Deep Dive
Shownotes Transcript
Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale.
and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D, roadmap, roadmap.
If there's one thing that you get from money rules is that you'd be switching your metric towards what am I saving every month rather than what am I making every month? Because the profit, what you save is the thing that matters, not the top line. And it's one of the biggest mistakes. And so your PRs, your personal records should be around your savings amount, not your income.
This is one of the best podcasts that I've made. It was after multiple years of kind of investing our money, Layla and I got advice from a mentor to sit down and actually write down what our rules for money were, kind of like our decision making algorithms, if this, then that, if this, then that.
And so we wrote down about 42 rules of how we were going to manage money. And this podcast breaks them down. I had a series of mentors that were both millionaires and billionaires that I won't name drop because you would know who they are, who recommended that I spend 12 to 18 months documenting all of my beliefs around money and the artifacts that have been created over the five years that led to that transaction. And so what I want to do is share the 42 beliefs that I have around money that helped me accumulate the material success that I had.
and hopefully so that you can't do. Number one, he who gives the money has the power, not the one who takes it. So a lot of times poor people think that
They're always trying to get money, always trying to get money, trying to get money. The thing is that the person who gives the money is the one who's in control. If you think about the biggest institutions in the world, where are they? Banks. What do they do all day? They give money. Because when you give someone money, you get to dictate the terms of the agreement. You actually now own them. When a customer gives you money, you're the one who now has to deliver. They have control in the relationship. And so,
One of the biggest shifts that I had was that having the money, which is why I'm a buyer, not a seller in acquisition.com, which is what we do in private equity. Like we have control rather than the person who accepts the money. Rule number one, the person who gives the money is in control, not the one who gets it.
Number two, never trade reputation for money because you can get money back, but you can't get reputation back. And so if you think about reputation as something that compounds over time, the longer you have it, the more you build it, the more it compounds unto itself, which becomes in and of itself a competitive advantage. Like it is your brand, which allows you to do more deals, do bigger deals, do them faster, get more deal flow to you.
Deals being whatever that is for you. So it could be deals in terms of like selling cars. You could be selling houses. It could be selling companies, right? The same concept remains. But the moment you lose the rep because you traded it for money in the short, you lose the long, which means you cut the compounding. And that's where all of the gains in life come from. Number three, money loves speed. Wealth loves time. Poverty loves indecision.
And so the big thing is, is like macro, micro, micro money, love speed, right? You want to move quickly. Like you want to respond fast to customers. You want to follow up with your leads, et cetera. Right. But when you think about building wealth, it's not about transacting. It's about letting that compounding happen. And that takes time and it takes not interrupting it, which is one of the biggest and hardest parts of compounding is you have to let it multiply unto itself. Like the size of the business that be creates wealth takes decades, not days to make right.
But the thing is, is that most people never achieve either of those things because they sit in decision and they continue to stay in indecision until they take action, which is why poverty loves the person who cannot decide. Four, we can always make more money than we need.
And so this is a belief that has served my wife and I really, really well because we look back on our lives and we've never not been able to eat, not had shelter, and we've continued to increase our skill set. And so a lot of times we have this desire or, you know, our animal brain wants to make us make decisions out of scarcity, out of fear. Right. And if we give into that, then we're not following this, which is like, we don't need any of the money that's coming because we have always had enough. Right.
And so when you can operate from that perspective, then you have less need to make deals to do things. And then you can sit back and have a lot more leverage in the conversation, right? Because you don't need anything. And that makes you hard to influence and gives you a lot of power. Fortunes are made by taking a lot of risk with a little bit of money. And fortunes are maintained by taking a little bit of risk with a lot of money.
And so one of the interesting things that I've seen people do, especially when they start making money or start having money, is that they think that they need to replicate the high-risk thing. Because if you think about fundamentally every business in the beginning, like somebody who's self-made had nothing. And so they risked everything in order to make it big. But the thing is, is when you have nothing, you're not risking a lot, right? You have basically no downside. You have nothing to lose, which makes you dangerous, which is one of the biggest advantages of having nothing. But
If you continue to do that, when you do have something to lose, you can lose your fortunes. And no matter how big the number is, anything multiplied by zero is still zero. And so fortunes are made by taking lots of risk in the beginning, but they are maintained and slowly grown by taking little bits of risk with lots of money. And so you have to change the behavior once you have the castle, once you have the empire.
Six, money flows where attention goes. And I'll hit on this one real quick, which is that if you spend time thinking about fashion all day, your attention's going towards buying clothes. If you think about cars all day, it's going towards your car. If you think about your business all day, it should be going towards your business. And on a micro level within the business, if you have multiple product lines or you have multiple businesses or hustles, this is why I'm such a big proponent of pick one thing, go all in. That's it. One thing, all in.
And when you do that, because you only have so much juju. And so think about it like a magnifying glass. So if you've got the sun and you're the sun in this instance, right? And you've got to burn a hole to get through to the next level, right? If you're spread across too thin of an area, you never get enough concentrated heat. But the thing is, is that that sun, when it's concentrated enough, can blast through any barrier. But most people have the potential, but they don't have the focus, which is why they can never break through. So money flows where attention goes.
Seven, your home life and your business life have to be aligned money wise. So you can't try to be trying to try to grow a business, right? And like reinvest everything here while you're living a super lavish lifestyle, trying to flex, right? Like it has to be aligned. And so one of the things that we have is that all of our business rules around money are
also our home rules around money. And so if we don't live with any debt, you know what I mean, personally, that are for liabilities within our personal lives, we do the same thing within our business lives. And so the values we have and how we treat money inside and outside of the business are the same. I see so many people who live like split lives, like they've got wives or spouses that want to spend like crazy, right? But then they're trying to do these things in the business or the reverse, right? And so they have to be in alignment.
Otherwise, long term, you create conflict and then that's what breaks things. Eight, ignore money advice from poor people. This may sound ridiculous, but let me say it differently. Ignore money advice from your dad or mom who are poorer than you want to be. Ignore money advice from your good friends who are poorer than you want to be. Ignore money advice from people who have smaller dreams for your life than you do.
And so the big thing is just like their opinion does not matter because they have not been there, which is the lowest level of expertise is having been there. Right. The higher up the expertise is not only have you been there, but have you taken many people just like you to where you're trying to go?
They probably don't have any of those things. And so what they're really doing is just regurgitating something that they may have heard from somebody else because they have no context. And then you somehow take that as truth. And so what happens is you have people, it's the blind leading the blind. You have people who have no idea and who are ignorant leading also the ignorant.
So if you want to get out of that situation, you have to stop consuming that information because it becomes the lens through which you see the world. And it's also wrong. The reason that rich people can lose everything and then recreate it is because they see reality more accurately. The reason people can't make money is because they don't see reality the way it actually is. Because how is it that somebody else can make a lot of money really quickly and someone else can't? They see reality differently. And so most of life is trying to pull these rocks out of our vision so that we can see more clearly. So stop listening to poor people about money.
Nine it's always easier to buy than to sell so think about it. You want to get into a stock? You want to get into something you can buy it instantly, right? You want to get into a real estate deal? You want to get into a business whatever it's always easier to buy than it is to sell and so because of that you have to be extra careful you want to put all the slow on the buy and you want to put all the lubricant on the cell right in terms of your thinking process and so that's where we use discipline and
10. Money is fickle. Money is jealous. It sticks and goes to the person who pays it the most attention. And so if you think about this big, big, big macro picture,
Money comes into the system, but there are these grooves like rain grooves in the ground where it all eventually flows up to the few people who pay it the most attention. Someone gets paid, they go buy their groceries, the grocery person has to go buy from the supplier, supplier buys from whatever, and the economy continues to go. But the person who has the access is the one who pays it the most attention, is the one who it sticks to at the end, which is why wealth always ends up flowing to the few who pay it the most attention.
Otherwise, everyone else is just a very temporary holder of the money. They're just taking in one hand, going out the other, one hand, going out the other. And so if you pay the most attention to the money, you're the one who will end up sticking to because it always loves the person who pays it the most attention. 11, we stay poor until we've learned all the lessons that poverty has to teach.
And so one of the things is that people stay in poverty, but they're not trying to pay attention to like, what lesson do I need to be learning that I'm not? Like there's a boss right now and it's poverty. You have to beat the boss. You have to learn the lesson to beat the level. Right. So it might be actually taking action. That might be part of the lesson that you need to learn. It might be learning how to save money at a basic level, personal finance. Right. Learning how to make more than you spend. Right.
Learning how to increase your skill set so that you can actually provide value to other people. Solving other people's problems. These are the lessons that we have to learn in poverty to get out of poverty. And until you do that, you don't beat the level.
Twelve, frugality drives innovation. Constrain, constrain, constrain. And so even when you have money, one of the best things to do, in my opinion, is to constrain your resources, constrain time, because it'll force you to think creatively to solve problems without using money as the solution.
And if you have constraints right now on time and or money, don't see it as a disadvantage because it's what people who do have money try to get into to solve problems. So it's actually an advantage. And the only thing that's the disadvantage is thinking of this.
13, think once before investing, think twice before spending. So investing is something that you're putting money into that is going to give you a return of some kind. It's either going to give you a skill that's going to increase your earning capacity or it's going to be something that's going to quite literally give you a return in terms it's going to be yield or worth more in the future, right? Spending is something that's going to never be worth more in the future and it's going to be consumed.
And so think twice before you consume the money that you're spending. Think once before investing. And so the idea here is that we want to put the discipline more around the spending than we do around the investing. Because most times in general, especially when you're starting out, the more you invest as a thought process, it's like you're always investing. Some things will return more than others. But overall, you will see compounding returns.
14, money flows to the person who needs it the least. And this is one of those unfortunate things about the world, right? The rich get richer. The rich get richer because they don't need it. And because they don't need it, they have leverage. And so the idea is you have to sell not from your own wallet, but from the person in front of you, right? You have to come to the table with other options. And so it's the person who needs nothing who's the person who has the most power. And that's where the money will go.
15. We make money. Our money does not make us. This was a belief that Laila and I had to write down because a lot of times...
you start tying your self-worth to your net worth, right? And so what happens is if you do that, then your net worth itself becomes a liability to your own self-esteem. And so I started noticing this within myself was that I started tying my self-worth to my net worth. And so I had to create a different statement of belief that I had to choose to believe, which is that it is my ability to make money, which is what creates my value, not the money itself. Because the money itself can be taken. Like, you don't know this, but my family was in the Iranian...
revolution and everything they had was taken. And so that's why the idea of legacy to me is so silly because all it takes is one government saying, oh, all that land and all those cars, all those homes, those are ours now. And that's it. And so a lot of people have this idea of legacy and permanence. That's just an illusion. And so for that reason, the value is in you, not in the things that you make, which is why we make our money. Our money doesn't make us.
16. It may be an amazing opportunity, but not our amazing opportunity. And so I think one of the things that I needed early on was permission to not do things. Because once you start to learn to take action, because in the beginning you don't know how to do anything. You're analysis paralysis and you just get scared and you're ignorant. You don't know what you're doing.
But once you get over that, which is the first lesson of poverty, you have to start taking action, right? Once you get over that, then the problem is that your yes muscle becomes too flexed, right? You start saying yes to everything. And so the idea was to be able to say, it's not that this thing is a bad opportunity. I recognize that it's a great opportunity. It's just not my great opportunity. And it also gives you language to tell other people who are trying to present things to you, say, hey, we should do this thing and we should do this thing together. You say, dude, I think it's an amazing opportunity. I just don't think it's my amazing opportunity. And it's gotten me out of so many situations that I know long-term wouldn't have been good for me.
17, we control the money flow wherever possible. So if you think about the flow of money, whether you're like people who have a lot of control, payment processors, right? Like everybody thinks they're amazing until the day you can't process money, right? And so the idea is the further upstream you can go, the more leverage and control you have over the money.
and so there's a reason that franchises in general take a percentage of top line there's a reason that insurance companies get paid before they put money out right banks get the money and then they give it back later right so the idea is how who's the person who's furthest upstream in the money those people churches god takes 10 a top line right the idea is that the people who like they get it this is old money right
This is why we do this stuff. This is why we crystallize it is that the person is for the sub stream the money has the most power over it So whenever possible control the money flow 18 always having a shit fund one of the things that's giving me a tremendous amount of confidence in going out out there and risking it is that I've always had this like just in case fund and that I don't invest in anything that is risky at all so this is just like bonds and I know
Here's what's crazy. I know that I'm losing money over time by the fact that this money is rotting.
But the thing is, is that me knowing that I can take whatever risk I want and I am still protected and everything that I have for the rest of my life is taken care of, gives me a lot of peace, which allows me to be more aggressive, be more offensive. And so as soon as you can, have your oh shit fund, whether it's three months, whether it's six months, whatever it is, start putting that away, that nut, so that you can go more on the offensive because you're not worried about how you're going to eat. 19, the biggest eroder of wealth
ignorance the second biggest is taxes and so the idea here is that
Not knowing how to make a million dollars is costing you whatever you make every year minus a million dollars. And so if you make 50 grand a year, it costs you $950,000 a year to not know how to make a million dollars. And so the question is, what would I pay to pay down that debt, that ignorance debt, which is the most expensive thing that everyone pays for every single month right now, wherever you are, whatever your goal is, you're paying a debt to the ignorance that you have for not having that income.
Like if you knew how to do it, you would be doing it. And so for me, that's always been the thing that scared me the most, which was how do I pay down this debt as fast as possible? Which is why I put so much money into paying down this invisible hand that's been suppressing my income my whole life and yours too.
And the invisible hand is the ignorance. That is the debt that collects every single month, the money that you are not making, right? And so you have, let's say right now, you could be making a million a month, but the invisible hand is taking $950,000 every month, or if you're making 50 grand a month, whatever it is. It's taking all of that extra money and putting it into his pocket, and that's the cost of ignorance. And so the thing is, is how do we get that hand to go away? And we get that through knowledge, right? We get that through experience. We get that through skills. And that's what we have to pay for in time or money.
20, you get paid for the value you create times your ability to negotiate divided by how hard you are to replace. So the idea is if you provide something that's very valuable and you're very good at negotiating, but somebody else can provide the exact same thing as you for a tenth of the price, you still don't have that good of a negotiating position, right? So the idea is how do I provide a huge amount of value, learn to negotiate for as much of it as possible, and do it in such a way that no one else can compete against me?
If you can do those three things, that is how you create value. That is how you make money. And it's really making money is capturing a percentage of the value that you create for other people. That is what making money is. You're solving someone else's problem. The value of that problem can be quantified. And the percentage of that value that you capture is how you make money in exchange. So if you don't know how to provide value and you don't know how to negotiate and everyone can do that and you can do the same thing as everybody else and nothing unique, then you have a hard time making money. So reverse those things and that's how you make it.
Hey, Mosley Nation, quick break just to let you know that we've been starting to post on LinkedIn and want to connect with you. All right, so send me a connection request and note letting me know that you listen to the show and I will accept it. If there's anyone you think that we should be connected with, tag them in one of my or Layla's posts and I will give you all the love in the world. All right, so let's get back to the show.
21, mistakes love a rushed decision. So whenever we feel like we have FOMO, right? Whenever you've like, I've trained myself now enough that like when I feel FOMO, I pause. FOMO means slow go. It means give it a pause, right? And the reason for that is that most irrational decisions, mistakes love a rushed decision, is that I always think about that over and over again. It's like, hey, this is probably a mistake because mistakes love rushed decisions.
And so it's like, well, then let's just give it a cool down period. And so it's just one of those easy beliefs that has slowed me down and has saved me so much money for mistakes. It's hard to even quantify millions and millions of dollars in money and failed and brand deals and reputational deals that I didn't do because I was like, I don't know. I'm going to give this one a cool down period and see how I look at it in 30 days.
And 30 days later, I'm very glad I didn't do it. 22, leverage comes from not needing the other person. And more specifically, leverage comes from needing nothing. And so the idea is you can either satisfy all your needs or you can eliminate all your needs. Either way, that is how you create leverage. Think about this. You can't control somebody who needs nothing, right? If someone needs nothing, you have no influence over them. And so the goal is how do I become that person? I can either become that person by satisfying every need I have materially or by decreasing my needs.
to zero. Either way, you can do it. The monks do it by relinquishing everything and needing nothing. And the rich man does it by satisfying all of his needs and not needing the deal on the other side of the table. And so by doing that in both of those situations, you create leverage because you can get more because you don't need it.
23, markets take longer to adjust than you expect, and then they move faster than you can imagine. And so this is one of those things where like the big short, if you saw that movie, the guy was shorting for like four years and he's like, the math doesn't make sense, but it's still the bubble kept going, bubble kept going, bubble kept going. And then...
It happened faster than people imagined. So when there are corrections and there's something that feels fundamentally off, it takes longer for a market to adjust. And then when it does make the adjustment, it happens very fast. And so the idea is that we have to be comfortable with the fact that we might have to sit in discomfort for an extended period of time before what we believe to be reality is reflected. 24. Money is a game. Treat it as such. You can't win the game if you don't know you're playing one.
And so one of the things is that the wealthiest people in the world see money as a game, right? They're just trading tokens at this point because they don't even use money to satisfy material needs because they already have it. And so the idea is how can I adopt that perspective as soon as I can earlier on in my career? And so that's where thinking about things in terms of personal bests, right? Thinking about in terms of bank account PRs, thinking about your PRs being how much you save every month rather than what you make every month,
right checking your stats every morning like you would a video game checking your rankings against yourself like these are the things that the people who have more money like when i was poor i checked my bank out every single day and i continued to check it every day until we passed about 20 million dollars in our worth and i started switching weekly because
Honestly, the variations made no sense to check it daily. But the idea there is that what gets measured gets improved. You can get someone to lose weight just by simply getting them to weigh themselves every day without giving them any advice at all, just weighing themselves, drawing attention. Remember, money flows where attention goes. So if you pay attention to it, it will start sticking to you. 25, don't bet the empire for a pot of gold.
And so the idea here is like, no matter how big the number is, and this is a Warren Buffett quote, no matter how big the number is, anything multiplied by zero is still zero. And so even though you might have this opportunity here, it's never worth risking the whole pie to get the pot of gold. It might be this tiny opportunity, but it's not worth the risk. And I can't tell you the amount of times where I'm like, man, if I went all in on this thing, money wise. So the thing is that you can go all in on your attention, right? But I wouldn't go all in on your money, right? Just a different perspective, unless you absolutely know what you're doing.
26. Always do a starter deal with new faces. So this is a hard one because one of your friends comes to you and is like, "Dude, I want to do this Airbnb thing," or, "Hey, I've got this portfolio of whatever, like you should invest, right?"
If you've never done a deal with somebody, accept the fact that you're going to miss out on the first deal and you do a starter deal first. It's training wheels. You've got to see how these people are. Now, everything should still look great on paper. Everything should still make sense. They should still be amazing characters. Once they check all the boxes, you still mitigate your risk by saying, first deal I'm going to do with you is a small deal. And so, mind you, people come to us for very big checks. And so I say, hey, I'm not going to write you a check above X percent.
Until we've already done a deal which if you're thinking about that you might be like well It might take five years for a deal to materialize. Yeah, which is why investing is a long-term game Which is why trust is built over time, right? And so the idea is like that means that you might have to get several first-time deals done Which is also good because they'll diversify your risk in the beginning and you will find out I promise you when you do get a partner that you were really excited about and then you hand them the check and then a Year later like thank god. I didn't give this guy the whole farm, right?
Right. And so this is one of those. This is a downside mitigator because most people who are rich think about not having risk rather than risking it all. Remember, fortunes are built by taking a lot of risk, a little bit of money. Fortunes are maintained and grown. They're taking a little bit of risk with a lot of money. And you can only take a little bit of risk with somebody that you already know. Right. Which is why starter deals with new faces.
Twenty seven. Trust is worth more than a bigger return. Trust lubricates deal velocity. Trust compounds. It's one of the most valuable things you can have, especially in investing in yourself, et cetera, is trusted partners. Right. And so it's one of those things where like you don't want to take all the meat on the bone because you want to have a long term relationship.
Right. And if you have the opportunity to one over somebody two years in and you've had multiple good deals with somebody, that is one where you lose on the compounding benefit of trust. And you will make so much more over the relationship by maintaining it and by maintaining trust on both sides, making it always work. I can tell you when I talk to partners, when I talk to business owners, how they talk about the people that they do business with.
tells you a lot about them and how they do business. And so when I talk to somebody and I'm like, "Hey, why don't you do this?" They're like, "Hey, these guys have been good to us for a very long time. Like, I don't want to rock that boat. Like we've had a very good relationship for 10 years."
That is something I respect a lot and that is what people who have money act like. Poor people always trying to one over everyone over and over again and they never get any trust from anybody which means they have no compounding relationships. And so they always have to hunt. They always have to find the next thing rather than have a network of people who are always feeding them deals, always giving them slices of other pieces of pie because they weren't greedy early.
28, money is not a zero sum game. And so one of the things, again, when you're poor, you think that if I either get this money or I got to take this money, it's like there's this certain pot of money, but the money supply itself is fluid. It grows, right? And money is created quite literally printed, but also in that you can create a deal where multiple people win. And this was something that I didn't understand earlier on. I always thought like I have, it's a zero sum, like they've got money and I have to take it somehow, right? I have to exchange something for it, whatever it is, right? I have to somehow get them to exchange with me.
But the older I've gotten, the more I'm like, how can I get onto their side of the table and both make money together? And so I have made significantly more money getting on the same side of the table as the other person saying, why don't we both take a big piece of this upside rather than trying to take slice up a pie that's in front of us, right? So it's focusing on the future pie rather than the pie that's in front of you, right? It's creating value rather than slicing and dividing value.
29, never take a standard deal. There's always a better one. And so one of the things here is that like, there's always a better deal. And a lot of times you have to ask for it, which is like, hey, this term and this term and this term are things that are concerning to me. Is there anything we can do about these? Because it may influence. And the big thing here, remember earlier, leverage comes from not needing the deal. You have to be willing to walk away. Like, I can't say this more than I'm saying this right now.
If you need a deal, you have no leverage and you're basically faking. The only way to actually get better deals is to not need deals. And the only way to get better deals when you don't need deals is to ask for better deals and be willing to walk away when they say no. And I can't tell you the amount of times that I've walked away from a deal and the person comes back after saying, well, I can't do a deal. And I'm like, cool, no worries. And they come back three or four days later and they're like, all right, man, I'll do the deal. Right. And then I might be like, hey, well, the terms have changed. Yeah, I'm kidding. Yeah.
But you get the idea, right? Is that one, don't accept standard deals. Two, the only way you can not accept standard deals is have other deals and have leverage. Step three, you have to ask for it and be willing to walk away when they say no.
30 expect low risk amazing returns so one of the things that I found about with the wealthiest friends that I have who are a billionaire plus is that they're just not interested in 10 20% returns they're looking for 50% plus annualized returns because they're like well I figure if I'm wrong I'm not going to get that and if I'm right then I crush it they're like if I shoot for 10 if I'm wrong I'm way below 10 and
And that made a ton of sense to me. And it's just like, it's an expectation of the world. It's like, well, when I invest, I just expect that this is going to be the new average. Most people expect 10% because that's what the S&P does. It doesn't mean that that has to be your personal standard, right? And so thinking through that way has changed how I saw investing in general. 31, don't think in IRR, which means internal rate of return. Instead, thinking how long will this take to double? How long will this take to triple? So for example, if you're like, hey, I want to have a 25% IRR.
It's hard to say this is going to grow by 25% a year. What is easier to say is this is going to double in three. And so the question is, what can I get today that's half off what it's going to be in three years is a much easier question to solve than what do I think is going to grow by 25% three times. Does that make sense? And so changing how you ask the question changes how you'll find the answer.
32, this is a Buffettism, but diversification is a hedge against ignorance, right? And it's only risky if you don't know what you're doing. And the converse of that is that the people who make the most money know what they're doing. And so there's two ways of knowing what you're doing. You either know everything or only know a few things and then only do those things, right? And that's what the wealthiest people that I have seen and witnessed myself,
The games that they play, you know, I've got buddies who only do hard money lending, right? That's all they do. And they do shit loads of it, right? I've got people who I know who just do like market making, which is like basically providing liquidity to buyers and sellers to make markets work, right? That's all they do.
I've got friends who only flip houses. I've got friends who only buy commercial. There's a million games and all of them make tons of money. And so it's really about taking one game and taking it to its natural conclusion, which is learning every single aspect of that game. Rather than saying, I want to be in stocks. I want to be in real estate. I want to be in crypto. I want to also have my side hustles. You can't get good at any of them because you're competing against people who are all in.
That's the thing. Like if you're in stocks, you're competing against hedge fund managers. It's all they do. Right. And so play one game and play it well.
34, I skipped 33 because I covered it in that last one. Returns are in the terms, right? So you probably heard the saying, it's either your price and my terms or my terms and your price, right? And so, or if I said that wrong, you know what I'm saying. The idea here is, in my opinion, terms are far more powerful. Like I could say, hey man, I'm going to pay you a billion dollars for your company, right? Like whatever, everybody who's watching this, if you make money doing anything that's a side hustle, I'll pay you a billion dollars for your business, but it's on my terms, right?
And I can make that deal every time and not lose money. And so that's the thing is that the returns are in the terms. It's in the fine print. And so understanding the terms of the agreement and how many different ways you can make terms. And the only way you do that is through having the conversations and trying to structure it from learning from other people. And so you, A, have to be careful of the terms. But, B, understand how you can use those things to your advantage.
I give an example there. So if I bought your business for a billion dollars, I would say, sure, I'll give you a billion dollars. I'll give you a billion dollars in cash, but I'll give it to you over five years. And the only terms that I'll give it under is that it's already doing 500 million a year in income. And it's not doing that today. But I will happily give you a billion dollars over five years if it makes 500 million dollars in profit next year. It's not doing that today. So on paper, I've bought your company for a billion dollars. What's the reality or the likely that you get it? Very low. Right. And
Under the conditions that you do get it, it's worth it for me every time. And so the idea is spelling out under what conditions would this make sense and then putting that into a deal, into an agreement. Like that is why the returns are in the terms. It's in the fine print, which is where the money is, right? The fortunes in the fine print.
35, whenever possible, use house money. And so what that means is that if there are things that are not your main game, right? If you have the opportunity to recoup your principal and still have money in the game, do that. Because then at that point, then you can get super aggressive with the investments and things like that that you're making, but you're doing it on house money. You're doing it with no chance of losing principal, right?
And so whenever you have those opportunities, if it's not your main game, I would recommend taking them. The amount of times that I have done that, I've been very grateful for it. The times that I have not, I have been bummed that I did not do that. So it's one of the money rules that we added. 36, always know how to get your money back. So whenever you're doing a deal, whenever you're making any kind of transaction, know how to get your money back. All right, because if you think about this, this is a lot like downside protection or preserving the principle, right? Which are just investing 101.
If you know how to get your money back, you have to know the exact way of doing it. Not just like, oh yeah, I can get my money back. It's like, no, but how would I do it? Like walk me through each of the steps so that I have full understanding of how this would work. And when you do that, you are able to decrease, because the thing is sometimes if they actually don't mean it, then they won't have a way to do it and you'll be able to sniff something out immediately. 37, cash flow is king.
And that's both on a personal level and on a business level. So for you, your cash flow is gonna be dictated by your income minus your expenses. When I think cash flow, I'm thinking it's really your savings flow. Because your cash flow in a business is revenue minus expenses. So your cash flow as a person is gonna be your income minus your personal expenses.
And so many people have super high revenue, super high income, but very low cash flow because their expenses are the same. And so the idea is our profit as a person is our cash flow, right? That's what we save every month. That's what we should be. Like if there's one thing that you get from money rules is that you'd be switching your metric
towards what am I saving every month rather than what am I making every month? Because the profit, what you save is the thing that matters, not the top line. And it's one of the biggest mistakes. And so your PRs, your personal records should be around your savings amount, not your income.
38, buy for forever. So this is a Warren Buffett and Charlie Mungerism, but Charlie said, "The money isn't made in the buy or the sell, it's made in the wait." And so a lot of times the idea is, they've given the idea of if you had a punch card, right? If you've got 20 punches on it, and those are the only investments you could make, you'd have a much better investing process. And believe it or not, they're some of the most successful private equity funds in the world actually run this style, right?
Some of the most successful funds in the world actually do this with their traders. Each trader only gets 10. That's it. And so if they want to buy something else, they have to sell something they currently have. And so this process gives constraint to the decision making, which forces you to make better decisions. And so if you could never sell anything you buy and you made that the thought process, when you are buying, you could never get out of it.
then you buy differently and you buy super long. And then ultimately that's what doesn't interrupt the compounding process. And that's what unlocks huge wealth later. 39, you heard me say it earlier, but FOMO means go slow, right? You feel FOMO. It means slow down. It means take a second, give a breather, put some space between you and the decision because most times FOMO,
99% of times. And a lot of people are feeling it now. The thing is, it's like, if you got burned in this last crash, remember the lesson. Like if you don't remember the lesson, then it'll happen to you again. So whenever, like when you, next time you feel that FOMO, like, God, I gotta put, I gotta put money into this thing.
Go slow. Because you know who the best people are who invested in crypto? The ones who didn't do it during the bubble. Those are the guys who have the best returns right now. And so don't try and time shit. The best people in the world still can't figure it out. And so, again, if you're buying for forever, if you feel FOMO, if you're buying for forever, you won't feel FOMO because you have an unlimited time horizon. The only reason you feel FOMO is because your time horizon is too short. 40. If you can't afford to lose the money, then don't use the money.
All right. So if you're like, this is my last dollar, then it's probably not a good idea to risk it. Right. Which is why we always have the oh shit fund. So if you can't afford to lose it, don't use it.
41, peace of mind can be bought and it can be sold. And so if there are situations where you're like, man, this is going to keep me up at night, don't do it because you can sell it. You can sell your peace of mind. There's a price that's associated with peace of mind. You can also buy it. Like if there's things you're concerned about, you can literally buy insurance for the things that you're worried about. Like peace of mind can very much be bought and sold. And I can tell you make much better decisions when you've got it. And so long-term, it's not worth the short-term sale of peace of mind to get the long-term benefits.
42 and final. A lot of people think about diversification in terms of industry, but they don't think about it in terms of capital stack. And so what that means is where you sit on
the stack in a business. So if you lend to a business and you're the first, like a bank, for example, is at the top, it's a preferred creditor, right? If the person goes under, they get the house, right? There's a reason a lot of banks don't lose money unless they're getting greedy. Let's not get into that, right? But most banks have been around for a very, very long time. And it's because the business model allows them to not lose money. And it's because they're the first creditors. And so you can invest in real estate, but if you have the bank, the bank is the first creditor. So you can think about diversification between like stocks, crypto, you know,
businesses, whatever, but you can also think about it vertically in terms of where am I sitting on the stack? And so if you think about those in terms of both types of diversification, when the tide goes out, you're the one who gets your money back first.