Aug. 26, 2020

Brendan Harris — Tapping into Major League Players' Full Earning Potential with X10 Capital

Brendan Harris — Tapping into Major League Players' Full Earning Potential with X10 Capital

Tapping into Major League Players' Full Earning Potential with X10 Capital

Former Major League Baseball player Brendan Harris joins Jay and Tim to discuss his role with X10 Capital, a private equity fund that provides athletes with the ability to start tapping into future earnings today.

X10 Capital is headquartered in San Francisco and led by former professional athletes, pro scouts, GMs, global executives, professional investors, and data scientists. We discuss the X10 Capital model and why it makes sense for superstar athletes to partner with a private equity fund early in their careers.

On this episode, Harris takes us through his decision to go to business school shortly after his playing career came to an end, and what the transition was like going from sharing a locker room with players like Mike Trout and Joe Mauer to sharing a classroom with business executives. Harris shares great advice for other pro athletes making the transition into life after sport, including the idea that making high-stress decisions on the field for years can indeed translate to the boardroom.

Listeners won't want to miss our guest's story about getting into Wharton's Executive MBA program and scrambling to fulfill the program's job requirement. The result was not your ordinary business executive role.

To keep up to date on everything Brendan is up to you can follow him on both Twitter (@BrendanHarris23) and Instagram (@b.harris_23). Listeners can also check out X10 Capital at https://www.x10capital.net/

Follow The Game Plan on Twitter (@thegameplanshow) and Instagram (@gameplanshow) for show news and updates, to recommend guests, and for bonus content!

You can also follow co-hosts Jay Kapoor (@JayKapoorNYC) and Tim Katt (@Tim_Katt) for all things sports, media, tech, and venture capital.


Transcript

*Please excuse any and all typos, errors and mistakes in the following transcript as we use an automated service to generate this text*

 the way the collective bargaining bear, particularly in baseball is set up is young players.

Aren't allowed to kind of tap into the value or the, you know, that they're creating, for their teams and in the marketplace until several years into their career.  And to give you a, just a very clear example of that, two pitchers, that are somewhat, fairly good cons you have Madison Bumgarner in Clayton, per Shaw.

Both of them, phenomenal careers, maybe Clayton Kershaw with the signings and better regular seasons mass and bone garner. Certainly as you know, great career three world series rings, But mass Bumgarner took an early five-year deal, you know, early in his career.

So he'll make about 120, $125 million in his career. Clayton Kershaw, din. Okay. He signed I think it's seven year, $210 million deal, and he'll have another bite at the Apple. So his earnings will be about two 57 more than double what Madison Bumgarner did. And so there's, there's an opportunity for our investments to be able to, allow them the leverage to delay that deal in, get closer to fair market rate.

hi, this is Brandon and Harris, former major league infielder, current director of athlete development at X 10 capital. And this is the game plan.

We're thrilled to have with us on the game plan. Brendan Harris, who after many years in the major league baseball got his MBA and is now the director of athlete development at X 10 capital Brendan. Welcome to the game plan.

Thank you guys. A absolute pleasure.

 

Yeah, let's just get rolling. So, so Brendan, you had a bit of a journeyman career in major league baseball's utility player playing for five different teams over eight major league seasons. Take us through that a little bit. And specifically when for you, you started to think about life beyond the game of baseball.

So my last point, my last year playing was, was 20, 2015, and it was kind of a, an injury plague, a forgettable year in AAA. and so that off season, it was, you know, I was starting to be a realistic about what the next year was going to bring and how many, you know, kind of opportunities we're going to present themselves as still play concomitantly the following year.

It is kind of interesting when I do hear people asking me, do your players, you know, talk about when they, when they decided to retire. And so it's, it's not really meant to be a smart answer when I usually give it, but it's always, when they stopped offering me jobs, You know, and as I was for forcing a different, to take a different path, but for me, you know, that going into that off season, I really set two tracks,  to, to pursue one was going to still work out and still for, to pursue a gig, or contract with a major league team.

But I was also going to, , start putting the pieces together, to apply to business school. And so that,  I included the essays and, and the GMATs and, you know, the, the interviews and everything, that like, and I know for me, it was something that I always wanted to do. A yeah. As you, as you mentioned, that kind of utility nature of my career, I felt like, especially considering that and being an ex pro athlete, that, that was going to get stale quickly, most, you know, early, early after, you know, I did.

retire, forced retires is most guys do. but also you knew there's going to be a considerable kind of skills and experience gap. How with a lot of my peers in candidly had been 13 years since the, since I was an undergrad. And so. even though you've been, you know, kinda out there performing, executing, using data decisions, performing under pressure, all those intangible things that are there, they're valued in the market.

there's still going to be a significant experience gap. And I felt for me that certainly one of the top business schools, there's going to be able to shrink that gap, considerably. So that was, I was kind of thinking behind, you know, Going to business school, but I'm also trying to go to as good a school as I could, I could get into, 

Yeah, just going to say, all right. Were you able to leverage your role as a professional baseball player to get into a top business school?

Yes. I absolutely led with that. certainly in terms of, what I did in my career and how it was applicable to a lot of different domains that I was looking to explore there at school and how I thought that, kind of a different or new. Perspective, certainly as mine as mine was, would, would be a net positive to a, to a lot of these, different organizations.

also certainly a way for me to, to,  make excuses for what I thought was still very good, but maybe below the, the top GMAT scores that, Wharton was, was accustomed to accepting. 

you combine it with your 

batting average. 

right, right.

And another 260 points added onto, they're not the top of the class.==== but, you know, I certainly led with all my experiences, certainly from, from playing on, you know, a number of different teams, seeing a number of different management styles. my experience as a player rep, for the players association and how all of that affected in, in informed my views on, on leadership management and even innovation.

and, but to circle back on the, The different perspective point. I think it's, it's really important to consider, especially for athletes or anybody really transitioning to a new field that how valuable a difference the perspectives are, to an organization. I think David I've seen spoke range, really talked about this and, you know, how having a knowledge structure that can be applied effectively across different domains.

It can create depth and adaptability for an organization. That's just invaluable. And I think I, I, from my experience is in this transition, I've seen a lot of different industries, right? With the same people that went to the same schools and think the same way, that I, I think have become very specialized in their area of expertise over time.

and I think it's an incredible, valuable. a shot in the arm for a lot of these organizations to bring people in with a diversity of opinion, diversity of, of lived experience, and that can add fresh perspectives, to affirm.

Yeah, we hear it a lot from guests that come on, the show that going right from playing career into something new, or even, you know, starting, let's say a company while they're in the last couple of years of their career. A lot of athletes say that it's hard to be taken seriously. Right? Because you you're doing this thing.

You're a very public figure, but you start a startup and you know, for one reason and other people don't. Don't think that, that you have what it takes to build a company. Did you find that to be true? True as you were maybe starting to approach roles or, you know, or, or sort of parallel tracking it with B school and now coming out of it, how much of the way you present yourself is athlete first versus, you know, Wharton MBA first.

A hundred percent. I think, even the term smart athlete, a lot of times is a coded language. and for me, I wanted to have the MBA so that. The market wouldn't judge me, like I'm still on scholarship. I think once you're out there in the wild, or the free market, I think, it's a, it's an incredibly level playing field and the ultimate meritocracy.

and, you know, I remember back in the day here in an interview with Mark Cuban talking about the, the late Kobe Bryant, and, and how, when he was raising a fund and getting into venture and getting all these different things, and you said, You know, you're in my world now. And, 

 

You know, it's a level playing field and you're not going to get credit for what he did on the court.

even though at the same time, a lot of the, certainly the athletes at that level. And a lot of these, upper echelon athletes have, have an incredible valuable brand that they can put behind their products. But, at the same time, for me, I thought, relative to my kind of station in the game, I think that that was a, a big part of, of, helping me with the transition.

And, and I mean, one of the benefits of, of playing on so many teams as you get to play with so many players, you know, the, the up and comers, the  and then big names, and then also, , guys like you that are maybe, you know, have played it a couple different places and have a couple of years of wisdom ahead. Were there any folks that you look to that you played with that really helped shape your thinking about, Hey, here's, here's how I should think about the next whatever 40 years of my career after I'm done playing ball.

So it's really interesting to sit here now and in 2020 and look back, and it really wasn't that long ago where I was playing and. to see guys where we sit today that have, diversified their interests in so many different ways and built their brands. And, you know, as we talked about become more naphthalene and a lot of ways, but it really wasn't certainly when I was in the prime of my career, really wasn't done, to an extent.

And there's, there's really two reasons for it. One was this cultural and the other is technology. Certainly you had your Jeters, your Rod's in the top tier upper echelon, Ryan Howard's upper echelon players, that had a brand and, were certainly monetizing themselves in a bunch of different ways off the field.

You had a, a few guys and I came across and it's, they've kind of started to build a little bit of a media personality. like Eric Burns, Kevin malar, Ryan Dempster. that we're starting to build a little bit of a media brand so that they could transition in, in the game after, after very easily, CJ Wilson was a guy that I played with had actually owned, a racing team.

but I think, The way it was at the time was it was frowned upon by many owners, GMs, and even coaches. And it was looked at that if you were into a bunch of these different things that you weren't a hundred percent committed, to the team and committed to your craft, on a day to day basis. I think it's, it's certainly changed now where we're it's certainly more than accepted.

It's actual actually encouraged. And that, that gets into the, the second reason that it's far, More accepted now and that's technology and the rise of social media specifically. And, I don't think GMs and owners really are, are okay with it out of the goodness of their heart. I do think, I think they do see the value in individuals building, building out their own brand and their own profile.

I think they see the trends, that. fans do seem to follow individuals more in, and not as much, you know, specific loyalty to the teams, but, certainly it's just a different world now, with the ability in, in access to, to communicate, with, with fans and builds your brand. and, that, that it was, you know, even five, six years ago.

After your playing career, you continued the grind by becoming a pro scout for almost four years. Tell us a little bit about the transition from player to scalp, but then also what eventually led you away from the game and out of the scouting world into more of the corporate world, where you were an athlete and residents with 76 capital and.

Then also went on to work at diamond kinetics.

Yeah. So for a little context of how I ended up working with the angels, I, initially chose the executive program, at Wharton, which is all day, Friday on the Saturday because I thought it was going to allow me the flexibility to be able to pursue other things. Certainly during the week, the meeting age of the person that did the executive program was, was closer to my age, versus the full time program, which was about, I think 28, 29.

So once I, it was kind of an interesting source. Once I got a call from a admissions saying that I was in a, there, it was a caveat that it, that they said, and upon you securing full time employment. And I had kind of retorted that, I thought that was just a suggestion. I didn't think that was mandatory.

And their reply was no, here at Wharton, we are very competitive. We will give grades. And then, certainly if you operate in the lowest 10% consistently of the class, then we will ask you to leave and not being fully employed will be a competitive advantage. So I circled back to the angels. one of the last teams I had played for, they had a new GM.

That he had a lot of the same personnel, as, as when I was there and just had to make a case that, for a scouting and player development job, even though I would be needed to be kept close to the East coast and, have, have this, Huge amount of work that I was still doing on the side for school.

So, ended up, making a compelling case and was hired. And, and it's funny how everything works out. how Morris who now works with X capital, was the scavenger director for the angels at the time and,  was able to, build the, a great relationship with him. He had actually done an MBA program himself at Stanford when, when he got done playing.

So some of. Majority of our conversations when he would call the check in were kind of interesting where we're school-related. But for me working on the other side of the game, I realized that I needed to. do something outside of the game and outside of organized baseball for once, different animal when you're, when you're playing in the game.

and yeah, in being compensated at a different level, but, I've heard you guys meant a lot of the, the issues of, bureaucracy and slow, slow to move and, and. Silos, within the game and within pro sports in general. And, and I think a lot of that is, is very similar, to what happens in, in player development, with a lot of major league organizations, I think in, in many ways it's improved, significantly from where it used to be.

And, I think the angels of we're we're moving in that direction as well. I had a good experience with them. but like I said, I, I, I just wanted to, do something else I became for once and expand the map, for me, me. And so that's kind of, you know, overlaps with my interest in, in, in the venture space about, you know, kind of midway through school.

and I was fortunate enough to have a communications professor that worked in venture. and, and ironically is one of the parts that I think a lot of, business school undersells is, is the opportunity and the power and the network of, of the actual professors. I think a lot of them have, have really good gigs, where they lecture during the week.

And then they consult for, for a lot of these companies on the side. but like I said, I had a great one. his name is Michael Aronson. He runs red and blue ventures. And, you know, we became fast friends. He was a big baseball fan and he helped me not only learn the space, but I actually, some of his portfolio companies, you know, my network benefited them and there was, there was some kind of mutual benefit, on both sides.

And so he was the one that made the connection to, Wayne Kimmel at 76 capital for me. And that's, that's how that, experienced one.

Yeah, well, that's great context. And we know Wayne and Ryan and the folks at 76 capital. And we appreciate what they've been doing all these years, but yeah, to hear you talk, it's like so many things conversations that Tim and I have week after week, especially about that immediate post playing period, which I think is so critical for players.

And it seems like you've been thinking about that piece, especially for quite some time.

Yeah, it's it's been a long time, you know, in the mix. It's funny in D C here you have, the, a players associations for the MLS and for, the NFL, Or right here in D C and Savannah fellows is a, is a bigger industry. They have the one team collective and they have all these different things, going.

And so there has been a big push about this ethic transition and, I connected with MLS people and, and they're like, Hey, you know, you're in school, blah, blah, blah. Could you give us some advice? And, and I got kinda going on and I was like, alright, why there's gotta be some skill development.

There's gotta be this, gotta be this, gotta be this. And they kinda went to the point and they're like, man, you can think about this. And I'm like, Oh, wait, I wasn't on the couch of the, you know, and I was like, no, I just lived it. You know, the last two years, you know, and it's fresh, you know, and I'm essentially just venting of things.

I would, you know, if I could have codified it, but this is what I wish I did or knew. And so you can pass these things along, you know, I, I feel like that really benefit guys. And because a lot of these leagues are, offering these guys opportunities that are only within the realm of, you know, of kind of sports.

And I think NFL is going a little bit better job in the internships that they create, certainly in, in the finance and real estate and stuff like that. But they need to really just kind of leverage And I tell them, you got low hanging fruit, you got leaked sponsors, you know, left and right.

You know, and say, Hey, we're going to throw 15 guys, you know, just intern for three months. And they'd be like, all right, sure, great. You know, and now you have something on your resume. That's non-sports related a, you know, and, and it just, it just gets your feet in that, in that door.

but it does, it does take humility on behalf of the athlete to be willing to dive in. And so like, even if they stepped into an internship, like, Oh yeah, I'm taking a day cause I'm becoming an intern, but it's like, yeah, but like, are you willing to really do the work that goes into that? And that's not necessarily for everyone and that's that's okay.

But you know, we had Stuart Bradley on, like he went to the iBanking TMT desk at Goldman Sachs is working 80 hour weeks. I still don't know how he wasn't just like. What have I gotten myself into, but you know what I mean? He was, but he worked through it. but it's that, you've maybe heard of it.

Heard us talk about this before you go from these three pillars of team routine and competition as like your core DNA for what you're driven about. And then almost overnight, all three of those things go away and it's maybe that's why like the sports solutions or like working for a team or league. A lot of sense, because those three things can be fulfilled, but, if you're, you're not working early in your career towards those finding other ways to fulfill those things, you're going to be in a lot of trouble when you retire.

That's a great point and I, you know, I've heard and it was actually one thing I did want to mention is I heard Baron Davis talk about, you know, this is different and it was a hundred million dollar guy, you know, all star. You know, hanging out for hours in his agent's office, you know, learning the business.

And so in all these stories are very easily told after the fact, but nobody really wants to kind of and selves and do it while they're doing it. And so, you know, as I said, Even after I graduated, it was easy. Cause I was already going down to Philly, you know, and, and go out to the offices in 76 Capitol.

But I was going down for another year, just on my own. And, and this isn't just straight Philly. Get off the, you know, at 30 street station and go, I got to go down SEPTA and go on another 30 minutes. So it was three hours door to door, you know? And, you know, I did that for a year, once a week.

You know, I did that for a year. You know, but there was utility to being in the office, learning how this is, you know, the sausage is made and, in doing that, and it's easy to say no, but you don't want to kind of admit it. You know, guys, there's some pride involved when guys are doing where I'm sitting there saying I'm, you know, on Amtrak again.

And you know, and I'm, and I'm getting sweat equity for it. You know, type thing. And, but, but it ends up being a, you know, I got my foot in the door and I learned that learned the ecosystem. And so it was great. And so that, that's a hurdle with guys where there's some status issues. I don't know if I want to do, you know, so that's, that's certainly a big issue with, with, with some guys.

Listen, it's you and Joe Biden, just riding that Amtrak back and forth from DC. Right? So.

It was funny. It rained Dell. I think they named the station after him. It is the Biden like station, you know, 

what was the most surprising thing for you coming from the world of athletics and you know, this sort of whole machine and ecosystem of professional sports to then the startup world, which obviously has  own, you its own, you know, , mechanics and the move fast and break things.

All of it. What surprised you the most about  with working with startups? , when you first started.

Yeah, that's a good question. I really liked being part of the creative process, getting to know a lot of these entrepreneurial, I actually enjoyed reading decks and yeah. And, as I said, seeing, the teams that a lot of these startups had put together, and overall I think the agility of, of.

the people within the space, to respond to could be concerns we're behavior in a pivot, and to make it better, I spent, it was, it was just far back or, then, You know, the, you know, working for a team, and also specifically it, it really, really helped me find my niche. and in this venture in specifically the sports tech space, I felt like I could connect the two worlds or, or bridge the gap if you will, between the tech and the entrepreneurs.

And the athletes, I I've heard, VCs a lot of times call themselves anthropologists as, as they kind of monitor human behavior and try to find the pain points, and, and create value. well, I I, the way I looked at it in sports deck, that's me, know the routines, I know the pain points, and I can help make, these solutions actionable and digestible.

and I, I, I felt sometimes, issues in baseball, tech development and in sports tech. I suffered from various complexity issues and the ability inability to communicate the particular benefit, to whether it was and digital player or, or just, you know, anybody in the fitness space, in baseball tech, a lot of times it's.

people that just want to sound smart. in, in, in feel like the more complex they make, an issue or they sound that, that, that, that must be the right issue. But I think in sports tech, it's a legitimate pain point. And so I was just fascinated at the opportunity to be able to bridge these two worlds.

And I was able to do that, in, in find that, a spot to occupy hi at 76 and then, diamond connects. And then obviously, with X 10, 

I love that. And you mentioned that, how Morris was director of scouting for the angels and is now with X 10. So. Maybe help us understand what X 10 is and does. And I guess ultimately what led you there?

Yeah. So, you know, X 10 is, is a private equity company that we invest in major league baseball players and NFL players. early stage in their careers for a percentage of future earnings. So it's essentially human capital investing. and we invest as any kind of private equity company would with a lump sum upfront, for 12 to 15% equity stake in, in future earnings.

we will cap our deal though. so that the deal ends up being fair for both sides. So hypothetically, if we were to invest in Garrett Cole, when he was a good but not great pitcher with the Pittsburgh pirates, we're never going to put our position ourselves in a position where he says at $324 million deal, we were taking $48 million from a guy like that.

So we're going to cap our deal, make sure it's good for both sides. you know, the structure of it is very tax efficient. So the pain is back to us or going to be tax deductible. So in essence, you know, sometimes there is some sticker shock for Gaza and giving up 15% of equity. But when the accounting is all said and done, it's, it's close to a 9% equity equity structure. And then, so in sourcing the deals, you know, we will do a quantitative and qualitative assessment. We have a model, that, that we run guys through. And so, you know, we, sometimes we kind of butt heads on what your value is. but we, we invest in guys that have broken through the major leagues and in the NFL.

So there's no minor league guys and no, you know, kinda NFL combine heroes. And so that helps us mitigate, mitigate the risk to an extent. And so once their production stabilized, we kind of priced them their future, you know, their, their present value accordingly you know, based on their age, position, production levels, and then trying to make a deal with them.

so presumably because of the way majorly baseball structures, their contracts and arbitration and everything. Baseball is definitely the most fertile area, for you guys to operate within.

so, right. So it's a good question. I should say, you know, first, a little bit more, what we do is, you know, we, our goal is for them is to, you know, build a relationship, work with our players. We're trying to improve their lives off the field, his health, as well as ultimately help them become better players.

And the goal is clearly to maximize their earning potential on the field. 

But we looked at it as, is this any different than a founder with an asset that needs growth capital. Okay. So that was the fundamental, premise of why that we exist in the marketplace. And so the reason is to kind of get back to your point, is that. the way the collective bargaining bear, particularly in baseball is set up is young players.

Aren't allowed to kind of tap into the value or the, you know, that they're creating, for their teams and in the marketplace until several years into their career. So for example, you have a guy, No three years to arbitration six years of four years. I see. So, you know, an easy, easy way to explain it is, you know, one of the, the player evaluation metric and baseball is Wars wins above replacement.

Well, that is a, that's a market value of about $8 million. So, you know, she would have a look at, my trout making $36 million. You could still say that he is highly underpaid because he creates about 64, $65 million of value for the angels. And so, you know, another one would be Bryce Harper's NDP here who created about $72 million back in 2015 in his peak two and a half million dollars.

And so. what happens is because these guys can't happen in this value. These teams will certainly leverage them to taking these early longterm pre arbitration deals. and where the team, a players going to be forced to give away probably 40 to 50% of their fair market value. And to give you a, just a very clear example of that, you know, two pitchers, that are somewhat, fairly good cons you have Madison Bumgarner in Clayton, per Shaw.

Both of them, phenomenal careers, maybe Clayton Kershaw with the signings and better regular seasons mass and bone garner. Certainly as you know, great career three world series rings, you know, to show for it. But mass Bumgarner took an early five-year deal, you know, early in his career. And then just signed a, a five-year $85 million deal recently.

So he'll make about 120, $125 million in his career. Clayton Kershaw, din. Okay. He signed a, I think it's seven year, $210 million deal, and he'll have another bite at the Apple. So his earnings will be about two 57 more than double what Madison Bumgarner did. And so there's, there's an opportunity for our investments to be able to, allow them the leverage to delay that deal in, get closer to fair market rate.

as a guy who's been in a locker room with. You know, the Mike trouts of the world, what's really the driving factors for these guys who ultimately opt to sign that contract earlier, obviously it's money, but is it, you know, a certain lifestyle that they have to project? Like I think of Aaron judge, right?

Another example where he lives in New York, he's this huge personalities everywhere. And yet he was very early in his career and it was like, he didn't have the money to kind of show the lifestyle that everyone just kind of assumed that he had. How, like, what are some of those driving forces for them beyond just, yes, I want money now, but like w you know, help us understand that, especially given your background as a, as a former pro.

Right. So we feel that our investment in these guys at the early stage in their career is really going to help them in three main ways. , first, it's going to give them the financial security in a peace of mind that comes with that, to play better and establish themselves early in their career as a top tier talent.

When, when maybe that would have taken a little bit longer, second is going to give them leverage in arbitration and free agent negotiations. Teams, especially these small and mid market teams. They're, they're increasingly preying on these guys or that have, you know, get to the big leagues in a year or two in they're offering them 25, $30 million guaranteed.

Over over five to six years. These guys have been making 12 to $15,000 in the minor leagues and that's. Seeing that amount of money, is a life changing amount of money, even though it's a team friendly blow market deal, and the guys are gonna have to give away 40 to 50% of their fair market value. We believe that our investment in them is going to allow them the benefit of time and in the ability to wait in the closer that they get to free agency, the closer to a fair market rate they're going to get.

We're also going to give them honestly, the leverage that comes with their earnings. It's a lot easier to turn down a longterm deal with 25, $30 million. If you have a few million dollars already banked and third, lastly, we're going to give them access to our network, whether that be personal professional or performance related.

and we feel that this is going to give them a competitive advantage to invest in themselves and essentially own their own development. And in conducting their careers in this stage, the veteran players do certainly wouldn't when I first came up, I felt like I noticed. The veteran guys had everything squared away from their house to their workouts and the nutrition to their prep work.

And almost most importantly, they seem to know all the right people. So this is what we want to bring to our guys and help them kind of put this together at an earlier stage, your career, not wait till their fourth, fifth, six year to have all these things in order. So we feel like if we give them all these different points of leverage, that they're ultimately going to increase their earnings as their career goes on.

Yeah, it's really interesting. I mean, I'm thinking back to a couple of iterations of this model that I think, Tim and I have both seen or have been pitched, cause there's some startups around that are trying to say, Oh, we can let you buy. Equity in the future earnings of a startup CEO or something like that.

But, but actually like looking back, I think like Erin foster was the first person I remember in the NFL that was doing something where he said, Hey, I'm, I'm, you know, creating shares that you can buy in my future earnings that I think he was up for a contract extension with the Texans. And then recently we've heard a Spencer Dinwiddie and he's doing a tokenizing it, so he's taking it in a new angle. And you guys are obviously not doing the crowdfunding model. You're coming in here with a dedicated pool of capital to do this. We'd love your thoughts on maybe where that crowdfunding model is interesting and maybe where it could. Cause we haven't really seen them take off as much as I think people projected them to take off.

You know, where do you think the crowdfunding model has struggled?

So Erin foster was actually a fantastic guy. And fan techs was the first iteration of, of, X, 10 capital. And it, treated the, the player, as an open security and it was successful, certainly in, in, in terms of the proof of concept. And I think there were, some. Regulatory hurdles in terms of the sec and, and, the firms having to file  for each player.

but, but the interest in, in the proof of concept, like I said, we're there. And I think certainly Spencer Dinwiddie is incredibly interesting situation in a bit of a trailblazer, as he is, he's trying to tokenize this contract, I think at X time, we'd, we'd be looking to get into the NBA. Certainly, as I said, as well as the English premier league will Leeka and in potential the NHL as well.

So anywhere there's going to be, an opportunity to create value. I think we'd be interested in.

yeah, there, there are certainly, I think some leagues where, where this starts to make a lot of sense. We look at a guy like Patrick McComb's right where he just got a massive payout, but the reason the chiefs were able to do as much as they did is because he came in on a rookie contract. So he's the lowest paid guy on the team.

So you can afford all these stars, but he's yeah, thankfully captured that value. But, but let's say they don't want a super bowl. Let's say he's not at that point. 

So I think it is really interesting where you say, you know, you can let these guys wait because it's not even just a personal thing. It actually allows the team in a hard salary cap league to, to go out and maybe do a little bit more than, than you normally could have.

Yeah, absolutely. And a lot of times, you know, with these, rookie contracts in the NFL, they will start to, you know, kick the tires and extending them. And, you know, after, after their third year, before the fourth year and, you know, guys will, you know, have the investment and have more leverage to kind of fight for, you know, either get to that kind of walk year and, and fight for more, for more guaranteed money.

given the structure of these leagues and how they regulate themselves, how susceptible are you to league regulation? Changing? especially with other competitors in the space space, rising up beyond X, 10 as well. It's certainly something that the leagues are more in tune with and aware of.

And I'm sure that given your background and others on your staff, you guys even have dialogue with the league to a certain extent, it would be curious like how susceptible, well you are to what the leagues can do and how they would change the CBA or, or other rules as it relates to the stuff you guys are doing.

Well, that's a good question. And it's tough for me to speak to what the league execs are going to be thinking. I think I can come at it from, from our point of view and we are totally focused on making sure our deals are fair for all parties involved. we're we're always going to go through the agent and the financial advisor.

We're going to cap our deal and hope that players bust through the cap and maximize their earnings. we're, we're not going to be relative to a couple of the vehicles in the space. so some of these loan deals that, as some athletes have utilized, where if the player gets hurt, the player doesn't.

You know, go on to earn a lot of money and put himself in a position that he can pay that loan back. He's going to have a significant tax liability that comes with that loan. eventually for us, we assume the risk is a straight equity play in. If the player either doesn't have the career that we anticipate or, or gets hurt, then the loss is all on us and we assume that risk.

And so we're, we're going to make sure it's a fair deal. for everybody we're going to put the players' best interests. first and, you know, in, in, in hope to bring you incredible value to each guy that we work with.

Yeah. And to Jay's question earlier about. like the we're crowdsourcing models have not worked out like with what you guys are doing. It's a financial instrument. And at the end of the day, a lot of that is predicated on economics and is predicated on trust. And so when I look at your team, it's like, Oh, advisors, John Mac, former CEO of Morgan Stanley, general partners from benchmark.

Great, people with. A BS in economics from West point and MBAs from Harvard. So it's like, you know, it's, there's a lot of trust that comes with all of those things. And that's really important because obviously these players don't want to mess around with their earnings.

Okay. And as I said, building relationships is key to all our deals. And, as I said, we go through, the agent or financial advisor first, every now and then we do get a referral from a guy who's got a teenager who, who, who thinks could be a good candidate or who it would benefit. but we have full transparency with our deals.

We take each guy, kind of slowly painstakingly through every part of the deal, how it's gonna work, how the investment is going to work, how the payments back to us are gonna work and how we want them to invest a little bit in themselves. But for the most part, we want them to invest this money. we don't want them going out and buying new Teslas.

but you know, I think some, restraint with, with some of this new money is, is in order. And essentially we, we like it. Yeah. Three different scenarios throughout their career. That could take place one. If, if they really. You know, the career flames out or they get hurt and they don't make really any money.

Then, then we take the risk and they're gonna, we really glad that they did that deal a second. And if it, hypothetically, they make maybe half to two thirds, with what they ultimately would. Have have deemed as, as, there, their optimal career earnings, then, then everybody breaks even. And they played their early career with financial security.

And then lastly, if they kill it and they, and they bust through the cap and they have a fantastic career. hopefully some, all star games and world series, appearances, and, and hopefully they look at our investment as, helping them wait until they kind of got, closer to free agency. Maybe it made them better.

And, lastly it allowed them to play those early. Years and their career with financial security. and then I guess the last thing to consider is if these guys do at any point in your career, things do get off track. They're going to be really glad. They have us in imperative access to our network and to help them get back to where they want to be.

Yeah, I really liked that. I'm glad that you said that and I want to sort of like touch back on it because it's the idea of the time value of money that I think we hear from a lot of our athletes where they're like, yeah, I just wish I started investing earlier. And, and the truth of it is you might not have had the capital to really, you know, if it was real estate.

You probably couldn't have gone and put it down on a property on your rookie contract or, or on your sort of second round contract. Like you just weren't, you weren't going to have that liquidity, but if you're in a good market and the market's the right time, there's, there's an opportunity for you to get that liquidity against your future earnings.

So I really liked that aspect of it, I guess, on the flip side, where have you seen the most pushback? Either from the players or from the financial advisors where you come in and say, Hey, here's the deal that we're trying to structure liquidity now for, you know, for future payment.

I think the main issues like with all young players, I think regardless of sport, nobody thinks about the downside. Nobody thinks about getting hurt. Nobody thinks about things getting off track or struggling. so we tried to navigate those issues, but we also need to sometimes explain the deal a few times in terms of the time value of money and what getting that money, investing it now.

and what's, that's gonna look like in six to seven years and taking them through the mechanics of the deal. we'll also, we have to talk about the tax efficiency of the deal. in, in how that's going to play, and how that kind of knocks down the equity, of what they think they're giving up. but I think far more broadly, I think his general sense is that a lot of people hit athletes up for a lot of different things, looking for their money.

I remember, and speaking with 76 and Ryan, to an extent about, how he got into venture. And then I remember thinking to myself, okay, Ryan made over $150 million in his career. People have been trying to get his money for a long time. So he's had to, he's been screening people, who have been looking for investments from him for a long time.

So I think there's a natural hesitation, from any type of professional athlete. With why they looking to invest in me or why me and what am I going to look to get out of it? I think in general, I think it really helps them. we all played, in terms of how, Randy and myself, I think there's one, the level of trust there.

And we just explained to them that, this is betting on yourself. This isn't hedging in any way. You're betting on yourself that you're going to, You know, bust through the cap in, you know, maximize your earnings and your success over the length of your career.

Yeah, I really liked that. And I, and I like the clarification that this isn't just about, you know, giving you liquidity to live the lifestyle. It's about, you know, giving you peace of mind, you know, all this, I mean, especially cause you think about. Some of these guys are coming from, you know, the NCAA or wherever it is.

And they they've been basically playing professionally for room and board for four years. Right. And so now you also have to think about like, yeah, there's probably debt that you've taken on.

So I, I want to highlight that point that this is not about providing liquidity, so you can. Go buy a nice car. This is about really having, you know, the, the sort of like mental peace of mind to go out on the field and perform at your best, because you're not worried about your finances. So I, I like that you highlighted that.

so Brendan, we'll shift gears a little bit and move to wrap up here in just a few minutes. And so we're going to end with a couple of questions that we ask all our guests. And the first one is, you know, knowing everything, you know, now and through the journey, you went both professionally as an athlete and now in the corporate world.

What's some advice that you'd give your younger self.

Yeah, absolutely. I think the first thing is to always remember is that your transition is going to be different for each person and to try to have some patients and try to have a long view. And one thing we always seem to know as athletes or as a linear progression in terms of at least in baseball, when you, you know, you, you.

Played division one, then you got drafted and then you moved up to able AA AAA, the big leagues. It was very easy to see the path to where you're looking to go. And I don't think it's the path. Is it going to be as clear or as linear, in, in this next phase of your life? but the first thing I always, would say or advise guys is, is that you're going to have to invest in yourself and in some way, you're gonna have to build some new, some new skills or acquire the subject matter expertise in, in a new field that you're, you're looking to get into.

the MBA program. I don't, I don't advise that everybody who recommend that everybody has to do that. I think you can, there's a lot of ways to acquire a new information and network and you can certainly save yourself a couple hundred grand. And so, but I think that the easiest quickest answer that everybody always goes to in terms of the next phase of their career is, is not just networking, but building relationships.

And, this is something that is. It took me a while to learn. but, but there's a right way network and, and certainly there's, there's different challenges for, for, we'll just say non-premium players, that maybe don't walk into a room where people say, Oh, there's there's so and so, you know, I gotta go talk to him or her.

but for me, I think a key was to have a plan of attack, when I would go to these networking events, or get in front of these, you know, real decision makers, you know, I used to spend hours really looking up open source information on people that I was going to get in front of and, you know, straight out of, How to, how to win friends and influence people.

I would try to find common areas of interest in whatever it was, you know, from where they're from or where they went to school or who they might know, or, you know, LinkedIn connections that we overlapped with, in a way that I could just kind of personalize the interaction. cause when, when you do get in front of these decision makers, it does seem like you're only going to have a finite amount of time and you will, do you want to build equity in the relationship?

And, you know, try to get that next meeting. And I think people like, doing business with, with people that, that they respect and, and, and have a genuine connection with. And so, networking. Yeah, it is, interesting skill to try to build. And I also, I kind of learned the hard way. In terms of how, how to have your pitch and how to be able to express, what you're doing and how your experience translates into what you want to be doing and wanting to get into, found out the hard way with, sometimes when, when you kind of lead with, Oh, my next player I used to do this would do that.

A lot of times the conversation used to pivot in a direction that really wasn't a productive way for, for either of us. I always felt like it either went to. Into an anecdote of whoever I was talking to his career, whether it be high school or college and how they didn't make it to the pros or how they got hurt on the, in the second option where it could go was.

And, people would ask me, as I said, being a utility player, they never asked me what I did to be successful. They always asked me about. The great players that I played with and how, what they did to be successful. So that I was constantly asked with a, about what Joe Mauer did, what, Mike trout did this and that, or, what, what were the, the toughest pitchers that I faced.

And so I used to always kind of lead with, Well, Chris sail and Justin Verlander. Those are the two toughest guys that I faced. And, for this reason, that reason, but I used to kind of pivot and throw it back to him and say, Hey, well, tell me about the Verlander, the sale on your team or, and or your industry FinTech or venture, for example, and in chat to get the conversation back to, something was kinda, as I said, more productive to, to both parties.

In the last piece of advice, I'd give somebody if they were to ask me about, about the career transition would be it's really to cast a wide net in intake meetings and an opportunity as it may seem a unconventional off, off the bat. But at the same time, you're really not sure where, where they're going to lead and, and or who you're going to meet as a result of them.

in the. New phase of your life. You don't know what you don't know. So, I I'd say be open to everything. is an example of that now, a couple of summers ago when, DC had the all star game. And there was an event in DC and I was still in school and working with 76 Capitol the diversity and inclusion, branch of a major league baseball was putting on, entrepreneurship kind of a modest, modified, shark tank event.

And, obviously they reached out to 76 capital. They looking for Ryan, And I think he had a scheduling conflict and he couldn't go in, in 76. It had come from homes that I kind of go and be half of them, but in his place, in, in incident on this panel. And so I jumped at the opportunity and, and, you know, As we were going through intros in I'm on the panel, you know, I kind of made light of it.

I said, you know, Brendan Harris, I w you know, here with 76 capital, obviously I'm the second choice. and Ryan couldn't make it, but yeah, you know, I'm just here to, to network and meet smart people and, and, you know, and it was, it was a great event and I actually, the moderator of. Our panel was Ganny Malkin lemons who, ironically, just had a book come out and give, give him a little shout out.

And so we connected and, you know, met for drinks a couple of times and become good friends and, and Malcolm is a phenomenal writer and, and, I was able to ask him if it's a pain point that I think a lot of athletes have in terms of this next phase of their career, when they're not still playing is in terms of building their brand.

Who is their audience in, what lane to kinda occupy and in with, I was able to kind of pick his brain on, everything from, from kind of the length of posts and across different platforms, whether it be Instagram or LinkedIn and in, in different articles. And it was great.

And, and we've been, you know, friends to this day and, You know, as a result of just kind of taking her a random opportunity, that seemed unconventional at the time.

I love that. I love the idea of being open to those new opportunities. You know, we had Donnie Jones on the show a couple of weeks ago, and his advice was also like the wind of change will find you if you're sort of open to receiving it. And I, I just really loved that phrasing of it is that you, you kind of have to be open to it.

Right. And so, so I, I appreciate you, you saying that as well. you know, where I would love to close is, Tim and I, one of the things we love about it during the show is we realize how much the world of sports has to teach the world of business. So I'd love to hear from you, what are one or two things that you learned over your plan and career that now stay with you 

as a business person today? 

I mean, certainly the ability to turn a page, deal with adversity and not take things personally, which you see in the business world where people had a bump in the road. And that was one of the things, you know, you kind of initially get the Wharton and it's taught you, take it on the chin early. Now, at least I did, you know, both sides.

And so I think when people do come to hurdles, they, they, they don't, you know, kind of pivot or just, just kinda, circle the wagons, to an extent and, take a deep breath and try to, discuss different ways to kind of navigate whatever, whatever problem they're dealing with.

and, as I mentioned a little bit. there's a not only a need, but an incredible value, to diversity of opinion and diversity, having people with diversity of lived experience, you know, in your decision making circle, which I haven't seen a ton, you guys might say, you know, a lot, you know, in working with.

76, I was reading, you know, DECA, it's your deck. And I started seeing, I was like, that guy advises that one and that one and that one. And you see a lot of the, you know, the same people and so surrounding yourself with people really, they don't think like you, and I feel like there's a, a hesitation to an inability for people to respectfully disagree with somebody and then just make their case on why they think their point is.

And so, certainly, you know, baseball because it was played every day. You know, you can want to do it one way, but that, Oh, for four, was it pretty, you know, with a couple of strikeouts, it was a pretty good indicator that you're going to have to make a couple adjustments. And so doing that kind of quickly on the fly and being able to kind of handle adversity, are two things that, you know, again, I really try to tell athletes that you have more intangibles that the marketplace does value than, than you think.

I love that. I think it is great to give that encouragement to folks because so much of the conversations we have on the show are. Not just about the actual, like what of what people are doing, but also the state of mind and sort of the emotional state as they go through that transition. And so I think you're absolutely right.

There's so much value that you bring from your athletic experience than obviously what you're doing now in guiding these young players in how to think about their longterm potential and their financial potential. So, Brendan, we just want to thank you so much for joining us on the game plan today. And we look forward to staying in touch and seeing how X 10 grows over the years.

Yeah. Appreciate it. Thanks guys.

 

Well, we learned a lot from Brendan Harris, former major league player. And he's now in a second inning at X 10 capital J it's time for this week's partner rundown. Give me your thoughts on this player loan model.

Yeah. Interesting thing to think about with X 10. And it was so interesting to learn how they're creating a dedicated pool of capital, where they're able to advance players money now for a portion of their future earnings. They actually started, initially as something called  where it was an equity crowd funding model.

Where you could buy shares in area and Foster's future contract. And the problem that I had with the equity crowd funding model is that it kind of got away from the purpose, which is how do you create liquidity in a salary cap environment where players aren't really able to capture the value of their performance this year.

Right? You think about somebody. , like a Patrick Mahoney who won a super bowl and now got this blockbuster contract, but he was lightening up on the field for the last two, three years anyway. And I think there's real comps for this. When you think about a model Brendan brought up, which is Clayton Kershaw versus Madison Baumgardner.

Madison Baumgartner did his deal early and he's probably gonna make 125 million over his career. Clayton Kershaw waited and then got almost 210 million as his career earnings potential. So you think about, that's almost two X just by waiting a couple of years, and you're able to do that when you can advance a little bit of the capital through something like a next step.

Yeah, so I think the easy thing is, is. They will. Yeah. Why not just wait, but the  reality is not every player has that luxury and there's also a huge risk. There's an injury risk, you know, will I continue to perform at this level? Could there be a global pandemic that I'm not aware of? So I think this is a great option for players just from a pure insurance standpoint, but then you also think about it just as well from a personal interest and lifestyle components.

So we have the Aaron judges of the world who are living in New York city. And I know that rent market in New York, it's pretty expensive. , and so on is 350 K or whatever rookie contract that doesn't really go too far. So there's another piece of it too, around like, okay, I want to be able to live a certain lifestyle.

And then on top of that, if I can get all of that money that I'm projected to earn. Five six years from now. Now it becomes investible. So yes, there's a tax that X, 10, or others that are doing this will charge, but you can also make a lot more money. And I also think that's why the model works for X 10, cause they can help manage it.

Yeah. From investing your money to invest in your time. You know, Brendan brought up that getting his MBA at Wharton was one way that he felt he could be taken seriously in a world outside of sports. But Tim, I want your thoughts on business school for athletes.

Yeah, it's a really interesting thing to think about because in our own worlds, We have friends who've gone to business school or we've thought about business school. And typically it's to make this career pivot is to go from engineering or consulting into, Hey, I want to be in a management role, but what we don't think about is, well, you know, what about a pro athlete?

You know, they can do whatever they want, but I think the amount of discipline and humility required to go back to school to go to business school, , should really be. held highly. And a lot of players should consider this route because it requires them to humble themselves, to put in the work, to learn how to work in a corporate environment, and really sharpen those skills so that they can go do something outside of the world of sports.

Tim, I'm going to push back on you a little bit there because I think the value of the MBA has actually changed quite a bit from learning to being about signaling. So all of the information that you used to be able to get an MBA class are now available online. They're available on YouTube. They're available on podcasts.

You can even read one of our Twitter threads to learn about a new business topic. So athletes, if they're so inclined can actually go and find all that stuff on their own. What the MBA, the modern MBA really gives you is some sort of a credentialing that says, Hey, now you're ready to take this next step in management or a different part of your career.

But we've already seen that there are athletes that are doing that on their own friends of ours that have been on the show as well as others that are becoming investors and publicly talking about what they're learning as they're investing in these companies. So they can start to create their own signals.

Signaling is the most important thing about the MBA today. But I would say if there's athletes that don't want to put 125 K up front to go do that, they can start to create their own signals as well.

So our conversation earlier around player salary loans has me thinking about this other recent trend that we're seeing with companies like Otis. And rally road where they're actually allowing people to purchase fractional ownership and things like art and vintage cars. Jay, what do you think has made these alternative asset models possible?

So the alternative asset model itself is not actually something new. I mean, even going back to, there was an sec court case in like the fifties where somebody tried to fractionalize citrus Grove and sell shares against it. And the sec said, look, anytime that you are taking an asset selling shares on it and promising some future return.

Well, that's a security. And we regulate that what's changed is that since the jobs act in 2012, these companies have started working with the sec to effectively create many IPOs. So anytime that you see a rally road or a, you know, a Basquiat coming out with a painting or, or, you know, any of these sort of assets, it's effectively a mini IPO that they're creating of a company whose sole.

Ownership is of a Warhol painting. And as that painting appreciates and value, you can own, you know, one, 1000th of that, that you wouldn't be able to access yourself because you don't have a million dollars up front.

That's right. I think that's, what's really driving. This trend is just how inaccessible these things have become from just a pure price point. And granted, there's plenty of people out there that may say millennials and gen Z. Shouldn't spend all their money on avocado toast, but look, I'm not going to have enough money to buy a 1964 Aston Martin DB five for $4.6 million.

But. I may think that that's going to continue to appreciate. And so what's cool about a platform like rally road is it allows me to put in 225 bucks and get to participate in that and get to feel like it's mine. Now. I am curious, like, do I ever even get to see the car? Do I get maybe a chance to drive it even, or like sit in it?

I don't, I don't know. Like I would have to look into it more. I would imagine maybe there's events or other opportunities to do this. , but that also brings up the other end of the spectrum where there's these different, , clubs that have started to exist. So if you're less interested or focused on like the financial upside of these vintage, or scarce pieces, you can actually join like a classic car club and get the experience to go drive them or actually have them.

 Speaking of growth people didn't see coming. I was fascinated to learn that Jim shark, which is a brand that most Americans probably haven't heard of was valued at over 1.3 billion after an investment from general Atlantic, Tim, where did this company come from?

Yeah, these are one of those stories that we think is the American dream and that only we're allowed to have, but, , this was definitely not the traditional venture capital path. This guy was in his garage. He learned how to sew from. And really, he just felt like there wasn't gym clothes out there that fit him properly.

And that's what they've been laser focused on. And that's where they've really, , experienced so much growth is on fit. Two thirds of their customers are female. So they're definitely tapping into the at leisure trend. , they've embodied a set of values and principles that, , they've been able to align with a ton of influencers with.

So they're riding that wave as well. And I'm excited to see this brand continue to grow.

Yeah. It's one of those things that you realize, like some of the best companies don't come from Silicon Valley. So this was founded in Birmingham, UK, right? The guy has built it to 300 million plus in revenue a year. Without a drop of VC and he's become an overnight success in about eight years.

And, and he owns 70% of the company. I mean, that's the best part. So I think it's one of those things where we have to remind folks that they think that venture capital is the only way to build a business. And here we are two VCs talking about building businesses every week, but there are so many different paths.

And for him. One of those paths was going and working with fitness influencers, and, and going and working with just brand influencers. Generally, one of the favorite ones that I love is that he's got this boxer named Ryan Garcia. Who's got 6 million followers and he sends him Jim, and then Ryan has his friends wear it and punches them and sees how well the fitness equipment holds up.

I mean, that's just a fun and interesting integration. Then every week you see some new celebrity coming here to get punched by Ryan and little things like that. It makes you realize that. You know, going and pumping all this money into digital customer acquisition. Isn't the only way to grow. There are organic growth paths out there.

And Jim shark is obviously a success story on that front.

well, I love that example, although I'm not sure how many friends Ryan has left, after all of this, Jay, thanks for joining me again on this partner rundown. I'll see you next week.

Sounds good, Tim.

 

All right. So that does it for this week's episode of the game plan with Jacob Horn and Tim cot. As always. Thanks for listening. We definitely learned a lot from Brendan Harris and are excited to follow the future of his path with X 10 capital a special thanks goes out to Luke  for putting us in touch for more insight from Brendan, you can follow him across social media on Twitter, LinkedIn, and Instagram.

And Hey, if you've made it this far, you must really like the show. Find us on Twitter at the game plan show and leave us a five star review on iTunes. We'll see you next week on the game plan.