Prometheus: That One Move to Raise Billions From Family Offices

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Hey, welcome to another episode of Making Billions, I'm your host, Ryan Miller, and today I have my dear friend Michael Wang. 

Michael is the founder and CEO of Prometheus, an invite only platform connecting billion dollar family offices with each other and tailor investment opportunities. He served as the managing partner at Cypress Funds, one of the oldest hedge funds still in existence.  Michael has been featured and quoted in Bloomberg, Forbes, Fortune, Business Insider, Entrepreneur, Market Watch and Institutional Investor. 

So what does this mean? Well, it means that Michael understands how to raise capital the right way, and he's about to teach you and I the fundamental differences between raising capital as an amateur versus raising capital like the pros.

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[THE GUEST]: Michael Wang is the founder and CEO of Prometheus.

[THE HOST]: Ryan Miller is an Angel investor

Transcript

Ryan Miller  

My name is Ryan Miller, and for the past 15 years, I've helped hundreds of people to raise millions of dollars for their funds and for their startups. If you're serious about raising money, launching your business or taking your life to the next level, this show will give you the answers so that you too can enjoy your pursuit of Making Billions. Let's get into it. 

Ryan Miller  

Listen. Job number one for alternative asset managers is raising capital, but there are sticking points. See, raising money from friends and family, it's okay, but you will struggle to hit the big leagues until you can pitch family offices and have them trust you with their billions. This episode is going to showcase a community of family offices that have said they are hungry for deals, and what you can do to connect with them on your way to Making Billions. All this and more coming right now, here we go. 

Ryan Miller  

Hey, welcome to another episode of Making Billions, I'm your host, Ryan Miller, and today I have my dear friend Michael Wang. Michael is the founder and CEO of Prometheus, an invite only platform connecting billion dollar family offices with each other and tailor investment opportunities. He served as the managing partner at Cypress Funds, one of the oldest hedge funds still in existence. Previously, Michael was the founding principal and the generalist head at Tourbillon Capital, where he helped to grow the hedge fund to $2 billion before leading Cypress. Prior to Tourbillon, he spent five years as a senior analyst at SAC Capital, and that was one of my favorite shows, the inspiration for the TV show Billions. So he was able to help grow to one of the largest, most successful portfolios in the game. Michael has been featured and quoted in Bloomberg, Forbes, Fortune, Business Insider, Entrepreneur, Market Watch and Institutional Investor. So what does this mean? Well, it means that Michael understands how to raise capital the right way, and he's about to teach you and I the fundamental differences between raising capital as an amateur versus raising capital like the pros. So Michael, welcome to the show, man.

Michael Wang  

Thank you so much. It's truly an honor to be here right now, and I'm a been a big fan of the show for ages, and you've built quite a community here, so I'm excited to chat with you, Ryan.

Ryan Miller  

Yeah, man, it's been a privilege. I know you and I, we've gotten to know each other for quite some time now, and we've been able to chop it up. I am so impressed in what you've built with Prometheus and how you're bringing family offices together. And I mean, the folks these aren't, I won't steal your thunder here, Michael, but these are some of the areas are, these are some of the family offices that are a big deal. These are the ones that people like me would drool over, to get in front of and so you've put together something so impressive, and I am very excited to get into it. When it comes to say, starting a fund, launching marketing, raising capital, there's so much that has to go into it. What would you say are some key elements on putting some early points on the board?

Michael Wang  

Sure, I think number one, just getting in that mind frame, that marketing should be, quite frankly, as much of a focus as building your actual portfolio and spending time researching stocks or whatever asset class that you're trading. One thing that people don't realize is that there is actually no correlation between positive performance and AUM, ie, just because you're up 100% this year doesn't mean people are gonna throw money at you, that it may actually be the opposite, right? Because returns are mean reverting. Of course, there's 100% correlation between negative returns and AUM, ie, if you lose money consistently, nobody's going to give you money. All right, so what does that mean is, is that the biggest funds actually spend quite a bit of time on marketing, quite a bit of resources on marketing. Now, I don't know this for a fact, but I've heard that at Pershing Square has a marketing or an IR team twice as big as their actual investment team, because that's a man that obviously understands the importance of AUM, right, of marketing. And so I think that's one, one important thing to keep in mind is spend a lot of time, spend a lot of resources on that marketing function. The second thing I want to touch on is how important is to build relationships. First, take the time to establish trust and credibility, or even think about asking for money in the first place. So I would say, think of fundraising like chess. You know the pitch, your actual formal pitch is that your opening move is your power play at the end, after you've put all the pieces together, right? 

Michael Wang  

In fact, your first move comes probably months before any formal pitch. And what I mean by that is this, establish that credibility by doing things like writing blogs, writing newsletters, posting content if you're fortunate enough getting invited by Ryan Miller to go on Making Billions. So what you want to do is you want to establish that credibility, that reputation, before you even go into the pitch. One example is I could give you actually a real world example. When I was running Cypress to the last hedge fund that I ran, I had an analyst, I had a person interview to be an analyst for me, this kid was smart. What he did was he put me on his distribution list, where every single day, he'd write about his thoughts about that market, thoughts about the macro, uh, stock ideas. Every time one of his companies reported earnings, not only would he summarize the earnings, but he more importantly, give his, uh, insights into what this meant for the stock. You know, I followed him and his content for a good year. He comes to me right after a year, he's like, hey, Mike, um, I'm starting a hedge fund, and I said, I'm gonna stop you right there. I want to be a first check, yeah? Because unbeknownst to you, I've already made money. I've built trust in you through your content, right, and I can putting a lot of your ideas in our own portfolio. We've made a lot of money on them, so be more than happy to invest in you so and it's because he took the time, he did something very unique, right? He built that credibility and that trust with his content. And those are the type of things that you can do to you know, to establish that credibility essentially.

Ryan Miller  

Yeah, wow. There's so much to unpack and thank you for very accurately and simply just describing exactly what it is, you know, on the show, and Michael, you know this, you've been hanging out with me for a bit, but on the show, I always talk about reputation, relationships and results. And I'm picturing this young kid standing in front of you going through the interview and get the job, you know, just out of school. But what he did, instead of going for this big play, there's something that I this is just my own, the Gospel of Ryan, for those of you who don't want to listen to it, and shouldn't, but for those of you who are still listening, I always say that consistency beats intensity. And so for this guy, this young kid, who I'm sure is looking for a job, he's doing interviews, but he never missed a day, I assume he never missed a day, or he was very consistent over a long period of time. So yeah, he didn't get the analyst role, which, for those who are in the industry, it's, it's entry level, it's not, it's, you're not rolling in the dough or anything, but it's a good foot in the door and he never got it. But what did he do, he actually leveled up and he was able to with Michael to demonstrate his results. And Michael got results from his results, meaning that kid's result is saying, I actually have a pretty good insight, a finger on the pulse of the market. Therefore, here's my call, and then you generate and you make some money off of some of those, and now you're like, I trust this guy. So then he goes from maybe I didn't get the job, but I got an investor on my own hedge fund that's probably 10 times bigger than what he ever would have gotten had he gotten that job. So the power of being consistent over being intense and the power of just building relationships of trust. Like you said, the pitch is not your opening move, it's your power move, because you have so many things that have to be in place and just like that young kid with you, it was building relationships of trust. It's showcasing your results, it's focusing and staying in contact with your newsletter or whatever it is, just some way of keeping people in your orbit. Anything else you can add to that? 

Michael Wang  

Yeah, the funny thing is, I don't even think he made a formal pitch to me, and that's the magic of it, all, right? Because by the time he told me that he was starting his own front I already knew his thought process, right? I already knew how he thought about the markets and how talented he was, so I actually asked to invest. That's the magic of it, all right? 

Ryan Miller  

And the real capital raisers do exactly what that young kid did to you, isn't it? They make them come to you when you're in a position, and that's where we talk about with the three R's, is, those are your most valuable assets. And as you invest in those, however you do it, eventually investors are going to start coming to you and say, hey, what do you got for me? I trust you. I think you have a really good grip on your sector. I've got a few bucks. I'd love to go in with you, like that. That's the ultimate power move and so it's not enough folks to be a capital raiser who's constantly just hitting up friends and family, fools and followers. You got to position yourself where investors come to you and Michael illustrated exactly one of those great ways to do it. I absolutely love it. Now it's not enough to win, we were talking before I hit the record button, about some downside risks that exist in almost every deal, and mitigating those. Yes, I really do talk like this when the camera's off, I do talk about risk mitigation, I'm a knock out at parties, it's super fun. In all seriousness, though, I'm totally joking. In all seriousness, there are some ways to get your butt kicked, get wiped out in the game. You've been in the game for a long time, you're a vet, you've worked with some of the best minds in the industry. What would you suggest to people, as far as some cautionary tales of what to look out for, of just, how do you not lose? How do you cover your ass? 

Michael Wang  

That's a great question. I think first things first should be fairly obvious, but you do see it occur pretty often, often, which is, don't ever lie, cheat or steal about your results. So anything that you put in a pitch deck, make sure that you have the right legal counsel to review it. You do not want the SEC to come knocking on your door and by the way, they see everything. I don't know what software or whatever, whatever AI they use, it's pretty darn good, so don't think that you can escape by them. Number two, things are important is, if you are starting a fund, whatever is that you pitch, whatever your strategy is, stick to it. Stick to that strategy, be careful with thesis creep. So if you're a long, short equity tech investor, don't invest in an auto OEM, no matter how good you think that idea is, because if the investor actually wanted industrials exposure, they'd find the best industrials fund that they could find, not allocate their industrials exposure to a tech fund. So that's number two, and let's say number three, which is very important to do, find whatever it is that makes you special. You know, whatever edge that is, whether it's your experience, it's your track record, it's your network, maybe you have a unique board of advisors. Maybe you do a podcast like Making Billions, where you speak to a lot of smart people, and you have sort of interesting access to interesting people with great ideas, right, like that's edge. And whatever edge that is, you really have to key in on that, because just know that if you're starting a hedge fund or venture fund or private equity fund or a real estate fund, there are 30,000 guys like you, right, that you're competing against. So think about how you could stand out.

Ryan Miller  

You know, and stand out is something that you've done, you've created something pretty cool. So I want to you've been so nice, but I want to make sure that people really understand how big of a deal you are, not just from the lead in that we did earlier in the show, but also what you're doing right now. So folks, if there's anybody that personifies the importance of trust and relationships and access and how all of that ties into finance, it's Michael, it's this conversation right now. You've done all that, and those are nice, fancy words, but we've, you've encapsulated that into this technology, this community called Prometheus. Maybe you can walk me through a little bit of what inspired you to create it, and what is Prometheus? 

Michael Wang  

Sure, I'll start with the latter question. In a nutshell, Prometheus is a tech enabled community of family offices, and all we do at the end of the day is make warm intros to connect family offices on one side of the fence with interesting, relevant investment opportunities on the other side of the fence, right. But yes, so how did I get here? How did I pivot from this world of finance, from this hedge fund world, from Wall Street to simply, I guess, Silicon Valley? Well, it is. I've actually been building Prometheus without realizing it for years, I think I've always had a natural instinct for solving problems through meaningful connections. And so whether someone needed to help fundraising or was looking for a filmmaker to document their family history, I found a lot of satisfaction in making these relevant introductions. And what dawned on me was that this sort of talent for connecting people and solving their problems by connecting them to the right person to solve them, could actually evolve into something bigger, something that I could potentially monetize. I decided to leave the hedge fund world a few years ago to sort of really pursue this, this idea, essentially. And you know specifically with family offices, how I built out this Rolodex of families, was when I started working at Cypress and running Cypress, my partner was a guy named Robert Day. Robert Day was the founder of Cypress, and that, by the way, that fund was found in 1969 which makes it likely the oldest hedge fund still in existence. He was a very prominent person in Los Angeles, LA wrote, if you go to LA you'll see some buildings with his name on it, for instance. And he was the one that introduced me to a lot of his veterans and we're talking about folks like, Charlie Munger and Michael Milken and stuff like that, that I would be able to meet at some of Robert's dinner parties. And I ran Cypress with Robert for about five years, throughout that period of time, I just really developed a large network of family offices. And that's really how I built that network of families was introducing them to each other, quite frankly. And then what would happen is just founders would then ask me, hey, you know all these families, can you make intros for me? And I was more than happy to make intros at a day job running a hedge fund. But then I realized, I realized these interests actually led to billions of dollars of assets that were ring side that  paid nothing. And so I figured, you know, I gotta figure a way to monetize this network and so, so that was really the genesis of me, sort of pivoting from the hedge fund world, of which I've been very grateful for, for having been a part of to building Prometheus and doing a startup.

Ryan Miller  

That's brilliant. So, you mentioned that through Prometheus, provide warm intros. So, so do people just come to you, maybe they have a cool deal and they want to build a multi family, or they have some kind of they want to go mine asteroids and outer space, whatever. And then through you, I'm sure there's some fees involved or anything, and then they're able to get tapped into that network, like you said, that you've been able to build during your times having dinner with some some well known names, is that a little bit how that works?

Michael Wang  

Yeah. So thus far, we've been primarily operating via a one white glove service. So companies now these could be founders, they could be fund managers, they could be sports team owners. They come to us essentially to get a ton of warm introductions to our Rolodex family offices. And generally with every single client within probably about a month, they'll get anywhere from 75 to 100 warm intros to the wealthiest families in the world. So we inundate them with not just high quality intros, but the quantity just blows them away. It's game changing. It's life changing for most of these folks, so that's the white glove service. However, we've experienced so much demand that I just manually cannot fulfill that with demand, I cannot do 100 warm intros for 30 clients at a time, there's no I don't have capacity to do that. And so a number of months ago, we started building technology, essentially an app to help scale and mimic what we do manually with these warm intros, and basically scale digitally, where essentially almost auto generates these intros, and that will be a service that we'll be launching fairly shortly. We've already built the platform, I'll be inviting my first set of family offices over the course of the next few weeks, and it will be a lot more cost efficient for clients, founders, fund managers, sports team owners, etc. than obviously the white glove, not because it stunts or the tech.

Ryan Miller  

Brilliant. And why would you say, since we're saying fundraising through relationships, why would you say raising capital through relationships is better than the constant LinkedIn inbox spray and pray emails that people are asking me to invest in, things that I clearly don't invest in? Why is relationships the better way to go for a capital raiser? 

Michael Wang  

Yeah, something like LinkedIn that you brought up. What LinkedIn is is, it's a cold intro platform, it's a cold outreach platform. It's, quite frankly, full of spam and solicitation, right? I mean, I don't know how many connections I have on LinkedIn. You know, 10,000, 12,000 whatever it is, I don't know most of these people, right? Like there's close to 0% probability that, if you're LinkedIn me, that I'm actually going to take a meeting with you. Now, contrast that with what we're doing at Prometheus, either the warm intros that I do manually or or the warm intros through our platform, those are all warm intros. And by the way, on the tech side of things, it still looks and feels like a warm intro from me, you know, except I didn't actually manually have to type it out, you know. And our goal at the end of the day is just to put buyer and seller together so that they can take that conversation offline, hopefully meet in person or through Zoom call or whatever it is, right? But as you know, warm intros have 10 to 20x higher conversion than cold outreach. Like Ryan, if you introduce me to somebody, no matter who it is, there's a 100% chance I'm going to meet with him. Contrast that to somebody who cold outreach, outreaches me on LinkedIn or email, there's closer to 0% chance that I'm going to meet with them, right? And so the weight of those warm intros, which will lead to relationships, because you can't build a relationship if the other person is that willing to meet you, obviously, right? But, but it really at the end of the day, unless you're Elon Musk or Peter Thiel, the people generally aren't going to give you money, sight unseen. They need to build trust in you, you need to establish credibility, and that takes time. 

Ryan Miller  

Brilliant, yeah, yeah, I absolutely love it. You know, I'm a firm believer as well, you know that in raising capital through relationships, I've said it before, but I think we need to underscore this, that launching a fund, for example, a lot of people want to do funds is fine, do whatever you think, but you cannot take this cold, hard look like a wooden thing that you look at, and it's just a series of steps and pretty soon, I'll be a billionaire in 18 months. Really, what this is is you have to build the relationships first, is my opinion, feel free to disagree or agree. You have to build the relationships first, get the connections. Showcase that you're trustworthy, showcase that you can produce results and then go launch a fund, and you move all of that trust relationship, all of that capital you built, push it through your fund structure. So I think what happens is, where people tend to make mistakes, is they get that backwards. So they have the if, if I build it, they will come and often that's not the case. So when you flip it, if you want to do it right, you want to raise capital correctly and I mean, we got Michael here, who's done a lot of that, has managed hedge funds and talked to some of the most brilliant minds in finance. But I think building up that relationship, reputation and results building those three things together, and then once that reaches critical mass, and for me, when that happened is when people start bringing you money and they say, do you have anything for me? I heard about this deal or that, once you're there, that, to me, is the first clue that it's time to, just like you did with Prometheus, it's time to formalize these relationships and actually put them in a vehicle, because people want my oversight with their capital, sure I can serve that up. Anything else to add to that?

Michael Wang  

I do have something to add, which is that it may seem like what I'm doing at Prometheus tech in the middle community family offices is totally different than what I did for, actually, most of my career, which is being a hedge fund manager. But the reality is this is, is that the grind in that experience I had as a hedge fund manager over a period of, you know, 15 years on Wall Street or whatever it was, it establishes a lot of credibility for me. That's why, when I speak to people, if I went, if I was raising money for Prometheus, which I was, you know, few years when I was really raising my seed round, like I always led with my experience as a hedge for measure, right and that adds immediate credibility. So take time, quite frankly, take time to build experience right. And the more experience you have, the more credibility you'll have, right and then, hopefully, by then, you'll have a reputation so that you know by the time that you actually do go out to fundraise, or whether it's a company or it's a fund, that your reputation will proceed you.

Ryan Miller  

Brilliant. I take pride in asking to leave behind some of your best advice, most competitive advantages that you can provide for our listeners, maybe one or two competitive advantages that you can provide. What would you say?

Michael Wang  

Actually, a couple things that we've already touched on, which is one. So it's very important to learn how to sell. Selling is everything, and quite frankly, the key to selling is actually to not sell. Reality is people are not stupid, they generally know and are aware when they are being sold something, and quite frankly, they don't like it, right? So again, going back to your cell by offering insights, by providing value first, provide value first, before you extract value from folks, right and so that's, that's certainly one thing. And by the way, whether you're a fund manager or you're doing a, you know, starting a software company like, that's why the freemium model exists in software. Yeah, these companies want you to test out your software so you know how good it is, right, before, before they ask for your money, I would say the second thing is, it is something that you know very well, which is network, network, network. For me, I, I took every meeting, yeah, and I take all meetings for the reason that any single meeting can lead to, whether it's meeting Stephen Cohen or meeting Robert Day, those all paint some mutual, warm introduction and meaning that, you know, I didn't know was going to lead anywhere that changed my life, right and so, so that's one thing, is definitely network, follow up, build those relationships. It's vastly important. The third thing I would touch on is, learn from others mistakes and learn from others who are successful, right? I can't remember who said this, I think it may have been Warren Buffett or something like that, that said a clever man solves the problem while a wise man avoids it, right? And so you learn how to avoid problems by listening to podcasts like Making Billions, reading books, autobiographies of people who have done it, you know, have made those mistakes already. So it's important to keep on growing and learning by consuming this type of content. 

Ryan Miller  

Yeah, you know, you bring up something that was very interesting to me before we hit record and I'd love to pull that one forward, which is about, and you've kind of alluded to, it is, I always say, don't start a relationship by asking for something, right? And you said, just make sure you offer value as one of your points there. Do you have any examples of when that happened, if you've dealt with any family offices or anything around the world? Maybe, maybe open that up a little bit about how, the mistake that people make when they're too aggressive and they open a meeting, and I'm all business, and here's what it is, this is what I need, please fund me my 5 million or 500 million. What do you what's your insight of just opening, you talked about chess, just opening that new relationship. How, how do you approach that? What would you advise people to do, as far as opening up and trying to start a relationship that they've literally have no grounds to start. How do they do it? 

Michael Wang  

Do more listening than the talking in that initial meeting. Learn about what problems that person needs to get solved and help them solve that problem. For me, it's all right, my thought is almost every single problem in world can be solved by being connected right person to solve them. One of the reasons why I'm building Prometheus, right? It's a warm intro platform to solve your problem, essentially and so that's how you do it, is start offering introduction. That's how I built up my network of family offices in the first place is literally finding one big family or two big families, right? Start there. Start small, and start solving their problems by connecting with people that could solve their problems. And they keep on doing that, and then they go, wow, this guy is really well connected. Oh, my goodness, he just introduced me to somebody who invests in my company, or whatever it is. I gotta do them back with solid, you know, and introduce them to other folks in my network. So the more you give, quite frankly, the more you get and maybe that's karma, maybe that's the universe. But, but absolutely, in that first meeting, or in the first initial set of meetings, think about how you could help the other person. Trust me, they're going to remember that and they're going to give it back to you in multiples, potentially.

Ryan Miller  

Got it. So as we wrap things up, is there anything else you'd like to say? How do people contact Prometheus, what? What kind of contacts do you welcome from, for Prometheus? Anything at all?

Michael Wang  

You could visit our website, Prometheusalts, alts.com and submit a deal there. If you have an interesting deal, I always love reviewing interesting deals or you can hit me up on on, I guess, LinkedIn, but you know, make sure to say, hey, I'm a listener of Ryan, Ryan's podcast, so that it becomes a more of a warm referral, if you will and and we can connect that way.

Ryan Miller  

Brilliant so it sounds like people, if they have deals, they can submit deals, and if those are accepted, then there might be some introductions that follow from Prometheus, is that right? 

Michael Wang  

Yeah, exactly. 

Ryan Miller  

Brilliant. All right, so all of you people raising capital out there who isn't anyone listening this shows probably in some part of their raise. But if you've got some good deals and you need access in a concentrated dose to family offices, check out Prometheus, I know they gave the website, check out Prometheus for those. So just to summarize everything, learn to sell properly, which is really just to provide value, more than just trying to extract it. The other thing that Michael said, for a competitive advantage is just network as much as you can. Please don't miss out on that and I'm going to put my full weight behind what Michael said there, you have to build the relationships, the upfront work, the prep work that you have to launch your business. Do not underestimate that. That was your first thing is when you talked about Pershing Square and how much marketing goes into it, which is just helping people know what you're all about, what you're trying to do, make sure that it's not below you. Make sure that you do your marketing, build those relationships. That's some of the best things you can do, and then learn from others mistakes, right, show some wisdom. You don't have to be out there, ready, fire, aim, show that you can learn from it. And then finally, listen a lot, solve people's problems and just build those, those trusting relationships. You do these things, and you too will be well on your way in your pursuit of Making Billions. 

Ryan Miller  

Wow, what a show, I hope you enjoyed this episode as much as I did. Now, if you haven't done so already, be sure to leave a comment and review on new ideas and guests you want me to bring on for future episodes. Plus, why don't you head over to YouTube and see extra takes while you get to know our guests even better and make sure to come back for our next episode, where we dive even deeper into the people, the process and the perspectives of both investors and founders. Until then, my friends, stay hungry, focus on your goals and keep grinding towards your dream of Making Billions.