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Hey, what's going everyone? Welcome back to the game. We're talking about making more money and fun stuff like that.

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Today, I want to talk about lifestyle limiting your growth as an entrepreneur or as an individual.

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And so I've had this recurring theme the last, I want to call it year, where I've had a few,

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I'll call it high level entrepreneurs, reach out and say, hey, I'd love to work at acquisition.com.

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I'd love to leave it a department or a division. It's been kind of interesting.

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And I was talking to a good friend of mine, Teran Zavatsa, who's president of real brokerage,

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it's a public trade company. We were, we were talking about this really interesting topic,

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which is basically the entry point of talent. And so this will be a little bit more probably,

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I guess if you're an entrepreneur, those will be a high level conversation. But if you're

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the person who's considering making one of these jumps, then it'll be a conversation that'll

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be relevant for you just on the other side. And a few entrepreneurs reach out to me and basically

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say, hey, I'm willing to give up my current business and income in order to join you at acquisition.com,

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which I'm superflattered by. One of the things that came up when I was talking to Shron about this

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was one of the difficulties to figuring out compensation. I realized in both incidents that I

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failed to figure out some sort of deal that would work was there was an element of risk that was

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not being taken into consideration by the former entrepreneurs or the, you know, would be would be

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employees teammates, whatever you want to call it, the talent. The issue comes down to this and

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he was telling me advice that he got from his uncle who, so Shron was telling me this about his

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uncle, who's had like three unicorn startups that he's like co-founded, the guy's just like a savage.

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And so anyways, he was giving Shron advice as talent because obviously he's down in a public

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trading company. So he's an entrepreneur, he sold his company for a gazillion dollars and then

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decided to just get back in the game, right? You know, came up as, as super high-level obviously

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president of real. And so we were talking through this and obviously he did really well or is doing

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really well there. And what makes these deals work versus not? What his uncle told him is never take

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any kind of compensation, meaning never take any kind of salary, try to have zero zero come.

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Shron can obviously, you know, do something like that and then have obviously the second part of

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that sentence is you want to have upside. You want to have potential to purchase baiting growth

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and you want that growth to be as closely linked to the activities that you perform or that

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you're responsible for, right? That makes sense. The thing is is that the amount that you have as

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base or guaranteed is going to disproportionately take away from your upside. And this is what I think

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people don't understand. The couple of entrepreneurs that I spoke with about, you know, coming in

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to acquisition.com, I think they lacked this fundamental piece and I struggled to have clarity

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to articulate it, which is why I'm making this podcast right now. There wasn't an appreciation for

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risk. All right, so let me explain what I mean. If you want more upside, you take on more risk.

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This seems obvious. But what happens is a lot of entrepreneurs adjust their lifestyle to their

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income such that they want their risk-free baseline to be equivalent to their current lifestyle needs

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that they're able to achieve with a 100% risk as the entrepreneur. And this is fundamentally the

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problem. And so it's basically a mismatch of risk appetite for the entrepreneur who then wants

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to translate income in as talent. This is a little bit more like high level recruiting stuff to be

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clear for everybody. So if you're like, I'm trying to find my first five customers and this is

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probably not going to be the best one for you in terms of podcast, just to be clear. That being said,

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the issue comes down to risk and many entrepreneurs and non entrepreneurs, whatever limit their ability

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for upside because they are unwilling to take on risk and they're unwilling to take on risk

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because they have increased risk in their personal lives. And so it's like you've increased your

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personal life run rate, your burn rate, what you spend every month in order to live, your lifestyle,

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such that you can't actually take more risks in a business context which limits your upside.

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And so the thing is is that you cannot have your cake and eat it too. It just doesn't work.

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No competent person's going to be able to make that deal with you.

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How can I articulate this in a way that makes sense? You have to be willing to come in

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and say, I will work for zero dollars. So this is minimizing the risk to the organization that's

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you taking on more risk in order to have upside. Now, this sounds really flippin. See,

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this is me trying to stay g-rated. Obvious. But people still don't do it. This is where

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entrepreneurs get stuck. And this is where I'll speak specifically to marketers. A lot of

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marketers get stuck here. They have a really good skill set. They're very good at marketing.

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They're not very good at anything else. And marketing is a very valuable skill if you're good at it.

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But you're going to be very limited in your life and entrepreneurial career if that's the only

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thing you know how to do. And so basically you have a couple options. One is learn the other stuff.

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Right. The other is go into an organization, decrease your lifestyle such that you can then

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negotiate a percentage of upside that you can directly tie to the impact that you're going to have.

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Right. And that's fundamentally how you get super rich within organizations. There's tons of

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deck of millionaires, sent to millionaires who are and billionaires who are very good at what

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they do and works within an organization. They typically have compensation in

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in form of stock or shares or profit share or profits interest or options, whatever tool or

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you know, vehicle or instrument they use financially in order to capture that upside. That's

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something for a separate podcast. But zeroing in on this has been something that like I think I'm

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sharing it with you guys right now because it took me a while to be I'm like why can't I articulate

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why these deals don't make sense? Because basically the people come in and say hey I currently

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make this I need you to match that and then I also want upside. But I'm like well you're currently

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with 100% risk doing that and you want to come here and have 0% risk and then only have upside

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on top of that which hey that's your prerogative to ask for. It's not my prerogative to grant that.

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The pushback typically again comes from what is required for them to live and this is why in my

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opinion living on the defensive in terms of how much you choose to live versus what you save

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is what allows you to go really aggressive on the big bets those big swings when those opportunities

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come up. And I mean I think Charlie Munger talks about this well RIP he's passed away now but he

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talked about this a lot which was like you don't get that many once in a lifetime opportunities.

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You typically get like call it 6 to 8 and I think what most most time happens is that people in those

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moments they get greedy and they get afraid which is weird because those are kind of like

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contradictory emotions right they get greedy on the upside but they get afraid on the downside.

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They want to have their cake you needed to they want to they want to get all the upside but none of

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the risk. Hey again you can ask for that I don't think it's going to serve you over the long haul.

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I've lived on so little for a very long time especially in the beginning of my career even

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disproportionately to what I made and you know put this in context that I'm pretty sure Layla and I

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at the beginning of our career in our mid and late 20s you know we were taking home over 10 plus

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million dollars a year in income and we lived on less than like $200,000 the reason for that was

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because I wanted to make sure that we were set up obviously financially but also so that if we

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needed to make a big bet we could I always saw personal lifestyle as basically exclusively risk it's

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almost all liability. Now again I only talk about this within the context of business if you're like

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well I want to live my life then that's fine but I also know that I was just about as happy when I was

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poor right as I am now I'm a little bit you know I'm a little bit or off I've got but most of

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that's happened between my ears and not outside of my world in terms of how much money I've spent

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I bring this up because risk is not understood and risk on a personal level with lifestyle is what

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people incur and that limits the risk that they can take financially with business and this is why

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like the first rule of finance is spend less than you earn the less you spend relative to what you

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earn the less your personal risk is so that you can take more risk in other places where you get

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outsized returns think about this one you've got this big riskometer you've got this big bucket of

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risk that you can take in your life where do you want to take that risk you want to take that risk

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where you have the highest potential for upside right or least for me if you're optimizing for financial

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outcomes if that's the the thesis that we're working off of it would follow that you want to

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limit all risk that has almost no upside aka consumption and maximize the risk that you take in the

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areas where you do have the best returns potential and so this is where I think most people screw up

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this is a shorter pod just because it's something that I was just struggling to articulate and I

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feel like I can now which is if you're talented and you are an entrepreneur and let's say you're a

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million dollar your entrepreneur three million dollars you're you know five million dollar your

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entrepreneur and you're like man I want to do something bigger you can either learn all the skills

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which is fine it'll just take time or you can go to a product that you already love you can go to

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a company that you already love and then say hey I think that your constraint is what I'm uniquely

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uniquely positioned to solve and I am willing to forego compensation which means you lower the risk

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of the company to take on more personal risk so that you can have more upside because of the risk

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that you choose to take on there where you maximize it I think for me personally I've been really

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willing to take on risk like lots and lots of risk and I think that honestly that's why I've been

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disproportionately rewarded in my career is just being willing to take on tons and tons of risk

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the the nature of that risk is you know ideally is what feels risky to other people but does not feel

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risky to me but objectively risky things for a neutral party that for me aren't risky because I

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understand it well anyways I wanted to share this this little mini framework for those of you who

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are we're going into union negotiations especially if you're a higher level individual contributor

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you're an entrepreneur who wants to you know maybe sell your business or shut down kind of a

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service thing that you've got going on because you want to do that thing at a higher level inside of

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an organization I hope this this may apply to you and maybe something that finally allows you to

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capitalize on the upside that you think you could earn but aren't keeping amazing lots of love and

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I'll see you guys in the next pot back