[00:00:27] Jay: Hi, everyone. Welcome to The First Customer podcast. My name is Jay Aigner. today I'm lucky enough to be joined by Christian Hyldahl of Varium Investment Partners. Christian, welcome, my friend.
[00:00:37] Christian: Thank you. Thank you for having me.
[00:00:39] Jay: so Varium, I was reading the mission statement. it's wordy, but, I thought it made sense to read it.
they, your mission is to create a unique and innovative partnership. That is the next evolution of the relationship between RIA firms and their investment management solutions. So, in layman's terms, what does that mean?
[00:00:56] Christian: Well, the easiest way to describe us, which is not totally accurate, is, an outsourced CIO solution or a turnkey asset management platform. We're something in between. Those are two separate things. what I've tried to do and what makes us unique is that we combine the two. I've been fortunate in my career to have come across, some great people.
we all got a little bit tired in the middle of our careers of, working for other people. Or kind of, you know, kicking the can down the road. Decided to come together, built an amazing team. and, so I got a couple of PhDs. I got a bunch of CFAs guys with, you know, tons and tons of experience in different aspects of, investment management, which we think is going to be super important in the coming years.
We think, you know, there's general rising to the right sort of easy market. those days are done. And, so expertise and, experience is going to be very important. so what we do for advisors and we actually do work for advisors and family offices is we sort of come in and supplement, in some cases actually, replace what they have been doing on their investment management.
So from asset allocation to manager due diligence, to trading, reporting. Rebalancing all the things that you would have an internal chief investment officer or an investment team do we do for them. the thing that's not unique, there's lots of folks who do that. What makes us unique is the way we partner with those firms.
And that is, we're not just a service provider. we're not just a, you know, you know, charge our fee and go on our merry way. what we do is we actually allow the advisors we work with to own equity in us, build equity as our relationship grows. And so what we've done is essentially take.
a very large expense for most RIAs, which is their, investment people, systems, processes, everything. And we've turned it into an asset. so that's really the unique part of what we do. we don't think you're sacrificing anything on the operational service side. Because, again, we do have an amazing team.
Probably outside of a bulge bracket firm or a wire house, you cannot, you cannot get the experience that we have. You certainly can't afford to. most advisors couldn't afford to hire us internally. So the way that we work is we work as a third party money manager to their clients. We charge the clients a fee, which they're used to paying, either in mutual fund fees, ETF fees, SMA fees.
we're very competitive on our fees. and so you get the full, gamut of, institutional level investment management strategy and implementation for really no cost to the advisor and a great benefit to the client.
[00:03:24] Jay: Got it. Love that. Can you tell us the story of, your background a little bit, your journey before founding Varium, and kind of what led you to, and you touched on it a little bit, but what kind of really drove you to starting your own business? you know, instead of joining, like you said, you kind of were in the middle of your journey and you were kicking some things around. What was the, you know, the linchpin for you to say, okay, we're going to actually start my own firm here. Right.
[00:03:54] Christian: I figured out after getting my MBA at Duke, I went to work for a very large mutual fund company. just found the politics to be second, really, it made the investment secondary to the, all the politics that was being played and it really bothered me, frankly.
so I went to work for a smaller firm. just a couple of guys, helped build that firm, and then just ran into the typical sort of stuff. The guy who was the primary owner, his kid graduated from college and he said, you know, this is your new co CIO. And I said, well, I've been doing this for a while and I don't think he really understands what's happening.
There was some friction there, and I decided that maybe I would throw my hat in the ring and go out on my own. So that's what I did in 2005. And I ran a traditional RIA, working with, you know, individual clients, some pension plans, and, building portfolios stock by stock. I was a portfolio manager. it's what I trained for.
It's what I've always wanted to do. And I did a pretty good job for about 15 years. outperformed markets and growth values, small cap, large cap. I developed a really kind of, unique process for figuring out what companies are undervalued, fairly valued, overvalued. and we were a long only company, so, you know, we would just look for the companies that were undervalued and invest in those.
Did pretty well, but I kept banging my head, outperforming the market very consistently. Obviously had a couple of down years where we did not perform, but over a period of time, outperforming by three, four hundred basis points. on an annualized basis, which is really good. and I was still getting people asking me if I would cut my fees.
So I saw that active management wasn't, like, the best place to be going forward. I was in my mid 40s at the time, and I said, I was actually lucky enough to have a private equity firm ask me to come in and consult on their investment strategies as they were trying to roll up independent advisors into something that, like, Hightower or Focus Financial are doing now.
and when I started talking to these independent advisors, which I hadn't really talked to before because I was really competing against them, the one thing they kept saying is, you know, I used to work at Merrill Lynch and if I had a question about asset allocation or what managers I should be using in a certain sector, I could just call up my research department and they would say, Oh, this is what we're recommending now that I'm independent.
I don't have that resource. I'm really feel like I'm on an island and the sort of bell went off and I said, Oh, okay. Well, there's an opportunity here to use some of my expertise. Some of the people that I have been talking to friends of mine in the industry who were very successful, and they're frustrated with where they're at, too.
why don't we get together and offer this service to independent investment advisors and small family offices and really, you know, provide that research capability. That they either didn't have themselves, couldn't afford, or, you know, for whatever reason, just didn't feel like they had access to it.
So that was really the genesis when I flipped from Archstone to, Varium. And Varium is, it's kind of a bastardization of Latin, but it means different. We are different. so I really wanted to be different about how we went about, advising advisors on their investment strategies. And that's where I came up with this equity.
Sort of plan. I knew I had to differentiate myself starting out, you know, working, you know, against the very, very large companies like invest net, which have huge market share. just saying, you know, we're the small group, but you know, we really want to focus on just a handful of advisors, help them grow their businesses, help them really deliver an institutional level investment strategy to their clients at a reasonable price.
And so that's what we did. We sort of flipped the switch from being You know, portfolio managers to really being investment strategists and implementers of the entire investment process. So that's what we've been doing. We've been talking to folks across the country saying, you know, this is what we think is going to be, you know, specialization is really, the key word here.
it's where you can really maximize the efficiency of your business. Managing money and gathering money are two very distinct, tasks in, in this business. And, if you're trying to do both, you're not doing either well. So you really have to decide what you are. If you want to manage the money, that's great.
We wish you all the best. but if you're gathering the money and you're sort of farming it out to third parties, why not use us? Because we're a unified, solution, at a very good price. And, you know, we, me and my team, we go up on your website. It's your investment. so we automatically multiply, the, you know, at least the perception, in an actually, in actuality, we do, really multiply, your capabilities within your firm, whether you're a 100 million firm or a 2 billion firm.
Putting a bunch of PhDs and CFAs with guys with 25, 30, 40 years experience is never a bad thing.
[00:08:41] Jay: Yeah. I can see that being a really good strategy. Can you tell me the story of how you got your first customer at Barium? I, maybe you touched on a little bit in that, the start of that, the private equity consulting, or did that lead to something else? Like, what was your, who was your guys first customer?
[00:08:56] Christian: Yeah, so it turned out it took us a long time to get our first customer. It was, it was a real struggle because we, we started in a time when we were about, I guess, six years into a very sort of gentle bull market. 2018 is when we really sort of made the switch. We started, you know, jettisoning our, clients that we had in the old RIA.
and really started focusing on advisors and family offices. And they just said, we don't need you. we're doing just great. We're not going to call our clients right now when we're doing fine and say, we're switching everything up, which I understood, but it was also very difficult because I was trying to build a business.
I said, I think this is a better mousetrap. I think this is a better way to go for the. future, not just the short term, but the medium and long term. So it took us a long time, and I knew that as soon as the market sort of really had trouble, we were going to start getting attention. The folks that we were talking to that expressed interest but weren't ready to pull the trigger, we're gonna jump.
so 2018 December was a really rough month. We're down about 10 percent very quickly. most folks didn't see it coming. It really blew up their year. because they were up 10 percent and all of a sudden they finished the year down. So they had to call their clients and say, Hey, look, you know, we actually lost money this year.
people who invested in mutual funds probably had to pay taxes anyways. so that's really where we started getting our first traction. And the first client was really someone I knew I had known for, 10 years. they liked what we had done. They liked the people that I was working with.
They actually knew some of the other folks. So it was really an inside job and so I got lucky, but I got some credibility because they had 100, 000, 000 to manage, which really sort of put us on the map, got us registered and we were able to, you know, to go out and say, Hey, we actually do have a client.
This isn't a theory. This is actually a business. and then, you know, it's still been a slog. folks still don't really understand what we do and how we do it. They understand the operational side of things. sometimes the actual ownership piece, the partnership piece, the legit partner partnership piece, not just a name, but an actual practice.
That has actually been something that's been more difficult to explain and get people to buy into than I actually thought. And I don't really understand why. But, because I mean if you're given the opportunity to own equity, I mean it's a whole industry. Venture capital and private equity, you know, guys have made billions of dollars doing it.
You want to own. You always want to own and so, giving them the option to do that and having them be reticent to do that has been a little bit of a shock to me, but, you know, it's just, it's, we're not bending the laws of marketing, you know, you got to make a thousand calls to get 10 meetings, get one client.
And so that's what we're doing.
[00:11:36] Jay: Looking back... What valuable lessons did you learn from those early attempts and like those different, all the no's that you heard or the maybe laters that you heard, that have contributed to success that you guys have had so far?
[00:11:50] Christian: The biggest thing is humility and, you know, you may think you are the smartest guy, have the best team, the best process, the best experience, a brand new way of doing things that just is bulletproof. In your own head and people just don't see it and whether that's you not properly explaining it or It being too convoluted.
There's something wrong. And so even though you think it's masterful and brilliant The proofs in the pudding and so if it may be it Ultimately may be but if people don't understand it and they're not willing to jump in, you know It's like a tree falls in the woods and no one's there to hear It doesn't make a sound.
And so, perseverance is primarily the thing you got to check your ego because, you know, look, you know, for better or worse, my life's been pretty easy. I've always found school easy. I went to really good schools. I always had really good jobs. I enjoyed what I was doing and here I was for the first time in my life in my mid forties.
Teenage kids going, you know, off to college soon, bleeding money and not getting the response that I thought. I thought I would be basically beating people off with a stick saying,no, we're just going to take the best of the best. And it turned out it was crickets. And so, perseverance and constantly reevaluating what you do and how you're doing it.
And then just, you know, fighting that, the depression of just hearing no all the time. you know, finding other outlets, finding, you know, I started a yoga practice. I started, meditating. I started doing things that I just had to get out of this, sort of death spiral of constantly hearing no, or maybe later, or sounds really interesting, but not now.
You know, it was very frustrating, and financially it started to be a pinch. but you have to persevere. If you believe in what you're doing, you really have to persevere. If you're going to be an entrepreneur, which I consider myself to be, you have to sacrifice. And there is no easy path. There is no magic bullet.
again, I'm not bending the laws of marketing in any way. And so you just have to persevere and you have to hope that your partners are willing to persevere as well because they took big hits on what they were making too. and so, you know, we were all in it together. We decided we were going to do it.
We decided that, you know, and often what we did is we said, all right, everybody go back, take a blank slate of paper and come up with the best business plan you can possibly come up with. I kept coming up with the same idea and I kept, and it was very. and my other partners came up with some other ideas.
We integrated some of those ideas. Some of them we were like, well, maybe that's not exactly what we want to do. We can probably make some money doing it, but that's not where we want to go. Staying focused on what we really believed in and then persevering through it is, it's really the key. And there's no other way to do that other than through just hard work and grinding.
[00:14:45] Jay: Yeah. Great answer. As an expert in investment strategy and portfolio management and all those financial, asset kind of areas, what advice do you have for business owners? Who are looking to optimize their investment offerings?
[00:15:05] Christian: Well, you know, it's sort of the same thing as what I just talked about is really radical honesty. are you doing the best for your clients that you possibly can? Or are you just doing what is easiest for you? I'm really surprised a lot of times when I really, when I dig into the books, the investment strategies of a lot of advisors that, that we start to work with and we do, we are privy to, you know, we do get past the no phase and we get to the main phase and here's a sample portfolio.
And I'm always surprised. I'm like, well, send me a couple, send me a couple of folks who are, you know, basically have the same risk. appetite in the same time horizon. And then you get two portfolios that are vastly different and you're like, well, if they're exactly the same and they should be invested the same, your entire book of business should really have like five portfolios because that's really at the end of the day, 98 percent of people, maybe even 99 percent of people don't have to have some bespoke, very special asset allocation because they just don't have, you know, a large real estate.
book of business or that's where the majority of their wealth is, or they don't have a large block of stock. Most folks are just kind of grinding away, 500, not wealthy, but well, well to do and comfortable. Very rarely do you run across somebody with 000, 000. Those folks you have to do something special for.
but just kind of standardizing the book of business, standardizing the investments across that book of business. is really the key to efficiency and maximizing your time. Look, I don't care how rich you are. I don't care how smart you are. One thing you can't buy. borrow or steal is time. time is time.
And if you're wasting it, you're wasting money. and so that's what we do. we actually, you know, consider ourselves to be a, basically a time optimizer. that's our main task for what we do for advisors. We say, look, if you're spending 20 percent of your time, on investments, that's not enough.
You're not doing well enough on your investments. if you're spending 50 percent of your time, that's not good for your business because you could be building your business 50 percent faster if you were servicing your existing clients better and looking for new clients, because the bottom line is the more clients you have and the more assets you manage as an investment advisor.
The more money you're gonna make it just falls straight to the bottom line.
[00:17:29] Jay: right
[00:17:30] Christian: So that's that's that's the key It's just basically figure out what you're really good at figure out what you're not good at outsource what you're not good at And focus on the things that you are good at really understanding how You know bringing in people and expertise outside of your own self and dropping the ego of saying that you're good at everything But nobody's good at everything I learned that the hard way.
I always thought that I could do it all and it didn't matter. Just give me more and I'll figure out how to make it happen. Well, that's the law of diminishing returns. You're going to start doing things, everything worse. And that's to the detriment of your clients and ultimately to your business.
[00:18:06] Jay: if you had to start varium over tomorrow with everything you've learned same business same concepts What would be step one for you?
[00:18:16] Christian: Well, I'd probably take on an outside investor. that, and I had the opportunity to do that. I just, I said, you know what? I think that I can be cashflow positive in the first year. And. again, I'm going to be beating people off with a stick because no one else is offering this type of, I mean, if we do this really, you know, correctly in, in five years, we could have a billion dollar valuation.
And even if you own 3 to 5 percent of this, that's 30 to 50 million that basically you were giving away to somebody anyways, you just create a giant asset for you and your family. you know, when you really put pen, you know, pencil to paper. you figure out that, you know, this, if it is successful, it could be, you know, massively successful for everybody, including the end client.
but if I was starting it over, I would say, okay, what if things don't work out, you know, what is the worst case scenario is my family going to suffer? Is my, are my financials going to suffer? Am I going to, you know, have to figure out, you know, how do I have to rejigger my life in order to make this dream come true?
so actually probably I wouldn't change much. I might change the timing of it a little bit and have waited for, you know, kept the other business going while, I, I, really had that first client locked in, which I didn't have. that may be the best advice is make sure you have that first client, that anchor tenant, so to speak, before you launch and really kind of jeopardize your financial future, your emotional future, and everything else.
You can't always have that, but if you can, I would certainly recommend if you can get, you know, maybe a little bit of a jump on the gun. Sorry. you can, I'll turn that. I thought I turned that off. you know, that's, that, that's the key, but I wouldn't change much. I mean, the struggle was hard looking back on it.
Now. I really did struggle. my guys struggled and, you know, we're still struggling. We're not anywhere near where we want to be. but we're sort of past the point where, you know, we don't have to consider going to do other things. so not a lot that I would change, but probably, you know, make sure you have enough money, make sure you have maybe even a backer, make sure you have expertise and even a mentor, had something of a mentor on the investment side, I didn't really have it on the being an entrepreneur and business side.
So that would be the 1 thing is I'd say, make sure that you have somebody who can help you, who knows how to build a business, and then have the capital to, to back it up.
[00:20:35] Jay: Love that What are three health tips or practices you kind of mentioned a couple of them already that you personally follow? To stay energized, I mean, part of it's energy, you know, just, life is just energy in whatever way you want to think of it. But, how do you stay energized and productive and, what are three things you're working on?
Or maybe do them daily, maybe you're trying to do them daily, weekly, whatever they are. what are your kind of three main pillars?
[00:20:59] Christian: Yeah. So for a while I, I really kind of fell into a rutt and, I put on 30 pounds. I was just sitting at my desk eating whatever I could eat, whenever I could eat it. Not really exercising, not following a, any kind of schedule. I would sleep when I wanted to sleep. I would, you know, stay up all night.
You know, I do a lot of programming. and that just really started to weigh on me. I got up to 233 pounds. I'm six feet tall. I am pretty broad, but I'm, I really can't carry 233 pounds. So, About 18 months ago, I decided I was going to get on a schedule. I was going to stop working at a certain time.
I was going to eat meals at a specific time. I was going to eat good meals. I wasn't going to just go down to Wendy's and grab something because it was quick. so I was going to eat clean. I was going to prepare food, you know, for the week. So I could just go down to the fridge, heat something up that was healthy.
and then, I made sure that I was exercising, whether it was just a... go for a walk. you know, just a mile walk or, you know, I'm now walking about two or three miles a day. I do yoga three times a week, sometimes four. I go to the gym the other three or four days. because you just, you gotta get that energy out.
And if you don't, you're going to, that energy is going to go into something. negative most likely. So it's really staying to a schedule, eating healthy and making sure you exercise, make time to exercise because it's the easiest thing in the world to say. I don't have time to exercise, but you know what?
It's as valuable as air. And for me, it's been that I'm down to 200 pounds. I still want to lose another five. but I feel better. I feel way more energetic. mind is clear. And, that's been the key is just trying to get on a schedule, eat healthy and exercise.
[00:22:42] Jay: Well, you look great. Congrats on the weight loss. That's
[00:22:45] Christian: I mean, not bad for 53, right?
[00:22:47] Jay: great, man. You would, you know, you'd pass for 52 any day, man,
[00:22:50] Christian: I know, right?
than 62.
[00:22:52] Jay: you look great, and I love to hear that sort of journey. I wonder if something happened 18 months ago, because I did something similar 18 months ago, and I've heard it about, you know, 16 to 24 months.
There's a weird, maybe it was coming out of COVID.
[00:23:06] Christian: It is COVID. I, it was COVID for me because
[00:23:08] Jay: it was.
[00:23:09] Christian: I sat in my basement like everybody else and, you know, saw the world coming to an end basically as we knew it. And that was depressing. I went through a breakup. I had a relationship of five years. I, that sort of fizzled. Part of that was, you know, I think due to the fact that we were 24 seven with each other.
and so, yeah, it was just, it was, that, that was the catalyst. And I just said, you know what? I gotta get my stuff together because that breakup was my fault. And, I just said, you know what, I gotta change my life, for myself primarily, for my future partner, whoever that may be. and for my kids who were, my daughter started college in 2020 so she lost her senior year
and her freshman year.
I felt really bad for her. And then my son just started, Dartmouth in 2022. And that was when, you know, I said, these are really great kids and I want to be around for their, for my grandkids for, you know, for their kids. And, at my present pace, not only am I not terribly happy, but I'm not terribly healthy.
so, and my dad had died in 2022 and he had not taken care of himself. He, you know, he died of heart disease and diabetes and all this stuff that. But, you know, unfortunately, you know, I have high blood pressure and I have, you know, pre diabetic, I'm pre diabetic just based on genetics. I eat, I don't know how I can eat better, but, you know, so those were concerns for me and they started weighing on me and I decided, do I want to, you know, burn out and die at 70 or do I want to, you know, be around until, you know, God forbid I, I lose my mind, but, I don't want my, I don't want my body to be the reason why I'm not here.
[00:24:48] Jay: Love that. I think I'm trying to live to the point where they can just download my brain into a computer and I can just be a robot forever. That's my goal. We'll see if I can make it.
[00:24:59] Christian: Yeah, that's what the world needs is me forever.
[00:25:01] Jay: That's what, I mean, it sounds like you've got a lot going on so maybe we do. So mystery question time. If you could do anything in the world, non business related. And you knew you couldn't fail. Bucket list item. Something you've wanted to do forever. What would it be?
[00:25:24] Christian: It, I mean, I love Elon. I would love to go to Mars. That would be
[00:25:28] Jay: That's a great answer. I usually get going to space, but going to Mars, that's beautiful. I
[00:25:32] Christian: Yeah. I think that would be, I mean, the challenge of that, just trying to stay alive up there. Like you'd have to constantly be vigilant and thinking and present has been tough for me to, I'm still trying to, you know, be present.
[00:25:48] Jay: think we all are, yeah.
[00:25:49] Christian: Can you just imagine, you know, every step is like, potentially your last.
I guess that's true here too, but really there. So you gotta be on your game. That, that would be super cool to be the first person or first group to be on Mars. that would be something that I would do. I wouldn't do it because I wouldn't, again, I love my kids and I think they're going to live fantastic lives and have wonderful children and I wouldn't want to give that up.
But if I could do it and I didn't have That, that, you know, those
[00:26:18] Jay: it and come back.
[00:26:19] Christian: super important to me. Yeah.
[00:26:20] Jay: Well, you can't
[00:26:21] Christian: Yeah. I don't think you come. I don't think, I don't think if I think the first people going to Mars
going, they're just going like, well, you know, look, it's your, it's your scenario. You can't fail, so you can go and come back. So Yeah. All right.
[00:26:31] Jay: we'll give that to you. If people want to learn more about you, Christian, if they want to learn more about Varium, how do they do that?
Where do they go?
[00:26:38] Christian: they can go to www. variumip. That's V A R I U M I P as an investmentpartners. com.
[00:26:46] Jay: All right, I will link that in the show notes. It was fantastic meeting you. I appreciate your time today, and let's catch up again soon. All right. Thanks,
[00:26:53] Christian: Thanks. I appreciate you.
[00:26:55] Jay: See you, man.