Millionaire Who Went Broke & Became A Millionaire Again (James Altucher) | My First Million Podcast

Shaan Puri

And so if somebody's listening and they're like, "Okay, cool, you made millions. How did you go to $0?" So, what was happening? How were you making money, and how did you take it to $0? 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 them 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'd pay me and my brother-in-law **$250,000** to make AmericanExpress.com. So 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 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...

Shaan Puri

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? Well, you...

James Altucher

Know what? That's a great question. So, no, it doesn't look like Craigslist. I wish it did, but back in those days, web design 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 company like Macromedia or something. They were very heavy designs and 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 cash... **Fuck yeah!** So, cash. Not like... a lot of people then, you know, went public or sold, and they got paper. Then they died in the dot-com bust because the paper went to $0. The stocks went to $0. So, I had enough sense at like the peak in 1999. I cashed out, and I had the cash in my checking account. 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 company 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 at the peak with 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 south. 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 kind of have that... I mean, you sound like it before you even told me you were 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 just began investing money. Was your firm...?

Sam Parr

all your money so your firm no

James Altucher

no we raised we raised $200,000,000

Sam Parr

like 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 total was to 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 **$0**. 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 on 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 world trade center

Sam Parr

so my god

James Altucher

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 dwayne 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 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