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If You Only Watch One Wealth Video, Make It This — Transcript

by Alex Hormozi · 7,283 words · 1,055 segments · language en · Watch on YouTube

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0:00when businesses get much larger,
0:02cash gets significantly lumpier.
0:04>> We built a large amount of our
0:05reputations off of a, you know, $46.2
0:08million sale.
0:09>> In this video, Layla and I are going to
0:10share our secret weapon. One of the
0:11hardest parts of entrepreneurship once
0:13you start to make some money is figuring
0:15out what to do with it because you spend
0:17all this time trying to make it and then
0:19you're like, what do I do with all this?
0:20>> This is about the game beyond the game.
0:22You know, it's not just what you make,
0:24it's what you can keep. We tried a
0:25million different things and
0:28mostly his idea.
0:29And we mostly lost millions of dollars.
0:32So we want to help you guys do the same
0:34and avoid losing millions of dollars
0:35like we did.
0:36>> It helped us completely change our
0:37thinking process to the game beyond the
0:38game, right? And so just to give a tiny
0:40bit of proof on this, we recorded over
0:41$400 million in real estate.
0:43He actually was a an advisor of ours
0:46helping us exit our first company for
0:48$46.2 million with Gym Launch.
0:50Since then we started ACQ Ventures,
0:52which has done over 60 private deals. He
0:54helped us reduce our taxable income by
0:5680%
0:57and it added multiple layers of asset
0:59protection.
0:59>> And the crazy part is he did that after
1:01having four exits of his own. $50
1:02million exit in his 20s, then he took
1:04five years off, played some tennis, went
1:06to business school, then worked at
1:08Goldman Sachs, then invested in Telis.
1:11Many of you may have heard of it and
1:12then sold it for
1:13>> $1 trillion.
1:15$1 trillion.
1:16>> An undisclosed amount of money five
1:18years later. Started his own family
1:19office where he did a bajillion deals.
1:21He exited a rollup for 198 million.
1:24And then he came out of retirement after
1:25six years which is
1:26>> six-year retirement.
1:27>> Yeah, yeah. His second retirement.
1:29Became the CEO of Real
1:31and grew it from 200 million in
1:33enterprise value to a billion in just 30
1:35months. And eventually him joining us
1:37here at acquisition.com so that he can
1:39do his next billion dollar company. What
1:41does that mean for everyone watching? It
1:43means that when Sharan talks about money
1:45and wealth stuff, you should listen to
1:47him.
1:47>> One of the first things that Sharan did
1:48when we met, he said, well, what are
1:49your money algorithms? And I was like,
1:50what do you mean by that? And he was
1:51like, what are the pre-made decisions
1:53you have around how you deal with money?
1:54Because there's so many decisions that
1:55have to happen when you have money and
1:57especially when you're active, like
1:59you're working in the business, it's you
2:00can't then allocate all this attention
2:01over here. I know if we had an unlimited
2:03amount of time, he would share, you
2:04know, probably the 40 plus different
2:05frameworks that he shared with us that
2:06have that we've directly applied to our
2:08uh you know family office and wealth. We
2:10just talk about the big three, the
2:11biggest ones that kind of change our
2:12behavior the most that I thought would
2:14be the most valuable for you.
2:15>> So I've had a number of wealth
2:17frameworks that I've had to develop over
2:19the last five exits and I've learned
2:21this the hard way, may it be through
2:23losing money through lawsuits to the
2:25very large tax bills that every
2:27entrepreneur struggles with. And mainly
2:30it was understanding what debt and
2:31leverage is, but the three important
2:33frameworks that I think every single
2:34entrepreneur should know uh are grounded
2:37around this first big idea, which is
2:40understanding this active passive
2:42continuum. And Alex, I remember our
2:44first conversation. This was a Zoom call
2:46that we had. You had a whiteboard in the
2:47background and I said, if we could learn
2:50anything else today I can if I could
2:51just transfer one piece of learning that
2:53I had to you, it was this active versus
2:55passive idea. And you actually equated
2:57it to, hey that looks like a barbell.
2:59Entrepreneurs tend to say if I'm working
3:02actively in my business, then everything
3:04else that I do in my life should be
3:05active as well. And we just know that is
3:07absolutely impossible to do.
3:09>> What I realized at least is that you
3:11think that the same skills that apply to
3:12business are going to apply to investing
3:15and multiplying your money and it's
3:16actually typically the inverse skills
3:18that apply. So it's like many of the
3:20skills that help you make the money
3:21actually help you lose the money if you
3:24apply them on the other side.
3:25>> Because you have so much risk in the
3:26main business and so I mean the big
3:28mistake that I made was early on
3:30seeking, call it entrepreneur-like
3:32returns from the money I'd made from
3:35entrepreneurship. And so I'm like, okay,
3:37well I get 20 to 1 LTV to CAC, so if we
3:39don't get 20 X on this money, then what
3:41are we doing? Um and to be clear, if you
3:43have just a little bit of extra money
3:44and you have a business, you should
3:45always put the extra money in. But at
3:47some point there's some businesses that
3:48are just very cash flow positive. You
3:49can't justify just spending money for no
3:51reason. And so you just get this excess
3:53cash and you're like, what do I do with
3:54it? And this is where Sharan basically
3:56in some ways gave me permission or like
3:58made me not feel bad about the fact that
4:00he's like, hey, if we get 15% a year,
4:03we're good. And if we get 20, amazing.
4:05But for me, I was like, if I'm not
4:06getting 100% then something's wrong. And
4:08I was investing that way, and it was I
4:10was my 100% dreams were becoming 0%
4:13returns.
4:14>> And I actually remember um there was a
4:16time where we were looking at, oh,
4:18should we just really actively invest
4:20our money? And so I read all these real
4:22estate books, right? We just met you. I
4:24I read five or so books on real estate,
4:26and then we went to visit somebody who
4:28was saying they were getting, you know,
4:29these crazy returns on their real
4:30estate. And it's all passive. And I
4:32remember I walked in and they had a
4:34building where they ran their business.
4:35And then they said, and here over here
4:37is where we our family office. And there
4:39were 45 people managing the money. And I
4:42said,
4:44oh, so there's no no such thing as
4:45passive income. [laughter] Like there's
4:47no such thing as passive income. You run
4:49a team here. You have the same issues
4:50you have on this team. It's all equal.
4:53>> And I think the biggest learning that I
4:54had was
4:55if it's passive for you, it has to be
4:57active for someone else. And I think
4:59that is the big distinction that most
5:01people don't see. And uh
5:03active managers are good. They treat
5:05that active business like their active
5:07business. And so uh having that
5:09distinction, just having the barbell
5:11where one side of your risk is based on
5:13your active business and the other side
5:14is passive for you, which reduces your
5:16risk but is actually the active
5:19risk for the other person. So that once
5:21you get the barbell right, it makes you
5:22think about the continuum of risk in a
5:24very special way.
5:25>> One thing that like somebody watching,
5:26at least what I thought when I was
5:27younger, yeah, but why can't I do both?
5:29And um I think what I realized in time
5:32was um you know, you're putting all of
5:35this effort into your business, getting
5:36these crazy returns.
5:38You can if you put that same effort, you
5:40take, you know, say you take 30% of your
5:42time to generate that income into
5:44managing your passive income or your,
5:46you know, the income that you've just
5:47made with your business, you actually
5:49would have would just make more money if
5:51you invested 100% of your attention into
5:54your active business and let somebody
5:56else who has the skills and doesn't have
5:58to learn all the lessons do this. So
6:00that was like a big piece for me because
6:01I'm such a control freak. Um and that
6:03really helped me because I was like,
6:05wow, this is very stressful trying to
6:06learn how to do both things at once.
6:08>> And I think
6:09Shaan encouraged us to He's like,
6:10listen, there's only so much risk you
6:12want to take. Obviously that's
6:13individual. But he's like, but you're
6:14like risk maxing the way, you know, on
6:16the entrepreneurship side. But what was
6:18interesting, and he made this really
6:19compelling argument to me where he said,
6:21hey, if you take this extra money and we
6:22don't take crazy risk with it, we
6:24actually think how do we build a nest
6:25egg or a fortress, you know, maybe in
6:27more Shaan terms, like how do we build
6:28the castle and then dig the moat around
6:30it so that we don't We don't want to
6:31risk the empire for a pot of gold. That
6:32was one of Shaan's first isms to me. But
6:36having that called fortress or nest egg
6:38actually has allowed me to take bigger
6:40bets on the entrepreneur side. And so in
6:43some ways taking less risk here has
6:45given me the the freedom to take more
6:47risk here and then get even better
6:48returns. So having like and I I think
6:50the big point here is that it took us a
6:52it took us in some argument too long to
6:54have a a strategy for what we're going
6:57to do with all the money that came out
6:58of the game. I think the second thing
6:59that you
7:01kind of opened my eyes to was the way
7:04that I think about customers
7:06is the same way we should be thinking
7:08about deals. And so it's like, dude,
7:10you're you're going on, you know, two
7:12dates and you're asking both people to
7:13marry you. It's like no wonder your
7:15deals suck.
7:17And and I thought I was like, oh, you
7:18know, real estate's bad or or hard money
7:20lending's bad or whatever, you know,
7:21whatever the thing of the day was. And
7:22you're like, no, no, no, that guy's bad
7:24at real estate and that guy's bad at
7:26hard money lending just like there are
7:27bad entrepreneurs. It has nothing to do
7:29with the vehicle or entrepreneurship
7:30somehow, but it's like that guy's just
7:31not that good at it. And it was just a
7:33great transference for me because it was
7:34it was speaking my language. And you
7:36were like, no, no, no, we need to look
7:37at a thousand deals
7:39and then pick the one. Just like you
7:42might convert 2% or 5% of leads, it's
7:44the same concept on the deal side.
7:45>> It's the same exact thing as running a
7:47business because volume does negate
7:49luck.
7:50And just like you have a customer
7:51funnel, you have a deal funnel.
7:53And the sad part is that the average
7:56investor, which is the retail investor,
7:58which is the masses of the world, get
8:00access to the mass market deals. They
8:03get access to the 7 to 10% returns and
8:05that's what they believe is the market.
8:07That's what they believe the S&P 500
8:09returns. That's all they have access to.
8:11But as soon as you're an accredited
8:12investor, you now unlock this whole new
8:14set of deal flow that you can get. And
8:17private deals over time outperform
8:19public market deals by over 50 to 100%.
8:23And Alex always tells me that
8:25if you could make a million dollars in
8:27your business with a $5 million top
8:29line, if you had to get twice the amount
8:32of returns, now you have to have a $10
8:33million business.
8:34>> Like think about like net worth
8:35throughput.
8:36It's like we do all these activities on
8:38the front end, and it ultimately
8:40translates to some amount of net worth.
8:42And so it's like if you're inefficient
8:43here and you're compounding, you
8:45literally have to build a twice as big
8:46business so that 20 years from now. So
8:48it's like let's say you invest $500,000
8:50a year as your, you know, from from what
8:51you save. It's like
8:53if you just have a couple of frameworks
8:55that are not act it's decision
8:57frameworks that you can make one time,
8:58so it's not active. This is basically
9:00allowed me translating what you kind of
9:02relate to me. Um we make these decisions
9:05one time about how we manage money, and
9:07then we never need to make them again.
9:08And then just by choosing some of these,
9:10okay, we're going to have
9:11private deals more than public deals.
9:13The trade we're going to make is we're
9:14going to be a little bit less liquid,
9:16but we're going to get higher returns.
9:17Do we need the liquidity? No. Okay,
9:19great. If you need the liquidity, don't
9:20do the deal at all. Rather than having
9:22this like, okay, well, I'm going to do
9:23it, but I'm going to I'm going to be
9:24able to pull it out against like, dude,
9:25if you if you're thinking that way,
9:26you're already lost, right? And so
9:28having that idea of like, okay, you have
9:31some end goal of your net worth, you
9:32could maybe get there at 1/3 the size if
9:35you just played this game a little
9:37smarter and made better decisions.
9:38>> And the crazy part is
9:41this is what you call a illiquidity
9:42premium, to hold your money
9:45in in a in a investment for a longer
9:47period of time. Therefore, you unlock
9:49bigger returns. But what the average
9:50retail market investor, the mass market
9:52investor does not realize is that
9:54they're illiquid anyway. Therefore, 1Ks
9:56are illiquid anyway. Their IRAs are
9:58illiquid anyway. Their defined benefit
9:59plans are illiquid anyway. Not only
10:01illiquid for three to five years that we
10:03are willing to take that risk for,
10:05they're illiquid for 35 years.
10:08And that is the difference between the
10:09rich and rest.
10:10Because there's, they don't realize the
10:12private market deals are so
10:14significantly superior from a
10:16risk-adjusted perspective. And the
10:17problem is only business owners can get
10:20access to these private market deals
10:22because they have the credit and net
10:23worth to be able to get access to them.
10:27>> I think it's just a matter of like, you
10:28know, until we met you and I think I
10:30look at all the money we made prior to
10:31that and how inefficient we were with
10:33it. I mean, there was a point where I
10:35remember the first time that our banker
10:37called me,
10:38um this was, you know, 11 years ago, 12
10:40years ago and he said, you have $9
10:42million sitting in your checking
10:43account. Like this is not, this is a
10:45liability. And I said, I don't know what
10:46to do with it. Like just keep it there.
10:48You know, and I think a lot of people do
10:49that because out of fear they don't know
10:50what to do with their money. And I
10:52remember how incredibly debilitating
10:54that was because it felt like this huge
10:56weight on my shoulders. Like I don't
10:57know what to do and I think so many
10:58people feel that way. They start finally
11:00making the money. They're finally not
11:01feeling like they're, you know, it's not
11:03like, oh, am I actually going to make
11:04it? It's like now I'm actually making
11:05money, but then it's like, holy I
11:06don't know what to do with it. So I'm
11:07just going to like keep it in the bank
11:09and and pray that it doesn't go away and
11:11like it stays okay.
11:12>> Or and then you do the first thing which
11:14is some when you start like it starts to
11:15kind of like uh burn a hole in your
11:17pocket, right? Where you're like
11:19all of a sudden somebody's like, hey
11:20man, I've got this deal and you're like,
11:22okay. And then you just start writing
11:23these checks.
11:24>> checks to everybody.
11:24>> And you think like how hard you had to
11:26like you're like how much revenue, how
11:28much profit, how much after tax I had to
11:30get to get this one check. So you're
11:31like, okay, I'm running 20% margins in
11:33my business and if you run let's say a
11:35million dollars and you take 200,000 and
11:37it's $100,000, you're writing this
11:39$100,000 check, but it's like I have to
11:40go make a million dollars of revenue to
11:43get this $100,000 check which it took me
11:44two seconds to write and I it took me
11:46way longer than that to make. And but
11:48like the thing is is like I didn't I
11:49didn't know any better.
11:50>> One of the things that we've talked a
11:52lot about is this idea that every dollar
11:55that you do something with
11:57it should have multiple uses, compound
11:59use of a dollar. And so often we think,
12:02hey, I have a friend who has a startup.
12:03I'm going to invest in my friend's
12:04startup. Okay, good. That is one use of
12:06that dollar. What is the other use
12:08elsewhere in our investment world? So
12:10for us
12:12we say we're going to go buy $100
12:14million worth of real state, but there's
12:15a very clear secondary use for that,
12:18which it produces taxes.
12:20And so, having multiple uses forces you
12:22to figure out how far that dollar can
12:24stretch, and you're not just succumb to
12:26the peer pressure of saying, man, it's
12:28burning a hole in my pocket. Let me go
12:29invest that dollar.
12:30>> Can you share the the four framework
12:31that you had in terms of like how to
12:33analyze investments? Because like I had
12:34this like Tron was the first person I
12:35heard this from, and I
12:37it I mean it changed how I how I saw
12:38investing in general.
12:39>> Um most people don't have an idea on how
12:42to analyze an investment when it's given
12:44to them, and they do it mainly because
12:46of either peer pressure or if it's
12:48burning a hole in their pocket.
12:49And here's a quick heuristic for how you
12:51actually analyze investment. It's called
12:53the investment x-ray. And there's four
12:55categories in which you analyze
12:57investment. The first is capital
12:58preservation, which is is it going to
13:00make money or lose money? Second is
13:03tax efficiency. Am I going to get some
13:04kind of tax advantage related to this?
13:06The third is yield or cash flow. While
13:08I'm invested in this, does it provide
13:09some kind of cash flow? And the fourth
13:11is growth.
13:12Does this money grow over time?
13:14The I generally like to have a 25-point
13:18score for each because then it totals to
13:19100. So if you take something very easy
13:22like Apple stock, well does it have
13:23capital preservation? Well, maybe 20 out
13:25of 25. It's not lost money in a while.
13:27Tax efficiency, zero.
13:29Yield, it has a 0.04% dividend yield, so
13:32like not much. Growth, it's done
13:34amazing. So essentially the 50 out of
13:36100 score is what
13:38you know Apple Apple stock gives you.
13:40But if you take Bitcoin, capital
13:41preservation, you're not sure.
13:43Tax efficiency, nothing. Yield, nothing.
13:46Growth, 25. So you're able to quickly
13:48have a heuristic on what that investment
13:50idea is. If you take a real estate
13:52investment, you can just run through it
13:53very quickly in your head, which is
13:54capital preservation, decent. Tax
13:57efficiency, decent. Yield, decent. It
13:59gives you cash flow. Growth, decent. You
14:01don't you don't like Alex says, you
14:03don't min max in every category. You
14:05don't maximize everything, but it it
14:06touches every bucket. So you feel like
14:08wow, I feel significantly better doing
14:10this because it has a compound use of
14:11that capital in some way.
14:13The reason I like having some kind of
14:15framework is when someone is pitching
14:16you an investment, it gives you a very
14:18simple heuristic on what questions to
14:20ask.
14:21So if someone's saying, hey, I want you
14:22to invest in my, you know, meme coin
14:24startup, you say, oh, um I'd love to
14:25know about how you preserve capital
14:27around this or does it have any tax
14:29efficiency or can I expect any cash flow
14:31during this process or if it hits all
14:34your growth assumptions, what do the
14:35growth assumptions look like?
14:37I think most investors don't have the
14:39ability to ask the right questions.
14:40>> I remember after you showed us that
14:41framework and then it was like anytime
14:42we were on a call, I just pulled it up
14:44and I would just write in each quadrant
14:46for the investment and it was like, wow,
14:47this is It like 0 0 0 maybe one.
14:50>> We we've learned a lot um and because,
14:52you know, you had to build your family
14:54office very early, you know, must be
14:56tough. Um but one of the other ones that
14:58I that I I I think massive mistakes that
15:00I made was uh bet sizing.
15:02Um I like my bet sizing was like, how
15:04much money do I have?
15:06Okay, maybe a quarter of that.
15:07[laughter]
15:08And that was just like when I deal with
15:09shop, I'd be like, quarter of this,
15:11cool, and I'd throw it in. Um and I
15:13think you changed the way I thought
15:14about that
15:16pretty meaningfully.
15:17>> I think sizing is the
15:19number one mistake that most people make
15:21because they've never been taught how to
15:23do it, you know. It's always it's not
15:25your not your fault, but it is your
15:26problem. And you say, well, I have
15:28$100,000, how do I size something like
15:29this? Well, uh Alex Lelan and I can give
15:31you how we size it, but it's not the
15:33right sizing for you because we're now
15:35saying, hey, we're going to make X
15:37amount of profit in our business that is
15:38taxable. We don't mind sizing a bigger
15:41chunk for real estate because it it
15:42provides this capital growth, but it
15:44also provides this tax efficiency. And
15:47when you're talking to a financial
15:47advisor, I think sizing is the number
15:49one question to ask. Also, there's a
15:51bunch of FOMO when it comes to sizing.
15:53People just think, well, I'm just going
15:55to get the entire universe of stocks or
15:57the entire universe of crypto or entire
15:58universe of all of that. Now you just
16:00have so much complexity that you think
16:02you have diversification, but it's
16:03actually an antidote for ignorance. You
16:05have no idea what to do, so you just
16:07invest in everything.
16:07>> You know, I think um
16:09as I'm sitting here and thinking like
16:10the third thing that you taught us that
16:12I think was the most
16:16antithetical to what we were doing, you
16:18were like, you have to minimize personal
16:20income. And I was like,
16:22>> was very upset by that.
16:22>> the does that mean? What do you
16:25mean,
16:26and I think that's actually the one that
16:27I think is the least intuitive for
16:30entrepreneurs and and business owners
16:31because it's like what do you mean
16:33minimizing my personal income? So I'd
16:35love if you could kind of share some of
16:36the insights that you'd shared with us.
16:38>> It's not what you make, it's what you
16:38keep.
16:39And the main reason for that is that you
16:42are in
16:43a partnership with the US government or
16:45any government that will depending on
16:47where you live. And that partnership
16:49agreement is not actually something that
16:51most entrepreneurs have read. They have
16:53no idea that they have a partner that is
16:56the tax collecting authority. If as
16:58business partners, we know our
17:00agreements, but we do not know the tax
17:02agreement. The reason is that the tax
17:05code is an incentive machine, not a
17:08penalization machine. And as soon as you
17:10look at why they want you to do
17:12something, it's because from a
17:14centralized portion, the government
17:15can't invest in all the projects it
17:17wants to invest in for the benefit of
17:18the country. So it gives incentives from
17:21a tax basis to all the private citizen
17:23entrepreneurs like us to go do the
17:25investing for them. They want you to
17:27develop these underdeveloped opportunity
17:30zones. They say, well, we'll give you a
17:3110-year tax horizon if you put your
17:33money into an opportunity zone and you
17:34keep it for 10 years, you have to pay no
17:36taxes going forward.
17:38Which is insane. By the way, the the
17:39greatest trick that you can have in real
17:41estate is
17:43you buy a property, it goes up in value,
17:44you 1031
17:46and which means you don't have to pay
17:47any taxes. You take the 1031 into an
17:49opportunity zone and then after 10
17:51years, you completely wipe out all your
17:52taxes.
17:54So in a 15-year period, you could pay
17:55zero taxes from how you actually started
17:58completely legally. The reason most
18:00people are afraid about taxes is that
18:02they don't remember these three rules,
18:03which is know the law, follow the rules,
18:05and document the truth.
18:07And if you just know the law, most
18:09people are unwilling to actually read
18:10that partnership agreement that they
18:11have with the with the US government.
18:14And if you know that you can take 14
18:17days
18:18and rent your home back to your
18:20business, That is the Augusta rule. You
18:22actually know that you can do that, but
18:24most people don't know how to do that,
18:25or they think, well, it's 14 days, so
18:27I'll do 13 to stay under the law. No,
18:29the law says 14 days. You can do 14
18:31days, but you have to know the law, you
18:33have to follow the rules, and you have
18:34to document the truth.
18:35And
18:36uh for every dollar that you save in
18:38taxes, you're dropping that dollar
18:40immediately to the bottom line. It
18:41doesn't have to go through your, you
18:44know, like your gross profit and your
18:45net profit. It doesn't have to go
18:46through that whole machine all over
18:47again. So whatever, if you can figure
18:49out how you keep more of what you make,
18:52you dramatically change the the inputs
18:54that you have to actually grow your
18:55wealth.
18:56>> Yeah, and two things on that. Well, one
18:57was like
18:58the the translation for me that helped
19:00was thinking about it from a return
19:01perspective, which is like I was, you
19:03know, really excited about a 20% return
19:05or whatever it was going to be, but it's
19:07like, hey, if you can just learn how to
19:08defer your taxes correctly,
19:10you get a 58% return year one.
19:13So instead of, you know, let's say you
19:15make 100, you know, $1,000 or I guess
19:18appropriate a million dollars, right? Um
19:20you would have $630,000 if you live in a
19:22tax-free state in the US. But if you
19:24don't have to pay taxes, you get
19:25$370,000 extra. And so if I had an
19:28investment where I put $630,000 in and
19:30then I got
19:31370 back immediately year one, I'd be
19:34like, I love this investment. And so
19:36taking that extra time, I think um was
19:38really good. The second one, and I think
19:40this is partly what Laila was alluding
19:41to, is like
19:42this is transitioning a little bit more
19:43into the business side, but how you
19:46think about your accounting in terms of
19:48how you recognize revenue versus
19:50expenses, um the way that Tron kind of
19:52transformed our financials and how we
19:54documented things um was, I mean,
19:57I would say arguably a bigger change to
20:00our taxable income than even the real
20:02estate stuff. Um and so for
20:04entrepreneurs, like
20:06the most expensive hire you have is a
20:07mediocre financial executive.
20:09Um
20:11I mean, bar none, because one, they'll
20:12make mistakes and they'll cost you. And
20:13Laila and I have had, you know,
20:15eight-figure tax bills two times that
20:17were extra, that were on top of our
20:19normal tax bill. Um because of
20:21>> $12 million one year?
20:23>> And we had an extra 17 another year. Um
20:25and
20:26>> With no notice.
20:26>> With zero notice, so we just had to
20:28immediately pull it. Um
20:30and so that that obviously sucks and
20:31that's not not not a flex. I'm saying
20:32like they can really mess things up
20:34and it can suck a lot. But on the flip
20:37side, when it's done correctly, um like
20:39we paid less taxable income in the last
20:42two years than we did in our first years
20:44of Jim Launch,
20:44>> Yeah.
20:45>> which is like crazy to consider. And
20:46it's because of the stuff that you did.
20:48>> All 14,500 companies run on
20:49accrual-based accounting. They do that
20:52for a very specific reason so that they
20:54can find a way to dislocate
20:58what is revenue and what is expenses.
21:00And once you can defer revenue
21:03to the future but take expenses today,
21:05then you reduce your taxable income
21:06today and you push all the revenue into
21:08the future, which is completely legal
21:10and all the Fortune 500 companies do
21:11that.
21:12And after running a public company, I
21:14realized how beneficial this was and I
21:16was like, wow, if we can just bring that
21:17into what we are doing day-to-day cuz we
21:19have similar revenue profile, we should
21:21be able to do exactly the same thing.
21:23And
21:24as an entrepreneur grows in the amount
21:27of revenue that they make, talking to
21:29your CFO or your accountant
21:32makes perfect sense because you're at
21:34least trying to figure out
21:35are these readjustments and
21:37reclassifications of when I can consider
21:39something revenue and when I can
21:41consider something expenses? Can I do it
21:42now or can I do it later? And what's the
21:44road map of that is super important. You
21:45may not be ready for it now, but you
21:47know that in the future that it has
21:49great value because
21:50you get to take the tax deferral today.
21:52>> So this is really important because like
21:54if you if you're growing at even call it
21:57a little bit more aggressively cuz if
21:58you're growing quickly, the tax becomes
22:01a gigantic drag on how you can grow,
22:03right? But like think about it like
22:04this, if I because let's say I'm I'm
22:07twice as big next year as I am this
22:09year, that means my expenses are twice
22:11as big. But remember I took my revenue
22:14next year, but it's the revenue that I'm
22:16recognizing off my one half size. And so
22:18my expenses doubled year two, but my
22:21revenue is from last year that's being
22:22recognized. And so the cash bit I have
22:26cash, more cash than I, you know, could
22:29use because I have all the taxes as I
22:31would have, you know, that I that I
22:32don't have to have paid that year
22:34available to me. And so on the micro one
22:36is you get an extra 12 months of um
22:40being able to get a return on that
22:41money, which I mean for those of you who
22:42are in a business where you get paid on
22:43let's say net 30 or net net 90 or net
22:46180, getting net 24 months [laughter]
22:49uh is a is a huge uh benefit. But the
22:52other thing is that you can, especially
22:54if you are growing rapidly, in some ways
22:56almost like indefinitely defer taxes
22:58because your your expense basis is
23:00doubling, but you're always on a year
23:02before in terms of revenue. And that
23:04makes the entire like the process of
23:06growth
23:07significantly more capital efficient.
23:09And that like I'm just like if you can
23:11take anything from what I'm saying right
23:12now like or what we're saying right now
23:14like
23:15pay attention to this one cuz just like
23:16it it it transformed the the economic
23:19engine of ACQ and this was what allowed
23:21us to take way more outsized bets than
23:23we otherwise would have been
23:23>> I think even if we look back to what we
23:25did with Jim Launch you know prior pre
23:28pre date Chiron um you know when we were
23:31growing really fast, you know, you're
23:32growing really fast and then the next
23:34year you have to pay the quarterly tax
23:36payment and you're based off last year
23:38when you had you know half the
23:40infrastructure and now you have to pay
23:43with the cash that is much more
23:44meaningful now because you have twice as
23:46many people but you're you know of
23:48increase in what I don't know you know
23:4940% revenue, but it's still not enough
23:51of the delta to offset the tax. So then
23:53it's like you're pouring all this money
23:54into taxes because you're just not doing
23:55your accounting correctly. So that was
23:57really painful for me to have to make
23:59those payments and I didn't understand
24:01that I wasn't having I didn't have the
24:02right advisors, I didn't have the right
24:03people explaining it to me and I didn't
24:04understand the system well enough.
24:06I just knew I was like this can't be
24:08right because if I were if I owned a
24:10plumbing company, if I had a business
24:12that was doing 10 or 20% margins, I was
24:14like I'd be out of business.
24:15>> Correct. When you buy yourself time in
24:17tax planning, it gives you more
24:19opportunities to plan.
24:21And the reason why most entrepreneurs
24:23struggle is they call their CPAs
24:26uh in the during Christmas time and say,
24:28hey, I've got this huge tax bill. What
24:29do I do? And then the CPA says, prepay a
24:32bunch of expenses. So you prepay for
24:34your mastermind, or you prepay your
24:36vendor, you prepay, and now all your
24:38cash is gone and you can't even bonus
24:40anybody. You can't bonus yourself
24:42because you just wrote a check for a 30
24:44to 40% of your net cash flow out just to
24:46let the tax tail wag your cash flow dog.
24:49And
24:50for us right now, we don't have to worry
24:52about what happens on your end anymore
24:54because that's dramatically removed the
24:56operating stress stress of you need to
24:58do something by December 31.
24:59>> I also think like when it comes to, you
25:01know, the CPAs that we're looking I mean
25:03the amount of times we invest in a
25:04business and we look at the CPA, we look
25:06at the, you know, the advisors that they
25:07have from a, you know, wealth
25:09standpoint, they're subpar. It's like I
25:11say it's like a strip mall CPA.
25:13Um and so I think for anybody watching
25:15like you have to be really really
25:17careful who you trust with these things
25:19and you should probably listen to people
25:22like Sharan or somebody else who
25:24actually understands these things have
25:26done them before um because I actually
25:28think of it like this, which is you want
25:30to as an entrepreneur know enough to be
25:32able to tell if you have the right
25:34advisors on your team and to tell them
25:36what you want to have done. So if you're
25:38listening to them and you're a business
25:40that's doing, you know, say below a
25:41couple million dollars a year and you're
25:42letting them advise you, it should be
25:44the other way around. Like you need to
25:46be getting the information and then
25:47telling them like here this is what I
25:49want to make have happen and if they're
25:50not able to do it, then you know you
25:51need a different advisor.
25:51>> The biggest learning that I had when I
25:53was a banker at Goldman and I saw
25:56the wealthiest families, the
25:57billionaires invest is that they
25:59separated the function of a tax preparer
26:02from a tax strategist.
26:04And that was the big aha for me because
26:06the tax preparer prepares your tax
26:08returns, but the tax strategist's job is
26:10to sit back and think how can I reduce
26:12this family's tax bill? And
26:15>> I I remember when you told me this and I
26:16was like, oh, I've had a tax preparer
26:19giving me strategy, which is why the
26:20strategy is terrible.
26:22>> And and I and I and I would listen to
26:23some stuff and I've even said stuff in
26:25much much much earlier concept where I
26:26was like, you should just try and pay as
26:27much as you can in taxes because that
26:28means that you're making money.
26:30Um and I and I and I and I did for many
26:32years take the position of like
26:34um
26:35just just make more money. Like that was
26:37basically it. Just make more money. I
26:38will say that that to some degree works
26:40early
26:41>> Yes.
26:42>> um because the amounts are smaller. But
26:45the thing is is that when businesses get
26:46much larger
26:48cash gets significantly lumpier, right?
26:50And seasonality when it's a you know 10%
26:52swing on a million dollar business,
26:53$100,000 is not as much of a you know a
26:56a big of a deal. When it's $10 million
26:58or $20 million or $200 million you know
27:01the bigger the business the the more
27:02that headwind or tailwind it really
27:04starts to whip things around. But I
27:06would say that I've I've
27:08you know changed my perspective
27:09obviously seeing how much bigger
27:10acquisition.com has been able to get
27:11because we've had so much more cash flow
27:13to reinvest
27:14because we just weren't writing you know
27:17just gigantic checks to the government.
27:19>> And I look back to all of the money that
27:20we accumulated and you know we we built
27:23a large amount of our reputations off of
27:25a you know $46.2 million sale and the
27:27money we made prior to that which was
27:29almost equivalent to that sale
27:31and it we could have had triple
27:33>> Yeah.
27:34>> quadruple that if we had applied these
27:35things which is painful to think about
27:37because like that was seven years of my
27:38life. If I could have made double the
27:40amount of money to set my family up
27:42indefinitely it would have been worth it
27:44if I had just known these things which
27:45is why we wanted to obviously make this
27:47video.
27:47>> And I think a lot of people think that
27:49you need to have these esoteric
27:51strategies to win and I think what Alex
27:53and Leia and I are sharing with you is
27:54that
27:56most of these are very bread and butter.
27:58If you just think about the world a
27:59little differently, if you just read key
28:01parts of the tax code, if you have the
28:02right strategies in place, you're
28:04probably five simple strategies away
28:07that you can put in place one time that
28:09will dramatically change the financial
28:10bloodline of your family. And you don't
28:13have to go and figure out how to you
28:16know invest in an oil and natural gas
28:17investment and get a part of the GP and
28:19then get some depreciation for risk. You
28:21don't have to do any of those things
28:22because at some point the risk that you
28:25take is significantly more than the
28:27benefit that you're going to get. So
28:29following the tax code just kind of
28:31straight down the fairway is a very
28:33simple way to do it. We were just never
28:34taught how to do it.
28:35>> And so with that being said, I know some
28:36of these things like if
28:38uh you know, if I'm on the other side of
28:39this, I'd be
28:40this is interesting. I don't know it
28:42like where do I go from here? Like I I
28:45would love to, you know,
28:46defer, not avoid
28:48uh taxes. And so you want to tell
28:51everybody what uh what what you cooked
28:52up?
28:53>> Yeah, we are
28:54we're excited to finally reveal the
28:56entire ACQ playbook for specifically for
29:00entrepreneurs and we're launching our
29:02first wealth workshop series. So please,
29:05if you are an accredited investor, this
29:07is a perfect fit for you because this
29:09gives you access to what you can do both
29:11from a private deal flow perspective and
29:13what you can do from a tax perspective.
29:15And this is about uh not just about how
29:18you increase your income, but how you
29:19restructure your business, how you
29:21manage your taxes, and how you set up
29:22your investing in such a way that it
29:24creates amazing wealth for you and your
29:25family.
29:26>> The reason that we also are putting like
29:28an accredited uh tier on this is just
29:30because a lot of the stuff that Tron's
29:31going to be walking through are not
29:33things that apply to you when you're
29:35earlier on in your journey. So like if
29:37you're not at $250,000 a year in net
29:39income and and or a million dollars in
29:41net worth at excluding your house, a lot
29:44of it just frankly it's just not going
29:45to apply to you and it's not going to be
29:46interesting. Um but on the flip side,
29:48the further you are away from that line,
29:50the more these tiny tweaks add up with
29:53big percentage points. And you know, 5%
29:55on you know, $100,000, you know, nice.
29:59But you know, 5% on 50 million or 100
30:01million, like that is significantly more
30:03worth it. And so for if you're that type
30:05of person, that's uh that's who it's
30:06for. It's really just like what I wish
30:09we had had and it's going to be the
30:1080/20 of like listen, there's 100 things
30:12you can do. If you just restructure your
30:14finances this way, if you restructure
30:15assets in a protection manner this way,
30:17and then you change the way that you're
30:19pricing and putting your money on the
30:20back end, if you just do these three
30:21things, um you'll get the 80/20 of what
30:24you need.
30:24>> We're going to go through the entire
30:25family office playbook that Alex Lale
30:27and I put together on how to set
30:28everything up, how to source deals, how
30:30to price and negotiate the deals, how to
30:31value add existing deals, and all the
30:34tax efficiency components with all of
30:35this. And we're going to do this in a
30:37very simple small group format that you
30:40can ask your questions and get the
30:41answers because everyone's situation is
30:43very different. So if you're interested
30:44in this, go to the link below, grab a
30:45free wealth blueprint. It'll tell you
30:47where you are in the process and on the
30:49thank you page, it'll give you a time to
30:50book uh a call and see if you are a good
30:53fit to come out and spend time with us
30:54in the wealth workshop.
30:55>> We're hosting the first one in January.
30:57We might open up a second one in
30:59February um but this is also open to our
31:01current Vantage members. So they will
31:04get first priority. So I would say if
31:06it's something that you're interested
31:07in, click the link, book a time as soon
31:09as possible and chat with our team and
31:11see if it's a fit.
31:12>> Part of the reason we're doing it in
31:12January too is that lesson this year is
31:14already done. There's nothing you're
31:15going to do about that, but if you do it
31:16in January, you can set up the whole
31:182027 um and you'll have time to do it
31:20and do it right and you'll be thanking
31:22yourself next year.

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