One Man, Two Companies: David Aferiat’s Passion for Business

Episode 29

Dr. Chloe Carmichael: [00:00:00] Hi everyone. I'm Dr. Chloe Carmichael. Welcome to the High Functioning Hotspot. Today's guest is David Aferiat who is a very interesting and successful entrepreneur. He's got two businesses. One of them did 11 million in revenue last year, which is pretty cool. And then the other one sounds like it's more in the startup phase.

[00:00:19] I think he said it did $36,000 last year but it sounds like a super cool business that he's building, which is called Avid Vines. And he's like bringing over amazing organic wine from France. So, yay, David! Thank you for doing that. I had a very interesting conversation with him. He had actually approached me through a chat feature in WhatsApp about my book actually, and then I got to talking with him and I said “I think you would actually make a really good High Functioning Hotspot guest” and he agreed to do it. So without further ado, I bring you David Aferiat. So David Aferiat, thanks so much for joining me on the High Functioning Hotspot today.

David Aferiat: Hello Chloe, it’s a pleasure to be with you.

Dr. Chloe Carmichael: So we don't know each other. I just want to put that right out there. And for a little context, of course, you and I connected through the Entrepreneurs Organization, and I didn't even really research you a whole lot. I just saw a couple of things that it looks like you have at least two successful companies that you run in your time. And so if you don't mind just sharing a little bit about yourself as an entrepreneur so that people understand who you are.

David Aferiat: [00:01:40] Sure. Thank you. So I run two companies, as you said, and the first time I've been doing it at the same time. One of them was an entrepreneurial adventure. I think that came from a network. A network of two lifelong friends that I had gone to college with.

[00:02:01] And then post-college in the years after, we started a business together in 2003, that is now about 18 years and overnight 18 year success, I guess. That company is called Trade Ideas and it’s a technology to help our clients make better decisions in the US equity markets. [It] Uses machine learning AI to optimize algorithms and produce ideas for trading and risk management.

[00:02:26]The second company is one that was different entrepreneurial journey where one that was really more of the traditional, “I have an idea” and it's birthed from that idea and it wouldn't have been possible without the valuable lessons I learned on both entrepreneurship, emotional intelligence, and well being that I've gained from being in such a great organization as Entrepreneurs Organization, EO, and that company is the importation of organic and sustainable sparkling wines and champagne from France to the US. And we import in a way where we actually add value by putting all of our products in refrigerated containers.

[00:03:07] Only 5% of all the wine from Europe to the US has ever put on such a container. And if you're going to promote the benefits of organic wine and how clean it is when it goes through you, so to speak, you have to take the extra step of putting it in a refrigerated container. So it's not dull from the journey as many others are, because it's so expensive. That said, I like to say you enjoy these wines twice, once when you taste them.

[00:03:35] And then the next day, when you wake up with no regrets.

Dr. Chloe Carmichael: [00:03:37] My gosh, I need that. So do you mind sharing David? And one of the things that kind of surprised me when I did get to Entrepreneur's Organization was the idea that people could talk openly about their revenues, right? So I'm from the Midwest. I almost grew up with the idea that we don't talk about money.

[00:03:56] And then when I entered the Entrepreneur’s Organization, I learned that people talk about their revenues kind of openly. And it's not a faux pas to ask about, that I used to think it was, so I apologize if I misunderstood the lesson, but do you mind sharing your revenues? I think that gives context for people about the breadth and thrust of these organizations that you've created.

David Aferiat: [00:04:23] Right. So I'm happy to, and the power of EO is a quick shorthand. When you meet other people from EO, there's no posturing. There's less posturing and you can get right to the heart of the matter, because we're all, as part of the organization, somewhat trained in the language of entrepreneurship and meant to get to the 5% that really matters very quick.

[00:04:45] So, as I said, Trade Ideas as an 18 year old. Our revenues in 2020, which was our best year ever. We're 11 million in top line revenue. And Avid Vines which was started in 2019. And much like Trade Ideas, so we started our first revenue collection in 2002, just six months, actually beginning of 2003, but very shortly after the acts of September 11th, 2001. And that's the best time. Sometimes they have an entrepreneurial beginning, the depths of a recession or uncertainty, because if you start something at the frothy top, your plans may not consider how far the bottom is.

[00:05:25]But if you start at the bottom, you kind of know you can't go anywhere but up. To that end, I also had the knack of creating Avid Vines in 2019, just in time for the pandemic. And so we're at a burn rate without advice. I think we made 36,000 in revenue, but we have, we built a platform, we pivoted to do a lot of virtual events when COVID hit.

[00:05:47]The important point is that we're set up to do much more as we come out of COVID.

Dr. Chloe Carmichael: [00:05:53] Well thank you. Yeah, that's really interesting. And I do, I really appreciate the vulnerability because one of the things that we look at on the High Functioning Hotspot is how very successful people navigate challenges. And so if you're, I gather the second company is actually kind of cash flow negative because it's still in the startup phase. So if you don't mind sharing how you approach that. Do you start out with a number in mind and say, if the cashflow gets this negative, I'm going to pull my chips and walk away, or how do you put boundaries around that?

David Aferiat: [00:06:30] That's a great, great question. And I will say we're not cashflow negatives. I'll answer it in the following way. When I started Avid Vines, obviously I had a conversation with my family and my wife, and I said, this is a dream that I thought I would be pursuing perhaps in retirement as something to do after I had done the work with Trade Ideas and finishing a kind of career. That plan was only accelerated because I happened to find such an amazing producer to build the company around. It started with the product and we built a company around it. Now we have more in the pipeline. So changing the timeline, made a conversation with my wife and we basically, I came to the table with essentially two goals.

[00:07:14] I said one after initial capital investment, the first rule is under no circumstances would I take on any additional debt to finance the company and secondly, and really most importantly, but in the opposite order here, but most importantly, that the work with Avid Vines could not negatively affect the work I was doing with Trade Ideas.

[00:07:39] So because of my responsibilities with that firm, I still had to grow it and put my focus there while at the same time growing Avid [Vines] with a team. And with those two rules, one, not taking on any outside debt to finance the company. I could invest more, but no outside debt to finance Avid [Vines] until we reach a smarter level. And two, not letting it interfere with my responsibilities with Trade Ideas.

[00:08:13] And so I've been able to balance the two and you can't do this alone. And I've been very fortunate to have and rally the team around Avid Vines to help with that effort. And a lot of it is because of the extra work at the beginning done with the mission, the values and the vision of Avid Vines tends to bring people toward, they start to attach their capabilities and talents toward that vision and toward those values.

Dr. Chloe Carmichael: [00:08:40] Yeah, definitely. Definitely. And I love the way that you did put up, you know, some kind of structure around how far it could go debt wise or financially. You know, I know for many of us, it's almost like a common thing in Entrepreneurs Organization that we're like, you know, serial entrepreneurs, we've all got a side hustle.

[00:08:59]And, and I personally feel like it's ironic, but the more boundaries we have, the more freedom we have, you know, once you know what the boundaries and the parameters are, then as long as you're staying within that sandbox, you can do whatever the hell you want, you know, like within like reasonable limits.

[00:09:16] So I really appreciate and I'm not surprised, you know, that you made such clear lines in the sand about, you know, where it could go and then you're completely free and liberated and relaxed within those boundaries because you don't have to worry about it, you know, getting out of bounds. So speaking of getting out of bounds, and, and that makes me think of course, about risk, which I found very interesting that you said that you had sounds like a little bit of a background or Trade Ideas has a connection with risk management.

[00:09:49] And, it's funny, as you know, I'm a Clinical Psychologist and I’m on sabbatical from psychotherapy right now, but when I was offering psychotherapy more frequently I actually had a little niche of risk managers in my office. And it was funny because they would all, you know, be constantly worried about risk, which was partly what made them so good at their jobs, but then it actually would make it hard for them sometimes to be vulnerable in their personal lives.

[00:10:16] Or they were just thinking about risk constantly. I mean, every profession has it. Right. So with lawyers, for example, they're trained to think about the worst case scenario you know, and almost, and then they struggle with catastrophic thinking sometimes. And so risk managers in my limited experience with them, they sometimes struggle to learn how to let their guard down.

[00:10:42] I won’t make you comment on that one personally, but I just had to share with you, go ahead.

David Aferiat: [00:10:47] I mean, you know so over time I've found that women make for better traders. And I think you would be an excellent trader in the markets simply because I believe women have a larger tendency to to respect risk and measure risks first, before they seek the reward. Sometimes you know, males, especially the ones trading in the markets are a little bit more of a reward-first and risk-later.

[00:11:08] That combination makes for better outcomes, usually. And so some of our biggest affiliates at Trade Ideas, the ones who help educate and use Trade Ideas as an educated tool are women who are quite successful. And so there's that. I'd actually like to go back to one other point of your earlier points about boundaries and setting limits you know, the flip side of that is it's the ultimate exercise in creativity.

[00:11:34] Creativity faced with a blank sheet of paper can be daunting. Creativity is created out of obstacles, it's out of, you know perhaps, you know, an artist can create their own sense of creativity by having certain obstacles and posts like either the size of the campus or the use of one particular medium, or the use of one particular color.

[00:12:00] There was a French novelist who wrote an entire book in French without using the letter E and had to like construct whole chapters to get around. And just to understand that that constraint, the constraint is what starts creativity in my mind. It's never right. It never, never is the ending point or block.

[00:12:18] It's like fantastic. If it weren't for that, I wouldn't be able to think more creatively about how to get around it.

Dr. Chloe Carmichael: [00:12:25] Right. That's very interesting. What you were saying about, you know, women and risk from an evolutionary psychology perspective. We would say that because women can get pregnant, we're wired biologically to be a little bit more risk averse, right?

[00:12:40] Because if we take a risk with the wrong man, we could end up with a long-term, you know, situation. But with that said, men have their own strengths too, I believe from their biological wiring. So I just, you know, kind of felt the need to mention that because it was kind of you to notice some of the strengths of women.

[00:13:01] But I feel like it's almost politically incorrect to talk about the other side of the coin. Like we can talk about how women are stronger at X, Y, and Z. But when we want to, you know, kind of talk about the natural corollary that maybe men are stronger, A, B and C suddenly, you know, we all get like called a bigot.

[00:13:21] So I just had to say that part because I really believe that we all have our strengths. And of course these things are all broad brushstrokes too. You know, not every woman is risk averse and you know, not every man is going to be better at whatever those other things are.

[00:13:39] But just for me as a high-functioning person and a person who specializes with high-functioning people. I feel like that kind of other part is the other side that many of us are kind of thinking about, but don't always feel comfortable to say, right. So I just like to bring it all out. But anyway, you also mentioned that you started your business with some friends from college and wow!

[00:14:02] Business with friends can go so far sideways, right? Do you mind sharing? You know what that's been like for you or how you all managed to ever, you know, apparently avoid having it turn into a blow up the way sometimes happens.

David Aferiat: [00:14:20] Wow. So I guess I shouldn't be surprised that a clinical psychologist would know where all the juicy parts are, you know, in someone's timeline or story, but yeah, you've kind of put your fingers on some challenges that have required a lot of emotional intelligence and a lot of the art of having the difficult conversation which many of us spend lifetimes avoiding. Which is something that through EO I've learned to kind of embrace, cope and have the hard conversations. That's the only way you really grow.

[00:14:46] Having said that, you know, it's not lightly that friends are argued to be defined as relatives. How long have you known them and how well do you know them. We, as I said, went to university with my third partner in Trade Ideas. And the three of us went to the same university and then my partner and I, the second partner and I both were in the same fraternity.

[00:15:10] And his outlook toward education, even back then, was somewhat unique where I came to university like with a book and pencil and notepad, ready to kind of learn. He came to the university with kind of like a Rolodex mentality and was like, I'm here to network. And so to, to find the people that in my life, I want to be closer with and find essentially a new set of friends that are found for success.

[00:15:35] And so it was a different approach. So his was like, I came university to find you. And I was like, okay. I came to university to kind of learn. And it's a different dynamic.

Dr. Chloe Carmichael: [00:15:44] So he was looking for the guy that was going to do all the work. You came ready to work. He said, “I'm looking for a guy like you”.

David Aferiat: [00:15:51] Yeah. It turns out he does a lot of work too.

Dr. Chloe Carmichael: [00:15:54] That sounds good. Thanks for standing up for your partner. I was just kidding around.

David Aferiat: [00:15:58] Yeah, no, no. Sure. But you know, we went our separate ways after university. I did a lot of work both for brand and marketing and analyst work for Kraft Foods and then worked for a consulting agency. And then he went on to really start his career in trading, consult and teach others how to trade and then started a company of his own, which was more of a back-office trading, clearing reporting, you know, technology and throughout our growth of those careers, we would check in on each other. And he actually, you know, I went on to get my MBA and he went on to get as equal or even larger and edgy an expensive education by raising a mezzanine round of funds for this previous company, becoming the CEO, raising the money and then losing control of the company to the board and to the venture capitalists that had funded the initial mezzanine round.

[00:16:49] And that was a painful experience for him. That led to some new rules and new lines in the sand. As we built Trade Ideas, which was to say, this idea is once delivered die on its own. It is not, we are not going to raise money and A.) lose control of the company, and B.) turn this passion that we have into work.

[00:17:11] Passion turns to work when you suddenly have other people's deadlines that they consider and other people's timetables to consider, and that creates stress. Whereas if it's all funded by our, you know, our, our revenues, it's all funded by our efforts with hitting, you know, subscribers with a product and service that they need and value, then we'll take care of it ourselves and manage the timelines and the expectations ourselves, rather than having it imposed on us without side money.

[00:17:40] And that led to a freedom, freedom to make mistakes, but freedom to act at it on a timeline independent of the agendas of venture capital stakeholders who have their, the company's interests in mind sometimes, but always a bottom line and high toward when do I get this back? When can we see results? And that's being generous. Others are just, you know, no, so you've got money and you've got deadlines that we have to, that we have to bring, you know, that you've got to work with. So the result was really the blessing to be able to control our growth. Sometimes we took the pedal 18 years over that period of time.

[00:18:18] So since you took your foot off the pedal to raise families, other times, you accelerated and reinvested quite considerably into the company in order to outpace a competitor, for example. So the result was something where you have this freedom to actually fill the vision that you have with the product.

[00:18:41] So that’s very important.

Dr. Chloe Carmichael: [00:18:42] Definitely. So speaking of passion it sounds like Avid Vines is, you know, it started really from I'm guessing a passion that you care a lot about drinking wonderful wines and, you know, going to France. I mean, what's not to love, right? So I was actually a yoga teacher before I was a psychologist.

[00:19:02] And one of the things that, you know, I work with a lot is mindfulness. And so I've actually done some material around mindful drinking before. And since you're somebody that has a passion, I'm guessing for wine, maybe other libations too, as I personally do as well. Since you are actually in the alcohol business do you have any tips or strategies for when you're at a wine or cocktail event and you're somebody who has a passion for that good stuff and there's handing it out and the drinks are flowing and everything's feeling good.

[00:19:42] How do we manage ourselves at those times?

David Aferiat: [00:19:46] Oh, Chloe. I knew I liked you from the start. And I also have nurtured a yoga practice for many years. And that combined with some mentors that I've had the privilege of working with EO. One of them, a Buddhist monk and another astounding gentleman by the name of Warren Rustin has helped shape a lot of my emotional intelligence to deal with partners, the ups and downs.

[00:20:12] And certainly as it relates to wine. So stepping into Avid for a moment. So I am a French American, I hold two passports. My father is French and I, by extension, I'm also a citizen. My children I've raised speaking French in our house and half of our families were, you know, we're split from the circumstances related to war from 1957 or so when the country of, the colony of Algeria was the property of France. And so half the family moved to Southern France, the other half moved to America, and those families went 25 years before seeing each other.

[00:20:51] And ever since I was maybe 13 or so, we have knitted this divide really to bring our families back together again. So that's led to year after year, you know, visiting France with that family. I studied in France as well. And so I come to it quite honestly, with the love of trying to bring these two cultures together, our families together, I was a French American Chamber of Commerce President for the Southeast for several years.

[00:21:19] And so this was a “Aha! This kind of makes sense” step in that journey, creating Avid Vines. I will say that if, you know, when we talk about mindfulness. If you are imbibing alcohol, it should be organic and it should be sustainable because the clean effect later the next day is so positive and it leaves you so well.

[00:21:43] We all create, as you can understand, as a former yoga teacher, and I'm sure you have a yoga practice that you continue with. We curate the routines in our lives and it upsets us to have those routines disturbed, especially if they're centered around wellness in our own self care. So the ability to be able to drink responsibly or in moderation or with organic and sustainable alcohol and not sacrifice that routine the next day is a huge win, it’s a huge positive.

[00:22:11] I will say that in my, it's my personal philosophy. If you drink from a sense of gratitude and a sense of being present, moderation always follows. So the problem is that sometimes people drink without a sense of, you know, being present or they sometimes drink without being a sense of vowed, a sense of gratitude because they have other issues and they're not necessarily so moderate, you know, and they don't consume in moderation or trying to fill something that's, that's taking them or trying to blunt or distract from what they're trying to do.

[00:22:43] That's the problem. But if you can focus on being grateful for where you are, the company you're keeping, the product you're about to enjoy. And if you are present to enjoy those sensations and the experience you're having with others, moderation always, always follows.

Dr. Chloe Carmichael: [00:22:58] That is brilliant, David. I love that!

[00:23:03] I really do, because I know a lot of us entrepreneurs, myself included, have kind of a work hard, play hard mentality. And you know, there is something also that feels great about sort of disabling that executive lobe a little bit, because that's the part of us that kind of thinks about like, “Oh shit, I say this. Is it okay to do that? Maybe I should think about the future consequences?”And when we can dull that part a little bit, I find, you know, for myself as well as many people, it kind of lets us free ourselves and share more than we otherwise might. And then it feels good. I feel like it's easy to get into a more, is more mentality, especially after you've had a couple of drinks and you're like, “Well, this feels great. I'll just have a little more and I'll feel even better”.

[00:23:47] But of course there's a tipping point. You know, something that's been helpful for me is to locate what I have called my “magic number”, which is where I can locate in advance like the number of drinks then for me, it's three that leads to maximum pleasure.

[00:24:05] And then when I've really been able to get it through my thick skull, that going above that number is actually not going to be more pleasure. So that way I don't feel like I'm trying to choose between having pleasure and being responsible, I'm actually recognizing that the responsible thing to do is actually also the thing that's ultimately going to give me the most pleasure.

[00:24:28] But I always love to layer in other just really good insights. So I definitely think that whenever I'm struggling to stick with my magic number, I'm going to focus on gratitude and just really being fully present.

[00:26:39] David Aferitat, that is probably a good note for us to start to wrap up on. So I just want to thank you for sharing your knowledge and business, as well as you know, from the heart about your culture and your life and yourself as a person.

[00:24:58] For people that may want to know more about David Aferiat or Avid Vines or anything. Well drop them links in the chat or the description of the show, in the show notes. But David, do you want to say the names of any websites or anything for people that maybe are not looking at those notes?

David Aferiat: [00:25:14] So thank you.

[00:25:14] Yeah, so for Avid Vines with a V. V I N E S. We have a wine club. It’s avidvines.com. You can find where you can order online, you can join our wine club, and you can even find the states where we are actually local to find this organic and sustainable champagnes and sparkling wines. Those who have had an interest in the markets can also find Trade Ideas with a dash. So trade-ideas.com for those who are wanting to follow the markets and make better decisions.

Dr. Chloe Carmichael: [00:25:49] Wonderful David Aferiat. Thank you so much again, for sharing your knowledge in so many different areas. It's been a pleasure and I know we're going to stay in touch.

David Aferiat: [00:25:59] Absolutely.

Dr. Chloe Carmichael: [00:26:00] Thanks, take care.

[00:26:02] Wow. That was a great conversation as always. I just continued to be amazed at the number of high-functioning people out there. And I so appreciate their willingness to just come and be open and share with me. I really liked the way that David let me ask him just pretty much anything I wanted to. He was really warm and easy to connect with despite a really high level of success, which I think is a special gift.

[00:26:27] Sometimes the more successful people get, the more intimidating they can get. But David really just made me feel right at home. So that was super awesome. I really appreciate that you watched. If you enjoyed it, I hope that you will hit the like button. It helps me a lot in the algorithms, the more likes and comments and shares and everything else I can get.

[00:26:45] So if you enjoyed it and you're thinking, “How could I do something nice for Dr. Chloe? She puts out all these episodes that I really appreciate”. Go ahead and please hit the like button, hit the share button, hit the subscribe button, all that kind of stuff. Obviously it's totally optional to do that, if you just want to watch and enjoy and you know, never do anything else, that's totally fine. And I genuinely appreciate every single view, but if you want to give me a little boost, please know, of course I would appreciate it. Thanks!

ONE MAN, TWO COMPANIES: DAVID AFERIAT’S PASSION FOR BUSINESS

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