From: myfirstmillionpod
Financial success is often perceived through the lens of big wins and glamorous industries, but a deeper look reveals that humility, a willingness to engage with the “unsexy,” and a balanced perspective are crucial elements for sustained success and well-being [00:06:22]. This perspective emphasizes that true freedom extends beyond mere financial accumulation [00:26:07].
Humility in Investment Strategy
The speaker highlights the importance of humility by readily admitting investment failures, such as buying Netflix at 10 before it soared to $1,100 [00:00:57]. This contrasts with individuals who constantly broadcast their wins on social media [00:01:07].
He emphasizes that luck often plays a significant role in successful ventures, stating, “It’s better to be lucky than good” [00:02:38], even when acknowledging the skill involved in his profitable distressed investments [00:02:52].
Distressed Investing: The “Unsexy” Path
Having invested across the entire capital structure—from founding companies (ultimate seed) to seed-stage, venture, growth, mezzanine, public company (growth and mature stocks), and distressed investing—the speaker unequivocally states that distressed assets offer the best returns [00:06:07].
He posits a “very simple notion” about investing: “the sexier an investment, the lower the returns” [00:06:24]. While venture capital is “sexy” and associated with glamour, distressed investing “smells like piss” and “reeks of death,” deterring most investors [00:06:28]. This reluctance to engage with perceived “ugly” or “complicated” opportunities creates a higher return potential for those willing to do the thorough due diligence [00:06:40].
Examples of successful “unsexy” investments include:
- FTX Bankruptcy Claims: By reading bankruptcy filings, the speaker identified an undervalued asset (Anthropic stake) and purchased claims against bankrupt FTX at 22 cents on the dollar, expecting 50 cents, but ultimately yielding 160 cents on the dollar due to market conditions [00:01:14]. This required detailed “real work,” including verifying claims and legal transfers [00:04:04].
- Enjoy (Vaping Company): Despite initial personal guilt and a low point where the company’s image was severely tarnished due to the “popcorn lung” scare and youth vaping crisis [00:11:27], the company, acquired out of bankruptcy for 2.2 billion, resulting in a 30x return [00:14:42].
- Dex Media (Yellow Pages): Investing in Yellow Pages, an undeniably “unsexy” declining business [00:18:11], allowed for returns through cost-cutting, consolidation, and a successful transition to a CRM software company, yielding a 4-5x return [00:17:41].
Conversely, more “sexy” investments, like a healthcare texting company (98.6 six), can result in significant losses, with one instance seeing $5 million go to zero in 18 months [00:15:51].
The Pitfalls of Success and Ego
A core psychological lesson from his investments is that “you’re never more prone to a really stupid mistake than after a big win because you start believing your own press” [00:35:38]. He advises to “be humble, really be grateful, realize a lot of it is the fact that you were born at the right place in the right time” [00:35:44].
His own experience with an “Oddity” investment demonstrates this, where he lost $2 million by selling covered calls without doing due diligence on upcoming earnings, a mistake driven by boredom and a desire to “generate some income” [00:07:42].
The Pursuit of Freedom Beyond Money
While acknowledging that money provides freedom from economic anxiety and offers options [00:25:59], the speaker asserts that “true freedom is releasing yourself from the conventions and expectations of a broader society” [00:26:07]. He describes a personal struggle with self-censorship, aiming to catalyze productive conversations but still worrying about being shamed or “not being liked by strangers” [00:26:40]. This highlights the interplay between money, success, and personal values, where external validation can still be a constraint.
He notes that people who claim “I don’t care what other people think” are often “obsessed with what other people think,” similar to those who claim “I don’t think about money” but are actually obsessed with it [00:28:18].
Dealing with Public Perception and Criticism
Despite the desire for freedom from external judgment, negative online comments, such as being called “professor genocide” for expressing support for Israel, can still “rattle” him [00:29:20]. While he has improved at not engaging and recognizing many vile comments come from bots, it still “affects me less than it used to, but it still does affect me” [00:29:42]. He aims to balance this with appreciating constructive criticism and positive feedback [00:30:13].
Advice on Perspective and Gratitude
One of the most important pieces of advice offered is that “nothing’s ever as good or as bad as it seems” [00:34:30]. This Buddhist-inspired perspective highlights that:
- Much of one’s success and failure is not entirely their fault [00:34:37].
- On one’s deathbed, the regret will be “how upset you were” about setbacks, not the events themselves [00:35:00].
- When good things happen, recognize that “a lot of that isn’t your fault” [00:35:33].
He emphasizes the importance of health, relationships, and enjoying the present, as time accelerates with age [00:24:21]. The saying, “the person with good health has thousands of problems. The person with bad health has one problem,” profoundly shifted his perspective in his 50s after friends faced sudden illnesses and death [00:24:25]. This encourages a focus on what truly matters, fostering gratitude and a willingness to forgive oneself when things go wrong [00:35:54].
This mindset encourages continuous learning and growth, even when facing adversity, by focusing on inherent value rather than fleeting outcomes [00:36:01].
Current Investment Philosophy and Future Outlook
While acknowledging his privileged access to deals due to his expertise and network [00:20:16], he advises most young people without extraordinary niche knowledge or deal flow to stick to diversified global index funds [00:21:01]. He believes the U.S. market, particularly big tech, is overvalued and anticipates a “massive multiple contraction” for the next 10-15 years [00:21:20]. Consequently, he is shifting significant capital to European and Asian markets, and favors residential real estate as a long-term investment due to leverage, depreciation, and its “unnatural lift” from societal NIMBYism [00:22:15].
For his personal investment strategy, he prioritizes “not getting poor” over getting “rich” and stress-tests his portfolio against market crashes [00:45:17]. His largest personal investment is in high-end residential real estate in global “super cities” (Dubai, London, Palm Beach, Aspen, New York), anticipating that the transnational oligarchs (0.01% with over $50 million in wealth) will increasingly concentrate their wealth in these constrained locations [00:50:55]. This reflects a pragmatic approach to wealth preservation amidst growing income inequality [00:49:29].
This strategic diversification and focus on non-correlated assets align with Ray Dalio’s advice to find 12 positive, uncorrelated income streams to achieve “above market risk-adjusted return” [00:43:05]. However, the speaker notes that widespread adoption of diversification has made true non-correlation more difficult [00:43:37].
Reflecting on Life’s “Game”
One conversation explores balancing personal wealth aspirations with business growth and purpose. The guest discusses reaching a point where future decisions aren’t solely “dictated by money” [00:53:34]. He recognizes two paths for successful individuals: continuing to play the “money game” even after earning enough, or choosing a “new game” to play, starting “at the bottom of the mountain” philosophically [00:54:10]. This involves a profound self-awareness of what true fulfillment means beyond financial metrics. This sentiment connects to the role of hard work and sacrifice, shifting from pure accumulation to more meaningful endeavors.
The speaker concludes with advice to young parents to “take so many pictures” as kids grow quickly, highlighting the scarcity and value of these moments [00:55:17]. He also mentions a technique, inspired by Tony Robbins, of emotionally “flooding” oneself with happy memories by reviewing camera rolls on a screen, to foster connection and happiness [00:59:02].