Wealthy People Are Hiding in Plain Sight (ft. Owen Zidar) | #428

22:08I do think capital matters in many cases, but it's surprisingly less important in the context we've studied than knowing how the business works.

22:16Ben Felix:Yeah, that's very interesting. What factors explain which places foster upward mobility. Yeah, no, so that's, I think, something we'd like to research a bit more. We have established some descriptive facts. So if you go across the country, there are places like Salt Lake City, where you're three times likelier to start a business if you grew up there than in other parts the South. Right now, we don't have a clear answer to that other than some speculation. So one thing that people say, if you go to Salt Lake City, is that, oh, you know, there's a substantial Mormon population in Salt Lake City.

22:51And one of the things that's often a part of people's experience when they grow up in the Mormon community is proselytizing. And so you have to go knock on doors, learn to deal with the persistence and grit of hearing no and saying at it. And I feel like that's something that contributes to successful entrepreneurship later on. Now, I don't know if that's really the thing, but that is one possible explanation seems somewhat plausible to me. Can you keep going on that and talk more about what explains the gaps in business creation across different population groups? There's all these different hypotheses for what might matter.

23:27It could be like access to capital. It could be how rich your parents were. It could be, do you have mentors? Can you learn from people on how things work? You can look at gaps across different groups. So for example, if you think it's all about money, then one puzzling thing that emerges from the data is the gap across men and women for a founding because if it's all about like having rich parents, men and women aren't systematically to poorer parents or richer parents, yet men are much more likely to start businesses than women in the data. It's also not about college attendance because recently women are way more likely to be college graduates than men.

24:06I mean, often like admissions committees have to fight if they want to make it 50-50 to kind of let in some more marginal men in terms of test scores relative to women because women tend to be better students. there are some puzzles and then a few things jump out one is the kids of business owners are way more likely to be business owners themselves you could drop all the ones that have a family firm so it's not about staying in the family firm and the reason why you're gonna be a business owner is because you are just running what your parents gave you it's something more about exposure to this entrepreneurial human capital that i think is an important part of what's going on and so some of the places.

24:43I also think they have more opportunity, like flatter organizations where you can really see, hey, you know, I could do this myself, or this is something that I could do. That is where we are in terms of our current understanding of what's going on to explain those gaps.

24:57Ben Felix:It makes sense when you think about it. If a kid grows up in that environment and sees their parent, whatever, doing entrepreneurial stuff and taking risks, that they would be more likely and willing to do that and kind of know what steps to take. What do you think entrepreneurs need to be successful? lots of things have to go right so some of it is luck and some of it is some grit it's amazing for a lot of these stories there are a lot of times when it wasn't going to work the queen of quiche that i talked about so her name's nancy muller she initially made quiche for christmas parties she froze them and that's what she did and then she wanted to scale it up a little bit and eventually it was getting to such a scale that she was fusing washing machines to dry spinach, which is kind of gross.

25:41When you talk to her, her dad said something like, with each box of quiche you're sending to the store, you're like shipping dollars because she was making losses. She needed to have real scale to make enough. And there were decades when it wasn't really looking great. And then eventually she got a big store, kind of like Costco, or I think it was Price Chopper was the name of it at the time, or like a Walmart that put in a big order. And then she finally got enough scale to really make it, but it was a long time. And so some of it is stick-to-itiveness and really having a vision and having to pan out and also knowing when to exit.

26:13So she was pretty nervous that if you just have this concentrated customer base, they could leave. So she sold the business too, mostly worried about losing that big contract. How has the share of national income accruing to labor in the U.S. changed over time? It's a striking thing to look at the labor show. I think it's really cratered nationally. And then if you focus by several points, but if you focus on pass-through owners, so these private business owners, so I guess I'll give you some broader macro facts, if I can remember them off the top of my head, then I'll talk about the labor share within pass-through.

26:51between 1990 and 2020, about 60 % of the growth in value added, which is profits plus wages of the business sector. So that's like traditional corporations, these private businesses, 60 % of that has been in these private pass-through firms. And by pass-through, I mean firms that don't face the traditional corporate tax, but instead the profits and losses of the business flow through to the owners. And that's what's really been booming for the stats we were talking about before in terms of the top 1 % share. Okay. So if you take all of business activity and how big the pie is, the growth in the pie, 60 % of that has been in pastures.

27:32And then there's the question, okay, how much does labor get and how much does capital get? One way to measure the pie just as like a labor productivity measure in 2000,$34 ,000 per worker was typical labor productivity. And then by 2021, it went to$52 ,000 per worker. So that was an$18 ,000 per worker rise in labor productivity. And if that were evenly split between labor and capital, that'd be$9 ,000 each. But what you see in the data for these top owned firms is that 15K goes to owners and only 3K went to workers. And so there was a very material decrease in the labor share. So I think in 2000, it was something like two-thirds went to labor.

28:17And then by 2014, it was like half and half. Part of the story of what's going on here is a material decline in the labor share. Some of that is because owners are getting a bigger slice, but it's also the pie is growing. There is some labor productivity growth.

28:34Ben Felix:What does that development mean for the relationship between business owners and workers? It means that an important part of why wealthy business owners are doing well is because they've kept a larger share of the slice. Now, there are lots of things going on there. Some of this, you could say, look, these are economic forces where expertise and ownership really matter. So one example I like to give and that is imagine someone like my former colleague, Kevin Murphy. He's an amazing economist. Somebody once joked his first language was economics. He could just go and like think about things and give you a really cogent explanation.

29:11So he does a lot of consulting work and antitrust. And so imagine you're some big company, you want to acquire another company. And if you get Kevin to do it, he's going to raise the probability this merger happens by 10%. This is a billion dollar deal. 10 % of a billion dollar deal is really valuable. That's increasingly valuable over time as you get bigger and bigger companies and economic growth. And so Kevin getting a growing share of what's going on is not an unreasonable proposition. He's bringing a lot to the table. And so that's part of what's going on. Another part is more nefarious, and it's about like a series of regulatory restrictions or things that prevent entry and competition and essentially pull up the drawbridge from other people trying to get rich in the same way that you're getting rich and exploiting that.

30:00It's hard to say, you know, that you have to kind of go by case by case to talk about what's actually going on. But there's definitely some of that as well. It's a nuanced picture for what's going on in the economy. And I think these things can happen at the same time and both be true. It just depends on what industry and company you're looking at. How do non-competes impact workers? One striking fact about the economy is almost one in five workers have a non-compete. You can make the case for some proprietary things, but for janitors or people making sandwiches, that seems pretty tough to swallow.

30:32And what it does is it lowers wages because it makes it harder for them to move and get offers from elsewhere. And that's one of the forces that probably contributed to the developments I was just talking about, the labor share not moving up and workers not enjoying all that productivity growth that we've seen economy-wide.

30:52Ben Felix:Jeez, it sounds like a rough picture that you're painting for labor. the labor share is at historic lows there are a bunch of measurement issues related to it one of which is the rise of pastors but fundamentally they're pretty material declines and just the share of the pie that goes to workers how do you think that results over time or does it i think that's one of the main questions that we face as a society is can you continue to operate just without paying attention to it and obviously you've had very tumultuous political environments and elections and people being very upset with the state of things, not just in the US, but just everywhere in the world.

31:33And some of that could be a response to globalization and some of these forces where the share going to labor is not looking high. And if you look at AI and some predictions people have, there's plausible scenarios where that's only going to accelerate. I'm not a political scientist, but it doesn't strike me as implausible that this will continue to be a very volatile situation. And it's important to think about reasonable interventions that are good for economic growth and good for prosperity and capitalism that can make sure we don't sacrifice the ability to have a healthy economy and also make sure people get paid.

32:10Ben Felix:This is a tough question. I'm asking you to solve the world's problems quite literally, but what are some examples? What could solve that? You know, one thing that's a little off topic, but it's fine, is the healthcare in the U.S. were really unlike many other countries in terms of how we do it. They're just absolutely crushing healthcare costs for small businesses. It's very bad for business and it's very bad for their workers. So I'm on the board of a daycare. And this year we were quoted a health insurance cost increase of 50%. Literally next year, whatever you're paying for health insurance for your employees goes up by 50%.

32:48You're saying, okay, I'm going to tell some set of workers who are devoting their life to helping kids who are basically making the minimum wage. I'm going to take your$30 ,000 and then$7 ,000 of that is no longer going to go to you. It's going to go to the health insurance company. That seems pretty crushing. We have to figure out a way to do something about this. And in a separate work, we studied what is the effect of rising employer sponsored health insurance costs on the labor market. And one thing that it does is it makes the U.S. a lot less competitive. It's hard to say, I'm going to go build a plant in Ohio if I have to pay$27 ,000 on top of whatever I pay that person's wages to pay for a family plan.

33:29Like, it's just not going to be something that is going to be reasonable relative to other production opportunities. So I think the fact that healthcare is so expensive in the U.S. and growing so rapidly makes it tough to compete and makes it tough for somebody making low income to survive. And so I think that this just has to change. So some economists who I really respect, Amy Finkelstein and Leron Einhoff, they have this book, trying to remember what it's called, something like, we've got you covered. But the basic idea is if you have an old house, there are a couple different strategies. And the old house is the healthcare system, you can like try to rebuild things and tinker around.

34:09And then their basic point is like, this is not a situation where you can just tinker with it. We need a teardown. And you should just completely overhaul the thing. And what should you have? Something that's simple, basic, and free. Simple meaning you don't have all these crazy institutions. Basic meaning it's kind of like the back of an airplane. You're going to pay to get from point A to point B, but it might not be the most comfortable thing in the world. If you want a more comfortable version, you have to pay more. And free meaning you don't have all these deductibles and things because that empirically doesn't work as well as people might think.

34:44That's one example of a place to do it. And, you know, for small business owners, if you're running a business and your cost go up by 50 % on wages, it's really hard to deal with that. You can pass some of that on, but if you're small, you can't compete with a big firm that can self-insure and navigate some of this more effectively. So I think it's also important for dynamism in the United States.

35:06Ben Felix:Super interesting. You said that was a bit off topic, but I thought it was great. Really interesting stuff. How do inheritances shape the path to wealth? Inheritance is a super interesting thing. So my co-author, Eric, he's funnier than I am. He likes to joke. He's like, that's his recommended path to getting rich. It's just if you can inherit it, that's where you start. But it's very complicated. In the book, we tell a couple different stories, basically the story of it going well and the story of it going very poorly. The one where it goes well, they were very coordinated. The dad basically brought the son up, put him in hard jobs at the company, was really learning the ropes.

35:46They're very smart about the transition during COVID when the value of the business cratered. That's when they handed it over because for tax purposes, it was no longer eligible, but below the exemption levels. That ended up working great. On the other hand, we told the story of a street sweeper repair business that had a couple brothers, one of whom was somewhat responsible and put a lot of his money in. The others treated it like a bank account. It was very contentious. The one brother was really at financial risk of the whole thing going under because the other ones were taking it down and basically tore this family apart.

36:24So you see a big range of paths. Other businesses employ dozens of people. So there's one family in St. Louis. And I asked them at a family gathering, I was like, okay, who's the richest kid in your high school to one of my nephews. And they're like, oh, it's the Tracy family. I was like, okay, what does the Tracy family do? They're a food redistributor. And the Tracy family, I think the business is called Dot Foods, and they employ something like 57 Tracy family members in the thing. And so there's some cases where it seems to be a bit more harmonious, at least from the outside. There's a range.

36:59But one other person we talked to, I think, who's interesting. Her name's Annette Lareau, and she is a sociologist at Penn. And she interviewed about 100 really wealthy families who have all inherited businesses. And her conclusion, she told me, for herself, she said, if I could give my daughter$40 million or zero, I would give her zero because of all the craziness she saw. I think that's kind of my take on inherited family firms.

37:28Ben Felix:Those are super interesting stories. Is there like an image in the data of how inheritance does affect wealth? There are several things. One fact is that it's less prevalent in the U.S. than in some other countries. Some people speculate that's one of the reasons why the U.S. economy grows faster. Warren Buffett had this joke. He was like, if you're going to select the Olympic team, would you restrict yourself to the sons and daughters of former Olympians or would you go for everybody? Some of it is about making sure more people have a shot. You want the best people to rise up into leadership roles and you get more productivity when you have the right people running things.

38:05How can business owners successfully exit their business? There's a lot of people who are interested in buying successful businesses now. Some of it is putting yourself in the market for a lot of these hungry business school grads or people who are mid-career who want to switch and just let it be known that, hey, I have a cash flowing business. That's a good business. If you really want to make it work, you can do seller financing so that these people can buy the business in part by using the proceeds of future profits to pay off a loan to you. To me, I find that very attractive as a potential buyer because then that signals, hey, this person really believes in their business.

38:46If they're going to basically take the promise of future profits from it, that means they believe it's going to generate future profits. It's not some lemon. That's one key way that I would encourage business owners to think about doing it. And often you can get better terms because it's a valuable thing. So that's not like it's a free lunch.

39:02Ben Felix:Can you talk about the benefits and maybe also some of the problems that private equity poses to business owners? Yes. So some of the benefits. So for example, we talked to this doctor and if you think about it from their perspective of a doctor who's had their practice bought by private equity, they can do some stuff at scale. So if you're running a small practice, there's a bunch of stuff that might not be top of mind that kind of gets lost in the shuffle, like really being on top of billing and getting paid right away by everybody efficiently. And if you have a private equity firm that has a portfolio of these businesses, they might have some larger scale where they could say, look, this is what's working for our four or five other practices.

39:43We're going to put you on this billing provider, and then you can get efficiencies that way. So that's the type of thing that I think works pretty well. You can also benefit from knowledge of their other portfolio companies. So say you're navigating some issue with financing or some other strategic issue, there's probably somebody else who's dealt with this, or maybe you want some more customers, they can put you in touch with customers. There are a lot of things that they can help with. But there might also be a lot more pressure, or there are material pay differences. So this doctor, I remember he complained he was getting$500 ,000 less in annual income, which also goes to show you how much doctors make that like you could have a delta 500k and like still be making doctor salary because he became an owner rather than getting the salary.

40:30So there's some in terms of what the pay looks like as well. So you need to be prepared for that. You might also lose some culture. You might have to, make harder decisions about losing employees. Maybe you lose control. Maybe the business is going to go in a direction that you didn't want to take it. And that's too bad. You've lost the ability to have that autonomy. And how can private equity be used well by business owners? I think one great use is an exit option to avoid some of those family dynamics that I was talking about before. Often, they're very hungry for these types of businesses. My first job, I worked at Bain Capital, which was pretty early at this.

41:06And I think one of the first, if not the first, investments of Bain Capital was Staples. This is basically an everywhere millionaire business when it was smaller. It's like they sold office supplies. Mitt Romney really helped grow that business well. And so I think some of the strategic support, some of the financing partnerships, bringing customers to people, I think those are all pretty real.

41:30Ben Felix:Can you talk about the effect of stealth consolidation?

41:59point is if you look kind of below the threshold, there's been a ton of consolidation in industries and that's driven up prices and not always been to the benefit of customers. And so if you think about some of the objectives of the Federal Trade Commission should really look below that threshold and maybe consider lowering it because there's been a lot of stealth consolidation. Things like dialysis. He has a bunch of examples that I'm not remembering off the top of my head, but that's the basic idea.

42:26Ben Felix:So is that like private equity rollups? They're just buying small private businesses and rolling them up into under one entity? Yes. So sometimes, or it's just not necessarily private equity, just a series of veterinarians that are going to buy up a bunch of things. And then all of a sudden they're like, look, we control the local market for vet services. We're going to raise prices by 20%. That doesn't have to have anything to do with private equity, just local consolidation. Interesting. Do you think that affects labor markets too? Yes. So there's some suggestive evidence that when firms have product market power, they can also have some labor market power.

43:01That's part of the story for the decline of the labor share. Now, how big it is, it's hard to quantify all these things on an equal footing, but I think that's part of what's going on. But again, that's very different than the, oh, we need to focus on big tech and the five largest firms that are driving the stock market for breaking them up. This is way more of a local, on the ground, regional story.

43:22Ben Felix:It happens like everywhere. Where we live in Canada, you see it with dental clinics, dermatology clinics, a lot of medical stuff, veterinarians, like you said, it's happening a lot. Just you can see it. I mean, some of these markets are huge. And so dentists, for example, one of my favorite facts about dentists, if you add up all the revenues of dentists in the United States, it's much larger than the total revenue of the NBA, the NHL, the NFL, MLB, all pro sports teams combined, just dentists make a ton of money. It's just not something you think about. But then when you kind of take a step back, you're like, all right, everybody has teeth.

43:58It does make sense. And if you see this product market power emerging at the local level, then raise prices. They're also pretty effective at fighting political forces to hold prices down. So there's some move in the US to include dental services in medicare but dentists fought it because they didn't want the price pressure of the u.s government being able to say all right no no no we're good we're not going to pay that much year after year and so that's one example of their political clout you mentioned the great gatsby earlier is the u.s in a new gilded age that's a great question so there's certainly some things that would make you think that.

44:39And many people like Paul Krugman and others have emphasized that we're in a new Gilded Age. So for example, if you look at top income shares, they look just like they did when we first started recording them. The US modern tax started in 1913 and just a little bit after the Gilded Age. But we're back even a little above the levels of concentration for the top 0.1 % and top 1 % that we had at the beginning of the 20th century. And there's this perception that there's just a small number of Rockefellers and Carnegie types that are dominating the news. But, you know, we're quite different in many ways.

45:16Many of these everywhere millionaires are not doing transformational innovation. They're making hot dogs or garage doors or cleaning teeth. So that's pretty different than like building transcontinental railroads or the first type of kind of grand, very capital intensive investments. You know, we're in a service economy that's quite different than the economy of the Gilded Age. And so we like to emphasize that we're kind of in this new age of millionaires where there's just an abundance of wealth and prosperity across America. And we're often obsessed with a few billionaires who have been monopolizing attention, but they really do not monopolize wealth in America.

46:01Ben Felix:We've kind of been touching this. Can you talk more about where the class of mainstream millionaires came from? Yes. So there are a couple of reasons why we call them everywhere millionaires. So you find them in any town in America. In terms of political power, there's also an everywhere millionaire in basically every congressional district. And so when you think about who is the senator or who is the member of Congress or who plays golf with the member of Congress, who employs a lot of people in the district, think about all the sales tax revenue. So auto dealers, for example, employ something like 10 % of retail employment.

46:35They bring in something like 20 % of state sales taxes. These are pretty important people from the perspective of the governor, the congressperson, or the mayor. It's a lot of jobs. It's a lot of money. And they have a lot of influence as a result of that. That's pretty different than Elon Musk, who donated a ton of money in elections and got in Doge. But when you look at what actually happened in terms of concrete policy, so take the One Big Beautiful Bill Act, Elon Musk was a loser in that he lost a lot of clean energy credits. The EV incentives were cut. And then a kind of everywhere millionaire auto dealer got 7 % deduction on their taxes.

47:20So from 37 to 30 preserved, they got a workaround from some caps on state taxes. They got a special new deduction where if you buy a new car, you can deduct from your taxes the loan you took out to buy it. I think when you actually look at the details of what happens, you should be focusing much more on this group of people because their influence rivals that of the much more in the news billionaires that some people are very worried about.

47:48Ben Felix:So interesting to think about why this is an interesting topic for a book. You don't hear about those people or people don't worry about them. People worry about, like you said, Elon Musk. for a good reason. But at the same time, once you see it, you kind of see it everywhere. So one of our hopes in writing the book is that, I mean, one is to inspire people, because there's some really inspirational stories about business owners who rise from the bottom to the top and bring a lot of good people with them. And I think we should have more millionaires in America, we should have more people who have a shot at becoming millionaires.

48:20But also, we should be quite aware of of how powerful this group can also be, very careful about things that are kind of, we need to make sure small business or the little guy is okay because that's been the Trojan horse that's led to a lot of problems. Once you kind of recognize this, you see it everywhere in political debates if you kind of follow the details of how some things shake out. How important are interest rates in driving increases in wealth? They're central. They're one of the most important macro factors. When rates came down at the great moderation after Paul Volcker, that was the first order cause of a lot of the boom in the stock market and in private business valuations.

49:03Are there implications of that? One thing is when you think about what's really going on with top wealth, you need to make a distinction of flows versus stocks. And the flows might not have changed that much, but the stocks change a lot if you're changing the discount rate for future cash flows. So when you see that, oh, wealth doubled, that doesn't necessarily mean that the annual profits doubled. From the perspective of business owners, they may be like, look, my flows are the same. I don't feel as rich as you say I am on paper. So that's one thing that you might get as an upshot of interest rates movements causing a lot of the rise and wealth accumulation.

49:44Ben Felix:How can more people be helped to climb the ladder of financial success. Yeah. So I think some is really getting a lot of people early labor market experience that puts them on a path to be at these more entrepreneurial sectors. That is one quite important thing that we should consider how to do that better because it does seem like exposure. As we were talking about before, if your parents are business owners, you're much more likely to become a business owner yourself. So exposure to this type of experience I think is quite key so more apprenticeship type opportunities and a more thoughtful cultivation of upward paths and careers that aren't necessarily in the conventional study hard go to a good college go to a name brand firm and earn a salary thinking about these alternative paths I think is the way to do that.

50:34And how can would-be entrepreneurs reduce their risks and boost their odds of success? There was this pretty interesting study out of Harvard Business School. The way Harvard Business School is set up, and my co-author Eric Swick went there, so I can learn some of these fun stories from him. It's set up in sections. So you kind of have this small group of people that you kind of take everything with. They looked at entrepreneurs who were placed in sections, which are the allocations random. Some of them were in sections where someone else had entrepreneurial experience. And some were in groups that didn't have any people with former experience.

51:08And what you found is that people who are in sections with somebody with experience, they're much less likely to start something. But conditional on starting it, they're much more likely to succeed. So it seemed like talking to people who have done this type of thing before and really vetting ideas is an important way to achieve what you asked of having entrepreneurs have less risk and more success. So it's basically getting exposure to people who have done this before is one thing that seems to work.

51:36Ben Felix:What do you think are some of the practical steps that could be taken in the U.S. to reduce inequality but preserve the ability of business owners to hire and fire workers? So first, this book is not a policy book. we very actively tried not to do that i think about these things a lot but i'll just rattle off a few so one we talked about health insurance and health care reform another is just basically resetting the tax code back to what it was in 1997 we jokingly call it party like it's 1997 growth was very high then we had surpluses not deficits and we'd raised trillions of dollars to go back to that era some of the cuts that we've had just have not been that effective and the generating new employment and investment.

52:18And so we think some reset is appropriate, mostly on the individual side. Another is that we haven't raised the minimum wage in decades. You know, it doesn't have to be astronomically high, but if just set what it was with inflation is a reasonable benchmark. And there's some pretty good empirical work looking at the effects on businesses and what actually happens. A lot of it kind of gets passed through consumers or the owners eat it. So if you're thinking about that question about the labor share and some of the dynamics, I think that would do some work to offset those dynamics a little bit without having a major drag on productivity and employment and investment.

52:56Because I do think when people talk about policy solutions, they really should be quite cautious about shrinking the pie. And that's something I care quite a bit about. So we have some work, for example, showing parts of the 2017 tax reform really stimulated a lot of investment. I do think we need to think about outcomes when we're talking about policy. And so like there's some things that work quite well and we need to focus our resources on that. And then the stuff that doesn't work, we really need to question it. And so the stuff that doesn't work as well, or this like 7 % deduction for business owners that cost a trillion dollars that was preserved in the 2025 bill, like that's the type of thing we can't afford right now.

53:36But some of the investment incentives did seem to be more effective. And so I would keep those. Really interesting. Final question for you, Owen. How do you define success in your life? There's a couple different dimensions. One is having a happy and healthy family. I'm blessed with three young kids and a wife. We have three, they're all under five. And so it's pretty chaotic at the moment. So sleep, I basically have my answers. It's just been hours of sleep is my current measure of happiness. No, but working in a profession where I can try to work on things that I'm interested in and let more people know about ways that we can make the economy work better and have policy work better and give people a shot.

54:19Because I do think learning about some of these stories is pretty inspiring. And so I'd like more people to be able to prosper in their lives. And so having a healthy family, a healthy and exciting job where you can help other people, I think are two measures of success that I think about. Love it. This is a great conversation. Congratulations on your book and this research. It's fascinating. Thank you so much.

54:42Ben Felix:You'll sleep eventually. Don't worry. Yeah. I've got four kids under 11 now. Oh, wow. At one point I did have three kids under five. I didn't sleep either, but you'll sleep one day. I can look forward to that. Awesome. Well, thank you all so much for having me. It's been a real pleasure talking to you. Love it. Take care. Thanks, Owen.

55:06you know ben it's got to be 30 plus years ago where we were presented in our office this is way back in the old mutual fund days the book called the millionaire next door and that was my first introduction to the thinking around like who is the average millionaire out there and what do they do and where did their wealth come from and what are their habits and where do they drive and where do they eat and how do they spend and i remember finding that book so fascinating of course it was presented to us as a way to help us connect and find our potential future clients but i can remember that day like yesterday being presented with that book by i think dr tom stanley was either the author or co-author of that book and then to have this conversation today with owen it's like wow just being right back in time but with this unbelievably modern set of data.

55:58Ben Felix:He took the premise of that book and gave it an economist's treatment. And as he talks about, they got their hands on data that just nobody else has had before. And so they're able to build that incredible profile of what typical millionaire looks like. And then I love the combining the data work they did, the empirical work they did with conversations with the everyday millionaires that they identified to understand all that stuff, like about how they spend their money and how they spend their time, who they are. I love the hustle part. Maybe that's because I like to work a lot too, but just the idea that they're just regular people that work really hard, work a lot, don't like to stop working, don't necessarily spend lavishly, but as you talked about, some do.

56:39Some do. And some have very conservative lifestyles through most of their working lives. And at the end, they really go and live it up. It's interesting, like in our roles, we get front row seat to seeing how people with some pretty good savings, is how they do spend their money. But what I think we find more interesting is how they earned their money. And we have so many examples of businesses where you just go, huh, I never even knew that thing, that need existed. They build these unbelievable enterprises completely under the radar. And we have many of those cases. Yeah, we've got some technology people that have hit it there.

57:18But to see these businesses that you had no idea existed at all,

57:24Ben Felix:Some of it's professionals. He talked about dentists, doctors, lawyers, professionals. To your point, Cam, we have so many interesting cases where the client has a business that, like you said, you didn't even know that was a thing that existed. But of course it does. Someone's got to do that super niche or not fun to do thing. As Owen talked about there, the people that do those things can make a whole whack of money doing it. A little bit more on Owen. We gave him a very brief introduction, but he is a professor of economics and public affairs at Princeton, jointly appointed in the economics department in the School of Public and International Affairs.

57:59Ben Felix:Prior to Princeton, he was an assistant professor at Chicago Booth, where we've had many guests from. He's also a staff economist at the Council of Economic Advisors and an analyst at Bain Capital, which he did mention. He's got his PhD from UC Berkeley. Super interested in conversation. He's got a book, which of course we were talking about. We get a lot of folks reaching out, wanting to talk about their books and we don't usually have them on because they're not usually economists with really data-driven things to talk about. But when I saw this one come in, I took a quick flip through it and it was pretty obvious it would be an interesting conversation, which I think it was.

58:34I agree. Anything else, Ben, you want to add?

58:38Ben Felix:I'm curious in your thoughts, Cameron, on just the value of entrepreneurship. You've lived that life. You're still living it on a different side of it now. You talked about that, the decades of grinding. This is something, you know, Seinfeld talks about a lot. It's like to find something that most people would find drudgery that you just love doing. You keep working at that craft for years and years. As I found myself thinking, like, look back on 35 years of doing this. It's just unbelievable to me that, hey, I did it 30 years in PWL alone and to have loved all of it. It's just that continual grind through years.

59:12You combine with that some of the habits that David Booth talked about when he joined us, just the compounding effect of working at a craft and then trying to squirrel some money away to go along. It's just a lifelong pursuit. Is it entrepreneurship? I guess so. But it's like to find something you love doing that others might not want to do. It's just pretty cool to be lucky enough to have found this career.

59:35Ben Felix:I think in your case, it's definitely been entrepreneurship. But even when we met 13 or so years ago, you were not in the same position that you're in. You were still grinding. Like you were still in the middle of the grind. It's so interesting to think about the compounding effects that you don't see. When we met, it was not obvious that you were building the business that we ended up building. You had your head down, you were grinding, you kept grinding, and then it almost seems like, and it's not like that, but it almost seems like all of a sudden, it was this incredible business. But that's just the long-term effect of compounding and grinding and keeping your head down and working your butt off and some luck and making good decisions.

1:00:12It's interesting because we talked about this last week at, we had our annual summit where, you know, 150 plus or minus of us were one place. It was one thing to look back 13 years when it was, you know, a handful of us and it was all our individual hustle. It's almost like entrepreneurship is the ability to keep up that vision as you keep growing and empower a team to keep up, I'm talking about the flywheels, to keep up what was started 30 plus years ago. but to go from like a handful of people to like a ballroom full of people, it's a whole different game. What we're doing is incredible and desperately needed by so many people.

1:00:50What we represent, you know, the simple concept of markets work and planning really matters. It's so desperately needed. The mission is clear, but it's to take that and to empower and energize and give the vision to 150 people to hopefully 300 people in the near future. had no idea this was at all possible when you and I first met. You think back, I mean, I know we're kind of riffing on different stuff here, but back in the day before you even joined, we used to have an annual client seminar. We'd get 80 people out, 100 people out. And it was expensive and it was a lot of hustle. And we thought that was pretty good.

1:01:30And now how many people a month are listening to this and to your YouTube channel? it's in the hundreds of thousands if not in the millions it's just a whole different scale same basic belief system just the scale of what's you can create by keeping your head down that compounding effect for years and decades it's incredible keep your head down trying stuff

1:01:53Ben Felix:some luck for sure but it's a silent compounding you're grinding you're doing stuff and then all of a sudden you have a valuable successful business and you keep grinding and compounding but it's really, as I always say, it's the unintended outcomes, the unintended consequences, the stuff that happens, the accidental meeting, the accidental whatever that might happen that you say, wow, you couldn't have planned for that. But if you weren't grinding and had your head down and open up to these opportunities, that never would have happened. But as we said last week, 30 years and we're just getting started.

1:02:26Ben Felix:So interesting to think about. We talked a little bit about the consolidation that Owen talked about, super interesting, but also just people know I've done a bunch of house renovation type stuff. And you look at the people in trades who are scaling businesses. There are individual trades people that make a good living, whatever. But then there are others who are scaling their business, taking on lots of clients, hiring the right people to help them build a business. And they can turn into really, really successful businesses really quickly. But they're not the kind of thing that people think about when they think about how do you get wealthy.

1:02:55Ben Felix:I agree. Great message from Owen. And as we said already, his data, his ability to take data to that great message is something that I don't think has been done before as he talked about. So hopefully listeners enjoyed it. Love it. And as always, thanks for listening.

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