Mike “Rooster” McConaughey is not your typical investor.
I first interviewed McConaughey last year ahead of the new season of his Shark Tank-style show, West Texas Investors Club. This year, I met him in person. During our interview, McConaughey cracked open a beer at Fortune’s office and chewed on a cigar. Why? Because this no-nonsense investor believes that beer goes with business.
Rooster is the older brother of actor Matthew McConaughey, and he made his money working in the oil business in Texas. Now, he and his business partner Wayne “Butch” Gilliam have a new show, Rooster & Butch, which premieres Jan. 10 at 10 p.m ET/PT. In the debut season, the duo puts entrepreneurs through a series of trials before they decide to invest in their companies.
McConaughey and Gilliam sat down with Fortune to discuss investment strategies, due diligence, and even Bitcoin.
This Q&A has been edited for length and clarity.
FORTUNE: Rooster, you made your first million at age 30 working in the oil pipe business. Butch, you sold your machine business in 2006 for more than $120 million. Tell me about your career trajectories.
McConaughey: My dad was one of those people that got me working as soon as I could walk. I ended up in sales and got in with the oil field. I had a pretty good run, and not much longer after that, I went broke. The whole industry was completely devastated. The banks went under. So I started all over, got rid of all my nice stuff, and pecked at it until I got it back. I was always good at making money, I was never good at hanging on to it.
Gilliam: Everybody asked me how I got started, and I always say: I got started with a broom and a shovel. I started my career by sweeping up metal shavings in a machine shop. It was just a steady progression from a broom and a shovel to machines to what the business has become today.
Give me a brief description of your investment strategy.
McConaughey: We invest in people who remind us of ourselves. We’re about common sense. In the old days, you shook hands after the negotiation. These days, a handshake doesn’t mean anything. People have become so focused on the money instead of the deal. I tell you, faith in humanity will cost you some money.
What are some of the key elements you look for in a founder or company before investing?
McConaughey: We look for integrity and for someone who’s willing to hang in there. We’re not used to getting rich overnight. We don’t know anything about that. We weren’t these fat-bellied guys who had all this money at age 30. I mean, it happened for me one time but it only lasted a day or two. I was a Donald Trump millionaire for like a day and a half. It was a slow process. We don’t have any sympathy for these guys who want to get rich quick. We didn’t make our money until we were 50 years old.
Gilliam: Another thing we look for is: Does this founder have skin in the game? Do they have some of their own money invested? That’s important. When you go ask investors for money, and you haven’t sacrificed a thing, that’s not a good sign.
In the show, you talk a lot about the importance of stress testing the person rather than their idea. What are some ways you do that?
McConaughey: It’s about creating a level playing field. Think about it. When you go in to meet with someone, and they’re sitting behind a big, fancy desk, you’re instantly intimidated. They know they got the advantage. We don’t like creating that kind of environment. We like them to be on a level playing field as us. It takes a little while to get them to that point, but we want them to crack open a beer and talk to us.
Gilliam: There’s a method to our madness. We’re not just out goofing off and just being a bunch of crazy asses. We’re trying to get to know them. If you’re in a situation where you feel intimidated, you’re not going to be completely honest. We’ve made some of the best deals sitting down with a potential customer over a cold beer after a hard day’s work.
What are some red flags you encounter when you do due diligence?
Gilliam: Just about every single one of them has an over-inflated value of their company. I mean, it’s in outer space. And that’s the first thing they run up the flagpole — how much they think they’re worth. It’s usually not even grounded in reality. If you can’t get them to come back down to earth, then we’ve got a problem.
McConaughey: And they just think — equity, equity, equity. I mean, think about that. Equity is bullshit. Think twice before you give away your whole company.
What kinds of companies do you like to invest in?
Gilliam: We kind of pick them at random. The tech space is so interesting because it’s the industry we’re seeing the most of that we know the least about.
Do you have any thoughts on cryptocurrency and the blockchain?
McConaughey: Bitcoin — I can’t figure out how to get in or get out! Do you know about it?
Bitcoin is a digital currency that…
McConaughey: It’s cyber money! I haven’t researched it much, but I can’t figure it out.
Are you in?
McConaughey: No, but a guy told me to buy it when it was at $600.
Oh, it’s at about $14,000 now.
McConaughey: Well, what backs it?
Well, nothing really. It’s worth whatever someone is willing to pay for it.
McConaughey. Nothing backs it — it’s like trading underwear. Whoever cashes in first is going to have the money. If everyone’s to cash in and you don’t get to the bank too quick, you’re gonna have nothing. I mean, we’re probably wrong on this one, but I just can’t figure it out.
