Rich People's Tax Credit Scheme, Harvard's Healthy Finances & My9

you put down let's say hundred fifty k you you put in a hundred fifty k cash and you get a million dollar deduction oh my god so let's say in california a million dollar deduction is saving you four hundred thousand dollars taxes alright we're live what's going on can i tell you about a cool rich people tax credit scheme i discovered yep so actually a mutual friend of ours is the longer to put me onto to this but i won't say his nate because you know never talk about another man's taxes so so when we sold the milk road i was like oh man how do you you know reduce taxes in a situation like this is there anything i could do and i think we sold in october so was like you know you get this windfall of profits in in october is there anything between october and december i can do to lower taxes and i looked at in what are different options like what are the legal clear by the book options that i could do and when most people try to generate large you know deductions or write offs they typically think of what a car car not even bigger car because let's say you need millions of dollars of of of depreciation real still go for real estate so so real estate is typically the one but you've always lazy and your boy doesn't like to go and own things and have to like you know manage properties or anything like that you can always put your money with somebody else and try to try to do it that way but this was pretty good still got research all of them and and yeah it's still yeah a little bit of a pain exactly and you have to buy size so like how do you get you know let's say you buy a tip of a a property you know you're only gonna be able to write off like a a portion of it right so you'll get the the sort of the depreciation that you can get the bonus or accelerated depreciation if you maybe do saying or something you'll get twenty or thirty percent of the value of the property to write off well let's say you needed i don't know what pick a number right let's say you needed a ten million dollars let's say you're you had ten million of taxable income you would need to buy like a thirty million dollar property or so just to be even close to deduct like enough to make it significant that's a big deal especially for somebody's who's not in real estate so i was like okay that don't wanna do that and our friend put it me onto to this thing he's like you know there's this other form of depreciation in the form of financing movies have you heard about this no but tell me about this okay so okay so here's by the way i it sounds like a horrible idea no it's a it's a great idea i think i think it's a great idea so basically there's this thing called film production tax credits and what ends up happening is the following movie needs to get made let's just use some numbers and by the way i'm not an expert at this but i i get the broad strokes so forgive me if i get some of the ratios a percentage of instead of bro science this is bro tax yeah exactly right numbers no numbers of words aren't my thing body language guy so so let's just pretend you have a a phone who wants to make a movie for a million dollars so in order to make a film for million dollars and need to raise that money from somewhere and what happened was there was always these there was always these kinda like depreciation incentives but when obama came came into to power he added attitude it them so what obama did once he changed the rules i believe during his time to say you can write off a hundred percent of a film's cost before they even make the film before the money spent on that film just on the budget so just states say it's a million dollar movie if you buy that movie you can write off a million dollars right then and there no money like you don't have to wait the whole thing to be shot before you had to wait for certain days of production in order order to write off those costs now you could just write off from day one as an incentive to get people to fund more movies and fund more art and culture and and this sort of think movies aren't really the best money makers you needed a a little bit of an additional incentive if we want wealthy people to to do this so that what happens you put down let's say hundred fifty k you you put a hundred fifty k cash and you get a million dollar deduction oh my that so let's say in california a million dollar deduction is saving you four hundred thousand dollars of taxes so already you see the spread i put a hundred fifty k in i save four hundred k in my taxes now it gets better so where does the best of the money come from so you need the other other eight hundred fifty k in order to finance the movie you could go to you know a bank get get a loan for that so you you can go get loans on it you can also get basically rebates in the form of taxes so i don't if you know this but like most movies are not made in hollywood do you know where they're made i think as of recently georgia is that right yeah georgia alabama basically a bunch of states coming and they say hey if you got a million dollar movie we'll give you thirty percent of the films we'll give you thirty up to thirty percent in tax credits and so you get you basically you don't need a million dollars to to fill fund the movie you're gonna get get three hundred thousand dollars from the state in order to do it why does the state want it right because state wants jobs state wants if something's filmed there and it looks cool that's know tourism maybe if you get let's say you filmed in new york and you york looks really glamorous now you get you know you know additional tourism appeal you get jobs and you get culture art in your community and you get business coming there where otherwise who's going to georgia to to do something cool like who's going to alabama yeah no no no shots firing at georgia alabama but but the kanye but it's human oh so so basically that's so that now you get funding on that side which by the way you can just go sell those credits you can just sell those credits for ninety cents all the dollar if you wanted or you can use them to fund fund the movie and so this collection of things is part of a a a a system that wealthy people use in order to get write off so what happens is there are companies that throughout the year are buying up rights to movies or scoping out rights to movies like and they're looking at it not in terms of like how's the plot how's the script they're like what's the budget i need a one million budget i a five i need a fifteen because i'm gonna i need options available for my clients at the end of the year so they basically hold options all these things till the very end of the year and then they go to their clients are they're like how much of a write off do you need oh you need three million dollars cool here's a ten million dollar project we're gonna buy right we're gonna put in this much cash we're gonna get that much of a write off we're gonna finance the rest and you could do this as a group of investors not just one person you're forgetting the the the the second part and the more important part which is the movie needs to be made and make a profit not necessarily the movie needs to be made not necessarily needs to make a profit so what happens the movie starts to get made they you wants once to get the funding it's gonna start getting made and then they'll do things to help but what you have to is pay off the loan so where am gonna let's say in this example of a million dollars where we're gonna pay off this eight hundred fifty k from well they'll get the tax credits for part of it they'll go sell the international rights before the movie's is made or they'll go sell an option to netflix and then they'll get some revenue in that way while the movie's is being made and they're using that to pay down this loan so that you get you know five years later when the movie is finally made hopefully the movie paid off if it's not fully paid off it's getting close and then you basically have the revenue from the movie once it happens and so it doesn't even need to be this awesome you know twenty percent annual return because you got your tax benefits five years ago and so you just need to make sure it's gonna pay off the loan amount dude this sounds like such a racket where is there like a it's hollywood baby it's hollywood just get to say it that way to being that it's less of iraq you know what i mean just gonna say it's world's best cup of coffee doesn't mean it is in ain't where where like what do you go to a website do you you you got a guy you got a movie guy i got a guy know that i haven't done it by way so i should say i didn't do this last year because i learned about it like four days before the end of the year and then i was like what the hell is this i was like i need to make a movie baby i was like oh my god i let's say his name was just his charlie i i i just got off the moment charlie he's got a ten million dollar movie before me alright hey why are the phones you know like it was a little too too rushed but the board looked into it it's a it is a legitimate thing it's completely by the book you can go read you know section twenty six of the tax code and you could do the bonus depreciation of a hundred percent of the film's cost in in that time i think the the key part is there's a little there's something nuance like just like a real estate you gotta be an active investor so you have to be an active film investor in order to offset it against your active income so you have to like go to film festivals and do do like thirty six hours of film study online in order to be qualified as active or whatever the rules are i'm i'm making up those exact numbers but there obviously is a lot of nuance to these things but just broad strokes pretty interesting that average rich people can't on get huge tax write offs financing movies so i'm i'm just looking at this so you said obama did this or he like accelerated it he he increased it so that you can depreciate a hundred percent so coincidentally the obama now have a wonderful production company it they do oklahoma georgia yeah so no they do it's it's called higher ground media and they they've made a handful of movies that i've i've noticed or that i've seen but they so i've got to hard higher ground media dot com they also have cop podcasts so they are the so they have an audible deal michelle obama it used to be with spotify now it's with amazon audible they have the some of us i don't know what that is the big hit show whatever they have all these oh they have renegade aids which is like this baroque one so does this work for podcast podcasts is the question what's that smell is that opportunity self dealing that's a little baroque special do they mama does this work for by the way he did it right man have you heard you haven't he you haven't heard a pete from brock he he he just he did this thing he did an alright job he didn't whether you like him at eleven he either did great or he did fine so he did alright job and then he bounced you know what i'm saying he did balance he's out it's so he's hanging out with oprah and david ge on man or on their yacht so he he did it right but does this count for podcast podcasts do we have a well i don't know my camera's is on you got a video over there that's a great point people would call i've seen in youtube comments people consider us you know a film a premium production premium bright i think they didn't change the the llc to premium productions and you're in texas texas on far from alabama and we can do a little road trip yeah that's interesting i hopefully this works for podcast podcasts but that's an interesting fine i thought it was stupid it's actually more interesting than i thought how was your pod with her meat it was awesome you wanted do a recap yeah i haven't listened to it so what's what was the best parts he made fun of you a little bit he took a he took a a jazz before not at you well because there was a podcast where i asked you if you could get eight percent consistently but you can't invest in anything other than your own private business would you do it and he was like sean was crazy i was yelling at though i was like yelling at the screen furious that he wouldn't accept that but he didn't actually give you our hard time that was it he's very he's very principled which i actually like i think you are the opposite not i think you are one extreme and i actually think i'm closer to you a little bit than i am to him where he's just like this is what i want i'm going to do it and i'm gonna do nothing else like he's laser focused on a couple things which i admire and then he what what is he focused on he was like i can make more money with my business i can do i could i could have done a podcast years ago but i just wanted to wait until i felt it was the perfect right time so he just calculated well you know you and i like to just throw a little things out there and see what catches he's not so much that he also did a really good job have you ever heard him talk about the rich life yeah i've heard him explain it's kinda like he made a list of like what's the rich life to him and then sort of use that as his financial blueprint exactly and he's got like handful of things like he's like i just wanted to have the best assistant because i want them to book things perfectly so he's like when i fly i try to fly on a very specific type of airline with a very specific seat so i want a certain plane when i fly i want a certain type of food ready for me when i arrived in my hotel room and it was just very exact and i love how exactly he was it sounded like a lot of work to set it up so i found it intimidating but like he do exactly i hate people who are that particular i hate people who are particular in general i find it to be extremely spoiled and s sn you know i have like sort of sort of like you are what you admire and i have the opposite of admiration for people that are extremely particular about how they want everything managed and taken care of in their life versus people who are like look i'm blessed i'm a roll with the punches you don't have to cater to me i'm gonna make you know you could serve me food i'm allergic to and i'm gonna find a way to have a a party in the right like you know that is more of the mindset that i admire is somebody who is what i call unconditional meaning their happiness or their mood is not contingent on anything i find that to be an absolute super superpower and i i say this because not to hate on ram meat i say this because i kind of only ever hear about the opposite especially in this kind of like you know life hacking productivity porn like kind of hustle culture type of thing where i think people get praised for being super meticulous for being super organized for planning out everything for scoping it out for working backwards all that stuff and i never hear about anybody who's praised for being like you know what this guy's always in a good mood regardless of what's happening but to me that's the superpower yeah i'm and i'm closer to you on in that regard like recently i went to a place i ordered a steak and they brought me a pizza that was best chicken and i didn't and i didn't i didn't tell like yeah i didn't even tell my my wife was at halfway there like did you order a stake i'm like yeah but it was here whatever and so i'm i'm more like you but i respect that he knows what he wants and he wants and he and he lives that way so i respect that and then martin sk do you wanna talk about him really quick yeah we never got to to debrief that so fun pie i got a lot of shit did did you get shit i got a ton of black that we had him on from where and dude just online and friends were messaging they're like why would you give this guy a platform and i don't think they even listened to the episode because my my response sent why would you give this person a platform it's it's twofold it's number one i'm like well did you watch the documentary about him on netflix and if they say yes then i say well then he has a platform did you criticize netflix do you know you watched it did you cancel netflix yeah like you you watch netflix do you watch the news about him because you he has the platform and second i'm how'd you like that ted bundy doc series pretty good yeah did you watch that did you did you watch that because that's the same thing and then second i'm like well we actually did challenge him quite a bit i think i explicitly said why do you act like an idiot and why are you such an asshole when you shouldn't didn't have to be an asshole like we had a very productive conversation i think and so there's a fair criticism which is he has an explanation about like you know why how the health system works all lot and we're not well versed enough about the healthcare system to know where to push back because like let's say i don't know if he told us anything that was incorrect or sort of sleigh of handy but if he did there's no way i would have known because that's not money chase right like you know it's like i but why is that wrong i don't know if that's wrong i'm saying that's that that would be a fair criticism let's say you did know yeah and then somebody comes out here they say something that's either not true or sort of mis redirection or besides the point or not really how things work and the hosts don't push back on it it could be very frustrating if you do know and so i'd say that that's a if if that's what happened that would be i would say a fair criticism on the other hand i thought the most interesting thing you talked about was just sort of like he's like i could be the pfizer ceo corporate speak don't don't tell outside the line don't give the media anything to get mad about just quietly make your millions just do whatever you're gonna do right raise prices you know what whatever whatever it is that you're gonna do it's not like most pharmaceutical companies are are seen as like you know angels but they don't get the same level of flack because he was very loud now he was very vocal and he he poked the bear constantly and what i liked was this moment in the thing where i was like did you're not dumb so like you probably knew what you should say or you had a person on your p team tell you at some point hey when you go to congress and they're asking you questions don't be doo you know like a dog on your piece of paper and and sm you know you know having a don't smile yeah don't have a sm look on your face like he knew what to do but he lives that trolled life baby he's like he's like i don't wanna be that i don't want a world where everybody who successful has to be this robot and i'm gonna be me and i'm gonna have fun with it and i'm gonna call bs cbs i'm gonna fight with people who don't know what they're talking about and i gotta say that is one part that i really do admire about him and i think somebody said this to me after them so they go you know you guys had a billy mc from the fire festival on and he seemed like a dumb like a dumb cheat go you know martin seemed like the opposite he seemed like a genius cheat it was just basically like you know billy came back he's like next thing i'm doing another fire another fire festival or like actually and he's doing that that was doing he would he had said to us on air was gonna do this thing where you could micro or do the people are gonna go to this island and then you could vote with micro payments to get them to like snorkel with sharks and like we're gonna shut up the water you was like we're gonna jump up the water if people donate it and i was like well that's your come that's a dumb idea but with martin i would say like you know i think you could question whatever his ethics or if he's you know gone straight after whatever you know what what he did to to go go to jail but i think it's hard to deny i think guy's very intelligent and has a lot of interesting things to say and i you know frankly you can learn a lot from from somebody who's highly intelligent has interesting things to say yeah i you know i when i was telling people i'm like i can like him how michael jackson dances and i can learn how to moon walk from him but also not like everything that he did right you know what i'm saying so i i can like both those things how's your mood walk you know it's a it's a three out of ten i'd say but i also there's one criticism that we're starting to get now that we're a little bit bigger that i've been thinking about which is like they're like you have a responsibility to do x y and z and my gut reaction is like f you i don't have a responsibility i'm doing whatever the hell i want but then i'm like it is journalist realistically a bit and that's like a really weird thing to like kind of approach particularly when no one got in for we didn't get into this for that reason like we didn't wanna pursue truth we just wanted to have fun you know what i'm saying yeah i think that's i mean to be perfectly clear we are not journalism this is not journalism we are not we are not reporting anything this is me and sam shooting the shit talking about business and interesting things we see and then when we meet interesting people we have on the podcast we have a conversation with them and sometimes we like what they say and sometimes we don't sometimes we buy what they're selling sometimes we don't sometimes we defend people because ninety five percent of people hate them but that doesn't mean we think that they're perfect so you know that's that's my stance on it alright let's move on to something else you tweeted out that yeah nothing to say today which is always great to hear i found a few things last minute though did you like my just like my meme yeah of the jesus meme i thought it was wonderful it was it was there's like this famous i is it catholic i don't know where it's like prints in the sand and the name of the story yeah whatever you know we saw two footprints on the beach or two sets of footprints and then all of the one see the point well then if it's no it's then all of a sudden i didn't see the second footprint what happened and it was like that's when i was carrying you son no it was good it's like where were you and you the most were the only one footprints alright so do you wanna go you want me to go i'll go first really quick this is something that i think both of us are interested in but i have a feeling you didn't you didn't care enough to look into us because it was like a shit ton of reading but tiny our friend andrew wilkinson he took his company public it's officially public i think the friday i don't know what it is today it was seven hundred and fifty million i think canada which is five hundred and sixty million usd somewhere between a billion yeah so hundreds of millions of dollars and you know whenever you go public you gotta release a huge report and it's three hundred pages and i read through a lot of and i found a bunch of interesting stuff if you want you want when wanna tell you some of the interesting things alright so the foundation for so andrew will consumes our friend he owns this thing called tiny tiny owns either outright owns or partially owns something like ten to thirty things thirty different businesses the whole thing started with meta lab meta lab was an agency that he created by himself in two thousand and eight and he basically made websites it was nothing fancy at first he made websites for silicon valley companies but that's a little bit glam it because it was like someone paid them like twenty thousand dollars to make like a fairly straightforward simple website then he just kept going and kept going and kept going well it's listed in his i actually don't know what this document called in america i think it's called the ten q or just whenever they file for to go public this company is in the i think vancouver stock exchange i don't know what it's called there but it's listed as digital services revenue in two thousand and twenty one it did sixty two point eight million dollars and that's interesting because it actually has been growing not crazy fast so it's been growing something like twenty three percent a year or for the last handful of years we can only see a couple of years here but it does a forty five percent or forty percent margin so for every hundred dollars they make their net income is something like forty percent forty dollars which is crazy now if you start in two thousand and eight and you only grow twenty percent a year you actually get to significantly higher than where he's at now so there was years where it was lumpy where it didn't grow or it grew a lot and then it got smaller but not significant of a business for something that's been around for which is now fifteen years and this has been the foundation of everything he has a ceo of that company and that ceo has paid one point one million dollars which is a good deal i think for everyone so the ceo gets to run a established company that's working and they get paid a million dollars so here's something that's really interesting if you scroll down to on this document i they have a list of a bunch of the dividends paid since two thousand twenty one and if you add them all up it's something like fifteen million dollars that he's took out of the business they took out a bunch more dividends because they actually took down i think something like a hundred million dollars in debt so he he had a debt facility in order to grow the company as opposed to equity which is awesome because you just take a loan and if that works it's significantly cheaper than equity if it doesn't work it's that's not good you owe a bunch of money but he did it and it worked out but as he's been growing he took money like fifteen ish million according to these documents out additionally they had a company called meal time which is like a meal prepping software that he sold for twenty five million dollars so he had a and they gained they profit thirteen million dollars off that so collectively he's been making tens of millions of dollars along the way super fascinating while this business remember when we were having the lunch with them we're gonna have to bleep out this number but remember you with him but you asked him some question you're like you know at what number did you know life sort of change for you or what what what numbers mattered in your kind of climb and then he's he's like yeah you know that's when that's when you know blah here and you go you go okay so that's a net worth and he goes no per year yeah and you go what and we're both like wait and then he skipped over it he was fine totally another story he's said like yeah i'm like every year we were like what the actual fuck this guy talking about you were making that much he's was like yeah and and now we see that it that it's all like it's all on paperwork and and by the way everything we're saying this is strictly from the document where so there's nothing else that we know but yeah like you kinda killed it there and then one last interesting thing is they own this thing it's the company call is called tiny boards it's really just we work remotely dot com and it makes i think it's like six million a year roughly so it grew during two thousand twenty to twenty one it grew from like three million to six million then it went back down to like three or four million but i looked it up on linkedin i'm pretty sure there's like three people yeah we're very fascinating and they bought that or they bought that from thirty seven signals from jason freed and and dha so that's that's pretty cool yeah you know when so i invested in this right before it went public so private just privately and when i had gone into kind of the data room i was looking around and i was like okay so it seems like really there's kind of like two interesting observations one easy he creates these like what they call platforms which is basically means you're gonna buy a bunch of the same type of company so he has an agency platform meta lab is the big one but i think they have like seven seven or eight other agencies they're just a lot smaller job there's like a web flow agency there's there's no code agency agency there's a whatever yeah so then there's job boards and they have i own a couple of job boards then there's creative tools which is like they own dr and dr block creative market and and grew that way and then they have whatever they have they have a couple of other and then they have like this like long tail of random things like they would be funky the photo editing app they own meal time like they own some random things i would say a couple of things really stood out to me when i looked at it i was like okay so you'll if you look at where the bulk of the revenue and eb comes from it's two companies so yes he's got a portfolio of thirty companies but it's meta lab and it's dr that are carrying the thing on his back i guess the other one would be weak commerce which has split and gone public which was a roll up of shopify apps but that one had done pretty well done i think and that one's at twenty five million dollars in revenue i think it was like something like ten million if you just look at the eb number so i was like and i'm not quoting this off i'm not looking at the sheet but like just ballpark i believe that we ecommerce ballpark was at about ten million in eb when it went public i remember you saying that on the that's what i'm that front the second one is you know meta lab which you just talked about you know let's say fifty sixty million in revenue forty five percent margin so roughly thirty billion in in eb and then which is just a juggernaut and then you have dr and dr does what does it have it for thirty so in two that yeah in two thousand twenty one so here's the numbers for two thousand twenty one digital services revenue which is considered agencies that was sixty three million creative platform revenue which i think is only dr or it's dr plus a small thing in two thousand twenty it did twenty three million in two thousand twenty one it did thirty four million and then they have other which is all this small stuff combined which was about fourteen so just those first two digital services which is almost all meta lab you know the rest mine add up to less than twenty percent of that so if you just add up sixty plus thirty plus thirteen right this is roughly a hundred little over a hundred million and a hundred and ninety of that comes from meta lab and and dr and the eb on that i don't know actually people are gonna laugh people are gonna me i know what adjusted eb means versus just normal eb but the normal eb which is earnings before interest tax and depreciation that was fifty million dollars on that revenue yeah and you know what i think is remarkable the amount of equity that they put in to create so now this thing is valued at let's call it eight hundred million dollars right now eight hundred eleven million market cap right now can which is canadian and it's i didn't realize it's a seventy five a twenty five percent decrease from us so let's say so it's that comes out to be a little less than six hundred six hundred basically so six hundred six hundred million dollar market cap company and i believe he can confirm or deny this but i believe less than ten million dollars of total equity was put so how much cash did it take to start this business and most businesses don't take a ton of cash but but this is a is an acquisition based companies so like you know they they were acquiring companies and so i think less than ten million of seed capital was put in i could be wrong on the and this and the seed capital came from the highlights of the agency so in reality it's like he started this as an eighteen year old or nineteen year old he said he was working as a barista in in the papers it it has the stories like i was working at a as a coffee shop person and then i started doing this on the side and it just we just kept going and so the takeaway here is like simple shit it's it's hard but it's simple but for since two thousand seven or something like that amazing honestly kind of i honestly it's amazing and congrats it's amazing rest to our buddy andrew for going public that's a big deal you know that's a decade plus of of hard work fifteen fifteen years plus of hard work to get there so you know kind of amazing for him i love that any other takeaways you have no those are the those are the main ones you know i think you know one other thing that the chris his book business partner told me a dinner was i think i might have already shared this in the pod but he said when he got hired and he met chris as at a bank chris was a banker literally like like a break a bank teller like like i had a branch hey met chris and they they were they hit it off about cars they were talking about cars and because andrew had rolled up at a cool looking car and chris was it or whatever so they hit it off they ended talking for a little while he's like what you what's your are you like i'm studying didn't to get my my like cpa license i wanna be a a finance person or account accountant or whatever and andrew andrew's like awesome i need help my business meta app is just getting off the ground it's working pretty well but like we're super disorganized come work with me and chris takes leap faith goes wants to work with him he says that on day one he's like i showed up at the office and there's nobody there like andrew's out there and nobody's answering at the door and then andrew pulls up in his his uber or whatever his car i guess no uber were back then but pulls up in a in a car taxi he hops out and he's like opens the trunk takes out this giant box full of paper he's like here here's all of our like numbers financials like this is where it's at you know makes sense of this and and help us get organized he hands up this huge box he's like by the way i gotta go so i'm not gonna be able to train you right now and there's no room in the office for you so i talked to my neighbor they have like a basement you can sit in the desk in there and he like just knock on the door and tell him you're the guy and then they'll let you into the basement desk or something so he tells the story how you started it whatever it gets gets organized and as they're looking at they're like alright you have a very profitable agency like what do we do with these profits right we're just gonna like accrue them that doesn't seem very good and like one other agencies do and they're like they looked around i see other agencies like all of a sudden there's a giant ball pit in the office there's a basketball court they're flying you know fancy everywhere they're they're hosting you know just basically spending money on like like status stuff or like appearances and he's like we shouldn't do that that doesn't seem to have any roi right like adding the ball pit to the office doesn't yeah it makes it more fun but like i don't think that's the best use some money what if we just thought of ourselves like a really profitable law firm and like you know what if we were a boring business what would we do with this money well we would just go try to find a place to reinvest this what if we take this business that's okay agencies aren't the best business but we use it to buy better businesses and then that was kinda like the the conversations that they had and that's when they started going out and acquiring other businesses using the profits for med lab but there's two there's one part of story that you're missing and and this is because it's probably not fun for them to tell but they will tell it because they'll they blog about it which is they actually started other things so they did the same things that we make fun of and that we've done as well they started to do list it was called flow and then they he said he spent like four or five hundred thousand dollars or maybe even close to a million a lot of money of the profits and they created this thing which was basically like asana but different and he goes asana crushed us because they spent way more money and then they started i think one or two other things i think another thing called ballpark so they actually started things right away and it failed and then they go yeah let's just buy that and that's what they did and they still start things like super cast or got a bunch of different ideas he's he started since but if you just look at them in the grand scheme of things it's almost like a big company right it's like they have the innovators dilemma it's like this business is at one million in revenue in nine months it's like cool who cares you that's one percent you know i didn't move the needle this year probably took a lot of creative energy and recruiting and promoting to get to to get to that level so you have a a a tough thing where you enjoy starting new things so you wanna do it you keep having new ideas but it's hard for those new things to really break out and make a difference you know and most most new things generally will will fail or or or not go exactly to plan either so it's it's a tough tough balance i think to have and i know what they paid for dr and do you think i i think you know too but we can't say it do you think that you can buy companies like this like is this one of those things like you know when or or am i just being a new here where people say oh you can't start a newsletter now there's too many new newsletters i'm no it's that's not true but do what do you think about the competition now to buy companies versus ten years ago yeah certainly more but there's also more supply right like the number of like interesting you know interesting internet companies in two thousand seven versus two thousand twenty three is gonna be obviously like many fold more because the internet has just become so dominant there's so many businesses that that are successful so many playbook of how to build a good saas business or a good marketplace or whatever having said that this probably the type of business where you make one good decision when good deal a year or two good deals a year and that was a great year and that i think that speed is just very hard for most entrepreneurial people to to go at right well yeah i agree with what you said this is pretty inspiring and and awesome so that's the slowdown on tiny good stuff can we talk about i see you have harvard revenue on here i have an interesting story about harvard revenue so i wanna hear your take yeah i was doing some friday night research and ask one does yeah got got to thinking how much money's is harvard making yeah i'd like to tell you some things about harvard so harvard is this thing that if you really like zoom out are you're like an alien and you're looking down at at harvard and you're like what is that thing on the map yeah yeah not no not not b you the other one you know the what's what's over there in boston what you would see is basically some combination of a church a hedge fund and a luxury day and i'd like to tell you about each of those components and how harvard is basically this multi billion dollar tax free juggernaut alright there's a lot of taxes in this episode yeah alright so buckle up okay so how is it a how is it a church well universities are tax exempt so they don't pay taxes they don't pay it on donations they don't pay it on tuition roman board or even capital gains from their hedge fund which is the second part so they have an endowment that's about fifty billion dollars that they invest across a wide portfolio i'll tell you their portfolio in a second so they got a fifty billion dollar hedge fund they have their tax exempt on the gains from the fund plus all the revenue from their students well i should say revenue from their luxury day care because parents will pay you know fifty sixty seventy thousand dollars a year to send their child to this place for four years and so they take your kids off your hand for four years and they say you're they're gonna come out at a better better place and so here's some of the numbers around this this mash up juggernaut last year five point eight billion in total revenue two billion of that comes from the profits of their endowment hell of a year for them i actually this wasn't a last year this is i think twenty twenty one so two years ago so five point eight billion total revenue two billion from their endowment one point two billion from education so what that means is eighty percent of their revenue is coming from not education that's the other way to look at that so where does the rest come from so they have the endowment you have a billion dollars of grants so the government funding research for their their professors five hundred million of donations and three hundred million from something you'll know pretty well which is their publishing arm i can tell you they're they're in house media company so couple couple observations here the school earns more revenue than both twitter and snapchat twitter at five billion till snapchat four point six six billion harvard is has more revenue than both of them and it's been doing that since when when when was harvard created in the harvard like hundred plus years old i think and so it's been doing that forever not forever because it's a very long time amazing business right the publishing arm makes three hundred million dollars just selling case studies to other business schools and publishing the h b the review journal which is basically a really fancy paid subs stack it's got three hundred fifty thousand subscribers who pay for the b the harvard business review but the majority of that revenue i think i can try to find it but i studied this a lot i think that a lot of the so if you go to harvard business school they they release all their they break they break it all out and so if i read it here so thirty four percent of the so their revenue actually went down in twenty thousand nineteen it was nine hundred million in two thousand twenty one it was eight hundred so thirty four percent of that was whatever you said three hundred comes from publishing the next thing down is fourteen percent came from tuition and of the of the thirty four percent from publishing most of it is from selling i think it's like they've sold like they sell like five million case studies a year other business schools yeah which is which is insane it's it's all the and the harvard business review has a lot of revenue from international so here's the other kind of like dirty secret from from harvard which is that they make a ton of money off of executive education four hundred sixty four million dollars so almost like not quite half but like you know almost half of the money they make from their degree their actual school bay bank on executive of education which is basically you pay to get professional development credits hey k you could put harvard on your resume without actually having a harvard degree if you go to tyra banks remember remember remember tyra banks the the the mod go to if you could yeah that's right if you big t for sure if you go to her linkedin it says harvard business school and then like you build down you'll see you'll see parenthesis and you'll say you they'll say extension it's a very classic technique right my cousin did this he went there at and i was like whoa you're go to harvard he's like i'm going to a so i'm taking classes at harvard wow you like yeah i'm taking classes at harvard so you you got into harvard yeah you know like sure i got into the executive education program at harvard and and he's like yeah like you know on my resume it says harvard and he's like you know one out of three people understand what it is and two out of three don't i like my odds yeah and there's also the international arm their international revenues up like eighty percent because they're selling the each of their business review over there they're selling you know executive of education come on come to come to america come to the best part of america come to the the louis vuitton of of a education right so basically you got billions in revenue zero taxes owed huge barrier to entry a brand that's lasted over a century the government loans your customers money and gives you grants for your re earned like what a business dude that's absolutely crazy and a lot of people don't realize this and to put these numbers in perspective let's just say that so you said they're endowment i'm just doing all this math right here so i might be off bet you if we google it this be true if their endowment is see not doing a public math are you well yeah i am sorry but if they're in but it might be wrong if their endowment is fifty five billion dollars can in their expenses some years i just google it right now is around five billion dollars that means theoretically there are some years that they can pay or charge their students zero tuition and pay for everything still the way that the endowment works is it's a fifty billion dollar issue endowment and their the plan is they distribute five percent of it a year so five percent of it a year is used but the the the the the rule is this endowment needs to last forever so they're only gonna distribute five percent because they need the other ninety five percent to stay in and keep rolling and in twenty twenty two when my portfolio was down like forty five percent they lost one point eight percent well the forever forever geniuses somehow lost only less than two percent when the whole market has been terrible this year here's here's their portfolio by the way three percent cash k thirty two percent into hedge funds which funds should say it doesn't say which ones know forty four percent in a private equity plus venture capital but most of its private equity so what do they do so that's the bulk of it and then there's six percent real estate three percent bonds five percent treasuries and six percent foreign equities okay so what's this private equity stuff is does that mean they're in actual pe like like blacks zones black stock or whatever black rock wow dude this is like a circle jerk to the max everyone's hands full on this one this is crazy right because yeah because you if you think about it like if i look up where the hedge fund guys went i bet you know seventy percent of them went to harvard i mean this is just it's it's pretty it's a very circular thing going on here it's pretty wild like it it it is it's i would say it's almost corrupt and if you think about fifty billion fifty billion dollar endowment that's bigger than i than i would imagine ninety five percent of countries gop i mean it's like that's massive gop or sorry gop gop that's the what's that the sorry problem what's the gdp yeah but and yeah like you know we think these vc funds like sequoia and are like really big like i don't know what injuries since total au is but i'm guessing it's like between ten and fifteen billion in eight in eight fifty yeah yeah exactly fifty billion and they're i think i mean they're they're okay they're now at thirty five they've been scaling it up like crazy that's our full job more that's the thing you on there yeah that's our thing this is just like you know i i would imagine there was a i forget what i was watching but there was some show where it was like a lot of people don't realize this but like venture capital and pe like the biggest when people i i always hated it when people celebrated a venture capital company going bust like what was that one guy who the the disney guy who went started the thing that qui you know it raised like billions of dollars and went and and it went bust what a lot of people get realize is this money for so the money that is given to h into this and that it comes from the universities it also comes from the california's teachers pension plan or the the police pension plan or firefighters or and like the you'll like i think if i remember correctly i i believe like nevada for some reason i think it was like the state of nevada for their pension plan for government government workers something like that had one of the best returns and they was basically like one do guy and he's pretty much just like warren buffett you know he has a a similar style or a similar budget where he has all this money and he just would sit in this office and picks up unlike warren buffett he's getting paid by the state and so there was a story about how he was making you know a nice amount of money a year but he would bring brown paper bag lunch and just before ninety five yeah yeah and he's like look on the and and and this guy was like a fiduciary of fiduciary where he was like i don't waste taxpayer money and because of that i read all this stuff i very rarely make big bets and but when i do it fucking crush it and so like these guys had yeah he's he's great and he's like and so anyway it's just like these guys making these decision they're just government workers in a way but they're making they're basically many warren buffett and so it's really fascinating like the world of these like endowments and these people i the guy once who worked for alaska permanent fund i don't know if you know about this they have seventy nine billion in assets under management so it has all this money from the oil stuff or whatever and then they give everybody who lives in alaska like three grand a year or something like that which is basically like we you know when people were talking about universe universal sole income they're like that sounds crazy i'm like you know they do that in alaska i think i think you get fifteen grand a year if you live in alaska right yeah i don't know don't know i thought it was like maybe three four but yeah maybe it's more but yeah that there and then there i met a guy who manages that that money and he's just like what was he like i mean he he wasn't the main principal but he was a guy who worked there and he was like he was at the farming conference and i was like what are you doing here and he's like i'm looking for you know intelligence and an and investments you know farmland is a great investment and i was like wow good for you this is a you know who would've have thought you this guy's managing way more money are these people manage way more money than like the the famous kinda hedge funds or or venture capitalists that you hear a lot about yeah i wonder if this topic is interesting ben let me know the slack because i like i'm geek out of this stuff i found this to be crazy fascinating so he's typing now you wanna do one more thing yeah let's do one more i have quick idea my nine my nine okay so sounds a little bit sick last twenty four hours i don't know you have a spring haircut by the way though i really like the beyond the uptown fade you got you know high high fade it's the uptown fade with the downtown brow oh jeez i just wanted say something cool it looks good you look sharp have you been have you lost how much weight have you lost in the past three years i think i've gained weight in the last three years i just changed the composition like i you're looking to put a lot of muscle too much muscle in a way that's like not good like not like it's like i'm not i'm neither a body nor am i ripped i'm just thick and thick is like i don't know anybody who puts thick on their vision board like some people do i mean looking at your you're right your right arm right or something dude your right arm right now i definitely with a little i definitely see right try yeah i see a great teardrop drop that's a the that you gotta you got a good tricep muscle that's why what do you call it like your your your your highlight your keystone asset that's my key your tries thank god it's in the zoom view you i if my quad were what was good i just be wasting it every day i'll welcome to my life my friend you you should make an excuse to stand up every day every episode just you know flex on a little bit quad cell no you look good you definitely looks felt and people in the comments are saying it but sorry go ahead well i mean that's was great same time anytime you only take that tangent and we can go there alright so i was i i was in a fever and i had a little fever dream i thought of an idea that i'm pretty sure would go viral i'm not gonna do it but you know our friend nikita who has created the same app twice and sold it twice to the same to to similarly stupid tech companies that that didn't realize it's like just like a nothing app oh you're talking nikita the asshole beer your rice that an official name right but those you don't know we cooper but i just douche bag cooper yeah i i don't to nikita at the s beer you know the funny thing is he's got this persona online of being kind of like a shit poster and like kind of a shit head but usually when you beat those people the if you ever meet somebody like that you're like what's one of the like it's like dude total sweetheart love that guy totally not like you see online no you know how like you know it's a very common thing where you're like oh you know sean you know saying whatever oh yeah great guy great guy i don't know if i that no that phrase may not be used with him he's a getting a great guy he's not good guys yeah yeah he's more of a he doesn't get a wow he gets a wow you what i mean that that that's him so anyways the genius of what he's done because undeniably created you know these like really viral team apps is his app works as follows you download the app you take a quiz that says who in your school or who in your contact is most likely to whatever and they try to figure out in your context who you talk who you talk to the most or whatever so i think it's surfaced maybe the right person in a in a multiple choice so that you you say sam is is the guy who i'd want to bail me out of jail and then at the end of the thing it's like wow those are awesome do you wanna know what sam says about you and you're like yeah for sure and basically it text you in the background and it's like sam someone said that you be the most likely person to bail them out of jail you wanna see who and you're like of course click yeah download you take the quiz and that's the viral loop do you remember back that i i another one of these do you remember back in the day that myspace top top eight i think it was called it was like was that like who was in your top eight friends yeah you just i mean this was this is was just like pretty wild concept to be honest with you just put on your profile yeah these are my top eight friends in order which just like i don't know that today that that'd be considered like you know bullying to the tenth degree but well you know i think where that came from it's like do you remember blog rules or it was like if if you go to a blog and it would say like here's who else yeah on the right hand side you would list like eight other blogs that were similar to you that you were friends with which by the way i thought was awesome i always like i i go i tried to find whenever wanna discover things yeah i love doing that and then a lot of people wanna know this but tony hs the founder of zappos he created what was it called it was called media link i think and it basically went from zero to like a four hundred million dollar acquisition and all they did i think originally it's called link exchange is what it was called is they helped broker the deals where eventually it was a pay to play for like the blog roles which is like the thing on the side and i think that is where my myspace kinda got like this idea of like here's like my top eight or whatever like here's the people i to help you discover new people right and you know tom from myspace would always be your your automatic number one when you start and then you have to fill in your friends and it was this awesome you could go to someone's you could be like oh their best friends so this person oh this girl moved to number one maybe they're dating it was like this little like this like signaling thing and it was cool it'll it was felt so good to be in someone's topic and it i felt so bad to be out of someone's topic eight so but it it let you know where you stand and there's something i really appreciate about that so i think you can recreate that now what's something i'm calling my nine and what my nine is you download this app and it just says who are your nine people who who you who you rocking with and you just designate of my context these are my nine and they let you publish that as a photo to instagram or as a video on tiktok or whatever and just get let you share that out just saying hey here's my nine eighty tag them and it text them also from your phone and somebody put you in their their they're they're my nine do you wanna see who and of course you're gonna download of course you're gonna sign up to see who you're gonna connect your address book and then you're gonna select your nine you'll reciprocate kate because that's what people do and so i think this would also go super viral because i think it just has those like human psychology triggers where if you got that message you you gotta know who did it and then when you're there you'll do it too because it's kinda fun like a little personality quiz and then that triggers the next nine invites that go out and nine invites is enough to go viral so like even if you have a fifteen percent conversion rate on which this would have like more like forty percent probably you will by definition your k factor will be over one you will you will go viral dude i always wanted that for when i die you know like my nine for when i ended out my die die my die so like i've i've always wondered like if i die how is anyone gonna know because like when you i imagine this sounds sushi i your tubes don't just here's my nine friends top my friends i don't know again i'm gonna preface this this sounds sushi but when you start having a little bit of something you eventually you have so many different accounts and like there's companies that i've invested in and i fucking forgot when i when i sold the hustle we there's just one guy he what was his name jonah you he started mo dot com and he sold it for like a billion dollars so he's just a rich guy and he gave me very little money enough that like he probably makes that a day in interest and when we sold it took me a year to get in contact with him i swear to god it took the the lawyers for like dude can not get in touch with this guy like his he because he sold his company so was and like he just we can't get touch them we don't know we gotta to give his money but he's owed money it's just sitting here and i'm not close to that but there are some investments that i've made that i forgotten about and i've always wondered like if i die how is anyone in my family gonna know like who get like where the stuff is or if they're who are they gonna contact my like is there like a like a like a like a next of kin like checklist you know what i mean and it changes all the time too so even if you wrote it down once this is gonna change yeah i actually don't know how this works when when you die how do they discover all your assets especially now with like crypto or angel investing like i don't know gonna discover all this stuff and who are they gonna know what to contact because particularly with crypto it's lot of single young guys like who's like the next the next of ken for that i i have no idea you know there is you watch succession hey this is producer ben quick note same is about to drop a massive spoiler for the hbo series succession so if you plan on watching it and you're not all the way caught up skip ahead like two minutes enjoy they're like he he just left everything to this emoji yeah dude on on succession it's like you know the thing it's basically rupert murdoch family and the the rupert murdoch character dies and they find his will and he wrote it in pencil but they and they there's just part where he's giving stuff the company to his son and they can't determine if he's yeah well no they couldn't determine is he crossing out the guy's name or under underlying the guy's name because he like it was like a crooked line they're like is he crossing it out or under we don't really know what that is i thought about that them i'm like when i die if i die and my wife died at the same time let's say we don't have kids whatever i'm like how are who are they i'm gonna contact it like they gotta figure out where my mother lives like it just seems like an ordeal they're gonna have a really rich dog yeah i guess so so they need my nine but like that's like now like just in terms of like a a a trusted and will solution yeah a my teenage viral app idea yeah my nine probate is what it's called that it's just like really yes that one he went full improv kid on that way and took into an old place dude i've just been thinking about that well have you not thought about that because like there's from shit that you probably done it couldn't be small like every everyone's while i like just do a deal like i'll just invest like five grand into something and i don't tell anyone about it like you know you and i you and were joking five grand is about the limit where you like tell your spouse with it you're doing it and like you know there's been things that i've done like i don't even fucking remember that and i guess there's a scratch off ticket that i won somewhere i have no idea dude yes i've thought about that especially with crypto but then when crypto crashed i was like hey never mind forget forget forget what i told you it doesn't matter more you know the instructions i told you about how like you know it's written on this fire proof you know platinum card that's stored in this safe in this ford country yeah i forget about it you don't need to go retrieve it anymore particularly with crypto it seems crazy so i need my nine but for my will goddamn am enough i guess that's fun did i i meant to be a yes ma'am on that one by the way not a not a yeah you did it alright good that's good alright is that the pod that's fine