Entrepreneur Who Lost Millions Breaks Down How To Come Back Financially | My First Million 5/18/2020

Sam Parr

So the background here, by the way, Sean, is I was on James' show three weeks ago. It actually aired today. Yes, because I've been getting people reaching out to me. James is an oddball. I like him. He's been around and done all types of interesting stuff. He's had books, he's got paid newsletters. I don't know how you would describe yourself, but you're just kind of all over the place. You've done all types of stuff and you have a really interesting life. We thought we'd get him on here so we can talk about anything. But do you know about James, Sean?

James Altucher

I know about you. Yeah, I know about him. I've read a bunch of your stuff, and I was like, "This guy is the shit!" Then I read something where you were talking about Bitcoin or crypto at the time, and I thought, "Wait a minute, is this just a guy who sells the latest thing? Like, 'Oh, here's the new thing, cool, I'll shill that.'" I was unsure how I felt about this. Then I read some of your stories where you talk about how you made money and lost it all over and over again. I thought, "This guy is very interesting." You reminded me of if Tim Ferriss, you know, smoked a bunch of weed and was on the internet. I don't know, is this some variation of a really interesting guy who built his brand on the internet? You always had something unexpected. It wasn't the formulaic thing. Even the fact that you own a comedy club is unexpected. That's what I have come to like about you. But, you know, that's my admittedly very loose knowledge about you.

Sam Parr

do you wanna give some background

James Altucher

Yeah, I mean, it's kind of like what you were both referring to. I've had, for better or for worse, a lot of different interests, which I turned into a lot of different careers. I say "for better or for worse" because a lot of times I would have an interest, I'd build a business, I'd sell it, I'd make money, and then for some reason, I would just... I don't know, I would totally shit the bed and lose everything. I'm not talking about like, "Oh, I sold something for $1,000,000 and I ended up with $10,000,000." This is horrible. No, I would sell something for $1,000,000 and then end up with $0 or less than $0 in my bank account. Really just $0. Actually, I wish sometimes it's better to be less than $0 than to be $0 because if you're less than $0, then that means there's a deal you could work out with somebody. Like, "Oh, I owe you $10,000,000. Let's work it out and you maybe give me some so I could build..." I don't know what it is, but I think it was a young man in the nineties named Donald Trump who said, "If you owe $2,000,000 to the bank, the bank owns you. But if you owe $2,000,000,000 to the bank, you own the bank." But anyway, I would often end up at $0 and be depressed.

James Altucher

Of like suicidal like I had kids to feed I had myself to feed and it's really true when you go from having money and selling a business to broke you find out who your real friends are and for me almost every time it turned out I had 0 friends and so I had nowhere to go and and no idea and and depressed and I didn't know how to in some cases put food on the table for my kids after having 1,000,000 and so I had to learn very quickly over and over again what are my interests what can I pursue what's an idea how to be creative in maybe a horrible environment and then figure out how to monetize it so I was a software guy I worked in the entertainment industry I worked for hbo I started I combined those two things and I started a a company in the nineties making websites for entertainment companies and then I became a venture capitalist then I started a hedge fund I wrote some software to help me invest in that and then I started writing books about that so I became a writer then I became a podcaster and then like you were saying I started writing about much more personal stuff and I think everybody who knew me couldn't believe it like it was almost like they had never seen anything like this before like why they people would call me up like james are you do you have cancer or are you about to kill yourself are you about to die like why are you confessing to all these things these these are horrible no one's ever gonna do a deal with you again or or this is too embarrassing and I I you know and then I think since then people have I don't wanna say people copied it people had their own versions of writing about failure and and so on but and then those became I started writing books based on those articles and it turned out I had not only was I building up even more as a writer and my audience was bigger than ever previously I'd written about finance now I was writing about all this personal stuff my audience became a 100 times bigger and then I started getting more investment opportunities I started getting a podcast which became successful I just started getting many more opportunities because of because because essentially I I paid with my vulnerability for freedom and that created a whole kind of career for me and it wasn't intentional I just was sick of writing about all the bs stuff I kept seeing everyone else write about and if you wanna if you wanna be unique you kinda have to say what's unique to you and what was unique to me was all the times I was scared to death and and depressed and and had to fight my way out of it so many things to to answer the question I've I've I've back background in a lot of things and also I always like trying new things and experimenting and I'm I was everything I'm passionately interested in I like I like figuring out how to make money from it and and getting good at it

James Altucher

And so, if somebody's listening and they're like, "Okay, cool, you made millions. How did you go to zero?" So, what was happening? How were you making money, and how were you taking it to zero? Were you just making wild bets, or what happened?

Sam Parr

yeah yeah what were your like hits I imagine you've had like 3 hits

James Altucher

Yeah, I would say it's more like 5 or 6 hits. Again, for better or for worse, I needed all 5 or 6. The first one, again, I was working at HBO and I made their website. At the time, other entertainment companies and other companies didn't even know what this internet web thing was. This was in 1995. Companies like American Express... here's what would happen: American Express would call Arthur Andersen, which was their accounting firm. You know, Arthur Andersen famously went out of business in a scandal 6 years later. But American Express called Arthur Andersen and said, "Can you make us a website?" Arthur Andersen said, "Sure, we're gonna charge you $1,000,000." Arthur Andersen would then call another software consulting company, and they would say, "Yeah, we'll charge you $1,000,000." The software company would call me because nobody knew how to make a website in 1994 or 1995. So I would say, "Sure, I'll do it." Then suddenly, they paid me and my brother-in-law $250,000 to make AmericanExpress.com. That was one of our first websites. My salary at HBO at the time was $40,000 a year. So my brother-in-law and I, we made HBO.com. Then we made websites for everything from Warner Brothers, Sony, Disney, BMG, all the record labels. We did every gangster rap record label: Bad Boy, Loud Records, Jive, Death Row, Interscope. We did the movies for *The Matrix* and many other movies. But anyway, that was...

James Altucher

And were these good websites at that time? Like, if you looked at that website today, what would it look like? Is it like a Craigslist?

James Altucher

You know what? That's a great question. So, no, it doesn't look like Craigslist. I wish it did, but web design back in those days was very different. I was a software guy, and my brother-in-law was a design guy. Web design back then was very heavy. There would be big, heavy images and animations using Flash or, you know, some Mac... I forget the company, Macro or something. They were very heavy designs, not that usable. But yeah, I mean, they were okay; they were admired back then. The website for *The Matrix* was a great website, which you can find on archive.org. HBO's website was also a great website, but it wasn't as functional as all websites are now. It wasn't very easy to navigate.

Sam Parr

and what did you walk away with at the end of that

James Altucher

about 15,000,000 and then

Sam Parr

cash fuck

James Altucher

Yeah, so cash... not like... So a lot of people, you know, went public or sold and they got paper [stock], and then they died in the dotcom bust because the paper went to zero. The stocks went to zero. So I had enough sense at like the peak in 1999, I cashed out and I had the cash in my checking account. Like, I didn't even want to...

Sam Parr

you mean cash out were you getting like stock in these comp I mean

James Altucher

I understand. So, no, I sold the company to a business that was rolling up web design for web agencies. In a sense, that was how we went public. Some company that made, I don't know, vacuum cleaners or whatever, decided to get into the internet business in 1998 and acquired us. Suddenly, they were an internet company, and the stock went from $3 to $48. I cashed out literally at the peak with about a little over $15,000,000—almost $16,000,000 in cash. Here I was, thinking I was smart every step of the way. I knew that the web design and development industry was going away because they were teaching how to make a website in junior high school classes. So, I knew this was going away. I was smart; I sold the business and cashed out as fast as I could. Then, suddenly, when you make money at one thing, you think you're a genius at everything. At least, this happened to me. Everybody would come to me and say, "Hey, what should we invest in?" or "You know this internet thing. You have curly hair and glasses; you must know all about this internet stuff. What should we invest in?" So, I started thinking, "Oh, I must be really smart at this." I literally poured all this cash back into internet investments after I cashed out of the internet, and it really went... well, not great. I also bought a huge apartment in New York City. The one thing I was doing that everybody thought I lost all my money on, but I didn't, was that I was gambling every single day. I was playing poker for 365 straight days, playing at least 8 to 10 hours a day.

Sam Parr

I was gonna ask you if you're a degenerate gambler because you kinda have that... I mean, you sound like it before you even told me you're a gambler.

James Altucher

But that's just it. Poker was the one thing I probably should've stuck with. I was doing well at poker, and it was right before the poker boom took off when I decided, "You know what? I'm just gonna focus on starting new companies and internet investing." I stopped playing poker at the end of 1999. I started a venture capital firm and I just began investing money.

Sam Parr

and was your was your firm all your money so your firm no

James Altucher

no we raised we raised $200,000,000 like

Sam Parr

holy fuck

James Altucher

That was the other thing too. I didn't have any experience doing any of this stuff. I didn't know anything. I'm trying to remember all the investors: CS First Boston, Deutsche Bank, and all these major banks gave us money. Then another company, Investcorp, which is a major private equity firm, gave us $100,000,000. I started investing my own personal money side by side with the fund and in other investments. I started buying stocks all the way down.

Sam Parr

so how long till was 0 from 15 to 0 how long was that

James Altucher

I was losing about **$1,000,000** a week in the summer of **2000**, and I just didn't know what I was doing. It wasn't even that I didn't know how to invest; I didn't understand that there are so many other skills to investing than just knowing what companies are good and what companies are bad. I didn't understand risk. I didn't understand money management. I really didn't understand anything about investing back then; I was an idiot. By around mid-**2001**, I went to zero. I was desperately putting my apartment up for sale because maybe I would have some money left. I stopped paying my mortgage, hoping I would have some money left after putting this apartment up for sale. I lived **2** or **3** blocks from a little building called the **World Trade Center**, and we were getting an offer on **September 11th**. Of course, many worse things happened that day than me not getting an offer for my house, but **9/11** happened, and we couldn't sell then because we were part of the crime scene. You know, it just... I went totally, totally broke.

Sam Parr

were you home in that

James Altucher

I was at the

Sam Parr

world trade center so

James Altucher

my god which I don't really I don't really talk about because a it sounds unbelievable but b it also many worse things happened to people to many more people than me that day obviously but my business partner and I there was a dean and deluca in on the first floor of the world trade center we ate breakfast there every day and then we would day trade the markets and at that? I was starting to come back a little bit from day trading and I had written some software and and so on and then we're walking to my home where I had my office and we my partner turns to me and says is the president coming into town today because this I look up and there's this plane that's just like right overhead and then boom we watched it go right into the like physically we watched it not on tv but like physically we saw it go right into the building and everybody on the street instinctively ducked and and your your brain does weird things so my I started thinking to myself like my my business partner his name's dan he said we're we're we're being attacked and I'm like no no no that was that was just an accident like and no one's no one's it's too early no one's in the building like my brain was telling me this even though it was a quarter to 9 am and you know how do you remote control us whatever it was a 747 into the world trade center but that's what my brain was telling me so we run to the fire station and we say we wanna help and these guys throw 2 fireman suits at us and say get this on we're gonna go straight over there and we start putting it on but then they say wait a second are you guys firemen and we're like no we just wanted to give blood or whatever we could do and they're like no no no only firemen and that fire station it was the duane street fire station a 100% of those people died who went to the world trade center that morning and and then from you know it was it was a a bad day but that kind of clinched me losing everything also because I had been invested in the stock market that morning and boom everything kinda went to went to 0 after that and then I was just desperate for like a year and a half couldn't sell the place couldn't there were no jobs I was an idiot nobody would I had no friends anymore and you know I had to I had to teach myself how to invest so I wrote some software where I took every piece of data about every single stock since world war 2 and looked for patterns you know when would I would have my software find statistically significant patterns where trades were good so I would try to model let's say fear and greed in the markets and and and it worked pretty well does it it wouldn't I don't think that strategy would work now but it worked then because there weren't there wasn't that many quantitative investors in the markets then this was kind of the beginnings of that and so I was very successful with it and that kind of kept me alive and that's how I bit by bit I started learning about investing this gave me time to actually learn the skill and and talk to people who were experts and professionals and and really learn then I started writing about investing and I started going on cnbc and I started a hedge fund and I start I wrote my first book about investing and so gradually I built these 2 careers 1 in the hedge fund business and the other in writing about investing and going on cnbc and then I built so I was doing deals also then and making money and then I built a a website that combined my interest in web development with investing I made like a social I called it the myspace of finance because myspace was big then and sold that site and that was like my next big hit sold that for 10,000,000 and you know and then a year later I was broke again and that's the things like that just kept happening

James Altucher

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Sam Parr

There's a lot going on here, but you've sold two companies so far. Well, you've also sold your newsletter business too, right?

James Altucher

Yeah, so that was a third company. I've also sold companies that I was either involved with as an investor or as a co-founder. There are many companies I've been an investor in that have been sold. For example, I was involved with a mental rehab facility that sold for $41 million in 2004. I did go broke after that. Then I was a stock picker on a stock site. I was also an early investor in Buddy Media, which Peter Thiel invested in. Mike Lazaro was the CEO, and Mark Pincus, who started Zynga, was an investor as well. We were all seed investors at a $4 million valuation, and it sold to Salesforce for about $700 to $800 million. I had a company today that I was an investor in that just announced a reverse merger; they're going public. So hopefully that will do well. I've been an investor in a lot of companies that have done well because I finally figured out the most important thing about investing that I missed before. Since then, my private investing has done very well, and I don't really do public investing anymore.

Sam Parr

well what's that thing

James Altucher

that one thing is that I am the worst idiot in the world if if you're in a room with me I'm the stupidest person in that room and what I mean by that is take buddy media as an example I didn't have to do any work once I invested because peter thiel was my co investor so it's not like they're gonna call me for advice they're gonna call the people smarter than me and also presumably the 1st investor in facebook would know what he was doing when investing in a in a facebook marketing agency which is what buddy media was so so I always if someone a lot smarter than me says hey I'm investing in this company I don't even have to do any more work I just send the check because I assume and I'm always correct when I assume this he's done or she's done all the due diligence all the hard work he's he's got phds working for him that are a lot smarter than me worse comes to worse he he or she can make phone calls and get this company acquired which is what happens and I've done very well with just that one strategy that if someone a lot smarter than me is investing at the same terms as me that's important too then I'm going to do well and it's almost like a 100 it's not like a normal success rate it's like a 100% success rate when you do that and and the other rule is if they ever call me for advice then on my spreadsheet where I keep track of these I assume their value is 0 and I never call them back because if they're if if they've reached so far down the totem pole where they have to call me for advice that means they're screwed so and this secret works like it's amazing how well that one technique works and so that allows me to invest in companies ranging from oil companies to tech to law enforcement to the company today is an erectile dysfunction drug I don't I don't know anything about biotech like the but as long as someone you know if if someone calls me and says look hey I've I've started the last 3 erectile dysfunction drug companies and they've all done well now I'm investing in this are you with me here's my check I don't need to know anything else

Sam Parr

I think Sean's going to want to ask you questions on angel investing, and I want to ask him as well. I want to hear his answers or your answers to those questions. But before we get to that, what about selling? I mean, you've sold more than a handful of businesses. Selling companies is hard; most people will never sell one. How are you able to sell so many? Do you think it's like you...?

James Altucher

Know that that's a great question. And let me ask you, Sam, I don't know if we've talked about this: have you ever sold a company?

Sam Parr

I had a small sale of like $100,000 for this company, The Hustle. We had term sheets, and I walked away at the last minute. I've had 2 or 3 term sheets, and I've walked away from them. I've never closed the deal. Yes, and then I bought... I've also helped buy companies too.

James Altucher

Yeah, so it's similar skills on both sides, but maybe slightly different. People don't realize that selling a company is very difficult. There are three skills: starting a company, building it, and selling it.

Sam Parr

and sean sold his company too to twitch

James Altucher

Yeah, last year, congratulations to you! So, you know what I'm talking about. Your company's up for sale, and you meet a bunch of people. I don't know if you met a bunch of people, but I would meet a bunch of people each time. There's this courtship, and you kind of fall in love with each other, just like in a courtship. Then, suddenly, you move into a different phase where lawyers take over, and you're waiting. It's a waiting game, and it's due diligence. It's very painful because before, you were in this massive selling and dating mood. But now, you're living together and getting to know each other. You don't want her to figure this out too fast, and you know, before she really falls in love. All that dopamine you get when you first meet has gone away.

James Altucher

The way I started this podcast was during the due diligence phase. I got so itchy because I was waiting, and I was like, "Oh my God, I'm going to jeopardize this deal." Either I'm going to push too hard just because I'm impatient, or I'm going to go start another business, which is the worst thing I can do while I'm trying to sell this one. So, I was like, "I need to do something." That's why I started the podcast during that due diligence period.

James Altucher

Yeah, that's smart because I would just do nothing but wait. It's a painful process. The way you sell is, first off, you have to be sincere the whole way through. You have to have a vision that matches their vision very strongly. It has to explain, "If your business is so great, why do you want to sell it?" There's that inherent contradiction in selling a business. I was always aware that in every business I've sold, I would be better off with a better capitalized partner. Now, maybe I would limit my upside, but you know, the first time you sell a company for $1,000,000, and then the second time, if you're broke, the second time you sell a company for $1,000,000, and then the third time, it's okay to not sell for $1,000,000,000 because you want to get that initial chunk. But you also have to say, "Look, together, here's how it's 1 + 1 equals 3." You have to be really persuasive on why 1 + 1 equals 3, even for you personally. You have to be able to express that this vision is going to benefit you personally if you partner with this other company. It has to really make sense. And then, of course, you have to survive this waiting.

James Altucher

You have to survive the initial phase, where they're still checking you out. But now you're together, and you have to integrate and get along. You also have to keep all your employees because usually there's some backend earn-out or something like that. You have to understand deal structure so you're not ripped off. It's very easy to be taken advantage of by lawyers in a deal, and people don't realize that. You have to have some skills at negotiation. Negotiating is one of those things that 9 out of 10 people think they're above average, which is impossible. Only 4 out of 10 can be above the median, and only 1 out of 10 is really good enough to sell a company properly. I had to learn the hard way how to negotiate. When they come to you and say, "Well, how much do you want for your company?" that's a very hard question to answer. You don't want to sound greedy, desperate, or underprice yourself. There are all sorts of negotiating techniques that you have to use to help them answer that question in a way that works for both sides, not just one.

Sam Parr

For you, both sides value your companies on a multiple of your profit or revenue. Or was it, "If you use our stuff with your audience or your current products, it will create this much value?"

James Altucher

so that also is a really great question because there's there's 3 ways to value a company right the one is a standard industry multiple on your earnings and cut it in half by the way because no one's gonna pay the maximum you cut it in half so they everybody wants to get a deal so like if if you have a profitable company and it's in an industry that trades on the stock market for 20 times earnings then your company is probably your last year's profits times 10 the 20 divided by 2 that's just a basic formula or you could do what you just said which is hey and I learned this for my second company I didn't learn this for my my first company was profitable unlike every other internet company and so we sold for about 10 times earnings which was was was a mistake the second company was like I did value it like how you said which is if if you if we put ads all over here and you're driving this amount of traffic and we monetize those ads and then you cut that in half this is what we're worth and I the second company I sold on the basis of that the challenge there is with the other company you work out this formula for how you're gonna value your company based on their their them helping you build your earnings and the challenge is then you fill in all the variables they know the variables better than you so you have to make sure when you're negotiating the formula that and you agree on the formula that you understand the variables enough to that it works out to what you want I didn't do that part properly on my second negotiation and then the third way to value things is you look at other companies acquired in the space they sold for this we're bigger so we should be this now that's kind of a b s way to value a company but that is how people value companies often particularly in the in the tech sector like giphy I don't know what they how they value themselves but certainly wasn't off of earnings I don't think they had $20,000,000 in earnings my guess is they were losing money so so they probably valued off of something some kind of comparable deal in in the internet

James Altucher

Yeah, because then Tenor sold. Tenor, which is Giphy's competitor, just sold to Google a year before for a little less than that.

James Altucher

oh who is their competitor

James Altucher

company called tenor t e n o r they were

James Altucher

And their competitor... yeah, just as a side note, is it true that Giphy was the second largest search engine in the world? That's what they're saying.

James Altucher

yeah they I

Sam Parr

don't think they said largest is yeah

James Altucher

they love the 2nd largest

James Altucher

yeah so youtube is number 2 and

Sam Parr

amazon would be

James Altucher

about 2 3 amazon 4 right like so

James Altucher

yeah

James Altucher

depends what you call a search engine

Sam Parr

But I did interview the founder in New York, and it is huge. There was just no way to make money off of it, really.

James Altucher

Yeah, I had that issue. I was a seed investor and on the board of Bitly. Bitly had about 5% of the internet's traffic every day running through it. For the life of us, we just could not figure out how to monetize it; it was impossible. They did exit; a private equity firm bought it, but it was like a 2 or 3x, which is not really what you're looking for in an angel investment.

James Altucher

And so, James, when you lose all your money, the first time you call back, you make money again doing something else. You lose it again. I mean, obvious question at some point: were you like, "Okay, rainy day fund, $2,000,000 is going into this account"? And hey, I lost the keys, just, you know, like, just to stash some money away?

Sam Parr

what yeah surely your wife was like come on man yeah what

James Altucher

how did you get away with not just saving some of the money

James Altucher

I I got divorced

James Altucher

alright there you go that was a good answer

James Altucher

that was a problem and I lost the second house that I bought and no I I kind of finally I think it was the 3rd time or the 4th time I finally looked back and I said what was I always doing right on the way up and what was I doing wrong on the way down and there were things in common which is just that I kind of I kind of would just give up after I made a lot of money I would kinda say phew I I did my job as a human now I can just let my health go away my relationships I don't care about it anymore I don't need to be creative anymore you know I don't need to have any kind of sense of spirituality and I would just whatever and I just would lose all sense of things and and not take care of myself and not just physically but like emotionally and creatively and so I just made it a very concentrated effort it sounds sort of cliche and almost self help help you a little bit but I really would make a concerted effort to keep myself physically healthy to have only good people in my life and quickly eliminate any toxic people like as like the speed of light no second chances and creatively I just started writing down every single day 10 ideas a day like and it could be business ideas it could be writing ideas it could be dumb ideas it could be ideas for tv shows it could be ideas for how Google could be a better search engine and then I would arrogantly send them to Google but the whole idea was not to have good ideas but to just practice this creativity muscle or else it would atrophy and literally like I'm not I'm not trying to sell anything here like literally within months of writing 10 ideas a day down it it felt as of my whole brain was rewired and I would just I would bounce back so quickly with ideas it was just nonstop and then the aspect of sometimes I would write ideas for other companies and I would send them these ideas if I felt they were pretty good and you know I would always get new opportunities because of that like I would visit facebook amazon linkedin Google quora airbnb and just just the this one process of writing 10 ideas a day down for the past 12 years has been such an incredible thing for me I can't even praise it enough so the other day just for fun a friend of mine recently took a job at disney + and he was just like because of this lockdown we're not getting any good ideas pitched to us so I'm like well what are you looking for and he said we're looking specifically for unscripted ideas that would cater to 9 year olds so I wrote my list of 10 ideas the next day and I sent it to him he forwarded it to the I don't know how like he forwarded it to the head of reality programming at disney and at right after this I'm meeting they they got excited and right after this I'm meeting with disney to go over the ideas

Sam Parr

That's wild! As someone who's gone up and down, can you explain what your happiness levels were like? What was the range from, let's say, $0 to $10,000, to $100,000, to like $1,000,000, to $15,000,000? What's the difference in your happiness and fulfillment and things like that?

James Altucher

oh my god so and and really we're just talking about the first time because then there's different it's different each time but I had $0 in the bank and I was living in a studio in astoria queens which is you know was not in the 9 early nineties was not a nice part of queens before that I had a a roommate in an apartment smaller than the room you're seeing me in and I was paying $300 a month I was working at hbo for 40,000 a year I had a suit in a garbage bag that I would pull out every day and put on the same suit 7 days in a row and walk over to hbo and then we did the very first site I did was this diamond dealer and he gave me $17,500 in cash this is 1994 and I had never had seen any money like this before 17,005 like it almost was like I couldn't believe this was actually happening and I walked over to the chelsea hotel on 23rd street it was like this sort of famous artsy hotel but also really rundown and I gave the owner like the whole bag it was a paper bag of $17,500 and said can I live here for a year and he said are you a drug dealer and I said no I work at hbo and he let me live there and I was just so happy like oh I'm living in manhattan now and in this cool hotel and I felt like part of something I felt like part of a scene I felt magical and that was an amazing moment and then when I sold that first business I felt good but it was weird because it was so much pain closing that deal like I was so stressed out in the months prior to that and I got burnt out and that's when I started playing poker every single night just to kind of escape burnout so I don't know if I was happy or just more escapist than and then when I started losing and every time I've lost every single time I've lost everything I was suicidal and in part for practical reasons I thought maybe my my kids could live off my life insurance and particularly that first time they were babies so I figured they wouldn't remember me but they'll definitely remember the life insurance so fortunately I I I couldn't figure out how to do it in such a way as to not hurt myself and I never did it and you know I was very depressed though for long periods of time but each time the?

James Altucher

Of depression would get faster and faster

James Altucher

And you know, I think one of the most probably important things I've been learning is that I used to think learning was like, you know, in school. It's like, "Learn math," and then as you get a little bit older, you're like, "Oh, maybe I should learn some skills like sales or programming or whatever." Now I'm like, "Oh, forget all that." The only skill that matters is managing my own psychology and my own emotions. So I started to figure out what works for me. Right? Like, cool, if I exercise, here's how I feel. If I eat this, if I make this decision, if I listen to this song, whatever. I started to find different little ways to manage my own psychology. Do you have any things that you've worked on or figured out that help you either boost gratitude or get out of that depression funk? What works for you? Or are you conscious about that?

James Altucher

yeah very very much so and that was part of this realization that every single day and I even I it it's I call it my specific daily practice and it's it could be different for each person but I always have to ask what am I doing to eat move sleep so that's physical health I always try to stay healthy like I'm not I don't I'm not an athlete I'm not a you know I'm not used to working out or I mean I'm 52 years old I've gotta stay as healthy as possible and so eat every day I have to make sure I'm eating well sleeping 8 hours and and moving and now with this pandemic lockdown is I have to go outside and make sure I have some outside time and then emotional health just what how much are are the people around me toxic or not and that is the key to emotional health nothing else and then creative health am I writing 10 ideas a day down because creativity not only is it rewiring your brain to be more creative you know or that muscle atrophies but it also triggers a lot of dopamine when you're creative and it just if I do it in the morning work on my 10 ideas a day list I've got this surge of dopamine that carries me at least till like 1 or 2 in the afternoon and then spiritual health is just am I trying to control things I can't control so that's a very important part of spiritual health so you see people on twitter all day long oh man they should we need to open up this economy right now or we need to lock down all the people who opened up like on both sides they're trying to control things they can't control and they're all day long they're 24 hours a day on twitter and even during this pandemic I felt like I was getting a little into that and then I pulled myself back and realized it's it wasn't I can't control this so it wasn't healthy for me and so always avoiding trying to control things you can't control is is very important and that really just those four things physical emotional creative spiritual just those four things if I attend to them every day I I keep at a very high state and even when I'm even when I lose money now or go up in money I it keeps me very you know contentment and well-being are much more important than happiness happiness is very as the cliche goes is very fleeting but well-being you build a real foundation of well-being and that and that sticks with you

Sam Parr

so what's your business now james that you're that like what's like your job now

James Altucher

Well, I do lots of things. I mean, I write every day, and I just finished a book that will be published by HarperCollins in a year. I do a podcast, and I'm still involved in my newsletter business, which I sold. I'm a private investor in about two dozen private companies, but remember, I'm not active in those because I don't want them to want my advice. So it's very, very passive. However, I have to make sure I'm enough in the deal flow that each year I can still put a little bit of money to work. You never know which year you'll find the next Uber or whatever. A lot of my time over the past five years, until this lockdown, has been on stand-up comedy, which makes minimal at best.

Sam Parr

So then, did your nut for your angel money come from your initial sale?

James Altucher

Really, really now. Most of the way I make a living and the way I built it up is just from private investing. Because pretty much every company I've sold, I ended up losing all or most of the money. But private investing is now the way I've been able to make a living, most of all.

James Altucher

So, on the angel front, what percentage of your money, of your net worth, do you put into angel deals? This is a risky, illiquid thing.

James Altucher

I'm very much now, and this was the key that made a big difference for me in investing: **risk** is the most important part of investing. Whether you're investing money or you're investing time, risk has to be managed and thought about first and foremost. The way I remove risk is in two ways. First, as I mentioned, I always invest with people who are smarter than me. I let them manage some of the risk because they are professionals at it. The other way I manage risk is through position size. I never invest more than **1% to 2%** of my net worth; that is the maximum I will ever invest in any company. Right now, I'll let the investment grow to much more than that. It's sort of like what Warren Buffett says: "If you've got Michael Jordan on your team, you don't trade him just because he got better." So, I like it when good private companies don't exit because that means they're still growing at like **50% to 200%** a year. As long as they're doing that, I don't want them to exit.

James Altucher

And what was your biggest angel or private company win so far? Which company?

James Altucher

Yeah, it's hard to say because a lot of my investments are doing really well, but they're still private. I have deals I invested in back in 2009, which are still doubling every year. But that Buddy Media deal, you know, went from $4,000,000 to $700,000,000, which was pretty good. Ticketfly was another one I invested in; I was in the seed round of that, and it sold for $450,000,000. I invested in another company that is public now. It's a law enforcement company. They have a gun that... I was sort of a co-founder of this. It started in the living room I was staying at, and there was a trending hashtag: #BlackLivesMatter. So, we tried to solve that problem basically. We found an inventor who made a gun that fires a Kevlar cable at you at the speed of sound. It wraps around you, and the more you try to struggle to get out of it, the tighter it squeezes. So, like Batman, yeah.

James Altucher

I was gonna say straight out of batman

James Altucher

Yeah, and even one of the founders of Taser is the president of the company now. He became the president about a year ago, and we went public. It's a really great company; it's still in growth mode, but they're starting to sell quite a bit. I'm not excited, actually. I own shares of the public company, and I'm not planning on exiting hopefully ever because it's... what's the name of that competition? The company is called Wrap Technologies. I'm not trying to push the stock or anything, so I don't want to even mention the stock symbol. But it's just such a great thing to invest in and be a part of the founding of something that literally saves lives every single day. So...

James Altucher

Can you... do you have the journal with you that you write your 10 ideas in? Can we get it on a random day?

Sam Parr

let's let's talk about some ideas like what what do you what's interesting to you right now james

James Altucher

A lot of times it's in my email. Oh, there's my pad! I do it all in waiter's pads or I do it in my email. So if I'm out at a cafe, I do it in a waiter's pad, and if I'm sitting at my computer, I'll do it in my email.

Sam Parr

Well, as an angel investor, I don't know if you're ever going to start another company again. Maybe you are, maybe you aren't. But as someone who's always scheming, what do you have your eye on now?

James Altucher

yeah I have no problem even saying what I'm scheming at because so I've I I haven't considered starting a a new company in a very long time but I have been considering it now and one of the ideas is I feel it's a shame that content is not monetized unless you're like the in the top 1 tenth of 1% of content creators so you have to be like you know logan paul to monetize your youtube channel and the other 20,000,000,000 people on youtube even if they have one video that goes viral they can't monetize it so or or like even if you have a if you have a tweet that 20,000,000 people see but you have only 300 followers you can't monetize it so I've been figuring out a way to use these ecosystems to allow people to monetize content so that's one idea I'm working on I'm actually physically working on it and another one involves making a a derivative of a of a board game that I like but in general I don't I don't come up with business ideas I come up with like like I said the other day I had this challenge like of oh I'm gonna challenge myself to come up with tv show ideas that 9 year olds would like and I did that and I sent it off and usually I don't send it off or sometimes the ideas are ideas for books I could write or if I have an idea for a book I could write like the next idea I'll write a list of chapter titles and again most of the ideas are supposed to be bad because you can't come up with 3,650 good ideas a year and it'd be foolish to think so so I'm just trying to come up with bad ideas but I'm trying to make my brain sweat so for instance one idea list that is particularly hard and this is the one I wrote this morning is 10 good positive things that have happened to me personally because of this lockdown those aren't actionable ideas but it was actually hard to come up with 10 like 1 through 7 is always usually pretty easy but 8 9 10 is usually makes my I feel like my brain sweating and but yeah but a lot of times I'll come up with business ideas or I'll I'll start to say to myself what industries are gonna be attractive after this that are unexpected so you can't say the obvious ones like obviously you know video communications technology is gonna be attractive businesses after this instead I would think what are the 10 ways I can improve zoo on zoom which is the is the most popular one right now so that will be how I exercise the idea muscle around zoom and

Sam Parr

For your content idea, is there a comp out there? Like, is there something out there that you're like, "Man, this little behavior that some people are doing, I think that if we just blew this up or systematized this, this could actually have legs?"

James Altucher

yeah so sort of so I'll do something what I'll call what I call idea sex so I'll take ideas from 2 completely different industries and again I've been a professional in many different industries again fortunately or unfortunately and I'll combine ideas to see if after idea sex there's a little idea baby that could work in in what I'm doing so for instance if I go to a restaurant and have a pretty good meal that meal could get monetized and if the waiter or waitress treats me nice they might get they they have they they have better chances of monetizing their behavior than otherwise so there's lots to learn from how monetization works in the bottom third of the economy in other industries so a waiter is the bottom third of the is in the bottom third of people who work in restaurants or involved in the restaurant industry so how do they monetize themselves and there's a lot there's a lot of industries where you can say hey the bottom third of this sector or this space or this country they don't make any money but but they could maybe and you could look at that as examples of you know how do I how do I lighten up this 3rd by allowing them to collect money this that's gonna be always a huge industry square is a great example square took the mom and pop store that couldn't accept credit cards because no bank would trust them and square enabled them to accept credit cards so square is the only company in the world that does that and they became I don't know a $12,000,000,000 company because they were able to monetize the bottom third of you know mom and pop retail stores and so that's one model for creating a $1,000,000,000 company and then I might use ideasx to generate the ideas like oh how does every other industry monetize their bottom third let's apply it to youtube and see what happens you know and then I'll look at competitors like okay there's patreon but you have to patreon has various hurdles you you have to already know you're gonna be a good content creator and you have to come up with awards and you have to interact and create content specifically for patreon and so and so patreon has problems so I try to look

Sam Parr

at what I hate patreon I think

James Altucher

people

Sam Parr

are so stupid

James Altucher

If you're a content creator, Patreon could be a great way to make money. However, I find that a lot of content creators, once they have a big audience, find Patreon to be more annoying than helpful. Advertising can also be annoying. Finding advertisers yourself and outsourcing all your advertising to YouTube could also be frustrating. There are various problems in the current ways people monetize. I mean, you guys monetize news, so subscriptions are another way, but that puts some friction in front of your subscribers. I've done newsletters, I've done advertising-supported media like podcasts or websites, and I'm familiar with all these types of monetization. I don't know, all these things together help me make my ideal list.

Sam Parr

what's your favorite wave ways for monetizing content

James Altucher

For me right now, I don't think I've ever really monetized content the way I would like to, like through subscriptions. But let me ask you a question: Is subscription the best way to monetize most content? Again, you have to plan for that in advance. You have to say, "I'm going to create a subscription product called 'The Hustle' with new ideas and trends every week, made by my great analysts." People are willing to pay a dollar a month or whatever it is—$10, for example. Subscriptions are a great way to monetize because you're not always chasing advertisers. It's this annuity that comes in and helps you even survive in a recessionary environment, like right now. So, I love it. I think subscription, whether it's an online newsletter, an online course, or a subscription community—like, you know, the Trends Facebook community—is my favorite way to monetize. However, it doesn't solve the problem of monetizing when you're not already in the top one-third of content. You guys are in the top one-tenth of 1% of content. You're going to monetize and do very well, no matter what model you choose. Whereas someone who writes a newsletter about, I don't know, some obscure kind of taekwondo, or someone who's trying to monetize how to mow the lawn better, is not going to be able to monetize. They might have one piece of content that really stands out, but that's about it.

James Altucher

And if you were, you know, I think you're pretty much one of the top 1% or better of people at building new businesses or audiences, right? I think you've done an amazing job of building up audiences that will follow you through one medium—podcasting, blogging, email, whatever you want. Let's say you're 21 years old again today. You know everything you know now, but nobody knows your name. How would you go about building an audience today?

James Altucher

yeah today I well first off let's assume I have something to say you have to have something you have to have a unique perspective and again I'll I'll I'll take I'll take the this podcast as an example it's my first million it's the name of this podcast right yep so there are other podcasts about there's a there's a podcast the eventual millionaire which talks to millionaires about but most of these other podcasts unlike you most of them are started by people who haven't yet sold their first business or haven't made that first million so their unique thing is they're approaching people almost as if they're asking for advice how can I do it you did it how can I do it so that's a different your perspective is you've done it so you're able to more in a different type of nuance drill down on that and you have something unique to bring out of people and and say to people and so on and and and sam for you you've spent so much time studying trends and side hustles and the gig economy the hustle is like the best email newsletter out there because it's your your the voice of it is so unique it's it's the go to particularly during this lockdown it's it's amazing people ask me hey what are some side gigs we could do from home the first thing I always say is check out the hustle and you'll get a ton of ideas even on our podcast sam you're just like spitting out ideas that I've I've I've run with and completely stolen from you so that's the other thing about having good ideas is you could steal them from people but you know I think you have something you have to have something unique to say so at the age of 22 you have to question well do I really have something unique to say and often when I write something I don't hit publish unless I'm afraid of what people will think about me after I hit publish because otherwise then I'm probably not saying something new or different or you know there has to be I have to challenge myself in some way to create unique content but give it let's assume you have something unique to say or some expertise you built up by the age of 22 I would go on quora and just answer every question I could I would participate on linkedin groups again answering every question I could I would go on groups like the trends group or other facebook groups and you know a lot of people ask questions I would go on podcasters paradise which is a subscription community about podcasting I would a lot of people say hey what you know how do you get get good guests or how do you what kind of microphone should I use I would answer every question I could and establish expertise and then I would again I'm thinking if I'm a 22 year old I'm not thinking this way now and then once I had some expertise I would branch out so now I've you just you just saw me everywhere you looked you saw me quora linkedin facebook there's there's james again answering questions now I'll start going on sites where there's a little bit higher barrier to create content so like a forbes.comorinc.comortechcrunchorwhatever and and this is what I did do and I started would start writing our yahoo finance I'd start writing articles for them so now people see me in a more of a position of authority so it's not just I have like a number of certain number of followers on either quora or twitter or linkedin or whatever it's like oh I I just saw james on quora now I see him on cnn.com what's he doing there and so so I established some authority then you gotta create an email newsletter that's free 99% of your content has to be free so I would create an email newsletter and always just at the end of my articles I would say hey if you wanna hear more from me I have an email newsletter sign up now and I'll give you my book the top 20 hustles for 2020 and just for free and you know just and then I would just start putting all my articles on my free email and then I'd start at some?

James Altucher

My level of expertise should be big enough that I can start a **four**-pay subscription newsletter. Whether it's about trends, stocks, or some physical activity...

Sam Parr

And this is the exact thing you did. I mean, I think that from an outside perspective, it looks like your newsletter business makes tens of millions in subscription revenue.

James Altucher

Yeah, so I did do that. Again, it wasn't the first business I started. That would have been a good first business if the question was, "If I was 22, what would I do?" That is how I did do that latest business that I sold, and it worked. That model works, and I encourage other people to start an online course. For example, a friend of mine has an online course. She is the most introverted, shy person I know, and she started a course on how to be noticed by the media—how to become a media expert. She priced it at $700. She opens it up for like three days every year, sells another 1,000, and makes $700,000 a year. She lives in a cheap country; she moved there just to keep expenses down. This is just a course, so it's not an ongoing newsletter. I think an online course is actually better than newsletters, and I think affiliate deals are better than creating an online newsletter. So, if I were to redo my business, I would do it over slightly. But, you know, that's what I would do if I was starting completely from scratch. I think I've seen that methodology work over and over again, and it is the advice I give people because content creation is king. There is always demand. How many times have you been asked during this lockdown, "Man, what show should I watch? I feel like I've watched everything." People always want more content. All the big content creators spent hundreds of millions on content just on sitcoms this year. So, there's so much demand for content, and you can provide value. If you really... again, 99% of your content will still be free—that's key. But you could provide extra value that is worth paying for. For instance, I forget if I get... I think I get "The Hustle" for free, right? That's a...

Sam Parr

free newsletter hustle's free trends is not

James Altucher

trends is not but but the hustle you convinced me I love the hustle and that's where most of your content is

James Altucher

yeah

James Altucher

But it's the quality and the voice in the hustle that convinced me. Okay, I need to get trends, and I'm happy to always pay for it. It just... we gotcha.

Sam Parr

we gotcha

James Altucher

Yeah, but there's value. If you don't provide value, then people are going to realize pretty quickly that you're useless. You always have to provide value and have something, and have a unique perspective.

James Altucher

Yeah, I think that is the key. The hardest part is having the unique perspective. Everything after that is sort of the textbook, you know? You run the playbook after that: how do I get it out there for free? How do I collect, you know, a customer relationship? And then how do I monetize for the most hardcore? But the unique perspective is hard. How do you shape that?

James Altucher

I'll give you another example. Do you guys play fantasy sports at all? Yep. Okay, so I do not play fantasy sports. I don't even know the rules of football. But Matt Berry, who's the fantasy sports anchor at ESPN, also hosts a TV show called "The Fantasy Show" on ESPN. That guy was a Hollywood screenwriter. He was writing movies and TV shows, and he hated his life. He quit that and started making a ton of money. He started writing a blog because he just loves sports and fantasy sports. He began blogging about that for $100 a blog post. He was kind of broke after all this and quitting Hollywood, so $100 a blog post was the most he could get. But because he had this writing skill from his Hollywood days, he quickly gained a huge audience in fantasy sports. Then he built a four-pay subscription site. After producing most of his content for free, ESPN bought it, and he kept moving up the ranks there. Boom! He's done so much better doing what he loves in fantasy sports and monetizing it in almost the same way I just described. He's so much happier than when he was writing movies, which a lot of people consider the dream job.

James Altucher

I love it! We should wrap up in a second. James, this was awesome. I gotta admit, you were way more legit than I expected. You know, I thought you were... what?

James Altucher

why did you expect me not to be legit

Sam Parr

Well, I've already called him out on this. Last time, or he called himself out, he goes, "So when his company was acquired, Sean James is like, 'Dude, my content's legit. I'm legit. I do it all.' But the acquiring company admittedly is incredibly aggressive with the advertising, and sometimes that kind of makes me appear as though I'm one thing when I'm not."

James Altucher

Yeah, and by the way, it's a very interesting topic: how aggressive you should be with your advertising. There’s Alain de Botton, who is this French philosopher. He has this theory that even the good guys need to use Machiavellian tactics. They need to use them because otherwise, if I just said, "Hey guys, I have a unique perspective on Bitcoin, please listen to me," there was so much aggressive advertising out there that they would have drowned me out. I would not have succeeded in my mission, which was to inform people of what I thought was a correct view of Bitcoin. And then what would have been the... right? So sometimes, it did cost me though. Because my ads were so good, we dominated. I mean, that was the reason Facebook, Google, and every place shut down crypto ads: it was because of my ads.

James Altucher

Yeah, you know, that was definitely a little piece of it. But what I actually meant was, most of the time when a guest comes on, I think to myself, "Well, this is a really successful person," but man, they don't tell a great story. They do not bring energy, stories, and also some unique insights that the listeners would appreciate. You know, I'm imagining I'm a listener, right? During this interview, you talked for most of us. I was actually listener number one for this podcast episode, and I would have liked this one. I can't always say that that's the case with all of our guests, but you brought that. That's all I really meant when I said you're legit, which is, you know, you've raised the bar for the podcast, which is great.

James Altucher

excellent thank you so much

Sam Parr

so james this was awesome if people wanna say hi to you is twitter your your go to method

James Altucher

no I'm james altucher on tiktok

James Altucher

that's

Sam Parr

oh my gosh

James Altucher

that's where that's where you could find my absolute best content now it's tiktok

Sam Parr

no one wants to see a 50 year old dude dancing to rihanna no

James Altucher

I'm not dancing perspective

James Altucher

Oh yeah, I'm not dancing. I did dance one time, and someone literally commented, "Stew, this is not why we followed you."

James Altucher

stop this yeah and so

James Altucher

I took that one down and I haven't danced since. Although, if push came to shove and I was drunk, I would. When I was 12 years old, I was a semi-professional breakdancer, but that was a long time ago.

Sam Parr

The comedian, Bitcoin breakdancer... well, that's a sad ass, man. We appreciate you coming. I'm looking forward to joining you again and you coming back to us and developing a friendship. That's awesome.

James Altucher

excellent yeah and and and sean yeah definitely let's have you on the podcast as well so I'll I'll cool

James Altucher

I'll hear

James Altucher

you exchange emails and we'll figure it all out

James Altucher

sounds good

Sam Parr

thank you

James Altucher

alright alright you guys thanks a lot

James Altucher

take care

James Altucher

talk to you soon bye bye