Money Expert: Exactly How To Make $1,000,000 From NOTHING! | Sahil Bloom

16:14Graham Stephan:I always find it funny that there are professionals out there who spend their entire lives, decades doing this. And meanwhile, you see some 19 year old who's saying, oh, I found a way to consistently make money in Forex and I'm going to teach you how to do it. I just don't see it.

16:27Sahil Bloom:Well, I'm going to teach you how to do it. He's going to make his money by selling you a course on how to do it, not by actually doing it. If someone can outperform the market, the best way for them to monetize that unique, extraordinary skill is to raise a billion dollars of someone else's money and go and do it because the performance fees you're going to make on being able to do it are astronomical. It's the reason why Ken Griffin has, you know, a like a hundred million dollar penthouse on the top of Manhattan. It's the reason Bill Ackman is worth 10 plus billion dollars. Like if you can outperform the market and you have this unique skill, please go raise a hedge fund.

17:00Graham Stephan:So what's interesting is that it seems like the new thing is these prop firms that are popping up. And what this is, is that you could go and you pay a fee to trade with a certain amount of money. And once you prove yourselves on these platforms, then they'll say, oh, we'll give you$5 ,000 to trade on our behalf once you've consistently made 8 % to 10 % a month.

17:22Sahil Bloom:It's not really that new. It's been around, and it's interesting. It's a very interesting model, and it's also one that recently has been getting a lot of press because there are hedge funds that have tip lines where they will pay you for giving them trade ideas. And what's been happening is that there are some enterprising people out there who basically are going and digging up inside information on deals or on stocks and submitting it to hedge funds, getting paid for it. And it's this weird legal gray area where like the hedge fund didn't know that it was insider info. They could just say like, oh, that was a good trade idea that someone sent in.

18:00Sahil Bloom:But like, obviously, if there's some random guy from Bulgaria consistently sending you these trade ideas on some esoteric stock and you're like making absurd amounts of money on this. Clearly, something was like the guy had access to like some truck driver that knew the inventory levels, whatever. But it's this weird, like legal gray zone that's happening.

18:20Graham Stephan:What's crazy for me are the short sellers where you could basically go and write this hit piece on a company and say at the bottom, you just disclose we have a short position in this and we financially benefit with the stock price going down. But they're able to make whatever alleged claims they want, drive the stock price down, profit from shorting the stock and then exit.

18:40Sahil Bloom:How is that any different than an investor going on CNBC and saying whatever they want about the upside of a stock and trying to pump it up?

18:49Graham Stephan:I think it's totally fine as long as you disclose your position and bias. So I could say, hey, I love this little small cap stock. Oh, by the way, 90 % of my portfolio is in this. It makes up, you know, X amount of dollars. And this is my bias. I think as long as you're forthright about your financial interest and saying whatever, then I'm open to it.

19:09Sahil Bloom:I feel like they both, short sellers get a really bad rep in the market, but they provide an actual like important service to a market that there's pressure down on stocks as well. And there's people selling and sharing information on the downsides of these assets. Like, I just think all of these things are helpful for market liquidity in the long run as well. But I do think like, I mean, the worst version of all of this was the SPACs. It's like, there was no, there was no boundaries on what you could say about the future earnings of these companies because you were able to like project these companies outward, which you're not allowed to do if you're filing a normal S1 prospectus for like a traditional IPO.

19:52Sahil Bloom:And so that got abused badly, right? Like people were just, and everyone, it was the Zerp era, right? So like everyone wanted to buy into these crazy financial projections for these companies that fundamentally their business model, they just lost money on every transaction and there was no pathway to making margin. And, you know, a lot of retail investors got destroyed by that.

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21:36Sahil Bloom:I mean, I've lost money on the vast majority of startup investments, right? Like startup investing, I think startup investing is like the sexiest thing that actually makes objectively no sense to do. I like look I mentioned figure that's a great one obviously that'll be a great outcome that is going to cover the losses on like 80 % of the other things that I've invested in as an angel investor as a with my venture fund because look like you're speculating on things that are ideas at the start you're basically betting on a person that they're going to be able to figure it out markets change things change the vast majority of them won't become successful and even if they do become successful it's pretty rare that they end up getting to an outcome where they exit or they go public where you actually get liquid on the money and so um i mean i've lost money on the vast majority of this i've also as a rule anytime i've tried to have a hack or a shortcut i've gotten punched in the face what i mean by that is like anytime i thought to myself oh i could make this much money this fast i got destroyed on the thing like what are a couple like nfts got just How much did you lose on NFTs?

22:45Sahil Bloom:Hundreds of thousands of dollars. And I had to pay taxes because I like.

22:49Graham Stephan:Are you trading them?

22:50Sahil Bloom:Yeah. Oh. Yeah, yeah. Like I got wrecked on NFTs. The only thing that, again, to the example of like one good thing offsetting, I've done very well on Bitcoin because I bought it a long time ago and have just never sold it and held it. And every single other crypto thing, any other crypto tokens and NFTs I've gotten destroyed on, but it's all made up for by this one buy and hold long term thing. So now my new rule is like, I don't do any trading. So how much better off would you be had you just bought the S &P 500 instead of all of these alternative investments, spreading your portfolio across NFTs, Bitcoin, altcoins, private equity, etc.

23:31Sahil Bloom:I would not be better off only because I had access to a few very unique things by virtue of like the networks that got created through these investments. So like when you when you think about an investment, there's a few things to consider. There's the financial returns purely on the surface. Then there's like the amount of time you're going to have to invest into this thing. And then there's what other value you might get from being involved in this. And so, you know, money is very easy. Like you're like, how much money am I pushing into the center of the table for this investment? The time is one people often forget.

24:05Sahil Bloom:Like if I'm investing in multifamily real estate and I'm going to actively manage it, there's a whole lot of headaches associated with that. I have to factor that in because that's real money that I'm putting in in the form of time. The last piece is really heavily skewed towards like in the angel investing or in private equity. When you invest in a deal, you're also going to have access to like the room, you know, the room where it happens on this stuff. So like being involved in a specific deal might be a bad financial investment for that one deal. But if it gets me access to a whole bunch of really smart people that are then going to do more deals, that actually might be a long-term positive move to go and do that.

24:45So what stage are you at then in those like categories of financial, like on your financial journey? And what would you say is your main goal financially?

24:56Sahil Bloom:I am like probably right, at least for where I live, like I think I'm like right on the border of rich and mega rich. And it basically hinges on a few, like if these investments ever got liquid, I would definitely be pushed over into the latter category. But I'm not like a money guy. Like I'm not a, I don't care about money stuff. So I'm not like, I'm wearing a running watch. How much does that shirt cost? I don't know, 40 bucks, Buck Mason. Oh, it looks like an expensive. Buck Mason is great. Yeah, I have a Jags accent. But like one of my huge things, by the way, on like you have to know when you buy something, there's like there's the cheap version.

25:41Sahil Bloom:Then like when you're talking about something that has utility, like a shirt or bed or furniture or whatever, there's like there's the cheapest version. Then there's the version that is like the best quality from a actual utility perspective. And then anything above that, all you're paying for is brand. so like the difference between a$40 shirt and a$500 shirt like there's no difference in quality at some point it's just it's just a nice shirt and you're all you're paying for is you're just handing someone money for the brand that you got on it what what brands if you're trying to trigger people here do you think of the biggest rip-offs the biggest rip-off brands I mean anything that's like a big you know like where you have a big logo on it where you're trying to status signal no uh uh no not Lululemon I don't know my wife wears Lululemon I'm like I don't know it doesn't seem like they're pretty nice i will say yeah that's that's nice well like the biggest rip-offs are when you're getting charged for the fact that they know the reason you're buying this thing is to try to impress other people so like that is what they're preying on your insecurity right like that that is what a luxury brand is like you don't carry around a bag because you're like oh i love the way this bag makes me feel you carry it around because you're trying to signal to other people that you are impressive and have a level of status that they should admire.

26:54Sahil Bloom:Like we spend the vast majority of our luxury purchases. If you were to ask yourself when you make that purchase, would I buy this if I could not tell a single person that I had it? If I couldn't take a picture on Instagram, I couldn't show it to anyone else. If you ask yourself that question, I call it the bot status test. Like, am I trying to buy status? Usually the answer is no. You're getting this because you want other people to think you're cool in some way. There's nothing wrong with that, but you also have to acknowledge how often you are living for the benefit of a whole bunch of people that are never thinking about you.

27:26Sahil Bloom:No one is as impressed by your stuff as you think they are. They don't care. What do you think are the biggest misconceptions about money that hold people back? I think that when you are starting out on your journey, you build in your mind this impression that an incremental unit of money equals an incremental unit of happiness. Money equals happiness, right? Because it does in the early days. Anyone that tells you money doesn't buy happiness is lying. Scientifically, it's actually proven, shown across every study that in the early days of your life and on the early part of the curve, money directly buys happiness.

28:03Sahil Bloom:The challenge is humans are really bad at adjusting to something when the fundamental calculus has changed. And again, the science is pretty clear that above certain levels, that incremental unit of money does not drive the same incremental unit of happiness that it did in the early days. But we're like mice chasing the cheese. And so what happens is we are still convinced that it will. We convince ourselves that our happiness is on the other side of just a little bit more of whatever it is. And we lose sight of everything else on that journey. And that is basically the trap that everyone falls into that leads you to this like, you know rich yet miserable existence which you honestly i mean i i could not conceive of that when i was in my 20s i was like what do you mean you you have it all you doing all the things and you're miserable how's that possible but that's the reason it happens do you notice any difference

28:58Graham Stephan:in mindset and money habits when it comes to like gen z millennials boomers and is one of those maybe better than the other.

29:07Sahil Bloom:Yeah. I mean, I would say Gen Z, all the recent surveys that I've seen show that Gen Z has these like dramatically higher expectations for what it means to have made it. I think there was like a survey recently that I saw that said it looked at all the generations and like how much money do you need to make in order to have like made it financially. And it was basically like$200 ,000 a year was the number for like boomers, Gen X, millennials. And then for Gen Z, it was like$600 ,000. It was like completely off the charts. And look, I think like the most common interpretation of that would be like Gen Z's cooked, you know, they don't understand money.

29:44Sahil Bloom:They're so crazy. But the other piece of that is like, look, they've also come of age in a time when inflation was through the roof. And how's like, it is untenable to own a starter home in most cities if you if you're just like earning a normal salary. And so I think that like there's reasons why people feel that way. It's also crazy Social media has cooked our brains in a lot of ways. You're like I hired a I hired a 27 year old kid Last year. It was his first job. He was like working as personal trainer before And when I first hired him, he was like i'm gonna be making a million dollars a year by the time i'm 30 and I just looked at him.

30:19Sahil Bloom:I was like how what what do you mean? What do you mean you're gonna be making me? He was like, oh i'm just gonna be involved in some different stuff I was like, there's a fundamental misconception about how you make money. You make money by creating value for other people. To earn a million dollars a year, you have to create$10 million a year of value. And if you do that, you actually probably will in some way. Like you'll probably capture enough of that value to make that money. But like value creation is what making money is about. The recipe for making a whole lot of money is not that difficult.

30:48Sahil Bloom:It is just create value and then receive value. And creating value is just identifying problems, creating solutions, and then scaling those solutions. At all points in time, if you're trying to make money, you need to be doing one of those three things. And if you were to go start any job and you just find ways to be valuable to everyone around you, you will find a way to make a lot of money over the long term. It's just not gonna be like the immediate dopamine hit, instant gratification that social media tells you it'll be. So then what are the most overrated wealth milestones people still chase?

31:22Sahil Bloom:overrated wealth milestones um i mean having a million dollars yeah no why is having a million dollars overrated uh because it doesn't add there's no change in your life from a million versus like 800 000 is what i'm saying it's like it's it's not like uh um like in the in the diamond world there used to be this like very funny thing in diamond prices where uh if you were to buy like a 1.99 carat ring, the price was one thing. And then if you were to get a two carat ring, the price was like 40 % higher. And it's because like we build up in our minds these like the next threshold. And so they're praying again on like the guy, you know, is going to go in and like it's his insecurities like, no, I'm going to buy the two carat ring.

32:06Sahil Bloom:So they priced it up a whole bunch. We build up like this significance to these certain thresholds like that, that actually have no bearing on your life. It might feel good to say I have a million dollar net worth, But a million dollar net worth is not what it was 30 years ago, 20 years ago. Like the whole idea of a millionaire was like this big, you know, this big thing. But like being a millionaire now, that's probably like$5 million to have that same level of financial significance in how you're able to operate. What is more important, having a lot of money or making a lot of money? Cash flow.

32:37Sahil Bloom:Cash flow, cash flow, cash flow. Really? I disagree. I would say having a lot of money is better than making a lot of money. Anytime anyone's talking about having a lot of money, all they're actually talking about is cash flow. And like everything comes down to cash flow. When people are like, oh, how much is enough? You see all these debates online, 5 million, 10 million, 30 million. All you're actually doing is in the back of your mind, you're doing this math on it's sitting there, what your actual cash flow is that comes off of it. Yeah, the cash flow's not guaranteed. Exactly. What do you mean cash flow is not guaranteed?

33:04Sahil Bloom:Cash flow. So for example, I'm talking that comes off of accounts and everyone always does this. You're like, oh, I've got 10 million sitting in the stock market. That's just going to get me. It's going to get me 500 grand a year. It's like, this says who? There are things like failure rates with a 3 % withdrawal rate off of X amount lump sum invested in a broad market index fund. Those you can actually apply a certain math to so you can have certainty. Okay, there's a 0.01 % failure rate for this sort of investment. And I can withdraw safely this amount per year. As opposed to, I've worked in this sector and I feel like if I job hop, I can get another job paying this amount.

33:38And then your future is just uncertain with that way. Whereas like you have more broad data all saying that, OK, if you withdraw this amount, your failure rate is is this percent.

33:48Sahil Bloom:If you're if you're posing this question as like, would you rather take 10 million dollars today or a million dollar salary per year? Obviously, you're going to take the 10 million dollars today. Like, yes, I would 100 percent do that because like the safety and the financial security of doing that is going to matter. But if you pose it as like, oh, I have the skills and knowledge to continue to grow that million dollars a year and I have, you know, an ability to like do that across a diversified stream of cash flows, I would take the million. I think broadly speaking, it kind of dictates the way that like the common argument of, hey, I'm not making that much money, but I make a little bit like enough to save a little bit.

34:28And you're like, OK, great. Invest that in a broad market index fund. That's one route or the other route, which is like, OK, invest that on trying to develop a new skill and trying to day trade or trying to drop ship or trying to do this, trying to do that. Because I'm just I'm just saying one route is like investing in yourself and trying to increase your income. And then the other one's saving for the future to try to build up a nest egg.

34:49Sahil Bloom:So everyone should build up a nest egg. Go through a couple of basic financial things. The best investment that you can make is having six to 12 months of cash in an emergency fund, which is so paradoxical because everyone's like, well, I'm not getting any yield on that. That is the peace of mind that you get from knowing that you are okay for a long period of time will allow you to see opportunities much better. Like that is the single best investment I have made is just having that sitting there because then I know I can actually capitalize on risk without worrying about these things. Like it gives you the flexibility and the freedom to go and chase the bigger picture things that allow you to go and do that because you know you're safe on the downside.

35:26Sahil Bloom:The analogy is like a Formula One car driving around a track. What allows them to do that effectively is the fact that they know and they're confident in their brakes because if they weren't confident in their brakes, they could not go really fast into a turn, but they know the brakes are there. Like that's what the emergency fund does. You have these brakes. the second piece is like this whole thing of side hustles investing in yourself a lot of times those are just like basically distractions masquerading as good opportunities you're like oh i'm going to invest in myself and really what it is is like i'm going to take 30 of my cognitive energy and put it towards this random thing that is speculative that i'm not sure if it's going to make me any money but it sounds good versus taking that same 30 of my cognitive energy and doubling down on the value that I can create in my main thing.

36:16Sahil Bloom:And, you know, like us having a discussion about, you know, doing a podcast tour. You're like, well, why would we do that if we can just like focus on doing incredible episodes, creating incredible clips that maybe are going to go viral and do really well? Like, that's actually a good point, right? Like, this is my main thing. That same cognitive energy, if I start now like piecing it into 20 side hustles, I could just deploy into the thing that I already know works. and like logically the way to think about that is say i want to uh you know i have my main job and then i want to like maybe start a side hustle agency like okay well let me just think about this the side hustle agency for that to be successful what do i have to do well i have to like figure out what my offer is i have to go send a whole bunch of cold messages to people i have to then go take meetings with those people i have to convert those people then i have to provide the service then i have to retain them that's my path to making money on that all of that energy that you could have put into doing that and how speculative that is, all the things that have to go right for that to work.

37:14Sahil Bloom:What if you just put that towards creating way more value at your main thing? Would you not be able to make more money by like doubling your value that you're providing to the main thing that you're doing? That is why assuming this other thing isn't like your life's passion, your life's work that you have to go and do it. If it's just a money play, you're better off doubling down on the value you can create in your main thing. This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales,

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39:37Graham Stephan:And if you get one of the reviews, just let them know that we sent you because that would mean the world to us and we would love for them to continue sponsoring these episodes. Thank you again. And now let's get back to the podcast. What do you think about hustle culture? It seems like that's really fallen to the side lately. You think so? Yeah. I think it was really big 2018 through like 2022. And it seems like people have shifted from that to like a work-life balance. I don't think so. Really? No, dude, that was the whole, like, Andrew Tate thing. Like, that's, like, that's the whole, like, you know, Iman Gadzi, TJR, like, I don't think they're a hustle culture.

40:11Yeah, I think it's all about, like, work really hard, grind, make a bunch of money while you're super young, buy a Lambo, live in Miami. Maybe the Miami. Ben realize you're miserable, Ben get married, have kids, yeah. I think it's still pretty heavily promoted.

40:24Sahil Bloom:I think that hustle, I mean, I worked 100-hour weeks for the first seven years of my career, And I've benefited from that enormously in terms of what I learned, the experience, the networks, and also the money that you make from doing it. Like, I don't know that, uh, I don't think it has to be that, uh, you like demonize hustle culture. Like, I think it's great to work hard when you're young. I mean, it's the one time in your life where you don't have all the responsibilities and you don't have all these people counting on you in the same way. Like you can really focus on yourself and on building this base that you're going to benefit from for the rest of your life.

40:59Sahil Bloom:It's actually the best time. Like when your kids are super young, it sucks having to work 100 hour weeks because then you're away like you're missing this time that you are literally never going to get back. When I have to work hard now with a three year old, I feel it way more than before I had kids when I was like sleeping on a mattress on the floor of an apartment at my first job. I didn't care. Like I could go into the office Saturday and Sunday and work 12 hour days. And I was just like, this is awesome. I'm in the trenches with people. So I don't know. I mean, I like I'm still old fashioned in the sense that I just don't think there's any replacement for hard work.

41:31Sahil Bloom:And so no matter what you're doing, if you're working in finance or if you're trying to build your business or your hustle, like you're not going to build a great business without working hard. You were in private equity for seven years. How many hours per week did you work? And what was the true comp progression over those seven years? I would say the average over those seven years was 80 hours a week. and that's not me like trying to sound cool or flexing on it. Like that's just, there was a lot of work to be done and we all took pride in getting that work done. Like you're in the trenches with a bunch of people and you're getting compensated for it.

42:05Sahil Bloom:Like, you know, at the analyst level in private equity, depending on how big your fund is, you're probably making anywhere from a hundred to$200 ,000 a year. At the associate level, you're probably making anywhere from$200 ,000 to$500 ,000 a year. VP level, again, depending on fund size, you're making somewhere between$500 ,000 to$1 million. And then once you get to the principal and managing director ranks, you're making$1 million plus. The real comp in private equity is not in your annual cash, though. It's in carried interest, which is the profit share that you get on the fund and the fund performance.

42:42Sahil Bloom:And that is where people have made extraordinary amounts of money. And even for me, not having been there for that long, that is where the vast majority of the wealth that I have associated with my time there is tied up. It's in the fact that you get, you know, a private equity fund, the standard model is 20 % of the profits that the fund generates. So if you have a billion dollar fund that doubles in value, you made a billion dollars in profits, the fund, the managers of the fund get to keep$200 million roughly. And that gets split up. Obviously, the founder of the fund gets the vast majority of that.

43:15Sahil Bloom:But like trickle down$200 million to a group of 10 or 15 people, like everyone is getting a whole bunch of money on these deals. And so that really is the bigger thing. But that vests typically over like seven years. So you're getting that over long time periods. That's really like a retention tool for keeping people in the industry. What do you think about the carried interest loophole? they've been trying to get rid of this loophole forever i mean obama talked about it uh biden talked about it trump talked about no one's getting rid of it explain what it is so the carried interest loophole is the idea that carried interest that money that you're making the profit share on the fund gets taxed at long-term capital gains rates rather than ordinary income so all of your like cash comp your salary and your bonus every year they'll like say you're making a million dollars as a VP that gets taxed at ordinary income, right?

44:06Sahil Bloom:Like you're, you're probably, if you're in California or New York, like you're paying 50 % at some point on that, on that million dollars. But then you make most of your money, most of your actual cash that you were generating in this line of work is like these huge lump sums from these payouts when you, when you buy and sell companies. And that could be$10 million,$20 million. And it's getting taxed at long-term capital gains. So you're paying whatever, 25 % on it total instead of 50. and people are always debating whether or not that cash is like investment income that you should be paying long-term capital gains or if it's just part of your income my personal take is it's pretty clear that it's income and like i get why there are people that don't want it to go to income it's a huge huge difference maker in your long-term wealth creation but to me it's pretty hard to argue that it's actual investment income like yes you put principle your own principle at risk when you raise a fund.

45:02Sahil Bloom:You might put, you know, maybe a fund has five or 10 percent of their fund capital is the manager's money. But like, it's hard to argue that the money you're making out of this is like real investment income on that. It's clearly like it's for your work. It's income.

45:18Graham Stephan:When I looked into this, it seemed like it was a scapegoat for people to call these fund managers evil and that they're the problem and that they're why we're spending so much money and they're responsible for the national debt and why we don't, you know, get as much tax money. and they're the ones cheating the system. Meanwhile, a lot of it goes out to social security. That's going to make you favorable. It's the truth. When you look at how much social security generates versus how much they pay out, the math just doesn't even work. And the carried interest loophole is like 0.000000. Like there's so many 0.1 of that versus anything else that you could do that'll make more of a difference than getting rid of that one thing.

46:01Graham Stephan:I mean, it's tiny, right?

46:02Sahil Bloom:Like it's one of these things that it's a great talking point for politicians because it's so easy to say like, look at these mega billionaires and they're not paying their fair share on this thing. It's like, it's an obvious political talking point that really doesn't have a huge impact on the national budget, right? Not at all. Just as you said. I do think that it's just like, it's always going to be something that keeps coming up. And then what you're going to go and look at is the donations and where a lot of these politicians get a lot of their campaign donations from. And there's always some big private equity guys that are funding, you know, 50,$100 million into these super PACs.

46:36Sahil Bloom:And so like, who do you think is not getting, you know, who do you think is like pushing the background agenda on this stuff, right? It's the people that are funding the money. So follow the money on it.

46:45Graham Stephan:Yeah.

46:46Sahil Bloom:I don't think it's going to change.

46:47Graham Stephan:It's something like, I think it's$4 million a minute is how much we go in debt as a country.

46:52Sahil Bloom:I think the new tax bill is interesting for a few reasons. The whole gambling change is really interesting. Oh, yeah. Have you seen this? I have. I mean, we're in Vegas, so it feels very relevant. But this is kind of crazy because the new change in the tax bill to how gambling is treated sort of craters the professional gambling industry.

47:12Graham Stephan:I'm told that if your main source of income is gambling, then that doesn't apply. This is more meant for - That's what I'm told. Who are you told that by? Twitter. Oh. No, but here's the thing. In my defense, there are tax experts who have analyzed this plan and they say, based on our interpretation of this, if you qualify as a professional gambler where this is your full time main source of income, this is not going to apply. It's going to apply to the people who are trying to deduct gambling losses against gains casually as like a side thing, not their main source of income.

47:46Sahil Bloom:It's probably more important for people who are non-professional, though. The change in the rule is that it used to be that you could deduct 100 % of gambling losses. Against your gains. Against your gains. So if you made$100 ,000 and then you lost$100 ,000 gambling, you didn't have any tax that you had to pay because it was offset. Now you can only deduct 90 % of gambling losses. So if you make$100 ,000 and you lose$100 ,000, there's only$90 ,000 of that loss that you're allowed to deduct. So you have a$10 ,000 taxable gains. You have to pay taxes, even though you have no money from your gamble.

48:20Graham Stephan:Why my my confusion was why they did that and who it benefits or what their reasoning was for it, unless they just don't like gambling. And that's their way of, you know, curtailing that a little bit.

48:32Sahil Bloom:Yeah, I don't know. I actually I didn't understand the logic behind it. The one interesting like second order effect from it has been. Have you seen these all these prediction markets that have blown up and are going viral? So I'm an investor in one of them called Calci. and um calci has like blown up in the news recently because they offer predicted prediction markets on sports games correct which basically just looks like uh the same thing as like going and betting at a sports book but it's not regulated by the same entity so they're regulated by the cftc and as a result it's not considered gambling losses if you lose money on it it's a financial contract prediction.

49:10Sahil Bloom:It's a vent contract. And so if you want to still do your same gambling now, but still benefit from the 100 percent offset of losses versus gains, you can just do it on these prediction markets and benefit from what it used to be.

49:24Graham Stephan:I'm wondering who's slipping this into the bills. It's always someone who has an agenda who says, hey, we're going to we're going to give you some funding, but we want you to slip in this paragraph. And this is going to benefit How is she execs, man? We don't know. Dude, it could be prediction markets going in and saying, hey, this. But you would think the Vegas casinos would really be against this. But in reality, I don't think it impacts the average person because they're playing with a thousand bucks here and there. If they win or lose a few hundred, I don't think they're logging it. They're not.

49:58Graham Stephan:And the casinos aren't keeping track, like unless you have a player's card of like, oh, you won a hundred, but you lost two hundred.

50:04Sahil Bloom:You don't think it's impactful for all the people that are doing like, you know, DraftKings, random sports betting on their phones now, all this. I mean, gambling has boomed over the last few years as it's. I think negligibly, like realistically, even like when I go to the casino, I don't log my gains and losses. I feel like very, very, I live here.

50:22Graham Stephan:I don't gamble often. You would just put in a hundred bucks and if you win or like it pays for dinner or you lost it all. But you're talking about casino gambling.

50:29Sahil Bloom:Like what about just on your phone? Like the number of people that are just doing sports betting on their phone. I think of my friends that do, and I don't think that they care about the tax consequences. I think that's kind of like a very niche thing. Like most people are just like W-2 people that get paid out and they get their taxes withheld. And they're like, okay, you know, they don't actually go in even investments. Like they don't consider realized and unrealized. You mean they don't care about the tax? Like they're just not going to pay taxes on it? No, they're just not thinking about it.

50:52Sahil Bloom:But like not thinking about it is fine until the IRS comes in. You get audited and you have it.

50:57Graham Stephan:I guess our friends aren't gambling at levels where it's like going to be more than like$100 in tax.

51:02Sahil Bloom:I hope so. I feel like gambling is one of those things that's like, you know, it's been increasingly legalized and everyone's like talking about all the benefits from not drinking. It's like the new hot trend of like, oh, people are drinking less and less. And you're like, OK, but they're gambling way more. You're like, so you traded one vice for another.

51:20Graham Stephan:What do you think is better, drinking or gambling?

51:23Sahil Bloom:Drinking.

51:24Graham Stephan:Drinking is better for you.

51:25Sahil Bloom:I think drinking is my hot take on drinking is that I think that I think that the whole zero alcohol movement is going to be a net negative for the health of society because people are drinking less. But as a result, even if they're getting a health benefit from that, they're not hanging out with their friends. And so I think like people are drinking less and they're like, oh, my sleep score is sick, but they're super lonely because they're not going out.

51:49Graham Stephan:That's interesting. You see Gen Z right now is not socializing as much as they were. they're not getting in relationships and the amount of i think it was like virgin 30 year olds living with their parents was like the highest level ever in history but that could be because they don't have the social confidence that just having a you know a beer would like give them that bit of a boost to go up and talk to that person or just want to get out of their parents house

52:16Sahil Bloom:yeah whenever you say this people say like well if you had to drink to hang out with your friends They weren't really, really good friends. But I'm just to that. I'm like, I just to me, having a drink just helps you loosen up. You like have a better time. It's enjoyable. Like I still have a drink probably once a week. Like I'll have a glass of wine with my wife or I'll go like if I'm having a dinner with a friend, I'll have a drink and I love it. Like it just it's a net positive to my life. Even if I like, yeah, it's a little negative for my health. OK, I'm fine with that. if it creates the type of social settings that I like with people.

52:49Sahil Bloom:I just think that on the statistics around this, it's pretty clear. Teenagers in the US are spending 70 % less time in person with their friends than they were two decades ago. A couple of weeks ago, I saw a stat that just was showing the percentage of people in the US who are married and own a home before age 30. It was like 50 % in the 60s, 70s, and 80s. and now it's like 11%. It's fallen off a complete cliff. Yeah.

53:19Graham Stephan:I mean, I kind of understand the reasons why. Why? Home prices? Rising home prices, incomes really not keeping up with inflation and the price to buy a home, and then the internet, that you could just do anything you want online. There's no real reason to go out and hang out with your friends because there's so much on bar. You don't go to the movies anymore. No. People don't go like out. It's just hang out, watch movies on Netflix, streaming services, TikTok. No one goes out shopping. anymore either like besides groceries but like i would never go to the mall and go shopping i wouldn't really do that before either but now i'm especially never doing it it's just i could go online find exactly what i want ship it and returns are so easy these days yeah partying is down

54:01Sahil Bloom:partying is down bad in the u.s if you look at like the percentage of people who said they went to a party in the last month it's like just completely falling off a cliff 70 80 90 down over the last two decades. But again, I'm like, okay, so we're drinking less. We're optimizing our life in this one area. But are we just harming ourselves in another one?

54:20Graham Stephan:It's probably going to be an issue when you look at the birth rates. And then at some point, we're going to be a bit like Japan. We're already like that. We're not that bad.

54:30Sahil Bloom:We're on that trajectory for sure. The demographics in the US are really bad. I mean, Elon Musk is like always talking about this, right? This is like their big thing. What are the main concerns with the demographics? Just that we end up in a world where you have a ton of dependent age people and not enough working age people. So you end up in a country where, like Japan, where, you know, the average age is over 60. And so you have a whole bunch of people that aren't working that need services provided to them. And it's all paid for by young people that there aren't enough of them.

54:59Graham Stephan:So here's what I think. There's really only two options. One is you financially incentivize people to have kids. That's certainly an option. I don't think we're going to do that. The other option is just really incentivize good legal immigration and bring people from other countries who want to live and work here. I think those are the only two options. And I think Japan is going to be doing the same thing. At some point, I think they're going to make it very easy for people who want to live in Japan to go and move to Japan. They could live there full time. They could work there. They could integrate within the society.

55:30Graham Stephan:Maybe there's some requirements there, but it's a beautiful place. And when they don't have that amount of people, I bet they could select for who they want to move there. I think they're going to make it very appealing for U.S. people to move to Japan. And then the U.S. is going to be like, wait a second, you can't take our workers. And so the U.S. is going to have to do something. I know a lot of people that are at the age of having kids, and their primary concern is being able to financially justify having a kid. whereas now I feel like everyone's like okay I have to build up this sort of a nest egg I have to have this amount of money coming in I have to have a house so I don't have rent when I'm having a kid whereas back in the day it was kind of like have a kid kind of figure it out so I don't know

56:06Sahil Bloom:why do you think that that's changed like why why is there such a uh you know concern around that now versus I think people care about money more than they used to like I saw this one Jerry Seinfeld clip a long time ago where he was like back in the day people didn't care about money like they do today. Back in the day, people would ask you, what do you do for work? Oh, I do this. Oh, that's a cool job. That's what they cared about. It wasn't like, how much are you making? How much money do you have? Which is kind of like the narrative of conversations now. Back in the day, it was just like, do you have a cool job or do you not?

56:39And so I don't know exactly why that is, but I think like maybe it's materialism, consumerism, you know, marketing, how every company is telling you what you need and how it's, you know, you need to buy the newest iPhone, the newest car to have the coolest things to attract the coolest partner maybe it has something

56:56Graham Stephan:to do with that maybe people are just getting a bit complacent you know there's it could also it's probably a combination of that too life has gotten too appealing to sit on your couch and scroll on tiktok get anything you want delivered on credit you could break up that totally burrito into four equal door dash is the bane of human existence you can spend a lot of money on those things man without realizing but everything is there everything you need is within a room and you're totally satisfied.

57:22Sahil Bloom:I mean, that's the, that's also the problem by the way, with, uh, like young people dating with, you know, committing to long-term relationships. Like all of this stuff is all tied together where you like, you live in a, in a world where at the touch of a button, you can press the eject button from anything, right? Like, Oh, I don't, I don't really feel like going out like eject button. Okay. It all gets delivered to me here. Like I'm dating someone and it's no longer like the honeymoon phase. Like, well, I have a thousand options on my phone on this app. So like eject button on that. And the problem is the vast majority of good things in life.

57:56Sahil Bloom:Every single thing you want is on the other side of a little bit of struggle. Like the best relationships are built through crawling through the mud with someone over a long period of time, like engaging in hard conversations, being able to navigate that, getting past that honeymoon phase and recognizing that, you know, all of the growth that comes from from the challenges. And if you're so quick to press the eject button as soon as it's no longer amazing, you're never going to actually experience the good that was on the other side of that struggle. So what do you think are the best opportunities today for the next few years?

58:34Sahil Bloom:To make money? Yeah. Speaking of money. I think that the most interesting opportunity right now is AI enablement. for small and medium-sized businesses. If you are a young person right now and you are technologically savvy, you could be making an enormous amount of money by consulting directly with companies that have no idea how to use AI or implement it into their workflows. Huge companies can go and afford McKinsey or Bain or whoever to come in and do this for them on these enormous projects. But small and medium-sized businesses are not getting hit up by those big consultancies. And you as an individual can go out and build a legitimate high cash flow consulting business going in and doing this.

59:24Sahil Bloom:And it's pretty easy. You're going into businesses that are fundamentally pretty simple. You're going and evaluating their workflows. You basically have them record everything they're doing. You maybe go in and spend a couple days there. And then you're effectively just going to create a playbook for them on how to implement AI to improve their workflows. I think that a young person that understands AI and like has a pretty decent understanding of some of the models that are out there and the capabilities can go build an$100 ,000 a month business doing that very quickly.

59:51Graham Stephan:And what's holding them back?

59:53Sahil Bloom:Agency to go and do it. I mean, you have to be willing to put yourself out there, right? You have to go send 100 cold messages to people. You have to create pitch decks. You have to actually build up some level of confidence to go into these rooms as a young person and be able to help them with this thing. Part of that is just recognizing that you have a completely unique lens on the world that these companies run by slightly older people do not have. My mom runs a small business, and she's constantly asking me, how should I be using AI for these things? And I'll give her the most basic thing that she should do, whatever it is.

1:00:30Sahil Bloom:And it's like world changing, the most basic thing. So you also have to realize that like for a lot of these operations that you'll go into, you're not going to have to like wow them with some extraordinary new use case. Like sometimes it's just giving them the system to implement something very basic that will very quickly create a meaningful impact for them.

1:00:50Graham Stephan:So I was reading earlier today that users of ChatGPT are reporting lower levels of like brain function because they become so reliant on ChatGPT. What are your thoughts on the future of people just becoming too reliant on this? because I'm finding now that like when I get a text sometimes and I maybe hastily would write something, I'm now screenshotting texts to chat GBT and I'm saying give me a good response to this and it's just giving me like a nice response and I hate to say it, but the responses are better than what I would have written. They sound a lot gentler. I think we're cooked.

1:01:31Sahil Bloom:Yeah, I think we're cooked. I mean, I'm like, I'm, I'm, I have a three-year-old kid, right? So like when you have a kid, you are fundamentally going along the future. Like, you know, you're having a kid, you're like betting on the future in a lot of ways in a really meaningful way. I'm terrified. I think that there are a number of like meaningful causes for concern. I think on the thinking front, this is my most immediate near-term one, which is we are outsourcing our general thinking to these models. And if you think in a simple sense, what you outsource in life will atrophy. If I go hire a private chef, after a couple months, I'm going to suck at cooking because I outsource the thing.

1:02:13Sahil Bloom:So I'm not going to be good at it. I'm not flexing the muscle in any way. if you start outsourcing all of your general thinking to these models you are no longer going to be thinking as much you're not going to be wrestling with ideas in your head you're not going to be sitting there with them as a result that is going to atrophy um there's this story of uh max plank you know who he is max plank he's the uh german nobel prize winning physicist and he goes on this like tour around germany after winning the nobel prize and he's giving lectures everywhere and his chauffeur is driving him around all these things.

1:02:45Sahil Bloom:And the chauffeur says to him, like, I've listened to you give a hundred of these. I could just give this whole lecture. I've memorized it. And so Max Planck says, sure, go up and do it. Gives him his tie. And the chauffeur goes up on stage and gives the whole lecture perfectly from end to end. The crowd doesn't even know. They all stand up and applaud. And then someone asks a pretty simple question. And the chauffeur is like, hmm, that's such a simple question. I'm going to have my chauffeur in the back answer it. And it's Max Planck standing there with a chauffeur hat on. The point is, there's really two types of knowledge.

1:03:15Sahil Bloom:There's real knowledge, and then there's chauffeur knowledge. Like chauffeur knowledge is that surface level stuff that you mostly see with people now because we've outsourced our need to think deeply about these problems to the AI. And so what I worry about is that we end up in a world where we are just humans, just chauffeur level thinkers, just surface level thinkers. And a lot of the problems in society are created by, you know, chauffeur level thinkers masquerading as real thinkers across any area. And so I just, I worry a lot about that. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new.

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1:04:15Graham Stephan:Do you think anyone could be an entrepreneur and who shouldn't be an entrepreneur?

1:04:20Sahil Bloom:I mean, if you broadly define entrepreneur, absolutely. I think anyone can identify problems and go and create solutions. I don't think everyone should, though. I think anyone can, but not everyone should. Who shouldn't? If you are not the type of person that is willing to truly have everything on your back, you should not be an entrepreneur. I think that the harsh truth of entrepreneurship is that most people say they want freedom, but they actually just want the illusion of freedom. they wouldn't survive a day with the reality of it. Because entrepreneurship is not the glamorized version that you see on social media.

1:05:07Sahil Bloom:Entrepreneurship is like being up at one in the middle of the night, stressing about whether or not an invoice is going to come in on time and whether you're going to meet payroll or whether you're going to be able to close that deal that your entire company's hinging on or whether you're doing enough or whether you need to pivot the company. There is nothing comfortable about it because it's a recognition that everything is on you at all points in time. Who's better at being an entrepreneur type A or type B people? That's a good question. How would you define type B? Type B, I would say more impulsive, more quicker decision making uh a little bit more chaotic disorganized uh not super great at planning yeah i mean i think on the surface actually paradoxically uh type b people would thrive more as an entrepreneur the risk with type a people as entrepreneurs is that you're so organized you're such a good planner you're a perfectionist and you never do anything right it's like the uh the trap of information gathering.

1:06:13Sahil Bloom:Like dopamine from information gathering is a dangerous drug. Like I'm going to go read all the things. I'm going to gather all this information. I'm going to take all these courses. I'm going to read all the books and do all these things. And you get this big dopamine hit from it and say like, oh, look at all the stuff I've done. But you haven't actually done anything yet. Like the real person has gone and failed 20 times while the other person was reading all the instruction manuals on it. Like you can't read zero to one by Peter Teal and think you're an entrepreneur. Like real entrepreneurs have gone and tinkered with a whole bunch of stuff while the other person was reading a book.

1:06:45Sahil Bloom:And so if you think about it as like entrepreneurship is really about awareness and action, all life is really about awareness and action. And the whole goal has to be to have a razor thin gap between awareness and action. From the moment you gather that information to the moment you are acting on that information, you need a razor thin gap between the two. And type A people, because they're perfectionists, tend to have a big gap. You like sit, you're gathering all this information for a long period of time. You're like stewing on it, planning all of these things where someone that's just willing to go out and test it and figure it out, screw it up and adjust, adapt, they're going to be more successful in the long run.

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1:10:04Graham Stephan:And now let's get back to the podcast. How do you personally raise your awareness?

1:10:09Sahil Bloom:Do you meditate? No, I can't meditate. I've never been able to. I talk to a lot of people and I think a lot every single day. I think that there are really four types of professional time. time you have management time which is like what we normally think of as work it's like emails meetings presentation stuff you know whatever like invoices processing admin tasks filming this filming this um this would be creation so the second type is creation time that's like you're creating something you're filming this you're writing you're coding you're creating something the third and fourth types are consumption and ideation very few people make any time for those two things.

1:10:52Sahil Bloom:Consumption is like you're reading, you're having conversations, you're listening to things. And then ideation is you are actually thinking about things, totally separate from the other types. Like you were actually stewing on ideas and thinking. Very few people create any real structure around those last two types of time. I create a lot of structure around those. I have those every single day. And so on a daily basis, I am consuming new ideas that are coming in the top of the funnel and I'm thinking about those ideas. And that allows me to constantly have the creative output that I need to actually go and make money.

1:11:24Sahil Bloom:And I make money off of writing and sharing ideas. Like most of my income is all around that speaking, writing book deals, all of that stuff. It's really interesting. I feel like Graham is, he's optimized for the, the management time, like the, uh, the time where he's like actually doing things I've optimized for like the, the thinking about things time. And I'm like very bad at that. And I think Graham's pretty bad at like thinking of, of new ideas. How do you carve out time intentionally to create new ideas? The first thing is that, do you just sit down and think I, so I I'm huge on time blocking.

1:11:58Sahil Bloom:So my calendar like is separated out like chunks of time for these different things. The first way that you have, you have to do, if you're going to create time for these others is you have to like condense the amount of time you're spending on the random BS, like emails tend to bleed out over the entire day as an example it's like um it's called parkinson's law uh work expands to fill the time allotted for its completion so if you give yourself eight hours to do emails you'll take eight hours to do your emails if you give yourself an hour you'll crank through it incredibly efficiently and get it done so give yourself uncomfortably time constrained windows for these like boring management tasks the fact is the management tasks are not driving you forward.

1:12:39Sahil Bloom:Like they're not creating the step function changes in your life. They're keeping the lights on in general, which is important. You need to get them done, but they're not the thing that's going to create the 10 X or the two X even, you know, jump in your income or wealth that comes from the other three that comes generally from consuming interesting ideas, thinking about them, and then creating things around that, whether it's creative work or whether it's new businesses or whatever that might be. so batching the stuff is really important and then just create a structure around it like have a window on your every single day for 30 minutes where you're like reading something like free reading have a window for an hour where you're going for a walk where you're just going to be thinking about different stuff i mean i probably walk several miles a day just like that's my thinking time i don't bring my phone so what do you think of a walk uh the most random things like it's not um i'm not like setting myself up for a specific thing sometimes it's thinking about a book structuring issue like that I'm working through.

1:13:33Sahil Bloom:I signed my second book deal. So like I'm working on that now and it's a lot of structuring time to think about it. Sometimes it's like World War One was really interesting and I'm like randomly thinking about some World War One stuff that I just learned. History nerd.

1:13:46Graham Stephan:Could you tell who's not going to be successful or who's going to fail? Yeah. What do you look for in that?

1:13:53Sahil Bloom:Anyone that can't stick to things and finish. I think that's probably the single greatest predictor of failure is someone who jumps from thing to thing. Like if I was looking at resumes, if I was hiring still for anything like, you know, long-term building a firm, I think the biggest red flag is someone who's jumped around to like six jobs over the course of two years. And unfortunately, very few young people get that advice that like that stands out in a negative way. But it's really important because not just seeing something through, like I think this is one of the biggest cheat codes for life at this point is just finish things, just figure it out and finish the thing.

1:14:32Sahil Bloom:And it signals a lot about the type of person when someone has been willing to do that, to just keep showing up, to do what they said they were going to do. And normally, if someone's willing to do that, they'll find a way to win over long periods of time. So how much of someone's success is determined by their natural biological disposition? And then how can like directly applicable things can they do to improve those chances? If someone's listening right now and they've failed over and over and over again, or they've just lived a life where they feel like hasn't amounted to much or what they would have liked it to amount to, what direct things can they do in their life to increase their likelihood of success?

1:15:10Sahil Bloom:I don't think anyone is destined for failure based on birth. Like, obviously, we are all born with a different set of, you know, different hand, if you will. Like, you know, Some people can be born on the streets of India and you're like, obviously you have the deck stacked against you. You have to like rise up a whole lot more. But I generally think in the world that we live in now, with access to the internet being what it is, anyone can that is high agency, that is willing to go out and do things, can go and live a baseline good life. I don't think it's fair to say that anyone can go from no matter what, where they're born to being like a mega billionaire.

1:15:51Sahil Bloom:I think it'd probably be very difficult for certain people, but you can go live a good life, I think, anyone. on. What would I do? Honestly, I think that if you take any job, like if you're going to go just take your first job, whether that's like working at Starbucks or cleaning bathrooms at Starbucks, whatever that thing is, I think if you show an above average willingness to just go above and beyond what is expected of you in that job, you just like go figure things out and go and deliver value, you will get more and more opportunity over periods of time. The problem for most people is the second they don't feel that they are getting that, some people jump off the tracks.

1:16:38Sahil Bloom:So if you think about your life as this chart of the value you're creating and then the value you receive, there are going to be times when you're doing a whole lot. You're working crazy hard. You're doing all these things and it's not being rewarded right in that moment. It's not being rewarded. It's called the heaven's reward fallacy. Like we think that all of our efforts should be justly rewarded, but that's not the case. Sometimes you have a boss that sucks. Sometimes you're in a work situation that sucks. But over the long run, those blips even out. It's kind of like in the stock market, it's efficient in the long run, but not in the short run.

1:17:10Sahil Bloom:Like there might be a company that's massively undervalued now. Then there's that same company is going to be overvalued at some point. But in the long run, price and value should align. It's the same thing for your life. Like the price you are paid for the work that you do and what you can create is going to, in the long run, align with the value that you go and create for people. And so I would just spend all of my time thinking about how can I be valuable in whatever context that I'm currently in? And it doesn't need to be dramatic. Whatever context you are currently in, just think about the problems that the people around you have and how you can figure out some slight way to solve those problems.

1:17:47Sahil Bloom:And that applies to any context. It It doesn't matter what that job is.

1:17:52Graham Stephan:What do you think about living very frugally throughout your 20s?

1:17:56Sahil Bloom:I think it's a great idea to live frugally first so that you can live wonderfully, lavishly later. I mean, just logistically, if you're thinking about making money and financial independence, the greatest asset you have in your journey to financial independence is the gap that you can create between your cash inflows and your cash outflows, right? It's like the money you're making versus the money you're spending. There's a gap there, hopefully a positive gap. And that's the gap that you can invest into things that are going to compound. And if compounding is like the engine of financial independence, then that gap is your greatest asset because that's what's going to fuel that engine.

1:18:36Sahil Bloom:That's like the coal that you're going to be throwing into the steam engine or whatever you want to call it. And living frugally, meaning like not allowing your expenses to grow as fast as your income hopefully grows is how that gap grows that you can then be investing more and more into something that's compounding long-term. For me, the fact that I saved money and compounded in the time period from my 23 when I started working until 28 was how I bought a million and a half dollar house when I was 27 or whatever. I didn't just make an astronomical amount of money in cash. I had wealth that was building from the carried interest, but I wasn't seeing that it wasn't cash that I was getting.

1:19:17Sahil Bloom:It was all just that neither one of my wife or I are big spenders. Like I don't, we don't buy jewelry. Like we, we like experiences. So we go on vacations, but we're not like fancy car people really. Um, and as a result, we had a gap and we were investing that gap and stacking it and small things become big things. Like it just, it just works.

1:19:37Graham Stephan:What are your thoughts on buying versus renting a house now?

1:19:41Sahil Bloom:Um, speaking of saving money, I think that in the vast majority of markets in the U.S. right now, it is more advantageous to rent than buy. Prices are crazy. And the American dream telling you that it has to be about owning a home can be a dangerous thing for a lot of people because I think there's a lot of homeowners in the U.S. who own some expensive home but have zero cushion if something goes wrong. and to me that's like an inexcusable thing to you know take on a whole bunch of debt and be in a situation for your family like as a father and someone with more traditional values like i just think it's inexcusable to leave my family in a place where we don't have a cushion or a safety net if i all of a sudden can't work for six months or something goes wrong or we have a big health care expense and a lot of that happens because of this pressure to buy a home, right?

1:20:39Sahil Bloom:You go buy like, oh, I make a million dollars a year. Well, a bank will loan me enough money. If I'm making a million dollars a year in a W-2 income, a bank will loan me enough money to go buy a four and a half million dollar house, you know, in Newport beach. And I might be spending 50 grand a month now on like between my mortgage and my property taxes and all of the things associated with owning this home. And then I have the like, you know, nannies and I like the whole life, the expenses. Now, every single month I am break even on this million, like I'm making a million dollars a year and I'm somehow breaking even on that money.

1:21:10Sahil Bloom:So I have no nest egg, no cushion. And if something goes wrong, if I can't work or if I lose my job, we have a month before we run out of money. Like one of my best friends actually was working for a long time in a like lucrative career track and got laid off and literally given two weeks notice after 15 years at this company, like thought he was on the long-term track. And we sat down and I was like, oh, let's talk about your next career track. But like, let's walk through your numbers first. And he had two months of runway. He's got three kids. He had two months of runway. And it's literally because like we've created this culture where you have to buy a home.

1:21:46Sahil Bloom:Now you have to move to the suburbs. Now you need the country club. Now like these, it's all the keeping up with the Joneses that we've created leads to people making decisions that don't actually make any sense.

1:21:56Graham Stephan:What happened to him? Did he make any changes after that? He got a new job, um, that, um, that sort of insulates him from it on the back end of this.

1:22:06Sahil Bloom:and yeah they made I mean I told him I was like dude you have to make some serious changes to the way that you guys spend money because there's no excuse for not having six months of you've been working 15 years on a lucrative track you need a six month emergency what car was he driving you know like Audis like nice cars you know but like in a nice suburb

1:22:25Graham Stephan:what sort of friend goes to you and says like here's my like monthly expenditures because even for me like I don't think any any one of my friends would come to me and say like, hey, go over my monthly expenses and tell me how to save money. My friends do. I literally got a FaceTime call yesterday. Really? I got a FaceTime call yesterday from a friend from in high school. And he was like, hey, man, because he quit his job recently. He's like, hey, man, look, I got this money and I'm traveling the world. And I spent, dude, I was in Europe and I spent like 15 grand on this trip. He's like, I don't know if I can afford it.

1:22:57Could you just go over and create a spreadsheet for me like I know you did for another friend? Because I did it for another friend. and we could go through all the income, all the expenses. I'm like, great. List out all of your assets, all of your liabilities, you know, how much money you could be making if you got a full-time job with your engineering degree, et cetera, et cetera. And he's like, okay, cool. I'm on it. Like the friends do that.

1:23:15Sahil Bloom:Dude, it's extraordinarily valuable for that friend that you did that to, by the way. Dude, give him Caleb Hammer's number. No, this guy, he's in a better financial position than most people on his show. But my friends know that like, if they're in a spot, then they can come to me and I'll walk them through everything. I mean, for context, this is also like, this is like my brother. This is like my best childhood friend. I've known him forever. I was shocked, frankly, by the whole situation. And like now he's making adjustments and he'll be in a much better place. But the point is a lot of this is cultural again to the point earlier of like your environment.

1:23:47Sahil Bloom:It's all my medic. So like if you think that the next step is buy a house, then it's have a kid. Then it's the country club. Then it's the, you know, fancy car. Then it's the vacation home. You do all these things. And then 2008 happens and you see why like a bunch of people had all these houses and boats and stuff that they couldn't actually afford. We live in a country where people will loan you money to buy things that you cannot afford. Just point blank, you can't afford the thing. My rule has always been if you're going to take on debt to buy something, exclude a house. If you're going to take on debt to buy a material purchase, like a car or a boat, you better be able to pay for that thing in cash twice over.

1:24:24Sahil Bloom:Then it's like, okay, I can afford this thing definitively. I can afford this thing. Now, now, if I want to play the financial game of taking on the debt because the interest rate makes sense versus what I can invest it at, I get it. Go do it. But if you can't pay for it twice over, the reality is you cannot afford this thing. You are living beyond your means. You're using someone else's money to buy a thing that you can't afford. So you have to be eyes wide open about what that means about your financial situation in buying this. Again, you were doing it. You're doing something you can't afford.

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1:25:19Graham Stephan:See homedepot.com slash license numbers. Yeah, I'm seeing when it comes to houses, a lot of stories on Reddit right now about people who've bought in like 2022, 2023, 2024, and they were told or they had the belief that, oh, I was supposed to refinance when rates came back down. And now rates never came down and I have to make this payment and we want to move now. But I owe more than I could sell the house for and I would have to come out of pocket to sell my house and I can't do that. So my only other option is to rent. but if I rent it, I'm losing$1 ,500 every single month to own this house and rent it.

1:25:56Graham Stephan:So I don't want to do, I'm stuck. And then you hear everyone on Reddit just going off on this part. But I think it's becoming more and more and more common. The market's softened enough where people can't get out of their houses and they're at an interest rate that they can't rent it out profitably.

1:26:11Sahil Bloom:I think the housing market is going to explode at some point. It just does not make sense to me. the way the housing market has functioned. I also think if you're a young person in a major city or suburban area, like the pathway to owning a home at the current prices, I don't know how you're possibly going to save up enough money from like a normal job. You could be doing well, making 150K a year, 200K a year in LA, let's say. I don't know what the path is to you saving enough money to have a down payment on a legitimate nice home.

1:26:45Graham Stephan:It's the great wealth transfer. But a lot of people are getting money from parents or financial assistance from parents and then they're buying the house.

1:26:52Sahil Bloom:Yeah, I bought when I bought our house in New York. I had a seven year interest only loan on it that I now have three more years on it. It's at it's at two percent. But I only have three more years on it and then it's going to adjust. And so like the cost of living in this house right now is incredible. But in three years, if we're still in the house, if I haven't sold it by then or if I haven't paid down the whole mortgage by then, I mean, it's going to be insane. The actual like market adjustment on the thing. I'm actually shocked, by the way, like that banks aren't out there paying you or giving you a discount on paying it down to just get you out of these loans.

1:27:31Graham Stephan:That's what I thought.

1:27:32Sahil Bloom:Like Bank of America should come and pay me to just get out of this. I think they're already getting enough, getting people to take HELOCs out because I always get these flyers in the mail that are like, hey. you'd be surprised the amount of equity you have in your home you could get a check for a hundred

1:27:45Graham Stephan:thousand dollars so i looked into this because i had a large it was a seven figure loan at 2.875 fixed for 30 years and i wanted to see if i can negotiate paying it off yeah at a discount yeah exactly there should be right like there should be a discount i think the issue there is that those loans are sold and bundled together and it's not like you could individually negotiate that one loan. Like if you had a private investor on the other side, they'd be begging you to pay this thing off.

1:28:13Sahil Bloom:I'm just shocked. There's not like normally within financial markets, if there's a way to make money, like there's like clips, like, you know, arbitrage like that, someone is going and doing it. And so I won't be shocked, actually, if like you hear about a financial product being created by some enterprising hedge fund or investment banker that allows people to go and do this.

1:28:29Graham Stephan:I want that. I also want to be able to take the mortgage with me to the next property. So if if I could afford this mortgage, as long as the next property appraises and there's enough upside on them, I should be able to take that two point eight seven five, take the same amount that I owe and just move it over to another property. And if anything, it could be backed by even more equity, like like the upside could be even greater in terms of like if I don't pay, they get even a bigger payout.

1:28:55Sahil Bloom:You can do that in certain countries. Canada, you can do that. You can't do it in the US where it's just very nonstandard. I looked into this recently because we were thinking of moving to the Boston area and you just can't do it. They're not set up to be able to go and do that. But the whole thing that breaks my brain on the housing market is I fundamentally don't understand why there is this assumption of housing values going up over long periods of time. I understand the land piece of it, but the house itself. So I'm like, okay, I get it. You have land that should be appreciating over time because it's scarce, but the house definitively gets worse.

1:29:37Sahil Bloom:Like the house itself is a depreciating asset, or it should be. Like if you go get a 20 year old house, that house is worse and costs more money to maintain than a brand new house.

1:29:46Graham Stephan:Okay. I'll give you the counter argument. You have plenty of homes throughout California that are a hundred years old or more, and they're still standing. The foundations are still holding up. They need repairs, obviously, but they're still functionally there. The counter to that is that labor is more expensive, materials are more expensive. And when you look at the long term over 30 years, it could cost more to recreate the same thing, thereby driving the values up because you look at the replacement value. It's not all of it, obviously, but that's a component to it.

1:30:18Sahil Bloom:So you buy into the whole housing prices should just keep going up over the long term?

1:30:23Graham Stephan:No, I buy that they would they will go up. But is that enough to counteract inflation and opportunity cost and repairs and maintenance? I don't know. But I think when you look at nominal home values and the prices, I think 50 years from now, they're going to be much higher. but is that enough you know if like if might might put like here's an example if home prices go up on average two percent a year which they you know it's been about a one and a half percent a year over the last hundred years but is inflation three percent like does that eat into the value of the home now your real returns are negative but you're showing a price increase yeah on your

1:31:02Sahil Bloom:house i just i also think this overlays into the whole ai discussion from earlier of whether or not were completely cooked because if you think about who has bought homes in the United States, it's been knowledge workers, basically. If you think about these high-priced homes in these city areas, these prices have continued to go up. It's basically knowledge workers. It's like all these college-educated knowledge workers working at these big companies that are hiring tons of college-educated kids. And my question is, a lot of those jobs are going to get just eviscerated, these knowledge worker jobs, right?

1:31:36Sahil Bloom:It's like the first thing that gets eviscerated is like, you know, social media manager, marketing manager, like, you know, all of these like roles that are increasingly using AI to disrupt, especially at the entry level. And so you wonder whether like this whole kind of house of cards that's been created in the US economy with like, okay, we take out huge student loans to go to these overpriced colleges because we know that there are jobs on the back end of it as knowledge workers, which are going to be these high-priced jobs, which is going to allow us to do the American dream, move to the suburbs, have a country club and have a house.

1:32:10Sahil Bloom:If pieces of that start to get

1:32:12Graham Stephan:broken, does the whole thing just start crumbling? Yeah, I think it does. I just posted a video about this, that college tuitions increased the moment they created the Department of Education. And what's crazy is that once they began subsidizing student loans, which I get why they did that to promote people to go to college, once they started subsidizing and giving loans, college tuitions increased accordingly. So now you borrow more to pay more, which required you to borrow more to pay more, and it was this upward cycle. The same thing, to a smaller extent, has been the case with housing, that it is subsidized by the government, who even backs mortgages.

1:32:50Graham Stephan:They'll buy the mortgage. They guarantee that they will buy your mortgage, even if there's not an investor, because they want to make sure there's money flowing into the markets. And studies have found that there is a marginal increase in the home's price when it's backed by the federal government versus homes that are not, all other things being equal, that being the only variable that those homes sell for a little bit more. So there is an upward pressure on housing prices, the fact that it is subsidized by the government. But now you can also argue wealth creation, the government has an incentive on that.

1:33:21Graham Stephan:It leads to higher property taxes, higher revenues for the city. I mean, I'm sure there's some benefits there, but like to what degree? Because I guarantee if you have an investor on the other side of the loan, they would be negotiating, like you said, to pay off those loans faster. Or if they get in a bad deal, they want to get that off the books. Or they would just say, hey, right now is a shaky market. We're not going to lend money. And if the capital market dries up and people want to sell their house, they could take a huge hit on that. So this is

1:33:50Sahil Bloom:a bitcoiner's wet dream this whole like oh like you know a ponzi scheme of the u.s economy that's

1:33:58Graham Stephan:been based around this inflation target it's kind of true because because the housing market should be efficient it should be if you're a borrower with a 650 credit score you should be paying a much higher interest rate than the person with a you know a 680 credit score just like but but the government looks at these things and if you have a score above 650 and you have like all these things you're treated the exact same like me having an 845 credit score makes no difference compared to the person who has a 780 so like i feel like there should be benefits to having a higher score more income being a safer borrower but the fact is like you only get rates so low

1:34:34Sahil Bloom:i feel like the other thing with the whole buy versus rent debate that people miss is life isn't lived on paper so like whenever you see one of these debates people lay out the math and they're like, okay, well, here's what it looks like if I buy. And then here's what it looks like if I rent. And generally speaking, when I've seen people lay out this math, it's like, okay, you should rent because, you know, the return you actually got from this home that you owned is not outpacing that same money put into the S &P 500. And you didn't have to deal with the headaches of home ownership along the way.

1:35:04Sahil Bloom:And so there's like, when people live it out on paper, I actually, I understand that. I understand that whole debate. What I think it misses is the part of life that has just not lived on paper that like it makes me feel really good that I own a home that I have my family come and stay in that I can have friends come and stay in and that I own it. I don't know why I care that I own it versus me renting it. But there's something about Saturday morning, like I'm cooking pancakes and my parents are playing with my little kid in a house that I bought that like brings me more joy than about anything else in the world.

1:35:37Sahil Bloom:And I can't put that on paper. I don't know where that is on this math sheet, but it would feel different to me if I rented that.

1:35:44Graham Stephan:That was the top comment of my video or went over the math. And the top comment was, I don't view my house as an investment. I just want a place to live. That's my own. And I agree with that. Like not everyone is seeing a house as an investment, but then you got to put it on the list of expenses of where do you put that in terms of like driving a nicer car? Where do you put that in terms of like flying first class or eating out at a great restaurant, getting experiences in your life? Like it's got to now be tracked as not only a place to live, but it is a financial expense that you have to think about.

1:36:18Sahil Bloom:Are you still not flying first class? No. You refuse?

1:36:22Graham Stephan:No. I've upgraded seats. He sat in the big seat in Spirit.

1:36:28Sahil Bloom:I've never flown Spirit in my whole life. What's the big seat? It's phenomenal. It's fantastic. It's like a first class seat. So let me walk you through something real quick. Okay. So you can buy a Delta flight from Las Vegas to New York for say 450 bucks. Or you could buy a Spirit flight from Las Vegas to New York for 300 and then pay$200 for the big front seat. That's like the Spirit first equivalent basically. And now you're at$500. Sure, you're on Spirit. Granted, it is Airbus, which we all like. yeah are we pro airbus yeah i'm pro airbus yeah so like you're in the airbus you're in the big front seat which is only two seats per row as opposed to delta where you just be randomly sat you could even be in a middle seat for 450 and you're in a boeing and you're in a three row seat or a three seat row so i would say spirit also by by every measure imaginable if you get that big front seat you're going to be way better off than just buying a random delta or jet blue flight where you could be sat in the middle.

1:37:32Sahil Bloom:What if it was$600 for first class on Delta? Would you do that? Well, that's just not true. Like Delta is still, it's like hundreds of dollars. If it was$600 on Delta for first class as opposed to$500 for the Spirit big front seat. But you have to fly on a Boeing. I'd probably take the big front seat. Okay, all right. Yeah.

1:37:51Graham Stephan:All right. Yeah, I just look at it like the value of every hour. If it's a few hours, I don't care where I sit. If it's like a six hour flight, having the extra leg room is nice. I don't need the first class. Do you work on flights? Yeah. I try to.

1:38:06Sahil Bloom:Yeah. And you don't find that there's a meaningful difference. There is. In the big front seat. Yeah. Oh, okay. Oh yeah. The big front seat on Spirit. So it sounds like I need to be flying big front seat on Spirit. Are you flying back to New York right after this? Yeah. Tomorrow. Tomorrow? Yeah. What time? Because there's a flight that goes to New York. It goes to. But I have a first class ticket on Delta books. That sounds refundable. How much was it? That sounds refundable. I should check. now that i really don't think it was more than like 700 there's a spirit flight that goes out of here in newark sure you got to go to new york but it goes to newark and it's it's uh it's gonna be at like 5 p.m and you'll get there oh no sorry is the is the is the big front seat always available like do people not no it's not always of it oh trust me it's a high demand it is oh yeah

1:38:48Graham Stephan:but you could probably somewhat luck realistic you got to be somewhat lucky yeah okay no you're

1:38:52Sahil Bloom:Right. So my round trip ticket was$1 ,567.96. So just under$800 each way. But that's not that much more expensive, by the way, than what you're talking about. And you're flying out tomorrow? Yeah, I'm flying out tomorrow.

1:39:06Graham Stephan:Yeah. Well, the thing is, you're probably picking different times. What we do is we'll get that same thing for 500 round trip by just picking the times that are the cheapest. And so if we leave early in the morning, late at night, I don't care. I could leave whenever.

1:39:20Sahil Bloom:But it makes you happy to have done that, to have like spent the extra energy thinking about it and saving it or because you like you feel like you need to.

1:39:30Graham Stephan:I would feel like that's a waste. I would I would look at because I'd spend an extra thousand dollars doing that. And I think what else could I have done with a thousand dollars? And I think of all the things I didn't do. And I think I could have done those things. But it's a weird. You don't understand. There's like a there's a weird cognitive gap here.

1:39:47Sahil Bloom:Because like if I if I offered you like a few thousand dollars to do something that you absolutely hate doing, you probably wouldn't do it. What is it? I don't like say I wanted you to come give a talk somewhere. And I was like, hey, I'll pay you for an hour of your time. I'll pay you three thousand dollars.

1:40:03Graham Stephan:No, that wouldn't be worth it.

1:40:04Sahil Bloom:OK, but you'll like you. You see what I'm saying? Like you do it in the other direction. Like you're like, oh, that thousand dollars that I could have spent and had a way better experience and gotten a bunch of work done.

1:40:14Graham Stephan:But you're asking me to take now a whole bunch of time and prepare for a speech and like do all these things like I count all of that in. It's not just like a, hey, come down the street, show up for an hour. Here's a few thousand dollars. I would I would strongly consider you would do that for five hundred dollars.

1:40:29Sahil Bloom:Let's say it was like around the corner from here and they just want you to have a conversation with someone for an hour. You do that for five hundred. I guess what I'm getting at is what is your hourly rate in your mind?

1:40:38Graham Stephan:You know what? Maybe my answer would be maybe if I'm not doing anything else that's valuable at that time. Like if it's me watching TV or doing that, I'd rather do that. But you could be doing something valuable. You know, it's like only so much valuable stuff that I could do in a day before I run out of valuable things.

1:40:54Sahil Bloom:But it's like it goes to that whole, you know, it's like this weird thing that we do with money where like you should just have an hourly rate and it should just be like you should apply that hourly rate in your mind to all of these things. We obviously don't do that because we're human. Right. Like my hourly rate now on speaking since the book came out is ridiculous. like there's no there's no business bet that i know of that is better than paid corporate speaking like you know you can make like as a starting point you can make like 25 000 for an hour talk corporate speaking on the back of books is typically how most authors i would say end up making their money like the book doesn't make money but they build a brand name on the back of the book and then they do like this long tail of corporate speaking but like you know speaking goes from 25 000 it just keeps scaling like david goggins will get a quarter million dollars or a half million dollars to go give an hour talk.

1:41:43Sahil Bloom:And if you apply that and you say like, well, that's my hourly rate, it feels insane to even say that. And so like, to me being new to it, if someone comes and offers me like 5 ,000, I'm like, yeah, I should do that. Like that feels crazy to not go and do that thing. But if it's actually much lower than what your hourly rate is on, you know, on a market level. And so like, you have to figure out what your, you know sort of personal like tipping points are on these things i just think you would probably be unlocked in a lot of ways if you allowed yourself to not think about those things like if you had someone just handle it for you entirely do you not think you could be more creative in other work that you do maybe yeah and that's how you make money listen i i've had so many expenses come up

1:42:30Graham Stephan:this last month that i have done my best to apply that thinking because otherwise i ruminate and my like my thinking and anxiety of spending money on things is through the roof so like this last

1:42:40Sahil Bloom:month i've just just paid it well i saw a clip of you guys with uh what's his name jimmy uh the comedian what's uh asian comedian the clip of you guys yeah bobby bobby yeah uh but the clip of you guys asking him how much money he has and he's like i don't know i have a money guy that just does all of it for me and it's like for him yeah he doesn't want to think about those things because it just allows him to focus on what he loves doing, which is his creative work. And he's like going and doing it. I feel like you should try it for a month. You should make a YouTube video. He said he would do that like so many different times and he's never done it.

1:43:14I've been trying to apply it this last month. Trying to. You should make a YouTube video of like,

1:43:18Sahil Bloom:I didn't look at money for a month. Here's what happens. That would be a great video. It honestly would be kind of interesting. Like you talk about how you're stressed about it or whatever, but like I'm going to have someone else do my money for an entire month and see what happens. That'd be a good video. I like that. He said on many different episodes, like we had Bill Perkins. I was zero. We had him on. Graham was like, I'm going to do a month where I just don't think about money. And I'll forgive myself for spending money on anything. I want to see you do that because you had some crazy things that you said.

1:43:44Sahil Bloom:I've had crazy expenses. You said the thing about eating a half eaten steak. I was like, bro, I need to have an intervention with this man. You need to set a dollar threshold below which you don't think about the thing.

1:43:55Graham Stephan:But there are so many things that could come up under that threshold that now I just like the faucet's on.

1:44:00Sahil Bloom:Doesn't matter. There's not going to be enough of them. One or two doesn't matter, but there could be 20 of them.

1:44:08Graham Stephan:You're not poor. You're rich.

1:44:09Sahil Bloom:I totally get it. But there's like a threshold for everyone, right? Like if I'm worth a billion dollars, I can't spend all my time thinking about$1 ,000 things. Sure, are the$1 ,000 things going to add up to some gross amount that looks like a lot for most people? Yes, but it's not a lot for me because I'm worth a billion dollars. I'm saying hypothetically I'm not. If you're worth$10 million, there's a different level. but like there's a level where below it you're spending all of this time focusing on these things they're creating you stress that stress is negatively impacting your life you're not you know you're not present conversations because you're thinking about it i've been there i totally get that like when when i feel tight on things i'm not like as present with my wife or son or like with work stuff i'm not as creative like it impacts you in every way but the way you fix it is you're just like below this like below a thousand dollars below five hundred dollars not going to think about it.

1:44:54Sahil Bloom:I'll think about everything else, but there's all, there's all this random stuff below 500 bucks that has no impact. Yeah. He comes to me a lot where he's like, Hey, I had this contractor. They said this one thing and it ended up costing a little bit more. Do I try to force it? So they, you know, charge the same amount as their original word or do I like, you know, let them charge this extra money. And he's coming to me with these problems and it's like, the difference is maybe like a thousand, $2 ,000, um, which for him is not a life-changing amount of money for an average person. Yes, it could absolutely be and i'll just say graham like forget about it it's not a big deal every single i don't think there's been one time where i've been like that's an amount that you should worry sometimes the principles like they want to just like get the print get a little more i get yeah but you can live and die by your principles or you can just like be happy you know choose one i also just think like in a relationship one of the most important things is that you're aligned on this stuff like my wife and i've had to have conversations about this where she would come and ask me like, Oh, can I do this thing at the house?

1:45:51Sahil Bloom:And it would be like$500 or a thousand dollars. And I was like, yeah, yes. Like I, and so we just set a number where I was like below this, just you do it. Like you're the CEO of this household, go and do the thing. And if, if it's above that, we can have a conversation about it. But like, it was causing me more stress to have to even just pat like the, the just attention disruptor that like having to think about this thing rather than just like handle it if it's below this number. And we do this at companies, right? Like if you're on the board of a company, you set like there's a delegation of authority, like the CEO and the CFO can make decisions up to a certain amount of money.

1:46:26Sahil Bloom:This is a common thing in private equity. Like the CEO and CFO that you hire or bring in knows the decisions that they are allowed to make. Like they can make decisions up to$10 million, you know, annual thing. And above that, they should go and ask the board. And like having that for yourself in your own life will just provide you a lot of comfort.

1:46:45Graham Stephan:What are the economics behind writing a book?

1:46:47Sahil Bloom:Traditional publishing is different, right? There's kind of like two different sides to this world. There's traditional publishing and then there's self-publishing. Self-publishing, you know, the economics on a per book basis are gonna be better because you're not having to pay this whole like, you know, cost stack that exists within these publishers. But the downside is you don't have the distribution necessary to hit like the New York Times bestseller list. you can't really self-publish a book and be a New York Times bestseller. Really?

1:47:15Graham Stephan:I thought it's just an amount of books that you have to sell within a certain amount of time.

1:47:19Sahil Bloom:No, because you have to have a certain amount of distribution. The New York Times list in particular is not just based on the number of sales. It's subjective. So it's also based on being in enough independent bookstores. You have to be in all these distribution points, which you can't do if you self-published it. So like, you know, Alex Hormozzi has sold tons of copies of all of his different books. not New York Times bestselling book. Actually, the best example is Morgan Housel with Psychology of Money has sold 10 million plus copies of that book. It's one of the bestselling books of all time and wasn't a New York Times bestseller.

1:47:52Sahil Bloom:It makes no sense. By all definitions, it is, but it was published with an independent publisher. He didn't self-publish it. It was independent publisher, but it didn't make the list. So self-publishing is a little bit different. Traditional publishing, the way the model works economically is they pay you in advance to buy the rights to your book. That is an advance against royalties. So they're paying you upfront a certain amount of money. So like, you know, my first book, I got, you know, a couple million bucks to go and write this book. And you get that paid out over four equal installments.

1:48:26Sahil Bloom:You know, like one upfront when you sign the contract, one when you turn in the draft, one when the book gets published, and one 12 months after the book gets published. So let's say for$2 million,$500 ,000 at each of those increments. And then you go and write the book, you publish it, and it was an advance against royalties. So that is your downside. If I sell zero copies of the book, I still get that$2 million. And once I pay it back via the royalties from sales of the book, then I start earning royalties above that. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs.

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1:49:24Graham Stephan:What if the book doesn't sell? You get$2 million, you publish it, and just no one buys it. Do you keep the money? So that's their risk. You don't owe it back.

1:49:33Sahil Bloom:They are a venture fund, effectively. They are going and investing in different authors. And a couple of those end up being the Atomic Habits that sells millions or psychology of money, sells millions and millions of copies. Most of them never earn back the advance. And they're fine with that because they're making tons of money on the ones that did. It's like it's all power law driven in that way. How much how much have you made from the book so far? I think we've sold to date 400 ,000 copies around the world. No way. Um, yeah, so it's done really well. I will, I will earn past the advance. Um, ideally I'll earn past the advance in the first year.

1:50:07Sahil Bloom:Cause there's like bonuses and certain things if you do it fast. But, um, uh, I probably like, I don't know, globally, I've probably made close to, it's a little different globally. So I probably made close to like a million and a half in royalties. Um, and I need to get to 2 million above that. I would just be getting a, you know, a quarterly check. wow um yeah that and that's been a great outcome like it's very good the bigger thing again with books is like the real economics for most people off of a book are on these side businesses like speaking or like um you know courses mastermind like other things people do that are sort of

1:50:41Graham Stephan:around the book versus the book itself so why books though because i always looked at a book and i thought why would i do a book when i could just make a youtube video and more people are watching YouTube videos than reading a book. Yeah.

1:50:53Sahil Bloom:But does anyone gift a YouTube video to their kid on their graduation? Like, does anyone make this a thing?

1:51:00Graham Stephan:Like, no, does anyone like,

1:51:02Sahil Bloom:you know, does anyone, uh, you know, come back to it and say that like, um, you know, they like give it to their grandchildren or like give it to their partner and like sit down. But maybe the

1:51:11Graham Stephan:new version of that is like, they shared the video. I don't think, but it's not permanent is my point.

1:51:16Sahil Bloom:Like you could argue that YouTube is the most permanent of all of the mediums because there are videos from several years ago that people will go back to. But there's something very permanent about a book that like, you know, the best books I've ever read, like I reread once a year, I gift them to people all the time. You know, they like sit there in a physical form. And so there is something that is just sticky about books as a medium. For me personally, why books? I love writing. Like writing is my favorite thing to do. Everything else that I do is just a natural byproduct of the writing that I do.

1:51:50Graham Stephan:So, but I signed a second book deal.

1:51:51Sahil Bloom:Like two weeks after I published this, I signed the second book deal because I was like, I want to write again.

1:51:56Graham Stephan:A publisher to get the New York Times best. Why is that so important? Because I was talking to someone else who published a book and they went through a publisher and they said, I'm never doing that again because I would have made tens of millions of dollars doing this on my own. now my next book i'm doing on my own and i'm going to make about 10 million bucks from that

1:52:13Sahil Bloom:uh do you have an indian mother is that this person does not have an indian they don't uh do you and you don't have an indian mother either uh indian mother uh doing a half joking half serious like doing it the name brand like kind of like credible high reputation way for the first one especially really mattered to me um so it's definitely a title yeah there was a doctor phd Yeah. Okay. I think people are lying if they say that those things don't matter to like everyone's like, well, I don't care. I just want to make the money. And you're like, well, you are taken seriously by basically everyone that is like of a certain level when you have a title like that.

1:52:51Sahil Bloom:And I can just say definitively, people say like, oh, your life doesn't change from hitting these lists versus not. My life has definitively changed. And that's mainly because people that I respect and admire, like these high, like, you know, high caliber business people, entrepreneurs, CEOs, like all these people that I want to get to know immediately have like a level of openness to spending time and talking to me because I'm like, I have this stamp in a certain

1:53:19Graham Stephan:way. How much do you think it is valued to be a New York Times bestseller? If you were to put a

1:53:24Sahil Bloom:price tag and say, I gave up to buy it from me for no, like in the sense of price it. Yeah. Like to take it away from me. How much money would you have to pay me?

1:53:34Graham Stephan:Or in the other way, here's how much money I'm giving up for the title of being a New York Times bestseller? To me personally,

1:53:41Sahil Bloom:it's worth eight figures. It's worth 10 million plus dollars. You would have to pay me. Yeah, you'd have to pay me$10 million probably to give it up. And to say that I was never allowed to have it. Just because if I actually just think about the long-term residual value of even just the speaking business on the back of having that, it is meaningfully higher than if I didn't have Are a lot of people just paying the New York Times to get that title? I imagine that it could be gamed similar to like the Spotify top charts for podcasts. Like we're not on that. And I know for a fact, like I look at those top charts.

1:54:18I'm like, I've never heard of any of these people. Not a single one of them.

1:54:22Graham Stephan:I was thinking of the same thing. I'm like, there's no way. And so, you know, a lot of that is for like paid media because you have to be in Forbes magazine. You have to be in this, you have to be in that. And then finally you get the, you know, top chart. so do a lot of people pay for that there was a big um there was a big uh like sort of discourse

1:54:43Sahil Bloom:around this being a big thing with the new york times that you could just buy your way onto it and continue people continue to say if you go look it up people will say like oh you can spend a hundred thousand dollars and just be on the new york times bestseller list as far as i saw it it's not really true and the reason it's not really true anymore is because the New York Times cracked down on billionaires just buying their way onto the list. And the way people used to do it is they would go buy 10 ,000 copies of their own book. Like you just go buy 10 ,000 copies. Now they don't count multiple purchases.

1:55:15Sahil Bloom:So like if someone goes and buys a thousand books, that's counted as one on the New York Times list. So if like a single address buys 10 ,000 copies, it starts to raise a red flag. The way that they claim they cracked down on it now is they use social listening. So like if you sold week one of your launch, when you're trying to hit the New York times list, if you sold 50 ,000 copies, if that's the number that it says on book scan, like which track sales, but there's only like five addresses, 10 addresses that that went to, it's a pretty clear red flag. The other red flag is no one on the internet is talking about it.

1:55:47Sahil Bloom:So you have social listening where they're like, it should roughly equate to the number of books that are being sold, the amount of buzz that's about this book. And if it doesn't, again, it's like, oh, this person is doing something. So there's been several cases where like people got blackballed from hitting the list where like they were doing something. Is it totally impossible nowadays? Probably not. There's always like back doors or side doors into all of these things where people are still managing to do it. A lot of people will do like they'll do speaking gigs. So if I'm like a billionaire business person, someone will pay me$250 ,000 to give an hour talk.

1:56:22Sahil Bloom:I could say to that company like, hey, instead of$250 ,000, buy 10 ,000 copies of my book and mail it out to all of your customers. People will go and do that and there are ways to have those sales still count towards the list. And so like that is effectively buying it because you traded$250 ,000 of income for that. Just a few rapid fire questions before we end the podcast if you don't mind. How could Jack get a girlfriend? Working for free underrated or overrated? Overrated. Working for free is overrated? What do you mean? Like, should you work for free?

1:56:58Graham Stephan:Yeah. Just like go and volunteer. Like, hey, I'm going to.

1:57:00Sahil Bloom:No, no, I don't think you should work for free. I think people should pay you for the value that you're creating. Like if someone came and did a bunch of work for me, I would pay them for that work, whether or not.

1:57:09Graham Stephan:What if you didn't need the work and they just say, hey, I want to do something like

1:57:11Sahil Bloom:they're trying to pitch me to work in the future. Yeah. Oh, like to prospect. But that's just like you're prospecting. You're trying to go. That's like a cold, a good cold email. I think that's kind of what it's applied for, like, working for free. Oh, you should do work up front. If you're trying to sell someone on getting to work with them, you should do some research and work up front to go and land that. But once you're working for them, people should pay you for the work that you're doing. Index funds are individual stocks. Index funds. What's a luxury purchase you'll never regret? I'm going to say first class for you.

1:57:40Sahil Bloom:You consider that a luxury? I don't even consider that a luxury. Okay. That's different. Different levels. First class. Different levels. First class on Emirates. First class on Emirates is my actual one. That is way too expensive. It's like$20 ,000 for a round trip or something, but it's, I will never regret that. It's amazing. Buy or rent in 2026? Rent. One money trap most people fall into? Thinking that money is going to be the end all be all of your happiness in life? The dumbest thing rich people spend their money on? Trying to impress other rich people. Is having multiple income streams overrated or necessary?

1:58:18Sahil Bloom:necessary to feel comfortable at night is college still worth the price tag no unless you're going to one of like five schools are credit card points actually worth paying mine to uh yeah in the early days and then you should stop do you believe in having a budget yes do you keep a strict monthly spending limit? Yes at my business, no at my house at this point. Is chasing passive income overrated? Yes, passive income does not exist. What's the minimum income someone should aim for to be free? $500 ,000 a year. How did you arrive to that number? I don't think my life has meaningfully improved post$500 ,000 a year.

1:59:04Sahil Bloom:I thought like once I got to 500, I could basically do whatever I want, whenever I want and travel and have cool dinners and experiences with my friends. And like beyond that, it's just, I don't know. There's not, my life hasn't changed from any money beyond that. So that means you're probably spending, let's say 200 ,000 and then you're saving 300 ,000. Well, you're not factoring taxes. Oh, sure. Yeah. Um, no, at$500 ,000 a year, I think in most places in the country, you know, uh, you, you live in a nice place, you can afford to travel, You can afford to eat out. You can afford to spend time with your friends, see your family, take care of your health.

1:59:43Sahil Bloom:You can do all the things that actually drive happiness. And then anything above that is like, you know, it starts to be luxury stuff, which I don't think has moved the needle that much of my happiness. Thank you so much for coming on the Ice Coffee Hour. Really appreciate it. Yeah. We'll link to your book, by the way, down below in the description. That will be linked down below in the description. Also, you should ride Spirit First Class. I'm just saying you got to get that big seat. Big seat. And by the way, for those of you guys listening, as always, thank you so much. We wouldn't be able to do this.

2:00:10If not for you guys, shout out to Gavin. He helped sit behind, listen to this entire podcast episode. So if there is crackling with the mics, it's not our fault. It's his.

2:00:19Graham Stephan:Also, big thank you to the members who subscribe to our membership and Mikey, who's editing this episode. So just comment. Thanks, Mikey. If you made it to this point, he'll really appreciate it. Thanks, guys. Till next time. See ya.

2:00:35Thank you.

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