July 18, 2022

Building The Board of Directors with Rick Batenburg

Building The Board of Directors with Rick Batenburg

  Rick Batenburg is the chairman of the board for Clear Cannabis, Inc. In addition to his role as chairman, he holds managing positions in several companies: BATMANN Consulting, Inc., an operational and strategic consulting company to cannabis-related and non-cannabis-related businesses, where he has served as both CEO and President since its founding in March 1997. Redwood Investment Partners LLC d/b/a Bonsai Cultivation, a cannabis cultivation company, where he has served as the chairman since its formation in January 2017. BB Talent, LLC, a talent management and production company; this is just scratching the surface of his credentials. Today Rick speaks to us about building our board of directors!

Transcript

Josh
 Good day, fellow dealmakers. Welcome to the deal scout on today's show. We're going to be talking about the cannabis industry, all the deals behind it, the exciting adventures of it. On that, we're going to have a conversation with Mr. Rick, Rick, welcome to the show. 


 Rick
 Hey, thank you so much for having me on a, on such a prestigious show. It's really a it's really cool. 


 Josh
 Yeah, man, absolutely excited to chat about these things. It comes to a deal-maker right, what kind of deal maker would you say you are? 


 Rick
 Oh, well, I like to say we put the people ideas and resources together to create value for the stakeholders. So, I think of it as like the world machine, right? If you find the right people that are passionate and you find the right idea and you find the ability to put together the resources, you can create something of value for the people that are involved in that deal from the stakeholders to the employees, to the consumers. When you're able to create that, it's really magical. So, maybe I'm a romantic, deal-maker. 


 Josh
 Romantic dealmaker. I like this. All right. Which, when it comes to the kind of deals, what kind of talk to us about, what kind of deals are you involved in? W what kind of structures you guys kind of give us an overview of what do you do on a day to day basis? 


 Rick
 Something that I really think is lacking in a lot of young entrepreneurs on long, a lot of young deals is capital strategy that is inline with the company's goals. What I mean by that is I've seen a lot of deals go sideways, not necessarily because the product was bad or the leadership was bad, but because they hamstrung them by their own, the instruments, they used to fund the company out of desperation or out of necessity or whatever it might be. So, I try to find deals that I feel like I add value to because I don't believe just writing a check is ever enough. And, really being involved with the capital strategy, I've found extraordinarily helpful for taking that kind of onus off of the CEO's or the subject matter experts that are running the company. To be able to add that type of value to the overarching goals of the company is something that's important to me, mostly because it's necessary for being successful. 


 Rick
 And, and B it allows me insight into the inner workings of the companies. Cause I, I'm beholding to my either fund holders or investors. I like to have insight into what that company is doing at least quarterly so that I can, offer advice or additional capital strategy. A lot of what I do is I'll come in and help them with corporate governance and, really organized their board and their organize all of the window dressing that's necessary to look and feel like a company that's ready to be funded, founded, bought, taken public, whatever it might be. My background before I started the venture firm was in, at Merrill Lynch and I did about the IPO's and new issues. I did about 200, 300 transactions on the buy side, and then brought in some, kind of unique private equity deals into a fairly developed portfolio. The one thing I really didn't like about transacting in that world was that there was not a lot of correlation without causation. 


 Rick
 It really, when you're just picking stocks or pick an IPO deals, there's not a whole lot of influence over the success or failure of that company and to feel authentic and feel like I'm doing the best thing I can for my advisors is really why I like venture capital and private equity is because, I have some influence over the success or failure of that company, meaning it's not just me writing a check, but it's also, the additional support that goes from there. And, I don't know, I'm, I've never found a single company that didn't need more money at some point. So, and that's where companies get in trouble often is, they raised an additional route or they raise around and then, oh, are, we spent it faster than we thought. Of course you did. Everyone does. Then, your projections were too optimistic and they need to raise more money. 


 Rick
 That's when people get desperate is when they're, the boats left the Harbor and they make bad deals, bad debt deals. They, over, ridiculous, safe notes or they, they make a bad deal essentially because they're desperate. I really always try to avoid that with companies that I take a position in so that, I'm aware of their cashflow and their cash needs. That way, when you decide to start around, that takes three to four months before you're getting funding. That's, if you're good, so, these companies get desperate and then, oh, we only got a month of capital left. All of a sudden they're taking, 17% high interest debt. That's got, first in, first out, it's just like preposterous things that ended up screwing these companies over in the longterm. By being involved at the, at the board level or advisory level or whatever it might be, I can help companies navigate that. 


 Rick
 Cause it's definitely something that, especially the CEOs that I like generally, they're not, they didn't come from finance. They came from a specific industry that really their subject matter expertise in that, in that industry really precludes them from also being finance experts. So, look for people that bring in the smart people. 


 Josh
 Copy. You got your start in finance at Merrill Lynch on the buy side of things, right? So 203 transactions under the belt, right. That, that is a great, that's a great trainer from, Merrill Lynch has been doing it for a long time. Okay. 


 Rick
 I have read a lot of prospectuses, 


 Josh
 The good, bad, the ugly right near what timeframe was this? 


 Rick
 2012 to 2015. 


 Josh
 Okay, cool. Wow. That's a lot of volume in that timeframe. Holy. 


 Rick
 'cause I do two a day. See I was on the syndicate. I, I basically, I managed a, a fairly large portfolio. I had a hundred percent of the new issue allocation into Colorado. I had a really senior partner. We would do these like first come first serves or IPOs. It was me talking to, the eight to 14 guys that were my clients that had capital with me about them buying the IPO at the open or buying the new issue at the open. That happened at between 5:30 AM and 7:30 AM. It was a lot of sleeping under my desk. There is a, it's a young guy, but it really teaches you about, what the biggest investment banks in the world are doing to prepare perspectives and the type of information that's expected to raise, millions of dollars in four seconds. So, it starts to teach you what a sophisticated company and they, the level of expectation of diligence that is there for them to be founded or funded at that level. 


 Rick
 It was really my ambition when I left Merrill was to create a venture fund that looked and felt and tasted like the type of deals that I was doing at Merrill Lynch, where I was bringing like Eaton Vance equity, swap funds, or, arbitrage group with had some really cool international private equity deals where, they were consolidating dairy farms in second world countries. Then, we're moving redundancies and installing their own management. They were just pressuring and made him, 28% year over year. That was the kind of deals that I started looking at that I was like, well, do I really want to buy, shares in a blue chip company that I have no say over that? I, I read the quarterly report like everyone else. And, I'm throwing darts at a board or, do I want to get my hands dirty? And, the choice was very simple for me. 


 Josh
 Yeah. So, you mentioned like investing in the stock market, right? You could, you could throw money at NASDAQ or something like that, or an index, but you view venture capital as the safest bet for you because you could invest and you could have some control of the outcome. 


 Rick
 Well, I think safest is the only word in there that I'm going to take exception to, but it's certainly more fun, you feel more involved certainly, but like when you're investing into the public market, there are some real big strategic advantages, right. Which is theoretically, it's a level playing field, but also you don't have any CapEx expenditure into your diligence process really, because all that diligence has been qualified by the sec and that the market that they're trading on. There's a lot less sifting through nonsense. If I know their financials are audited. So, so you get a lot of diligence for free, right? It makes your ability to allocate large sums of capital, maybe more economical than having to go. And right. I gotta go write 50 quarter million to a million dollar checks into 50 different companies that I then have to manage. It's just a more specific fo and it really depends on what you enjoy doing. 


 Rick
 My grandfather who retired as an Oracle senior executive, he loves to trade the stock market. And, but he does it, he comes into my office here still to this day, 83 years old and trades his own account. But it's what he enjoys doing. Right. He came from tech, he trades tech and he knows tech, he does it very well, but just not something that I enjoyed, I enjoy doing like, dealing with people and, and again, this may sound romantic, but there's nothing more gratifying than, an entrepreneur and you're able to make it happen for them. Watch it work is like, there's nothing more gratifying. Yeah. It's absolutely. 


 Josh
 Let's do this, you, me and grandpa, your grandfather were going out for a cup of coffee. You guys are in Colorado, right? Yep. Okay. We go out for a cup of coffee or something like that, and we're asking Raskin and grandpa for some advice right on what does it take to build a successful business to be success? What is grandpa? What is success? What would he say? 


 Rick
 No, let's see my grandfather's gave me lots of advice over the years. Probably. I think the first thing I remember him ever saying to me was if you can sell, you'll always have a job and sell the most expensive thing you can. I think on my first job was selling windows door to door for renewal by Anderson. But I think it was 15. My grandfather is very methodical man, but he never built a business. He always, he worked for tandem computers and actually did the first installation when NYC did redundant systems, he was on a, did that. He worked for Oracle and he was always a, he was sales, executive managing, sales guys. He had, I think the peak of his career, he was managing like 400 salespeople across the Americas. And, and, he would, he had a very structured approach to growth and how to qualify salespeople. 


 Rick
 And, and he's got this great story. He was telling me when I was a cure or a kid. I mean, I was in my late teens, I think. He's telling me about how he would handle the sales guys and every quarter, rack and stack them bottom 10% get whacked. Right. He would have him it's so f****d up. He would have them meet him at the red carpet club. Like he'd fly into the city, have a meet him at the red carpet club, had their s**t packed back at the office and then fire him at the red carpet club. They get back on the plane and fly to the next city. Cause he said, can do it. I like it in one day, which is ruthless. Right. He also had to do a 15 minute phone call with every single sales guy every week. You know, like what do you need? 


 Rick
 You know, what are the expectations? I also remember him always telling me that, sales guys need to understand how they're compensated. It needs to be very clear how they need to understand how they're compensated and then hold them accountable to the, the sales goals. If I were to take that kind of advice into, nothing happens until somebody sells something, having a very rigid and very specific, structured approach to your sales that is repeatable and scalable is really key to any business. You can't have just one rockstar that just does it as a way and knows how to do it and can configure it out because you can't reproduce those results. You're much better off having, a very structured approach to your sales that is you can teach to the most nascent employee that you have. I think that I have definitely heated that advice in my involvement in some of the companies that we own. 


 Josh
 Yeah, no, that's super cool. He sounds like an incredibly intense guy, like in how he approaches me being able to manage 400 wild sales guys is a task in itself. Okay. 


 Rick
 Well, this was, during the, I mean from, I guess what, from 1960 to 2010, it was basically even his career and, he lived through the good old, well that, well, he was worked for Oracle at that point. I think that was less impactful for him during the.com era, but it was more the, the seventies, eighties, when, men were men, executives, where she had, she goes, home type trips and things like that. So I'm sure he had his fun. 


 Josh
 Do you mind if I ask you more family questions? I know this is a show about deals, but like what I find is this is behind every deal maker, there's a deal story of what made the deal, maker, evolve. Right. And, and we can learn a lot from pedigree. We could learn a lot from the things that have passed around from generation to generation. Cause you've, you've sat around. I mean, that is some of those largest companies. You're, you're getting the wisdom overflow, 


 Rick
 Oh, a hundred percent. I sincerely believe the fastest way to learn something from anybody or anything is to talk to somebody who is an expert and a passionate about what they're talking to you about. I have a few mentors, I got some very smart people around me and it really, that was fostered my father and I very close. We still work together and I've been working for him since I was four, in the f*****g basement reading P and L's, out loud to him. He could, so my father's lifetime entrepreneur, he started a comedy club chain that he then consolidated into radio stations to public, they own radio stations all over the world. He began making infomercials, which is a really interesting thing because the way that he would do it is in the early nineties, like kind of through the nineties, it was just this kind of new form of media, this online TV, or not online TV, this, what are they called? 


 Rick
 Sell? I buy on TV. What are they? What's that called anyway, making short form, long form. For mercy made me like 140 of these. Every thing was like a new deal. Right. Cause what do you do is he'd find inventors. Right? He would figure out how to market the product, right. Make the infomercial take equity, right. Put the product on, on TV. Right. And I know he really enjoyed that. Right. It, it's not dissimilar, it's just a different way of basically doing sales for these entrepreneurs. He had some, I just remember growing up there some so silly ones, there was this one called star dust, which was great. This God, he was like an astrophysicist or some space scientists found a meteoroid, a big one big media. Right. The idea was they would shave off like 0.3 grams of it. They put it in a little medical vial, right. 


 Rick
 With some like oil, like mineral oil and like some food coloring. They were selling them for like 40 bucks on, on seen on TV or whatever it is. And they just crushed. They just absolutely crushed, but it was such a silly, it was such a silly thing, but he did some good ones too, like face fit. He did pooper scooper. I'm like, this is what I grew up with. Right. The Chillo I think was a good one. It was like this, it was this little kind of foam and just plastic. Think of it like a gigantic sponge covered in like, thicker than Ziploc, but like thick Ziploc called the cello. You put between your pillow and your pillow case. So keep your fingers. Cool. I know there's still some of those in his house somewhere, but it was always interesting, I, and ever since I was a kid, I mean, I was at the trade shows, pitching whatever, whatever it was. 


 Rick
 So my father taught me a lot. Right. I don't even know if he realized he was doing it, but he was by nature of like, he was busy and I was there, so get to work. I started to realize, I think in the beginning part of my career, actually I think during business school is kind of when I really realized that I, I knew more than I thought I knew. That understanding of kind of where all this information came and that by nature, how it came really led me to seeking out mentorship from smart people that I respected and that would care to teach me. So, Jim, John Johanne, ran Oppenheimer's investment banking for during the.com for 10 years, hedge fund manager. Now as a gardener, 10 years, JP Morgan investment banking. Now he runs a venture fund that brings in Israeli tech deals out of here. 


 Rick
 Take some public, just took a company, public NASDAQ, best capital strategist. He sits on my board of directors for clear cannabis. Dave Cole NYC CEO for the last 20 years in the international mineral rights space, Heather potters. She was interested in Young's personally or twice. She was a hedge fund manager. Now she's the CEO of pharma jet that does needleless injection. That has huge contracts with the who, Bruce Adkin. Really cool, a real estate developer built skyscrapers all over the world. Hotels just really fantastic, authentic and smart, empathetic, compassionate, ambitious people that were willing to teach me. That's given me so much guidance in my career and perspective on kind of what's important that it's allowed me to it's allowed me to make better decisions. I've never had been somebody who had to learn the hard way. Even if something's against your gut, but you have someone smarter, that's been to the places you want to go. 


 Rick
 If you heed their advice, it's amazing how much quicker you can move. So, well, people poke me sometimes. They're like, oh, you're so young. I go, well, it's not the age, it's the miles. And I drive very fast. So, 


 Josh
 All right. I think mentorship is huge when it comes to, if you want to go, if you want to go somewhere, having someone who's been there and knows how to get there is the fastest way to avoid pitfalls and expensive mistakes. Now I'm the hard-headed guy that had to learn the hard way. Right? After, you know, 30 something years of, 


 Rick
 We talked about your Bramble before we started and I'm very impressed and it's really cool. 


 Josh
 Oh, thanks man. Yeah, I definitely learned, I grew up on a construction site, swinging hammers and I found myself, later on in life getting into syndication and venture capital and private equity, but man, did I get my ass whooped? I was unprepared and I didn't have, at the time, I didn't have strong mentorship of people who had been there done that. I've learned that, and I've actually leveraged podcasts to find people who become my mentors. 


 Rick
 Well, and that was really the clever part about what you've done here on the show is really, you've created value for people that can give value to you. You know, the, the exposure is valuable. I do a lot of media and this isn't the first time that I've actually encountered this specific strategy, but that guy was super rad too, but everyone has to find their own way. You know? If you didn't have that natural mentorship, you found your own way and that's 100% winners find a way Pope constantly around, across the board. Right. That's why you always spend on the person, not the deal, because the deal is going to change. A promise video is going to change, right? You want to bet on the entrepreneurs that will sooner die than fail because they are emotionally connected to the success or failure that company, because they will do things that somebody who it's a job will not do. 


 Rick
 That's sincerely in the zero sum game that we're playing. So it was what it takes. This is what it takes, everything you got. That might still not be enough, but, it's the people that carry that courage and that conviction in their heart are the ones that I bet on. 


 Josh
 You talk a lot and this might be the romantic side of you. Right. You talk a lot about character, about virtues and values. You talk a lot about that and, yes, you've read P and L's when you were four. Right. You do talk a lot about these things. Why is that even important? Right. You talk about passion and you talk about, empathy and compassion. Like why is that even important in deal-making? 


 Rick
 Well, for all, for the reasons that it's important to be a good human being for the same reasons is that, doing deals with people as an extension of trust and doing deals with people that you don't trust or that don't share your ideals is it can be a very dangerous place because again, the deal always changes always, right? The, the company has never been, I've never seen a projection that hit projection exactly. Ever, right? So, there's going to be challenges that are gonna be unforeseen and how you deal with that, how you deal, especially because I do venture and, doing companies that have no revenue or that's, I all the way back to, I've got an idea, I've got a plan, up to companies that are doing cashflow, but it's so important that the leader or leaders of those companies can handle being told no, and, and failing, right? 


 Rick
 Because you only fail when you quit. And, I've built a few businesses and I've invested in a lot of businesses and it is always harder than you even imagined. I've done it a few times and I can tell you that even going in and going, oh, this is going to be really hard. If you're, if you're not prepared to do whatever it takes, that it's not that you, maybe people get lucky and people can overcome them. They plan well enough and they're able to execute. And, but, generally there's going to be moments where you think you're done and you think you're going to fail, and you have to find that courage and that extra gear to do things that other people are not willing to do and take risks. So, I find that finding people that have that conviction in their heart, they carry that courage in their heart because, courage requires fear, right? 


 Rick
 You have to find the people that are willing to overcome that fear because they have so much conviction in their heart that they will do it anyway. Finding the overconfident people that aren't afraid is a mistake. I like, because as soon as something gets hard, then they haven't overcome anything. You know? They they'll fold, and also finding compelling leaders is how you build an organization of culture. If the CEO is, I've never met a successful pessimists, they have to have that. They have to have that courage. They have to have that ability to influence them when friends, because that's what it takes to, to build people that want to follow you. And, and especially in a startup industry, right? You have to find those leaders that can inspire others and share a vision and articulate what they're trying to do, communicatively in a way that is executable by somebody who's not, standing there right next to them to build an organization of any scale, you have to find people that are applying their diversity of skillset and information to make decisions in the best interest of the company. 


 Rick
 If that leader is unable to articulate what they're trying to do together, that creates an inefficiency that can tear down organizations. It's easy for me to make investments decisions. When I feel like I've had open, vulnerable communication with the leadership group, because, vulnerability builds trust, builds relationships and relationships build empires. 


 Josh
 Oh, I like that. Say that again. 


 Rick
 Vulnerability builds trust builds relationships, build infrastructure and infrastructure builds empires. And it starts with vulnerability and honesty. 


 Josh
 Yeah. 


 Rick
 Well, you asked me before this show, if there was any questions you can ask me and I said, absolutely not bring it. Cause here's the thing, I'm exactly the person that I'm going to be in. If somebody doesn't want to do with deal with me because of that, then I don't need to be doing a deal with that person. Anyway. 


 Josh
 So. 


 Rick
 It's self cleansing cycle of honesty, 


 Josh
 Self cleansing cycle of honesty. I love this man because I'm a Wilson and the Wilsons are masters of putting on a mask and posturing. Right. I, I was trained by the best and I had to unlearn this in my thirties. 


 Rick
 I'm sure a lot of people do. It's, you're trying to preserve this own image of who you are to the exterior world. That really stems from your right insecurity around who you are. Right. Once you kind of accept that, this is who I am you realize is that's very disarming to people that you're trying to do business with because they don't feel like you're hiding anything from them. Right? So your honesty, begats honesty. That's kind of how I live my life and how I try to do business deals is, we're, I'm as honest and open book as I possibly can stand, but I'm not perfect obviously, but I, I try to live my life with that ethos and especially in business, just because the quicker you can get to know, right. The easier life becomes, right. You're wasting time, money, resources, and energy chasing something. 


 Rick
 That's not going to work inevitably. If you're holding information back on the onset, because you're afraid of how that information is going to be interpreted, you're probably looking at the wrong deal. 


 Josh
 Yeah. Yeah. I love this man. Awesome. Awesome work, man. What is this something that you've always subscribed to right. Successful grandfather's successful father, right. They were big shoes to fill and Rick number three, coming down the pike, like, did you ever find like a, a, a time in your life where you were, like challenged with that question that, who am I question? 


 Rick
 I, I just wanted to be a hockey player. Now. I start playing hockey when I was three and that pretty much consumed my life. Then, after high school, I played junior hockey in Canada for three and a half years and then played college hockey. I went to basket weaving business school and in Massachusetts, and then that I went to either go play pro in Europe or go work for Merrill Lynch. And I sold myself. I went and worked for Merrill Lynch, but I actually founded and started the professional hockey team at Breckenridge in 2015. And, that was kind of my passion project is my expensive hobby. But, watching the town, like after eight years kind of embrace that team was really meaningful to me. My performance from a academic or business was always expected. It was not hoped for, it was, and not that it was overbearing in any way, or maybe that's just because I always perform, I don't know whether that was afraid of failing, but I'm not sure it's pressure. 


 Rick
 It's I, I would call it healthy competition, so, my father and I owned the venture firm together and then my grandfather does his own thing, trades his own account, does his own, does his own thing. But, I, I, I hate to say this. It was like, you basically treated like an intern, right? Like I would, I bring them all the deals I go, and he doesn't look on the computer and I print them out for me, he marks up the deck and he was thing he's just seen, he ran M and a for Oracle for a while. He, I mean, he's seen every kind of deal, every kind of trope and trick. And, so, his ability to see through the b******t is pretty spectacular, but, it's so funny actually, one time I was putting together some projected financials for one asset, were doing a cap raise for this company and it was a really complicated P and L project, proforma. 


 Rick
 It was like, he printed them out on the conference. I've got a picture of it. It's printed about like, and taped 12 pieces of paper together. Right. We could look at the P and L yeah. And I'm very grateful for the help. Cause he doesn't know what nothing in it for him, there's no juice in it for him. He just, we're just a family of entrepreneurs, I suppose, that are, it's the game that's fun, right. It's not just the game. Well, can you put the people, ideas and resources together to create value? And that's the game and when it works, it's magical. There's a, I will never forget probably the, a couple of years ago, when I started that hockey team in Breckinridge, there was 34 people in the stands. It was like a disaster. It took years before the town stopped, like actively trying to get rid of me. 


 Rick
 Now, the mayor drops the pumpkin that, it's a whole thing. We just did a game with the avalanche alumni the season. So, I'll never forget standing on the blue line, like listening to the Anthem and like looking down and, the stands were full and, there's kids getting autographs and there's something really magical about working so hard to create something that adds value to, in that case it was the community. My involvement in fields that, come together are, there's nothing more gratifying to me than, talking to a CEO that, can take a smile off their face. Cause it worked, is like, and sincerely, I think that's the whole jam, right? Like, can you add positive force to the universe, for your products or your employees or your stakeholders, are you adding value? I really dislike deals that are, they're scraping some inefficiency that adds nothing to the economy. 


 Rick
 They've noticed an inefficiency that they can extort and I just despise those deals. And I'm being honest with you. You're like, oh, I figured out, I had this one deal coming to me recently. They were like, well, we figured out that, the price of CBD isolate wholesale has come down so much. There's all these farmers sitting on all this biomass. We're going to go basically tell them, Hey, we'll store it for free and we're not going to pay them anything. We'll pay him on the back end. We, and they basically just were figured out a way to exacerbate this economic problem for these farmers. For lack of a better term, it's basically going to try to take advantage of these farmers. And I was just like p****d off. Basically. It's like, I like left the me, I should've known, they wanted to have it at like a cigar bar. 


 Rick
 I'm like, okay, this is not a good sign. They were crypto dudes. Anyway, I really enjoy companies that are, they're creating things. They're building value. Yeah. 


 Josh
 With this, like you and I in the other Rick's right. Rick, Rick. 


 Rick
 Rich and Rick. 


 Josh
 Okay. What is it? 


 Rick
 Dick? My grandfather's Dick others rich. And then. 


 Josh
 Rick. Okay. Got it. We're not at a co cigar bar, but we're hanging out in the perfect deal comes across the plate, right? You guys have multiple funds. You guys have been doing this awhile, invested in a bunch of businesses. You guys love the game, but the perfect deal comes that would get your dads, your attention. Even grandpa would sign off on it. What does the perfect deal look like? 


 Rick
 Oh, that's interesting. There's no perfect deal. So ever right. Deals deals happen because you make them happen. So deals, perfect deals are generally overfunded or, I've had some deals come to me that were alcohol, for lack of a better term, I'll say they're perfect. Right. Most recently there was a, a biotech company that came to me. They, one of the re they need to raise 75 million, which is outside of my check writing ability, but not outside of my investors check writing ability. So, I looked at it and frankly, the deal was really good. It was really good. There was an arbitrage there was a, there was a really good, there was my dad. There was a, there was a really good deal. It was a great deal. It was a really great deal. One, they had four products in this one company that one of them already got their indications for FDA, which is a really good sign because the other three things basically did the same thing just with a different body part. 


 Rick
 Basically they wanted to spin out this one, this one that got the indication, raise money for that. You got, cascading equity in the other three, which are pretty good indication. Those are going to go. Now, here's the thing. I'm not gonna add any value to that deal, right. Outside of writing a check, it's outside my scope and it's not a fun. You say the perfect deal, I wouldn't say that those are the deals I'm looking for, what the deals I'm looking for, the ones where there's something somebody has missed that traditional funding has missed because they miss something that they weren't looking for. And there's a company called bet booth. This is a great example because this company's about to be on basically every state in the U S and illegal gambling space. This company figured out how to put a ATM or sorry, basically a sports book that go can go into a bar legally and compliantly that can take and give cash without a casino where that gives a percentage of the, it gives a percentage of the losses to the bar owner itself. 


 Rick
 Right. Totally crazy deal. Like I sat like, and the deal is so good that I remember when it came to me, I was like, okay, I'm looking, oh yeah. I was looking for the catch. I was looking at me like thumps and something's wrong. And it sounds too good. Right. What I realized was the CEO who was a Brooklyn cop for 20 years, then started an ATM route after nine 11. Now he owns bars and restaurants across the U S he's also brought on channel 82 to talk on Sirius XM about sports spending. Very good indication of CEO that has tribal knowledge and specifically the areas that they're going to be managing, which is something I love, I looked for that. Right. The problem was, he sounds like a Brooklyn cop. He described this f*****g deal, it sounds like bluster, right. Like, right. So, as I dug in and I CA and I brought in my processes, when I find a deal that I think I might be interested in, I'll bring in kind of my top five to 10 guys who have product expertise in that market. 


 Rick
 I'll go, what do you think? You know? If those guys won't write a check who know the most, then I don't have to deal with it. Right. I actually brought it to Dick, my grandfather first. And he goes, oh, you know what? You need to call Ben. And Dick does not write checks. He just he's my intern. Right. He moves in, he goes, well, you gotta call your cousin, Kenny, because Kenny owns 2000 ATM's in Pennsylvania. And I was like, okay. I call Kenny and I start going through this with him. He's like, not, he wrote, not only did he write Jack, but he was like, okay, I want to be the Pennsylvania guy, blah, blah. I was like, okay. I guess I better start paying attention to this. So, I talked to the CEO, Mike Orlando, awesome guy. Honestly, first time CEO, but amazing like how quickly he's picking it up. 


 Rick
 And I haven't mentored with other CEOs. And my other portfolios are like teaching. Like here's how we do a board meeting. Here's what, but it was super cool because the only missing piece they had was the ability to articulate the deal and prep their diligence and prep their data room and perform and do the corporate governance. As soon as we did that, it was overnight like bang all the funding, everything we need. Right. Got all kinds of great people on the board of directors. And, and that was a really cool deal. Like it was a really cool deal because I was able to add value in a specific area that I'm an expert at, and that the deal was passed over because people were looking, they were looking at the wrong thing. That created a capital inefficiency and an asymmetrical risk return profile that I'm able to exacerbate simply because not only can I get, board of directors and advisory and, and I can add value, but I also have insight into what the company is doing and I can help them capital strategy. 


 Rick
 For short future raises and negotiating with venture capital guys and all the things they're going to need to grow that have almost nothing to do with the business. Right. I wouldn't say it's perfect deal, but it's a good example of the deals that I tell you, I like to look for is when you evaluate a deal in a different way, you start with the people, instead of starting with the P and L you'll catch things, other people are missing. 


 Josh
 Yeah. What I love about the story is when you're sharing the idea and you're like, Hey man, you've got more experience, Kenny, from Pennsylvania, you got more experience with this. We do, what's your advice, right? So that's a humble approach. So that's in itself is awesome, right? Like, what's your thoughts. And when he goes, this is awesome. I want him, I want, here's my money being, being then, like, holy s**t, I should be paying attention to this. Right. 


 Rick
 Got it. Well, and the other key to this is that I don't pitch people. Right. I educate people, right. Because here's the thing is that I have enough investors and I've got a really great group of investors that work with me and that are in my fund, or they're in deals with me. And, I've developed a reputation to know what the hell I'm doing, right. From a more traditional finance perspective on, understanding the financial instruments available to us, the capital strategy, how that's gonna impact the cap table and the, everything right. Taking companies public that the whole full spectrum, by nature of the experience, I have allows me to have some credibility when it comes to the more technical analysis. Beyond that, when you it's like a groundswell, right. So investors know each other. Right. It's more like, okay, well, if this guy is in, then then we know that the manufacturing is okay. 


 Rick
 If this guy's in, we know the finances. Okay. If this guy is, then we know that, the, the product specialization or industry expertise that we know is okay. Right. And then I bring everyone together, right. Like kind of the core group of investors and go, okay, guys, let's read team this and go, okay, well, what's wrong with it? Is it a problem we can fix? Or is this an unfixable problem? Once we have your kind of core group of investors, and then what I'll do is I'll go out to my more, check writers and the guys that are like, less passionate. They're more just, when we've got a deal and they do the diligence. I prep the diligence in a way that is consumable, because I know what questions they're going to ask. So, the key to it is really going to people that know more than you, because when you can have a vulnerable and honest conversation with someone and you can, they can apply their diversity of skillset and information, and I can apply my diversity of skillset and information. 


 Rick
 We can use Socratic method to solve problems together. It's no longer about who's. Right, right. It's about us solving a problem together. If I trust that you're going to bring anything in your diversity of skillset and information to the table. Right. I trust that you're going to do that while we're solving this problem. You trust that I'm going to do that. I don't have to know everything you're going to know. I just have to trust you. Right. So, for example, you grew up doing construction. I don't know f**k all about construction outside of poorly laying hardwood floor while I was playing hockey in Vancouver. The point being is that, like, if we're talking about like a development project, I actually looked at this cool 3d hemp printed housing for totally self-sustaining geothermal totally cool deal. I knew nothing about construction at all. Right. So, I mean, if you and I were trying to solve that problem together, you're going to have the insight into some of the pitfalls that would come with that deal that I'm not going to be aware of. 


 Rick
 Right. That's why it's so key to at least understand, where the product or the, the specific company expertise that pertain to it. That's also how I build board of directors. Right. Same idea is, you have a representation of different skillsets and then set expectations of communication and participation. 


 Josh
 I think that this is man, we're Rick. We're probably going to want to do, a future episode. Cause I've got other questions to ask about the venture model, why you chose venture versus hedge or private equity. But I think. 


 Rick
 That, 


 Josh
 Yeah, the question that really started my heart when you were chatting about this and how to build a board, I think is so vital for entrepreneurs as they're building and growing to build a board, that's smart, that's different, expertise that has these things. Kind of walk us through, let's just say on the, I'm a retired firefighter here and I'm building a tech company or something like that. I don't know a damn thing about tech companies or whatever, and you're going to build a board around me, like what the, what are some things to look for? What are some red flags where like get rid of that person go? 


 Rick
 Generally red flags are, investors with no product expertise that write a big check and they want oversight is usually a pretty big red flag. Take it your, especially your core investors, your first investors, you really want to be very careful about who those people aren't and resist the urge to take on bad capital from people that are uninvolved on sophisticated or they, that if all they're doing is looking at the P and L and they're not looking you in the eye, that's a red flag. If I was gonna build a tech company around you who does construction, this is not dissimilar to one of the first deals I did where an old hockey player, buddy of mine, who was real estate came from old real estate, New York money. Frankie Basilico was building, he got his hands on a provisional patent for the business process development of 3d printing and securing 3d printing information. 


 Rick
 Now at the time Frankie had absolutely zero business and having this patent many guy, went to business school, played hockey together. This is a really technical, really technical provisional patent. The first thing I did was I actually brought it to one of my good friends. I was best man at his wedding. He actually built the systems, the DOD, the FBI, and the CIA talked to each other on black sites when he was in his twenties and he worked for Lockheed. Then he started his own company. Now he super f*****g smart tech guy and dealt with security of information. So, he was the first one that I brought to. And he's still on the board today. That company is actually doing some cool stuff right now it's called indigo 3d. The point was, the first hole is you're in tech, find a tech person, right. Simple. 


 Rick
 Right. Ideally you want to find capital strategist, right? Cause if you don't have any expertise in raising money, right. Nothing happens until you raise some money. All right. So, and that came in the form of me in this case. The key would be, you want to have, find, depending on the industry, what kind of tech, right? You want to find somebody that's in that industry that has a specific tribal knowledge on the ins and outs and the kind of nuances of that specific industry so that you can understand your competitive advantage, which you cannot do without a macro economic analysis of the industry at whole, which means that you're going to need somebody in this case, the 3d print space and gaming space. That came in the form of a guy named Tim. I don't know Tim well enough to give you is I'm not gonna give you his last name, but give me. 


 Josh
 Cell phone. 


 Rick
 Fine, but Tim's really smart guy who built, worked in the Las Vegas gaming machines and space, and then worked in the video game space. Like all the ones, all the screens, you see an Applebee's that was him too. So really specific knowledge. So the key being is like, right. People, ideas and resources, right? The idea is we've got this provisional patent, right? The idea, or sorry, the other people are industry experts and you want to build it like a, your platform, right. Build it like a pyramid, however you want, whatever. You'd like to describe it as, but, you need to start with the core components of where you lack. But, before I even started doing that, you have to evaluate the CEO. Right. That's the key is that, is this CEO coachable, or they were, are they so, full of p**s and vinegar that they're not going to listen. 


 Rick
 If that's the case, then no matter how good a board you build around them, it doesn't, it's not gonna matter. You want to look for, and I usually, I just test this by basically, as soon as they give their pitch and I knew, I'm like, okay, well, this is going to need to change. I'll immediately tell them, well, it's not going to wear like this, but it might work like this. You can see how they take that, ? If they don't take that well, then it's probably not a good enough. Whether I'm right or wrong, it's more about do they, did they take analyses? Do they either hate that? Or they don't need that. If they won't take it from me, the guy that they're trying to get the money from, then they're not going to take it from somebody they're certainly not trying to get money from. 


 Rick
 Then, that's not somebody I'm going to fund cause it's not about whether I'm right. It's just about how they take it. Yeah. 


 Josh
 Yeah. Let that be for you guys, all listening in fellow dealmakers that one day may be raising capital. If the person you're asking for money gives you some feedback, shut your mouth and just say, that's a really interesting point. Let me think about that. Right. Do not. 


 Rick
 Oh, so what, so here's the best actually. Here's my, so that's fine. What I prefer is that they argue with me, right? Well, here's the thing, Socratic method is a really great way of solving problems together. Not if they're like, f**k you. That's a different thing. If they go, well, what about this or that? Or they bring up a counterpoint or they defend their position or they write, but it's how they take it. Right. If they are personally attacked by me criticizing their business model, no go, right. If they go, well, I think of it this way, because of this and this, then I know that we can have a productive discussion to solve problems together. Right. It's not about, it's not about who's right. That's the key. It's not about who's right. It's about, there is a right answer probably. Right. We got to bet on this together. 


 Rick
 We got to solve this problem together. It's always, we it's always like, we either want a teammate. I think there's just the hockey player means like, teammates are simply people that are aligning goals, right. That are willing to sacrifice their own personal, whatever for the betterment of the team goal. Right. If we don't both agree on what the team goal is, right. We're not teammates, right. Cause again, when your build is scaling organizations, if everybody knows where we're going, right, then I don't have to be over their shoulder. The CEO doesn't have to be standing over them, checking with, is this the right decision, right? No. If you find the right people who understand where we're going, they can independently make decisions based off of their diversity of skillset and information that is going to help the company. So then that's how you scale, right? 


 Rick
 It's all the people. It's always the people, you can build the perfect infrastructure that you want, but if you don't have the people there to execute, it's not scalable. Right. That's why a lot of companies get caught at that, like kind of eight to $12 million, top line revenue. It's because, Dunbar's number is 150 Dunbar's number is basically the average amount of interpersonal relationships that a human being can handle. We have one from your wife to your mailman, whoever you maintain personal relationships with generally, most people are only are capable of maintaining about 150 interpersonal relationships. Organizations exceed 150 people, there's a significant drop-off in productivity and culture and all kinds of things. To build scale, past 150 people, roughly this has Dunbar who did a lot of research on this to scale past that number is a different skillset than getting to 150. That only comes with your ability to find people that can carry the torch, for proverbially here, the church. 


 Josh
 Yeah. Super cool. All right. Let's do this because w we'll probably have a few more questions sprinkled in towards the end of this interview, but for people listening in who want to connect with you, maybe do a deal with you. What's a good way for people to learn more about your business. What's your, your maybe your investment thesis and how to connect with you and do a deal. 


 Rick
 You know, clientele, capital.com. Clientele with two eyes is a good way to get more information. It's very high level information. There's a link tree that actually is pretty clean. It's L I N K T R dot E forward slash clientele, C L I I N T E l.com or not.com. Just, just like that link tree forward slash clientele that has a lot of like contact information and it's got links to the different deals I've done and kind of our family history and all kinds of stuff. So, I am a big believer in, finding the people, you find the special people I promise. I promise. And, subsequently it's added a lot of color to my life. That level of perspective and insight is cannot be overstated. If you choose an industry where you're working with s**t, people know you're going to work or the direct result of the people you spend the most time with. 


 Josh
 Yeah. Yeah. Don't play with s**t and not expect to stink. Right. During this interview, it could be business or personal. What questions should I have asked you that I completely screwed up and did not ask you? 


 Rick
 Well, I love that question. I asked that interviews. Well, you covered a lot of great information. Probably the coolest thing that I think I've done professionally was I took a big risk. When I left Merrill Lynch, I left it, I left a fairly large book and fell flat on my face for the first year and a half at least. I went to my, one of my mentors, Heather potters, and I've been trying to figure this out. Cause I noticed a capital inefficiency in the Colorado cannabis market where, it had to be a two year Colorado residency. You invest in cannabis at the time. I was desperately trying to figure out how I could structure a fund to basically for lack of a better term, I'm going to say circumvent, but basically compliantly allow outside investors to invest in cannabis. At the time there was no functional way or licensed to do this. 


 Rick
 In like 45 minutes, literally I've been hammered at this with months 45 minutes between meetings, other potters, this goes, oh, you're just do it like this. Right. And just like that. That fund became the first qualified institutional fund in the U S to hold a cannabis license inside of it. It was because I was basically three years ahead of, I just guessed that the marijuana enforcement division would allow me to do it this way. Because it was such a novel concept in the way that I structured it allowed me, I could extraordinarily flexible funding instrument that I can allocate across the supply chain of cannabis. Grow extraction, dispensary, packaging, hardware, compliance, trading, leasing, f*****g everything. That is really what set the stage for the diligence baseline that allowed me to analysis the cannabis industry in such an, hands-on way, I've done every job in the cannabis industry, both physically and metaphorically through, managing those companies. 


 Rick
 That allowed me insight that is extraordinarily valuable when allocating capital into cannabis and understanding the macro economics of the space. That fund was really the most clever thing that I've done professionally that allowed us the bandwidth to kind of make it this far. I've only come this far just to come this far. Right. 


 Josh
 The genius of Heather was like, oh, do it like this. 


 Rick
 Like I said, the genius of it was going to Heather, right. Is, is going to Heather is going to people that know more than you don't assume that, everything, you don't go to people. People want to help. I mean, those, the truth is people wanna help, especially really smart people. You know what I mean? Their, their talents are often, untapped because people just assume they are too busy or whatever, but, especially when they can sense that you care about what they're saying, and I, and frankly, I try to pass this through me to, and mentor people and, and, help the people that want help because frankly, there's an old metaphor. I like that. If you're driving on the road and you see somebody with the hood up and, sit and lead in next to their car on their phone, you're going to drive past, but you see somebody pushing their car, you're going to get out and help push them. 


 Rick
 You know what I mean? My advice to entrepreneurs is always push the car, push the car, go, don't wait, push the car, right. Do what you can with what you have and the right help will find you. It will, it will find you cause people, be a doer, don't sit back and wait. 


 Josh
 Super cool. One more time. What's a good place for people to connect with you. 


 Rick
 Clientele, capital.com, CLI I N T E L capital.com. It's probably the fastest way, but I go through your show, you've got to, we'll keep the, we gotta keep the money through your deal scout, dude. You know, there's no reason to circumvent. You. 


 Josh
 Let's do some deals. All right. Fellow deal-makers as always reach out to our guests and say, thanks for being on the show, man, if you're interested in clientele, capital and the cannabis industry and all the cool things that they're doing as always reach out to our guests say, thanks, but you could find all their contact information down below. If you'd like, if you'd like to come on the show, maybe talk about the deals that you're working on or looking for a specific deal, head on over to the deal. Scout.com. Fill out a quick form. Maybe get you on the show next until then talk to you all on the next episode. See you guys. 

Richard M. Batenburg Jr. Profile Photo

Richard M. Batenburg Jr.

Chairman

Richard Batenburg, Jr. is Chairman of the Board of the Clear Cannabis Inc. In addition to his role as Chairman, Richard holds managing positions in the following companies: BATMANN Consulting, Inc., an operational and strategic consulting company to cannabis-related and non-cannabis-related businesses, where he has served as both CEO and President since its founding in March 1997. Redwood Investment Partners LLC d/b/a Bonsai Cultivation, a cannabis cultivation company, where he has served as the chairman since the company’s formation in January 2017. BB Talent, LLC, a talent management, and production company, where he has been the managing member since its founding in February 2015

Mr. Batenburg has held executive level positions at First Entertainment (FTET) as a publicly listed CEO. Mr. Batenburg has founded, owned, and operated businesses in diverse industries such as VideOne Marketing where he not only produced infomercials but developed and distributed products direct to consumer via television.

Mr. Batenburg worked as an executive consultant throughout his career at AT&T Broadband, Comcast, Sun Microsystems before forming a consultancy that worked with other fortune 500 companies on process improvement and strategic change.

In April 2015; Cliintel Capital Management Group was formed, and Mr. Batenburg serves as the Fund manager of a fund directed at cannabis investments. Mr. Batenburg made his first investment in the cannabis space in 2015 as a lender and advisor to a vertically integrated cannabis firm that operated three indoor medical cannabis cultivation facilities and a medical dispensary. Mr. Batenburg managed an investment fund to invest in two large indoor cultivation and dispensary projects in Colorado, successfully exiting one cultivation and dispensary after one year, while the other indoor cultivation remains in the fund’s portfolio and is operational. He also raised $4.5 million in a third fund that owns a large stake in Clear Cannabis INC.

Mr. Batenburg’s operational, management and investment expertise gained through years of experience both within and outside the cannabis industry qualifies him to serve as the Company’s Chairman and President. Richard is an operations-oriented executive with experience managing all aspects of a business from strategic to tactical planning and execution and has run different capital market group firms for over 20 years. He specializes in the acquisition, optimization, and management of businesses, with deep experience in consolidating and standardizing technology infrastructure, business processes and practices, and establishing strategies to maximize profitability while reducing overall costs.

Batenburg excels at “end-to-end” processes to help frontline employees deliver products and services to customers and published a book titled Change Is Great-Be First! published by Advantage Media Group in 2016 having pivoted from the Cable/Broadband/Telco industry to Cannabis.

Richard M. Batenburg, Jr. has over 40 years of proven success as an entrepreneur and business owner/ operator managing all aspects of business from strategic and tactical planning through to execution. He has directed the marketing, sales, promotion, publicity, and public relations for public and private companies. He has also streamlined technology infrastructure, business processes, and practices and established strategies to maximize profitability while reducing costs.

He is the founder of many startups in Software, Consumer Goods, Consulting and Finance in dozens of industries, focusing the past 7 years in Cannabis and Hemp. Batenburg concentrates his time on financing of cannabis businesses and is the badged owner of several Colorado Cultivation, Extraction and Dispensary licenses, lives in Denver, CO with wife and three children. He is an avid ice hockey player, a Colorado Avalanche season ticket holder, and a die-hard Detroit Red Wings fan.