Chris Lahiji - The Impresario of MicroCap

Narrator: [00:00:04] Welcome to Compound Ideas, hosted by Ken Majumdar of Ridgewood Investments. This podcast will feature exceptional individuals to uncover deep insights into business, entrepreneurship, personal growth, investing and multidisciplinary thinking so that you can learn how to improve your finances, find better investments, and pursue authentic, lifelong growth, wisdom and happiness. Learn more and stay up to date at Compound Ideas Show dot com.

Ken Majmudar: [00:00:35] Our guest today is Chris Lahiji, president and founder of LD Micro, one of the most influential micro-cap investing conferences in the world. For those of you who may not know, companies are broadly categorized by size large companies mid-size, small and then micro-cap. While definitions differ at my investment firm, Ridgewood Investments, we consider micro-cap companies to be those with a total stock market value of under $500 million. The interesting thing about microcap investing is that there are many more interesting companies to choose from. Many thousands, actually, and they tend to be ignored by most investors, which may be one of the reasons why in the long term, studies show that microcap investing produces higher returns. I met Chris originally around six years ago when I first started attending his conferences. In the last conference, I presented a keynote, and by attending his conference, I've had the opportunity to meet many interesting people and many interesting investors over the years, including my now partner, Sam Namiri, who joined me on our very first episode of this podcast and who co-manages our Ridgewood MicroCap Fund along with me. While Chris conferences are invitation only and I'm told it's pretty hard to score an invitation these days. Listen further as Chris shares some of his personal and professional insights, both on life and on the conference and on microcap investing. And who knows? This might even lead you to score an invite to his next conference. Chris Lahiji is an exceptional person with insights to share far beyond investing, and we uncovered some interesting similarities in our journey so far. Please enjoy my conversation with Chris Lahiji. Chris, thanks so much for joining me today. I'm really excited about our chance to converse. We've known each other for a while, but this will be a special opportunity and I'm sure a lot of people are going to be really interested in what we cover. We always make this podcast about ideas and a person's life arc, so let's start at the beginning. Tell us about your family and you and where are you from? Where were you born? What culture or community were you first exposed to?

Chris Lahiji: [00:02:44] Thank you for having me on the show and it's always a pleasure to catch up with you and hopefully people can get some insight that they can use that positively changes their life. I always start out by saying I'm very lucky just to be born. A doctor once told me that the odds of being born are about 1,000,000,000 to 1. You and me have already hit the lottery a couple of times. That is critical to know about me and my family in the sense that the Lahiji's have been around, I want to say, for almost 1000 years. Last month, early February, we celebrated my uncle's 80th birthday. So of course that meant taking the entire family and going in some of the coldest weather that you guys have experienced on the East Coast. Not an easy proposition, but we wanted to surprise him for his 80th. My uncle came to the US in the late sixties when there was a lot of social unrest. He came with 1000 dollars.

Ken Majmudar: [00:03:39] Where did he come from?

Chris Lahiji: [00:03:40] From Iran. So we are Iranian. The term that people like using more often. It sounds more elegant. Persian either or works for me. But he didn't want to be in Iran anymore. Took everything he had, came here, didn't really speak the language, didn't have any job prospects. Just think about that dynamic that you have to go through. It's literally a crash course in life. I always tell this to people If my uncle didn't come, then my mom wouldn't have come. And then my mom and my dad met in the New York, New Jersey area back in the seventies, and ultimately I came out. So I'm grateful for that connection. I was just thinking how much positive impact our family has been to the US. They all legally immigrated here in pursuit of the American dream. I don't know if you and I have ever had this conversation privately, but the American dream has no color, it has no religion, there is no creed. It is just people that want to better themselves and hope to make everyone around them better as well. That's always been our mindset. I was essentially the first person in my family to go into finance. We had a lot of entrepreneurs. A lot of people get surprised. A majority of my family is in the medical community.

Ken Majmudar: [00:04:56] You mean a lot of doctors in the family?

Chris Lahiji: [00:04:58] Nurse practitioners. We do have doctors as well, but people who you can tangibly say are helping those that are in need for me to be able to have this dynamic already made me much more appreciative of every single day.

Ken Majmudar: [00:05:14] And where were you born? Like what city?

Chris Lahiji: [00:05:16] Fort Worth, Texas.

Ken Majmudar: [00:05:17] Oh, you were born in Texas. Your parents met in New York, New Jersey, but they had moved to Texas by then.

Chris Lahiji: [00:05:23] The story goes, by the way, my dad essentially stopped my mom for an extended period of time or showcased relentless interest, but does.

Ken Majmudar: [00:05:33] Work, by the way. One of the keys to life is persistence. I got a couple of threads here, but first of all, my father came to this country, so he was like your uncle. But for my family, he was the tip of the spear. The first guy also came with nothing and so forth. Picking up on the thread that you just said, most people just give up. I don't know if you were as much of a nerd as I was, and I used to want to chase girls and date girls.

Chris Lahiji: [00:05:56] I wasn't still am.

Ken Majmudar: [00:05:57] Yeah, but I realized I didn't have the confidence to just try harder. Just keep going.

Chris Lahiji: [00:06:02] Well, let's talk about this. There's being passionate, there's being relentless, and then there's being annoying, and then there's being exasperating.

Ken Majmudar: [00:06:10] And then stalking at the very extreme end.

Chris Lahiji: [00:06:13] I think that obviously the arc of sociability has changed over the last half century. I think that the reason why the Iranians I can only speak about the Iranians have been so successful as a collective group is because people will tell us no and we'll take it personally, as opposed to if someone says No, it's okay, I'm still fine or do something else. My secret is that I'm appreciative of everything. Whether we eat at Le Cirque or Burger King, I will take enjoyment from both an extra barbecue sauce packet with extra nuggets, warm bread from the oven, from Le Cirque. That's what I think a lot of successful people have in common. They can take it appreciation in so many different ways. So let's go back to Texas. Texas being Persian eighties.

Ken Majmudar: [00:07:02] Yeah, were there Persians in Texas. When they move.

Chris Lahiji: [00:07:05] There, a small contingency Dallas Fort Worth area. My dad worked at Texas Utilities, hence the move he built power plants for a living, which is, as you know, a zero sum game. Either it generates clean, safe power or it doesn't. We lived in a very middle class, very white contingency. I absolutely loved it. That neighborhood was familial, friendly, cordial. They didn't care who you were as long as you were part of that team, part of that neighborhood. I miss Texas every single day. I've been in the state of California now for over 28 years, and I still tell people I'm going back to Texas next week. Obviously, that state those dynamics have changed drastically. And a lot of people are surprised when I tell them this Texas new generation is more multicultural and more diversified than California. And there was a huge article in The New York Times last year that said that Texas is the new California.

Ken Majmudar: [00:08:02] It definitely is. And Austin might be the new Bay Area, I guess slash partly LA.

Chris Lahiji: [00:08:08] It has been for the last 15, 20 years. They just put kerosene on the fire.

Ken Majmudar: [00:08:13] What was it about Texas that first ten years there that made Chris?

Chris Lahiji: [00:08:18] Chris, I was again very fortunate that I grew up very middle of the road, modest home dad working 9 to 5, mom being home. I took enjoyment. I love the Christian school that I went to and it really altered my life from day one. I'm always really easy, as you know personally to hang out with. As one famous firefighter said, You are the most disarming human being I've ever met. I don't mind who is sitting next to me at that table. I just want to learn more about that and enjoy the time that we have on Earth. Because, as you know, very finite. But the secret was that I had a good family life and I had a good school life. It helps that I was inherently ambitious from day one and it helps that I had this drive in me.

Ken Majmudar: [00:09:06] So where does that come from?

Chris Lahiji: [00:09:08] A lot of it is genetic and a lot of it is just trying to again make everyone around you enjoy that moment. I understood this conceptually as a very young kid, whether it was giving someone some goldfish or playing kickball, helping someone with their homework or asking for help. There's always been a huge amount of humility.

Ken Majmudar: [00:09:30] You know, that Rudyard Kipling poem called If?

Chris Lahiji: [00:09:32] Oh Yeah, I was an English major.

Ken Majmudar: [00:09:34] That captures the sentiment that you're describing, that you could be with the kings or the common men. It doesn't really matter.

Chris Lahiji: [00:09:41] That's what I do now. I'll go to the most prestigious country club and then I'll have Del Taco for dinner.

Ken Majmudar: [00:09:47] You and I are so similar in a lot of ways, including our immigrant upbringing and things like that. Even though you're born here and I'm not, but I can really relate to a lot of what you're saying. But let's go back to it.

Chris Lahiji: [00:09:58] Oh yeah. One day my dad loses his job and we had some family in Southern California. So we make the transition to Santa Monica.

Ken Majmudar: [00:10:06] And how old would you have been at that time?

Chris Lahiji: [00:10:09] 9 or 10. Leaving Texas was very hard for me.

Ken Majmudar: [00:10:11] Obviously, if you're ten years old and you're really happy and you have this great life in Texas and you move to California for the reason that you said, that's got to be a little traumatic.

Chris Lahiji: [00:10:20] It is. Oh, yeah. It's the parents with all the drama is the kids. Just look at it as an adventure. So my brother and I were excited and he's very similar in the sense that he will talk to anybody. He will. Find enjoyment in pretty much anything. When you're 14 blocks from the ocean, it becomes a much easier incentive. And I have to clarify this now. Santa Monica was not the enclave of the very affluent, inspirationally opulent, if you will. There's been a lot of tech money that's come down there, a lot of foreign money. And then everyone in Hollywood, Beverly Hills and Brentwood is a little too stern. But Santa Monica and Venice, that's my jam. At that time, Santa Monica. Most of the southern side of the city was very middle class. There is no middle class in Santa Monica anymore. I told my dad and my mom recently, Look, if we had to move right now as a ten year old, where would we live? We'd live in Gardena, Rancho Cucamonga, Riverside. That's inland. That's the only place where we could afford because there's just a different dynamic. And in many ways, I'm one of the very few in the city that would much rather have the same prices as we did 20, 25, 30 years ago with the same people. It's becoming a new mixture of people. There was something big that took place in fourth grade, and I went to a school called SMASH, which was an acronym for Santa Monica Alternative Schoolhouse.

Chris Lahiji: [00:11:51] If I didn't go here, I don't think anything would have happened the way it did. So SMASH was a self funded project of the hippie generation that the traditional teachings that they have in school and I'm pretty sure your schooling was a lot different than mine is wrong and backwards and it needs a massive revision. 30 years later, they're still talking about what SMASH did a long time ago. I think it started late seventies, early eighties, and it was all these hippies getting older, getting married, having kids, getting jobs. This was a school that you address your teachers by their first name. We didn't use traditional textbooks for learning. They would give sixth graders off campus privileges to go down to Main Street in Santa Monica and get their food and come back on campus. You don't do that with 11 or 12 year olds these days. You just don't. SMASH told me that there are no walls, there are no boundaries, there are no ceilings. The possibilities are infinite. As a father and as a mentor to a lot of young guys who reach out to me because of my arc, the fact that I started as an 18 year old, I tell them a lot of my teachings are based off what I learned at SMASH. Example fourth grade Northridge quake Santa Monica got hit. There was an old building called Henshey's. It was one of the few skyscrapers in Santa Monica.

Chris Lahiji: [00:13:12] They had to tear it down because there was massive structural damage from the earthquake. Our teacher, Laurel Schmidt. Laurel, thank you for all the crap that I put you through. You changed my life for the better. Laurel decided to take the entire class, walk to the Santa Monica City Hall and not only protest outside, but go in the courthouse and give our reasons as to why the building should be saved. The historical significance, the beauty of traffic congestion within that immediate area. And then on the other side of the courthouse, you had a bunch of high priced lawyers, which obviously one. Henshey's she's got torn down. It became a Toys R US, and that didn't last very long either. I bumped into Nicholas Cage at that Toys R US, but just taking these kids and making signs and going into a courthouse. I didn't know that you could go as a ten, 11 year old and speak your mind as to what bothers you or what you want to see changed. And that was it. That was the light bulb. Growing up in that environment where your teachers are more mentors, you do a lot of things outside the box. You have school at the beach. You draw old historic buildings that have been saved by the city. That was it for me. It allowed me to be very autonomous from a very early age. So as you fast forward and me going to high school in Santa Monica High School.

Ken Majmudar: [00:14:37] Which by the way, is where you met Sam. I had done a podcast with Sam, who's my partner, and manages with me the MicroCap Fund. He talked a lot about the Persian experience, so I'd refer people to listen to that one. Now you transition to high school.

Chris Lahiji: [00:14:53] There was a bigger transition from SMASH to Santa Monica High School because kindergarten through eighth grade you had 150 kids. Santa Monica High School has 3000 kids. So for me, going from Texas to Southern California and then SMASH to Sam Ojai, that was a lot harder because I went to a school where everyone knew everyone and they were different age groups. I go to a school where I don't know anybody. Of course, everyone in SMASH in eighth grade made a pack, never end that friendly bond. We always had each other's backs. I didn't see anyone from SMASH. After the first day of school, I learned very quickly that they kind of had their own.

Ken Majmudar: [00:15:33] Felix And how many were in your graduating class that would have gone to Santa Monica High School?

Chris Lahiji: [00:15:37] 15. 20.

Ken Majmudar: [00:15:39] Really tiny?

Chris Lahiji: [00:15:40] Yeah. 800 kids coming into the freshman year. Those first few days were really hard for me. I don't know if Dr. Ford is alive. Dr. Ford was my drama teacher. What better place to get confidence than drama? He said, for all the freshmen coming in, if you ever want to use this room for homework and stuff during lunch, you can. I took him on that offer because I didn't want to talk to anybody because I didn't know anybody. Day one, I was in there. Nobody was in there week one, month one. And then he's like, Chris, what the hell are you doing here? He's like, You've made friends by now. You won't shut up in class. Go and have some fun. Every high school has cliques. Doesn't matter where it is. Rich area, poor area. They have cliques. And the first clique that accepted me in their group were the Mexicans.

Ken Majmudar: [00:16:25] Why is that?

Chris Lahiji: [00:16:27] I don't know. I really don't.

Ken Majmudar: [00:16:29] You could pass for a Mexican guy. I could probably also.

Chris Lahiji: [00:16:32] Oh, for sure. I want to say Puerto Rican, maybe a little Cuban. But the Mexicans had my back. There was a couple of guys who are Mexican in one of my classes and we had great rapport and they would have a designated area where they would hang out. That was literally a staircase. So for the first few months of Santa Monica High School, my social hour was at a staircase right next to the cafeteria that no one frequented. I don't think many people went to the cafeteria for food for many of the obvious reasons. But then guess what happens? The secret of life is that you're going to get a lot of no's, but it's what you do with that one. Yes. So this group accepted me. I was made whole. I got confidence and I became more opinionated and loquacious in my classes. And more people found me funny than not. Of course, there's always going to be people who you'll get on their nerves. But it allowed me momentum to be confident. And I think after that first year of school, I want to say I was very well known, but maybe not designated as popular. Same thing with life. I was able to go in between different groups with relative ease. Tennis was probably the only thing that my dad forced his kids to play. It is a huge part of my arc and I was like, Dad, why did you want us to play tennis? And he said, Well, it's the sport that rich white business people play. He's been in this country for 51 years now, but if you talk to him, he still has that accent. He didn't understand all the cultural idiosyncrasies that you and I were accustomed to because we lived it. We were here. They weren't. To him, success was being a really good athlete in either golf or tennis. The problem is he couldn't afford golf and he could barely afford tennis. So it became something to do. I started tennis in Santa Monica. My brother and I were both a unit. He was naturally gifted at everything and I had to bust my butt to improve.

Ken Majmudar: [00:18:35] What's your brother's name?

Chris Lahiji: [00:18:36] Eric. Luigi.

Ken Majmudar: [00:18:37] Okay, so I don't think I've ever met him as far as I know.

Chris Lahiji: [00:18:40] Oh, he's. No, he was. He was a big part of the conferences for many years.

Ken Majmudar: [00:18:44] He was. Okay, if your dad has this idea and you guys move to Santa Monica, how does he actuate that? Like, how does he say, okay, Chris and Eric, you guys are going to get good at tennis? Does he drag you to the local tennis court and make you play each other?

Chris Lahiji: [00:18:57] Exactly. And then he found an instructor, Irene Diarkesse, who was from Switzerland and one of the kindest people that I've ever met in my life. She was a very patient woman. And of course, you practice, you play competitive matches, you establish a ranking.

Ken Majmudar: [00:19:14] Where are you guys on that junior circuit for tennis in Southern California?

Chris Lahiji: [00:19:18] We were, but I stopped playing tennis as a 13 year.

Ken Majmudar: [00:19:21] You stopped completely.

Chris Lahiji: [00:19:23] Completely.

Ken Majmudar: [00:19:24] And by then you are pretty good for your age.

Chris Lahiji: [00:19:26] And so, yes, I had a blister. If you get closer, you can still see it. I literally had a hold of my hand because the way I grip the racket, I used a lot of wrist and there's a lot of secrets to tennis. But for the most part, I couldn't use my right hand. I was in high school.

Ken Majmudar: [00:19:40] Within three years of taking it up, I would assume, because you move there roughly when you were.

Chris Lahiji: [00:19:44] Ten. Yes, but we got good fast.

Ken Majmudar: [00:19:47] So that must be because of some natural ability. Or you guys just had more lessons and more work put in.

Chris Lahiji: [00:19:52] I think genetically always had great hand-eye coordination and great anticipation. It doesn't hurt to be six one. I think that even as a youngster there was a physicality that I had.

Ken Majmudar: [00:20:03] Obviously your brother had it too because you were both good.

Chris Lahiji: [00:20:05] You had more of it. But the difference is my brother, one day my dad yelled at him on the tennis court, I'll never forget this. He very quietly, gently puts his racquet down, opens up the gate for the tennis court, goes up the hill top, which we could see waited by the car until the lesson was over, did not pick a racket up for 15 years after that.

Ken Majmudar: [00:20:27] Oh, wow.

Chris Lahiji: [00:20:28] That put more pressure on me to see my dad's vision. I didn't agree with it at the time, but I enjoyed it enough to keep going. At 13, I had to stop because of an injury, and in high school, no one really knew of me as a junior ranked tennis player. I didn't even want to join the team until I found out that you can get out of school early. That was a big incentive.

Ken Majmudar: [00:20:51] Because you have to go to practice.

Chris Lahiji: [00:20:53] Or you travel. And I hated school. I thought that this was a unique way and that I heard that you could take tests on the bus and.

Ken Majmudar: [00:21:00] Various perks.

Chris Lahiji: [00:21:01] Yeah, it incentivized me enough for me to try out. And that's where I met Sam for the first time. Sam really hated my guts. Then I didn't like them because they were Persian.

Ken Majmudar: [00:21:12] Because you are, by this time, an honorary Mexican. Is that why?

Chris Lahiji: [00:21:16] Well, I always like to say there's two Santa Monica's. Most of the Persians that attended Santa Monica High School there in a very nice area and were south of Pico.

Ken Majmudar: [00:21:26] So when you tried out for the tennis team, were you number one seed because you're just really good?

Chris Lahiji: [00:21:31] No, I was varsity one, two or three, depending on the strategy. What's crazy about varsity tennis is that one plays one, one plays two and one plays three, and they all play a set.

Ken Majmudar: [00:21:45] Oh, really? It's sort of a weird round robin of the top three.

Chris Lahiji: [00:21:48] It is a round robin. Yeah. What would happen is if the number one was really good on the other team, we would take the number three player knowing that they're going to lose the match anyway.

Ken Majmudar: [00:21:56] Yeah, exactly. That's called stacking.

Chris Lahiji: [00:21:59] Oh yeah. We would tire the shit out of the number one. It's like, dude, I don't care if you win points or not, just hit as many balls as you can. I thought that by being a freshman playing varsity, I was going to have a lot of street cred. Women looking at me as a potential candidate for courtship. Ken. No one gave a shit. No one cared. Tennis. If you look at that group of guys from, say, 1996 to 2003 and seen what they've done in society, there is no sports team, in my opinion, that is achieved as much or as paid as much taxes as we have as that tennis team.

Ken Majmudar: [00:22:37] Why is that?

Chris Lahiji: [00:22:38] Because we had a chip on our shoulders. No one gave us the credit we deserved, even when we were going deep in sectionals, what they call CIF. No one cared that we were a really good team.

Ken Majmudar: [00:22:51] Isn't that somewhat cultural, though? I'm sure they cared about something. It just wasn't tennis over there, right? Like maybe their football team or basketball or whatever the case may be.

Chris Lahiji: [00:22:59] The sport that is popular is the one that the opposite sex shows interest in outside of maybe a handful of women. And I know all of them by heart who are very kind to us. We did not have the same cachet or pep as, say, the baseball team or the football team.

Ken Majmudar: [00:23:17] But in America, in Southern California, my kids play squash. I actually love squash, which has some relationship. Federer plays both squash and tennis. I've heard tennis like squash. It's not the sport that most Americans watch on television. They do watch baseball, they do watch football, etc..

Chris Lahiji: [00:23:32] I'll be real with you. No one watches.

Ken Majmudar: [00:23:34] Squash. It makes tennis look like football.

Chris Lahiji: [00:23:37] Squash is what is on ESPN the show. At four in the morning.

Ken Majmudar: [00:23:42] They had to make their own Web stream channel because nobody would actually broadcast it. It's even hard to see on your TV, the little squash ball going up a hundred miles an hour. So you guys had a chip on your shoulder, but you did well as a team and individually.

Chris Lahiji: [00:23:54] We also had a team member that passed away.

Ken Majmudar: [00:23:57] Really? How did that happen?

Chris Lahiji: [00:23:58] You could see it still impacts me. 23 years later, we had a member of our team that had an illness being 14, 15, 16 and knowing that someone is sick and not knowing what's going to happen but not wanting to register it because you didn't want to break down us losing and see if that year was still one of the hardest things I ever did. CIF means sectionals as it basically the road to state. I haven't gotten completely over it. You were playing for something far greater than just a fuzzy ball going over a net. The difference with me and everyone is anyone who's ever played tennis competitively, professionally, there is almost no money in the sport. It is one of the worst career decisions you can make unless you want to be a coach. And as one of my tennis mentors has told me, and you love money because remember, most people who play tennis are very affluent and you have to have drive and you have to be on the court. You can make as a coach a couple of hundred thousand a year at least if you're recognized. But as an 18, 19 year old man, knowing what I knew in terms of what the talent was out there and what I was capable of, I basically called it quits because I knew I couldn't make a living. The other axiom is I will not do anything in my life unless I think I can be the world's best at it.

Ken Majmudar: [00:25:23] A little bit of the insight I had from Sam, because obviously I know him well. He's my partner now. He mentioned that he got interested in investing because you somehow influence. Him, that you are into stocks. Even back in high school, I guess you were both on the tennis team as well. How does a young kid with your background ambitious, competitive, wanting to be the best at something? Suddenly this bug of money and stocks and investing the same thing had happened to me. I just want to know how you got into it.

Chris Lahiji: [00:25:54] Dad had a broker 30 or 40 or 50,000 at the time, which to us was pretty much everything. And he bought a lot of companies and his broker kind of failed him. It was more the concept, and I understood this even as a 13 year old. Just the ability that someone like you and me can buy a share and become a real part owner in a company. It's still why I wake up and I get excited. Back then, you could own one share and get it to a shareholder meeting. I'm pretty sure you can still do that.

Ken Majmudar: [00:26:25] Absolutely.

Chris Lahiji: [00:26:26] That to me is power to think about now where you have these things that these online brokers have announced, where for five bucks you could be a part owner in Google or Netflix or Apple. That is so cool to me.

Ken Majmudar: [00:26:38] Still, it is cool. And by the way, the sad part of that is that it's become so abstract in a way that I think the younger generation doesn't fully grasp that it's a partial ownership of a business, not just data that moves around on your app.

Chris Lahiji: [00:26:54] I lived the dream every day. Say I owed 1% of a few companies. I think that that's really awesome. My investment approach is you have to invest in the long term because great things don't get built overnight just like any arc growing up. 97, 98, 99, 2000. This was the era of microcap. And while we had some of it immediately after COVID, where you had literally companies that would go from 1 to 30 in a day back down to three or two. A company like GBO that would trade 30,000 shares on average traded over a billion shares one day. I mean, the outstanding share count got traded 85 times over. I think that you're going to see less of that. There's nothing that matches what I experienced as a teenager in the dot com boom.

Ken Majmudar: [00:27:39] The late nineties was when you first got the bug.

Chris Lahiji: [00:27:42] Yeah, 96 when I started 97. 98 were relatively normal. Remember the Asian crisis of 98 and then 99 2000 were bonkers.

Ken Majmudar: [00:27:53] Did you have a brokerage account somewhere?

Chris Lahiji: [00:27:55] Kennedy. Cabot.

Ken Majmudar: [00:27:57] Hey I had an account at Kennedy. Cabot That was my first account. It was in Beverly Hills. I'm a kid in New Jersey, and I would go into the World Trade Center or somewhere, and I opened up an account with Kennedy, Cabot.

Chris Lahiji: [00:28:07] Ours was in Santa Monica. I love Kennedy, Cabot. Then it was Waterhouse. Then it became, I think, TD Waterhouse, TD Ameritrade, Ameritrade.

Ken Majmudar: [00:28:17] And now Schwab.

Chris Lahiji: [00:28:18] Right.

Ken Majmudar: [00:28:19] Schwab is buying them.

Chris Lahiji: [00:28:21] Just this ability of being 13 and 14. This was kind of the onset of Internet initially.

Ken Majmudar: [00:28:27] It was like, hey, this is cool. I can buy a little piece, I can buy a stock, I can have my account at Kennedy Cabot. You start from that basic thing at that time, what was your approach? How do you decide what to buy and what to sell?

Chris Lahiji: [00:28:39] Simple. I would buy things that are very popular, but the smaller variants of them and for a couple of years that worked.

Ken Majmudar: [00:28:47] Give us an example to make it more tangible.

Chris Lahiji: [00:28:50] The only 90 bagger I've ever had, I still haven't had 100 bagger and it bothers the hell out of me. So digital light wave DIGL. So they were in fiber, but so was JDS Uniphase. So was Sycamore Networks, my goal was to find those public companies that were in fiber before everyone else did.

Ken Majmudar: [00:29:10] So you noticed there are these big successful fiber companies. So can I find a little unknown version of them?

Chris Lahiji: [00:29:18] That was the first strategy.

Ken Majmudar: [00:29:19] I started value oriented just in my mindset. Somehow. This is even before I read Buffett stuff and all that, it just seemed natural that wouldn't I want something good for less?

Chris Lahiji: [00:29:29] And I think your listeners will be absolutely shocked because what I'm going to do for now is tell them how my strategy has changed over the last 15 months. But the premise is the older I get, the more value oriented I become. But I still love stories and I still love concepts, and I still will chase certain things if I think that they're going to do well, for example. Ticker symbol GROW US Global. I think that the sum of the parts were worth more than the whole. And you can play crypto, you have value, but you also have a growth catalyst. One of my mentors basically said, I buy value with a catalyst and the catalyst is acquisition, M&A, partnership, etc. Even early on because things move so quickly, the timeline was much more limited. What I've been doing for the last 15 months that may surprise you is that I've never said this even privately, but early last year I realized that things were bonkers and a lot of things were trading at ridiculous valuations we sold. Most of our positions. Hindsight is looking like 2020 right now. That could change, two markets could go up, etc.

Chris Lahiji: [00:30:38] But what I decided to do is I decided to still make positions in micro-cap companies, but smaller positions, more trial positions and see how that went. Obviously, a lot of these things have been hit hard, but I took a bulk of that money and I bought a lot of things that had high yields and pay me on a month to month basis. And some have tax incentives. You know how Tiger Woods and the tight end from the Tampa Bay Buccaneers Gronkowski. A lot of people think that Gronk is a meathead. Gronkowski is brilliant. I think the only money he spends is sponsor money. All the money that he makes in terms of playing football, he saves. So imagine me having hypothetically a multi multimillion dollar account and getting monthly dividend checks from certain companies, companies like SJT, companies like Compass Diversified. We own both of those. But the stance is that I would take that dividend that they would give and that I deployed in MicroCap as a growth as a value. So while I'm making positions, the positions are smaller and then you have core positions.

Ken Majmudar: [00:31:45] Your core is the income stuff that you take that income gradually create a microcap portfolio with it.

Chris Lahiji: [00:31:51] I have made better decisions because it is less money.

Ken Majmudar: [00:31:54] Okay, interesting. We covered high school. You got into stocks, you had some preliminary strategies. Where did you go next?

Chris Lahiji: [00:32:01] I didn't come from a wealthy family, so I could only go to the school that could essentially take care of all my schooling. Thankfully, the University of Kentucky was kind. I learned very, very quickly that Kentucky was not Texas. My dream was to go to UT and play tennis there. At the time their team was incredible. I got accepted second semester UT I got a partial scholarship at UT. I didn't want to pay out of state even though I was born and raised in Texas. It was a very tough situation for me. I don't want to go to UK, I don't want to go second semester UT and I don't want to stay with my parents. I went to the only school that would accept me in the first semester and that was a small school right outside of Fresno called Reedley College. Leaving home for a year was insane for me. Remember, most Asians are pretty closeted. We kind of stay close to home until you get married.

Ken Majmudar: [00:33:03] But Fresno is not like crazy far 30 miles.

Chris Lahiji: [00:33:07] Reedley is a very, very small community.

Ken Majmudar: [00:33:10] Is it a little liberal arts college?

Chris Lahiji: [00:33:12] It's a community college that had a dormitory.

Ken Majmudar: [00:33:15] And you could play tennis there.

Chris Lahiji: [00:33:16] If junior college. But remember, junior college, California, if you are ranked high enough, which I was you play D1, you go to community college and then you go to a Division one school, having that ability of leaving home, not knowing anybody, having to re acclimate 120 degree weather in the summer, 15 degree weather in the winter fog where you couldn't see your own hand.

Ken Majmudar: [00:33:41] So what did you study there?

Chris Lahiji: [00:33:42] I was an English major.

Ken Majmudar: [00:33:43] You did four years there?

Chris Lahiji: [00:33:45] Oh, no, I did a year, but I did almost two years of schoolwork in a year.

Ken Majmudar: [00:33:50] And then what?

Chris Lahiji: [00:33:51] And then I had to decide whether I want to go back to college or not. So I was talking to Evan, the CFO of SALM. SALM. He went to Cal State, San Luis Obispo back in the day when junior colleges actually had a budget. They would take the top students. I got into their business program as a transfer. I think the business school had its own set of requirements. They made transfers really hard. I think nine people that year got accepted from the JUCO system and eight of them went, I was the only guy who did it.

Ken Majmudar: [00:34:22] What did you do?

Chris Lahiji: [00:34:24] I am 19 years old and I'm crashing at Sam Namiri's dormitory or his frat. He's at Cal and I'm writing the documentary on small businesses in America. And the reason I did the documentary is because when you watched any financial media, they would talk about the same five big companies every day. And this hasn't changed. 20 years ago, it was Microsoft, General Motors, AT&T, AOL.

Ken Majmudar: [00:34:51] Today it's Google, Microsoft, Apple.

Chris Lahiji: [00:34:53] Facebook, that shit Tesla. And it's just so annoying. But I did a documentary highlighting all the great small businesses out there.

Ken Majmudar: [00:35:01] What was in this documentary? Can we find the documentary anywhere?

Chris Lahiji: [00:35:04] It's called The Best Companies No One has Ever Heard Of. And yes, you can. There was a kid I forgot his name who did it as his college dissertation titled Like What Chris Luigi Saw and How That Changed. I basically scanned through 12,000 annual reports because at that time there was 12,000 public companies over a year, and I handpicked the ones that were most interesting.

Ken Majmudar: [00:35:26] And you made this when you were 19.

Chris Lahiji: [00:35:28] November of 2002. I was finished, so I was 19 years old. Yes.

Ken Majmudar: [00:35:33] How do you make a documentary? How do you get the budget for it?

Chris Lahiji: [00:35:36] I had to convince the parental units first because I was staying at their place and I was their hope of getting into a good school and providing for the family. So now they're devastated, all that work. I was like, I'm going to do a documentary, you guys. I had a friend who could build a website and I had a friend who was a production guy and the camera. It was great, but we had to have something to talk about. This was that thing.

Ken Majmudar: [00:35:59] So you contact the companies, every company.

Chris Lahiji: [00:36:01] They would send me stuff. I wrote all the ones that I thought were most interesting. So the two notable ones and that there was a lot of them Taser at an 11 million market cap, which is now Axon and Hansons Natural, which is now Monster.

Ken Majmudar: [00:36:15] What was the business model? What were you going to do with it?

Chris Lahiji: [00:36:17] The business model was to get someone interested in it. It was between a new dog park and my documentary for the Santa Monica Mirror. And in terms of who this journalist wanted to write on and my first head to head dog park, Chris Lahiji, the dog park one. What happened is that the person managing the dog park had pneumonia and he needed to do a story. So he said, Hey, Chris, do you mind if I come over to the house so I could see what the documentary is? It became the cover story of the Santa Monica murder circulation 250. I used that newspaper article to get national media interest, and the gentleman that really found interest was Louis Braham. I think he's a professor now at Seton Hall. Louis Braham at Businessweek. Businessweek became Barron's. Barron's became Wall Street Journal.

Ken Majmudar: [00:37:09] You got coverage in all of these. You leveraged one to the other.

Chris Lahiji: [00:37:12] That's it.

Ken Majmudar: [00:37:13] The documentary where you're selling it or how did that help you?

Chris Lahiji: [00:37:16] Well, it helped me get notoriety for this kid who was really passionate in finding great small companies to invest in. We had a successful newsletter as a result of all the contacts that we had.

Ken Majmudar: [00:37:27] You have all this notoriety, you become known and you start meeting people and they know you're the guy that finds interesting smaller companies, which is obviously very related to what you're doing now. Was it at this time that you met the secret mentor? Much more than a mentor through this process.

Chris Lahiji: [00:37:43] He is a man that has been approached by the best top guys in small cap hell, the top guys in large cap. He is literally the oracle of value. And this is what the D in LD Micro taught me a long time ago that I couldn't realize. His strategy is I only invest what I can afford to lose, which I love. It's a very Asian idiom, and I'm going to think about this really long term. So he buys and he forgets. You saw what happened in 20 and 21. These things you wouldn't trade. Wouldn't trade for years. Up ten x 25 million shares. I don't know if he sold or not, but he had opportunities to sell, for example, AT&T. Who the hell would ever buy AT&T? Someone who wants a 9% yield and a business that is, in my opinion, grossly miss priced by the street. There is no way in hell. I don't care how the world evolves outside of extraterrestrials coming here and setting up new technology. You will go through one of AT&T pipes, given whether you pick up the phone, Internet, cable, they got you covered. But taking that money and being able to spend it in micro-cap is like me being a kid in a candy store. Again, the two greatest contacts I have were Yahoo message board contacts, where they were able to see that there was someone cognizant and somewhat intelligent that was relaying information of value from a different angle.

Ken Majmudar: [00:39:12] So are we in your twenties now? Somewhere between 2002 and 2005.

Chris Lahiji: [00:39:16] This is all 05 06.

Ken Majmudar: [00:39:19] Pre the financial collapse from the real estate.

Chris Lahiji: [00:39:22] Bubble. I don't know how many people know this, but the story of LD Micro was my analyst and I got invited to a local Santa Monica event. They treated us very poorly. People always ask me why you had December dates because those were the dates of that conference that pissed us off. They're no longer doing events. This is 2006 2007.

Ken Majmudar: [00:39:46] And what year did you actually launch LD Micro?

Chris Lahiji: [00:39:49] I launched LD in 2006. We had our first event April 28th of 2008.

Ken Majmudar: [00:39:53] I didn't realize it had been that long. I was assuming it was like ten years ago. I've been going for six years.

Chris Lahiji: [00:39:59] I think the last thing the guy tells me, and this is advice for everyone tuning in, don't ever piss off somebody that has disposable income and no hobbies. They will destroy you if they have the energy and the drive.

Ken Majmudar: [00:40:13] A different version of this that I've heard was never underestimate a man who overestimates himself.

Chris Lahiji: [00:40:19] Yes, I love it. The guy who was a salesman for this firm. Last thing he told us while they were escorting us out and again, my analysts did not do a damn thing. He said, If you think our event sucks so badly. Why don't you have an event of your own four months later? Five months? I did.

Ken Majmudar: [00:40:36] You had a little bit of a motivation, not just because you want to get them back or anything, but you're like, this event wasn't that great? I don't think it was run the right way. I think I can do better, and I think there's an opportunity to do better. How do you get a new event like that going? You did have some credibility.

Chris Lahiji: [00:40:52] Oh, yeah. It took us all five months to do 50 companies one day for the invitational. We did over 50 companies in one day registered. It took us every hour of the day.

Ken Majmudar: [00:41:05] Well, of course, like when you do something the first few times, especially the first time, you don't know how things work. You don't have all the relationships. It's hard. Anything is hard.

Chris Lahiji: [00:41:14] There's only 250 people there.

Ken Majmudar: [00:41:16] Was it at the Luxe?

Chris Lahiji: [00:41:18] It was at the Omni, downtown Los Angeles. They had pissed off my mom, which is why it was a one and done it Omni. That was April of 2008. Since 2009, the big ones have been at the Luxe Sunset, Bel Air for the first time since 2009. The next one will be at the Four Seasons Westlake Village.

Ken Majmudar: [00:41:40] Is that just a temporary move or is that potentially a permanent move?

Chris Lahiji: [00:41:43] It is a transient move. We are still going to do the main event at the Luxe sunset, Bel Air in October. But the basis is I feel like we've done enough to see both sides of the coin. You cannot think of the LD without thinking about the Lux, but because of the limited amount of space that they have, there's a lot of things that we've always wanted to do but couldn't do. We can now do it. At the Four Seasons.

Ken Majmudar: [00:42:07] The luxe sunset is a smaller, intimate, got this beautiful outdoor little courtyard. It's very good because you run into everybody. There's just one intersection to go anywhere in that conference venue. It's a beautiful property. I only found this out later. After years I'd been going to LD. There's a show called Millionaire Matchmaker, and they set it at the exact same place. I'm looking at that and I'm like, Hey, I've been to these halls and these conference rooms and things because of LD.

Chris Lahiji: [00:42:34] Millionaire Matchmaker actually had a lot of people from the Luxe staff. So I know over I want to say 60 employees at the Luxe on a first name basis.

Ken Majmudar: [00:42:45] Oh, no. I would imagine.

Chris Lahiji: [00:42:46] When I go there, I've gotten several times, do you own the hotel? There is no greater flex in life than me just smiling for that moment and wanting to say yes, but saying no. So the stance is that I still believe that most conferences suck and they're a huge waste of time. I think it's because a lot of people went into this business for money, got rich and are still miserable. I'm talking about mostly investors and people on the financial side of things. I can't speak for the executives. Their work is a little bit more concrete. I get invited to the bigger conferences now. You can hear a pin drop. It's really boring. There's no camaraderie.

Ken Majmudar: [00:43:30] How did you do stuff different? What else did you deliberately architect into LD?

Chris Lahiji: [00:43:35] The trick is you have to basically bring people that can mesh well with an existing group. Every single year we're going to have to stir that pot and see with the new mix how that changes the flavor. The benefit is that we are in a very small, tight knit community and being in a small, tight knit community, you know, the lay of the land very quickly and with technology, you could pretty much see who you want to invite and who you want to bring back.

Ken Majmudar: [00:44:05] Twice a year. You do these conferences, you bring people together. One of them you call the main event and the other one is.

Chris Lahiji: [00:44:11] Invitational are the new companies and the smaller ones main event are the.

Ken Majmudar: [00:44:16] More established within MicroCap.

Chris Lahiji: [00:44:18] The blue bloods, as I call them now.

Ken Majmudar: [00:44:20] And the business model is or was that the companies they pay their way so that everybody can attend the conference and have food to eat and so forth.

Chris Lahiji: [00:44:30] In a perfect world, I'd have one sponsor and I actually had that conversation this year. There was one sponsor who said, What's the number? We're we're the only sponsor, and I gave them a number. Do you know what that number was? I'll tell everyone. It was $1,000,000. They said, Well, what do you think about this? And I said, I think not in a perfect world, you and I can basically bring all the companies that don't go to events and not charge you with a single thing.

Ken Majmudar: [00:44:55] Right. You could pick and choose and get the best.

Chris Lahiji: [00:44:57] The first event did barely $100,000 in revenue. The numbers have gotten substantially bigger because the sponsorship quotient has now gotten bigger. But even there, we're being selective. So what I want to tell all the listeners is we are not going to be the biggest conference and we won't be the most famous one, but we will be the hardest one to get into. I believe that the mixture of experience, the companies there and amenities will be something that will be very difficult to replicate because no one has our group of people. And as you and I know, it's not a one day thing. It's a 20 year thing.

Ken Majmudar: [00:45:34] And you've been at it for 15 years already. Now, I know a couple of years ago, I think it was pre-pandemic, you sold the conference to SRAX.

Chris Lahiji: [00:45:41] We sold on September 4th, 20.

Ken Majmudar: [00:45:46] Oh, 2020.

Chris Lahiji: [00:45:47] At the time, it was the world's largest virtual conference. At the same time, we were selling the company. I'm very happy with the decision that we made because now, because of SRAX, we could do stuff at the Four Seasons, remember, about the yields. And the more money that I make from that, the more flexible I get, more confident I get. I'm feeling that now this batch of companies that we were able to get in 23 days, we have a lot of stuff that hasn't presented in two, three years. We have a lot of stuff that is never presented.

Ken Majmudar: [00:46:17] What are the dates of the next conference?

Chris Lahiji: [00:46:19] Seventh, eighth and ninth.

Ken Majmudar: [00:46:21] June?

Chris Lahiji: [00:46:21] June? Yeah. I better not see anything with, like, a sweater. I don't want to see your knees. None of that stuff. It's going to be very comfortable. And you're going to go to a venue where you could truly be there for two, three days and not see every bit of it.

Ken Majmudar: [00:46:37] So this is the invitational that's coming up. And then the next one, you're going to go back to the Luxe for the main event.

Chris Lahiji: [00:46:44] Yes.

Ken Majmudar: [00:46:45] What happens next year? Is it the same format or that's to be seen?

Chris Lahiji: [00:46:49] You don't know until you play the game. I think a lot of it will be feedback from people like you and the executives and the sponsors. The one thing that I did learn from this is kind of a joke is I found out all the people who didn't like the Luxe, you know, it was like, what, different venue?

Ken Majmudar: [00:47:05] My guess is that it was not an anti Luxe thing. I think it was more like, Oh, well, if we have more space and maybe a nicer, bigger property, I'm guessing that would motivate people more than anything else.

Chris Lahiji: [00:47:16] Luxe staff head to head against anybody on match, pound for pound, one of the best in the world. But Luxe as, Hey, I want to go get a massage. I just want to see the sunset. It's limited.

Ken Majmudar: [00:47:28] I mean, just physically, it's a smaller property, it's a boutique property.

Chris Lahiji: [00:47:32] So somebody's like, Hey, Chris, why are you doing it? The Four Seasons? Because one of the companies is bringing a boat. Imagine taking a one on one. It's like, Hey, let's go see it. That's pretty cool. Or a truck where you can essentially test drive it and not get clipped on sunset. Making your ride turn.

Ken Majmudar: [00:47:47] Is your focus still primarily on the conference business?

Chris Lahiji: [00:47:51] It is because that is what people know me for. I'm a master of ceremonies to an event or when people ask me, What do you do for a living? I say an event planner and I'm proud to say that.

Ken Majmudar: [00:48:01] Do you have ideas of what's the future of LD and microcap conferences as written by Chris Lahiri?

Chris Lahiji: [00:48:09] My dream is that 100 years from now, they're going to have a portrait of me just like they have in Augusta National. I have made a lot of the things that I've done with LD, very similar to what they do at Augusta National Tradition, history, legacy being open to as many people as you can. A lot of people will never get into LD for a multitude of reasons. They'll never get into it as long as I'm around. What happens after me is anyone's decision. It SRAX's decision. It's a group decision. But I believe that 100 years from now they'll still be doing LD micro conferences and no one could have predicted what happened 100 years ago. No one is going to be accurate. And what happens 100 years from now? I'm thinking literally cyborgs.

Ken Majmudar: [00:48:54] Let's make it not 100 years. Let's make it ten years.

Chris Lahiji: [00:48:57] LD will become the Davos of small cap ten years from now.

Ken Majmudar: [00:49:00] And what does that mean?

Chris Lahiji: [00:49:02] It becomes basically a thought leader in all aspects that are related to the financial industry. I think that we are a thought leader in MicroCap today. I think of us as one of the top brands of the space in terms of people knowing us and positive responses. I think we get absolutely no credit on the data side, which, thanks to tracks, has grown immeasurably. Very few people will give us credit for the index or the website, which I still think is the best place to research anything. I look at a bunch of very accomplished, well-liked people coming together and trying to get shit done. 100 years from now, they'll be cyborgs. We'll have chips in our heads by that time, and that's why they'll look at my portrait and be like, What would Chris do? The only thing that Chris does is if I could see people smiling and laughing. That's it.

Ken Majmudar: [00:49:52] So if there's a young Chris now listening to this who's just curious, loves the game, wants to learn from the feet of the master, so to speak, who's had all the experiences you've had, both in MicroCap as well as in business in general? What are things that you've learned that you can pass on both from success and failure?

Chris Lahiji: [00:50:11] If you know what you want to do and you don't need a college degree to do it, then do it. I think that's the biggest advice. That's the one thing as an 18, 19 year old kid coming into the water, I was full of energy. I was full of optimism. I was fresh in some aspects, depending on the school that you. Go to a lot of kids at 22, 23, 24 are already burnt out. My fuse was fully lit. So if you recognize something you want to do, don't wait for it. The other piece of advice that I want to give anyone, once you have a girlfriend or boyfriend, once you get married, once you have a kid or a pet, it changes. So you go from 20 hours of the day to 15 hours a day to 10 hours a day to 6 hours a day. Do all this stuff early before you decide what you want to do next with your life in terms of micro-cap. If I knew that this was going to be the arc, I don't think I would have ever done microcap. I think I do tech. And there was always a lot of interest in me in tech as well, just in terms of what are you doing? Microcap is a lost art. This is a dying business. All this thing I'd probably do tech.

Ken Majmudar: [00:51:18] They're not mutually exclusive. I mean, there's tech within microcap.

Chris Lahiji: [00:51:21] Being an early employee at a company that's worth over $100 Billion, I think the financial arc would be a lot different. I don't know. It never happened. I always stayed in microcap. If I knew that some of these piece of crap companies were getting the valuations that they were, I'd probably be a VC or someone that worked in technology, probably more on the sales side, but something where you know that your talents would be used accordingly.

Ken Majmudar: [00:51:47] There's a part of public microcap investing that is almost private slash VC type investing in a public format.

Chris Lahiji: [00:51:56] It is, and there are so many instances of being able to identify something and waiting to let it marinate. But it's kind of weird, though. The older I get, the more long term I become. You would think that because you're getting older, your timeline is more limited. But that's kind of my thing. Remember, if someone likes you and they trust you, you could do whatever you want.

Ken Majmudar: [00:52:17] You've obviously seen hundreds of thousands of companies. Have you gotten better at investing through the things that you've experienced running a micro-cap business? Do you have insights for somebody who's interested in becoming a better investor?

Chris Lahiji: [00:52:30] Invest what you can afford to lose or not think about? That's one more. I feel this the more money I have.

Ken Majmudar: [00:52:35] Made because you are less emotional.

Chris Lahiji: [00:52:37] And because I don't need the money. LD Micro has done well. More investments have done well then investments that have failed. I just feel that as an investor, never stop looking. Your best ideas come from accidents. Don't get too happy when things are great and don't get too sad when you have in 2008 2009 scenario and try to be honorable and cordial with everyone regardless of whether they'll benefit you in your life or not. I feel that that last one is the hardest one because a lot of people like to pick who they're exclusive with. Spend a day with me. All those companies after the fire through spent days with me, all of them come back to the conference because they know who I am because they spent the day with me.

Ken Majmudar: [00:53:19] Everybody's people make friendships, make relationships.

Chris Lahiji: [00:53:22] That's the greatest benefit of having an event. A very famous portfolio manager out of Wisconsin, I tried to get him for ten years, but another fund manager said, Hey, you should come to this. For whatever reason. He decided to come one day and he spent the entire day. He did not open his mouth. One time they had no one on. Once he would go into the track rooms, he would listen to the booths, he would come to the booth where there was other people at the booth. So he didn't have to open his mouth. And at the end my buddy says, What did you think of this? And he says, I've been doing this for 50 years. This is the best event I've ever been to. But not only that, he said, this is like a family reunion that you actually look forward to coming to.

Ken Majmudar: [00:54:03] If somebody is listening to this, maybe they're exactly the type of person you'd want. How do they apply?

Chris Lahiji: [00:54:08] You have to have one degree of separation from someone who is already coming to the event, very similar to country clubs. You have to know somebody. However, we have made exceptions. That is again what makes it special. And some exceptions include this college basketball player whose flight was delayed. It was like, I'm kind of interested. What are you guys doing? I said, This is kind of like Shark Tank. And he's like, Can I kind of like make him a badge? So you have all these people and you have a 20 year old kid.

Ken Majmudar: [00:54:34] I think you have a soft spot for younger people and students, I would think rightly so.

Chris Lahiji: [00:54:38] Oh, yeah. And the guy is 6'10 and everyone's asking him what he does. And of course you see him acclimated in the group and he's having a great time. That's the difference. No one goes to a conference and remembers that presentation. What you go is like, Man, the food was great. Or it's like, I think I drank way too much that evening. Or That was the first time I met so-and-so from this company. That's why you come.

Ken Majmudar: [00:55:01] By the way, I met Sam at LD and now he's my partner and we're doing a micro crowdfunding.

Chris Lahiji: [00:55:05] We are the Nile of microcap. You can very quickly contaminate that water. So whoever decides to look through the remnants of history and look at LD, LD is an emotional experience. LD is meeting with people that you enjoy. LD is catching up, and it's also finding great ideas and buying a couple of them.

Ken Majmudar: [00:55:27] How many people are in the LD community companies? Investors.

Chris Lahiji: [00:55:32] We've had nearly 2000 companies present since 2008. I told you, it's a small community in terms of legit base. I would say it's a few thousand people.

Ken Majmudar: [00:55:42] Investor types.

Chris Lahiji: [00:55:43] The like. But again, on the institutional side, it's been limited. On the retail side, it evolves. On the corporate side, it's always different.

Ken Majmudar: [00:55:52] I'm going to give you a couple other quick questions. What are great resources like let's say if I'm an aspiring microcap investor and I don't know much, except I know I'm interested in it, is there a book or a site?

Chris Lahiji: [00:56:04] Not a sponsor. I love it. It's BamSEC.com.

Ken Majmudar: [00:56:10] Oh, BamSEC. Yeah, I just heard about this recently. Patrick O'Shaughnessy has got a great podcast.

Chris Lahiji: [00:56:15] Oh, yeah, I know Patrick very well.

Ken Majmudar: [00:56:17] Touching on your tech point, he's got the best people in tech and also hedge fund guys. It was an investor saying, I love Bam SEC. That caught my attention. I think I'd heard ads for it before, but I never paid attention. But when this investor said I love it, so why BamSEC?

Chris Lahiji: [00:56:32] First of all, it's relatively inexpensive. I think it's $69. The ability to search and the ability to identify it saves me 30 or 40 hours a week. I love the layout.

Ken Majmudar: [00:56:44] How does it make your life better?

Chris Lahiji: [00:56:45] I use BamSEC as an investor and I use BamSEC to learn more about the companies that are already coming to the conference or companies that I want to come at the conference.

Ken Majmudar: [00:56:55] Are you saying it has a screening functionality that you like?

Chris Lahiji: [00:56:57] I'm obsessed with the transcripts, obsessed especially with transcripts where there was a bunch of people who were really pissed off at the company. That's when you really learn stuff.

Ken Majmudar: [00:57:06] Conference call transcripts. Is that what you're talking about?

Chris Lahiji: [00:57:09] It's one of the interfaces clean. It's all there in front of you. It's inexpensive.

Ken Majmudar: [00:57:15] So BamSEC. What else is there a book? Is there another resource?

Chris Lahiji: [00:57:19] LD Micro I spent a lot of time at LD Micro, the only live news feed in all of micro-cap. There are a few hundred people every single day that look at every Press Release.

Ken Majmudar: [00:57:28] You're talking about. LD MicroCap.

Chris Lahiji: [00:57:30] Yes. I'm not just tooting my damn horn. I'm saying that it's the only place where you can go and know everything that's gone on in MicroCap in less than 5 minutes.

Ken Majmudar: [00:57:39] If you were to create a microcap portfolio starting now, give us how you would do it. I'm not talking about the tools. I'm saying I think the thing to do is to focus on companies that are between 100 million and 200 million for this type of time horizon or whatever your strategy would be.

Chris Lahiji: [00:57:56] Buy undervalued companies in markets where there's a lot of M&A things that, you know, would command a pretty big price point on the private side, but are not getting the valuation they deserve on a public side.

Ken Majmudar: [00:58:10] Are you saying companies that can get taken out by bigger strategic acquirers.

Chris Lahiji: [00:58:14] Or companies that could do partnerships with much bigger companies? Perfect example. Two years ago, I wanted to write on a company called United Natural. It was a recommendation from a prominent buy side, or it was eight bucks a share, and our legal team said, No, you can't do it. I got to be very careful because I'm basically one degree of separation from everything. But HABT was the greatest example that I could share with your listeners today. But this is the biggest regret. You know how I laugh when you say Salesforce.com. I'm like, Can you drank the Kool-Aid? The hardest thing for me to acknowledge is that if you just bought companies that people had a great time with Apple, Google, Netflix, you want to make more money than anything you would have found in MicroCap HABT was a great product. It was a chain of fast, casual restaurant, mostly in California. We had one a couple of miles from our house. And what I learned is that the wealthiest people from the city brought their family there and the poorest people from the city brought their family there, and both of them got to enjoy it for HABT. I had a pretty big, meaningful stake in it because if I could buy the entire company at a $200 market cap, I would do so in a heartbeat because you were paying less than a million in the store.

Chris Lahiji: [00:59:27] So the thing is, everything is consolidating in that space. Del Taco recently got bought by Jack in the Box. That made people quite a bit of money too. I was listening into Yum calls. There was transcripts from Taco Bell executives. Yum was literally saying, We want to buy concepts between 150 and 300 stores and things that we don't have access to right now. So what do they have? Pizza Hut, Pizza, Taco Bell, Mexican and then KFC, chicken. They didn't have burgers. So if you ever went to the HABT, it was literally across the street from Taco Bell, which is owned by YUM. And I said someone's going to pay up. They did. They didn't pay a huge premium. But for us, it was a 50% return in less than two years. That's kind of the take. The take is I always want to go into areas that, you know, can easily be acquired, but you're paying a big discount relative to their peer groups.

Ken Majmudar: [01:00:19] What are the biggest mistakes you've made that you wish you knew back then?

Chris Lahiji: [01:00:23] Numbers don't lie. People do. I don't think that there are executives that are blatantly dishonest, and I'm sure there are executives who are. Blatantly dishonest. I think a lot of people get caught in the action. They drink their own Kool-Aid. They're overly optimistic. I've always felt a certain comfort with numbers, so my advice is make sure that you have someone on the team or make sure that you have proficiency in reading an income statement or balance sheet. Because with microcap. First rule is try not to lose money. Second rule is stay alive for a long time. Look at SAKT SAKT. Nothing happened and then it went to 36 bucks a share. Now it's in the three, four, $5 range. You have to have that timeline to be successful. So for me, it's not getting caught up in the day to day making sure that you talk to management and making sure that they're cognizant of what needs to be done to be successful.

Ken Majmudar: [01:01:19] How much does the quality of management factor into what you've experienced?

Chris Lahiji: [01:01:23] More than half of it?

Ken Majmudar: [01:01:24] And how do you figure out quality of management in microcap?

Chris Lahiji: [01:01:27] Specifically definable track record always helps people who get miserable being at conferences. Executives have turned out to be the biggest winners. It was a guy who would be like, I hate doing this. He wouldn't even have a hotel room. He'd come in in the morning, he'd read it, do 15 meetings and be like Chris until next year, a box that's got bought for, I think, a couple of billion dollars. I love to have guys who are focused on the business and that's all they think about. I know their family lives are a little bit uneven, but people who are truly passionate in what they're doing and it's palpable. Example Sandra Peltier at EDFM full disclosure, we own it. The stock's been hit, but I still believe because of the passion that she has and the work that goes in, you want Sandra to be successful, you root for the team. First impressions are very big. But in microcap, if you've been around long enough, you kind of know all the players. There are companies that are public that will never, ever do a conference call and never, ever do a conference. Also, they'll never, ever go up and share price.

Ken Majmudar: [01:02:30] That's one of the reasons I love coming to LD. It's a great experience. I love meeting the people, the management teams in particular. I don't actually do a one on ones a lot. I don't know if you've noticed. Sam does a lot. I don't, but I'll just pop into different presentation rooms just to see who they are, what they present, like how they speak, how they answer questions to get a feel for the person, particularly at the top. To me, that's a big part of the value that I get from live conferences in particular. That's just adding to what you're saying. I want to get away from the investing in close with this sense. In terms of your personal arc, you're only 38, so you're still a young guy you've sold. LD It sounds like you're going to stay involved with it for as long as you can, and I guess you probably have that understanding with the current owners of LD Plus. You're probably still an owner too. You ended up moving to the Bay Area, even though you had all these roots and a love for Texas that you expressed right at the beginning, and then obviously a real grounding. And your whole conference is in Los Angeles. Why are you in the Bay Area?

Chris Lahiji: [01:03:27] Very simple. My wife is from the Bay Area.

Ken Majmudar: [01:03:30] Ok

Chris Lahiji: [01:03:30] A lot of companies that we've invested in are in the Bay Area. Our core is here. It's a different dynamic. But I was looking at this personal arc, too. You know what Woody Allen said? 90% of it is just showing up. Life is a lot like that. Some of the best relationships I have got off on the wrong foot. Sam Namiri, Steve Bronson, CEO of Interlink. The first time we saw each other, we were like trading insults. And now he's a very close friend of mine. We got to roll with the punches. Life is like boxing. You're going to get hit. You're going to get hit a lot. Can you get up when you hit the canvas? Can you take a punch essentially? Can you go back and keep grinding away? It's so hard to define with one sentence. I think the biggest thing that anyone can take away is that I didn't exercise for 12 years. I gained 115 pounds and I've lost about 100 of it. If you are not physically ready, you will not be mentally ready either. There are very few people that I know that are not physically capable, but extremely mentally capable. It's more they come in a package. That's my only big regret professionally because of an injury. I stopped working out for 12 years and I gained over 100 pounds on it. I don't think that that ever comes back. I think that I will continue to allocate a certain amount of time just to do things that I want to do and put this thing away. Another big secret is go with people that you feel comfortable with and just have conversations. You never know where to leave.

Ken Majmudar: [01:04:54] And last question is there a book or a person or both that has had the most impact on you that you would commend to others or what you've gotten from that?

Chris Lahiji: [01:05:04] Set the table by Danny Mayer, the famous restaurateur, easily one of the most powerful books I've ever read, because it showcased everything that had to do with hospitality and not just events. And Danny should be proud of what he's built there. In terms of people, guys that I've looked up to, I know this sounds crazy. Weird Al Yankovic, Dolly Parton, they've been doing this for decades and they're still. 20 years, 30 years, 40 years, 50 years later, I.

Ken Majmudar: [01:05:34] Don't know where it all was still around doing this.

Chris Lahiji: [01:05:36] Thing. I still haven't bumped into him. I think he lives very close to us, close to my parents. Weird Al to me is pretty incredible because he inspired a lot of people my age to know that it's okay not to look like a certain person and still be funny and entertaining. In many ways. That's what I am. I'm kind of a showman at this point. I'm part of the theatrics. If I can take that and make people's lives better for two or three days, so be it.

Ken Majmudar: [01:06:01] Thank you, Chris. That was great.

Chris Lahiji: [01:06:02] It is my pleasure. And thank you again for having me.

Ken Majmudar: [01:06:05] I enjoyed speaking to Chris, although I wasn't able to locate the Santa Monica Mirror cover story that started it all. A quick search on Bloomberg Revealed Businessweek articles that featured Chris Lahiji titled I Want My Annual Reports from April 21, 2003, and he manages a million but still can't drink from March 8th, 2004. Look for links to these articles in the show notes. I'd also encourage you to read Setting the Table by Danny Meyer, which Chris recommended highly, and to check out some of the investor tools that we discussed in this episode, including BamSEC and LD Micro, of course. Chris is a person who takes pleasure in pretty much everything he does, including making everyone around him feel comfortable and stay present and enjoy the moment. This and his larger than life personality lends itself well and has been instrumental to the enormous success of his LD Micro events. It was a pleasure catching up with Chris and I'm looking forward to attending LD Micro Next Invitational from June 7th to ninth and of course his main event in October, both located in Los Angeles, California.

Narrator: [01:07:25] Thank you for listening to this episode of Compound Ideas, hosted by Ken Majumdar of Ridgewood Investments. Connect with Ken. Learn more about the show and never miss an episode at Compound Ideas. Show Dotcom. Ken Majumdar is the founder of Ridgewood Investments and several other affiliated companies. All opinions expressed by Ken and podcast guests are solely their own opinions and do not reflect the opinion of Ridgewood Investments or any of its affiliates. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Ridgewood Investments and its affiliates may maintain positions in the securities discussed in this podcast.