How To Turn $100K into $4,000,000 with Distressed Investing

24:45You've done the cleanup work on this. That's what we would have to trust you. And that's why you get paid a carry or a fee from investors. And you know, what's interesting is, so it is a lot of grunt work. That's why I think sometimes it gets like the more like, you know, guys holding footballs who, you know, played hockey or something in college. You know, there's not, it's not like the brainiest side of the stress, but actually there's a lot of intricate, at like, I'll call them corner cases, like claim corner cases, where you really do need to know a lot about the legal side. I mean, with ChatGPT, it helps a lot, but still it helps to have a bunch of experience and, you know, prompting chat is just as important as anything.

25:21So the more you know, the more powerful it is. But it seems like a good life for you. You're hanging out in Italy. It seems like you work project to project. And what's the upside here for you? Like, can you make tens of millions of dollars in one year? Yes. I mean, I don't know. I mean, seven figures definitely eight figures is pretty hard uh what happens is you get people that push back on your fees they say like oh you're not in new york you're not a real firm like it's just a few guys like you're just a broker and um but you know you build a reputation over time and then people will pay you more and more and um but you can definitely make seven eight figures um especially in a good year um especially if you have something work out and you ever promote on it so let's uh let's walk through that game I talked about.

26:06First, last, best, worst, weirdest, whatever. So what was the first lifetime? Maybe you were a kid. Maybe you were in middle school or something like, you know, Sally didn't want her bike anymore. And you're like, oh, your trash is my treasure. You know, so what was your first foray into buying distressed assets? Okay, so my parents were the more bankruptcy lawyers or lawyers. My mom specifically was a consumer bankruptcy lawyer. So I used to hang out like at the courthouse as a kid. and like hang out with the clerk's office and with like U.S. trustees and stuff. So I kind of grew up like really.

26:39Did you like it or she just like didn't have daycare and you had to go? Yeah, basically. She didn't have daycare. A single mom, basically like no daycare. Tom's got the clip-on tie and he's in court with me. So a lot of clip-on ties. Yeah, this is my associate. Yeah, so, and this is like paper files everywhere. So, no, I grew up kind of hanging around it. We'd always hear about stuff from, I remember when I was a kid, first hearing about like HUD houses. I was like, what's a HUD house? What's that? It's like, oh, you can buy these houses. And, you know, they're really beaten up, but you can get really good deals.

27:13So I remember my brother and I flipped a HUD house. My mom put up the capital. I have no idea what the numbers were. We probably bought it for$20 ,000 or$30 ,000 that my mom put up, and we probably sold it for$60 ,000. We did the demo, Demolition Ourself, which is a, you know, I have to say, God love my parents. I'm glad I wasn't injured severely. You know, doing demolition when you're 14 is probably a bad idea. Listen up. The old playbook is slowing you down. AI broke the funnel. Loop marketing fixes it. It's a new era for marketers. AI is capturing search traffic. Channels are fragmented and generating leads feels less predictable than ever before.

27:52HubSpot's loop marketing playbook will guide you through this unprecedented disruption. It's the system your marketing teams should use to move faster, connect deeper, and grow smarter. The modern growth playbook for the AI era. Built by HubSpot, designed for today's marketer. Get the Loop Marketing Playbook at hubspot.com slash loop-marketing to find out more and leave your competition behind. All right, back to the pod. What was the story of the baseball card shop? Ben told me there was a baseball card shop story. So these are the kind of things I was talking about when I was a kid. These deals would come up.

28:25you know, there was a whole thing where they, the baseball card industry went through this, this, they were, they were printing cards. They said they weren't printing. I don't know if you remember this, Sean. And, and there was a bit of fallout and like the collection market for baseball cards. And I'm sure a few of them went under probably like the microbrewery thing, where there's people overmade microbreweries. And then I've seen a bunch of microbrewery bankruptcies. And I remember seeing it was the entire shop was$3 ,000, which is a lot of money when I was a kid. And my mom was like, do you want me to put up the money and you'd buy the whole thing i was like we can do that i was like so i would hear about these things as a kid and i guess it probably colored my my imagination for what was possible and then i kind of like between that and you know i was really obsessed so i started i guess i bought my first stock when i was 11 or 12 i can't remember but i was sort of obsessed with warren buffett as a kid um but i and then what happened guys over time is i sort of melded the two things together it's like what what would Buffett do if he had the specific knowledge, you know, the Neval term, like specific knowledge of bankruptcy plus what he knows well, which is like, you know, valuation and sort of like deep value investing or value investing.

29:31So I kind of melded those two things together. Yeah, it's almost, I actually think there's three. There's, you have knowledge of the law and not as fearful. It's like I speak the native tongue of bankruptcy court, right? So it's like, okay, I feel I can get more certainty than the people who hold the claims. I have a better idea of how this will play out and how long it'll take to play out and where the puck will land. So it's like knowledge of the legal code, knowledge and interest in deep value investing, which I like admiring Buffett and Howard Marks and a bunch of these guys and really learning from their playbook.

30:07And then the third is just the entrepreneurial hustle to go cold call, knock on doors, raise the capital, get the claims, do the verifications, go travel to, you know, wherever and make it happen. Right. So you kind of needed that Venn diagram to be able to do what you do. That's what I'm hearing. And I think for me, like I got kind of obsessed with the adventure of investing. Like for me, you know, like my very first like real distressed investment was this thing called Ethnex Energy where people had all these restricted physical shares. and so like i literally drove around like the northeast and bought shares off of people and like we'd go into the local bank and get things medallion signature guaranteed and i was like oh i'm just like buffett and snowball where he's like going around and buying shares of the hunting lodge he's like knocking on the door of geico like can you give me a tour of the office and like like trying to like figure it out yeah if somebody hasn't read snowball can you tell us a uh sort of a buffett hustle story or a buffett devalue distress story Gosh, I mean, I must have read it at least 10 years ago.

31:06So, yeah, I mean, he was famous for, there was some security. I can't think it was a hunting club that he joined just so he could buy stock in this. I mean, maybe you guys have heard the story. But there was like a hunting club that also had oil on its land. And so it's probably an apocryphal story where he like, you know, gets all the hunting gear and like joins the hunting club. You know, Buffett doesn't give a shit about hunting. Hello, fellow hunters. Hello there. and he's got his rifle on his, you know, and they're like, you don't suppose you want to sell some of your shares, do you? So I can't remember exactly what the story was, but it was something along those lines.

31:40And I think it was like, you know, you could, you know, now, you know, one of the things I took away from Buffett is you're always using your unique competitive advantages, just like in any business, right? And all the lessons from business kind of apply to just pure investing. And, you know, using those new competitive advantages, at the time, there was all this informational arbitrage. That's probably less and less now, they're still scuttlebutt, meaning like making phone calls and channel checking and like getting out in the field and hustling. And hustling goes a really long way. But you know, now you have other advantages, like you can invest in Japanese insolvencies.

32:11Buffett couldn't invest in Japanese insolvencies because you didn't have Google Translate. So, you know, you just have to keep pushing the boat out. To me, that's the real lesson of Joel Greenblatt or Warren Buffett. Joel Greenblatt was like a famous special set investor, which is, you know, you play the field and you use everything. We just talked to Howard Marks and both Sean and I have read a bunch of Buffett stuff. You're doing something. I don't know how great of an investor you are other than this one topic is really fascinating to us and you seem wonderful. But you're doing something that they do, which is you use really great language.

32:45So you've used a few phrases. You've used a few really good phrases that helped me understand things a little bit more effectively. So you're like, you just got to keep pushing the boat out. Or you're talking about like scuttlebutt. Like you've used these words that have done a really good job of explaining what you do, which in my head means you have done a very good job of creating a framework on how to think about this type of stuff. For me, I think it's all about valuation. Just how you manufacture the valuation is like the sauce and like how you, you know, you're making your sauce. Like you guys are doing venture deals.

33:15Like so much of it is probably access and connections and reputation and being able to get allocation, but also being able to vet founders or vet VC firms. And like, you know, and also knowing what the docs look like, like all that kind of like, not a Venn diagram, but that whole like soup that makes it work. That's that we have the same thing in what we're doing. I mean, Howard Marks is an absolute legend. And, you know, he has a very famous, I mean, I'm sure he talked about Bruce Karsh, who did, you know, a lot of the investing. And Howard Marks is like the great communicator. I mean, the guy, I mean, that's one of the things I think people don't appreciate is you can still work on investments, make really good returns.

33:56But those guys are like monster communicators. Like they are great at fundraising and they're great at what they do. So it's just, they have like multiple skill sets or, you know, or they have partners to back them up. You sent us a list of your like core philosophies and you've told us the first one, the steak and sizzle philosophy that you live by. Tell us about some of these other ones. So one is shop Madison, not canal. What does that mean? Okay. I stole that one. I like it because what deep value and distress, the mistakes they make is they sometimes buy like value traps. They give out real crap.

34:33the idea is you want to buy real stuff that is cheap that could be good so like the the phrase is you know you don't buy you know handbags on canal street because those are all fake you buy them you try to get a good price on the madison avenue when they're discounted not you know because you know fool's goal is a real problem in distress you just say oh this guy put 200 million dollars in it's only 10 it's like yeah but it's worth zero so you got to be careful of of this kind of bias that runs into like, oh, it's such a good deal. You're like, is it? So, I mean, you know, assets become liabilities and liabilities can become assets when you get in a restructuring situation.

35:11All right, let's do the next one. He said, start young. The first decade is tuition. I love this. This could apply to any field, by the way. I think that's a great phrase just in general. Well, you guys, come on, y 'all know a lot of this stuff. But for me, I started when I was 12. I was terrible. I think the first i could tell you the first stocks i bought i bought home depot because bob nardelli who was passed over for whoever i think maybe jack walsh or maybe emmett whoever became the ceo of ge came over to home depot and he was gonna ge home depot well that didn't work at all and you know so i wasn't investing at all in valuation i was based on a story in hbr there was this huge article in in a harvard business review and i was like 12 years old like reading this being like oh yeah ethos i don't even know what this word means he's gonna change the ethos the culture i was like the first stock yeah i was like i was like ethos what's i never heard of this word sounds smart so that was like the first stock and the other one i bought was inco which was a large nickel producer in canada that actually did work out it was based on like the rising price of nickel i read about in foreign affairs and the third one was from a forbes article it was emc which is a chip manufacturer which i can't remember what happened to that one i think i you know the thing is is it is the thing about stocks especially when you're young and you've never done anything you buy them and you're like okay i bought them all right and then day two you're like now what do we do my kids are um i have a one-year-old a four-year-old and a five-year-old and for my four and five-year-old i just uh like they were trying to earn something they wanted like ice cream or a treat or a toy or whatever like if we do this can we have that and i was like, here's what I'm going to give you.

36:49I'm going to give you$100. They're like,$100? I was like, I'm going to give you$100 each. But because I was teaching about like, we were at the group, we were like waiting in the parking lot. And I was explaining what a grocery store is. I was like, yeah, so somebody owns this business. And then they buy the stuff. And then they sell it to us. I was trying to explain what a business is. And I was like failing miserably. I was like, oh my God, why is this so hard to explain what a business is? But I basically told them, I gave them$100 each. And this weekend, I'm going to present to them five stocks of products that they use and buy.

37:20So we bought a Nintendo Switch. So it's like, here's Nintendo stock. And I'm going to let them pick and let them invest it in an account where they're going to start to see whether it's going up or down. And I'm going to have them explain whatever their logic is of why they picked either Nintendo or whatever, Yamaha or whatever stock that they pick. And then they're going to get to like ride the ups and downs of this so i'm with you on stardom young even younger than uh than you you would guess well yeah i just think that you know i don't know i'm you know my own experience like you know you'll meet guys this is a common thing i'll meet guys i don't know when i'm here on holiday or wherever and they'll have an exit like i met a guy who's like a very um early employee at airbnb and he had probably 80 million dollars or 100 million dollars but he's never actually invested money so now he's 45 probably 50 and now he's like you know i'm so good at this like i'm gonna buy some duolingo and i'm gonna you know do this and do that and i'm like well you just need to respect the fact that you've actually never invested money i mean you were amazing operator and you got a rocket ship that's awesome we say that all the time on here which is there's a huge difference between investing and earning like via a company Not just a difference.

38:32It's almost like the opposite. Yeah. It's like a power lifter that then goes and tries to, you know, do ballet or something. It's like, oh, yeah, operator. It's all about action. You know, it's all about action, action, action. You got to do stuff, right? You're trying to do as many things as you can, be super productive. As an investor, it's like, sit on your hands. Inaction is your friend. All the money's made in the holding, the waiting, the observing. and as an entrepreneur who was rewarded for taking action, you get punished as an investor for taking too much action. Yeah. And, you know, it just takes a ton of experience to be good and, well, even to be okay.

39:08A question that Sean has asked me before that I love, which is, like, basically, how do you invest your own money? And I want to ask you the same. Do you, since you are a professional investor, do you have 100 % of your portfolio in a variety of deals like this or are you doing any passive stuff or is it all active? It's all pretty active. Yeah, I don't, you know, like for me, it's like tax advisors, great. People that like, you know, estate planning advisors, great. Guys that want to manage my money, no thank you. Partially because I enjoy it, but also I don't think that I've reached the capacity where I have more money than I know what to do with.

39:53You know, I think that I can still find a lot of deals. I mean, you know, your opportunity set when you have, you know, a million or 10 million or whatever is just a lot better than if you're, you know, if you're at a hundred or for it, you're, you know, the optimal, the optimal, the optimal strategy, uh, changes based upon your capital base. So when you say active, do you mean it's all distressed? It's like your specialty. That's where you're putting most of your, your net worth, the majority of your net worth? Most of my money into our own deals. Right. When you were saying like, you know, early on with your hedge fund, you were putting 5 % into that deal.

40:27You weren't allowed to because you have us investors to get like, you know, as crazy as maybe to match your own conviction in the deal. Now that that's not the case anymore. Like how concentrated have you gotten? Like do you have you gotten any have you ever been at a point where you're just like insanely concentrated? I kind of like it when it hurts a little bit because it's so I'm so concentrated. But maybe that's me. I don't know. I mean, I feel like it's a little bit like an entrepreneurial bent. Like you kind of, if you're not pushing yourself, then, then, then I wouldn't feel comfortable with it.

40:59I mean, I understand if you have a big exit, um, you know, for me, I'm constantly, uh, investing into other deals, friends deals. I have pretty, I feel like I have pretty good deal flow in the distressed area. And then the claims work, I wouldn't say it's free money, but you can almost reliably compound your money on a small base, you know, like a few million bucks or something you You can reliably compound that at pretty aggressive rates. What do you mean by pretty progressive rates? What is that? Is that 15 %? Is that 25 %? Is that 30 %? What do you talk about? I don't know. Probably 30 to 50, depending on the year.

41:30You can probably easily get higher than that. There's these guys, Sean, like in, I used to live in Texas and there are guys who like, I didn't know what their job was. I'm like, I don't know what you do, but you're really wealthy. And I just started calling them capital men. they're just capital guys where they just like do they like it when you call them capital men it's a good phrase i think you're a capital guy maybe i don't know i guess i'm for me i i've i feel like i've spent my entire life studying like the history of sort of like modern investing like guys that bought banks out of bankruptcy before you you know before you know when you could do that you know guys that have minted enormous fortunes with um you know like there's there's the guy that bought a tobacco company around the time they were doing the settlements with tobacco companies who made a fort.

42:20And so I've studied a lot of these things and I've always wanted to be, to do just one deal like that. So I guess I've always aspired to do that. But I mean, if you, there's that phrase, you know, what is it? A position well bought is already half sold. And I do think when you're doing sort of very special sit, sort of deep value distressed stuff, if you're selective, the problem with the fund and the big institutional money management firms is they always have to constantly be finding deals. The nice thing about being a little bit of a home gamer is you can kind of select, you can be very selective.

42:49You can literally do nothing in a six-month period or a year if you just can't find anything. And, you know, there's still new claim work and bring in income, but you don't necessarily have to swing. I mean, we've seen deals, over my lifetime, I've seen deals where guys have, you know, turned, you know, 20 million into 3 billion and, you know, 6 million into 80 million in one year. I mean, you see some incredible deals in the space and you know, you're getting high optionality, low risk because of the price you're paying. But it's a ton of work and a lot of brain damage for sure. And a lot of hustle.

43:20And that's not necessarily the claims. All right, let's take a quick break because I gotta tell you a story. Let me tell you about the first time I tried to run payroll for my team. I was using a traditional bank and you know the type. It's got a janky interface. It's built like a 2002 tax form and it was open only during business hours. And I hit send and it froze. They flagged the transaction. They locked my account. They put me on hold for 45 minutes. And then they told me I got to visit my local branch. And that was the day I started looking for a new banking solution. After asking a few founders what they were using, I found out about Mercury.

43:48And so now my payroll is two clicks. I can wire money. I can pay invoices. I can reimburse the team all from one clean dashboard. That's why I use it for all of my companies. And so do 200 ,000 other startup founders. And so if you're looking to level up your banking, head to mercury.com and apply in minutes. Mercury is a financial technology company, not a bank. Banking services are provided through Choice Financial Group, Column N8, and Evolve Bank and Trust members, FDIC. We've kind of hyped up, you know, what you do. We've been glamorized a little bit in this episode. We've glamorized you and what you do.

44:17Give us a little bit of the ugly. So first on the asset class in general. So for example, startup investing, I could tell you is amazing. You meet these entrepreneurs. They're telling you about the future. These are the smartest of the smart, young, ambitious, creative people. And when it works, did you create the next Facebook, next Airbnb? You can get 10 ,000 X. And then you go and start doing it and you're like, oh, and also, you're going to be wrong most of the time. You think you're going to learn so much from these people. It's like you hand them the check and then you kind of don't hear from them that much after that.

44:48You're not actually going to learn that much, nor do you have any control or say in at all what's going on in your investment. And by the way, even when it works, it's going to take 10 years for it to get liquid. You might be rich otherwise. This is not the way you're going to get rich. It's a hobby for people who are already rich. And that's like, if I was going to say, what's the real talk of angel investing? That's how I would describe it. what would you say is like the ugly side or the bad side of what you do? What's the downsides of this asset class? Well, distress in general, as a small player, you can get totally hosed.

45:20So don't like, every now and then I'll hear someone, even smart friends will say, oh, well, you know, KKR is going to make sure everyone's taken care of because they don't want the bad press. I'm like, what are you talking about? It's not Lake Wobegon. They are going to walk all over you in bankruptcy court. So I never understand this logic. And it's only from many years of being like, oh, they're going to play nice. No, they're not going to play nice. And don't ever assume that. And sometimes you do get a gift. They'll do, you know, things that'll be a little more gift-like to wherever you are, if you're in a preferred or if you're in equity.

45:56God forbid you're in equity. But if you're even a claimant, things like that. So that's one of the ugly sides. I think also one of the ugly sides is, you know, it's very transactional and financial. So it doesn't exactly, you don't get people who are like giving you the starry eyes of the future. A lot of times you're sitting across people arguing over a pie that ain't growing. In fact, maybe the pie is bad apple pie that's already gone off. So it's like they're really arguing over something that could be either dying or shrinking. So I think it has an emotional toll on you being in distressed investing.

46:32Also, you are actually hearing people's life stories. Like, you know, I will not mention names, but, you know, companies will go bankrupt and this will be someone's entire life's work. And they're Picasso and they're spending two hours telling you about their Picasso. And you just can't you just got to let him you're almost like a guidance counselor walking them through, you know, maybe doing a deal or transaction and try and be as respectful as possible. the fact that this person might have just lost their life's work or their family's fourth generation business, et cetera, et cetera. So you, um, you have people in real, they emotionally are in distress.

47:06So it is a tax on you, but also you need to be as respectful as possible. And, um, I don't think we'll say what else? I mean, I think as a small player, it's very hard. I think for me, I always say that investing isn't, I would, I wouldn't say I'm good. I'd say I'm okay investor. I'd also say that it's a bit of a disease. So I kind of like feel compelled to do it, even though sometimes maybe it's not the best thing for me. So, um, I always joke that it, you know, it's kind of, it's kind of a disease. Like I'm looking at this stuff on nights and weekends on Sunday morning, you know, I'm, you know, just like you might be looking, having another call to startup that you think is interesting or trying to get on an allocation for something.

47:45Like I'm doing the same thing with my deals. Like I'm trying to learn a little bit more and see if I can find something. So yeah, I don't know if I answered your question. No, you did. The second part of the question is we've been glamorizing you a little bit, but you called me before the pod and you called Ben and you were like, hey, just to Google me, you're gonna see some stuff. I wanna be able to, do you guys wanna ask me questions? Do you want me to talk about that on air? Do you want me to clear the air about this? So like, hey, here's an opportunity. Because if somebody Googles you, yeah, there's like a settlement case.

48:18I don't know what's going on with this. Like, what do you want to say about this? Yeah. So, and I, that's why I said, I said, Ben, I got, I, you haven't said anything about this and I'm wondering why you haven't. And I just want to put it out there, which is, yeah, I was involved in this receivership in Delaware and I got some pretty nasty headlines. And I have to say, you know, as I've gone through my life, I've had a lot of ups and downs, like any, anybody or any entrepreneur for sure. And this was a down one and I'm, I'm glad to have it behind me, but basically it was a receivership that I was in charge of.

48:48You know, we made a lot of money for the shareholders. So the court didn't like some of the way I went about, you know, my activities and sort of aggressively slapped me on the wrist or maybe in the face. And I'm glad that everyone in the, it's called fun.com is getting a good recovery and I'm glad to have it behind me. But yeah, it's like something I wanted to bring up because I didn't want to act like it was, something didn't happen. Okay, but what'd you do? You're like, ah, it's not my best. What'd you do? So the biggest thing is, so I was running this receivership. And of course, because of that, I was in charge of doing everything, whether it's like administrative work or like running the bank accounts and doing the taxes.

49:31And, you know, while I think I'm a good... Sorry, dumb question. What does doing the receivership mean? You're taking it through bankruptcy? Is that what that is? So it's kind of like a bankruptcy, but it's a state, in state court. So this was in Delaware a chancellery court because the company was a Delaware court. And so my job was to sort of marshal all the assets. There were no assets when I showed up. So this was a basically a pump and dump penny stock. I bought up 20 % of the company. And then I went to Delaware because the guy who was running it actually got arrested for a different fraud that he was doing, this guy named Jason Galanis.

50:05And so because of that, I was like, oh, because I knew all along that this company likely owned the domain name fund.com plus they own this um ownership of a um an etf company called advisor shares so i went and got myself appointed receiver there was no assets in the company and my my goal or my what i was my remit from the court was as a receiver almost like a bankruptcy trustee was to marshal all the assets and then try to pay out as much to to uh shareholder as possible i think i did did that uh the court we and i did do it but we had I had a shareholder who was very unhappy with the way I was going about it.

50:41He complained to the court. The court looked into my activities. They didn't take kindly to some of the things I did, whether it's the tax position or how I was moving money around and the fact that I was investing the money in deals that I was doing. And so, you know, they pretty aggressively slapped me. And that's where the headlines come from. I, of course, the whole time feel like I did my best to cooperate with the whole thing. and I'm glad to see that we have a good settlement with the new receiver, of the receivership. And again, the outcome for all the shareholders who were involved is pretty darn good, which I'm glad about because at the end of the day, I didn't want it all just to go to lawyers fighting over this.

51:22And, you know, that's kind of what happened. So not my brightest moment, I would say, because I feel responsible as a person in charge to do everything and do it properly. and I don't think I'll be being in person for anything anytime soon. Don't think I'll be doing that again. Okay, well, you know, sorry to make it awkward. I just had to ask, try to understand. No, no, I'm glad you do. And I've, you know, my thing is for me, reputationally as someone who does what I do, it's important that I try my best. But I think in the end, over time, I'll be able to talk about it more and more. Sam, you look highly amused by this question and answer.

52:01What are you thinking? The headlines aren't good. Yeah, I saw the headlines. I understand why you'd want it addressed. It's not a good headline. Yeah, I'm reading it as you spoke. So did you admit guilt? What's implied with the settlement? So the settlement is just, well, the settlement in addition to the fine from the court, the court fined me$2 million. So I paid$2 million of what they considered were constructive trust profits in. Plus I paid for the special master. That was another$750 or$800. So it's basically$3 million. then the settlement was 3.6 million plus 800 ,000 that was in escrow plus about 10 million dollars in claims so i gave them claims that they say were commingled within my personal investments do you did do you think there was no admission of liability yeah so i don't know how to even ask this question i can't ask this there's no admission of liability well you can ask because you should my only thing is i don't i've never i'm glad it is a good outcome for shareholders and i wouldn't want anyone being inflamed by the stuff i say like any shareholder to be like oh oh, he's not like admitting, you know, in my estimation, it's a lot more gray than the court tries to make it out to be.

53:14But at the same time, like, I respect the court, you know, like I was grazed by lawyers. If a court says that, you know, I don't care what you're arguing, I just agree with you. We've had a bunch of people who've come on this podcast before that I think have had stuff. I mean, I think it's fairly common in the world of business. You do business for 30, 40 years that at some point something can, you know, it's extremely common for something to go down where you get sued or you sue somebody or whatever happens. That part's not uncommon. What is interesting, like, Sam, I don't know if you remember when we had Martin Shkreli on.

53:45And he sort of got this character, which is like, he's the bad guy. And he, like, leaned into it and, like, inflamed it and, like, did a bunch of stuff, which was, like, really crazy. And he got in trouble for it. And then he had the issue where he got in trouble and he was like, hey, everybody made money. And then they're like, yeah, but, like, you went to jail. So, like, you know, something happened. You paid the price. And I remember you were telling him, you were like, and this was, this is now like years later, he had like literally like done his time. And again, he's quite a character. Like, Skreli is like an actual, he's an actual character.

54:15I think he plays a bit, I think he plays up that character. And I think he likes it. He likes mixing it up in that way. But I remember just thinking like, it's so interesting how to handle something like this. It's such a tricky spot to be in. Because there's many versions of things like this. Like there's, I did something wrong. not knowingly or unintentionally. I did something wrong intentionally. Then there's like the Shkreli case, which is kind of like, I did something wrong intentionally, but everybody like made money. And so who's, you know, so it all worked out, right? And even for example, like Elon right now, I think is getting sued in like 15 different courts by 15 different people, like publicly feuding with the president and Sam Altman and others, right?

54:56Like it's like, there's a lot of people who are just like constantly mixing it up. And I don't know, it's just, it's very interesting to see how that side of entrepreneurship, that side of business, that side of investing. I definitely think it has to happen. Maybe not as aggressive as mine was, but I definitely think people think over time you're going to have scrapes with certain stuff. The whole bad guy thing, and I know Scarelli did kind of lean into that, I guess. Even now, I feel like, well, I don't know if it does now, but I don't know. It's a different way to do it. For me, I kind of like, don't view it as a good thing for me.

55:30I kind of view it as like something that if someone's going to be a business partner to me, I need to be able to explain. And, you know, frankly, probably more candid than on air. But at the same time, like try to respect the outcome of the whole thing. How long did this last? Gosh, 2022? Oh, wow. Three years. Yeah. That has to feel horrible. I've gotten in trouble before when I was in college and just like waiting to hear the verdict. I remember like that feeling. And mine was not, I think your consequences are significantly worse than my consequences. And I can't imagine three years of what's going to happen.

56:09You know, for me, I tried to resign myself to whatever happened. Like, I have to accept responsibility for that. That was a big one for me. So I, like, really was, you know, bracing for the worst, but trying to do the best. Also, like, even with the settlement, but, like, way before the settlement, with different things that went on in the case, I usually try my best to be constructive and cooperative with what the court wanted me to do. But at the same time, like, you know, not everybody's going to love your decision making. I guess it's like, you know, in a weird way, it's like, you know, it's, it's, you know, I grew up in the South where people are way too like, I don't know, maybe, maybe sometimes, you know, maybe my upbringing was a bit too like people pleasing.

56:50But this was more like, you have to do the right thing, whether someone likes it or not. You have to do what you think is the right thing. So that's what I really, a lot of it, what I got out of this. And I tried my best. And people might not like what you've done, but, or, you know, what you've made a decision, like, oh, you're doing this, you're trying to hide this, or you're trying to do this, and you're not cooperating here, but you're still trying to, you're still trying to, to, to find some middle ground. So, but it was a big one, a big, big one over me. I wanted to ask you, uh, we can end with this.

57:18I want to ask you, uh, for a bit of a reading list, like if I was going to try to get, you I don't know, the most influential books or blogs or people that are worth checking out? Like, give me your kind of top three in no particular order. But what's your short list on stuff I would go read just if I wanted to get smarter about the stuff? So I think on the list, because I shared like a book list, of course, you have people like Seth Klarman and Margin of Safety. It's a hard book to find. But if you Google around, you might be able to find a copy that you can read. Isn't it like a$2 ,000 book now?

57:53Yeah, it's like a thousand plus. us it's it's good he talks about different stuff i just think that he's kind of a goat in the in the kind of deep value um you know bow post and seth klarman are pretty influential but you know an easy guy to find you know um anything by marty um not marty litman but now i'm trying to think of his name um from third avenue value um he's written a few books on distressed investing and he was the one that kind of stole the idea from him where it's like an asset is a liability and a liability can become an asset in a bankruptcy. And it's so true. And you think about it with a lease.

58:27If you have 50 leases and they're all below market, well, a debtor can assign a sum or reject leases. So if you're all below market rents, you can assign them and they can become an asset, even though leading up to the bankruptcy, they can be a huge liability to make those payments. You like Kirk Akorian? Sean, have you ever read about Kirk Akorian? You've told me about him, but I haven't read anything about him. Oh my gosh. that's one of the best biographies of all time kirk kakore oh you like that one that's a oh my god yes the gambler that's one of the best basically he's a armenian i think i think armenian uh immigrant yes raised in central valley california uh went to the army when he got back his first little business was a small airline which basically just means he somehow convinced someone to lease him a small cessna and would fly people back and forth from like i don't even know all around California.

59:19It sounds more glamorous than it was, but he grew that over something like 15 years and sold the business to TWA, which was the large airline company at the time. And he made a little bit of money, but he parlayed that into buying what would now become the Las Vegas Strip. And then he parlayed that to buy this other thing, this other thing, this other thing. And he worked his way all the way up from being a nobody, poor, no running water immigrant to owning, what was the car? Chrysler. and I think he also owned Warner. Did he own Warner? But he for sure owned Chrysler. MGM, I believe. Sorry, MGM.

59:55And the biography is basically his thinking. He's very calm. He's very methodic. He's very kind of traditional immigrant where he was straightforward. It is what it is. I don't stress about it. But he was a total kind of degenerate gambler and he died with a net worth of something like$15 or$10 billion. That's not about right. Wow. Well, you know what I actually love? Because you were asking about books, Sean. It's like, I actually think the entrepreneur, like biographies, either autobiographies or biographies can be amazing. There's one called Zeckendorf, which is by a guy who's like a big real estate guy in New York who like made a billion, lost a billion.

1:00:33uh there's like one it's like how to lose 100 million dollars and other valuable advice by arthur little like there's all these kind of like entrepreneur books that are like some are out of print some are still out there and of course there's like you know special sit investing joel greenblatt you can be a start market genius these are these are great books for when talking about securities markets but i actually think the best investors are people you've like never heard of um because you know they make 100 million bucks and then they're like i'm out peace like Like, you know, you might, and there are stories aren't recorded.

1:01:03I think I put E.P. Taylor in there. So you want to hear the E.P. Taylor story real quick? That was a really great one. So E.P. Taylor, during the prohibition, he would go up and buy up breweries. And his whole thesis was like, one day this is going to be done. Like, we're not going to, we're all going to start drinking again. so he would go around and buy up like uh you know manufacturing distribution bottling that was a play on that and he would roll them up because the capacity was so low he could buy them for peanuts and that was it that was his one trade like you know of course it took him 20 years to work the trade out but um you know he may he minted himself you know some serious dough and then he wrote a book about it so i think these these guys you know you can do the book the biography of edward plunkett taylor is that him yeah that's him edward plunkett and he founded the lifer key club i don't know if you guys ever been down there but it's like a famous club in the bahamas like primlots and well sam bankman freed was across the thing in a place called albany uh down and down in the bahamas but um did you ever did you ever bump into sam bankman freed any any good sbs stories you know what's funny is like so i was in crypto and then And Sam became like this like Rockefeller of crypto, like John D.

1:02:18Rockefeller of crypto. And I was like, who the hell is this guy? Like I never even really, I never really ran across him in passing. And a lot of people that worked for him were like, you know, whatever EA or EI, effective altruism. Yeah, EA people. So you had a lot of EA people around. I just didn't know any of those folks. They weren't like hardcore crypto people. Yeah. It was kind of a weird thing. When I saw him coming up, I was like, man, how did I miss this? Where'd this guy come from? we had robert green from 48 laws of power on the pod like two weeks ago or something like that and um yeah he kind of we we have you read 48 laws of power it's like the book is what it sounds like i own the book i think i breeze through it i read all of it 48 laws on acquiring power whatever it's very sociopathic but that's like kind of the point which is like it's the sociopathic but it's real and one of the laws is like to reinvent yourself and and also um we so and we had talked to him like we were like when you have social media you can like talk to your people or talk to your audience like while you're on the toilet like any any hour you can tweet anything how do you deal with that and he was like basically like you want to have um you want to have planned silence so you like you know the best way to be loud and in everyone's face sometimes is to just shut up and and and not say a word disappear for a while and disappear for a while and he was talking all about like powerful people who kind of come out of nowhere john rockefeller is one of these guys who uh he was one of the richest men in the world before everyone like no one had seen a photo of him and it was all part of a plan i think and it sounds like uh sam bankman freed we didn't give him enough credit because when at least when i saw him coming up i was like oh he's just an autist and he's just this typical silicon valley type of like he just doesn't know he doesn't have any manners this is all but it turns out it was probably all planned where he was like i want to appear as though i slept on this beanbag i want to appear as though i'm playing video games while i'm talking to sequoia over a 200 million dollar deal and it was straight out of robert green's 40 laws of power uh which is pretty funny i mean i met a ton of people that work there of course and a ton of people that were like in the orbit and it's kind of crazy to see the different um i guess like munger does it best right the lalapalooza effect of like the whole thing like everybody's getting drunk off the money were they straight like the dollars coming in yeah like almost all the people all these employees they didn't know anything what goes around they weren't just normal nerds they're just normal workers just normal they weren't part well i think they no i mean like i met the lady she was a head of payments and she was like an expert to getting like uh payment licenses so basically like banking licenses around the world um and uh she had worked for somewhere and then she got then cz pulled her over to Binance, and then she got poached by Sam.

1:05:05She was just the best. Of course, he had to pay her like she was the best. She was making millions of dollars a year. But some of their contracts were insane. I mean, Sam was giving out 10-year contracts to people, guaranteed 10-year pay contracts, like million-dollar contracts to salary employees, a little bit like the AI. Meta thing, yeah. Meta thing. I mean, it's a little bit like that because he had so much money coming in from VCs. And of course, he had an unlimited, you know, well, not unlimited, but he had a big customer base to dip into. So between that, I mean, he was making unbelievable, like, whatever you want to call it, unconscionable contracts, too.

1:05:45Dude, just to put this in perspective, I think Zuck, I think the news about this stuff kind of came out, you know, let's just call it even three, four months ago. Okay. So let's just say this has been going on for three, four months, the researcher stuff. If you go look, so four months ago, the stock was at about 500, let's go April 1st, so 586. Today, the stock's at 784. So he's spending this money or he's making these offers, which has multiple effects, right? First, it raises the price for all of his competitors. So he's like, cool, even if they don't take my offer, now they have to pay 100x what they were paying for talent before.

1:06:26Way to screw up their business. In his own business, the stock since then, it's now at$784, so it's up 33%. So what's 33 % of it? It's almost a$2 trillion stock. $600 billion or$500 billion. And he's basically offered the equivalent of$20 billion for this talent, right? Maybe$40 billion max. And so he's basically said, cool, I'll put out offers and try to spend$20,$30,$40 billion. already made back$600 billion in the market just in that time by strengthening my story of us being all in on AI. It's not like the Facebook business changed that much in four months where it's up$600 billion because of the actual user base growing or even revenue or earnings.

1:07:16Yeah, they beat by a small, maybe 8 % beat or something like that. but the reason it's up is because everybody believes ai is the future and who do you think is going to win an ai and you get punished if people think you're not going to win apple stock is like going down right now because people are like apple has no ai strategy they're going to lose and then somebody like you know meta at least the story is zuck is all in going to win poaching great talent we'll see you know and so there's a believability to it so that it's crazy that you can spend so much and somehow net out way ahead like he did it's crazy that's crazy that That is the magic of the markets.

1:07:53Hey, Tommy, we appreciate you doing this, brother. Oh, guys, thanks for having me on. It's good to meet you guys in chat. All right, that's it. And we appreciate you. That's the pod.

1:08:13All right, let's take a quick break because as you know, we are on the HubSpot Podcast Network, but we're not the only ones. There's other podcasts on this network too. And maybe you liked it. Maybe you should check them out. One of them that I want to draw your attention to is called Nudge by Phil Agnew. And whether you're a marketer or a salesperson and you're looking for the small changes you could make, the new habits you could do, the small decisions you could make that will make a big difference, that's what that podcast is all about. Check it out. It's called Nudge and you can get it wherever you get your podcasts.