How Anyone Can Make Their First Million, James Altucher on My First Exit

28:51So I'm just going to hide those alerts, But okay, so long since, you know, long time, I wanted on this thread, and this is my last question on this note, I wanted to be a speaker. What held me back in the early days was I thought that that pursuit was, for me, a little empty, not for anybody else, for me. Because I was like, oh, to be a speaker. And then I would go and I would actually try. I like spoke at like a few classrooms and stuff. I would like call my friend. What did you speak about? Oh, I spoke about, that was the issue. That was actually the issue. I was like, I just feel like I'm just spewing stuff because I said, I want to be a speaker.

29:22speaker. The thing is, I realized through doing that, I said, this is the wrong goal. The goal is to have something to say and to care enough to want to share it and craft something around that. And so I was like, oh, I guess I don't have much to say right now at this point in my life. I've seen people like Tony Robbins and stuff. I said, oh, I want to be them. I don't have anything meaningful to say. So it all feels empty coming out. And guess what? People don't like that. They can sense it. So what has been your muse over the course of your life as an artist, as far as your writing and as far as you're speaking?

29:52Has it always just been, oh, this is what's interesting to me. And so I'll share it. And like, did you just, is it, I can overthink things sometimes. And so is it overthinking it to say, is it just as simple as saying, I'm interested in this. I'm actually going to do research. Most people, frankly, they actually just don't research stuff. And so if I just research it a bit slash a little bit more than everybody else, I'll kind of be an expert and then I can speak on it. I'm almost 30 now and I actually have real things to say, which is going to sound dumb maybe in a few years when I think I have different real things to say.

30:21Yeah, it's always going to change. Yeah, but my question for you is like, what's your muse and how do you view that medium? Because I hated the feeling of doing things like from an empty place and doing it for like a false goal. So I would love to know how you conceive that because I think you're a great thinker. Yeah. And I think, look, it's like I said about writing. At first, it was really bad because I feel like I had nothing to say and I didn't have the skill. I didn't know how to say it and I didn't know what to say. And so it was just like derivative and it was just bad writing and bad writing comes across as like maybe arrogance.

30:56But like with speaking, it's really important. Like, who are you? And, you know, why do you do the things you do? And why now? Like, how did you survive till now? Why now you want to speak? You know, these are really important questions. And And then that's, again, the content, the material. But then there's the skill of speaking, which also is very difficult. Like to be a great speaker. Some people are great speakers. Like Tony Robbins is a great speaker. Some people, not as great speakers. So for instance, I love Peter Diamandis. I've never really saw him speak. But he's been on my podcast maybe like five or six times.

31:36And he's really fascinated by what's in the future. And not like 100 years in the future, but like what is futuristic happening right now? And so even that content is so interesting that even if he wasn't a great speaker, and my guess is he's not as good as Tony Robbins, but he's probably decent. And, you know, he would still be able to hold people's attention just by, oh, here's, by the way, this chip you could put in your brain so you could see things around on the other side of the world or whatever. Here's a flying car that I was in yesterday. you know so he's he's got like his content could overcome you know any again i've never seen him speak so i'm just using as an example but uh if he didn't have all the skills of speaking he can have he still has great content so there's this you know give and take there a little bit but you know for this is why i got interested in stand-up comedy is that think about it no one is a better public speaker than a really good stand-up comedian yeah because they have to basically make a bunch of drunk Swedish people laugh in the middle of the night on demand.

32:47Like, and they have to make them laugh every 15 seconds roughly. So that's really hard. Like most public speakers cannot do that. And yet comedians, they know how to move their body. They know how to make voices. They know how to like, you know, raise their eyebrows or move around the stage. And, and they're, they're good at telling, you know, they know how to write jokes and write good material. So like when I have to give a talk, I always watch, sometimes for days beforehand, I'll watch standup comedy just to kind of get that in my brain. Like I program my brain. It's like a short-term shot, you know?

33:23And then I did it for many years. So I got that doubly so. It's like doing standup comedy probably was, what do they say? It's like a cheat code. Like it's like it 10X my standup, I mean my public speaking ability like I was doing public speaking for a long time but now it's like no a no-brainer so so I would definitely recommend like studying comedy to be a public speaker but in terms of like what you want to speak about again like what do you want to speak about you can even speak oh everything I've learned from from you know 100 episodes of my podcast and then and then in terms of like what the muse is this is where where you find the muse.

34:04Like what really is like, like what, what, what do you read that fascinates you? So like, I remember one time I read a book about day traders. This is like in 1990 or 2000. I read a book about day traders. And then suddenly I was like fascinated. Like, I want to be like that. And then I became obsessed. Like all I wanted to do was read about finance and day trading. And then I became a day trader. And then I started a hedge fund, like because it was just like i was obsessed and the same thing with with with writing like i was just obsessed or stand-up i was obsessed chess right now i'm obsessed so like what you know that's the thing you want to and so okay no one wants to hear me give a talk about chess so okay i'll i'll broaden it out a little bit mastery and peak performance how do you get good at something um you know or or you know i'm not going to give a talk about writing but maybe i'll give a talk about communicating or maybe I'm not going to give a talk about finance, but I'll give a talk about maybe the psychology of being an investor and the psychology of money.

35:08And, you know, cause that's something I'm more interested in now. And, you know, so you just have to figure out like what part of the bookstore could you go to where you'll just read every book in that section of the bookstore. Follow your curiosity and just people that are interesting are people that are interested and just being interested in sharing that I think is amazing from what you're saying.

35:43you also said something that that segues into are something i really and nick and i are really curious on you've mentioned talking around mastery i feel like something that you have done very well in your life is you're fucking good at so many things that you would do like you're like i want to go do this and you become a master at that and you become a master at this. And there's this notion of the one thing, like pick one thing and commit your life to that and only do that. But I feel like you're contrarian in a way where you don't do that and you follow your curiosities, just as you mentioned, and you do so well in all of it.

36:13How do you do so well in the things that you want to do? And this is again, this is one of these things, there's really no answer because I often regret like not just doing one thing. Oh, wow. Like for instance, what I stopped playing chess for 25 years. What if I had kept playing it or I stopped? I, because I didn't really enjoy running a hedge fund, I stopped doing that in order to write. And what if I had kept, what if I had moved when all my tech friends moved from New York city to Silicon Valley? What if I moved with them. They were all became investors in Uber and are billionaires. So, so like, I just didn't really, on the one side, I got good at a lot of different things.

36:59Like I did comedy for six years, but to get really good at it, you have to do it for 20 years. And so I never really got in the top, you know, of the world at something. Maybe the closest, I'd probably put the most hours into It's just sheer writing. But then again, you look at like the tennis world. Okay, the top 10 make a great living. Okay, maybe the top 20. But if you're at number 150, now let's say 100 million people around the world play tennis. If you're even number 150 out of 150 million, you're broke and you're depressed, right? Because it's like, why can't you be in the top 10? and and i see this in the chess world like number one in the world is great like who is that but what's his magnus carlson yeah magnus carlson okay amazing amazing player the best player in history uh very you know and he makes a great living is the best chess like a billion people play chess and he plays and he's number one of those billion that's so nuts and i've spoken to various people who have been number two in the world and they're just not that happy about it because they can't be number one.

38:16He's like so far ahead of everybody. Now he's getting a little older. We'll see if he keeps the throne, but no matter what, he's the number one in all history. So sometimes I think, okay, and this is where the niching down comes in. Sometimes you could be the best at an intersection of things. So maybe I might be the best at the intersection of, I don't know, finance and writing. Okay. So now I can, I don't have to be the best finance guy, but I'm the best at the intersection of finance and writing. I might be in the top 1 % of that intersection. And which is Like being in the top 1 % of something is different than being in the top 10 in the world of something.

39:03Maybe, again, 100 million people might be finance professionals who write, and then I have to be in the top million to be in the top 1 % of that. I'm probably closer to top 0.001 % of that intersection. But other things, like I'm not necessarily a great comedian. I did it for six years, but that doesn't put me in the category of like the best. but I'm also a public speaker in the business world. So at the intersection of comedy and business, I'm definitely among the best. Oh, you're crushing that for sure. There's not a lot of people in business that are funny. Yeah. So, you know, you could find your intersections too.

39:40This is sort of another way of saying niching down, I guess, but you find like that intersection of things where you're among the best in the world and uniquely you're among the best in the world. Cause maybe that intersection is not so big, but it could be an area that a lot of people are interested in. So, so again, that's sort of the, the, the niching down, but, you know, I think figure out all the different intersections where you live and that's what you, that's what you're the best at and you feel good doing it and you become an expert. Okay. I'm going to ask you dead on one thing. Is it a myth?

40:14Agree or disagree? Like choose one thing and pursue for your life? Because I think that the question that really stands, James is, what's the objective? What are you doing this for? What's the outcome? What's the result that you want? If the result is mastery, sure. I think you have a point in saying, Hey, maybe sticking with one thing is probably the right thing. If it's generally fulfillment in life, I don't know if one thing is the answer to that. I don't know. Maybe for some people it is. If it's money, maybe, but what's your take? Like, is one thing a myth? Because while you say choosing one thing might've benefited you, you might've been a chess grandmaster, maybe number one in the world or whatever, you're also really successful.

40:47Like you haven't done bad for sure. Yeah. And, and because I haven't done just one thing and I have this intersection of lots of things that I've, I've, you know, again, I've, it's contributed to my success, let's say financial success, because people don't want to do business with a guy with yet another hedge fund manager, or yet another guy who, you know, has just been starting businesses. Oh, he's a chess master or he did stand-up comedy or, you know, he did all these other – he wrote all these books. Like so if you kind of make the one thing kind of the intersection of all the things you're fascinated by, that also is another way of doing the one thing.

41:33But you're just sort of – you're defining the intersection as that's your one thing. and so yes I'm glad ultimately I didn't spend my whole life playing chess because most of those people who did are very unhappy people like they they're 50 years old they're too old now to really play at the highest level and they got to figure it out like what they're going to do and same thing with you know sports you see a lot of if a sport doesn't make you a millionaire like some guy who's ranked 200th in the world in tennis he's just going to be the pro at a tennis club ultimately you know, when he's older and that's, that's what he's got to do.

42:10And, uh, you know, so you have, I think doing just one thing in academia, it sometimes works like, Oh, I'm going to just do mathematics and for my whole life. And then you get to be a tenured professor and you get to mentor a lot of students and they thank you in their PhD VCs. And you get known as a, someone who really created a lot of other great mathematicians, um, cause you passed on your skill. But, uh, I think, I think it's very rare to just do one thing and most people aren't interested in the same thing for yeah 50 years yeah it's like I don't think I was I mean I was interested in writing then I was interested in computer like programming computers like I was a computer programmer for a really long time I was interested in investing and day trading and running a hedge fund and venture capital I was interested in comedy and uh chess and again writing and so you know I don't know what I would if I had to do one thing, I think I would have been miserable.

43:07In fact, you couldn't keep me for doing one thing. Like I was in graduate school for computer science, like, and I was at one of the top schools in the world for it. And I just lost interest. I only wanted to write. And eventually they had to throw me out. And the Dean who wrote the letter throwing me out, like two years after I was thrown out, I ran into him in a cafe and I was studying, and this is in my 20s, I was studying a chess book. And he said, hey, I'm interested in learning chess. Can I have lessons from you? And I still, the dean who threw me out of grad school, I still get, I just saw him this past weekend.

43:43You know, I'm reading a book right now called Range, Why Generalists Thrive in a Specialized World. Oh yeah, David Epstein. Yeah. Have you read it? Yeah, it's very good. And he talks about that. So he was a geologist who also was interested in sports. So if you take the intersection of that, he is the only writer at Sports Illustrated who kind of has a scientific take on his writing. Wow, yeah. Like he won in that intersection. He's the leader in that intersection. That's amazing that you've read it. Yeah, everything you're saying right now is triggering what I'm learning from that book. I was literally reading it right before our call.

44:23And then I want to pass it off to Nick because I know he has a burning question. Okay. So I'm going to bolster us into the third and kind of like final sect here. I wanted to talk with you about money. And so I remember listening to it. I tried to find it earlier because I was writing a post about you saying, hey, we're going to talk to James today. And I had a really hard time finding it. During COVID or maybe after you wrote, you made a podcast that I never forgot. And I've cited it again and again. And you were like, there's three skills to money. There is the skill of saving money. There's a skill of earning money.

44:54then there's a skill or growing money. Just because you have one skill does not mean that you have any of the other three. You have to work on them independently. Right. Making it, keeping it, growing it. Yeah, yeah. That's exactly it. And so, okay. I have one question, which is right now, because you have been, for people who don't know James, he's a serial entrepreneur. You've exited many companies. Also, you've been public about this. A lot of the companies you started didn't work, but that led you to what really worked. And you're still an entrepreneur to this day. It's in your blood. It's kind of woven into you.

45:21How are you, what do you have going on right now? Because I couldn't really find anything right now business-wise. Are you doing a business or is it mainly the brand that you do kind of ad deals with? Is that what you're doing right now on a money stand? I'm curious to know how you treat this right now, where you're at at this stage in your life. And then I have some deeper questions about how do you save it? And then how do you earn it? How do you grow it? Type of thing. Yeah. So these are all really great questions. Are you okay with me asking that, by the way? You don't have to answer. Oh, yeah.

45:49I have no problem with anything. Making it was what I was always good at. And keeping it and growing it were sometimes problems for me. Because I would take really elaborate risks and try to make more, not realizing that the risk was too great. And so I would not be able to keep it. It's a big danger with money to think that you're smart about money. Nobody is smart about money. It's very, very difficult. And so you have to like really like respect the money. Like think about for every dollar, like how many hours of not just work, but building up the skills it took to earn that dollar. Like you have to really respect it and not risk it inappropriately.

46:35But in order to make more money, you have to risk, take some risks. You have to really have a big understanding of what are the risks involved. involved. So, um, the, you know, so right now, and, and by the way, whenever I started a business where about a topic, I didn't know anything about it always failed. But when I started businesses about topics that I knew a lot about, they succeeded. Oh, wow. And, and so this guides my investing. So for instance, I'll give an example. One time I was, uh, a friend of mine had a business and he was raising some money and, uh, you know, and I, I liked the industry, but I didn't know whether he would succeed or fail.

47:13Who knows? But he said, and Peter Thiel is also investing in this round. And he also mentioned Mark Pincus, who's another big investor. But he said, Peter Thiel, and I'm like, okay, I'm in. Because I know Peter Thiel is smarter than me at investing. And Peter Thiel's had a lot more success than me. He was the first investor in Facebook, for instance. And he's co-founder of Palantir and ran a very successful hedge fund. So when I heard Peter Thiel was going in. I said, I'm in. So my whole style of investing is to know that I am not the smartest person. So I need smarter people than me to be in an investment in order for me to go in.

47:51And I diversify not by sector, but by the people I follow into deals. So if somebody's in, if, Like, you know, another deal I'm in is also a tech deal. Like it's a chip company. And the number two guy from Applied Materials, which is a big chip company, he quit Applied Materials and joined this company. So I'm like, okay, this guy's smarter than me. And he gave up his whole career where he was like the number two guy making tens of millions of dollars a year to join this startup. So, okay, he's banking the finale of his career on this startup. So, okay, I'm in. I don't really have to do due diligence behind that.

48:32Like, oh, I don't know. There's lots of other examples. But so in terms of like what I do now, I mean, yes, I write and I have a podcast and they're doing very well. But that doesn't really – writing, by the way, unless you're like JK Rowling doesn't really make money. You have to have other reasons to write if you're going to do it professionally. Yeah. Or you have to kind of get a reputation. So people invite you to do things and be a part of things and so on. So I do several things. One is I always invest. I always invest in private deals. The most money I've ever made is by investing in other entrepreneurs.

49:11Well, using this approach of I'm not very smart. So keep the investment small and invest with someone smarter than me. And that is a strategy that works over time. Sometimes it takes a long time, but that works. And like seeds you plant 10 years ago will suddenly bloom and you'll make millions of dollars that you just be like a surprise. And and then also I did start a financial because I was very good at I mean, I spent many years running a hedge fund and also writing about stocks. I started a – and I've written books about investing and so on. I started a financial research service like in 2015 called Choose Yourself Media.

49:52I sold it around 2017, but I'm still like the face of it and I still come up with the ideas. And I have a lot of really great analysts who also write for this service, like really great people. And so that turned into – I'm no longer the owner of it, but I have a profit share. That turned into – I mean it will do well over$100 million in revenues this year. Wait, what does that do? Wait, hold on, hold on. What does – I thought when I read Choose Yourself Media, I thought that that was – because I was researching. I thought that was like just the media umbrella that you just kind of did all like the podcast and the newsletter and your writing underneath.

50:33I didn't realize it was financial servicing. um well it could mean different things like depending on when when i was describing something as choose yourself media but and now it's not called choose yourself media now it's part of a bigger entity um but but but like my particular franchise is still my franchise because they have to profit share me on my stuff yeah and and again i still help with the stock picks and but again there's very very many really talented good people working there and um what do they do like what do So for instance, we have a product – like I'm a big fan of crypto. So we have a product that analyzes smaller cryptos, which ones are going to succeed, which ones are going to fail, which ones are just shit coins and which ones are like here to stay because they're actually being used and they have a function that society needs.

51:20And then we – people subscribe to see what our recommendations are so they could maybe invest in them. And we've had very good picks. For instance, we have crypto. We have microcaps. We have AI. we have an options trading service and so people subscribe and and you know and and they're doing very well or else they wouldn't keep subscribing and you know the business is is you know again surviving and hiring more people and soon you're like i know omid he sent this and so i'll give him the credit he said humble like neil patel because we had on neil patel i don't know if you know neil yeah and he was so humble in the sense where he was like he was like he would be really open about like money and stuff, which I really appreciate because I never asked to pry because I'm not interested in probing.

52:03No one really has like a good like foundation for, okay, what's a good amount of money? What's enough? And so I like to ask for me because I'm like, you know, the endless pursuit of earning is kind of useless. But yeah, I wanted to, oh no, it sounds like you're mincing thoughts there. I don't want to, go ahead, go ahead. No, no, but that's interesting. Like I would, like I never set out to make a billion dollars. Like if I really was interested in making a billion, I wouldn't have spent five or six years doing nothing but writing the articles that became Choose Yourself, for instance, the book Choose Yourself.

52:39Or I wouldn't do – I certainly wouldn't do a podcast if I was hungry to make a billion dollars because as you guys know, a podcast is not making a billion dollars. you know uh and and uh or i wouldn't have tried stand-up comedy like when i when i was doing stand-up comedy it was like you know i was performing every night i was performing six nights a week sometimes two times a night when i was traveling around and i wasn't you don't make any money i even bought a comedy club just so and unfairly to guarantee that i'm going to get on stage whenever i want it's a flex because it's hard in new york city it's hard to get on stage There's only so many – there's 5 ,000 comedians in New York City and there's only so many stages.

53:18So I had to buy my comedy club to make sure I get on stage. You still own it? No, no. During the pandemic, I left New York City and sold my part of the comedy club. Are you back in New York now? No, no. Although I visit there a lot. My kids are there. Where do you live now? I'm in Atlanta, Georgia. Oh, nice. Oh, let's go. Hence my southern accent. Yeah, yeah, yeah. I can tell, man. And so you and Jay are in the same area of the world. Yeah, yeah. And so basically, I passively try to make a lot of money by doing this investing. Like, oh, here's a good deal. I'll invest. And hopefully, five years from now, I get a return on it.

54:02And so I sort of think – I always go back and forth on what's the right number and what would I be satisfied with. And the number changes because you get married, you have kids, you get a house, all this sort of thing. I think the right number is probably – and initially, when I sold my first business, I made$15 million. And that was – at that time in the year 1998, that was definitely higher than my number. And then I lost all of it. Like I went down to$143 in my bank account. Whoa. And then I made it again and lost it again. And then I made it again. And now I'm trying to keep it and grow it.

54:49And it's difficult. It's a difficult thing. But I think the number is probably – the quote unquote number is between 20 and 30 million. Oh my god. That's what Felix Dennis says in How to Get Rich, the founder of Maxim Magazine in his book. Yeah. Yeah. Is that 20, 30 million like in the bank cash or like what is that? Or is that – Yeah, kind of in the bank cash. Or, you know, stocks and liquid investments. And the reason I say 20 million is because what can you really rely on as a decent return on your money? The index? The index probably? Well, no, because are you really going to put all your money in the stock market index?

55:30Like that would be kind of a crazy thing to do because sometimes the stock market goes down 50%. So let's say you have 20 million. Are you going to put it all in the stock market index? And then when it goes down 50%, it's not like you'll say, oh, it always goes back. When the market goes down 50%, people are – there's blood in the streets. Like people are jumping off buildings. So you're not – you're going to be scared. So that's really – like if you have$20 million, why would you put yourself in a situation where you're going to be terrified? So in order to diversify properly and let's say you're not a professional investor.

56:01So you're not really doing private deals and all this kind of stuff. You're probably only going to make like 2 % or 3%. And, you know, so 20 million gets you, you know, like 400 ,000 a year, 500 ,000 a year, maybe. And let's say that's after taxes. So, okay, that's a decent amount for if you have the big house, if you're taking big vacations, and you're flying first class everywhere or occasionally flying private, and you're able to splurge on all of your interests. So, for instance, I was able, you know, I'm interested in comedy. I'm going to buy part of a comedy club. Okay, so that's a horrible investment, but sometimes you splurge.

56:42And it turns out I got lucky. I made back everything. I didn't make any money on it, but I didn't lose any money either, which is very rare for a comedy club. And but I think 20 is about the right number. Can you survive and live the rest of your life on 10? Of course. Can you survive and live the rest of your life on five? Of course. but 20 is where you never have to think about it. Yeah, I love that. No, no, 100 is, okay, I really want my own private jet. I really want a million-dollar car, blah, blah, blah. Dude, it's a different game.

57:33I met this billionaire once and he's one of the best people I know value-wise. And he's in private equity. That's what he does. He's a PE guy. And so he takes companies public. But it's all for really important things. My accountant's calling me. Ignore. But that being said, James, I have a burning question. Omid and I are going back and forth. He's like, can I go? I was like, oh, dude, I have one. And then you could go. So, okay, this is all final. Well, I'm still trying to make my first million. That's kind of like the path that I'm on. And so, okay, earning money 101. How would you advise me and Omid to make our first million?

58:14And I have a company and if you want context, I can give you context. But I think maybe even more like general stuff would be the idea that we're looking for. So, anybody listening could get your take on that. Maybe it's even a bad goal to make a million dollars. If you feel like I'm curious to know what you think. Yeah. I mean, I've kind of always stumbled into the businesses that I've started. That's a great stumble. Like think about every business. Every business in the world has three components. There's something that there's an excess supply of on one side. There's people who want the excess supply.

58:56And then there's the platform in the middle that mediates between the people who want the supply and people who have the supply. So Uber, there's an excess supply of empty car seats. There's a bunch of people who on occasion need to be sitting in an empty car seat. And Uber, the business, is the platform that mediates between the two things. Airbnb is like that. Oh, I'm going away. My home can be Airbnb'd. I have an empty house. Oh, it turns out there's a bunch of people who want an empty house, but I'm not going to call them. I'll just list it on Airbnb. And they handle the transactions. They handle the discovery, like someone can discover my house on Airbnb.

59:35And they handle the payments and customer satisfaction and all that stuff. So even – and every business can be thought of that way though. Like even a financial research service like I have, I had an excess amount of knowledge and people with knowledge about stocks and investing. and then there's a lot of people who want to make money who have demand for that and then a financial research service is a platform in the middle and so think about a business in terms of that like is there what can you control that there's an excess supply of and or what do you have like it could even be knowledge and information what what knowledge do you have that you know you have an excess supply or you think people want an excess supply of and test out that need.

1:00:20And then the people on the other side who want that supply. Or another way is also really being obsessed about money. So for instance, I actually really do like the process of thinking about structures that make money. So for instance, right now, baby boomers are old. So they're retiring. So a lot of baby boomers own mom and pop kind of businesses. Do you know 80 % of businesses out there just get shut down? They don't get sold. They don't go public. If you run a laundromat and you're 80 years old now and your kids are not interested in running the laundromat, you're just going to shut it down.

1:01:02So one business model, if somebody just wants to make a million dollars, here's what I always suggest. Find a boring business that you could buy for free. And so what I mean by that? I can go to the laundromat where the guy was just going to shut. 80 % of laundromats just get shut down. I'm using laundromats as an example, but there's also car washes, plant stores, medical practices. It's just a boring business like a welding company, whatever. So you go to the laundromat and you say, hey, I'd like to buy your laundromat and say, look. they'll say, okay, well, we want half a million dollars. And then you say, well, okay, how about I give you 20 ,000, but I'll pay you$700 ,000, but I'll just pay you over four years.

1:01:56Cause you know, you've already researched like the income and how much they make. And then you have ideas about how you could grow it to make a little more money. They're 80 years old. They're not growing their business anymore. They're younger and you could grow the business. And then you buy two laundromats, three laundromats because what happens is you buy a bunch of laundromats and you get synergies between them like, oh, suddenly washing machines are cheaper because you're buying them in bulk and detergents cheaper because you're buying it in bulk. And then also the market likes size. So the original laundromat you buy for, let's say they earned 200 ,000 a year, maybe you would pay 400 ,000, two times earnings.

1:02:35But as something gets bigger, let's say now you buy five of those laundromats, so now you're making a million, you could sell it not for two times earnings, but five times earnings. Because as something gets bigger, the earnings multiple goes up. So just buying a budget company, even if you don't improve them at all, you naturally will make, so let's say you just bought five of those laundromats that were making$200 ,000 a year. So now you're making a million a year and you bought them all for two times earnings. So you're earning a million a year, but you spent 2 million. But now because of the size is bigger, now people are willing to pay people who are bigger than you or more aggressive about wanting to buy big laundromat companies, they'll pay five times earnings.

1:03:18So you just bought everything for 2 million, but now you can immediately sell it for 5 million. That happens all day long, all around the country. And people are making millions every day doing this. Wow. And ladies and gentlemen, bookmark this piece of the podcast. Wow. So that's like if I was just raw, I'm going to make a million dollars. I don't care about being Gary Vaynerchuk or anything like that. I'm just going to make money. That's what I would do. Hell yeah. Hell yeah. And then also I've seen the newsletter business is a great business. Oh, I looked into that one. Yeah. I wrote a newsletter about stocks and it has zero – to put out a newsletter has zero cost and people will pay money for newsletters.

1:04:02There's a saying in the newsletter industry, and it's the information product industry, get paid, get laid, lose weight. So if you have knowledge about getting paid, which is finance and investing, or getting laid, which is that whole dating industry, or losing weight, you could probably make money selling a newsletter. So a friend of mine – and you have to have knowledge about copywriting, which is the direct marketing techniques. And so a friend of mine, this was 10 years ago, he started a newsletter. It was called The Jesus Diet. And basically like what would Jesus eat? And that's all he did.

1:04:37And he would quote the Bible and he would have like diet tips every month. And there was a whole course and everything. And he made like half a million dollars on it in like a month. And then moved to Medellin in Colombia and lives there still. Wow. That's fucking awesome. So, man. Wow. Wow. It's so – man, I love talking to you. You're one of my favorite authors and also thinkers. Thank you. So one of the things that I want to kind of touch back on here. So I've been running into this lesson a lot, which is like just acquire a company that's already working. And for me, I've thought about potentially – Nick and I have talked about this as well.

1:05:12I've thought about like buying maybe a laundromat or something physical. I have a friend of mine out of Oregon and he just bought like two car washes and he just plays like Monopoly and just buys all this shit. Oh my God. Car washes are the best business because it's just particularly like in a city where there's cabs, it's just all day long. They're going, you know, the cabs or the Uber cars are just going through the car wash and you're just, you just make a lot of money on every car. Like there's no, the cost is water. Like that's your cost. What's your take on owning something physically versus like, like the sexy digital product businesses?

1:05:45Like for example, info products, selling courses or service product or something. Just because I'm trying to think of like lifestyle, for example. So when I talk to my friend, he's very, he's very successful worth multiple millions of dollars, but he's so tied to his businesses and his location that he's like, sometimes he'll have to go to the car wash and fix some shit. And he's there for like multiple hours a day versus, you know, he doesn't have the flexibility to just be like, I'm going to go to Medellin, for example. So what's your take on like acquiring maybe a digital business or like e-commerce versus boring old businesses?

1:06:12it depends like you just have to do a lot of research like so so i'm trying to find um there's two sites is it like flip flip.com i think yeah the sites yeah micro acquire the next one microcar is sass specifically oh is it like yeah like here's here's one um i'm on flipper right now yeah now these are like a lot of sass businesses but um let me see if there's a good and there's also empirebuilders.com. I actually sold my, I had a book publishing business on Amazon and I sold that for a hundred K on empire flippers two years ago. Yeah. Empire, it's called empire flippers. Yeah. And so that's where you can, sometimes they don't always have the best deals, but, uh, that's where you can find like kind of e-commerce businesses.

1:07:00And you can look at all their financials like, Oh, this one has a monthly net profit of$21 ,000. That means it makes$252 ,000 a year. And the price is$1.2 million almost. This is the first listing I'm seeing on Empire Flippers right now. And that's – okay, so that's kind of five and a half times earnings. That's a little too expensive. So you kind of shop around for a good deal. Then you do due diligence and make sure it's all real and that the earnings are going to continue even if the founder is not there. So that's a good way to buy like a digital business. Would you recommend digital or physical?

1:07:37Well, I think both could be good. You just have to make sure the earnings are very real and it's only valuable depending on what you pay for it. So if something makes a consistent$20 ,000 a year and you have some ideas to grow but you don't know for sure if you could grow it, then you want to pay a low multiple earnings. You want to pay two or three times earnings. And then there are people though who again like they have funds set up that all they do is buy these businesses off of Empire Flippers all day long and then they combine them together and then they sell a big e-commerce company that makes$100 million a year.

1:08:15They sell it for again 10 times earnings instead of two times earnings. Wow. So the only thing is it's harder to do due diligence on something that's just an information product or an e-commerce business. But if you look at all the financials and you make sure the financials are audited. But the problem with the physical business is what if there's another pandemic? Like a lot of physical businesses got hurt. Like car washes, you had to get bailed out. Like fortunately there was a bailout or your friend's car washes all were going to go out of business. So, but I don't think there's going to be another shutdown like that.

1:08:51I think the good thing is the more boring the business, the lower, the cheaper it is you can buy it. And the more likely it is you can get seller financing. So if you had to say simply like in a list, what's your criteria for an acquisition? Like if you could simply put it and keep in mind that Omid and I are rookies, we're beginners. Yeah. I would say the earnings have, so there's, let's say, let's divide it into two categories. One is a business you could buy. and the other is a business you could start. Okay. Perfect. Oh, I love that. So like let's say, oh, I'm going to start a Twitter for left-handed people because there's 50 million left-handed people in the US, so there must be a big market.

1:09:32So the problem with a startup and the reason why there's a saying 90 % of startups fail is because you don't actually know if there's going to be demand until after you start the business. Yeah. Like all your friends could say to you, oh, my God, God, I'm left-handed. I would totally use that site if you made it. And then you go out and you raise money. Like, oh, everybody says they would use this site. And so all the VCs give you a check and you start this business. And then it turns out nobody, you send out a mass email to all the left-handed people. Nobody uses your site. The best example of this is Quibi.

1:10:02Do you remember Quibi, the vertical streaming platform? They tried to be Netflix. Yeah, yeah. All of this stuff on vertical. I think they raised 100 million or something insane. Jeffrey Kassenberg. Yeah, and it looked like it was going to, and they had Christopher Nolan and like, Like, you know, limited series, like real A-list actors and no one sweeps you because we don't want to watch two hours on vertical. It's annoying. So, for instance, if you – I like to think of it as inheriting demand. So, for instance, I used to write for the Wall Street Journal. I used to write for Yahoo Finance. I know there's demand out there for people who want good information about stocks.

1:10:38And I know some people charge for it and some people don't. So I knew there was already demand and I already had a big audience from social media. So I was able to inherit the demand of an industry I knew there was a lot of demand in. And I felt I was unique because I had sort of a unique social media group as opposed to many people in investing. So I was able to start that company. Or when I made websites for a living and my first company was making websites for like American Express and Warner Brothers and all the record labels I made websites for. Yeah, yeah. And I knew there was a demand because people would literally – I wouldn't hire people unless somebody hired me.

1:11:22So with AmericanExpress.com, it was just me doing the site and finally it was just too busy and so I hired somebody. and with a service business, so there's service businesses and product business. With a service business, like, oh, I'm going to make a website for somebody. You don't have to hire people until there's demand. So that's one way to test demand. Now, what I could have done, which I didn't do because I didn't know anything about business, is that I could have converted it into a product company. I could have said, oh, I'm making the software that's making the websites, but I didn't really understand that product businesses are valued for like a thousand times earnings versus service companies are valued for like six times earnings.

1:12:04So that's a big difference. Um, so I had to be like profitable as opposed to product companies don't always have to be profitable. And, uh, uh, you know, cause they, cause everyone is betting on the scaling with product companies, but, but that was, you know, that I, a service business, you know, there's demand because someone, you don't hire anybody until someone hires you. So, uh, and if nobody hires you, you just do something else for a living. So, you know, so that's how you find out demand. And there's, there's, there's also, I don't know if you've done this, James, I I've, you know, launched products before where you just run Facebook ads to a landing page.

1:12:40And then, you know, at checkout, you just refund everybody their money or you just block the payment. And like, you know, you have criteria going into it and you know, you spend maybe a thousand,$2 ,000 on some ads and some creative and you're just like, whatever. Like, uh, yeah. Like, Oh, take my course on, on, you know, picking up women or men or whatever. And, and, and, but then you also have another one here, take my course on math or here's another one. Take my course on, uh, you know, poker, how to, how to play the best poker. And then you see where people click and, and like, like you said, you shut down, that's a good way to test a man.

1:13:14And then you shut down the other services is that there is no demand for. I did that with the title of Choose Yourself. I had like five different titles I was choosing between and I put Facebook ads up for each title and Choose Yourself got like 80%. What were some of the contenders out of curiosity? The Choose Yourself era, E-R-A. Yeah. But that was my initial title, but I felt like I kept saying error and I didn't, And then Tucker Max, a friend of mine, said, test out Pick Yourself. Ryan Holiday suggested some title. There was a couple other people suggested a title. And I tested all of them and choose yourself, work the best.

1:13:52Okay. So I just got a note from Omid. This is the beauty of hustling. He has to jump because he has a call to get to. Okay. Which sucks because I know he doesn't want to go. But... Thank you guys for having me on the podcast. I'm happy to come on anytime. time man this was awesome well uh james this was an absolute pleasure where can people find you uh they can find me on your podcast hell yeah i love your most popular episode ever people should just listen to this podcast episode they should share it with all their friends damn and don't go to any of my stuff just share this particular episode that's not gonna happen i'm gonna link to everything james below but james i i meant to what i said at the beginning dude you're literally one of my favorite people.

1:14:35I always tell Jam, like, dude, James is the, you know, best known act that like not enough people know about because I just get so much value from everything. Chopping it up with you today was frigging awesome, man. So I hope you had fun and thank you for this. Yeah. Thank you guys. Thanks for inviting me on and for thanking me for this and, and, uh, look forward to the next time.

1:15:04You