I put 80% of my money in the S&P

0:00All right, Sean, I have a study that's going to show why the amount of money that you make is almost entirely out of your control unless you do what I tell you to do. How's that for an opener?

0:12I feel like it is like a late night infomercial that just like is about to brainwash me into something.

0:25Okay, I'm intrigued. Go on. What do you mean? What do you mean it's out of my control? Nothing's out of my control. It's about as out of control as it is your ability to control if you're seven foot tall or not. So I got to give a shout out to Jim O'Shaughnessy. I saw a clip where he kind of like brought me to this topic. He talked about the study that I'm going to reference. So in 2014, there was a researcher in Sweden named Heinrich. Interesting things about the Swedes is that they are obsessed with two things, twins and money. So Sweden has this massive twin database where they have many, many like hundreds of thousands,

0:58hundreds, millions of twins that they've documented. And for some reason, they track twins. I think originally they did it for health reasons where they wanted to track like what type of twins got diseases. Twins are great for studies, right? Because nature is controlled. So it's all about nurture. Yes. And so they have this massive database and they were able to break the database down into fraternal twins, which are twins that are born at the same time but don't look alike, and identical twins. They're also obsessed with money. They love money. And in particular, the government loves money. Up until 2007, they had a wealth tax.

1:31And as part of the wealth tax, Sweden basically tracked every citizen's entire financial portfolio. So they looked at which stocks you owned, the mutual funds that you owned, every dollar of savings. They basically tracked all of this stuff. And so what was interesting is that this guy named Heinrich, he had this premise, this idea where he was like how much of investing in savings behavior is controlled by genetics. And so he looked at the differences between fraternal twins and identical twins because presumably twins grew up in the same environment.

2:08In many cases, they have the same education levels. Their parents spoke to them the same way. They were loved to similar amounts, whatever. And then he looked at, well, how do the fraternal twins who only share 50% of genetics, how do they invest and save compared to the identical twins who share 100% of DNA? And he broke it up into six biases. So people who held too few stocks, excess turnover, people who traded a lot, performance chasing, so people who bought whatever that did well the year before, overinvesting in your home country called home bias,

2:42loving lottery type stocks, loving lottery type stocks, and then the disposition effect, which is refusing to sell losers. And he looked at all of this data. And I think he looked at it over the course of 30,000 such as twins. Additionally, he looked at outliers. So like, for example, twins that were separated at birth and a couple of stuff like that. And the results that he found was basically and concluded was that 45% of savings and investing patterns and behaviors was genetic, which I find to be astounding. And the reason I was thinking about this was you and I, I would not, I think we both in different ways like investing, but we are not, I would say, professional investors.

3:21And yet, my portfolio would also say, I'm not a professional investor. And yet, we love having professional investors on the podcast. We both love reading about Warren Buffett and people like that. And I was trying to figure out two things. The first is, why do I like that so much? What am I drawn to these guys for so much? And the second thing was a couple of podcasts ago, we talked about passion and how to figure out what you're kind of supposed to be doing. And I was trying to look for a more scientific reason about why I should do what I do to address the first one of why do we like these investors so much?

3:55Well, I think I realized that in order to be a world-class investor, finances are actually secondary to human nature. Financial trends change every decade, every handful of decades. Something will, some new thing will pop up, you know, SPACs are this new thing. So, like, learning about that is important, but that changes every so often. But what doesn't change is thousands and thousands of years of human nature. And understanding how humans behave and asking yourself, why do they do what they do, is significantly more important than the financial stuff.

4:33On this show, we have spent hours talking to some of the best investors alive. Well, lucky for you, the team at HubSpot, they have pulled out the principles that matter most and turned it into a very simple, easy-to-read wealth guide. It's 35 principles from the top investors. We're talking guys who have been on the pod, like Howard Marks, Monish Pabrai, Morgan Housel, Kathy Wood, and a ton others. So, these are all their frameworks, their mental models, their rules, basically how to play the long game and how to avoid ruin.

5:03You can get it in the link below.

5:06There's this great story from Monish Pabrai. So, people who have been listening to this podcast, you've probably seen that Monish came on the podcast twice. I think his two episodes are the most viewed episodes in the history of My First Million. So, he's been this kind of Hall of Fame guest for us. And in the interview, I don't know if you remember this, but he said this thing where he was running a company. He was an entrepreneur. And he was running this company, and it wasn't super, super successful, but it was like moderately successful. I think it was like a $6 million a year revenue business or something like that.

5:40Now, he did this, but he wasn't loving it. He just assumed this was a normal entrepreneurial burnout. You know, I'm working really hard. I've been doing this for a long time. This shit's hard. I probably feel how most founders feel. But he was encouraged to do a very fancy version of a personality test where they talk to you, they talk to your coworkers, they talk to your parents, they talk to everybody in your life, this sort of 360. And they try to understand a little bit more about you. And the result came back, and they were like, you know, it's no surprise that you're miserable here.

6:10This is a game that is completely incompatible for your personality type. And he goes, what do you mean? And they go, you like, and I forgot the exact descriptor, but it was something like, you like solo player competitive number games. And he's like, what? And they're like, yeah, let's say that again. You like one person. So you by yourself, not team sports. You like solo player competitive number-based games. And it's like things that had a lot of like a math or number thing to it. And here you were, you were running this company.

6:42So now you're playing this multiplayer competitive non-numbers-based game. And so he was like, okay, I don't know what to do with this. And he decided to start investing on the side. And basically, it turns out that as he's done in his life, he did way better as an investor, as a solo investor, playing a competitive money numbers-based game, which was the stock market, than he ever did doing this other thing. He really encouraged this sort of know thyself thing, which is like, you have to know who you are and what you are like predisposed to love and obsess over.

7:14And then find yourself in those types of games. And he, so I'll give you another example with that. When I was there, he was like, he was telling me about how you've been kicked out of these casinos because he was winning too much money. I was like, you were card counting. He's like, no, I wasn't card counting. And you're like, dude, you're running around without your shirt on. Like, I know that.

7:33That's not a casino. That was Margaritaville. And so he was like, he, he, off camera, he wouldn't tell me on camera, off camera. He told me, he showed me the exact system that he used. And then my life, I've had like friends go and use this system at these specific casinos, play this specific way. And it was, he had actually found an edge. He's like, he's like just the intellectual thrill of actually being able to beat the house. There's nothing like it. You know, financially, this was not a good decision to spend thousands of hours figuring this out,

8:03but I just like those single player competitive number-based games. And same thing with philanthropy. He's like, when I got into philanthropy, oh, you make money. They got to figure out how to give it away. And it's like, should I be going to these galas and dressing up and donating to these causes and socializing? And it's like, there's a whole socialite scene with philanthropy. And what he figured out was the version that was fulfilling to him was again, a single player competitive numbers-based game where he realized the fun part of philanthropy for him was figuring out how to make $1 that he puts in, have the highest economic return

8:36in terms of impact anywhere. So what he figured out was there were kids in India who were really smart that had no schooling. Like India's got a bit, you know, over a billion people. So a lot of people just live in rural India that are very intelligent, but have no access to good education or a pathway to better their lives. They're just going to end up on a farm. And what he realized was that if he could identify the smart kids for like three, three grand a year, he could put them in like a competitive school. So they started these competitive math schools and they got them into IIT and IIT is this feeder

9:07system to like the best jobs in the world. They can go get visas. And basically for three, three grand, he can up the, that family's earning power from 10,000 a year to 50,000 a year. So he could 5X and create like, you know, 50,000 per year for a one time three, $3,000 one year, um, like acceleration in training and his like admittance rate, you know, the normal IIT is harder to get into than Harvard, um, than Stanford is a harder, harder to get into than any, uh, us college. So it's like whatever point, whatever percent admissions rate typically.

9:39And I think his is like 8% or something crazy, like, you know, like a 10X larger, uh, admittance rate. So even that wasn't a single player game or whatever. And it really got me thinking about this idea of how do you know yourself enough to know what game you should and shouldn't be playing, which is kind of a spinoff of what you're talking about, right? You're well, that's like step one. Yeah. Um, I had another, uh, kind of mentor, this guy, James Currier. He told me the same thing last week. He goes, I wish somebody earlier in life had told me, uh, who I really was. I go, what? He's like, I didn't know what he meant.

10:11This could go a lot of ways right here. What are you about to say? And he was like, you know, I played soccer my whole life competitively. And what I realized is like, you know, I'm just actually not very attuned to playing soccer, but I was actually really good at racket sports. I had long wingspan, good hand eye coordination, and I should have been playing racquetball early on. He goes, the same thing happened to my career. You know, I was doing these types of businesses when I really should have been doing this type of thing. He got me wondering, wow, there's probably billions of people walking around who never discovered what game they're actually great at and never got into that game and therefore like kind of life passed them by.

10:42Isn't that sort of a tragedy? Yeah. Well, like I don't selfishly, I don't think about other people. I just think about myself where I'm like, where I'm like, uh, I see the more important bit, me, but that's, but that's what everyone thinks. You know, they think like, okay, but how does this apply to me? And, um, I think it was Andrew Wilkinson who told me about that self-assessment thing, which I really dig. Did you do it? Um, yeah, it was awesome. Uh, well, what's like the, when you're like a teen and you're like discovering yourself and you get a little curious, I think we're both a little self-curious here.

11:12Yeah.

11:15I'm a little my curious right now. There's two of us. Therefore, we are bi-curious.

11:23So, so what game do you think you would be disposed? I don't even know what the options are, right? Like, I don't think I'm single player competitive numbers-based game. That's not me, but I don't even know what the menu looks like. Um, so, so what do you think yours is? Researching. Uh, I, I think it'd be like a new topic and going super deep and obsessing over one topic and coming to it, trying to, trying to come to a conclusion. Right. So naturally go run Hampton.

11:48Yeah. You're describing like sitting alone on a couch with a book and thinking and really like finding your joy and you're, you're being the best at that. And then you're like, so I'm going to go sit in an office with 50 other people. No, I, uh, thank God my, my co-founder Joe is the CEO. So he runs Hampton, but it's when we like are gearing up to launch something new, like I'm in my, uh, zone of genius when I'm like researching how others have done something similar to us and where they failed and when they won. And then going, talking to experts and weaseling my way into conversations of people who have been there, done that and being like, tell me, tell me like the mistakes that I'm going

12:20to make. I think you and I are both similar in this weird way. I thought this was completely normal until somebody pointed out that, Hey, that's probably not super common. I was talking to this guy who's a book developer. One thing that's one of the things this guy has done is he's written some of the most popular books as a ghostwriter for smart, successful, famous people. Okay, great. So I'm talking to him and he's like, okay, so what's your book idea? And I'm telling him my book idea. And I talked to him a couple of times over the, over a couple of years. And so he had seen me talking about a couple of different book ideas.

12:52And he goes, you know, maybe we save this for later. He goes, but I think the most interesting about you is, and I'm like, he pauses. And this is very interesting to me because this guy's job is to spend time with really smart people. And he lets them talk for hours and hours and hours. And then he's like, oh, the real story here is X. And they're like, really that? And he's like, yeah, that's the, that's the most interesting part about this. And that's his gift. So he goes, the most interesting part about you is you have some weird predilection for reverse engineering businesses or reverse engineering.

13:25He goes, everything you do, you seem to reverse engineer as a first, like as a first instinct. Whereas most people, I don't think do that. And he's like, whether it's like something in life, you know, it could be family oriented. You told me this, it could be creatively this, it could be investment. And Sam, you're the same way where it's like, I think our first instinct when we want to do something is like, all right, let me go study in history, how other people have done this. Let me go talk to the other people who have already done this. And I'm going to reverse engineer based on the principles that they tell me. I know what to ignore of what they're going to say. I know what to focus in on. I'm going to create my own system and my own understanding.

13:57And then I'll just do that. And I think we both do that as our default mode. And it's what we enjoy doing. And I don't think that that's common. And here's an example. Whenever we have someone on the podcast and they explain, they'll ask for advice or something like that, instead of saying like, well, you should probably raise venture capital or you should, you should probably do this. The first question is always like, well, how would you define success in five years? Like what's the definition of success to you? And then let's figure out what the rules will be to the game. Then we can give feedback.

14:28But the reason why I've been always obsessed with this is I've noticed in my company, the times that I have issues, which is all the time, the times that I have issues... Every waking breath. Every time I screw something up every day, I'm like, I have to change the business. I have to change the people. I have to change all of these external things. But the reality is, and this is why I think I like capitalism so much, is that the business that you're controlling, if you are controlling, it's just an extension of your personality.

15:01So if you have trust issues, then your co-workers are probably going to think that you're micromanaging them. If you have trouble committing, then they're going to think that you're absent-minded. The issues that you have in the company, they are an extension of the issues that you have. And vice versa. If you are a kind person, you're going to have a kind culture, I think. And I think that what investing habits are, are just human nature habits. And that's why investing is really interesting. And so even though this study was related to finance, it's the exact same thing.

15:33So if you tend to have excessive turnover with your stocks, which is one of the six biases, then perhaps you struggle having steady relationships. If you tend to over-invest stocks in your home country, which they call a home bias, the likelihood that you have moved from your hometown is actually quite low. And so what I have found is that the best ways to make change in these issues, for one, it's not just reading. And so I wrote down this line, which was that change requires pain, not words.

16:07Because according to this study, what they found is once they normalized for education, meaning they took two people who both had business degrees, if person number two went and read a bunch of business books, they wouldn't necessarily be a better investor. What they found was that the only thing that made a meaningful difference other than genetics was people who worked in finance, meaning you have to experience a loss, like, oh, I did this, I got burnt, I can't put my hand there again, versus just constantly reading about

16:39burning your hand. You'll still burn your hand. Even in the book, Thinking Fast and Slow, he even says, he's like, I'm writing a book on biases, but I suffer from all these same things. And I have to work on this all the time. And so the best way, I think, or I wrote down like four ways that you can like prevent this. But one of the biggest ways to harness this is what Warren Buffett said. He just said, actually, again, we invest in our zone of genius. And what that means is Warren Buffett is a slow and steady type of guy. So he invests in slow and steady types of things, which would entirely explain why he's

17:14adverse to Bitcoin, which would entirely explain that if he were a type of if he were 18 or 25 nowadays, he probably would not consider having an AI startup that raised lots and lots of VC. The people who do that tend to be the ones who want dopamine a lot faster, who maybe care about glory. And you have to optimize the thing that you're working on for the personality that you have. But the other ways that you get rid of this, I think, is that you have to pre-commit so the future doesn't decide. Basically, don't go to a grocery store hungry. So like when you make a decision, you write it down, like if I'm gonna, I'm gonna fire

17:45this person in month three after hiring them, if they don't hit these requirements, did they or did they not hit the requirements, you stick to it, not if you're like predisposed to like, you know, not like confrontation. Another one would be to shorten the feedback loop. So you're able to like see points on the scoreboard very fast and get new information quick. And the last one, you can't play games where your bias will be fatal. And that sort of means like, for me, I'm a control freak. I'm a little bit of a slow and steady type of guy. Raising lots of VC where I'm not in control and I'm expected to go really, really, really

18:16fast, that would potentially be a fatal game for me. So I'd be setting myself up to lose. That's really interesting. So I like the two premises you have. One, the problems you see in your situation, whether that's your life or your work, workplace, is a mirror to the problems you have in your psychology. And then the four or five tactics you just described are like, okay, what's the remedy? And also, you know, the insights, which is, I think, Morgan Hounsel's book is this, which is basically getting wealthy through the money game and investing is far less about strategy

18:49and far more about behavior. And it's your own poor behavior that leads to poor financial results, not poor strategy. He says it in a much better way, which I stole from him. I wrote it down here. I said, personal finance is more personal than it is finance. Yeah, exactly. So I think that's great. It's also interesting because you said like, you know, the best investors weren't necessarily the ones reading more books. At the same time, all the best investors talk constantly about the books they're reading. And I actually thought about it while you were saying it, it might be a weird thing. So it might not be that the knowledge in the books is super important.

19:20It might be that one of the biggest leaks in investing is too much activity. And the remedy for too much activity is actually to just busy yourself with bridge and books and playing pickleball and doing other things so that you are not prone to just sitting there and pushing buttons because it's the pushing buttons that's the problem. And so it might be that reading, it might not even matter what you actually are reading, but just simply that it takes you away from constant activity is actually the best part of the reason why all these great investors read so much.

19:51Or put differently, if you found a company that's going well, which that's the situation I'm in, I've noticed the best thing that I can do is to do nothing. Because oftentimes when I meddle, it gets screwed up. Or if you like, let's say that you're trying to get popular on social media and you notice that when you post three times a day, you get growth. It's like, just do that. Don't do other things. Like this idea of like, it's working, just continue. And that you need something else to do in order to have your playground where you're

20:22allowed to mess something up, but don't mess up the main thing. Yeah, there's a great example of this. I just picked up, Buffett did an interview with the Berkshire thing and he talked about this, which was like, because Berkshire has, I think, almost $400 billion in cash. And it's just been piling up over the last five years. They just haven't deployed it anywhere. I wonder what that even means. It's like, where is it? They just have $400 billion in like treasury bills, basically. It's treasury? Yeah. Wow. I wonder what percentage of like the U.S. treasury that that makes up.

20:53I don't think it's that much. There's trillions in T-bills.

20:56You know, it's not zero, but it's not more than like 5%. So he was talking about like, well, you know, we don't do anything unless there's something to do. And he was talking about this. There's an Amazon, Jeff Bezos just gave this interview and he said the same thing. He goes, early in Amazon's history, Jeff Wilkie came to me one day and said, Jeff, you have enough ideas to destroy Amazon. And he goes, what? He said, you have enough ideas per minute, per day, per week to destroy Amazon. I said, what do you mean? He goes, you have to figure out how to release the work at the right rate that the organization can accept it.

21:30Because every time I released an idea, I created a backlog, a queue, a work and process, a distraction. And it was just stacking up. It was adding no value the way I was doing it. In fact, I was creating distraction. So I had to learn how to prioritize the ideas better, keeping lists of them, keeping those on myself until the organization was ready for the ideas. And I saw this and I was like, oh, like, your honor, I plead guilty. Because, you know, the same thing, if you're very generative with ideas, it feels good. And the ideas themselves might be great ideas.

22:01It might be a very sound idea. And so it seems like you're doing nothing wrong. But you can literally drown your company in ideas. And I've done this many times, especially, like, the growth teams or the marketing teams. It's like, here's 14 marketing ideas. And then every day, two more are coming. And then I'm going to send you a tweet about something somebody else is doing that you guys should check out. And then I'm going to tell you this. And then I'm going to have an event you should go to. And then there's this guy you should meet. And then there's this thing we should try. And then did that ever work? We should try that again. And I can literally suffocate an organization by releasing too many ideas into the org at once, right?

22:37It's just, again, like you described, like, a personality defect that becomes a culture defect, an operational defect. I read that same quote, I think, six months ago. And so my co-founder, Joe, who's the CEO, we set up this meeting every Thursday. And it's the only meeting that him and I have together. And it's just when we go through a running list of ideas. And he's like, just say anything you want. We can say anything. We can talk about anything you want. And it's just in this room. We can talk about anything. Yeah, we'll talk about anything you want. I don't think we're going to do any of it, but maybe we will.

23:07But, like, let's just, we can get it out. And don't slack me any ideas, though. But he's like, just have a running notion list. Yeah. And we'll go through any idea that you want. And then maybe we'll, maybe we'll do something.

23:19All right, let's take a quick break. And I got a question for you. When a buyer asks AI for a solution like yours, does your business come up? Most companies have no idea. And by the time they found out, they've already lost the deal to another company that did. HubSpot has AEO, which helps you show up in the moments when the right buyers are looking for a company like yours. Before the first click, before they fill in the form. That is the moment HubSpot AEO is built for. Check out HubSpot.com, the agentic customer platform for growing businesses. I have a different tactic with these research papers, which is I basically read it and then I say, does this serve me?

23:53And, like, if the conclusion of that was that your genetic disposition determines half of your financial success, you know, I tend to just throw things like that out the window. Partially because there are some great lies in statistics, right? Like Howard Marks, who was on the podcast, described, he's like, oh, what's the S&P's average annual return? And we're like, 10%. He's like, yeah, but do you know how often 10% happens? And it was like, pretty much never. The actual annual returns vary widely.

24:24So it might be the mean, but it's definitely not the median or the mode. And so, like, you have these numbers and you expect it's going to be 9%, 10%. And it's almost never 9%, 10%. It overperforms and it underperforms and it averages out to that. And same thing, like, you know, many men drown in the pool that was crossing the river that was on average five feet in depth because averages don't tell you so much. And so there's all kinds of these, like, statistical things that can mislead you that just because something is a norm or an average or was studied once that that's, that is, I guess I should draw a conclusion from that.

24:56And I'm a big fan of basically, like, productive placebos. So the question is not what is the situation is what do I need to believe in order to do the things that will lead to a good result, right? And so, you know, I don't need to know everything. I don't need to know even what's right, what's true. True. True. Who cares what's true? It's what's useful is what matters. And so I try to find what are the beliefs that I need to stuff in my brain that is going to lead to me doing the things I want to do to have the life I want to have.

25:27Dude, that's so weird that that's your takeaway. My takeaway is the opposite, which is if these are the facts, then how do I use the facts to continue to get what I want? First of all, there's like this huge replication crisis where who knows if these are even the facts. And then secondly, even if they were the facts, if the facts are telling me that it's out of my control and that, you know, whatever my DNA was is imprinting, you know, half, it's kind of like, you know, Lloyd and Dumb and Dumber. It's like, so you're saying there's a chance. It's like, oh, so there's still 55% in my control. Fantastic.

25:58So it's like, why did I need to know any of that? All I needed to know was that here's the behaviors that lead people to make money. Here's the behaviors that lead people to lose money. Do the ones that make money. Avoid the ones that lose. I think what you're saying is that your genetic disposition is going to like bias you towards maybe failing in a couple of these more than others and be more on guard to those. Is that the takeaway? Yes. Which of those five or six are you most guilty of? Because I was guilty of all of those. Every one of those I do wrong. What do you mean? I haven't spent enough time to think about this, but.

26:30I'm pretty home country bias. I'm not like buying like industrials in Indonesia. But that's not, I mean, I don't think the bias, that's not how biases work, where it's like you only do these and not all of these. Obviously, you do all of them. It's just what you skew towards. I would say probably refusing to sell losers. You're like, I don't know, I'm pretty good, actually. No, I mean, I do. No, what I'm saying is I do all of them, but I do some more than others. I'm trying to think, which ones do I do most? Mine's definitely the activity one, overactivity. I don't have that issue, but, and I don't have performance chasing.

27:03I do like stick to what I know, and I've always done that, and I do refuse to sell losers. I get emotional about like the things that I like. Right. Let me ask you this. You sold the hustle six years ago, five years ago? What was it? February of 21. All right, so let's call it five years. Has that performed well? Because obviously you've got a huge slug of capital. Have you doubled in the five years? Are you like? Well, assume that 80% went into the S&P 500. Yeah, it's double. Is it up 75%?

27:33Yeah. I think the S&P, I mean, just whatever the S&P is up, 80% of my portfolio is up that amount. Right.

27:41And I'm curious how you feel. You know, Howard Barks came on and he said, hey, the S&P 500 right now is a bad bet. And so here's, you got a guy who's whatever, 900 years old, who's got all of the experience and all of the knowledge. And he says, he comes on our podcast and says to our face, the S&P is a bad bet right now. And he says, it's because it's valued at, you know, 23 times PE ratio or whatever it is on average. That was in August that he came on. And he said, you know, the 10 year, history tells us, the data tells us that the next

28:1410 years will fluctuate between minus two and 2% when the S&P, when you buy in at this valuation. Is it like, yeah, sure. But here's my counter argument. Or is it just like, la, la, la, la, la, la in my ears. Is it just, I don't know enough. I'm just not going to worry about it. Like for peace of mind. Like what was your reaction to that? So just, I went into the math, just so you know, the market's up 12.5% since he said that. Yeah. He's like 10 years, right? So it's not like a five month thing. Um, when he says that, I think I don't, I don't care.

28:45I think, uh, I know that like I study America, I study history, history will probably continue to repeat itself while I'm alive. And if I'm, I think America will continue to exist, but the S&P 500 at this point is not an American index. It's a global index. And so I just think that it's just going to keep on going. And I am chasing 8% nominal return every single year. And if I get that, which I feel quite high that I will, that I will, that I'm very happy.

29:17And that fits within my personal plan that I set out when I was, when I, before I sold the company. You're saying I study history. He's saying the history shows that it's not just a 8%. It depends what your entry point valuation is, which makes sense, right? Obviously. But what, but, but, but he, but he didn't say that it's not going to be that way for the next 50 years. What I'm looking at is. You're just saying like longer time horizon. Longer than just a decade. Yes. What I, what I look at is to where I'm a hundred. Basically when I was 21 years old, I set a target where I want this amount of money while I'm 30. And if I get that amount of money at the age of 30, that will grow 8% a year, which means

29:51I can spend this amount on my life and I could still have X, Y, and Z, which I can leave or give away. And I just don't think that what Howard Marks says, which if he is right, it won't break that plan. And as long as that, as that, as long as 8% per year, over 40 years on average, as long as that happens, which I believe it will, then I am happy. I love that. If you wrote like a book on investing and you like open it up, it would just be like, America would be like the first page. The S&P 500, is Apple an American company?

30:23Of course not. Do you know what I mean? It is. It's an American company. Is Toyota a Japanese company? Of course not. They make Toyota here in America. You know, I lived in Tennessee nearby the Nissan plant. Like it's all. If a company is headquartered here, vast majority of employees are here, vast majority of revenue is here, vast majority of profits is here. It's for all intents and purposes, it's an American company. Whether that number is not 100%, but is it 60%, 70%? It's still a majority. I just don't know what that means to me. Like you just said a lot of words that to me were vague. If the profits are here, if the...

30:56Who's buying the iPhones, right? Like where are the... I don't know if the answer is majority. Let's ask Claude here. So 43% of total revenue comes from American sales. 54% of the like operating income. Okay. So let's just say half on both accounts-ish, give or take 10%. I don't know. Is that an American company? I think we're both right.

31:21When you sold, what percent is it up based off of whatever you did with it, which I don't know what you did with it. My net worth is up 40 times or something since we sold, right? It's up a lot. But the problem is a huge percentage, probably 70% of that came from companies we started or we own and not like, oh, I'm a good investor in the public stock market. So, you know, I don't know. Do you consider private companies to be part of your net worth? Yeah, of course. Dude, I don't calculate it.

31:54But I don't say liquid net worth, right? I have liquid net worth. That's one. Whenever I do my like every two months when I just feel like I need more money, then I go, okay, let's go see how much money we actually have. Let's go see what's going on. I go and I calculate liquid net worth and I calculate the illiquid net worth. I look at them separately because like the illiquid one, like that one thing can go wrong in two of these businesses and that can get wiped out, right? Like it can go way down, like our e-commerce business was a much bigger percentage of net worth, but it's gone down because if that business hasn't performed as well as the other

32:29businesses, because when tariffs hit and, you know, consumer sentiment has changed and our margins shrunk a little bit, like, you know, it hit a little bit of a plateau, like there has been changes in that. So, okay, we have to mark that down internally of like how much we think that's worth. We thought it was worth X. Now it's worth a little less than X. Today's podcast is brought to you by my friends at Mercury. They make the world's best banking product. I think you know this already. I use Mercury for all of my businesses. I think I have like maybe seven or eight businesses. We use Mercury as our business banking across all of them. And now they actually just launched a personal banking account.

33:01So I have my personal account there. I moved off of Wells Fargo and Chase. I'm just all in on Mercury. Why? I like products that are easy to use. I like products that get me and the problems that I have. So like very easy to make a joint account with my wife, very easy to spin up virtual cards, one click and I get savings yield. It just has all the stuff that I need in one place. So if you're looking for the best banking product on the market, it's definitely Mercury. I will fist fight anybody who disagrees with me on that. Go to mercury.com slash personal and learn more. Mercury is a fintech, not an FDIC insured bank.

33:32Banking services are provided through Choice Financial Group and column NA members FDIC. What was your topic? What I want to talk to you about is a couple of business ideas that broke my brain. And these come from the YC Request for Startup List. So if you don't know, YC, the most successful accelerator investor, early stage investor in the world, in the history of the world. They helped see Airbnb and Dropbox and they were the first investor at like a $2 million valuation in these like, you know, $100 billion companies now. Great.

34:03So they every year release these Request for Startups. And I've been looking at these lists for like 10 years, right? And most years, it's kind of like you just nod along. You're like, oh, okay, cool. No, they do it every semester or every quarter. They have fall, summer, spring, winter. Right. And they used to do it a little bit less often. And it would be things that were like, hey, better software for lawyers. Hey, somebody should make a tool that helps this person do this. It is normal sounding businesses. Well, some of them are not. One of our three years ago was a way to end cancer.

34:35Yeah, like, okay. So over time, they've been getting progressively more, I don't know if you want to say like ambitious or just impressive or like, you know, just sort of breaking my brain. So the one I want to talk to you about the most, which I think you have a bunch of ideas around, but I have three that I want to talk to you about. I'll start with a fun one and then we'll go to the most brain breaking one at the end. Fun one is this. This isn't on their list, but it came from one of the XYC guys, Daniel Gross, who's great. He's talking about aesthetic data centers. And so there's this problem right now in the world where we need way more data centers and

35:10we need way more power in order to like, quote unquote, win the AI race. And the problem is that most Americans actually hate AI. It's crazy. Like they use AI, but they hate AI. They don't like AI. They don't like where it's going. They don't like the big tech companies. It's like all the big tech backlash is just like ratcheted up for some reason. If you go read like the TikTok comments about anything about AI, it's unbelievable. People really do not like AI. They don't like AI art. They don't like AI music. They don't like AI, you know, productivity.

35:40They don't like data centers. They think it's taking their, it's going to increase their power bills. It's going to like use all their water. There's all kinds of different things, even though the data would say the opposite, right? Like, you know, golf courses use a hundred times more water than data centers, but nobody's out here like protesting a golf course. And so there's this problem, which is that these big companies need to build data centers, but the towns all have this sort of like not in my backyard mentality when it comes to data centers. So somebody brought up, Daniel Gross brought up this idea. He's like, I think that we need to, if we look at these data centers,

36:10the spend is so high to build them, right? We're talking like billions of dollars to build one. The incremental extra to make it like architecturally beautiful or interesting, or like something that helps the, like, like feels good in the neighborhood type of deal is very small. And we should really be considering this. And I just thought this was like a really interesting idea I had never thought about. I thought you as a man of style, history, and culture would appreciate this, that there's probably some historical like comps to this that I don't know about that you might be

36:41able to think about where companies sort of figure out how to like, almost like create a public good or create public art in a way to like, almost like corporate wash their like agenda. I can give you a great one. Yeah. So, um, John Rockefeller, he was sort of like the Jeff Bezos of the 1920s. He started Standard Oil, which by the time he was 50 years old, it was the largest company in the world. So large that Teddy Roosevelt, uh, became a monopoly, uh, buster and the non-monopoly act

37:12in America was created because of him. So he had this really bad energy about him where people thought he was just like, you know, Scrooge McDuck type of guy. Well, he also was part owner of a mine. I think it was in Colorado and they were basically, Standard Oil was so big, they needed to, uh, create their own mine in order to get the chemicals they needed to make the ovens for the, um, to make the, you know, to make all their shit. Anyway, John D Jr. was the predecessor. He was the son of John, uh, senior and he takes over the company and he's a, he's a good

37:42guy and he's John D Sr. He actually was a good guy as well, but he goes to his son. He's like, I need you to figure out how to do good in this world and like bring our, your name back and do what's right. Well, Jr. goes to this mine and he sees that like tens of thousands of workers are living in squalor. It's horrible. And the reason he goes there is because I believe that there was a flood, um, and like 200 people died in this little crappy mining town, which is basically a company town. And John Jr. goes there and he's like, this is horrible. I can't believe we let this happen.

38:12I see why you guys died. This is, this is garbage. The way you guys are living. I feel so bad. We have to do something about this and he does do something about it, but his reputation is truly harmed. Well, the great depression happens in New York city. A lot of jobs, um, get screwed up and a lot of blue collar workers go on, um, are forload and just laid off. And he's like, we got to do something. And he comes up with this idea with this for an architectural project and he builds this massive tower in midtown New York city. And he's like, we're going to make this amazing. It's going to be one of the greatest things ever. And we're going to employ like 10,000 people.

38:43We're going to revitalize the city. And that is Rockefeller center. And Rockefeller center is a huge tower surrounded by smaller towers. And in the, in the beginning or sorry, in the, the, the, the courtyard, there's a man lifting up the world. It's like supposed to be like Atlas, you know? And he was sort of like, this signifies what we're trying to do. We are trying to take like, uh, the bad in, in this area, in this era of time, we're going to try and make this amazing. So John D Rockefeller is an example of someone who has done what I call reputation laundering.

39:13He, uh, like he, he took something that was bad. And, and so John D jr. actually has a great reputation and a lot of people believe it's in part because of Rockefeller center. That's a great example. Um, I asked AI also for some other examples of this. And, uh, it talks about one funny example that I didn't know about was when cell phone, um, towers were needed like everywhere, right? Like it's phone, phone towers. People didn't like these ugly steel towers I would put up. So they created, um, have you ever seen a monopine or a monopalm?

39:44So it's basically a cell tower that is like a Halloween costume where it looks like a palm tree or a pine tree at the top. They just like fake put like bark, they put fake bark and fake branches and fake, fake plastic, you know, pine needles so that it looks like a tree and not like a ugly steel thing. Uh, and that's how they got through and building out the infrastructure needed. Another example was, um, Carnegie. So Carnegie obviously had Carnegie steel and then he built 2,500 libraries, uh, across America

40:16while, while running Carnegie steel. And it served as like, you know, a good to each of the communities. And this was while like, there was like huge strikes happening because like they had pretty brutal labor practices with Carnegie steel. Oh, he was horrible. He was such a hypocrite. He was like, I'm gonna do all this good stuff for the world. But he had this famous quote where he would say, if you watch the cost, the profits will follow. And for him, the biggest cost was workers costs. And he was known for being a, a, a kind of a jackass when it came to workers. And so, and so I think there's, I think this is something very interesting that I would predict

40:48is going to happen. I don't know what they're going to do. I don't know if it's like park spaces or if the, if they're going to design the actual data centers to look like the bird's nest or whatever. I don't know what they're going to do, but it does seem like they're going to have to do something. It totally can be done. Have you been to the, like, do you know the Paramount in Oakland, the theater where I used to host my event? Do you remember how beautiful that is? That's from, um, the 1930s, but like up until like the 1950s, I would say before, uh, like right before the end of World War II, a lot of these buildings were gorgeous. I live in the upper side of West, uh, uh, New York city and the architecture from any,

41:20they call it a pre-war building. They're absolutely gorgeous. And so I just, I don't know why like this minimalism took place where like it's things a lot more plain, but I, this is a great idea. Shout out to, uh, David Perel and Cultural Tutor who are, who are on a crusade right now to bring beauty back, uh, to, to the world. And so if you haven't seen, go watch their, uh, go, go look up Cultural Tutor, uh, I think on YouTube and, uh, watch the, the sort of the stuff they're putting out. It's got millions of views. People really resonated with this.

41:50It's like, why does everything look the same and why does everything look so bland now? Um, I would have never guessed that that would touch such a nerve, but it definitely does. They've found like something that the, that people resonate with a lot and they're building like a whole, like, I think they're doing like a movie on it or something like that. They're doing something cool with that. All right. Can I give you two of these other ideas that kind of, uh, broke my brain a little bit? So one is the company brain. I think you've been thinking about this. I do it now. We have it now.

42:22Um, there's, and there's a bunch of different ways to take this. What does this mean? So there's two ways to take this. I'll, I'll just describe the first one. The one that's more interesting to me. Today, AI is seen as a very smart assistant. So it's someone you go to when you have a question and it'll go fetch you the answer. It's somebody you go to when you have a task and you delegate the task and it'll try to do the task for you. So it's kind of like this junior, everybody gets a chief of staff. Everybody gets an assistant who's smart, always on and doesn't talk back.

42:53Fantastic. And that's what I think the, the mental model most people have of how AI is going to, going to, going to work. And some people sort of see it as like, oh, it'll be like, you'll have digital employees like, oh, well, we'll probably hire fewer people because they'll just be like kind of these workers, these AI workers, these, these guys in the coal mine, just digging for us. Ah, this is so great. We're going to have so many, we're going to have so much productivity. And I think actually it's going the other way, which is it's not that the AI works for us, but that we work for the AI and people are going to hate that sentence.

43:24But let me just describe what that means.

43:27AI is very good at understanding a broad set of information, having eyes and ears everywhere, reading everything, knowing everything and making decisions. Today, we use it as the sort of junior employee, but it does seem like the way this is going is that AI becomes the boss. Jack Dorsey is probably the most vocal about this right now. So he laid off tens of thousands of people at block. And I think he's trying to like change the way the, the, you know, like the org structure looks inside of a company.

43:58And I, I, I believe, maybe I have this wrong, Sam, you can correct me if I'm wrong. I believe what he's saying is basically that the AI is the brain and the rest of us are giving context to the brain. So we're out there, we're trying to feed it the right information so that it can make the right decisions. And then we go do tasks and those tasks also produce information that comes back to the brain. The brain sort of knows everything that's going on in the company, can weigh all the different factors and can make awesome decisions at high speed with less bias, with less fatigue, with less stress than the rest of us. And, um, it does seem like this is the way that things are going.

44:30I could say this only just for my own use, which is I started out very much in a, Hey, go do this. Or, Hey, tell me this type of mode. And more and more, I basically say, Hey, can you ask me questions? I'll give you some answers. Then you, can you help me make this decision? Hey, can you tell me what the right move is here? And, uh, it's very good at doing it. Right. And so the question is like, are companies going to work this way? And I'll give you one last story that's on top of this. So I don't know if you remember, but a few months ago, there's this research arm called Citrini that put out this research, uh, that put out this, this blog post and the blog post

45:03basically described this, um, sort of almost like a bit of a doomsday scenario, but basically what they described was that you're going to get all this productivity from AI, which means you're going to have fewer people working at these companies. So you're going to have less people earning wages, which is what you need because the wages of one person become the spending in the economy, which becomes the wages of the next person. And so when you have fewer employees, then you have fewer wages. And when you have fewer wages, you're going to have less spending. When you have less spending, you have less revenue and we have less revenue, then you're going to tighten the belt even more and cut more staff.

45:36And it creates this downward spiral spiral. And maybe they said it's smarter than that, but ultimately this was the sort of conclusion that they had of how you might get this productivity gain and it still might, uh, result in the economy going down. This, I don't know if it triggered or created, or maybe just coincidentally, uh, there was a huge sell-off in the stock market. Like the stock market went down like a huge percentage on the back of this because people got pretty worried about what's going to happen in the U.S. economy. Because again, the S&P 500 is an American index. All right, uh, let's go back.

46:06So, so, so you, you hear this and you're like, wow, that's pretty bad. And basically they, they wrote this thing that's kind of depressing for everybody. I asked AI to summarize it in three sentences. Imagine that the bulls are right and that, uh, AI works exactly as everyone predicts. That's precisely what breaks the economy. The white collar jobs get gutted, displaced workers earn far less, consumer spending collapse, and the productivity gains flow entirely to the owners of compute rather than circulating throughout households. Right. And so, uh, there's a big market sell-off. Everybody gets mad at Citrini. People, if you agreed with them, you got mad at their conclusion.

46:39If you disagreed with them, you got mad at them for spreading, uh, you know, doom and gloom. And they, I imagine, were short, right? Uh, I'm not sure. They sell the research. So I don't think they, uh, they, they sell the research. I think they might have like a capital arm, but it's like pretty small, if I remember correctly. It's like, it's not a huge thing. So then a few months later, they go viral again. And this time it was for the analyst number three, where they basically, they sent a researcher out to the Strait of Hormuz. This guy went on this like, you know, Jason Bourne mission and he sneaks across the border of

47:11Oman and he bribes this guy to take him out in a boat into the Strait and he tries to collect first, first party data. And he says, oh wow, look, um, it's not open or closed, but it's functioning as a bit of a toll route where if you, if you are from the right country and you pay the right bribe, you get through the Strait. It's not fully closed and it's not fully open. And they found this and they, they fed that information back. And people again, got mad at them and they go, look, first, you got mad at us for telling you that the white collar jobs are going away. And then you get mad at us when we show you the only types of jobs that are going to be left, which is basically feeding real world information and context back into the, into

47:44the engine. And that's what the future of analysts look like is not guys sitting at spreadsheets. Cause guess what? The AI is much better at sitting there looking at a spreadsheet, reading every earnings report, listening to every earnings call on earth simultaneously and coming up with the right decision. It's going to far outperform an analyst. So what does an analyst need to do now? You better be in the field, getting better information, higher quality first party data. To give back to the AI so it can make a better trading decision. That's what an analyst is going to be. And I just thought, oh, that's really interesting how that like the reframe of like what a job

48:15was and what a job is going to be. And then, you know, what does that look like across other jobs? So I just find this whole idea of like the company brain, the AI brain is basically the AI management software. What Jack Dorsey, I think he originally said this on Brian Halligan's podcast. And I think he said what you're describing is the way that you previously and I previously used AI, but a lot of people are doing it this way, is you are the human and you are in a circle and there's nodes connecting to you and you are this decision maker and the

48:48AI machines and agents are feeding you new information to help you make the bright decision. As the CEO, right? As the CEO or business owner or project manager. And what they're saying is that's all wrong. The AI should make the decision and the human should be around the AI and the AI should be the company brain. We're the line now. We are the line. We are the nodes. We are just giving it new information. And in some ways, the AI is making the decision, but also going to execute or we will be in charge of the execution.

49:18But the AI is the thinker, not us. And the reality is, is I believe that except that humans will have editing capabilities. Sure, sure. Yeah, it's not all one or the other. That's a pretty brain-breaking concept to me because it just flips the world model upside down of how I thought the world works and would work. So do you use anything for this? I use Victor. I have no connection to these guys. It's getvictor.com, V-I-K-T-O-R. And it connects to all these tools.

49:48And in Slack, everyone at my company just asks the information. I don't use any of those because I don't trust them. I'm kind of waiting to see how this plays out. I try not to give startups too much information because startups are just super leaky buckets in general. And, you know, I've been inside startups and you could just like, you know, some random employee can see everything. And, you know, they're not super concerned about security because they don't know when they're, you know, they're just trying to grow is generally how things go, no matter what they say. Like, I remember once I used some like telehealth thing and our buddy Seave was like, bro, whatever,

50:23whatever you got, everybody in that startup now knows what you got. He's like, what do you got? You got a fungus? They know you got a fungus. You got a virus? They know you got a virus. Whatever you got, they know. And I was like, he's still right. You just have to assume that that's true if you're going to use a startup's product. Dude, every once in a while, I'll buy something from a company. And like the other day, I bought shoes from someplace and they emailed me, the founder did. And he was like, oh, I love your podcast. So I'm thankful that you shopped here. And I was like, you're trying to treat me nicely.

50:56And that's wonderful. But what if I was buying a cream? You know what I mean? Like, I wouldn't, I don't want you to do this.

51:05I'd meant medium, not actual.

51:10All right. What's the other one that you like? The other ones I would say are the scary ones. So one here is like drone swarm defense. They talked about the story I hadn't actually heard about, which was that the Iranians sent a small, shitty drone swarm and took out an AWS data center that didn't have like drone defense protection. They just blew it up. And they're like, yeah, that's going to happen more. And we need a defense for low cost drones. And what they talked about was like the US military is almost built wrong.

51:41Like I forgot what the name of the, whatever the missile is that, but like we basically send like $2 million missiles to knock out $200 drones. And like, that's just, they're going to make that trade every day. They're like, great. Exhaust yourself. That's expensive for you. And it's cheap for us. And so just this idea of like, wow, war is really going to change. And then you've got, you've got like Anderil and others trying to build these like defense systems. And there's many companies like this, that many startups that are in this field. But it just reminded me, there's going to be a lot of these like Anderil type companies because it seems like the nature of war has changed.

52:12And like all of the, if you go look at like the decorated generals that are buying, you know, that, that lead, lead our stuff. Like, I wonder if that's the right person, you know, and I mean that in the most respectful way possible. But like, if you fought a war and you, what you know about war is from a completely different