Transcript
The algebra of wealth, very good book title by Scott Galloway. Very good conversation I had with him about how to create wealth, all the mistakes he's ever made. He's he's started 9 companies. 2 of them were successful, super successful. Several of them were pretty successful. He's talked about entrepreneurship so much. He's a real smart guy, and these lessons about building wealth, I wish I had known them when I was younger. I wish my kids would know them, and I want your kids to know them. So pay attention to this conversation I'm about to have with Scott Galloway, professor g. This isn't your average business podcast, and he's not your average host. This is the James Altucher Show. Yeah. Scott, you have a new book, The Algebra of Wealth. Yep. And we'll talk about it. Very interesting. Good. But just what have you been up to lately? What's what's the biggest thing going on in your life? Well, I think I don't know if we I I don't know if you spoke since I moved to London about 2 years ago. I don't know how long it's been. I think I might have no. I don't know if I knew that. Like, the last I was kinda I was kind of going into this assuming you're still a professor at NYU. I am. I'm still on faculty. I'm just not teaching right now. So what do you do for NYU? Well, I do, like, fundraising or events here. I still do you know, if I'm there, I'll I'll host an event. I still get involved in, you know, strategy sessions. Basically, not a lot, but they wanted me to maintain affiliation. I'm happy to maintain affiliation. They also have sister relationships with, LSC here, so I'll probably teach at some point here. But right now, I'm on leave. And and why are you doing that? Why did you decide London? Why are you on leave? I wanted to I wanted to give my kids something different. We just wanted to get out of the US for a few years. I'd never lived overseas. I was didn't like the idea. I'm not getting any younger and thought it would be just a gift for our children to have them be raised in another country for a few years. You know? Why are we here? Because we can. And, you know, but it doesn't doesn't make a ton of sense. I have no professional activity here. I'm on planes a lot again, but the kids are happy. And, you know, the honest answer, James, is not around these decisions. I'm an influencer, not a decision maker. So my wife decided we were moving to London, and here we are. Well, I I if I was to move to a European city, I think in in order, London, Amsterdam, and that's it. Those are my only two choices. There you go. Yeah. Madrid is actually really hot right now, but you gotta speak Spanish. We'd live in Munich if I spoke German. My wife is German. But London's the easy choice. If you have money, London is a nice city. It's it's and and the proximity of the continent is great. It's very civil. It's very nice here. It's not in my opinion, it's not it's it's not even in New York shadow in terms of the quality of the city and density of opportunity and things to do, but it's a little bit more civilized, fewer homeless. Anyways, we can talk about it, but, yeah, I'm here. And and, you know, it's interesting you say density of opportunity. So and I I wanna ask you about this because you talk about this in the book too. I I would describe this book, the algebra of wealth, as a a guide to what things you need to do to create the greatest opportunity for luck because we all know luck is involved in success. Not not a huge amount. There's hard work. There's all that stuff. But you talk about lots of different things that all added up together will increase, let's say, the surface area of your possible luck. That's how I interpret this book. Yeah. I I I like that, James, and it it's, like, it's really difficult to predict the weather, but you wanna have your sails up such that when there's a gale force wind, your sails are up. And, you know, so for example, I've always believed you should always be invested in the market. It's very hard to time the market. Economists were unanimous that 2023 was gonna be a recession. They had they had never when they did a survey, they had never had unanimity around anything, and they all said in 2023, we were going into recession. So it would have made sense in late 2022 to dramatically scale back your public markets or your S and P investments, up 23%. Yeah. So I mean, in the history of the stock exchange, at least in the US, anytime you would have bet against the market, unless it's, like, a short term thing, which, you know, is a 50 50 gamble, if you had bet against the market today, you would be drastically wrong. To the like, specifically today. Like, we're at all time highs. So That's right. And so this is a series of things that say, okay. If you're really lucky or you're just a genius, if you're Kanye or Jay z or Beyonce and you have or Ronaldo or Messi and you're so talented, you can't help but make money. Fine. But it's kind of based off this notion. You you've probably seen this study that if you hang out, you're the sum and then the mean of the people you hang out with. So 5 people hang out together a lot, they end up the same weight, same income, same jobs, same political values. But what's got greater variance is 5 people can be making approximately the same amount of money, 3 end up okay, 1 ends up wealthy, and one ends up financially strained. And I try to understand what are the habits and strategies such that even if you don't have that big win, how do you make sure that by the time you're kinda our age, or I should say my age, you got a plan b and you have some wealth? And then what are the attributes that separate people who are economically secure from those who are very, very wealthy? And the reason I I brought the the the luck aspect in relation to cities and and, by the way, this concept of your you also bring this up in the book, the average of the 5 people, you know, you say basically hang around with rich people. First off, the cities, I remember one time, this was in 2,005 roughly. I had an office on Fifth Avenue. I had a hedge fund. And the reason I the only reason I had an office on Fifth Avenue was to have an office on Fifth Avenue. Like, I didn't really need an office. But to your point, go to a city, have an office was is a chapter in your book. And I ran into 1 guy, and he said the great thing about New York City is you're literally tripping over opportunities on the street. And it's true. If you're in, I don't know, the middle of Oklahoma, you're not gonna have as unless you're Sylvester Stallone in the in the TV show Tulsa, you're not gonna necessarily have opportunities that you're tripping over. Whereas New York, you meet people. There are deals happening. You could raise money and so on. I wonder, though, if that's getting got distributed because of the pandemic and the exodus from large cities. Like, New York City is is number 1 ranked in terms of, the exodus of basically high taxpayers leaving the city. Well, it's distributed, but, I mean okay. So 2 thirds of economic growth over the next 30 years are gonna be in 20 cities. So while you can play, like, you can play you can handicap which cities are gonna like, Austin and Miami are booming. You know, I was just in Madrid. Madrid is booming. But generally speaking, where you know you're safe is while you're young. If you're ambitious, you wanna get to the biggest city in your nation. And then if you're super ambitious, you wanna get to London in Europe, in my opinion, or New York in the US. And the data I've seen around the exodus in from California, New York, yeah, there's some of it, but there's still it's gone from it's gone from a massive amount of opportunity every day to just a a a s**t ton of opportunity every day. Living in New York, living in a big city, one, you're you're constantly bumping off of personal and professional opportunities. It's the density of professional and personal opportunities is unmatched. Also, the competition is greater and the expenses are ours. So the only way you can survive in New York is to be pretty good at something, and it's very motivating. And I always say that if you wanna play it's like playing tennis with someone better than you. It elevates your game. When you're in New York, you're playing with with really talented tennis players. Now has some of that reduced? I would argue no. My world's a little bit sequestered in New York because I live in SoHo, and as far as I can tell, it's shed its skin and its back stronger than ever. A lot of people point to data around high taxes and increasing crime for reason why people are leaving. They're definitely they make that argument more often for people moving from California to Texas, but something like 90% of the people who move in California move somewhere else in California. And despite the what is the 2nd highest tax burden, I think, behind New York, all of these people who ship post California, who are rich, could live anywhere they want, and yet they choose to stay in California. The reason why I think these people endure high taxes is quite frankly because it's worth it, Whereas Oklahoma has the lowest tax burden in the nation. Why? I don't think a lot of people are dream of moving to Oklahoma. So I think the market is really good at calibrating this. I like that states compete. I think it's gonna put pressure on New York and California to get their act together when people start moving to Florida and Texas. So I think intrastate competition is actually a good thing. Sure. But I think most people have decided that it's that it's worth it to stick in those cities, most people. And and I I would argue, yes, to live a quality life with a family in New York City in Manhattan is extremely difficult because of the 100%. The cost. Yeah. But, like, I moved to New York City, as an adult. I I grew up around there, but I moved to New York City as an adult after graduate school, and I had $0 in the bank. You know, you basically, when you're young and in your twenties and you don't have a family You can do that. Live in the s**ttiest circumstances and love it because it's New York City. That's right. And and but the question I have is, young people, particularly those in their twenties, and I'm thinking of my own experiences, being in New York then, it's hard to necessarily find the opportunity there. It's easier when you're in when you are aware of these things and what opportunity looks like. If you're young, how do you look for the opportunity? How do you push yourself to look for the opportunity in a in a great city? Well, it's increasingly hard, and I'm not here with a message of hope. Our our parents' generation on an inflation adjusted basis, when they were 25, were making a 105,000. We were making on average about 85, and now 25 year olds are making 55. You can't live in New York on that. I mean, the sad truth, James, is if you wanna live in New York, you either need rich parents or a crazy well paying job if you're young. But but you could live like I said, you could live in, like, you know Gowanus or something? 3 3, yeah, 3 subs subway stops into Brooklyn or or Astoria, Queens or Forest Hills or Jamaica, Queens. Like, I was I was sharing one room with a a guy pay it, and I was paying 300 a month. And it turned out he actually wasn't paying any he was squatting Yeah. Illegally, and I didn't know that. And we had to, like, move at 3 so, like, New York that's a common story in New York City. It's, like, the horror real estate story for for young people. I think that was more common. I had some I paid $1900. My first job was in Morgan Stanley right out of college, 1987. I was 22, and I paid $1900, and there were 3 of us in a 1 bedroom. And 1 of us slept in the entryway, 1 in the bedroom, and I slept in the living room. So $633. You can figure it out. I think it's actually gotten harder. I think dancing between the raindrops has gotten harder, for young people. But back to your question around, I think your twenties are for workshopping. I think you work really hard. You don't you get to a city. You don't spend a lot of time in your house. You pursue opportunities. You try and meet as many people as possible. You work really hard, and you have a sober conversation around not what you're passionate about, but what you're good at. And I think that the key is to find something you think you could be in the top 10% of at some point. Not now, but at some point, you think I have a natural aptitude towards this. I'm good at it. And then the second question, and this is the key part, is that it's an industry that has a 90 plus percent employment rate. So I know you like stand up comedy. I know some guys who are the top 0.1% stand up comics, and they have a tough time making a living. Oh, yeah. I'm oh, go ahead. Sorry. Well, whereas if you're in the top half of tax accountants, you're gonna make a you're gonna make a good living. And if you're in the top 10% of an industry that has a 90 plus percent employment rate, you're gonna make a really good living, and the the accoutrements of making a good living, being able to take care of your kids, your parents, take wonderful vacations, have people laugh at your jokes when they're not that funny, a broader selection set of mates, whatever gets you those things is gonna make you passionate about whatever that thing is. In your twenties is the opportunity to try a bunch of different things, develop a kitchen cabinet of people who will be honest with you, and also just have an honest conversation around where you expect to be economically and what are the trade offs. Yeah. So so a a couple of great points there. 1 is, you know and you make this point in the book that doing what you love isn't necessarily gonna lead to success. In fact, it's often quite the opposite. Like like, if what you love is stand up comedy, forget it. Like, there's 0 people who make a living at stand up. It's very, very easy to go broke and and commit suicide doing stand up comedy. That's that's more common than getting rich in in in that world. But it's the same thing for, like, you know, being a a novelist who's rich or or a screenwriter or an actor in Hollywood. Artist. Yeah. Yeah. And and but here's the flip side of that. Doing several years of stand up comedy, like, amped up by 10 x my public speaking skills where it is possible to make a living. So sometimes getting good at what you love, can be translate. You can borrow 10000 hours from that to do something that makes makes a lot more money. But but I think you're right that that that but but but the other thing you said, which is very important, is that when you find what you're good at and you start seeing results from it, you do become passionate about that. And that's a key insight is that your talent actually leads to passion as you start seeing results from it. There's just nothing like being great at something. Mastery mastery is intoxicating. And the moment you start to get good at something and you get promoted and people admire you and wanna learn from you and the economic accoutrements of being great at something just make you you know, I I know people are I I know a guy who's passionate about iron ore smelting because he's really good at it, and he makes a s**t ton of money doing it, and it affords him amazing life. So he's just fascinated by the collision of, you know, of heat and metal. So this is your challenge as a young person. Find something you're really good at, again, where the employment rate is positive. To your point about you can transfer the skills, I wanted to be an athlete. I going to UCLA disabused me of that notion really quickly. But that discipline, that discipline and that grit and that willingness to, like, push myself really hard paid huge dividends when I went to work for Morgan Stanley. I didn't wanna be an investment banker. I was bad at it, and I didn't like it. But the attention to detail, the work ethic, the understanding of the markets have paid huge dividends for me. And then finally in business school, I said, okay, I kind of enjoy brand, and I figured out that companies I did some student projects, and I found out that companies will pay you to do this. There's a word for it, consulting. Started a consulting firm, was good at it, and started making money, which made me love it. And I got to do cool things and go to board meetings in foreign cities and start a firm and that just made me pa*s. You know, I never grew up thinking, oh, I wanna be a brand strategist. So and generally speaking, the industries that kids dream of going into are the worst, lowest ROI industries because basic chart in the book is, the sexiness of a job or an industry is inversely correlated to its ROI. And that is the amount of brain damage, energy, and the return you'll get from that investment in the fashion industry is just awful. Whereas if you apply the same grit and talent to another industry that's less romantic or less sexy, the return is immense, because these sectors and jobs are asset classes. When everyone's buying real estate in Florida in, you know, in 2007, it gets over invested, the returns go down, and it's due for a crash. And then when no one wants it in 2011, that's when the time is to buy. It's the same is true of careers. The careers and investments. I get pitched on a members only club in SoHo for artists in the entertain in the entertainment industry and models. I'm like, yeah, I wanna be a member, but I wanna invest. I get pitched on it. Oh my god. You may have gotten the same pitch I did, but this was I got this pitch 10 years ago. When did you get this pitch? It was a while ago. It's a we probably it's probably the same guy. We're probably both friends with him. But I'm like, I'd love to be a member, but I'm not gonna get near this in terms of investment standpoint. Whereas I'm just about to invest in a health care maintenance SaaS company. I hear the business and I think, this sounds awful. I'm definitely investing. Because the industries that have a dearth of human capital going into them, and we know this when When everyone's investing in venture capital, don't get near it. When no one's investing in real estate, run into the fire. And it's the same as true of sectors. Don't write off sectors just because, you know, be a DJ on the weekends, but figure out there's gonna be an enormous opportunity in trades jobs. There are 5 people leaving trades jobs, baby boomers, and selling their businesses, and only 2 entering them to them because we've shamed them so much. There's gonna be a huge opportunity to start, like, a carpet cleaning business or a drape hanging business or, you know, the guys that lay the soapstone down in your kitchen. You know, if you're not one of these people that that is cut out for college, there's gonna be huge economic opportunity in sort of these trades jobs. You know? And, also, like, let's say you're not talented at carpet cleaning and you really don't wanna do it, but you are let's say you're talented or or fascinated by business, there's also an opportunity in investing in 16 carpet cleaning businesses and and, you know, combining the cash flows and bringing that public. So if you if you're talented at business and you study business, there's all sorts of opportunities in any industry if you love it. Well, I think financial literacy and economics should all be taught, in accounting, I think, should all be taught in high school. Because here's the thing, 80% of the jobs in any industry aren't in that industry. 80% of the people that work in Google aren't tech workers. They're in marketing, they're in biz dev, they're in sales, they're, you know, they're doing different s**t. Yeah. Exactly. So, like you said, you don't have to love carpet cleaning to be in carpet cleaning, but if you're a business person and you recognize there's an opportunity and there's a baby boomer who's trying to sell his 5 trucks and his business and his $3,000,000 business spinning off 500,000 in EBITDA, there's gonna be need to be someone who's passionate about the business, and then there's gonna be need to be someone who understands business. So but in terms of picking a sector, what I generally have found is being good at something and making money and developing economic security is just is just a s**t ton of fun. And your job is to find that opportunity and to say, okay, what am I really good at? So you want to develop you want to get to where there's a lot of opportunity before you have dogs and kids, that's usually a city. You want to develop a kinship cabinet of people that can advise you, I didn't have this, I could have saved who could have saved me from myself a lot. I made a lot of stupid self inflicted unforced errors when I was young. And you want to develop a really strong social network and try, like, invest, you know, we always talk about compound interest and the power of investing capital when you're young, but also just try and create a lot of allies. Hang out with impressive people, try and have good character, talk them up behind their backs, try and collect a set of allies and mentors as a young person, and don't be afraid to switch careers in your twenties. I I had an opportunity to make the jump to associate at Morgan Stanley, and I didn't do it because like, I hate this, and I'm not very good at it. And but that was a great move for me, even though I didn't know what I was gonna do next. So keep in mind, your twenties is about figuring it out. Take a quick break. If you like this episode, I'd really, really appreciate it. It would mean so much to me. Please share it with your friends and subscribe to the podcast. Email me at altutra@gmail.com and tell me why you subscribed. Thanks. I feel like I have a similar story to you in terms of, like, the the types or the category of mistakes I made in my twenties and early thirties, and I too would have benefited from having allies. Like, a team of people who I knew I could go trust, have take advice from them. I wouldn't be, you know, everybody has their purpose. Like, a a big danger of being in your twenties and early thirties and having early success is you get arrogant, and you think you're too smart, and you don't listen to people. And this was a big mistake of mine is I didn't have that that kitchen cabinet as you call it. But, like like, right now, I I think of I have 2 daughters who are in New York City who wanna do glamorous jobs that are you know, have a high probability of not being successful at. So in the meantime, they're, you know, waitresses. And and I I also feel they don't necessarily push themselves to find success. They sort of feel if they keep doing the typical New York thing, they they forget about survivorship bias, so they think success will happen. But, like, what do I what do I tell them about how do I translate what you just said into something that will create action for them? James, me and every other parent of kids would like to know the answer to that, and I don't have an answer. My I've I often said I have sick 13 and 16 year old boys, and my one of my biggest fears, if not my biggest fear about them, is if I had what they have, I wouldn't have what I have. Okay. So let's say you were 25 and in the city or 24 in the city, and you don't have a clue how to find the right people. You know, you're you're the average of the 5 people, and you don't have a clue how to find opportunity. You don't know what your talent or passion is. And you see people make money, but they live up high in the big buildings on, you know, Central Park West, and you don't know how to get there. What actions do you think you should take? Well, I mean, it it okay. Let's say you read Scott Galloway's book. Well, my my advice is more around my advice is more for the person who is tracking, has some certification, has a job. I'm not I'm not at what colors your parachute or how to get out of debt. I'm, like, I'm making decent money. I'm reasonably talented. I I wanna be one of these people that ends up financially secure even if I don't kill it. What you're talking about, I think, is even more difficult, and that is how do I find how do I develop not only find a place to apply my energy, but find kind of a mojo to apply that energy? And at the end of the day, I think it's kind of the same thing, and I got this from sports. Get up every morning early, make a certain amount of progress, and don't let perfect be the enemy of good, and take a job in an industry where, like you said, your kids are you know, I was I've I've been fired from the best restaurants in LA. I worked as a waiter all through college, and I was terrible at it. But that was never an endgame for me, and I always put a limit on stuff. Okay. I wanna be an athlete. Well, I'm not nearly good enough to be an athlete. Alright. Next, I wanna be an investment banker. I'm gonna show up every day. I'm gonna try hard. I don't wanna do that. And then if you're a good student, you know, I think grad school is a great way to buy time and maybe try and find something. The reason why I went to back to business school is because I had no idea what I wanted to do and why we all pretend in our in our applications that we're supposed to be very focused. My application at UCLA, I said I wanted to be a pediatrician, and I thought that was true, until I took chemistry. When I was applied to business school, I said that I wanted to be in computer science, and that was true too until I started, you know, actually coding and realized I wasn't very good at that. Your job is to, every day, show up, work hard at something, really test it in an industry that you'll get better at and it'll pay well. And what I would say to your daughters, who are it sounds like pursuing kind of one of these romance industries, is I don't wanna crush anybody's dreams, but what I tell people is if they wanna be an actor, ring fence it. Unless you're making a sustainable living within 24 months, realize that you're gonna be one of the 9 I mean, do you the the SAG AFTRA union, the union for actors and people in Hollywood, these are the best in the world. There's a 180,000 members of the union. 87% don't qualify for health insurance because they don't make more than $23,000 a year. So it's a s**tty industry. Now but were you gonna tell your daughter who dreams of being an actress not to be an actress? No. What I think you can say is, alright. You're talented. You're going to find something that you can find reward in. Maybe this is it, maybe it isn't, but let's ring fence it. Let's give it 2 years and certain hard metrics around whether this is really working. Because in those industries, if you're not in the top 0.1%, and you'll know pretty early whether you are or not. Messi knew he was Messi at, like, 11. Right? And and and lean on me, your parent, although it's hard when you're their dad because they'll listen to anyone but you. But lean on me to say, okay. Let's be honest about how this is going because you are talented, and there's a ton of opportunities. And what you said, James, is really, I think, compelling in terms of your narrative. Those skills as an actor, actress, or in the creative industry, you can apply those to other industries. And also, I, you know, I for me, grad school was a great way for what I call the elite and the aimless to kind of figure it out or explore other industries while getting certification. But I would say, at the end of the day, get up, get a job, don't let perfect be the enemy of good, meet as many people as possible, try and make as many allies as possible, and have mentors such you can say, is this working for me? Is it really working? And if it isn't, don't be afraid to switch because in a matter of 5 years, I was a doctor, investment banker, MBA student, and consultant. You know? None of it worked until it did. When did you first feel like that so so I know that feeling you're talking about where suddenly you fall into a job, and it's neither here nor there. But then suddenly you realize, oh, I'm good at this. And the harder I work at it, the better the results are, the more money I make. And now I have this excitement that I've never had before in my life. I'm I'm enjoying getting up in the morning to go to this job where I see my future for the first time. When did you first have that experience? Yeah. I know the exact moment. I was a second year in business school, and I took a class called brand strategy with David Aaker. And we were supposed to do our final project was to do a consulting engagement for a client. And I pitched Yamaha Motors, and they said, sure. We'd love to do this. We're looking at the youth market, how we can reinvigorate the Yamaha brand in the youth market. And I said, you know what? I said this requires this is a real important project for you, and this requires market research and interviews with experts and real statistically rigorous, data. And I said, I want to do this right. I'm gonna write you a project, but I need money to do this, and they said, okay, write us a proposal, and I wrote them a proposal. I called my friends at BCG and I said, what should I charge? And they said, well, we would charge, this is 1992, we would charge half a $1,000,000, so I said, well, I'm not BCG, so I'll charge them quarter of a 1,000,000. So I wrote a proposal, my mom proofed it, and I sent them via FedEx, so it would seem important, a proposal, and I've asked them for a quarter of a $1,000,000 to do some market research and a brand strategy engagement for Yamaha, and they didn't call me back for, like, 2 or 3 weeks. And then I pulled up to my apartment in Rock Ridge, Oakland, and I was paying $280 a month, and I opened the mailbox, and there was a check for $125,000. And a voicemail from this guy, Matt Takazawa, saying, we're really excited about the project. You should have received the 1st installment. I remember thinking, James, at that moment, looking around and thinking, did I just commit a crime? Is this fraud? And what you realize is that no one everyone's a fraud. Everyone's an imposter. But for me, it was I was very economically focused at a young age. Something that was a benefit of growing up without a lot of money was I was very focused on economic security. So recognizing that I had the skills to convince a company to pay me a quarter of a $1,000,000 to try and answer very difficult questions and then do a good job of it and get multiple engagements from Yamaha over the next several years, it was intoxicating. I felt relevant. I loved making money. I enjoyed hiring people, and I enjoyed standing up in group of in front of a group of people. And I enjoyed standing up in group of in front of a group of people and communicating and storytelling around business issues. That was intoxicating. Over time, I decided it wasn't for me, I got out. Consulting and services is a young a young man or young woman's business. You're traveling all the time. It's dependent upon relationships. As I get older, I become more of an introvert. I didn't wanna hang out with clients, so I pivoted to academia. And I think you're gonna see that a lot in industries. But for me, that moment was when someone would actually write me a check for a $125,000. That was a moment I thought, wow. Maybe maybe there's a there there. Did you, you know, while you were doing the Yamaha Motors project, did you seek out in parallel other clients to pay you, you know, $250,000? Yeah. And here's the thing, and and you must know this as a stand up comedian and as someone who had to raise money for a hedge fund. Your success has largely correlated to your willingness to pull out a spoon and eat s**t. I started calling every alumni of Cal and saying, hi, CEO of Levi's. I've just started a consulting firm. Will you have coffee with me? No. No. No. Okay. And no men, I would email them again in a month. I mean, I was just relentless. And And go ahead. Go ahead. Your your willingness to eat s**t and endure rejection is the only way you're gonna score above your weight class professionally and personally. If you wanna marry or or date people who are nicer, higher character, and hotter than you, then it's really easy. Get used to rejection. If you wanna if you wanna score above your economic weight class, if you want people to look at you in 20 years ago, I wouldn't have guessed he'd be that successful, then get ready to eat s**t, because that means walking up to strangers, emailing people, taking risks, risking public failure by trying to raise money, starting businesses that might fail publicly. And here's the reality, 98% of people aren't willing to endure rejection. Everyone's so impressed that I'm an entrepreneur. The only difference is I'm willing to sign the front of checks, not the back of checks. The majority of people would never put their own money into their own venture. It it it's so true, and it's so painful, the decades decades maybe for some people who are more talented than me, it was years, but not decades, but the decades of rejection. And as you put it, eating s**t, like, you just get humiliated all the time. It's not just rejection. It's humiliation in many cases. Because the because the because people who have the power to reject you also have the power to tell you why they're rejecting you. And sometimes they don't know, so they just say whatever they wanna say to you because that's how they get off. But, that's that's the mojo. That's the push is that you have to, like, have a goal that you're willing to jump through fire to get to. And it's painful it's painful to do that, and I don't know if there's really a formula for it. Like, I don't know how you like you say, you already have to have that willingness before you can go out and get it. Yeah. I don't know how you teach someone the willingness to be rejected. I mean, I ran for sophomore, junior, and senior class presidents, lost all three times, and based on my track record, decided to run for student body president where I went on to wait for it, lose. And I think that that just paid huge dividends for me, the recognition that failing is painful, but a couple days later, you're fine. And I've, again, I've described success as the ability to mourn and move on. Like, oh, this didn't work out, mourn and move on. I mean, you raise money. Like, I'm now reading that an average venture capitalist has to do 300 meetings to find 1 person to fund him or her. It's just constant, constant, rejection, and the majority of people aren't willing to endure that. So I don't know how you train it in people. I I'm trying to do with my boys. I force them to speak to strangers when they're out because it's awkward and uncomfortable, and I'm like, well, get used to it. That's the key to success is putting yourself in awkward and uncomfortable positions. And I've sat outside of the front of my house with, I mean, my youngest very upset because I won't let him back into the house until he talks to a stranger, and I'm literally like, just go pet that dog. But those skills, I think especially for men who are still expected to initiate conversation with potential romantic partners, I think that skill is so important. And I'm not saying that everyone should be an entrepreneur or you have to be risk aggressive, but be clear, you know, 1 out of 7 businesses succeeds, so I've started 9. I mean, when I business failed, I mourned for a little while, and then I got up, dust up my pants, and called people. I was I like to think I was a good person, a good employer, a good good person, a operator who took other people's money, and I'd try and start another business. And I've started 9 businesses, and 2 have been very successful, 2 have done okay, and 5 have crashed into a fiery ball of flames. But all you need is 1. And so to think that you're gonna be successful in your first relationship, your first business, your first job is just you're deluding yourself. And so forgive yourself and get up and try again. You you are the answer. I think a key component, and even just articulating this, looking in the mirror and saying, I am the answer to Affirm's problems. I would be great for Affirm. And then answer the question, well, why would you be great? And get in front of people and start practicing convincing them why you'd be great. You're you could make someone very happy. Right? There's there's no there's no pain like getting your heart stomped on, but then convince yourself, I could make someone very happy, and I'm going to someday. I remember I mean, I didn't I didn't have girlfriends in high school, and in my freshman year, I I it wasn't until I was a sophomore that I had really my first serious relationship. And I remember thinking, I'd be so good at this. I'd be so good at this, and it gave me the mojo to be more aggressive and ask people out and then have them say no and then ask them out again. But for me, that's been really the key to success. And if your business fails, if you're if you're getting no's, that just means you're on your way to yes. So the more no's you get, the more that means you're on your way to yes. I think also very important, as crass as it sounds, hang out with rich people. Because, for instance, take raising money. If you're trying to raise money and everybody you talk to has 0 has a $100 in the bank, you're not gonna raise money. If everyone you talk to has $50,000,000 in the bank, you're going to raise money even if you have a crappy idea. You're gonna you have much more likely to raise money. You increase the the potential for your luck. So and maybe it's hard to hang out with people who are rich, but I would say one shortcut to that is, you know, and this is relating to mentoring too. Offer as much value as you can. You can't get a mentor until you offer value to somebody who then says, okay. I wanna, you know, guide this kid along. And so, like, if I had high hung out with like, you were at Morgan Stanley. If I had worked at Goldman Sachs and then worked at a hedge fund, it would have been much easier to raise money for a hedge fund than doing what I did, which was starting without any of that pedigree or any of those connections. Well, it goes back to when you're in a city, you can't be in a room when you're in New York, you can't be in a room with more than 20 or 30 or 50 people and not have a lot of wealthy people in the room. So you're just around a lot of wealth. What I would say is that I would frame it a little bit differently. The people you hang out with, you wanna try and hang out with really high quality, impressive people, people who are funny, interesting, ambitious, and a lot of those factors lead up to wealth. And because really impressive people, other people wanna know them, and if you speak well of them behind their backs and you're a good person, they're gonna wanna put you in a room of opportunities even when you're not in that room. What I would say is, and this is sort of across too, is I'm I always say, if you can, go to work for a rich person. Because when I didn't have money, when I was hiring people, I just have to watch every nickel. And what I would do is try and compensate that with equity. And when the company's worked out, that would work out really well. But now that I have money, you know, I pay my people really well because I can, and it would just be it would just feel very awkward to live the life I'm leading and be really, like, pay people market salaries. I pay above market. I mean, they probably don't think that, but I know I do. Because, okay, how could I ever be on the wrong side of this equation given you know, absolutely. If you have a different job offers, go to work for the for the for the boss who's wealthiest because they it's just easier for them, quite frankly, to pay you really well. I'm always trying to think kind of the very beginning side of this equation, like, what you call, you know, getting the the mojo. If you work for a a rich boss, and it doesn't matter what industry, you try to pitch ideas to them or come up with ideas for them or do something that adds a little just like they just like you pay above market salary, a young person should have above market service they provide. So don't just do your job. Do more than the job. Come up with new ideas. Come up with ways to be more efficient. Do things that are outside the scope of your job. Because you have to have some way to stand out because the competition is immense. New York City, there's 5,000,000 kids wanting to break out. Yeah. Look. I don't I'm I'm very I'm very boomer on this. I think it's ridiculous when I ask my kids, when I say my kids, I mean my students, where they expect to be economically. Somewhere between about 2 thirds by the time they're 35 wanna be making 3 quarters of a1000000 a year, which means they expect to be in the top 1%. And my experience is the only way you can be in the top 1%, unless you're smart enough to be born rich, is to pretty much do nothing but work for a solid 2 decades. And then in the same breath, they'll they'll talk about the need for balance. I'm like, these 2 don't work together. That's like saying you really wanna get into ice cream, but you wanna be really fit. It just Well, you know, 3 quarter of a $1,000,000, by the way, what job pays 3 quarters of a $1,000,000 other than in the finance industry or, like, a top lawyer? Or unless you're in the top of any industry. But by the time you're 35, you gotta be in finance, but or, quite frankly, you just have to work to get to get to that level by that time, by 45. You have to just work your a*s off. And what I've I mean, one of the things I took I tell the story. When I was at Morgan Stanley, I'm like, okay. You gotta figure out what your strengths are. What can you do that no one else can do? The strategy all boils down to one question. What can I do that is really hard that other people aren't willing to do? That's your strategy. When what are my strategies? You're 25 years old, how do you how do you even you don't right now, you're not good at anything that's really hard. Okay. So so how do you find that? What I did at 22 is the following. I was an athlete. I was mentally strong. I didn't have a girlfriend. I was living at home. I had no social life. So what I could do, and I did this, was every Tuesday morning, I'd go into work at 9 AM, and I'd stay till 5 PM on Wednesday. I'd work through the night. And because it was such a macho bulls**t, weird, abusive culture, they valued that. I'm, like, okay, I am physically capable of doing this. There is no sacrifice or trade off other than being very tired because I have nobody at home, I have no dogs, I have no kids. So I thought every week, I'm going to work 36 hours straight. And they valued that. I wasn't as well educated as my Ivy League peers, but that was one of the things you can do at a very young age, quite frankly, is work harder than anybody. You may not decide to you may decide that you don't wanna employ that strategy, but you have to have an eye towards an unassailable, differentiated, unambiguous talent or skill or commitment that other people aren't going to bring. You have to figure out what that is. You you you're it's funny how, like, you're bringing back memories for me. Like, I haven't thought about this in a long time, but I remember being in my twenties and almost feeling sorry for my boss at the time. He was in his forties. And because I was young, I did have the ability to do like, I would work through the weekend, for instance. Like, there was no problem for me to come in Saturday Sunday and put in full workdays with nobody else there in in the office, and my boss couldn't do it. And then Monday morning, when he would come in, I would have so many achievements. He'd have to figure out how to take credit for them so that he could keep rising. And that, you know, developed a good relationship between him and me where he would then essentially let me do whatever I wanted to do. I would let him take credit for it, and I and you've you've brought up twice. I would talk say good things about him behind his back. I would give him the credit so that he could let me continue to rise, and that was that was good for my career. In consulting or in business, the easiest way for you to develop really strong relationships is to get your boss or your client promoted. Yeah. That's very true. My job was I was always working for the CMO as a brand strategist, and my job, I would say at the firm, our job is to get that make that guy the CEO, to to make him so brilliant with our work that he becomes the CEO of Latin America for Levi's or Dreyer's or whatever it was. And the same, if you can make your boss successful by just doing great work for them, you're gonna be the boss at some point. And you gotta figure out, well, what is it? Am I brilliant analytically? Do I understand design? Am I great at PowerPoint? Like, fine. What are your weapons of choice? Like, you gotta be able to fire a bow and arrow, a musket, all of it. You gotta be try and be a reasonable athlete so you can handle any weapon. But then, what are you gonna be a ninja at? Like, where is your ninja? You've got to be you know, at any company, you got a year to figure out what do they go to you for, and it could be pretty f**king narrow. Well, that's the guy that knows how to run the copier like no one's business. I mean, it could get pretty narrow. He is great at planning the social events for the company. That's important. That's important. Yeah. Right? He is great he is great at welcoming new people or pitching people. When we make an hire, a young hire, to have him speak to Jake. He's great at talking up the firm. Like, what are you the go to for? That's the first question. Within a year, I've got to be the go to girl or guy when they need x done. Right? And then more broadly, how do I make the people I work for and the firm successful and pretend, and good firms do this, you know, make you a shareholder. How do you how do you think to yourself, I wanna make this firm really successful? Because people will notice. Right? They'll notice. It's like if someone likes your kids, you immediately like them. If someone comes up to you at your school at drop off and says, oh, I'm just so impressed with Alec. He's such a good kid. You immediately love that person. Anyone who likes your kids, you like. You wanna show and demonstrate every day that you really want the company to be successful in little ways. Like, I don't care if it's picking up litter in front of the office. I don't care what it is. People notice. It it it you know, I I wrote about this concept in one of my least read books. It was called the rich employee, and it was this idea that what you're saying is you have to become the identity of the firm. You have to, like, absorb that into your own identity. So I worked at HBO for instance, and h HBO had a very distinctive type of show compared to, like, let's say, NBC. Mhmm. So you you I had to feel what was the HBO aesthetic in order to then implement it at at my job at various levels, and that and that technique works. Like, you have to love where you're working. Like, I I'm I'm talking too much here, but at the same time, I got offered a job for HBO at make making 40,000 a year. And at the same time, I was offered a job at JPMorgan making 80,000 a year, and I was gonna move to New York City to take one of these two jobs. I rejected the JPMorgan job because I felt what's the difference between JPMorgan and Morgan Stanley or or any other bank? Whereas HBO, I had a feeling I could feel what that brand is, and I would do good at it. Mhmm. And and that worked for me. The the money wasn't the important thing there. I think when you're young, like you said, and you have the opportunity, you wanna find something you're gonna be really good at. So if HBO, you think it's gonna be better suited for me and I can the top people at HBO make not as much as the top people at JPMorgan, but they make a s**t ton of money. And that's key. Tens of 1,000,000. Yeah. So the if you think, alright, where could I be a master? Would I better would my skills am I more likely to develop mastery at JPMorgan or develop mastery at HBO? It's simple. Do I have more creative instincts? Do I have you know, am I better analytically? That's JPMorgan. You know, whatever it might be. But you wanna go somewhere where you can say this is where I can develop I can develop mastery. And and, again, it's it's still like, I you use a really important word, workshopping. You you can't be afraid to to switch jobs, interests, talents, passions many times in your twenties because you're not really gonna know what you love until you try lots of things. The only thing I the only wrinkle I would add there is have a kitchen cabinet and never leave a job until you talk to some people because young people and old people, but especially young people, oftentimes have emotional reactions to to things that they need to take a breath and take a beat. And you need you need a group of people you can call and say, I think about I'm thinking about leaving my job, and this is why. And because sometimes they'll save you from themselves. Sometimes they'll go, well, your ego was hurt. You're just putting up with the bulls**t that exists in every other company. Don't have an emotional reaction, or find another job before you quit your job. Just like when I now I wish I'd figured this out. I didn't figure out so in my forties. I don't make a big decision without talking to at least 2 or 3 other people personally or professionally. It's really important. You have to put all questions of ego aside as well, which I think is is hard for young people. Like, you have to really learn to listen to people. Very important. Well well, you you you you can't read the label from inside of the bottle, and I don't I've known so many radically successful people. Everyone is a f**king idiot in certain aspects of their lives. I have friends who are amazing business people, credible judgment, good board members, great investors, and they have just they're just terrible they have terrible judgment when it comes to their relationships. And then I have other people who are, like, great at what they do professionally, make a ton of money, great family members, great shape, and for the life of them, they can't save money. They there's something about their their saving and their ability to manage money that's just broken. Everybody has blind spots, everybody, and a series of people you ask questions to and friends and a social network and advisors, that's your kevlar. That protects you from making really stupid mistakes because when you're young, you like to think, oh, I'm smart and I conflated leadership and masculinity with making my own decisions and then convincing the world and myself and other people that I was right, and if I just checked in a couple times with people, they could have gone, well, Scott, does it really make sense for you to do this? Have you really thought this through? Like, what about x, y, and zed? It would have saved me so much heartache and saved me so much money if I just had a 2 or 3 people I could call on and ask basic questions to. In in another part of the book, you you talk also you talk about all aspects of of wealth, and and I think that's what makes this book so valuable. Is it not you know, once you have money, for instance, how do you invest it? How do you save it? The importance of compound interest, etcetera. But one point, I I don't know if I disagree or not. You when you're young, if someone says, you know, x y z cost 2,000 and let let let's say you have 6 months in the bank safe, so you know you're not dying tomorrow. But if something costs you 2,000 and and you had a friend who said, if $2,000 is important to me, you know, 40 years from now, then something's wrong. And and so you were talking about personal finance and the importance of savings, but I kinda agree with the person who says you don't need to worry about $2,000 because it's true. You you your your money making power grows so so much faster than the interest on $2,000 that when particularly when you're younger, it doesn't really matter $2,000 or or or if Starbucks coffee is $10 or whatever. I'm of 2 minds here. The first is okay. First off, you save if you just cut out 1 cup of coffee from Starbucks and save $7 a day, and then you can figure out a way to live in a place that's clean and nice but a little bit smaller, you can find a way to save 500 or a $1,000 a month, which isn't easy. But if you can figure that out from 22 on and you just put that money in SPY, you're gonna be financially secure when you're our age. They they just I mean, the the market's been going up 11% a year since 2008. That means every 21 years, your investments go up eightfold. So my friend who I referenced who was putting those $2,000 away from the time we got out of college, I would say on average, every year he made 20 or 30 percent of what I made. He ended up in almost the same spot because the compounding of that money early on that he saved ended up being 100 of 1,000 and then 1,000,000 of dollars when we were in our fifties. So there is something about having the discipline to put some money away when you're younger that just that magic box of and ignoring or trying to trying to recognize the flaw in our species is we don't realize how fast time is gonna go because for the majority of time on this planet, our species has not lived past 35. It's impossible for us to calibrate that 20 years is gonna go by in a blink. I mean, it's just gonna go by so fast. Yeah. And at 7 to 11% a year, a small amount of money over 20 years turns into a lot of money. Having said that, I also recognize that there is a balance, and that is you don't want you don't want your youth wasted. It does make sense every once in a while to buy a cool outfit and go to Coachella, to really try and enjoy yourself, to occasionally spend some money. I don't want I would never wanna deny a young person of their youth and and say saving is the only thing you should be doing in your twenties because you won't really start making real money probably until your thirties, and then you can catch up. What I would say, though, is that develop that savings muscle, even if it's just a $100, 50, a $100 a week. And then here's the key, find partners or friends that also gamify money. I went to UCLA. I didn't have any money. I had to save $33100 every summer. Otherwise, I wasn't reenrolling in school because I'd racked up fraternity bills and I needed to pay my tuition. Everybody knew who the 6 guys in the fraternity were. It was mostly wealthy Jews in the valley, but there were 6 of us that didn't have any money, everybody knew who we were, and we would gamify it. And we'd have a whiteboard, and every day we talk about how much money we made in the summer and how much we spent. I spent $77 a week for 12 weeks including rent. I lived on top ramen, bananas, and milk. And guess what? I still had a good time. We pool our money and buy a 24 pack of Schmidi beer as we saw at a nice time. Gamify it. Find a partner, a spouse, a girlfriend when you're younger that is also you know, wants to track their budget, wants to build something with you, and it's really powerful if you can surround yourself with people like that. And I'm not suggesting you don't go to Bangkok and do something cool or go, you know, go you know, I just came back from Egypt and Israel. Have some fun, but develop that savings muscle in your twenties and also recognize and you just have to make the trade offs. A $1,000 at 22 is like saving 25,000 when you're 42. So just do the trade off, which is gonna be harder. If you don't if you wanna spend all your money in your twenties and have some fun, I get it. That's what I did. My first bonus check, Morgan Stanley, I bought a BMW and hung swim goggles out the rear view mirror to pretend I was more athletic than I would. I was totally peac**king. How how old were you? I was 22, 23. I got my first 22. You bought a how big was your bonus check? I think it was, like, 20, 25 grand. You know, Morgan Stanley pays pretty well. I mean, this is a What was your salary at Morgan Stanley? I I I think it was 38 or 40 grand. I think I made 60 grand my 1st year out of college in 1987, which probably today is a 1000000 grand. You were rich. Well, yeah. And I spent it all. I spent it all. And if I just saved a little bit of money, I mean, here's the bad news. I I didn't save money. I was assumed. I'm such a baller. I'm starting companies. 1 even went public, and I always raised my consumption to my spending. I didn't spend more than I made, but I always raised my consumption to my spending. And then 2008, the great financial recession hit. I lost everything because I was way over invested in tech. And about the same time, my oldest son had the poor judgment to come marching out on my girlfriend. And that, you know, when your kid your first kid is born, you're supposed you're told that it's gonna be bright lights and angels singing. I was so sick and nauseous. I really came very close to fainting. And at first, I thought, is this because I find the the the process of childbirth so disgusting, which I do. But more than that, I was ashamed. I was 42. I'd had a lot of curb success. Like, I've been on the cover of magazines, and I didn't have any f**king money. And now it was no longer just about me. I started my first moment with my son was a recognition that I was already feeling as a father, and it was emasculating, and it was really upsetting. And if I had just put a little bit of all that money I'd made away and let time take over in an index fund instead of going all in on these investments that were gonna pay off huge for me, I might not have been had 1,000,000, but I would've had enough money to be able to enjoy my kids as infants. And that's really what this book is about. I I want you to be rich. I I hope you hit it big. I hope your company goes public. I hope you have a best selling book or album. But just in case you don't, there's a little bit of effort, a little bit of discipline when you're younger, in your twenties and your thirties, that can make sure you have a plan b and have some financial security. And that's what I did not do. And I started doing it in my forties. When I started making real money, I got very serious. My kid changed everything. I'm like, I am lowering my burn. I am going to save a s**t ton of money. I'm going to diversify. I'm going to find unique opportunities. I'm going to save a ton, diversify, and let time take over. And then I got very lucky. Since 2008, the markets have been on their greatest bull market, you know, run ever. And I started saving a lot of money, and it compounded. It went, you know, it went crazy. And I would have saved myself a lot of stress if I'd started doing that just a little bit much earlier. How did how did you deal with that fear in 2008? Your kid's born. You don't have as much money as you'd like. You need and and by the way, the capitalism is falling apart in on the front pages of every newspaper. Like, how did you you must have been terrified. And how did you personally deal with that fear? Well, I'm used to I'm used to a certain level of failure. I just got to work. I started working hard and trying to, you know, trying to find opportunities. I started a company that ended up being very successful. I started l 2, which 7 years later was it 7 years? Yeah. 7 years later, we sold for a 160,000,000. That was a big hit. Things just got I just got very focused. And I also had an honest conversation with my partner. I'm not gonna be a great dad. I'm I'll be here for you, but I'm gonna be working all the time. My job is to co kill the g*****n mastodon and bring it home. I had a very traditional approach to it. By the way, my wife or my now wife was working at Goldman Sachs. So I would go home for bath time, but I was just working around the clock. And I I, you know, I gave up a decent amount. I didn't see my kids a lot when they were very young. And I would say it cost me time with my infant children. It put a strain on my relationship. It was not great for my health, and it was worth it because now I have a lot of balance, and now I have a lot of time with my kids. And what I tell people is you can have it all. You just can't have it all at once. And I just got very focused and very serious on on career and economics. So you didn't let the you didn't let the fear paralyze you? That's a huge point because what I see with a lot of people who are successful is they hit their first failure, and they get stuck. They can't quite recover. They lose their mojo. They they start they start a business, and it doesn't work, and they're afraid to ask for more money, or they stick with it too long and they fail slowly, or they they get kind of like a dog that's been hit by a car, they're skittish, they're too skittish to start a new business or get back in the game or they they have just the wrong amount of money. What do I mean by that? They have enough money so they don't have to do anything right away, but they don't have enough money to retire. And so they let perfect be the enemy of good. Like, if you're out of work or your business fails or something happens, put a statute of limitations. 3 months, 6 months, whatever it is, the best opportunity that rolls along within 3 or 6 months, you're taking it because you gotta get back in the game, and you gotta, you know, you gotta gotta get back to the plate. And I know so many successful people, which is they're just grazed by a ball. They've been so successful their whole life, and they just get a slight, the ball just comes too fast to their face, so they strike out for the first time in a while, and they're just literally paralyzed for years. And it you gotta you just gotta get back up. No one no one remembers your failures but you. No one cares. Oh, his business failed, and then they go back to thinking about themselves. They don't care. They're not thinking about you. But and but you bring up a an important thing about, like, having so much money, but not quite enough. And you discussed this in the book, and this will be basically my final question, but it's it's such a fascinating thing. What is the number? Like, how should people think about the number the like, cash in the bank that they need to have where they really don't have to worry? Now I know there's not one number fits all. Right. I can give you What's the formula? I can give you the math. About it. I can give you the math, and then Yeah. I can tell you, like, you know, how I how I actually behave. The math is pretty simple, and that is you look you want your passive income to be greater than your burn. So calculate out how much money you need, and it might be reducing. You have kids, sounds like, leaving the house at some point. You'll have Social Security and think, okay. To live in New York, I need I'll just pull a number out of the year. I need you know, you live a nice life. I need 500 $600,000 a year. I don't know what the number is. Assume assume you can get 6% in the market, maybe 4% after tax, and then just do the math. If it's 6% and you're making 600,000, that means you need 10,000,000 in the bank. That's a lot of money. And if you don't think you're gonna get to 10,000,000 by assuming a 6 or 8% return in the amount of money you're saving, then you need to lower your burn. So you just gotta reverse engineer back from when do I hope to have some sort of to when do I wanna be wealthy? Do I wanna be wealthy at 55, at 65, and the definition of wealth is passive income greater than your burn? What will I need to live? Assume the market's gonna return 6%, assume you'll get some additional sources of income in terms of Social Security, look at your burn, and then just do the math. That's the formula. Now distinct So, like, if you need 500,000 after taxes, you need roughly 10,000,000 in in in cash in the bank, let's say. Right. But there's that's awfully intimidating for your for your listeners. My father, between his Royal Navy pension and Social Security, makes $48,000 a year, and he spends 38. When I take my dad out for dinner, we go to a Mexican food restaurant, he orders a margarita, he drinks half of it, and asks for the rest to go. That's his approach to life. He's rich. His passive income is greater than his burn. He's rich. And to get to $38,000 a year, which is all he needs, it wasn't that hard. He could figure out, I'm tracking between my pension and Social Security. I'm gonna be there. So a lot of this is just an honest conversation around your burn. Wealth isn't about how much you make. It's about how much you spend or specifically how much you save. So just have an honest conversation. I think I can get to this wealth. It'll you can do it the other way. I think I will get to this wealth. I'm saving this much money. I can account on this return. By the time I'm 50 or 60, I'll have this much saved. It'll spin off 4 or 6% plus Social Security. I'll make this much. How do I adjust my lifestyle to to foot to this? And the thing is, once you start doing these calculations, it gives you a sense of control and mental comfort because you can think of, okay, how can I manage and take control of my financial future so I don't have that type of anxiety? And then the things that can take you off track are obviously an illness, but this is the difference between wealth being wealthy and super wealthy. The people who are really, really wealthy are the ones who bring character, to their investment strategy. What do I mean by that? The most devastating the way to snatch defeat from the jaws of financial victory are divorce, personally and professionally. I'm divorced. I lost 60% of my net worth overnight, probably more than that because not only do you have to split everything, but now you have 2 households to manage. So your net worth goes down by 60%, you know, overnight, maybe even 70% because you're a forced seller. And now it's never good to be a forced seller. It also takes you off track for a year or 2 years emotionally. In addition, if you look at a small business that's doing really well and ends up going out of business, it's usually because the partners in the business get a divorce professionally. They stop getting along. They go after each other, and the business gets torn apart. So if you look at really rich people, they usually there's a myth that rich people are lighting cigars with their $100 bills and they're bad people. The Elizabeth Warren, every billionaire crawled over someone to get rich. I have not found that to be the case. I have found in general that really wealthy people are high character people. They bring generosity and forgiveness to their relationships, and people want them to win. They collect allies along the way. So what's the difference between being, you know, fine economically and being super wealthy? It's character, and it's bringing a certain amount of forgiveness and generosity to your personal and your professional relationships. People you want people to want you to win. That's that's really great advice. And, you know, I guess, finally, I I wanna ask you, you know, let's say you wanna make a steady 6% a year. Now, yes, the stock market has gone up 11% per year for so many years, but it's it's gone up 20%, down 20% some years. So you don't really feel safe on the years you're going down 20% because you don't know how many years in a row it will do that. It could do it 2, 3 years in a row. What would you what would you do if you wanted to make a steady 6% per year, which is not as easy as people think? Well, I mean, a steady 6, you can probably now I mean, there's there's money market accounts are, like, 5.2. Yeah. That's true. So let's say a little higher because, like, inflation's a little running a little higher, interest rates are higher. So let's say you wanted to make a steady 8% a year. I like SPY, low cost index funds. Any one stock, as you said, James, has a 50.1% chance of going up. If you picked any 5 stocks in the s and p and held them for 10 years, no one has ever lost money. Population growth and technology create an increase in productivity. Over the medium and the long term, the trajectory of the markets has been up into the right, just low cost index funds. The number one question I get on email right now outside of advice for young men is, should I buy NVIDIA stock now? And what I tell people is, I don't know, but your approach is if you buy an index fund in the S and P, a third of your dollar, 33¢ on the dollar, go to the magnificent 7. So if they continue to rip, because it's index adjusted, you'll participate. But if they are overvalued and the other 493 stocks have their day in the sun, you have money there. The you don't wanna don't try and convince yourself or put the pressure on yourself to be a hero and find the needle, buy the whole haystack. Time will go faster than you think, and over the medium and long term, the market's direction, natural trajectory is up. You don't need to be a hero, buy the whole haystack, and then forget about it and make sure it's low cost, and don't fall under the illusion that you can pick stocks and do not day trade. Well, as a former day trader, I definitely agree with that. That was the most stressful period of my life, and I did it for years. Well, Scott, author of the algebra of algebra of wealth, thanks once again for coming on the show. I think you've been on the show for every single one of your books, so I'm very happy about that. You're always a a great guest and so many interesting things. So thanks once again for coming on the show. Thanks you well, thank you, James. Thanks for being such a great supporter, and, like, I think of you as an icon of New York right now. I would I think we if we put things into a time capsule, like, if there's any way we you could be one of those cryogenic I feel like you kinda mark the age for me in New York. I've known you for 20 years now or 15 years. And the comedy clubs, the investing, the HBO, I think it was sort of this iconic like figure in New York. Anyways, I was a drugstore. Every rock in New York during the past 20 years. I mean, actually, right right now, I don't live in New York because I am worried about New York's future as as I've I've written about, but New York really has defined a lot of my life. So Well, come back, James. Stop to resist is futile. You belong in New York. Maybe. Maybe. Well, once again, Scott, thanks so much. Thank you, James.
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