Financial Literacy: The Key to Innovation and Growth with Stephen J. Cloobeck

0:02Who's ready to rock today, Fire Nation? JLD here and welcome to Entrepreneurs on Fire, brought Brought to you by the HubSpot Podcast Network, the audio destination for business professionals with great shows like Truth, Lies, and Work. Today, we'll be breaking down financial literacy, the key to innovation and growth. To drop these value bombs, I brought Stephen J. Klubeck into EO Fire Studios. Stephen's 40-year journey has been one of grit. Entrepreneur, philanthropist, and author, Stephen overcame dyslexia to become founder of one of the most successful hospitality companies in history. In today's foundation, we will be talking about financial literacy, what needs to be done, where it needs to be addressed, why it's so important, and oh, so much more.

0:46And a big thank you for sponsoring today's episode goes to Stephen and our sponsors. The Next Wave, your chief AI officer, hosted by Matt Wolf and Nathan Lance, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. AI technology is transforming the way we do business and the media landscape is fragmented. The Next Wave strives to be the leading podcast on AI technology and how you can apply it to growing your business. Listen to The Next Wave wherever you get your podcasts. Are you looking to start or grow a successful business? Attend the world's highest rated business growth workshop taught personally by Clay Clark and featuring Robert Kiyosaki and Eric Trump at thrivetimeshow.com slash EOfire.

1:27Again, request life-changing tickets today at thrivetimeshow.com slash EOfire. Stephen, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. How about getting punched as many times as you can? Are we talking literally or figuratively? Sometimes both. No, figuratively. Do you have the grit to withstand punches financially in business and blue sky punches, things that are absolutely unknown to any of us, like 9-11, the financial crisis of 08-09, recessions, skirmishes in the streets where you reside or operate your work. Can you withstand that?

2:23Do you have the grit to handle it? And can you learn that that will help you grow So not just arithmetically in an additive fashion, but exponentially, do you have what it takes? Well, Fire Nation, I will tell you that having financial literacy is going to help you in those situations at the very least because it can be the key to innovation and growth. And Stephen, I remember leaving college. I mean, let alone high school. I remember leaving college with absolutely no idea how to balance a checkbook. And this is back when that actually mattered. You and me both. I went to college to become a surgeon.

3:11And there was no such thing as balancing a checkbook. You know, there wasn't a course at the university where I went to that even offered that. I actually, after I decided not to become a surgeon nor go to law school, I had to go to Cal State Northridge to learn Accounting 101 and 102. I took it upon myself to do it, and I highly suggest that everyone takes a course like that. Well, that's what I want to talk about right now is how America's education system is actually addressing financial literacy today. And then of course, let's talk about the gaps that still exist as well. We haven't focused enough on how to prepare people for the real world.

3:57And I think that's the issue at hand. So what do you need to know? Balancing a checkbook is important, but let's take a step further. How about opening a checking account? How does one do that? Basic steps. And are the folks that are teaching our young adults capable of teaching this? Have they ever done it? Do they do it for themselves? Let's start there, John. And have they done it for a business? Have they signed the front of a check or are they just backup check signers? You know the difference between the two, right? I do now, thankfully. Good. So you took the big step. And that's a big step because you are now taking risk because you're signing the front of a check.

4:42And it gives you a different perspective, right? It gives you a totally different perspective. And it really comes with a lot of responsibility. And one thing, Stephen, that I think is pretty interesting is California being your home state. I used to live in San Diego myself for quite some time. Why specifically is financial literacy critical in California? How is it differentiated there? I don't think it's any different than any other state. But California used to be the number one innovator and the number one educator in the United States. I think we're still doing a good job of innovation. But when it comes to education, not so much.

5:22And perhaps it's the leaders that we've chosen to run the state, both at the highest levels and even the local levels, that we're not doing deep enough dives as to holding those leaders responsible for meaningful, measurable results. Because they do have a responsibility to do that, but I think we elect them to office and they forget why they get elected to office. They're not geared to execute and know their numbers themselves and then enforce the laws that we put them in charge to enforce. that come with fanciful ideas, some of them beautiful, socially wonderful, but they're not well thought through.

6:11Does that make sense? It does make sense. And one thing that I want to break down for my listeners, Fire Nation, who are entrepreneurs, Stephen, is chatting about some of the curriculum that's critical to help drive specifically entrepreneurship that's not being addressed in our education system today. Can you talk about that? I used to teach my children tongue-in-cheek, but with all sincerity, adding, subtracting, and multiplying, you're important. Dividing sucks. I don't know if you've ever been sub-divided in any form or fashion, but it's not good. You've got to know about it. So you have to know your numbers.

6:57Numbers don't lie, right? One is one, two is two, three is three, four is four. One plus one equals two, but in business, we like one plus one to actually equal three. Oh, yeah. Maybe four. Or five, if we get good at it. And that's what you got to think about. And you can't hide your numbers. And you have to know them on a daily basis. you gotta know how much you're charging for goods what it costs for those goods and what it costs to sell those goods oh don't forget about gna and taxes i know a lot of people say they've made so much money per year they don't tax adjust it so everyone likes to talk about the casino win right oh my God, I won$100 in the casino today, but how much have you spent in the casino the last three trips?

7:53Right. And so people like to tell you the good things. But in business, you must be so sober about what you're doing, the good, the bad, the ugly. And people just always naturally like to talk about the good things, the adulation, greatness that they've achieved. But it's okay to talk about some of the bumps. that you've encountered. Because true success only comes with falling in potholes. It's how you navigate those potholes or how you get in and out of them. Does that make sense? It makes sense. And I actually experienced that firsthand because I was having a lot of pre-tax financial success in California for a number of years.

8:39But then when I had to sit down and be honest with myself and look at my business and say, man, I feel like I'm a seven-figure-a-year business and I'm making that much money in a year. But when I actually sit down and I pay my employees and my taxes and everything else, I'm way below that, way below that. And that was a hard truth to be honest about and to look in the mirror and to be truthful with me. And it actually caused eight years ago me to pick up out of California and move to Puerto Rico so that I could take control of my financial life that I felt was spinning out of control that I couldn't really get ahead because of, you know, frankly, paying over 51 % a year in taxes and going to Puerto Rico and paying 4 % taxes was really a big game changer there.

9:26But of course, then you still have to, you know, be literate and be smart with the money that you're generating and that you're making, even if you're keeping it, because what are you spending it on at that point as well? It is, but what do you have to do to live in Puerto Rico? You have to stay there six months of the year. Isn't that correct? That is correct. It's a minimum six months, one day. And I will tell you, and that's kind of one thing we do kind of pride ourselves on. We are so transparent about everything that we do here. Every month for 132 months in a row now, we publish a monthly income report where we share everything.

10:01We share the taxes, we share the income, we share the expenses, we share our mistakes when we fall flat on our face with a launch or a product or a service. We bring our lawyer on for a legal tip. We bring our accountant on for a tax tip. And we just try to make it a valuable report of saying, hey, this is great. This is not great. Hopefully you can learn lessons from both of these things because it's happening to us every single month. And Fire Nation, we have a lot more to talk about with Stephen around this topic when we get back from thanking our sponsors. Picture this. You're at a party and someone asks you what you do as a marketer.

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12:36Stephen, we're back and we've been talking a lot about financial literacy. I mean, the reality is it's the key to innovation. It's the key to growth. So what needs to be done? What are you working on right now? We launched a political action committee a few months ago to make sure that we hire, and we use that term loosely because elect is the true word, great school board officials that understand that civics and financial literacy are key component parts to young adults' future. and we didn't want to get involved in the dicey issues of gender, books, but these are the core issues that I think everyone can agree on because if everyone can agree on a few things at the beginning, you start to build trust, and then you can get into dicey issues.

13:31When it comes to civics, I found that there has been a good couple decades now where civics has not been taught. So how do we perpetuate a democracy if you don't understand the basics of our democracy? And that's what civics is about. And the test that I would propose for that is the immigration test of the United States. Because it's good enough for everyone that we admit to this fine union, but it's good enough for all of our children. And with regard to financial literacy, we have seen, you know, magic wand, philosophies. Yes, we all want financial literacy, but what does that mean? And you boil it down to, are the young adults ready for the real world?

14:22That doesn't mean you have to go to secondary school. If you so choose that, then you have to make a financial decision, and you better be prepared and understand what is that education going to cost and are you going to get a return on that investment for that education? I mean, if you're going to go to law school, that's$70 ,000 to$80 ,000 a year, right? So multiply that times three. If you're going to medical school, multiply it times four plus plus. Could be up to 12 additional years. So you want to spend a million dollars on education? How are you going to pay that back? Same thing with your legal profession.

15:07You're going to spend just under$400 ,000. How are you going to pay that back? Is that job going to pay you enough where you get a good return? Or are you going to basically just pay that off the rest of your life and end up living paycheck to paycheck? Well, you might as well just work at McDonald's for that. So these are tough decisions people have to make. Or you could become a plumber or electrician and actually make a million dollars. So these are questions that should be posed to young adults so they can really determine their future and make an informed decision. And then, you know, the next step is, of course, logic tree learning.

15:51So Stephen, Fire Nation are entrepreneurs, small business owners, and it's a volatile workplace in today's day and age. So is being an entrepreneur the only way to be secure in today's volatile workplace? I don't think so. Because if you do want to become a tradesperson today and want to be a plumber or an electrician, I think you can create a viable financial world that certain individuals would be happy with. I mean, if you read the latest rags, the compensation for those jobs and the education required is probably a better return on investment than becoming a lawyer. So, you know, becoming an entrepreneur is not for everyone, as you know.

16:40Taking that jump into the entrepreneurial world requires risk. And not everyone's cut out for risk. Not everyone's cut out for making payroll before you eat, which I'm sure you know. So let's talk about hiring somebody out of school. What trades do you specifically look for when you're hiring somebody? And what's a deal killer? I have tested and tried many a different way. You go to an Ivy League and you get straight A's. Well, I don't want you.

17:14because you're going to be too introspective and don't have EQ. Give me somebody with good EQ, IQ, and grit. You tried hard, you get up early, and you stay late, and you're willing to learn. On-the-job training is fantastic. I don't even look at grades. Grades are not something that I even care about. Did you pass? Pass, fail is important to me. Did you put in your time? Are you well-rounded? Do you show interest? Or are you just going through the motions? Going through the motions never works with me. I like creative. I like abrasive. Respectful abrasive, if you will. Challenging. Forward thinking.

18:07and somebody who's always willing to help solve a problem, not cause a problem. If somebody causes a problem within my company or companies, I remove that cancer immediately. I always give fair warning. Everyone gets a second chance, but there's no third chance. But more importantly, if you lie and you don't have integrity, you die. You're done. Go see HR. Stephen, what keeps you up at night? What keeps me up at night? Nothing. Making the world better, that's what keeps me up at night. I just try to think of how do we make the world better? How do we bring back civil discourse where people can agree to disagree and do it in a very thoughtful way where we don't have this patrolling hard right, hard left?

19:02I live in the center. I always have. and there's always a solution, and I never have a fire drill because I'm a guy who runs into the fire and saves people. I serve and save. And I'm just geared that way, built that way. And people are so dogmatic or cultish. I just don't have the time for. Steven, we've talked about a lot of very important things today, and I really like how we ended here because you are right. So many people are spending so much of their time on this just absolute hate and anger and spitting at the moon type of attitude. When there's just a lot more productive and beneficial ways to be spending our time, our energy, our mental bandwidth, our finances.

19:49So what would you say is the one key takeaway you would want our listeners to walk away with from our conversation today? Well, you said something important, spitting at the moon. when you spit at the moon, it blows back in your face. Don't do it. If Fire Nation wanted to learn more about what you have going on, your company, if they want to connect with you, what would be your call to action for our listeners today? Rise up, stand up, get up early, stay late, work hard, don't complain, focus on the positive, and always look at yourself in the mirror. Don't make it up. It's binary. It is what it is.

20:28Live in the world of love and inclusivity. Be part of the solution, not the problem. Fire Nation, that's what we call a lot of value bombs in a very short period of time because you're the average of the five people you spend the most time with. You've been hanging out with SJC and JLD today, so keep up that heat. For links to everything that we talked about, visit eofire.com. Just type Stephen, S-T-E-P-H-E-N. In the search bar on the show notes page, we'll pop right up. And Stephen, thank you for sharing your truth, your knowledge, your value with Fire Nation. For that, we salute you and we'll catch you on the flip side.

21:04Hey, Fire Nation, a huge thank you to our sponsors and Stephen for sponsoring today's episode. And Fire Nation, over the last decade, I've interviewed more than 4 ,000 of the world's most successful entrepreneurs. And I've created a 17-step roadmap, revolutionary to your financial freedom and your fulfillment. I put it all into my first traditionally published book, The Common Path to Uncommon Success, personally endorsed by Seth Godin and Gary Vaynerchuk. The common path to uncommon success is the step-by-step guidance that you need to achieve the lifestyle of your dreams. Visit UncommonSuccessBook.com and I'll catch you there or I'll catch you on the flip side.

21:44The next wave, your chief AI officer hosted by Matt Wolf and Nathan Lance is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. AI technology is transforming the way we do business and the media landscape is fragmented. The Next Wave strives to be the leading podcast on AI technology and how you can apply it to growing your business. Listen to The Next Wave wherever you get your podcasts. Are you looking to start or grow a successful business? Attend the world's highest rated business growth workshop taught personally by Clay Clark and featuring Robert Kiyosaki and Eric Trump at thrivetimeshow.com slash EOfire.

22:20Again, request life-changing tickets today at thrivetimeshow.com slash eofire.