financial-samurai-po_steve-and-sam_full-length-apr-28-2023-003_composer-648ghrqhr_clip_2023-apr-28-1652pm-utc-riverside
00:00:00.000 | Hello, everybody. It's Sam from Financial Samurai. And in this episode, I have a special
00:00:05.360 | guest with me, Steve Cho from My Wife Quit Her Job. How are you doing, Steve?
00:00:10.720 | How's it going, Sam? Am I the first person you've interviewed?
00:00:14.600 | You are the first person I've interviewed outside of my wife because I have some technical
00:00:19.960 | challenges. But you finally encouraged me to figure out this Riverside FM podcast setup.
00:00:25.900 | So now I can talk to many, many people.
00:00:28.320 | Nice. It's an honor, Sam. It's an honor.
00:00:31.260 | It's an honor to have you. So we go way back, I think maybe eight to ten years. We first
00:00:37.320 | met at a financial bloggers conference. Was it in Denver or was it in New Orleans?
00:00:42.700 | I think it was in Denver. That was my first one.
00:00:45.220 | Okay. And what year was that? Do you remember?
00:00:46.940 | I want to say it was 2013 or 2014. Does that sound about right?
00:00:51.500 | Okay. Yeah, about ten years ago.
00:00:53.900 | And back then, you were an engineer at a tech company?
00:00:58.720 | That's correct. And then what did your wife do?
00:01:01.920 | She was a financial analyst at a Fortune 500 company.
00:01:05.720 | Okay. And then how old were you guys back then?
00:01:08.400 | Ten years ago, you can ask my age, I was 38.
00:01:10.960 | Ah, so you're 48 now. Almost the big five. Okay.
00:01:16.160 | I know. Yeah. Old man. Old Chinese man.
00:01:19.300 | And so back then, so tell me the story about how my wife quit your job happened and then
00:01:26.040 | how she transitioned to, I guess, being a staying home mom and then how you eventually
00:01:32.360 | transitioned. Yeah. I mean, the whole reason we started a
00:01:36.240 | business in the first place was because when she became pregnant with our first child,
00:01:41.040 | and this is my wife, she told me that she just wanted to stay at home with the kids.
00:01:45.400 | And you get that, right, Sam? Yeah.
00:01:48.000 | I grew up not seeing my parents as much as I would like, so I was on board, but Sam and
00:01:53.260 | I, we live in the same area. It's very expensive here.
00:01:55.700 | Yeah. And education is important.
00:01:57.740 | So in order to get a good house and a good school district here, pretty much need two
00:02:01.340 | incomes. So when my wife wanted to quit her six-figure
00:02:04.940 | job, that's how much she was making, I started to panic a little bit.
00:02:09.500 | So we looked for different opportunities to make money on the side, and we kind of stumbled
00:02:14.860 | upon selling handkerchiefs. And there's a short little backstory behind
00:02:18.860 | that. Three years ago, when my wife and I got engaged,
00:02:23.900 | she knew she was going to cry. She's kind of like a crier.
00:02:26.100 | Okay. She gets happy, right?
00:02:27.860 | Anyway, we spent all this money on photography, and she did not want to be in her photos using
00:02:33.020 | like ratty tissues to dry her tears. So we looked all over the place for handkerchiefs,
00:02:37.900 | couldn't find any except for these factories in China, but you had to order a bunch.
00:02:41.740 | So we ordered a bunch. We used maybe a handful of them, and then we sold the rest on eBay,
00:02:45.620 | and they sold like hotcakes. So later on, we kind of got back in touch
00:02:49.500 | with that vendor, imported a bunch, and just decided to launch an online store.
00:02:55.300 | And that became Bumble Bee Linens. And that ended up making six figures in profit,
00:03:00.580 | right around $102,000, I would say. And my wife quit her job right after her maternity
00:03:05.460 | leave, and it's been growing ever since. Oh, that's great.
00:03:09.300 | You know, that's something that I have thought about as well, doing an e-commerce store.
00:03:13.220 | And I think many people think about that as well, to be able to do something from home
00:03:17.100 | and have more freedom and flexibility. So how happy was your wife once she quit her
00:03:23.460 | job and started focusing on her side business full-time?
00:03:28.860 | I mean, initially, she was ecstatic. You know, she was spending all her time with her kids.
00:03:34.040 | We were just having fun, packing orders at night. So our child would go down around 7
00:03:39.180 | and we would pack orders at night. And then I was still working full-time at the time.
00:03:45.060 | And then it started growing every single year, like growing significantly, like doubling
00:03:50.660 | every year. And then it got to this point where I got super crazy and I was trying to
00:03:57.620 | grow it a lot every single year. And we'd set these ridiculous goals. I should say I
00:04:02.540 | set these ridiculous goals. And then we would hit them. And then I'd set them higher for
00:04:07.820 | the next year. And then all of a sudden, we were working a lot more than when we were
00:04:13.380 | working at our day jobs.
00:04:15.940 | You were doing, I guess, double.
00:04:17.260 | I was doing both. Actually, I was coming home from work. So this is a story. So my wife
00:04:22.820 | used to be really into embroidery. She would embroider pillows and everything with monograms.
00:04:28.020 | And once we started doing that for money, she started hating it. But it was such a huge
00:04:31.340 | profit center that I took over those sewing duties. So I would come home from my engineering
00:04:35.340 | job and I was working probably 50, 60 hours a week. I'd come home and then I'd sew for
00:04:39.700 | a couple hours and then go to bed.
00:04:43.820 | And it kept going on like this until I think our breaking point was we got on the Today
00:04:49.180 | Show. We only got on for 12 seconds, just 12 seconds. But then our daily average order,
00:04:56.940 | you know, orders increased 7x. And because this show got syndicated all over the US and
00:05:02.060 | everything, different time zones, it was probably like that for two weeks. And at the time,
00:05:05.540 | it was just me and my wife and one employee. And we basically almost killed ourselves during
00:05:10.660 | that period.
00:05:12.420 | And then my wife was like, "I don't want to do this anymore. Why?" We were already making
00:05:16.780 | like 10x what we earn or what we spend for sure. And she was like, "Why are we doing
00:05:22.380 | this? We make way more than we spend. So what's the point of doing this?" And that's when
00:05:29.300 | things changed.
00:05:31.700 | And when you say things changed in terms of the outlook on the business, the happiness
00:05:36.260 | of running this business or you and your occupation at work?
00:05:39.660 | Oh, no. It has nothing to do with my job. I really love my job as an engineer. I mean,
00:05:45.140 | that's what I studied all my life. What changed was that I stopped being so aggressive with
00:05:52.340 | the business.
00:05:53.340 | Okay.
00:05:54.340 | So my wife kind of – we had this talk and there were tears but they weren't the happy
00:05:58.740 | kind this time. And when she said she didn't want to do this anymore, I was like, "You
00:06:03.940 | know what? You're right. What's the point of making all this money?" So we stopped
00:06:07.140 | all the revenue goals and we focused our efforts in getting my wife out of the business and
00:06:13.540 | just automating as much as we could so that everything was streamlined.
00:06:16.540 | Yeah.
00:06:17.540 | And it was just a lot less work.
00:06:19.300 | Yeah. And so how – so it sounded like the business did very well. How long did you continue
00:06:25.860 | to do double duty before you left your job?
00:06:28.900 | Oh, double duty. So the sewing part, I stopped right away if that's what you're asking.
00:06:35.700 | In terms of just helping out, I quit in 2016 and we have an even split of duty. So my wife
00:06:43.060 | kind of handles the day-to-day. We just bought our own warehouse just recently actually.
00:06:46.900 | And we have employees. She just makes sure the orders go out the door. And my job is
00:06:52.020 | marketing which is something that I can just do kind of behind my desk.
00:06:55.700 | Okay. And so 2016, how many years was that after she started her linens business?
00:07:01.180 | So we started in 2007. So nine years.
00:07:05.140 | Oh, wow. Okay. So nine years. Interesting. Was there ever a point – did you have a
00:07:12.860 | specific number to make? Because I love numbers. Financial Samurai is a personal finance site.
00:07:17.620 | It's all about numbers. So what do you think is the ideal income to live a middle-class
00:07:24.260 | lifestyle with two kids in the San Francisco Bay Area? And what income level do you believe
00:07:30.340 | where your happiness no longer increased?
00:07:33.380 | Interesting. I think in order to live – you said just a regular middle class.
00:07:38.580 | Yeah. You have a house, couple cars, two kids, vacation, two, three weeks, a year. You're
00:07:46.020 | feeling comfortable. You're not feeling like a lavish lifestyle. But this is what
00:07:51.460 | you need in an expensive area.
00:07:53.860 | So the answer to that question really depends on what type of house you want really, right?
00:07:58.260 | If you want to get by with like – and this is going to sound crazy to your listeners,
00:08:02.740 | right? If you want to get by with like a $1.5 million house, which would sound absurd to
00:08:08.020 | anyone outside the U.S., I would say you would need to make $300 a year.
00:08:13.020 | Okay.
00:08:14.020 | Right?
00:08:15.020 | Yeah.
00:08:16.020 | And so how – based on your experience earning various levels of income, what was that income
00:08:23.060 | level where you felt this making more income no longer made me happier? Because you took
00:08:30.740 | a route of – your wife made six figures, you made six figures at your tech job, and
00:08:36.300 | then your business blew up. So obviously, it's made much more. How do you decide when
00:08:41.940 | is enough? Because that's one of the themes that I've talked about in Financial Samaritan
00:08:46.620 | for a while. How much is enough? Why keep going or doing a single thing you no longer
00:08:52.820 | want to do if you have enough? So how do you determine that? And what do you think that
00:08:55.700 | number is?
00:08:56.700 | Yeah. So the way we figured that out is we just figured out how much we were spending
00:09:02.700 | every year. And so the last time we did this exercise, we spent about $150,000 a year.
00:09:07.940 | And this is obviously post-tax money. So I would say in order to feel comfortable, if
00:09:15.060 | you can make double that, that's good enough, right? Because then you got 50% to save and
00:09:20.380 | whatnot. So that's what I would say would be our comfortable number. And what's funny
00:09:27.460 | about this is once you – if you're not used to making money also, and if you're
00:09:31.940 | not careful, your lifestyle is going to creep up.
00:09:34.700 | Yeah.
00:09:35.700 | So fortunately, I'm pretty frugal. And I always feel like I don't need these luxuries.
00:09:41.180 | So like my wife likes to fly first class. I don't fly first class.
00:09:45.740 | So she flies in the front and you fly in the back?
00:09:47.660 | No, no, no. When we fly together, we always fly coach. Like if she goes by herself on
00:09:50.980 | a girl's trip, maybe she'll go first class. But like in my mind, like if we're going
00:09:55.500 | to get to the destination anyways, like if it's slightly less comfortable, it's not
00:10:01.260 | a big deal to me. The only reason I would ever use business or first class is if I had
00:10:05.820 | an early morning meeting, like if it was for business and I need to be alert the next day.
00:10:09.420 | But outside of that, we go in the same place.
00:10:13.620 | Now it seems like you're a parent to two children just like I am. It seems like the
00:10:20.140 | world has become more competitive because of globalization. It seems like it's very
00:10:25.700 | hard to get into a top 50 college nowadays, let alone a top 10 college. It also seems
00:10:33.900 | like we have more and more opportunities to make more money online and be our own bosses
00:10:39.580 | quicker. So do you believe in college and the cost of college? And how do you view our
00:10:46.980 | children's future going forward as a small business owner?
00:10:51.620 | I've actually had arguments with my wife about this. I still believe that if your child
00:10:58.020 | can get into a good college, it's worth going just for the networking alone. So I went to
00:11:02.820 | Stanford and I have all these buddies that are super successful now. They start large
00:11:08.740 | companies or they're heads of other companies or they work with a lot of famous people.
00:11:13.980 | So I think it's important to have those connections. And I think I developed socially a lot in
00:11:18.980 | college so I still think it's important. In terms of making money, which is probably
00:11:24.860 | what you were getting at, right?
00:11:26.580 | Or just the expectations. So you're going to Stanford. Do you have expectations for
00:11:32.860 | them to go to Stanford? What if they don't go to Stanford? What if they go to Chico State?
00:11:38.940 | I'm cool with that as long as Chico State, I hope none of your listeners are.
00:11:43.940 | Or San Jose State. Good schools but it's not Stanford.
00:11:48.500 | Yeah. I'm not going to let that happen. But you're just saying hypothetically if it does
00:11:54.220 | happen?
00:11:55.220 | I'm just thinking about expectations, right? So I feel the irony of making a lot of money
00:12:00.580 | or going to a top school. I mean, all parents want upward mobility for our children, a better
00:12:06.980 | life for our children. But if you go to a top 10 school or a top 1% school, the chances
00:12:13.620 | of them getting into a top 1% school is much more difficult. The more money you make, the
00:12:18.940 | chances of them making the same amount or more will be much more difficult as well.
00:12:24.500 | So I'm just trying to understand how you think about expectations for your children given
00:12:29.340 | where you are.
00:12:30.340 | I mean, it's hard to put expectations. I've become a lot more lax over the years. But
00:12:34.560 | like let's use your Chico State example. If that was the case, if that was the only school
00:12:38.540 | they got into, I would probably have them go to community college for a year and then
00:12:41.900 | transfer to like a UCLA or something like that.
00:12:44.260 | UCLA's acceptance rate is like 5%. It's impossible to get.
00:12:47.900 | It is. But if you go to community college first, the acceptance rate is actually much,
00:12:51.300 | much higher for transfers from community college specifically. We have a college coach.
00:12:58.060 | Yeah? Did she give any percentage rates for the acceptance rates from community college?
00:13:05.180 | No. Actually, it's more of a planner right now, like what classes to take, the key points
00:13:10.980 | you should focus on. I know the acceptance rates are low. And I feel like I have a lot
00:13:16.060 | of friends who have kids that are applying to college right now, and it seems to be random
00:13:20.420 | for UCs especially. Like it's almost like a lottery system. There's this one kid who
00:13:24.420 | had top scores, top SAT scores, everything. They got rejected from everywhere except for
00:13:29.620 | Riverside whereas they got into some Ivy League schools.
00:13:33.820 | Oh, cool.
00:13:34.820 | So it just doesn't make sense for the UCs right now at least. I mean, yeah.
00:13:41.380 | I mean, it sounds like you're focused because you hired... How old are your kids?
00:13:46.100 | They're teenagers.
00:13:47.100 | Okay. So you hired someone to guide them in the high school path?
00:13:50.940 | Yeah. Yeah. Like I don't mess around. I mean, I hired a book coach to help launch my book,
00:13:57.500 | right?
00:13:58.500 | Yeah.
00:13:59.500 | So we are instilling entrepreneurship in my kids. So my wife has been running the entrepreneurship
00:14:05.420 | program at their school the last couple of years. And so my kids actually started their
00:14:10.940 | own print on demand store when they were nine and 11.
00:14:13.940 | Oh, nice.
00:14:14.940 | And my daughter is on her second store right now selling her own handmade jewelry. So those
00:14:20.340 | businesses make money for them and they're happy with it. I don't want it to do too well
00:14:24.420 | per se. I always believe in having multiple paths. So if college doesn't work out or whatever
00:14:33.860 | they want to do, then they always have entrepreneurship and everything to fall back on and vice versa.
00:14:38.500 | Yeah. Well, that's kind of one of the points I was getting at because the more entrepreneurial
00:14:45.300 | you are, it feels to me like at least in the Bay Area, the less emphasis you have on college
00:14:52.260 | because why go to college and learn liberal arts and be a well-rounded person and all
00:14:56.940 | that when you can find a business, find what you love and then make money and be free,
00:15:01.260 | like go directly to entrepreneurship.
00:15:05.740 | So if I were to have my druthers, I would have them go to school and start a business
00:15:10.420 | while they're in college.
00:15:11.420 | Yeah, that'd be good. You can kind of hedge and discover yourself and get the best of
00:15:17.620 | both worlds.
00:15:19.340 | I mean, I got a lot out of college. I would definitely go back 100% regardless of any
00:15:24.740 | money.
00:15:25.740 | Have you been donating regularly to be in the pool of consideration for alumni donors?
00:15:32.820 | I mean, I don't think it really matters. I mean, I think it matters to be consistent,
00:15:37.180 | but I don't think the dollar amount really matters unless you get into the millions,
00:15:41.460 | I think. And we're definitely not doing that.
00:15:45.620 | Yeah, it's fascinating to me because with all the entire college bribery scandal, most
00:15:52.900 | of the schools were private schools where you can manipulate how your kid looks easier
00:15:59.780 | with dollars and you can bribe through the front, but I guess they got caught bribing
00:16:03.660 | through the back door.
00:16:05.340 | But with the public schools, they're very specific. There's no face-to-face interviews.
00:16:13.420 | It's very hard to bribe your way into public schools like the UC school system. And I feel
00:16:19.420 | that there is a little shift in perception, at least from the hiring managers that I've
00:16:23.780 | spoken to regarding hiring people from private universities because there's this kind of
00:16:32.820 | like this asterisk. Like, okay, are you a child of an alumni who went to that private
00:16:38.340 | university? Did you donate? The acceptance rate is like 40% for the children of alumni
00:16:45.780 | and donors and faculty. And so there's this whole talk about meritocracy. I mean, what
00:16:51.340 | are your thoughts about that and meritocracy as it pertains to entrepreneurship, which
00:16:56.780 | I think is a highly correlated thing as opposed to getting to college maybe and getting a
00:17:03.460 | day job?
00:17:06.180 | Can you rephrase that question? What do you mean?
00:17:08.140 | I guess my thought from you is, do you believe meritocracy is declining? Or how important
00:17:18.540 | is it meritocracy in terms of building your business, getting ahead? People who have a
00:17:23.820 | huge network versus people who don't have a network. Do the people who don't have a
00:17:27.940 | network, can they succeed just as easily?
00:17:31.020 | I mean, they can definitely succeed, but it always helps to have a network, right? I mean,
00:17:34.900 | let's take launch in this book, for example. I would not have been able to do it without
00:17:38.460 | the help of my network and my connections, right? Same with business, same with blogging,
00:17:44.660 | right? We've been blogging for a long time. At least in the early beginning, we used to
00:17:49.300 | all help each other get ahead, linking to each other, promoting each other. So it definitely
00:17:53.820 | helps for sure. Is it required? No. But over time, you just kind of naturally develop that
00:18:01.100 | network. Now, in terms of getting a job, I've talked to my friends who are still engineering
00:18:05.300 | managers and they don't care about the school so much. Having a good school might get you
00:18:12.180 | the interview, but you still have to pass the technical part, which is the most important
00:18:16.100 | part. And they've hired people who've never gone to college. And this is for engineering,
00:18:21.100 | just to be clear, though. They've hired people that have no education, but they're fantastic
00:18:25.560 | at what they do.
00:18:27.660 | Yeah, it's interesting because that would align more closely to meritocracy. You get
00:18:34.620 | hired based on what you know and what you can do, not so much who you know and your
00:18:39.580 | identity, right? And so I think about that a lot because as an Asian American person,
00:18:47.820 | it does feel like the standards for test scores and grades are higher. And the reason why
00:18:54.500 | is because there's a higher representation of the Asian minority in colleges and in these
00:19:01.180 | well-paying jobs. And so I just think about that for the future of our children. And I'm
00:19:06.740 | just wondering how you think about that for the future of your children.
00:19:13.500 | I mean, I think our children are going to be lucky also because we have a network, so
00:19:18.620 | it's going to be a combination of meritocracy and network, right? I mean, what I'm trying
00:19:22.820 | to instill in them is that you've got to work for it and you've got to ask for what you
00:19:26.660 | want because that's not the way I was brought up. I was brought up that if you work hard,
00:19:33.140 | put your head down, you'll be recognized and you'll get promoted. And in my job, at least,
00:19:38.940 | when I used to work, that was not the case. I used to work hard and I wasn't getting really
00:19:43.740 | promoted. I wasn't getting the raises that I wanted until I started asking for them.
00:19:49.260 | And then what was funny is once I had these businesses and I was already making like eight
00:19:52.460 | to 10x what I was making at work, I stopped caring and I started getting cocky. And at
00:19:57.620 | meetings I'd be like to my boss, I'd be like, "Hey, I think your idea is dumb. I don't think
00:20:02.340 | this is going to work at all." And only then did I start getting higher raises and getting
00:20:07.140 | promoted. It was like the weirdest thing.
00:20:09.500 | Interesting. Yeah, be more assertive. Be more aggressive. Don't believe that just doing
00:20:17.060 | good work will help you get recognized and promoted. It's like the squeaky wheel, right?
00:20:21.460 | It's the grease. Yeah. Yeah. I believe that as well. Especially, I mean, that's kind of
00:20:26.460 | like the benefit of having that side income or financial independence is that the more
00:20:31.660 | you make, the more you can be true to yourself, the more you can speak up against things you
00:20:36.740 | don't believe in without fear of getting crushed financially or getting blackballed, frankly.
00:20:44.180 | I remember at work, I worked in finance and it was a club. And so if your boss spoke Korean,
00:20:52.580 | you should probably understand Korean culture. If she liked Premier League soccer, you better
00:20:57.820 | know all the players on her favorite team. And even if you didn't really care, that's
00:21:02.820 | just kind of how things worked. Yeah. I mean, I think that's the case for anything, really.
00:21:10.060 | You have to be personable. You have to be able to get along with people. And in business,
00:21:14.980 | at least, I'd say that's like half the battle. In your business, though, do you think so?
00:21:20.780 | Because if you produce great products, you're assertive. Oh, you're talking about the linens
00:21:24.220 | business. I'm talking about... Okay, sorry. Let me talk about the linens business. In
00:21:29.180 | the linens business, when it comes to partnering with other companies, I would say that's the
00:21:34.500 | case. We used to do these group giveaways where you and a collection of other companies
00:21:41.060 | that have the same target customer but don't directly compete with each other, we would
00:21:45.900 | each contribute a gift card and do a group giveaway where we would all blast our lists
00:21:50.140 | and at the end, we all keep the emails. Oh, that's good.
00:21:52.620 | Yeah, to quickly grow the email list. But in order to get those deals, you got to be
00:21:56.180 | able to talk to these other companies and be aligned so that they even agree to do this
00:22:00.780 | with you. That's just one example. Or in order to just get any sort of publicity, like when
00:22:10.260 | we got on the Today Show, that was a combination of people's skills as well as just being out
00:22:17.420 | there with content. How did you get on the Today Show?
00:22:21.060 | Yeah, so they found us through Google, I think, because we had written articles that had ranked
00:22:28.100 | and then they were interested in our products and we just kind of hopped on the phone a
00:22:31.540 | little bit and we went back and forth, sent them products and they're like, "Hey, I'd
00:22:34.500 | like to feature you." Yeah. Cool. So being in it to win it, because if
00:22:40.780 | you last long enough, something eventually good will happen. And it seems like grit and
00:22:47.220 | just staying with it is very important. You have another business where you teach people
00:22:54.340 | how to be e-commerce owners, yes? Yes, that's correct.
00:22:58.940 | And what percentage of the people who pay to learn how to be an e-commerce store owner
00:23:05.700 | stop doing the work after three, six months, 12 months, 24 months?
00:23:10.100 | I mean, I don't have that data, but most people don't follow through, right? I can tell you
00:23:15.540 | this. I've done a survey in the past where the people who have stuck with it for at least
00:23:21.700 | a year and have launched, 59% of them go on to make at least four figures a month and
00:23:26.500 | then 10% of those make at least 50K a month. But you have to get through that first year.
00:23:31.060 | Yeah. So four figures, so like 1,000 to 9,000. Yeah, exactly.
00:23:37.540 | And so when people, if I heard that, let's say I went to community college, free community
00:23:43.780 | college, and I didn't go to a top 50 university and like 60% earn between 1,000 to the $9,000,
00:23:52.260 | let's say it's 1,000 to $3,000 a month. Why wouldn't I just do that? Why wouldn't I just
00:23:58.660 | continue if I had no other options? Why quit? If you have no other options, then yeah.
00:24:04.980 | Or even if I had options, but I was like not in my ideal job, I was making enough to pay
00:24:11.460 | my rent. But if I could boost my income by 12,000 to 60,000 a year, why would I ever
00:24:18.580 | quit? Why do people quit? Quit their jobs or quit the business? What
00:24:22.180 | do you mean? Quit the business.
00:24:23.180 | Oh, quit the business. Quit a new endeavor that seems obvious that
00:24:26.660 | there's a high correlation with duration, effort, and reward.
00:24:30.500 | I mean, the answer is they shouldn't. The way I always teach it is you should do this
00:24:35.860 | on the side while you're working, mainly because you don't want to be making boneheaded decisions
00:24:40.660 | based on not having enough money. Let's say you need this tool. You don't want to be like,
00:24:46.020 | "Oh, I can't afford this tool," when in fact this tool is very crucial to the success of
00:24:49.860 | your business. But yeah, I'm a full believer in that you should do both. Then once your
00:24:54.900 | side hustle starts taking off, get a little bit cocky at work, and then maybe quit.
00:25:00.220 | Or ask for a raise and a promotion. Exactly. It also depends on the upward mobility
00:25:04.460 | of your job. With my engineering job, I became a director, and I probably could have become
00:25:11.140 | a VP if I stayed. It's just a question of whether it's worth it. Let's say you are in
00:25:18.220 | retail as a clerk. Well, maybe the upward mobility wouldn't be as good, and it wouldn't
00:25:23.460 | make any sense at all to stay at that job. Well, right. I would think that the less upward
00:25:31.740 | mobility you have at your job and the lower you make at your day job, the more you should
00:25:37.580 | try to do this e-commerce store or any type of side business and not quit.
00:25:42.660 | Absolutely. I would argue that even if you are in a white-collar job, you should do it
00:25:48.260 | also. Look at where we are right now, Sam. I have a whole bunch of friends at Facebook,
00:25:52.140 | Google, and Amazon that have all gotten laid off. Now, they're actually having problems
00:25:57.780 | finding a job because when you have like 30,000 people looking for a job, it's actually hard
00:26:01.660 | to get one. I'm trying to figure out what is that right
00:26:08.420 | message to encourage people not to quit. One of the things that I tell my readers is to
00:26:13.420 | try to forecast your misery because when you get your job, you graduate college, you'll
00:26:18.540 | be happy, and you'll be like, "Oh, I'm going to be here for the next 10, 20 years." But
00:26:22.260 | if you do anything long enough, it starts to get mundane, and bad things and good things
00:26:26.980 | happen to you over the course of your life. What is that one or two messages that you
00:26:32.220 | can encourage people not to quit? What do you tell your kids?
00:26:36.580 | Not to quit their jobs or the business, just to be clear.
00:26:38.420 | Just not to quit any type of endeavor that sees a positive correlation with effort and
00:26:43.940 | duration. I haven't had that problem if there's a positive
00:26:48.260 | correlation. Most people quit when they don't see any results. The problem with business
00:26:53.580 | is you might be working hard. Let's take my blog, for example. I didn't make any meaningful
00:26:59.420 | money until probably the three-year mark. Those first three years were a slog. I was
00:27:04.100 | writing these blog posts and whatnot. People weren't reading it. I wasn't making any money
00:27:08.060 | at all. But isn't that an example of not seeing progress?
00:27:11.540 | How do you break through that? How do you encourage people to continue without seeing
00:27:14.540 | that progress? I think it's all about expectations. If you
00:27:18.820 | go into a business, for example, with the expectation that you're going to make money
00:27:22.460 | within three months, and three months passes and nothing happens, you're probably going
00:27:26.380 | to quit. But if you go in with the expectation that this could take three to five years,
00:27:32.300 | then you know. I went into my blog saying, "Hey, I'm not going to stop this forever."
00:27:37.780 | I set aside a routine where I write every single week. I'm not sure how you do this,
00:27:42.180 | Sam, but I have a day where I do all this. I'm just used to doing it now forever. That's
00:27:47.260 | something I'm just going to maintain. With the e-commerce store, you should probably
00:27:51.740 | expect to see results in a year, year and a half, maybe two. If you haven't gotten your
00:27:57.540 | first sale after a year, something is wrong. Hopefully, you get that first quick win that
00:28:02.540 | encourages you to go on. That's the problem with my kids.
00:28:06.940 | Let's just take volleyball, since they're playing club volleyball right now. When they
00:28:09.580 | first started volleyball, they sucked at it, right? Of course, they never played. They
00:28:13.340 | didn't want to play anymore because they sucked at it. It was my job, I felt, to work with
00:28:18.060 | them to the point where I pushed them over the hump, where they were just good, where
00:28:23.900 | they were confident. Now, I don't do anything. They just go off on their own and play.
00:28:28.900 | What would the three key variables be attributed to for a successful e-commerce business? Like
00:28:35.900 | search engine, networking, what are the three variables?
00:28:40.620 | It really just depends on what you sell. I would say this. If you're selling something
00:28:45.300 | online, it's not really about the product so much because everything is a commodity.
00:28:50.980 | There's very few products that are brand new. People sell clothes, jewelry. It's all been
00:28:55.420 | done before. What's more important is that you evoke some sort of emotion. The best example
00:29:02.420 | I can think of is Dr. Squatch. Have you heard of Dr. Squatch?
00:29:06.060 | No.
00:29:06.340 | They sell soap. They sell men's soap. You can get soap anywhere. It's the biggest commodity
00:29:11.620 | ever. The way they sell it, though, is clever. If you watch any of their ads, you'll notice
00:29:16.180 | it's always a girl and a guy. The girl is always like, "Oh, my God. You smell so good.
00:29:20.260 | I want to jump you right now." They're not really selling soap. They're selling sex.
00:29:25.620 | There's this book called Cashvertising where he talks about the life force eight. These
00:29:30.260 | are the eight emotions that you must evoke and you can sell anything. There's protection
00:29:34.820 | of loved ones, keeping up with the Joneses, looking superior to others. Sex is one of
00:29:39.180 | those. If you can portray your product and evoke one of those emotions, you can sell
00:29:43.260 | anything.
00:29:43.580 | Awesome. I'm going to get more emotional in my posts in the future.
00:29:48.500 | Your posts are already emotional, man. When I read your stuff, you're always right on
00:29:55.180 | the edge of controversy and that evokes emotions. That's why your blog does so well.
00:29:59.100 | I'm just trying to write the truth about all the things that we experience and feel because
00:30:04.300 | not everything is always hunky-dory. There's a great saying, "Hell is other people,"
00:30:10.260 | because there's always conflict. The reason why there's conflict is because not everybody
00:30:13.460 | gets along and everybody has different opinions. I just find it fascinating. I will keep that
00:30:19.100 | in mind, the emotions. I'll be more emotional. It's interesting.
00:30:24.820 | I do want to talk about your book because you have written a new book, The Family First
00:30:30.140 | Entrepreneur.
00:30:30.580 | That's correct.
00:30:32.500 | Who is your publisher?
00:30:33.940 | Harper Collins.
00:30:34.940 | Awesome. How did you get that book deal?
00:30:38.860 | It was painful, actually. I had to write a proposal. That took about a year. I don't
00:30:45.860 | know if you went through it. No, they came to you.
00:30:49.860 | Yeah. They just emailed me out of the blue, "You want to write a book?"
00:30:54.500 | People like me, we have to actually apply. We don't get approached.
00:30:58.540 | Maybe you wouldn't have to apply. You could have just done your thing and then it would
00:31:01.580 | have come out of the blue, too, just like the Today Show.
00:31:05.860 | That's true. I have gotten book offers in the past, but I never took them seriously
00:31:09.100 | because I said, "Okay, yeah," and then they still made me write the book proposal.
00:31:12.500 | They said, "I want to offer you a book deal, but you got to write a book proposal?" What
00:31:17.900 | kind of pitch is that?
00:31:19.580 | Basically, you got to come up with a table of contents, how many books you can write
00:31:24.020 | in a sample chapter. I think that's pretty much what it is. That's what I had to do.
00:31:28.780 | Then I hired an agent, and then the agent shopped it around to all the big publishers.
00:31:32.860 | It's kind of like selling a house. You set a date, everyone places a bid, and then you
00:31:37.860 | choose who you want to go with.
00:31:42.220 | Once you hired that agent, how long did it take for you to get that book deal? Did you
00:31:46.580 | have more than one? You got a book deal immediately after you got an agent?
00:31:51.060 | Well, it depends what your definition of immediate is, but I basically had meetings with all
00:31:55.100 | the big, fine publishers. A number of meetings, usually like an hour long, and we'd get to
00:32:01.100 | know the editors and just make sure we're aligned. Then at the end, they all put in
00:32:06.540 | a bid, and then you pick who you want to work with.
00:32:09.060 | You had multiple offers?
00:32:10.660 | Yeah.
00:32:11.660 | Oh, that's good. That's actually positive for sure for having a literary agent because
00:32:17.340 | you can shop it around. Generally, when you have multiple offers, you get the highest
00:32:21.300 | amount of money at least.
00:32:23.500 | Correct. The downside is that you have to pay your agent.
00:32:26.780 | Yeah, 15% or something, whatever it is.
00:32:29.620 | Yeah, it's interesting. I didn't go with an agent because an editor from Portfolio
00:32:33.660 | Penguin came straight to me, and then I basically talked to other authors and tried to understand
00:32:40.460 | how they did it, and then I just negotiated upward. In retrospect, I probably left money
00:32:45.100 | on the table, but it's not a lot of money to begin with.
00:32:48.260 | Money's not important.
00:32:49.260 | Right?
00:32:50.260 | Yeah.
00:32:51.260 | If you were a competitor, you could have gone back and forth.
00:32:54.740 | Yeah, exactly. I couldn't even get an agent. I tried 10 years ago, and I failed after 25
00:33:02.380 | submissions.
00:33:03.380 | Interesting.
00:33:04.380 | Yeah, but it was 10 years ago. I decided to screw that. I'm just going to write my own
00:33:10.060 | book myself, which is about how to negotiate a severance. Let's talk more about your book.
00:33:15.140 | Why did you decide to take on this endeavor, and how long did it take you to write this
00:33:19.100 | book?
00:33:20.100 | Yeah, so I wrote this book mainly because I feel like most of the entrepreneurship advice
00:33:25.900 | given out there just doesn't apply to me. If you look on YouTube, I'm sure you guys
00:33:30.780 | have seen the ads, there's always these single dudes who have all the time in the world,
00:33:35.540 | they have no responsibilities, and they can work 68 hours a week. That's not my life.
00:33:40.380 | I got two kids, and I actually want to spend time with them. Everything that you learn
00:33:45.420 | around the web doesn't apply to a lot of people. You don't actually have to work 68 hours a
00:33:52.140 | week if all you want to do is make a couple million dollars. Like my life today, I work
00:33:56.540 | about 20 hours a week. I run two seven-figure businesses. It can be done. You just have
00:34:01.220 | to be very deliberate about it, understand your priorities, and then automate as much
00:34:05.500 | as you can. To answer your second question, Sam, it took me three years to write the book.
00:34:11.820 | Who is the target audience for your book? What would be the ideal audience?
00:34:19.460 | I think it's really just people who want to achieve financial freedom, and whether they're
00:34:24.660 | not happy with their life or they want to spend more time with their loved ones, or
00:34:27.580 | they just want to do something that they want. Because what I found, at least with my audience,
00:34:33.140 | is that most people aren't looking to start a $100 million company or an Amazon or a Facebook.
00:34:39.340 | They just want to do what they want. If all you want to do, let's say, is make a few million
00:34:44.860 | dollars or even $100,000 or whatnot, you don't have to work 68 hours a week to make that
00:34:51.100 | happen. Let's talk about probabilities because I
00:34:55.260 | really like talking about the probability of something happening. Let's say I read your
00:35:02.620 | book, The Family First Entrepreneur. What do you think is the probability that I could
00:35:08.380 | recreate that lifestyle of working 20 hours a week, having two children, and then making
00:35:15.260 | $300,000 a year? Let's not talk about millions. It was about $300,000 within three years.
00:35:22.700 | Within three years? Okay. Here's what I always say. Three years is kind of like this weird
00:35:29.060 | in-between number, Sam, that you just chose. I would say if you want to make money within
00:35:33.420 | one year or just around that time frame, I think you really need to be selling something.
00:35:39.460 | That's where e-commerce comes into play. There's a direct transaction. If you have a longer
00:35:45.100 | time frame, and when I say longer, three to five years, I think content is the way to
00:35:49.740 | go. I speak from my own experience. I just recently released a YouTube channel. By recent,
00:35:55.940 | I mean three years ago. It took me three years, but now it's going to generate probably $300,000
00:36:01.620 | just in ads just this year. It took me three years to get there. The first two years were
00:36:07.460 | actually quite painful because no one was watching, and I wasn't making that much. What's
00:36:11.540 | weird about content is that it's slow, and then all of a sudden, it spikes up. E-commerce
00:36:16.900 | is different. There's a direct transaction from the beginning you're making money. You
00:36:20.900 | probably won't see exponential growth after a while, but it's pretty linear. If you do
00:36:27.500 | everything correctly, and you establish a strong repeat customer base, and you just
00:36:31.140 | kind of build gradually every year, you can make it happen. Your three-year number is
00:36:36.100 | kind of weird, but I would say if you go in thinking that you're going to do this forever,
00:36:41.660 | I'm pretty sure your chances are going to be super high no matter what you do. It's
00:36:45.140 | all about perseverance.
00:36:46.500 | Yeah, it's back to perseverance because it does seem like you can't fail if you don't
00:36:52.340 | quit. Again, I see quitting or quitters all the time, and it's just so sad. Yeah. Okay.
00:37:03.020 | It is, but Sam, I don't know how you were brought up, but I was brought up to kind of
00:37:08.300 | get used to suffering. What I mean by that is just doing drudgery, drudge work, and that
00:37:14.100 | sort of thing. I studied for the SATs when I was in the fourth grade, and while my friends
00:37:18.380 | were out playing, I was sitting there studying vocab.
00:37:22.460 | Is that you or is your parents pushing you?
00:37:24.540 | My parents pushed me because they wanted me to take it so I could get into this nerd camp.
00:37:29.340 | I don't know if you guys have heard of CTY, but you had to get—
00:37:32.620 | What does CTY stand for?
00:37:34.820 | Stands for Center for Talented Youth.
00:37:36.420 | Oh, okay. Yeah.
00:37:38.460 | The way you get in is you get, I think, like a thousand on your SATs when you're in fifth
00:37:42.060 | grade. That's why I studied for them in fourth grade.
00:37:45.940 | Yeah, my good buddy, he ended up going to Cooper Union when it was free. He got a 1600
00:37:51.980 | on his SAT. I'm trying to understand what percentage would it be genetics and nurture?
00:38:01.220 | How much is it, do you think, is you're born with the ability to score high on your SAT
00:38:06.100 | or it's because you studied for it?
00:38:07.980 | I mean, the SATs is irrelevant, I think, in this case, right? I think that what's more
00:38:12.780 | relevant is what your work ethic is going to be. I think that's something that is kind
00:38:19.620 | of developed.
00:38:21.340 | But I would say 99.9% of families out there are not studying for the—pushing their kids
00:38:28.740 | to study for SAT in fourth grade.
00:38:30.580 | That's correct. Yes, I agree.
00:38:32.580 | Therefore, you got to give me a percentage here. Out of 100%, what do you think is genetics
00:38:37.500 | and what do you think is nurture?
00:38:40.380 | Just in terms of SAT?
00:38:42.060 | Just as a T for the example.
00:38:43.060 | I mean, here's what I believe. I believe everyone is born with a certain—let's call it like
00:38:50.220 | a microprocessor. That's what I used to do, like your CPU on your computer, right? You
00:38:54.300 | might be able to pick up certain things faster or you might learn slower than everyone else.
00:39:00.540 | Sure.
00:39:01.540 | So that just determines your speed at which you pick things up. So again, this is where
00:39:05.340 | time comes in, right? If you're super quick, like you have a super fast CPU, you can pick
00:39:09.860 | up things way faster than other people.
00:39:12.020 | But, given enough time and effort, you can be just like everyone else. It's just going
00:39:18.260 | to take you a little bit longer.
00:39:19.260 | Okay. So I'm still looking for that percentage. What do you think is genetic out of 100%?
00:39:24.140 | Out of 100% for the SATs?
00:39:26.140 | Yes, SATs, standardized test scores.
00:39:32.140 | Give me some other parameters. That's like asking—
00:39:35.260 | There's only two parameters, genetics or how hard you're pushed in your environment.
00:39:41.660 | I'd say it's half then, if no other parameters.
00:39:44.580 | Half. Interesting. I think it's more like 70%.
00:39:47.460 | 70% genetics.
00:39:48.460 | Really?
00:39:49.460 | We're born with our personalities, for example. Look at your kid's personality when they were
00:39:57.900 | three years old or two years old or one years old and compare their personality then to
00:40:01.980 | now. Has it changed much?
00:40:05.940 | Actually, my kids have surprised me because in elementary school, when one of my kids
00:40:11.780 | couldn't get any assignments done, waited until the last minute. Now that they're in
00:40:15.180 | high school, much more diligent now and really on top of things. I was worried for a while,
00:40:20.340 | but they got it together.
00:40:21.340 | Diligent. But what about personality, like spunk and joy or moodiness?
00:40:27.980 | Okay. I'll give you another example with that. We purposely signed our daughter up to this
00:40:33.500 | all-girls school that is designed to—there are no boys. Boys always get in the way, right?
00:40:39.980 | It's designed to empower you as a female. Before she went to that school, she was super
00:40:45.580 | shy.
00:40:46.580 | How old was she when she went to the school?
00:40:49.820 | Sixth grade. What is that? Twelve, thirteen, something like that. After being in that environment,
00:40:57.820 | she's a lot more assertive now. I've seen it both ways. Her fundamental personality
00:41:03.480 | probably hasn't changed, maybe. I don't know. But she's certainly gotten more assertive.
00:41:08.660 | I think that's the 30%. That's the environment. You're putting her in this environment. Did
00:41:15.620 | you make them study for the SATs in fourth grade?
00:41:19.660 | No, because the SATs are going away.
00:41:24.740 | But you have this optionality. Why not?
00:41:30.660 | We had them study vocab, but not taking the practice test like I used to do.
00:41:35.460 | Oh, you're getting soft in your riches.
00:41:37.460 | I used to take a practice test every single week. You know what we're doing instead, Sam?
00:41:40.460 | I think this is way more important. Let's talk about college. What's more important
00:41:43.540 | is that you stand out. Everyone takes SATs. Everyone has grades, right?
00:41:48.460 | But my daughter is going to be working on her own course that teaches people how to
00:41:52.020 | start their own business. You just need to stand out, really. You just need to do something
00:41:56.780 | different than everyone else. I have a friend who wanted their kid to be an athlete, but
00:42:01.700 | all the major sports are super difficult. So they chose fencing. And she's a top fencer.
00:42:07.700 | That's smart. I was thinking about Cru being the coxswain. You've got to get the beat going.
00:42:16.700 | What I get from this conversation is that you're very deliberate. There's a very deliberate
00:42:25.660 | intentionality to what you do. From doing your book proposal, to hiring the agent, to
00:42:32.260 | meeting with all the publishers, to pitting them against each other. It seems like being
00:42:39.100 | deliberate and having that plan is a big part of having a successful business, book, life.
00:42:46.100 | What do you think? Here's what I believe, Sam. If you're going
00:42:49.980 | to do something, you may as well put in the effort to do it right to the best of your
00:42:53.860 | ability. And whatever happens, happens. Who knows what's going to happen with this book?
00:42:58.220 | But I put a lot of effort into marketing this book. And let's say it doesn't hit the best
00:43:02.900 | seller list. That's my goal, is to hit the best seller list. But let's say it doesn't
00:43:05.380 | happen. I know deep in my heart that I did everything that I could to hit it. And if
00:43:10.860 | I don't hit it, I can sleep at night. So this is the way that I think everyone should do
00:43:16.140 | things. Don't half-ass it.
00:43:19.140 | Right. What do you think is better? Would you rather let's say your kids get into a
00:43:26.140 | top 10 school and then your book doesn't get on the best seller list or they get into a
00:43:35.700 | top 50 school and your book becomes a huge best seller?
00:43:39.580 | Oh, I don't care about the book that much. Like if they get into a top 10 school, yeah.
00:43:43.500 | The book doesn't matter. The book is an ego play, Sam. Is it going to change my life?
00:43:47.780 | No. Did hitting the best seller list change your life in any way?
00:43:54.500 | I felt very proud to make the Wall Street Journal best seller list and other lists.
00:43:58.260 | I did feel proud because 2020, 2021, and 2022 were difficult years because of the pandemic.
00:44:05.260 | And writing the book for me was a way to say, "Screw you," to the pandemic.
00:44:12.940 | But I've been off the grid for a while. I don't have YouTube. I'm not out there. I'm
00:44:17.580 | not speaking. And so I didn't understand the importance actually of status and being proud
00:44:24.580 | of your work for a while because I left in 2012. And I only understood the importance
00:44:32.780 | of having some status when my kids got rejected from every single preschool they applied to
00:44:37.700 | in San Francisco. And there were six because when you're applying to preschool, you're
00:44:43.300 | not evaluating the kid, although a couple of schools had play dates. They're evaluating
00:44:48.620 | the parents. It's literally 95% the parents. Because I said, "Oh, if it costs $75 to $100
00:44:55.620 | to apply to preschool, I might as well apply to the most exclusive preschools in San Francisco
00:45:03.100 | and see how I do." And I got rejected from all of them except for one which wasn't part
00:45:07.780 | of the exclusive list. And then my buddy who's a CEO and he's worth a lot of money
00:45:13.060 | and he's been profiled by major outlets and everything, he was asking me for advice.
00:45:18.660 | And I said, "Oh, buddy, for you, maybe you'll have a 30% hit rate because there's a lottery
00:45:25.660 | system. There's a lottery system so you're supposedly not able to game the system." But
00:45:31.020 | anyways, he applied to four of the top preschools in San Francisco and he got into all four
00:45:35.620 | even if it was a lottery. So when you're asking me, "Did making that Wall Street Journal
00:45:42.700 | bestseller list or national bestseller list matter?" To me, it actually did because I
00:45:47.140 | was so far down in terms of getting any kind of accolades or any kind of recognition. So
00:45:52.740 | to me, I was like, "Oh, this actually feels pretty good." But it only felt really good
00:45:56.940 | for maybe a month or something and then it's like back to the normal day-to-day.
00:46:01.460 | >> I'll tell you for me, my mom has never really read anything that I've ever done or
00:46:07.540 | watched any videos or anything. But when I told her I was writing a book, she got all
00:46:10.980 | excited.
00:46:11.420 | >> Yeah. I mean, to make our parents proud, I hope you dedicated to maybe one of them.
00:46:18.420 | >> Yeah, yeah, yeah. They're in the plan. Take that.
00:46:25.820 | >> I'm assuming you can buy the book. When does it come out?
00:46:30.420 | >> It comes out May 16th. The best way to get it actually is mainly because I'm giving
00:46:36.780 | away a lot of bonuses is to go over to thefamilyfirstentrepreneur.com. You can get the book anywhere. But if you
00:46:42.780 | want the bonuses, and the bonuses are pretty cool, a three-day workshop on how to get started
00:46:46.980 | in e-com, a two-day workshop on how to make money with content, whether that be YouTube,
00:46:52.300 | blogging, or podcasting. And I'm also doing this six-week interactive challenge where
00:46:57.660 | I'm going to be in a Facebook group live with you all and help you figure out what your
00:47:00.860 | site also should be.
00:47:02.260 | >> See, you're very intentional. You got the bonuses.
00:47:04.500 | >> Very intentional.
00:47:05.700 | >> I mean, and that's really good. It really is the message that I hope many of the listeners,
00:47:12.700 | every listener comes away with. Because when I was doing it, I was not very intentional.
00:47:18.020 | I was like, "I got to write this book. I don't have a book coach, nothing." But I just kind
00:47:23.060 | of went on the Internet. But to be intentional, to pay for things that can add a lot of value,
00:47:28.380 | I think will really help people. Don't be too parsimonious, folks, and wanting just
00:47:33.700 | everything for free. Actually, spend money to go out there and get that education because
00:47:38.300 | it'll pay back multiple fold over time.
00:47:42.260 | Steve, before I let you go, what is one thing I should have asked you but I haven't, or
00:47:48.820 | one thing you want to leave before we go?
00:47:52.380 | >> All right. This is what I believe, and we've been kind of chatting about this the
00:47:57.060 | entire time. But if you don't have a side hustle, or if you're depending on all of your
00:48:03.060 | money or salary based on one thing, whether that be a job or even a business, or even
00:48:08.300 | if you already have a business and you're depending on all your revenue for that one
00:48:11.420 | thing, I really think you always have to have something else on the side.
00:48:16.980 | Because I've just seen it time and time and again. I actually just recently had a conversation
00:48:21.060 | with a buddy who just started paying college tuition for this private school, and he was
00:48:27.180 | stretching. And you know, the economy has been really good for as long as I can remember.
00:48:31.420 | And he was like, "Oh, don't worry. I can make it. I'm barely skipping by, but I can do it."
00:48:35.020 | And then he lost his job. And now he's debating whether to pull his kid out of college because,
00:48:40.900 | you know, it's a private school and it's like $60,000, $70,000 a year. So what do you do
00:48:45.820 | in that situation? But if he had something going on the side, maybe he wouldn't be in
00:48:49.180 | such dire straits.
00:48:50.180 | Now, tell me more about this situation because, you know, you're 48. So I'm assuming your
00:48:55.580 | buddy is in their 40s.
00:48:57.580 | 40s, yep.
00:49:00.980 | But at 48, you've had 25 to 28 years of work experience post-college to save and invest.
00:49:10.100 | And if he's your buddy, he's probably at least medium intelligence who plans ahead. So how
00:49:16.700 | did your buddy end up in this situation? Because clearly he knows the cost of college and he
00:49:21.620 | plans ahead. So tell me more.
00:49:23.540 | Okay. So the problem with this area that we live in, Sam, is that people tend to overspend
00:49:29.060 | on their houses. So even though this person is very intelligent, they... Well, I don't
00:49:35.980 | want to blame the wife, but let's just say that they overextended on their house.
00:49:43.700 | Okay. They have a sweet house though, at least?
00:49:46.260 | Sweet house.
00:49:47.260 | At least at Living Laurent, yeah.
00:49:48.260 | But kind of at a bad time, you know, the timing just wasn't good.
00:49:51.380 | Okay.
00:49:52.380 | Sweet house though. And the mortgage is just gigantic, really. Almost uncomfortably so.
00:50:01.380 | And they spent a lot of their money on that. And in the Bay Area, in the past, real estate
00:50:05.420 | has always gone up and to the right. Always. And now that it's kind of stagnated, like
00:50:10.300 | in my area, I don't know about yours, but it's dropped maybe 20%.
00:50:13.060 | 20%?
00:50:14.060 | No.
00:50:15.060 | Oh, yeah, yeah, yeah.
00:50:16.060 | What's your area?
00:50:17.060 | Mountain View.
00:50:18.060 | Mountain View?
00:50:19.060 | No.
00:50:20.060 | Maybe 10, 15%.
00:50:21.060 | From the peak? No, no, no. I follow it very closely.
00:50:24.500 | Okay. Okay.
00:50:25.500 | Yeah. So, you know, if you put all of your money on a down payment and you have this
00:50:32.300 | insane mortgage and you're like, "Ah, things are going well." And let's say a large part
00:50:36.980 | of your income is a bonus that you depend on getting every single year. And all of a
00:50:41.900 | sudden you don't get the bonus and then all of a sudden you get laid off. You got debt.
00:50:47.620 | So not enough cash buffer?
00:50:50.420 | Not enough cash buffer. Definitely not. And they don't have as much passive income as
00:50:53.980 | you have, Sam, for sure.
00:50:56.260 | You know, it's interesting. I wonder how much of a bubble I live in, we live in, in terms
00:51:03.140 | of thinking about our finances and being intentional. Because the last thing I wanted was to work
00:51:09.500 | forever given I worked in finance and it was like 60 plus hours a week and a lot of stress.
00:51:14.640 | So rationally, I would save and invest and try to figure it out.
00:51:18.700 | So maybe they were also rational in the sense that they experienced a 10-year bull market,
00:51:23.780 | life at big tech is pretty comfortable, relatively easy, and they just got caught by surprise.
00:51:31.620 | But they went through the global financial crisis in 2008 given they're 48 years old.
00:51:36.060 | Yeah. I don't obviously know this person's finances. I just know we had this conversation.
00:51:42.260 | And I also do know that a lot of people here stretch big time, mainly for their home. And
00:51:47.340 | I also know that I'm super conservative. I don't believe in taking a huge mortgage. I
00:51:52.780 | wouldn't be able to sleep at night.
00:51:54.540 | Whereas let's take in the business space. I have friends that are just kind of leveraged
00:51:58.500 | to the hilt for their businesses. They take out loans for inventory for their e-commerce
00:52:01.980 | businesses. And it's all based on prior history. Everything's been good up until now because
00:52:09.420 | they haven't experienced really something really bad happening just yet. This is why
00:52:13.820 | I don't know if FIRE people listen to your podcast, but I used to chuckle all the time
00:52:19.860 | with these FIRE guys going, "Hey, yeah, I can retire with this portfolio." Because you
00:52:23.940 | haven't lived through a downturn where all your stocks from portfolio goes to junk. And
00:52:29.180 | I've lived through probably three of them at this point, right?
00:52:33.500 | So how much is, I guess in conclusion, if you could put a net worth figure, how much
00:52:38.540 | is enough for you?
00:52:40.080 | How much is enough for me? I would say 20 million would be great.
00:52:44.220 | 20 million.
00:52:46.140 | What's your number?
00:52:47.140 | Well, I did a survey, 10,000 people, and I asked them, "What is the ideal number to retire?"
00:52:52.980 | Oh, the ideal number or what I want?
00:52:57.940 | Right away, ideal number or what do you want? And that number was 10 million, but that survey
00:53:03.740 | was done a couple of years ago. So you add on inflation, maybe that number is 12 million
00:53:08.580 | now.
00:53:09.580 | Right.
00:53:10.580 | So I feel like my indication is go to where the estate tax threshold is. So in 2023, the
00:53:19.460 | estate tax threshold is 12.92 million per person. So if you can accumulate up to that
00:53:27.020 | and die, you don't have to pay 40% estate tax, death tax. But then if you cut that estate
00:53:33.700 | tax threshold down to 5 million, then I think that ideal number is maybe 5 million if you
00:53:39.380 | have that cash flow. I mean, obviously it depends on where you live. So I'm kind of
00:53:42.460 | going with the wisdom of the government and how they're going to tax you once you die.
00:53:46.780 | So yeah.
00:53:47.780 | So your number is 25 million approximately with your wife?
00:53:51.180 | So I would say per person, 12.92. I'm just following the estate tax threshold.
00:53:55.460 | I mean, I don't, that's weird. I've never heard someone answer like that because I don't
00:53:59.500 | care when I die. I mean, it's not my problem.
00:54:03.340 | Well, that's not the intention, Steve, that I know.
00:54:06.580 | No, I have a trust. Do you have a trust? You have a trust, right?
00:54:09.740 | We created some trust. Yeah. So you have to be intentional with that because the 40% tax
00:54:14.860 | after all that effort would be a shame to pay.
00:54:17.860 | When you're dead, it doesn't matter. And I actually don't want my kids to have a certain
00:54:21.260 | windfall money. So they're actually not getting it until much later. And this has to do again
00:54:24.820 | with motivation. Like a lot of things I did, like what I've started my business, if I wasn't
00:54:29.500 | motivated to make up for that money that my wife quit, who knows? Maybe not. Because I'd
00:54:33.620 | been talking about it for a long time before that happened.
00:54:35.860 | Well, yeah. Seven years before you left your job.
00:54:38.180 | Well, no, no. I mean, before we started Bumble Bee Linens, we were always talking about starting
00:54:42.820 | a business, but we never did until something happened where we had to do it.
00:54:47.060 | Right. And then once she started, it took, it was seven years until you left, right?
00:54:52.500 | Until I left. But my backup plan was the blog. That was my retirement plan.
00:54:56.900 | Yeah. Yeah. Well, cool. So. Well, great. It's been great chatting with you for the past
00:55:02.140 | hour. I hope listeners got a lot of value out of this. Check out my wife quit her job
00:55:08.100 | and Steve's new book, The Family First Entrepreneur. And I'll speak to everyone later. Thanks so
00:55:13.940 | much, Steve. Thanks for having me, Sam.
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