Why He's Cutting Back on Angel Investing After 200+ Deals

All right, we are back with The Mechanics of Money, this time with Adam Spector. Adam, thanks for coming on.

Sam, pleasure to be here.

I know we've been talking a while before we even hit record too on all things from early-stage investing to the giant AI implications that are coming out to how people spend their money as a kid. But more importantly, kind of give us some of your background. We can go dive into all those fun areas here shortly.

Yeah, so I mean, high level of me, right? I'm a 4-time entrepreneur. So I founded 4 different companies. One failed, one was acquired, one's still running. It's pivoted and gone in a different direction. And then I'm running as CEO the other, which is a company called Shore. We essentially removed the CEO from doing any back office chores. They should never do those. We fired them from doing that work. And I've also had the privilege of investing in over 200 early-stage companies. I've been based in San Francisco for almost 16 years now. And throughout that period, I've had the privilege of doing a lot of early-stage investing. So I've seen a lot of things come and go. I think I have a really good track record, but it's my side hustle. It's not my day-to-day.

Okay, cool. And let's go talk through those 4 companies, right? Walk us through kind of different pieces of them. So the first one, the one that failed, like at what point did you realize, hey, we need to call it quits? Or kind of how did you come to that realization? Because I think that as entrepreneurs, it's a really delicate balance from the standpoint of I can go push through this period that's kind of shitty and get to the other side of it and things are great, or I have a sunk cost here. I need to go move on. And that sunk cost fallacy is costing me way more money in opportunity cost in the future. So how do you think about that on judgment to make that call?

Yeah, I mean, well, the short thing is we made a mistake. I don't believe in regrets, but I do somewhat regret, to use the term badly, us shutting down the company. The reason why is— so why did we make the decision? Well, we ran out of steam. We just had been at it for a while. We were running out of money. We didn't think we had visibility to raising more money. In myself and my co-founders, we probably could have afforded for a while to go without any pay whatsoever, but we just kind of ran out of steam. We didn't think it was going to get huge. So we decided to shut it down. We did it in a proper way. We gave money back to investors, all those things. So I feel good about how we did it. However, the mistake we made was twofold. One, I think every founder should get an exit if you can. So we actually had some interest in acquisition. It really would've been an acquihire. Nothing super sexy, but would've been an acquihire. And we actually interviewed at a really cool company, although at the time we didn't think it was very cool. We basically said to ourselves, if we were applying out of the blue, would we go work for this company? And we were like, no, it's not that exciting. We don't have an interest in it. They were interested in us as a team. They were going to make us really strong, essentially job offers with a lot of equity. Our investors would've been wiped out, which we felt bad about. However, we should have taken the win because on paper, people just see you had an exit. They don't usually ask for how much or how good it was. They just say, wow, you got acquired by this company. So that's number one. Number 2, even if you got acquired by the company, you can leave the next day. You can still say we got acquired and then quit. Now you're just a W-2 employee. You could have quit. I don't think that's the right thing to do to the company acquiring you. That's not why they did it, but you could have done that and you still had the win from a public perception variable. The final point is this company, of course, hard to know these things. This company ended up, the equity probably 10 or 20x'd at least multiple times. They're a publicly traded company today. We would've been employed, I don't know, maybe employed like 500 at the company at the time. Their equity was way lower priced. I emailed the CEO a few years ago. I was like, oh man, do you remember when we had those discussions? Like, we should have said— I said, yeah dude, you should have said yes. Our equity's gone crazy. But we didn't know, so we shut it down and moved on. Oh, and the final part of why we made a mistake is about 6 months after we shut down, another company came out. So that first company was doing background checking basically as a service. 6 months later, a company called Checkr came out in the market. We were building Checkr before Checkr. That was literally the idea we had. We didn't do it quite the right way. We weren't hitting on all the right elements, but it was the right general idea. We were in that space. They came out, raised a bunch of money. I was actually lucky to be a really early seed investor in them because I was like, oh my God, I know this space super well. This is absolutely going to be great. But we had that idea. That was kind of near the tail end of our work. We had that idea to build that and we were doing it for companies. We just ran out of steam. So from both perspectives, we made a mistake. So

before we go even deeper on that too, I think you made a really big point where if you are a founder getting that checkmark that you have had an exit, regardless of if you take off $500,000, $5 million, $10 million, right? You get that checkmark of approval, kind of like being a fund manager, getting your first actual win on the board, right? That gives you some level of track record and will help you massively whether you're raising for your next round, whether you're raising for your next company, right? you then enter a whole new league of person. I'm sure you've seen that kind of going forward as well.

100%. And this is once again where we made this mistake is the— we did look at opportunity costs and say, hey, what do we rather— what would we rather be doing now? And the mistake we made, I think most entrepreneurs should say like there's 2 options for you. You either sell and get a win, even if it's for almost no money, you just get the win and you build— you're building your reputation. Essentially, you know, this show is about investment. You're investing in your future by getting that win on your track record. Now, luckily in Silicon Valley, you can fail and move on. But even so, getting that win is great. Or to your other question, like, we should have stuck with it. Had we just stuck with it longer, maybe we would have had that idea or been in competition with this company, with Checkr, and they would have acquired us someday. We would have rolled in because we had all the tech, the right people, the right idea, right team. So I think a lot of entrepreneurs jump out of things before they really should. Because they think about opportunity costs, whereas there's a real value in just sticking with something and essentially having that grit to stick with something and getting to a great outcome.

So there's both sides to it, right? Because you can be wrong on both sides of the equation. One in terms of maybe jumping ship too early, the other one on being part of a sinking ship way too long and losing some opportunity. If you had to go over and do it again or give advice to someone who's in that same position, What kind of framework would you use to figure out where you actually are and which route makes sense for you?

Yeah, I mean, I think I would ask the person, have you really given it all? Are you truly, truly, truly done? Just mentally checked out? There's no options out there for you? Once again, we had at least that other option of being acquired, my company, and we didn't take it. And so every founder I talk to and advise, I say, hey, look, if you have an option of being acquired, if you're sort of done and out of it, Go get acquired. Like, just get the win, get out of it, and move on. So that's the advice I would give to anybody, and that's where we made a mistake. And then I think for other people, I'm like, hey, are you sure you're at the end? Is there nothing else here? And do you have no traction? Once again, if you have a little bit of traction, you just need— I think Kevin Kelly said really famously, you just need an audience of one, one true believer, or 100 true believers might be his thing. We had customers who were paying us money. to do background checks for them. We were running it on top of other companies' APIs, things like that, which I'm sure is what Checkr was doing early on too. We could have built that out and we just didn't follow it through. But we had customers who were like, yeah, we like this. We were making margin on it. It was not profitable at the time, but it was a real business. And so I think if founders have one or two of those two options, either one of those options, stick with it a little bit longer because you just don't know what's going to come next.

Do you think it also matters too what stage in their career they are too?

Maybe. Maybe not though. Sure. Yeah. Look, if you aren't going to get paid anymore and you lose your health benefits and that's going to impact your entire family, sure, you need to be able to pay for your house and stuff. Sure, make that decision. If you were younger, on the other hand, and the worst-case outcome is you have to go live in your old bedroom at your parents' house, no, keep fighting. you have nothing to worry about. Keep on fighting that good fight every single day. Even if you aren't, even if your company's failing, you might have this other idea to pivot into something crazy. And then you go do that crazy pivot because you're out of ideas and you go do it and it becomes the next huge thing. There's so many companies that I know of that have done similar pivots and then boom, it takes off.

Cool. I like it. And now let's shift gears a little bit more so to the company that you actually did get acquired.

That one we were doing marketing, basically marketing software. So it was machine learning marketing software. And the whole thesis of that basically was to— we were one of the early pioneers. And I'm sure we all use YouTube and YouTube. Your YouTube page is different than my YouTube page. And by the way, that page changes in real time. So if you're on your phone at a different location, what you see on that page will also change. And YouTube's gathering all these data points about you to make this decision to keep you engaged on the site. My co-founder of that company was one of the first guys who actually built the first algorithm at YouTube to do that. We were like, let's go build a company to make this happen. So we did. It was good. It wasn't great. The software was sort of ahead of its time in getting paid for attribution of like, hey, did we actually increase your page views or increase the amount of product you sold? things like that, which was really difficult. So we got acquired by a company called Maven. They did marketing software and it was a good win for the team, not wonderful for the investors, but we moved on and it was a good experience.

Cool. And also too, so now you've got one company you're acting CEO, one company you're just more so investor.

Advisor, investor. I have a significant amount of equity but no other real They're, they're a partner of ours, my current company, they're a partner at my current company, but nothing else.

Got it. Okay, cool. So let's pivot a bit now to more of the angel investing opportunities you've done, right? You've done 200+ of these. Walk us through why you started there, the thesis behind it as well too, because I know a lot of folks listening to this show right now are people in the corporate world, they're people who are investing in real estate, into businesses, into private credit, right? I think most people listening either have potentially none or a very small allocation of their total portfolio in things like angel investing or venture capital?

Yep. So the initial reason why I did it was I was in Silicon Valley hanging out with all these founders. They were my buddies and friends. These are people you kind of— in San Francisco, everyone is sort of a founder essentially. So you're kind of running into these people no matter what you do and become friends with them, of course. And what I realized is there's all these really cool companies, building cool things where I didn't have the capital to put into them, but I wanted to. So I essentially created almost like a syndicate. For those who don't know, that's sort of a group of investors. This is before— now it's very easy to create syndicates and there's lots of tools to do it. This is way before that time of wealthy East Coast individuals, much older than myself, who had money. And we essentially pooled our funds to go invest in various deals. So it wasn't a sort of standard fund. It was sort of a per-deal sort of thing. And I would get a percentage. So instead of me, no one, no one, no small startup wants my $2,500 check as an example. But if it's a $25,000 check, then it's a different story. So that was much more interesting to my friends and said, oh yeah, we'd, we'd love to have you on the cap table, Adam. We love your $25,000. It's great. And so I did a bunch of those and kind of kicked things off and many did well. Once again, some, some are doing still great on paper. I've seen a decent number of exits. We can talk about that a little bit too. But at a high level, it just was an opportunity to invest in companies that I believed, and actually I still believe and the data would prove this out, that technology is eating the world. Or as Marc Andreessen famously said, software is eating the world, but now it's just technology in general or AI is eating the world. And being in that ecosystem early on enables you to have outsized returns. However, I think for most people, it's not a good decision to make unless you're doing it for fun. It's not a good investment class anymore.

So before we get into that, because I definitely want to come back to that point, so walk us through those 200, right? Because I assume, just a guess here, some went to zero, some are still operating, right? Some maybe have been marked up on paper, but you haven't seen a dollar from that just yet. And so maybe you've actually gone full cycle and exited. walk us through the overall portfolio mix and how you think about it from a performance standpoint. How do you go measure that today just because it may be years before you actually truly find out what happens?

Yeah, totally. So a few different things I look at pretty closely with my group of investors. One, of course, we look at how much we invested and at what valuation and then what the exit multiple might be. We've seen a number of— so yes, at a high level, the key thing to know is we've gone We've, across all the sort of funds that I've had, we paid back 100% of the money. So essentially all the funds are in the black, I guess, at this point. Like everything's upside for us. And that has come from largely like one or two big deals. And even not even the full exit of the deal. So as an example, we had one investment that we made out of, in this fund, probably like 50 to 80 investments in this fund. One investment that we made that had an opportunity for us to do secondaries. And literally the CEO came to us because we had a large portion because we were really early and said, hey, I have someone else who wants to buy your stake. We said, great, what's the price? Blah, blah, blah. He told us, we said, okay, we sold 1/3 of our stake. That 1/3 sale paid off the entire fund. So now everything else, all the other investments are upside, including the other 2/3 we still hold in this company. On the other hand, that was like 5 years ago. We've heard almost nothing from the company since. So for all I know, they could either be going broke or utterly crushing it and have zero time for anybody. And there are other deals like that. So another deal that was sort of interesting, we had one company called Relativity Space. So it's a space company crushing it. It was sort of the number 2 for a long time after SpaceX, doing really well. We were able to do a secondary in some of it and sort of got a probably 20% of it out because we're just not sure. And then shortly thereafter, it went to zero. The company's still around, but it was purchased by— I'm blanking on his name— this former CEO of Google. He bought essentially all the equity for pennies on the dollar and is redoing the company. I hope it crushes it. We still own equity in it, but our equity now is worth almost nothing. Sure. So there's story after story like that. And frankly, once again, 90 to 98% of startups fail. So you just need one or two of those big wins to like pull you through, but most fail and you have to be really comfortable with losing most of your money.

Yeah, it's a really interesting topic too, because again, like what we focus on in our end, just in our investment firm, your variance of outcome is so tight. Like if you look at, you know, in the credit space, like we're looking at, you know, 10 to 16% yields a year and you're within that range all day long. And you know that every year, if things are going decently, you'll get those yields. Whereas in the angel venture space, you could have a deal go to zero. You could have a deal hit a 50x, 100x, and in turn, it can go make up that entire fund if you have 50 even shares of other companies, right? So you can have one deal hit makes for all the other ones in the space that we're in. It's tough to have other deals make up for one deal because of how the deals for themselves are structured. But on that topic too, when looking at the allocations you still have left, how does communication really differ in this space than other investments you may have made? Not hearing from a company for years at a time, I feel like there's less standardization around how investors are treated and communicated into deals like that.

Yeah, no, it's terrible. I've talked to a lot of other investors as well, and I think maybe 25% of early-stage companies send investor updates. So even for Chor, my company, We don't have many investors, but I still send quarterly updates just because I think it's a good practice. It forces me to think about the business. However, there's a large portion of companies that never communicate and never give you feedback, which is weird. I think every founder out there should because you can use your investors to help you. If you don't tell them what's happening, they can't help you, of course. So you should do it, but most don't communicate. And this is where they really fail on that front. And your point, by the way, on the capital allocation in the 10 to 16%. As I've gotten older, I'm more and more leaning in that direction on everything. It's fun to invest. It's fun to make a bet on these early-stage companies, and I'm pretty successful at it. Even then, if you look at the actual trajectory of something like, I don't know, 80%, 90% of the average VC firm that's out there, they don't beat the S&P 500 ever. So like, and people would say, well, they're not correlated, so maybe that's useful. But I would just argue they're also not liquid, so that's also not valuable. So if they're not beating the S&P 500 and you're not liquid, why put your money into the early stage? And I've generally started heading that direction myself. Um, it's probably not worth it unless it really feels like it's a good deal, and even then, hard to know.

So it's also an important thing too, is that when I think about venture capital and like mine, My venture capital, I think I have like a few points of my net worth in Bitcoin, right? That hits in the future, like, great, by all means. If it doesn't hit and goes to zero, like, I won't notice it, right? But how I think about it too is that unless you are living in the VC space where your entire business is built around it, it's really tough to go place big chunks of your money. So for example, if you're worth $20 million, my guess is that it's really tough to go place $10 million across angel deals, right? Because one, the sizing's smaller, but two, Your confidence around it may not be as high as well. How do you think about it in terms of percentage allocation previously, what you had done in the past, and more so where you think you're going to in the future, how you look at allocation across both things of angel investing or VC and other areas of your portfolio too?

I would say for me, historically, it's probably been 15% allocated to early stage and good deal flow, things like that. I'm certainly going down closer to probably 5%. or less, just because to your point, like, I don't, I don't think it's really worth it. So, so the key thing to remember, the professionals, the venture capital firms who do this day in and day out, they do not beat the S&P 500. And none of us on this call are going to be able to get into like Sequoia's new fund or the top, top, top tier VCs. You're probably not going to get into their fund. And if you're not going to get into their fund, you're not going to see the upside because those are the only firms that really have the real returns and get into the best deals. In which case, you shouldn't play the game. Play the game that's not as sexy, but getting 10% year over year and letting that compound will probably make you richer than playing the VC investor game, early-stage investor game, and having 90% of your deals fail and hoping you're in. Look, if you're in Anthropic or even OpenAI, some of these people who are in those massive AI companies today, They're making billions of dollars. The amount of money is insane and more power to them. They kind of got lucky. They were in the right place, right time, talking to the right people. If you were not in those deals, your returns might be middling.

So even in those deals, we were talking before we hit record, I know you're in one of those big names as well. How do you think about how you've messed into those? Because I've seen such crazy things on OpenAI, on Anthropic, on SpaceX, as it relates to the multi-level SPVs that go into those deals where you can hit a 5, 6, 7x and maybe only get 2. So how'd you, one, get access to it? And 2, how'd you vet it to truly see where you fit in the cap table?

So before I answer, I want to maybe back up in a second to just distinguish between what I would call early-stage venture capital investing and later stage. So for me, I've historically done a lot of early stage, being an angel investor early in companies, being one of those first checks in to make a bet. That's changed because everything has, one, gotten so noisy out there. Number two, it's really hard to know. If you pay attention closely to AI, it's really hard to predict— or well, actually, it's actually relatively straightforward to predict, I think, what's going to happen in the next 5 years when it comes to AI and how it's going to impact the world. There's lots of smart people who have made predictions that seem to be coming true. The danger is if those are true, most early-stage companies, tech companies, don't have a real business because AI is going to replace so many different pieces. Obviously, for my own company and for many others, I expect we will be the ones that can find a way through, but it's really difficult to do that. So what I've done is I've moved most of my venture-related investing that I try to do every year To more later stage deals. So as you mentioned, so I'm an investor in Anthropic. How I was able to do it. So yes, I've heard all about the SPVs that are bad and I still could be in one that's bad. I don't know. However, I try to do a ton of vetting with people that I trust deeply who are saying this is actually a clean SPV. This is a deal that is worthwhile. Therefore, you can put your money in and feel safe about it. And I've done that in a few different deals in later stage. So Ramp, Anthropic, actually SpaceX. There's one or two others. Anduril as well. So a bunch of later stage deals. And frankly, in most cases I've regretted not doing more money because these companies seem like they're clearly redefining how certain industries work. And you can sell early stage venture-like returns but at a much later stage where there's a clear return profile.

Yeah, that's really good. So with your portfolio now too, how much of that have you shifted to more of the later stage type investing?

More and more on the later stage, although once again, largely saying most of it should really go to public company equities because in the end, this is of course what Warren Buffett and Charlie Munger always said. Warren Buffett had a famous bet probably 10 years ago about would a passive S&P fund beat an active hedge fund manager, um, and Warren won. Um, of course he did, right? And the reason it's sort of the same thing is it's really hard to— even if you're a professional at this, it's really hard to beat the market. You can't time it, you can't beat it. Some people do. We always hear those stories because those are what we like to read about in the news, but it's really hard to beat the market day in and day out. Um, and it's not my day-to-day job, right? It's not what I'm necessarily great at. So therefore I shouldn't try to do it. I should just put money in, dollar cost average into the stock market. Maybe if I'm more tech heavy, maybe NASDAQ. If I just wanna be broad-based, S&P, and just let it ride every single day. It's liquid. I can get it out if things fall apart. Yeah, of course it would go down in value, but I could get it out at least. Um, that's probably the right way to go. That's 100%. That's how I've thought more about my allocations is just in the end, I don't know. And if I don't know, I shouldn't be making bets. Unless I'm really okay with just like having fun because I'm literally going to the casino and then sure, have fun.

Yeah. And it's with founders too. And oftentimes like business owners, founders, the ones who actually have meaningful amounts of money to go allocate to things like this, that can be more intentional with their portfolio. But at times too, you see that the person who is a great business operator or a founder, they may not be the best investor. How do you think about those 2 skill sets and how they either overlap or not at all?

I think they overlap in some cases. So for me, being an early-stage investor, it probably did overlap because I was sitting down with founders and having a one-on-one conversation founder to founder as an operator. So they weren't pitching me then, they were having a conversation with me about their business. That is very different than someone who's been running a company in some completely different industry saying, well, now I'm going to allocate capital to early-stage founders. You're not an early-stage founder, you can't vibe that way. So instead, you're just listening to a pitch, which is basically just a sales call. And maybe you should do it because you want to learn more about cool companies, but don't do it— but recognize it's a sales pitch. You're getting sold why this company is going to be great. And to be clear, the founder probably believes it deeply, why that company is going to be the next big thing. That doesn't mean it's actually a good use of your money to do. Or what I tell some founders who want, or investors who want to do this, go do 1 or 2 investments a year just for fun. But do it more, but have all the meetings, stay busy having meetings with founders, give advice, advise them, and do it because you enjoy learning about what's happening in the ecosystem, but not once again because you think you'll make a lot of money from it. Don't do it from a financial perspective.

Yeah, that's smart. And, you know, before we actually were on here too, we were talking offline and you mentioned something that I think is really important too. You're like, at this point in my life, I'm just trying to go spend more money. And oftentimes you don't hear that from people. You hear people go in and say, you know what, I'm going to start cutting back in these areas and be really intentional on this spending here. Walk us through why you're trying to spend more money.

A few different reasons. One, look, I was kind of raised in a very frugal way. I give my parents credit for thinking frugally in probably most things and giving me that basis for how to think about life. And then believing that like, hey, I want to invest. I'd rather invest. Like, I get more enjoyment from investing, whether it's a private investment or a public market investment, in watching that grow than in buying things. Part of that is because as I've gotten older, like, I've acquired most of the things that I want. Now, to be clear, I don't lust after the next fancy Porsche or some fancy car or a private jet. To be clear, I couldn't afford a private jet, but I don't lust after those things either. I don't care the same way. And so I mostly have the things that I want. And frankly, buying more things to me creates greater stress than I have to get rid of those other things that I had. find a way to do that thoughtfully. Um, so I don't really enjoy buying stuff. Um, but I do enjoy seeing my net worth go up. Like, that might be weird, but I like— it brings some enjoyment. Like, well, like, I'm doing something right. And to be clear, like, usually if you're just letting your— putting your money in the market, you don't have— the amazing thing about the market, you don't have to do a lot to see your net worth go up. You just have to not spend the money that's in the market and it will just grow for you. It's amazing. Um, and so I just get more enjoyment from that. With all that said, to answer your question, um, as I've gotten older, I'm sort of saying like, hey, like we can, we don't need to be quite as frugal as a family. Like maybe we'll fly economy plus instead of economy, um, on long flights and like things like that, just because, you know, I'm getting older and like we can afford it. And my wife, I say, you can't take it with you. And so, and she's right. And so trying to be a little bit more thoughtful, like, hey, maybe we'll spend on this experience a little bit more. Or enjoy this a little bit more. But I also, I love getting a big discount and deal and I still search for the coupon codes when I make a purchase for everything and all those sorts of things too, because why waste money when you don't have to?

Yeah, it's interesting too because I've done that exercise as well where I went through, if you actually go map out, okay, this is what my ideal life looks like and you actually start mapping out all the costs of doing it. at least for me, I found out 2 things. One, I'm already pretty close to there, but 2, it's actually not as much money as you think it may be. And you start being really intentional with, okay, if this costs this much, is this worth it? There's, and there's certain, like everyone has their certain quirks too. Like for me, like I will not fly economy no matter what. Like I will not fly economy and I will not not take the subway in New York. I grew up in Brooklyn, New York, and like that was your, you know, the subway was sometimes like quicker to get somewhere.

Yeah.

It was always a horrible experience. Reminded me as like a kid growing up where We were scrappy, right? And that pivot of, I'm going to take nicer cars, I'm going to take business class flights wherever I go, are something that I will gladly go spend on. I'm definitely much more the person in Lululemon joggers and a t-shirt and a Whoop than a fancy watch in business class versus the economy type seat behind

it. Good for you. You're ahead of me then, Sam, on figuring that out, because that's the right— I think generally the right attitude to have. And I mean, for me, it's always sort of about like, okay, where are the right things to spend on? I will say, to be really clear, like part of where I feel really lucky is I feel very content in my life now. Like, look, there's a lot of things I want to fix and grow and build and do better. And I have all this other work I need to get back to after we do this podcast and all these things, right? But generally speaking, I'm like really content and really lucky in that way, right? Where I get to work with really interesting people. I've set up my work in my company to be a way that like I get to work from home and I get to spend time with my kids. I can be as efficient as possible in all the things that I do. On the other hand, I still am not going to go waste money. Like, I want to go get, let's say, the— so I have a Tesla Model Y, right? Truthfully, it's a great car. It works well. And I don't need to— it doesn't have that many miles on it because we don't drive that much. I kind of lust after getting the Rivian R2. It's a great looking car. I want to get something different. But like, I know the moment I buy it, Oh man, my insurance rates just went up and I'm still not going to drive that much and it's just going to get dinged up in San Francisco anyways. So why do it? Why not just hold onto my current car until technology truly changes enough? And so I go through these mental discussions with myself about where should I really spend money versus just not. The one other thing I will add, I do try to spend money deeply on when I save time. So, taking the airplane flight, economy class and business class gets there essentially at the same time, right? So, to me, I don't care as much. Now, look, longer flights, yes, I want more space and comfort and I want to show up more rested, but it gets me there at the same time. So, it doesn't save me a lot of time. On the other hand, I will absolutely pay for babysitters for my kids when I need to do more work because the ROI in paying my babysitter $25 or $35 an hour Versus what I can make per hour or my value per hour is much higher. Or another example is I don't do my own laundry. I take it to the laundromat. I have a washer and dryer in my house, but the laundromat are specialists at doing laundry. They do it faster, better, and I get everything back folded. And truthfully, if I could have someone also unload it, I'd do that too, but I can't. So I just do that and it takes me 5 minutes. But I'll spend money on things that save me time. Always, because time is the one resource I can't get more of. And that's, I think, a key point for people to consider. You can't get more time. And maybe I'll add to that too. I'm also trying not to be as much of a coupon shopper in those things either, because it's also a waste of time. And so try not to spend too much. Like, okay, like, can't find a coupon. I want to go buy this. I'm just going to buy it. Like, who cares? You know, it's like a $10 item. I don't need to get 50 cents off. I can't quite help that mindset, but like, I can But I'm trying to get better at it.

Yeah, it's, it's so— you almost have to go retrain yourself too. Like, I know you mentioned the— you can take it all with you too. Like, Die with Zero is such a great book around that topic too, like how people choose to go spend. And the net worth thing I think is really important, right, of tracking and measuring. And it's, you know, the ultimate masculine scorecard too, if you go put it into, you know, business sense as well. But I've kind of almost like shifted my focus a lot too, from the like balance sheet side to the income side. The last like few years where that income piece is, you know, the net worth is great. You can do things that can go bigger pops, and then in turn can go create more income for you in the future. But when you look at it as okay, if I spend X, I can go build you know one and a half X passively or in some form or other way. I can go work on way cooler shit that allows me to go have those bigger swings in the future. So it's almost like a. back and forth balance type thing too. So on your end too, when you were building up your companies, how'd you think about the income piece of it? Because I know a lot of founders go to that phase where you were out there, you were grinding, you're hustling, and in turn you're likely being paid way less than you should for the work you're doing at that time period. How do you think about that now in your businesses as well?

I try to live really frugally. I mean, what I thought deeply about was I I have an aversion to debt. And so I tried really hard to think, I don't want to go into debt for what I'm doing. Is it worth that much to go into debt? Because when people come to Silicon Valley and maybe New York and a few other places, you think you're one of the best. You're doing it because you want to compete with the best in many cases in your field. And so I came to Silicon Valley thinking that, hey, I'm one of the best. So I had a pretty big ego and thought I could go do these things, but there's still no guarantee. And look, to be clear, like part of— so I would never really go into debt. I was really careful about what I spent, what I spent on, how I would do things and making sure, yeah, I'm taking less of a salary, but is it enough to cover my main net that I need? Like what do I need to cover my monthly expenses? And I would make enough to cover that. And that's what I would really focus on. I will say as an entrepreneur, and you know, I have a podcast, Entrepreneurial Excellence, and I think about this with other entrepreneurs all the time. Am I not crazy enough as a founder? So my advice would be financially, don't go into debt. Don't overspend. Be thoughtful. There's so many things you can do without spending a lot of money and still have a good time. As long as you can cover your food and a roof over your head, you're good to go mostly. On the other hand, as an entrepreneur, maybe I should have been way crazier and been like, I'm not going hard enough. Screw it. I'll go into debt because of course I'm going to make it up later. Who cares? And I do think I'm not crazy enough sometimes because I'm unwilling to take those big, big, big swings that the craziest people are. Now, to be clear, you and I never hear the stories about the people who are crazy, who took those big swings and then totally whiffed and are completely in debt for the rest of their lives. We only hear about the Elon Musks who was like, yeah, I totally went into debt, had the last million dollars I had left in my name, and I put it all into SpaceX and bet on black and it now I'm a trillionaire. We hear about those stories. Those are like the N of 1. They don't really exist, but they're the big stories we all want to aspire to.

Yeah, that's the best Elon story I think overall too, where it's like, I sold PayPal, I got whatever X number of hundreds of millions of dollars, I put this much into Tesla, this much into SpaceX, and I borrowed money for rent. You talk about having a set on you, that is how you go do it in terms of fully committing to what you're doing. It's interesting because I think I operate in a more similar way to you as well, where I'll go take big swings in terms of my time, but I'll make sure that even if this fails, I'm not going to zero, right? Like, that's the biggest thing I think about is that if this fails, can I still go build something from that? Am I not in a position of like personal financial stress? I think there's different types of stress you could put yourself in, right? Business stress, partnership stress, like all these different other areas that can push you, can drive you. The personal financial stress thing that I don't operate well under. It's also like knowing yourself too as to What can you tolerate? What can you not tolerate in terms of quality of life, headspace, right? Things wear on people differently as well too.

Look, yes to all that, but this is why you and I are probably not crazy enough to be the world's best entrepreneur. I'm a good entrepreneur. I'm really good at running companies, but I'm not maybe crazy enough to take these big swings. And most founders aren't, even if they're out here doing that. And that's where acknowledging— but at the same time, I need to, one, acknowledge that, two, I'm able to sleep every night, right? There are people who are so stressed and things are moving so fast, they're not sleeping, they're completely wiping out their health.

Yeah, you get the full head of hair still.

Yeah, I do. There's a bunch of gray in there though. But once again, maybe I wasn't crazy enough, right? And that's where— whereas those people were, they were willing to give it all, like their bodies, their minds, their life, their family, all those things to achieve that goal. One's not better than the other. It's just if you acknowledge who you are. But once again, I can go to bed at night, get sleep, generally not be overly stressed, and I can feel content in my day-to-day life and content knowing that despite my ego, I'm okay with who I am today and what I've achieved. And that's pretty good. A lot of people say, oh my God, you have an amazing background. I'm like, oh, I have so much more I still want to achieve or things that maybe I won't ever achieve. But I'm just content. And that's not— it's maybe not great for becoming an amazing entrepreneur, but it also means I can sleep at night and have good friends and have a— and feel pretty good, even though I work 6 days a week and I'm totally fine about it. It's just like, yeah, this is what I logically decided to do as a rational adult.

Yeah, I like it. I think one of the biggest things I think we talked about today too is like people need to be realistic, like where they're at in terms of who they are as a person. You know, on my end, I think it was kind of similar where like from, you know, 21 to 28, I was working 90+ hours a week. And like now I just don't do that anymore. Like mine goes through phases where I'll have a stretch from working quite a bit and a stretch where it's, you know, pretty flexible. But it's also building something that's also sustainable now too, right? Where this is a business now that I want to be able to go run for the next 40 years. Versus the next 4 or 2 or like the next sprint. So when you think about running a bigger distance, you start shifting how to make it more sustainable and integrate into your life itself. Like for me, it helps me a ton with working more, being more productive. The only time I'm ever on my computer is maybe 2 hours a day and like half those are like video calls like this. Like I live on my phone. Yeah. Like I will always, you know, default to a phone call and like I'm okay making less money to never get on Zoom calls. I avoid it at all costs besides conversations like this.

Yeah. I mean, that's fascinating in some ways, but once again, it sounds like you know yourself, which is amazing, Sam. You should. And that's cool. Now, at the same time, you are almost certainly capping your upside, right? And you have to be okay with that fact that you're probably capping your upside for understanding who you are and where you are in your life and for the things that you want and how you want them to be.

Yeah, potentially. Potentially. I mean, I think that could I go bigger in certain things? Totally. But I think this business is one that I think can compound massively for that long period of time. And part of it is saying, okay, yes, in the next 5 years we'll have an exit that mimics like a massive entrepreneur. Probably not. But this compound for decades over time and make that delta in the back end where they have to go swing big, hit once, swing big again, hit again, right? This, I think, can have more of that compounding effect to it. Either way, I'm okay with that in terms of quality of life too.

As long as you're okay with it, once again, that's the key thing. As long as you're okay with that and understand it, then that's fine. I do actually very much believe, and this is hopefully everybody who is an entrepreneur or wants to be an entrepreneur or make a lot of money someday, I really do believe hard work or grit in a sense trumps almost anything else. Elon Musk is clearly very smart, but he also is willing to work way harder. than most of his peers. He works harder. Now, I don't know if he has— it doesn't seem like he has a good home life or family life or friends or you name it, but he is also the world's first trillionaire and clearly money doesn't even drive him. It's just some unknown push to, I know he would claim, save humanity, but whatever it is. And so this is the question we always have to keep asking ourselves in general is where do we want those things to go? And then where do you invest your time, money,

So, on your end too, besides buying back some of your time, where's the best place to use the money right now in terms of purchases you've made or things you invested into that actually give you meaningful fulfillment?

That's actually a good question. I don't have a good answer for you because I don't think there's a lot of things that I would spend money on that give me extra meaningful fulfillment. There's small things but nothing major. Like going to nice dinners when I want to and not stressing about how much it's going to cost. I will do that now and not stress it. But I can't go to nice dinners all the time. We spend, as an example, in my family, my wife used to get pretty annoyed by making dinner for all of us. Even though, to be clear, I never told her she needed to make dinner for anyone. But it would stress her out a lot and she felt obligated to do that. It's like, we'll just order on DoorDash, whatever. But we've actually upgraded. So we actually have a— Oh, cool. It's sort of like a chef service. It's not a private chef, but they make a bunch of food for— I don't know, they have probably 20 or 30 families they work for and they deliver food. They're coming actually today. And it's just like super high quality, really tasty stuff that we would never make at home and stuff you can't go buy on DoorDash. And so eating well is important. And that's another key element that I find valuable. So spending money on that and once again doing other things that will just get you more time. But that also means like I should spend— I'm trying to spend more money this year on doing friend trips with my guy friends and going out and doing stuff with them and making sure. But someone has to plan it and we're all busy and deep with kids and work and everything else. And so that's its own set of issues and challenges. But I think paying for experiences or paying for more time so you can delegate away the things that do take more time. Yeah. Like, I could garden and clean up my garden in my backyard and things like that, but I pay someone once a year to come in and go clean it all up, or I pay my kids now to go clean up the leaves and things too. But there you

go.

It's that sort of stuff.

Really cool. And before we hop off here, what final piece of advice do you have for people who are in that, again, entrepreneur building type seat? More think of like that tech software entrepreneur as well.

Your time is so precious. Think deeply about where you want to spend it and how you want to spend it, number one. Number two, if you aren't vibing with the place that you're at or the things you're feeling that are going, that are right, don't try to keep up with the Joneses. So what I mean is like San Francisco is the most expensive city in the United States right now. If you're not enjoying being here or you're like, oh my God, like I'm making barely enough money to like pay my rent and food. And you don't want to be here, like, don't. Like, you can go get a job if you're talented and you're already someone who can get a job at a company in San Francisco. You can probably go get a great job at another company and you can work somewhere so much cheaper. That might be— I think San Francisco is beautiful, but you go work somewhere that's just as pretty for a lot less money. And so, um, I would just think deeply about what do you really care about? Like, yes, I've seen a huge number of my friends who were entrepreneurs 10 years ago who've washed out. and have gone in very different directions in their lives. There's nothing wrong with that at all. Maybe they were the smart ones. They got out of this sort of rat race and building new companies, like staying deep in it every day. And they don't work every night until 10 or 10:30 at night and work every weekend like I do. Are they the smart ones? I don't know. So my advice to people is like, find what you love, make enough money to afford what you're doing so you don't stress about the money part. And then the rest is gravy. Like, lucky all of us for being people who can even listen to a podcast or be in a podcast. Like, we're already lucky people if you're listening to this. So that luck is then just you being a rational adult making smart decisions for your life.

I like it. Adam, thanks for coming on.

Sam, absolute pleasure. Thank you for having me.