They Lied. You Don't Need Money To Make Money | Ep 814

If you believe the shit that you're reading, if you're listening to poor people and advice on how to be rich, you will stay poor. They have no idea. You don't need money to make money. The wealthiest people in the world see business as a game. This podcast, The Game, is my attempt at documenting the lessons I've learned on my way to building Acquisition.com into a billion-dollar portfolio. My hope is that you use the lessons to grow your business and maybe someday soon partner with us to get to $100 million and beyond. I hope you share and enjoy. I want to break the myth that you need to go make a million dollars, that you need money to make money. All right. And so I'm going to show you 10 different ways you can make $1 million, and you can apply this to $1,000, $100, $100 million. The concepts is what I'm trying to translate to you, because you can do any of these things and add or detract the amount of zeros that you feel comfortable with. So if you want to make less money, by all means, take more zeros off. All right. Now, the first thing that you can do if you want to make $1 million is that you can sell something for $1 million. And as crazy as what I'm saying sounds, You absolutely can sell something for $1 million. If you go to an e-commerce store and they're doing $100 million a year and you say, "Hey, if I can increase your conversion across your entire site, rewrite your emails, redo your landing pages, et cetera, and I can get you a 5% lift site-wide, can I get 1% of that?" So you make them an extra $5 million a year and you get 1%. Do you think you can do that? Yes. Why are you gonna be able to do so much? Not because of you, but because of who they are. All right, so you make $1 million by selling someone else $5 to $10 million of value. That's how you make $1 million. Like, real talk. The second way— and if you're like, I don't know how to do that, that's fine, but accept that you don't know how to do that and then say, I want to learn how to do that, and then go get the skill of doing that, and then you can go sell it. But you can't say that you don't have the money and that's why you can't make money. That's why I'm making this video. The second one is that you can borrow $1 million and then buy something and have someone else pay it back. It's fundamentally what real estate is. You borrow money to buy an asset, you put tenants into the asset, they pay off the money that you never had. That is what real estate is, right? And if you can get the asset for free, which is going to be the next bullet I'm going to make, you can get a contract on something for less than it's worth and then you get the bank to finance the whole thing. So if you're like, but I don't know if they'll do that, They will if it's priced low enough. So if you have to go talk to 1,000 building owners, then you will probably get one of them who's willing to depart for their thing for significantly less than it's worth, and a bank will loan the difference, and you don't have to put any money down out of pocket. They'll also be willing to sell or finance a portion of their house to you. So if you get a house for, let's say, let's say you have a $100,000 house, okay, and you get it under contract for $80,000 from them saying that they're willing to give you the house for $80,000, and then you say, cool, I I can give you 70 and then you gotta seller finance me the 10 over the next 5 years. And they say, sure. And now all of a sudden you just gotta get the bank and the bank finances 80%. And now you actually just made the difference if you wanted to. And you can take that number and you can do it at $100 million. You can do it at any of these levels. That's number 3 is you refinance something for more than you bought it. Number 4 is that you get a contract for something for less than it's worth and then you sell that contract. And so for example, in the, the refinancing thing that I just went over, if I got that contract for 8, I could not even go through with the purchase and just sell the contract to somebody else for 9. And I make the difference between those two prices. Again, add as many zeros or as few zeros as you want to this example. But if you understand how it works, then you'll stop asking, how do I make 6 figures a year? Because fundamentally, the fact that you're attaching it to a year means you're thinking that you have to trade time for the money. And that's how poor people think. And that's why most people stay poor, because they're trying to think about what they have to do over a year to make $100,000 because they're not thinking in terms of value. They're thinking about themselves. So if you wanna be selfless, you have to think about the value you're providing somebody else, not about the money you're gonna get, the time that you're gonna spend. So if you can make somebody like the CRO example, conversion rate optimization example at the beginning, if I can make someone $5 million and it takes me 10 minutes, I can charge a million bucks for it. Why would I ask, how do I make a million dollars a year? I would try to do 100 of those every year, right? Doesn't matter. How many of those would I do? As many as I possibly could. People think differently if you want to have more than you have right now. Now, the next one you can do is that you can sell something that's really expensive and get a commission. Sounds really simple. If you sell a skyscraper that's a $100 million skyscraper, you'll get 3-4% of that deal. You'll get $3 or $4 million on a single transaction. If you sell a $20 million residence, and you might be like, that's crazy, they exist, look on Zillow. It's fine, believe me, they exist. The realtor gets 5-ish percent of the transaction. That's $1 million. They never own the asset. And so you absolutely can make $1 million with no money down if you have skills. That is the point. That's the point I'm making. The next one is that you can find somebody who has an audience and buy whatever they're about to launch early and then sell it later. Now that one does take some money. It's less, but the, the value of the thing later, that's how it balloons. This is how the entire NFT thing worked is that you have tremendous demand for a scarce resource. They have the scarce resource and then it balloons the price because there's so how many people bidding against each other to get it, right? And so getting in early on those types of things, which is why if you buy into something pre-IPO, it tends to almost always go up simply by the fact that there's way more eyeballs that are competing for it. The next one is selling units of stuff. All right? If you wanted to make a million dollars, you've got 52 weeks in a year. You gotta sell something that's about $20,000 a week is what you gotta make, right? Over a year. So there's a million bucks, 20 times 52. It's technically $1,040,000 for the internet trolls. But we're gonna go with that. So if you gotta make $20 grand a week, how many different ways can you make $20 grand in a week? Well, you can sell 20 people a $1,000 thing. You could sell 2 people a $10,000 thing. You could sell 1 person every 4 weeks an $80,000 thing, right? Or you could sell on a weekly basis 20 people who have $1,000 lifetime value. And so for example, if you have a $100 a month membership and the person stays for 10 months on average, then if you sell 20 of those every week, over time those will stack up and then you will cap at $1 million. And the only way to grow from that new million, that's your new cap or threshold, is either you gotta sell more units or you gotta make the thing that you're selling worth more. That's it. And so right now, for example, if you've been capped at your current revenue level, your current income level, this is for small business owners who are listening, you either gotta sell more units in the same period of time or you gotta make the units worth more. That's it. If you've been stuck, Those are the only two things. Those are the only two levers you got. So you just gotta figure out which one it is for you. The next one is that you can get people to give you their businesses for no money down. All right? And so a good friend of mine actually did this and he combined four different information businesses into one business. And they were all small businesses. They were all doing about a million-ish a year. I get small is relative, but you know, like, and so he combined them all to be a $4 million top line, million and a half bottom line business for no money out of pocket. He literally said, hey, I know you don't wanna do this business anymore. Just give it to me and I'll pay you the income that you were gonna make for this business for the next 2 years. That's what he said. And they said, sure. And so he combined all those businesses together and then overnight he owned an asset that was doing $1.5 million a year in profit and $4 million in top line. And it cost him nothing to do it. So not only did he make $1 million, he made something that made him $1.5 million a year per year. Now he has to pay the debt service back, which is the, the loan that those people said that he would pay them over time back from the profit from the business. But he owns the asset now. And so if he turned around and went to say, hey, I'm gonna go sell this, he could probably sell the thing for $5 million put together. And so he got no money down and he said he would sell it and he could sell it for $5 million. And let's say that if the seller financing all those was 2 times earnings over, over time, because at, at small numbers, the, the deals aren't very good for sellers, right? It might cost him $2 million over the next however long, and he can flip the whole thing for 5. And he makes the 3 and he could still just choose to slowly pay 'em off over time where he could probably have an early sale bonus and pay even less. Like he made more than a million dollars with no money outta pocket. And if you're like, I don't know how to do that. The point is not to teach you how to do it. The point is to get you to recognize that you don't know how to do it and understand that the people who are making money don't constrain themselves by time. They're not thinking, how do I make X dollars per hour, X dollars per year? They're thinking, how do I provide the most value to somebody so they'll give me a percentage of the value I provide? And so the reason a good buddy of mine was able to make so much money selling and flipping commercial real estate was that he realized that if he bought for very little money down, that he could basically take 100% of the cash that someone would put as a down payment for a commercial building and make it into a write-off. Which means that if you made $100,000, let's assume you're in the highest tax bracket, a million dollars a year, and you had $400,000 in taxes, you could take the $400,000 that you were going to give to the government and just give it to him, and then he'd put it into a building. But because of the amount of leverage he was able to get in his deals, because he would get them to seller finance half of the down payment, so you only had to put 10% down on these buildings. So when you put 10% down on the building, he could take the depreciation on the whole building and hand it to the guys who gave him the money. And so they got free buildings. They didn't even care about the return on the building because it was bought with free money. And so he figured that out. And so he was able to get these big buildings under contract under the terms that he knew his investors would like because it basically exited them from the tax system. And then he was able to make the difference on every one of those deals. And so it was because he understood the value that he was providing to the building owners who'd owned the buildings for many, many years and wanted to get cash. He would lease it back to them after he bought it from them, and then he would flip it to an investor who wanted to get a tax write-off. So he understood the needs of multiple parties and was able to make the difference. And if he does one of those deals and he makes $4 million, how does he make $100,000 a year? I have no idea. He probably wouldn't answer the question because he's like, why would I bother? And so that's the things people are asking the wrong question. And so you will always answer the questions you ask. And so the point of this to get you to ask different questions, I'll show you the last one right now, which is that you might be like, okay, well I don't have any money, et cetera. And I gave you a whole bunch of examples that don't require any money, but here's another one is that you can go find stuff that you really like and go promote that. So you don't have to go find and make your own products. You go find products that you really like from other companies and just become affiliates of those products, right? And the nice thing is that I just recommend you be honest. Be like, hey, I tried 100 fucking different soaps. This is my favorite one and here's why. People don't wanna go through the time and the money of figuring out which soap is the best for your audience. And if you make the rec after you do that, they're like, oh, well shoot, he just saved me time. He provided me value. And so then I'll go buy from him through his link or whatever, right? And so you can affiliate other people's products and make money in that way without any money out of pocket. And then finally, arbitrage in general, which is a fancy word, but it just means that you sell the same thing between two different markets because they're priced differently. So the simplest example is if Bitcoin is $19,000 in Japan, uh, on the Japanese market, and it's $19,100 in the US market, You buy the $19,000 Bitcoin over in Japan and you sell it in the American market for 19.1 and you make $100. That's all arbitrage is. And it happens with physical products. It happens with lending money between two parties. If you can get money for 1% and you can sell the money for 6%, you make 5 as the difference and you can put as many zeros as you want on that transaction. It works the same way. All of these are different versions of arbitrage, which is just same thing, 2 markets, 2 different prices, you make the difference. And so if you're looking for ways to make money, look for arbitrage opportunities because that's where you can make tremendous income. So the next way to make a million dollars without any money is that you find something that is undervalued or that you believe will be undervalued in the future, and then you ask for a contract to buy it. So I was talking to Caleb about this because he's like, oh, it's kind of like flipping. I was like, it's not, because the difference between flipping is like you go to the garage sale, you buy something for a buck, and then you find out that it's worth $30 online and you make The difference here is that when you get an option, it's like you going to the person who owns the garage and saying, hey, I would like the option to buy this thing for a dollar, or rather $2 if they're marketing it for a dollar, for the next 30 days. That's what I would like. And I will pay you a penny for that option. And then you sign an agreement and they say, sure, you have that option. And then now you take that piece of paper, the agreement that you can purchase it at a fixed price over this period of time, and then you say, Hey, anybody who's got $30, I know you want this thing cuz you're willing to pay me $30. Why don't you pay me $20 for it and I'll just give you the rights to buy it. And then you sell the paper for $20 and it costs you a penny. And then the person who bought it from you makes the spread on the $10 because they're happy because they're gonna get it for less than they probably would've paid for it. And you get rewarded for finding something that is worth more than you got secured the option to purchase it for. And you made the difference. And in that instance, you made a lot of the difference, right? And you're like, how is that possible? I'm making these to break your beliefs about what is possible, because it is a farce when you think that you have to have money to make money. You have to have skills to make money. If you can find an asset that's undervalued, like a house, like a building, like a WhatsApp, whatever. And if you're like, well, these aren't all over the place. Duh. That's why it takes skill to do it. That's why everyone's not a millionaire. I'm not saying it's easy, but I'm saying you don't need to have money to make money. That's what I'm saying here. And so if you go find a house that's worth $10 million and you can get it for 7, you can get the bank to pay you 8 for the house because they'll do 80% loan to value. Right. And so if you bought it for 7 and the loan will be for 8, it's like refinancing out the money. So you make the spread from the bank with no money down. So Manny Kochman was able to make his first million dollars in real estate, if you've ever heard his story, was because this is literally what he did. He went from broke to a millionaire on his first transaction. The reason I'm telling you this is because if you believe the shit that you're reading, if you're listening to poor people and advice on how to be rich, you will stay poor. They have no idea. You don't need money to make money. Real quick, guys, you guys already know that I don't run any ads on this and I don't sell anything. And so the only ask that I can ever have of you guys is that you help me spread the world so we can help more entrepreneurs make more money, feed their families, make better products, and have better experiences for their employees and customers. And the only way we do that is if you can rate and review and share this podcast. So the single thing that I ask you to do is you can just leave a review. It'll take you 10 seconds or one type of the thumb. It would mean the absolute world to me. And more importantly, it may change the world for someone else. Another way to make a million dollars is to sell something that's expensive that you never owned and be the salesperson, like a $20 million house, and get a million dollar commission. That's how you do it. You never own the house. You literally find something that's very valuable. You go to the owner, you say you can sell it, you have the skill of sales, and you sell that very expensive thing and you get a small percentage of the thing. And the bigger the thing that you sell, the more money you will make. The same thing can happen for a business. So when we sold Prestige Labs and Gym Launch, we sold for $46.2 million. The bankers got $2 million for facilitating the transaction. They never owned anything. They signed an agreement with us, which cost them no money, and then they did work, which cost the company money, but didn't cost the individuals money. They had skills, they applied those skills, and they got paid $2 million. You can make money, lots of money without having lots of money. And literally all you do to all of these examples I'm giving is you add zeros. Like it works the same way. You can get an option to buy a company. What do you think options traders, that's what they're doing. They trade options to buy companies. So they, they buy an option to buy a company. Let's say they get 100 options cuz they have limits on them. It's not an unlimited option. They get 100 options that they can choose to exercise. Right. And so let's say that the stock price that they're getting the option for is $40. And at the time it's $50 in the future when they secure the option in the past. And so they paid 1% of the total option, which would be 40 times 100, which would be $4,000. They pay 1% of that is typically the price for acquiring options, 1% of the total purchase. So they pay whatever, $40 for that. And then later, if it does go up and it's $50, they make the difference on the 10 times 100. So the $1,000 they made on $40, right? That's how option trading works at a high level. There's a million other things I don't wanna get into it, but the point is like, They're doing that just on companies, right? So you can do that on a house. You can do that on a business. You can do that on a company. The concept of trading a future value, that's what it is. Another way that you can make a million dollars is that you can put a small amount of money into something that's extremely risky, which is the NFT, crypto, et cetera world, and then attach an audience to it. And so you create scarcity for a good or service or asset. And then you blow an audience on top of it, which then jacks the price up of whatever the thing it is that you're selling. So you have a scarce resource. Let's say you have 5 of a thing and then you get a million people to want the thing, and then you sell only those 5. And then the price that you can charge for anything when you have a million people bidding on it, if there's only 5 of them, is a lot. So it's another way that you can make a million dollars, and that's on a digital asset, which costs you nothing to do. Another way is literally reverse engineering this. So this is a little bit more tactical. But I think it's, it's, it's important is that most people don't even know the math around making a million dollars. All right. And so in a big picture perspective, you can just sell something for a million dollars and that may make you laugh, but like that is also a way to make a million dollars. Underneath of that, you could sell 100 things that are $10,000, right? Which is 2 a week. So 2 people a week for 10 grand, you have a million dollar business. Now you're not making necessarily a million dollars unless you have no employees, but you have a million-dollar business. Underneath of that, you can also think about it from a monthly perspective, right? Which is, okay, if I have people who are paying me $200 a month, right? That's $2,400 a year, assuming they stay for that period of time. And in order for me to make a million dollars, I have to do 400 people who are paying me $200 a month, roughly. It's $83,000, but you get the idea. 413 or whatever the number is. On recurring revenue every single month, Makes you a million dollars, right? You can sell 1,000 people a $1,000 thing. And a good way to think about this is not even necessarily the ticket price, but the lifetime value. All right, I'm gonna get real with you guys right now. This is how I analyze every business that I look at. I look at sales velocity against LTV, and you're like, what the fuck is that? I'll tell you right now. Sales velocity is the number of units sold per month. All right? So if you sell 20 people a month on your thing, your sales velocity is 20. It's the number of units sold. Okay? And then you multiply that. By the lifetime value of the customer. Okay? And so for me, I know I have a long time horizon. And so even if something's $10 a month and I know that this person over time is going to be worth $1,000 to me, then I know that at this sales velocity, at 20 times the lifetime value of $1,000, I'm gonna be at $20,000 a month. If I change nothing about this business, it'll increase quickly and then it'll slow down as you start to reach near equilibrium at the top where you have 20 people per month $1,000 in LTV. It just depends on how long it takes you to get that $1,000. If it takes you a year, you'll get to that balance point in about a year. If it's actually, probably take you 2 years cuz you have a year to assemble that amount and then a year later, but doesn't matter. And so big picture, when you are thinking about how to make a million dollars, multiply the number of customers you have by the lifetime value, and that will give you your predictive index of where you will hypothetically max out. So if right now you're stuck, right, at 10 sales a month, and the average person who pays you is worth $1,500 of lifetime value. And if you're stuck at $15,000 a month because you got 10 people times $1,500 and you're stuck at $15,000, you're not gonna grow because your lifetime value's 15 and you're selling 10. Unless you make them more valuable or you sell more of them, you're not gonna grow. And so if you want the million dollars, you have to figure out how to make that math work. So either you got to sell whatever that is, 5 times, 6 times more on the front end in terms of total units, or you have to make them worth 5 or 6 times more on the back end by selling more expensive stuff, get by getting 'em to stay longer, upsells, cross-sells, et cetera. Right? And so reversing your way into a million dollars from a business perspective, it just comes down to number of units sold and then lifetime value. That's it. Another way to make a million dollars with no money is that you can combine things that make money for no money down. I'll give you an example. So there's a company that we're looking at in our portfolio that's trying to come on, and they actually, this guy went through a course on M&A. He got 4 small guru businesses to give him their businesses. He seller financed it. So let's say, you know, I'll give you $200,000 for your business. Your business makes $200,000 a year, and I'll give it to you over the next year, right? So you just give me the business, I'll keep running it. You get your, your $200,000, and after the end of that year, I get it back where you can spread the debt over 2 years, whatever. Right? And so he did that and he combined 4 different businesses and he has a business now that does $4 million top line, $1.5 million in bottom line. And he didn't build any of it. He just combined it by getting all of them to seller finance their own businesses to him. And now he has a business that does 4 and 1.5, which might be worth $4 or $5 million combined. Right? And so he was able to create that value because of skills. He didn't need money to do it. He needed skills. And that's exactly what he did. And in that instance, he didn't just make a million dollars. He made something that makes him a million and a half dollars a year, and he just has to wait a year to pay off his debts and then he can start realizing that. But day one, even with the debt on the books, he has the asset that is now worth more. Now you probably wanna show a run rate to that, like, you know, it's stable and it's not gonna all go to shit, but fundamentally it is now a much more valuable thing than it was before. So when you combine small things into a bigger thing, things become more valuable. If you've heard the term a roll-up in private equity, that's when they take lots of little things, they combine them together and they make it into a big thing. And the big thing is worth a lot more because of the effort it took to combine all the little things. And so a guy who's got a bigger check, Carlyle can't write checks for less than $100 million, right? They just, it's not worth it to them. It's not worth the time. And so they let these small operators make the purchase more efficient for the big sellers and get the arbitrage. So at the smallest level, people will just give their businesses away for free. By the way, if you didn't know that, like every day, like 10,000, you know, old people retire and they just give up their businesses cuz their kids don't wanna be plumbers or whatever it is, right? They just, they just give up their businesses. So there's huge opportunity right now to do that. And so people can mop these up for basically nothing. They roll them together and they sell it to the first kind of tier of private equity. Now those tiers of private equity, like the guy that I was telling you, he's just mopping up the bottom here. Right? He's got $4 million, $5 million bucks of top line. Now another guy's gonna take 4 or 5 of those guys and mop 'em into $25 million of top line and $6 or $7 million of EBITDA. And he's gonna be able to sell that for $60 to $70 million. And then from there, there's a guy who's mopping up 25s and putting them together to be $125 million top line with $30, $40 million. And that guy's gonna get even bigger multiple. So you get the arbitrage on the multiple that is given to the business that you're buying. Like that's the arbitrage between the two things. Like the guy who gets it for free, he gets a huge arbitrage by percentage, but his absolute amount is lower at the end. The arbitrage in terms of multiples is not as high, but you're getting it on an enormous amount of money. And so everybody makes money down the chain. It's just on different ways here on the bottom. It's on the multiple on the top. It's just on the fact that it's such a huge amount of money. If you get one more, if you go from a 10x to a 12x on $100 million, Well, then you just made $200 million, even with that 10 to 12 difference, right? That's the idea. Another way to make money is that you lend money between two parties. So if you get access to money between one person and he's like, I'll give you money at this rate. And these people are like, I'll pay you money at this rate. You hand the money to this person, you make the difference. And you can do that at every level of business, whether it's $100, whether it's a billion dollars. You're arbitraging price, but now you're actually just arbitraging money. Another way to make a million dollars is to promote stuff that other people sell. So rather than you try and figure out how to like build a supply chain and build products and do all that stuff, is you find stuff you like and then you promote their stuff and you just get money and it costs you nothing, right? All it did is cost you the time to build the audience. All right? And so if you're like, well, I don't have an audience, it's like, well, I didn't say that it was free. I said it wasn't costly money-wise. You can do that if you don't have money, if you have the audience. If you don't have the audience, get the skills. That's the point. And the last one is arbitrage of a different kind, which is arbitraging between two things. And so think about it this way. So I talked about the option thing, right? That might seem like a little bit amorphous to some of you, but think about this. Imagine you look on walmart.com and see a product that's selling for $10. and you go on Amazon and it's selling for $14. You can market and have the difference between those two prices and never touch anything, right? And you can do that as many times as you want to make a million dollars and it costs you no risk, right? Now, whenever you take on inventory, take on these other things, you incur more risk, but you have more upside. But the thing is, is that with scale, you can make anything big, right? So if you sell a million units of something, you tend to make money in general. And so, I want people thinking in orders of magnitude in terms of like, not just how do I make $100,000 a year, but how do I make a million dollars on a single transaction? If you're like, I don't know how to do that, then solve for that problem. Like it's gonna take you the same, and honestly it might even take you less time to learn what to do to make a million dollars than it does to learn what to do to make $100,000. Like the time it takes to learn the thing is the same. You just change the goal of what you're trying to learn. And so what ends up happening is that people go up the entrepreneurial ladder And they give themselves permission to learn the next level. When I'm giving you permission to learn the top level day one, you can just go for learning the skills at the top. You don't have to learn how to make $100,000 a year. You can just go straight for learning how to make a million dollars on a single transaction and learn how to do that. And I'll tell you a quick story on this. So a buddy of mine got into real estate, was flipping houses, didn't think there was a lot of money in it. Was like, oh, this sucks. There's so much work and there's all those 10, you know, Fixings and all this stuff. He didn't like it. So he ended up buying a 14-unit apartment building with someone else's money, and he didn't have any. Bought the apartment building and then sold it 4 months later for $500,000 more, and he made $500 grand in one transaction. He was like, holy shit. And so then he realized that the more expensive the building he sold, the more money he made. And so then he started getting into commercial real estate, which is even more expensive than residential on average. And so he's like, wait a second, I can buy something for $10 million and then I can flip it to somebody for $13 and not even hold onto it for that long in a few months. And then all of a sudden he started flipping 30 or 40 of these a year with just him and a couple of VAs. And just like that, the man's making many, many millions a month. And I say many, many, I'm being many, many with a very small team because he learned a skill that he could do at scale. Because he's not actually selling a ton of units. Just each of the units he sells is worth so much. And so he sends out 250,000 letters a year to make 40 deals. People are like, oh, well, how can I find a deal like that? Knock on 250,000 fucking doors. And that's how you find deals like that. But people dramatically underestimate the amount of effort it takes to be really successful. They're like, I sent 100 letters out. It's like, 100's not even a test size. It's literally just an irrelevant number. The statistical, like, efficiency of that number is so small It's irrelevant. It doesn't even matter.