SPEAKER_03
As I like to say I've lost more money than most people have ever made
SPEAKER_02
I'm such a good investor that I've lost more money than you can dream of making
SPEAKER_01
What's going on in New York headed back to Austin tomorrow, but I'm good. How are you? I'm doing great
SPEAKER_03
I'm stationary where I was am and not moving anywhere
SPEAKER_01
What did you say you tweeted out you said I'll be in LA who's up or what did you say I said knock knock who's there? Knock knock who's there? You also said you're looking for a cold plunge that you can buy That doesn't require you to post on Instagram. Yeah, I can't tell I can't tell if you're making fun of me or if you actually want a plunge do you
SPEAKER_03
Small part of me that wants to plunge, but I know that like I just feel like it's gonna be like maintenance or something for me. That's I'm not really that interested in that but I Thought it was funny. I was like, you know Basically making fun of you saw Hill and the like everybody everybody who has a cold plunge It's like, you know what? This is actually a recording studio that I'm going to use every day every day.
I do this I'm gonna post every day about this. It's like It's like yeah brushing your teeth man It's just part of my routine. I just do it and then when I do it.
I want to bring you all with me Just get this on my story every day
SPEAKER_01
We'll have to put an Andrew Huberman fan a vegan and like a crossfitter all in one room and see like does spontaneous combustion
SPEAKER_03
Yeah, it's like we've discovered something stronger than entropy
SPEAKER_01
Is there enough friction to create a fire there might be between who talks the most all right I've got a couple interesting topics today the biggest one and What we're gonna do right now is I want to do something that I only do privately. I'll do it publicly So this is that can go different ways, but you could critique me But basically like with some of my friends and some people in Hampton I do this thing called a portfolio review where I explain my financial portfolio And you are allowed to critique it and challenge me in order to like hopefully make me better. Okay You know what I'm saying? I know exactly what you're saying.
You don't have to keep asking. I know what you were saying You asked this question a lot to our guest I think it first started with Ryan holiday and I thought it was like just the most blunt wonderful question You go so what do you do with your money and I thought that was wonderful And so that's kind of how I like came up with the idea to do this and so I figure today We can do that. Does that sound interesting to you? Yeah, let's do it
SPEAKER_03
All right the portfolio review and I guess I think we're gonna do this like the other way I like to ask the question is if there was a pie chart, you know Roughly what percent are you putting over here? What percent are you putting over there and why and I'm not like one of those guys
SPEAKER_01
So our friend Nick Huber sent an email out the other day and he put like exact numbers of everything of his net worth And there's a bunch of people who do that. I'm not that transparent Right, I don't I don't particularly like that, but I'll be very transparent about some things
SPEAKER_03
Yeah, we're not going financially streaking here, but you know, yeah, we can go to the beach. We can yeah I'll take my shirt off
SPEAKER_01
Yeah, yeah, yeah, we're gonna go we're gonna pop the top but we're not we're keeping the bottoms on right Okay, so First let me say my strategy for this whole thing The first thing is that a lot of this is contingent on my previous strategy Which I started when I was like 21 years old was to start and sell a business by the age of 30 I thought if I did that that would give me some financial security Which was basically rooted in like being insecure about money for a very long time and wanting to have like some type of security So that's like a lot of people listening in the YouTube comments. I know they're gonna say but how did you get like blank? Well, we talked about at the time, but anyway, it was about starting and selling a company another thing Unlike you Sean and I think unlike most of our listeners I would say I am incredibly conservative And so that is not the right fit for a lot of people right the reason I'm conservative is I'm gonna break it down into four different Accounts of which my big major account. I consider that account my livable money So I don't actually draw off any of it But my game plan was to sell a business and have that big windfall if I wanted to it could just go into The stock market and the gains could pay for the rest of my life without ever having to touch the principal so that's kind of like a The strategy on that and then also as of now I currently live off of my income So we make income from this podcast from our other companies my wife works So I live off that money so I don't actually touch any of the other explain because I think without numbers
SPEAKER_03
It's hard. Let's pretend for a second that when you sold a hustle you made ten million dollars after taxes Let's just pretend that's true. Yeah, what you're saying is you put ten million dollars in Vanguard index and that's you're basically like if I need it.
That's there I'm financially independent, but you don't want to touch it and so you live you pay your bills off of things like this podcast or You know people buying your digital products or random stuff like that. That's like kind of money in money out That's your that's how you fund your lifestyle and you could do whatever you want and then you have this nest egg That's there. That's basically what you're saying was your kind of strategy from 20s was basically live cheap build a company sell it so you have that nest egg now You're like I got the nest egg and I have this income source.
That's that's pretty strong that pays for all of my lifestyle stuff
SPEAKER_01
What now? Specifically the way that I had planned on it was let's say you had ten million dollars You can put draw out three percent of that per year and basically your nut your portfolio that ten million dollars would Hypothetically and mostly realistically based off 100 years of data continue to grow each year some years It actually wouldn't some years of wood, but it would average to That each decade it would grow Yes, and that number is three percent that I hypothetically would pull out of course I don't but I could and then finally My strategy is to reduce stress and to make income from my private companies And so I am not an active investor of which we are gonna see and also this is not advice I don't know anything so don't actually do anything. I'm saying. I'm just telling you what I do.
All right
SPEAKER_03
Also, if this were advice, this is like the financial equivalent of like Try missionary, right? You're not even gonna This portfolio reviews not gonna be like Like crazy backdoor sweep. That's you know, it puts over here some calls over there Like I'm pretty sure what you're gonna say is that by the index buy some bonds And then I try to build more wealth through my private businesses. Did I already?
SPEAKER_03
Exactly let's talk about percentages what and and what index are you buying? Is it one or you buying multiple indexes? Yeah
SPEAKER_01
All right, so I'm gonna break this down into four categories category one. I'm just gonna call it the big account I'm not gonna say who I use because I don't want people looking after me or going after me the second thing So there's the big account which is the earnings from my sale There's other liquid account which I'll talk about there's non liquid stuff and there's private company stuff Okay, okay, so the big the big account I Have 79% of that in VTI So that's just a vanguard total index fund Another 15% of the pie chart is in short-term treasuries which are currently yielding I think 4.9% and I think it's like a 60-day term meaning Every 60 days as of now we're rebinding rebuying them.
They could be 90 days I forget but the short term and then 6% in a real estate fund that buys Walgreens, I think it's called like oak oak tree or I don't even know just some boring thing that like owns like Either hundreds or thousands of Walgreens buildings and wall Walgreens releases the buildings and year-to-date
SPEAKER_03
VTI up 19% One-year chart 15% five-year chart 57% that's fine. I'll take that all day
SPEAKER_01
What's VTI historically over the last 30 years? I think it's like 8% a year maybe yeah So that it's just boring stuff and then bonds Prior to like when the economy was killing it like three years ago I think bonds were like 1% now they're like 5% and so I'll take that all day And I think like a savings account like a high-yield savings account is also like 3 or 4%
SPEAKER_03
Which is where I keep cash which is basically all a way of saying wealth preservation at this point Which is not where most people are at wealth creation is right most people at wealth preservation is where you're at where you're basically like You're just trying not to lose the nest egg the big the big account let's say it's about Just keep up with inflation. Maybe beat it a little bit. Okay, if the whole market goes down, I'm diversified I will also go down but less so than somebody who was concentrated bets trying to make a bunch of money
SPEAKER_01
Yes, my opinion is that most people if they are trying to make a lot of money should try to make money through starting a company or owning equity in a company and Then as their cash flow comes in as long as they don't need that to start another business They should mostly do what I'm doing which is what I've done before I did this
SPEAKER_03
I was just in a wealth front and by the way, you said this on a different podcast I think it's worth saying so you were like I wanted to be kind of like rich by 30 ish And you're like to do that You basically have to start a business
SPEAKER_01
And not only that I think you the the likelihood of selling a business and getting there is probably higher because if you start a company At the age of 21 and you want to earn $10 million You can assume that more likely than not your first three years You're gonna make minimum wage or in my case. I made 20 grand a year I made $2,000 a month is what I paid myself in the first two years of my business So that gets you to like the age of 25, which means you have to average something like two or three million dollars a year in profit Because you got to get tax and that will accumulate to like ten million dollars
SPEAKER_03
I think that's very very challenging and I think it's a little bit about selling. Yeah, that's that's the differentiation here It's about selling versus you know cash flowing your way there
SPEAKER_01
That's my opinion Yes And the way that my like quote big account works is I keep roughly 100 to 200 thousand dollars in my checking account Any number or savings account, whatever you'll use any number above that go straight into my investment fund This big account. All right the second one. I Got a sugar mama.
Have I told you that?
SPEAKER_01
Her name's Sarah. I've been with her for nine years and she's my sugar mama my wife Actually made money before I did my wife went to pen very very smart woman went to an Ivy League school got a job at Facebook and then worked at Airbnb. She's been there for like six or seven years Airbnb with public in December.
I think of 2021 We thought that they were gonna go out of business. We didn't think Airbnb was gonna work out turns out they did awesome I think what she started working there. I think the valuation of Airbnb was 10 billion.
It could have been 18 I don't remember when I peed. I think it was a hundred billion I don't know what it is today, but it's tens of billions her stock did wonderful So we own a bunch of Airbnb stock of which we have sold none of it. What are you looking at Airbnb stock right now? 93 billion 93 billion so I think it was like eight billion during the pandemic if I remember correctly I don't remember exactly We haven't sold a lick of that the other stock of which we own is Hub spot when I sold to Hub spot I was given a bunch of stock I have not sold any of it other than the amount that I had to take out to Pay taxes and that's like a legal thing like they they automatically take that out My intention is to not sell any of that in the next five years Maybe I will maybe I won't as of now.
I don't need the money. I like both Airbnb and I like Hub spot I'm not selling any of that at the moment I also have a 401k that I've always maxed out and then I had Bitcoin that I bought in 2014 that basically it just sat there dormit forever and I don't even know what it is now, but right I have not sold any of it
SPEAKER_03
Have you ever sold Bitcoin? Yeah, so Bitcoin had a couple different points each time I sold was a poor decision I don't know if I tell you the first time I sold so I bought Bitcoin like back was like $300 or something like that That was my original original buy. I think 400 was my average It shot up to I don't know 3000 4000 at one point I go to a wedding and And my aunt I think I've told the story before my aunt who's like, you know an Indian auntie is I'm walking to a conversation. She's having with her friends and she just she literally goes.
Oh, yeah Ethereum is very good and I was like I was like my hands talking about Ethereum and saying it's very good and I was like, well, how can we say it's good? Oh Ethereum it used to be this price now. It's this place. It's very good And I was like, oh, it's good because the price is going up and I was like pretty sure there's bubbles I've read something about this.
This is I think the moment when like your Indian auntie You know on the East Coast is talking about assets like, you know Good because they go up and telling her friends they got a buy and I'm like, this is gonna be a bubble and I Was right and wrong so I I immediately go and I try to liquidate everything. I try to sell the whole thing I everything I have coinbase limits. You know, wait, was it really because of that? Literally because of that I so like that night I go try to sell everything coinbase is limiting me because you can't just sell like Lots of lots of stuff at once.
They're like, you can only sell like 15 grand at a time or something like that So I'm just trying to max it out every day and try to sell and at some point I got time to time by the fifth day or whatever I was like, okay, let me just leave whatever else is there. It's fine. It kind of wore off Bitcoin shoots up to 19,000 in like the next two months and I was like, oh my god What am I doing? I missed time the bubble and then it goes back down to like whatever 3000 I was like, I feel good now and I was like, this is stupid.
I shouldn't just feel good at bad I shouldn't try to time this basically. I'd be either believing this or I don't in the long term and I should just
SPEAKER_01
Dude, I can't believe that you let your aunt that one story suede like change your actions
SPEAKER_03
Oh, that's happened to me multiple. I told you about the Tesla one, too I basically own a ton of like the only stock I owned early on was Tesla back in Tesla was like very like kind of like a young stock it was like maybe like a two or three billion dollar evaluation maybe five and
SPEAKER_01
What's it now like 600 billion or trillion or something it went up to basically close to a trillion Now, I don't know what it's at. I can't even do that math. So what's a thousand dollars in Tesla?
SPEAKER_03
I had a very small amount of money at a college I had like made like 25k and my first job or something like that saved enough to like invest that much or 2530k or something and I did the math once. Yeah, it's at 900 billion now. So it would have been basically I remember when I had done the math It was like, oh that 25k would have been like six million dollars by now If I just held and instead I went on Reddit and there's like, I don't know if you know on Reddit There's all these like it's called like Tesla Q It's basically like a group of people who that believe that Tesla is like going to zero slash like Maybe it's like fraudulent and there's like all these people sending they say that they have fake cars, right? Like like there's Photoshop images not fake cars, but like lots of other things like that like there would be like guys We'd be like guys There's this garage in Phoenix and look at this and he would go to this garage And it was only Tesla's parked on six stories that he's walking up.
He's like they're stashing them here So that you can't tell where they're like because if they just leave them in the factory lot, it's clear They're not selling this pot piling up. He's like look at this this one has and he's like put his finger on it's got dust He's like look at this. This hasn't moved in months and I was like, he's right.
Thank you You slash three three three kitty kitty hot like you know And I was like just taking all these signals from people on Reddit that were like look at it And I think at one point they had had like 15 different CFOs and I was like that does seem fishy Why have so many CFOs come looked at the books and left in a very short period of time? that doesn't sound right and I basically took all these signals and I sold and I was like so high tripled my investment or putruple my investment I was like, yeah, I'm get out of the top boys and then You know it like hundred X since then
SPEAKER_01
Wasn't really the second time that's happened to you the first time it happened to you was with stripe when you had a job offer
SPEAKER_03
I think that's right. No, no, I blew the interview. I didn't get the offer.
I only applied to one job It was striped back in 2011 or 12. So I would have been like employee 20 at stripe Which is like a guaranteed Like if you if you stick it out and you know, you're there for four or five years or seven years And you kind of like work your way up a little bit even at a junior level entry position probably would have ended up over like a seven-year period making summer routine 10 and 20 million dollars and My mentor is the mentor of the guy who's interviewing me He that's his mentor right the mentors have like a pretty big influence if the mentor says hey, this person's amazing You're like, oh Thank you sensei like I'll listen. I He had my mentor had written a blog post saying I met this kid.
He's 21 years old He's an entrepreneur and he's got the highest like bias for action of anybody I've met in the last 10 years and I was like wow glowing five-star review basically I hand it to this guy's guys like wow if John thinks this about you Let's do the interview anyways as a formality. Yeah, we got to do it But like I'm so excited to talk and we talk and somehow I blew like a 30 30 30 point lead during the interview where I am he's like Okay, so like this is kind of like a sales position like you know, sell me a piece of software that you really like I was like I was like sell me this pen a I was like I was like so what I would do is I would basically just ask him a bunch of questions He's like no no like ring ring. Hello like just do it pretend and I was like And I just I don't know like I don't know what I said, but whatever I said at the end.
He's like, yeah, that wasn't very good Yeah, I think this is sales probably not your thing. You're probably not that good at this So, you know, maybe there's another position we could look for and I was so embarrassed at that point or whatever I was like, I just this guy basically rejected me and said maybe there's some other role for you like, you know Down in the basement. Yeah, maybe you could fold someone's laundry one of the engineers laundry I was like, I forget I'm gonna go for this other job instead in the inner the guy was like
SPEAKER_01
He was like so Sean, what do you know about stripe and like the banking system? It's Sean's like Well, I like money. I would like I would like to have some more of it
SPEAKER_03
White stripes Stripes, sorry, sorry, sorry, this is strips. Let's see Adidas look you know, you're from stripes convenience store. Love it
SPEAKER_01
That's how that interview went so that blew it you blew that one But that's okay. That's okay You let emotions sway you and I'm gonna give you a a lesson here in that I never do that So it's okay. Your weakness is my strength.
So it's good because I don't sell anything as I like to say
SPEAKER_03
I've lost more money than most people have ever made
SPEAKER_01
When we sold the HubSpot, I think the stock was 367 I think it went up to like 860 and that was it was amazing and then it went down to like 250 and I remember thinking like, oh man, is this right? Is this right? What do I do? And so like that that that definitely impacts me like I definitely want to sell
SPEAKER_03
I literally did it with the HubSpot thing. I bought HubSpot stock Right around when you when you sold and that it went up and it was like oh and everything was going up during that period of time And then when the whole market crashed, I was like, you know what? I don't really want to be in the stock market right now This isn't very fun. I don't know like there's all these war again Tesla Q There's all these warning signs about where the economy is going I think I have a much bigger edge just like in my own businesses and in private businesses Let me just get out of like public market stock picking which I'm not like I don't know if I'm very good or very bad at it But I just think generally is a bad strategy to take to take your investing and yeah Basically sold almost the exact bottom of the markets Somewhere in air traffic control, he's like the bottoms in he's out
SPEAKER_02
Most people only hit rock bottom once in their life. That's like the point of the phrase
SPEAKER_03
Somebody's asked me this day they were like they're like, oh, so what are you doing with your kind of like investments? I'm explaining what I do and they're like So what do you like, you know, what do you feel like your safety net or whatever like and I was like Safe safe like you're looking at it. He's like, what do you mean? I was like, am I still me if I'm still me? I'm safe like what do you I can lose all this who cares? I can get I can lose all of it I'd make it all back like who I have no I am the safety net I know a bond portfolio is not my safety net my 401k that's locked up till I'm 65 I don't think of that as my safety net. I am my safety net and that's I think that's an approach honestly If you're like high caliber, I see so many people that are high like really high caliber people that play it so safe with their finances, I would count you as one of these people and You never look bad But I also think you leave so much room where like you didn't need to like Have you spent a dollar? Or like have you spent more than 10% of the money from the hustle sale? No way definitely not 5% even have you even spent a dollar from that account?
SPEAKER_01
No, no, I've never pulled money out of my big account The most expensive thing I bought was a hundred thousand dollar car of which I think you bought three like last month You've got three all white G-waggits, that's all I'll say so so the thing you you know
SPEAKER_03
This is one way I think about it like you worked for ten years every day to build this company and you sold it you achieved the thing you exactly wanted and Not a dollar has moved in like two years three years or you haven't like moved a dollar from it in a way You bought you spent ten years to save up for this power tool and then you just leave it in the case and And I don't know if like I'm not saying that my way is right, but I also know that for me I Philosophy is money is a tool to be used to enhance your life and if you're not really using it And then you work hard to like go get more money. It's like it doesn't really all compute for me What is the way you think about that to like make that feel right?
SPEAKER_01
I think that's an incredibly fair criticism and my joke is when Warren Buffett talks about the long-term view And I'm like dude you're fucking 95. There is no long-term view like there that doesn't exist Right and so it to criticize myself. I am horrible at spending money room eat safety who we have in the pod He does a really good job of like saying like look you could earn income and you should be good at that You also have to get good at spending.
I'm quite bad at spending. I think it's just rooted in emotional Instability and being insane. I think that these are just like personality defects and oftentimes what makes you good at saving Makes you bad at spending and I think that it's like a therapist issue that you need to work out and so I think that's Incredibly fair criticism.
I think the truth is half is it's not quite halfway in the middle I think I should of what you believe what I believe I think it's more like I should loosen up a bit, right? But yeah, that's it I think typically what I've seen is people who earn a lump sum like a startup where they are poor and then suddenly They're not poor those people tend to be more like me where they're really tight-walled and they're frugal and they're cheap And that causes a lots of anxiety people who earn a significant amount of cashflow throughout the years and get used to it They tend to be a little bit more offensive and a little bit less conservative But I think it's rooted definitely in like childhood trauma and shit like that like just like how you're raised
SPEAKER_03
You know what I mean? Just like running out of money. I'm gonna share without sharing somebody's name Some friend of ours sent me a presentation that they did that they made kind of like about their life as part of like one of these like Pure group things Don Hampton, but a different one. So we don't we don't plug no other names of no other groups on this podcast That's right.
Thank you. I appreciate that so So I sent me this thing. I thought it was really great.
Basically. It's like, you know, here's my life story and Here's what I do with my money and I had a couple slides. I thought were really good so one was this person had sold their business for over a hundred million dollars so they have like a nine figure exit of their business and The next slide is so it's like here's the picture of me the day we sold for over a hundred million dollars Next day, it's like I bought this bike is bike.
It's this $2,000 bike. It's awesome bike Most expensive purchase most expensive item I've owned since Ten years or something like it's like whoa Until I recently bought a condo finally like last year. This was the most expensive item I owned love this bike And then I was like, okay interesting and then and then there's another slide that said top five financial mistakes That I've learned to cope with Love that title.
Oh, and there's five interesting ones about basically like sold this too early Sold this too early was gonna buy this and talk myself out of it because there was a fee associated with it I would have made like 20 million bucks on that, you know, so so I think that's just a great exercise to go on which is like You could survive a bunch of bad mistakes and if you're gonna play the game any like any good startup investor has an epic anti portfolio a bunch of businesses that they passed on that they should have invested in and That's That is part of playing the game. You can't play the you know It's like being a basketball player and you know that Michael Jordan commercial He's like I've missed three thousand game winning shots or whatever. It's like, yeah That's what happens when you're you play you're gonna miss shots and like you can't yeah
SPEAKER_01
Every everyone has like I literally know 15 people that have the same uber story Like that was like that was like the famous one for years, which is I passed on uber I passed on everyone said I passed on uber like I know a ton of people have said that I think Gary Vaynerchuk like in the beginning of his book He like gives a compliment to Travis Kalanick the father calls him out as like, you know, yeah He's like dude. I think my wife He's like I think my wife my children and Travis Kalanick meaning I was super close with them And I still passed on that and that cost me a hundred million dollars. Exactly.
I think that's like a famous story He says so yeah, everyone has that story
SPEAKER_03
Let me give you two other slides he says then it's then there's two slides called my fdp relationship with money I think I can read this. Let me see so it says I work hard to make money and I got good at it But then I hoard the money I make I put it in bank accounts. I look at it constantly and besides hoarding I know money.
I know that money is good for one other thing making more money You know like that's that's something I realized and it's like, you know I really like put a lot of my own self-value on money Here's some things that I do that are dumb about money like I feel guilty spending on myself My parents were the same way they they would spend on their kids or spend on like other things but they wouldn't spend on themselves and That's annoying. They did it and now I'm doing it. He said I bought a business that was a cash flow business And I said, okay, this is my cocaine fund all the profit from this I must spend on something he didn't stick on us.
I must spend I can't save this money didn't work still saved it Because I'm comfortable losing 500k in an investment just like that But if you said five spend 500k to improve your life and I guarantee it will improve your life. I Can't I can't do I can't get myself to do it. I'm the exact same way.
I've been looking at I should be helping
SPEAKER_01
looking at your company Well, I've been looking at your company shepherd I think it's like three thousand a month for an assistant of which I desperately need but I'm like $3,000 a month, that's but well, it's not a fee whatever the payment is
SPEAKER_03
If you hire somebody you pay 30% of their salary as a as the headhunter bounty once that's it So they'll be like three. It'll be like three grand for the year is for most people. That's like let's say an average
SPEAKER_01
But I mean I have to pay this the the the person's thing the person's salary And I'm like well, that's 36 grand a year But if you do that over five years at the rate that we're growing right now
SPEAKER_03
That's $90,000 like I'm ruining the county might really be valuable and that might be a 15 year relationship Now I'm talking about a $500,000 investment, but I could also put that in VTI And it would compound 8% and now you've talked yourself out of it
SPEAKER_01
When I was buying my wife's wedding ring, I was like, oh man, this is the most expensive thing I've ever bought that's a lot of money But I guess if we're married for 80 years because we might live to be like 110 That means that that's only $800 a year And that's okay You know what I mean? Like there's all these weird mental gymnastics that crazy people like me have to do So this guy is he an immigrant is this guy an immigrant? Yeah talking about It's 100% most immigrants that I've been around have or not most but met this it sounds like a very much an immigrant problem Right of which I'm the exact opposite of an immigrant, but that's why I did that's why I like those guys identify
SPEAKER_03
We had this this funny experience yesterday where another friend who also Oh, mega mega wealthy where we met him and we met up with this person in person They were like, you know, I really want to like shift into like family mode Like I'm ready to like meet somebody have a kid like, you know, like I want to do that part of life now And we're like that makes total sense good on you. You're you know, you did the money thing the business thing you you you Scratch that it you proved you could do it now. You're in your 30s and you're saying, you know what I'm not really I don't really have a partner.
I don't have kids. That seems fun. I'm the I do see myself as a family guy I want to do that.
So that was where we left a conversation and now My business partner Ben Ben leave you. He's like the man with like checking in on people checks in on everybody He's always providing me the stream of updates about like what people are up to and it's great And so he's like, you know that friend he's like he's like doing something new and I'm like Like not just doing one thing news. I got these like four projects.
He's cooking up and I was like, oh, that's interesting Like what happened to the whole like I want to actually focus on like like finding a partner or start a family like Whatever that is like, oh, yeah, he still wants to do that. It's like we start in four companies I mean, that doesn't seem like that's gonna be very conducive to like, you know Put your focus on something, right? And it's like, yeah, I agree and I go, how come this keeps happening like We have so many smart friends. I said There's a big difference between smart and wise and I think that's what we're seeing is basically We've a lot of smart friends that are not that wise about like decision-making.
So they're intelligent for sure But they make decisions that don't really make sense if you zoomed out a little bit how old's this person I don't know like my mid 30s or something like that. I think some of that will come with age
SPEAKER_01
I think that we're in a weird circle of which many of the listeners Listening to this they have a higher income than most people their age And I think that like sometimes maybe your earning power is ahead of your brain power or wisdom power
SPEAKER_03
Do you know what I mean? That's what I'm saying like I'm not telling you you you gotta go Get married and have kids But if you told me you wanted to get married to have kids and then instead you're spending all your time Doing these other things that are gonna completely make you busy and if I asked you why didn't you why hasn't this happened already? It's like, oh, I was so heads down in my company. It's like cool So why are you getting heads down in four companies now? That doesn't make sense either and I text a Ben I go Man, we're you know, I'm guilty of this in other areas of my life, right? Yeah, because again, if you spot it you got it. So anytime I notice something other people I'm like where in my life do I make the same stupid mistake and I was like, oh, it'd be like Like yesterday I canceled.
I do something I'm very rarely do I almost never do this I canceled my workout because I was like had two doctors appointments And I was like if I if I do this work out in the middle of the day Then I'm just not gonna get any work done today canceled my workout was like But my number one goal right now in life is to get fit. I would get more value out of becoming more fit than making another dollar
SPEAKER_01
You have 54 days left. I think right. Oh, yeah Monday
SPEAKER_03
No, I'm on 49 at 49 days left. Yep. Yeah 49 days left to get abs I'll meet weeks away from being that guy. So So but I guess like the point is that's an area of my life where I make a stupid decision.
That's an unwise decision to say, hey On one day I said, this is my main goal and then three days later I'm prioritizing something else above my main goal. What that doesn't make any sense And same way this person's doing that with their relationship Their main goal is to get married and have kids But they prioritize a bunch of other stuff and I was like that's not intelligence. That's wisdom Like that's basically having good judgment And I realized that like wisdom or good judgment is the thing that's most short in supply and the most valuable Because it's like a lever Because it's like a lever you don't have to be that hardworking or that smart If you have great judgment if you pick the right things to focus on pick the right people to work with Pick the right place to live.
You don't have to Be like 9000 IQ. You don't have to know everything about everything. You don't have to be the hardest worker But if you have poor judgment No amount of hard work or like intelligence really saves you you kind of screw yourself And so it just really emphasized that point to me about like, you know Smart does not equal wise and the goal is wise not smart.
I think that's a good one
SPEAKER_01
I like that and it's like when you're driving and you say Everyone's such a horrible driver. It's like dude That is you too It's like there's like some weird emotion and logic that don't make sense there and then my final accounts of which You can these last two you're gonna have a lot of opinions on The last one or the second to last one is my non liquid stuff of which it's roughly 3.8 million dollars in real estate of which I have a mortgage on My house.
I think my house was nine hundred and fifty thousand dollars that I bought I have a mortgage of like five hundred and fifty dollars left. I own a ranch I own some vacant lots in austin and i'm a small owner in some storage deals a brooklyn building and One or two small things and the other non liquid stuff is angel investing now. Here's what I do and you tell me if i'm wrong I reduced I value it at So the principal sum that I put in Plus I even put a large Discount on that of which it's now that would be around five hundred thousand dollars of startup investments The way that I see that is I've done roughly 50.
I think 40 will probably not work 10 will work of which three might pay back everything plus a little bit and I've reduced the principal by A significant amount just in assuming future net worth and anything above that whatever maybe it will work
SPEAKER_03
What do you think about that? Yeah, I think basically startup investing is a So it's so long time horizon right like you have to Assume that these are going to take seven to ten years before they pay out. So even if they are worth x They're not really worth x to you yet Uh, they're these little eggs that are that are you know going to be hatching and so I'm with you basically when I calculate I never calculate net worth because I think that's Kind of useless because it takes into account illiquid things that are going to either like go to zero or go way up in value Like my own businesses are going to either go to zero or go way up in value most likely And they're illiquid. So what does it matter? I can't do anything with them right now anyhow So I I basically only calculate liquid net worth when I calculate it So that doesn't include any my own businesses and I also don't include any startup investments because it's not liquid yet That doesn't mean it's not valuable, but it's just not liquid yet So I don't I don't even apply the discount because it doesn't matter.
It's not in my calculation
SPEAKER_01
And that's my last category which is private companies. So those include like any course I do this podcast Speaking fees, which is like called par media. I assume that has zero equity value I live off that income and then the the next big company is Hampton as of today.
I assume that is worth zero I've taken zero salary from it I will likely take a dividend at the end of the year, but until that business hits like 40 or 50 million in revenue in my head. I assume it's worth zero I do not include any of the private businesses that I operate or own as part of my net worth So we are totally aligned on that part like by e-commerce. I don't I don't include it in the calculation Even though that business is doing great.
You you include that as zero still. Yeah. Well, I just I don't
SPEAKER_03
I don't market at zero. I just I'm not calculating total net worth. I'm only calculating liquid So if I tried to calculate total net worth, yeah, I did include it I put some conservative number there, but I don't even really bother because what's the point? In fact, I think the whole net worth thing is like, um Not a great Thing to like I kind of in search of a better metric
SPEAKER_01
Well, there's earning so income
SPEAKER_03
Do you know but then income is like only things that are you know, it's gonna buy us way too hard to get to things that are only You know generating cash flow today Um, so it's not gonna count really any like an ass. No, I mean
SPEAKER_01
Do you measure your income on a monthly basis? I measure my every month? I like do like a report right look at like all right. What was my income this month and where to come from?
SPEAKER_03
Yeah, not religiously, but it's it's mostly like steady I can I kind of know the one or two things that are variable. I'm like, oh, that's what that was at this month Plus, you know, it's it's like in the same range roughly Um, so yeah, I know I know what it's coming in every month. I know roughly what's coming out every month I don't really keep track of spending too much Um, I I'll kind of calculate spending every couple months just to be like am I did I add anything significant here?
SPEAKER_01
What's your spend right now? I think I spend maybe 25 or 30 thousand dollars a month
SPEAKER_03
Yeah, I think I'm at 30 30k a month of burn life life expenses
SPEAKER_01
And and and I feel that that's a lot that sounds like a lot to me that sounds insane to me We have a friend who told us that they are currently spending 300,000 dollars a month And I was like gasping. I was like, I can't comprehend that and then they listed it all out and I was like, yeah
SPEAKER_03
That definitely adds up, but that's just like you do need the jet. I mean, what are you gonna do without it?
SPEAKER_01
It was insane to me I've got another friend that spends 80,000 and I'm like gasping right, but I guess like everything changed when you get when you get to different levels, but So anyway, that's kind of like my portfolio. I want to say that a this isn't advice But also I basically do the most simple conservative stuff I use tiller. Have you heard of tiller? I think the website is tillerhq.
com It's like a plugin and I track this in google sheets What do you do you track anything like your account? I don't use any of these apps because I'm like
SPEAKER_03
Connecting my shit to these random startup apps like you know, I don't want to I don't want to put all my stuff into these apps So because I'm not that Concerned with it in general um You know the fewer things that you're concerned about the better In general, yes, but you just like truly like occasional checks and balances. So every three months I sit down and by hand I write down I write out Where I'm at with liquid stuff where I'm at income wise and where I'm at monthly burn wise
SPEAKER_01
Every three months I do that but there's like a there's like a logistical problem Let's say your wife has a 401k from her job from like eight years ago Yeah, and you have one from each job that you've had and you haven't combined them That's like six accounts potentially or five accounts plus a checking plus a savings plus Like let's say that you each had like a Robinhood account or an e-trade account Plus her previous before you were married. Maybe checking your savings I mean like it kind of can accumulate whether you have money or not that you have eight or ten accounts And like what happens if you die and she doesn't know about all of them or vice versa
SPEAKER_03
Do you know what I mean? Yeah, we do have that problem which is if I die I don't think she's gonna be able to like know or find or access a bunch of stuff Especially the crypto stuff how she could get to that I've told her three times I'm like you're not really paying attention enough to remember this Like nine years from now if something happens. It's like, I don't know what's gonna happen with that That I am a little bit concerned about however The rest of the stuff again, I just do it by hand and I make a day out of it I treat it like a spa day. It's like right.
I think you talked about this concept of worry time You're like I just schedule some worry time in the future. That's what I do with this I don't call it worry time because I'm not trying to feel worried during it, but same thing I just schedule a little a day every three months. I'm like, oh Today's that day.
It's basically like let's have a little financial picnic Right, let me open up some of these baskets and see what's inside And let me take stock of what's going on and I think once a quarter for me is the right amount of energy I'm trying to spend on on this and I just don't really want to think about it otherwise
SPEAKER_01
Do you know anyone who's crazier than you? I mean, I have you as being quite crazy. I've got one friend that Made like $150 million and they invested like the majority of it in only two things their next company and a house And they're like, I basically don't own any like bonds equities. I've got very little savings So I consider that person to be crazier than you right or a similar amount of crazy, but potentially at a larger scale Are all of your circle of friends like you or do many of them say the same thing like I'm saying which is like, man
SPEAKER_03
You're not conservative enough. Would you say crazy? Do you like is this kind of like Oh this bum on the street. It's a little crazy.
Was it like wow that she's hot, but she's crazy Like which one am I my hot girl crazy or my bum crazy?
SPEAKER_01
More like bed it all in on black like like tuition money or This game of roulette, right?
SPEAKER_03
I don't view myself as that crazy. I think I have a pretty healthy view on money I'll explain it to you in a few sentences number one Money is a tool to enable a better lifestyle. That's what it's for.
That's how I use it So that's the first thing that includes spending on lifestyle, but it also includes learning things by angel investments I don't view as the Absolute optimum way for me personally to make money But I love them because I learn so much about where the world is going from startups and I like being around entrepreneurs That's those are my people. So I'm using money as my tool to like make my life more like how I want So I use money as a tool that's the first thing money is a tool to enable a better lifestyle I think I abide by that law the second thing is money's no fun when you're stressed about it So there's basically like a strategy that just says I don't need to I don't need to be stressed about this. So what is my amount of money that I know is my like safety net? So like, you know Basically, can I have two to three years of expenses put away? That's just in like it could be a nothing It could just be literally sitting in a bank account doing absolutely nothing, but it's not doing nothing It's enabling me to Be free with the rest of the money because I know that if I lost everything if somehow everything went to zero I would still have three years of runway and again I'm me.
I am my own safety net if I give you give me three years of runway. I'll have it all back and more by then Like, you know, if I needed to to make money a focus and so I do that so to me. I'm like if I have three years of life expenses Put away, what am I worried about? Right? So I do that the third thing is I know if I'm in which gear am I in wealth creation mode or wealth preservation mode? So well, I view myself still as in wealth creation mode You know when I sold my company, it wasn't for as much money as you sold your company for I think if I had sold my company for as much as you did I might do things slightly differently But I Still view like most of my investments as like more on the aggressive side more concentrated bets In things that I believe in And I know I'm going to make mistakes.
I'm going to have some things that go to zero I'm going to sell some things at the wrong time I would say the only leak in my game is really just that I sell things at all I really just shouldn't sell like the the only investment mistake I've made is just selling
SPEAKER_01
Okay, but are you actually gonna you've just acknowledged and we'll go we'll we can make fun of me after this But you've acknowledged that so are you making that? Yes, exactly. So I made that but okay So you're not going to sell ever or often. I'm buying things.
I basically default to say this is
SPEAKER_03
Only you have to break glass if you're going to sell this Only you have to break glass if you're going to sell this. So basically like you have to really have a reason like either you need the money and you got to sell the thing or Something in the world has changed that caused you to like re-underwrite this now I would argue I kind of did that With the last time that I sold when basically like the post-covid Kind of like what's money printing is going on. What's going on in the economy? Everything all the stocks crash I thought okay, we've had a 13 year bull market We're probably not just going to have six months of bad times and then back to the good times again like I still kind of believe that that's true um, but I should say I wasn't in a place to re-underwrite that that those investments because I was now thinking about macro stuff where like If I'm spending 30 of my time on wikipedia, that means I'm not informed enough to be making an intelligent decision about this
SPEAKER_01
You know, I'm like I'm learning about it. But where do you get the information from do you get it from current people? So for example, I like to I prefer to get information I try to read books that are at least 30 or 40 years old and to figure out like I try to learn about stuff What's it called like the lindy effect where it's like I try to learn about stuff that as is has been repeated many many many times And isn't exactly new for and and the counter example that is when biology said all the crazy stuff about What was his argument that bitcoins going to a million because this reason dollars gonna hire that shit scares me And I'm like, I don't understand that that's so new And it legitimately scared me where I do I don't try to do that because with what I find happens with that is
SPEAKER_03
I already have an opinion in my head and then I just go find evidence of it Right. I already want to hold this stock forever. So then I go find the lindy effect that says ah Lindy effect says that this thing's it has stayed valuable because it's been valuable And I'll like cling to that evidence, but it's really just reinforcing some bias.
I already had in my head So instead what I do And you can't learn everything right like you can't just say I'm gonna go learn the world of like Finance like this is too broad. It's impossible to do. So here's what I do I go through and I say what are people that I consider to be smart saying and thinking right now and I go try to line up Contenders it's like here's theory a about where the world is going right now about what here's thesis a here's thesis b Here's thesis c and then I basically say Inherently does one of them just intuitively make more sense to me? Does it really does it resonate in my gut that one of these just feels more true than the other? Okay? Let me that's the first test second test What evidence do they have that backs up their belief? Let me now stack the evidence Okay, now which one appears to be the strongest thesis.
So instead of going and trying to learn about the topic I take people who already Like have strong opinions about this topic and I go try to find what is the spectrum of opinions about this? So on one end you have biology who's like do you actually talk to them or just consume? I'm not not always sometimes but like not always like you know like biology for example He's just very public about his thesis. So you don't need to like talk to him, right? It's like he's publishing every day What he believes to be true. He's like I moved out of America I got out of the dollar and here's the sources I'm citing that I'm tracking that basically says that the banking system is insolvent That the you know the money printing is you know is out of control inflation is higher than they are admitting And that this is what what is the result of this? It's x right.
They have Ray Dalio that says look I've been studying empires and all empires come to an end Here's the cycles that they go through and I think that America's at the tail end of the cycle So you go read that book you go watch his talks. You're like, all right, that's one another thesis you have some people who say No, you know what this is going to bounce back because Even with all the problems America has the dollar is still the best thing we got out there And that when all the all the countries in the world get weaker, they'll actually flee to the whatever this relatively strongest currency is And maybe that's the dollar and the dollars are going to drink the whole milkshake basically. It's like, all right, cool That I didn't make there's some something I forgot it's called like the the straw that drinks the shake or some shit like that people talk about it's from there
SPEAKER_01
Will be blood because if I had a long straw all the way over there, I drink your milkshake I drink it up
SPEAKER_03
so you basically line up a bunch of arguments and then you kind of like You litigate them like a lawyer. You're like, what evidence do you have that supports this? What examples do you have? And then you basically say, look, okay, even if I don't know what's totally true Can I hedge? So it's like, you know, I don't think this guy's right, but he might be and if he is what hedge would I wish I had in place? Just in case And like, you know, this is the most likely thing to be true. So then let me like allocate things that way So that's generally how I try to approach things.
I do like that. I would say I would say however, I know my my my Achilles heel in this is that I do get drawn to the to a bit of the sexy underdog opinion the conspiracy opinion the kind of like This is the con the most contrarian opinion appeals to me inside because I'm like Oh, shit There could be a mystery that we're on to that nobody else really fully like people don't believe it that makes me want to believe it more And I think that's led me to make too drastic of a decision in the past of like selling all of my Tesla or selling You know 70% of my stocks or whatever like, you know, it doesn't have to be that dramatic Like I should just put into place smaller hedges in those and track them and be like, cool If that's true Then six months from now, I might be seeing more of this. Let me check in at that time and see if the signals have grown stronger or faded
SPEAKER_01
right now you're in a little bit in advice giving mode because I'm asking you questions But to swap it Who do you look up to where you're like I need to be more like them when it comes to? Personal finance
SPEAKER_03
I wouldn't say there's somebody on the personal finance like managing your own money But there are a lot of people that I look up to or or find I talked to to get ideas on What game are they playing to generate more money? So I don't I don't really seek or I'm not that interested frankly and like Well, who are those people?
SPEAKER_01
You obviously like Andrew our friend Andrew Wilkinson tiny tiny.com. He took the company public so you can actually go and see the numbers So you like Andrew. Yeah, I like Andrew like Xavier.
I like Xavier. Yes side bulky. I think had really
SPEAKER_03
Had really interesting things to say about what he does like give you just a funny example So side by the way, he owns this thing called
SPEAKER_01
Wp well, it's called awesome corp. He started as a blog called WP beginner Which was a blog on how to use WordPress now. He owns Tons of WordPress plugins.
I don't know how big it is, but I bet it's worth half a billion dollars of which I bet he owns Most of it and it probably does many many many tens of millions in revenue and probably Tens of millions of profit, right? Yes, and yes as in direction. Yes. I don't know the exact numbers
SPEAKER_03
But he basically has a business. That's amazing. That's a monopoly it prints cash and then he does interesting things with this cash Like he owns like I don't know 40 gas stations or some shit like that.
It's like, why do you own gas stations, dude? Is that a good idea bad idea? Does that take up a bunch of time or not? He's like, no, these are triple net leases I just own the buildings that other people operate in and they pay for all the maintenance So I was like, oh, okay interesting. So I did a call with him once and he's like my mentor taught me one thing which was Okay, you want to you don't spend it's kind of like I don't know the math. I'm not gonna say a math term even though I don't know math He's like you don't spend like the first derivative money.
He's like basically what most people do is the cash comes in from the business Then they spend that money on life expenses. No, no, no, you only spend the second derivative. It's like cash let's say a million dollars comes in from your business You don't get to spend that million is not spendable The million has to be invested into something and that the income from that investment That's what you get to spend you do that.
You'll never grow broke And I was like, oh, that's interesting. He's like, yeah, so like I wanted to have a kid before we had a kid I bought a gas station gas station makes six grand a month That pays for this kid And that's how he was born you work now. I was like, you know, I'm not gonna spend that much money on that And that's how he was born you work now.
I was like interesting again Decese line it up say does that does that seem like a way of life? I'd like to do maybe maybe not but like I want I find it interesting because he says different things than most people He does different things than most people and how he runs his life and how he burns his businesses and what he does with the money Um, you know, he was the one who was like, you know what? I love buying businesses. He's like, but there's another strategy I do where I buy These are 30 to 40 percent minority stakes and businesses that I can help in these two specific ways And they're they're gonna keep running it. So they get a little liquidity They get to retain control and I'm gonna help them break through the plateau to get to the next level He's like, I love doing that.
I look for those deals. And so When I invested in shepherd, it was exactly it was I exactly that mindset I was like, what's a great business that I already believe in and I'm a customer of a customer of That I can buy a minority stake. Let them keep running it but then help them get to the next level by doing these two things and
SPEAKER_01
Has your contribution to that already do you think that that your contribution has paid dividends in their business yet?
SPEAKER_03
Yeah, of course. Yeah, we're last two months have been the highest two months of the business and the history of the business So it's great. And for me, that's great too, right? Like I'm already I'm already paid back.
I don't know 33 percent of my money or something like that on on that investment So like, you know, wow that thing's gonna, you know In terms of oh, could I put my money in the stock market trying to get 8%? Or this thing's clearly this thing's gonna do 200 a year. Basically, I don't know unless something bad happens So that's like, you know, a great use of Okay, yes, I maybe I sold my whatever amazon stock or whatever stock hub spot stock, whatever it is And I missed the kind of like a little bit of the bounce back But I put that money to work in a place where I felt like I had a little more control and and could see a path to a much greater return Um with with more risk, of course
SPEAKER_01
This episode is like the personal finance episode. I'm very curious to see if you listeners actually enjoy this stuff Next time we got to get back to like the business building stuff because I think that that is interesting to more people And it's also interesting to me and you but I'm very curious to see if this is useful for people All right, everyone, that's the end of my first million. However, I've got good news You see if you liked this episode, we actually have another podcast the hustle is another podcast It's called the hustle daily show it's a daily podcast that has everything you need to know about business and tech in only a few minutes It's awesome.
Our best writers like Zach Crockett are behind it. It's incredibly fascinating. I listen to it daily So check it out the hustle daily show