Kind: captions
Language: en
all right so Tom my question to you is
if I was starting from scratch as in I
had zero dollars in your opinion what
will it take for me to get rich in three
years whoa okay getting rich in three
years that's that is a very aggressive
timeline
the only way that you're gonna get rich
in three years and we should probably
Define that I'll say seven figures or
higher seem like a reasonable Baseline
okay so the only way that you're gonna
get that kind of wealth is and I'm
assuming that you're not able to invest
something go buy something or something
like that so we're literally starting at
scratch so you're going to have to
create a company create something that
generates a lot of value
typically that's going to be a company
so you're going to create a company that
meets a very well-known need that has
not yet been serviced by a product that
is relatively easy to get across the
finish line and into the marketplace it
needs to be something that is going to
resonate with social media and it needs
to be something that doesn't cost a lot
of money to get started so either you're
gonna layer on way better marketing so
if somebody has a solution to a
well-known problem but they don't know
how to Market it you can go and partner
and say hey look I understand marketing
I'm going to be able to get this out
there or if you have an information
product that can be associated with a
known problem that you uniquely can
solve I happen to know a little bit
about your background so if there's an
element to working in the music industry
to becoming a professional singer
improving your voice or something like
that that you really have a beat on that
you know a lot of people are interested
in that you could turn into a course for
instance that people would really
resonate with
that could be a great one the reason
that I keep coming back to information
products is you're looking for something
that doesn't cost money up front if
you're going to like take Quest
Nutrition for instance when we were
building that there was still a
substantive amount of investment that we
had to make even just buying a bunch of
protein powder was expensive buying the
liquid fiber you have to buy them at 55
gallon drums so it's like there were
still thousands of dollars that we had
to put in in the beginning and so to
find something that really takes little
to no money down you're either going to
be doing an information product or
you're going to be doing something that
you can make yourself that doesn't have
expensive uh constituent parts or you're
going to be finding something that's
already made that the person doesn't
understand marketing so it's really
about what is the bit of value that
you're going to be able to bring to that
that's unique that somebody else can
easily replicate that the world is going
to know instantly that they need and you
just have to make them aware of it
because three years is fast
and so quest for instance depending on
what you mean by Rich so for instance
three years into Quest we had a billion
dollar brand
but I was I didn't have a billion
dollars that I could put in my pocket so
I was still driving I think by then I
had finally upgraded my car but for the
first couple years of that I was still
in a beater car even though I was worth
a lot of money and so if you need the
money to be in your pocket that's
probably going to take a fair amount of
time longer and if I can take a minute
to get everybody watching to understand
the difference between net worth and
income that would be really valuable so
if you don't mind generating a million
dollars plus a net worth now we're back
to you just have to build something that
other people say that they want
to have the actual money in your bank
account you have to build worth in
something that people say that they want
and then you have to sell that thing so
it's very rare that you're going to get
rich off of the operations of your
business you get rich by building a
company where somebody's looking at that
God this is going to get complicated
fast so ask follow-up questions so
you're either going to build something
that's going to IPO okay initial public
offering and what you're saying is hey I
built this really cool thing it makes a
lot of money or people think it's going
to make a lot of money and by going to
the SEC they'll actually let me
fractionate my company break it into a
bunch of pieces known as shares and then
I'm going to sell some of those shares
on the open market the public markets
and then people can buy those shares and
so that's a way that you're going to be
able to put that money in your pocket
but you're you're literally selling a
piece of the company that you own
otherwise you can sell a minority
controlling or total interest in the
company to private Equity Venture firms
something like that but usually when
people do that they're not doing it for
founder liquidity they're doing it
because they expect you to invest the
money back into growing the company
which is why IPOs get people really
excited because some of the shares you
will sell as part of the company
treasury which generates operating
Capital some of the shares will be yours
personally that you get for being a
founder and so you can use that as a
liquidity event so now you actually have
that money in your pocket
but most people in three years it's
gonna be tough you could get to an IPO
stage but that's going to be a really
rare moment that again follows the
equation of you're solving a problem
that people already know exists in a
very Dynamic way that people are
basically falling over themselves to
give you money for and
you've actually
created a company that can be sold which
is we could do a two-hour class just on
what that means so it's interesting when
you ask that question I really want to
give you a hot sexy take and just be
like oh go do this but the reality is to
to have a seven figure exit that fast
would be hyper rare it does happen
and I would rather get people thinking
about how do I build a business that's
doing a million dollars in Revenue all
the following things apply but then it's
really about reinvesting every dollar
that you're getting back into the
company to grow and scale but again it's
a problem with a killer solution that
you're doing in a unique way that didn't
require startup Capital yeah and so
going off of that who would be the I
guess the top three people that I should
first hire to take on this this event
this you should hire nobody you should
be going after people that are going to
partner with you so that you're not
paying salaries because the thing that
eats companies alive is overhead
so when you're starting if your goal is
like look I've got no money and I'm
trying to build a million dollars in
value in the next three years now you
want to be focused on what is it that
I'm good at so what's the problem I'm
solving who's my audience who am I
making this for and what skills are
missing from myself right so even if
you're doing an info product you're
going to need maybe a marketer you're
going to need a tech person that can
help you package it up you're going to
need customer service you're going to
need somebody to run the day-to-day
operations so there's a lot of things
that are going to have to be done but
you don't necessarily have to pay
somebody to do it and so the mistake
that I see entrepreneurs make is that
they're imagining oh my God it's going
to be worth a hundred million dollars
why if I give you you know even 10
percent of my company that's 10 million
dollars like why would I ever do that
because you'll never get to 100 million
dollars if you don't have other people
so to give you an idea I've never once
done a company where I didn't have a
partner ever so I highly encourage
people obviously and I've become
fantastically wealthy so I highly
encourage people to bring on partners
that you trust it's it is literally like
choosing a romantic partner that you're
going to be married to for a long time
and it's going to be hypers it's like
having a spouse and kids right but you
don't just have one two or three kids
you have 10 20 30 kids and all the
stresses of running a business so be
very thoughtful about who you partner
with but bring out a partner who's
strong where you are weak and then you
guys are going to be able to really
multiply your efforts and you can work
things into it like if they end up
flaking out if they quit that the shares
then revert back to the treasury so it's
what's often referred to as Phantom
shares so you guess what we do here at
impact Theory so we give Phantom shares
and we say hey as long as you're an
employee in good standing you own that
much of the company if we exit boom you
get it but if you leave or get fired for
any reason the shares revert back to the
treasury because what we're trying to
incentivize is performance we want
people that are in here killing it doing
it long term versus the sort of
traditional Tech VC back company that
knows they're going to exit in three to
five years years and so that's a very
different mode of being that's raising a
lot of capital that's having the idea
that sounds amazing on paper it's
knowing that you're part of a portfolio
so let's say they invest in 10 companies
they're only expecting one to hit so it
means nine of them they know are just
not going to work out nobody can really
see the future so I would say especially
for beginning entrepreneurs get partners
that you don't have to pay that are
going to work as hard as you and they're
good at something you're not awesome
thank you to follow up on that do you
need an entrepreneurial mindset to
become wealthy no doubt I mean you could
win the lottery or have your parents
give you money that certainly is
possible I don't think you're ever going
to get what I would call wealthy in the
short term without an entrepreneurial
mindset now in the long term you can
invest very traditionally and generate
incredible wealth it's really pretty
startling what compounding interest
looks like over time and if you're
willing to sit in the stock market which
which returns an average percent of
seven percent over inflation so being in
the stock market for 30 40 50 years
really is pretty amazing and you double
your Capital every seven years so you
put it in you know if you've got fifty
thousand to begin with seven years later
you've got a hundred thousand dollars
seven years after that you've got two
hundred thousand dollars seven years
after that you've got four hundred
thousand dollars so it gets big number
pretty fast right when you're going from
one million to two million two million
to four million but you've got to be in
it 50 years right so you've got to have
a lot of those seven year cycles and
that quite frankly for the vast majority
of humanity is exactly what you should
do you're effectively if you do it the
right way do not try to pick stocks okay
don't try to pick stocks I nobody beats
the people like Ray dalio right he's got
hundreds of millions of dollars in AI
eighteen hundred employees that all they
do is that for a living and they know
how to make Arbitrage on milliseconds if
you're not going to play at that level
and you're basing your decisions on
things you hear about on Twitter it's
already too late by the time that makes
its way out so that's where people make
the mistake they want to do it sexy they
want it to feel like gambling they're
trying to treat an nft like an
investment vehicle all mistakes you want
an index fund and the reason you want an
index fund is index funds are you're
betting on on a sector of the entire
economy so you're not trying to pick a
winner it's kind of like saying I'm
going to the horse track all I'm going
to bet on is that a horse wins the race
a horse comes in second place a horse
comes with their doesn't matter which I
just know that they tend to work out on
this distribution so I'm going to invest
in something like the S P 500 which is a
list of the 500 strongest is probably
the right way to think about it the 500
strongest companies in the economy if
one of them ceases to meet that criteria
they fall off stop being a part of that
portfolio a new one comes on and becomes
part of that portfolio so it's it is not
what they call actively managed so
nobody's trying to buy a quick stock
they just it meets this criteria or it
doesn't as you get fancier you can
invest in more index funds so maybe you
want a growth index or an index out of
China or developing economies whatever
and you can start to broaden out like
that but still index still passive still
long-term hold it's the only reliable
way historically to buy low and sell
High which sounds stupid but is the
hardest thing to do in investing the
easy thing and what most people actually
do is buy high and sell low now the
question becomes if we all know that's
dumb who would ever do that it's because
of the emotion you buy High because you
think it's actually low it's euphoric
numbers going to go up forever even
though it's a really high number
compared to where it was a year ago
it couldn't possibly go down come on
everybody knows this is all only up only
up it's different this time and so
people convince themselves at this time
it really is different you live through
the crypto Euphoria you know exactly
what the feels like and it feels good it
feels good it was so fun I was having a
ball now thankfully I don't trust myself
so I was like I'm gonna invest this much
and that's it and no more and even
though when I hit that number I was very
sad because I wanted to keep investing
and keep investing and keep investing I
was like no I know better than that and
so we stopped and then of course the
numbers come down now the problem is
they bought on the way up Euphoria felt
good number go up forever and then as it
starts to come down they panic and it's
like whoa that sense of like it couldn't
possibly go down you realize isn't true
it is going down and now you're
terrified that you're never going to get
your money back and if you got yourself
in too deep and you don't have money to
live on you start going oh damn like to
pay my bills I'm gonna have to get money
me out so now you've effectively got a
life gun at your head that's telling you
to live your life you're going to have
to cash out even though that would have
been worth ten thousand dollars you know
three weeks ago it's now only worth
fifteen hundred but you need the money
so now you lock in your loss by selling
low you buy High you sell low that's
what most people do and they do it all
for emotion on that note uh so if
there's certain things about
understanding your emotions what are
certain things that people need to
understand about money to actually
Attract it into their life or to build
it build out wealth what do you think
are those key things that they need to
understand okay so you don't attract
money the only thing you can hope to do
with your mindset is to allow yourself
to be optimistic enough to do the right
things to move forward what I mean by
that is it's what I call the only belief
that matters the only belief that
matters is that if I put time and energy
into getting good at something I
actually will get good at that thing so
you do need to have that mindset so
Napoleon Hill in the book Think and Grow
Rich he says like it was like page 45 he
kept saying I've already told you the
secret to this book on every page and he
was like if you don't get it by now
you're never going to get it and I was
like what has he said on every page and
I was like the only thing that he's
repeated on every page is that if I
think I can I can and if I think I can't
I can't I was like oh my God that's so
true if I think I can then I'm going to
act in accordance and I'm going to go
learn and do the things and ask other
people that invest and I'm actually
going to take money and invest it and
I'm going to figure it out because I
think I can but if I think I can't I'm
not going to read the books I'm not even
going to try because I already believe
that it's not going to work and so you
do have to get your mind right in that
way so that you have that belief so that
you are moving forward so that you are
learning but make no mistake if you had
the best mindset in the world if you say
a thousand times a day that you are I
already am a millionaire I'm attracting
money into my life it isn't going to
work and the reason it's not going to
work because that's not how value is
created that's not how money arrives
right so and if that did work there'd be
a lot more rich people so it really
comes down to do you going back to the
first question do you do the things that
you need to do to generate money which
then enough of that stacks and becomes
quote unquote wealth and to do that you
have to identify a problem
solve it and solve it in a way that
people get right away and they're like
oh damn you solved my problem and now I
would rather have that solution than the
money that I have in my hand
and if you fail to do that you're never
going to get anywhere and so
unfortunately a lot of people think that
thinking about something moves me
forward because it really does feel good
it puts you in an expansive mindset it
makes you feel like you've made progress
but the reality is you haven't and this
is why the most like hardcore
manifesters who are like this is all you
have to do none of them are on the
Forbes 500 it's just never gonna happen
so you've got to get those are going to
be people that are just die hard
executors
so how in your in your opinion would you
say
how can we get into a money mindset
what is a money mindset to you I guess
just you know how when we're when for
example me anyway growing up I was told
you know whenever you have extra money
save it put it in the bank and if you
can buy a house blah blah like very
traditional but I'm learning especially
just with all the resources that are out
now that there are other ways to make I
don't know to just invest your money in
a more smarter way and I I would
classify that as like a money mindset
where I'm just smart with where I
allocate my money let me use different
words that I think are really going to
help people
it's not about a money mindset it's
about mastering the game money is a game
and it's played by extremely Savvy
people that know the rules and you don't
know the rules and because you don't
know the rules they get you to
contribute to their wealth fund by
buying the things that they want you to
buy by investing in the way that they
want you to invest like I remember so
there's a whole thing which most people
don't even know about called accredited
investor so to buy something before it
reaches the public market you have to be
an accredited investor
now I remember when I became an
accredited investor which meant that you
had a net worth of over 1 million
dollars so the day before that I
couldn't invest in something private and
the day after that I could and I was
like why I'm not a better investor from
the day before till now I know how to
make money so fair enough being able to
start a new company yes you should let
me do that because I've proven that I
can but you shouldn't be rewarding me as
an investor because they are entirely
different skill sets and so I was a
little bit offended on behalf of the
rest of the world who do know about
investing but don't have the money to
qualify and so now those guys are stuck
and so there are years and years and
years where they're going to have to go
play in the public market game to build
enough net worth that they can finally
go be an accredited investor now why
does it matter being an accredited
investor means that you get what they
call Deal flow for the people that want
the fancy words you get deal flow where
people are coming up to you and they're
saying hey hey I'm starting this company
and
if especially if there's something about
you so let's say people will come to me
and say things like that because I have
a platform and they know that if I talk
about their company then that's going to
be valuable to them so they'll ask me on
their Advisory board or whatever and
they're going to give me shares in that
company so if I wanted to buy some
shares in that company they might come
to me and say hey we're going to have an
over subscribed round so let's we're
raising 50 million dollars it's going to
be over subscribed meaning we'll have
people that want to put in more than 50
million dollars but hey Tom we're coming
to you because we know that you're Savvy
you know what you're doing we'd love you
to
um you know give us advice or whatever
and the secret thing that they're not
going to say is you also have a platform
we hope you talk about us so it's like
Okay cool so now I get deal flow because
I'm an accredited investor where I can
invest in that but think about a tick
tock influencer that may have a way
bigger voice than I have socially they
can't do that same thing and so that to
me is crazy now there are other ways you
can work it out you can become a partner
and things it's not like there aren't
ways around it but in terms of being an
accredited investor you can't do it now
usually in the private round is where
the bulk of the meat is picked off the
bone so the people that end up getting
really wealthy are the ones the VCS that
come in early when a company is still
private they invest at a very low
valuation then they spend three to five
years trying to blow the company up even
farther and then they exit and that's
their whole thing is that the exit is
often going public so all the value that
they capture from the moment they do
their investment to the moment that they
exit that's all where the average person
they'll never get to capture that value
ever now they still have an incredibly
powerful tool at their disposal which is
now we've gone public and where does it
go from there so they still get to
capture all of that value but is that
remaining value is that an extra 20 an
extra two thousand percent who knows but
what we do know is the person that
invested here and exits you know at the
same time the public investor exits they
got a lot more juice from that so that
is very frustrating to me that instead
of it being knowledge based it's based
on how much money you have in your
account which they're trying to use a
proxy for being Savvy but I think it's a
terrible proxy so people should be very
thoughtful about that so getting away
from the notion of having a money
mindset and just really understanding
the nature of the game so understand oh
okay literally just in listening to that
part of the answer you now already know
three or four different things about how
the game works you might not have
understood before going very deep about
how the stock market Works what like
what's an index fund
um what does it mean to do a put or a
call options trading what is all of that
stuff what are Futures what are
Commodities when you begin to learn all
of that stuff then the magic happens and
this is the thing the very nature of
learning itself is the following when
you understand something
it makes a prediction
and now you can test your prediction to
see if you're right 92 percent of people
that set a New Year's goal fail to
achieve it which is why I've created a
90-day challenge designed specifically
to ensure that you hit your goals you
really can radically transform yourself
just click the link below to join me and
the entire impact Theory university
community to kick off 2023 right with
the impact 90 challenge alright guys now
back to the episode
so you understand all of these things
and you're like hey wait a second if all
of these things are right it makes the
following prediction
and cool I'm going to make a bet on that
prediction now the Market's either going
to reward you or slap you down so I'll
walk you through a prediction that right
now probably is about as controversial
as it's ever going to be and so we're
going to get to see if I'm right or not
so I got introduced to the blockchain
which allowed me to figure out oh now I
understand what this technology does it
takes a digital asset and gives it the
properties of physical assets so this is
utterly fascinating what most people
don't understand why did gold become
gold why did it become the gold standard
right most people know that for a long
time money was backed by gold but most
people never stopped to ask the question
why the reason is for something called
proof of work so however many billions
of years ago Stars exploded when they
explode one of the elements that they
shoot out into the universe is gold that
gold then crashes into a forming planet
and that gold chunks get locked into in
the case of the earth into the crust
right so you see it it in the mountains
and things like that so you can go and
pick it a mountain you can actually find
gold that was an exploded star it's
crazy right so first of all you have the
work of the universe being done to
formulate that element then you have the
work of the person chipping it out and
finding that thing so those are two very
difficult things to do so if you have a
piece of gold you know this was a star
that exploded that's going to be very
hard to replicate and somebody had to go
find it get it out of the ground
whatever so we know that the supply of
gold is never going to balloon up too
far it does balloon up which is another
thing people don't know about which is
inflation which people know that
buzzword but do they really understand
what it is so that's how gold becomes
gold it's scarce and it's valuable and
it's extremely hard to replicate and
it's very resilient so you can melt gold
and then you can reform it again and
there's no loss whatsoever gold doesn't
mold uh it doesn't get water damage
right so there's all these properties
that it has has but it's heavy as hell
so that's one of the things that's sort
of a strike against it but this idea of
proof of work so now you get people
going okay wait a second if all gold is
is proof that a star exploded and that
somebody found this in the ground and
therefore is provably scarce what if I
could perfect that because gold inflates
at about two percent a year which
doesn't sound like a lot it's a lot
so that's inflating away so its value is
constantly dropping due to inflation
which we could get into a whole rabbit
hole which I know George really wants to
about what psychopath called The Bad
Thing inflation because it sounds
awesome and what person called the good
thing deflation it sounds bad but it's
amazing it means your buying power goes
up over time okay when something
deflates which by the way economists
hate and we could derail into why but
this is the game of money right see how
many rabbit holes I can keep going down
so when you talk to somebody that really
knows what they're talking about and
they're like yo the currency in China I
believe I understand this much I predict
right my knowledge makes a prediction I
predict it's going to start deflating
which means if I transfer my inflating
US dollar it's going to be worth less
over time into a deflating currency in
China that means it's going to be worth
more over time yo send my US dollars
over into Chinese yuan hold it there
it's what they call Arbitrage one dollar
here gives me something over here and
the values are going in opposite
directions and I'm actually making my
well simply on that difference I didn't
create anything new I just took the
Arbitrage of a deflating currency sorry
I should be using this hand my deflating
currency over I'm making this up I'm not
saying that China is actually deflating
although the US actually is inflating uh
but just example example example
not a financial advisor either this is
not Financial advice so in this
hypothetical example where the Chinese
currency is deflating it's actually
increasing in value so a deflationary
asset isn't devaluing an inflationary
asset is devaluing now some people say
that that was done on purpose to create
a mind virus that makes people think
inflation is good when you start
thinking about why would somebody ever
want to trick the public into thinking
that inflation is good and this is a
conspiracy theory
but if somebody wanted to do that I
would understand why because inflation
in a small amount stimulates the economy
by changing your behavior
because what are you going to do if the
money in your pocket is worth less
tomorrow than it was today what are you
going to do with it you know spend it
yeah because you might as well get
something that retains its value could
be a car could be a book could be a
handbag a fancy shirt whatever but
you're going to spend it on something
that that price is going to be the same
tomorrow but my dollar is going to buy
less of it so I'm actually better off
you're literally incentivized to spend
your money now and in hyper inflating
economies people go out and buy a
hundred iPhones they'll buy 50 cars
they'll do things like that because they
need something that's going to hold its
value and because a car or an iPhone has
intrinsic value it's better than the
paper money that's being devalued by
inflation right so something super
sketchy about those words now whether it
was done on purpose is a totally
different question but you have to begin
to understand like all this like
confusing mess of interconnectivity of
one thing means this another means that
but it all makes predictions so if I
could get people to master the game of
money to the point where they go oh I
know what this means I understand the
last time this happened it meant this
and so now I've got a prediction and now
I can begin to bet on my predictions or
now I understand how to use leverage or
when not to use leverage and so all
these tools that are available to the
quote-unquote hyper Rich are available
to anybody you may only have ten dollars
to invest in that same way but it is a
knowledge problem it isn't a money
problem now there's a speed issue for
sure the guy starting with a dollar it's
going to take him a lot longer to get to
100 million than the person that's
starting with 10 million to get to 100
million takes a lot less doublings right
to get there takes a lot less risky
stuff you've got a lot more things you
can try that don't work all of that I'm
not denying any of that so scale becomes
a question of what your how quickly
you're able to generate that money but
you can play the same game I actually
want to call back to when you're talking
about accredited investors and so my
understanding is they have certain
income you know brackets or like you
know Network bracket where you can jump
into it because of how they view risk
and they're assuming again these people
have more
I guess bandwidth to take on that risk
and so I'm curious
for you how does risk play into like
wealth generation because again timing
also plays into it because in my head
when you're talking about the S P 500
index funds these are like safe right
over long periods of time but at the
same time you know if you want to take
risks that's also where you get like the
100 X's or things like that so how do
you view risk in wealth building yeah so
I think people if you want to there's
two paths before you to build wealth you
can invest in building something or you
can invest in assets and we'll Define an
asset as anything that actually pays you
to hold it so there are other ways but
just for Simplicity let's stick with
those two building something is going to
be ultra high risk but high risk High
reward so that's how I generated my
wealth I didn't own a single stock in a
single company until after I was worth
hundreds of millions of dollars so none
of my money did I generate in that way
all of my money I generated by building
a company that became incredibly
valuable to somebody else to Own by just
making hundreds of millions of dollars a
year in Revenue so another company
looked at that was like yo those
hundreds of millions of dollars owned by
us we can either grow it or it's a
creative to our bottom line which makes
our share price go up or that product we
recognize is a necessary part for our
brand portfolio to own whatever for
whatever reason it was extremely
valuable to them
here's another money Master the game
idea so
when you're talking about buying a
company there are two ways to value a
company more but these are the two
really typical ways you can get a
multiplier on Revenue so oftentimes
that's 1X 2x something like that so if
you're making 300 million dollars we'll
give you 300 million dollars to buy the
company or you can get a multiplier on
what's called ebitda so ebitda is just
an acronym it stands for earnings before
interest taxes depreciation and
amortization I always forget the eight
you've got your all it's basically the
money you make minus fancy accounting is
the easy way to think about it so you've
got uh you're trying to eliminate all
the different ways that a company can do
accounting and just look at how it's
making money without all the accounting
stuff and that could be 10 times ebitda
16 times ebitda 20 times ebitda because
they want to know how profitable
effectively is the company so I'm only
going going to give you 1X your purchase
if it's just based on Revenue but I
don't like the way the revenue is going
or if you've really shown that this
business is functioning we can do it as
a function of ebitda so while I can't
disclose the multiplier Quest sold on
ebitda and that was part of how we were
able to win so well was we had put
together a high functioning company and
so looking at the different ways that
something can be structured it becomes
really important now we started getting
a field what was the basically about
risk and how to manage that right so
going back to risk so you have those two
paths before you've got the high risk
High reward then you've got the much
lower risk much longer time Horizon to
get wealthy and so that's where I would
advise people if you're going to bet on
yourself accept a lot of risk but know
that it's like most businesses fail but
it could still be the right of a
lifetime if you've got me meaning and
purpose right so I still don't know if
impact theory is going to do what I
wanted to do but I show up every day and
fighting for it feels awesome and so
I've already spent six years of my life
just doing the same trying to build it
it's been six of the best years of my
life so it's like okay well nothing can
take that away so even if it ends up
failing while I will be you know
there'll be a moment of emotional trauma
that doesn't negate all you know going
after something that really matters so
for me that's where I invest the vast
majority of my net worth is
um I guess technically the vast majority
of my net worth is effectively buried in
bonds so that I can't lose anything uh
which is me saying I'm a very low risk
investor and so
all of my high risk dollars though are
in building impact Theory right so we're
just pumping money into it to continue
to scale and grow and grow and grow so
if I were doing risk I would do that but
for most people I would say you'll be a
lot happier you'll sleep a lot better if
you put money into an index fund as
boring as can be and just leave it in
for a really long time dollar cost
average in so don't put all your money
in at once buying slowly over time no
matter what price up price down you just
keep if if you're going to buy in a
thousand dollars a month you're buying a
thousand dollars a month a hundred
dollars a month a hundred dollars a
month ten dollars a month whatever and
you just slowly slowly again index funds
don't try to pick stocks so I would Ward
P if you're an entrepreneur you take
risk if you're not don't I have a
follow-up question on the risk tolerance
of uh index funds and S P's 500s do you
see it as more risk given Ray Dalia's
most recent book about the changing
World Order
so I love Mia Ray dalio uh Rabbit Hole
so I would still say that it's your
safest bet you just may want to be
thoughtful about so for those who don't
know Ray dalio's principles for changing
World Order is an extraordinary book
that points out a fact that every Empire
in all of human history has ended up
collapsing and their currency along with
it
so whether you're talking about the age
of England and the Sterling being the
world's Reserve currency whether you're
talking the current U.S being the
reserve currency when the Dutch were the
reserve currency so on and so forth
forever the Romans when they were the
jam and every one of them has failed all
signs point to it's a it's a six phase
cycle and phase six is total collapse
and Ray dalio pegs is somewhere in the
middle of phase five as the U.S Empire
so we are clearly on the decline in the
world order in the last 18 months as the
time of filming this uh 40 of all U.S
dollars ever made in the entire history
of the US dollar were printed in the
last 18 months so that is a very bad
sign so when you think about uh an
Empire collapsing it usually begins with
inflating their currency
it begins with inflating their currency
and beginning to lose their standing on
the world stage and that there's another
Rising superpower and of course right
now that would be China so there are a
lot of things but Rey will be the first
to tell you he doesn't know if it's five
years 50 years or 150 years they do tend
to collapse somewhere in the 150-year
range give or take a hundred years
though that's a pretty big swing so we
are at what the US is 250 almost 230
something like that no almost exactly
250. so we're almost exactly 250 years
old right now so we're along in the
tooth so uh even if it's the plus 100
years uh according to Ray dalio's
research and of course nothing is ever a
hundred percent so one might want to not
just invest in a U.S Index Fund but I
certainly would not think somebody
investing in the US economy is stupid
because what you're saying is that you
just trust that the U.S economy is going
to grow and the odds of it not growing
over the next 50 years to some
meaningful amount is effectively zero I
can never say nothing is zero but
historically certainly that's a very
positive sign like even somewhere like
England it's not like they went to
nothing they're still a major economic
player especially for a country the size
that they are
but it's worth paying attention and
seeing does China start to pop off do
you hedge your bets a little bit do you
start doing emerging markets do you do
based on technological sectors whatever
and looking at that but the only sort of
dumb thing to do would be to pick the
major
um like the S P 500 the I'm sure there's
a global index to get as broad of a
portfolio as you can that is a
well-trusted index fund and invest in
that and then as I say uh
diversification is critical you're going
to hear people say diversification Is
for Suckers the crazy thing is they're
both right because what they mean is
there really will be a winner and a
loser and if you bet on the winner then
you make all the money and this is the
guys that get incredibly wealthy it's
never on index funds you'll get Wealthy
by sort of family standards but you're
never going to become uh Elon Musk or
Warren Buffett betting on an index fund
so if you look at somebody like Warren
Buffett who did make his money in the
stock market the way that he did it was
he picked somebody's he made like 80 of
his wealth off of three trades I mean
it's really ridic it's less than five
for sure so there are precious few
companies where he looked at it got it
right and went all in now if he had
looked at it got it right and then was
like well I'm still going to hedge my
bets across everything he would have
much less risk for losing money but he
never would have become the richest man
in the world so again it's optimizing
risk for what you're comfortable with
I'm hyper risk-averse in investing and
I'm hyper risk tolerant in building so
the bad news for my wife is if I put all
or most of my money at risk to build
impact Theory and it ends up failing I
still feel like a warrior who is in the
arena and that's how I want to view
myself if I were to
failed to take that risk and never try
to build something great that would
really bum me out but if I lost all my
money on an investment I would feel like
an so because I don't consider
myself to be a clever investor so I need
to be very thoughtful hedge my bets be
very risk-averse and So for anybody
following the FTX drama Lisa got text
messages from friends who were like oh
my God I'm so sorry uh that you guys you
know you must really be panicking I
think they said to her and she was like
oh my God what the hell and so she
reaches out to me she's like what is FTX
and I'm like your husband is way too
paranoid for that like we have no money
in FTX my heart absolutely bleeds for
people that did the loss of human
capital as an app an absolute tragedy
but because I'm so risk-averse on
investments
we didn't do that we didn't expose
ourselves to D5 or anything I'm just too
paranoid so know thyself know what your
risk tolerance is but most people would
get queasy if they saw how much risk
I've taken in my life on the
entrepreneurial side
and then they would laugh at me if they
saw how little risk I take in the stock
market
I'm actually going to interject here but
you you made one comment which I don't
know if it was a mistake but you said D5
which just in the crypto world it was
actually a centralized exchange that
caused like all the drama you know I was
not trying to say that FTX was defy I'm
saying you don't not only did I not that
I didn't do defy or any of the things to
get people excited because the yields
are amazing but thank you so that nobody
thinks I'm conflating the two
um they were just when I got into crypto
which already I only invested in three
total coins one I sold and boiled down
to just two
Bitcoin and ethereum
um even then when there was so much
excitement around the kind of yield that
you could get when Banks were paying you
nothing I was like nope
it just seems too good to be true I'm
going to stay safe and so even if I look
like a chump because I don't make a lot
of money on the D5 and other people are
fair enough but I'm also not going to
lose money and then literally like a few
weeks later uh was when Mark Cuban lost
God only knows how much on a D5 thing
and I was just like yeah and the thing
it really does come from an
acknowledgment of my level of ignorance
so I don't want anybody to think I'm
smart I want them to realize how
risk-averse I am as an investor and so
you just have to and the reason that I'm
so risk averse I don't think I
understand it well enough and so you
need to know your level of knowledge
because again your knowledge makes
predictions if you don't have enough
knowledge your predictions are going to
be terrible and so the only things I
invest in are things where I feel like I
understand it well enough to make a
prediction so that to go back to an
earlier answer that I can really Buy Low
and sell high so as the price of Bitcoin
fell and ethereum fell I didn't even
think about it because one I was
investing for the long term I knew that
they fluctuate wildly within any
four-year window the fluctuations on
Ethan Bitcoin since their Inception have
been violent and so I was like well I
know they're going to be violent swings
so I'm only going to invest so much that
I still have plenty of capital dry
powder as they call it to live my life
and build when I'm building and then I
want to make sure that I don't see that
number and panic and go oh my God I have
to sell it's never coming back it's like
you have to be sober in that moment and
go what what was the knowledge that made
a prediction it's what people call my
thesis right you'll hear that a lot in
crypto my thesis is still intact what
they mean is you learned something about
the way that it worked which made a
prediction and that's your thesis so my
thesis is that the world becomes more
digital relies more on the blockchain
and more of the things that we think of
as being physical like money are going
inevitably to become digital if it's
going to become digital what do I think
will be the digital currency uh honestly
the digital currency will probably be
nation-based digital stable coins if I'm
completely honest but I think Bitcoin
will be digital gold and then ethereum
because we we actually build on it
ourselves here like that one to me is
even more than a currency it's it's a
whole universe of creation so anyway as
long as my thesis I Theses whichever the
case may be as long as those remain
intact I'm I don't have an emotional
problem right so even the other day when
I saw that uh ethereum was down to 1100
I was like whoa it was almost more a
fascination of like wow like volatility
is really real but then when you see
people being devastated devastated to
the point of like weeping and obviously
we know unfortunately it can go even
farther than that and it really becomes
scary
for me it isn't emotional because I
followed a set of criteria again because
I know my level of ignorance this is not
a clap for Tom this is a hey maybe I can
own up to I am as ignorant as Tom and
therefore will be as cautious as Tom and
play at that level
many people change their thesis over
time so how do you decide if you're
gonna change or how do you always stay
focused throughout the ups and downs one
I don't chase it because I don't know it
well enough I don't spend enough time
but if you look at somebody like Ral
Paul who I think is a brilliant macro
Economist when he's spending all day
every day watching the macro Trends two
he is extraordinarily educated because
he's been in this for a long time and so
he's lived through a ton of these Cycles
so even in the Euphoria he was like guys
you have to be careful you have to be
thoughtful here the macro Trends this is
what this makes as a prediction be very
thoughtful and just walk people through
historical Rises and falls and so you'll
get people like that that as their
thesis changes they change their
portfolio so one point he was what he
called irresponsibly long on ethereum so
he had something like 95 percent of his
net worth now as things began to change
he started changing that ratio for me I
was just like this is how much which I'm
willing to put into crypto once I hit
that level then I just stop and I'm
going to turn my brain off to it for the
next five to ten years now if 10 years
from now it doesn't hit I'll be like
yeah maybe that was a mistake but my
thing was I put the money in it and and
if if over that time my thesis changes
then I may rethink but the way that I
see it right now today I would ride
ethereum and Bitcoin to zero I have no
intention to sell the reason that I
would write it to zeros as of right now
today I in my do not follow my advice
way believe that right now those are the
Front Runners to be the ones that last
because I think everything not
everything I think a lot of things are
going to go digital a lot of important
things are going to go digital and those
two things still matter to me for the
reasons that I was explaining a minute
ago so okay those still matter so even
if the rest of the world momentarily
says these have no value it's my belief
that they will once again realize no
actually they do and and because I'm so
familiar with the technology and have
built so many things now on the back of
ethereum and really have researched the
life out of Bitcoin the protocol why it
matters watch the adoptions just seeing
some of the greatest thinkers in the
world think through predicting their own
future and where this goes I have a
pretty robust map of where it goes and
obviously it could be wrong but I have
confidence in that such that for now
it's just wait and see now if through
all of that like if the Bitcoin protocol
were to suddenly stop or we realize just
kidding there's not 21 million there's
22 million then I'd be like whoa my
whole thesis has changed now I want out
right so if any of us saw the supply of
Bitcoin inflate at least people that
that's part of their thesis which it is
mine that would invalidate everything
and I would be in a mad scramble because
then suddenly my thesis goes away
and I'm left like yo I want to get out
right now so but as long as everything
stays intact then I'm good the truth is
hitting your career goals is not easy
you have to be willing to go the extra
mile to stand out and do hard things
better than anybody else but there are
10 steps I want to take you through that
will 100x your efficiency so you can
crush your goals and get back more time
into your day you'll not only get
control of your time you'll learn how to
use that momentum to take on your next
big goal to help you do this I've
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free by clicking the link in today's
description alright my friend back to
today's episode
do you believe in the advice about in
order to get rich you have to follow
your passion and do what you love and if
that doesn't work out how do you know
when to stop and to explore a new hobby
or a business venture so it goes back to
there's two primary ways I know the
comment's gonna light me up with what
about this and what about that there's
two primary easy to discuss ways to get
rich way number one build something way
number two invest like you're watching
paint dry as
um I have heard from ramit seti so if
you are doing the just invest then no
it's going to be super boring if you're
doing the build building is hard and
building will question your will to
continue not once not twice dozens
hundreds thousands of times like my life
as a roller coaster every day and the
funny thing is when something's going
right and my day is awesome like today
we just announced something big and the
Discord it was so fun and people were
loving it I was like yeah I know
something is goi