Entrepreneur Mindset: Are You Chasing Money When You Invest? (Advice & Tips) | My First Million

Sam Parr

You know, I think I've changed my mind. I think that investing is **fucking stupid**. We had a friend who is raising a fund right now. You know, I think I've changed my mind. I think that investing is **fucking stupid**.

Shaan Puri

I would have bet a $1,000 you're gonna say stupid I would have been wrong because you said fucking stupid but

Sam Parr

like

Shaan Puri

why is investing stupid I would love to hear why investing is stupid

Sam Parr

Tell me if I am being like just a baby here, but I just find this financial arbitrage stuff to be so boring and meaningless.

Shaan Puri

okay

Sam Parr

And I watched the TV show "1,000,000,000," and I'm like, "Oh, that's cool! They're doing all these big things; it looks exciting." Then I'm like, "Well, those guys are losers. They're not actually adding to... I mean, they're just wealthy and they're accomplishing dreams." So, I respect it, but I also think, "Oh my god, that's so soulless." That's what I think a lot of... I've got friends that create these websites. They're already wealthy, and they're building these websites that are just hawking stuff. They will admit that they are. I'm like, "What the heck's the point of this?" And that's kind of what a lot of investing is.

Shaan Puri

So, okay, but the friend's hawking shit—that's different than investing, right? That's just like selling out to some degree for money, right?

Sam Parr

It's definitely from a similar perspective. It's just like, "Why?" If you already have a little bit of cash, which if you're still trying to get your hit, you know, you gotta go for it. But if you already have a little bit of cash, do something cool and meaningful.

Shaan Puri

okay so here's here's I'll give you 2 2 thoughts on this I'll give you the first as an example that supports your case and then I'll give you the feel good reason why you're wrong so okay the support your case so I I mentor this guy who's 20 years old and he's at this. Where like he tried to do some stuff and it kinda didn't work out and now he's like fuck do I need to go get a job I need to pay my bills I don't wanna go move back home with my parents and so he's like he's like about to take this job and he's like should I you know leave this entrepreneurial path and go get a job because I you know I need to pay bills in 2 months and I don't think I can spin something up in the next 60 days that will get so profitable that I'll be I know I'll be able to pay my rent and I said you know I empathize with the problem but I said you know let's just slow down for a second before you go take that consulting job let's just let's just talk things through for a second so I said how much money do you need to live every month what's your burn rate he said 2 grand I said okay 2 grand fantastic and I was like so let's say you wanted a year of runway to go try some shit you need to come up with 12 months times 2 grand you need to come up with 24 grand I said I know you do some investing in the stock market you're kind of a degenerate you know you like to pick stocks you try to buy bitcoin and shit I was like because at the beginning of the conversation he's like you know my my good the thing that's going well is my investments have done well the thing that's going bad is I'm about to have to take this job for my my bills I was like well those two things don't add up I was like I was like do you have enough money in the stock market right now that you could just sell and you could use to live off of to chase your entrepreneurial dreams he's like yeah I could but then I'd have to sell and I don't wanna sell because I'm getting you know good returns I said okay let's do the math real quick what do you think you could generate per let's take just the 24,000 that you need I don't know how much money you have you don't have to tell me let's take the 24,000 that you need how much do you think you could generate per year in return average he's like 50% I was like okay mini warren buffett you think you could do 50% a year but let's let's assume your delusional number is correct and that you could do it consistently which is the hard part you could do it for 1 year for sure but consistently generate 50% so let's say you you do the warren buffett you you invest perfectly you get your 50% way above market return and your $24 has turned into $36 now like fantastic congratulations you made $12,000 like you are still nowhere near where you're trying to get with your goals and if you and how many years would you have to continue to get this absurd return for you to be with where your goals are I was like not

Sam Parr

that many but he'll that would never happen

Shaan Puri

You would never happen, right? You'd never get the 50%. So, anyway, I was like, "You're talking about this year going and trading all your time for money at a consulting gig when instead you could just sell some of your stock, get $24 of runway, and you could live for 12 months. This would give yourself a bunch of shots on goal to try to build something that you believe in. You'll learn way more, you'll have way more fun, and you'll have way more upside than if you go take the consulting job." So, like, you're crazy. He was of the mindset of, "Well, I heard that rich people invest, so I want to invest, and I want to get a return. I want my money to work for money." He had kind of heard all these things and was investing for that reason. So, I think investing doesn't make sense when you have a very little amount of capital overall and you're trying to go invest that capital while trading your time for dollars in other ways. Now, the other... so that's the argument for times when I think investing would be stupid. If you take a normal return, the amount of money that you're making every month or every year is not going to change your life, and you're locking up money in the system.

Sam Parr

The second... Because I think the second point's going to be better than the first. The first point you made was that "well, only invest if you got a lot." Yeah.

Shaan Puri

Exactly. If you don't have a lot, I'd rather you use that money. If you're entrepreneurial, if you're one of the 5% of people who actually want to build a business or do something on their own, you're better served investing in yourself and buying your time back. Yeah, and taking a bunch of shots on goal. Now, the second is, is investing stupid? Well, I think you're kind of right that it is not the most exciting thing, but excitement is different for everybody. Here's the cool way of thinking about investing: for anything to work, you need leverage. Right? So you run the hustle, but day to day, you probably write zero emails. You don't write the daily email, you don't do the trends report. This podcast is the most active thing you do for the hustle, is that correct?

Sam Parr

it we could say yes for sake of argument

Shaan Puri

okay so for the sake of argument

Sam Parr

your your argument is correct I'm leveraged

Shaan Puri

So, you're leveraged because you have a bunch of humans doing work for you. Cool. Another form of leverage is media. We’re going to talk for one hour, and then this is going to be listened to for hundreds of thousands of hours out there. So, media is another form of leverage. The last one is capital. Capital is another form of leverage. Here’s a cool way of thinking about it: if you have capital, investing is your way of allocating that capital to things that are either a) going to return the most or b) going to change the world in a way that you care about. So, capital is your way of influencing the way that the world goes because you get to assign units of energy to different companies and causes that are going to go do things.

Sam Parr

In the world, I get that, and I think that's great. What I'm completely burnt out on is just lame-ass investments.

Shaan Puri

like what's a lame ass investment

Sam Parr

like

Shaan Puri

you don't have to use a name if you wanna kind of code name something

Sam Parr

I've got a friend who gave a lot of money to an investor who's going to buy a bunch of multifamily real estate. It's simply a... I don't ever see this. I don't touch it. This is a gift.

Shaan Puri

me 7% a year yeah

Sam Parr

Simply an asset class, and it's just a thing on a spreadsheet. I'm like, "Oh my God, that's so boring." I just can't decide if I'm being a little... like, "bitch hater" or... yeah. But my... or like when we have some friends who are buying companies, they just look for anything that checks the boxes of: "Does it have net churn this?" and "Is the acquisition cost this?" And that's it. That's all. I mean, it's like mechanical.

Shaan Puri

yeah

Sam Parr

Yeah, I get it. I'm like, "Alright, that's a great way to make money," but it's just like so **lame** sometimes. I'm like, "Oh my god, you guys! Can we please do something exciting?"

Shaan Puri

Okay, so here's the rub. Let's say you don't invest. You're going to either: A. Park cash on the side and do nothing with it, which is probably lamer than investing and having the cash grow. Or B. You're going to... or what's door number C? So, what else would you prefer to do with your capital besides invest or leave it in cash?

Sam Parr

either start companies and even if that means I don't run them or

Shaan Puri

that's investing

Sam Parr

Yeah, I'm not saying investing. I'm using "investing" because I can't think of a better word. No, investing is cool. I mean, investing is great. But I'm just saying, like, arbitrage is, again, starting a company as arbitrage. But I think you understand what I'm saying.

Shaan Puri

I I get where you're coming from I

Sam Parr

I don't know. It just hit me last week where I'm like, "Oh my God, this is..." I don't want to talk about a carry fee ever again. I think this is just so **lame**. When I was traveling, I saw these normal people at the gas station with their wives and kids. I realized I'm way more fascinated by how I can make that person just a little bit happier or a little bit better, not by how I can eke out a little more profit from this service. Do you know what I'm saying? I'm like...

Shaan Puri

I can't understand

Sam Parr

Like, it's like I saw these... I remember being at this gas station and I saw this mom give her kid a generic Coke. I was like, "Oh God, that kills me that this little girl is gonna drink this stuff." How can we help this mother either afford or learn that this thing, or that thing, is not as good? How can we help her make a better decision? Make a better decision. Easy. Not, "How do I get 5% net?"

Shaan Puri

So, I think I actually understand what you're saying now. It's not that investing is stupid. It's not that putting money in some place and getting a return is stupid. What you are starting to get annoyed with, or tired of, is the amount of your mental energy that goes towards thinking about how to reap returns from cash deployed. So, it's actually about where you devote mental energy and not where the money goes. It's kind of like, I get that money—you've got to do something with it. You might as well put it in a place that's going to grow or fund a company that's going to do something. But it's about mentally spending cycles thinking about how do I get 7% versus 8% versus a tax-efficient 9%, versus just mentally spending those same cycles thinking about something else. Like, I'm reading a book, talking to a person, building something cool, writing a song, whatever it's going to be. Is that more accurate?

Sam Parr

Yeah, just like get out of this financial arbitrage circle jerk and actually make a difference. Have an exciting, wonderful life.

Shaan Puri

yeah

Sam Parr

I'm with you on that myself and others

Shaan Puri

I'm with you on that. I catch myself doing that all the time, where I'm like, "How many hours is my brain spending on this financial game?" There's some amount that's correct, but it's very easy to slip into spending more than what you need—more than what's adding value to your life.

Sam Parr

I love that TV show, *Billions*. Bobby Axelrod, this powerful billionaire guy, is going to war over some of the people. That's so awesome! I love that. Yeah, he's an alpha, but he's also just a jerk who's trying to squeeze pennies out of this thing or that thing. It's complete nonsense.

Shaan Puri

right

Sam Parr

you know what I mean

Shaan Puri

Yeah, I think, you know, what also happens is important. In your twenties, you're trying to figure out what... like, your twenties, in many ways, are about feeding the ego. It's like whether you're partying, trying to make friends, trying to date people, or trying to get your name on the map in your career or your industry. I feel like a lot of people, including myself, spend their twenties feeding the ego. Then, in your thirties, you start figuring out that, okay, my ego is either full or it will never be full. I actually want to feed the soul in some kind of way.

Sam Parr

that's what

Shaan Puri

I mean, yeah, I actually want to become more conscious of how I spend my time and my energy. Then there's this constant push and pull of like, "Maybe I just want to make a bunch of money," or "Maybe I'm not ambitious enough."

Sam Parr

well I think you can do both

Shaan Puri

way over money focused and there's like these debates that I have in my head it sounds like you do too

Sam Parr

I think you could do both. I guess the point is I'm beginning to realize I love the builders more than the allocators. Like, yeah, yeah, yeah... builders over allocators.

Shaan Puri

all day okay yeah good that's a good that's a good way to end the podcast