In this episode, we have Michael W. Sonnenfeldt, an American entrepreneur, philanthropist, and political activist. He is the Chairman and Founder of TIGER 21, the premier peer membership organization for high-net-worth wealth creators and preservers.
Michael is also an accomplished author, having written the acclaimed book “Think BIGGER and 39 other Winning Strategies from Successful Entrepreneurs,” which was published by Bloomberg/Wiley in September 2017.
During our conversation, we explored some of the key insights from his investing experience and how they can be applied to achieve financial success. Michael brings a wealth of knowledge and experience to the table.
Michael also emphasized the significance of meditation, particularly when it comes to making financial decisions. He highlighted how incorporating meditation practices into his daily routine has positively impacted his ability to navigate the complex world of wealth creation.
Join us as we dive deep into Michael Sonnenfeldt’s wealth strategies and gain invaluable insights from his vast experience.
In This Episode
- Insights into wealth creation and preservation from his role as the Chairman and Founder of TIGER 21.
- Michael’s current economic outlook and how you can leverage the market today.
- Meditation as a huge part in making rational choices that align with his financial goals.
- The importance of peer membership organizations for ultra high net worth individuals in achieving financial success.
Michael, welcome to the show.
Thank you so much. Thanks for having me.
You bet. I’m grateful to have you on the show, Michael. This is going to be super valuable to the audience, especially in the period that we’re in. There’s so much going on in the world, geopolitically, and politically, and there’s so much uncertainty out there right now. You’ve had an amazing journey and background as an entrepreneur and an investor.
I’m looking forward to unpacking some of the wisdom and insights from your journey. Why don’t we start there? If you can share with the audience who isn’t familiar with you, a bit about your background, a bit about your story, and how you got into eventually getting into TIGER 21. Starting right back from your Real estate days, MIT, and such.
I’m what would be called a classic serial entrepreneur. I’ve had four, five, or six different business lives. Some overlapping, some sequential, and maybe a little more unique as I’ve split my time between business and philanthropic activities. They’re all related right now as an example. For the last 15 years, climate has been my primary concern and I mix it both politically, philanthropically, and in terms of the investments I make.
The thing that made my career was that when I was seventeen, I was working in a warehouse that was on the waterfront of New Jersey directly across from the World Trade Center, in Lower Manhattan. I was a meditator at the time. I used to go out to the end of the pier, which was a warehouse then. It was a thousand feet out in the water. Imagine the Empire State Building lying on its side. That’s how far out in the water the pier went.
Luck tends to favor those who are ready, willing, and prepared to take risks.
When I looked at Lower Manhattan, it felt like it was closer than the land behind me. Behind me was a warehouse that had been the largest building in the world when it was built in 1929. The times had changed and I had a vision for that to become a mixed-use office, condominium, hotel, retail center and what was then the Harborside Terminal.
Seven years later, I acquired with a partner and began the redevelopment, which became the largest redevelopment in the country at the time and converted into the Harborside Financial Center, which was a great first project. It was fun that my first Real estate project was the largest commercial renovation in the world.
It’s good to make a career when you have success that way. I sold it after I was thirty, trying to figure out what to do next, and went into the Real estate information business, which was Technology. That didn’t work out so well, but a few years later, I went back into Real estate and created a billion-dollar merchant bank for Real estate called EMMES & Company.
It means “truth” in Hebrew, and my initials are MS. I sold that when I was 43, I had my second successful exit. I started TIGER21, which was about 23 years ago. Grown into the premier network of high net-worth investors around the globe with about 1,300 members who manage their own money. We’re not a money manager, but the collective personal wealth of our members is now about $150 billion.
That’s amazing. I had the opportunity to live in Harborside right when I transitioned out of the Marine Corps, and it was my first job working for an international supply chain company.
Wow.
So I am very familiar with Harborside, all of the freight, and all of the activities. I was there early 90s, but there was a lot of development to happen. You look at it today and it’s an unbelievable piece of land and what it has grown into.
Tell us some of the decisions that went into that. At your age, at your experience level, all of us as entrepreneurs, want to make big moves on the chessboard. You had to have made some very big thoughts and managed your risk to get into this. Can you tell us a little bit more about the transaction?
As I mentioned, I had this vision. For lack of a better term, I just called it an ‘idea’ when I was seventeen. The building had been owned by my wife’s family, which is a large Real estate business. They ran it as an industrial warehouse. It wasn’t very successful as an industrial warehouse. When I graduated college, I went off with an MBA from MIT. I went off to Goldman Sachs for a year and then went to work for my father-in-law for three years.
One of the things I was running was that building as a warehouse. I had this burning passion. So I developed some plans about what it would look like and how you would go about it. I found some mentors, a very important one. He was an architect who had unusual financial skills named Rick Baer. He taught me how to think about world-class development or redevelopment.
One day, a man walked into my office named David Fromer, who was twice my age. I showed him all the plans that I had been working on. He said, “Let’s do it”. I had been introduced to him by a common acquaintance. This was the first time somebody saw the plans and bought into them.
It took about a year and a half for David and I to find the right formula that would allow us to acquire the building. In those days, you could have purchased money mortgages and we were able to get financing. David was able to get financing. The deal that we had between us was because it was my idea and I had the plans, that’s what I brought to the table. He had to bring the financing to the table.
You need knowledge, perspective, and discipline. Many successful entrepreneurs experience a liquidity event, transitioning from running a business to managing wealth as investors.
We became fifty-fifty partners and the project was completely leveraged. We acquired a building for 25 million dollars with literally two hundred thousand dollars down and the rest multiple layers of debt. The sellers were happy to take back the debt because they were getting a much higher price.
One lesson is that sometimes a win-win is when one person gets what they need and the other person gets what they need. In our case, we needed financing and in the seller’s case, they wanted a high price. We were willing to pay a higher price with the advantageous financing. We closed in August of 1982
In one of the great strokes of luck, maybe this is the second thing, luck tends to favor those who are ready, willing, and prepared to take the risk. We closed in August of ‘82 on an industrial building that was losing money with a vision that it could be converted into modern computer centers.
Six months to the day later, in one of the great gifts of life, Bankers Trust, which was then the eighth largest bank in the world, leased a section of the building to put half of their worldwide data center. The minute they did that, the rest of the building became unfinished office space rather than industrial space. Then the rest is history.
Wow. That’s an amazing story. From a wealth perspective, Michael, even before you got into setting up TIGER21 and creating that community, we know that as an entrepreneur it’s a different skill set to build capital than being an investor, preserving and growing your wealth.
Have you created a particular wealth strategy for yourself, some type of guiding thoughts or parameters that you have as you’ve been building your wealth over the years?
What comes to mind is to do what you’ve just asked, you need knowledge, perspective, and discipline. Because 90% or more are successful entrepreneurs, but then have a liquidity event. All of a sudden they no longer are running a business. Now they have a pool of capital. They go from being managers and entrepreneurs to wealth preservers or investors.
For people who don’t have capital or haven’t built businesses, maybe being a wealth creator and a wealth preserver seems like the same thing, but they’re radically different. All of these things allow some of the most successful entrepreneurs to be successful. Predispose them to be mediocre investors.
An example, most entrepreneurs are very emotional about the one thing that they’re working on, that they’re so excited about. To those entrepreneurs, being an investor is watching the paint dry because investing is much more dispassionate. As an entrepreneur, you focus on one opportunity. As an investor, you have to prudently diversify.
As an entrepreneur, you focus on one opportunity; as an investor, you must prudently diversify.
I’m saying all of these things because today, the single most important issue for somebody with a wealth strategy is Asset Allocation and what it suggests about your view of the world. There are lots of studies to prove that if you can pick reasonably successful investments in each asset allocation, the asset allocation is more important than the investments themselves.
In other words, if you have a certain percentage in Stocks, a certain percentage in Private equity, and a certain percentage in Real estate, getting the allocation of those big buckets correct over the long term is more important than the individual investments. Of course, as long as the individual investments are at least in the median of each of those areas.
In my case now, the strategy that I find most compelling is to think of my assets in three buckets. One is cash, and the cash is for both a rainy day, meaning if the market downturn, can I survive on the cash I have without having to liquidate investments at exactly the wrong time? In the case of TIGER21’s members as a whole, that number is about 11% to 12% in cash.
If you spend 2% a year of your wealth, if you have sufficient wealth, that’s the number. That’s about five years of reserves that you wouldn’t have to liquidate other investments in a major downturn. The second thing is what I would call my passive investments. Those might be Index funds, stocks, investments in Private equity funds, or Real estate. We’re not operating it, we’re just investing.
Then the third part, and this is the biggest choice that an investor has to make, is active businesses. Do you have enough of an edge to own or participate directly in businesses that will provide superior returns, but also provide significant risk if you don’t know what you’re doing? Many people don’t have that option because they don’t have either that skill or that interest.
Then they have to say, “What’s realistic if I have stocks, bonds, cash, or some variation of that?” The point that I’m making is that, unless you have some demonstrable, quantifiable edge investing in companies, you’re not likely to outperform the markets. Historically, that would be an 8% to 10% return in the Stock markets, which will be reduced by whatever cash you have.
I’ll just end by saying, that there’s a study that shows the Stock market since 1910, I believe, has had an average of a 9.6% compounded return. Individuals have only earned in the 4% to 6% range because individuals who aren’t disciplined sell at the wrong time.
They tend to sell at the low, and they buy at the wrong time. They tend to buy at a high. That’s why long-term ownership of Index funds provides benefits that stock picking and even many managers can’t match.
If you can select reasonably successful investments in each asset allocation, the asset allocation is more important than the investments themselves.
That was a great summary. From your perspective, why is it that you think, certain asset classes – let’s talk about Real estate and Private equity specifically. Most people don’t have that in their portfolio, even entrepreneurs who’ve been successful.
Then they’ve had their exit, they get exposed to those Asset classes, which as you start to understand and analyze them a little bit more, provide multiple benefits at the same time, especially if you’ve had an exit. You’re able to offset with taxes, getting into Real estate, investing in energy, and some of these other Asset classes that can have multiple benefits at the same time. But most people are still looking at things from the viewpoint of, “I can only invest in the Stock market and a mixed type of portfolio”.
That’s the largest distinction between TIGER members, Family Offices, and some of the wealthier families. If all your available investment is in the Stock market, the bond market as an example, you can do quite well if you’re smart about it. Meaning, that if you had invested just in Index funds that mirrored the performance of the Stock market, you’d be one of the great investors.
As I mentioned, you could be earning in the 9% to 10% compounded range for a long time. The vast majority of TIGER members, people who inherit money, or come into money for one reason or another, have the hardest time understanding how hard it is to outperform that simple Index fund that is earning over a long time from 9% to 10%.
If you have access to, knowledge about, and are willing to take the risks of the two categories you’ve talked about – Real estate and Private equity. If you can perform in the top half and maybe the top quartile of investments, that will bring up your yield, but it’s not without significant risk.
There was a very famous investor named David F. Swensen, who was the head of the Yale endowment that revolutionized endowment investing. He came up with what was called the “Endowment Model”. It turned the world upside down, it used to be 70% equity and 30% debt. He started diversifying Yale’s investments into natural resources – forests, minerals, other forms of natural resources, private equity, and real estate.
We could go into any level of detail, but the bottom line is that he regularly generated in the mid-teen returns as opposed to the high single digits. The cumulative impact of that is to make five and ten times as much money over some time because of the power of the compound.
What do you think in terms of a percentage that you see with your members in TIGER from, let’s say more of a defensive if you have those three different buckets? How much are they putting, allocating towards defensive-type plays versus looking at equity appreciation?
The current asset allocation for TIGER members is about 25% in Real estate and about 31% in Private equity. Those two add up obviously to 56%. Public equities are only 22%. When you add those up, that’s 78%. The rest is largely defensive, its cash is at 12% and fixed income in the 7% range – some currencies, commodities, Bitcoin might be in there, and Hedge funds.
Unless you have a demonstrable, quantifiable edge in investing in companies, you’re unlikely to outperform the markets.
The overwhelming point is, that TIGER members are relatively unique in the very high allocation to Private Equity and Real estate. Those are two eloquent markets where if you can find the best opportunities, whether it’s through funds or directly, you can regularly achieve returns that are higher than the Stock market, or at the very least diversified from the Stock market.
One way to think about is it’s a bit of a barbell, very long invested in long-term assets between what we call the “Three Equity Buckets” – Private equity, Public equity, and Real estate can be seen as equity. A lot of safety with 12% cash and another 6% or 7% in fixed income. The cash is there for the rainy day and the three equities are there to build value over time.
Would that strategy hold up during different economic periods? Especially where we are today, would that hold up for you as to where we’re going to be in the next five years, say?
First of all, nobody knows where we’re going to be. That’s for sure. The most difficult form of investment trading is Macroeconomics, trying to take the biggest macroeconomic trends and translate them into specific investments. If you want to read from the Dean of Macroeconomics, Ray Dalio is the man. He’s just come out with a book in the last year on The Changing World Order.
If you read that, you’ll see how China is accelerating and the United States is growing less strong. China is catching up faster and in certain areas is beating us on the statistics. The point about that is Interest rates have a mind of their own, but over the last 20 years, Interest rates have come down. Over the last year or two, they’ve been going up.
If you were a betting person, you wouldn’t want to bet your entire portfolio that Interest rates are coming down. If you think they’re more likely to go up because of the inflation story, you’d have less fixed debt and you’d look in your equity areas for things that are inflation-proof.
A simple example is if you’re in a Real estate business and you want Inflation Protection, many Retail Real Estate leases have a pass-through of sales to the landlord. As the tenant, whatever they’re selling raises their prices because of inflation. You get more and more rent as the landlord. That’s as opposed to many other types of leases that have a fixed rate and don’t have that pass-through.
If you were concerned about inflation protection, you would lean a little more towards having that kind of pass-through rent where you participate in the growth of your tenants’ receipts. But it’s not always available. On the Private equity side, we don’t track it. Although anecdotally, we think of why Private equity has grown so much over the last fifteen years because of the Venture capital component.
When a company starts, it normally doesn’t have debt. You can only qualify for bank debt when the company is up and running, may be successful, and has a track record. That sometimes takes a couple of years. What that means is when the company is in its early stages or its Venture capital period, Debt is not that important because you don’t use debt to grow baby companies, you use debt to grow much larger companies.
If Interest rates are rising, you’re going to be less exposed to that as a venture capitalist than as a leverage buyout guy. A Leveraged buyout (LBO) guy uses debt for everything. In each of the categories, some areas are more dependent on debt and less dependent on debt in a rising Interest rate market. If you could fix Interest rates at a low rate, you’d get a benefit for many years. If your Interest rate is floating, then you’re going to be exposed to the rising Interest rates if that’s your concern.
Makes sense. Any other guidance you can give on the current economic outlook from a strategic perspective?
Getting the allocation of those big buckets—Stocks, Private equity, and Real estate—correct over the long term is more important than the individual investments.
These are the strangest times. Many metrics are as good as they’ve gotten. Under the current administration, inflation has come down dramatically. Employment has continued to surge. The stock market is strong. Yet, we have this sense of unease. It probably has to do at the very least with three or more factors, each of which is a study in itself.
The competition that we’re now facing with China has truly profound ramifications because just look in the chip area for advanced chips. On the one hand, we still have a lead on advanced chips that go into all sorts of machinery and so forth. China has an advantage in the rare earths which are the minerals that go into making chips.
They can squeeze our ability to manufacture and we can squeeze their ability to use these advanced chips. As an example, most of us think of Tesla probably when we talk about electric vehicles. Tesla is accelerating at a mind-boggling rate, doing amazingly well, beating all the records. Most Americans have never heard of BYD, which is a bigger electric vehicle company than Tesla.
The growth in Electric Vehicles (EVs) will be at the smaller end through Southeast Asia, and there BYD has a huge advantage generally in China, and America. The dynamic is changing. China has caught up in many respects and is catching up faster. You then have the polarization in America, politically, which can take a toll on how people’s well-being feels. We’re polarized more than we’ve ever been in recent history.
All of a sudden, we’re starting to see the devastating effects of climate change. Many people haven’t thought it through. This isn’t the new normal, this is on the way to things getting a lot worse. That’s going to have a huge economic impact.
There are a lot of different factors that go into thinking about these issues. Interest rates are the one that many of these get translated to. One of the things that we want to do is not be prognosticators. Meaning, don’t bet on the portfolio because you think you know whether the Stock market is going up or down. Create an all-weather portfolio that can survive in the downturn, maybe even prosper, and better prosper as the world gets better.
When you’re an entrepreneur, your ideas are important, but your execution is paramount.
A sage advice, Michael, I would wholeheartedly concur with that. Once you have a strategy and you’re following these parameters of those buckets as you outline that you’re investing in, you can manage different economic conditions and things that frankly no one can predict. Whatever it is that’s coming across the bow for us.
Also, it’s fascinating as well that Meditation is as important for you as it has been for me. I would define it as one of the top three skill sets to have in life. Started out trying to teach our kids even how important that was. You find that very successful business leaders, entrepreneurs, and investors.
People who have evolved have only gotten better at skills such as meditation, regardless of the different techniques. It’s mastering your mind, being thoughtful, and being intentional about making decisions.
When you tie that to investing as well, Ray Dalio does like to talk about that a lot, which is that we lose a lot based on emotions. We’re making decisions based on our emotions and that’s when we’re losing and investing.
Can you share with us your thoughts on meditation and how that’s helped you as an entrepreneur, and as an investor to be more intentional to make better investment decisions?
There are lots of ways to both tame. I don’t know if I would use the word “master” in your mind, but at least wrap your head around it for lack of a better way of saying it. One of them is through Analysis. Some people think of Psychoanalysis as a negative. If Psychoanalysis is a way to open up into your unconscious and reveal issues that are on your mind.
Meditation is another way. How many times have you heard people say, “I was in the shower and I had an idea come into my head”, or “I woke up in the middle of the night with an idea and I wrote it down”? It was so important. These are all variations on a theme. Meditation of course is one of the most important of them.
For me, I do get some mastery as you mentioned from meditation. But the more profound impact for me is that the more you can clear your mind, the more things can surface that are being held below the surface. Think of it as the meditation is removing a blanket from something and revealing things.
In every personal interaction an entrepreneur has with an employee or customer, awareness of their actions and perceptions allows for more productive adjustments.
When I’m meditating, something will come into my head that I have no idea where it came from. I remember I forgot to respond to an email, or I’ve been working on a problem that I can’t quite figure out the right solution to and the solution pops into my head. What it means is that our brains are working on multiple levels and we’re not in touch consciously with all of the levels that our brains are working.
Our brains are working on some problems that we’re not even aware of, and sometimes you can’t put all the pieces together. Both meditation and being in the shower. For some people, it’s Hiking and so forth. Finding ways to calm and clear the mind allows some of those problem-solving to come to the fore with extraordinary solutions.
Sometimes I find I’ve been working on something for weeks or months, and I can’t get there. With meditation, a solution pops into my head. It feels like it’s the right solution. There are lots of reasons to meditate. There are lots of health reasons. The other one is that when you’re an entrepreneur, your ideas are important, but your execution is more important. An execution almost always involves working with other people.
One of the things about meditation is to have what’s called an ‘Observing mind’. Most people are in the moment. If they get upset, they’re experiencing the upset. If they get angry, they’re obnoxious, or they’re arrogant. With meditation, you start to learn how to observe what’s going on. You’re both in the moment and you’re observing the moment.
In every personal interaction that an entrepreneur has with an employee or a customer – the more they can be aware of how they’re acting and how they’re being perceived, the more they can adjust to a more productive mode. Meditation is one way to build this observing mind.
You’re not just in the moment, but your mind is observing you being in the moment. We’re all human. If I come into a room and I’m feeling insecure as an example, because everybody is more successful than me. If I can be aware that I’m feeling insecure, it will moderate my behavior in a way that I don’t behave in a counterproductive way. Without that monitoring, I might not behave as well as I’d like.
The clearer your mind, the more things can surface that have been held below the surface.
I agree with that. It’s such a powerful technique. It can benefit so many areas of your life, in business, with your relationships, with your health, and with investing as well. I appreciate that. Michael, why don’t you tell us a little bit about TIGER21?
Some folks might not necessarily be aware. We have several of our partners, folks in our community, friends of our community, and our members. For folks who aren’t familiar, tell us how it started for you, what is the make-up today?
I mentioned that I had built and then sold this very large project when I was past 30, I may have been 31, I was successful beyond anything I would have ever imagined. When I sold the project and now I had the millions of dollars that I made, I had no real thoughts about preserving the capital. I thought that if I had been successful the first time, the second time would be just as easy.
I didn’t have a well-thought-out strategy for protecting capital. I started some new businesses and I wasn’t thinking straight in hindsight. I overestimated my success, which is very typical when people who win the lottery think they’re geniuses and forget that they won the lottery. On the other hand, they took the risk and bought the ticket, so they deserve some credit, but it’s not the whole story.
I had some setbacks in the next round of investments and realized that I needed to be smarter about it. I went back to the Real estate business where I knew something and built a billion-dollar Merchant bank called EMMES company, then I sold that business when I was 43. I’d had two terrific successes and I realized the second time I sold the business, that I didn’t want to ever have to go back to start a third business because I had made stupid mistakes.
I wanted to avoid the mistakes that rookies make. I wanted to learn from other people who had been very successful. I then learned how to preserve the capital and maybe even enhance it without unnecessarily risking it. I wanted to create an organization around six other people who were in a similar situation to me. We were all in a Vistage group that’s an organization like YPO, two great organizations, whose members are mostly CEOs of businesses. Their peer-to-peer learning is about being great CEOs.
Once you sell, it’s like the Harvard and Stanford undergraduate or the Oxford and Cambridge. TIGER21 today is the graduate school after you sell a peer-to-peer learning model. I started TIGER wanting to learn from other people how they were preserving wealth and thinking about legacy, Estate planning, and most importantly children after they had been incredibly successful as entrepreneurs.
Private equity and real estate are two distinct markets where finding the best opportunities, whether through funds or direct investments, can often yield returns higher than those of the stock market, or at the very least, provide diversification from it.
That was an idea 23 years ago and today, that’s grown into the premier network of high-net-worth entrepreneurs around the globe. We operated in half a dozen countries, growing a few more. When you join TIGER, you join a group. We have over a hundred groups around the globe. Ninety-five of those groups or more are geographically located.
You might be in New York one, London three, Tel Aviv one, or Vancouver two because in many cities we have two to five groups. Now we also have global groups where you could live anywhere in the world, join a group, and then meet by Zoom every month. Eleven months a year except for three of those meetings you meet in person depending on where most of the members in the global group are. You might meet in New York and then in London.
It’s a global group, but regardless, each of these groups has about 12 to 15 members, that’s the size. The reason is that when you meet once a month, one person each month does something called a “Portfolio defense” where they’ve worked often for weeks, if not months, with their accountants and advisors to put together. A way to explain their portfolio decisions is to get the input of 12 peers that they can’t get from anywhere else.
It’s the defining experience. It’s all subject to confidentiality. Today, at the core is a little over 100 groups, with about 1300 members managing and about $150 billion. We’re not money managers, we are the organization that puts all these people together in these groups.
We curate the activities and they meet – it’s a full-day meeting focusing on the portfolio. We have speakers, but it’s like a personal Board of Directors. You get 12 people who you meet with every month for years. I was in a group yesterday that I’ve been meeting with for 20 years. It’s an extraordinary way to get information about how other smart people are investing, how they’re thinking about their legacy, how they’re thinking about Tax planning, and how they’re thinking about their children.
You’re learning from peers. That’s the model. It’s not a consultation. The groups are run by chairs, those are our facilitators. Their job is to make the magic happen between extraordinary members. Our members are uniquely successful, on average about 1 in 10,000 by success. What that means is if you have 1,300 members worth close to 150 billion, our members have a net worth between 20 million and a billion. On average, in the middle there, at about 110 million.
That makes them about 1 in 10,000. The best way to understand that is if you’re in the major league – Football, Baseball, or Basketball, you’re about 1 in 17,000 by accomplishment. If you take the All-Stars out of any one of those leagues, you have the Majors minus the All-Stars. Think of the All-Stars as the billionaires, what’s left is an extraordinary group of people. That’s about 1 in 10,000.
Create an all-weather portfolio that not only survives downturns but thrives and improves as the world progresses.
Excellent. What do you think in terms of members from a team perspective? One of the things that we see in Family Offices is that everyone is creating a team of superstars and experts around you to build your wealth plan.
Our members are typically making their own investment decisions with strategic members such as a CPA, to what extent are they outsourcing to traditional wealth advisors?
This is a core question because some wealth advisors were nervous about TIGER21 for fear that somehow it would harm their business. TIGER21 is a confidential community where people can share best practices. When one person has a wealth advisor, a broker, or somebody who’s helping them productively make money. They share that information with other members.
For the best providers of services, whether it’s legal services – wealth, investment, etc., For the best providers, TIGER is a way to crowdsource business because one member introduces another. Part of our discussion is for two people to say, “My advisor is giving me this advice, producing these results, and charging me these fees. How are you doing?”
None of these things are black and white because you might’ve earned less but taken less risk, in which case that’s a good thing. In the discussion, 12 smart people can pretty much identify who the better performers are and who the worst performers are. It’s not a surprise that the worst performers get less and less business, and the best performers get more and more business, although performance is hard to quantify.
One of the greatest benefits you have is when you sit and talk to another member and say, “How are you thinking about this issue or that issue”, you start getting into the nuance that either excitingly or unfortunately is at the essence of investing.
Michael, if you could give one piece of advice to listeners about how they could accelerate their own wealth trajectory, what would it be?
I don’t think there’s any one piece, but there are three quick ones if I could share them with you. The first in the book (Think Bigger) that I wrote, I mentioned that if you line a hundred people up in any industry, not just finance. Line them up from least successful to most successful using any reasonable metrics, it doesn’t just have to be profits or returns. It could be academic papers, there are lots of different ways, but use any reasonable basis.
The half that are the most successful will overwhelmingly have had mentors in their life and the half that are least successful will overwhelmingly have excuses for why they couldn’t have mentors in their life. Peer-to-peer learning is a variation of that because if you’ve just sold your business and you go into a group with a couple of people who had sold their business three to ten years ago, you’re going to learn things you couldn’t learn anywhere else.
Mentors in particular were the big learning for me. I’ve been as lucky as can be to have had about half a dozen mentors across my 50-year arc from when I was a teenager. People who helped me along the way. Mentor is almost certainly the number one.
The second is, that many of your members may be aware of something called the “Marshmallow Test”. It was a test with young kids, three-year-olds, where they put kids around the table and one marshmallow in front of each of them and said, “I’m going to be back in a little while if the marshmallow is still there, I’m going to give you a second marshmallow and you can have two.” It wouldn’t be a surprise that if you had ten kids, not all of them can wait.
Most of them might want to eat the marshmallow first because they’re not sure when you’re coming back and how long they’re going to wait. They’re not even sure if they believe you. There are always a few kids who are disciplined enough, smart enough, or wise enough to wait and then they get the two marshmallows. It turns out as silly as this little experiment seems, they track these kids for the next thirty and forty years. This has been going on for decades.
It turns out that the few kids who could wait for that second marshmallow learned about delayed gratification. In almost every important endeavor, delaying gratification, investing upfront, but not reaping the reward for some time, those who know how to delay gratification through discipline or personality are predisposed to be far more successful. People who want to take the rewards out of an early career don’t have the resources to reinvest them and use the power of compounding to build great success. I’ll stop at those two.
Fantastic. So many things come to mind personally off the top of my head from that. I appreciate you sharing those with the audience, Michael. I appreciate you coming on the show today, and giving so much value to the audience.
If people would like to learn more about what you’re up to at TIGER21, some of your other companies, some of your philanthropies or would like to get involved, what’s really the best place to reach out?
The TIGER website, www.tiger21.com is the best portal to get a snapshot and dig in. I’m available on LinkedIn as well.
Super. How about one more last question, Michael, a trivia question? How did you came up with the name TIGER 21?
It stands for, “The Investment Group for Enhanced Results” in the 21st century. For people in finance, they’ll know that there was an amazing investor named Julian Robertson, who was the founder of the Tiger Group of Companies, Tiger Management, and so forth. He went out of business in 1998 as one of the greatest legendary investors when we were starting.
I wasn’t taking my name from him because he had said he was through and he didn’t understand the way the markets were working. He’s been the greatest father of what is called “Tiger Cubs”. Dozens of his protégés have gone on to build multi-billion-dollar funds, some of them the most successful.
Those who can delay gratification through discipline are predisposed to be far more successful.
We had to accommodate one another. We can’t sell securities the way TIGER can. They can’t run high-net-worth learning groups. We have what’s called a “Mutual Recognition Agreement” that has worked fine for the last ten years, and I expect it’ll continue to work fine.
Wow, that’s great. Michael, thanks again for coming on the show. It’s been an honor to learn from you and the community that you’ve created. Super impressive what you’ve done. How you’ve been able to give back is impressive as well and an inspiration to others.
I encourage listeners to reach out and follow what Michael’s doing, what TIGER 21 is doing. The elite group in the space and well aligned with our thinking here as well. Thanks again and talk to you on the next show.
Thank you so much.
Important Links
Connect with Michael Sonnenfeldt
Connect with Pantheon Investments
Book Mentioned
People
Further Resources
Your 10-Step Actionable Checklist From This Episode
✅ Identify your core interests and long-term vision. Leverage your passion to drive your entrepreneurial ventures.
✅ Develop a balanced asset allocation strategy. Diversify your investments across different asset classes to manage risk and enhance returns.
✅ Keep 12% of your portfolio in cash to manage emergencies and provide liquidity during economic downturns.
✅ Invest in assets that provide protection against inflation, such as real estate leases with sales pass-through clauses.
✅ Be cautious with high levels of debt, especially in rising interest rate environments. Prefer equity investments that are less dependent on debt during the early stages.
✅ Incorporate meditation into your routine to improve decision-making, manage stress, and enhance clarity and creativity.
✅ Apply the concept of delayed gratification to your investment strategy. Invest upfront and avoid withdrawing rewards prematurely to benefit from compounding returns.
✅ Allocate investments among private equity, public equity, and real estate. This diversification helps build long-term value and reduces risk.
✅ Join networks like TIGER21 to learn from other high-net-worth individuals about preserving and enhancing wealth, estate planning, and managing legacies.
✅ Connect with Michael Sonnenfeldt on LinkedIn and learn from his insights and activities.
About Michael Sonnenfeldt
Michael W. Sonnenfeldt is the founder and chairman of TIGER 21, a leading peer-to-peer learning network for high-net-worth individuals. A serial entrepreneur and philanthropist, he runs MUUS & Company, focusing on alternative energy. He previously founded Emmes & Company, a real estate investment firm, and led the renovation of the Harborside Financial Center. Sonnenfeldt holds degrees from MIT and is active in non-profits related to the environment and international peace.