If You Only Watch One Money Video, Make It This | Sharran Srivatsaa

When I first met Alex Herozi, he was in the process of selling his business. And so my first conversation with Alex, we talked for 4 hours and he showed me everything. 8 years later, I'm the CEO of that business. Fastest way to get in great rapport with people [music] is to give them the gift of going second and actually share on the money side because it's the most vulnerable thing and it allows you to get deeper in the conversation. >> He's a CEO and managing partner of acquisition.com alongside Alex and Leila Hermoszi. Today's guest is Shiron Shrivatza. He's going to break down the laws of money and what you need to start thinking about right now to make money easier for you. >> What were the greatest lessons you learned about teaching tennis to billionaires and celebrities? >> The amount of risk that we can take is based on how much pain we can handle as well. I think it's really sad that people are being taught that debt is bad. Everything runs on the access [music] to money overall. So the the fact that we have to go cut up our credit cards, that's like saying don't ever drive again. >> What is the money framework you wish everyone knew sooner? >> I think it's evolved over time. In my 20s, I thought it was about >> You grew up in not around the most wealth in the world, right? you grew up without uh in kind of a middle lower class environment financially and I'm curious now that you've been a part of multiple billion dollar companies were the rules of money that you learned growing up much different than they are today were there certain rules that you thought of that money is about one thing that now that you've learned it's a much different thing >> I think that's a natural evolution right because uh money is tied so much to the environment that you're in. If you take uh someone that grew up middle class versus someone that grew up wealthy, why does the wealthy person believe they're that they can achieve more >> because they just see that other people have achieved more? I think there's such a environmental effect to money overall. And I never realized that growing up. All I thought was the greatest thing would be for me to come to the US and at some point make $100,000 a year. >> My dad sold his scooter to get me a plane ticket. My parents sold everything that they had to send me to the US. And at the airport, I remember my dad telling me it's like, "Hopefully one day when you're in the States, you can make $100,000 a year." >> That was the dream. >> That was the dream. That was the That was the upper limit. That was like, "You need to hit that. >> You've made it." >> Yes. Yeah. Yeah. >> And but I also think there's some humility to that because you realize that the the goal is not that far off. You there is a line of sight to actually getting to that thing and then once you get there you see where the next mountain is. >> Uh sometimes we I have friends who have this hey I need to have a $55 million net worth before I'm 55. And I go you you have a minimum wage job. It's you're so far removed from reality that you can't even see the next step in getting there. So yes, the dichotomy was definitely there, but that was what my dad said to me before I stepped on that plane. >> What was your big belief system around money when you were growing up >> that only that rich people are evil? That uh if you had money, you probably got it by some kind of scam. Uh if your family was wealthy, then you were wealthy. everyone else could never become wealthy again. Uh if you had you may win the lottery but you should keep trying. But all of us were just destined for a work hard be mediocre life >> really. Who taught you those beliefs? >> I think it came from the general environment because that's all that's all that I saw >> really. >> And I saw my parents work so hard uh to make ends meet and we lived in a one-bedroom apartment. I remember sleeping with my parents in the same bed till I was 15 years old and I knew no different life >> and looking back that feels strange but that is the only life that you know. >> Yeah. It felt normal for you at the time. Yeah. >> And how old were you when you moved to the US? >> I was 16 when I came to the US. >> Wow. So how did your views around money change the moment you landed in the US from India? >> Tell you a crazy story. Uh, I landed in Chicago airport and I was had a ride that was supposed to pick me up and I waited in the airport. It took one hour, two hour, three hours. This was before there were cell phones and my name got called on the public address system. It says Shirant Tribots please report to a white courtesy phone. So I was like this is not fun on your first day in the US. So I go answer the phone and he says hey your ride uh his car broke down. So he wants you to take a bus >> and meet him in Molen, Illinois. >> Wow. >> I had no idea where Molen >> like an hour away. >> Yeah, >> it's kind of far. Yeah, I've been there. >> So So I I was like, "Sure." I So I grabbed my bag and I left the airport and I figured out where I needed to go. Grabbed the bus and I jumped on this bus to go to Mullen, Illinois. Well, we were It was supposed to be an hour, hour and a half away. And hour goes by, two hours go by, three hours go by. Finally, it's dark and we pull into a bus depot and I'm the only one on the bus. And the bus driver comes up to me and says, "Hey kid, where are you headed?" And I said, "Moly, Illinois." And he goes, "Well, we are in Lacrosse, Wisconsin." >> Oh, wow. >> So, I'm in a completely different state. I don't know anything about the geography of where I am. He says, "Well, if I were you, I would get in, rest for the night, and figure out what you're going to do the next day." >> Wow. >> And I didn't have a lot of money. I had $100 in my pocket, maybe some loose change, tennis rackets, and a bag, and that's it. So, I grab my stuff and jump out of the bus. And out of nowhere, this guy jump this guy with the hoodie jumps on and and pulls a knife on me. >> Wow. >> So, this is seven hours in the US. I get a knife. >> You're 16. You're alone. >> I get my knife pulled on me [snorts] and he says, "Uh, it's like, give me everything." So, I just hand him my bag and he starts to rumage through my stuff. And then he says, "You're like the worst person I ever mugged." And I go, "What do you mean? How many how many times do you do this?" Then I was afraid for my life because the last thing I wanted was to me bleed out in Lacrosse, Wisconsin. my parents not know what had happened. So, I pulled a $100 bill out of my wallet. I mean, and I said, "Hey, I have $100 and I'm trying to get to school. If I gave you this hundred, would you give me 50 back?" And he looked at me weird. And he opened up a rat his ratty wallet and he dishes me out a 20, a 20, and a five, grabs a hundred and walks away. And if you put me in that situation, he short five bucks. [laughter] If you but if you put me in that situation today, I would not have tried to negotiate with a mother. >> Take the money. >> And I think that when you're put in tough situations, you start to figure out how to negotiate your way out of things. And I think that was the big mindset, which is, wow, if that was the lowest of low I could go. And I could still find a way to have a conversation humanto human with somebody because I knew that he didn't want to hurt me in any way. I think even in the tightest of money situations or the tightest of life situations, there's probably a conversation to be had >> and that probably changed that was that was a lot that probably changed a lot of things for me. >> Interesting. So, when did your beliefs around money start to change? Like how old were you? When do you start to notice that money wasn't like the root of all evil or or people that had money were bad? When did that shift? >> When I graduated uh I graduated from college with a computer science and math degree. This was during the technology boom and I was an early engineer in a startup and uh we raised $27.5 million uh and uh the company the company got bought for $550 million and so I thought as an early employee I was supposed to get a big fat stake >> just shy of $50 million. >> Yeah. >> And this was before we had mobile phones and apps etc. So the only way you could check your balance was to go to a Bank of America ATM and hit receipt and it will tell you your balance. So, we were supposed to get our wire that day and I went and got my wire and I looked at the account and it was at a whole zero off. I was like, "This can't be right. I thought I was going to get a lot more than this and I would have made it." So, I called the CEO of the business. I said, "Could you help me understand why this is $4.97 million, not $47 million?" He says, "Well, you have something called a ratchet." And a ratchet is a massive delusion based on how this acquisition My all my rules around money changed when I realized that everything was a contract. Everything was structural. If you did not speak the language of money, you're probably not going to make a lot of it. >> And that was the big shift for me. It was not a did someone tell me something or me see the world differently. I just realized that I I got a 10x cramdown on what I was going to get and that was because of a contractual issue that I did not know how to read. And that was the entire reason why I decided to go to business school. It was entire reason why I decided to go to Wall Street. You just learn that thing because if I if I learned how the contractual aspects of money work because everything's a contract and when you learn that things get out significantly easier. >> Interesting. So, how old were you when that exit happened? >> 21. 21. It's pretty young. >> Yeah, >> man. So, from 16 to 21, five years, you were, you know, had no money. 100 bucks into, I guess, a $5 million exit for you at the time, roughly. It's pretty good still. >> Yeah. Yeah. I I got to pay off all my debt, uh, buy my grandma house, and then decide to be like, well, what am I going to do with my life? And so, I spent five years, uh, traveling the world and teaching tennis. And I got >> Were you a tennis pro or something or like on a tour or something or? >> Yeah, I played I played pro tennis before and then I did not know what I wanted to do with my life. So I was like, "Hey, I'll I'll go travel and teach tennis." And I I knew that money would last me for roughly five years. So I spent five years teaching tennis. I was in the Caribbean, Dubai, and on Maui for 5 years. And taught tennis to Richard Branson, Alan Alda, um Bill Mullen Gates, uh Michael J. Fox. It was fascinating experience. What were the greatest lessons you learned about teaching tennis to billionaires and celebrities? >> They are just like us. When you get them to doing raw things like working with their hands because on the tennis court with Richard Branson in Neker Island, I was better than him. He had paid me money to come teach him tennis. And I was going back and forth with him. I said, "I have to ask this guy some advice. I'm here. I don't want but I don't want to be that guy. How do I actually >> he's paying you to actually give him >> actually do this. And so I actually asked him a question. I said, "Hey, you know, you've run so many companies. You've done you've done so many different things. How do you make decisions?" And in Branson's own way without having a single line of advice, he tells you like four stories. I said, >> "This is so help unhelpful that you gave me all this advice in the form of stories." and net he said if you don't have a framework for making decisions you will always get left behind and that really stuck with me and so I said well I I need to come up with a framework for making decisions because you are the cumulative sum of all the decisions that you made in your life so if you don't have a framework for making the decisions you probably should come up with one so I came up with a framework which was uh understand the context isolate the issue accept the risks and map the next steps and so if to take any decisions that you have to make and say your team comes to you and you say can we do this you're like hold on back up what are we talking about understand the context >> the second isolate the issue so so you want to do blank third is okay if we did blank we probably can't do A B and C except the risks and the fourth is map the next steps which is all right so if we're going to do that we should do ABC right and so if now that's become a natural part of what I did and so even though Branson gave me those four stories that were extremely unhelpful At least it drove me down the path of saying I probably should have some kind of framework for making decisions so that I don't do dumb things. >> Right. When did So after 5 years of teaching tennis, you'd already made you know millions before then and then you were on the road kind of teaching tennis. When did you decide to get back into the business world again? >> Yeah. Um my mentor said to me, "No one is going to hire a teaching pro." So you have to use the ultimate career switcher in the world, which is going to business school. >> And so I went to business school at Vanderbilt. And uh because they had a really clear path for going from Vanderbilt to Wall Street. >> And so I got an MBA in Vanderbilt and then I was an investment banker at Goldman Sachs and a credit suite on Wall Street. The crazy story was I had 39 one-on-one interviews to get the job at Goldman. And this is not including dinners, lunches, informational interviews, right? This was 39 one-on-one interviews to get a job at Goldman. And of those the the craziest interview of those was I walk into this managing partner's office. And this was when the great financial crisis was happening. And he walks in frazzled with a briefcase and a, you know, a leather notebook. And he sits down. He's like, "You're a hot shot? I I see hot shots like you all the time." He drops a notebook. He goes, "That's my prospect list. Here, here, set me some appointments." And he pushes the book towards me and I am I have no idea what to do. So I grab the book. I look at it and it has Louis house and a phone number on it. I said, "Would you like me to call that?" He goes, "Yeah, set me an appointment." And I said, "Sir, I don't want to misrepresent you. Could you give me a script so I can actually have this conversation?" He looks at me, he smiles, he wraps up the book, >> he stands up, he shakes my hand, he says, "You'll do a great kid." And he walks out. And so I see him at the cocktail party that night and I said, "That should have gone really bad or really well. Like what happened?" He says, "I've interviewed, you know, uh, NBA grads for the last 20 years. I do the same exact routine with all of them. Only two of you in the last 20 years. I've actually had enough humility to stop and say, >> "Give me script so I can actually make the call on your behalf because you're not even allowed to make the call. You're not even licensed to call this person, but everyone wants to show off that they are brave enough, courageous, >> and he's like that taught me that you were coachable." M and that was like a I did it out of pure survival but although it came across as humility I guess. >> Wow that's cool. Um from all the things you've learned um you know on Wall Street and building businesses what are the seven laws of money that you think are the key to building wealth? >> Of all the seven laws I think that there is one single one that means so much to me and that is money loves speed but wealth loves time. Mhm. >> Uh I'll tell you a great story here in LA. I was running a real estate business not far from here in Beverly Hills and I had access to so much deal flow from all these real estate agents. These real estate agents would come across a great deal and they'd say, "Hey Sean, do you want to buy this? Hey Sean, do you want to buy that?" And I said, "If I was getting all these deals, I should just spend all my time and all my money just buying this." I didn't care about the business. I'd spend more I get more uh kind of lucrative results just buying these deals. So for five years, I just flipped homes loose. So I would buy the deals and the agents would sell them. I'd buy the deals and the agents would sell them. I did roughly 50 flips a year, a flip a week for close to three to five years. >> So you weren't you weren't >> rehabbing them or anything? >> I was rehabing them. You were? Okay. >> So buy them, rehab them, put them on the market, >> take a few months, rehab them, then put them >> put them on the market. And I did this over and over again. And >> from the outside looking in, it feels like, oh, that's a great idea. But when you have multiple going at a time, you're extremely cashstrapped. But you make the money and then you recycle it. You make the money and you recycle it. But I was making the money. Money loves speed. But at the same time, I had a friend who had bought a duplex in Silver Lake. And then the markets went up. He traded that he stayed in one unit and he rented the other unit out. Then he refied that duplex into a forplex. Then he refied the forplex into a 12plex in the same amount of time that I had been doing these deals. And at the end his net worth was five times that of mine. >> Really? >> Five times. >> Huh. >> I had made the cash, paid the taxes, but I was always cash strapped. So I felt like this money loves speed, but wealth totally lost time. I don't know if you're famili familiar with the Arnold Schwarzenegger story. So Arnold got his first uh big role, Terminator, when he was 37. >> Did he buy property in Santa Monica? Correct. >> But he was a millionaire when he was 25. He had $27,500. His real estate agent told him that if you want the staying power of being in Hollywood, we need to give you time in this business so you can find the best role. So he took his first $27,500. He bought a duplex. And that duplex grew. He got a forplex and the income from that is what allowed him to sustain and wait till he got the Terminator script and now and after that he was able to become governor and do all the other things. So, uh, people don't realize that you want to make the fast buck, you want to make the affiliate commission, you want to make the crypto deal, you want to make whatever I can do super fast, but you don't realize that like wealth loves time. >> Wow. Okay. So, that's one of your favorite laws. What are a few of the others? >> The the thing that I think about often is um when uh every money goal needs a money plan. >> Uh most people just are like, "Hey, I want to I want to buy a jet." Well, okay. If that is a money goal to actually get there, well, what is the money plan to getting there? Overall, most people don't realize that if you can just say, if this is my goal, what are the steps that I need to do to get there? And and I don't think the world teaches us that money goals are okay goals to have. >> Uh the acceptance, you wrote this in your book, the acceptance that um it's not wanting what you want. I always tell my friends, he's like, "If you want a yellow Lambo, say you want a yellow Lambo." Don't say, "I want a yellow Lambo because >> there's the because is because is irrelevant. If you want the yellow Lambo, that's for you. Go ahead and have the yellow Lambo, but if you have a money goal, what is the money plan that allows you to to get there?" I think as soon as people realize that, hey, to do this, I have this plan. It allows them to actually put that plan into place. And I think that's such a big law because otherwise you're trying to do the secret or some kind of woowoo or manifestation which is fine but it >> still need a plan right >> you still need a plan >> even manifestation needs a plan at some point. >> Yeah. So every money goal needs a money plan. >> Yeah. >> When did you learn that? Did you make a mistake that you're like oh I just had this goal but I didn't really have the plan to go with it and I lost energy money along the way. When did you learn that? My mentor of 30 years now is a real estate tycoon. Uh he'd be walking around LA and you would not know who he is. And he had made so much wealth in real estate that I one day asked him, I said, "There is no way I'm going to be able to do this. You've got to give me like some insight, some secret on how to do this." And then he said, he goes, "Hey, if you um if you don't have you got to host the meal for this to happen." And I said, "What? What do you mean if you don't have if you're not invited to the table, you have to host the meal?" I don't understand what that means. Rich people say things and you have no idea what these things mean. They're like, "Follow your passion." I'm like, "What does that mean?" Right? And then, so what? So the next day, I sent him a text message. I said, "Hey, I know you're doing these real estate flips. I know you hate doing them. I know they're so hard for you to do. what if I was able to do all the work a Toz would you be open to sharing 10% of this deal with me? >> And he was an attorney so he responded write it up. >> This is your mentor. >> My mentor. Yeah. >> And that was the first time I had a chance to actually have a have a shot at owning something in LA. I would have never been able to own something in LA to put money down and buy a $3 million house and then flip it. No. No way. And it's easy to say, "Well, Sean, that's 10%. What could that have ever done?" Well, he did 16 deals in 18 months. I got 10% of every deal for 18 months. >> And that was the money goal that I had, which was if I can't do this myself, who can I partner with to allow me to do that? And I would have never been able to create that wealth for myself at all. That was a huge switch for me. >> Really? How much did that bring you in 18 months for all those deals? >> Yeah. Um, we sold a few of those. Uh, probably one to$2 million worth in 18 months. And I still own three or four of them right now. >> Wow. >> 10 plus years later. And there were >> cash. Yeah. >> There was so much money and all and I didn't put any money down and I did it all on uh kind of sweat equity. Wrote the check to be able to do that. >> Wow. 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Every money goal needs a money plan. How do you know how to create the plan? >> Yeah, there's this big misnomer of financial freedom. uh if if you if you Google the topic financial freedom, it it goes everything from how to invest in your 401k to let's buy crypto, right? Like that the range is everywhere. >> And I asked myself this question, what is financial freedom? And I realized that it was when you have to stop trading time for money. >> There's financial freedom, which is you wake up in the morning and you say, what would I like to do today? Because there's some other source of income that is covering your monthly expenses. So, the definition I have is financial freedom is where your passive income is greater than your monthly expenses. Well, those are two really interesting definitions. Passive income and monthly expenses. Well, we know what monthly expenses are. Say we're making $10,000 a month and those are our monthly expenses. They're not changing. But what is passive income? Well, passive income is not a scam. Passive income is preunded income. Meaning, it's either you actually have to preund it with some effort or you have to preund it with some money. Effort. um I'm going to, you know, do all the work in my real estate com company's deal or I'm going to uh build a affiliate product or I'm going to be a part of a network marketing organization. I'm going to do some effort upfront so hopefully he'll pay me down the line somewhere else or I'm going to write a check on and buy a piece of real estate just like Arnold Schwarzenegger did and it's going to pay me. >> But the problem is most people don't know how to generate passive income and they don't they're like no one's going to wake up in the morning and say, "Well, I'm going to send Louis $50,000 a month." You got to do something for it. >> Right. Right. But I think America has failed the hardest working people because they have said that you only have one road to retirement and that is to put 3% in your 401k. >> And that 3% in your 401k has three people associated with it, which is you putting 3% in, which is your employer getting a deduction for for matching it in some way. And then it's Wall Street for getting all the fees for 30 years sitting in that account. >> Mhm. And I think the big question we all have to ask is for the average person working so hard, what if the 401k was not an option? How would they change and live their lives? >> If people weren't allowed to put money in their 401k, where should they be putting their money to create passive income long term? >> Right. Right. I think that if that's the question that you ask because now people are they don't have to say I'm going to wait till I'm 65 to retire. They say the definition of passive income is the financial freedom is passive income greater than monthly expenses. Let me do that today. >> And if they can do that, your entire world starts to change. >> So if you're coaching someone who's in their young 20s, what would you tell him to do? >> My son's 14. >> Okay. What do you tell him to do? Yeah. Yeah. >> And he hears me have this conversation often. He says, "Dad, I'm not going to able be able to buy a company that pays me a dividend or get gives me cash flow or u a check every month. I'm not going to be able to buy a piece of real estate yet >> because it doesn't have the money. >> Correct. >> And he says, "What do you think I should do?" So, I think whatever applies to my 14-year-old probably applies to no one else. >> And my advice to him is you still need to invest in the same masterass, which is there's what I call the golden stairways. There's only two ways in mo in the modern world where you're guaranteed to make money, and that is investing in companies, investing in real estate. Nothing else exists. >> Yeah. >> Did you know that 1% the top 1% of the world own 40% of all stocks in the world? >> Wow. >> That is insane. >> That's crazy, >> right? The the Forbes 400 is littered with people that are business and real estate tycoons. The US real estate tax code is engineered for investors and we don't think about that. We think about putting another 3% in our 401k. So I explained to my son, I said, "If the golden stairways are companies and real estate, what should you invest in?" He's like, "Compies and real estate." I said, 'Yes. Well, let's start with that. Let's start with the Vanguard ETF, VO that owns the companies, and let's start with VNQ that owns real estate. And now he gets dividends from both of those because now he knows as he puts his $50 birthday contribution or whatever in this, he actually can see it invested in the right asset classes. And if not any anything else, if he just started doing that over time, he'll start to realize that, wow, I'm still invested in this asset class, but I'm not getting the return right now. I call that a TIGA, a tiny income generating asset. >> Everybody wants the the big apartment building, but they don't realize that you can just buy VNQ and still get still be invested in North American real estate and get a piece of that >> and you don't have to manage it. You don't have to deal with credits. You don't have to deal with, you know, fixing stuff, right? It's like you're investing in a fund, >> right? that does that for you >> at least when you start and then hopefully that number grows and then he can say wait I have $100,000 in this over time now I'm going to take that and put it into a multif family syndication that makes perfect sense but he's already invested in that asset class in some way >> the the crazy story with my son um Alex Leila and I bought three apartment complexes at the end of last year and my son's listening to this story in the car while I'm driving and negotiating the loans and he says this look sounds like a great deal can I invest in I said, "Sure, but where are you going to get the money?" He says, "Well, I I'll talk to the bank." I said, "You're 14, but I appreciate the the enthusiasm." He's like, "Well, why wouldn't the bank lend me money?" I said, "Well, uh, you're under 18, but more importantly, they just don't trust you because you don't have a track record yet." He looks at me with these puppy eyes and says, "Do you trust me?" [laughter] And I said, I see where he's going with this. He says, "Oh, why would you not loan me the money?" Mhm. >> And so I said, "Well, I'll loan you a part of it." So I loaned him a part of it. He borrowed some from his life insurance policy. He conned his sister >> and saying that he would do chores for her. >> Wow. >> And and or the the responsibilities in the house and and he made his first investment by borrowing money from me and his life insurance policy and investing in the deal with us. >> That's pretty cool. >> It's amazing. But and I think that goes to the environment of he was in the car listening to me negotiating the loans talking about this. And so I think it opens up the possibilities of what is happening and what is possible in the world. I never had those growing up. I had no idea that you could do any of this. I just thought that the ultimate goal was to make $100,000 a year. >> Mhm. Do you think someone in their 20s today, if they only invest in a 401k and they make no other investments in the stock market or real estate, do you think they can become financially free? I think it's very difficult >> for two reasons. Reason number one is they are now defining financial freedom as this big nut that they are going to have at the end in when they're 65, >> 40 years, whatever. Yeah. >> Right. You have no idea what's going to happen between now and then >> or they get lucky in their their job or they launch something that makes them a lot of money maybe. Right? >> We also have no idea what the tax code is going to be back then. Then >> the question becomes is do you tax the seed or do you want to tax the harvest? And give you the craziest story. Just take no one talks about just fees, right? >> Uh easy example. If you put a million dollars into just a straight S&P 500 today and you literate for 20 years, it roughly gives you $6.6 million. Awesome. That's at a 10% return. Well, if the advisers charge a 1% fee, so cut that return down to 9%. >> Mhm. >> Guess how much is paid in fees in that period? >> Oh, I don't know. Probably a million bucks. >> A million. >> Oh my gosh. >> You're right. >> Is that right? >> A million dollars. >> Oh gosh. >> A million dollars. So if you I was a banker at Goldman Sachs. This is one of the most crucial reasons why it broke my heart because that's why I think people struggle big time. >> Ask you even crazier question. >> So how do you invest then where you minimize all those fees? Do you do it on your own? Do you find like a fund that has the minimal fees? Do you you know and especially if you know nothing about money and you're like just starting, you don't want to make money mistakes. >> Yeah. How do you invest with minimal fees? >> Before we choose to invest in something, we have to figure out what type of investor we are. >> And that allows you to make a much better decision. So, uh I believe that there are three types of investors. An active investor, uh thematic investor, and a passive investor. All right, let's define them. Who's an active investor? Someone that wakes up in the morning and actually does this for their job, right? They're active real estate. That's all they're doing. They're not doing anything else. They're actively trading. They're actively working on crypto. They're actively working on real estate. That is their job. They're active investors. And I love active investors because they know that like you know that is their work. >> Most of us are not active investors. >> Then you have thematic investors and thematic investors are essentially saying hey I believe that in the next 10 years AI is going to do great. Therefore I'm just going to make a bet on AI today. Hopefully the theme carries in the future and creates that result. I think most of us are thematic investors. I'm probably one. You're probably one. You have a bet of the future that you know that techn is probably going to be better in the next 10 years than it is today. So you're probably you're okay handling the volatility over time. And the third one I struggled a lot with which is who is a passive investor. Then I realized a passive investor is just somebody who invests in active investors. >> So you and I just say hey um there's a multif family syndication. You are going to go work on that. >> They're doing all the work. Exactly. >> Investing. I think the issue becomes >> there's still a fee to that. >> Correct. The issue become >> there's a management fee. There's a this fee. There's a >> Yeah. But that's okay because they are actively managing the asset. The issue becomes when if it's passive for you and it's passive for John, it's passive for Lisa, it's passive for J, it's passive for everybody along the way who's actually doing the active work. So I always say if it's passive for you, it has to be active for some for someone else. The issue I have with all of this, especially the fees, is imagine you were hiring a CFO for your company. Would you hire a CFO who was a fractional CFO that was also a CFO for 300 other companies? >> Probably not. I mean, it's >> spread thin. Yeah. Yeah. >> But we do that with our financial adviserss. >> Mhm. >> He's a CFO for our family, >> right? >> We have no problem working our tail off in our day-to-day work. >> And then we say, "Hey, Mr. Financial Adviser, >> you are show me your track record of work with all these other people. How many families do you have? 300. Sure, I'll be one out of 300 of your attention. Manage my is insane from a financial literary p literacy perspective. We will go to seminars. We will do roleplay. We will hire coaches to get better at our active income. But we will take our entire nest egg and give it to somebody whose core attention is not on our >> nest egg. So what's the solution? >> The solution is first is to define financial freedom just so we feel good about this. Second is I think our financial literacy needs to go up. There is no way you unless people start to read your book, watch the podcast, there's no way that people actually realize that they have to take control over their finances. You don't need to know everything, but you at least need to know enough to have a legitimate conversation with somebody overall. There's a great Charlie Mer quote where he says it's all about being less stupid. You don't have to chase brilliance. >> And I thought about like what does that mean? And that is if you can just make fewer mistakes, >> you will you probably don't have to chase the big returns. And >> I think these fewer mistakes come in four forms. I call them the four money monsters. >> Uh number one is inflation is a massive drag on wealth creation. Most people don't realize that. They think that, oh, I'm just I just have my money in my Bank of America account that makes 0.1%. It'll feel safe. >> I can wake up in the morning and I can look at it and I feel better about myself. But they don't realize that $10,000 that's in their account today at the end of the year is worth significantly less than the $10,000. I remember this. Uh I had been drinking the same co coffee order from Starbucks. >> What's your order? >> It is a venti decaf americano. >> Wow. >> Venti. Maybe you're going big. >> Yeah. Decaf. >> Two pumps of sugar-free vanilla. >> Uh and >> how many calories is that? >> Oh, it's like 12. >> That's not bad. >> Yeah. But from 2020 when they started when I started using the app till today, I make the same exact order. >> How much have you spent? >> I don't know how much I've spent. I know what I spent every single day. So my order every every day today is 380. It's $3.85. When I actually started ordering it, it was $180. >> Really? >> So in the last 5 and a half years, it's gone from $180 to 385. Now inflation is a silent tax on purchasing power. It is you pay more for the same coffee. That's what it is. >> And what people don't realize is that they just think that the $10,000 is their $10,000 and they just don't even think about putting in simple things like a high yield savings account or something like just to manage inflation. >> Yeah. >> If we just manage inflation >> 3%, right? It's like Yeah. >> Right. Um if you're keeping cash from a tactical perspective, there is a uh security called TIPS. I don't if you're familiar, it's called Treasury Inflation Protected Securities. And all it does is most uh treasury bonds they pay out a certain interest rate. What tips does is it actually takes the interest rate and ties it to the CPI ties it to inflation. So based on what inflation changes, it pays you that as the interest rate. So worst case scenario, what most Americans should do is if they don't at least put it in the high yield savings account, they should just put it in tips. And you can go buy TIP, which is the ETF, and it'll at least keep place with inflation. So number one money monster is is managing inflation. >> Okay. >> Second money monster is taxes. Taxes are the number one draw drag on wealth creation. And if you think about it for us we are very brave souls that live in the great state of California >> because we spend so much on tax man. >> You take the 37% then you add another 13% then you add whatever else you need to add to it. But the what people don't realize is they'll chase a 7% return in the market, but they won't learn the the tax code to just reduce their the taxable income. >> Are we done are dumb for living in California based on a tax standpoint? >> Yes. [laughter] >> But but you wake up in the morning with your degrees. >> It's joy, right? It's just joy. >> The crazier part is this. Did you know that there's roughly 5,7 5,800 pages in the US tax code? >> Of which only 30 pages actually explain what taxes to pay? >> Wow. >> 5,770 pages of the US tax code explain how you can avoid taxes. We just don't spend any time doing that. >> And I think that's the problem. Now, there's no way that someone's going to go with the US tax code and leave it on their nightstand and and read about it. That that makes no sense. But the switch that I found, Lewis, was that most of us have CPAs and uh tax advisors. They are tax preparers. They just want to make sure that our taxes get filed. >> Tax strategists are some somebody completely different. >> Yeah. >> And in today's world with AI, you can ask you you can upload your documents. You can say, "Hey, where are my tax savings?" That's interesting. >> Rumage to the tax code. Find me the deductions. You can do so much more related to that. and a a 1% savings in taxes is an instant 1% drop to the bottom line. You don't have to go then create a 1% return in the market. You've already made that overall which I think is amazing. >> Mhm. >> So the third is interruption. Hardworking families who are work and then put their money to work and then they get stressed reading the headlines. They're like, "Wow, straight up horses. Wow, there's a there's a war here. >> Take my money out. >> Take my money out. I'll put it back in when it's okay. Take my money out." and they just interrupt their growth. And the interruption, there's only 12 days in a year on average that if you miss those 12 days, you lose the entire return for the year, but you have no idea what those 12 days are. So, you you're better off leaving it in there and not interrupting it anyway. And the last one is fees. And you and I talked about a million dollars in fees going away. It's the entire principle sometimes. So if we can just as Charlie Monger said eliminate inflation and uh taxes interruption and fees, you almost don't even have to create any returns in the market. This will create you more returns because it's not what you make, it's what you keep. >> Wow. Yeah, that's powerful. Four money monsters. I like that. >> Um >> it's the way to teach our children these things. As your children, as your twins grow, you'll learn them. Uh yeah, I have my 10-year-old who will now say, "Oh, dad, that's a money monster." >> Wow, that's cool. >> Remember, >> what's another law of money that you learned uh once you came to America? >> There was um tell you a crazy story. My first day when I got to college, I show up at financial services. I hand them a check. My dad had written a check for the entire uh school year of tuition room board. And that's all my parents gave me. And they said, "If you don't make it in a year, come back." Is was their gift to me. So I handed it to them and the lady said, "Hey, this is a international check. It may take 7 to 10 days to clear, but here are your dorm keys, but your meal plan will not activate >> for another 7 to 10 days." So I had already traded I only had $45 back from the mugger. So I didn't have that much. And so I hit Louis, I hit every rush party. I hit every student athlete party. I hit every pizza party on campus. And then one Sunday morning, I was hungry. There's no parties left. I'm walking by and I see a a couple of guys throw two pizza boxes into a dumpster. And I had not eaten for a day. I wait till sundown and jump in the dumpster, grab the pizza boxes, and I run to my dorm room. Just shame. >> Mhm. But I was hungry. Sausage, by the way, didn't great. >> And I was like, "Wow, this is the lowest of lows. I cannot >> tell my parents this. They would break their hearts that their son is dumpster diving." Well, the next day, I was still hungry. Went veered back by the same dumpster. And this time, I saw a couple folks tossing in Subway sandwiches into this dumpster. And I'm I'm talking like party sub. I go, "Wow, this is jackpot." And so I wait till the sun goes down. Jump in the dumpster, grab the bag of Subway, and I see an all-American box of Pop-Tarts. Strawberry, by the way, and this the street lights are streaming in. I grab the Pop-Tarts and suddenly out of nowhere, something hits my face and I'm bleeding and I look in the corner. It is a raccoon. >> No way. >> In the dumpster. scratched you, >> just whacked me in the >> Wow. And but I I don't remember any of this. It's just fight orflight kicks in. I'm in a 8 by8 or whatever with this. I kick the raccoon, grab my stuff, and I run. I sit on a park bench crying, not knowing why I'm crying, and realize that that was that bottomed out. >> That was the lowest of lows. And sometimes you have to hit those to actually realize how much more there is in life. The amount of risk that we can take is based on how much pain we can handle as well. The craziest part about that story is 22 years later I was invited back to be a commencement speaker. >> Mhm. I stand on stage with thousands of people and I tell the same exact story because that dumpster was right on top of the hill and the crowd is laughing. When we were done, the dean walks me up there. He's like, "Hey, let's go back up there. Let's look at the dumpster. >> See if that raccoon's still a mess." We get back up there and I I a tear just comes down my eye and that because I see on the side of the dumpster a poster that with Aquaman on it and it says not giving up is the most heroic thing you can do. I read that again. I took a picture. I sent to my wife. is that 22-year arc was that phrase. >> Mhm. >> Like not giving up is the most heroic >> you can do. I think the lesson the money lesson from that is we all don't know what our risk profile is. >> And the only way we can test ourselves is deeply tied to our personal experience is can we be honest? Can we be open? Can we say can I actually can I actually handle that risk? I honestly believe that if that was what I am ever having to go to again, I can do that again because I've experienced that and >> sure I've been okay. But most people are they don't want to they don't want to risk something because they don't want to get something but you have to risk something to get something. >> So when you realize that money is a riskadjusted reward game. >> Mhm. >> Um it gets very powerful. I I tell folks that the greatest deal that you can make is where it's heads I win, tails I tie. >> And that's asymmetric riskreward. Like what are the deals that you can get in your life where you're like, man, if this wins, this goes big. But if this does not go big, but I just get my money back. >> The more deals you can get like that, the better because you just lose fewer times. >> Wow. What's the biggest uh money myth that people are buying into these days that they see online or on social media that when you see you're just like that is a big mistake? Um besides crypto. >> Oh. Oh my goodness. There the the sad part is I think there are so many and I'm thinking through like what would be will be a very important one. I think it's really sad that people are being taught that debt is bad. Now, the reason debt is bad is like essentially telling somebody driving is bad. You have a car, you have to get a license to be able to drive the car. We give people credit cards. We give people home equity lines of credit. And we say, "Have at it, Jimmy." And I think that's why because we we give people this powerful instrument and don't teach them how to wield it. And then we berate them for being irresponsible with their money. If debt as a instrument was paused in the world, the entire world would pause. >> Everything runs on the access to money overall, including our consumer finances, including our credit cards, including everything that we do. So the the fact that we have to go cut up our credit cards, that's like saying don't ever drive again. And I think that we should help America like use these vehicles well. And uh for most people, it's just they just don't know how to budget. They just don't know how to plan. They just don't know how to say, "Well, I've got these monthly expenses. I've got this debt payment. Can I actually convert this debt payment to these to these monthly expenses?" And if there's any course that I wish I could teach at high school or college, it would just be how to just manage debt because we are being thrown debt so much in the face. Did you know that the most recent Coachella event over 47% of people bought their tickets on Afterpay? >> They took a $180 ticket and they were willing to finance that payment for a completely um discretionary entertainmentbased expense and they just don't know what that means overall. So >> they're probably well they're probably also paying double I guess over time. Right. >> Of course. And so it it really bothers me when the only advice to people is cut up your credit cards as opposed to saying hey let me teach you how to use this. >> So what is the best way to use debt to create financial freedom for yourself? >> Um you want to use debt to actually buy an asset. U when I first came to the US I was and I graduated from college. I was living in my aunt's basement and I read Rich Dad Poor Dad >> and it said, "Oh, you should buy real estate." I had no money. I was living in my aunt's basement and I got a offer for an American Express student card in the mail and it said 0% cash back for 12 months. So, I called and I said, "Well, what does this mean?" She said, "Well, we will wire you $19,000 just like you spend $19,000 in your car for a 12-month period at 0%." I said, "Awesome." So, I took that card and then I waited a week. I got a second card. So, I got two cards and then I took both the I got $19,000 each and I bought my first rental property in Mount Chasta, California. >> Wow. >> Of two AMX cards. Now, that was all because I was able to take the debt. People would said, "Well, you borrowed from American Express to buy your first real estate property." Yes. I got two years of 0% financing and I was able to buy a piece of real estate to be able to go do that. I have never seen this property in Mount Chasta. I invested in it and then over a two and a half year period I got the money back. I paid off my loan and I made like 12 $13,000 from this entire deal, but all because I read this thing that said 0% financing to be able to for 12 months. Folks just don't know how to manage their debt. Now, I also believe that >> since you and once you're in the hole, the only way you try to get out of the hole is to dig deeper to get in the hole. So, a lot of these baby step programs are good to get people out of the hole, but I would offer that people should not even be in the hole in the first place if they just knew how to manage this process overall. >> I mean, how do you manage it emotionally knowing that you've spent whatever 30, 40, 50,000 in debt or have invested it in an asset, but maybe the money is not coming back yet or maybe now you've got to go work two jobs to pay this off in two years or whatever it might be. How do you manage it emotionally and psychologically or spiritually? Yeah. >> Knowing that you owe someone money and maybe you don't have it yet. >> It's tough. >> Um, anytime I get into a tough situation, I think about uh a three-frame approach, which is past, present, future. My past self thought this was a good idea, therefore it made this decision. My present self is struggling with this heaviness of that I owe somebody something and I have to work two jobs to make it. But am I doing the right thing because the future is good because this assets value is going up. I think the the dichotomy happens when your one of the selves are not in congruence with each other. >> They're not aligned. >> They're not aligned. And so the reason why most people who are in credit card debt that uh took the $10,000 loan from their credit card and bought three big screen TVs and went on a vacation to Cabo, they are struggling is because their past self made the decision >> there's no asset. >> Correct. Their present self is now feeling guilt and shame >> and they're paying the price. >> Correct. And their future is like, man, >> I'm going to have to continue to work these two jobs to pay what I should have made a better decision on. Mhm. >> And uh the way to make a better decision is just say, well, am I doing this in service of my future self? Because if I am, then I'll be able to actually put in the hard work today because I know that, hey, I will be okay in 18 months. >> Yeah. So, just making sure you make the I guess wise enough investment that your future self is saying this is what you should invest in because it's going to pay dividends rather than some experience that you're going to have to pay off eventually that's not paying dividends. I will tell you a decision that I made that my future self would have thought very highly of me on and actually completely bombed >> really. >> I invested a million dollars into a company and lost it all. >> Mhm. >> And I thought I was being very strategic about it. So, um, a CEO contacted me for a potential investment. I said, "Hey, I don't know you, but I'm happy to get to know you. We're going to do a two-part process where I'm going to work with you for a six-month period, and you're going to pay me a consulting fee, and at the end of that period, if we are a good match, I will roll my full consulting fee in, and I will make an investment as well." >> Wow. >> So, I worked with him for six months. I met with him. I met with his management team. I went to his offices. I worked on their operations. I saw they took the advice. They did did a good job with it. >> They got some growth. >> They got some growth. It was working. I was really impressed with the guy. And then at the end of the six-month period, I rolled a $300,000 consulting fee plus a $700,000 investment >> into this company. >> 3 days later, Lewis, >> he vanished. >> Come on. >> Not only >> Come on. >> Not only did he vanish, >> gosh. >> Not only did he vanish, I was not even able to serve him because I had to hire a private investigator to find him. >> Shut up. That's crazy. And you spent six months with him and his team. I found out it was all a sham. >> Come on. >> He had hired actors. >> No way. >> He had two sets of books. >> Oh my god. >> This process and I thought I was the man. I was a I was like I built two billion dollar companies. I was the banker at Goldman Sachs. I've done six months worth of diligence. >> Wow. >> I've worked with this guy. It it was a massive ego hit for me. >> Wow. He conned you? >> Yes. I still haven't been able to find him. And >> really >> I they were not I had I was shaking at night because I didn't know what I would tell my wife now. Yes. >> Could he how did he have the money to pay you a consulting fee from some other con or something? >> Correct. >> Wow. This is crazy. >> And then what happened was uh that was the first time I didn't know how to manage my emotions. And >> so I started therapy and um two questions that my therapist asked. She said, "What are you telling yourself about yourself?" Which I was like, "What does that even mean?" Like, "How?" She goes, "What are you telling yourself about yourself?" We would sit there and I she would just ask me that question over and over. She's like, "Until you can answer that question, you have no self-awareness of this at all cuz you're just projecting it out to everyone else." >> And the second thing is, what did you learn? >> So, what were you telling yourself about yourself? >> That I should have known better. Um, I'm too I was too good. I can't believe I didn't see this coming. >> Wow. >> The um, how can the world do this to me? >> I'm a good guy. I work hard. >> I'm a good guy. I worked hard. I I walked into this with the best intentions. Why me? Why? Why would you do this to me? What lesson are you trying to teach me? It's all everyone else's fault. >> Yeah. Yeah. Why did they screw me over? >> Why did they screw me over? I I approached this with the best intentions. >> Yeah. And just articulating that was extremely helpful. I had never done that but the biggest fear that I had was my wife trusted me and I had to somehow tell her what had happened. Now uh the one thing that my wife and I do is every month I show her a P&L of everything and that has been a really great practice for us. And so I told the my therapist that I don't know what I'm going to tell my wife. And she said,"Well, what do you think she'd ask?" I was like, "I don't know, but I need to have a learning here." So, we worked through our learnings and I came up with a framework that I said, "Wow, if I learn nothing from this, I at least should learn how to make a better investment." >> Yeah. >> And so, I came up with something called the four goods. Good people, good intentions, good rationale, good contracts. So what is good people? Good people is, hey, I trust you, but I'm going to trust but verify. I should have run a background check on this guy. I never did, but why would you run a background check on somebody? The thing that we do now is, so if if uh we were talking about, you know, uh being in partnership, I say, Louisis, I'm super excited to >> work with you and and partner with you. I would love for you to know who you're getting into partnership with. I would love for you to do a background check on me. >> Yeah. To make sure you feel comfortable. >> And I'd assume that you'd have no problem if I did a background check on you. Call it the mutual background check. So trust would verify. The second is good intentions. The question I ask is, hey, if everything went to hell in a hand basket, what would we do? Walk me through it. When has something else gone down this way? So now it allows me to say, what are your true intentions? Are you willing to stay? Are you willing to fight? Are you willing to actually do the right thing even when everything goes wrong? >> And people usually just say, "Yes, I'm willing to stick it out and this and this, but but show me what have you done this in the past." Right? The third is good rationale. Finally, let me see the deal on on a spreadsheet. And the fourth is good contracts. People are like, "Well, I just have my lawyer drafted up." I'm like, "Lawyer drafting it up means nothing if you can't even find the guy. I can't even serve him." So, when I met my wife, I walked her through it knew that I had finally had married the right woman and she said, "Uh, what did you learn?" And I said, "Well, I learned that it is not about a good investment or a bad invest in investment. It's about a good investor or a bad investor." And she goes, "What does that mean?" I said, "I've learned a process for making better investments." And I warmed it through the four goods. Good people, good intentions, good rationale, good contracts. And he said, "Seems like a really cheap million-dollar lesson, >> right?" >> And that I think that even in our relationship, that made us closer than uh you it's easy to talk about the wins. Yeah. >> But when you can work through the losses and she's like, "Is that why you've been weird? Is that why you've been like chat your teeth have been chattering at night? Is it why you've been like shaking under the covers? >> She didn't know about this. >> No, she didn't know about it. >> Wow. >> And so don't keep things don't keep your spouse. >> Wow, man. That is crazy. That must have been felt like such a betrayal. >> Yes. >> Cuz you were building a relationship with this person and they lied to you and then ran away. >> But I think as professional investors, it's going to happen. >> Uhhuh. >> It happens in friendships. It happens in relationships. It happens in business. Um, we have to put a process in place to at least increase the likelihood that that didn't happen. >> Yeah. I probably made I don't know a dozen like angel investments when I kind of first started making money. So I was like I have all this cash like what do I do with this? And maybe over a few years I was making, you know, 25 to $50,000 checks or whatever. And I have made zero of all that money. Yeah. >> From those early stages. And and I put a lot of time and energy and, you know, promotion behind certain things as well because I was like, I want to help these companies. >> And I realized I didn't do any of those, you know, or maybe the people were good, but I didn't have like any of this. Maybe there was good intentions, but I didn't really do the background checks. Not that these people were like bad or nothing. you know, no one ran away with my money, but >> uh it's probably more like three and four, you know, it's like I didn't know there was a good deal or good contracts involved and what if it doesn't work out, you know? >> So, it's just kind of naive and thinking, oh, this is what you do. You just make bets on different companies. >> Yeah, >> it seems like it's all going to work out, you know, but what happens when it doesn't? >> And are you willing to make that investment if you don't if you don't know what's going to happen when it doesn't? So, I think that um having seen things go wrong allows you to figure out how to make more things go right. >> And most of these processes are not complex. It's just a hey, I'm just going to slow it down just a second. >> And if it's a good partner, they're going to be very happy to run through this process to do this anyway. >> They don't need to rush it. >> No, not at all. >> They're rushing it. That's a red fact. That's a red plus. Let's just get this done. We'll figure it out later. You know the figure it out later is very difficult. I I think that's uh it's like we can we can also fund it later. >> Yeah. Exactly. Yeah. Yeah. And the taking the the ris the I've been talking to my wife about this concept of risk. Well, what is risk? Risk is the probability that something goes wrong. Well, what is luck? Luck is the probability that something goes right. Well, aren't they the same thing? So the reframe for me was oh wow to to reduce my risk I just have to ensure that the the likelihood just goes up of me just running a simple process so that I can just minimize doing dumb things. >> Yeah. Yeah. And there uh the great you know there's a great Warren Buffett quote which he says uh if you can from the day you graduate from high school till the day you die if you only had a punch card and the punch card had 10 whole 10 punches in it and you could only make 10 investments in your life and that's all you could make. How careful would you be make when you when you did that? >> Wow. >> And he talked about the idea of like you know u in baseball you what if you never had to swing? What if you only could swing at the best pitch? You could just wait there forever and swing at the best pitch. He's like, that's the gift that we've been given as as investors. You only have 10 punches that you can you can punch. >> And so I was at this mindset that I just want to spread my risk out. I want to get take a ton of deals, etc. And I realized that uh you know, don't put all your eggs in one basket. Well, I think that us as entrepreneurs, we put all our eggs in one basket and we watch that basket closely. That's our job. the average person is, you know, diversifying. So I I I think a lot now about to do great things, we must do fewer things and we just watch those fewer things much more closely. >> Put more attention and energy into building those things. Yeah. >> Correct. And you can actually grow something much bigger like if you when if you put your your your brand, your love, your promotion behind two things that is significantly better than behind 20 things because you can't even keep track anyway. >> Exactly. What's the Where are you putting your money these days? Um, I think about I think about the money monsters a lot and the number one thing that I want to do is dramatically reduce taxes. >> So, you're in the wrong state. >> Uh, on the on the investment side, we're spending a lot of time on multif family. >> Uh, uh, so >> are you buying them yourselves? You're buying syndicates? Are you buying >> funds or what's the process? We're buying we're buying properties directly and we have a operating partner that manages the property. So we control everything from the purchase all the way till the operation. So we control the full stack >> and we do it for two very important reasons. Important reason number one is that it gives us a physical asset to own for to manage manage during inflation and the second is that multif family is the only only asset class that actually trades like a business. So, let's say our our homes, right? Uh if the person next to us sold their home for $400,000 less, now our home is worth $400,000 less. >> Yeah. >> But in a multif family apartment complex, you could have four apartment complexes in a row. And one may trade for $300,000 less, one may trade for $800,000 less, one may trade for a million dollar less. But the apartment complex that you own, if it's operated well, it trades on ibeta or net income. So it can be in the middle of all the other underperforming properties, but it trades as a business. >> It's cool. And that one thing allows us to say, hey, we if we operate that better, we can actually generate significantly better returns. >> So now beating inflation, getting the tax advantages, and actually getting the responsibility to operate that better allows us to say no matter what environment, we have to take full responsibility for delivering on this asset. So I'd say right now close to 70% of my net worth is in Merley >> multif family real estate. Wow. >> What's another money rule that you had to learn the hard way or the law of money that you had to learn the hard way? >> When people are rushed, they make decisions out of peer pressure. >> Mhm. I've realized that uh when I don't know something, the answer is not to do not not to do it. It's very easy to say, well, I don't know much about that. I shouldn't do that. What I've realized instead is if I don't know much about that, who can I partner with who knows a lot about that? My first uh investment was my college friends. We all didn't have a lot of money. And I got a something called a commitment fund. I said to them, "Hey, my goal is to have each of us contribute $100,000 for a total of a million dollar. And I know that all of you don't have $100,000, >> but I know you have at least 10. >> What I'm going to do is I'm going to put my $10,000 in. Each of us are going to put $10,000 in. >> And I'm going to take the responsibility to invest this. I will never call more than $10,000 at a time, and I'll never call it in a six-month period. So, no more than six months apart." That was the first fund that I created for myself with my friends. I still have that fund going >> over 25 years later. >> That's cool. >> And the crazy part is if you don't know how to do something, get people around you that you can actually invest in groups and that dramatically reduces your risk. >> Mhm. >> Because money is such a personal thing. People want to, you know, keep it keep it behind closed doors, keep it very very close to their chest. I think if you talk more about it, >> yes, >> it gets it gets significantly easier to work through and you actually make much better friends when you talk through money. I call this the the five levels of relationships. I'll walk you through it. The the bottommost level of a relationship is when people talk about the past. So you're like, "Hey, remember that time when we used to do that?" They just talk about the past. >> The second level of relationships is when you talk about other people. You're like, "Wow, you know, Lewis did that. Sean did that. Alex did that. >> Yeah. Yeah. >> It's the gossip. >> The third level of relationships is when you talk about ideas, you go to random events, maybe a mastermind group, and you're like, "Oh, that's an idea to do that. That's an idea to do this." But you don't do anything with it. The fourth level of relationship when you talk about execution, you're in a very tight circle. You're like, "Hey, Louis, what what do I actually invest in? What do you actually do? Did you actually talk to the that active manager? How much did you put in? What questions did you ask?" You're talking about execution. But the fifth level of relationships is when you talk about money. If you and I got together the first time and in within the first 20 minutes, we actually started talking about money, you automatically get the entire scope of everything else. >> The crazy story is about eight years ago, nine years ago when I first met Alex Herozi, he was in the process of selling his business and I got in introduced to him to help him sell his business. And so my first conversation with Alex, we talked for four hours and he showed me everything. And because he showed me everything, I then met with Leila. And because of that, I knew everything about their lives. And I was able to actually be their personal adviser through their first exit. And eight years later, I'm the CEO of that business. >> And without that actually accelerated how fast you get the relationships going. So I I often think about the fastest way to get in great rapport with people is to give them the gift of going second and actually share on the money side because it's the most vulnerable thing. and it allows you to get deeper in the conversation. >> Yeah, it's beautiful. What is the money framework you wish everyone knew sooner >> that you don't have to wait till you're 65 for retirement. Financial freedom is available to you today. And if you can just decide that passive income is greater than monthly expenses, you can actually create a really great, you know, life for yourself. I talk about um this little thing called the wealth ladder. >> The wealth ladder is anyone can use it. >> The first wrong in the wealth ladder is can we get our active income to be greater than our monthly expenses. >> Can we just get the active job that we're doing to pay for the lifestyle that we have? Because if the job that we're doing is not pay not paying for our lifestyle, something dramatically is wrong. So the focus there is, wow, can I actually improve my skills? Can I work harder? whatever I need to do, can I get that going? Because >> or drop expenses if I'm overspending. >> Exactly. Right. Exactly. Right. So, the first level for me is can I get my active income greater than monthly expenses? As soon as you're able to do that, now you can say, well, maybe I can get a better job. >> Maybe I can do something else. >> Uh the next step ends up being how do you manage the surplus? So, let's say your active income is greater than monthly expenses. You have a little bit of a surplus. Well, what do you do with that surplus? Before people do anything with that surplus, I believe that you should create a money factory, some way in which the money automatically manages itself. Because if it comes into your checking account, mechanically speaking, it's just going to sit there because that is the easiest thing to do. Instead, if you're like, hey, for every dollar that comes in, I do 70% in my expenses. I do 20% of my savings and 10% of my investing. You can use a 7010 20110 rule, whatever it may be. You have a way to distribute your money. From a football analogy, I'd say that is your quarterback. >> The job of the quarterback, it's just to distribute, not to just have the money sit there. So to manage your surplus in some way. >> The third is how do you actually get your first tiny income generating asset ta like my my son is 14, invested in a VNQ, got the tiny income generating asset, and then the fourth level finally becomes, hey, can I start to get my passive income greater than my monthly expenses? When you're when you start to look at opportunities where you can actually generate passive income, you'll realize that, wow, I made my first $50 passive income check today, like, wait a minute, >> feels good. >> I didn't do anything. >> I didn't have to work for it. >> Yeah. I didn't have to work for it. I invested in this and I actually got that. How can I do more of this? Can I stack more in this? >> It gets exciting. >> Yes. And and you also realize that you're working towards something specific, not something that is 30, 60 years away. And so someone if everyone just follows the active income greater than monthly expenses, manage the surplus for the money factory, invest in my first tiny income generating asset, and then do passive income greater than monthly expenses. It dramatically takes out all the noise of should I have debt, should I use a 401k, should I use a credit card, should I use a Roth IRA, should I invest in multif family? It doesn't matter because everything is in the service of only one thing, which is going to get my passive income greater than my monthly expenses. >> And if you can do that, you can wake up every morning and say, "What would I like to do today?" >> Yeah. Yeah. That's beautiful. Uh, I got a couple final questions for you, Shiron. This has been powerful. So, thank you for sharing this. Um, and I want people before I ask them, I want people to follow you on Instagram. I know your YouTube is starting to take off. So, if they go to Chiron on YouTube or on social media, they'll find a lot of your information there. Uh, what's your main place that you're going to right now and creating the most content? Is it YouTube? Is it Instagram? Is your website? >> I have realized that all the adults are on YouTube. >> Yeah. And and for >> not kids >> for for two reasons. One is >> when because I have children now, I'm starting to realize how much short form is just scrambling their brains >> after my daughter who's 10 has a, you know, short form video session. I have to like not talk to her for 10 minutes just to let the snow globe calm down. >> Yeah. Yeah. >> But I think that that changes dramatically with the long form videos. I've also realized that long form is very hard to AI fake. And so the best creators, the people that have spending a lot of time spent a lot of time on YouTube. So, um, we only started a YouTube channel less than a year ago and we've had, uh, some pretty good success so far growing it. So, spending all my time on YouTube right now. >> Wow, that's great. Well, we'll we'll probably collab on this video. So, if you're on YouTube right now watching this, make sure you subscribe to Shiron as well on his channel and check it out because you a lot of get you got a lot of great lessons there as well. Um, this is a question I ask everyone towards the end called the three truths. So, hypothetically, imagine it's your last day on earth many years away, but you get to accomplish all your dreams and build and exit and have all the life memories you want to have, but for whatever reason on the last day, you have to take all of your work with you, all your content, work, everything's gone. This conversation gone, but you get to leave behind three lessons to the world. What would those three truths or three lessons be for you? Truth number one, average is the punishment for the weak. As a greatness guy, we realize that to do great things, we must do fewer things. >> And the world has taught us that being average is okay. They talk about average income, average person, average weight, uh you know, the the average job. And they've made average be okay. But to really get great, I think we have to set aside average and know that average is the punishment for the week. >> Second is probably my favorite, which is it's okay to suck, but it's not okay to skip. There's so much that goes into self-discipline that we can easily not keep our promises to ourselves. Mhm. >> We say we're going to go to the gym, but we say ah not today. We say going to go for a run. Oh, say not today. We say we're going to give our wife a hug, but not today. But I don't have to do a perfect gym session. I don't have to go for a perfect run. I can still give my wife a hug. It's okay that I suck doing that, but it's not okay to skip >> doing that. The last thing I would say, truth number three would be assume every single person that you meet was sent to teach you something. Think when we're children, we go to the park and we start playing. We say, "Hi, I'm Louis. Hi, I'm Shan. You want to play?" We're so much more open to people. And as we get older, we get more skeptical. We say, "Well, what does he want from me? What does she want from me? What is their ulterior motive?" In a lot of ways, I think that we are just our 10-year-old selves in adult bodies. So, if we could just assume that every single person that we meet was sent to teach us something, I think it changes the world very quickly. >> Yeah, those are cool, man. I like those. >> Um, how old are you now? >> 46. >> 46. So, if you go back, I guess what was it 30 years ago to your Is that right? 30 years ago to your 16-year-old self. Is that 30 years? If you could go back to your 16-year-old self right after you got mugged and had to give away your hundred bucks and you got 45 back, I guess, what would you say uh if you were staring at yourself in the camera? What would you say to your 16-year-old self with all the wisdom and all the knowledge you have now to help that younger version of you get to where you are now? become the person that deserves the goals that you have for yourself. Meaning the pivotal word is deserve. What is deserve? Does Kobe Bryant deserve that? All the trophies. Why? Does Tiger Woods deserve that? Does Oprah deserve that? Does Lew deserve that? Why? And I've realized that how you how I define deserve is you put in unreasonable effort but you have reasonable expectations. >> Kobe just wanted her to win a win a ring but he put in the extra reps to get that result. Same with Tiger. Same with Oprah. Same with you. So I think about how do I deserve my goals? And the answer just becomes become the person that can do unreasonable effort >> so you can get that reasonable result. >> That's cool. That's cool, man. Um Sean, I want to acknowledge you for everything you're creating. You know, I feel like you've been putting yourself out there the last year, couple years since you joined with Alex and Ila, and it's been cool to see your content and how you're serving people and just sharing your wisdom. So, I want to acknowledge you for all of that and I really hope people check out your content. So, keep it up, man. It's awesome. >> Thank you so much for having me. >> Yeah. >> Final question. What's your definition of greatness? >> I think it's evolved over time. In my 20s, I thought it was about the destination. >> In my 30s, I thought it was about the journey. And in my 40s, I've realized it's about the company. Mhm. the people that you work with, the people that you uh share with, the people that you build with, >> not the company you own, but the >> Yeah. the people that you're with, the people that you're with. And I think that a lot of it comes down to the reward is not in the outcome, but the reward is in the work. >> And I say that, I don't know if you've heard of Seephus. Seephus is a a Greek god, a Greek king that was condemned by the gods. And he was condemned to roll a boulder up a mountain. And then every time he got up to the mountain, the outcome it would roll back down. And they wanted to mock him for playing pranks on the gods. But Sephus, this Greek king said, "Wow, if the goal is not the outcome, maybe the goal is the work. Maybe I get all the joy pushing the boulder up the mountain. So I want this boulder to roll down every time." So I really believe that this idea of greatness comes in where we tie it to the reward being the outcome, but if you can just tie it to the reward being the daily work, >> you get to push the boulder up the mountain with a big smile on your face every single day. >> Yeah. Awesome, man. Sean, thank you so much, brother. Appreciate it, man. >> Appreciate it, D. >> Powerful, man. >> What is at the top? [music] What is number one above all? Is it being the richest man in the world? No. Is it being a billionaire? No. Is it being the smartest? No. It's [music] one thing. And by the way, when I figured this thing out, my life changed. >> Patrick, >> money and success is not attracted to people that talk down to that.