Breakaway Wealth

Breakaway Wealth | Episode 267 | Exploring the Power of Thoughts, Legacy, and Entrepreneurship with Kristian Marquez


Welcome back, Breakaway Wealth. I’m your host, Jim Oliver, and with me today, Kristian Marquez. I knew I was gonna do that wrong, Kristian. Kristian Marquez, sorry about that. So tell the audience a little bit about yourself, what you’re doing, and we’re gonna get into breaking away from the herd, and how you’ve been able to break away, and how you see people break away every day. But just give everybody just a little bit of background on you. 

Kristian: My pleasure. So first, Jim, thank you for having me on the show. Great to be here. Today I serve as founder and CEO of FinStrat Management. On paper, we’re headquartered in Annapolis, Maryland, but a fully distributed team providing accounting, finance, and reporting services to early-stage venture backed companies, as well as investors. So both angels and venture capital companies. Been a long accounting and finance profession spanning the previous two decades. This current iteration with FinStrat Management. I started the company back in January 2017. Originally thought that I would help founders raise capital, whether it was debt or priced equity financing, but the business very quickly morphed into full service accounting and finance. 

A little bit in the weeds but if you think about especially software-based businesses, they have a heavy dependency on accrual accounting versus cash. And I know it may sound a bit trite, but there’s a significant reason, at least for software-based businesses who are selling subscriptions greater than a month, to have a set of GAP-compliant financials. In this case, that space is heavily scrutinized on SaaS metrics.

So customer acquisition cost, customer acquisition cost, payback period, individual components of monthly reoccurring revenue. And the only way to bring that to life is if you have a clean set of financials. And from there, the business just evolved. So today we have over 30 clients, but we also provide reporting services to investors, both angels and VCs. So if you think of a non-public private asset portion of a portfolio. You can easily look up on Yahoo Finance how Tesla, Apple, Google is performing at any given day. A lot more challenging to do if you’ve cut a check in an early-stage business. Investors will delegate portfolio company monitoring and reporting to us. So we collect, normalize, and we’ll publish that information on an agreed upon cadence — monthly, quarterly, annual — on a web-based front end so that they understand how those investments are performing. 

Today we sit in this really unique space amongst accounting and finance providers. I like to describe it as the intersection of shared interests between founders and investors. And you know, business is great. I’m very grateful for our team, our culture, and just how we approach business in general. It is relevant to how we got to this point. So when I first started the business — I will say I have a more corporate role serving as CEO — but when I first started, I had a fractional CFO hat on. I was able to do that because I’ve held a variety of accounting and finance roles over my career.

Next year will mark 20 years as a CFA, our Charter Financial Analyst® charterholder. I’ve had the opportunity to be in the weeds and in senior roles myself, but I’ve also had a tremendous amount of success, but a handful of failures. And those failures have really complemented my understanding of, at least for early stage, how a business should think about capital allocation, what’s important, and how to grow, especially when you have your sights set on the branch ring, as many early-stage venture back companies do. And so probably the most, the notable starting point is 2004. I was hired as a financial analyst for a small Annapolis, Maryland-based consulting firm. The CEO was a go-getter. Fast forward nine years later, it was a company with IPO at 4.4 billion a year after I left. Got to wear a lot of hats: product development, sales and marketing, client implementation. The irony was, here I was a financial analyst, we were in healthcare IT and they’re like, you’re smart, we need you to go do this. And it started the evolution of really having a sense of what it takes to scale, in this case, an intro business. Obamacare hit in 2012. We were in the right place at the right time. We had a combination of healthcare analytics plus clinical interventions. We married the two. Ended up, I actually had a material hand, I can say this, in developing what was a predictive analytics model that looked to improve quality outcomes for Medicare Advantage members. And we were marrying our software with actual telephone calls, in-home visits, customized letters that sought to modify behavior in the pursuit of improving clinical behavior.

At the end of one full year cycle, we beat the market as a whole by two standard deviations in terms of what was used as the yardstick star measures or, excuse me, star ratings. And it was statistically significant because our population was one-fifth, yes, one-fifth of all of the Medicare Advantage members in the entire United States to include Puerto Rico, Hawaii, and then suburban and metropolitan areas in between.

So I had to pep in my step. A number of the investors in that company knew me, had a high opinion of me, encouraged me to spread my wings, if you will. And so I co-founded a telemedicine startup with two physicians, ended up raising $2.5M in revenue and ended up burning through it all over the course of two and a half years, despite having a tremendous amount of brain power.

It does not make a difference, but just for context. I’m a service academy graduate. My two co-founders are both Ivy League board certified urologists. Great people, great team. And if you were to read our pitch deck, which I published on the project section of my LinkedIn profile, so that’s Kristian with a K. Marquez, M-A-R-Q-U-E-Z. You can see it there as long as some other collateral I used to raise the $2.5M. It didn’t matter.

You know, so it was this phenomenal lesson of, you know, what’s really important when starting a business. And so, you know, together that today enabled me to wear my CFO hat. The preceding six and a half years with FinStrat Management have – what I’d like to think – is a material impact on helping our clients raise debt financing, price equity around, and sell their business. I mean, I’m happy to stop there and unpack anything I said or didn’t say.

Jim: No, no, I love a lot of what you said, Kristian. And I think I want to start with, you know, there’s a lot of people in the audience and what we advocate for is that breaking away. So whatever you’re doing with your nine to five, even like you said, you could be a doctor, I mean, you’re still trading time for money when you’re a doctor, you know, and the only way to not trade time for money is that own businesses and real estate and things like that, assets, so that your assets can provide income while you’re, you know, kind of that old thing, while you make money while you’re sleeping, right? But what I really love is when people are sitting there thinking about starting a business, it’s scary and taking action is scary. But you know, it’s kind of like jumping into a creek or a river. Once you’re in you got to just figure out how to, how to get yourself down the river or to the other side, whatever the goal is. But what I think is really cool is you invested in what you knew, but the telemedicine thing is particularly interesting too, because I know during COVID there were so many people making a ton of money and I know the timing was different for your business there, but there are people that were like, Hey, this is the way that it’s going to go, whether it’s all going to be this telemedicine thing. And I still think that there’s a big place for that, but you can have all the preparation and still you can struggle. And then I just love what you said as far as looking for talent. You know, I own parts of quite a few businesses and people ask me, well, how do you stay absentee or semi absentee? And I said, I hire really good people and I overpay them. I mean, that’s just my simple formula. But when I find somebody who’s smart, like you said, I mean, I grab on to that person and yeah, Hey, have you ever done anything like this? I mean, can you figure it out? You know? And I think that I was smiling inside when you said that because … and you’ve got to treat the person like an owner because you want that person to be an owner, regardless of your exit strategy.

Which again, I love that you mentioned that because when you start a business, you should have an exit strategy. What are you trying to do? And, um, if you’re trying to create cashflow, cause you’re going to start a real estate business and it’s going to be for the rest of your life and your kids’ lives and everybody, okay. But that’s typically not the cycle of business. So in the book, The Richest Man in Babylon, one of the tenants is invest in what you know, right? And so I love that you did that kind of maybe like just talk about… I love that you have this accounting background because so many people think — and there are accountants out there and people that are in accounting — it’s black and white and they don’t really think they want to be that security and that firm.

But the security of starting your own business and like you said, you’re grateful and you’re blessed. Talk about once you kind of break away from that and start your own thing. It doesn’t even matter that it failed or that you’ve had failures. Like you said, just talk about the psychology of that. 

Kristian: Yeah. So all great subjects. I’ll start a little bit big picture because I find myself having this conversation with friends and colleagues on a regular basis because I’ve been asked the question, like Kristian, how did you break away? And it isn’t easy. One of the things I’d always say is, what’s the profile of the person I’m listening to? And so in my case, I still had three kids at home at the time. They’ve all since graduated. I had the car payments, the mortgage, the private school, like everybody. It’s hard. So anyone who’s listening to this and saying, oh, Kristian, you were probably already loaded. I wasn’t.

And it really speaks to the heart of this, answering the question, is there a formula? I believe the answer is yes, there is a formula. And so I’d say let’s use profile as a starting point. So we have three kids. My oldest is now 24. He graduated college last year. And one of the things I encouraged him, but also our daughters was when you’re young and you don’t have any financial obligations, you’re in a great position to take risk, i.e. start your business now. A bit unorthodox because people say, oh, get experience. But I have an opinion that there’s no substitute for actually doing. And so he did. He started a construction business outside of Nashville, Tennessee. And there’s a whole bunch of smaller elements: focus on great service, communication, doing what you say you’re going to do, that have influenced his success. And I say that objectively, if you go out to his website today, you’ll see, knock on wood, he’s got all five star Google reviews. Because he really pours his heart and soul into this.

But construction not only suits his personality, but I think is really important from a breakaway perspective because today I work with a lot of early-stage businesses who are selling software. And a reoccurring theme over the previous two decades is that a lot of software businesses were going to operate at a loss so that they can just grow. And in today’s interest rate environment, the mentality has changed. Now there’s a heavy emphasis on profitability.

If you take a step back from that mindset, you know, really what we should be asking ourselves, well, why do businesses fail? Businesses fail for one reason only, and that’s because they run out of cash. And so then really we should be asking ourselves is if we’re going to start a business, how do we generate cash? And that’s why I come back to construction. My opinion today is that anyone who’s going to start a business, best starting point would be something where there’s a high probability that you’re going to generate cash. And usually that’ll be professional services. That’ll be companies where you don’t necessarily have to convince anyone as to what you’re selling. And I’m, you know, landscaping, construction, accounting, and finance. I mean, we can probably come up with a laundry list as a starting point.

And the significance is whether you’re just graduating college or you’re married with kids at the house, really what we’re talking about is increasing the probability of being successful before you start to swing for the fences with maybe the next innovation or product or idea, whether it’s software or other, that somebody may have.

Going back to breaking away, I 100% acknowledge it does get more difficult when we’re in our 30s and 40s and 50s. So the question I get asked, if I don’t have anyone who’s willing to invest in me like you did, how do I do this? And this comes back to the statement you just made a moment ago. And I do think there’s a progression. The progression I would encourage people to find is find a great company where there’s an owner, like yourself, who maybe only wants to be involved part-time, but knows they need somebody who has a little bit more time on their hands is looking to create an economic foundation of wealth for them and their family and give them a little bit more equity and have them hustle. 

Sure, they don’t own 100% of the company, but if you have greater than zero, that’s more than you had if you were an employee and you’re not getting stock options.

I think it’s probably the biggest challenge that a lot of people run into is we get bombarded with news articles of Elon Musk, and take your pick of founders, who become what seems like billionaires overnight when, I mean, they’re totally the exceptions. And if we take the pressure off of ourselves and say, hold on a second, I can still create a path to creating a multi-million dollar balance sheet.

At least at inception. I mean, that’s how Elon got his start. He effectively sold what was white pages for the internet back in the 90s and then parlayed that into PayPal and now today SpaceX and Tesla and EuroLink and the boring company. But it’s a progression. And I think when people understand and appreciate that, yeah, depending on your age, depending on how much risk you can take, how much time you have. I mean, kids consume a tremendous amount of time. You know, notwithstanding having a great marriage. It’s hard. It’s not easy. And so, you know, I would definitely say to anyone who’s listening here, if you feel a bit, you know, like frustrated with how this works, you’re not alone. The good news is, is there’s definitely paths that we can take, to increase the probability of breaking away. I think I hit on most of what you said. 

Jim: Yeah, I love what you said. And I love what your son’s doing at 24. That is amazing. That’s really cool. And you know, the thing is, is that what I would, I’m sure is going to be his experience is what he’s doing now is not what he’s going to be doing five years from now in his construction business. Things evolve, you get one contract or you get one customer that explodes or, you know, whatever it is and your business goes in a direction that you didn’t expect. And as long as you adapt, which I think that, you know, most people that start businesses, they have this flexibility in their thinking to be able to adapt. But I love what you said. And I always think that this, the younger people today, Kristian, they don’t think about working for a company for 20, 30, 40 years, putting money in a 401k. And then trying to live off that lump sum of money for the rest of their lives. That’s not their goal. And you know, they really understand money better than I know I did back then. And so I love business owners. I love young people that start businesses.

Because you’re right. I’m in Southwest Florida. You know how many business owners there are down here in their 60s and 70s that are just looking for somebody to take over their business. And I like businesses that are simple as well. In Louisville, Kentucky, I’m in the trash business. Well, it doesn’t get any simpler than that. And you know what? 

Kristian: That’s here to stay.

Jim: My partner and I are looking for somebody to take over that position, to take it over like an owner and run it and earn equity. So we’re looking for that person. I know there’s millions of people just like me and my partner looking for people to take over those businesses and build it into something great. And yes, I mean, there’s lots of formulas on when you go in and you, and you buy a business, on how to buy the business, how to share what has been built, what’s going to be built. And there’s all kinds of fair formulas. I love what you said about breaking away early because I would challenge everyone to do that. But also, you know, let’s say you’re 60 and you think, man, I’ve wasted this amount of time. You can, in five to 10 years, create something really amazing and then be that person bringing that younger person in and exiting that business to some degree. But you know that concept of retirement isn’t, you know, that isn’t really the goal anymore in my mind. It’s really … I wouldn’t encourage any of my children to work till they’re 65 and then turn it off and retire. And I’m in Southwest Florida. I see those people every day, but they have a scarcity mindset.

The people that have businesses that have real estate, that have cashflow. Hey, yeah, you want an assessment to improve our golf course? Absolutely. Let’s do it. So I love that you have that abundance mindset and that your children do too. Maybe someday we should have your son on as a young person to just talk about some of the struggles that he’s seeing and what he’s going through, because that’s really cool.

Kristian, you know, obviously you said you were a service academy grad. Where, where did you go? 

Kristian: Naval Academy in Annapolis. 

Jim: I just wonder – my 14-year-old granddaughter that lives with me wants to go to West Point, At 14, that’s where she’s at. If she’s doing this dual program in high school, I haven’t told her that none of those credits would count at any of the service academies, but we can talk to her about that some other time, but I just wondered. So obviously at the Naval Academy, your experience in business, you probably got a lot of great advice. Can you give me one thing, maybe the best advice anybody ever gave you? 

Kristian: Yes, I will do that, but I’m actually, I’m not really eloquent, so I’m actually going to quote Waldo Emerson, which I think does a great job of at least giving us a little bit of guidance on how to think about life. And it goes, I’m going to read this, but it goes: 

Sew a thought and you reap an action. 

Sew an action and you reap a habit. 

Sew a habit and you reap a character. 

Sew a character and you reap a destiny. 

And I had someone, summarize that by saying, take great care of your thoughts for your thoughts determine your destiny. And it kind of really just gets at the heart of who we are. I think is really important. I think our community — this is going to sound cheesy — but I think our communities, our relationships, and maybe you can argue even as we see a manifestation of our country, is a reflection of who we are as individuals. 

And so I think maybe like a lot of people, you read the news today and say what difference can I make. I think really what we can do is, how we conduct ourselves. And so I always kind of like that as a blueprint is how I could think about going. 

Jim: I love that. You know, there’s a great little book and actually a video for the young people, you know, the young guys out there that don’t love to read. But there’s a great book and a 32-minute video on YouTube. 

But it’s the Strangest Secret by Earl Nightingale. And it’s like, whatever you think about, you’ll become, right? And, you know, even the Bible says guard your heart because your heart becomes your thoughts. Your thoughts become your actions. Just like you said, just like Emerson said, and you know, these are timeless truths that we have to respect and we have to think about. And I agree with you in this country, we have to think about, if we have hatred in our heart, guess what? We’re going to have — regardless of somebody agrees with you or disagrees with you. I see a lot of smart people that have a completely different view on the world than I do, but I respect the fact that they are intelligent and that they have their own view and normally it’s our experiences that create our views. So, obviously I don’t know their experience and if I did, then I probably would understand their heart and their thoughts and in a more peaceful manner than our society is having. 

You know, so one last question, Kristian. If you could only retain the knowledge that you’ve received from one book that you’ve read, what would that book be? 

Kristian: Dale Carnegie, How to Win Friends and Influence People

Jim: Love it. 

Kristian: You know, I give you a little bit of insight into organizing my time and my decisions. A long time ago, I don’t get credit for this. I’m sure I picked it up someplace, but I what I do, health, wealth and legacy. And legacy is synonymous with relationships. And so in my mind, it’s God, it’s my wife, and my children, my siblings, my friends, and colleagues. I’m an introvert by nature. I’m probably analytical to a fault. And so, you know, my social skills have required a lot of TLC over the decades. And I really like what Carnegie said in his book, at least in terms of listening, active listening. Really trying to put yourself in somebody’s shoes, so that you can understand where they’re, where they’re coming from in the spirit of how do I make a better connection with this individual. Yeah you can have selfish motives or it could be for the betterment of society. But I mean, the instruction and insight it gives in there, I think is timeless. 

Jim: No, I love it. I love that book. And I think you’re exactly right. I tell people pay your kids to read these basic timeless books. I don’t care how much you have to pay them. It’s worth it. If they’ll just get that one or two things out of each one of these books. But Kristian, thank you so much for being on the show. If somebody wants to reach out to you on LinkedIn, Instagram, tell them how to reach out to you. 

Kristian: Yeah, so a couple ways. I mentioned my LinkedIn profile. So it’s my first name is Kristian with a K, K-R-I-S-T-I-A-N and then last name is Marquez, M-A-R-Q-U-E-Z. If you want to send me an invite to connect, mention that you’ve got to listen to us on Breakaway. I’ll happily accept. Also, you can go to our company’s website. It’s – so fin, short for financial; strat, short for strategy, and then m-g-m-t from And you’ll find there’s a Contact Us on there. 

Jim: Kristian, so thank you so much. And congratulations on the success of your business. 

Kristian: Thank you, Jim. 

Jim: I’m sure the future success and how you serve people and help people. And I think that’s another key is if you’re truly a go-giver, like it sounds like you are, then you will have success. You’ll find your path. So audience, we’re going to end this like we always do with the great words of Earl Nightingale. Take it away, Earl. 

Earl: Here’s the key to success and the key to failure. We become what we think about. Now let me say that again. We become…what we think about.