00:00 Lincoln Like 20% of our firm's success in this one person. Yeah. You can think about it that way. Imagine your investment. Imagine your investment. 20% of its profits is coming from one person, right?

00:08 Koloa It's hugely important. Welcome to Funds That Won, where we dive into some of the world's most renowned investment funds. We'll interview investment managers across the alternative landscape and learn how they built their million and even billion dollar asset management empires. We'll explore teams, structures, strategies, and best practices in launching and running alternative investment funds. All right, what is up everybody? Today I've got Koloa with Wolfgram Capital here with us today. You know, I've seen Koloa around for a while. He's always posting about these crazy deals he's taken down inside of our ecosystem. So I'm super excited to have him on with us today.

00:49 Lincoln Koloa, welcome. Thanks. Thanks for having me on board and excited to talk about what we're doing and some of the things we've worked on

00:56 Koloa and how we think about the investing landscape. Yeah, love it, man. Well, why don't you start off by telling us a little bit of background

01:04 Lincoln about yourself and your firm. Yeah. So I did not start in finance. My first real professional was in sports. I was a bobsledder on the USA team. Oh, no way. Yeah, figured that I should probably not peg my income ability to sliding down a mountain of ice in spandex. And so, you know, went to school, eventually ended up at Yale Law School, founded a small prop tech company, venture backed. My exited and then did VC for a little bit in New York with First Round Capital and was actually looking to exit the tech scene to do real estate private equity. And so in December of 2021, I formed Wolfgram Capital and over the last 13 months, we've done 220 million in acquisitions.

01:54 Koloa We mainly focus in the hospitality space. Wow, that's crazy. So bobsledding, let me get this straight, bobsledding to venture capital now in private equity real estate, is that right? Yep, yep. Hey, that's quite a journey. That's awesome. That's great. Well, tell us a little bit about kind of your buy box, what type of deals you like to do and what you focus on. And we'll hear later about, you know, what you think about today's environment. Obviously real estate's a little crazy for that, but first tell us a little bit about, you know,

02:26 Lincoln what type of deals interest you. Yeah, so we have a interesting mix between as we focus on hospitality, particularly hotels and resorts, and within hospitality, there's a whole bunch of different types of brands, right? If you stayed at a Marriott and sometimes it can be confusing, right? Fairfield, Courtyard, Residence Inn, Town Place Suites, Spring Hill, right? Those brands, right, kind of sit to, and then they market to different customers. So you might have on the top end of a brand, like the Marriott's five-star brand is Ritz Carlton, Hilton's is the Waldorf, and then on the other side of the brand levels, Marriott's, you know, Entry brand is like a Fairfield or Spring Hill Suites or a Courtyard, and Hilton's is, you know, Hampton Inn. And so within those spaces of hotels, we actually play on the spectrums and nowhere in the middle. So we buy luxury, ultra hot five-star luxury, we just bought the Waldorf in Park City, Utah, that was our five-star luxury hotel. And then within a couple of weeks, we closed on a Residence Inn in Podunk, Louisiana. And so we like to play on both sides. And the reason why is, you know, luxury gets these massive developmental returns because their cap rates are so low, right? There's luxury in places like Hawaii or LA, and even in Park City, they'll trade at sub-four cap rates. And so you develop it or you do a rebrand or you do a reposition or something like that on the luxury side, you get like these ridiculous return profiles. But on the other hand, luxury gets hit first, right, in a recession. For example, in COVID, luxury went from like 50, 60% occupancy down to almost zero, right? Closed down, shut down. Whereas like you had a Fairfield in Podunk, Louisiana, Podunk, Texas, that thing went from like 75% occupancy to like 55% occupancy, like even during COVID, right? And so we actually target a ratio between the two of getting all the cashflow, super steady cashflow, you're not gonna have crazy multiples, super steady cashflow on the limited service side, and then ultra luxury for the pretty big developmental

04:22 Koloa equity multiples. Wow, so a little bit of a barbell approach then, going for both sides. That's really cool. Do you have like a target allocation percentage to each of them, the high end luxury or the lower end, or is it just kind of you take a deal as it comes

04:39 Lincoln and if it's your criteria, you move forward with it? No, yeah, so we do have a ratio. We do have about a 10 to one ratio. So it's about 10 limited service to every one luxury. And so across our 200, and that ends up being close to 50-50 in terms of assets. So like of our 220, now 30 of our assets that are management and our actual real estate that we own, about a little under half of that is in luxury,

05:06 Koloa and then the other rest is in limited service. Oh, cool. Okay, and do you have like different investor bases that you go to for these different types of assets or do you kind of pitch them all

05:20 Lincoln to your entire investor base? Yeah, so definitely different investor base, particularly when you syndicate on the limited service side. I mean, these are small deals. These are, maybe they get into the mid teens, but these, residents in, courtyards, fair fields, a lot of times we're buying them outside. We don't even like to go downtown even on those types. We typically find a metropolitan area that we like and draw like a 30 minute circle around it and try to hit those more suburban markets. And within that, these deals are, it's called a $10 million deal. The equity on that is three, maybe three and a half, four million. We can't get institutional big folks to get, maybe we did a roll up of those. We were looking at a $175 million portfolio of like 20 of those things. That would be exciting. But a lot of these one-offs, a lot of times we find locals. We have some other friends and family type investors. And then on the luxury side, yeah, we have, we've worked with huge family offices, couple of institutions and their appetite favors, obviously writing the bigger checks. We had one investor, one single investor, write a $127 million check into a deal.

06:31 Koloa And that was a crazy close. It sounds like you do a lot of different things in investing. You've had a lot of different experiences. In our ecosystem, we have a lot of just plain emerging managers, emerging allocators, investors. From someone who's been able to take the bull by its horns and move successfully over the past year, especially with all macros, what advice do you have for people listening on this call that are thinking about starting their own fund or managing their own fund? What's some life advice from Koloa?

07:11 Lincoln So I actually think that, and this is applicable to general entrepreneurship, but I think it's particularly relevant in funds. And that is, I see too often people taking a problem first approach when they're trying to solve for what they're gonna be investing, particularly in asset class, right? So what they'll say is, look, multifamily is, cap rates starting to expand and there's an opportunity to buy there. I'm gonna go raise a multifamily fund or sell storage is under built in my area. And I'm gonna go, and that's like identifying a problem to try and solve the problem. And that works. I'm not saying it doesn't work, works for a lot of people, but particularly if you don't have background in that area, I actually think that a tools-based approach is better. And that is look around and say, what are the tools that I have available to me? So do I have a competitive advantage in anything? Do I work in an industry? And if I work in a manufacturing plant, and I know manufacturing plants, and I probably know 30 manufacturer plant owners and managers and supply chain, like all throughout. So I would look and that's how I got into hotels was, I was practically raised in hotels. My dad is working hotels his entire career. And so I looked around and said, if I was gonna have three steps ahead of somebody in buying an asset class, what would that asset class be for me was hotels. And so we were really, really quickly. So if I was someone like that, I'm looking at private equity role, but I think some guys like doing a veterinary roll up, veterinary clinics, and I think he's a vet, right? Which makes sense. So he goes in there and he looks, okay, what are the tools I have? What are the people that I know? What are the things I can leverage off of? Start there, I think is typically a little bit better than just like, oh, I think that the market is long. I'm just gonna like put together a hedge fund and start shorting securities.

08:51 Koloa I don't know, it's kind of weird to think about it that way. No, hey, I honestly couldn't agree more with you. Like, I've seen hundreds of emerging managers come through our programs over the past couple of years. And it's all about taking an inventory of your resources, both on the capital side, so like demand for your product, like do what type of relationships do you have? And then your capacity to effectively allocate there. And it goes back to your resources of what experience and legs up you have. You brought up a great point earlier about, you're bringing these, you have these smaller deals that are three to $4 million raise. And a lot of people don't understand that you can't take that to an institutional shop, right? Like they don't wanna write checks for three or 4 million. They wanna write checks for three or 400 million, right? And so, your offerings have to fit your investor demand. So I don't, like, I love that comment.

09:47 Lincoln That's great. Yeah, and one of the, a big piece of that is, and it's funny, coming from a legal background, the amount of work that it takes to close a $10 million deal. Like, so we closed the Waldorf's nine figure asset. We actually closed that in two days after we signed the PSA all cash.

10:06 Koloa Wait, let me cut you off there. I don't know if any, if you guys, if that name doesn't ring a bell to you guys, I don't know if you appreciate how big of a deal that is. So I'm local, I'm here in Salt Lake City area. And that's a big freaking deal. Like that's a well-known location. So kudos, man. Like that's awesome. That's so exciting. Sorry to cut you off. No, no, no, it's good. Yeah, there's a, it's-

10:30 Lincoln How big that was, so. Yeah, it's funny when you list out, and one of our slides and our pitch decks after we closed that deal is, there's only 13 Waldorf's in the entire US. And so what we have is we have one of the pitch decks that shows all the owners of the 13 Waldorf's. Not a very long slide, right? Yeah. And it shows, and it's like, sovereign wealth fund, huge multi-billion dollar private equity firm has been around for 45 years, some billionaire tech founder out of SF, and then it's like Wolfram Capital, right? It's a great, like, associating ourselves with all those other owners. But on a deal like that, that deal was complicated, and there was, it was a great deal for us because there was a lot of hair on it that had to be worked out. But in reality, closing that nine figure deal was not like 10 times more work or more effort than closing that $10 million deal. So that's when you think about like in a big institutional fund, right? They're trying to deploy hundreds of millions, maybe several billion into asset classes. And so they're underwriting of a $100 million deal that they can do once and spend the legal fees one time to spend into that, versus underwriting 10 residence ins in middle of nowhere somewhere. Even if those deals are good deals, it's the same amount of effort, right? And so the numbers are different on the contracts. And so that's kind of a lot of what's undergirding

11:46 Koloa that analysis. I wanna shift gears a little bit. You started, so what is it? A year ago, two years ago? Year, year. A year ago. And you've raised millions of dollars in equity capital for these deals. I feel like that's at least a mental hurdle for a lot of people, before they've actually gone out and tried to raise money for something. Can you walk us through your experience in fundraising and maybe some tips, tricks or stories

12:17 Lincoln that you have that you could share? Sure. So I think the first one is understanding that what you do as an investment manager is a well-loved and much needed product or service for four groups, right? So there has to be the shift that, you're not a car salesman knocking on people's doors that no one wants to hear about. For the right people, they dream about meeting you. Their full-time job is to meet people like you. And so once you have that shift that, look, we offer product or service that, our last portfolio of hotels, we had a 17% cash on cash return, right? Even in 2021, which was like, the average was well less than that across hospitality. I mean, there's a whole bunch of ways we do that. We vertically integrate, we just bought an insurance firm, we acquired a management company, emerged it. We do a whole bunch of things to try to do that. But at its core, right? What fund managers need to understand is that if they're good at what they do, just like when I managed a VC fund, I loved when founders wanted to pitch in because my entire thing was finding good founders. And so if I had a hundred people emailing me about, that was awesome. That's like the first, I'll call it mental shift that has to happen. And then after that, there's so much of raising capital that is, not just relationship-based, but it's like skill-based. So people come to us all the time for LP checks and we've done a couple of LP stuff here and there. I would say the biggest trick is doing some customer discovery beforehand, so trying to understand what their goals are, what kind of investment horizons, what kind of deals they've had in the past. Skipping past all that is almost fatal

14:02 Koloa when you start to pitch. And I love just something else you said earlier. I think going into these things from an abundance mindset and not a scarcity mindset, right? Like everyone, what you were saying earlier, it feels like you need the investor really bad, but in most cases, they need you, right? They need good managers. They need guys like Kaloa out there that can do all the legwork, do all the hard lifting, and be a good steward of investor capital. So I love that. Why don't you tell me a little bit about what the future looks like for Wolfgram Capital. What are you guys planning on doing the same stuff, just 10 times bigger, or do you have new products you're bringing to market?

14:49 Lincoln I mean, tell me, how are you gonna do the next decade? Yeah, so it's funny in that we grew really fast, right? And that wasn't necessarily expected. We actually had planned on our first year buying one or two hotels, and growing from there, and then the deals started coming through. And because COVID was so bad for hotels, I mean, the deals that were coming through, not in all cases, but there was some distress. There were some hotels that loans were coming due, interest rates were rising at the same time, and they had it fully recovered from COVID, and we were kind of in this perfect storm. And so we grew really fast, and a couple of things that are happening on our firm internally. One is that we doubled the size of our team, because we needed to just handle, we had three of us that was running this $230 million portfolio, just under a dozen hotels, hundreds of employees across the hotels, and we also have the management company that manages our hotels.

15:47 Koloa I was gonna ask you, so do you have your own management company then,

15:50 Lincoln or do you have- No, so we started our own property management company. We actually just got a former regional director at Marriott Corporate to come over. We poached him to come over and lead that. Wow, hey, that's a win. That's great. Yeah, yeah, just a couple of weeks ago. And then we hired a CFO, former investment banker at Merrill Lynch. He led 40 billion of acquisitions. He's coming over in-house, CFO. We had a head of construction who's built the Ritz-Carlton's, and JW Marriott's coming over, head our construction. But in terms of next, what does our next year look like? So there are a couple of things that happened that are now starting to bear fruit that we're gonna kind of dig into deeper. So one was, not only did we start our own management company, we then acquired another management company and merged them so we get some licenses. When you manage hotels, you have a license for IHG hotels, Marriott, Hilton. Even within those brands, you have licenses for a Fairfield versus a full-service Marriott, blah, blah, blah. And so there was some strategic acquisitions we did, merged them all together. And that is now really starting to go into its own, and we're trying to really spin that as like it's completely self-operating company before we were wearing all hats, and now we're starting to hire some specialists, right, to get in there and run that. The other thing we realized pretty early is that insurance is expensive, and it's a yearly cost. Yeah. And so we put together a full enterprise management team. We bought an insurance firm and put together a full enterprise management team. Like we were shocked at what we were able to do on our hotels, even small things. Like one of the highest costs that a hotel incurs is like insurance claims, is either a fire, but right below that, especially when we think about controllable costs, is water damage. So it's real common, right? Everyone's in their hotels, they don't turn something off, or something floods, or there's a pipe. Every room has bathrooms, and some have showers, or some have nice showers, but kitchens and all that. And so small things like our insurance team was looking at, say, look, you put these little sensors in, 20 bucks a room, and not only do you go to market, and you go to the brokers, and you go to the insurance firms and say, look, we have all this data that we can actually provide, and we control the operations. And that brings out, we dropped our premium, even which is like historically high premium year 2021, across our portfolio, we dropped it like 35%. And then we get to capture the premium because we own the insurance firms, we get to capture some of that. And so that's starting to be kind of going off. And then the other side is, we're starting to expand different markets. So we had our markets, we like portfolios in areas because we can do cluster management with our own property management, right? We're gonna share an engineer, share a GM across a couple of properties. And so now we're expanding different markets. We currently have 225 million under contract, that's scheduled to close in the next two quarters. So we're gonna double the size of the firm in the next six months.

18:32 Koloa So we're moving. Yeah, sounds like it, holy cow. I mean, so every firm has different issues when they go from one million to 10 million, 10 to a hundred million. It sounds like you guys are in that 100 million to a billion journey. And I love the direction, I think that's great. Starting to take things in-house, right? Setting up your own management companies, insurance companies, right? There's so many costs associated with doing deals and running funds, like why not do it yourself? So what I always tell everyone is, if you can provide a good or service at or below fair market value, you're doing good by your LPs, right? Cause you're saving them money, so they get a higher return. But if you can do it, if you can fulfill a service at or below fair market value, there's no reason you shouldn't start your own company. So I think that's awesome. So kudos, sounds like, I mean, after only being open for a year, you guys are already jumping into that. That's really impressive. And then new products, that's so exciting. So with all of this, you kind of alluded to it. You've got a lot of human capital demands, and either from an executive level or more analysts, lower tier level, walk me through what you look for when you're vetting partners or key level executives. Like, how do you choose people for your team? Cause it is such an important part of this journey and often overlooked.

20:05 Lincoln So share with us how you look at that. Yeah, so obviously, the type of vetting that we do for a GM is gonna be different than the vetting we do for CFO and these are that, but there are definitely some broad principles that we look at. One is we try to be as objective as possible. And so we actually have an internal system that we try to ask all the, when we're interviewing for GMs, we try to ask all the GMs the same question, right? So we really compare them against each other. When we're interviewing for financials, we try to ask all the same questions. And the way that we also have a rating system that we use is one, two, three, and four. We don't have a middle. The reason why we do that is that you have to make, might go through three or four rounds of interviews. And one is bottom of the market in a certain skill area. Two is below average. Three is above average. Four is world-class level in a certain particular area. So that might be in innovation, that might be in strategy, that might be in risk mitigation, that might be in finance. And one thing I found is that things kind of come to the mean unless you force it out into like that one, two, three, four. So when he discusses a team, you have to say are they above average or below average, right? There's no middle ground. You can't just say average, average, average. And you rank them across skill ratings. What we look for is we look for spikiness, not for necessarily even well-roundedness. So we're looking for a partner, right? I'd rather have someone who is world-class at finance and below average at speaking skills because we're not looking for him to be the speaker or whatever, we want world-class. I'd rather have that than a bunch of threes, right? I'd rather have someone who has fours, fours, fours, couple twos than someone who has some twos and a bunch of threes. And then the other things. Yeah, and then the other piece that we look at is I think when it comes to those who make investment decisions, right? Those who are the principals. One of the things that really matters is, are they able to identify risk? Are they able to qualify the risk? And then are they able to mitigate risk? I think across those three things, those in my mind, almost all of our investment decisions roll up to those three buckets, right? Are they able to identify the risks? Do they see the things that can go wrong? And list out all of them, right? Even if it's as silly as something that's almost out of our control, then can they qualify it, right? Can they understand which of those risks are most likely to happen, least likely to happen? And also there's some expense calculation within there. And then do they know how to mitigate that risk, right? Can the business plan and business strategy informed by these two things, mitigate those risks? And we look for the ability to do those things across their career, across asset classes, kind of as they're, if we're looking at true or principal position. Wow, awesome.

22:33 Koloa That's gold, I love it. So let me ask you this though. Do you, like in terms of making those hiring, like final hiring decisions, do you have this potential higher interview with all members of your team? Is there a final decision maker? Is that you, do you wanna be involved in all those decision-making? And obviously as your firm grows, cause what's your head count right now of your internal team?

22:56 Lincoln You said it's six? On the executive side, yeah, it's only six of us.

22:59 Koloa Okay, so obviously as that grows and you start bringing in more and more money,

23:06 Lincoln how do you guys think about that? Yeah, so all of the, so there's kind of a, I think about hiring in like groups, right? There's the types of hiring that is important. And I do interview with every new hire myself. I think it's important, especially on this stage. I don't think you can also, if we're Blackstone and you have 100,000 employees, okay, yeah, you're probably not interviewing the analysts. But I interview and talk with everyone. We run them through the founders, three of us that are the co-founders. And we interview all of them and we have kind of separate things that we're looking for. And then we come together and then we make a decision as a team. It's pretty quick process to try to make decisions using like sometimes same day, sometimes day after. Because I think that if, one of the things we try to, the way that we look at human capital, same way we look at our investment opportunities, we would solve for conviction, right? Where if we're looking at two investments equally and one investment is like, oh, we have two out of the three and it's like, yeah, it'll probably be fine versus one that's like all three is like, that is the home run. Obviously you'd want that one. So when we get employees that are like, yeah, maybe some people have reservations, a lot of times they just don't make the cut, right? We wanna look for, when we're talking about our internal team on the capital side, we want all three super high conviction. And because we're gonna work with these people and they're gonna be huge factors of our success. On a small team like that, you think about one person, let's say we hire another person, seven, right? That's like what, 20% of our team? Like 20% of our firm success in this one person? You can think about it that way. Imagine your investment, imagine your investment, 20% of its profits is coming from one person, right?

24:38 Koloa It's hugely important. Wow, that's a great way to look at it. I love it. Well, great, thank you. We're about out of time here. We've covered a lot of topics. It's been awesome conversation today. So, you know, people are, excuse me, if people are interested in learning more about like Wolf Grand Capital or trying to get in touch with you, you know, where's a good place that they can go

24:59 Lincoln to learn more about you guys? Yeah, so we have a pretty simple website, wolfgram.com, W-O-L-F-G-R-A-M-M.com. My email is my first name at mylastname.com, which makes it easy, kaloa at wolfgram.com. And I respond, I see all the emails, things like that, so if people wanna get in touch or talk or chat through,

25:18 Koloa or if they have hotels to sell, we'll talk about it. Yeah, well, great, man. Well, I love it. Well, thank you so much for coming on today and, you know, sharing some words of wisdom and your traction. I mean, if you made it this far in the past 12 months, man, just think what the next 24 or 36 are gonna take you. That's super exciting. So, Kloa, thank you so much for joining us today. Yeah, thanks for having me, appreciate it. Hey guys, thanks for listening. As you know, we don't run ads on this channel, so if you could really help me out, if this podcast has added any value to you or your business, please subscribe, rate, and review. I would appreciate that greatly, thank you. All information shared are the sole thoughts and opinions of the author. Do not take any information as legal or financial advice. You should seek a certified accountant and a professional legal team before taking any further action. We are not selling or soliciting a security in any way, shape, or form. This content is for educational purposes only and is not to be construed as financial or legal advice. Clients of FundLaunch or Black Card Capital Partners may maintain positions and securities discussed on this podcast.