Season 1,

77: How to Lose Money by Giving Up Control of a Deal with Gary Klopfenstein

August 29, 2017

Gary Klopfenstein is a highly successful executive with over 30 years of experience in asset management. Gary has a wealth of global expertise including successful client relationships in the U.S., Canada, Europe, the Middle East, Asia and Australia, and is considered an industry pioneer in specialist currency management.

Gary is Chairman of GK Investment Management, a private asset management company established as a family office. In addition to the investment of capital, the firm partners with sophisticated institutions to create and capitalize on unique investment opportunities. Prior to starting his own firm, Gary was Senior Managing Director of Mesirow Financial, a Chicago based diversified financial services firm. Gary was responsible for growing the business from $1 billion to $60 billion in less than ten years.

Time Stamped Show Notes

[4:29] Our guest and hosts talk about the bitcoin, other cryptocurrencies and their volatility.

[10:35] Being the head of a medium sized financial services firm, the opportunity to go fully global came with a potential partner for the firm.

[12:20] Running a US based firm with global clients, the next step to overseas presence was this potential partnership.  

[14:30] Deciding to do the joint venture, Gary’s firm went for it but saw a first red flag when the other company wanted first to expand to a bigger office than to get their first client.

[16:10] Despite the flashy office not being what Gary wanted, they moved there, to further realize their core belief systems where different.

[18:47] After having everything going and a pipeline set up, the increasing spending rate told Gary they would take a really long time if ever to reach profitability.

[21:21] put in a lot in infrastructure, wanted to continue to expand. No sense to expand before we can prove this partnership works

[21:50] Before expanding and not knowing if the partnership would work on the long term, honoring the people he works with, Gary looked to have an easy and quiet way out of the partnership.

[24:00] The opportunity cost of taking this partnership and reallocate resources to it must have been around the $30 million dollars

[28:18] Gary’s firm was probably not ready to do something of this scale.

[29:22] Failing Forward Segment

  • What is the bottom line reason of this failure? – “We lost sight of controlling the things that made us successful in order to do something larger.”
  • What is the single most important lesson you learned from this? – “There are certain non-negotiable things about why you’re successful in your business and regardless of the shiny thing that may be out there, never back up on this non-negotiables.”
  • Who do you turn to when you need help? – “I have several advisors that I would turn to. They can help me understand what the driver is.”
  • How do you protect yourself from failing in this way again? – “I need to have people that I am connected with and I can bounce ideas off. There’s a lot of quiet reflective time. Making sure that I’m always at a place of peace and calm.”
  • What advice would you give to someone in a similar position? – “Cut your losses. When you see something that you know that it’s not going in the right direction get out of it sooner than later.”

[39:00] it can be hard to know when to quit and when to keep going. Know when you’re wrong and cut out quickly.

[44:03] If you’re interested in a light talk about liquid assets you can email Gary at gary@gkinvestmentmanagement.us

[46:11] Gary’s final thought: “Know what your identity is and operate on that.”

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