What Does a Tech Entrepreneur Do With Money?

‍Thank you for finding the time. Michael, after selling FriendlyData do you follow the stock of ServiceNow company? 

Since I’m an active investor in the stock market I'm pretty much aware of what's going on with enterprises in the public market, so yeah I'm pretty much sure where I follow the quarterly updates but I do for any other big companies in this sector. 

You've been an active investor since when, since what year?

I would say I’ve been an active investor for more than four years. Before that I was investing in indexes and the stock market in general. About three years ago I started managing my active stock portfolio. 

When I was preparing for the interview of course I googled you, saw a lot of information, you have a website and I got stuck at one particular topic of you that I find fascinating is photography so you have amazing photos and my first question is actually what's the last photo that you took what's the last photo on your analog camera? 

Oh, good question frankly I don't even remember because for analog photography I have kind of a different approach. When I go somewhere, when I travel I take my film camera with me but it can take like a year to fully process the film and reveal the actual result. But it's a good way to revisit some memories and reflect on them, so frankly I don't remember what was the last one. I think it's it's my trip to Hawaii, Kauai island. 

Wasn't it like a couple of months ago? 

Well, in fact yes. I was in Hawaii a couple of months ago, but for me usually, it's a no-brainer. So every time I have an opportunity I just go to Hawaii so I don't remember what visit was that exactly 

Okay, all right, easy choice. Could you please tell me, how did you first earn your money and how much was it? 

Like first-first or first serious money? 

No like first-first, like first couple bucks that you got. We need to understand with our followers, how you start a path to success.

Yeah, my background is kind of unusual because I'm an immigrant from a post-Soviet dictatorship, which is called Belarus. And in Belarus, you don't have many entrepreneurs or many successful businesses or business people to follow. Maybe 15 years ago I was moving cattle with my grandfather in Belarus and I never dreamed of being a CEO of a tech company or moving to Silicon Valley, I was just living the life of an ordinary person in Belarus. But at the same time, I always wanted to start something to build something practical, and for me, the way to do it was to learn how to code, because when you are in tech you can do things on a global scale no matter where you’re based. And this is how I started my career in tech. I started it as an engineer in a small company in Minsk. Then in a few years, I learned a lot of stuff, I learned how to manage people, how to build tech products on a global scale, and eventually I become a CTO of another company. And at this point, I started earning some serious money. But going back to your initial question about the first-first few bucks, I think it was related to some help on a farm, so probably something related to that. 

Okay, my next question is: what's more difficult managing people or managing cattle? 

Great question, people are a more complicated problem. If you can solve it, you can do anything, there is no limit. But as long as you have a team you can trust, as long as you have experienced people you can delegate to, there is no limit to you. 

Okay, but here comes the problem, where to find these people you can delegate to? But that's a different topic that's in the next episode where we talk about HR. 

Yeah, but it’s all about people, people are everything. 

That's why you have founded Founders AI, right? Because it's a startup platform where you also invest in projects and people too, right? 

Yeah, I'm a pretty active angel investor, but it's not just an investment vehicle for me, it's a way to give back to the community because when I started building my first company FriendlyData, I had a lot of people around me who helped me along the way. Not just investors but a lot of advisors and more seasoned founders who were a few steps ahead of me. And without this help, I wouldn't have achieved anything. So this is the way to contribute back to the community, to support founders with my team, advice, or money.

Do you believe in karma? 

I believe in the law of energy conservation because I'm a physicist. 

Great answer. Because, you know, when thinking about the ethical aspects of investing or something. At one point in time I was thinking, in trading there is someone losing and someone winning, so if you're winning if you're like outperforming, it means that someone is losing you are taking someone's money. And I couldn't make up my mind about this because like does it mean that I get someone else's money? Do people get poorer with what I'm doing? Have you ever had this kind of ethical dilemma in investing? Maybe in different industries or with trading?

I think that's a pretty interesting topic to discuss. My personal approach is there are plenty of ways to make money legally and without negatively impacting anyone. So I personally try to avoid some grey areas like betting or gambling and stuff. Also, I don't invest in any other stuff that is not fully legal. Speaking of investment tools, I personally prefer to invest mostly in the long term. I try to avoid shorting other companies and day trading. It’s just not for me and I don't have time. 

Okay, I see. Do you remember your first investment, like the first stock that you bought?

Not really, because the first investment was in fact in an ETF, which is like an index for different stocks. So I don't recall which ETF in particular, but my initial approach was to build a diversified portfolio and try to learn from it. Initially I wanted to to have a more conservative approach, because without experience I didn’t want to lose too much money, but at the same time comfortable to lose time and ETFs give you an opportunity to lose some money also to learn something. 

Has your approach changed since then?

Yeah it's changed dramatically, because right now maybe 80 percent of my portfolio is actively managed portfolio that consists mostly of industries I understand like enterprise software, data analytics, cybersecurity, some financial stocks.

But you're also diversified in terms of assets. So you invest in the stock market, you invest in enterprises, do you have any other assets? By the way, how did you split money among them?

Yeah, besides the stock market as I said it's active angel investing. So I invest in early-stage startups, but not just early stage. When I have an opportunity I can invest in later stage as well. Also real estate investments and a lot of other stuff: crypto, gold, even wine.

Oh, that's amazing! Do you have a couple of rare bottles? How did you pick the ones that you wanted to buy?

I'm not an expert, but I just understand that some varietals appreciate better than others. But the reason why I like this type of investment is because it's not just about money. You can have a couple of good bottles of wine with a good company, so it's not just about money. 

Yeah, definitely. So also I wanted to mention that you make the pinterest-worthy cocktails! Since I follow you on Instagram…So everyone who is seeking inspiration you can join Michael in this cocktail exploring journey. All right, so how about art? Do you hold any art pieces?

Not really, maybe I'm not there yet. Most of my previous entrepreneurial life was a nomadic life without without place to settle in, so probably it did not reflect my lifestyle. But maybe at some point I’ll look closer.

You seem to have a very like settled approach and you diversify well and make sure you're doing well in terms of your money management, but where does this knowledge come from? So you're a physicist and physics is also about numbers like finance. But like where did you learn this stuff? From people? From courses? How did you assemble it all in your head?

Yeah I couldn't say that my portfolio is well-diversified, actually on the contrary it’s a pretty concentrated stock portfolio. And the reason why actually lies in the way how I invest. So I invest mostly in stuff I understand, and answering your question about the knowledge, where I get this knowledge basically it's years of experience working in the tech industry, that's where I got this knowledge. And my personal thesis is that companies will continue to invest into cloud infrastructure, into cybersecurity, into data storage, data infrastructure. And for me personally it's a no-brainer, even if now we have some correction on the market segment, in a few years I believe the demand for data for cloud infrastructure will not go anywhere. That’s a part of my personal thesis. 

And the reason why I don't diversify much is because I’m still young and I can take more risk than the average investor. My risk profile is pretty aggressive sometimes. I am ready to lose some portion of my holdings, but at the same time the potential reward is higher. That’s a part of my investment philosophy. More risk, my portfolio is pretty concentrated, but the opportunity is bigger at the same time. 

So would you say that you had any negative feelings because of the falling current market? Or were you like, yeah I'm just gonna buy more, buy the dip?

No, I don't have any feelings about it. At the same time I was kind of prepared for this situation. Last year I took some profits from one of my investments.  Most of my investments are long-term, I plan to never sell or don’t come back to where I already took some profits. 

Well, in case anything happens you still have some good wine, right? It's going to cheer you up in any situation. But do you have any examples of companies or investments that you made that you regret?

I can share my experience. I regret selling Tesla a couple of years ago, because I was like, oh no it's too high. And then it went even higher. 

Well, you can't be right in 100 percent of cases. So of course I had some losers, I had some winners, but it's a numbers game in a way, as long as you maintain your discipline, and you also maintain this discipline when exiting positions, you will do well in the long term. Because on a long term stock market investing is a net positive. 

True, that's true. So you say you invest in something that you understand. And since you're a photographer could you tell me what camera brand do you have? 

I have a Nikon D840.

Okay, so you probably understand something about cameras. Do you invest in any camera producers? 

Well, not really. I'm an amateur. Unlike data infrastructure or data analytics, I spent a lot of time professionally. But it’s just a hobby.

If you look at charts of Canon or Nikon or any other, GoPro even, you would see that for the past couple of years, actually not a couple of years, like five, ten, they were just falling and falling because the cameras on our phones are getting better, and people are switching.

Yeah, that makes sense.

Yeah, understanding something also could give you a hint of where you should not invest. But talking about something that you invest in, is there anything else except for tech companies that you are passionate about or enthusiastic, or you you see a bright future ahead for something, I don't know, electric vehicles? 

Not electric vehicles specifically, but the whole industry of alternative energy sources is pretty interesting. Not just because of potential returns but by impact in general. So there are a few stocks and a few ETFs that actually cover this area like NextEra Energy (NEE), and a few ETFs that cover lithium batteries and stuff like that. 

So you hold green energy as an ETF? Or do you have any particular companies? You don't have to name the companies. 

Yeah, I wouldn't say that I'm an expert in this field, but I'm pretty bullish about the sector in general, so I invested in a few ETFs like QCLN, a First Trust Nasdaq Clean Edge fund, which follows clean energy. Also ICLN, a similar ETF. And I previously invested in a whole ETF that follows lithium-ion producers.

Why don't you choose particular companies? By the way, do you choose any particular companies in tech since you really understand this industry?

The answer is simple, in tech I have an actively managed portfolio where I pick specific stocks. For energy or any other sector, I don't have specific picks because I don't have enough expertise to make a judgment.

Okay, when are we going to see Narrative BI on the stock market? When's IPO? 

In six to eight years. We’re just starting. 

Okay, this is a really precise answer, looking forward to it. Okay, so my last question is. You seem to be a very calm and confident investor. What helps you maintain this quality? Do you ever feel, I don't know, anxious about your capital?

No, because I'm prepared for anything. And as I said my risk profile is pretty aggressive. So when I invest in in some risk assets you’re kind of prepared to lose a portion of the money or most of the money. And the same approach for venture capital investments. By definition, venture capital is a risky investment. So that's kind of part of my strategy. I treat it without any emotion or anxiety about it. 

Okay, okay. This one is really, I'm really curious about it. What if tomorrow you lose everything, what would be the first thing you try to do to earn money?

I just keep working. 

So tomorrow is a brand new day you don't have your past, you know you don’t have your companies or something. Just a new world, how would you start earning money again? 

We live in a unique era where every person with a hard-working attitude and some expertise can earn money in some way. There are plenty of ways to do it. You can learn coding, you can start creating content, you can acquire some specific knowledge like, I don't know, related to construction or whatever. But there is plenty of demand for skilled workers and there are lots of opportunities for any hard-working person to build some initial capital and invest in the stock market or whatever you're passionate about. Our generation is a unique opportunity to build generational wealth. 

My takeaway is that there are a lot of geopolitical or economical challenges today and there are some risks. But my point is that if you work hard enough, if you learn quick there are a lot of ways to earn money, to earn some initial capital and keep investing. Long term I'm optimistic about the market specifically and about the world in general. 

That's why in your Instagram bio your call yourself a radical optimist? 

Yeah, exactly.

Did you come up with this term for yourself? I'm asking because there is a book called Radical Optimism, did you pick it from there? 

Well, I didn't hear about this. I got to check it out. That’s just the way I think, my mind if you will. 

That's great so the key takeaway — guys, be optimist optimistic and then you'll be as calm as Michael. Thank you so much for the interview, it was very insightful and enjoy the rest of the day.