hey it's Bradley welcome to firewall we've got a special live episode for you guys and it features Professor investor podcast host impressario the wonderful Scott Galloway uh I was lucky enough to interview Scott in front of a soldout crowd about his new book the algebra of wealth here at P netware um it is a fantastic book it is full of great lessons and this episode is full of grace stories from Scott and how he's built his companies his wealth and most importantly his character so I love this interview and I hope you guys enjoy it too so uh welcome everybody this is definitely the best crowd we've ever had at p&t net wear so I am really excited um this is you should know this is the only time in the two years we've had this store where people have texted me and said hey can you hook me up with a ticket it's sold out um that never happens for these kinds of events so thank you you um we're here to talk about Scott's new book the algebra of wealth um not sure how many of you had a chance to read it yet obviously just came out um but I would imagine that is anyone here not a Prof G listener who would have the balls to raise their hand and say that at this point even if they're not that guy right there um if you like the podcast the book feels like you're just listening to the podcast for an extended period of time that same voice that same kind of narrative tone the same logic the same irreverence um the same vulnerability and honesty that I think is makes Scott's podcast so effective and everything else you that so effective um is exactly what you get in this book too so uh I think you're really going to like it um so when I was going through it I wrote way too many I think I came with over 40 questions for you so uh that's way too many so I I'm cut it down to stuff that I'm interested in which may or may not be what you feel like talking about but um let's start with these and then I'll kick it over to the uh to the audience so um you right find something you're good at that people will pay you for and go really really hard at it spend less than you make so you can deploy a platoon then a division then an army of capital that fights for you and your loved ones while you sleep diversify so you can endure the unknown that surrounds us and have a long-term perspective embrace the wisdom to recognize time will go faster than you think and goes on to eventually end this is the whole shooting match which is pretty much the end of the book um how long did it take you to realize this and like given that a lot of people in the audience are younger than than you and me you know how can they internalize and kind of get to the that perspective faster than it took you to get there uh first off Brad thanks thanks for having me thanks for every whenever I walk in a crowd like this I got I got I wonder when it's all going to end I I wonder when I'm finally going to say something really stupid or people are going to find out that I'm not the person I portrayed that I am um look it took me it took me the better part part of 20 years post College to realize quite frankly how many terrible mistakes I had made financially and as a result the amount of emotional and mental anguish I put myself through probably unnecessarily and the the motivation or the inspiration for the book was you know that study that says that you are your five friends there's just this these there's crazy studies showing that the four people you hang out with most you become their same body mass index you become their same politics root for the same teams live in the same place and shockingly earn about the same amount of money but amongst those five people there's greater variance in who ends up wealthy and not wealthy of those five one will end up financially stressed three will be fine and one will end up wealthy so I got fascinated with the notion of what are the behaviors of people who end up much wealthier than their peers who made the same amount of money and I decided and I I started thinking about it and I try to distill stuff down to an equation my class is a series of charts because humans have a difficult time or a much easier time holding on to constructs and if you're a teacher what you want is you want you want some residents you want people in their careers and their lives to be able to pull out something and have it be useful so essentially the the equation of the calculus of the geometry and everyone's like why did you call it calculus anyway is uh find your talent um I'm a big believer in that the worst advice you can get is to follow your passion the person F telling you to follow your passion is already rich and typically that person has made their billions in Iron ore smelting and uh you know it it's just it's young people can often mistake their hobbies for their passion and I think your 20s is about workshopping and trying to find something that you could be great at that you could be in the top 10% that and this is the key Point has a 90 plus% employment rate there are 180,000 actors in Sag aftera these are the most talented actors in the world it's not easy to get into the union and of the 180,000 87% don't have health insurance because they didn't make more than $23,000 last year so your return on your invested capital and there's a lot of young people here the capital you have is time the return on your invested capital is inversely correlated to how sexy the industry is if you want to be a chef model an athlete an actor open nightclubs be a DJ you better get bright green signals almost right away that you are in the top 1% if not the top 0.1 otherwise you're setting yourself up for a life of frustration uh you should absolutely pursue those professions if you have Rich parents if you if you don't I meet documentary filmmakers all the time and I'm like oh okay so you're rich um if you don't have Rich parents what I would suggest is if you get into an industry where you think you can be great and this isn't easy I I thought I was going to be a pediatrician when I was 18 applying to college chemistry disabused me of that notion I thought I was going to be an athlete in high school UCLA Athletics disabused me of that notion when I got out of UCLA I thought I was going to be an investment banker two years in fixed income of Morgan Stanley told me that this isn't for you so I kept workshopping stuff until I found something I thought well I think I could be great at this and then your job is to invest the requisite 10th hours of grit enduring rejection try to get certified uh try and aggregate allies such that you might be someday in the top 10% and being in the top 10% of something that has a high employment rate and discovering the Mastery of it the the economic accoutrements the camaraderie The Prestige the relevance the broader selection set of mates than you deserve all of these things will make you passionate about whatever it is Mastery and getting Prestige and getting Economic Security is an amazing thing I am so passionate about taking care of my kids stressfree I can't even well I can't imagine but when I was sitting in the the delivery room and my oldest had the poor judgment to come marching out of my girlfriend in 2008 when I had just lost everything I mean everything I had negative net worth you know I'm worth 30 or 40 million on paper in January of 2008 and by June of 2008 I was worth negative3 million and so when my son came out I had this overwhelming nausea and everyone thought it was because of child birth you know this guy's never seen a child being born before that wasn't at all it was nausea from this overwhelming sense of failure that I hadn't lived up to my ultimate obligation to be a good dad right away you know that I was failing this kid did cuz if IID just been a little bit smarter uh I could have saved myself a lot of mental anguish anyway and I'll come to that find something you're good at in an industry that has 90 plus% employment and by the way 98% of Industries have 90 plus% employment and you will love you will be passionate about taking care of your parents you will be passionate about going to stage coach for the first time which is what I'm doing this weekend and I don't need to worry or save for it I am passionate about giving money to things that are important to me and it makes me passionate about these really boring industries that I'm good at analytics storytelling right I mean I've just gotten really good at a few things that are pretty not the romance Industries the second part of the equation so the first thing is your focus you have to make money to be at some point financially secure again unless you're born into money the next thing is kind of what I call stoicism and it's actually the wrong word it's trying to have some maturity and I didn't have this mat maturity to recognize that no one's thinking about your as much as you are that no one's as impressed with that BMW you own as you are and drive a Hyundai you don't don't be the guy late at night that's ordering a bottle of Grey Goose in a club thinking it makes you more attractive to potential mates it doesn't figure out that stuff at a young age while it's important because you're in your mating years if you can have some discipline to recognize that other things are more important in life and have be able to control your emotions around falling into the Trap that every day every day the brightest people in the world who are the most well-resourced are declaring war on your instincts and that is they're trying to convince you with psychologically tested offers on a screen that you're on 16 hours a day to at the exact right moment convince you you should upgrade from economy to economy plus to uh business class right to offer you this happened to me this morning I get my my protein shake from Joe and the BO juice and my tuna avocado sandwich tunacado I think it's called and right at that moment hey do you want to add flowerless chocolate cake from balazar balerie and I'm like I love chocolate cake yes and you know that's another 12 bucks plus fees plus it is so hard not to spend everything and every day in a capless society the brightest people in the world are trying to get you to spend more money and try and have some discipline and realize that things like working out relationships self-worth knowledge are really the most rewarding things such that you can develop a savings muscle I'm not suggesting you don't enjoy your youth you know go to go to music festivals occasionally buy something stupid that's fine that's called youth but you should at least establish a savings muscle where you think okay I understand how much I'm making and I'm going to spend slightly less than what I make and understand and make connect those dots a lot of people never form that muscle their entire lives they just can't even conceive of it oh I have money it's meant to be spent they never develop that discipline such that you can go to the next part of the equation and that is let time take over and you need to fight another flaw on the species how old are you young man okay realistically you're you're thin you're living in New York you have good genes you're probably going to live likely this is an insurance an insurance company would say this guy's probably going to live another 75 years but here's the thing because of the majority of the time on our planet our species hasn't lived past 35 it is impossible for young people to wrap their brain around the notion they're going to be here almost another eight decades so you don't tap into one of the most powerful sources in the universe and that is compound interest and that is if you can save $200 or $300 a month in your 20s and then 500 maybe a th000 bucks a month when you're in your 30s as you start making money when you get to 60 and I don't you're not there yet I'm not there yet I can tell you this anyone over the age of 40 in here wow it's gone really slowly said no one ever I cannot tell you I mean Jesus Christ hasn't it gone fast it literally it goes by like in a blink and the mistake I made I made so much money in my 20s and 30s and I was figured out a way to spend most or all of it and if I had just put a little bit aside just a little bit and let the S&P takeover which was gone 11% a year since 2008 and you think that's not a big deal 11% come on I can do better than that I understand crypto or whatever it is right that 11% a year means every 21 years your Investments are up Eightfold and you don't need to worry about it you don't need to be a hero you don't need to find the needle in the Hy stack you just buy the entire hay stack and then that leads to my last part of the equation and that is diversification and again this is where I always really screwed up and I didn't learn this until I was well into my 40s I started a company called red envelope and went public and I thought anything I really throw myself at because I'm very talented I am I'm not a humble person I'm very talented I work very hard but I'm like if I throw myself at a company and it's doing well and it's gone public on the NASDAQ okay I'm worth $22 million in envelope stock what do I do I go to the investment bank and say how do I borrow $10 million against my stock so I can buy more red envelope because I always thought that to be a real baller you had to be committed I wanted to make a hundred million I had control over this anything I went on all in on was going to be massively successful because the above I'm awesome and what I didn't realize is that success is about 49% of of you and it's about 51% of things you have no control roll over the majority of My Success is not my fault being born in the 60s a white heterosexual male in California was like winning the lottery really was for a variety of reasons I'll come back to that but I kept doubling down I never Diversified on anything so in 2008 happened and the credit crisis happened and red envelopes credit line got pulled and then at the same time bad news is usually has momentum to it we sent out during the holidays we had a software glitch and the label gun went crazy and we sent 30,000 gifts to the wrong addresses that's really bad for business and within 17 days I went from being Worth 22 million in Red Envelope stock to -3 million because I never thought well why don't I just take three or five million bucks out of red envelope and put it in a Brazilian mining company or put it in Japanese bonds that regardless of what happens to the e-commerce Market in the United States just just in case I start having kids just in case I don't want to be really mentally stressed put a little bit of money somewhere else and diversification is just so incredibly powerful and I didn't figure this out despite having a degree in economics being a graduate student I mean supposedly I'm the guy that's supposed to understand this stuff any one stock has a 50.1% chance of going up on any given day but if you purchased any five stocks in the S&P and you held on to those stocks for 10 years no one has ever lost money and what the majority of great investors will tell you I see boyin Curry who was a great investor what boyin would tell you is one of the keys to staying wealthy is staying wealthy it's not losing money and not only is diversification a fantastic way of getting risk-free return it's a fantastic way of protecting your mental health when you go from being very very wealthy to negative 120% in 11 days I can tell you that's a really ugly 11 days and the next 11 months are also really ugly and sure if you get lucky and people will take screenshots with this and the media loves these these stories of Steve bomber barring more Microsoft stock and Mar Mark Zuckerberg refusing an offer for 10 billion that's the you hear about you don't hear about the mental anguish of people who decided not to diversify so what do you want to do you want to find your talent in your 20s Workshop it recognize the first thing you pick may not work it took me three or four swings at the at the plate that's okay finding out you don't like something or you're not any good at it is a blessing so you can move on to something else try and live a little bit below your means and just establish a saving muscle in your 20s so you know how to do it and work out that muscle when you start making some money in your 30s and hopefully find a partner that's on kind of the same has the same sort of economic values as you recognize time is going to go really fast and if I said to you I have this magic box and what feels like an instant if you figure out a way to put a th000 bucks in there I'm going to get you 21,000 bucks back in what feels like an instant how much money would you put in that magic box as youth you have access to that magic box because the next 21 years are going to go really really fast and you don't need to be a hero just put it in lowcost S&P index funds and then finally just diversify you you may not be able to a lot as a young person you may have to go really Allin to buy your first home if you're an entrepreneur you have no choice early on to go all in but the moment you have an opportunity to take some off the table to diversify a little bit do it I now don't put more than three to four% of my net worth in any one thing and I try and diversify like crazy I'm in the craziest that has almost nothing to do with the other thing if if I have an opportunity to invest in something that feels totally alien a petroleum refining company in Switzerland an aircraft maintenance engine company in El Salvador I love those things because if one thing goes to zero I had an investment go to zero today and by the way I think it was the investment I was most excited in about it was a text-based healthc care company focusing on preventive medicine via your phone baller CEO tier one VC all these incredibly Masters of the Universe on the board oh my God so excited they let me in they did me a favor they let me invest you know several million of my own money I could have invested more but I'm like I am not investing any more than 3 to 5% in any one thing of my net worth so when I went to zero today I'm like oh that's a bummer but I have Kevlar on and nothing really can really really hurt me you know it's a nuisance oh that hurt but I'm fine I'm absolutely fine divers ification is your Kevlar get that Kevlar as soon as possible a bit of a word salad there that's great so one of the things that you write about is a survey of senior citizens that found that their biggest regret was worrying too much and you write the things that you really beat yourself up about you'll look back and realize they weren't that big of a deal what should we worry about what should we worry about uh you should be in great shape I think we have shamed physicality uh 70% of America is obese or overweight and because the industrial food complex wants to addict you to shitty fatty salty food and then hand you over to the industrial diabetes complex there's a profit motive in convincing people who are overweight that they're finding their truth I think your health I think at a young age establishing a real commitment to emotional and physical fitness is hugely important um I think a lot about masculinity I'm writing a book on it I think every man under the age of 30 should be able to walk into any room and know that if got real they could kill and eat everybody or outrun them and I'm at the stage now where I'm focusing on out running people but I think being physically strong pretty sure women can do that too most women it's interesting I go to CrossFit and the wonderful thing about CrossFit is we celebrate women's strength as opposed to celebrating women to be quite frankly anorexic we celebrate women who are really really strong but I do think that men have an advantage and I'll come back to this men have a lot of disadvantages as youth it ends up that why boys are physically stronger they're mentally and emotionally much weaker when they lose a male role model they become much more likely to commit suicide end up in jail become addicted whereas girls have the same outcomes in single parent homes so they're actually mentally and emotionally much darer and I say this sort of tongue and cheek but when you're young you really should be worried about establishing outstanding strength flexibility emotional and mental health take stock work out three to four times a week take stock of what you're eating find people who make you feel good about yourself figure out what triggers send you into a dark place and then start creating a series I have I figured out right I struggle with anger and depression which probably isn't going to shock anybody but I figured out this is how I get when I I recognize when I'm going into a dark place I recognize it I have some triggers that I'm like oh go oh no I'm going dark and I have the few things I do you know and I call it um scaffa the first thing is I sweat that resets my swi my system I I need to go sweat a lot C clean I eat really clean I don't eat Al for a while something about eating out and the salt and all the is um bad for my mental state uh being abstinence not the abstinence you thing I cut out all THC and alcohol both of which I love and I use a lot but when I'm really dark I just take them out f is family I try and stick around my boys because they take me out of my head because they're so demanding and so awful sometimes that I can't just dwell in my own and then a affection I try I tell my boys I'm not feeling great and they know that they're supposed to okay we're supposed to go lie on dad or like throw our legs over them and I let the dogs up on the couch just be affectionate with any other mammal around you and that helps me snap out of it but if you really want to be successful in life I would suggest you really want to workshop and get outstanding at physical and mental Fitness at a young age because if you let it slip if you let Neurosis turn into depression that occurs if you become really unhealthy and start convincing yourself that oh Uncle Joe lived to 95 and smoked a pack of cigarettes and drink a lot which means that I'll be healthy when you get to our age it just catches up to you and it makes you much less likely to be able to enjoy your life anyways what you should be worried about is being physically and mentally strong while you have all the advantages you can get to a nine on both those things I think especially physical your age get to that point because then there's no choice it becomes a slow burnd down it's going to get cut it's going to go down do you want to start from a nine when it starts going down or do you want to start from a four because you are going to lose a lot of those things as you get older anyways that's what I would worry about if I were younger so you talk a lot in the book about sort of time being your most important assets the real currency um and you explain kind of when you should use your money to buy yourself time and and when you shouldn't can you talk a little more about how you see that so uh comparative advantage you know another famous concept and that is try and find out something you're really good at and then try and um spend as much time and decision capital on that thing you're good at once you have a little bit of money you probably should hire someone to clean your place and then spend that time either working out or working or socializing because it's pretty expensive to get someone to clean your place and it'll take four to six hours I'm not suggesting I think it's probably a good idea to clean your own place when you don't have a lot of money every Sunday my mom and I used to clean our house I think that's good for a kid I forc my kids to do some cleaning but try and Outsource as many unimportant decisions as possible I no longer pick my clothes I haven't picked a movie a vacation I don't I try and screen out every decision that I'm not great at so I can focus on the decisions I am good at and really think about the stuff that's matter that matters because you only have a certain amount of decision Capital uh and you want to focus on the things you're really good at so try and Outsource a lot of stuff I try and do stuff in rote I try and do stuff at the same time so there's almost no decision um anyways cool so you're right at one point I saw my work through other people's eyes and believe their criteria for what constituted economic success and I got those things I gar their status and found pleasure but real Economic Security and Lasting happiness eluded me I didn't know any other way to be so we all let other people Define how we see ourselves and one of the things you talk about in the book is sort of trying to not do that um what's the best way to build that muscle to resist the temptation that we're all so susceptible to of just defining ourselves through other people's eyes I don't know I think that's I think that just takes character or people around you who love unconditionally or reading the you know the philosophers I think that's difficult I also think I just this book is not what should be this book is what is I believe America becomes more like itself every day and that is it is a loving generous place if you have money it is a rapacious violent place if you don't anyone who tells you money can't buy happiness has not read any academic literature there is a very strong correlation between money and happiness I'm not saying that's a good thing it is that is what America is and the correlation is the following middle- inome people are much happier than lower income people rich people are modestly happier than middle- inome people that's the bad news there is a correlation between money and happiness the good news is that it tops out and that is once you get to a certain point it's diminishing returns now billionaires are no happier than millionaires that's also a myth but they're not a lot happier and what does that mean it means that if you're fortunate enough to get to some level of Economic Security you got to realize that money is just the ink in your pen it can write new chapters it can make certain chapters burn brighter but it's just a means to an end and real happiness lies in relationships it's like what's the point of money I get to buy it's fun I love buying stuff I'm a total materialist but the real endgame the ends to the means of making money is that it reduces and relieves you from the stress that gets in the way of deep and meaningful relationships 70% of divorce filings are from women and at the heart of that is not infidelity it's not usually not shared values it's economic stress on the household that turns every cut into an opportunistic infection kids in low-income households have higher resting blood pressure than kids in middle-income households so I just think at a very early age you want to commit to some level of E Economic Security now having said that that doesn't necessarily mean getting to Economic Security in New York Because by the way that is so hard it's just the bar here to have any sort of reasonable level of Economic Security is just insane so what I'm suggesting is you have an honest conversation because one of the myths is that wealth is about how much money you make not really it's about how much money you spend what is wealth what is Rich I'll give you two examples I have a close friend who runs uh the m&a group for a very prestigious Investment Bank he makes between I don't know seven and 10 million a year and because it's all current income right it's not money from selling stocks or bonds it doesn't qualify for a capital gains and it's all current and it's a big number he pays about 53% income tax rate you still think wow okay 3 to six million a year that's pretty good between his wife his two kids his ex-wife his two kids from a previous marriage his home in the Hamptons his belief that he's a master of the universe and needs to maintain that perception his flexjet card all this I can tell you he spends nearly all of it and the years he doesn't make a lot of money he spends more than he makes and I can't I know this firsthand he is very very stressed out and worried about what happens when the Music Stops my father's going to be 93 in 94 in a few months between his Social Security and his Royal Navy pension he was a frogman in the Royal Navy he makes $552,000 a year in passive income he gets $4,300 a month he spends $48,000 a year he has a modest home he goes out his big Thrills he goes out for Mexican food every Friday swims every day you know he loves trivia day at the you know all that at the senior center and my dad's that kind of guy he'll go out for Mexican food same place every Friday and he'll ask for his half half finished frozen margarita he'll ask for it to go I mean my dad was that guy I'm still scarred for it when we he used to take me and my friends to movies he would collect money from them after the movie and I would just be like oh God but but he's Rich passive income that's greater than your burn is the definition of Rich so part of your plan to get to Economic Security is having a sober conversation with yourself and your partner around what is the spending side of this equation because deciding to move to akan Ohio there's a lot of really happy people in akan Ohio and say do we have the opportunity to move there and make a decent salary and what would the number be such that by the time we were 50 or 60 we would definitely have enough money saved such that the interest on that the return on that and you can do the estimates of what the expected return would be would at some point be greater that passive income than our than our burn that's the definition of rich and it's okay to say I don't want to work all the time I don't want to place the expectations on myself that I need to be a baller and make hundreds High hundreds of th if you want to if you want to stay in New York and have say two or three kids you're going to have to make a minimum kind of high six figures if you want to live in the city and have three kids I mean unless you're like really can dance in Between The Raindrops I left New York because I couldn't afford it in 2010 with two kids young kids at home I was and by the way I talk about money I use numbers people who promote the zeit guy so you're not supposed to talk about money it's nothing but a ploy to keep poor people and middle- inome people middle income such that rich people who have total symmetry of information and know how much everyone makes in their company have asymmetric advantage over you and it also lowers the expectations we have on rich people because we don't exactly know how much money they're making I think it's important to talk about real numbers in 2008 2009 I was teaching at NYU my my wife was a Goldman I think we were making probably $6 or $800,000 combined a lot of money working really hard a lot of money a lot of stress lot of money I felt broke I'm like this is just kind of humiliating to make this much money and be worried about sending our kids to private school because $58,000 a kid two kids6 I got to make 200 Grand to send my two kids to school could have sent them to public but I'm a narcissist and I want a Prestige brand so we moved to Florida and immediately cut our expenses by probably 40 maybe even 50% and it was like a giant sigh and by the way it comes to a tradeoff delr beach is not nearly as cool as my Manhattan and I had to commute to New York Sunday to Thursday night which took a real toll on me I didn't get to see my boys during the week but the tradeoff was I was able to get to some level of Financial Security much sooner so my point is wealth is knowing that at some point you're going to have passive income greater than your burn which means saving money which means an honest conversation around your burn people are so focused on their top line but they're not as focused as they should be on their burn at your age you should all be here the most opportunity is in cities two-thirds of economic growth is going to happen in 20 just 20 cities over the next 30 Years this is the place to bump into professional and personal opportunities but it's okay to at some point have an honest conversation around all right how do I get to Economic Security and mental health by moving to a place where I can get to a point where my passive income is going to be greater than its burned the majority of people can't stay in New York for that this is a training ground and then people leave about the time they have kids and there's absolutely no shame in that at all so I'm going to ask you one more question for me I'm going to turn over to the audience and it's kind of a a weird one but but you did Inspire it so you write a carried an imaginary scorecard with me everywhere in my into my 40s any slight rudeness or lack of respect need to be countered with an equivalent counter punch to make the world right again God what a waste of energy don't make that mistake you don't know what's going on with that person maybe they just got fired file for divorce or found out their kid has diabetes or maybe they are just cruel who cares you shouldn't you don't need to respond to every slight every small Injustice so the thesis that I've kind of been mulling over is you know when we think okay what traits do we want to ultimately be successful which we think will then bring us happiness you know we pick sort of intelligence and risk tolerance and all that stuff isn't geniality ultimately the the best trait you could possibly have that if instead of like you know like you I have to sort of work hard to not bristle with every one of these things and kind of contain myself if I didn't have to work that hard it would just came naturally to me that sounds great yeah I think that's I think it's right I would call it character not geniality but wealth is a full person project another like I would say the most interesting thing I found in the research around people who become wealthy really wealthy is there's this myth this Elizabeth Warren Bernie Sanders myth that every billionaire every very wealthy person by virtue of them being very wealthy crawled over other people and is not a very good person and unfortunately it's cemented by a small number of exceptionally wealthy young men in technology who through a lack of immaturity or idolatry of innovators don't equit themselves well in my view but the majority of wealthy people are High character people because the only way you're going to get really wealthy that I've seen is if you collect allies along the way you want to be the person that's put in a room of opportunities even when you're not in that room oh wait they're looking they're looking for a position at this firm I just met Lisa would be so good at this and I love Lisa I want her to do well and I'm going to follow up at Google they did a study and they found that when they put out a job opening they get for product management they get 200 CVS they pick 20 to come in an interview and 80% of the time the one person that they pick out of that 20 is someone who is being referred and championed by someone internally someone who walks into the head of hiring and says trust me I know this guy I know Bob I I trust me he's fantastic great guy really good really hardworking oh you know him personally and you're willing to vouch for him then we'll hire him so the bottom line one of the things you want to get a job you want to be always in a room of opportunities you need to be very social and two the thing that really f fed me up was that I just made the assumption that everyone want I wanted to be two things I wanted to be rich and awesome that was everything I wanted until the age of 45 I grew up with no money very early I looked around and I'm like I thought I understood America and I'm like I am very committed to making money and I assumed everyone else just wanted to write off my awesome coales I had very little empathy I wasn't very kind I wasn't a bad person but I wasn't thinking about people I also o made the mistake of having the scorecard and the scorecard was amongst my girlfriends my ex-wife my business partners how much am I getting from this relationship relative to how much I'm contributing and the problem is that you will naturally inflate your contributions and accidentally diminish theirs and there will be deficits where they are not contributing there'll be deficit periods where you are not contributing and if you have a scorecard you are guaranteed to at some point be really disappointed and angry in this relationship express your disappointment and anger they might be at a bad point in their life and the whole thing begins a downward spiral the fastest way to snatch Financial Victory from uh excuse me the fastest way to snatch Financial defeat from the jaws of financial Victory is divorce when I got divorced I lost 60% of everything literally over night because split the assets and then another more expensive to maintain two houses you're be a force seller at almost inevitably the wrong time I'm not suggesting you stay married no matter what I'm not suggesting that what you also have if you have a small or medium-sized business that comes flying apart and it's a good business you can't figure out why it why it went down so fast it's almost professional always professional divorce it's partners that don't appreciate each other that aren't generous with each other so unless you bring forgiveness love and generosity to a relationship personally and professionally you're not going to be that successful so what I did and it really kind of liberated me I put away the scorecard and I thought all right what kind of dad do I want to be right what kind of friend do I want to be what kind of husband do I want to be what kind of business partner do I want to be what kind of financier do I want you know what kind of investor do I want to be and I have this this is the kind of person I want to be and I don't measure anything I only thing I measure is myself am I being this person I'm not suggesting I put up with I don't I don't get abused or anything like that at some point you got to walk away from anything but put away the scorecard and it's also in your own personal relationships it's really nice to say I would like to add Surplus value I think about the difference I'm trying to figure out the difference between a boy and a man right is that there's all cultures have all sorts of things that are supposed to signify when a boy becomes a man and it's usually some sort of religious ceremony or some sort of physical feat and I love Richard Reeves notion of surplus value and that is your whole life maybe even many of you up until this point you've absorbed a lot of love and care from your parents and your community you've absorbed a lot of Education some of it's state funded you've absor you've absorbed a lot of benefits from being born in an amazing country when you become an adult I think and and by the way I'm using the term masculine a lot I think that masculinity is a a social construct I think a lot of women demonstrate fantastic masculinity I think a lot of men demonstrate fantastic femininity I don't think these are sequestered to people born as one gender or the other but I think it's important to embrace both wonderful attributes of gender and celebrate them but I think when a boy becomes a man is he gets to a point where he's loving people more than they are loving him he is producing more tax revenue than he's absorbed he is protecting more people than have protected him right he's influencing more lives in a positive way and if you can get to that sooner and think you know what my goal is to be a better husband sometimes than my wife is to me right my goal is to be a better business partner sometimes maybe most of the time than my business partner is to me that's kind of liberating you just put away the scorecard and you're not disappointed because Prof my biggest failings economically have been character failings not assuming the best in people getting angry flying off the handle getting into Wars with my Venture capitalists you know not being as kind and as forgiving and expecting more from my relationships than I perceived that I was giving put away the scorecard it just it's liberating and the most successful people I've I I can ascertain have one thing in common they're empathetic and two they're generous they're generous in 35 years in business I have never been sued nor been sued and I feel like I've been treated poorly a few times but I decide I'm just not going to work with them again Warren helmet one of my mentors taught me that and then when I got really angry and I struggle with anger and I thought I really want to serve these people a cold lunch I am pissed off one another one of my mentors a guy named Hamid mogadam who's the CEO of prologo just called me and I got into a war with Sequoia Capital the most powerful Venture Capital firm in history by the way awful people just FYI awful people still still working anyways and I'm like planning all this and how I can like call every entrepreneur and their portfolio companies and tell them what horrible people they are and I have this Communications thing and I hired a publicist and I'm just like about to go nuclear and Hamid calls me and he's like you really want to have you really wna like you really want to register revenge against these people you really want to serve them a cold lunch and I'm like yeah and he goes okay he's like sit down he said meet actually said meet me for lunch and I'm laid out and I'm thinking we're going to like you know redraw the maps of the world and he's on board and we're about to I'm about to get my bloodlust itch scratched with this plan to take down seoa capital and he's like Scott this is what you're going to do the best revenge is to live a amazing life be successful find people you love find people that love you unconditionally and he's like that is the best revenge take all of this energy you have on seeking revenge and put it into your work put it into your relationships and that just begins to shrink and when they find out about how happy and successful you are they will hate you and it'll be upsetting to them that's your revenge and I constantly try and remember that and I want to be clear I'm not that spiritual I still work on it I had this person come after me a few weeks ago online while I was on vacation insult me and my colleague Jonathan height and said that we were grifters creating a moral panic and that we didn't care about children and I lost my and I did a companywide meeting this is how we're responding to her online and offline and I'm going to send a letter to the editor of the newspaper that this person works for I had my whole strategy laid out and something I have learned to do is I never do anything in isolation I called a team meeting and I said this is what I'm thinking of doing what does everyone think and I have a lot of young people in my company and all three of the young people said Scott why are you playing into the algorithms of social media that you claim are terrible why are you getting caught up in this rage cycle and then one of them goes Scott look at your life look at hers what the are you doing and right then it was just like they're just so right and I keep preaching these things but sometimes it's really hard to read the label from inside of the bottle in some anyone does you wrong ask yourself okay is this a relationship that I've committed to because I love the saying the key isn't to get the apology it's to forgive the perceived debt right and then two if someone really does you wrong just again serve them a cold lunch by just having an amazing life and I'm still working on that but I find that generally speaking really successful people don't spend a lot of time trying to seek revenge they just spent a lot of time trying to make their own lives really amazing all right we're going to open up to you guys uh first question lady right here do I have to be official with the microph I guess I'll be official with the microphone oh thank you sorry can you introduce yourself yes my name is Savannah and right uh um anything else you want to know whatever you want um I'm a freelance consultant great uh and I've started a couple of businesses myself usually by myself which is actually the topic of my question for you yep you have started multiple businesses with multiple partners and you have mentioned on multiple platforms y that it's more fun to do with others yep your relationship with Cara seems amazing so I'm curious what should one look for in a great partner a business partner I think you covered romantic Partners in your last book yeah uh great business partners should just have entirely different strengths than you I think someone who's different than you um my first partner guy named me and chaplain a total introvert really good at technology very anal very just sort of like the two of us used to have to present because we started a strategy for him and he would almost throw up and die when he had to present but he had you know he had his meals on a spreadsheet and I mean he was just so different than me and you know would travel with every charger known to man you know just that kind of guy right and I thought I need this guy around me and he needs me so I would say someone who has different strengths than you someone you have some level of affection for so you can forgive each other you're talking about Cara Cara called me today and she's like you got to tone down the Gaza where you know she was just upset and and I naturally kind of it's something I'm passionate about I naturally reared up and started getting defensive and angry and I'm like you know she likes me I know she likes me I know she cares about me I just need to take a beat and kind of accept it it's nice to work with people that you can develop some level of affection for because the most rewarding thing you know raising kids with someone is really really rewarding when it goes well and building a business with someone and you can also get a lot of this from the people at the company it's just so rewarding when it works it's like I talk about I talk about my mom a lot in the book I used to every time something good happened to me I used to call my mom literally every time because you know you can brag your mom oh Mom I just I just got into Berkeley or Mom I just got my first bonus or Mom I just met this really nice woman in the line at Starbucks and I got her number I would literally call my mom and then when my mom now that my mom's no longer here it's strange it feels as if nothing great really happens cuz it doesn't get cemented when you do in isolation and you don't share Victory with people it kind of for I think at least for me it's like it doesn't happen inevitably if I ever get upgraded to this massive fat suite at a hotel I know I'm alone and it's like who cares who cares that I have the triple bathtub and a view of the skyline and a butler waiting outside to like rub my feet if I ring a bell or something I mean if there's someone not there with you it just doesn't it's like it doesn't happen so I think building companies with partners and I think it's so rewarding it's really um we're mammals we're supposed to do stuff with each other um anyways you didn't ask that what find someone that's different than you that you think in a in a way you could develop some sort of um fondness for I wouldn't go to I wouldn't pick Partners where you immediately kind of think I wouldn't really want to hang out you don't have to be the same person or for the same background but do you think over time I feel like I could develop a nice bond with this person but someone who complements your strengths different strengths than you oh thank you oh hi um my question is so I read the the blog last week about the the war against young people yep and I'm kind of like I got the book and I was like okay I'll focus and I'll be stoic and I'll diversify and it'll take a long time and I'm like good plan like let's do it but then I read the blog about how the kind of like deck is stacked against people who are young I'm 23 and I was kind of like well what is the point of any of that if like the sort of economic WIS are in your face if you're young and I want my question is sort of like like what's the plan like if if you like if like if is working against you in a lot of ways like we have the algebra but like how do you kind of get over the I don't know fism maybe about that yeah understood so do you have a college degree yeah uh from NYU from an elite College yeah no so you have an elite college degree uh do you feel physically and emotionally healthy personally yes it's others that are worried about you okay so you're in you're in the greatest city in the world you're young you're healthy and you have an elite college degree you're going to be just fine the the people I'm worried about so I just did this uh by the way I'm going to name drop a lot cuz I'm desperate for your affirmation and deeply insecure I was just Vancouver I spoke at Ted for the first time and my talk was called the war on the young I think the intergenerational theft from people this age transferred to people our age and older is absolutely criminal we used to spend $3 on children for every I'm sorry $1 on children for every three we spent on seniors now we spend $1 on children for every eight we spend on seniors my tax rate for the last 10 years has been 177% because I can take advantage I buy and sell I I I start companies I get shares in small businesses and then if I sell the company I get something called 122 where the first 10 million or 10 times the initial investment is tax-free so when I sold my last company L2 the first 10 million was taxfree most of you don't know that you're not familiar with that rich people are familiar with it right I invest $2 and5 million doll in a bankrupt company less than 50 million do in assets almost goes through the fley of death got sold N9 months ago first 25 million tax free does that make any sense is that literally does that make any sense the person here making 160 Grand pays $9,000 a year in Social Security taxes the person making 1.6 million right pays $9,000 in Social Security taxes our tax rate goes up and up and up and the weird thing about our tax rates is it's actually the workhorses that are most screwed people who make between 100,000 and a million a year in current income you work you get you know from a job it's all reportable and if you live in a city like New York you might start paying 40 45 50 53% tax rates but if you live in a lowcost a low tax state like me Florida and you make all of your money from buying and selling assets your tax rate plummets so the workhorses end up end up absolutely getting screwed and the very very wealthy see their tax rates plummet Co was nothing but in my view a transfer of wealth on Epic Proportions from young people to old people okay we have to flood the market with stimulus all I understand the rationale we're going to pump $7 trillion do into the economy 85% of it was saved wasn't like oh thank God I'm starving or I can't make my rent 85% of that $7 trillion was saved so where does that money go it goes into the market either either housing or buying a house or stocks so stocks went crazy and the myth is that a strong Market High stock prices and High real estate prices are a good thing there's two stages in your life there's investing and there's harvesting almost everyone I see in this room is in the investment part of their life ideally ideally you're finding something you're good at ideally you have the discipline to spend less than you make and you start investing in a house you start investing in stocks while you're investing you want the markets to crash you want to buy assets as cheaply as possible the reason I'm financially secure is that in 2008 we bailed out the banks but we didn't bail out the economy so guess what happened to the stocks as I was coming into my Prime income earning years and getting you know dusting off my pants from the great financial recession I was still making a lot of money I got to buy Netflix at 12 bucks a share Apple at 8 Amazon at 8 Netflix is at 600 bucks right Apple's at 180 Amazon I think's 150 or 160 because we let the markets crash but what happened in covid was the government decided Well a million people dying would be bad but Boomers losing money would be tragic so let's bail out the baby baby boomer Boomer owner of a restaurant when you bail out the baby boomer owner of a restaurant all you're doing is robbing opportunity from the 26-year-old G graduate of the Brooklyn Culinary Academy that wants her shot how the hell do you buy real estate in Brooklyn or by stocks right now when everything is artificially pumped up with $7 trillion that was financed on your credit card that was the most massive intergenerational theft in history why on Earth are we transferring $1.4 trillion a year from The Young to the wealthiest generation in the history of this planet senior citizens I'm not suggesting we do away with it neither of us should get Social Security that's insane and why does it happen because the people that make these decisions our elected representatives are AC cross between The Walking Dead and the gold girls and if I sound aist I am and you know who else is agist biology so does Nancy speaker Pelosi whose first child was born when Fidel declared martial law in Cuba and houses only onethird of houses had color televisions does she understand the challenges a 17-year-old girl who's getting messages on Instagram about extreme dieting tips who's 5'9 and 95 PBS does she really understand those Tech Technologies does she understand the temptation of a gambling app to a 23y old man does she understand the challenges a single mother is facing these people are so insanely old but I guess what the 34 billion doll child tax credit doesn't make it into the infrastructure bill it gets stripped out but you know what made it through no problem the $95 billion a year increase in Social Security through a cost of living adjustment two biggest tax and then I'll I'll stop here two biggest tax cuts mortgage tax interest and capital gains who owns homes and stocks these guys who makes their money from current income and rents you guys it's literally we've stopped investing in young people the average 70-year-old is 72% wealthier than they were 40 years ago the average person under the age of 40 is 24% less wealthy and so young people aren't having kids for a variety of reasons but one of them is economic in 1990 60% of people aged 30 to 34 had at least one child that number is now 27% is it because young people have all of a sudden decided they hate kids they can't afford them they can't afford them 55% of people our age feel extremely proud to be American it's 18% people under the age of 25 and every day it's speed balled by you are constantly thrust in your face images of how well everyone else is doing but you so I can understand the rage I think it turns every cut into an opportunistic infection because young people are enraged so social issues are important I don't say that's fake rage but the incendiary rep off every issue is that young people for the first time in the history of this country a man or a woman at 30 isn't doing as well as his or her parents at age 30 that is a fundamental breakdown in the social compact we have limited disruption which is a natural transfer of wealth from the incumbents to the entrance on your credit card let me finish where I started at your age with an elite college degree living in New York you're not the person I'm worried about we one thanks so jumping off of that curious like how do you bridge the gap between public and private sector um to your earlier Point like if I'm a welled educated person it's not attractive for me to run for office so if you don't have people who can represent you in a certain age grab like how can you change policy is it just going to be done through private sector going forward no I hope not look I think we need final five uh rank Choice voting we need less extrem I mean this is this is Brad's whole thing trying to move voting to the phone um you're you are we have minority represent you know 80% of our Senators represent less than 20% of the population it must be an amazing job because they've all gerrymandered the districts in hard hard red or hard blue most people are fairly reasonable but our elected representatives aren't fairly reasonable they're either very far left or very far right I also think we need government funded um campaigns I think we should pay our elected representatives uh uh at least a million dollars each so they don't try and feather their nest and they shouldn't be allowed to trade stocks or go into work in the private sector for 5 years after they leave office I like what Singapore does it pays it El officials a million bucks a year so they don't just have to themselves out because they don't make as much money so I think there's a bunch of things we could do to get U more representative a more representative government right now it's minority rule um but yeah I don't I think it's uh you know Andrew Yang gave the talk before me at Ted and this is his whole thing and Brad's actually done a lot of interesting work here but I don't I I feel like I need to end on a more optimistic note here um resilience okay thank you you my wife what's going on here um anyways uh what I'll what I'll finish with is he asked me he said resilience I think the key and we talked about this a lot I think the key to success in this economy um is is your ability to endure rejection and resilience and this is something you also find in all successful people and that is your ability to mourn and move on the only thing I can guarantee all of you is that you're going to have a lot of love in your life you're also going to have a lot of tragedy and your ability to get through that tragedy you know you will lose a job you will have Investments go to zero some you love a great deal is going to get sick and die and successful people have the ability to mourn and move on key to my success has been rejection specifically my ability to endure rejection in high school I ran for sophomore class president junior class president senior class president law lost lost lost and then based on my track record decided to run for student body president where I went on to wait for it lose it never really got in the way of my confidence right it never really got in the way I applied to nine schools I got into two one off the wait list I just have never been afraid of rejection I've had nine companies only one out of seven companies is successful so I started nine and I had two that were successful and by the way that's all you need if if you want to a score if you want to score above your weight if you want to punch above your weight class professionally or personally you have to be willing to put yourself in an uncomfortable position and supposedly my wife was going to stop by so I'll tell this story about her when I was I had um I had an apartment in South Beach uh when I was younger and I went to the Raleigh Hotel they had these DJ parties on Sunday and I said I walked in and I said I I saw someone and I thought I was very drawn to and I said 'I am going to speak to this person before I leave I promis myself I'm going to speak to this person before I leave and it's not easy to approach a strange woman under the midday son without the benefit of alcohol it's just not easy when she's sitting with another woman and a guy it's just not easy and I'm like I need to get home I'm going to go home and watch The Sopranos I'm dating myself and bombed out of the Raleigh Hotel and I got near the cabin I'm like I promised myself you told yourself you'd do these things so I bombed back in and I went over to these three people and I said where are you guys from anyways long story short two years later our first son's middle name is Raleigh if you want to score above your what you deserve you want wealth that's greater than the wealth the average GDP if you want a person who's incredibly High character and is more attractive than you that's kind of what we all want right someone who on a balanced scorecard is just very impressive you better be willing to take an uncomfortable W risk the world loves people who are willing to get out a spoon and eat my thing in entrepreneurship is I will call clients over and over I will call people who don't come to work for me back and try and convince them to work for me I I've never been scared of rejection I've always been able to look in the mirror and go you are the answer to a firm's problems you are going to make someone else a lot of money if they invest in you and you're going to make someone really happy you have to surround yourself with activities and people that give you that confidence such that you can endure rejection that is the key to success your ability to mourn and move on and here's the thing that helps me we're going to all be dead soon so anyone saying no to you anything you do that embarrasses you embarrass yourself or you feel public humiliation it really doesn't matter it really doesn't matter you want to squeeze as much juice out of this lemon called life and the way you squeeze is by taking uncomfortable risks that's it that's it Bradley thank you for this firewall is recorded at my bookstore pwar located at 180 Orchard Street on the lower side of Manhattan we'd love to hear from you with questions feedbacks or idea for a guests just email me at Bradley firew wall. Media or find me on LinkedIn and to keep up with what's on my mind and my latest writing please follow my new substack at bradley. substack