Beyond Data: Human Decisions in Investment with Daniel Nikic
[00:00:00]
Aicila: Welcome to Business as Unusual Today, I'm welcoming. Today I'm welcoming Daniel Nicki, an investment research professional and entrepreneur whose career spans over two decades of empowering investors and businesses with actionable insights. Daniel's journey began with a strong foundation in business administration and a passion for market dynamics and financial analysis.
As the founder of Chorus, a boutique investment research firm, Daniel specializes in helping high net worth individuals, venture capitalists, and startups navigate complex markets and emerging industries like ai, sas, and data.
His dedication to innovation combines a global perspective with a hands-on approach, helping clients uncover growth opportunities and achieve their goals. Today Daniel will share some of his unique insights into strategic solutions that can make business truly unusual. Welcome to the show.
Daniel: Well, thank you for having me.
Aicila: I have some. General curiosity is around like, I don't even know what is a research investment firm versus just an investment [00:01:00] firm.
Daniel: Okay. So, um, to state it in plain terms, we do all the work so investor can make a decision to invest in a company. We don't do the investment. We do all
Aicila: Hmm.
Daniel: analysis and insights to be like, you know what? We think it's a. A good idea to invest in this company. Here's our reasons why. Or this, it's not a good idea to invest in this company.
Here's our reasons why.
Aicila: Hmm. So that kinda sounds like a good almost separation of duties too, so that you don't get, you've got someone else who's making the investment decision and you're providing the, the data. So there's a little gap between those two incentives, I guess.
Daniel: Yeah. And, uh, we give the client the insights to be like. We have all the research. What's the takeaway? Because anyone can just do that today, especially with AI as we see with Chad. But we're like, based on this research, [00:02:00] we think you should invest in this. This due to these reasons, or we think we should be cautious because of these reasons. And a lot of times it can also be not even based on the research. It could be just on the financial analysis of a company. It could be
Aicila: Mm
Daniel: for example. You should not invest in this company because their finances does not make sense. What I mean does not
Aicila: mm.
Daniel: sense is that it's not an order. There's some, let's just say wrongful accounting to say politely
Aicila: Yeah.
Daniel: they have too much debt, or there's some previous owners, shareholders in the company are gonna want their money back.
It could be a convertible note.
Aicila: Mm-hmm.
Daniel: in other words, is when an investor invests in a company, but they don't have ownership in the company, but it's kind of like a loan. And if the company cannot pay back that loan, then they take ownership at a discount. What I [00:03:00] mean by
Aicila: Hmm.
Daniel: instead of paying at $1 per share, they're paying 80 cents per share.
Aicila: Gotcha. So it sounds, it sounds like there's a lot of pieces to it and I, I don't think. In my own experience is that AI definitely has its place and it's very helpful, but there's a, there's a synthesizing and there's sort of an extra dimension that you can't get without having a person paying attention to all the details, so
Daniel: Well, based on my experience, I think AI is developed on human bias.
Aicila: mm-hmm.
Daniel: an ai?
Aicila: It is, of course. Yeah. It takes all of the human bias that we have and it formalizes it.
Daniel: Exactly. So it could be, for example, my favorite color is purple.
Aicila: Mm-hmm.
Daniel: be like, my favorite color is blue
Aicila: Right?
Daniel: the A, AI that I develop,
Aicila: Mm-hmm.
Daniel: the best color. If you're ever
Aicila: Right.
Daniel: ask how to develop a website, we'll use purple all the time as your color, for example.
That's just a
Aicila: Yeah.
Daniel: but yeah.
Aicila: No, it's a great, that's a [00:04:00] great way to make it concrete. There's a lot of conceptualization and scare mongering around AI. I think of it like a calculator. You know, if you have a calculator, you can do certain math more effectively than you might be able to do on your own, but you still have to understand what numbers to put in and also what numbers to expect, because sometimes you make a mistake and if you have some sense of what's gonna come out of it, then you're like, oh, wait a minute.
This doesn't look right. So it can be a helpful tool, but it's not necessarily replacement for understanding the process.
Daniel: Oh, I agree because, um, I have experience in auditing data
Aicila: Mm-hmm.
Daniel: to train, uh, AI models
Aicila: Oh, okay.
Daniel: If you don't give it the right information or synonyms, for example. For example, you say and it might just mean for funding. So a company gets some money, but it could be mistaken to also mean transactions as in a company has been acquired. So you have to train it. So in detail, [00:05:00] as
Aicila: Yeah.
Daniel: to me like I'm a 5-year-old.
Aicila: Mm-hmm.
Daniel: It's plain and simple, but you have to really think of it that way.
Aicila: Yeah.
Daniel: you have to analyze the results and stuff. So think a lot of times people want, or users of AI tools don't understand that you have to be so specific to the point that it understands because it's not, won't understand maybe some jargon or expressions that we use in every day and be like, how can I not understand it? Well, it's not human
Aicila: Right. Mm-hmm. Yeah, it doesn't have enough, uh, context.
Daniel: Yep.
Aicila: So there's a couple topics that I don't know if one of them is more interesting to you, that, that were suggested rethinking risk. What startups must prove to Dec VC decision makers or evaluating founders
Daniel: Sure.
Aicila: beyond the pitch to human signals. I, I think folks that are listening might appreciate understanding if they [00:06:00] are in that place of trying to expand and they need to, uh, take that step towards outside capital.
Well, one of, I think either of those would be useful, so whichever one's more interesting to you to talk about.
Daniel: Uh, we could talk about, uh, risk in
Aicila: Okay.
Daniel: of for investors and for also startups
Aicila: Okay.
Daniel: of times founders and startups don't understand the risk they're going with when they get investment from a company.
Aicila: Right.
Daniel: Would you
Aicila: actually a really good point. Like I feel like there it is a, it's a mixed bag and I've been reading it. I don't know if it's something you wanna touch on about private equity here in the US and the major issues that's been for the business industry. I would love to hear your thoughts on that.
Daniel: sure. Um,
Aicila: I.
Daniel: with the risk for VC startups and then I'll discuss private equity, if that
Aicila: That sounds great.
Daniel: So say what's a risk for vc? I think a lot, sometimes entrepreneurs and founders, they don't understand a venture capital fund obligated to its shareholders, and its shareholders can be endowments from [00:07:00] universities such as University of Michigan, brown University, Columbia, and et cetera, and pension funds.
There's a lot of time pension funds invest in these venture capital firms that in some ways you as an individual who's paying money into their retirement fund. And subsequently a shareholder in subs that people don't, under, don't realize they could be a shareholder in, let's just say in Meta or Apple, I'm saying like the big late stage.
Aicila: Yeah.
Daniel: one thing I see with venture capital firms, are always looking for a return on their investments. And usually they're aiming for three x, what three x means is 300% of a return that they get from the investment. So if they invest 100. Dollars, they wanna get 300 back.
Aicila: Mm-hmm.
Daniel: So a lot of times investors are thinking, what is my return?
And a lot of them are hands-on. They care about what the idea is. But startups have to understand [00:08:00] you could be as passionate and as possible, but if you do not have a product or service that can, let's just say change or innovate the market, or that's gonna make a good return. It's
Aicila: Yeah.
Daniel: passed by.
And venture capital funds, based on my experience working with them, tend to work with that they want to work with. a human they,
Aicila: Hmm.
Daniel: they believe their story. And I remember this one vc, uh, founder said. I'm curious about the general idea. If it's from a personal experience, I know they're gonna be passionate about it.
They're gonna be able to deal with the volatility of being an entrepreneur or a startup. 'cause it's
Aicila: Mm-hmm.
Daniel: great roses. You
Aicila: It's really not. It's really not. Yeah.
Daniel: and in relation to startups, [00:09:00] what risk they're dealing with when going with venture capital. funding. They have to look at this more like a bank loan.
Aicila: Hmm.
Daniel: This is not a grant. This is not even grants. You have to have standards and requirements to show that you are doing something with your company. But with startups, they have to understand if I'm getting venture capital funding, what are their expectations? For example, are they preferred shareholders? So preferred shareholders, usually the case that they have board seat. They can vote about things and sometimes they can also change. And what I mean change, kick out the CEO if they have certain voting rights.
Aicila: Mm.
Daniel: And lastly, if a company is not successful and they have to liquidate, can get their money first.
Not the company, not the employees, the investor, then the employees and et cetera.
Aicila: Mm-hmm.
Daniel: [00:10:00] when dealing with venture capital funds. Are they gonna help them grow or are they just gonna help them with the monies? If they're gonna help 'em with the monies, it might be a good, idea to go with a bank then. Then you know what their interest is right away. 'cause a
Aicila: Right.
Daniel: I see with entrepreneurs founders, they're like, okay, we want you to help us break into new markets. For example, if they're a European startup, they want to enter the North American markets. So they go for American investor, they wanna be introduced to. Companies in San Francisco, New York, Miami, Austin, et cetera. And also are curious about the experience expertise if they're dealing with healthcare. What experience does this venture capital fund have with healthcare companies?
Aicila: Hmm.
Daniel: breaking to the new market. You have to deal with the government, you have to deal with a lot of requirements, and FDA. So those are a lot [00:11:00] of, uh, things that entrepreneurs and founders have to think about for their startup. How are they gonna help the, are they gonna get the right investor? And a lot of times, founders and startups management do not understand that VCs want to reduce cost expenses, so they
Aicila: Right.
Daniel: Yeah, that's great. You wanna spend this much on a, let's just say it's tech, an IT engineer. How about you reduce the salary and give them stock ownership? And
Aicila: Mm-hmm.
Daniel: not preferable for the founders or the manager. They're like, wait, we want to sell this company in four years. We're betting on this.
We want to give part of our ownership, we're gonna give them a salary 'cause it's better for us in the long term. So there's a lot of things to think about in that way.
Aicila: Yeah. Do you think it is a good idea for companies or do you think it's just very much one, uh, dependent on the, the style of company and the, the goals they have.[00:12:00]
Daniel: In my opinion,
Aicila: Mm-hmm.
Daniel: a new market and I can have a VC help me get there and I know that I have a product that or service gonna make a bang as to say or make noise. I think it's worth it,
Aicila: Okay.
Daniel: it depends on the VC and depends you are willing Because sometimes founders want to have 99% ownership at the end of exit or whatever, and
Aicila: Right.
Daniel: You can't, uh, have uh, everything what you want. You have to negotiate. it
Aicila: Mm-hmm.
Daniel: the founders and the management team want long term. Are they gonna think about? The team are, or they're more interested in just in themselves.
Aicila: Right. And how does private equity fit into that from your perspective?
Daniel: So private equity is very late stage. So that's usually companies that are profitable or in some cases have high revenues [00:13:00] and they're not really doing good 'cause they're having losses. It could, and we see, let's just say for example, manufacturing.
Aicila: Mm-hmm.
Daniel: manufacturing for example. We've seen how it's changed in the last 30 years.
Aicila: Mm-hmm.
Daniel: A lot of it's being, uh, a lot of these manufacturing jobs are shipped to, uh, east, Southeast Asia and we see what's going on with China, India, and also Africa. Private equity, usually they come in, they want to clean up the expenses and a lot of times that results in cuts in terms of salaries or firing employees or shipping jobs to say. just say not as prosperous countries. If they're dealing with America, they're gonna ship the jobs maybe in Central America, such as Guatemala, or they're gonna go to Africa and Southeast Asia or Latin America, and they need to make a return. And sometimes it can result in bigger issues if it's, uh, companies that are [00:14:00] public in the stock market. So they're more late stage and it's more. I would say it is a bigger effect on the global economy. A lot of times
Aicila: It seems really destructive, honestly, from what I've been reading, that there's a lot of the private equity a, a model has some, has some weird loopholes in it that can be very harmful actually to the business.
Daniel: I think it sometimes depends
Aicila: Yeah.
Daniel: if a, how can I say? an entrepreneur, a. I'm an entrepreneur. We love our companies.
Aicila: Mm.
Daniel: child. It's like we think about it
Aicila: It's facts. Yes.
Daniel: who's an entrepreneur, you can have coffee with your friend. You can watch a TV show in the back hand. You're like, Hmm, I gotta do this, this, this, this, this.
We're kind
Aicila: It's like you're right there.
Daniel: Exactly, exactly. And I think sometimes management [00:15:00] teams or CEOs get too passionate. About their company and they haven't innovate with times. let's just
Aicila: Right.
Daniel: the internet. A lot of companies did not believe in the internet. They believed in the Yellow Pages flyers. I'm talking a bit back in the nineties 'cause I'm an eighties child.
So I remember those days.
Aicila: Mm-hmm.
Daniel: then you see now with AI and stuff, it's becoming more and more into, uh, let's just say the everyday lives of companies and how they
Aicila: Yeah.
Daniel: And sometimes companies need to innovate to survive.
Aicila: Mm-hmm.
Daniel: And I think we've seen that with a lot of companies. Look at Kodak, it was so big back in the day,
Aicila: Yeah.
Daniel: innovate itself, for example. So sometimes private equity companies can be good 'cause it can help the late stage company to survive or continue growth if possible. But sometimes it could be, like you said, it can be really bad 'cause a lot of people lose jobs and. I think sometimes people don't [00:16:00] understand if a person lose a job, it's a, let's just say a dominant effect.
'cause there's several other individuals affected if they're a big family and et cetera.
Aicila: Yeah. Well, and the, the thing, the book I was reading was talking about this loophole where they, they will take a loan out. Purchase the company and take a loan out in the company's name to pay for the purchase.
Daniel: Yeah,
Aicila: And then that company is responsible to pay that debt. And even if they were in a, you know, po, like a positive position, and they had cash that they could use to invest in innovating or updating or whatever, to, to be more relevant to the current market.
Either way, there's no risk really for the private equity. They, they're gonna make their money back. Most of the, like, because of the way it's set up. To me that feels like, again, in, in a certain way, the, the whole, the whole point, right? Like of the, the interest in all of those things is there's a little bit of risk.
You take on some risk and then there's some reward. That's what investment has in it, and they've managed to, it seems like they've managed to, [00:17:00] uh, control the risk to make it very little and put it all actually on the company they buy. So, I mean. Not a finance expert. So, but I just reading about it, I'm like, Hmm, this seems like it's got some, because then we don't have the company.
It's like, if you care about business, then you care about, you know, that like the, the amount of limitation we have now, like everything comes through Amazon. There's not really competition. If you really believe in a free market, then you also need to have the ability for competition to thrive. And it seems like right now we're in a space where it's harder and harder for that to happen.
Daniel: I for private equity funds, they're looking to minimize their risk like every
Aicila: Yeah.
Daniel: and
Aicila: Yep.
Daniel: I think a lot of times people need to understand it's a business. Money's the end game
Aicila: Yep. Mm-hmm.
Daniel: You can be having the best idea to be like, Hey, I want to share some [00:18:00] of my profits for charitable donations or for some, uh, reliefs or whatever throughout the world or, and et cetera. Private equity funds wanna return on their investment 'cause they have shareholders.
Aicila: Mm-hmm.
Daniel: It's just like you see a lot of public companies. Why do you think they're so concerned about quarterly earnings?
Aicila: Yeah,
Daniel: That's
Aicila: it's the dividends.
Daniel: growth, growth, dividends. Exactly. And it's, how can I say it is war in a way,
Aicila: Mm-hmm.
Daniel: it's not with guns and weapons, it's with, uh, money.
And sometimes private equity funds can be brutal, but sometimes they can be great. It all depends and I think. In a lot of ways we've seen so much growth. It somewhat seems unrealistic, and some will say, are we in the AI [00:19:00] bubble? Just like we're in the internet bubble. You see with these companies, stock market prices going up crazy, and I think at the end of the day it goes back to basic mathematics or accounting.
Debit
Aicila: Mm-hmm.
Daniel: Cash is kink as they
Aicila: Yeah.
Daniel: and if a company isn't profitable. Okay. You see some companies, they have zero revenue, but they have, they're valued at 300 million based on future expectations. What if they don't reach it? Then the law of people are gonna lose their money. And a lot of private equity funds, they also invest in VC funds. So it's like a circle. It's a domino.
Aicila: Yeah. What do you see as unusual about what you do or how you do it?
Daniel: What do you mean by unusual?
Aicila: Uh, well, the, how do you, what is the approach that you take that's distinct to your company or your work?
Daniel: In terms of how I work with clients or
Aicila: Yeah. [00:20:00] Or yeah,
Daniel: I'll
Aicila: either one.
Daniel: do my work and
Aicila: Mm-hmm.
Daniel: deal with clients. With clients. I don't take too many clients at once. 'cause I think. They wanna be treated as they're special.
Aicila: Yeah.
Daniel: So I'm the type of person, if you message me and stuff, I try to get back as soon as possible.
I usually say, I'll get back to you. If I'm not traveling, dealing with a personal like issue, or I'm not with my kids or I'm sleeping, then I'll respond within
Aicila: Right.
Daniel: time. And I think responsiveness is really key to professionalism
Aicila: Hmm.
Daniel: in terms of how I deliver my services. I customize it to how they want it. won't be like, oh, here's a template work. You get this? I just fill in the information, boom. I've delivered services, research and analysis, and emails and text messages and voice notes
Aicila: Yeah.
Daniel: presentations. So I really customize it how they want it,
Aicila: Mm-hmm.
Daniel: because I think live in the world today that people want what they [00:21:00] want.
Hence just look at, for example, I'm gonna take a off topic television.
Aicila: Yeah.
Daniel: No one can deal with commercials anymore,
Aicila: Yeah.
Daniel: they see, that's why they get Netflix. That's why they get these streaming services. And I think in general, humans have a lack of patience compared to the past.
Aicila: Mm-hmm.
Daniel: see. this ASAP and in, in terms of how I deliver my, uh, services.
On top of that, am, I would say that we are not sensitive to criticism. I've had clients that are like, Daniel, this is great what your team has done, but I want, this is what, okay, we'll get back to you as soon as possible. It's okay. We get to this. No sensitivity, because they're like, okay, they're not saying they can deal with Chrism.
They're always willing to deliver what we want.
Aicila: Yeah, that makes sense. What does success look like for you?
Daniel: That's a great question. In my opinion. think if someone's successful, they should not be taking, oh, I want that [00:22:00] type of person's lifestyle. have to be content with what you have and grateful
Aicila: Yeah.
Daniel: I think a lot of time people do not what they have. Meanwhile, there is billions of people out there that'll want that lifestyle in a second.
Aicila: Mm-hmm.
Daniel: And I think you have to, you grateful for the good things and sometimes when you deal with tough as we all have, you can either grow from it and learn from it, or you can help allow it to damage you. I think if it's not health or death, there's still a possibility that you can grow from a situation.
Aicila: Yeah.
Daniel: Obviously
Aicila: It's,
Daniel: circumstances,
Aicila: mm-hmm.
Daniel: that's my opinion based success.
Aicila: I, I'm right there with you. What advice would you give your 18-year-old self?
Daniel: Well, my 18-year-old self, Daniel in university, um. I would say your best so you don't have any regrets.[00:23:00]
Aicila: Hmm.
Daniel: try your best, even if you like, even if you get a in a D in a class or you fail at something, at least you can't say what if.
Aicila: Right to give it your all. Is there something you're excited about in your business?
Daniel: I think that despite what's going on with ai, and I see it from my perspective, that we can still use it for good. It's
Aicila: Mm.
Daniel: be like the term the movie Terminator or I wrote. We can still prevent it, but.
Aicila: Probably, yeah, we get some time.
Daniel: Yeah, we still got a few, maybe a decade, um, I'm excited to see how there's pos, there's gonna be new jobs coming in.
'cause I see
Aicila: Mm-hmm.
Daniel: my industry has changed quite a bit. We see with, uh, market research, which is in investment research. It's really changed, hence with perplexity [00:24:00] or chat, GBT, how it's really changed and, but it also makes you want to use your brain more. To be like, what's the takeaway of all this
Aicila: Mm-hmm.
Daniel: 'cause there's so much data, information that, yeah, a lot of things are gonna change, but it'll be a lot more efficient to get stuff done,
Aicila: No, I think, I mean, it def there's a lot of possibility and I, I agree. And, and there's, we have influence. We just have to use it.
Daniel: fill in.
Aicila: Uh, for folks that are listening, how do they learn more? Follow you, get in touch.
Daniel: Oh, perfect. Um, they can, uh, check up my website at www.danieldanielnikic.com.
Aicila: Mm-hmm.
Daniel: uh, you can also contact me on LinkedIn. I have a pretty unique name, so it's not hard to find me.
Aicila: And I'll post that in the show notes. thank you so much for joining me today. I really appreciate you taking the time to talk about what you're up to.
Daniel: Well, thanks for having me. It's [00:25:00] been a pleasure.
next week, discover why genuine donor relationships, not just quick wins, are the real secret to transformational fundraising with my guest, Jeff rif.
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It's about standing out. See you next time. Stay curious, stay innovative, and always keep it unusual.
