← Rich Habits Podcast
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- [00:01]
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- [00:50]
Austin Hankowitz
Now Robert, before we jump into this episode with Scott, I think it's time that we announce something that we've been working on behind the scenes a little bit here. We are helping organize something called the Grit Money Site Summit. As you guys might have seen, my newsletter Rate of Return was acquired by a financial media company called Grit late last year and now that company, Robert and myself are organizing a big in person and virtual event in Toronto, Canada on April 3rd of this year. It's called the Grit Money Summit. You can join us completely for free, either virtual or in person to gain insights from experts, empower yourself with knowledge needed to navigate today's fast paced, ever involving markets and learn from a lot of interesting people. Like I said, I'll be there, Robert's going to be there, Sahil Bloom will be there, Cody Sanchez, Genevieve Rock, Dr. Chris Camillo from Dumb Money Live TV and all these other incredible speakers. There's going to be some more information in the show notes below to join virtually and or in person. Remember it is completely free to register and we can't wait to see you on April 3rd.
- [01:54]
Robert Krok
It is going to be so much fun. I cannot wait. What a killer lineup hold. Holy moly. It's going to be so good. So make sure you check it out in the show notes. We will also have links, I believe in our stand stores to the event also coming up so you can get all the information to sign up, where to stay where the event is if you join us live. So we're really excited about it.
- [02:17]
Austin Hankowitz
So don't get left behind in 2025. Get equipped to invest with confidence through this Grit Money Summit on April 3rd. We can't wait to see you guys there. All right Robert, let's jump into the episode. Hey everyone and welcome back to the Rich Habits Podcast brought to you by Public.com, a top 10 business podcast on Spotify. My name is Austin Hankowitz and I'm joined by my co host, Robert Krok. Robert is a seasoned entrepreneur in his 50s with lifetime revenues of over 300 million. And I'm an entrepreneur in my late 20s with a background in finance and economics. Since quitting my full time job in corporate finance a few years ago, I've built a seven figure media business and actively advise some of the most well known fintech companies around the world. Now, as the show name might suggest, every episode we talk about Rich Habits as they relate to business, finance and mindset. However, we try and bring you two unique perspectives. One from an industry veteran, which is Robert, and the other, myself, someone who's still in the process of building wealth and figuring it all out. Robert, we have an awesome guest for this episode, so let's introduce them.
- [03:18]
Robert Krok
Yes. Today we're sitting down with my friend Scott Clary. He's an entrepreneur, investor and host of the wildly popular Success Story podcast. If you follow business and self improvement content online, you've likely seen Scott's work. His podcast YouTube channel has over 340,000 subscribers and he's built this media empire by reverse engineering the habits, strategies and mindsets of the most successful people in the world. So in today's episode with Scott, we'll be discussing the following. Number one, how to reverse engineer success and work backwards from your goals like the world's top performers do. Number two, why the idea of overnight success is a myth and how the ten year rule actually works. Number three, the power of networks, why there's no such thing as a self made success. And number four, manufacturing luck and creating high value opportunities. And lastly five, how to build a personal brand that makes you money while you sleep. So clearly we should jump right in. Welcome to the show, Scott. I'm super excited about this episode. It really, really aligns well with Austin and I's message. What you do is incredible and we're happy to have you.
- [04:32]
Scott Clary
Now, I appreciate you guys for having me on, so thank you, Austin. Robert, first of all, I love your show. I love the concept of breaking down all the habits and principles that really lead to success and wealth. And I also would say that one of my favorite things about the theme of this show is that rich habits, at least in my mind, they're about making money for sure, but they're also about building leverage in every aspect of your life. And I think that's really what I try and capture on my show, and that's really what I hope we can do today. So thank you.
- [05:00]
Austin Hankowitz
Absolutely, Scott. So let's jump into this sort of first question. You've studied and worked with some of the most successful people on the planet. One of your core ideas is that success is not accidental, it's engineered. So can you walk us through how billionaires, elite athletes, and top entrepreneurs reverse engineer the end result and how you've been able to do the same?
- [05:23]
Scott Clary
Yeah, absolutely. So I think the biggest misconception about success is that it's random or it's purely talent based, and it's not. So when you study billionaires, elite athletes, top entrepreneurs, you realize that they don't just stumble into success. They work backwards from outcomes that they want. And just to define the process very simply, anything that you're trying to accomplish in your life, there is somebody who's accomplished it before you. And when you start to understand that and you start to realize that that person who's accomplished it is not so different or not so special, I think it starts to give you the authority and the, the agency to go accomplish these things and to reverse engineer how they got there. So, very simply, if you're trying to accomplish anything, build a business, invest, lose weight, it doesn't matter what the goal is, define the end goal. So what's very specific outcome do you want? Not a vague outcome, which I think a lot of people say, hey, I want to be, or I want to look like the, you know, the guy on the COVID of the, the bodybuilder magazine, or I want to have a hundred million dollar business. But very specific, what is the goal and the outcome that you want in the next one, three, six months? You deconstruct the key steps. So what skills, habits, or connections you need to get there? Find someone who's done it. So success leaves clues. You want to learn from their playbook. And then I would say the bonus would be to optimize for leverage. So once you define the goal, deconstruct the key steps, and then you're emulating somebody who's already done it before. Whether or not it's capital, technology, media, relationships, the best people in the world, they don't just grind indefinitely. They're figuring out how to scale their efforts. I've applied this to literally everything I've done in my life, and we can talk about exactly how I've done it with my own podcast. But podcasts, building a business, growing personal brand, and all the other sort of lifestyle benefits of how do I want to look better, how do I lose more weight? How do I want to emulate a relationship that works out well? Everything I've done has been a result of reverse engineering someone else's success.
- [07:29]
Austin Hankowitz
Do you have any advice for the person listening right now who might be saying to themselves, okay, I know where I want to go. I've got my 3, 6, 9, 12 month plan. I know exactly who I want to look like from maybe a losing weight or building muscle perspective, or I know the kind of business I want. But they don't know the tactical steps, the I have to go start the LLC or build the website. Like, how do they find those steps? Do they put it into chat GPT? How do they find people who have already accomplished the goals that they're trying to accomplish? How do they go from like, idea to actual, like, in the trenches, boots on the ground, getting the work done?
- [08:04]
Scott Clary
I would say there's a couple ideas around this. So first of all, a little bit of care and vetting and due diligence in the people that you listen to and take advice from is important. So, for example, like, I mean, I love the crossover between fitness and business because there's so many similarities in sport and business. But for example, if you're trying to lose weight and you're listening to a guy that's juiced out of his mind on steroids, that's probably not the best role model for you, right? And also similarly to business, if you are listening to somebody who's lying about their numbers and their success and they're another Instagram guru, that's also not the best person to listen to. So I think that trusting the person who you're taking advice from, looking for signals that they're associated with the right people, they're very transparent, they're candid, they're not hyperbolus in their, in their achievement. That's number one. Because if you are following the wrong person, your own results are going to suffer because they don't actually know what they're going to be teaching you. And even if you do figure out how they got there, it's not going to be the proper advice. So finding the right person is key. And then the second piece is in the beauty of the Internet, where everyone posts everything online. If you, for a business example in particular, look for a founder that is six months or a year ahead of you who has accomplished something that you're hoping to accomplish in the next year. Everybody is very candid on podcasts about, on their YouTube channel about how they accomplish and how they got that thing off the ground or how they achieved exactly what you want to achieve. So when I do this exercise, I'm listening to shows and I'm listening to those key bits of information that apply to where I'm at in my journey. Listening to somebody who just accomplished what I wanted to accomplish about a year ago. That's a very, I guess, analog way of doing it. But if I want to do this at scale, I could take transcripts from five to 10 early stage founders that had just raised their seed round, put it into chat GPT and ask it to find all the common threads and commonalities across all the interviews with these founders, and I'd have a pretty good roadmap on where I should go in the next few months. So very, very straightforward, in my opinion.
- [10:03]
Austin Hankowitz
So what I'm hearing is just be resourceful, right? Have the ability to connect the dots on your own in the back end. Use the technology, artificial intelligence, YouTube videos, podcast, interviews. I mean, there's so much content and free content, including the Rich Habits podcast that's out there for people to learn from. You just have to put in the work, be resourceful and connect the dots on your own.
- [10:26]
Scott Clary
Yeah.
- [10:26]
Robert Krok
You said success leaves clues. I've always loved this statement, this quote, whatever you want to call it, just because of the fact that back when I came up, let's call it pre Internet, if you weren't surrounded by successful people, you really struggled to get the information right in front of you to learn. So back then, everything took years, if not decades to really master. Whereas now, because of the Internet, because of podcasts like Scott's and the Rich Habits podcast, you can really achieve a lot more at scale very quickly if you do the research and you really do understand the information. Whereas back in my day, you couldn't do that. Everything took so long. And right now, I think is the greatest time to be alive, to be authentic and be successful and build wealth because of all the incredible tools like Scott mentioned. You look at all of these really, really successful founders that are always out there sharing the best nuggets we have from our own experiences. And if you can learn from that and deduce all of that information, it really sets you up to be much quicker to be able to scale and get an idea, you know, from napkin to success very quickly. Whereas it didn't work that way 15 or 20 years ago. So I wanted to make sure we unpack that for everyone that might be an older entrepreneur like myself that can understand how to gather this information and learn so much more quickly than we could in the past.
- [11:57]
Scott Clary
Robert I love that one thing that I think is very important that I've had to learn and I think it's important for people that are on this journey of reverse engineering success is if you are reverse engineering success and this will be a whole other conversation about mentors. But when you're learning from somebody, you're not always looking for the person that has achieved success 20, 30 years ago. They can be a resource for another reason. But if you are truly looking to reverse engineer success, I think people that have just achieved or are quite literally doing the same thing at the same level. So almost somebody as a peer, those are people that you can learn from for this particular strategy. People that are 30 years into their career and have had exits. They're useful for another reason. But make sure that you're not just looking at them. Because Robert, to your point, times change, strategies change.
- [12:43]
Robert Krok
You know, we hear it all the time. I've been doing real estate for 30 years. Well, that doesn't mean anything if you're not keeping up with modern times and you do not understand modern strategies and business practices. And that is one of the things that I think is very critical is have someone like you said that knows what is happening in the modern markets and knows how to give you the right information you need currently not from their success 25 years ago. So I love that.
- [13:08]
Austin Hankowitz
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- [13:45]
Robert Krok
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- [14:15]
Austin Hankowitz
All right, let's now jump back to the interview.
- [14:17]
Robert Krok
So let's talk about the next part of this and that is you've personally applied this framework to scale your podcast, grow your business and build your personal brand. So can you break down some of the day to day examp of how you accomplish these things, walk our listeners through it a little bit of some day to day things you do to help yourself but also teach others?
- [14:37]
Scott Clary
Sure. So in terms of reverse engineering success, what I've done for myself at a macro level while I'm building a podcast. So when I started I looked at who were the biggest names in the space. So I studied Tim Ferriss, Jordan Harbinger, Harbinger, excuse me, Stephen Bartlett, Chris Williamson. To understand their playbook, you look at what did they do differently. So long form interviews, high value guests, distribution Beyond Just Audio, for example, so YouTube newsletters, social media, and then I figure how can I apply that? So optimize guest outreach, create shareable content distribution from the episodes. So you optimize for what somebody else is doing best at a macro level with the, with the project you've taken on. And then for example, at a micro level in terms of reverse engineering success, one of my podcasts goes into, I don't even know, 40 or 50 different pieces of content. And for each type of content, meaning short form video, tweets, newsletters, I have an avatar or somebody that is at the peak of their game that I would look at their format, their style, how they architect a tweet, how they architect a short form reel with the proper hook. And every single mentor that they don't even know I exist, every single mentor is teaching me something different about a different content format. For I'll give you a very real example that I still do with diary of a CEO Stephen Bartlett tests about, I don't know, 10 different thumbnails for each single podcast that he puts up on YouTube. And you can check this out because Facebook, a cool little Facebook ad is you can see ads that any Facebook page in the world runs. Stephen Bartlett runs ads to about 10 different types of thumbnails before he chooses one to use for his YouTube because he figures out what's the best result when he runs paid traffic towards all these different thumbnails. So Stephen Barlett has a lot of budget, has a lot of resources, and I can see all the different iterations and tests he does and then I can see which one wins and which One he puts up on YouTube. And I can use that learning to inform my thumbnail strategy. So that's a very simple micro example of reverse engineering success for one piece of the hundred different things that I do for the podcast. But that's how I apply it on a macro level and on a micro more granular level.
- [16:50]
Robert Krok
Yeah, I love this. And it really does go back to the kind of. The theme of this success has its clues. You do not have to, you know, reinvent the wheel, everything you do in modern society, because it's all out there. All of the information is out there. And those, I believe that can deduce the information and learn from others and learn from what works, tend to scale the best and become the most successful, because what worked even two or three years ago no longer works. You know, the algorithms change how we reach people. Whether it's through DM strategies or email strategies have changed. All of it changes rapidly. And I love the fact that you mentioned frequently in your reverse engineering process that you have to stay on top of what is current and follow and learn from the people that are doing it well.
- [17:38]
Austin Hankowitz
And I think, to your point, Scott, around this, you know, luck doesn't just come, it's engineered, right? Success is sort of engineered with the end goal in mind. A lot of us might look and see a Mr. Beast or a Diary of a CEO podcast, or maybe, you know, Chris Williamson with his podcast and things of that nature, and say, wow, they're so lucky they get all these views, and they're so lucky they get all these, you know, the traffic and all these, you know, awesome things. When in actuality, to your point, this was engineered, right? They ran the ads already. They went through the process of figuring out, and they do it every single time what's going to produce a wonderful outcome for them. And they just copy and paste that process with every single video, every single interview, every single playbook. And this is, of course, you know, we're talking about podcast interviews, but this happens the exact same way when you think about merchandise, right? I'm sure the Nelk boys had a very specific playbook that they had every single time that they dropped a new T shirt, a hoodie, different types of merchandise for their brands that they would go. They'd have probably case studies, they'd figure out what people liked, what they didn't like, the pricing, everything around that. So I guess what I really want to hammer home to people listening right now about is that everything you see around you, every successful outcome that you see with these big Businesses or these influencers or these brands or these companies. A lot of intricate hard work, a lot of process, a lot of testing, a lot of reiterating went into creating that end outcome. And don't compare your first process and test with someone's 19th outcome, right? Don't compare where you are right now, figuring things out, testing things, making sure it works best for you with someone else's. Oh yeah, I've done that a hundred times and here's what works great for me, right? You can learn from those people, but don't compare yourself to them and make yourself feel bad that you're not getting the same outcomes, right? There might be light years ahead of you with the testing, the reiterating, the paid ads, everything they've already figured out.
- [19:37]
Scott Clary
Instead, there's a few ideas that you just discussed, but one in particular. Luck is never random, in my opinion, it's always engineered. I break down luck into almost four categories. So there's like blind luck, which is winning the lottery. Obviously that's not controllable, but I believe that there is luck that manifests from motion, luck that manifests from preparation, and luck that manifests from reputation. So luck from motion would be the more action you take, the more opportunities you get. Luck from preparation, when you have this deep expertise, first of all, things work out better. But also you recognize opportunities that you would have missed if you didn't have that expertise in preparation. And then luck from reputation is when you build a strong personal brand, things start to find you. Now, personally, you mentioned, you know, all these different names that have been in the game long enough, have been doing the things long enough. I think a lot of what they do and what I focus on as well is luck from motion, action and luck from reputation. So putting yourself into the right rooms, doing the things you have to do, repeatedly creating the content that attracts opportunities, always staying top of mind, making sure that if you're going to do something, you do it right. When you create luck through motion and through preparation, you'll be surprised at the opportunities that present themselves. And even in both of our lives, just through doing the thing and preparing for them properly, that's created more quote, unquote luck than I've ever experienced. Just ad hoc or blind luck.
- [21:07]
Robert Krok
Yeah, I agree totally. I really want to add one to this and then utilize this more with people. And that is the at bats, the repetition. You group it as motion and I totally agree with that. But I want to break it down a little further because for me, in my success of my life, I have definitely failed more than I've succeeded. And for me, it's all about kind of like when I look at having a partner or I look at hiring someone, I would rather have tenacity over talent every day of the week because I have dealt with, hired and worked with some of the smartest people on the planet over the last 25 years of my career. And so many of the educated smart ones give up as soon as they run into any hurdles whatsoever. I just think the tenacity part is so huge for me because I want someone that'll figure out how to run through the brick wall or climb over it rather than giving up. And I think that's a big problem in modern society with our youth in entrepreneurship.
- [22:04]
Scott Clary
Notice how I didn't say that there's luck through intelligence. In fact, that sometimes, yeah, having too much smarts and too much intelligence, actually it removes your ability to take action because you overthink everything. That's why some of the most successful people in the world are not the smartest. And there's some very smart professors that their, their IQ is, is through the roof and they're surviving on a pretty modest salary. Intelligence is not a precursor for success.
- [22:32]
Robert Krok
Yeah, when I was younger, I would literally analyze a situation for about four seconds and if I felt right in my gut, I would go for it. And that lasted until I got to be about 45 years old. And then I started to fall into the trap of overanalyzing instead of just going for it. And I think that can be a huge hindrance. And that is why so many of the smartest people on the planet, like you said, just never reach great financial success because analysis paralysis sets in because they're a little bit too smart for their own good.
- [23:04]
Austin Hankowitz
So something you also talk about, and I would argue that this definitely has a lot to do with luck. Right? Is this idea of the ten year rule and the compounding effect of showing up every single day over a long period of time. You can manufacture your own luck by being consistent. Can you talk a little bit more about the ten year rule?
- [23:26]
Scott Clary
So the ten year rule, I first started thinking about this rule when I was very young and I saw friends, parents that had businesses that were the least sexy businesses ever. Like, for example, somebody who manufactured paper for a living, that's his company. Or somebody who put glass into new homes, some sort of glass manufacturer, but they had been doing it for 15, 20, 25, 30 years. And just the absolute wealth that they've achieved over their lifetime with these very Unsexy businesses. And I started to realize that even in my own life, the things that I ended up being successful at, they weren't the things that I was the most strategic about day one. They were the things that I stayed in the game long enough to achieve. And again, this, this rule applies to business, this rule applies to relationships, this rule applies to fitness. I think the biggest reason why people fail, it isn't because of lack of talent, it's lack of patience. And they quit before compounding effects kick in. So this is a 10 year rule. So if you look at anybody at the top of their game, entrepreneurs, athletes, investors, they've been doing it for a decade or more. The problem is that social media only shows the highlight reel. So people see someone crushing it and they assume they got lucky. But the reality, this is where the saying, there's no such thing as overnight success. This is, this is it. So they were grinding for years when no one was watching. And then the mastery is about sustained effort over time. So the person who stays in the game the longest usually wins you. There's a whole bunch of sayings and cliches around this, but they're all true, right? If you stay in the game long enough, you, you do the thing for such an unreasonable amount of time that it's highly unlikely that you're not going to succeed at it. I think that when you adopt that mindset and you assume that the thing that you're trying to do is going to take longer than you expect it to, but it is possible. What you do is you architect your Life for that 10 year vision. Meaning if you're going to build a business, you structure the time and the energy and the effort and the capital that you put into that business so that you can play the long game. Meaning that you are not trying to speed run a business, you aren't quitting your job if you only have three months of savings in your bank account. And then if the after the three month mark, you, you run out of money, you don't know how to pay your rent, so you have to go back to your job. Everything you do, the energy you put into it, the hours you allocate, the money you put in, the idea of whether or not you quit your job 9 to 5 before you start to pursue your 5 to 9, all of that gets optimized when you think long term. And I think that's one of the most important ideas for business success. And I would even make the argument that if you listen to a lot of people speak about entrepreneurship, they say there's a 95% failure rate. I think that if you optimize for 10 plus years in the game with whatever it is you're building, I don't know if those numbers flip entirely, but I can tell you with significant certainty after interviewing hundreds and hundreds of entrepreneurs, as well as my own experience, that those numbers start to move into your favor where it's more likely that you'll succeed than fail.
- [26:33]
Robert Krok
Yeah, I agree totally. And it really gives me chills thinking back, because I remember when Silly Bands became the worldwide success that it was. Everyone came out of the woodwork. All the big news channels, all the big, you know, magazines, and I did the whole circuit. And their number one thing was constantly saying as if I came out of nowhere. They didn't look at the 10, 15 years of grinding and other projects that I did leading up to that big moment. They all painted this picture to the world that I crawled out from under a rock and got lucky with this project. And you're so spot on that it is just years and years of work and tenacity compounding on itself to when you finally get that breakthrough. And when you do get the breakthrough, you are then prepared for it, and it helps you be able to sustain it for a much longer period of time. So I love that conversation, and it's very, very accurate relative to my success over the years.
- [27:33]
Austin Hankowitz
So, Scott, I'm curious. As you know, I'm going into year five of entrepreneurship for myself, and I'd say over the last 18 to 24 months, I've began to see the compounding effects and my learnings really begin to help propel my business forward. But from your perspective, what actionable advice can you share? Right. For people who are still early in the process, it's very slow, it's grueling. They haven't yet seen any of the compounding effects of consistently doing the mundane things every single day. Do you have any advice for those people to help them, you know, stay motivated?
- [28:06]
Scott Clary
Sure. So I think that if we look at sort of the learning phase, which is probably the most difficult phase for people because there's not a lot of progress yet. And I would say after the learning phase and becomes growth phase and then eventually breakthrough phase and one more, and that's where, you know, that's around the 7 to 10, 11, 12 year mark, where you're really achieving success and this is where things all start working out. I would say one more idea that's important is you have to get through this learning phase. Obviously, if you don't, then the thing doesn't come to fruition. But when you apply enough time to the project that you've taken on, you start to achieve a compounding momentum because you start to build leverage in, in your network, in your skills and your abilities. So I think that to get through that learning phase, you have to optimize for different KPIs than, for example, pure revenue goals. I think that you have to optimize for measuring progress differently. So instead of just looking at revenue or follower count, I think that you should input leading metrics that will eventually lead to those lagging metrics. It could be just putting the reps in and just real quick breakdown for.
- [29:14]
Austin Hankowitz
Our listeners the difference between a leading metric and a lagging metric.
- [29:17]
Scott Clary
So for example, a leading metric would be I'm calling 20 people per day to try and talk to them about my product or service. A lagging metric would be revenue. So a leading metric are the activities that you have to do to get to the lagging metric. If you are just tracking revenue and you're not getting any, that means you're not putting the actions in that will eventually lead to revenue. So you have to understand what those leading metrics are. A leading metric in weight loss would be going to the gym. Them leading metric in a healthy relationship would be going on date night once a week. A leading metric in business is usually calling people, sending out emails because that's going to lead to conversations, that's going to close more business. So I would say focus on again the actions and the leading metrics and then optimize for learning. So just doing the thing without understanding if it's working or not, or incorporating any feedback from that thing into future iterations or activities is also not helpful. So optimize for learning. If you're improving every single month, if you are getting feedback in a business context from your customers and you're taking that feedback and you're using it to improve how you pitch people your marketing, messaging, all of all the things that eventually will lead to revenue, then you're winning as well. One more idea about sort of pushing through the friction when you first start something would be to track your wins. I think it's very important from a psychological perspective. So every single day we win, we could get a customer to jump on a demo, we could go to the gym, we could close a deal, but we forget about our wins very quickly and we focus on the negatives. As entrepreneurs and humans in general, we always focus on the negatives. That's the thing that we remember, we forget all the times that we've actually done good work and succeeded. So in my opinion, one of the easiest ways to push through this really tumultuous, difficult beginning of any project or business is when you win. Keep track of it, even in, like. In, like, notes on your. On your iPhone, something so simple. But write down, hey, listen, we got five calls booked this week. One of them wants a demo and one of them wants a proposal. Those are wins. But if you don't write those down and if you don't look at them every month or two months, very quickly, just skim through them. It's very easy to get demotivated because you're focusing on all the. All the other stuff that's not going right. So it sounds so rudimentary, but I think that mindset is. Is a lot of the battle. So anything that can keep you optimistic about what you're doing and keep you in the game and keep you cognizant of all the success you've had, that will also help you when you're just getting started.
- [31:58]
Austin Hankowitz
And to that point as well, people like to track the revenue. We want to track the profits, right? We're tracking the lagging results, the lagging metrics, but we're not tracking the leading metrics, right? We're not saying, yeah, I got five calls booked, or, yes, I'm down five pounds, or let's go, I've got my first five Instagram followers or my first five podcast listens, right? We're not tracking those, like, leading metrics as thoroughly as we're tracking the lagging metrics. So to your point, I think it's really, really important for everyone to keep track of both. You mentioned the Notes app I've got in my phone, that exact thing. It's my little wins of 20, 25, and I've got, like, nine things in there so far. We're halfway through February. It's just, like, little things I'm proud of for this year, so I can reflect upon it every week and month and say, yeah, I did that. That's awesome. Like, I'm working and I'm moving in the right direction.
- [32:48]
Robert Krok
Yeah. When we had the Ohio office during the height of all the craze around Silly Bands, we actually had a makeshift scoreboard. And so kind of like you see in real estate offices where they ring a bell when they sell a home or a property, we would put up our wins and put up our losses. And I did it to help myself and my management team Keep perspective on the day and the week, because like you said, Scott, so many people, their brain is immersed in the negative thoughts and the negative aspects of their day or their month or their week or whatever it is, and they forget about all the wins that are happening concurrently. And I think it's so important to do this. And I actually joked at one point and was going to have an actual scoreboard, like a college stadium scoreboard, built where people could slap it and the light would go and all that stuff. But I think it's a tremendous activity, even if it's a note on your phone like Austin does, to keep perspective on where you're at. Because it's so hard for so many people from a mindset perspective. And that's why when they get ready to go to sleep, they can't sleep because their brain is constantly whirling with negative thoughts and unfinished project thoughts. And you have to be able to get over that by keeping it in perspective.
- [34:02]
Scott Clary
Fully agree. I think it's one of the most important things, especially when you're just starting out.
- [34:05]
Robert Krok
Yep, I agree. So a lot of people think success is a solo journey, but you've said on your podcast a zillion times that nobody is truly self made. And I want to unpack that for our listeners because I think it is so, so important. So what helped you transform from being on this solo journey and running numerous businesses by building a team or having a significant other? What was the big turning point for you to really unpack this and reverse engineer this solo journey aspect of success?
- [34:39]
Scott Clary
First of all, I only pick on the idea of no one is self made because I see people say it and it's not true and it signals the wrong thing. It's this hustle culture mantra of I can figure it out, I never have to sleep, I'll grind through. And I'm a big believer. It's. It's so stupid. And I'm such a big believer. We spoke about reverse engineering success. Well, if I'm going to reverse engineer success, what. What is the prerequisite for reverse engineering success? I have to study somebody who's done it before, and I don't have to reinvent the wheel. That's the goal. The goal is not to reinvent everything that's already been figured out. I don't need to live the hardest life possible. I want people on my team who have figured it out, who have done it before, even if they don't know I exist. If I'm reverse engineering someone else's success, I'm not self made. I'm learning from somebody. So no one is self made. It's a complete myth. I don't care who you are. There's never been a single example of anybody self made in the history of the world. Why? Because every single successful person has had mentors, investors, co founders, people who open the door for them in people who made introductions and take it out of the business world. How important a partner is somebody who they've been dating. And there was some stressful thing that happened at work and they went back home and that person said like listen, life's going to be okay. And they brought them out of their own head so that they weren't spiraling. Anyways. The point is it doesn't matter who you are, you're not self made. So anybody who's built anything successful has mentors. And there's different types of mentors. There's people that are a year ahead, five years ahead, 30 years ahead, but you're learning from people that are ahead of you. And this is, this happened very early on in my career. I just realized like when I was still working for a company if I wanted to at the time I was working for a telecom company and my goal, my like dream was like I want to be a manager, then director, then VP and like climb the corporate ladder. And I was just talking to the people that were my direct manager and I was asking, hey, to get your job, what do I have to do? Teach me. Very simple, like very straightforward. So those would be mentors, peers, people that are sort of high achieving at the same level as me, that are going to hold me accountable and I'm going to hold them accountable. And also a non disgust sort of underrated version of mentorship that I love is teaching. Why? Because when you teach, not only do you help people, which is I really believe what most people are put on this earth to do, I think that there's a lot of fulfillment that comes from helping somebody else who's earlier on in their life and their career, their business. But also you start to recognize your own knowledge gaps because the second you start teaching you realize what you know and you don't know. And that is a form of education and self mentorship as well. So the point is there's no such thing as self made, find mentors, peers and teach. And I think that that is the path to building things efficiently and not having to reinvent the wheel and doing things with the least amount of friction possible.
- [37:32]
Austin Hankowitz
I largely agree with that. I mean, you know, sometimes I Want to like think, yeah, I'm a self made millionaire, look at me go. But to your point, I have a co founder. I also have the Internet. I also have all the cool people like Robert that have helped me along the way. Right. It's like all these things around me, what's that saying it takes a village to raise a child. Right. It's kind of like that when it comes to being successful. And that's in whatever endeavor you want to go, if that's having a better relationship with your spouse or being, you know, better in your fitness regimen or being a successful entrepreneur, there's all these resources and tools and people around you that want to help you and are willing and happy to help you achieve these goals. So yeah, I largely agree with that. It's really hard to for anyone to claim that they're self made, but. But on the flip side of that too, if you think about this idea from a victim mentality, oh, I won't be successful because I don't have it in me to be self made or I can't be a self made millionaire. That's crazy talk. I've never had anyone be self made in their lives that are around me. I don't have that support system. Well, guess what, there's no such thing as it. Therefore you should go try it anyway. It kind of brings down that barrier of intimidation that will now allow people to say, well, if they're not self made and they're not self made, then maybe I don't have to be either. And I can go, you know, lean into my support system, my networks and everyone around me to help me achieve these awesome new goals that I want to achieve in life.
- [38:53]
Robert Krok
And I'll tell you one of the greatest things that was ever spoken to me by a mentor early on, and he wasn't even financially successful at the time. He said to me, humility leads to speed. Humility leads to speed. And I never, ever forgot it. It gives me chills to say it. It because we live in a society now where people can literally pay for speed. 30 years ago I couldn't. You had to learn the hard way and the slow way. Now you can pay for speed. And if you find the right mentor, the right coach, the right program, the right facilities of where to find your information, like following Scott's podcast or the Rich Habits podcast, all of this leads to speed if you're willing to learn. And that's where the humility comes in. So many entrepreneurs have big egos and like you said, Scott, they have this big mantra of I gotta grind all day and get up at 4am and read a book on three times speed and all this stuff that's all bull crap. Use the information in front of you for speed and you will grow so much faster and cut through all the stuff. Because there's no reason in modern society and modern business to deal with pain. You're still gonna have your bumps and bruises, but you can certainly learn from people that have already gone through it and avoid all of the pitfalls, or at least as many as you can.
- [40:13]
Austin Hankowitz
Now, before we ask Scott our final question, let's take a moment to hear from this episode sponsor, Masterworks. Robert we're under a new administration and it seems like a lot of people involved are billionaires.
- [40:23]
Robert Krok
Yeah, it's crazy. When you look at the inauguration stage, they had Bezos, Zuckerberg, Musk, the CEOs of Google and so many major investment companies. Heads were on stage as well. So we saw some of the greatest wealth that has ever entered in a five foot radius all on one stage. It was pretty crazy and I think it's an indication of things to come.
- [40:45]
Austin Hankowitz
Well, one thing you don't see is the wealth hack that a lot of these people like Bezos and other the CEOs share together with their access and funds, they're actually investing hundreds of millions of their own hard earned dollars into blue chip artwork. In an ultra rare sale result for the sector, Bezos spent $180 million on a single paint. And here's something from an independent 2024 bank of America survey of wealthy individuals that I thought was pretty incredible in just two years. So by 2026, ultra high net worth individuals could be devoting approximately 11% of their entire portfolios to fine art and collectibles.
- [41:26]
Robert Krok
And the data suggests this is a generational investing change. That Same report says 56% of collectors now consider their art as a part of their current or future wealth management strategies, including 98% of younger collectors like Millennials and Gen Z.
- [41:45]
Austin Hankowitz
It's important to keep an eye on multiple asset classes because we always preach diversification and we have our own money in artwork. We've both been using Masterworks art investing platform to diversify for about five years now.
- [41:57]
Robert Krok
That's right. Both Austin and I invest with Masterworks, the sponsor of today's episode and we've even interviewed their founder and CEO Scott Lynn show. Since then they've crossed over a billion dollars in capital raised featuring artworks that typically range from half a million to $20 million each. Although with Masterworks you don't need to spend millions or even be an art expert.
- [42:20]
Austin Hankowitz
Masterworks has offered investments in over 450 works and exited 23, with investors realizing annualized net returns including 17.6, 17.8 and 21.5% on those works held longer than just one year. Masterworks also just crossed 1 million users and you can join them at Masterworks Art Forward Slash Rich Habits, which is also in the show notes below.
- [42:45]
Robert Krok
As with any investment, past performance is not indicative of future returns. Investing involves risk. Sale returns are not inclusive of unsold works. Important Regulation A disclosures can be found at masterworks.comfront/cd all right, let's now jump.
- [43:02]
Austin Hankowitz
Back to the interview. So rounding off the conversation now with this idea of network effects. You've used the phrase relationship arbitrage a lot on your show. What does it mean and how has relationship arbitrage helped you grow personally?
- [43:16]
Scott Clary
When you discuss the concept of relationship arbitrage, it's important to understand that I'm going to give three ideas, but the first idea is the most important. So when you are building relationship with somebody, you're going to hear the next two ideas. But first, it always starts with giving value. So you always have to give value up front. You are not asking for favors up front with anybody. It doesn't matter who they are, what they can in theory give you. So the best time to build a relationship is before you need it. That's always been my mantra. I have people that, as we both do because of our career, the business that we're in, interviewing incredible people, people that have access to the the most interesting, most influential, most successful people in the world. I have no need for them, but I'm friends with them. And in some, at some point in my life, maybe we'll do a deal together, we'll build a business together. There'll be something that we can do together. But the point is, for years you're giving nothing but value. It doesn't mean like you're teaching them everyday. Value can just be being a good friend with no ask. Value can just be when they have a problem, you're their business or otherwise to help them through it. I think that people in the networking relationship lens of business, they always look for how can I extract value from my network as quickly and efficiently as possible. I'm sure there'll be people that I know that I won't do business with for another five, 10, 15 years. But there's people that I actually trust and care about and I'VE given enough value and it's been reciprocated it for some reason. We always focus on the quickest path to the end result. And I, I see this a lot because I get. People hit me up that I haven't spoken to in years. And I know the second they do, they want something from me that is not relationship arbitrage. That is pure extraction. And it never works. Pure extraction of value. So once you give value and you build true relationships, then the next two ideas are very important. So first of all, always position yourself as a connector. So people value introductions. And if you are the one making them, you do gain leverage there as well as leverage other people's credibility. So, for example, if you have a friend who you've given value to, who you've built a relationship with over time, if they have achieved something successful, get them, introduce you to their network because their word carries weight and their accomplishments carry weight. It's very simple. And it all starts with giving value. But once you have that value, being the connector and leveraging other people's credibility would be the most useful way to tap into your network.
- [45:55]
Austin Hankowitz
I 100% believe in this strategy, and I just looked it up online. Gary V. Is the guy who, at least I know that pioneered the give, give, give, ask strategy that you're, you're sort of referring to here with a relationship arbitrage. February 3, 2014 is when he posted his video explaining this. Right. So this is 11 years ago. He's about give, give, give, then you ask and to this idea. I mean, it's so powerful because I think there's like a few really strong muscles that every successful person needs to have flexed in their brain, one of which is this relationship muscle. You need to have a really great process of providing value to people in your network, as well as keeping track of what those people are doing and how you can help them further in the future. Be a sounding board, but. But more specifically as well, is thinking about like, okay, how can I now also to your point, Scott, you're surrounded by these awesome people. How can I lean on them without also asking too much? Because I think that's something I fall victim to is like, I feel like sometimes I ask too much of these people if I really do want a favor, if I want to do something, I'm like, oh, I don't really know if I should even ask them, because that's weird. How do you balance that? How do you balance when you're thinking of this relationship arbitrage, the idea between, okay, I've given a lot of value. I know that we have got a great friendship and I'm able to lean on this person for some advice or some business help or some fitness help, whatever it is that I might need. But how do you balance asking too much versus asking too little?
- [47:27]
Scott Clary
That's a really good question from personal experience, and this is less of a concrete answer. I know you do want a concrete answer, but I'll tell you how I feel about this. I over index on giving value. And what I mean by that is the people that I ask for help, I've given so much that I would be offended if they didn't help me on the one little thing that I asked them for. I, I've always felt, and I feel like if it becomes more than just an introduction or a question or a coffee, after giving a significant amount of, of like value towards that person, if it becomes more than that, then I realize that it starts to border on a business relationship. And I'll make sure that they're compensated or they're, they're taken care of if I want their help in an ongoing capacity. Because I think that the, the one off will point you in the right direction or affirm if you have a problem. That one off conversation that you should be fine asking for will affirm your thoughts or your ideas around that already. Usually we already kind of know the direction we want to go in and we're just looking for somebody who's experienced it before to point us in the right direction or affirm what our assumptions are. I think that after that, if it becomes an ongoing, hey, I need help permanently, then realize that everybody should win in that transaction somehow. And I think that that's a very healthy way to approach what you're alluding to, which is like, how many times should I ask for help before I start paying the guy or cutting them in on the deal? I would say that more than one or two times I would bring that person into the deal if I feel like they're so valuable, they can give me ongoing advice because I keep in mind that if you zoom out, this person is in theory, my friend. So I would want them to win anyways, right? If I win and they're helping me win, I want them to take a piece of that as well. Like I'm very much abundant mindset. I don't need to. If they're helping me build a business and they give me ongoing advice, you know what that's called? Like an advisor. And then you can, then you can give Them some you can give them 1% that vests over 12 months, 24 months, and then you set out KPIs for them as well. And usually the type of people that are going to give you advice would actually be on board for that because they also trust that you're going to build something incredible and they want to see you succeed and they want to be part of that journey. So I think that that would be how I apply that sort of like the litmus test that I apply in my own life.
- [49:51]
Robert Krok
You know, I do one on one calls and I do mentorship for people. And it does become difficult and sometimes too transactional when people will pay for a call, but then they want to follow up 15 times after that. And then it becomes difficult because at some point you do have to draw the line between where is this going? And where do I charge? And I think it's a fine line because you always want to be helping people and you always want to be providing value, but you also have to make sure that you take care of yourself because otherwise you will continually be distracted helping others and not focus on yourself. So I always want to bring value in ways that are sometimes small and sometimes large. But I always ask those people that I lean on, what can I do for you? And I think that's so important because we do live in a society where so many things, especially in our circles, are transactional. And to me, I just don't like that.
- [50:45]
Scott Clary
I think that, you know, when you engage with somebody, if they are transactional or if they truly want to add value to your life and if somebody is just, you know the feeling, I mean, I know that it's not a concrete answer, but you know the feeling when somebody is just trying to like leech and like, you know, just piggyback off everything you've ever done. And you know, they don't care about you for any other reason other than what you can provide them, you know it, you really do know it. And those are the people that you avoid and stay away from.
- [51:14]
Robert Krok
You really do have to, because, you know, I'm at a point in my career and I know both of you are as well. I am so good in life. I can choose to only do projects, invest with and work with people that I love and people that I want to hang out with. I don't have to do anything else. And I think it's an important lesson to learn, especially for the younger audience watching today, is that you don't have to chase a dollar when you build the network. And you build a network of people that aren't being transactional with you and want to see you win and you want to see them win, then life just becomes so, so incredible because then you can choose what you want to do each and every day and build the life. Like you say, reverse engineer the life that you're looking for and exactly what you envision for yourself. And that is where I'm at in my life today, and I love it.
- [52:07]
Austin Hankowitz
Scott, thank you so much for joining us. On this week's episode of the Rich Habits podcast, I learned so much as it relates to engineering, success, compounding effects, network arbitrage, and everything in between. Is there anything else that you want to share with our viewers? Maybe about your own show?
- [52:22]
Scott Clary
I just appreciate the opportunity. Obviously, kindred spirits. I love your show. I love what you're doing. If people enjoy podcasts, obviously you have to listen to Rich Habits. You can also listen to mine, though. It's called Success Story and you can find it on any platform. You listen to podcasts, all the socials, Scott Declary. And if you want a website, success storypodcast.com is where you go for everything else.
- [52:45]
Robert Krok
Scott, thank you so much. And I will be coming to Miami very soon to join you. This was amazing. I love having guests like you on and we're so excited. So thanks for stopping by.
- [52:56]
Scott Clary
No, thank you, guys. I appreciate it.