Ep524: Barry O’Reilly – Keep Improving Your Investment System

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning. In our community. We know that to win in investing, you must take risk, but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives to reduce risk in your life, go to my worst investment ever.com Right now, and take the risk reduction assessment I've created from the lessons I've learned from more than 500 guests, fellow risk takers, this is your worst podcast host Andrew Stotz, from a Stotz Academy, and I'm here with featured guest, Barry O'Reilly, Barry, are you ready to join our mission?

Barry O'Reilly 00:41
I think I've lived your mission many times, and I'm ready to share my stories.

Andrew Stotz 00:45
I'm very excited to hear it. And we had an interesting talk beforehand. So I'm really looking forward to it. So let me introduce you to the audience. Barry O'Reilly is an entrepreneur, business advisor and author who has pioneered the intersection of business model innovation, product development, organizational design, and cultural transformation. Barry is the co founder of nobodies studios, a crowd infused high velocity venture studio with the mission to create 100 compelling companies over the next five years. I love that mission, Barry. Now Barry is auto, also an author of two international bestsellers. And first one is Lean Enterprise and the other one is on learn. I'll have the links to those in the show notes. So Barry, can you take a minute, and fill in a little bit about the value that you bring to the world?

Barry O'Reilly 01:37
Well, my passion has always been innovation, building new products, services teams, I've always enjoyed finding the edge of what's happening and exploring it. And I uncertainty, IOC is opportunity. And it inspires me it helps me to grow keeps moving me forward. And I think the stories I'm going to share will hopefully exemplify when I've got that right, and also the moments where maybe I got it wrong, but also had helped me move forward.

Andrew Stotz 02:06
Interesting. Well, now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be. Tell us a bit about the circumstances leading up to it, then tell us your story.

Barry O'Reilly 02:18
Yeah, well, my story is probably a story and maybe other people have felt moment. But in sort of November 2015, one of my oldest best friends sent me a video. And he was convinced I had to watch this video, it was going to change my life, it was going to change the world, it was the future that was about to impart and democratize the world make everyone have a equal footing and totally transformed the way we live and work. So I was like, Okay, maybe he just had a good night out. And he's gonna send me a dance track that he enjoyed. But the video was a very young guy talking about an idea called Aetherium. And what it would do, and how it was this unique technology that was going to transform the way we interact transact, the world would be different. And I watched the video seven times, seven times, I kept watching it. And every single time I watched it, I was like, I don't get it. I don't see what this thing is actually meant to do. So I replied back to my buddy and said, Look, you know, I've been an engineer for most of my life, I was sort of sitting there going, I don't really see how this technology particularly is different from just a regular database. That's basically what it looks like to me. And so as much as he imparted, no, you got to do this, this is something that you know, get involved, give it a go, I was just like, You know what, I don't get it. I'm just gonna move on and on to the next thing in my inbox. And lo and behold, here I am hanging out in Manila chatting away to you about, you know, the life I'm enjoying here. Meanwhile, he's you know, buying a chateau out in a beautiful part of Spain and funemployed for the rest of his life. So I didn't make the investment. But it was one of these things that when I look back on it, it was a great another great learning moment for me. Right? And you never know at the time when you look at these things, you know what, what the right thing was wrong thing. But, you know, I thought it was a fun story, to share, to just help kickstart the conversation. It's

Andrew Stotz 04:34
it's a story that we all feel I feel like, I think we have the same friend. I think he said the same video. I think I had the same response. And I have and that friend of mine is, you know, sitting on a big amount of money because of the fact that he made that investment. Now he lost in other areas too. But he wanted that one, of course now, one of the things that we've learned is that you know We can we really fully remember these dramatic events that happen in the ones that we miss. But of course, there's also losses that we missed, too. So there's, you know, our memories can be really difficult for us sometimes. But let me ask you, so how would you summarize the lessons that you learned from this? And then I think we can talk a lot about what you're doing now.

Barry O'Reilly 05:24
Yeah. So what are the things that sort of struck me that? Yeah, I'm also quite comfortable that, you know, you look at two pieces of paper or pitch decks ones, Google and ones wobble? How do you know, which is the difference? Right? Like, this is what I live every day. And so I think it's, you know, the thing, I didn't spend my life beating myself up or envious in any way. But what it reminded me of is, I didn't like to curiosity, right, and I didn't like, and I lacked the ability to just get in the game. And even if it's just a small step, to get in the game, because you know, what the upshot of a lot of that was, is that later, like a year or two, as I started to see that movement happen, then the penny dropped for me a little more. And I was able to say, Ah, okay, well, let's make a little investment here. Because that made me be curious and follow what was happening in that domain. And, you know, that got me sort of interested and a monitoring, and it drove my turn my curiosity into education. Right. And I think that is something that I would be more frustrated with myself at the moment, is that I didn't trust curiosity. And I didn't make a little small bet, to get more skin in the game and find out. And this is something that I learned a lot, especially in venture building. Right? Like when I meet entrepreneurs all the time, I'm trying to build businesses, myself with nobody studios and our venture studio. How can I just make small little investments to start to actually learn to test to educate myself, and not thinking that everything has to be these big investments? I'm all in or I'm all out? It's actually what are the small steps I can do to start getting started and learn, right, as you say, in even in your opening, a controlled risk, to start learning my way through these domains, these new ideas, these new technologies, and see what's a winner and what's not a winner? And that's okay, I think that's part of the process. And you know, that so read the frustration was that I wasn't true to what I believe in, by taking that small step. I just, I just passed, because I didn't understand. And that's what it meant, more so than, you know, that I'm not sitting here with a chateau in Paris and living the dream I've always wanted, I'm pretty happy with my life. But not with not with the decision and reaction in that moment.

Andrew Stotz 07:51
So let me share a few things that I take away. I mean, the first thing is that we're all going to have missed opportunities in our lives. And you know, sometimes it's just it's extra painful sometimes. And I know, like in the stock market, people will say, you know, I missed that one. Yeah, well, there's, there's 50,000 companies that are listed in the stock market every single day you are missing stocks that are going up. And then there's millions of businesses that we're surrounded by wherever we are. And every single day, some of those are doing well. And you've missed that opportunity, also. And so, you know, there's no point obviously, focusing too much on that missed opportunity. So don't beat yourself up on that, I think to the listeners, but that's not what you've done. You didn't beat yourself up, you learn from it. So let me review some of the things that I'm getting from you. The first thing is start small. And you know, I just want to highlight this one, because it's a difficult one. Because, you know, I think you wouldn't say everybody that comes up to you just give them some money. Right? That's not what you're saying, I suppose. But how does the listener draw the line? And say, that's good enough that I want to put a little bit into it versus something, you know, similar and enthusiastic and all that anything in that? So first question is how do you draw that line? And I think, from nobody studios, you probably have some experience of thinking about, where do we start to make that small commitment?

Barry O'Reilly 09:17
Yeah, well, first of all, it's like you say, it's impossible to pick the winners and the losers, right, like don't do it, but we can make educated guesses or we should have a system, I think is a well what you're sort of alluding to, and for me, the system has always been is it an area that I'm curious about? Like, is there something when I see it that goes, Oh, that's interesting. And I don't understand it, but I'd like to, or write like something that piques my curiosity,

Andrew Stotz 09:46
just to finally watch that video seven times. Man, I was trying we're trying you know, I was enough there.

Barry O'Reilly 09:53
Yeah, I was trying like I was trying to get it. You know, and it's not not that I'm for a moment. I would think this, you know, I have to get everything some things I just don't get right and, and there's loads of ways I was able to hear it was a communicated well, whatever, just there's, there's lots of reasons. But I'm always looking for that spark that I'm like, That's interesting. That's something I could see myself like going deep on and, and following and being part of and want to learn more of. And in that moment, it didn't strike me right. And, you know, later maybe it has for I did, I've learned more, I've educated myself more because I started to get into the game, right as I started to understand it and be a bit more curious about it. But at the time I didn't write. So I think that's always really interesting to me is not that I have to understand these domains so well. But I'm incentivized to educate myself more, right to actually learn through it. And what I have found for me to unless something is such a slam dunk that I'm so excited by, and I'm like, oh, I need to learn more, I sort of need to incentivize myself a little bit, right. And the best way for me to bring focus, because I can't look at 50,000 things a day. And I have to actually make a little investment. Right, put some skin in the game, whether that's 50 bucks, 100 bucks, whatever. But it forces me to say, it's a commitment for me to say, Well, I was curious. Now I'm going to educate myself in that, and I'm going to invest in that education. And force me now some people might spend 10 books and buy a book, and educate themselves more, that's a small investment in some respects, right? You may spend 10 hours and watch the video 75 times and still not get it right, like whatever it might be. But these are all investments, it's time it's energy, it's money, whatever it is for you. And that actually, it becomes a forcing function, because it's a commitment. And just like when we find startups or entrepreneurs that are brilliant, we make investments in them, right to work with them put our time, regardless of ever starting to put capital into a business, you put capital into accelerate, right. But even just taking a meeting with people doing a workshop with them, getting like spending a week together, right, there might be hard cold cash transfers there, but it's time, which means you're giving up on a different investment. And I think these are sort of the way I think about the world now is sort of very conscious to how I invest my energy, my capacity, my focus, and I commit to it, then sometimes by putting a little bit of capital into the game. Cool, that's fun. But you know, simply as we build venture studios and companies, that's actually really what we're doing. We're, we're investing in the people we work with, to build great businesses. And as the businesses traction, then we're just investing capital into that business to help it grow. So it's very rarely that you sort of lead often with don't want to give this business money. It often starts What am I curious about it? Is this person, somebody I want to invest in as an individual or team, whatever it might be, but when I want to commit to it to find out if it's a good investment, a phone call an hour or a day workshop? And then what are the signals then to tells me that that is a good investment that we should double down and scale it up over time. And, you know, I sort of live that now. 24/7, that's pretty much my life.

Andrew Stotz 13:32
That discussion kind of reminds me also of, you know, what's the level of confidence you have in the person who's delivering the message? So in this case, you know, it was a friend that was not a dummy. You know, he had done his thinking on it. And he was presenting something, and it reminds me of something like I remember, many years ago, a friend of mine just went down the rabbit hole on the JFK assassination. And I didn't want to go down that rabbit hole for many different reasons. Just I wasn't interested or whatever. And I just said, you know, it can't be what he thinks it was. But however, he was, he was a very smart guy. He was no dummy. And he had read a lot about it. And I said, Okay, he talked to me long enough about it. I was like, okay, just give me one book. I'm an analyst. I can think about things on my own. I'm independent. And I read that book. And I went back to them. I said, I think you're right. And I basically made a judgment. But I wouldn't have read that book. If it was just a crackpot coming up, Hey, yo, this is that you know, but it was. So sometimes I think getting a channel or a funnel of high quality people bringing things to you also is a screening factor that we should pay attention to.

Barry O'Reilly 14:48
Oh, absolutely. Right. But that's that's a core fundamental of venture building and venture capital. Right. The notion is deal flow. You want high quality companies showing up at your door Through from trusted entities to make investments in, right? It's part it's part of the filtering mechanism, as you say, it's one of the reasons nobody studios exists, right? We're de risking early stage businesses and standing them up. So when venture capitalist see a studio, a company came out and nobody studios that they're like, oh, wow, that's, it's a quality stamp of approval, in a way. Right. So it those systems are important, you know, and, and then just to be contrary, as well is, it's also we dangerous, we get too wedded to them. Right? That, you know, it's just like the person who always picks a winner, sometimes they're gonna pick a loser, or that we get so narrow in our focus that we don't look at opportunities that are, you know, off off the paved road. And so it's a great reminder, you know, and I always love to that contrarian ism as well to like, keep thinking, like, keep shaking up the system a little bit in some respects to as well, and which is fun, too. Yeah,

Andrew Stotz 15:59
there's two last things that I'll share, and then we'll move on, but I liked what you said his turn, turned my curiosity into education. And I think that's a good lesson for all of us is, when you put a little skin in the game, it does kind of force you to turn your curiosity into education, because you're going to pay more attention to it. So that's a great quote, I think that I like. And then the last thing I would say is that, you know, investing in startups is a little bit like planting 100 coffee trees, you know, and then thinking about, Okay, which one of these 100 is going to grow in the next three, you know, coffee tree doesn't start to produce, you know, any particular yield until year three, and by year five, they produce produce, they start really producing a great yield. So out of these 100 coffee trees, which ones are going to produce the best yield? I mean, it is a crapshoot. And it's a function of things that you could predict, and things that you can't predict. And so, hey, you got a lot. We got a buddy there. This is a family show that your son?

Barry O'Reilly 17:08
Yeah, this is Oscar, he said the future event venture building. Hi, Oscar. Gonna say hi, Oscar. Hi.

Andrew Stotz 17:19
Fantastic. So that's the idea, or, or the same idea is investing in, you know, a bunch of kids in kindergarten to say which one's going to be the ones that's going to be successful. So I think the lesson that I learned from listening to you, but also from what you're doing with nobody studios, is that when you're investing in startups, invest in many, with the idea that your some of them are going to fail, some are going to succeed, but you're going to learn from all of them.

Barry O'Reilly 17:46
Yeah, and I think just keep improving your system, right? Like figure out the things that helped you identify the ones that went the way you hoped and mitigate the ones that didn't, right. And that's, that's all we can keep working on. Right? Chance plays a huge part in what we're doing. But that ability to just keep improving your system to help you make those choices, I think you can always work on that.

Andrew Stotz 18:10
Great. And I just want to ask you another question that I asked people is what is a resource that you recommend for our listeners, but I'd love for you to just give us a short version of what we would learn if we went and read the book. Unlearn?

Barry O'Reilly 18:26
Well, so my inspiration for writing unlearn came from what I found to be the biggest inhibitor in helping high performance individuals get better. It wasn't actually any of their ability to learn new skills or adopt new behaviors. It was the inability to let go of their existing mindset and behavior, the things that had made them successful in the past, because they believe they would just keep making them successful in the future. So what I kept finding was that it the problem was not our ability to learn, it was about ability to unlearn and let go of the past to succeed in the future. And you know, like I said, in 2015, I was a victim of my own model in a way, right where I couldn't let go of my understanding of what this is just a database, rather than thinking of the properties that were unique to us, and let go of that to see the future. So I think I'm constantly learning unlearning relearning. And the book is really an inspiration for a people I've worked from all over the world coaching for Fortune 500, execs to startup founders, and even myself and yeah, hopefully, they might enjoy that book and take a few lessons with them.

Andrew Stotz 19:42
Fantastic. And I'll have the links to that in the show notes as well as the link to nobody studios in case you're a thriving startup ready to go. So last question, what's your number one goal for the next 12 months?

Barry O'Reilly 19:55
Well, I think one of the things we are doing or nobody Studios is we're going to be the first venture CTO to ever offer equity crowdfunding, which means anybody with a couple 100 bucks will be able to invest and own a piece of the studio and stake in every company we create forever. So typically, to invest in early stage companies, you often have to be high net worth individual, like a value of over a million dollars. But we're going to do it through crowdfunding and totally blow up that model. So bring the barrier to entry way, way down. And then hopefully, a whole new group of people who can get into the investment system in private early stage companies and own a little piece in the upside. So you don't need a million dollars, you can start with maybe a couple $100 and become a venture investor. So that's interesting to you sign up to nobody studios calm, and we're looking to do that crowdfunding in the next month or two. And I'd love to have anyone who's interested be part of it.

Andrew Stotz 20:53
That's exciting. And I'll have all that in the show notes. And one quick question I have about that is if we look at investing in you know, let's say bonds over the long term, you're probably earning three or 4%. Over the long term. If you're investing in, you know, just s&p 500, or let's say, the broad based stock market, you're probably earning eight to 10%. If you're investing in a large group of startup companies, what would you expect for a long term return from that?

Barry O'Reilly 21:24
Well, the short answer is it has to be better than the two mechanisms you just said, correct. Otherwise, individuals are not going to put money into it. Right. And so I think, you know, not obviously allowed, say what the return would be for investing in nobody studios, that's technically illegal. But just to compare, like, you have to have such a viable and appealing her mechanism to beat both s&p 500 advanced that people are willing to put their capital into it. Right. And what we do know is that there are no greater entities on the planet than startups for creating huge global impact people following their passions, but also recognizing wealth creation, on the back of it for the succeeding and bringing your passionate to fruition. So you know, have a think about it. And we'll be the sign up to nobody studios, and we'll share everything we're doing. And, again, we'd love to help more people part of us and opportunity.

Andrew Stotz 22:27
Exciting, and I have six common mistakes that I've found people make from interviewing 500 people. And number six, I have labeled as invested in a startup company. And what I try to tell people, he said, you know, because startup companies are all or nothing, generally. And because the, you know, you really have to think about it from a perspective that, you know, you're probably gonna lose all your money. And that's why I tell people don't invest in startups, and then they get mad, and I say, invest in 10 startups. In other words, don't, you know, it's great to think that that, you know, cousin down the street is going to have this amazing restaurant, but the truth is, you probably should be diversifying. And that's what nobody studios provides.

Barry O'Reilly 23:15
Straight out of the gate. Yeah, you're diversified because you own a stake in the studio and the portfolio. So by definition, you're diversified from the stars. And I think that's why it's probably, for me personally, one of the most compelling investments I'm helping to create, and I hope we do everything we aim to do, and everyone who supports us, gets to bring their talent or influence the capital to help us be successful and see all the upside we create as a result of doing some amazing things.

Andrew Stotz 23:47
Alright, listeners, there you have it another story of loss to keep you winning. If you haven't taken the risk reduction assessment, I challenge you to go to my worst investment ever.com right now and start building your wealth the easy way, by reducing risk. As we conclude, Barry, I want to thank you again, for joining our mission. And on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Barry O'Reilly 24:18
Just keep up the great work. Andrew, I think you're encouraging and sharing a tough conversation that Meebo actually learned so much from so thanks for hosting this show and bringing that message to the world.

Andrew Stotz 24:29
I appreciate that. And I have to always remember that, you know, you're one of the few that says yes, my favorite rejection was when a guy replied to me, and I asked him to come on the show. He said, great idea, not my style. So that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. This is your worst podcast host Andrew Stotz saying thank you for joining our mission. And I'll see you on The upside.