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- [00:00]
Sam Parr
This is for the folks out there who have a business that does at least $3 million a year in revenue. Because around this point, that's when you're able to look up after being heads down for years building your company, and you realize two things. One, you've done something great, but you're still a long way from your final destination. And two, you look around and you realize, I am all alone. I've outrun my peers. Which means you're now making $10 million decisions alone, by yourself. And that is when mediocrity can creep in. My company, Hampton, we solved this problem by giving you a room of vetted peers of other entrepreneurs who are going to hold you accountable, call you out on your nonsense, and help show you the way. Because the fact is, is that there's only a tiny number of people in your town who know what you're going through and who have been there. And they're hard to find. And if you can find them, it's hard to have this explicit time, this explicit place where you sit down where the rules are clear that we are here to help each other and to be one another's board of directors. The biggest risk is not failing. You have a company and it's working. You're gonna be fine. But the biggest risk is waking up 10 years from now and saying, shit, I barely grew in business and in life. And for people like you who are ambitious, wasted potential and regret is what we want to help you to avoid. We have made so many of these groups and we have a thousand plus members. And I know this stuff actually works, whether you work with Hampton or you get your own group on your own. But having a group like this, a group of people who you meet with in real life once a month, and it can change your life. It changed mine. And I know it will change yours. So check it out. Join hampton.com.
- [01:35]
Daniel Burke
Hey, I'm Daniel Burke and this is Money Wise. I want to say something right up front. If you're new here, this show is not what you think it is. Money Wise is not a show about how to make money, because there's no shortage of that type of content. You can find it literally anywhere. This show is about what happens after. What do you actually do when the money is real? How do wealthy founders spend it, save it, invest it, and how do they actually feel about their money? The numbers, the psychology, the conversations that typically only happen behind closed doors, those are the types of conversations that we're going to have on Money Wise. The show was originally Started by Sam Parr. He's the founder of the Hustle, he's the co founder of Hampton. And it became something genuinely unlike anything else. In podcasting, wealthy founders have been talking about their actual financial lives on the record, with real numbers. There aren't generalities or. No, I did well for myself. No, there's actual numbers. What they spend, what they own, what they regret, what surprised them, and a lot of the learnings that they have from building highly successful businesses. I met Sam Parr a couple years ago and really started to get to know him when he was actually a guest on my podcast. Fast forward a bit. I loved what Sam was building with Moneywise and at his company, Hampton. Which brings us here. I am the new host for Moneywise. I'm in the middle of producing a lot of new episodes right now that are full of conversations I think are going to be some of the best we've ever made. But before those drop, I want to go back through the archive, all of it. And there are moments in those early episodes, moments that I wasn't actually here for in the room that I think deserve a second listen. So that's what today is. I'm going to play some of my favorite clips from the first few episodes. I'll set each one up and share some of my own thoughts. And if you haven't gone back through those early episodes, I highly recommend giving them a listen. They're gold. Now let's get into it. On the second ever episode of Money Wise, we had on a guest, Neil Patel. Neil runs a bootstrapped SEO agency, Neil Patel Digital, which does around $100 million a year in revenue. He also owns Crazy Egg and a portfolio of software companies he rolls up under the parent. His net worth is nine figures, which he confirmed, but wouldn't be more specific. Entirely self made and entirely from businesses he controls. Back in 2014, he wrote a blog post called How a Ferrari Made Me a Million Bucks. And in it, he said something Sam Parr remembered. For years, Neil claimed he could be perfectly happy on $15,000 a month. And during this episode, it seems clear that he actually meant that. Sam brought him on the podcast and asked, what's changed? This clip is the answer.
- [04:18]
Sam Parr
So when I started this interview with Neil, I told him the reason I wanted him to come on was because of that blog post that I read that was like 10 years old. The blog post that said that he needs to spend only $15,000 a month in order to be happy. Now let me recap that 2014 blog post that I keep referring to. The blog post is called How a Ferrari Made Me a Million Bucks. In the article, Neil detailed his frugal lifestyle. He said that he lived at home until he was around 23. Then he moved to an apartment which, as he described it, was across the street from a drug park in Seattle. And overall, he spent relatively little money. But then something happened that changed his perspective on money. Someone gifted him a $6,000 watch. And what he noticed was that he got a lot of attention because of the watch, and it was a good type of attention. People who he eventually did business with came up to him, and that was like his conversation starter was that fancy watch. And that insight led him to an experiment where he started spending money on luxurious things to see which stuff would start conversations with the people that he wanted to meet. And eventually what he found was, even if he didn't buy these items, even if he was just around luxurious, nice stuff, people started talking to him. He didn't even have to buy it.
- [05:25]
Neil Patel
I've never owned a Ferrari. I think the Ferrari was me driving a Ferrari on a racetrack. None of them have been mine, though. I'm shocked on how many people hit you up being like, wow, cool car. And even if you tell them it's not yours, you're like, sure, you know what I mean?
- [05:41]
Sam Parr
But it's actually a good thing. According to Neil, his lack of Ferrari was probably best for all of us.
- [05:46]
Neil Patel
I'm a terrible driver. Like, the amount of times I got into car accidents, almost all of them were my fault.
- [05:54]
Sam Parr
Hey, I'm happy that he's able to admit that. But I digress. In the article we're talking about, Neil himself said that he really didn't give a shit about most of the stuff that he was buying, and yet he kept spending and kept getting connections because of it. He called it lifestyle marketing. It's got a good ring to it. But then he got sick of it. The whole point, though, of this entire conversation is a comment that he made about the blog post years later, after the blog went live. He said that he was spending all of this money basically to portray an image of being successful. In fact, he said he spent $250,000 on furniture. However, in reality, he could only have spent $15,000 a month, and he would be perfectly satisfied.
- [06:32]
Neil Patel
And then I give away all the furniture in my apartment, too. And then I live the period of time with no furniture.
- [06:37]
Sam Parr
So, Fast forward to 2022, and I talked to Neil, and he told me something that blew my mind. He Told me how much money he spends per month.
- [06:44]
Neil Patel
Now, right now, if I had a guess on my burn rate, 120 to 180amonth.
- [06:49]
Taylor Adams
What?
- [06:49]
Hank (Anonymous Guest)
That's insane.
- [06:51]
Sam Parr
And that gets us to the answer of the question that I originally asked, which is, what changed? How did he start with $15,000 a month and multiply that by 13 times, and that's what he's spending? Now? The answer you probably could have guessed.
- [07:03]
Neil Patel
It's called marriage and having kids, so it's not really of choice.
- [07:10]
Sam Parr
But the more nuanced answer is that he spends this way because he can. Something important to understand is how much your mindset around spending is shaped by your past. If your whole life, you grew up only being able to spend 100 bucks a month at the grocery store, and then all of a sudden, you could spend as much as you want, that's going to be a direct contradiction to all of those learned behaviors, the way that you used to behave. But. And this is a huge but, spending and not worrying about money is a huge part about why we work so hard to make it in the first place. So if you're not embracing it, and this is something I ask myself all the time, what's the point? Of course, there's a huge downside to this. There's a huge downside to recklessly spending and throwing your money. But even at the top of his spending, Neil isn't doing that because he understands his own wealth, he accepts it, and he recognizes the fear of losing it is mostly irrational. Listen, I know it can be a tough thing to wrap your head around. I struggle with it as well. But you make money so you can have nice things when you want them. So buy them. Be smart and buy them. That said, there's still a lot to glean from Neil's spending evolution, including how he spends with no budget and while still healthily growing his net worth. And also, and this is a shock, how his spending of around $200,000 a month, how that's nothing compared to some of his friends. But let's find out why Neil's approach to spending shifted from $15,000 a month to the most extravagant era of spending in his life. Living in Las Vegas.
- [08:26]
Neil Patel
In my last house, I spent $2 million on furniture. Okay? The one I lived in in Vegas. Literally, you would see it on Architectural Digest if we showed the pictures of it. And we refused to let people take pictures and showcase it. And in Vegas, that house had the highest price per square foot sale sale in history for a custom house like we spent that much money on it.
- [08:48]
Daniel Burke
That moment. Sam's what? That's insane. Is the show in one reaction. This isn't a show where some journalist interviews someone for a good quote. Its intention is to be two people who are having a healthy conversation about wealth and one of them who is supposed to be very, very wealthy. The punchline, it's called marriage and having kids, is doing more work than it seems. When Neil's on the show, Neil's not defensive. About $200,000 a month, he's almost shrugging. At a certain level of income, the spending starts happening to you more than you're actively choosing it. The lifestyle expands around you. And it appears like one day you just look up and you're at $200,000. But hold that number because I need you to hear where it's actually going. That's next. Right after the $200,000 reveal, Sam just keeps going. He wants to know, where exactly does the $200,000 go? What does $200,000 a month actually look like broken down? Then Neil starts listing things. Housing, cars, staff, food. But then right in the middle of the breakdown, something comes up that completely reframes the entire number. Oh, and for some reason, he flies Southwest economy. But that's on purpose. And his answer is really interesting to that.
- [10:06]
Neil Patel
I will go Southwest. If I go from here to Vegas, which, funny enough, I have to go in a few weeks, I will go economy on Southwest Airlines. I don't think Southwest doesn't even have first class, but I go economy.
- [10:18]
Sam Parr
Would you go economy on Southwest with your family? No. Neil says he could do 30k a month or so, but he doesn't because he doesn't need to. And he's not trying to hide it.
- [10:33]
Neil Patel
I remember in our old house that we had in Vegas, we're in LA now. I had these amazing bed sheets, and they were just so soft. And then I bought more bed sheets, enough for my kids and us and multiple pairs because you get them dry clean. I didn't realize I spent $35,000 on bed sheets. You know, I just bought them. But, like, sometimes you just spend money and I don't really think about it. And it's not that I want to spend 35 grand on bed sheets. I like how they're soft. I sleep for eight hours a day. I sleep, you know, every single day. I'd rather have things like a mattress or bed sheets or whatever, be super comfortable versus trying to save a dollar here or there. I've also found in life that it's easier to make the money. I still am quite a bit of a saver. I don't really spend majority of my money by any means, but I do splurge here and there on things that matter.
- [11:22]
Sam Parr
So even though he said he could do 15,000 or 30,000amonth, in reality he's doing something like $200,000 a month. Let's quickly find out where that money is going. And we're going to start with housing costs.
- [11:33]
Neil Patel
10 grand a month for HOA at least that's homeowners, homeowners association or something like that. Right? I think that's what it stands for because I live in a condo. I live in the Mandarin Oriental in Beverly Hills. So they charge. It's not a hotel, but it's only condo, even though the brand is a hotel. But the HOA dues are just expensive. But the beautiful part is the service is really good.
- [11:55]
Sam Parr
And by the way, that cost, that's just for where he's currently living. That does not include everything that he's paying for housing.
- [12:01]
Neil Patel
I have quite a few homes. We have four homes in Beverly Hills. The property tax alone is through the roof. I don't know how much I spend on property tax a year. Maybe 300, 400 max.
- [12:15]
Sam Parr
Now my favorite part. Let's talk cars.
- [12:18]
Neil Patel
We have quite a few cars. Even though we have a Honda Odyssey and I mainly drive it, I do have a Maybach. My wife has a Bentley suv. We also have a big SUV too. I think a extended Lincoln Navigator. But the cars aren't that expensive. It's just insurance. I don't know what we pay on insurance.
- [12:33]
Sam Parr
Well, a Bentley SUV is expensive. I think that you're talking about, is it called the Coleman? I forget what they're called, but that's like a $400,000.
- [12:39]
Neil Patel
That's a Rolls. Those are expensive. Those are like a half a million bucks. I think we only paid 300 grand for ours for the Bentley.
- [12:45]
Sam Parr
I mean, 300 grand for an SUV is a lot of money.
- [12:48]
Neil Patel
I know, like I'm hearing myself say it, I'm like.
- [12:50]
Sam Parr
But at least like a, a Ferrari sports car. You could say that's a toy. An SUV isn't always a toy. That's purely just because it's kind of sick. It's awesome. Now let's get to some other stuff.
- [13:01]
Neil Patel
Staff is always a big expense. We have nannies, cleaners, full time driver. You know, that adds up. And we pay staff really well. Assume if someone works for us they make 100 grand a year. We typically at least pay 100 grand per person, no matter what they do, because we believe that people work hard and they deserve to be paid well.
- [13:22]
Sam Parr
And of course there's food. He's not gonna go to McDonald's every day, is he?
- [13:26]
Neil Patel
Food is a big expense. You know, going to restaurants, like a lot of time you go with friends. I don't even drink alcohol. You sit up spending 500 bucks or a thousand dollars between two, three people.
- [13:36]
Sam Parr
And one of Neil's favorite things to give money to, one of his favorite ways to spend money, which I love hearing, is donations.
- [13:43]
Neil Patel
We still donate a lot of money. My wife loves donating and I do too. It makes other people happy and hopefully you can change our lives.
- [13:50]
Sam Parr
How much are you spending per month donating?
- [13:52]
Neil Patel
I don't know. I haven't checked. But if I had a guess, somewhere between 100 and 150amonth.
- [13:57]
Sam Parr
Okay, so then your real life living expenses are probably 50 to 100amonth. And then your donations are double that or triple that.
- [14:07]
Neil Patel
If I had to guess, a real expenditure on a monthly basis, 50 to like 60, maybe 70 max a month.
- [14:15]
Sam Parr
Those are huge numbers.
- [14:19]
Daniel Burke
Okay, let me do the math out loud. Neil Patel is spending about $200,000 a month. Of that, somewhere between $100,000 and $150,000 is donations, which means his actual lifestyle, which is four homes in Beverly Hills, a Maybach, a Bentley, a full time driver, nannies, private schools, restaurants cost him somewhere between 50 and 70 thousand dollars a month. And he flies southwest economy because he genuinely doesn't seem to care. He spent $35,000 on bed sheets because he didn't notice it happening. And every single month he writes checks larger than most people's annual salary to charity. But he doesn't really talk about it. It's not really part of his brand. He's just doing it. And that, I think, is what money wise surfaces that no other podcast does. You hear $200,000 a month and you picture one thing, but the reality is typically not so much the same. The number is real, but the story behind the number is completely different than what you might have assumed. The next episode is different in one important way. The guest actually asked to remain anonymous. This next episode that we go through, we're going to call the guy Hank. It's not his real name. He just asked to remain anonymous. Hank is in his 70s at the time of this recording. And he made his money in the 1980s and 90s distributing electronics, pagers and cell phones. A lot of most people didn't really even know what a cell phone was at the time. He eventually merged with his biggest competitor and helped build one of their largest distributors in the country, A company doing around $3 billion in annual sales. In 1996, he exited for around $60 million. And then over the next couple of decades, he did something almost no one plans to do. He ended up in a 24,000 square foot house. Here is how that happened.
- [16:07]
Hank (Anonymous Guest)
Yeah, bigger than I ever imagined, that's for sure.
- [16:11]
Sam Parr
Then in 1996, Hank exited the company, and he made around $60 million. But Hank didn't just get tens of millions of dollars and immediately buy a massive house like a video game. He started working his way through the levels. First, his starter home.
- [16:28]
Hank (Anonymous Guest)
My first house was a little townhouse,
- [16:32]
Sam Parr
Then the regular old mcmansion.
- [16:34]
Hank (Anonymous Guest)
My second house when I was married, you know that I was shaking when I signed the agreement. It was like a 3,600 square foot, which to me was like, my God, we ran from room to room. It was like, wow, this is a castle.
- [16:48]
Sam Parr
Then there was his first custom build.
- [16:50]
Hank (Anonymous Guest)
My first house that I built was 11,000 square feet, which also is ridiculously huge to me and beautiful, but in a small lot.
- [16:59]
Sam Parr
And after that, I guess you could say he downsized. I mean, technically, he did.
- [17:02]
Hank (Anonymous Guest)
I ended up moving on to a different home in a country club myself. Unfortunately, we. I separated from my wife at the time. That house is like 8,500 square foot.
- [17:15]
Sam Parr
And then he leveled back up. It was after that house that Hank, with his now fiance, decided to build his current house.
- [17:24]
Hank (Anonymous Guest)
No way did I ever plan to build a house this big. No way. I never even thought about it. I said, look, I don't want to talk about size. I don't want to say, I'm going to build this, and we'll fit into it. What I said is, what do we want in a home? What rooms do we want? What's important? What have I always fantasized about having in my once in a lifetime house? And it kind of grew. Oh, you want a manicure, pedicure room, you want a movie theater, you want this, you want that? I said, sure, sign me up. Yeah, it sounds good.
- [17:54]
Sam Parr
So the process didn't start out with Hank saying, you know what? I want to own a house the size of a bowling alley. It really just kind of happened because he said yes to everything he and his fiance wanted to, right? I mean, when you have the money to put literally anything you want inside a home, why not just go for it, right?
- [18:10]
Hank (Anonymous Guest)
All of A sudden, the house just started growing. And I said, well, can we shave anything off? Can we? And we did. Like most people did. We looked around, tried to find the, oh, this house didn't have this and this house didn't have that, and this house didn't have enough ground. So ultimately, if you have the time and the ability and the patience because it takes a couple years to build a house this size and you really end up getting what you want or most of what you want, you still move in and say, oh, I wish I would have put this in. I mean there's houses in here that are bowling alleys and this and that.
- [18:41]
Sam Parr
I didn't need that.
- [18:42]
Hank (Anonymous Guest)
But it's cool, it sounds cool. So we put in what we thought was right. And when we moved in, it was still cavernous. I mean, it was just ridiculous. And we looked at each other, said like, what did we do? I felt like I was, you know, like we needed to tram to get from one side, but you grow into it.
- [19:04]
Sam Parr
Going to get to the pros and cons shortly. But let's talk about the thing that you guys love about money wise. Let's talk about the money. How much did Hank actually pay? First, the price for the lot itself,
- [19:16]
Hank (Anonymous Guest)
to me, it was just shy of a million dollars for a three acre lot, which in Florida in this area is considered a buy. When the initial plans came out with this development did not sell at all. It was out in the middle of nowhere. Nothing was built around it. None of the homes were built. It was just like out in the middle of nowhere. Anyway, to make a long story short, I was able to buy the ground relatively inexpensively compared to what it would cost today. The lots alone are half of what my house costs now.
- [19:44]
Sam Parr
And then there was the build cost.
- [19:45]
Hank (Anonymous Guest)
The cost to build a house without furnishing was about $8 million, $8.5 million with the ground, with furnishing, maybe 10 million.
- [19:58]
Sam Parr
That's how much Hank paid around 10 years ago. Now if we simplify this a little bit and we look at Zillow, that price, $10 million, that's going to get you around 4 to 5,000 square foot in the form of a townhome in Manhattan. I'm walking here, I'm walking here.
- [20:13]
Daniel Burke
I quote, I felt like we needed a tram. He's really not joking. He genuinely felt like he needed motorized transport to get from one side of his own house to the other. And he delivered that line completely straight faced. What I love about this story is that the house wasn't Ego. Hank never sat down and said, I want 24,000 square feet. He just kept saying yes to rooms. A movie theater, a manicure, pedicure room. Why not a tennis court with a basketball court? Sure, sounds good. Eight garages, a guest house with two bedrooms. But then one day you look up and you move in and you're standing in a building the size of typical commercial properties, and you're looking at your fiance and you both think, oh my, what did we do? The build cost was about $10 million in cash, which means for him, no real mortgage. And for context, Sam points this out. $10 million is roughly what you pay for a 4 to 5,000 square foot townh Manhattan. But the purchase price is not really the most interesting number in the story. The more interesting number is what Hank accidentally reveals about his net worth without really saying it, and what it costs every month just to keep the thing running. That's what comes next. Sam asks Hank a question that I think every financial podcast host should ask, but no one really does. He says, when you were deciding how much to spend on a house this size, what percentage of your net worth was that? Hank answers. But in answering, without even really ever saying his net worth out loud, he sort of tells you exactly what it is. This segment is edited from two sections of the episode. The ongoing cost and net worth discussion first, then Hank on how much time the actual house keeps to maintain.
- [21:52]
Sam Parr
What do you think is like a good ballpark for what percentage of your net worth should be in your primary residence? Like, when you were doing the math, were you like, I'm okay with 20%?
- [22:03]
Hank (Anonymous Guest)
I mean, I guess in my case it's, you know, it was, you know, maybe 5% or 8% of my net worth. I can retroactively plug that number in. I didn't think about it at the time. And don't forget, there's two people with two different piles of money paying for it. So a couple together, it's their joint money that's spending it. So it's a different calculation for me. You know, not to throw people off and confuse them, but it was just a different calculation for me. I would not, let's put it this way, I would not be living in a house this size. Size for me and my grown children. No way would I buy a house this size.
- [22:39]
Sam Parr
All right, as promised, let's talk about some of his ongoing expenses for owning this huge, huge house.
- [22:45]
Hank (Anonymous Guest)
I have all kinds of creative ways to make myself feel good about the money I'm wasting or spending.
- [22:51]
Sam Parr
I should say we'll start with landscaping for context. Hank has around three acres.
- [22:56]
Hank (Anonymous Guest)
I think I pay $1,900 a month almost to 1950. $2,000 a month.
- [23:00]
Sam Parr
And then utilities, which would be heating, cooling. So electricity and water and trash. Do you know what that would be?
- [23:07]
Hank (Anonymous Guest)
Trash is included in our taxes here. So electricity is probably around anywhere from 1500 to 2000amonth. That's not bad, depending on which light bulb is left on. And then there's a gas bill that goes with that.
- [23:22]
Sam Parr
What would gas be?
- [23:23]
Hank (Anonymous Guest)
Gas, about 400, 500amonth.
- [23:26]
Sam Parr
And then there's repairs, which can add up a lot.
- [23:29]
Hank (Anonymous Guest)
Yeah, maybe 50, 60,000 a year. I mean the pool, because everything is five, $6,000. You know, patch a pool, it's $5,000. Find a leak, it's $1,000. So it does add up.
- [23:39]
Sam Parr
And then you probably have a pool cleaning service. What do they charge per month?
- [23:43]
Hank (Anonymous Guest)
They're about 400 and some dollars a month and they come once a week.
- [23:47]
Sam Parr
These costs actually aren't that crazy.
- [23:49]
Hank (Anonymous Guest)
I think they're not.
- [23:50]
Sam Parr
That's not that crazy for how big it is. But I'm shocked that what I would think what would happen is a vendor would come to your neighborhood and be like, whatever our normal rate is, just multiply that by two.
- [24:00]
Hank (Anonymous Guest)
Right. It's just like when you walk in to buy a car, you don't say, give me a car, whatever request. I trust you. You do a little research. So by me learning more about it, it's very similar to running a business. You know, you can be the head of a company, but it's good that you know what everybody's job description is so you understand what they're doing or not doing. Otherwise, you have no idea. And there's no check and balance. So I'm the check and balance just as much, if not more than the person actually does the fixing.
- [24:31]
Sam Parr
All that adds up to around $10,000 a month. Real quick pause. Because this is important. If you're running a company, you already understand leverage. You apply it everywhere in your business. Most founders, they treat health like it's a rounding air, inconsistent training, reactive eating, Good weeks, bad weeks, start, stop, repeat. That was me. I didn't need motivation because I had plenty of that. What I needed was structure. I needed systems, better energy, lower body fat, more muscle, something that actually stuck and not some 12 week sprint that I would abandon when things got busy. And so I hired a coach and it was one of the best decisions I ever made. Training built around my schedule, nutrition that survives Travel, clear targets, clear metrics, daily accountability, no guesswork. And so today's sponsor is brought to you by Daily Body Coach. They are premium online coaching for entrepreneurs and executives who want their body keeping up with their business. It's run by an exited software founder who's already a Hampton member. And yes, a bunch of Hampton members already use it. Everything's personalized. They're coaches, they're available seven days a week. And the habits they help you build survive board meetings, late nights and back to back travel weeks. This isn't about looking good on the beach. It's about being strong and sharp in your 40s, 50s, and 60s. So if you're serious about it, go to dailybodycoach.com Hampton dailybodycoach.com Hampton but what does this kind of money actually get you? If you're going to have a 24,000 square foot house, you better fill it up with a bunch of cool stuff.
- [25:55]
Hank (Anonymous Guest)
It's approximately 24,000 total. 18:5 under air because there's living space and then there's additional. And when your house is built on a decent sized property, which this is, it's about three acres, you have the ability to build all kinds of loges and different things like that. So they count that in total space. The 185 would be air conditioned. Let's say it'd be air conditioned space. Let's talk about it that way. It makes it simpler to understand. But the total includes garages and outside space and all that.
- [26:24]
Sam Parr
So it's nine bedrooms?
- [26:26]
Hank (Anonymous Guest)
Well, yeah, it's seven in the main house and then a guest house with two bedrooms. Separate guest house.
- [26:32]
Sam Parr
And then how many living rooms? How many kitchens? And then what other rooms are there?
- [26:36]
Taylor Adams
I think.
- [26:36]
Sam Parr
Did you say you had a mani pedi room?
- [26:38]
Hank (Anonymous Guest)
Well, I don't and if I did, I wouldn't tell you. But.
- [26:40]
Sam Parr
But the home does though.
- [26:42]
Hank (Anonymous Guest)
The home does though. And I passed through it a couple times.
- [26:44]
Sam Parr
So what are the other rooms?
- [26:46]
Hank (Anonymous Guest)
So, yes, and that's a small room. It's not like a huge commercial place or anything. It's sink, manicure, pedicure. I don't even know how that stuff works half the time, but it was used. And my mom lived with us for a while so it was easier for her. She couldn't get out to go to the thing. So I always have to rationalize everything that I put in here for you cause I sometimes embarrassed about it, but. And then we have a movie theater which is kind of 101, you know, in a big house, I guess there's certain things that we have. An elevator. Putting an elevator in a one, one story house would not be a good idea. But this, you know, we have a couple stories and we've used it. You know, the kids, they get, they hurt their legs, they do this, they have luggage and they bang up the walls. So there are certain things that just go with a larger house that. Which add expenses and would be very hard to resell a house this size without an elevator. Not that people may never use it. They may use it, whatever. Has a movie theater elevator, a fairly big family room for entertaining that we designed specifically for that reason because we had parties or whatever, which we used to use quite a bit years ago.
- [27:53]
Sam Parr
How much time per week are you spending or per month making sure everything's taken care of?
- [27:57]
Hank (Anonymous Guest)
I mean, it depends whether it's hiring contractors, evaluating their proposals and. And trying to oversee what they're doing. I probably spend 10 hours a week doing it. Maybe five to 10 hours a week.
- [28:10]
Sam Parr
So like a part time job?
- [28:11]
Hank (Anonymous Guest)
It is, It's a part time job. And I think it makes a difference. I'm just, I'm not trying to micromanage as much as I'm trying to learn what I can do and what somebody else can do. I. So I guess the fact is I don't mind doing it. I don't need to hire somebody to screw in a light bulb.
- [28:27]
Sam Parr
And you're semi retired.
- [28:29]
Hank (Anonymous Guest)
Yeah, right. I mean, I do need somebody to change the light bulb, however, that is 25 or 30ft high in a high ceiling. And that's a dilemma we're facing now. These are LED lights and we're saying you have to get a structure to stand on, just like they do when they're painting and stuff.
- [28:45]
Sam Parr
So scaffolding.
- [28:46]
Hank (Anonymous Guest)
Yes. Just changing a light bulb in a high ceiling house becomes an issue. I'm the only guy that I believe washes and waxes my own cars in the neighborhood. To the point where people have driven by and say, hey, what days are you in the neighborhood? And I said pretty much every day.
- [29:04]
Daniel Burke
So the house is 5 to 8% of his net worth. If the house cost $10 million. Do the math. If 10 million is 5 to 8% of your net worth, you're looking at somewhere between 125 to 200 billion in total wealth. Hank never said that number, but he
- [29:18]
Taylor Adams
didn't really have to.
- [29:19]
Daniel Burke
And that's the money wise move. You don't really have to ask the question directly. Sometimes you get the answer and it comes out sideways. But you Know, that's what's exciting about these episodes is we have to figure those numbers out somehow. And it's always creative and fun to get there. The other number that gets me personally, he spends five to 10 hours a week managing the property. That's like a part time job. This man sold a $3 billion company, exited in 1996, and now a significant portion of his week is spent making sure the landscaping crew shows up and the pool doesn't spring a leak. And he washes his own cars. He's the only person in the neighborhood who does, because, and this is the thing we sort of keep coming back to. The work gives him something, it gives him purpose, it gives him meaning. When you remove the structure that a career provides, you sort of have to find it somewhere else. For Hank, the house became the job. And he's not complaining. This is what he chose. It's a version of wealth that I don't think a lot of people talk about. It's not the accumulation of the money, but like, what do you do after when you have more money than you're ever going to need for many lifetimes? What now? And that's what brings us to the final episode that we're going to highlight here. In this episode is the one I'm personally most invested in. Sam came in asking a question I've heard from almost every successful founder I've ever worked with. If you make real money and your kids grow up inside of that, how do you make sure they still have something to reach for? This next guest was Taylor Adams. Taylor is from a multigenerational family in Los angeles with over $1 billion in total assets, which includes real estate, industrial, you know, going all the way back to the 1800s. His great, great grandfather pioneered the bond business in LA. And then each generation after built on it. Taylor experienced all of it from the inside. The wealth, the pressure, and the absence of sometimes anything that really felt like his own. But in his mid-20s, he got sober. He built a company, Belief Partners. His idea was to help other wealthy families avoid what he had gotten wrong a few different times. And here he is telling his own story.
- [31:27]
Taylor Adams
Growing up in an environment where it's like you're in a business family in an environment of extreme success. It has a lot of interesting implications, a lot of mandates that were not spoken but that I internalized. You know, on an emotional level, you think in order to be loved and respected by my family and specifically my father, I need to become as successful or more successful than he was.
- [31:49]
Sam Parr
That's a real burden because as you have kids, I have to imagine that everyone wants their kid to be better than they are in some capacity, whether it's money, happiness, anything like that. You want your children to be better off than you were. But when you have generations of wealth and a lot of luck and a lot of hard work and all that stuff. But when you've been very successful for hundreds of years, that's a ton of pressure on you if you want to achieve something greater than your family already has. On the other hand, money is money, and when you're young and it's at your disposal, it can be tempting to buy away that pressure.
- [32:19]
Taylor Adams
Growing up in Los Angeles, I wasn't immune to the lure of pursuing property, power and prestige. Any kid can get naively sucked into fast cars and fancy stuff. That was definitely the case for me. It was a thirst for significance. And that led me down a path that got pretty dark. I basically engineered my world around drinking and partying and chasing girls.
- [32:40]
Sam Parr
Fortunately, Taylor recognized that his actions weren't providing him with a happy and sustainable life, and he decided to make a huge change.
- [32:48]
Taylor Adams
Driving home from work one day when I was 26, I just. I had a moment of clarity where I realized that the trajectory that my life was on never intersected with the life that I wanted to. And if nothing changed, then nothing would change. I had a realization that the most addressable thing in my life was my drinking. So I got sober at 26, right after getting sober, got a coach, and he had me read Viktor Frankl's Man's Search for Meaning. And it totally changed my perspective. I was on a pathway of pursuing pleasure, instant gratification, and the impulsivity that comes with that. And then just had an awakening that I realized that fundamentally, life is about pursuing meaning and being of service to others and having purpose beyond yourself.
- [33:28]
Sam Parr
That purpose ended up being very helpful for other families with wealth. Set up the next generation so they don't feel lost. Sort of like Taylor did. He does that with his company, Belief Partners. Oh, and that idea of finding purpose is paramount to everything Taylor is going to talk about today. Let's get into what we as parents can do to make sure that our wealth positively impacts our kids instead of holding them back. I once heard someone say, don't rob your kids of any struggle, because that struggle is important towards building motivation, towards building grit, all these important things. And that's something that I'm very fearful of, is robbing my kids of that struggle. And this is a really common Feeling among parents that Taylor works with on
- [34:10]
Taylor Adams
a wealth creation journey, we might be motivated by the idea that I want to empower my children to have opportunities that I never had so that they can live a meaningful and purposeful life. And then once wealth is actually created and realized, then it switches to now. I'm worried about how my wealth can potentially poison future generations and rob them of meaning and purpose entirely. And when you think about, like, that flip, it's like, man, what that tells me is that there's something wrong with how we view and manage generational wealth.
- [34:44]
Sam Parr
And as a new parent, one extreme that I've considered while raising my daughter is when she gets a little bit older is basically not giving her anything other than education and healthcare. The essentials. Of course, Taylor called me out, rightfully so, and he says that I'm bluffing.
- [34:58]
Taylor Adams
There's a lot of families that I've spoken to where they're like, I've seen what wealth can do to poison future generations and rob them of meaning and purpose entirely. So I'm not giving them anything. And once they finish college, they're going to be on their own and I won't support them financially. I don't care how much conviction you have as a parent. And you're, like, going to hold that line really hard. I promise you, whether you realize it or not, it's a bluff. Because what happens is once they finish college and they're like, all right, I'm ready to move back to the city I grew up in. Parents quickly realize there's no way for them to afford to live anywhere near where they grew up. And very quickly they're subsidizing rent or justifying decision to purchase a home on their behalf.
- [35:43]
Daniel Burke
I don't know if you caught this, but he said, the trajectory my life was on never intersected with the life I wanted. He was 26 years old, from one of the wealthiest families in LA. But that's what clarity looked like for him. What I find most striking about Taylor is the complete absence of victimhood. He doesn't blame the money, he doesn't blame his family. He just sort of describes in very clear terms what happened and what he did about it. He got sober, he read Viktor Frankl, and he built something I love, something, he says in response to wealthy parents who say they're not really going to give money to their children. He calls it a bluff. He says, I don't care how much conviction you have as a parent, you're not cutting your kids off financially. That might be the most honest thing I think anyone has ever really said on this topic. Wealthy parents know it's true, but no one really chooses to say it out loud. What are you going to do? You're really going to let your children become homeless? I don't think so. I think worst case scenario, you're giving your kids money if you have it. In this next segment, Taylor is going to give you the clearest framework for thinking about your wealth that I've heard on most of the episodes of this podcast. Pay attention to the metaphor because I want it to sit with you and then we'll talk about it a bit after. At this point in the episode, Taylor and Sam are really deep into the conversation. They're talking about shirt sleeves to shirt sleeves and three generation patterns. They're documenting tendency for first generation wealth to be created, second generation to manage it, third generation to spend it down. And Taylor frames it in a way that I think is really important to look at in here slowly,
- [37:19]
Sam Parr
which is basically, you know, I, I read a ton about the Vanderbilts, the Carnegies, the Rockefellers, and basically by the third generation, most the money is gone. Is that the idea?
- [37:27]
Taylor Adams
Yeah, that's the whole idea. I think we misinterpret the Andrew Carnegie quote and we focus on like the accumulation, the preservation and the destruction of financial assets. I think what Andrew Carnegie was actually talking about is the human capital across three generations. You have a first generation that's an active value creator. The second generation transitions from value creation to value stewardship. So managing the wealth essentially. And then the third generation observes their parents being stewards of wealth rather than value creators, and they can have a tendency to become default value consumers. And so I think it's really important to reframe how we characterize and how we view wealth. Right now. We view wealth as the accumulation of financial capital as measured by Aum. And I think it's important to create a culture within your family that that's not how you characterize wealth. I think it's important to characterize wealth as our ability to create value for others. If we use like a race car metaphor and I asked you what your net worth was, Sam, it's essentially like asking, hey, Sam, how big's your gas tank? And the reality is like, I don't give two shits about how big your gas tank is. Show me what's under the hood. I want to see what your engine for creating value for others is. If that engine's like awesome enough, then you can have other people put gas in your gas tank just because they want to see what it'll do. So I think re characterizing what wealth actually is is super important.
- [38:56]
Sam Parr
Well, do you define value as like, big scale? Like, let me give you an example. So have you read the biography of Joseph Kennedy?
- [39:03]
Taylor Adams
I haven't.
- [39:04]
Sam Parr
You should. It's pretty cool because it deals with a lot of stuff you deal with. So basically a lot of people don't know this, But Joe Kennedy, JFK's father, he was the seventh richest man in America by the time JFK was about to become president. Joe Kennedy was mostly a piece of crap guy. He wasn't a good guy. And there's not a lot that you'd want to copy with him. Cause he was a bad husband. And his kids got into government, I think because he cared about the power. And he failed at becoming president, which is what he really wanted to become. But he said, my goal is to get super wealthy so my children can serve the country. There was a lot of other things, like he wanted power, but take that out of the equation, that's like an interesting goal. His kids didn't become business people. They served others. And I love that. I really love that. And so when I'm thinking about it, I'm like, in one part of me, I'm like, I would love my children to be business people so they could kind of be stewards of capital and carry this legacy on. On the other hand, I think that, like, if you think of who the most impactful people in my life is, it could have been like my fourth grade teacher. This woman probably has impacted 5,000 or 2,000 children over the course of 40 years. I find that to be very admirable or just a good mother. Someone who raises four or five healthy kids. When you think of value, did your family ever look down on someone if they wanted to not pursue business, but instead, you know, serve others? And as a teacher, or just being a good mother, or being a good whatever it is that impacts people, but maybe on a smaller but more intimate scale, yeah, 100%.
- [40:28]
Taylor Adams
There's no mandate to build wealth. The ideal is fundamentally rooted in service. And so that's why my father would always share things like if you want to make a million dollars, then find a way to help a million people. It's fundamentally about building your own capability where you can contribute to others and make their life more meaningful. And if you think about business fundamentally from a value creation, value capture standpoint, it's that value creation thing that makes it all work. And then hopefully you capture enough of the value that you can continue to create value for others. And there's plenty of family members within our family that have become artists or teachers or done things that you wouldn't consider like pathways to building wealth.
- [41:12]
Sam Parr
Okay, so what I'm about to say, I realize, makes me sound kind of douchey, maybe cringy, and it's easy for me to say is what a lot of people are going to be thinking. But as I've grown and I've been very lucky and privileged and fortunate in my career, and as I've grown sort of my wealth and some of my successes, I've realized that money is a lot less important than I thought it was going to be. At least it doesn't make me always feel the way I thought it was going to make me feel. And I'm a new parent. But it doesn't take a genius to think to myself, look, I don't think it's going to necessarily make my kid happy, but what will make them happy is something that my parents did and you didn't have to have a lot of money to do this, which is they did a really good job of helping me discover the value of my effort of doing things. And it just so happened to be that I like to do business stuff. But whether it was sports, arts, becoming a teacher, as long as I had that encounter encouragement from them to do that and I had a positive feedback loop from them, I think I would be equally happy and have a sense of purpose like I do now.
- [42:13]
Daniel Burke
This metaphor about gas tanks and what's under the hood. Taylor says he doesn't really care how big the gas tank is. He wants to see what the engine looks like. Show me what's under the hood. Net worth is the gas tank. Value creation is the engine, and the engine is really all that matters. I've been in finance adjacent conversations my entire career in tech. I've never heard that framed more clearly or more memorably. It's the kind of thing you put on a wall and I feel like you would look at throughout the rest of your life as you start to accumulate wealth. What Sam admits in this segment is also worth noticing. He's sort of self consciously says that money doesn't make him feel the way he thought it would, which I think is a real moment. It doesn't get a lot of airtime, but it's there. And I like when that stuff happens in these podcasts because it's something worth taking note of. And here's the last one that I Want you guys to listen to. And it's again, what Taylor Adams says about the first time he sat down with the trustee of his family's office. There was a piece of paper on the table face down. After that, Taylor's framework for how wealthy families destroy themselves. He came up with this metaphor called the Four Horsemen. Every one of them sounds like wisdom, and every one of them is a slow moving way to kind of lose what the first generation built. And I really like how Taylor puts this.
- [43:29]
Taylor Adams
I think I was 23 at the time, and I met with the trustee, who's the president of our family office. And it's kind of like this ominous thing where there was a piece of paper folded upside down on the table. And then he slid it across the table, turned over the piece of paper, and immediately went to, like, the bottom right and looked for bold numbers. I remember in that moment, it was like I had this weird thought that. And there was like, these two schools of thought. One was like, whoa, that's a big number. And the second thought was, that's not enough.
- [44:04]
Sam Parr
You've got to empathize with your kids and understand that they have unique mental hurdle to get over. They have different privileges and a different experience with money than you probably did. And when it comes to their me years, which is probably in their late teens and early 20s, they're going to feel a different sense of entitlement. Your job is to guide them through that, but understand that they're going to make some mistakes and potentially probably have a lot of wrong ideas. All right, now, of all these mistakes that parents make, everything that we've talked about can basically boil down into four things. This is a concept that Taylor calls the Four Horsemen of Destruction. That's a great name. Before we end this episode, we're going to do this on rapid Fire.
- [44:44]
Daniel Burke
Fire.
- [44:46]
Sam Parr
The first Horseman is preservation.
- [44:48]
Taylor Adams
An entrepreneurial value creator. Grinds and experiments and takes risks until one day, like, they look around, they're like, holy, I've actually built something. And then inevitably, like, an advisor will whisper in their ear, shirts, leaves, and shirts, leaves in three generations. And they think to themselves, you're telling me that some entitled little two or three generations down, down the line are going to just destroy everything that I've created? I'm not going to let that happen. So they switch from a strategy of entrepreneurial value creation to one of wealth preservation, which I think is crazy, because it's in direct opposition to the strategy that created the wealth in the first place. But the most important mistake in that is that it makes the financial capital the priority.
- [45:28]
Sam Parr
The second, protectionism.
- [45:30]
Taylor Adams
If the number one priority is preservation of the wealth, then the number two priority is to protect family members from the wealth. Because we've seen how wealth can rob future generations of meaning and purpose entirely. The problem with that thinking is this preservation mindset. It creates this incentive where we're going to try and set them up for success. But the reality is that what we should be doing is teaching them how to fail while failing smaller and failing forward.
- [45:56]
Sam Parr
The third is stewardship.
- [45:58]
Taylor Adams
In my experience, future generations only care about about stewarding something that was created in the past when they can't access a vision for their future that's more meaningful than what already exists. And the subtext of stewardship is, hey, something really significant was created before you, and so we don't need you to create anything new. So it disincentivizes future value creation.
- [46:21]
Sam Parr
And last, collectivism.
- [46:23]
Taylor Adams
A first generation wealth creator can say, man, I've seen what wealth can do to terrify families apart. I'm not going to let that happen. So I'm going to create really rigid top down governance structures that prioritize family unity by forcing everyone into a room together where they can make shared decisions around or collective decisions around shared assets. And the paradoxical outcome that creates it just accelerates the likelihood that they all end up suing each other, which by the way, is par for the course. It's not the exception, it's the norm that family members end up suing each other.
- [47:00]
Daniel Burke
He says that's a big number, but that's not enough. Sort of a dichotomy. There's two thoughts. They're happening at the same time. He's 23 years old and he's looking at the number in his family trust for the first time. And I don't know that it's ingratitude, not necessarily weakness, but it's sort of what happens when money becomes a primary scorecard in your life. You've been around and surrounded by a very high score for your entire life. And the only way Taylor found out that that loop could be stopped was really to stop using the scoreboard entirely. The Four Horsemen is this metaphor where he goes through four different tenants of the Four Horsemen. One is preservation, protectionism, stewardship and collectivism. Every single one of those is a piece of wisdom. They're all, according to Taylor, a slow moving way to destroy what the first generation built. And I think the human capital and the financial capital that comes from framing it as a gas tank and what's under the hood. It's how you survive in a multigenerational wealthy family. The families that survive three to four to five generations, if you look at history, are the ones that figure out how to keep creating value rather than just protecting the value that was created 1, 2, 300 years ago. And that's a show. Real numbers, real psychology, real people talking about honest parts of their wealth and the way they did accumulate it, how they're spending it, the way their lives look after becoming wealthy. That I think makes Money Wise a unique and phenomenal podcast that I hope you guys enjoy listening to. And that's the end of today's episode. We went over three different conversations from past Money Wise episodes from Neil Patel, Hank, who is Anonymous, and Taylor Adams. The numbers and the moments and the things that stayed with them years after accumulating the wealth or inheriting the wealth. Like I mentioned, new episodes are in production right now. And what I'll say is the conversations I'm building are in the exact spirit of everything you just heard. They're founders with real money, talking about their actual numbers with real candor. And they really go into depth and length about what their wealth looks like from the inside. It's the actual thing. What are you doing every day with the money that you have? And speaking of that, if you've been listening and thought, that sounds like a conversation I want to have, I really would like to hear from you. I am actively looking for guests for upcoming episodes. If you're a self made founder or have been through a significant exit or you've built wealth through real estate or alternative assets or some other thing, maybe you've even inherited it. If you have a financial story you've never told publicly and you're ready to tell it, please reach out. You don't even have to use your name. Hank didn't and several of our past guests haven't. What matters is the honesty and how much you're willing to divulge about your personal finances. You can find Money Wise wherever you listen to podcasts and if you're not subscribed yet, do that right now. It's the best way to know when new episodes drop. Again. I'm Daniel Burke. This is Money Wise and if you do have questions and want to reach out, find me on X@DanielCburk. I'd love to hear from you. If you hate the way that I'm hosting this, I'd also like to hear that. Believe it or not, I would like to improve. I want this to be the best podcast about money on the entire Internet, and I think it will be. If you guys give us a chance. We're going to absolutely blow you away. Thanks for listening to Moneywise, and we'll see you next week.