative investments is that it’s not as volatile as the stock market. It’s not as fickle as consumer sentiment moving things or one tweet that moves things or one opinion piece that literally swings the market. So, to me, that’s why I feel like, I mean, they say a balanced portfolio is 60% equities or stocks and 60% bonds. And to me, that’s just reckless, if 100% of your money has exposure to the markets, you are all over the place. That’s not a well-balanced portfolio. The wealthiest people in the world only have 15% to 25% of their net worth in public equities.

Yuen Yung: Yeah, that’s right.

Justin Donald: So, it’s like 50% to 60% in alternative investments, and so, I think, I’m into all these different groups and I’ve got friends that are freaking out right now with the market and I’m just so comfortable, so calm. I have a very non-existent or very minimal position in public markets just based on how I feel about them and the timing right now and actually, my robust enthusiasm for alternative investments in this cycle, and especially private credit in this cycle, I think that’s going to be a huge winner.

Yuen Yung: Yeah. Well, what people don’t realize is that, and part of it is because of access. Let’s be honest, right? It’s not knowing, and also the lack of access to the alternatives and the private side. And as industries mature and certain sectors grow, the access becomes a little bit more available, but still, you’re kind of behind the curve at that point in time, right? So, the idea of, for example, investing in a company that is already making a couple million bucks net profit but has an aging founder that’s looking for an exit, that kind of activity is not something that the normal investor gets access to, right?

Justin Donald: That’s right, that’s right.

Yuen Yung: And I hate to say you have to be in the know, but you almost have to be in the right circles, right, talking to the right people to realize that, oh, my gosh, that’s a great business to buy, right? That could turn into a $10 million profitable company and grow the value of that company.

Justin Donald: Totally. This, by the way, is the power of masterminds and peer groups and mentorship, and you and I, we’re in two different founder groups, founder investment groups, and I know you’re getting more and more tied into the Lifestyle Investor community, which I’m thrilled about, but it’s exactly what you just said there. So, I want you to keep going with it, but access is everything.

Yuen Yung: It is. It is. And that’s why it’s so critical to build your network the right way, right? And it’s getting to know people like yourself. And you run into somebody like myself and then they say, “Well, what are you doing?” And I’m like, “Well, I’m doing this kind niche strategy,” right? And they’re like, “What?” And you explain it to them, they’re like, “Oh, that makes sense.” But then this question is still, “Okay, well, can I get access to that? Can I be an investor in that?” And in some cases, some of the deals, it is actually hard to get access unless you know somebody and that’s unfortunate, but that’s the reality. But that access can be built as you build your network and that’s the key, right?

Justin Donald: That’s right.

Yuen Yung: And there is a decent sized network out there that is well beyond just stocks and bonds. Well beyond stocks and bonds. And we all know each other because we’re always hanging out and talking. But you’re right. The rollercoaster that you ride to grow wealth, I think is much more sustainable and less frightening than in the public markets, right? And I grew up in the public market, so I’m familiar with that. But you’re right, every one little piece of bad news or a change of a half a percent by the Fed, all of a sudden wreaks havoc on onto that market.

Whereas if you look at alternatives, if you look at real estate, you look at private equity, I woke up and you know what? People still had to go and use the pipelines that we build for one of the companies that we own. There isn’t a whole lot of conversation. Now, is there a long-term effect? Sure. There’s always going to be systematic macroeconomics that affect everybody to some degree, but it’s not a, oh, the company’s value just went down 40% today, right? Very, very different conversation in terms of what you’re dealing with, or if you’re invested in real estate, I’ve been in real estate, you got multifamily. You’ve got retail, industrial.

It’s not like people are moving entirely out of the apartments tomorrow, right? And so, it’s a different way of thinking about investing. And I feel like, and I don’t know how you feel about this, but I feel like you’re closer to where the operations and the things that are happening on the ground level.

Justin Donald: Yeah, I totally agree with that. And I mean, here’s the deal. With real estate, everything is based on a multiple of some sort of formula on profitability, right?

Yuen Yung: That’s right.

Justin Donald: So, there might be different formulas or different companies use. Each industry might have a little bit different formula that may be the standard there. A lot of real estate would be net operating income, NOI, and so, what I like in alternative investments or in real estate specifically, is you’ve got that number. It is based on financials. It’s based on historic and current financials. Someone tweeting something is not changing the price. And that gives me a lot of comfort because what if someone’s retiring today and they need that money and they pull it out, well, now they’ve lost 30% of their portfolio overnight.

And there’s a guy that I was literally just– who was it? I was talking to someone that had $10 million in the market approximately. And then the last time it cratered during COVID got scared because it dropped 50%, pulled out $5 million, and then sat in cash, and then it rallied back and then rallied greater. So, not only did he lose $5 million, but his money hasn’t grown, and so, it’s just…

Yuen Yung: Yeah, lost all the opportunity costs.

Justin Donald: Yes. It’s just so tough when you have overexposed assets and resources in any single market or industry.

Yuen Yung: Yeah. I mean, if you think about the public markets, they’re thinking literally, you’re running multi-billion-dollar companies thinking three months at a time, right? That’s a very challenging environment. Very, very challenging environment. And so, when you look at even the returns from the public markets, it’s really mainly like the Magnificent 7. They’re driving the entire market, right? So, I like businesses where I’m looking out a year to three years, to five years, to 10 years, right? A very different thought process, as opposed to, oh, I got to meet quarterly earnings, otherwise, my value will change. We don’t have that problem, thinking about that now, I don’t even think about it, right? And I don’t have to worry about it. We’re trying to build real economic value over time. And that is exactly what you said, driven by profitability because a business has to be profitable for it to be worthwhile or have value. And then, so that’s what we’re driving at all the time.

Justin Donald: I completely agree. So, let’s take a step back because when you founded, How Do You Roll? which is a sushi franchise. I believe you started that franchise from the ground up. That was the one that you were on Shark Tank on. And if memory serves me correctly, Kevin O’Leary invested, and this was the highest investment either still ever today or at that time. Maybe it’s still ever in…

Yuen Yung: I think it’s one of the top five still.

Justin Donald: On Shark Tank. Yeah, that is incredible. So, give us, tell us about that.

Yuen Yung: Yeah. So, it’s interesting. So, at that time, we were building a business. My brother was a sushi chef and he came to me and said, “Hey, we have this idea. How do we bring sushi to every day?” And so, we started building this idea of like sushi rolls, but like done Chipotle style or Subway style, just go through a line. And so, it took a while for us to develop it and grow it and we started the first store here in Austin. And I’ll tell you, first four months was rough, because nobody understood it. Nobody got the concept, right? And it didn’t make any sense.

And a lot of people were scared to build their own sushi rolls because they didn’t know what to put in it, right? They didn’t understand what would make a good sushi roll or not. And so, it took a little while. And then, we had the fortunate opportunity where some influencer, this was long before people knew what influencers, but somebody online that had like 20,000 followings or something like that, tweeted about us and put us on Instagram and their feeds.

And next thing you know, we started having lines, like people started showing up, right, to try out this brand-new concept. Totally different. And so, then things started catching on and we opened a second unit and I told him, I said, “Hey, look, if we really want to grow this, we’re not going to be able to do it one store at a time. That’s going to take us 15 years. Let’s look into franchising and let’s figure out, does franchising make sense to us?” And so, we hired a franchise consultant, started learning about that business model, and the first response was, “You’re not ready. Go home. You’re not ready. Thanks for the fee, but you can’t franchise right now.”

And they gave us kind of a laundry list of things that we had to do before we could franchise as a system. And so, given another year or two, we started building, we’re working, right? We’re grinding. And so, we start opening a couple of franchises. So, finally, they’re like, okay, now, let’s start a franchise. So, we start opening a couple of franchises. We picked up some franchisees. And long and behold, somewhere on the internet, Shark Tank found us, ABC Shark Tank found us and said, “Hey, we really want you on the show.” And I was actually doing my masters, my entrepreneurial masters at MIT when they approached us.

Justin Donald: Wow.

Yuen Yung: I remember getting the call from my marketing director going, “Hey, there’s a TV show that wants you on.” I didn’t know about the show at the time, admittedly. I thought they were going to put me like underwater and swimming with sharks. That’s what I thought they meant.

Justin Donald: That’s awesome.

Yuen Yung: So, I didn’t know about it and I had to research it a little bit. I learned about it and I said, “Let’s deal with it when I get back.” And when I got back, there was a contract that was probably close to half an inch thick, sitting on my desk, right?

Justin Donald: Oh, my goodness.

Yuen Yung: From ABC. And so, I said, no, I’m not going to do it. There’s no way. This is ridiculous, right? I’m busy. We’re growing our business. This is not the right time. And so, my marketing director was like, “Well, okay, I’ll tell him.” And so, she told him, and then next thing you know, it’s like, “Hey, I got the producers online on the phone. They want to talk to you.” And I’m like, “What?” Come on, people. So, what was supposed to be like a two-minute conversation turned into about an hour on the phone with the producers. And what they explained to me was like, “Hey, you got to understand you’re one of the– what we call the scouted talent. And then we also do auditions and stuff like that. And to make a good TV show, we have to have real businesses and people who are interesting characters that aren’t real businesses. You got to make people cry and laugh and all this great stuff, and that’s what makes a show. And you guys are pretty far along as a business. And so, we would love for you guys to be able to do this.” And I was still kind of hemming and hawing. And then, what really got me was when they said, “And we have 5 million viewers.”

Justin Donald: Oh, there it is.

Yuen Yung: And I said, “What?” I was like, “Your show has 5 million–” And they’re like, “Yeah, we got 5 million viewers. And we’re probably going to win an Emmy award at some point soon, because we’ve been nominated for Emmy for reality TV.” I’m like, “Okay, let’s talk about this.” Five million eyeballs on a little concept in Austin, Texas, that could be interesting.

Justin Donald: Yeah, no kidding.

Yuen Yung: And so, we ended up signing up to do the show. And what was funny was at that time, I was talking to the producers and they’re like, “Okay, well, we got to get your pitch down.” The way it works is it’s like 30-second pitch, and then it’s a free for all after that. And then we just record all of it and we cut it up, right? And I said, “Okay.” And they’re like, “So how much are you going to ask for?” And I said, “I’m going to go in there, I think I’m just going to ask for like 3 million bucks.” And they said, “No, no, no, no, no, you can’t do that. You can’t ask for $3 million.” I’m like, “Why?” I mean, I’m like, “I think I’m valued at this. I need this.” And so, 3 million bucks is really– they’re like, “We’ve never done a deal over like $250,000.” I’m like, “Oh, man, really?” They’re like, “Yeah.” Like, even the deal that was like 750 had to get pieced together by two sharks to make it happen. And they said, “Well, look, if you ask for that much money, there’s not going to be a show.” They’re going to be like, “Hey, love your business. Great concept. We’re not giving you 3 million bucks. We’re all out,” right? And I said, “Well, crap. Okay, so what do we do here?” And they’re like, “Well, you got to ask for less. Like, ask for half a million.” I was like, “Come on.”

And so, I said, “How about a million? How about I ask for a million?” And they were nervous that I was going to ask for a million bucks. And they said, “But, all right, let’s give it a try.” And so, that’s what we did. We rolled in there. And it’s funny because if you watch the episode, which was Season 4, Episode 16, which was a while ago, the whole episode is only like eight, nine minutes long. But we were in front of them for almost 90 minutes.

Justin Donald: Wow. I think you met my buddy, Kyle Jansen. If not, I’ll connect you. He was on Shark Tank and he said the same thing. The amount of time that they’re recording to what the finished product is, is drastically different.

Yuen Yung: Yes. And that’s how you realize that’s how they get deep into business and how they can get real emotions out of you, because that’s a long time to really talk about your business. And unfortunately, in all fairness to the show, I understand why they do it, but most of the real business talk gets cut on the floor. Like, I had this conversation with Cuban about my valuation and how I came up with my valuation. And it was like a 15-minute conversation with him going back and forth and what’d you use for discount, cash flow model. What interest rate did you use for discounting? Why did you pick that? I mean, we were going back and forth, like, for 15 minutes. And then when he was done, he was like, “Oh, man, that was the best presentation of somebody that knew their valuation,” right?

Justin Donald: That’s cool.

Yuen Yung: I’ve ever seen on the show. I don’t want to be in the sushi business, so I’m out, right?

Justin Donald: By the way, he was the one– it was Mark Cuban that was in on Kyle Jansen’s Guardian Bikes.

Yuen Yung: Okay. He did Kyle’s deal. Okay, very cool. Very cool.

Justin Donald: Yep. So, I invested in that as well.

Yuen Yung: Yes, yes. And so, that’s kind of how we got there. And then, of course, afterwards, it becomes a real business deal. You have to decide if you’re really going to take the money, what does that mean? What does the LOI look like? What does the due diligence look like? And all the normal business stuff that you have to go through. But what it did for us was it blew us up. I mean, we ended up selling like 200 units to be opened over a 10-year period. And we grew really too fast. Really, the lesson there for me was that it was growth beyond what we could handle. And so, we decided we should just capture the enterprise value and exit.

Justin Donald: Okay. Are you able to disclose or share whatever you’re willing to share on what were the exit multiples? What did that look like? How many units did you have? How many franchise locations, et cetera?

Yuen Yung: Yeah. I can share some of the economics with you. I can’t disclose the actual deal terms, but where we were at was, we were at, I think, at that time when we exited, we were close to 20-something units open already all across the US. We had another 100 and something to develop over the next 7 to 10 years. And we had franchise fees coming in from all of those. And so, we exited for a seven-figure number. A high seven-figure number. But I can’t tell you exactly what that number is.

Justin Donald: Well, well done. I mean, that seems like a great win. And what timeframe was that about? Did you say about four years?

Yuen Yung: So, we started the concept in ‘08, right during the GFC. We started right during the GFC, which also was a challenge by itself because we couldn’t get any loans at that time. So, we funded the whole thing, bootstrapped.

Justin Donald: Which probably ended up working out better for you anyway. But I’m sure it was a pain in that moment.

Yuen Yung: Oh, my gosh. It was horrible. It was tough, because we were thinking about leveraging, right? And then when we exited, that was 2013, 2014.

Justin Donald: Okay. Hey, that’s a great return in that period of time. Well done.

Yuen Yung: It was a fun ride. It was probably the hardest thing I’ve done in the shortest amount of time.

Justin Donald: And so, did a larger franchisor buy you out?

Yuen Yung: Well, actually, no, the purchaser was a private equity firm out of California that was trying to roll up a couple of franchise concepts.

Justin Donald: Okay. I’ve seen a few of those guys out there.

Yuen Yung: Actually, they were after a couple of Asian franchise concepts, and so, I think they bought like two or three different franchises and kind of rolled them together.

Justin Donald: Okay. Very cool. Well, I love that you have had an exit in financial services and exit in franchising and restaurants because most people don’t make money in restaurants. So, you’ve done well on both of those. You’ve done very well in real estate as well. And I’d love to hear what you’re most heavily invested in there before we kind of pivot into your kind of experience today and what you’re doing with HalBar.

Yuen Yung: Yeah. So, with real estate, so after I was done, I had the chance to join with somebody that I knew I to partner up and do real estate because they were already doing real estate and they were doing value-add multifamily, which essentially is buying older apartments and fixing them up and hopefully selling them for a higher price. And so, I did that for eight years, end up being CEO, running the company, managing several hundred folks, and really got into that business from an operational level, not just an investment level, but an operational level, so…

Justin Donald: Which you seem very good at, right? I feel like you’re an outlier in that space where you can see those things, you can make those tweaks. You kind of pay attention to the numbers and the data, right?

Yuen Yung: I really believe my years of being in the restaurant business helped my years in the real estate business.

Justin Donald: It has to, it has to. From an operational standpoint, it has to. So, many more moving parts in restaurants, right? It’s got to make real estate look kind of like a cakewalk in some respects.

Yuen Yung: Yes. And dealing with customers, it was like night and day. It was like after you’ve done dealing with customers in a restaurant, right, where you just can’t make them happy no matter what, dealing with renters was easy.

Justin Donald: Yep, totally.

Yuen Yung: Yeah. And so, we built that and it was largely a value-add play and did that for a while. I’m still invested in a few of the projects and properties but had some exits and just decided, and then a friend of mine came along and just said, “Hey, this might be right up your alley. I’m working with entrepreneurs.” And I was like, “Oh, what are you doing?” And so, I decided to make another exit, right? And my wife thinks I’m crazy and she’s right, which is that I have ADOS, which is attention deficit, ooh, shiny.

Justin Donald: That’s good.

Yuen Yung: And so, that’s what happened. Like, the next shiny thing came along, and I was like, “Oh, wow, that’s really cool.” And so, now, I’ve been doing that for about three years now.

Justin Donald: So, you had your third exit. Now, you’re onto your fourth phase of your career, which is really cool. Now, I want to get into this because this term has become very popular, search funds. But I feel like most people don’t know what a search fund is. And you’re really kind of emerging in this space with HalBar Partners. So, why don’t you talk about that and talk about just, I guess, private equity in general, but this is kind of like a niche asset class or a niche strategy under the banner of private equity.

Yuen Yung: Yeah. It’s interesting, the characteristics of the search fund world or what now the MBA programs are calling ETA, which stands for Entrepreneurship Through Acquisition, has really been around for a while, but characteristically, it kind of fits, like you kind of get the returns of like what you would imagine in venture, right? Like, big multiples, high IRR, but with more of a steady private equity feel. So, it kind of fits somewhere between the two because people always ask me, are you private equity? Are you venture? And I’m kind of like neither. I’m kind of somewhere in the middle.

But the concept itself has actually been around for a long time. So, it started at Stanford University where you had a professor who was having his MBA students do the due diligence on these small companies as part of their learning. What happened was they were like, “Hey, some of these companies are good for like buyout, right? Let’s go buy some of these companies.” And so, he put them in place, raised money and put them in place, and they became CEOs. And long and behold, they were making a lot of money, doing very, very well.

And then the concept caught on, and then Harvard got into the game. And then, now, today, every MBA program talks about ETA as one of their spaces, right? And there are a lot of searchers out there. The space itself, what we’re trying to do is, again, going back to that accessibility piece of it, is that the reason why you haven’t heard much about it is because nobody talks about it. And it again is a little bit of a good old boy thing, right? And so, what we’re trying to do is actually bring it to light where it’s like, hey, this is a real investment category where you back an entrepreneur who’s sharp, who’s ready to own a business, but instead of doing startup, have them go find a business that they can improve on.

If you’re talking about real estate terms, this is value-add private equity, right? That’s the best way I could put it, if you’re a real estate person. And so, effectively, what you have is, especially if you can find a company where you have an aging founder who’s needing a transition and exit, man, the opportunities are just so– I don’t want to say easy because you still have to operate but so, so abundant, right?

Justin Donald: That’s right.

Yuen Yung: So, when you think about buying a company from somebody that’s been running it for, call it 20, 30 years, there are certain inefficiencies that are built in because of that. There is usually a lack of investment in technology and efficiencies because they’re typically trying to milk the company for as much as they can get out of it. There’s no governance, right? They’re used to being their own king or queen of their company. And so, there’s no sharing of ideas and helping in any form. So, we put all those systems in play, right?

So, you get an entrepreneur who understands or an MBA. They’ve been in the workforce for 10-plus years. They understand the industry. And now, you say, okay, well now let’s have you run it. It’s already profitable, but man, we can actually double or triple the profitability just by making tweaks to those things, right?

Justin Donald: It’s incredible.

Yuen Yung: Yeah. And so, I mean, we shoot for like 3x, 4x returns, 30-plus percent IRR. The search fund world, so Stanford does a study on this every two years. And over the last three decades, they’ve been averaging 35% IRR.

Justin Donald: Wow.

Yuen Yung: Right?

Justin Donald: That’s incredible.

Yuen Yung: That’s the highest performing in the sector, right? And so, we figure there’s fees and different things that are happening with what we do. So, we’re targeting 30. We’re targeting 30.

Justin Donald: That’s awesome. And now, this is your first fund that you’ve opened, right?

Yuen Yung: So, we’ve done one. We are actually getting ready to launch our second one. Yeah, we’re actually getting ready to launch our second one.

Justin Donald: Yeah, super cool. And is this more rewarding to you than some of the previous work that you’ve done? Because I feel like, you can get in the weeds on the real estate, especially if you’re plugged in as the operator, you’ve done financial services, but now, you’re kind of spending time with the people who are your archetype, right? They’re your exact avatar. They’re founders.

Yuen Yung: It’s interesting, every business and when I look back, I go, there was good and bad to it. There was never a perfect scenario, right? When I think about what I do today, what I love about it is that I get to share my experiences and my expertise in my lifetime of being an entrepreneur, right? And I love the energy of young entrepreneurs. People always say, oh, this and that about America. And this is– I was like, “Look, do you know what’s great about America? We have young entrepreneurs. And they are going to light the way,” right? Like, they are going to be the ones that are going to light the way. And I just love the energy of entrepreneurs, right? And I truly believe that is where the American dream is built off of, right?

So, I love the space. I do miss sometimes operating, so I don’t get to get into the weeds as much as I used to, right? I have to stay a little more high level. But I’m also dealing with the capital side of things, which is a little bit different than what I’m used to be dealing with, right? And so, things are just different. I wouldn’t say it’s like better or worse than anything else I’ve ever done. Real estate had its interesting things and nuances. And I still love real estate as a business. I still own real estate. I still do real estate projects on my own or with partners. It’s just another category. It’s just another category.

Justin Donald: That’s right.

Yuen Yung: Now, with the restaurant, do I want to go back and operate a restaurant again? Probably not.

Justin Donald: That’s what all my friends who have been in the industry say.

Yuen Yung: Full transparency, probably not.

Justin Donald: That’s right.

Yuen Yung: Yeah. I love to eat. I’m a foodie, but I definitely don’t want to get back into owning and operating one right now.

Justin Donald: Oh, I love it. Well, yeah, and this has been such a fun time to connect and learn more from you. You’re a wealth of knowledge and I just want people like learning more about you.

Yuen Yung: Oh, thanks.

Justin Donald: Before we direct them to your website, I just want everyone to know you’ve written two books. You sit on a bunch of boards. You’ve mentored tons of people now, and so, you’re an authority in all these different niches, but at the same time, you’re pouring into people. You are teaching your wisdom. I mean, you’re taking your brilliance and your genius and you’re putting out in the world, so thank you for that.

Yuen Yung: Oh, thank you. Thank you. Yes. Appreciate that. Yeah.

Justin Donald: Where can people find out more about you and about HalBar Partners?

Yuen Yung: Yeah. HalBar Partners is just HalBar.io. So, that’s the website there. You can also find me on LinkedIn, right? So, LinkedIn and my name, right? Y-U-E-N, Y-U-N-G. You can find my books on Amazon if you’re interested in reading my books, or if I run into you personally, I’ll give you a copy of it. You don’t even have to buy it. So, yeah, that’s the best way to contact me or reach me. And always happy to help. Always happy to help entrepreneurs and people who are in business or people who are looking to invest and figure out kind of how to do it and is there a better way, right? And I think that that’s the key, so yeah, thanks for having me. This was fun. I love your energy, Justin. Always enjoy spending time with you. And I’m excited about our little ESPY event that we’re going to do for the athletes coming up.

Justin Donald: I think you and I have a world of partnerships and strategic plays together, and I’m so looking forward to it. The ESPYs is going to be the first of many. It’s funny because we are running our big Lifestyle Investor event on buying businesses, our buying and selling businesses. And so, that’s April 30th, May 1st. So, our agenda was already packed by the time I thought about incorporating you in, but I feel like you could be one of the future sessions that we do because…

Yuen Yung: Happy to help. Happy to help.

Justin Donald: Yeah. You’ve got all kinds of cool insights, so thank you. Thank you very much. And I like asking our audience one last question as we wrap things up. So, if you’re watching this, if you’re listening to this, my question today is the same every week, but what is one step you can take today to move towards financial freedom and really just move towards living a life that you desire that’s on your terms? Most people live a life by default, this is a life rather by design. So, take something from Yuen today, implement it immediately, and start moving in that direction, one foot after the other. Thanks, and we’ll catch you next week.