WEBVTT 1 00:00:00.000 --> 00:00:04.560 If you're unsure or you're uneasy, you get one of these like tiny like I'm just not sure if I'm 2 00:00:04.560 --> 00:00:08.480 going to do it, don't do it. I'm telling you like there are so many reasons you should not do a deal. 3 00:00:08.480 --> 00:00:10.240 You should be saying no way more than you should be saying yes. 4 00:00:11.760 --> 00:00:15.680 The wealthiest people in the world see business as a game. This podcast, the game is my attempt at 5 00:00:15.680 --> 00:00:19.280 documenting the lessons I've learned on my way to building acquisition.com into a billion dollar 6 00:00:19.280 --> 00:00:22.800 portfolio. My hope is that you use the lessons to grow your business and maybe someday soon, 7 00:00:22.800 --> 00:00:25.840 partner with us to get $200 million in beyond. I hope you share and enjoy. 8 00:00:26.800 --> 00:00:31.200 I'm going to talk about the 24 rules of investing. These are all structured as if 9 00:00:31.200 --> 00:00:35.040 then statements. The reason they're structured that way is that we make many decisions, 10 00:00:35.040 --> 00:00:39.040 countless decisions every single day. The idea is that if we learn a principle, 11 00:00:39.040 --> 00:00:42.800 then we can continue to use that winning principle over and over again. We don't look at the 12 00:00:42.800 --> 00:00:46.320 principle in the micro, which means you could not make an investment and it could blow up. 13 00:00:46.320 --> 00:00:51.200 But the question is, if I had made that same decision-making process over and over and over again, 14 00:00:51.200 --> 00:00:55.680 would I over the longer term have made more money? The reason some of the greatest investors 15 00:00:55.680 --> 00:00:59.360 publish books about their principles is because they know if people make the right decisions, 16 00:00:59.360 --> 00:01:03.360 they get the right outcomes over a long enough time horizon. These are the 24 rules of investing 17 00:01:03.360 --> 00:01:06.880 that I have gathered over my career. If you don't know I am, my name's Auction, I'm across 18 00:01:06.880 --> 00:01:10.080 $100 million net worth at $33. I make these because I hope that if you have a $3 million 19 00:01:10.080 --> 00:01:13.920 to $100 million company, you'll ask us to invest in it and we can hop and grow. Other than that, 20 00:01:13.920 --> 00:01:21.200 it's just free. Enjoy it. If you can't buy it twice, don't buy it once. This is a principle 21 00:01:21.200 --> 00:01:26.400 around sizing how much you're going to put into something. If you can't buy it twice and 22 00:01:26.400 --> 00:01:30.640 realistically, probably three, four, five, six times, don't buy it once because it means you're 23 00:01:30.640 --> 00:01:34.400 probably taking too big of a chunk out. When I got into investing in general, I used to think like, 24 00:01:34.400 --> 00:01:38.400 oh, I'm going to put like a third into this and they're like, no, like your biggest allocation 25 00:01:38.400 --> 00:01:44.640 might be 10%. I was like, oh, so it takes a totally different frame of mind. So the principle is, 26 00:01:44.640 --> 00:01:48.960 if you can't buy twice, don't buy it once. Two, if you're worried about it, you can buy insurance 27 00:01:49.120 --> 00:01:53.040 for it. So there is unlimited insurance products. There are so many insurance products under the 28 00:01:53.040 --> 00:01:56.880 sun. You'd be amazed at what you can buy insurance for. And so, for example, people are like, 29 00:01:56.880 --> 00:02:01.120 I'm afraid of running out of money. You can literally buy money for the rest of your life. You 30 00:02:01.120 --> 00:02:06.240 can literally give money and they will have a guaranteed income until you die. Like, there are 31 00:02:06.240 --> 00:02:10.160 things that people don't know exists. There's called annuities, right? If you are afraid that 32 00:02:10.160 --> 00:02:13.920 certain person's going to die, you can get insurance on that person. Like any type of scenario, 33 00:02:13.920 --> 00:02:18.160 like what if I lose my arm? Like surgeons can get insurance on their hands because if they get an 34 00:02:18.160 --> 00:02:22.800 accident, they get you surgery. Like you can get insurance on anything. And so if you have a specific 35 00:02:22.800 --> 00:02:27.600 concern, you don't have to get crazy about it just by insurance for it and know that it's covered. 36 00:02:28.320 --> 00:02:32.960 If a deal feels like a grand slam, get a second opinion. And so whenever I'm looking at something 37 00:02:32.960 --> 00:02:37.120 and something looks amazing or whatever, I automatically send it to other people because it means 38 00:02:37.120 --> 00:02:40.880 like I must not be seeing something like I need someone else's eyes on this. And so it's a good, 39 00:02:40.880 --> 00:02:45.520 easy decision making rule for yourself for investing. If you don't know how you can lose money, 40 00:02:45.520 --> 00:02:49.600 don't do it until you do. So you have to figure out how you're going to lose money. Like there's 41 00:02:49.600 --> 00:02:53.760 always a way to lose money in the deal. And you not only want to find a way to lose money, 42 00:02:53.760 --> 00:02:57.440 but you want to find all the ways you can lose money in the deal. And so if you don't know any, 43 00:02:57.440 --> 00:03:00.960 you definitely shouldn't do the deal until you know most of them and or all of the ones you 44 00:03:00.960 --> 00:03:05.280 possibly think you can now, right? We're always controlling for the unknown or the unknowable. But we 45 00:03:05.280 --> 00:03:08.960 want to minimize that to the highest degree possible. So if you don't know how you can lose money, 46 00:03:08.960 --> 00:03:14.400 don't do the deal until you do it. If it feels rushed, don't do it. And this is one of the biggest 47 00:03:14.400 --> 00:03:17.920 ones that has served me in my life because what happens, a lot of people will try and apply pressure 48 00:03:17.920 --> 00:03:21.040 to you. They're trying to say like, Hey, do this deal. Hey, give me this money. Hey, can you let me 49 00:03:21.040 --> 00:03:24.640 this thing ball ball, right? And they and the more money you have, I promise you, it doesn't stop 50 00:03:24.640 --> 00:03:30.400 and it gets the pressure gets bigger. And so if someone tries to pressure you, pause, right? And if 51 00:03:30.400 --> 00:03:34.400 anything, if someone tries to pressure you, just don't do the deal altogether. So if you feel rushed, 52 00:03:34.400 --> 00:03:38.160 don't do it. It's one of the easiest things that saved me so many mistakes in my life. 53 00:03:39.200 --> 00:03:43.760 If you only have one deal in the table, don't do the deal. Always have backup deals. And the 54 00:03:43.760 --> 00:03:48.320 reason for that is like, imagine you're dating, right? And there's only one girl on the planet. 55 00:03:48.320 --> 00:03:52.400 Well, you're going to find a way to think that that girl and if, you know, your gender's 56 00:03:52.400 --> 00:03:56.320 reverse flip it, right? Or your preference is rough, whatever. You know what I'm saying, right? 57 00:03:56.320 --> 00:03:59.520 If you want to bang somebody, if there's only one person on the planet, then you're going to find 58 00:03:59.520 --> 00:04:03.840 a way to make that work, right? And so it's kind of the same thing with deals. Like if you only 59 00:04:03.840 --> 00:04:07.280 have one deal on the table, you're going to keep telling yourself like, man, maybe this is a good deal 60 00:04:07.280 --> 00:04:10.800 because you have nothing else to compare it to. And so the idea is you always want to have a 61 00:04:10.880 --> 00:04:15.040 plethora of options to choose from. And until you get those many options to choose from, 62 00:04:15.040 --> 00:04:18.640 don't move forward because what happens is you artificially make that girl look a lot better, 63 00:04:18.640 --> 00:04:21.680 or that person or that deal looks a lot better when there's nothing else to compare it to. 64 00:04:22.400 --> 00:04:26.560 If you buy with the intention of selling, you're not investing, you're trading. And so a big 65 00:04:26.560 --> 00:04:30.080 thing that everyone like I hear people, especially in the younger community, they're like, I'm an 66 00:04:30.080 --> 00:04:34.160 investor. It's like, well, if you're, if you're buying with the intention of selling, you're, 67 00:04:34.160 --> 00:04:38.320 you're trading, you're transacting. You're really just running a business, not investing. 68 00:04:38.400 --> 00:04:42.000 Investing is about very, very long time horizons, just sometimes it's harder when you're 69 00:04:42.000 --> 00:04:45.280 longer to even imagine a longer time horizon. But it's also the reason that there's not like 70 00:04:45.280 --> 00:04:49.600 many legendary investors who are in their 20s. And so part of that is because it takes time time. 71 00:04:49.600 --> 00:04:52.880 And so the idea, though, is this a mindset shift in terms of decision making, which is if you're 72 00:04:52.880 --> 00:04:58.160 going into something with the intention of selling it, you're not investing, you're trading, 73 00:04:58.160 --> 00:05:02.480 you're transacting. And it's just a different shift. And then it's a whole different set of rules. 74 00:05:02.480 --> 00:05:07.920 Where you get in trouble is where you're trying to apply business stuff to investing versus investing 75 00:05:07.920 --> 00:05:11.120 stuff or investing stuff to business. Like they are different skills, which is why investors 76 00:05:11.120 --> 00:05:14.480 aren't necessarily good at business. And a lot of business people are necessarily good at investing 77 00:05:14.480 --> 00:05:18.080 because they're completely different skill sets. Now, there is crossover. There is time where 78 00:05:18.080 --> 00:05:22.800 there are benefits of principles. But overall, they are, they are different skills to master. 79 00:05:23.360 --> 00:05:29.200 So this comes into play. You have a partnership. If we don't agree, we don't do it. So this has saved 80 00:05:29.200 --> 00:05:33.520 me so many mistakes. I'm usually the yes man in my partnership. So I'm always, I'm tend to be 81 00:05:33.520 --> 00:05:38.640 more optimistic. I tend to, I tend to see more upside and less downside. And most entrepreneurial 82 00:05:38.640 --> 00:05:42.080 people are that way because we have to be because we have to, because if we actually focused on the 83 00:05:42.080 --> 00:05:46.000 likelihood of success, which is usually low for most entrepreneurial things, you would never get 84 00:05:46.000 --> 00:05:50.320 started. And so you have to have some proclivity for being a little bit overly optimistic, right? 85 00:05:50.320 --> 00:05:54.880 And so it's good to have a partner who balances that. But be, if you have that partner who 86 00:05:54.880 --> 00:05:58.640 balances it, they actually have to balance it. If they're just a yes man and they always like 87 00:05:58.640 --> 00:06:02.800 bend to your will, then they're not actually providing value. Like there's a recent yin and yang 88 00:06:02.800 --> 00:06:08.240 are equally weighted in the, in the symbol, right? And so if you don't agree, don't move forward. 89 00:06:08.240 --> 00:06:11.120 This has been something that's been really valuable for my life and for business partnerships in 90 00:06:11.120 --> 00:06:15.760 general. Like I don't strongly remember, even if I have decision making authority, I still won't 91 00:06:15.760 --> 00:06:20.960 move forward until we agree. And as a tangent into marriage stuff, we get asked this all the time. 92 00:06:20.960 --> 00:06:24.320 They're like, well, you know, push comes to shove and you both don't, you know, like somebody has 93 00:06:24.320 --> 00:06:29.600 the upper hand. Honestly, no, we keep talking about it too. We agree. Like we just keep, we don't 94 00:06:29.600 --> 00:06:33.920 make the decision until we both agree. And it's been one of the earliest pieces of advice we got 95 00:06:33.920 --> 00:06:38.320 and it's woman, one of the ones that paid us the most dividends. If it's complicated pass, 96 00:06:38.320 --> 00:06:42.800 if it feels above your head, it probably is. And so one of the things is that people want to feel 97 00:06:42.800 --> 00:06:46.160 fancy. They want to get into the room. They want to do, they want to do these deals. They want to 98 00:06:46.160 --> 00:06:50.880 get into the complex stuff. But if you don't get it, you're going to get fucked. And if you pretend 99 00:06:50.880 --> 00:06:55.920 like you do, you're double going to get fucked. And so the idea is, if you don't get it and it's 100 00:06:55.920 --> 00:06:59.760 not simple to you, it's probably because you don't understand it well enough. But if you don't 101 00:06:59.760 --> 00:07:03.520 understand it well enough, it's very high risk, right? If you have complete understanding of 102 00:07:03.520 --> 00:07:06.960 something, the risk goes down because you understand the variables. And so if you're barely 103 00:07:06.960 --> 00:07:10.400 catching on, you might as well be gambling, right? Which is not the way to invest. 104 00:07:11.440 --> 00:07:16.000 FOMO means slow down. All right. So if you feel that emotion, you're like, I'm going to miss out 105 00:07:16.000 --> 00:07:19.280 on something, slow down. All right. This is a decision-making variable. When you feel that 106 00:07:19.280 --> 00:07:23.440 emotion, slow down. Again, these are, these are principles. If you just, you start flexing these 107 00:07:23.440 --> 00:07:28.960 like muscles, you do it. And if this, then that, if this, then that, and then it preserves your 108 00:07:28.960 --> 00:07:32.800 ability to make better decisions over time. And if you apply all of these things to all the 109 00:07:32.800 --> 00:07:38.480 decisions you make, you will have outsized returns over a longer time horizon. No diligence, no deal. 110 00:07:38.480 --> 00:07:42.720 All right. So if someone's like, oh, I don't have a lot of diligence. They don't send you to Packard. 111 00:07:42.720 --> 00:07:46.480 They don't send you enough information on the thing. And they still expect you to invest in 112 00:07:46.480 --> 00:07:49.920 something. And when I say invest, doesn't have to be formal investing. Like it can be like buying 113 00:07:49.920 --> 00:07:53.440 into something. It can be buying, like you're buying anything. It's really a purchasing decision. 114 00:07:53.440 --> 00:07:56.960 If you don't get the information you need to make the decision, you don't make the decision. 115 00:07:56.960 --> 00:08:01.520 And I know this sounds ridiculous, but many of you do this, right? You just go off the hype. 116 00:08:01.520 --> 00:08:06.640 You go off of an email or phone call or, you know, whatever. Like get the information you need. 117 00:08:06.640 --> 00:08:10.240 All right. And if you, if there's no diligence, no deal. Right. That's the way it works. 118 00:08:10.880 --> 00:08:15.440 And if you miss out on something, because you didn't do diligence, remember that there were 119 00:08:15.440 --> 00:08:19.280 nine other things that you also didn't do that you would have lost your ass on. All right. It's 120 00:08:19.280 --> 00:08:23.200 using these principles over many decisions over a long period of time, which yields the return. 121 00:08:24.240 --> 00:08:30.320 No model, no deal. And so what that means is if someone doesn't send me like their proposal for 122 00:08:30.320 --> 00:08:34.720 how something's going to grow or how something's going to improve or how they're going to add value, 123 00:08:34.720 --> 00:08:38.720 then there's no deal. Right. I don't want to hear a story of it. I want to see the math behind it. 124 00:08:38.720 --> 00:08:42.560 I want to see the projections. And then when I look at those things, I can make the decision like, 125 00:08:42.560 --> 00:08:46.080 is this reasonable? What assumptions are this based on? Do I think those assumptions are 126 00:08:46.080 --> 00:08:49.360 reasonable or probable? And what information can I bring to this decision? What are the things 127 00:08:49.360 --> 00:08:52.960 that need to believe that have to be true for this to occur? Right. And so then you can actually, 128 00:08:52.960 --> 00:08:57.200 you can be more objective about the decision rather than just like, yes, if I multiply a hundred 129 00:08:57.200 --> 00:09:00.960 by a thousand, it's a million. Ah, you know, whatever, a hundred thousand. You get the idea, 130 00:09:00.960 --> 00:09:05.440 right? Is that like if there's no model, no deal. If someone's non-responsive in the deal process 131 00:09:05.440 --> 00:09:10.720 or slow to respond, no deal. Reason for that. Communications, one of the most important things when 132 00:09:10.720 --> 00:09:15.600 you're doing any kind of business in general. And I judge someone very quickly on how meticulous 133 00:09:15.600 --> 00:09:19.920 they are in their responses and how quick they are to respond in general. Now, if someone says, 134 00:09:19.920 --> 00:09:23.120 hey, I received your email, I'll get back to you in two days and then they get back to me in two 135 00:09:23.120 --> 00:09:28.160 days, that's fine. It's about expectation setting and expectation meeting. Right. What's not good 136 00:09:28.160 --> 00:09:32.000 is either of these scenarios, either the person doesn't respond, right, or takes a long time to 137 00:09:32.000 --> 00:09:37.280 respond, or they say, I'll get back to you tomorrow and then they get back to me two days later. 138 00:09:37.280 --> 00:09:42.560 Right. I expect, especially in this process where I'm just getting to know you, that what you say 139 00:09:42.560 --> 00:09:46.160 is going to happen, it's going to happen. And it's one of the easiest ways to build a reputation is 140 00:09:46.160 --> 00:09:49.920 do what you're going to say, say what you're going to do. And if someone's not doing that with you, 141 00:09:49.920 --> 00:09:57.520 don't do the deal. If it costs peace of mind, don't buy it. So if anything costs me my sleep or 142 00:09:57.520 --> 00:10:01.600 something that I'm worried about as a result of me making an investment or purchasing decision, 143 00:10:01.600 --> 00:10:05.600 I don't buy it because the cost is too high. Right. And so you think about this over a long time, 144 00:10:05.600 --> 00:10:10.720 Ryzen, like you can't absolutely sell your peace of mind, but it's probably not worth selling. 145 00:10:10.720 --> 00:10:13.600 Right. So don't, don't buy something that causes you to sell your peace of mind. 146 00:10:15.440 --> 00:10:19.920 Real quick, guys, you guys already know that I don't run any ads on this and I don't sell anything. 147 00:10:19.920 --> 00:10:23.440 And so the only ask that I can ever have if you guys that you help me spread the words we can 148 00:10:23.440 --> 00:10:28.240 not more entrepreneurs, make more money, feed their families, make better products and have better 149 00:10:28.240 --> 00:10:32.160 experiences for their employees and customers. And the only way we do that is if you can 150 00:10:32.160 --> 00:10:36.560 rate and review and share this podcast. So the single thing that I have to do is you can just 151 00:10:36.560 --> 00:10:40.640 leave a review, take 10 seconds or one type of a thug that would mean the absolute world to me. 152 00:10:40.640 --> 00:10:43.120 And more importantly, it may change the world or someone else. 153 00:10:44.720 --> 00:10:50.160 If it doesn't build your reputation, don't do it. No neutral moves. So this is one that I've 154 00:10:50.160 --> 00:10:57.280 adopted more recently. But the idea is your brand personally, your reputation is the one thing 155 00:10:57.280 --> 00:11:03.040 that you take with you forever and you absolutely can lose it and it can be irreparably damaged. 156 00:11:03.040 --> 00:11:09.680 Whereas your money you can recover from. And so the idea is I made this rule for myself also 157 00:11:09.680 --> 00:11:14.080 because it makes it even easier for me because it's not I don't want to hurt my reputation. 158 00:11:14.080 --> 00:11:20.080 It's only do it if it builds my reputation. No neutral moves. And so what happens is when we do that, 159 00:11:20.080 --> 00:11:24.480 we continue to reinvest in our reputation in our personal brand, which gives us compounding 160 00:11:24.480 --> 00:11:29.280 returns over our entire lifespan in terms of relationships, in terms of literally financial 161 00:11:29.280 --> 00:11:35.360 returns in all other aspects of life. But no neutral moves. Only invest if it builds your reputation. 162 00:11:35.360 --> 00:11:43.440 If it doesn't build, don't do it. No track record, no deal. Pick performance over charisma. 163 00:11:43.440 --> 00:11:46.960 All right. And so a lot of times people are trying to get their start, whatever. The thing is just 164 00:11:46.960 --> 00:11:50.640 like they're probably going to get somebody to say us. It just doesn't necessarily have to be you. 165 00:11:50.640 --> 00:11:56.480 Right. And so big track record over performance. And this comes also for like hiring people. 166 00:11:56.480 --> 00:12:01.360 It comes for investing in deals and doing transacting with people in business like for vendors, 167 00:12:01.360 --> 00:12:05.840 whatever it is. The best predictor of future performance is past performance. As much as people 168 00:12:05.840 --> 00:12:09.120 want to be all hand-waving, they want to show you some crazy graphs and whatever. Like sure, 169 00:12:09.120 --> 00:12:13.200 they have a model. Fantastic. Other allow us to do deal. It's great. Oh, they're being very 170 00:12:13.200 --> 00:12:18.320 responsive. Phenomenal. But if they have no track record, might they be successful? Yes. 171 00:12:18.320 --> 00:12:21.520 But if I invest in every deal that doesn't have track record, is that a good way to invest? 172 00:12:21.520 --> 00:12:26.400 Probably not. And so like Napoleon like to say, I'd rather have lucky generals. 173 00:12:26.400 --> 00:12:30.480 Someone's going to probably do their deal. Doesn't have to be you. And then if the deal does crush, 174 00:12:30.480 --> 00:12:32.560 then they're going to do another deal. And you can get it on that one. 175 00:12:33.920 --> 00:12:38.000 If it's the same thing you've always done well with, do more of it. And so this is one of those 176 00:12:38.000 --> 00:12:42.400 things where we as humans are entrepreneurs, we like having variety, right? We like trying new 177 00:12:42.400 --> 00:12:45.600 shit. But the thing is that a lot of investing, a lot of compounding comes from doing more of the 178 00:12:45.600 --> 00:12:49.280 same thing. And so it's like, hey, man, I've done three hard money loans and they've all been 179 00:12:49.280 --> 00:12:52.160 awesome. It's like, well, then you should probably consider doing a fourth rather than starting 180 00:12:52.160 --> 00:12:55.920 to get into crypto day trading. You know what I mean, which is obviously not investing. But like, 181 00:12:55.920 --> 00:12:59.920 what happens is you start to build your own track record, right? And so when you have a track record, 182 00:13:00.560 --> 00:13:03.920 you have your own performance. And so you can start looking back over your shoulder and be like, 183 00:13:03.920 --> 00:13:06.960 okay, let's look at all the things that I've done. These have been the things that have worked well. 184 00:13:06.960 --> 00:13:11.280 Maybe I'm better at this stuff or maybe I have more insight into these things that I think I do. 185 00:13:11.280 --> 00:13:14.080 Now, mind you, don't get hiring your own suppliers or thinking that you're smarter than you are, 186 00:13:14.080 --> 00:13:18.240 which is not a good idea. You might have also got lucky. But again, I'd rather have lucky generals. 187 00:13:18.240 --> 00:13:20.960 And so if I tend to be a little bit luckier on this side of the board, then I'm going to play on 188 00:13:20.960 --> 00:13:24.080 this side of the board, right? And so that's the idea. Once you find something that you start to get 189 00:13:24.080 --> 00:13:27.360 good at, do more of it because the thing is is that your luck will improve the more you do. 190 00:13:28.560 --> 00:13:33.440 Always under borrow because any number, no matter how big it is, multiplied by zero is still zero. 191 00:13:33.440 --> 00:13:36.640 And this is something that I tend to be very risk-reversed when it comes to debt, 192 00:13:36.640 --> 00:13:40.000 all right? Because it's called leverage on the way up and it's called debt on the way down, 193 00:13:40.080 --> 00:13:46.720 right? And so the idea here is that debt introduces risk into any equation, right? And risk, 194 00:13:46.720 --> 00:13:51.680 if multiplied over a long enough time horizon, will occur, right? The downside will occur. 195 00:13:51.680 --> 00:13:55.280 And so the idea is, if that's going to occur over a long enough time horizon, 196 00:13:55.280 --> 00:14:00.160 and I am going to get multiplied by zero, that is probably not the best idea. And so if you are 197 00:14:00.160 --> 00:14:04.400 going to borrow, then under borrow. So even though you could juice your return by getting more, 198 00:14:04.400 --> 00:14:08.080 remember that there is a likelihood over a long enough time horizon that if you overjuice on 199 00:14:08.080 --> 00:14:13.840 a consistent basis, you will get zero. So again, this is a principle in thinking, okay, if I get, 200 00:14:13.840 --> 00:14:20.560 for example, a 30% return on my stuff because I juiced it by taking on extra money to get better 201 00:14:20.560 --> 00:14:26.320 returns on my initial capital. And I do that on 10 deals. Maybe nine of them, I do get 30%, 202 00:14:26.320 --> 00:14:30.640 but then if I do it on the 10th deal and lose it all because this is a principle of decision-making, 203 00:14:30.640 --> 00:14:36.320 then I go down to zero. And that sucks, right? And so the idea is always under borrow. And if you 204 00:14:36.320 --> 00:14:40.240 always under borrow, then you won't make as much money, but you won't lose it. And that will allow 205 00:14:40.240 --> 00:14:47.360 you to continue compound over time. So this is an important one. Ask stupid questions, define terms, 206 00:14:47.360 --> 00:14:54.160 draw pictures, see examples. And if you can't draw it back, you don't get it. And so one of the things 207 00:14:54.160 --> 00:14:58.640 that I think about a lot is I want to understand everything that's in front of me as much as I possibly 208 00:14:58.640 --> 00:15:02.960 can. And especially if you're getting into these things, there's probably a lot of stuff that you 209 00:15:02.960 --> 00:15:06.240 have no idea what it means. All right. And you know what's crazy? Most people don't even know what 210 00:15:06.240 --> 00:15:09.600 they're saying. Most people don't even know how to define the words they use every day. All right. 211 00:15:09.600 --> 00:15:14.400 And so having a definition of terms is useful. And if someone else is across the table for me, 212 00:15:14.400 --> 00:15:17.440 don't pretend like you know what they're talking about because they might not know what they're 213 00:15:17.440 --> 00:15:20.160 talking about. Be if they do know what they're talking about, they know if you don't know what they're 214 00:15:20.160 --> 00:15:24.240 talking about. And I start every single call when somebody's going to bring me something. I'll be 215 00:15:24.240 --> 00:15:28.320 like pretend I'm a golden retriever that doesn't speak English. All right. It's like walk me through 216 00:15:28.320 --> 00:15:32.240 this. And if you set that frame at the beginning, usually get a laugh, but you also just say like, 217 00:15:32.320 --> 00:15:37.920 this isn't my game. And on the flip side, there is no advantage to somebody thinking you know more 218 00:15:37.920 --> 00:15:42.960 than you do. None. But there is advantage just to you knowing more than they think you do. 219 00:15:43.440 --> 00:15:49.520 Right. And so always play the fool because there's oftentimes you won't be pretending to be 220 00:15:49.520 --> 00:15:54.320 posturing and you will learn because even if they tell you stuff and 80% of you already know, 221 00:15:54.320 --> 00:15:59.120 the 20% you didn't know, you still get better from the conversation. And it allows you to ask obvious 222 00:15:59.120 --> 00:16:03.600 questions. But oftentimes the obvious questions is where like the lies or the bodies are buried 223 00:16:03.600 --> 00:16:06.880 underneath. And if they start struggling to explain it to you, it means they also don't understand 224 00:16:06.880 --> 00:16:13.520 it well either. This is for my richer friends. So once you have 10, 20, you know, 30 million 225 00:16:13.520 --> 00:16:17.920 and investable assets, one of the things that I got from mentor of mine, he said, if we're not in 226 00:16:17.920 --> 00:16:21.920 the GP, we're not in the deal. So one of the best pieces of advice that I've gotten, which is like, 227 00:16:21.920 --> 00:16:26.880 if you're able to write bigger checks, then just say I want a part of the GP or I only do deals 228 00:16:26.880 --> 00:16:31.680 over part of the GP. And when you do that, you start getting parts of the GP. And so like now, 229 00:16:31.680 --> 00:16:34.880 for example, Laylon, I only write, like we're only going to write a check into something that we 230 00:16:34.880 --> 00:16:38.160 are a part of the GP for it. If you're like, I don't know what the GP is, then don't worry about it 231 00:16:38.160 --> 00:16:41.440 because that probably doesn't apply to you. All right. And so it's general partner and limited 232 00:16:41.440 --> 00:16:44.160 partner. The people with general partners are basically the people who run the things that get an 233 00:16:44.160 --> 00:16:47.280 extra slice of the pie versus the limited partners who actually invest the money. And so if you're 234 00:16:47.280 --> 00:16:51.360 putting the money in only, but if you write a big enough check, you can also negotiate in a slice 235 00:16:51.360 --> 00:16:56.480 of the GP, right? And so you can make that as a rule, which I have, right? Which is like, we only 236 00:16:56.480 --> 00:16:59.600 do deals were a part of the GP because I want to make sure that we have a part of the people who 237 00:16:59.600 --> 00:17:06.080 were really running this thing. If it's a bad person, it's a bad deal. I mean, Layla has an 238 00:17:06.080 --> 00:17:11.680 impeccable people picker. It's unbelievable. Like she can, she's never been wrong. My entire 239 00:17:11.680 --> 00:17:14.560 relationship, she's never been wrong. And it's why I've been wrong all the time. I'm like, 240 00:17:14.560 --> 00:17:18.800 this guy's great. You know, that's not, but like again, I'm a rose colored glasses guy. 241 00:17:18.800 --> 00:17:25.200 Layla's never been wrong. And it's freaky, actually. What we have learned is that like bad partners 242 00:17:25.200 --> 00:17:29.440 doesn't matter what the paper says because a bad person will always try and find a way to fuck you. 243 00:17:30.000 --> 00:17:34.000 And so it doesn't matter what it is, even if everything's great, they will try and find a way 244 00:17:34.000 --> 00:17:39.520 to fuck you. And so if you're unsure or you're uneasy or you get one of these like tiny like, 245 00:17:39.520 --> 00:17:43.120 I'm just not sure if I'm going to do it. Don't do it. I'm telling you like there are so many 246 00:17:43.120 --> 00:17:46.000 reasons you should not do a deal. You should be saying no way more than you should be saying yes. 247 00:17:46.240 --> 00:17:53.120 No contract, no deal. But live in the world as though there were no contract. This is a really 248 00:17:53.120 --> 00:17:58.720 important one for me is that earlier on in business relationships and employee relationships, 249 00:17:58.720 --> 00:18:02.640 I used to just be like, I, you know, I heard that if you just have a handshake, that's what matters 250 00:18:02.640 --> 00:18:07.760 more. Dude, it's a, it's a different time. All right. You got to have contracts for everything. 251 00:18:07.760 --> 00:18:12.480 And the important thing here is that contracts serve the purpose of setting clear expectations. 252 00:18:12.560 --> 00:18:15.760 If you're like, I don't want to go through this. It's going to like lawyers. It means that you're 253 00:18:15.760 --> 00:18:20.560 not willing to confront hard conversations. What happens if you lose all my shit? What happens if 254 00:18:20.560 --> 00:18:23.360 you don't do what you said you're going to, what happens if I don't do what I said I was going to 255 00:18:23.360 --> 00:18:26.320 do? What happens? You got to walk through that. If you can't walk through in the beginning, 256 00:18:26.320 --> 00:18:29.600 you're definitely not going to walk through it when it actually happens, right? So be able to get 257 00:18:29.600 --> 00:18:34.160 through the uncomfortable conversations early so that when shit does happen, you actually know 258 00:18:34.160 --> 00:18:39.120 what the actual terms are like, what are the, what are the stakes, right? And anyone who says, 259 00:18:39.120 --> 00:18:46.400 I only do handshake deals, I don't, I don't do contracts, run the other way, run the other way. 260 00:18:46.400 --> 00:18:52.160 Every single person who is talking to me that way has been a fucking crook. Like every one of, 261 00:18:52.160 --> 00:18:58.240 like not, like not once has someone approached me that way and they not be an unbelievably shady. 262 00:18:58.240 --> 00:19:03.360 So like, please, I mean, don't trust me, do it everyone. But like, if there's anything you can 263 00:19:03.360 --> 00:19:06.560 get, if someone says like, I don't believe in contracts, be like, I don't believe in dealing 264 00:19:06.560 --> 00:19:12.320 deals with all contracts. Sorry. Like clear expectations. Good. The contract is only worth 265 00:19:12.320 --> 00:19:16.400 the signature that signs it. Okay. And there's multiple levels to this. One is that if someone's 266 00:19:16.400 --> 00:19:19.760 personally guaranteeing something they have no assets, it's not really guaranteed, right? 267 00:19:19.760 --> 00:19:25.120 They're guaranteeing against nothing. But more so, it's the reputation, right? Of the person 268 00:19:25.120 --> 00:19:30.080 that you're doing business with. And so on the flip side of that, if you were the one people 269 00:19:30.080 --> 00:19:34.640 are doing business with, I like to pretend like the contract doesn't exist. So you absolutely 270 00:19:34.640 --> 00:19:38.000 want to be clear when you're writing the contracts and when you're talking about the terms and 271 00:19:38.000 --> 00:19:40.880 like, what happens if this happens? What happens if this happens? Like you want to be really clear 272 00:19:40.880 --> 00:19:46.320 about all that stuff. But I want to exist in a world that I'm not in litigation all day. 273 00:19:46.320 --> 00:19:50.800 I want to exist in a world where I'm always way above my contractual terms. And I exist in a way, 274 00:19:50.800 --> 00:19:54.800 like even if someone's committed, for example, to, let's say I have a services relationship that's 275 00:19:54.800 --> 00:19:59.040 a year long, whatever, I want to mentally think even though they've committed to a year because 276 00:19:59.040 --> 00:20:03.120 that's where the economics of the business makes sense that I'm going to pretend like I'm only 277 00:20:03.120 --> 00:20:08.960 week to week. Like they don't have to pay me next month. And so if you, if you go on the defensive 278 00:20:08.960 --> 00:20:12.480 when you're contracting, but you go on the offensive when you're in delivery, you kind of get the 279 00:20:12.480 --> 00:20:15.600 best of both worlds. And this has been something that has served me in so many parts of my life. 280 00:20:15.600 --> 00:20:19.520 It's like, be defensive on the contract in the terms. That's important, right? Like you want to make 281 00:20:19.520 --> 00:20:24.480 sure that the eyes and dives are crossed. But then as soon as that process is over, live as though 282 00:20:24.480 --> 00:20:29.840 this doesn't exist and the person could leave whenever. And that has served me incredibly well 283 00:20:29.920 --> 00:20:35.440 in my whole life. Live as though the contract doesn't exist. Negotiate it as though it's the only thing 284 00:20:35.440 --> 00:20:39.040 that matters. But then after it's done, it's done put it in a shelf and like you never look at it 285 00:20:39.040 --> 00:20:44.240 again because you want to live as though you're doing this only off of goodwill. And if the spirit 286 00:20:44.240 --> 00:20:48.160 of the original agreement continues to be maintained, then both of you will continue to try and 287 00:20:48.160 --> 00:20:53.520 act. The contract is only for when someone doesn't stick to their terms, right? So live as though 288 00:20:53.520 --> 00:21:03.680 it doesn't exist.