Prof G Markets: The Art of Spending Money

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Speaker 18 Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network.

Speaker 17 I'm Kara Swisher.

Speaker 16 And I'm Scott Galloway.

Speaker 18 And today we have an episode of Prof G Markets for you all. In this episode,

Speaker 16 finally, the white meat. Finally, the Taylor Swift of podcasting.
Finally,

Speaker 16 pivot is the tax you pay to get to the dog. Well,

Speaker 16 welcome. You're welcome.

Speaker 18 No, here's the situation. We're on vacation.
We on vacation and we had to put something in there.

Speaker 18 In this episode, Scott breaks down the best and worst purchases he's ever made. That should be a good one.
Scott, give us a one-sentence summary of this episode. I mean, one sentence, please.

Speaker 16 Worst purchases, cars when I was a young man, when I didn't have have the money to afford a car. Best purchases have actually been homes, homes when my kids were little.

Speaker 16 It was nice to have nice homes when my kids were little.

Speaker 18 All right. Well, this should be interesting.
It actually is a fantastic episode and a fantastic podcast. Enjoy.

Speaker 16 Today's number: $91 million. That's how much King Charles III's coronation cost British taxpayers last year.
Ed, what does Burger King and vaginas have in common? What's that?

Speaker 16 It's generally considered bad form to eat them in the middle of a McDonald's.

Speaker 16 That wasn't easy to bring Burger King and the King into something this profane, Ed. And you're pretending not to laugh for fear that you'll be named in the lawsuit.

Speaker 16 I don't get, you can laugh out loud. That's right.
Even Claire is laughing.

Speaker 16 And Claire is literally the general consulate of Wokestan. I always laugh at your pussy jokes.
Come on. She does.

Speaker 16 She does. Claire's down with me.

Speaker 16 We're both looking for the same thing, if you know what I mean. That's right.
That's right.

Speaker 16 We're both on the same team. We both point out the same accouchement.

Speaker 16 We're looking at the same, we're seeing the same sights together on the road. All right.
I need to get out of this, Ed. What are we talking about today? We're talking about

Speaker 16 what are we doing today? We're doing something different today. Here, you take this.

Speaker 19 Gladly. We've got a special episode today, Scott.
We are diving into one of our favorite topics. We're not going to be talking about saving money or even investing money.

Speaker 19 We're going to be talking about spending money. We're going to be answering questions like what are the best ways to spend money? How should we think about spending?

Speaker 19 And most importantly, how do you spend your money? So I'll walk us through a series of questions about spending. You'll give me your honest answers, I hope.

Speaker 19 And then hopefully we'll learn something along the way.

Speaker 16 This doesn't fit my opening joke. I think we might have to re-record.
This sounds very thoughtful and responsible. Anyways, but yes, Ed, please continue.

Speaker 19 It is going to be very thoughtful.

Speaker 19 It's practically going to be a therapy session.

Speaker 16 Yeah. I'm in.

Speaker 19 Amen. All right, well, we'll start with a pretty easy question.
And that is, what is the worst purchase you have ever made?

Speaker 16 Oh, when I was, I grew up in California, and I grew up in this era that you don't relate to. It was kind of California Dreamin',

Speaker 16 American graffiti. The only thing you had to express any sort of coolness or wealth or aspiration or matcha was your car.
In addition,

Speaker 16 living in Los Angeles, you had literally no aspect of a social life unless you had a car. There was no public transportation.
There was the RTD, but it wasn't really efficient.

Speaker 16 So if you wanted to go to Friday, you know, on a Friday night, go and crash a party that someone was having, you were invited to, see above Scott Galloway, you needed a car.

Speaker 16 And so from the age of about 13, I saved pretty much everything for a car.

Speaker 16 And I got, my dad gave me an old Volkswagen rabbit from his old home in Phoenix. On the way back from Arizona with a friend, the tire blew out and there was no spare tire.

Speaker 16 Gives you a bit of a sense for the protective instincts my father did not have about a Renault La car.

Speaker 16 And finally, I think the Renault got towed my freshman year in the fraternity, and I didn't even go get it. I think I just let it be sold for scrap.

Speaker 16 So, buying a car, my first cars were the worst purchases, hands down, I ever made. They literally took all of my disposable income and more.

Speaker 16 It was like $2,500 to buy insurance when you were 16, which on an inflation-adjusted basis probably meant $10,000 a year. I did not have that kind of money, and yet I found it.

Speaker 16 So, hands down, the worst purchase I ever made was a car.

Speaker 19 What about the BMW you got after you got your bonus from Morgan Stanley? I'm always kind of blown away by the fact that that's how you spent your bonus.

Speaker 16 I respect it, to be clear.

Speaker 16 Oh, yeah. And not like that.
I think I told you, I think I bought a 325i, Navy Blue. I bought it out of the recycler.
I think I spent, I don't forget what it was, my first bonus was like 25 grand.

Speaker 16 I spent 28 grand on a car. But I think of that, I mean, this sounds dumb, but a bad car that you don't need in college and high school, I kind of needed it, but I just couldn't afford it.

Speaker 16 You know, that's a dumb purchase.

Speaker 16 I would argue that when you're 23, working in Morgan Stanley and you're in your mating years, that buying a BMW and hanging swim goggles from the rearview mirror makes a lot of sense.

Speaker 16 You're trying to say, you're trying to signal to women that if you have kids with me, your kids are more likely to survive than if you date someone who is driving a Hyundai.

Speaker 16 and does, you know, does water aerobics. So I sort of, I empathize with what I'll call smart signaling purchases.

Speaker 16 I think it's difficult to lecture someone your age on to not occasionally buy cool shit and do cool things. Your 20s come and go.
You want to signal attractiveness.

Speaker 16 I get sort of the irrational purchases. To me, the BMW kind of made sense, and also I sold it and I paid for my European trip, so it was worth it, and I don't think I lost that much value on it.

Speaker 19 Yeah, my follow-up was going to be, was there ever an item that you splurged on that seemed pretty irresponsible at the time, but ultimately, as you reflect, turned out to be completely worth it.

Speaker 19 Perhaps the BMW, perhaps something else.

Speaker 16 No, and I'll turn this back to you, but I wish I'd learned earlier, and I did learn it accidentally, but it was more organic than anything I read.

Speaker 16 You remember experiences, you don't remember stuff. People overestimate the joy they're going to get from things, and they underestimate the joy they're going to get from experiences.

Speaker 16 When I left Morgan Stanley, I initially, towards the end of Morgan Stanley, I thought about trying to do a third year and maybe making the jump to associate or interviewing with another firm because everyone had convinced me that if you have your foot in the door at investment investment banking, you never want to leave because you'll never get a job that good.

Speaker 16 Even though, despite the fact I hated it and they hated me, I wasn't very good at it. I was trying to figure out a way to maybe stay in it.

Speaker 16 And then the only time I've ever been in the hospital was I got an arrhythmia

Speaker 16 towards the end of my second year. In a what? An arrhythmia.
I had something called ventricular tachycardia, which is an irregular heartbeat. Okay.

Speaker 16 And the timing was really unfortunate because the week before, this guy named, was it Hank Gathers? The best high school or or the best college basketball player

Speaker 16 got a rebound, went down for a monster jam in front of a national audience, and then turned back to run up the court and dropped dead on the court.

Speaker 16 And he was diagnosed with VTAC and an enlarged heart, which is quite regular for people who ⁇ your heart is a muscle. And if you work out a lot, which I was doing,

Speaker 16 and crew, your heart actually can get too big for your chest cavity and it can create an electrical imbalance. I was overinsured.
I was having this irregular heartbeat. Hank gathers the week before.

Speaker 16 They stuck me in the hospital. So while I was in the hospital, this woman, I was at St.
John's, I think it was.

Speaker 16 And she said, why are you, she looked at me, you know, I'm 23, said, you're in the ICU unit of the cardiology unit. She's just looking at me, not a doctor, and said, you shouldn't be here.

Speaker 16 What's going on with your life?

Speaker 16 And it hit me so hard. I was, I was, I became very emotional because I'd obviously tried to push down all these emotions about how fucking freaked out I was that I was in the

Speaker 16 ICU unit of the the cardiology unit, St. John's.
And basically, net net that afternoon, I decided I was going to leave investment banking and do something different.

Speaker 16 I moved back in with my mom and I sold my car and I went to Europe with that money with my friend Lee Lotus. And we got a backpack, a URL pass.

Speaker 16 And that still remains as evidenced by anyone who watches this podcast. I do amazing travel.
I travel to the best places.

Speaker 16 I have an extraordinary life with respect to travel. The best trip I've ever taken was when I was 24, right out of Morgan Stanley with Urail Pass, sleeping in hostels with my good friends.

Speaker 16 Lee Lotus and then David Kingsdale joined us, and I connected with a woman I was dating at the time and to be in, you know, Myconos on no money, but with someone you were into.

Speaker 16 That was just the best expenditure I've ever made. And I spent everything and more.

Speaker 16 I think I had to call my mom and ask her to wire me some money, but it was hands down the best expenditure I've ever made. So I'll put it back to you.
The dumbest and best purchases you've made today.

Speaker 16 Other than like a big wheel and that glass dildo I saw you had on your shelf. Turn off the camera.
Jesus Christ. I'm sorry, go ahead, Ed.

Speaker 19 No, that one was worth it. Yeah, I think it's experiences for me too.
It's funny.

Speaker 19 The first thing that comes to mind for me is also Mykonos.

Speaker 19 There was one night in Mykonos. I went last summer with a bunch of friends.
And there was one night which was probably the most amount I've ever spent in a single night. And it was ridiculous.

Speaker 19 We decided that, you know, we had picked out what the best club on the island was, and that club was Alamagoo.

Speaker 19 And we decided, okay, me and my boys got together, said, Okay, we're going to pay for this whole thing.

Speaker 19 We're going to, we're going to get all the girls, and they're not going to pay a penny, and we're going to just spend

Speaker 19 like crazy on this one night. On Thursday night, we're going really, really hot.
And so, we got the best table at the club, we got one of the biggest bottles that they have on offer,

Speaker 19 and we kind of just decided, like, this is, this is our big night.

Speaker 19 And, you know, I turned, we're having a great time.

Speaker 19 I turn to my left and we're in the VIP section sitting next to the table that is occupied by Paul George, Carl Anthony Towns, and basically just all of the biggest NBA stars in the world right now.

Speaker 19 And that was a moment where it's like, okay, this is an amount of money that I don't have, clearly, but I've made a very intentional choice and an intentional decision.

Speaker 19 Like, this is something that I know I'm going to enjoy. I know it's going to be special.
We had, we sat up till sunrise. It was like the greatest night ever.

Speaker 19 And that to me is like a moment where it was very irresponsible when you think about it numerically.

Speaker 19 But in terms of like the intention and the purpose behind it, where I was like, I know that I'm spending a lot right now and I'm going to be very, you know, responsible when I get home to New York.

Speaker 19 That was probably my number one.

Speaker 16 It's funny. It reminds me of my dad occasionally would say something that

Speaker 16 was close to insight. And he always said to me, doing nothing is fine as long as it's planned.
And I remember another saying that

Speaker 16 anger is actually a productive emotion as long as it's planned. And I think what you're saying is you made a responsible decision to be irresponsible.
And I think that's okay.

Speaker 16 Occasionally it's fun to splurge. And

Speaker 16 I would argue that splurges when you're young are,

Speaker 16 I think you remember them more, especially if they're around experiences. Anyways,

Speaker 16 my advice advice to young people, you know, Andrew Huberman and Peter Atiyah will say, you know, don't drink alcohol. I don't see drunkenness.
I see togetherness.

Speaker 16 And I just love the image of you and your homies and Mykinos

Speaker 16 doing your thing and then late at night getting shut down by every woman in the club. Still, it was worth it.

Speaker 19 That was definitely worth it.

Speaker 19 Okay, what about the best purchase you've ever made?

Speaker 16 Probably the best purchases both financially and emotionally for me were homes.

Speaker 16 And that is right out of business school, I was very much in love, and we bought a home together. And it just represented like a commitment to each other.
And we got a dog. And it just,

Speaker 16 at the age of 27, it just felt really nice to, to have some of that like feeling, that,

Speaker 16 that. domestic bliss to be committed to someone, to be making a mortgage payment and owning a home.
And the home was just a vehicle, I think, for kind of that commitment to each other.

Speaker 16 And it felt really, it was emotionally very rewarding. And then going back to the probably the last house purchase I made, when I sold L2, I had, you know, a big windfall.

Speaker 16 And my partner said, we should buy this, you know, beautiful home. You know, it is a beautiful home on the beach.
And one of my flaws, many flaws as investors, I think

Speaker 16 nothing is ever cheap enough. And the home was, they were asking 15 million.
She said, trust me, we can get it for a lot less.

Speaker 16 I'm like, she offered, ended up getting it for nine and a half and i'm like i didn't want to buy it i'm like no it'll be worth six in two years we're going into recession this is 2019

Speaker 16 i'm sorry 2017 and it took three years to renovate shit ton of money and then covet comes and we have uh you know a really nice home on the beach and then again about see above better to luck be lucky than good this mass migration of people to florida from covid all these masters of the universe who all want to live in the same aim same area and be on the sand, and that home is probably doubled or tripled in value.

Speaker 16 And more important than that,

Speaker 16 in an environment where people had to sequester and isolate with their families, I was in a beautiful home,

Speaker 16 more time with Netflix, more time with my boys, and my stocks were skyrocketing. And COVID was, in my opinion, the most unfair, pornographic, gross

Speaker 16 transfer of wealth and health from the already wealthy and the incumbents from people who are unhealthy or poor. And

Speaker 16 I was on the right side of that. And it just strikes me, it just feels so uncomfortable to say COVID was the best two years of my life.

Speaker 16 But this is a long-winded way of saying the best purchases I have made, and I'm not suggesting that it's right for everybody because a lot of it is timing.

Speaker 16 But emotionally and financially, the best purchases I have made were my first and my last home.

Speaker 19 Are there any categories of spending that you kind of refuse to skimp on or that you pretty consistently go all out on? Something where you look at the price tag and you say, doesn't matter.

Speaker 19 I'm going to buy this no matter what.

Speaker 16 I'm sitting in a room that costs $5,000 a night.

Speaker 16 I mean,

Speaker 16 enough said.

Speaker 16 I don't own a car. I don't spend a lot of money on clothes.
I spend a crazy amount of money on travel. Next door in the next room is my friend Augusto.

Speaker 16 And Augusto is like this greatest guy, easygoing, super nice.

Speaker 16 And when I'm doing a lot of traveling and I'm lonely and my partner can't come with me or my kids can't be with me, I call one of many friends and I say, come join me.

Speaker 16 And if it's not easy for them logistically or financially, I make it easy for them. And we go out and we go to the best place.
I mean, and I feel self-conscious. It's so funny.

Speaker 16 I've always, I've had this weird shame around money. Up until the age of 30 or 35, I was ashamed that I didn't have more money.
I was always, I was broke because I was in school. I had student loans.

Speaker 16 I was really self-conscious about how much, how little money my mom and I had. It made me feel very insecure.

Speaker 16 And then

Speaker 16 student loans, starting businesses, never had enough money, even when my friends were starting to make money. So I didn't have enough money.
I was embarrassed by that.

Speaker 16 I think from about the age of 30 to kind of 45, I had just the right amount of money. I had enough money to do nice things, but I wasn't self-conscious.
Then I got exceptionally lucky.

Speaker 16 And by the way, I'm not humble. I think I'm a fucking monster.
I think I'm exceptionally talented, but I also got really lucky. There are a lot of exceptionally talented people out there.

Speaker 16 And now I'm not embarrassed, but a little self-conscious by how much money I do have.

Speaker 16 And you're not supposed to talk about it. And I think that is nothing but a bullshit construct to keep poor people poor.

Speaker 16 Because when you speak a different language, rich people talk to other rich people about money all the time. They talk about taxes.
they talk about investments, and they get more literate.

Speaker 16 And then we're told not to talk about money in case you decide to share your salary with someone else or you figure out how much money I have and decide to fucking, you know, show up with a guillotine or actually vote for people who have a progressive tax structure or maybe demand more compensation because you realize the person down the desk from you is making 30% more because they've been there 10 years or they're a different sexual orientation.

Speaker 16 I mean, basically the asymmetry of information and this inclination that you're not supposed to talk about money keeps the financially illiterate illiterate and also keeps rich people richer. So

Speaker 16 other than bragging, it is, I think, important to talk about money even when you have it. But hands down, where I go ape shit with money now that I have it and spend

Speaker 16 more than I should is on travel. I'm going to Africa.
I'm taking my sister and her family. And they didn't want to go.
They have responsibilities. Their kids inquire.
They're working hard.

Speaker 16 And I'm called her, and I'm like, you're going to be dead soon. When are you next going to Africa like you're going to go with me?

Speaker 16 When are you going to roll into Africa like you're going to roll with me? What the fuck are you thinking?

Speaker 16 And that was the right lecture for me to give my sister. These experiences, if there's anything the research shows you around spending money, it's the following.

Speaker 16 Drive a Hyundai and take your husband to Africa. I don't really buy a lot of things.

Speaker 16 I'm just not into that. I don't buy stuff.

Speaker 19 Do you look at the price tag much when you buy things? So if you, I don't know, you walk into a nice clothing store, are you thinking about how much it costs?

Speaker 16 I do because I can't get out of that habit. I was in, I forget where I was, but there was just an insane price on something.
And I'm just like, this is offensive.

Speaker 16 I can't, I can't bring myself to spend money on this thing. It's just, you know, I'm like, that's just ridiculous that you would even try and charge this amount of money.
I can't buy it.

Speaker 16 I really need it. I really like it.
It doesn't make any difference to me, but there's that part of you. You just can't do it.

Speaker 16 You just, you, you remember back when you didn't have enough money and you establish a value system and you're like, I just can't do it. I can't, I can't, you know, I can't spend this kind of money.

Speaker 19 What do you think is the difference then? What do you think justifies like a good purchase versus a bad purchase?

Speaker 16 Look, this is the majority of people, 99.9% of the planet doesn't have these problems.

Speaker 16 They have a much bigger problem, and that is they're constantly trading off needs versus wants. And that is the majority of our planet, I think only about one-third of the planet are consumers.

Speaker 16 What does that mean? It means that they have enough money to buy things beyond basic food, shelter, and education. So, only a third of us even get to make these decisions.

Speaker 16 Do I want a scarf, or do I want to go to Mykinos or do I want to take my spouse out for a nice dinner?

Speaker 19 Yeah, it's I think you're in a unique position because you have experienced pretty much every economic class there is to experience, in a way.

Speaker 19 I mean, you haven't experienced real poverty, but you did not grow up wealthy and now you're extremely wealthy. And the way I kind of think about like,

Speaker 19 you know, you talked about there are certain people that can't make those trade-offs that we're describing. It feels like there's a progression when it comes to spending.

Speaker 19 It's like in a certain economic weight class, you can't make trade-offs because you have to survive and you have to get by.

Speaker 19 And then you, there's another class, which is you start being able to make trade-offs. and then there's another one where I feel like you are where it's like

Speaker 19 you don't even really need to be making trade-offs that much I mean it sounds like you can

Speaker 19 generally speaking have your cake in and eat it too in most situations I would say so I what I would be interested to know is like how has the psychology of spending money changed for you as you have breached each of those economic weight classes like did spending money

Speaker 19 take on a different gravitas to you as you got richer or as you got poorer?

Speaker 16 So I think it's important that everyone have a certain code or values that they want on their tombstone and then try and live their life across those two or three values.

Speaker 16 And one of my values is I pride myself on being generous. And I'm generous with everything but my time.
I like spending money on it. I like treating people.
I like buying things for people.

Speaker 16 I know that's virtue signaling, but anyone who knows me knows that is true. And the reason why is not because I have this inner nobility.

Speaker 16 It was because I was deeply traumatized by my father's relationship with money.

Speaker 16 My father was born and raised in Depression Era, Scotland, where you could literally starve if you didn't have enough money. And so he was painfully cheap.

Speaker 16 He was the guy when my parents were divorced and he came and took me and my friend, best friend Adam to see Greece, amazing movie, in 1976.

Speaker 16 After the movie, he collected two bucks from my friend Adam because he had bought the tickets. And I had to sit there and watch this go down.

Speaker 16 I went to Hawaii once with him on a big golf vacation, or he was the crown circle ITT salesman of the year, and he got to go on this golf trip and take his family. And we went to Baskin and Robbins.

Speaker 16 They got ice cream. I ordered a shake.
And then for two days, my dad didn't speak to me.

Speaker 16 And you're 13 years old and you're a guy and you're looking up to your father and you're like, why is my dad not speaking to me? Like just ignoring me.

Speaker 16 And finally, I asked Linda, his third wife, my stepmother, a wonderful woman. I'm like, what's going on? Why is dad mad at me? She's like, he's upset you ordered a shake at Baskin and Robbins.

Speaker 16 They cost $3 and you didn't ask him. My dad didn't speak to me for two days.
And so when my parents got divorced, he immediately went to the upper middle class.

Speaker 16 We immediately went to the lower middle class. He was so awful to us financially.
He could have made our lives so much easier with just a little bit of money. I really struggled in college.

Speaker 16 And I like to think, oh, Bill Grit, bullshit. It was really fucking stressful not knowing if you were going back to college every summer.
And he could have made my life so much easier.

Speaker 16 And so I remember just explicitly and implicitly deciding if I ever have money, I am not going to be this guy. I mean, and I can't stand it now.
I can't stand.

Speaker 16 I have friends who are really wealthy who

Speaker 16 always find reasons not to pick up the bill or whatever. And I just find it such a grotesque attribute.
And some of it is them they're just responsible. They were just raised that way.

Speaker 16 I find being cheap one of the grossest attributes, especially for men. I'm sexist this way.

Speaker 16 I can't even be around these people.

Speaker 16 If every one of my friends isn't fighting over the bill, we're not friends. But

Speaker 16 my spending right now, in large part, or some of it is I'm just,

Speaker 16 God, I just don't want to be my dad. He was awful with money, just awful.
And I always thought, if I ever have money, I'm not only going to enjoy it, I'm going to share it.

Speaker 19 Yeah, I feel like people

Speaker 19 don't seem to understand how good it feels to be generous. I think I started

Speaker 19 only starting to realize this recently, that it does actually feel really, really good to get the check

Speaker 19 and give someone a nice experience. I mean, I did that recently with

Speaker 19 my dad for the first time, and it was kind of like a, it felt like this sort of exciting,

Speaker 19 important moment where it's like, no, I can get this. Like I can, I can give to you.

Speaker 19 And

Speaker 19 yeah, I mean, it sounds, it sounds so trite when you say it, but the reality is just as you say, it's like, it actually just makes you feel really good.

Speaker 19 And it's almost the same as getting something for yourself. It's all, as you say, it's all, it's selfishly motivated.
It makes you feel good.

Speaker 19 But it seems like I've just found, I'm surprised by how many people don't realize that, that like it really enhances your life and your own personal experience to be generous.

Speaker 16 There's all sorts of different ways to garner emotional reward from money if you handle it well. You know, money is, money is nothing but the transfer of time and work.

Speaker 16 And there's few things you can do that are more generous than give someone time.

Speaker 16 and work.

Speaker 16 I was a services, I was, I used to park cars, I was a waiter. I remember I was a waiter at the Mondriana Hotel, and this lovely old lady was a character actress.
I forget her name.

Speaker 16 Every time she was there, every time I would walk by, she'd put five or 10 bucks in my pocket.

Speaker 16 Like literally, every time I walked by her table, she'd come over and she'd like slip five or 10 bucks in my pocket. And you're going to UCLA and you can barely afford your books.

Speaker 16 It like changes your fucking day. This like nice old lady gives you 30 or 40 bucks.
I mean, it's the difference between being able to go on a date or buy lecture notes or whatever it is.

Speaker 16 It is wealthy wealthy people who do not tip big, that makes just absolute fucking lutely no sense. It is so easy to give in a liquid economy time and work to people by giving them money.

Speaker 16 And it has nothing to do with nobility or ethics. It just, like you said, it just feels really good.
The other thing that you inspired is that I think even more, I love spending money.

Speaker 16 I am really good at it. It's one of my core competences.
I'm outstanding at spending money. I always say I'm spending money like a gangster in the 50s just diagnosed with ass cancer.

Speaker 16 I am just going large and I'm loving every minute of it. I'm really good at it and it creates a lot of joy and happiness for people near me and around me and for me myself.

Speaker 16 I do think though that even more rewarding than spending it or having it was making it, specifically making it with someone else, both both professional and personal partners.

Speaker 16 My ex-wife and I,

Speaker 16 we were working so hard. We were trying so hard.
We were making good money. We had setbacks.
And then, you know, I had businesses fail. I had businesses work.
She got promoted.

Speaker 16 She didn't get promoted. But we were saving money and we bought a house together and we started saving money together.
And we really built economic security together.

Speaker 16 And it was just so rewarding to do it with someone. And then

Speaker 16 where you also get a lot of that reward is, let me be clear, the businesses I've started and sold, my first obligation was for me to make the most money. And I I always have.

Speaker 16 That felt better than anything, but it also just felt fucking awesome to bring in really good people who'd worked really hard with you alongside of you and go, hey, I know you're 27, but you're going to make $550,000 next week when this transaction closes.

Speaker 16 And them just looking at you like they couldn't believe it. You know, like I get huge reward out of underpaying you.

Speaker 16 No, but look, no one ever feels overcompensated, but for the last 10 or 15 years of my life, since I've gotten wealthy, I've made an objective to say, okay, what is this person's market rate?

Speaker 16 And how do I pay them 20, 30, 50% more than market? And it just feels good. So building,

Speaker 16 spending it is great, but I found actually the making it, specifically the making it with other people, was actually the most rewarding part. Yeah.

Speaker 19 Wow. I 100% agree with that.
I think that's one of the things that makes relationships so fun is that you're building something

Speaker 19 together. It's just so much more exciting than doing it on your own.

Speaker 16 Well, by the way, it just dawned on me that it's no accident that you've asked me to do all this virtue signaling around generosity right before bonus season.

Speaker 16 It's clear that everyone has figured this out. And there's like eight people on this line taking notes that, yeah, reviews are about to come out.
You know,

Speaker 16 it's giving money away, isn't it?

Speaker 16 I find it's all about grit and helping people realize their inner child and save by not by underpaying them. That's how you build character.
I'm planning to build everyone's character here.

Speaker 19 We've got more after the break. And by the way, we'll be recording an Ask Me Anything episode very soon.

Speaker 19 So please send in your questions for me and Scott to officehours at profgmedia.com or leave a comment on our YouTube channel.

Speaker 16 We'll be right back.

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Speaker 7 support for the show comes from odo running a business is hard enough and you don't need to make it harder with a dozen different apps that don't talk to each other one for sales another for inventory a separate one for accounting before you know it you find yourself drowning in software and processes instead of focusing on what matters growing your business This is where Odoo comes in.

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Speaker 24 No more app overload, no more juggling logins, just one seamless system that makes work easier.

Speaker 11 And the best part is that Odo replaces multiple expensive platforms for a fraction of the cost.

Speaker 27 It's built to grow with your business, whether you're just starting out or you're already scaling up.

Speaker 28 Plus, it's easy to use, customizable, and designed to streamline every process.

Speaker 30 It's time to put the clutter aside and focus on what really matters, running your business.

Speaker 14 Thousands of businesses have made the switch, so why not you?

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Speaker 19 We're back with profit markets. I'm going to go through some

Speaker 19 individual situations where spending is very important and I just want to get your reaction on how you would deal with these little little situations I've come up with.

Speaker 19 So the first one is restaurants. You're out to dinner with friends.
And let's imagine you're not as wealthy as you are right now for these.

Speaker 19 One of your friends orders a really expensive bottle of wine. They order like a bunch of plates for the table.
And then when the check arrives, it's way more expensive than you thought.

Speaker 19 It's one of those checks where you see it and you start to feel kind of anxious and uncomfortable. You don't really know what to do.
So

Speaker 19 what would you do? Would you still offer to get the check? Would you split it equally? How would you handle that?

Speaker 16 Is this a group of guys or just friends?

Speaker 19 Group of guys, friends.

Speaker 16 I mean, I roll with a different crew. I just don't, we were, I never had friends that were into fancy wine until I got rich.

Speaker 16 And now I have friends who are trying to like inject class or some air of prestige into their life by ordering stupidly expensive bottles of wine and buying art.

Speaker 16 If you want to talk about, you know, if you want to signal for someone with a little dick, find someone who's all of a sudden really into art and or, you know, orders orders anything above a hundred bucks a bottle a bottle of wine unless you're really i mean if you're really into art and you're really into wine fine my my friend adam is really into cars he buys expensive cars because he's always been really into cars fine fine i get it but if someone ordered an expensive bottle of wine and i was with a group of guys and we didn't have a lot of money i mean okay if he's a baller and he's paying for it the general form is the following general

Speaker 16 general like manners if you order an expensive bottle of wine it means you're paying for dinner you're basically signaling, I am going to pay for dinner.

Speaker 16 You can't be generous with other people's money. And then when the check comes, if it's a group of guys your age, you're all friends, you all split the bill unless someone went crazy.

Speaker 19 What about if you're like in your 30s? Like

Speaker 19 it's not as absurd to be in your late 30s. Everyone's making good money.
Maybe everyone's with their partners. Like, what do you do in that situation?

Speaker 16 I personally feel like

Speaker 16 with friends,

Speaker 16 I mean, young people split the check or whatever that is, vend me or send me a request. I get it, right?

Speaker 16 I think if you're in your 30s and you're blessed with some reasonable economic security, general format should be the following. We get this one.
Oh, at the next one, they get it.

Speaker 16 And if people aren't,

Speaker 16 if things aren't kind of evening out over time, you have to decide whether you want to stay friends with these people because,

Speaker 16 you know, generally what I have found is that you're out with couples. I can't stand splitting the check.
I'm at a point now where people say, oh, you did this.

Speaker 16 I'm like, boss, either pay for it or I'm paying for it. We're not splitting the check.
We're fucking grown men. I just,

Speaker 16 and I'll get this one, you get the next one, whatever it is. And especially when you're out with couples, I think you're mindful of each other.

Speaker 16 But for the most part, I think one couple gets the check and then the other couple gets the next one. I don't, I think the moment, I think it's always that strange moment when the bill comes.

Speaker 16 I think it's awkward. It's very awkward.
But it should all come out on the wash. If you have good friends, they're not going to be stupid in terms of over-ordering.

Speaker 16 And you'll realize that you trade off two or three couples, two or three, or friends. And if they, if, if their turn never seems to come around, you call them out on their bullshit and be like, hey,

Speaker 16 how come you never see, how come you always seem to find a way not to pay?

Speaker 19 Okay, this one's particularly relevant right now. Christmas is around the corner.
Let's say, again, you're in your late 30s. You've got like two children, a partner, two parents.

Speaker 19 You got aunts, you got uncles, you got friends, godchildren, et cetera.

Speaker 19 Who gets presents?

Speaker 19 And how much do you think you should be spending on those presents? And do you spend more on one person? Do you spend less on another person?

Speaker 19 How do you think about presents and Christmas as it relates to spending?

Speaker 16 I think about Hanukkah, you anti-Semite. Hanukkah.

Speaker 16 Okay. Actually, that's.
The holidays. That's not true.
I think about Christmas. I don't even know what the, I don't know what Hanukkah is.

Speaker 16 This is personal, how your approach is spending the holidays.

Speaker 16 When the kids were little, it was fun to just buy them a ton of shit and have this consumer orgy that morning where they're wrapping shit and then playing with it for two minutes. And that was fun.

Speaker 16 As we've gotten older, what I do with my boys is they make a list of stuff. We try and connect it to chords or something or something.
And we pull stuff off their list.

Speaker 16 And maybe we wrap one or two gifts. We just don't, I don't want that kind of consumer Lollapalooza in the morning.

Speaker 16 And then with my partner, I ask her to, you know, occasionally, we don't buy each other stuff around the holidays or for birthdays.

Speaker 16 I buy her stuff

Speaker 16 randomly because I think it's just more fun that I think she'll love. And she drops hints every once in a while.

Speaker 19 That she wants something?

Speaker 16 Oh, yeah.

Speaker 19 I say, and I've been looking at this, or it's like, you haven't given me a present in a while.

Speaker 16 No, she'll send me an instance. She'll send me a photo of a Birken bag with the exact color and be like, hey, what do you think of of this? I'm like, okay, message received.

Speaker 16 And what I try and do is wait just long enough, so she forgets about it, and it's a surprise. But yeah,

Speaker 16 I'm not a big gift giver.

Speaker 16 I don't want gifts. The gifts I like, you know, for me, I want meaningful gifts.
I want,

Speaker 16 you know, my sons will write me a note or they'll get me a book that was meaningful for me. Or they'll get a picture of us framed.
That's the shit I want.

Speaker 16 I can buy anything I want personally, and I'm not into stuff. You know, the gifts that, I mean, it sounds like a Hallmark commercial, but I don't want stuff.

Speaker 16 I don't want an automatic tie rack or a cream shave heater. That's what we got.
My dad. Ooh, was he thrilled? Back in the 70s, you put shaving cream in a heater.
I love that.

Speaker 16 And you'd have the delight and the supple feeling of warm lather on your beard.

Speaker 19 That's a great idea. I'm probably going to get that.

Speaker 16 A rotating tie rack. I have so many ties.

Speaker 16 I need to see them electronically whiz by me.

Speaker 19 I love that too.

Speaker 16 Yeah, no, we're not big, we're not big gifters.

Speaker 19 So who gets presents then? This is a question I've been thinking about. I can't tell, or it's not totally clear to me who I'm supposed to be getting presents for

Speaker 19 during the holidays and also how much we're supposed to be spending.

Speaker 16 First and foremost, your boss. Yeah.
Okay.

Speaker 19 Because I will say, by the way, you get presents for us at the end of the holidays. I don't know if you know what you're getting us, but we have received Christmas gifts from you.

Speaker 19 And I would assume that that's sort of part of...

Speaker 19 you know, you build that into the budget. Okay.
Over the holidays, I need to put aside this amount of money to get my employees some gifts and to get these people gifts.

Speaker 19 Like, I feel like it's an important part of the income statement, if you will.

Speaker 16 But it's strategic and it's selfish. So employee gifts.
And it's the following. First off, I don't buy anything.
I don't know what's going to be in that fucking bag.

Speaker 16 MJ, who has much better taste than me. She does a great job.
She'll say, I'm going to spend 500 or 1,000 bucks on employee gifts per person. I'm like, fine.

Speaker 16 And she'll figure out the latest cool thing and she'll do a great job and merchandise it. And I just give her my credit card number.

Speaker 16 And the reason it's strategic is that if I spend $1,000 on a gift or gifts for employees, it's worth more than $1,000.

Speaker 16 If I gave them $1,000 in compensation, one, they'd have to pay 30%, 34% taxes on it. Whereas if I give you $1,000 with whatever, AirPods and a scarf or something,

Speaker 16 it's pre-tax income. And also, it's more meaningful.

Speaker 16 The psychological benefit is greater than if I'd just given you $1,000 cash. My first business partner would always be like, he was totally gruff.
He's like, just give them cash.

Speaker 16 And I'm like, no, they like gifts. The kids like gifts.
You know, for me, the holidays, I don't, I can't stand the holidays. They were not an enjoyable time for me growing up.

Speaker 16 So I literally loathe them.

Speaker 16 It's so personal, though. You might find,

Speaker 16 I mean, so, for example, I think gifts are more important for women. Cocaine, jewelry, cocaine and jewelry, women have a special relationship with Ed.

Speaker 16 And

Speaker 16 maybe you don't like cocaine. Maybe you don't like jewelry.
But if you don't

Speaker 16 in your 20s offer that to women and in your 30s and 40s offer jewelry to women, you are not a good person.

Speaker 16 And mostly the jewelry.

Speaker 16 Like, I can't ever imagine spending, oh, I guess I buy watches now. I never used to buy watches, but I can't imagine people spending this money on jewelry.

Speaker 16 But you've got to determine what's important to the people in your life.

Speaker 16 That's what it means to be generous, is you're doing something for someone else you wouldn't do for yourself. It makes no sense to you, but it makes, but it's important to them.
So you do it for them.

Speaker 19 Do you think that people don't value gifts enough?

Speaker 16 What I have found is that,

Speaker 16 and I wish I'd figured this out earlier,

Speaker 16 writing somebody and complimenting them and recognizing them or telling them you were thinking about them or telling them how impressive you you

Speaker 16 are with them or or taking the time to say, you know, you handled this situation so well, or congratulations, this is just such a, this is such a nice achievement for you or taking the time just to recognize their achievement in a very thoughtful explicit way especially men to men i think that's the best gift you can give another man

Speaker 16 my best friend lee

Speaker 16 on a regular basis he will text me when he

Speaker 16 i get choked up thinking about it

Speaker 16 he'll literally he'll literally text me he'll say me and my parents saw you

Speaker 16 on Bill Maher, and we're just so proud of you.

Speaker 16 Yeah, that is so nice.

Speaker 16 Those are the gifts.

Speaker 16 And everyone's different. Maybe people like stuff.

Speaker 16 Like, that's the, you know, that's the shit I remember. And wouldn't you know my friend Lee is gay? And I think gay men have an easier time expressing their emotions than straight men.

Speaker 16 And, and,

Speaker 16 and just registering how important and meaningful that stuff has been for me

Speaker 16 has

Speaker 16 helped me be much more generous with my emotions. But that, in my opinion, is true giving.

Speaker 19 We'll be right back after the break. If you're enjoying the show so far, hit follow and leave us a review on Prof G Markets, wherever you get your podcasts.

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Speaker 1 Support for the show comes from Odo.

Speaker 3 Running a business is hard enough, and you don't need to make it harder with a dozen different apps that don't talk to each other.

Speaker 7 One for sales, another for inventory, a separate one for accounting.

Speaker 10 Before you know it, you find yourself drowning in software and processes instead of focusing on what matters, growing your business.

Speaker 21 This is where Odo comes in.

Speaker 2 It's the only business software you'll ever need.

Speaker 6 Odo is is an all-in-one fully integrated platform that handles everything.

Speaker 8 That means CRM, accounting, inventory, e-commerce, HR, and more.

Speaker 24 No more app overload, no more juggling logins, just one seamless system that makes work easier.

Speaker 11 And the best part is that Odo replaces multiple expensive platforms for a fraction of the cost.

Speaker 27 It's built to grow with your business, whether you're just starting out or you're already scaling up.

Speaker 28 Plus, it's easy to use, customizable, and designed to streamline every process.

Speaker 30 It's time to put the clutter aside and focus on what really matters, running your business.

Speaker 14 Thousands of businesses have made the switch, so why not you?

Speaker 15 Try Odo for free at odoo.com. That's odoo.com.

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Speaker 19 We're back with Profit Markets. I want to move on to

Speaker 19 some things around what is essential to spending, like what kind of things in your life you find essential. I mean, we talk a lot about like discretionary versus non-discretionary.

Speaker 19 And

Speaker 19 the

Speaker 19 technical definition of non-discretionary is like the stuff you can't live without. So, you know, food and housing costs and health insurance, et cetera.

Speaker 19 But I can imagine that as you get richer,

Speaker 19 that category sort of starts to expand. Like, you know, I sort of feel like I can't live without an iPhone at this point.
Like, that's sort of the way I think about it.

Speaker 19 So I guess my question for you is like, what

Speaker 19 stuff can you not live without at this point? What do you have to spend on? And what is your approach to spending on those items?

Speaker 16 This is going to sound

Speaker 16 under the title of infinite douchebag, it would be really hard to lose my plane. I've gotten very used to having a plane.
So,

Speaker 16 I mean, there's something around ramping your spending behind making sure your spending lags your economics because

Speaker 16 it's the joy you get from having something isn't as great as the disappointment if you lose it and can no longer do it. You get used to this shit really fast.

Speaker 16 So, when I bought a plane seven years ago, the best piece of advice I got was a friend of mine who said, just make sure you have way more money than you need for this.

Speaker 16 Because you do not want to give it back. He's like, don't buy it until you know you can keep it.

Speaker 16 And that was what's so been so rattling about

Speaker 16 being rich and then poor and then 2000, being rich and then poor again in 2007 and 2008, because to kind of step backwards, and I didn't really, actually, I didn't step back materially because I'd never, I always lived below my means, but you step back from an emotional security standpoint, that is really frightening.

Speaker 19 Yeah, I was going to ask, like, have you ever sort of downsized your lifestyle because you just couldn't afford it anymore?

Speaker 16 Yeah, I did. And after the great financial recession

Speaker 16 hit in 2008, I had a loft in New York. I had to sell that.

Speaker 16 I just didn't have any money. I wasn't making any money.
And all of a sudden, I was at negative net worth. So I had to sell my loft.
That was very disappointing. I loved,

Speaker 16 it was kind of just humiliating to be whatever I was 43 and have to sell my house to pay my bills. You know, I was never in debt, you know, but.
Were you with a partner at that point?

Speaker 16 No, I was single at that point, but it still felt really fucking humiliating.

Speaker 16 So yeah, I've had to step back. And I think most people have to step back at some point.
Maybe. I mean, if you're really responsible, hopefully not.
But I got crushed. Yeah.

Speaker 19 I feel like that's a really,

Speaker 19 that's a big one for me.

Speaker 19 Just the prospect of downsizing. And the way I have it in my head right now is like, you know, I have.

Speaker 19 I'm doing forced savings, so I'm good. I'm being responsible.

Speaker 16 How are you doing that? How are you doing forced savings?

Speaker 19 I have the automatic 5%

Speaker 19 that goes into the 401k and then you match that.

Speaker 19 And then I'm also just immediately when I get at the beginning of the year, I just take a chunk of cash and just put it in the IRA and that's the end of it.

Speaker 16 I just want to say you're like light years ahead of where I was when I was 25. I just, I wasn't even thinking that way.

Speaker 19 And part of the reason I do that is like,

Speaker 19 I want to spend a lot. And

Speaker 19 this might sound dumb, but I

Speaker 19 like nice things and I like nice restaurants and I like going out out to cool places and I spend a lot of money on all of those experiences.

Speaker 19 And part of it for me is that I want to kind of surround myself in that world and get myself

Speaker 19 deep in that position such that I have no choice but to go on and make a lot of money. And I think the scary thing for me is the idea that at some point,

Speaker 19 you know, this this podcast stops being successful and I sort of find myself at a crossroads and suddenly I can't do all of this anymore. I can't live this cool life in New York.

Speaker 19 And

Speaker 19 that's the, that's the thing that I'm gambling with. I need to make sure that I'm working so hard that I can keep up.

Speaker 19 And I can sort of see how this is going to be a potential slippery slope in the future when it gets bigger and bigger when you start dealing with kids.

Speaker 19 And, you know, I'm going to start thinking, oh, they need to go to the best school. And, you know, I need to have a house in this area where all the cool people are.

Speaker 19 And I can feel that sort of like treadmill feeling.

Speaker 19 But I almost don't want to get off because I don't want to give myself

Speaker 19 permission to stop working really hard in a way.

Speaker 16 I wouldn't look at it that way. I mean,

Speaker 16 you go to the playbook you played. When I was your age, I didn't appreciate nor had access to nice things and nice restaurants.
I just didn't.

Speaker 16 You know, you're at a point, Ed, where you shouldn't be saving 5%. You should be saving 10%.
And then the 5%, you know, 15%.

Speaker 16 Because if you just do the math, it's like what Brian Chesky from Airbnb says. You can have it all.
You just can't have it all at once.

Speaker 16 And the reason why I have so much balance in my life and so much opulence was because I had a lack of it when I was your age. And that is I was very disciplined.
I worked a lot.

Speaker 16 I didn't spend a lot of money. You know, occasionally went out to dinner or whatever, took, you know, went to ClubMed in Mexico.
That was my big vacation when I was your age.

Speaker 16 But you just got to recognize that some of that indulgence now, and I'm not going to tell you not to do it, it's just a trade-off. If you can find a way,

Speaker 16 I mean,

Speaker 16 my out-of-control opulence now is a function of the fact that I didn't have it when I was young.

Speaker 16 I could have had more of it, but I wouldn't have been able to, you know, for the most part, I was constantly investing, reinvesting in startups, reinvesting in the stock market.

Speaker 16 And then sometimes I'd lose it all, which hurt.

Speaker 16 But I was always putting myself in a position that if the winds kicked up and my sales were up I was going to make a lot of money because I was constantly reinvesting in my own companies constantly reinvesting in the markets and not consuming a lot I think it is very difficult when you're a guy your age especially I know you have a girlfriend but you guys don't live together right oh we do you do live together Jesus Christ yeah okay so you're on your way by the way that's been a big that that's helpful in terms of just creating a more responsible lifestyle for sure yeah you know we always say greatness in the agency of others wealth Wealth is in the agency of others.

Speaker 16 One, your ability to attract and retain really talented people,

Speaker 16 especially if you're an entrepreneur, or just find them, go to a place where you're working with other talented people.

Speaker 16 You want to be able to, where you, if you look left and right and think these people are talented, you're going to make more money.

Speaker 19 That's sort of what I mean, right? Like, I kind of, I feel like I need to spend to be

Speaker 19 there. You know, I need to go out with my friends and go to these social events.
Like, one of the questions I had on this list here of like situations, um

Speaker 19 i'm not gonna

Speaker 19 be specific about who this is but you know here's a situation your friend is getting married and has planned a very big bachelor party and you look at the agenda and you realize you're gonna have to spend a lot of money on flights a lot of money on meals on alcohol and going out and it's all beginning to get a very

Speaker 19 pretty uncomfortable But this is a really good friend, and you don't want to just not show up and let them down. So in a way, it's sort of like

Speaker 19 you need to be spending in order to maintain relationships at a certain point in life, I feel like. So I guess, how do you think about that?

Speaker 16 If he's a really close friend, you should be able to say to him, boss, this is a strain for us. I make really good money and it's a strain for me.

Speaker 16 I can't imagine what it's like for some of the other guys. And quite frankly, you're being a little bit selfish here.
You're putting us in a difficult position because nobody wants to say no.

Speaker 16 Is there any way you can ratchet this back a bit?

Speaker 16 So I don't think that's unreasonable. You're at that age where you're just going to spend a disproportionate amount of money on the wedding industrial complex.
It's ridiculous.

Speaker 16 It's just going to happen. And it's going to be worse for your partner because she's going to have to buy bridesmaids' dresses.

Speaker 19 Way, way worse for women, for sure.

Speaker 16 And then go to hotels that are overpriced because, you know, unless they bought out the hotel. But yeah, that's just part of that's just a tax that you pay to William Sonoma.

Speaker 16 William Sonoma tax.

Speaker 19 I love that.

Speaker 16 That's right. That's just part of it.

Speaker 19 Yeah, I guess it's just, I bring it up because I find it interesting how

Speaker 19 as you age, it's like just

Speaker 19 the

Speaker 19 financial burdens just accumulate in ways that you didn't really expect. Like the wedding tax that you just described is a very real tax and planning for those things

Speaker 19 I'd like to do it as best I can, but I think it is very difficult because costs just sort of come up out of nowhere.

Speaker 19 And the one I'm I'm going to bring it up, bring up now, which is probably the biggest one, is children.

Speaker 19 Like, children are a huge cost. So my question for you is, were you surprised by how much kids cost?

Speaker 19 And two, do you,

Speaker 19 to what extent do you sort of budget in the cost of your children? Like, how do you think of your kids as that line item on your income statement?

Speaker 16 Well, this is not financial advice, but my experience with kids was that when I had them later in life, so I was a little bit more economically secure. You know, I had my son when I was

Speaker 16 41, 42.

Speaker 16 And for me, it was, it was actually,

Speaker 16 I think part of the reason I'm as wealthy as I am now is because I had kids. And the reason why is because I just scared the shit out of me and it got me very focused.

Speaker 16 I think having kids when you're younger, if you don't have dual income, would be really financially stressful. Also, something I did once I had kids was,

Speaker 16 and what I would recommend is ask yourself, can you make a lifestyle arbitrage? And this was my partner's idea. She said, let's move to Florida.

Speaker 16 We're going to be able to cut our rent in half, if not by 60%. We're going to cut our private school tuition for our two boys by two-thirds.
Grace Church wanted $58,000 a year.

Speaker 16 And for me to bring that lady muffins,

Speaker 16 and then they ask you, are you philanthropic? Like, are you going to give us more money?

Speaker 16 Anyways, so we immediately cut our burn and that was her idea.

Speaker 16 And she was smart she's like no we're gonna love Florida it's nice stop being such a snob I'm like I'm not going to Florida they're all yeehas down there driving F-150s and shooting at each other and their guns and everything and she's like don't be an idiot you love that stuff anyway yeah all those better things life but what I did do was smart I took all of the money that we saved and I put it into the market and so immediately I think combined we were probably making you know I was probably making between I don't know

Speaker 16 400,000 and 700,000 a year between the two of us and then we took that 14% swing in savings and all the other savings.

Speaker 16 We took about 150, 200 grand a year and we put it into stocks for 10 years from 2010 to 2020.

Speaker 19 Yeah. I mean, the thing that really shocks me is that,

Speaker 19 I mean, just how crazy it's gotten,

Speaker 19 $400,000 to $700,000 a year and you got priced out of New York.

Speaker 19 Like, it's unbelievable. That's the part that I can't really wrap my head around in especially living in New York.
And that's sort of what this treadmill feeling is.

Speaker 19 It's like, in order to just get some basics

Speaker 19 done in New York, you need crazy amounts.

Speaker 16 There's a reason why people are moving into Texas. Right.
And there's a reason why the South is economically booming.

Speaker 16 A lifestyle arbitrage is, you should always be thinking about a lifestyle arbitrage, especially in a world of remote work. Where could I move? Don't be a snob.

Speaker 16 A lot of people are really happy in Atlanta. And economic security is an enormous ointment for stress and anxiety.
And if you are blessed with mobility, you want to take advantage of it.

Speaker 19 Just going to start wrapping us up here.

Speaker 19 I know you've gotten a lot into philanthropy recently.

Speaker 19 We were talking about what is essential in life. Is philanthropy essential to you at this point? Is it something that you budget for? And,

Speaker 19 you know, are you trying to make more room for giving?

Speaker 16 You know, I've always said that

Speaker 16 one of my biggest unlocks is my atheism because I really think having a strong sense of the finite nature of life creates a lot of courage and a lot of boldness to share your emotions, to take risks, to tell people you care about them, to seize the moment, to embrace now.

Speaker 16 And one of the things I decided, when I sold my company in 2017,

Speaker 16 I sold it for $160 million.

Speaker 16 I was worth somewhere between $50 and $100 million, depending on how you would calculate my private investments. And I thought, all right, I'm going to put in $25 million.

Speaker 16 I'm going to go raise another $250 or $300, start a private equity fund because I thought I need to be a billionaire by the time I'm 65. That was my goal.

Speaker 16 And I thought, the only way I'm going to do that is through a private equity fund. I have the credibility, the contacts.
I'm going to raise a fund.

Speaker 16 I got the first, I think I got about $50 million in commitments just from three calls. I was going to start a consumer private equity fund right after I sold L2.

Speaker 16 And then I thought, a friend of mine got sick, passed away, and I thought, okay, this is going really fast. I have enough money to live really well.

Speaker 16 I didn't have enough money for a plane, but I had enough money for everything else at that point. I thought, okay, why do I need to be a billionaire?

Speaker 16 I thought, well, all right, would I have more influence? Maybe, not much more. Would I be able to do anything else? No, I can pretty much do anything I want right now.

Speaker 16 So I made a conscious decision that I would change my approach to money. And it was the following.
Once I hit my number, which I was about to, anything above that, I would do one of two things.

Speaker 16 I would either spend it or I would give it away. I love spending money.
I'm selfish. I like nice things, nice experiences.
But every year, I look at my net worth,

Speaker 16 and if it's up $7 million

Speaker 16 and I've spent four, I'll give three away. I do not need to increase my net worth.
Hoarding is a disease that infects a lot of Americans. There's just no reason.

Speaker 16 I don't begrudge billionaires. I don't think they're as happy as me.
I don't think there's any reason to hoard money. Spend it.
In a capitalist society, there's so many amazing things to spend it on.

Speaker 16 And then if you still have more money than what you need to spend to have an amazing life, for God's sakes, why wouldn't you find,

Speaker 16 if you believe young men are struggling and it freaks you out that four and five people in a morgue have died from suicide are men, why wouldn't you give money to an amazing charity with really talented people focusing on mental health?

Speaker 16 You know, the Jett Foundation, why wouldn't you...

Speaker 16 If you are constantly lecturing at people about

Speaker 16 the misgivings or the moral corruption of the university university system and how we need more vocational training.

Speaker 16 Well, if you have the money to start a vocational problem, why the fuck wouldn't you? And you know what? It feels really good. It makes me feel strong.
It makes me feel nice.

Speaker 16 It's not even an ethical thing. It makes me feel like a baller.
And also, just some of it is an overdue nod to California taxpayers.

Speaker 16 I give a lot of money back to UCLA and Berkeley because they spent so much money on me, despite the fact I was such a fuck-up. You know, California taxpayers kept giving me another chance.

Speaker 16 So this is a great position position to be in. But once you hit your number, why on earth would you not do one of two things, spend it or give it away?

Speaker 19 Well, this has been great. Final thought from me.

Speaker 16 So

Speaker 19 I feel like spending is kind of like the truest, most accurate reflection of ourselves. Like, you know, we tell ourselves these stories about, oh, this is who I am and this is what I like.

Speaker 19 And then we take these personality tests to sort of like figure out, oh, yeah, I'm kind of like a EQZ or whatever the fuck that test is. But it's like, if you just look at how you spend,

Speaker 19 it's like this data set

Speaker 19 testimony that says with no biases, like, this is who you are. This is what you care about.
This is what you want to achieve. And these are the people who you want to impress.

Speaker 19 Like, I feel like if you want to understand who you are, you just look at, look at your bank statement. So we've been talking about your spending.
We've been discussing it on this podcast.

Speaker 19 So I'm wondering, what do you think your spending says about who you are as a person?

Speaker 16 I'm an atheist. I'm generous and I'm a father.

Speaker 16 I recognize the finite nature of life. I'm spending a lot of money on experiences.
I think I'm a generous person. I give away

Speaker 16 a lot of money. I'm generous with my friends, and I'm very focused on

Speaker 16 on being a really generous provider for my kids and my partner. Those are the things I aspire to.
It also says, quite frankly, I'm indulgent. I'm selfish.

Speaker 16 I spend a lot of money on my own comfort and my own joy and my own,

Speaker 16 you know.

Speaker 16 I do frivolous things that make me feel important and good. I spend money on things, you know, I spend money on dumb shit because I'm a bit of a narcissist.

Speaker 16 You know, that's an interesting way to look at things. So there's some very good things about my spending.
There's some things I'm also probably not that proud of in terms of how I quit.

Speaker 16 I spend too much money on nightlife and alcohol.

Speaker 16 That's not good at my age.

Speaker 16 I have nice things, quite frankly, to probably impress other people that I shouldn't need to impress.

Speaker 16 How do you know I'm building a house in Aspen? I tell you.

Speaker 16 That's sort of fucking pathetic, isn't it? So you're right. It does say a lot of things about me.
It says a lot of good things and a lot of bad things. You know, I'm human.

Speaker 19 This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss.

Speaker 19 Mia Silverio is our research lead, Jessica Lang is our research associate, Drew Burroughs is our technical director, and Catherine Dylan is our executive producer.

Speaker 19 Thank you for listening to Prof G Markets from the Vox Media Podcast Network. Join us on Thursday for our conversation with Michael Saylor, only on the Prof G Markets feed.

Speaker 19 You have

Speaker 19 any kind

Speaker 19 of reunion

Speaker 19 as the water

Speaker 19 and the girlfriends

Speaker 19 in love.

Speaker 16 What you're saying is you were irresponsible, but it was planned. You made a conscious decision to be irresponsible.
Oh, that's my room service.

Speaker 16 Speaking of irresponsible, I just ordered a shit ton of beef. It probably costs 11 million

Speaker 16 breakouts. Yeah, hold on.
I'll be back in a second.

Speaker 16 You can leave it there because I'm on a podcast, so you can leave it in there. I'll bring it out.

Speaker 26 Thank you, sir.

Speaker 16 Thank you.

Speaker 16 So, what you're saying is you made a responsible decision to be irresponsible, and I think that's okay.

Speaker 16 You know, occasionally it's fun to splurge, and

Speaker 16 you know, when

Speaker 16 I would argue the splurges when you're young are,

Speaker 16 I think you remember them more.

Speaker 16 It is clearly bonus time. You guys plan this.
You guys so plan this. Scott, do you think it's important to be generous with your employees who don't have as much money as you?

Speaker 19 Where does that rank in your priorities?

Speaker 16 Scott, how do you think your employees get by and what could you do to make their lives easier? Yeah, yeah.

Speaker 19 Something to think on.

Speaker 16 Oh, God.

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