Vision Of A Global Family Office With Ivan Ogilchyn

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TSP Ivan | Global Family Office

Episode Summary:

A study on financial advisors showed that about 17% were multi-family offices. It also revealed that the affluent sector finds the multi-family office model more appealing than other business models. In a nutshell, a multi-family office (MFO) is an independent organization that supports multiple families to manage their entire wealth. Today, John Livesay is joined by serial entrepreneur, experienced asset manager, and banker Ivan Ogilchyn who runs a global multi-family office around the world. Ivan is the founding partner and CEO of Octagonal, a multifamily office with focus in impact-minded, strategic direct investing. Listen to this episode to know more about running a multi-family office, the power of a warm introduction and building great human relationships, and how we should be more fearless like children.

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Vision Of A Global Family Office With Ivan Ogilchyn

Our guest is Ivan Ogilchyn who is a serial entrepreneur, experienced asset manager and banker, and has served for decades as an investment advisor to institutions. He served as an investment advisor in deals amounting to more than $9 billion and has assisted companies expanding into the US, Eastern Asia, Central, Eastern Europe and the Middle East. Ivan has over a decade of experience in the banking market. He started his career at COOP Bank as an intern and he retired as the chairman. That’s quite a journey. He has additional years of experience in investment banking. He is the founding and leading investment company as the Chairman and CEO and manages this wonderful brand called Octagonal. Ivan, welcome to the show.

Thank you much, John. How are you?

I’m good. I always like to ask my guests their own story of origin before you got into running the world and touching so many countries and so many people’s lives. First of all, you live in both New York and Ukraine, is that correct?

That’s correct.

You’re beyond bicoastal, which is people who live in LA and New York. You’re a citizen of the world. If you wouldn’t mind, can you take us back to your college days? I’m fascinated by your bio. You started off at COOP.

I want to start with how I made my first big money. It was when I was seventeen years old.

Paint the picture for us. Where were you at seventeen? Where were you living? What’s was your life like?

Be fearless of failure. Click To Tweet

I was born in a farmstead in the Carpathian Mountains, which is in Western Ukraine. It’s a small village with about 180 citizens there. It was small. When I was four years old, my grandma asked me, “What is your dream? What is your life goal?” I said, “I’m going to be in a big city and I will have my office building with 100 floors. The entire building is going to be built from glass.” It was a fantasy at that time. There wasn’t one in the world that has 100 floors made from glass. She said, “Okay. It’s nice,” but my neighbors started laughing at my dreams. They said, “You are a crazy kid. It is impossible.”

You didn’t have anybody as a role model. It’s not your father was Richard Branson or something. You’re like, “No, I’m going to be living in New York,” and New York doesn’t get better than that. I love that you have this vision for yourself at such a young age.

Thank you. I started to study in college when I was fifteen and finished college when I was almost seventeen. After that, I had a choice to go to university or go to work. I decided that I had to go to work to make some money and to pay for the university. I started in college in a small town in Western Ukraine. They wanted to move to capital over Ukraine and I knew that they have to make some money for it. For one year, I spent working for one local company.

I started as a trainee and in a few weeks, I became a manager. In a few months, I became the main person in the company who was responsible for all the suppliers and the clients. I learned it well and it was a completely different industry. It was building materials like tiles, pipes, ventilation systems, heating systems, etc. I learned it fast and in nine months, I met with the owner of the company. I have a good salary so at that time it was an amazing salary. It was about $2,000 to $2,500 per month.

How old were you when this was happening?

It was when I was seventeen years old. I only spent about $200 per month and the rest was savings in the bank. It was deposited for my education and moving to another city. In nine months, I told him, “I’m good at my job and I want to get some shares from some bonuses from sales.” He said, “No, it’s impossible. You are fired.” I said, “Okay.” I got fired that same day. After that, I founded my own company because many suppliers and many clients said, “We don’t want to work with this firm. We would like to work with you.” I found the investor and he invested $200,000 into this startup.

We were waiting three weeks to sign official papers because according to Ukrainian legislation, you can sign the official papers when you are eighteen years old. He invested and we got through the first month. We returned about $50,000 with an average margin of 11%. It was quite good. I got 30% in such a business. This is how I made my first capital. After that, I moved to Kyiv, the capital of Ukraine, but I had more time than just to study. I decided to go to work for a French company, Schapee, and a Serbian company, Peštan. They represented these two companies in Ukraine. It was pipes and heating systems, which was close to what I did.

TSP Ivan | Global Family Office

Global Family Office: According to statistics, 70% of wealthy families lose their capital at the end of their life.

 

After this entrepreneurship, I understood that I am zero in corporate finance. I had two choices. The first is to go to university to study it. The second is to go jump into the mountain river and try to survive. I decided to go with the second path. I started to work for an Austrian bank, Raiffeisen. From Raiffeisen, I left to join Erste Banking Group which is also Austrian and I had a good promotion. I started as a trainee at the Raiffeisen. I became an economist manager. In four years at Erste, I became the senior client executive who was responsible for international companies. After that, I left Erste and I went to Germany to start with a wealthy family. I learned how to provide investment and how to do investment banking. I founded my own investment boutique because there is no special license for investment banks in Ukraine.

Let me ask you to pause there because that seems a big leap of confidence and skillsets from being involved in what you were doing with pipes and things to, “I’m going to start my own investment bank.” How does someone find the skillset, courage and even the money to do that?

There is no problem with money at all once you have a great product. Once you are confident of what you do, it’s the same with small children. They’re never afraid to fall down. They don’t know the risks. When you’re a mature adult, you think about a lot of risks and, “If I try and if it doesn’t work out, what will happen after that?” I never thought about it. If I have a goal, I am thinking of why I want to get it and the impact of this goal because you have to make money but you have to make money with some impact and some integration with the whole world.

You’ve got this investment bank. You’re fearless. You’ve raised money and you’ve got a great product. Tell us about this COOP bank. You start off as an intern and how long does it take you to become the chairman?

No. With the COOP Bank, it was a bit of a different story. I was invited to do crisis management for this bank when I already had my own investment boutique. It was a crisis time right after the revolution in Ukraine. It was in 2014. We did a great job in three weeks and 90% of the deposit portfolio, we restructured it in three weeks and the percent rate was 21 that the bank paid to these clients before. We resigned the agreements with them for 16% and 17% in half a year to 2 to 3 years. The other jobs we did because once we got the audit report, the numbers and the facts there was a bit different than in the real loans in the bank. We did restructure all of this stuff, too. I started being an intern for Raiffeisen Bank in 2008. In 2014, I was a chairman of the COOP bank but I was invited there as a chairman because it was based on my experience in banking and my entrepreneurship skills.

What’s the one lesson you learned from being the chairman of that bank?

You have to always work with like-minded people. Your team should be always like-minded people, that’s for sure.

Work with a team that has the same values that you have. Click To Tweet

Let’s double click on that concept of like-mindedness. To me, when you say that, it means similar values, integrity and passion. How do you define like-minded?

It’s the same including discipline.

I want to hear more details of what a wonderful journey you have. You’re so inspiring to so many people. You’re running all this and suddenly you go global and now you’re in the US. Tell us how did you start Octagonal multifamily office investing for families based on your track record? How did this expand out of Europe into having people here?

I never planned to be in the US. It was not the target for me to go there to live and run business. I always knew that it’s a completely different world and mentality. Before that, I got experience in China, Emirates, Singapore, European countries and Canada. I came to my cousin’s wedding in LA and after that, I spent some time in New York. I had a bunch of meetings in Mexico City and that’s where I met with one of the wealthiest families in the world. I decided, “There’s nothing to do in Eastern Europe compared to this part of the world. I have to try.” I got my first client in three weeks.

That’s some wedding you went to that changed your life.

It’s almost because I’ve been there before. When I came to the US, I have nice meetings with nice people. At that time, I still had my investment boutique in Ukraine with representatives in different countries. I met the right people in Washington, DC. First of all, I met Andrew Bottimore and his family. I call them my American family. They call me their Ukrainian son. They’re a nice family. I propose it to Andrew to come and work for my investment boutique and he joined me. Two years after, we’ve worked together as cofounders of Octagonal. I invited him as a junior partner.

During this period of time in DC, I met Michael Fegelein, who used to work for IFC, which is a part of the world bank. Erik Brattberg, at that time, used to work for McCain Institute, now Carnegie Endowment. We decided that it’s a nice idea, “Let’s work together and let’s do an investment management advising for companies from Eastern Europe and the US. How do you get ahead of capital and to build the bridge with the right investors around the world?” For the first two years, we’ve been busy with existing clients and with our families.

TSP Ivan | Global Family Office

Global Family Office: With multi-family offices, there should be a constitution and a requirement on who is going to be the decision-maker on where to invest and how much capital should be invested.

 

In the end, we understood that we do not like investment boutiques or investment management but we do family office stuff. We have our families with real business assets, some liquid assets and etc. This is how we started to work. We got four families and we got a few more families. We have twelve families because the last one joined us and they’re from Saudi Arabia. The geography of these families is Mexico, Brazil, Switzerland, Germany, Sweden, Ukraine, Saudi Arabia and the United States.

One of the questions that my readers have for you is, when you think of the ecosystem investors, there are friends and family that fund startups before they have any revenue, angel seed round and venture capitalists that fund things like series B and etc. There are family offices which is what you’re representing, not only one but multiple. That alone is a unique niche. What are the criteria for you to decide, “This is the kind of company we want to invest some of our family office money in?”

Some of the families understand where they want to invest and we help them to find the right investees. For instance, if they’ve been busy in agriculture in their whole life, they have some liquid assets, that’s for sure. They have some savings, that’s for sure, but they would be interested to invest in something where they have some expertise to learn more and to add value to their business too. Definitely, all the families have investments in real estate. They keep money in liquid assets and have some savings. According to statistics, wealthy families or people who made their capital, let’s say, until they’re 50 or 60 years old, 70% of them lose their capital, until the end of their life.

Why is that?

It’s because they think that they will be always full of energy, rich, super successful and lucky. They think they’re always 35 to 25 years old.

Do you know what that reminds me of, Ivan? It reminds me of an actor who’s on a hit TV show and they’re making millions of dollars every week. They think it’s going to go on forever. They don’t realize that their show is going to get canceled and that they’re not always going to be in the sweet spot of being the right age to be cast as the lead. Living here in LA, I find what you said so comparable. Have you thought of that before?

Yeah, and this is how it works. It’s because of arrogance and people don’t feel grounded or they’re not down to earth. They are trying to invest everywhere because they think that if they made capital, their investments are going to be successful.

Wealthy or not, we have to be human and treat people well. Click To Tweet

They have the Midas touch.

They think they have the Midas touch, that’s for sure but 30% of families are dynasties. For instance, we can see the Gates family, Bill and Melinda Gates. What we can learn from them is, they’re the wealthiest family in the world not only because of Microsoft but because they invested their profits from Microsoft into other companies and projects. They did it with an impact. They invested $38 billion into an endowment.

You cleared up a big myth. Everyone thinks Bill and Melinda Gates, their foundation and all the money strictly came from Microsoft. What I heard you say is, they made other investments from the money from Microsoft. It’s not all Microsoft money.

I read this article about some families and we’ve worked with some families where it’s a fourth or fifth generation. Many friends of mine are the fourth generation of a family office and I understand how it works and why. There should be family constitution. There should be a requirement of who can be an influencer and who can be a decision-maker, where to invest, why to invest and how much of a family capital should be invested. It’s a whole constitution. It’s a whole bible. It’s important because people like the principal of the family and the entrepreneur who made the first big capital, he’s not sure that his children or grandchildren are good enough to make more.

To use capital and spend money is easy, but to capitalize and to make more is not so easy. It’s one of the biggest requirements that the person from children, grandchildren, it doesn’t matter what kind of a generation. It’s 1st, 2nd, 3rd, 5th or 10th in case the person is an entrepreneur and made his or her own capital as an entrepreneur or made his or her business or enterprise sustainable which means 3 or 5 years, this person understands how to make money and how to manage capital for the family. This is why it’s important.

Sometimes due diligence can go on for months or even longer but family offices, do they sometimes decide faster than a venture capitalist? How long is the typical due diligence with your Octagonal corporations?

It depends on the family. Some families are fast because if they got some desire to invest in a project or if they do understand the business well, they are fast. Their luck likes people who are decisive. Some families need more time. Sometimes they can be in the process for 1 or 2 years. If my family or I would like to invest somewhere where I don’t have the expertise, I have two choices. The first one is to learn it by myself and to go to this industry to work. For instance, when I started to invest in property management a few years ago, I spent two months as a broker and as a realtor. I had about 1,000 meetings with other brokers, landlords and tenants to understand how it works.

TSP Ivan | Global Family Office

Global Family Office: It’s important not just to have a network or warm introductions but to build relationships with people.

 

I go to real market research. It’s not like someone had written them to never be a broker or realtor. The other option is, I should hire someone or company who has the right expertise and I can trust to invest based on their opinion on which is much better to invest together or alongside. I like to do joint ventures for families and I like to do investments with some experts and anchor investors or I can invite other investors to invest together with me. For instance, in banking, agriculture or property management because I have my own expertise and they can be sure.

It also sounds like the power of network. If someone wants to get into your world, a warm introduction from a mutual friend that we both trust. In our case, there is the wonderful Judy Robinett. I’m constantly telling people that if you want to get access to any investor, especially family offices or someone you like who manages family offices, you need to build your network to have those warm introductions so people automatically have a sense of liking and trusting you. Would you agree?

Absolutely. It’s why it is one of the most important but the most important is not only to have a network and the introduction, the most important one is to build a relationship with people and to treat people well. It doesn’t matter if the family is wealthy or not wealthy. You have to be human and treat people well.

If people want to follow you and find your company, please tell people what’s the best way to keep track of you and the articles you’re writing on LinkedIn, etc. How do they find you on social media?

I have one social media. It’s a LinkedIn. It’s easy to find me because there’s one only person in the world for such a surname on LinkedIn. We have a website, it’s Octagonal.global. There are contacts so you can text message or email to the email that is mentioned in our website.

It’s a beautiful website, by the way. It automatically establishes the brand, prestige and luxury. To everybody reading, take a look at how your marketing materials are representing you and your company. Ivan, I can’t thank you enough for sharing your story and your insights on the importance of having a team that’s like-minded and not having an introduction but building a relationship with people and figuring out what we can do to help other people along the way.

Thank you so much, John. It was a big pleasure to be your guest and thanks to Judy. She made the introduction with such a great person.

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Tags: asset management, asset manager, building relationships, financial advisor, global multi-family office, multi-family office