Jeff Vernon

This transcript has been edited for better readability: Henry Harrison Podcast — Entrepreneurs, Business & Finance Guest: Jeff Vernon Henry Harrison Hello Jeff, and welcome to the show. This is Entrepreneurs, Business and Finance, and we’re fortunate to have Jeff Vernon with us this morning. How are you today? Jeff Vernon I’m doing fantastic. How are you? Henry Harrison Great. Great. Jeff used to live in Dallas, and like so many good relationships, we were introduced by a mutual business colleague. Jeff has tremendous experience in oil and gas, along with some other areas we’re going to talk about today. He has become a friend. He now lives in Florida, and I actually made a point to stop and meet him there because we were introduced after he had already moved from Dallas to Florida. Jeff now works with Mineral Royalties Group, helping with our marketing and some other efforts. Since I’ve introduced you as the oil and gas expert that you are, and I know much of your career was spent in the drilling world, while Mineral Royalties Group is focused on owning properties and royalties, can you share a little about what you learned in the oil and gas drilling world and how that compares to what we’re doing at Mineral Royalties Group? Jeff Vernon Absolutely. I sold interests in joint ventures, limited partnerships, and similar investment structures. I also handled investor relations for an independent oil and gas drilling company. One thing I learned is this: if a company has to ask you for your money in order to drill wells, they’re probably not very good at it. Companies like Chesapeake and other major operators do not need our money. They do not need your money. That’s why getting paid out of the gross revenue, instead of dealing with all the expenses, is such a no-brainer. One of the things I used to hear all the time from smaller operators was that they had found something Chesapeake or Continental Resources had missed. But the reality is, those billion-dollar operators do not miss much. If they really want something, they are going to acquire it. So when a smaller group says, “We found something the big guys missed,” what that usually means is the big guys looked at it and didn’t want it. Every time I ever saw a project framed that way, there was usually a problem. That’s how good the major operators are. They choose what they want, and they leave the rest. Henry Harrison That’s a very interesting point. I do think there are some successful smaller independent operators, but it’s incredibly difficult. I’ve done that myself in a past business, and the challenges are enormous — funding, operational issues, engineering, all of it. When you combine modern shale development, where you already know the oil and gas is there, with a company that has enormous experience in geology, engineering, and geophysics, it makes all the difference in the world. Jeff Vernon It really does. Those smaller companies often have their hearts in the right place, but when you don’t have all the resources that the large operators have, the problems can really take over. If you’re a large company with billions in resources and something goes wrong, you can usually fix it very quickly. If you’re a smaller company, it often takes longer, and you may have to choose the cheaper route, which is not always the most effective route. That’s one reason mineral ownership is so attractive. With the properties at Mineral Royalties Group, those companies have already spent tens of millions of dollars drilling the wells. We already know the production is there. They would not be spending that kind of money if it weren’t. Henry Harrison I always try to work with people of good character, and my understanding is that you eventually got fed up with that side of the business because it was hard to watch people try, struggle, and often not do well. But when you learned about mineral properties — and it took a little while to see how different it was — you became excited about oil and gas again. Would you say that’s accurate? Jeff Vernon Absolutely. Being able to offer something that is a real asset, where people get paid out of the gross and don’t have operating expenses, is a completely different proposition. All we really pay is taxes. That’s incredible. And the idea that you can generate revenue for your family for generations from a single purchase — that’s amazing. It’s truly passive income. People used to call it mailbox money. Now I guess it’s more like inbox money, because you just hear the little notification when the deposit hits. You can literally make money while you’re sleeping or doing anything else in your life. Henry Harrison That’s really the fascinating part of royalties. Most people do not realize that you can buy property rights underneath the ground where a large, potentially publicly traded company is drilling, and then receive a percentage because you own that underlying property. That’s what mineral rights are, although people use different names for them. It’s not a well-known business for most people. Jeff Vernon It really isn’t, even though people have been able to buy mineral rights since around 1839. You can look at families in the Permian Basin as a good example. Back in the early oil days, when people were drilling conventional traps, some of those families made a lot of money from what were basically dirt farms. They could barely grow anything on the land, but the mineral rights turned out to be valuable. Then as those conventional resources were depleted, the checks got smaller. But once they discovered the shale formations and started producing those, many of those same families started receiving checks again — almost out of nowhere. Imagine suddenly getting royalty checks on land your family has owned for generations. It’s mind-boggling. Henry Harrison It really is. You also live in Florida, which has a large senior population because of the climate. I’m at an age now where both of my parents have passed away, and I went through both the rewarding and difficult sides of helping family deal with dementia, Alzheimer’s, and different levels of care. I know another one of your passions is helping seniors. I think people would be very interested in what you’ve learned and what you know about helping parents, aunts, uncles, or other loved ones as they age. What have you learned in that area? Jeff Vernon I actually moved to Florida because a friend of mine I had worked with for years took a job with Life Alert, and he offered me a position. I already knew a lot about Life Alert because years ago, when it first came out, I was working in the security industry. I remember the owner of the security company I worked for talking about how impressive Life Alert was. He said, “With normal security equipment, the only way to know something is wrong is to press the button and find out the hard way. But with Life Alert, if something goes wrong with the device, they call the person and say, ‘That unit isn’t working — we’re sending a new one.’” And that makes sense. If a safety device can fail without you knowing it, then it’s not really very safe. The biggest problem we run into is that people have become so cost-conscious that they assume all these emergency response systems are basically the same. They are not the same. If you actually read the paperwork that comes with many of those other devices, it often says you cannot rely on them as an emergency response device. That’s incredible when you think about it. A lot of companies in this space are really taking advantage of people. They present themselves as though they provide the same level of protection, but they don’t. Being able to get help immediately, from a fully licensed medical dispatcher, with your full medical information available anywhere you are in the United States — that’s huge. With Life Alert, you are not just a generic 911 call. If you’ve ever had to call 911, you know they usually know nothing about you. They have to figure out who you are, where you are, what medications you take, and what’s going on. Because of privacy rules, they can’t always communicate everything effectively before responders arrive. Life Alert is about protecting people and making sure they get the help they need when they need it. Independent studies have shown that Life Alert members stay out of nursing homes and assisted living facilities an average of six years longer than people who don’t have it. And that’s specific to Life Alert, which is an actual company — not just a generic type of device. A lot of people call and say, “I need to buy a Life Alert,” as though it’s a category. It isn’t. It’s a company. And some of these other companies will happily sell you their system as though it’s “Life Alert,” even though Life Alert is a registered trademark. Henry Harrison That’s incredible. I honestly thought I knew a fair amount about it, but I clearly did not know as much as I thought. Jeff Vernon Most of the other companies simply forward emergencies into 911. So they’re literally charging you to add time to your response. If you call 911 yourself from your cell phone, the average response time may be around 15 minutes. But if another company first verifies the emergency and then transfers it to 911, they have only made the process slower. That’s why they can’t really say they’ve saved lives in the same way. If you look at those companies’ websites, they tend to talk about helping you feel safe. But they usually cannot prove that they have saved lives the way Life Alert can. Life Alert saves a life from a catastrophic event every 11 minutes, and that can be documented. That’s the difference. Henry Harrison That is astounding, and also encouraging. It’s encouraging to know there are still good companies with good people making a real difference — and making a good business out of it too. That really is the American way. Jeff Vernon Absolutely. Life Alert is a family-owned business. It’s not publicly traded, so there are no stockholders pressuring people to make safety decisions based solely on cost. The equipment is manufactured right here in the United States. It’s top-of-the-line, state-of-the-art, and the most reliable equipment in the industry. Sure, a company could charge a lot less if it imported lower-quality equipment from overseas. But that’s not what Life Alert does. One of the most frustrating things about this business is the amount of misinformation that’s out there. These other companies use the same words we do, but they mean something completely different. For example, when they advertise their response time, they’re usually talking about how long it takes their monitoring station to answer the call and say, “Is there an emergency?” Life Alert may take a little longer to answer initially, but the person who answers is the one who actually handles the problem from beginning to end. They dispatch the right responders, and you’re not getting transferred around or put on hold. The other systems often just answer quickly and then transfer you. So the real question is: what are you paying for? You can call 911 for free from your cell phone. Henry Harrison When you boil it down like that, it really does seem simple. One of my business beliefs has always been that one of the most important things you can do is simplify the message down to the core point. And when you explain it that way, it becomes very clear. Thank goodness I don’t need it right now — but hearing this makes me want it. Jeff Vernon You never need it until you do. It’s like wearing a seat belt. You don’t wake up and try to predict whether today is the day you’ll need it. You just wear it every time. And when something happens, you’re glad you had it. Henry Harrison Never mind. Sign me up. I will say I’m a little envious. I grew up in Arlington, Virginia, where we used to average maybe 16 or 17 inches of snow a year. People from Buffalo or Minnesota would laugh at that, of course. Now here I am in Dallas, and it’s been below freezing. Meanwhile, you’re down there in sunny Florida. What’s the temperature today? Jeff Vernon Let me check for you. It’s 58 degrees. Henry Harrison That’s tough living right there. Jeff, it’s really good to work with you, hear what you have to say, and have your friendship. Thanks for coming on the show. I think people will find this both interesting and useful. I’ll talk to you soon. Jeff Vernon Thanks for having me. Have a great day. Henry Harrison You too. Bye.