How to Make A Million Dollars (with the Co-Hosts of My First Million)

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1:33There's no safe like SimpliSafe. From Entrepreneur Media, this is Problem Solvers, a show in which entrepreneurs do what entrepreneurs do best, solve unexpected problems in their business. We were completely wrong. And I'm just like, it's not selling. It was like, we have to start from scratch. I'm Jason Pfeiffer, the editor-in-chief of Entrepreneur Magazine.

1:58Here's a weird question. What is a million dollars? Now, I understand that the technical answer to that is it's$1 ,001. That's not exactly what I mean. Conceptually, what is it? A million dollars sounds sexy. What does it get you? For some, it's a dream. It's a dream to work towards. For others, it's a goal. A million dollars in profit is a form of financial security, or at least the freedom to take some risks. A million dollars in revenue is a marker point where business models are proven and investors start calling. For experienced entrepreneurs, a million dollars might be a unit that they now measure in the tens or hundreds.

2:39How many millions do they have? But however many millions you aspire to have or have or want to have more of, the question always remains, which is, how do you get it? And what does it get you? These were the questions that we started kicking around at Entrepreneur Magazine. Because for so many aspiring entrepreneurs, a million dollars is that first marker of success. And yet I don't think people spend enough thought on what it really is and how useful it is and what it takes to actually get there. So we just started making some calls, talking to entrepreneurs who struggled to reach it and then made a big change and then got there, their million dollar unlock.

3:27We started calling people who've raised millions of dollars. How'd you actually do that? And as we thought through who it was worth talking to and who could shed light on this big question of a million, there were two guys who I just thought, we have to talk to, I have to talk to, because they host a podcast called My First Million, where they brainstorm new business ideas based on trends and opportunities they see in the market. That's literally the language from the podcast description. But I'd never actually heard these guys just talk about a million dollars. Talk about the money. Talk about the meaning of the money.

4:03I happen to know one of the co-hosts, Sam Parr, founder of a newsletter company called The Hustle. And so I asked him, would he and his co-host at My First Million, Sean Puri, who has built a number of companies, including a video streaming company called Bebo that he sold to Twitch, would they want to come on this podcast and talk with me and then be in Entrepreneur Magazine? And they said yes, which I didn't realize until we started talking was actually a rare thing for Sam. I don't like doing a lot of press stuff. I rarely do it and I don't like doing it. Yeah. Thanks for doing it with me. Why?

4:41I did it with you because I like you, because we're friends and we've hung out. I don't like it because I don't like when people... First of all, when I used to do it, when I wanted to do it, people would refer to me as like a bro. And I'm like, bro, I don't drink, I don't party. I'm like a family man. So I didn't like being treated unfairly. And also, I just don't like... I don't think that press is necessarily needed. I think I used to think that it was needed in order to get popular for business and get more customers. We are the press, Sean and I, at this point, at least in our little small world.

5:10And that's all we need, at least to get things started. It does feel good to show your mom. That was Sean Puri's voice. But it does feel good to show my mother. My mother doesn't care if I come up on her TikTok, but if my name is in a magazine that she could touch, it will make her happier. And I am happy to confirm that I happened to run into Sam shortly after this issue with the magazine hit stands. His mother, indeed, very happy. My work here is done. Actually, okay, my work here is not done because I actually have a great conversation that I want to play for you. Sam, Sean, and I talked about a million dollars, how to get it, what it really gets you, how they plotted their ways toward millions, which was really fascinating to learn.

5:53And their really healthy perspective on what money is. As you'll hear them say more articulately than me right now, money is freedom. That's what it really is. And so it's worth thinking, Well, how much freedom do you want? That's coming up after the break. You're growing a business, which means you need every spare hour you can find. That's why the most successful growing businesses are working together in Slack. Slack is where work happens with all of your people, data, and information in one AI-powered place. Start a call instantly in huddles and ditch cumbersome calendar invites. Or build an automation with Workflow Builder to take routine tasks off your plate with no coding required.

6:37Grow your business in Slack. Visit slack.com to get started. How to make that first million and what it really gets you. So I started by just questioning what a million dollars really is. That is a marker of something for people. When you are aspiring, when you are starting out, a million dollars is a thing to reach, is a thing to drive towards. we wanted to engage with that in many different ways as a magazine. But I wanted to start that issue off with what a million is it anything? Is it an arbitrary number? Is it useful? Should people be thinking differently once they get it? How do you get there?

7:15And let me start with this question to you, which in a way maybe undercuts the title of your podcast. But does a million mean anything? Really? Sam, when you were growing up, did you I used to play these games all the time like all right for a million dollars would you cut off your pinky okay would you cut off two what would you do and it was just a million at the time felt like it's all the money it's all of the monopoly money you can get and you're either a millionaire or not a millionaire i didn't even like maybe i was just a bubble but when i was a kid like there weren't just like billionaires everywhere i didn't know i didn't even think about the word billionaire so millionaire definitely felt like somebody who's rich and has all the money and not millionaires whereas the rest of us thing.

7:57And they're all the same. One million, a hundred million. It's all the same. Yeah. I'd never even thought about what happens after you get past a million. The dog, the dog chasing the car. He has no idea what he's going to do with it after he catches it. And so that is part of why we named the podcast that because there is a, there's this part of me, at least that's why I named it. That was a part of me that thought making a million bucks meant something and it was meaningful. And I wanted to know how to do it. So we started off by talking about different ways you can do it. And that's what the whole podcast theme is now in reality sam taught me something cool sam tell him the unit thing because i think the reality is that for most of what you want you either need far less than a million to do a lot of cool shit or far more than a million a million is almost this dead zone where you really nothing happens but sam tell the unit thing because that was big for me i yeah i met this guy when he was an older guy he was in his 50s or 60s really wealthy and And he just would talk about getting your first unit.

8:54And he was like, you basically like you want to your first unit is you could say whatever the number it is. But a lot of people, it's a million dollars. My opinion, this is me speaking. I think it's about five million. You want to get your first unit as fast as possible. And you only basically have you work on projects in five or 10 year increments. And you only and the unit, Sean, was it the time or the money? The unit, I thought it was basically getting to 10 million bucks, like your first unit. then things start to really feel different because now you never have to work for money again yeah you have to rush to get your first unit you once you get your first unit that's your fortress of solitude that's where i could do anything i want within that 10 million dollar unit but you got to get that first unit every other unit after that's just icing on the cake but that first unit is real freedom and when you have real freedom life changes it's as if you've had bad eyesight and you finally are able to put on some eyeglasses things change after your first unit i think freedom is definitely the right way to look at it.

9:49And not just in a corny way. Like it's legitimate. If you ask yourself, what do I want to do with this money? Almost always, you know, maybe there's a purchase or two. You want to buy your mom a house. You want to buy a fancy car. But after that, even that, by the way, is just freedom to do whatever or free my mom from the stresses of whatever her life is all about right now. But the reality is money is a tool. It has no use and it's on its own except for that it can give you some amount of freedom. So there's actually different numbers. Let's say you have 250K in the bank. You might have the freedom to like, I can take a shot.

10:19I can go work on something and not make a dollar for the next 24 months, 36 months, depending on where you live. And that's great. It's not forever money. It's not legacy money. It's not buy a library at your school money, but it is two years of not having to have anybody to answer to except for yourself. You can fund yourself and give yourself that runway. I think that's a really valuable marker is getting to that point because that lets you take a shot at building something. Then I think the next one is like never need to never need to work again, basically, which is the first part of your career, you're trading your time for money.

10:53And then from once you get to that first unit, you're now trading. Basically, your money works for money and you work for you. Your money is invested. That's what's bringing in more money. You can now do whatever you want, whether make a new business or go frolic in the garden, whatever you want to do. okay i want to pick a part a couple things in those answers number one what why is that guy using the word unit that we just because it's like stackable right like the first unit the second yeah it's memorable what do you say your first 10 uh i don't know it's it's memorable yeah it's definitely memorable but sam you remembered it sean you remembered it after sam told it to you so it doesn't sound badass but it does sound badass but the thing that what i'm driving towards is are we to have a visual metaphor here of units of 10?

11:38Is that the idea? No, no, no, no. They're different. So your second 10 after your first 10 is significantly less important. And also, as you get more money, the units change to time. So it's like, how do I just have more time? How do I free time to do with these other things? And in fact, it's far better to be a time billionaire in many cases than it is to be a cash billionaire. That's for sure. But, and the reason why it was 10 million is if you have$10 million, you could basically spend$300 ,000 a year or the equivalent amount of money, so close to$30 ,000 per month for the rest of your life adjusted for inflation.

12:15And you'll still have a whole lot of money at the end. So you're not gonna be able to spend all your nut. And so the idea is that's enough where I don't need anyone, I don't need anything. Of course, I want more people to help me or I want more things maybe, or I want a better life or I just wanna be the game. But at 10, you can tell anyone to go up themselves and you'll be all right. Yeah, it's kind of Paul Graham has a thing for startups where he says you're either default dead or default alive. Default dead basically means your burn rate is exceeding the cash going out is exceeding the cash coming in.

12:42It's just a matter of time. By default, unless something changes, you will decline down to zero. The line goes to zero. Whereas default alive means you're basically break even or slightly better. So you're not like every month, the balance goes a little bit up, not down, which means by default, if nothing else happens, you still survive. And I think that's the same idea with the unit, which is You can live a great lifestyle, like a pretty lavish lifestyle. If you're spending 30K a month, you can do a lot with that. And your bank balance is going to go up, not down, just because the earning 5%, 6%, 7 % interest on your bank balance is going to pay for your lifestyle and more.

13:19The other thing I wanted to unpack, and I think you hit upon it in a way, Sean, with the example of the$250 ,000 ,000, and how that buys you a certain amount of time to maybe go develop an idea without having to worry about bringing new money in. But I just wanted to double click on the idea that you had introduced of the million dollars as something of a dead zone, right? It's because the real financial freedom and the ability to start thinking about time is 10 million. But then you said that there's also real impact much earlier than that. Don't get me wrong. If you offered me 250K or a million, I'm taking the million.

13:55That's not what I meant. It's obviously better. Yeah. But what I mean by that is we ask this question a lot. people come on the podcast. We say, what amounts changed your life, right? So when somebody's in debt, and they get back to zero, their life has changed. They're like a monkey is off their back, the debt monkey is gone. And then when you get to that first, let's say$250 ,000 saved up, you're like, Oh, I can go and I can try to make something happen. I might lose all of this. But I give myself two years to really take a crack at jumping 10x to the next level of success and fulfillment and all that good stuff.

14:27That amount of money is it's okay if I get fired. Yeah, exactly. Like I don't need this job. I have enough to pay for two, three years of salary in my bank account and my savings. Okay. What's the next number where things change? I think million does have a psychological impact, but not a huge lifestyle impact. When you have a million bucks, you're not making tons of investments. You can't just live off of it forever for most people, unless you're living like a really minimalist life. So you should ask the question at what thresholds do things actually change versus what are the arbitrary numbers that just sound good.

14:57And we've talked to a bunch of people and they're like, we're like, okay, cool. So you get to 10 or you get to 20, but you're still trying to create stuff or you're taking big bets. You're trying to get to a hundred or get to 500 million or get to a billion. What's going to change when you do that? And it basically after about 50 million, it's just, I could fly private all the time. Like I could buy the boat and never use it. And so it's, oh man, okay. It's good to know that's what's on the menu when you get there. So I can decide, do I want to order that or not? Do I care about that person or not?

15:23So I think forget our opinions about what amounts of money matter. And I live in San Francisco and we have a certain lifestyle. So we're obviously just speaking from our own experience. I think the real takeaway is just, have you calculated how much the things you want actually cost? And then set your targets, break that into chunks, right? Break that into the first milestones that you want to achieve with the most important one being, how much money do you need to be able to quit your job and be able to go be an entrepreneur, take a shot and give yourself two years of runway to go try it out?

15:52what was your own experiences with these calculations? Sam, you did an interesting thing with your spreadsheet, right? Maybe tell that story. Yeah, I've had a spreadsheet since I was 22 years old. And I basically, like, when I had very little money, I just said, here's the, and I would track all of my monthly expenses. So I'd say, all right, the average of my trailing six months of expenses was$4 ,000. I've got$100 ,000 saved. When I have zero income coming in, this is how many months I have. My goal was just to make that number of months go up every month. I was like, I got to go. And that gave me freedom to go and start a business that I eventually sold.

16:30And that kind of created my first unit plus. And the way that I came up with the number that mattered was I went and spoke to a bunch of wealthy people. And one wealthy guy said, he goes, I spend$60 ,000 a month. At the time, I was spending$4 ,000 or$3 ,000 or nothing. $2 ,000 a month, actually, probably. I was 22. too. And I was like, okay, whatever that number is, if I only want to spend three or 4 % of that means I probably should try to save up around$18 million. And so I read a bunch of books, and I noticed a trend amongst a very people who I admire, Travis Kalanick, Mark Cuban, a handful of others on entrepreneurs.

17:08And they said, if I could do it all over again, and many of them either said it explicitly, or they did this life where they sold a business at a young age between their late 20s and early to late 30s in order to get that number. And that was so much easier for doing the big thing. So I said, instead of shooting for the moon, I'm trying to build a business that I raised 10s or hundreds of millions in VC for, I bet you in five years, I could start a business that gets to let's these are just numbers that I'm making up that gets to around 10 million in revenue that I could sell for$25 million that nets me the number that I need based off the wealthiest person who I spoke to.

17:42I don't spend$60 ,000 a month. I've never spent that much, but I was just like, that sounds a really high number. Let's be conservative and shoot for that. And that's how I do it. And I used to track it all religiously on a Google sheet. That is remarkably strategic. Because here's why. When you create rules to play, when you figure out the rules of the game, it's far more less stressful and actually more exciting to play the game. Sean, do you have any similar kind of approach? I'll give you the psychological and then the strategic psychological here's my story so when I'm young I'm like I'm gonna by the time I'm 30 right I started my early 20s let's say doing business by the time I'm 30 that seemed light years away I said okay what do I want I want to have a million bucks in my bank account I want to make Forbes 30 under 30 I want to do this I want to do that and again like my goals weren't even good let alone my plans so now looking back Like obviously dumb, but hey, that's where we all start.

18:41We start pretty dumb and hopefully we get a little wiser every year. Now, fast forward, I'm 29 years old and I see this note that I had written about what I wanted and I get the existential crisis. Oh, damn, I'm behind schedule. I do not have a million dollars in my bank account. I am not Forbes 30. I'm about to be ineligible for Forbes 30 into 30. And by that time, I was like, oh, wow, this list is bogus. But who cares? I still would rather hit it than not hit it. Sure. So I was, I had this sort of feeling of behind and I had that for an hour and a half and it didn't feel good. And I was like, okay, I'm either just going to always feel like this.

19:18Cause I looked around, there's a lot of people that feel like this and not even just with money, people who aren't married and they're 35, they start to feel like they're behind and people who are whatever. There's a bunch of ways that you could have this feeling. And it's a terrible feeling. I didn't want to have that feeling. So I decided after an hour and a half, I was like, all right, I have two choices from here. Either I can keep telling myself I'm behind, or I can be like, are you joking? I'm young. I'm 29. I got my whole life ahead of me. And yeah, everything I've done so far is teaching me and preparing me to actually go do the things I want.

19:48And actually, some of these goals were stupid. I should rewrite these goals to be what I actually believe now, not what my 20-year-old self thought was cool. So that was a psychological turning point in my life. And as soon as I did that, the floodgates opened. Literally, as soon as I had that conversation with myself, all of a sudden I started to come up with different ideas, change my strategy. I ended up selling my company. So by 31, I had done a bunch of those things. 31, all of a sudden I was a multimillionaire and I had sold my company and all these good things started to happen. Strategically, I would say it became very obvious to me along the way that the salary path will get me there, but way too slowly.

20:26So that was just became a non-option. I needed to not be an employee because I just did the math. I was like, if I'm making 200K a year, which I was like, that's a great salary. Great, okay. But then after taxes, I'm around 100. Life expenses, okay, now I'm down to, I'm saving 50K a year. Let's just do round math. I'm saving 50K a year. Okay, so it's going to take me 20 years to get to 1 million. And by then, 1 million is not even what 1 million was when I started. And so I just very quickly realized that salary was going to be too slow. I needed to start a business and I could either do moonshot businesses, like try to just create the coolest thing ever or I could create like a service business or whatever.

21:07I chose the moonshot thing because I thought it'd be more fun. I ended up not hitting a moonshot, but we still sold anyways. You shoot for the moon and you land in the stars or whatever the hell that phrase is. That's what happened to me. I tried to create the next big social network. Totally didn't work, but my team was good. My product was good. And we sold to Twitch, which was already one of the big social networks. And that's how I ended up almost like failing my way into success. I think Sam's approach was a little bit better, which was he created a business that was far more likely to succeed.

21:33He did a media business, but you could also do an agency or a service business of some kind. And if I had to go back, that's what I would tell myself is focus in on one skill. It doesn't matter what it is. It could be Facebook ads or TikTok ads or whatever. Create content about it. That'll attract customers. Take those customers. And if you can get 10 to 20 clients paying you 10K a month, you are now a millionaire. And you could do that in the first three years of your career. And if you do that, and by the time you're 25, 26, you've done that, You will have A, learned a bunch of stuff, and B, you'll be on a different trajectory because you'll have a lot more money in the bank than most people.

22:06What's really interesting about both of your answers, different as they were, is that they both in some way or another involved reverse engineering. You both had an idea of the destination in mind, did some math, figured out what it would take to get there. You took different paths there, but there was such an intentionality to both of your answers. And in a moment, I want to transition to what you have learned from the people that you have spoken with and the people that you know on this very subject. You're talking to people under a banner of My First Million and what it was that they were doing and what the patterns are that you see.

22:44But the starting point I want to just point out for both of you, and I wonder if you see that in others, is great intentionality. And the steps may be different. The choices that you make may be different. but there is a reason why you're taking the steps that you're taking. I think Sean, I think we both came up with this idea and he coined this awesome term called ABZ, which is like when you're starting something, you can think about Z, which is the end of the journey. And that's really exciting. And that's awesome inspiration and motivation to get up each morning and work towards something. And then besides that, you should only focus on the letter A and the letter B because your first customer and then get your second customer and then worry out, worry about everything in the middle, the next step as you go and just think about Z, because that's exciting, but don't really care about anything else.

23:33And so that's like where the intention begins and ends, which is like having a goal and then just saying, okay, I'm just going to do step one and step two, and I'm not going to worry about step eight and nine. In terms of the people we talk to, the people we hang out with, it's incorrect to say that everyone else has had this intentionality. I think that there's some narrative. We have met people, you know how people say overnight successes don't exist. We've hung out with a lot of people who have overnight successes. It's discouraging to meet those people sometimes. Yeah. We've hung out with a ton of people who it didn't work for 20 years.

24:07And it finally did. We've met people who just said, I'm just going to hang out with the people who it doesn't work for though. We just don't. You don't hear their stories. We don't hear that too often because that ain't fun. Sure. My first negative million. Yeah. But there's a thousand, the biggest learning for me, or one of the biggest learnings is there's a thousand ways to get to the same place. And there's a bunch of different ways that work. There's a lot of people who will work 80 hours a week and grind, grind. We have a lot of friends that work five hours a week or 10 hours a week, and they sometimes end up in the same destination.

24:39There's a thousand different ways to do it. And I think when Sean and I were both in our early 20s and moved to Silicon Valley, there was one way to do it. And what we've learned is there's many ways. You can raise a ton of money. You can raise no money. You can live in New York or SF, or you can live in Missouri. You can start a service business. You can start a tech company. You can do it any which way you want. There's so many different ways to get it done. Yeah, I think that's the biggest thing we try to do with all of our content. Most people who are business content creators, they're advice, and they're telling you what to do.