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I think our circumstances have an enormous impact. Our immediate family circumstances, our socioeconomic framework about beliefs, cultural, our schooling, potentially religious sides, and the wider socioeconomic factors that happen in countries and times. I think of what's also happening in economic cycles, and all of those If we don't bring consciousness to them or are able to realize that they construct these frameworks of almost slavery that are formed, will just drive us in a certain direction. And for most people, it's not a direction of wealth and it's not a direction of abundance. It's one generally will go to either fear or greed or not enough.

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In this episode, you'll learn how to shift your mindset, work smart, and find your financial freedom.

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When it comes to financial wealth and abundance, it's fun to come across female powerhouses who have this figured out, have it wired, and go out into the world and share it with others. Ann Wilson is one such person. Before the interview, I read her bio, was interested in what she had to say, thought it would be a good interview. But man, did it outpace my expectations, and I think it will outpace yours. So enjoy this interview with Ann Wilson. And I'm very much looking forward to this conversation. Something tells me it's going to be a little lively.

I think it could be. Well, you know, you've got to make money sexy because it is.

Money is sexy, huh? Have you always felt that way?

Certainly not.

No.

Felt really— well, firstly, growing up, very WASPish family, but I think many families it was almost a taboo, something out there. You didn't really speak about it. There was something a little bit dirty about it.

Yeah.

You know, there would be phrases like the nouveau riche. I had no idea what that meant, but you definitely didn't want to be one of those, right? It was sort of shaming around it. And so a real confusion around it. And also money, you know, don't ask for it because that came at a cost, or being greedy. So it was certainly anything but sexy.

When you talk about growing up, you have an accent. Where are you from?

So really confused accent, but I am, I'm African through and through. I'm from South Africa, and I grew up at the height of apartheid.

Wow.

Which I think really also has had a very big influence on me as well around the relationship with money, access to opportunity, have-not, scarcity and abundance. And yeah, so South Africa is— you cut through the African I am.

So this is interesting because you started to talk about how growing up, you know, during the time of apartheid, you know, that influenced your thinking probably around wealth and abundance and, you know, scarcity and all those, you know, variables that have to do with wealth. Do you think that that's true for basically everybody, that their circumstances in growing up probably plays a big role in their outcomes with wealth?

I think our circumstances have an enormous impact. Our immediate family circumstances, our socioeconomic framework about beliefs, cultural, our schooling, potentially religious sides, and the wider socioeconomic factors that happen in countries and times. I think of what's also happening in economic cycles. And all of those, if we don't bring consciousness to them or are able to realize that they construct these frameworks of almost slavery that are formed, will just drive us in a certain direction. And for most people, it's not a direction of wealth and it's not a direction of abundance. One generally will go to either fear or greed or not enough.

Right. So let's talk about then your story. You know, how did you get to be doing what you're doing? Was it your childhood dream or did you kind of end up here in a way that was unexpected?

I think definitely ended up here in an unexpected way, but the seeds were planted pretty young. The questioning of, and as I mentioned, sort of a part of growing up and seeing these huge different extremes of just access of privilege and real confusion as to why that should and shouldn't be. And although white, privileged, still grew up in a very lower middle class kind of family where dad worked hard for the money. There was very much that role, very role segregation between the money aspect. I'm one of 6 kids, number 5 of 6, and so mum looked after the kids. So there was that modeling and very much the story of dad worked really hard, was always exhausted, was always tired, making money was a struggle and it required sacrifice. And so there was that base aspect, you didn't really speak about it, you didn't ask too much for it. If you wanted that extra thing, the conversation was don't be greedy, that would come at somebody else's cost. So whilst there was this privilege, there was also this confusion around you must work hard for it, it's painful, it's sacrificing. And then My father died relatively young and I got to watch my mum, who had done her role, which was look after, let's say, the household budget and the kids, suddenly grappling with the longer term and they said the bigger picture financial wellbeing stuff, which she had never been skilled in. That was always something the man, my dad, looked after. And I noticed not only her but many other women, her compatriots, her friends, actually there was this underlying deep anxiety about money in many women. And just hoping that the person they went to, they could trust and hoping it would somehow work out. And I really, I remember my mom at one point and I'm getting a bit emotional, but I literally seen her saying, I hope I run out before the money does. Well, she had this pile of money, but this complete, I don't know what to do with it. And at that point I went, I'm never going to be that vulnerable. So that really started that seed of going, I'm not going to be in that place. But the only thing I'd been told was work hard, sacrifice, get the good job. It seemed like my dad sort of had it sorted. The men did. And so I studied engineering. I went to go and do civil engineering, not because I gave a damn about how steel bends or a concrete cube crushes, but I thought that was going to be the safe route. And I think that's one of the big challenges. That was the only money education I'd got was earn well, earn well, and then hopefully you'd be okay. So I did that and got the job. And with the job, I got the credit card and the overdraft and the bank offering me this and then the car. It felt like a nanosecond, I was deep in debt.

Wow.

And trying to do the right thing.

There's, there's a lot of seduction there, isn't there? Because I noticed the same thing too when I got out of school. Suddenly, like, I had, you know, and they were really good at knowing how to get their lists and to promote, but it's like, you know, suddenly all these things came at you for credit to acquire things, and, uh, and it's, it's very seductive.

Hugely seductive. And I'm going to take it a step further. I think there's almost a message that if you don't have that, you're not worthy.

Right.

You're not successful. You're not going to be loved. You're not going to find that partner. You're not going to succeed.

You don't measure up.

You don't measure up. And that there's debt and consumer debt has become so normalized in our society that it's almost to not have debt, you're the freak. You're weird.

Yeah.

And it's starting younger and younger. You know, teens now are able to get— we could go a whole path down student debt, consumer debt. I mean, it's absolutely devastating.

So you ended up getting in all this debt once you got a job.

And then, wow, the supposed anxiety and financial security that I wanted was anything but. I was working for everybody else. And my father had died of cancer, and so I'd had some time to be with him when he was dying, and he had said something to me. He said, "Ann, you know, life goes past in a heartbeat. It's going to be gone before you know it. Live, have adventures, go out there, do things." And that was in the second conversation really stuck and I went, well, hang on, I thought I was doing the right thing. I'm earning this money, but now I can't do any of the things I want to do. I'm feeling anything but free. And there was these two, this deep desire for freedom and life and expression and appreciation that it was so short. —then really went, hang on, I've got to do something about this consumer debt. And a fierce sort of reclaiming of myself. And I knew I had to be pretty radical.

How old were you about at this time?

So I was now in my mid-20s. And I'd just got married. And I had no idea how to have money conversations. Well, there was completely, you know, something you just didn't do. So it was only after I was married. I mean, I look back now and it feels almost embarrassing. Only once I was married did we really do the big reveal of, I'll show you, you know, mine if you show me yours.

You don't recommend that.

I don't recommend that. And I realized he was even worse at this money stuff with me. He was deeper in debt.

So, yeah, because this is kind of important, maybe something you think about. So here I am, I'm in a marriage, a new marriage, and now there's money circumstances around that, especially debt. Yeah. Um, does that impact the relationship? Does it redefine it? What happens? Absolutely.

And it has— it's one of the most insidious weavers of judgment, shame, lack of trust in relationships. And the biggest challenge, just like we're not taught about how to manage money, invest, most of us are not given frameworks or examples coming back to what is our family's situation of how to have empowered money conversations. Do we even know how to sit down and have a financial plan that actually represents two individuals as well as the relationship as a third entity? How are you going to invest? How are you going to manage it? And so it's no wonder that money is cited as the number one reason for relationship breakdown.

So how did you end up then from being a civil engineer in a new marriage with a lot of consumer debt to now doing the work you're doing today?

So, managed to climb out of that debt hole, really then focused on— and went really radical.

Was there a lightbulb moment?

It was a complete lightbulb moment. I remember that conversation when I've got to change. But I then swung and went, okay, no consumer debt, work hard. There was still this huge gap about— I knew nothing about the world of assets and investing. So, we actually ended up— I was working in Hong Kong. Gone there working on a big project. Now I was in the, if I can just control myself and my desires and not spend any money, then maybe sometime in the future I can do some of the things I really want to do. Just this pendulum swing. So you went to austerity. Completely. And it all just blew up in a big messy money drama. So my marriage blew up, all this money I'd been trying to hold on to walked out the door with the marriage. And there were two big learnings from that. I had no idea what there was. I had no idea what enough was. So there was this trying to create financial safety, trying to create enough, but having no idea what enough was. Never knowing, well, where does the role of actually living— when does that come along? And I think so many people end up just getting stuck in that place and forgetting even what life is for them. And so I was obviously a bit of a slow learner. I needed a few of these wake-up calls, but it was then sitting in Hong Kong alone, the money had now gone. I'd been working for well over 10 years in this supposedly good career and going zero. And after the initial shame and judgment, and that's, you know, for a lot of women that can be a big issue around that side. I realized, hang on, maybe it's not just because I'm blonde and stupid. Maybe there's a gap that I haven't been taught. And I heard a bit about the stock market and assets, but knew nothing about that. So it started a, hang on, there's a difference between earning money, spending it, but creating wealth is a whole different side.

Well, how's it different? Because a lot of people say, okay, I got to earn and save. That's how I create wealth.

And that is the devastation. Nobody earns their way to wealth or freedom, and nobody saves their way to freedom. They, some of the two most insidious lies. It's actually, What do you do with the money you've earned? Not in terms of savings. Savings got a role, but it's how do you convert that or create these amazing things called assets. Literally, I felt like I had— there'd been this parallel world, like a Disneyland of wealth that I never knew existed. And when I got curious and I opened back this curtain was this world of assets, asset-generated income, growth capital, which seemed like there was this private club of the insiders who knew. And for many centuries, it has been an insider club. The access to it was lots of money, privilege, insider knowledge. And it felt damn scary because it felt like I wasn't meant to even know about this. But I started, and I started first with the stock market, learning about equity, investing, assets. Then I got into investment property, then low input businesses. And I slowly learned about these different asset classes and built up. 'til the point where, well actually 8 years from that day of zero in Hong Kong going, hang on, there's another way. I achieved the point where I had enough assets that could pay for my lifestyle indefinitely, forever. And that then started a real different journey of going, realizing how many people never get to experience that privilege, that freedom, that choice. That comes with this knowledge. And that was really the real start of, I want to share this and how do I do that? And so the whole business that now is The Wealth Chef and TV program, the books and everything all came out of that, that deep desire to share.

I'm curious because in some respects it sounds like this was kind of an incremental journey. You started with like, you know, one thing and then another, another. And in other respects, it sounds like maybe you had an epiphany. So Was there a breakthrough moment, or did you just sort of take your first step on the road saying, I need to learn more about, maybe I've heard about stocks and the market, and then I've heard about real estate. So was it suddenly, aha, I'm going to go out and get this, or was it more incremental for you?

I think there was quite a powerful wow, there's a whole world here in this middle that I have no clue about. And almost a deep relief that it wasn't just because I was getting it wrong. that it wasn't about let me try and work harder and earn more, can I live on less. So there was this deep relief that there was actually a whole gap that I could get into. That was a real epiphany of it did feel like a whole new world come in. But then it was going, okay, I know nothing about this world. So it was tentative steps initially into it and going, well, where do I start? But there was a lot of excitement, enthusiasm, but I felt quite alone initially. So I read books, and some books were all about motivation and mindset and manifesting, and they'd get me all revved up and yay. And then I'd go, but what do I actually do? Or I'd pick up some investing books, and they were fantastic for insomnia, but it just felt like it proved that this wasn't for the world. I mean, it was just formulas and, yeah, just boring as hell. And there was a key learning in that first initial stage. I really had to learn the difference between trading and investing. And I was so hungry to try and find this way, and I was still working full-time, that I was looking for that one hit wonder, that investment that's now going to make me rich, that thing that's going to blow it up. And I fell for some of the frogs that didn't turn into princes, you know, those get-rich-quick kind of schemes. And I think there can be a real danger in that stage, in that feeling like, oh, I've waited so long, or I've left it too late.

And did you say that it was 8 years that you went from where you were at zero for the most part to saying that you were able to now say, I've created assets where I don't have to work to support my lifestyle? Yep. That's pretty fast.

It is fast. And what's so interesting, a lot of people go, 8 years? You mean so slow? Because there is a lot of that mentality of wanting this lottery, this ka-ching event. I want this overnight get-rich-quick side. And 8 years is quick. And in that very first year, I was looking for that ka-ching event. And I actually fell for one particular scam in Hong Kong, which was this, buy this disc and it's going to tell you what to buy exactly, and you're going to have these crazy returns. Because now I was learning that return was important. There was these investments. And, um, in hindsight, I mean, I was deeply embarrassed when I realized I'd been scammed. And it could have been so easy to have gone into the, oh, well, this isn't for me, look, lose confidence, and that shaming side. But instead, it was really going Okay, let's get the greed monsters down and that there's a sustainable path and way. And I'm very grateful I then stumbled across good old John Bogle and Vanguard, and I learned about index tracking very early. Really, there are these bundled investments. So now we want to invest in the stock market, so I thought this is going to be the easiest thing for me to invest in while I'm still working full-time, and I knew property was there, but I thought, let me first focus on this area. And there were these mutual funds, bundled collective investment schemes, which most retirement funds investments are in, but they come with layers of fees. And there's this whole concept that there's a financial advisor, well, a financial manager who makes a selection, and they're very clever, and they're going to be able to beat the market, and as a result, you're going to get these returns, and thank heavens, you darling blonde woman or man or whoever, you know, this finance thing is very confusing, so let us, the very generous financial industry, take care of this complicated thing for you. I'm veering off a bit, you can see I've got a little bit of skepticism about the financial industry. But essentially, there's these actively managed funds which are aiming to beat the market, but you've got to be paying these managers fees. And so John Bogle, who was the founder of Vanguard, and it was a fund house, so in the '70s just really went, hang on, let's challenge this assumption that doing all this activity, these actively managed funds, are we actually beating the market? We arrogantly assuming we are, but has anybody actually tested this assumption? And he took a whole lot of analysis and he realized that most funds failed to beat the market. In other words, all of this activity going on, all these people paying to be these experts, they didn't achieve just what the average stock market was returning. And it was like, well, that's a bit embarrassing. What can we do about it? And so he created the very first index tracker. So an index is just, well, simply put, the stock market is just owning a slice of somebody else's business. You can own a piece of somebody else's business without having to pitch up for a day's work. You don't have to take the risk. And, you know, you benefit from both the capital growth and the income in terms of dividends. And so these slices of business are bought and sold on a stock exchange. Just like the supermarket, but it happens to be at the stock exchange. And so, an index is just saying that particular exchange or a portion of it, what is if you just bought all of the shares bought and sold on that exchange, mirrored it, and you put that into a fund? And so, you didn't need supposedly this expert buying and selling. You could strip away the costs. How would that perform? And so, the birth of index tracking came about where typically your index funds will outperform between 80% and 85% of your actively managed funds, predominantly because you're getting the market return, but you're cutting out the costs, which are the things that eat in. So, I stumbled across these, and they— I'm deeply grateful. They still form a large part of the base of my wealth and my freedom. And so I started in that. So there was this incremental way, and I was trying to do these octopus on roller skate things, you know. I was still in that way thinking I could control, and if I did more complicated things. But as I actually evaluated, I realized that consistency, that sticking with a strategy, those were actually far more powerful than any one Let me try this. Let me do this crazy stuff. And a huge big lesson came along that actually what I needed to do was put in place just systems and processes that could protect my money from me. That's an interesting comment.

You had to protect your money from yourself. But that's probably true for a lot of people, right? They're their own worst enemy when it comes to developing wealth. Absolutely.

We fiddle, we get arrogant, or we get impatient, or we get afraid.

Or we get, you know, how could I put it, lustful for certain extravagances that are not really properly affordable. Yeah.

And so we'll dive in and sabotage, we'll rob ourselves. Right. So maybe we started an investing plan and then an emergency comes along. We believe it's emergency. You know, sometimes it could be a real emergency. Of course. So it was important to realize, well, what are these ways to protect me from me? One, from the emergency. Expect those unexpected events, plan for them so I don't then sabotage my wealth. Then systems will process it. Absolutely. I mean, I am a bit of an adrenaline junkie and I know I'll— and I'm going to completely own I can be pretty arrogant at times. I think, you know, the ego can come in and think, I can maybe do better here or fiddle. And so, I really learned, get my thrills elsewhere, let my investing be boring, be consistent. Those are the things I can control. And once I had this recipe, this just base application over and over and over again, then I moved to the next asset class.

That's an interesting premise or maybe even a quote is, "Let my investments be boring." So, 'cause that's the whole thing, like if it's boring and it's just, you know, producing incrementally all the time. That can get very boring, and people then maybe do get impatient, especially, you know, people that, that need stimulation in their life. So, so that— I think that's a really interesting strategy, saying let me get my thrills somewhere else. Yeah, but not from my investments. Absolutely.

And I talk about a freedom pyramid. So lay it out for us. So maybe the engineer in me is a bit of the geek in terms, you know, your pyramid, especially a four-sided pyramid, is, is the most stable structure in the world, good enough for the Egyptians. But really looking and saying, how do I design my investments, my portfolio in a way that's really solid, that can stand whatever life throws at it? Because money and wealth is never going to protect us from life. It's not meant to be. You know, the aim of wealth is not to now suddenly live in a land of unicorns farting flowers and andesite. I think the aim of it is to be able to be fully present for everything that life brings, in having this real amazing solid base that we can rely on. And so pyramid structure is the solid broad base, but it's got a big fat acid base. It's all about the base, no treble in this. So the four-sided pyramid is going, there's 4 primary asset classes, and going how the more asset types, different kind of assets we can bring into our life, the more stability we have. So we're not also just relying on one kind of market, just property, or just business, or just equity, or just commodities. How do they fit and work together? So the broad classes being the equity class, so owning other people's businesses. The second side of that pyramid being investment property, real estate in various forms. The third side is passive or residual businesses. I don't like the word passive. I think it's businesses where we use systems and processes and leverage to do the value exchange so we're not having to be in a job. You mean you have a business. And it's such a great wide range. I mean, literally in all of these areas we realize there's so many opportunities. But on the low input business side in the physical world. It could be things like having a range of vending machines. So you have these vending machines which churn and deliver the value for you. Automated car washes, laundromats, you know, that's in the physical world. The internet has created unprecedented opportunities to also create low input residual businesses on digital products, knowledge-based businesses where systems and processes, tools can deliver the content, the video, that side of things. E-commerce, Amazon wholesale, there's such an amazing range, but the principle, the key principle is there, is that there's systems, processes, and other people, usually lower input costs, that can operate a model and a system that can keep delivering the value and bring the money in. Which is a really important point for me. Money is all about value exchange. You've got to deliver the value first, it comes back. Every asset. Because if an asset isn't delivering value, it's not really an asset and it's not going to be sustainable. So, that's the third side of this pyramid. And the fourth side is ourselves. You know, we truly are our greatest assets. And for most of us, when we start off, yes, there's that aspect of exchanging our own time for money. And I think it's And it's super important to not shame that because I think it's great privilege to be able to deliver value to the world through our own time and energy. And I think it's part of giving meaning to life. But it's so important that that's not our only option. So, we have flexibility. But also, this side of the pyramid is also deeply important. It's just knowledge and skills. If we don't know what we don't know, so we need to be expanding that. But also our mindset, unweaving those frameworks that we spoke about that we socialized into grown so we actually can create that. But then with this freedom pyramid, it's saying, what is the kind of investments that are going to be at the base of my pyramid? And this is going to be the bulk of the boring, consistent, put it on automation, autopilot, protected from ourselves with, you know, 13 locks and bolts and we can't get to it. And then we can move up the pyramid to slightly more volatile assets, where, and I'm not even going to use the word speculation, maybe a bit more volatility potentially, having to get involved a bit more in terms of evaluating. And then we come right to that tip, tip, tip of the pyramid, and it's a tiny little tip, whereas we can allow ourselves some speculation, maybe some fun. This is where we can bring in the likes of the cryptos or the pot stocks or the angel investing startups, or if you want to add some collectibles like watches, if that's really what you're into. But it's this discipline of having a structure which provides a framework to again ensure it's safe, and having scientists say, okay, that tip of that— you can't start working on the tip of your pyramid if you don't have the foundation in place.

And in that kind of ascension from the base to the tip. So you're saying— and just to kind of reiterate a little bit— so you're saying on the equity side or on the stock side, you're looking at indexes are the base. And then is there something between indexes and crypto?

Yeah, I think, you know, there's indexes as base, but also at the bottom there, there'll also be some cash. So stay— look, almost when I'm saying that equity side, I'm also really talking about some intangible assets. There's You can also be adding some loan instruments or bonds. I'm not a huge— again, because I'm a bit more of a spec— that adrenaline junkie in me finds bonds super boring, but I force myself to have some of those kind of really boring stuff in there. So, that forms part of that really solid base. The middle side for me is more direct share investing. So, we might do some stock picking with some specific strategies. It might be value investing, contrarian, maybe some shorter-term trading. Trading. I, I, I've done— I tried the day trading kind of week trading thing, and that's when I really realized big difference between trading and investing. Oh yes. Um, now I'm 99% an investor. I'm looking for growth and, and income.

Is there a percentage of allocation from, you know, the base? You know, as far as if you say these are— let's say they're 3 strata. Yeah, the very base. Yes, kind of really boring stuff. Maybe some trading or picking some stocks and then, you know, then these, the speculative stuff like crypto. Yeah, there is.

Well, certainly it also depends where we are on our journey and where— and on, are we at the feasting off stage, drawdown stage, are we just starting out? Because when we're just starting out, it's going to be really hard to get a, a balanced portfolio that's spread because there's also balance between equity and tangibles, property, low input businesses, and also ourselves, making sure we're also having fun, directing some money to life and the things that actually make wealth and life wealthy now. That's a whole nother side. But within that, I really see that bottom base as a good 70% of that pyramid. It really is a broad, solid structure. You've got that real solid base.

Is that true mathematically, incidentally? You know, it is.

You know, and in many of your buildings, like your— that huge big building in Dubai, the Burj Khalifa. Yeah. 70% of the budget and the cost is actually what's below the ground. Wow. Unable to go up, you know. So there is this real parallel there. Yeah. Yeah. Do we have that solid stuff? The stuff that we don't see that isn't sexy, that's never going to get, "Woohoo, look what I've got." Right. But it's the foundation for everything else to stay and stand. So, I think in terms of each of the assets, you've got 70% in the solid, good old Mr. Misaki, wax on, wax off kind of side. Good 15%, well, actually sort of more like 20% to 25% in this middle, maybe mid-caps, maybe more specialized asset classes. And then 5% to maximum 10% in that cap.

So there's a school of thought when it comes to all this that is very conservative, saying the way to get ahead or to create financial freedom is to have no debt and, you know, get out of all debt, have savings plans, and just keep those savings in a very safe and protected place. So it's austerity. It's basically saying, you know, don't take that vacation necessarily. Don't buy that car that costs a little bit more. It's just bring everything down where you're almost— it's very constricting.

And while you're at it, put your dreams and your life in the bottom drawer, right? Because that's that, you know, just wait until you grow up kind of, then you will know, right? Kind of devastation. Yeah. And so I think there's a real difference for me about austerity, contraction, the scarcity-based fear. If I really can control myself and life, then I'll be safe. But there's no life there. There's no wealth there. And that's why I use the word wealthy very consciously, because that for me is about a way of being, to be able to be with life.

Do you have a definition of wealth that you utilize?

For me, being wealthy is being able to have the resources to be fully present with life and to be able to respond to it in a fully engaged way. To be able to explore the curiosities, to be able to be there for the devastations, to really have the privilege of living our lives as much as we can fully. With these resources of money serving us as fuel coming in, not slaving, enslaving us, right? And so when we start talking about this, you know, have we just put our life and our hopes and our dreams in a bottom drawer because then we'll be safe? That's not being able to live. And so truly wealth is being able to also come out and go, at its core, having to really do some deep stuff about going, what do I actually want? What is wealthy for me? And so whilst we can build up assets, and these are key part of the side, there's another whole part of this equation which is about us, which is some real work of going, do I know what I really want? How much of the things that I'm spending my time, my energy, my money on is just default, or in an attempt to get validation and be shown that I'm, you know, prove that I'm worthy externally, or because I'm just following this framework that I thought I should do to fit in. And, you know, I think truly wealthy is where we can come out into the world and explore and do things because we know we're already enough. Because we truly understand that every single one of us is just born worthy. Just by having breath, we already are. And then we go and do what we want as an expression of that, rather than from so much what we're taught, and now with money is woven through it, that we do a whole lot of things to try and prove worthiness. And that will never get us there. So, for me, it's a middle path between really being conscious. So, take debt for example. Consumer debt is devastating, and especially when it's driven out of a belief of trying to prove to be worthy or trying to fit in or believing that's our only way, this unconscious choice. But there's also neutral debt. So, things like, for most people, we'll get a mortgage on a home to own. Are we choosing that home in a way that's financially sustainable for us? You know, your home is not an asset. It doesn't matter how much equity you've got in it. You've got to understand the difference. But there can be expansion debt where you consciously understand money, you understand the cost of it, and you choose to do borrowing to control or, or get assets. So it's, it's not this rigid all debt bad. It's about understanding money and understanding the elements of it. And then, you know, frugality, you know, don't spend, how little can we spend. It's shifting it and going, how can I become a great wealthy spender and really enjoy the back end? I'll go, you know, it's all about the assets, it's all about the back end. I truly believe our wealthy life is created by the choices we make as to how we spend our money, not how it comes in.

To me, in what you're describing, the pursuit of wealth seems to be a spiritual quest.

Yeah, we've been outed. And I'm obviously biased, but I do think when we truly— if we, if we have the courage to dive into this world of money, wealth, And really, and I use the word courage because there is courage that's needed into it because oftentimes we're really going to have to challenge our own beliefs, our societal constructs, what we're bombarded with by advertising, by books telling us what we should be doing or what it means to be worthy, wealthy, enough, successful. We realize that money has become interwoven in every aspect of our lives. It starts with food, shelter, access to opportunity. Then it comes interwoven into expression, into power, into creativity, into relationships, into our own worthiness. So when we're— if we're prepared to go down this rabbit hole, it's extraordinary, it's amazing, and I think can be one of the deepest and greatest journeys back to ourselves, to really explore. And for me, I invite everyone to go, what is your unique freaky wealth recipe because it is going to be freaky and it's going to need experimenting and it's going to go, yeah, this is true for me. This, this brings me deep joy. I love it. But actually this I've got in just because of default and, and being prepared to test and explore this side whilst putting in place these systems and investing the automation to, to provide this resource, this that can, can then fund and fuel that the exploration of life.

So this may seem like a strange question, but it's just occurring to me. Yeah. So much of what we're taught or shown, you know, sometimes we're not really taught it, we're just shown it, is that, you know, going out and succeeding and creating wealth, it's a very masculine thing. And the way you're describing it, there's a lot of femininity in it, you know, in its vibration or in its energetic state.

How do you see it? Oh, I love this question. Coming right back to the spiritual thing, I see it as also an extraordinary journey to really get an exquisite relationship between each of our own yin and yang, the riverbanks and the river, the Shiva and the Shakti, the Logos and the Eros. And I think we have in a world very polarized and disconnected aspects. We've had so much of the financial world has been put across as either this very machismo Wolf of Wall Street kind of stuff and that we have to be like that, and it's cutthroat and ruthless and money's scary and investing, you can lose everything. So this can be this real energy of of that side. And we also have a lot of side of, if you're creative, if you're a bit spiritual, if you like that, well then you just have to accept that poverty is your lot. And it's almost been glorified that money is a bit dirty and the side. So there's almost, if we think of money as this framework, there can be shaming of that masculine element and that deep shaming of the creative element and this disconnect. And I think learning how to bring these things together has also been a huge part in my path. I came very much from 'Well, if I go the masculine route, if I go engineering, if I'm sensible and if I have this, then I'll be okay.' But there was this deep devastation of life, of expression, of exploring. And more and more, as I created frameworks, which is very much the masculine, but getting into right relationship, not frameworks of suppression, but frameworks of support. And really understanding that frameworks create freedom. We need that riverbank for the river to flow. We need that system. Without that, the river's just a big goddamn puddle. Yeah. You know? But then how to have that in service of life, expression, creativity. And when we dive into the world of investing and assets, we realize that in many ways it can be deeply creative. Some of it we want to be just automated and boring, but we might want to, let's say in the investment property side, If we go up that pyramid, there's also base of the pyramid kind of stuff in real estate. But there can be ways of really— it's the wealth Play-Doh. There's so many things you can do with it, creating businesses. And yeah, so it's this glory, I think, when we truly are on that path of this beautiful line of enough. Of we're enough, there is enough, I have enough, worthy and wealthy line of noticing where we're being pulled to, I've got to have more out of either greed or fear. And just coming back to that is where we've got this beautiful balance between the masculine and the feminine.

Fascinating. So this is a very unique look at this whole thing called wealth. Yeah. And I think the whole, you know, theme here to have a wealth breakthrough, I think really it is a look in the mirror. I think it does become, you know, a soul-searching type of a phenomenon. And we need structures, you know, but, but you have to figure out who you are to be able to know how to work the structures. Absolutely. And you can't also—

you might have desire and wishes and know this is who I am, but without financial resources to direct to those It's also nothing. Yeah. And to really also come and go, I think there's this whole, you know, Money 4.0 of where we're at now is really about getting into right relationship. Yeah. And going, if we truly want to make a difference in the world, if we want to, for ourselves first, then our communities, if we want to get into better the word balance is so sad, but right relationship with our resources, our earth, our animals outside is not about money bad. It's become integral to how we represent. Money is completely neutral. It's tofu. We get to put the flavor on. So when we understand we need that extraordinary protein, as part of that input of life. We need money as part of one of the resources that come in with oxygen and energy to be able to express. Then we can respect it, and then we can come from an energy of being custodians to it and not either dominators or just abusers.

Well, then I could say this has been a fascinating and very unique look at the whole concept of wealth and money and putting meaning around it all, and as well as some structure so that we can figure out how to get to that place that you've gotten to. So I really appreciate you taking the time to sit and share that with us.

Oh, it's such a pleasure, Patrick. It really is. And my dream is, you know, I think more and more of us who can have that breakthrough and shift, shift so money becomes something of service. The ripple cannot not make a difference.

Perfect. Well, thank you so much for sharing all of this, and it was really great to be with you. And you. We all have heroes. Some of them maybe even are legends that we look up to. My next interview is with a personal hero of mine who is a legend. His name is John Mackey. He's the co-founder and CEO of Whole Foods Markets. He's someone that has had a great vision in the world He also is an activist starting the Conscious Capitalism Alliance. His philosophy about life, about business, and about the human experience is something that is admirable. He's put this philosophy on the ground and created great success with it. He's championed things in the world that I really care about, which is why he is somebody that's a hero to me and my opportunity to sit and have this conversation was something I'll remember for the rest of my life. It's poignant, it's powerful, and I'm happy to share this with you right now. John, thanks so much for your time. I really look forward to this interview.

Thanks for inviting me.

You have a foundation, I think, from your college days, maybe before, in philosophy, studying it intently. What role did that play in your life as an entrepreneur?

I mean, it played a huge role. People oftentimes ask the question if you're studying philosophy is like, what good is that for? But philosophy really taught me how to think. Taught me how to think critically, rationally, to see what's a bad argument, what's a good argument, to be able to defend my positions with logic and reason and facts and evidence. So few people actually do that. Most people are just go through life just being ruled by their emotions and they're unable to actually ever sort of get clarity. So philosophy helped me see more clearly. And if you're going to be in business, deceiving yourself or fooling yourself is a very, very bad thing to do. You have to be able to see things clearly or you're not going to make good decisions. So absolutely foundational.

And do you still use it to this day as far as, you know, your thinking and your process for, you know, how to make decisions? Absolutely.

I mean, I still study philosophy. It's not like I figured everything out. So I'm still learning, still growing, and still enjoy studying philosophy. One of the things I do.

What got you started in being an entrepreneur and going into business?

I mean, I wasn't— I didn't self-identify as an entrepreneur for a long time. I didn't set out to be an entrepreneur. I mean, I didn't study any business classes when I went to the university, University of Texas in Trinity and San Antonio, and kept going back and forth between those two. And I basically just took electives. I studied philosophy and world literature, the humanities of all kinds, psychology, anthropology. I was trying to figure out the meaning of life and meaning of my life in particular, what my own purpose was. And I wasn't— I moved into this vegetarian co-op when I was 23 years old. It was a housing co-op. I think they had about 18 people living there, 2 per room. And it was— I wasn't a vegetarian at that time, but I actually just thought I'd meet a lot of really interesting people in a vegetarian co-op. And I— but I was interested in all things counterculture. And so there were, yeah, just a bunch of hippies living there, going to going to school, and I had a food awakening there where I learned how to cook. I learned about natural foods. I learned about organic foods. And the more I learned, the more passionate I got about it. So then I went to work at this small natural food store to earn some money, and I fell in love with retailing. And I thought to myself, you know, I could do this. I could, I could have my own store. I went back to the co-op one night and pitched my girlfriend, "What do you think about opening our own store and be a vegetarian store?" She was very excited about it. I oftentimes think my life would have been perhaps very different if she had said, "That is really a stupid idea. I don't want to do that. I don't want to go into business. It's a dumb idea." I might have dropped it right there. When you're young and idealistic and you don't have as much to lose, we went out and hustled $45,000. We thought we needed $50,000, but we could only get $45,000, so we opened a little bit short. And it was in an old house. The first store was called SaferWay. And I was just passionate about selling healthy food to people. People ask me what was the original purpose of SaferWay, and it was like, well, It was to sell healthy food to people, have fun, and earn a living. And we did all of those things. Renee and I actually moved out of the co-op and moved into the— it was in an old house where the first store was. So we lived on the first floor was a store and the second floor was a cafe, a vegetarian cafe, and the third floor was an office and Renee and I had a futon and we just slept there at night. So I literally lived in the first store. So I just kind of followed my heart, I followed my passion, and that led me on the journey. So I didn't, wasn't, you know, didn't like go to business school and say there's a huge market opportunity in this whole natural organic, I've done a study on it, and wow, we think it's going to be X amount of hundreds of millions or billions of dollars someday and we want to get in on the ground floor. It was like I'm interested in healthy natural foods. I like doing it, so we did it.

And that's the interesting thing. You had no business school training, no business background. What made you think that you could open a retail store, you know, deal with inventory, suppliers, the whole thing? Or did you not know entirely what you were getting into?

I mean, I think one of the advantages of being young is not only do you have a lot of energy, but you don't know what you can't do, right? You don't yet know your limitations. And that enables the young to— we usually depend upon a lot of our breakthroughs with young people because they naturally think outside the box because they have never been in the box. And they naturally just tend to be more creative. And you see many of the innovations that are happening in our society that shift things are done by people, yeah, in their 20s. I mean, in my generation, you know, how old was Bill Gates when started Microsoft, or Steve Jobs when he started Apple, or Michael Dell when he was in his college dorm selling computers. I mean, and now, you know, how old was Mark Zuckerberg when he started Facebook? I mean, it's story after story after story of very young people that just went for it and were successful.

In line with that, you know, skipping forward a minute, you know, I serendipitously ran into you at a Whole Foods in Park City, Utah, and I saw you talking to the young people who were the workers in the store. So you still, you know, I don't think I wouldn't have known this, that you still show up at the stores, you talk to the people on the staff who are working there, you're interacting with them. What is the, what's the motivation behind you doing that?

I mean, it's, it's a, it's one of the highest leverage things that I do because rightly or wrongly, because I'm the co-founder and all the other founders left over 20 years ago. And the CEO for 40 years, within Whole Foods I am a legend. And with so many stores today, a lot of the team members, you know, never get a chance to meet me. So when I can tour stores and connect with the people, it really— we know it really raises the morale. And so I used to go into the stores and, you know, try to— I put my operations hat on and I'd to see what was wrong with the store. But what I realized is I'm like the daddy, right? So they really want my approval. They don't want my criticism. A lot of times they've gotten up at, you know, come to the store at 3 in the morning to make it look as absolutely perfect as they can because they know I'm coming. The last thing they want to hear is how they could be doing it better. And so I try to really restrict that type of negative feedback. And mostly I'm just trying to connect with people, thank them for their hard work, appreciate what they've done today. Thank, you know, thank them for being part of our team and approve of them because that's what they want and that makes them happy and that helps the morale of the store go up and it helps our customers get better service. So it's, I think it's actually one of the most impactful things I can do. I just regret now that I'm still just one man. I can't, I can't get to every store. I meet people all the time. How long you been working for Whole Foods? I've been working for Whole Foods 15 years. First time I've met you. And I said, well, chances are you'll never meet me again. Let's make it count.

I could tell you they were beaming. Yeah, you could just see it. Like there was this sort of electricity. They feel—

it makes them feel special. Yeah. Today, you know, he's paying attention to us. We must— we matter. Self-esteem thing. Yeah. Yeah.

So when you were starting out in Safeway, and you then transitioned into Whole Foods. I think you got a merchant's company after 2 years. Did you have at that point a vision for what Whole Foods would become? No.

The whole vision thing, I mean, I think entrepreneurs have a bad habit of recasting their success and almost it was destined or they look back And because of the human mind, the way it works, it looks for patterns. It looks for connections. It wants it to make all ordered sense. And so I always make a joke that, you know, I did not go up onto the top of the mountain, and God did not speak to me and give me this assignment, and I have been carrying out God's will ever since. I mean, we did Whole Foods because Safeway was too small. We weren't a real grocery store. And we wanted to be a real grocery store initially. It was like, what if we could just have a bigger store that was like— I mean, you couldn't do one-stop shopping at Safeway, and Safeway was very pure. It was very idealistic. We didn't sell— it was vegetarian, and we didn't sell any— we didn't sell sugar, we didn't sell white flour, we didn't sell alcohol, we didn't sell caffeine, so no coffee. And also just didn't do that much business. I mean, basically we we narrowed our focus so narrow, we were so pure, so this is the way people should eat, that we unnecessarily restricted the market too narrowly. So when we did the first Whole Foods Market, we said, well, we're gonna— still gonna be natural, still gonna be organic, still gonna be focused around health, and, but we are gonna sell some products that have sugar in them. We are gonna sell beer and wine. We're gonna sell coffee. We're gonna sell meat. We're gonna sell what people want to buy, but within the natural and organic framework. That proved to be a very successful strategy because while Safeway struggled, Whole Foods became the highest volume natural food store in the United States within just a few months of opening. It was a huge success.

And that one was in Austin, right? Yeah. Yeah. So is that an ongoing struggle even through the decades of trying to reconcile kind of this moral or value framework with what's practical to go to the market with?

Yeah, it really bothers non-business people who don't have to meet a market test. They don't understand that you're ultimately in business to serve customers. And so we're frequently judged like I'm a vegan. So a lot of vegans can accuse me of being a hypocrite. Because you sell meat and it's like, I don't eat it, but customers want to buy it. I don't eat a lot of things Whole Foods sells and you have to meet the market where you find it or you'll go out of business ultimately. And so business people inherently understand that because they are all having to serve customers. And I always tell my vegan friends like, hey, I'd like nothing better than to stop selling meat. And why don't you? I said, because the customers keep buying it. If they'd stop voting with their dollars for it, if they'd stop buying it, we'd stop selling it. You're not doing a good job persuading people not to eat meat. Don't blame me because we're selling what the customers want to buy. I have never had that much problem. I've always seen— I've been an idealist, but I'm also a pragmatist. And what's art of the possible? What is it possible to do today? And then over time, are the possible changes. You can do more in the future than you could do today. So you keep the long-term ideals in place while taking steps towards them, but you have, you have a long-term vision, you have a long-term view. So I've never really had this kind of anguish that other people have. It's just always seemed like you do sometimes make some trade-offs, but they're necessary to meet the market as you find it.

Yeah, Ayn Rand used to talk about, you know, the problem if you have a contradiction between the moral and the practical. And, and, you know, you didn't have an anything goes standpoint. There was still a framework from which you still had it.

We still had our, our quality standards. That's right. And they kept us from drifting too far. In a lot of ways, Whole Foods has always had these two elements within it that, that struggle with each other, two polarities. One polarity is, is what I call the— you can call the foodie polarity, right? Somebody that's really preoccupied with food and all the different aspects of it. And they— and then within Whole Foods, there's a second element, which is the Puritan element. Food is not for pleasure, food is for health, right? So food for pleasure versus food for health have struggled for the soul of Whole Foods, and sometimes one waxes and the other one wanes, and then the opposite it occurs. So getting a good synthesis between those two has partly been what's led to our success. We've, we've had elements of both. If you're a foodie, you can shop at Whole Foods and find really outstandingly high-quality, good tasty food. And if you're a Puritan, you're— if you're paleo, or if you're vegan, or if you're ketogenic, or whatever your particular diet is, Whole Foods has got what you want.

So if we were to extrapolate now to the general entrepreneurial and business world for people who are saying, you know, I've got a certain set of values I want to put in the marketplace, but I also realize I have to meet the market in order to be able to be successful. What, what type of framework or considerations could you give them? It's, let's say it's outside the food, but it might be something else.

Well, first thing I would do is, in terms of conscious capitalism, I mean, it's like first you ask what your purpose is, and you don't want to drift away from from your purpose. As you go out and fulfill your business, it's always a risk that you will forget what your purpose is, why you're doing the business in the first place, what you're trying to accomplish. So the purpose acts as your North Star that keeps you on track. Even if you wander off, you can get back on track by going back to making sure this is aligned with your purpose. And secondly, I think the stakeholder philosophy is very important. The stakeholders being the business doesn't exist only to create value for the investors and the owners. It also exists to create value for its customers, for the people that work there, for the suppliers that trade with it, for the communities that we're doing business in. And then in a sense, the larger, also the larger environment as well, minimize our environmental damage. So if you have a stakeholder philosophy, everything's shifts, you begin to ask yourself, is this a win-win strategy for all of our stakeholders? Is this going to be good for our— if you're making decisions that are, say, good for your customers but bad for your employees, maybe that's not the best decision. And if you're making one that screws the suppliers, maybe that's not the best decision. So how do you make decisions where they're all going to simultaneously flourish? And if you keep purpose and stakeholders in mind, those type of contradictions and trade-offs tend to get resolved pretty easily.

So with people that have been doing that and maybe they've found success in some type of a career or an entrepreneurial venture, and over time they said, you know, I've worked hard, I've made some money, what do you— as far as that type of a person that, you know, obviously doesn't have a Whole Foods level of success What do you think they should be thinking about as far as their own wealth protection or wealth development?

Well, first, of course, if you want to create great wealth, the best way to do it is to own businesses, a business or businesses, and generally concentrated. And then that compounds, in a sense, over a long period of time, and that's how large wealth is built. You— if you look at almost all the super wealthy people, they got it through building something and some type of business. And from real estate to computers to software to— I mean, Jeff Bezos, the richest man in the world, he built it through the— took the internet. And there's been so many different strategies And as the world technologically evolves, there's always going to be new strategies, like the next thing, the next big thing will always be coming along. I mean, you take Uber, for example. First time I did an Uber, and it was like, why didn't I think of this? This seems so obvious, right? And I could have thought of it. And perhaps I would have if I'd been in a different generation and a younger person. One thing I always encourage people to do is, as you go along, Don't get too greedy in the sense he should be taking some off the table. It's like a poker metaphor. If you're— it's always good to— you start out with a stake. Eventually, if you're doing well, you pull out the stake and then some, and then you're just playing on your winnings in a way. So if catastrophe occurs, you're still a winner. And I have always done that with Whole Foods. Gradually and steadily sold stock for really— we went public in 1992. That was the first time I sold any, but I probably gradually sold it all the way up through the Amazon acquisition a year ago. And also, I really believe in the philosophy of— I think I initially picked this up when I read a book called The Richest Man in Babylon. And The Richest Man in Babylon, one of the principles is pay yourself first. So basically, take at least 10% out of your paycheck and put it away and invest it and you don't touch it. It's just you're going to let it compound and grow over a long period of time. And that's not that hard to do once you get in the habit of it because it doesn't really change your style of your lifestyle because you used to live on 10% less than you're making and you did fine. And so there's a bad habit of people tending to, as their salary ratchets up, they just ratchet up their lifestyle. And I don't think you should ratchet up your lifestyle. I think you should— and we see this in cultures that are wealthy cultures, that the Chinese, for example, are very good at saving. The Jewish faith has been also also put an emphasis on saving, saving and investing. And that's just a lifestyle habit to not— in America, we tend to go for flashy cars or big-screen televisions or the latest, hottest new iPhone or whatever. We're out there chasing the Teslas. And, you know, I just always believe that You should be about creating lasting wealth, and that's through being reasonably frugal and saving and investing. And that's the proven over and over and over and over again strategy to create and maintain wealth. And I mean, if you're 24 years old and you've created Facebook, then this is not a— you don't have to worry about this. But that's a very small percentage of the people that hit that type of jackpot in their lifetime. It's, you know, I mean, 100 people, maybe? I mean, out of 7.5 billion or 8 billion? I think it's better to, whatever you're doing, save the money, invest it, and then keep doing it your whole life, and you will become a millionaire and potentially very wealthy by the time you reach late middle age.

You know, speaking of Whole Foods and investing, I remember back after Whole Foods went public and one opened up in my town near where I grew up, Ridgewood, New Jersey. And I remember they had direct traffic in and out of that parking lot when it first opened. It was just so busy. And my mother called me up saying, you got to buy Whole Foods stock. And at the time I had an E-Trade account. I'm like, I think it was like $25 a share or something like that. And I said, it looks like all the growth is already priced into it. I don't— I'm not seeing it, which just shows like, you know, I'm not a stock picker. That's why it's not my—

You know, I'm on the board of directors of The Motley Fool and That has been really good for me because I've made a ton of money through basically following their stock advice. And their basic stock advice is the best companies always look fully priced or overvalued. But I mean, Amazon's gone up 200x since it did its initial public offering. Microsoft's gone up even more because it's had a longer time to compound. And in no time, I mean, maybe once or twice in their histories after a big market washout, did it look— did they— you could say that's really good value. Problem is when you have that kind of market wipeout, everybody's too scared to invest because maybe we're going into a Great Depression. And so it's just better to realize if you get a great company, you just buy it and hold it and let the compounding work. And here's the thing, you'll have some duds. I actually own 136 stocks. I counted them up recently. And I mean, every year I sell off a dozen or so for tax loss harvesting because they were duds. They didn't work out. But the ones that do work out, they go 5x, 10x, 20x. And just one or two of those pays for all the other losers you'll ever have. And they just continue to compound. And they're compounding tax-free. You're not having to pay capital gains taxes on those stocks as they work their magic. So I diversified. I realized, of course, in hindsight, that if I had kept all of my money in Whole Foods, never sold any shares, I'd be far wealthier than I am today, because Whole Foods just did so well since we created it. We were a 30x gainer since our IPO. PO to the sale over 25 years. However, remember, I bought when we had the— I got almost all my shares when the company was $45,000 and I had 10,000 of the 45,000. That's a 1,000x. So I was just prudent in the sense that I kept taking money off the table. And it's done well on my other investments, but it would have been foolish for me to keep all the money in Whole Foods for all those years because what would be more horrible? You do something for 40 years, at one time you're worth, you know, hundreds of millions of dollars and then maybe a billion dollars and then it all comes crashing down. You'd probably blow your brains out. You'd be so depressed. So I never did that. I was always more prudent, I suppose.

And for people in the advice thing, if you're saving 10%, You're saying invest it. You find companies you like?

You know, I mean, honestly, I broke down my investing philosophy recently because I did a talk at FreedomFest on it. So 30% of our assets are in public stocks, and about another 30% is in index mutual funds like Vanguard Total Stock Market Index. And total world markets and things like that. So, very diversified, but through low-cost index funds. And then we have about another 30% that are in basically short-term cash and bonds, because if the stock market has a massive complete meltdown, you want to have— you don't want to have all your eggs in the stock market. At our— my wife's and my age, it's prudent for us to have a sizable chunk that's going to be, you know, it may not grow, right, but it's not going to lose very much even if you have a market washout. And then about 10% in real estate and some venture capital investing.

That's kind of how it works out. Well, so was there a period of time as the CEO that you were taking, if I remember, like a dollar a year salary or something?

Oh yeah, I've taken— I haven't really been compensated for 13 years now since— no, 2006, so 12 years.

And what was the reason that you didn't want to take compensation, or did you take it in other ways?

No, I didn't. My stock options were all— that I would have been entitled to were given to our foundations, and that served as sort of like an endowment for those foundations. You know, it's very hard for other people to understand. I had enough money. I was fabulously wealthy. I didn't need any more. I didn't— I wanted to take money off the table in terms of what my motivations were, and I wanted to embrace a servant leadership, which I talk about in Conscious Capitalism. And I thought taking a huge compensation or huge stock options education grants would dilute the purity of that service attitude. And the only time I regretted it was back when the market wiped out in 2008. Whole Foods Market stock went down 90%. And my wife was very upset. She said, you got to start taking a salary. I mean, you know, we got to pay the bills. I said, do you know how much I'd be the laughingstock? I can't go back and start taking a salary. Forget it. We'll get through this. We'll sell some other assets. But it was the right thing for me to do. It was what my heart called me to do. Does that mean I recommend it for other people? No, it was just right for me.

Yeah, and that's interesting. I think that's in the end what people have to figure out is just, you know, what is right for them as compared to trying to perfectly model somebody else's life.

Absolutely. I mean, and I've always been a guy that's I'm very intuitive. I try to be in touch with my own inner purpose, my own higher calling, and my own values. And it was clear to me it was the right decision. I've never regretted it. It was— other than my wife being mad at me briefly, it was absolutely the correct decision for me.

What motivated you to start the Conscious Capitalism Alliance?

Well, that started because I read a book called Firms of Endurance. Firms of Endearment by a guy named David Wolfe and Raj Sisodia. And Whole Foods was one of the— they identified 30 firms that were basically loved by their customers, loved by their employees, loved by their investors, loved by all their stakeholders. And those were firms of endearment. We were one of them. And when I read that, I know this is going to sound sort of weird now because that was, you know, 12 or 13 years ago. It was like, we're not alone. I thought Whole Foods was this weird, super weird company that nobody else was doing what we were doing. I had no idea there were other people out there, other well-known companies that were also— had a higher purpose, were also taking care of stakeholders, were also at a different style of leadership, servant leadership. And when I met David and Raj, we started talking about, you know, let's start an organization that brings— let's spread these ideas. And because one thing we discovered is, is that the companies that are firms of endearment, or now what we call conscious capitalists, they actually financially do better as well. It's because they just synergize at a higher level. When you've got happy customers and happy employees and happy suppliers, that just It kind of raises everything up a couple of notches higher. So we realized these ideas work and we're not alone and we need to kind of put the message out to help other, particularly young entrepreneurs, to say they're not going to be stupid or suckers for following this philosophy. They're actually going to be more successful.

Well, so I guess in a sense the idea is that there's this moral virtue to capitalism that it's not this— Oh, yes. You know, and is that most people say, hey, to be really successful as a capitalist, you have to be in this dog-eat-dog kind of world or environment as compared to saying, you know, there's a moral virtue here.

Well, Patrick, you've just hit on like one of my higher purposes is that when I do my conscious capitalism talk publicly, which I do many times a year, I usually start out by saying, you know, let me just declare my bias right up front. I am a capitalist. I believe in capitalism. I think capitalism is collectively the greatest thing humanity has ever created. It has completely changed the world, and I'm going to prove it to you. And then I show what's happened since capitalism came in and how much progress the world has made. I have no patience whatsoever for socialists or people who are anti-capitalists. They're ignorant of history. They don't understand understand business. Business is this great value creator, and the merchants are the heroes. They're not the bad guys. They have higher purposes. And basically the intellectuals and the aristocrats have always hated business. They've always persecuted the successful minorities that were in business, the Jews in the West, Chinese in the East. And they've looked down on commerce as greedy and selfish and exploitative, and yet it has been commerce and business that has helped lift humanity up, to help elevate humanity. So in conscious capitalism, we believe business is inherently good because it creates value. We reject the idea that it's all about the money. I've known hundreds of entrepreneurs, and very few exceptions, they weren't primarily in it for the money. They wanted to make money, but they were mostly following some kind of passion or dream, or they wanted to do something in the world, and the money that was necessary, so for them they could say it's a way to keep score, it shows that we're doing the right thing, the money empowers my lifestyle, helps me to be free. There's lots of, you know, but the money itself was not, maybe in the financial part of capitalism, Wall Street, it's just about the money, but not Not in the entrepreneur world for the most part. That's not the way I found it to be. It's not the way it is for me. So Conscious Capitalism was about and still is about helping people— business is good inherently, but it can be better if you become more conscious of purpose and stakeholders. We can elevate humanity better, faster. And business people need to wake up, stop falling for the the tales that the class enemy, the intellectuals, say about us, which is that it's all about the money, all they care about is money, and start talking about maximizing your purpose, start talking about how you're making the world a better place. And inherently, business makes the world a better place, but it can also be philanthropic, it can also be socially responsible. These are things we think are important as well.

Yes, I mean, for the conscious capitalist who's the entrepreneur, money, I guess, abundance becomes a means of expanding the range of the purpose. That's more what money means.

Exactly. Philanthropy just comes from generosity. It comes from an overflow of abundance that says, of course I want to help. I'll do what I can because I care, because I'm a caring human being. I'm alive. I see there's suffering in the world, and if I can do something to lessen it, then I definitely am not going to be sitting there counting my money feeling— because, you know, You're going to die. There's no getting out of here alive. We're all going to die. So it's not so much the legacy as just if you can help people while you're alive, why wouldn't you want to do that? It just seems so obvious to me.

You use the term, I think, servant leadership. What do you mean by that?

Well, I contrast servant leadership with what the kind of leadership we frequently get, which is self-aggrandizement. It's people trying to get as get as much money, as big a— hogs at the trough trying to get as big a meal as they possibly can get, and the way business is often caricatured by its enemies. So the servant leader turns that on its head and says, you know, I'm in here, I'm serving the higher purpose of this organization. I've internalized that higher purpose, I made it my own, and I'm serving all the stakeholders. I want all the stakeholders I want my cultures to flourish, and I'm in service to them. Those are the two biggest parts of it, and then our world is crying out for more conscious leaders. It really is. If we're gonna get through the polarities that we have politically, and a lot of the challenges that we have, we need leadership to resonate at this higher level. And so two of my friends and I have started— In fact, one of the things I have to do when we finish here is I'm getting We've got a book proposal out called 12 Virtues of a Conscious Leader, and that's going to be like a sequel to Conscious Capitalism. We have 2 chapters in leadership in Conscious Capitalism, and people tell me those are their favorite chapters. So it's like, okay, we're going to expand those into a full-scale book, and we're talking about the virtues that you want conscious leaders to cultivate, that you have to practice virtues. I mean, some of these are timeless virtues, like you cultivate courage, integrity in all things, dare to love. I mean, but then also about the importance of customers, put customers first. Today, in the technology world we live in, you have to learn how to think exponentially. So we're just going to have a chapter on each one of these 12 virtues and give ways for people to understand what that virtue is and how do they practice it daily. To be a servant leader or to be a highly ethical human being today, you have to practice it. It doesn't just automatic. To be a good leader, you got to study it, you got to practice it, you got to work at it. It's not just— leaders are, they're made, they're not born. People might have a have a natural desire to be leaders when they're kids, but that doesn't mean they're any skillful at it. Good leaders are skillful leaders, and that takes practice, particularly practice of virtues.

It's interesting, you know, being on the, I guess, the other side of Conscious Capitalism, meaning I'm the recipient of being in an entrepreneurial community who joined Conscious Capitalism, studied it, and the things you were talking about. And I think the excitement amongst my peers, other entrepreneurs, other business owners, etc., was the idea of a moral sanction in what we were doing as compared to feeling like, you know, we're either greedy because, you know, we want to succeed and expand our companies.

We're the heroes, Patrick. We're not the bad guys. We're the heroes. We're the ones— that doesn't make us better than other people. It's just the calling of Leadership is to help elevate humanity, and, uh, um, you got to answer the call. And, and, and I think that is part of the community, is recognizing that we have a special role to play, that we can help make the world a better place, and let's get on with it.

What do you want your, your biggest legacy to be after all these decades of, of what you've done in the world?

I, I think one way to understand it is that, um, because I have people come up all the time and say, man, you've done so many amazing things. You must be so proud. And I say, you know, I don't think about it. It's like the fun part in business is not what you have done, it's what you're going to do. The creative process is what's fun. If you ask an artist like Picasso, he didn't care about his old paintings. It's what he was working on right then and there. The projects that we throw ourselves into is what gives our life meaning. And I mean, someday, maybe, I hope never, I hope I actually die working on projects. And, but possibly someday I got nothing else going on, I'll look back and say it's been a pretty good life. But right now I'm too busy living it, too busy creating the next big thing that I'm excited about. I think that's the key to— I think that's one of the keys to happiness is to be alive, to be creative, to be engaged. Legacy is not something I have time to think about. Somebody else can think about it if I have a worthwhile legacy after I'm gone. I'm not too worried about it right now. So I believe the engaged life, the purposeful life, for me is the life that's led to great happiness. And I actually think most people would be happier if they're doing meaningful things they care about.

You mentioned 2008 and how, you know, that was kind of a tough time. You know, are there any other low points? I mean, all entrepreneurs, I think, go through them, and they have to try to find some inspiration to get through them.

Oh man, I mean, remember, I've got 40 years now, so there have been a ton of low points. I mean, most recently, it was a low point when our same-store sales, our comps, went negative, and we got shareholder activist activists that were trying to throw out our board, throw me out, take over the company, and then sell it to Albertsons or Kroger or somebody like that. And the Amazon solution, they were the perfect fit for us. And, but that was a low point that we ended up having an elegant solution for, the merger with Amazon. So that was definitely a low point. I mean, those guys launched their attack attack on Whole Foods the day I released my second book 15 months ago, 16 months ago called The Whole Foods Diet. And that wasn't an accident. They immediately said, look at this guy, he's on a book tour, he's not running the company. He's— Wow. Wow. So I had to stop the book tour, of course. Yeah. I mean, well, early on we had our flood. And when the first year we relocated Safeway and we opened the first Whole Foods Market, as I said, it became the highest natural— highest sales natural food store in the United States within just a few months. And then 9 months after we opened, Austin had a 100-year flood. And we were in the flood zone. We had 8 feet of water in our store. We were literally out of business. We were washed down into the river. And that was definitely definitely a low point, but we didn't die even though we didn't have insurance. That's when I really first began to understand about stakeholders. I didn't have a word for it then, but the next day after the flood, we showed up to start cleaning up the mess, not knowing whether we didn't have enough money to buy new inventory or anything. But there were all these sort of semi-strangers, I kind of knew them, but they didn't work for Whole Foods that were there cleaning up the store with us. And then as we found out, they were our customers and they were our neighbors and they just loved Whole Foods. So they were going to pitch in and help. And a lot of those people pitched in and helped all the way till we got reopened a month later. We had our suppliers fronted us new inventory even though they weren't, you know, I mean, on credit, which we didn't really have the money to pay them if we didn't get the business back going again. Our stakeholders literally didn't let us die. They rebirthed us. So that's one of the reasons I'm so passionate about stakeholder philosophy. But that was a low point because I thought we were, I thought we were dead. I was wondering what I was going to do next. And then over the years, there have been a couple of coups or attempted coups that failed where they tried to have ambitious executives teaming up with dissident directors of the board who thought my time time was over. I mean, if you're an outspoken entrepreneur who thinks out of the box, you're not conventional, and that always irritates certain people. And when you're doing well, they credit you with a certain visionary genius, but when the business is doing poorly, they think it's time for you to go because you're clearly— you've lost your magic touch. So I had to weather a couple of those in the 40-year period as well. I mean, there's personal stuff that happens and tragedies occur and people you love die and lots of low periods. But I mean, entrepreneurs are sort of inherently optimistic people or they would never start a business. The odds against them are huge. I've always been very optimistic and very resilient. I tend to bounce back quickly. I wake up the next day and you figure out, okay, how are we going to solve this problem? What are we going to And you do it.

How important is the team around you in being able to—

It's one of the 12 virtues we're listing in Conscious Leadership, which is always upgrade the team. You are no better than your team. If your team is good, you'll be good. And if your team isn't good, they make you look bad. So you've got to always be upgrading the team. That doesn't mean that you're you're always replacing people. It just means the team itself can be learning and growing and evolving, but it's got to get better because you've got to get better. So I feel like part of my success at Whole Foods is I just had some amazing people I've worked with. I mean, amazing, very talented, creative people that, that complemented— I have certain strengths, but I have a ton of weaknesses. And I've had the wisdom to sort of recognize weaknesses and say, I better get somebody to help me in that area or we're going to— I mean, I don't think I have all the answers. So yeah, team, extremely, extremely important.

Those initial team members that, I guess, made the foundation for Whole Foods to be able to grow to what it's become, how did you source them? How did you find them?

What did you look for? I mean, initially, they just came to us. I mean, we had a certain energy, a certain culture. And we just attracted people. They just wanted to be part of it. It's magnetic. When you're growing and you're successful, a growing business is great fun. And it brings people in that want to be part of it. That's a very different thing when a business peaks and maybe starts to decline a bit. One of the great things about our merger with Amazon is we've renewed our growth. And that is very energizing for everybody. When everybody wants to feel like they're a winner. And if you're, say, have stores, and the stores are not doing as well this year as they were doing the previous year, you don't feel good about yourself, you tend to blame yourself, even though it, you may, it's not your fault necessarily, but you still don't feel good about your work because it's not working. Yeah. But when there's growing, it's like, yeah, we're doing good. We're winning. And we're getting, by the way, more money as a result of the success. So growth is fun. It really is. Growing a business— I don't know anything more fun than growing a business, or I would have done it. It's a blast.

At one time recently, I was kind of deep in contemplation trying to figure out what the next thing I should do is. And the basic message that came back to me was, whatever is the most fun.

Well, remember I said the higher purpose initially for Whole Foods was sell healthy food to people, earn a living, and have fun. So those are still all there. Now our purpose has been articulated a little bit more succinctly to— our purpose is to nourish people and the planet. So that's Whole Foods' higher purpose. And that key is the word nourish because there's so many different levels of nourish On the surface, of course, it means healthy food. But then you're also nourishing the souls of the people that work with you. The planet is our overall connection that we're doing. You know, we buy from all over the planet. And it's our environmental statement as well, our commitment to sustainability in what we do. So fun. Absolutely. I mean, building a business is fun.

That's why I'm still doing it. John, I very much appreciate you taking time and sharing your wisdom. Do you have a final thought for the people that would be watching this?

My final thought is, is that as I'm going to be 65 in about 10 days, and it goes by pretty fast. Life is much shorter. When you're young, you look out and you see this horizon out there, and you don't— you think it's, I got forever to get there, it's no big deal. But you're actually going to get to that horizon much quicker quicker than you realize. And because of that, because, and because none of us get out of here alive, life's too short to not really go for it. You go for the things that give you meaning and purpose and fun, and you won't get to the end of your life with regrets. I think to get to the end of life and think, you know, life's too short to settle for less than your very best effort, things that you care about the most. You should go for it. And there's no guarantee you're going to be successful, but there is a guarantee that if you don't try, you'll spend your life second-guessing yourself and you'll get to the end of it with regrets that you didn't give it your best, give it your all. Terrific.

Thank you so very much for taking this time, and I look forward to, you know, getting your new book and experiencing to be witnessing that and to also see the growth of Whole Foods and its new relationship with Amazon.

For me, it's been great. Thanks, Patrick.

I'm excited about all those things too.

Next up for you, we have Jason Katzenback and Michael McClary. This was a really energetic interview. These two guys are characters, but they also have a message for you. Amazing.com is, well, an amazing success. And what they have figured out is how people with very little to no capital can start an Amazon-based business and grow it into something that is substantial, that can absolutely change the wealth in your future. I didn't really have much of a concept of it before I listened to these gentlemen, but afterward I realized, wow, this is really something that is a huge opportunity that many can take advantage of. In today's uncertain times, there's a lot of people who are dislocated. Their careers are either over or they've taken a left turn. There's uncertainty in the future. Well, if you want to create some certainty, these two gentlemen have something to share with you that can create that for you. Enjoy this interview. Jason, Mike, thanks for taking the time to sit with us and have this conversation. So the joke is almost too easy and it's probably not even funny to you anymore, but you have an amazing story, right? So let's talk about, you know, your lives maybe before Amazing.com and then we'll get into what you're doing right now. So Jason, why don't you start? Tell us your background.

Yeah, so originally I was going the corporate route with life, but I, uh, back in 2003, I remember the CEO decided to abolish all bonuses that year, and I just realized that I needed to stop working my butt off to line other people's pockets, and it needed to be more about what I could spend my time on to give me the most ROI. So I started my first business back in 2005, and it was a pretty cool success. You know, that first year we did over $3 million, and it just really got me the bug for the internet. I went from, you know, working for a corporate company where I was working all these hours to try to improve my lifestyle, and I found I just had to work more and more hours, and it didn't seem like I had any freedom. And then I started my own business and also I could work from home, I could travel as long as I had an internet connection, it was good. Now back then Wi-Fi wasn't like it was now. So the freedom wasn't quite the same.

Was it a related industry or was it—

Well, what I did initially was I started with little ebooks. So I would research topics online and I would figure out what people were looking for whether it was learning to to get your driver's license, health issues. And then I would hire ghostwriters to write the content. And then I would use SEO, a lot of article creation, article marketing to, to just dominate the search engines. And I started doing really, really well. So then I started teaching that and I launched a product in 2005 called Portal Feeder that was based off of that. How to build websites to be able to promote affiliate programs, products, anything like that. Like that. And that's when I realized the feedback I got that I was very good at teaching because I was very— I had a lot of empathy with the people. I would really work hard with them. I cared a lot about customer support. We got a lot of feedback on that early that it was our customer support that made the difference because we really followed through with the customers. And so I started refining that membership model and teaching model. It was always based on the business businesses I was doing. It's like I had to be a success in the business I was teaching. And so initially, starting back in 2005, it was focused on SEO and PPC, but all Google related. And then in 2012— not 2012, 2010— that's when all the penguins and all those things came out from Google with the different algorithm changes. And I realized I was kind of doing the same thing again. I was working for someone else. I wasn't creating an asset because I Building business is always based on hacks and, you know, how you can trick the search engines, rank on the search engines. But then suddenly the search engines decide to change their algorithm. It's like you have to start over. And that's when I met Matt Clark, actually. It was in— I'm not sure if you've heard of The Mavericks. It's a mastermind group.

Janek Silver. Yeah, yeah.

And so we met in that. I joined that in 2011. And me and Matt got into a mastermind group. And so he was— here's this young 24-year-old kid at the time doing like $100,000 a month selling his own products on Amazon. It was just mind-boggling to me. It's like, how can you have your own manufacturing? And he's like, well, I private label it. And I knew private label from the context of content, you know, like for someone to, you know, to repurpose content. But he was actually doing it with products. So he started teaching me that. And so when I launched my first product, within 4 months I was doing over $100,000 a month profit. Wow. And that was because I was able to take all my SEO skills, all my marketing skills from Google, and translate it on to Amazon. Now I also had a little bit of a helping hand because at that time Dr. Oz was really pushing health supplements like Garcinia Cambogia, raspberry ketones. My first product was a raspberry ketone. And so that really helped. But the cool thing was, is the product I started selling was the exact product that my manufacturer was selling. But because I differentiated it, used all my marketing skills, I was selling my product for 3 times as much as my manufacturer. And I was ranked number 1, and they were like number 30, kind of thing. So it was— so the bug hit, and we started teaching people the Amazon model.

Can I ask a question about that? I'm really curious. Sure, sure. So your manufacturer— so basically you were being— you were white labeling from your manufacturer. And when you started outperforming them on such a significant basis, did they at least like take notice and say, hey, maybe we should copy some of what you're doing? Or were there any conversations around that?

No. Interesting enough, as much as I thought that it would actually hurt me once they figured out who I was, the opposite, because Manufacturers, most of them, that's their business model is the manufacturing side. They're not marketers, and so they almost just dabble in that kind of stuff. But, you know, a lot of our students have asked that, like, what about when the manufacturer finds out that you're selling the products? Like, well, that's not their business model. It's like my business model isn't manufacturing. Now, sometimes sellers will start to develop so much they build their own facility to manufacture it. I don't want to get into that. I don't want to have more warehouses and employees and those kind of things. So no, I mean, in fact, they— it was more of a partnership. They started giving me better deals because I was such a high-profile seller, and they kept dropping the price on me. So it was just— the only problem was, the one drawback of that industry is I didn't like selling that product. I mean, you know, and that's something with any business. Like, I think, you know, it's great to start a testing business business. Like when you're going into business, you always, you know, like don't look at it like I'm going all in on this. Like, you know, test the waters, make sure. And that's what we tell a lot of our students is, you know, pick a product and learn the business model, learn the system, and then start building a real business.

Did you think there was gravity there? And there was— you said Dr. Oz was promoting this, so was that what got your attention? Said, hmm, I think I know. It was research.

It was really— it was just following our strategies of figuring out what are the sellers on Amazon? How many reviews do they have? How much competition does it look like they have? Is this an emerging market? Because Amazon, you know, I had in the mindset at first it was like Google, like if you're not number one, you're nothing. But it's not like that. Like on Amazon, people browse, you can direct traffic to it, it's very different that way. So I, it was never that. It was all about, no, this opportunity says let's see. And as I started doing the business model, I started feeling kind of I didn't like selling people a weight loss supplement when their responses— when I'd, you know, because I tried following up giving them value, saying, as you buy this product, you know, here's some exercise tips, all that. And I get responses like, if I wanted to exercise, I wouldn't have bought your product. And so you just start feeling guilty. It's like, well, you know, as much as they say it works, this isn't really good for you. So I've actually gotten out of the health industry. Industry, and now I focus primarily on the house and home.

But so I can see the trajectory into Amazon for you, and we'll get more, more specifically into, you know, those aspects. But I wanted— I want to know, Mike's, uh, you know, how did you arrive here? Sure.

Well, I'll go back even a little further, and probably people don't know this, but I actually sold paint right out of college. Paint? Yeah. So I put myself through college by working at a paint factory that my dad worked at, and in the early '90s when I graduated the job market was not there for anyone. Luckily, the factory called me back up, said, you realize we have more jobs other than just factory jobs. We have professional jobs. And luckily I was able to take a job with them. No idea that I was going to be selling paint, but I took that and moved to Alabama. And then within a few months, they realized that computers were now all the rage in the early '90s. And Mike, the, you know, 20-something kid out of college, must know computers. Didn't. But I vowed to learn them. And so I moved to Chicago, really got into the whole data analysis with the company as computers are taking off. And that led me to another job of once I realized like data and computers was where I wanted to go, I got into consulting business. Then I started traveling, consulting. I found a client that I was doing a lot of data analysis with, telecom company, and they actually got me involved in the finance side of it. And so shortly thereafter, I became a finance director for a large telecom company.

What does that mean to be a finance director? Like, what kind of stuff did you do?

Yeah, so I focused a lot on the revenue recovery side where a business, you know, you get so big you don't realize where you're leaking money, right? You don't— you just look at the numbers, the top line, the bottom line. You don't realize that there's all these little gaps and holes in your system. So my job was to find those gaps and plug them. And we did that with data. And I always loved research. I love, you know, analyzing what's coming in, what's going out, and where's the delta between between those two. Right. I really found that that was a great spot for me. And so after doing that for them for a while, I loved the work I was doing, but I felt chained down. I was this guy that sat in an office. I had a team working with me. We're always looking, you know, it was mostly cable at the time. Cable did not have a really good, you know, perception among people. And so I didn't have this feeling that I was bringing joy to people's lives, doing anything like that. Definitely not my own life. I had a lot of stress in that job. So it was a great, you know, great group of people, but I wasn't really feeling fulfilled. So then it was about 2012. I realized I want to do something different. I didn't want to have this corporate job with this week or two of vacation every year. You know, I was making good money, but I was stressed out not seeing my family. And luckily, you know, I saw an email come by, talked about, hey, there's a great opportunity on Amazon. It must have been months after, you know, Jason and Matt had started really, you know, finalizing and fine-tuning how to build a business on Amazon. And I was one of the first people to get this email, and it just really, you know, stoked something inside of me to realize this seems like a good opportunity. Mm-hmm. And I remember, you know, hearing about the training and it all just clicked. You know, why, why go out there and try to invent a brand new product? Find something that people already want. There's already a demand, right? That's half the equation of selling. If you know that there's a demand for something, then create something that fulfills that demand or something that even does better than that. And that's what the model taught me. And so I jumped in, I took this You know, I learned how to build my own business on Amazon, how to build a brand of products. I had no idea. I launched my first product with a leather conditioner. I didn't know anything made of leather.

I'm actually looking for one of those right now. I'll talk to you about that after this.

Good. But I knew I could source in the United States. I knew there was, you know, a low quantity to get going with. The price was, was right. I knew I could make a good profit margin. And most of all, there was a demand for it and not too much competition at the time. So I started off with that. And lo and behold, a year later, I was making enough that I could actually quit my corporate finance job in order to pursue this full-time. And it's just kind of taken off from there. And a lot of other things happened since then as well. Yeah.

So, and I want to get into that in a moment, but when did the transition come from you being a customer, you know, of the company to actually coming into the company?

So I'd say probably start about 6 months after I started, you know, doing, you know, learning how to build a business. And we actually met in Austin for the first time. There was a live event for for all the people learning how to— this new business model. We got to meet for the first time. At that point, it wasn't just virtual community, everyone talking on Facebook or in a private group. It was 500, 600 people in a room face to face meeting Jason, meeting Matt, and then talking about all of our successes, our failures, what was working, what wasn't working. And what was amazing about that— not to use amazing again— was how much everyone was sharing with each other. Yeah, we had 500, 600 people that you thought were competitors of each other. but they're all helping each other out because the world out there is so big. There's so much demand for everything. There's no point in trying to keep it all to yourself. And so when I started sharing more and more of what I was finding out, because let's face it, you know, two guys can't figure everything out and do it all the time. They're, they're running, you know, a large business, bringing in all kinds of students. They need other people to help. And so I came in as more of a mentor in that role. There's probably a handful of us in that. And then after another 6 months of doing mentoring, then they realized we need someone to help with training. And so I came in and started doing training about 6 months later. And then a few years down the road, as it was really building the rapport, the relationship, we're all, you know, we realized we're in this together. We're helping change the world. We're changing lives. We're building a great business that's expanding beyond Amazon and beyond just e-commerce. Realized it was, you know, a better idea to bring me in full time to really help, you know, with the business and the customer support and also the building of the products to make sure they're as good as they can be.

Yeah, if I just want to add one thing on that. So what, you know, he's talking about our events. When our first event, what really surprised us, and when he talks about changing people's lives, was that fact. And that's one of the reasons we pulled Mike in too, because he has a lot of empathy for people. And because it's, you know, one thing to teach people, but if you're not relating to them, if you're not understanding them, you can't help them. And at the end of the event, we had You know, the whole room was lined up around the room, and it took us an hour to go through. Everyone wanted to take a picture with me and Matt, shake our hands, and tell us how we changed their lives. So it was this spark that went in my mind. It's like I found my passion. Mm-hmm. We're changing people's lives. And it's, you know, oftentimes you hear about passion, follow your passion, find your passion. And I used to get stuck in those mindsets of like, how can I be passionate about something? Like, I got to find my passion. And And you see people that are health experts and all that, but it's when all of a sudden you find it and it was changing people's lives, the energy it gave, and just the spark that we saw in Mike and how he wanted to affect people's lives. And so he's definitely been an asset. He's a very successful seller of his own brands, but he's got a real knack for being able to relate to people and help teach them. So it's been a really good partnership.

So amazing, you know, it's legendary in the digital marketing world because the size of some of the launches you've done, you know, it's— people know about them. And it's this whole concept of the virtual world. But what gets my attention is you decide to have a live event, which is like the, you know, kind of like the other direction a little bit. So what was the internal dialogue saying? You know, hey, this is all about how to be virtual and, and, you know, really build a good business, a profitable business virtually. Let's get everybody together live. So what was the impetus behind that?

It's about camaraderie and sharing ideas and the fact that, you know, over the 7 years before that, I went from being in an office to working in my home and going through a lot of ups and downs. Working from your home can have a mental challenge at times. You know, you get depressed, you feel alone, you don't have people around you that can relate to you, can bounce things off. So it's really about creating that community. And we also knew that we wanted to have an experience. So not only to help people create a community, but also to help connect people that can help one another. One of the biggest things that me and Matt did originally was we created this mastermind group. And so I started selling in October, we had the mastermind group in November, and then every one of us in that mastermind group by February were crushing it. And so it really opened our eyes to that you have to be sharing. As Mike said, there's there's just too much to teach. And so it was really just about how do we create community with people, how do we make people feel they belong, and how do we get that camaraderie so people feel that they're not just on an island by themselves doing this business, that there's actually something more to this. And it just worked. It really did. Did you have—

I guess this is really a question for you because you're there at the point in time, but when you got together with Matt and you said you know, let's put together this product and this project and let's go launch this. Did you anticipate the size it would be? No.

You know, I was going for, you know, my target was the John Rhys, Frank Kern kind of million-dollar launch, you know, the Mike Filsaime kind of thing. And what we did originally, what we launched was 3 products in 1. It was originally called the Amazon Money Machine, and then Amazon let us know that, you You can't do that. So we quickly changed it, and thankfully at that time, you know, we were nobody, so like we had time. We changed it to The Amazing Money Machine and then The Amazing Selling Machine. John Reese actually helped us change that. But when we started, we were focused on private label, wholesale, dropshipping, and Kindle because those were the 3 aspects of Amazon. But after the year of doing that and all the community testimonials, we were looking like, yeah, people were making a few thousand dollars a month with kindle, some are doing okay with private label, with wholesale. Private label, we have people crushing it. We had one guy, David Paul Doyle, actually, he was one of our first guys that— he's right now NatureWise, and he's one of the biggest health brands on Amazon. He was one of our first success stories, and we just looked at this, it's like, so by having this training, we should probably get rid of the, you know, look at the 80/20. What's getting us 80% of our results was private label. And then so when we did that, and now we had these testimonials, you know, you go from the first year launching the product doing $1 million to the next launch we do, just the launch itself in 9 days doing $7 million. You know, it's kind of like, whoa. And then the next launch you did $10 million, next launch you did $16 million, then you do a $22 million launch. And it was just— it was two things happened. Number one, we were the first to market. We were the first real established system. But the other cool thing is all of that pre-training I did of creating communities, courses, all those kind of things just fed right into that. So it was just really all those relationships from affiliates and everything that I had. It was like the perfect storm. And, you know, it plays with your mind too when all of a sudden all this success comes. It's like winning the lottery. It really— there's a lot of challenges that come with that. A lot of challenges. But no, I was hoping for like a $2 or $3 million launch. I had no idea it would do what it did.

And the biggest launch was the $22 million, was that the— Yes. Yeah. So that's a lot more than one.

Yeah, it was pretty incredible.

But with all the people now that have come in, because obviously you opened up this kind of new frontier, that's an opportunity. You know, when I look at it sometimes, I think in terms of It's almost like learning franchise, you know, as far as saying, hey, there's, there's kind of a turnkey business method here that you can adopt. But franchises, you need a lot of money to be able to engage in. Here you need very little investment to be able to kind of get a product, get a business, get the whole structure together and be able to go to market. And then you— so if for some reason it didn't work, you don't really have a downside or much of a downside. And if it does work, it's a terrific thing.

And we actually teach that where some people will You know, there's one person we were just talking to that put like $16,000 in their first inventory order. And it's like, what are you doing? Like, that's absolutely— you want to start as risk-averse as possible. And the idea is start with this. You know, you want to start with about, what, 200, 300 units?

That's about—

that's all you need for really to get going. You know, you don't— you don't need to spend thousands of dollars. As a matter of fact, you only started with $500 worth. You know, got me about 100 bottles of leather conditioner. But, you know, and talking about risk, you know, we're in— you're building a business. There's risk involved in it. But I like to think of it as calculated risk. Yeah. You don't just go out there and blindly spend money on something you don't feel has a proven way of working out for you. And one of the things that, you know, probably the biggest thing we built up is all this credibility, social proof, all these success stories of people who've made it work and all the reasons why people who didn't weren't able to. So we know what not to do as well as what to do, which is really important.

You know, it's not just do this, do this, but here, don't do this, it can be the difference between success and failure.

And that's why we have— one of the challenges we have, we have to keep it up to date all the time. And e-commerce is changing every single day. Amazon changes every single day. You can't open the paper, not read an article about Jeff Bezos or about Amazon, right, without seeing something in the news about them changing or expanding to a new business or shutting down a part of the business. Right. We have to stay on top of that because we don't and we teach someone to do something wrong that could hurt their business big time.

In line with that, because there's a question I have relative to that. Because one might think, okay, well, now you've done this for some years now. You've had all these thousands of people who've come in are doing it. Is it saturated? Is there still a lot of room for people to come in? Where do you think you are in that particular part of the arc?

Yeah.

If you look at it, saturation is a state of mind. Yeah. There's, there's absolutely no way that a business or an entire section of the economy that's growing so big could become saturated yet. Amazon or e-commerce in general only has a fraction percentage of all retail sales. I think it's not even over 15% of all retail yet.

So it's an expanding universe, right?

Absolutely. Yeah. And the way that it's growing, the number of sellers can't even keep up to pace with the way that the amount the market is taking over. And Amazon still does only about 50% United States right now. They can still grow there. They're expanding into other markets, other areas, and there's always new products coming out. It's a constant, you know, continual flow of new, new ideas, new products, new methods of marketing that you can just take advantage of. And, you know, but one thing is the sooner you get in, the more time you have to take advantage of. That's why I always want people to get in as soon as they can.

And people make the mistake of thinking this is an Amazon business. It's not. It's a physical products business, but you're leveraging Amazon to get started. And the whole idea is once you have a proven brand, once you have your proven products, and there's so much opportunity on Amazon, and like you said, you can expand internationally so easily. Then you create your own e-commerce store, you start going on different websites, and you expand how your product reaches. But the world's changing. I mean, just— I was just telling about an article I was reading where it listed all the stores closing this year. You know, people are gonna go somewhere to buy. And then people say, well, what if Amazon starts selling all their own products? Well, then would you buy on Amazon? You know, if you know— if I only go to Amazon and you can only buy Amazon brand products, products there, I'd start looking elsewhere, right? You know, because Amazon doesn't want that. Amazon admits 50% of the revenue is from third-party sellers. So there's so much growth, and it's just like a hockey stick right now with how quick that Amazon is expanding. And some people think that it's oversaturated because I think it's a fear, like they want to talk themselves out of it where they're looking for opportunities but they, they almost seem to red flag everything. And no matter what business model I've been teaching, that's the number one thing. Oh, is it oversaturated?

It's over— like they missed it.

Yeah, they feel like they missed it. And it doesn't matter that the first year we started selling Amazing Selling Machine, the, the number one question was, is it too late? Is it too late to get into it? And the, the, the only thing that determines success or failure failure, in my opinion, the number one thing is mindset going into it. You know, you hear mindset, you know, some people say, oh, it's irrelevant. It's like, it's not. And every success story we talk to, the people say right away, this is— I knew I could make this work. And so it's really believing that if you're going into this and saying this isn't gonna— you know, the word try, I think sometimes people misuse, like, oh, I'm gonna try that. Why don't you just do it? Don't just try it. Do it. Implement it. Like fully go in. And it's even incredible sometimes. People buy our course and they'll send me their— Because they'll be struggling. I'll say, "Let me see what you've done." It's like, "Well, you haven't followed the training." It's like, "Well, why are you doing this? Like, is this a hobby for you?" Because if it's a hobby, then I'll step back and it's like, "You just go have fun." But if you want to change your life, if you want to be a real successful business, then you can't just try. You have to do it, and it's all about mindset. And at the end of the day, there is so much room on the internet for e-commerce. Whether it, you know, Amazon right now is a behemoth, but you remember when Google took over Yahoo? People were like, there's no way, like, Yahoo's gonna be it. And then Google came along. Like, there'll be something come along. But the thing is, people are always gonna need to buy. There's always, you know, whether it be, you know, and I love it now. Like, just the other day I ordered a bottle opener opener, because it's like, oh, I got to go buy a bottle. Wait a sec, you know, order it and same-day delivery, you get it, you know. And the big— so it's like, I'm just gonna do more and more of that. And I think the world's turning that way. So it's really, if you want to change your life, if you want to do a business, look for the reasons why to do it. Now be cognizant, like, obviously if it's, you know, you want to look at the market share and all those different elements, but at the end of the day, if you want to change your life, you just got to take action and really believe in yourself. I'd say that, you know, in line with that, who's the avatar for you guys?

Like, this is the ideal person or the ideal 3 types of people that really are our customer.

It started with this guy, with really— and the idea was because it worked for, you know, mid-40s, middle-aged kind of person that had some disposable income to be able to buy had some inventory, not a lot, and they were looking for something else. It was somebody that was stuck in a job and they were just feeling like, I have to commute to the office. It's really like the commute could summarize it, like if you're sick of the commute, but it was more of the middle-aged person that was an executive that was looking to get that freedom. But it's since changed a lot.

Yeah, now we see people from all walks of life too. I think anyone who wants to make a change in their life and has a reason why they want to do that. You know, and money very seldom is the reason why. It's what you want to do with that money. But if you have a reason, if you're wise, you want to spend more time with your family, you want to travel, you want to, you know, buy nice things. There's nothing wrong with that at all. Just understand what it is you're doing this for. If you have a reason why you want to make a change, that's our ideal person, because having a good reason why you want to make this successful will help you be successful. And I know, like, number one thing that got me successful was as soon as I started and made the decision that I was going to build this business, I didn't, I didn't, you know, wonder what's it going to be like when I'm successful. I started visualizing I've already made the step, I've already made a change, I'm already successful because I've already taken that big leap.

Now, you're full-time as an executive when you started, you said, right? Yeah. So because that's one of the big questions that come up. How much time do I need to be able to make this work?

I was nervous starting out, thinking, how can I build an entire brand and a business while, you know, having two young kids at home? Having a wife that, you know, she needs attention from me and vice versa. So I couldn't just, you know, ignore all those things and having a full-time job that I travel to. Luckily, I was able to do it within an hour to a day. So the way that, you know, the training— when I, when I took training to learn how to do this, it was laid out where you could watch it anytime you wanted to. It's online, it's virtual support, the help, the mentorship, that's all virtual online. So anytime you wanted to go watch it, I usually— my plan was work all day, came home, I had dinner with the family, and then I would go downstairs and I'd watch some training for an hour or two, and then I'd come back upstairs and hang out with the family a little bit more. And then 10 o'clock, I'll go back downstairs and spend another 30 minutes to kind of plan out my next day. So it's never more than a couple hours a day.

But I think what's important is that you had a kind of a structure around the training. In other words, uh, it's probably not a, I'll get to it when I have time, because that probably never shows up.

Yeah, those are the people that a year later they're still— we have people from ASM 4, they say, okay, now I'm started, you know, and that was 4 years ago because you get lifetime access. So once you join, you'll keep getting all the upgrades. And so we'll have people starting now say, now I'm gonna commit. And it's like, you know, it's just mind-boggling at times when you hear that because it's like, why didn't you make this financial investment back then? But it's— you have to be able to do that. You have to be able to dedicate— we recommend a minimum of an hour a day, but really, like, if you want to make it work, 2 hours a day is probably more realistic. Like really to be able to get it done in 6 months where if you dedicate 2 hours a day, in 6 months you'll have a dramatic transformation. And you'll know at the end of those 6 months you either— because that's another thing, one of the things that we believe is that everybody can do this business, not everybody will want to do a business. You know, a lot of times being an entrepreneur, there's a little bit more responsibility in life because you're more responsible responsible for everything in the business. And so after 6 months, we do occasionally have people that say, no, this just really isn't for me. So we actually offer a guarantee on that, that if you're not— you follow our system, after 6 months, if you're not, you know, if you've done everything and you're not happy, we'll refund you still. Because sometimes people fall into that victim, um, very, very small percentage of people do that, but it's just an interesting phenomenon because some people, they think that they want to be an entrepreneur, but then they don't. It's not for them. It's not for them. Yeah.

So another, uh, category of person I wonder if this is right for, which is on my mind— so I've got a, a 22-year-old son who's a, uh, senior in college, you know, finance economics major, who, you know, looking at going out into the job market saying, hmm, I wonder if I, you know, how do I go look for jobs? What am I looking for? But then he just comes back from a trip to London, says, you know, I found a you know, small gin over there that they don't import over here. I wonder if there's a way I can figure out how to import that over here. You're thinking about ways to take products from one place, bring them and distribute them to another audience. Is someone like that that's like maybe ready for the job market?

Just the Dysons, like they're 29 years old now and they're doing what, half a million, half a million a month in sales, you know, and half a million.

And these are— so who are, who are these people? Channing and Justin Dyson.

Yeah, we just had them in Hawaii for some video.

Are they college, like you just out of college, or what?

Well, Justin dropped out of college once he realized how well the business was doing, right? And I think that Channing, she now owns a beauty shop that she still does some part-time work in, but now they're really just running their own business selling all kinds of, you know, children's apparel and different types of products that for them— they have young kids— they realize that, you know, could we make something better? Could we make something that we would want to buy as parents? And knowing that there's hundreds of millions of parents out there, they were similar what your, your son was. They wanted to bring something different to the market that they knew there was a demand for, and that gave them their passion to really dig into this business.

One of our early success students, John Gill, who, you know, quickly became an 8-figure seller, one of the things that he was most dedicated to us for is how this transformed his family because he taught his son the business model and now his son does better than him, and he's like, I, I feel safe now, like my son is taken care of. Um, so absolutely, you know, and the neat thing about this business is, you know, we recommend that you start— you know, when we teach you, we try to teach you the most effective way to get the fastest results possible with the least amount of risk as possible. Now, there's always some risk, um, but the reality is if you only have $100 to start with, you can you can start with $100. It's just, it's gonna take you a little bit longer to find the right products because some types of products will have minimum order quantities. So you might have to have $1,000 for that product. So keep looking for another product because the idea is just get started with a product. Find a product on Amazon that fits certain criteria so you know that it's a good seller. And if it's proven on Amazon, that's why we also sell— like, if you're just starting out, don't start with a brand new product. Don't say I have this this idea, it's gonna do well. Well, if it's not selling on Amazon, you have this whole other hurdle that you're gonna have to figure out. So what you do is you find a product that's selling well. First of all, you try to figure out how to make it a little bit better.

There's steps in this process. So is that the first step?

So finding the product's the first step in the process, the most important one, because your product is everything. I like to think of it as the base of the entire business. And that's why we're very, very careful about the criteria we use. We want to make sure that it's priced a certain amount of price because of its It's too low of a price, you won't make enough profit. If it's too high of a price, you can't afford enough inventory. Right. You also make sure that the competition is at the right spot on Amazon, because if you have too much competition, you can't compete with people that have unlimited pockets to outspend you. But if there's not enough competition, there's a reason for that. The product probably isn't in demand out there. You also want to make sure that it's not too heavy because, let's face it, shipping is a cost of business nowadays. And if you can remove that from the equation, then that makes it much easier to get going. And then you also want to make sure that you can private label it. That's a big part of what we talk about here. So it's much easier to take a product, a generic product. Think of a thermos instead of selling the Thermos brand thermos, create your own brand of it. Come up with the Mike and Jason's Thermos or whatever it is. Jason and Mike. Mike and Jason. And brand that yourself because if you own the brand, you own an asset. Asset. And you're bringing cash flow every month and you're building an asset that at some point, if you choose to cash out and retire, you have that built up. If you sell someone else's exact same product, you're building their business. Right. But if you make your own, you're building an asset for you.

Yeah. And that's a really important point. A lot of people ask two things like, why don't I just sell somebody else's brand to start off? Well, with Amazon, you're allowed one listing. So let's say, you know, whatever it is, AB Acme spatulas, there's only one listing on Amazon. And then you'll see underneath beat the buy box where you, you click the buy button, other sellers. So then all of a sudden you'll notice that there could be 50 others competing. So what's happening now, everyone's driving for the lowest price, right? So now it's a commodity product. But when you're your own seller, you're the only listing. You might have Amazon because it depends on how you have things set up, they can resell your used stuff. So if someone returns some, but that's the only time you'll have a competitor. So it's, it's just you get all the profit, you get all the sale. And so people think, oh, it's easier to start this way. It's not.

Do you ever have a manufacturer decide to acquire somebody who is white labeling, saying, hey, you know, this is really good, I like this brand of my product, I think I'll buy you?

So I haven't had that, but I had had them want to partner with us and several other people as well. So once they see, like, like your example with your, your raspberry ketones, where they could have very easily came to you and said, Jason, let's partner on this, we'll give you a better deal, let's share in the profits. I had one of my small Suppliers came to me after seeing the growth and wanted to partner on a whole new line with them. They do want to do that sometimes. You don't have to do that. I mean, again, they're, they're really happy being a manufacturer, knowing that they have someone out there who knows what they're doing selling their products, because that's what they do best. They manufacture, they distribute them to their third-party sellers, and then let us do what we do best.

Stay in their lane. So now, okay, so step one is finding the product.

What's step two? Next one then is seeking the manufacturers, finding them. And this is what blew my mind when I first learned the business model. I thought that if I was buying any kind of product out there, that whoever made— maybe it was a Rayovac lantern— I thought Rayovac made that product. They had a plant somewhere in St. Louis and they're, they're churning out lanterns. Ends up there's, you know, 100 plants in China all making similar lanterns and they're private labeling and branding for you. So the first thing is to find a supplier from usually overseas, or if you're selling like a beauty product or some kind of health supplement in the United States, you need to find those suppliers that are looking for you. And I didn't realize you could even do this. I didn't know that was a possibility. I wasn't aware of private labeling at that point in time. But nowadays you can go online to sites like Alibaba.com, even Google, and search for private label products, and you will see hundreds, if not thousands, of different suppliers that actually are looking for you to sell their products for them. Right.

It's so much easier today with freight forwarders. And, you know, a lot— that's a big concern people have. Okay, well, how do I get get the product from China to here. It's so easy. It's really just a matter of picking up the phone, talking to the freight forwarder. They ask all the right questions. I don't even know if all of them need a phone. There's probably online forms now. And they'll take, they'll make sure it goes from the manufacturer right to Amazon. So it really, we don't recommend this, but you could start and run this business without ever touching the product yourself, ever. Now we always recommend get a sample, make sure you check the product. But you really don't need to. It— yeah, yeah, yeah.

I don't see any of our products anymore.

Well, when we're creating the products, I know for our brands, like, we obviously— I'm sure you do this too— you look at the product, you buy the competitors, you compare them, you feel them, you see how you can make it better, and then that's it, you know. And then the only other time is launching a new product. Launching a new product. Yeah, yeah. You don't have to have a warehouse or anything.

So that's step 2. What's step 3?

Step 3 then is your piece of property or real estate on Amazon. Like Jason mentioned earlier, every product has a listing we'll call it on Amazon. It's like, it's almost like having your own mini website on Amazon. What you want to do is you want to make sure that as many people as possible that go to Amazon, if they see your product, they want to buy your product. And so there's very specific criteria. You want to have the best images possible. You want to have the best title possible. To make sure that it gets a lot of traffic, but also doesn't look spammy. Looks like a product that I'd want to buy at the store. You want to make sure that you have plenty of details in the bullet points, those 5 points right below the name of the product. Right. And you want to have a good product description as well. And there's, you know, there's— it's not overly complicated, but there's a formula for making sure you have all 4 of those in place. And there's a 5th one. There's kind of a secret one that most people don't— when you're buying on Amazon, don't realize Amazon in the back end has these hidden search terms that if you want your product to show up for other searches that aren't in the title or in your listing, you can put them back there too.

Oh yeah, we had at one of our live events, we had someone come on stage and be vulnerable because they showed us their product and we looked at it, audited it. It was actually Mike that did it. He suggested, oh, do this in your back. And the next day his sales were up 20%. Wow. Just by optimizing it right.

And one of the things with the—

they say thank you, or they're very successful now too. They have— and it's really cool how now that with their success success, they're paying back and they're treating in third world countries people with eyesight issues. So they're— it's a very cool story. But with the, the one thing to keep in mind when you're creating your listing on Amazon is when people can go into a store and touch and feel the product, you have to try to figure out how to give them that experience virtually. So your pictures have to be— we call them lifestyle images. Think of the person. And a good way to do this is look at your competition first of all and see what people are complaining about. And if you can create a picture that negates that— so let's say someone, it's a spatula, and someone says, "Oh, it broke on me." Well, if you had a picture showing them bend it, for example, you know, unbreakable. But really, you just want to get in the person's mind, try to get that person able to visually see themselves using the product, and it makes a huge difference.

And if you use video also to that, you can now.

Amazon has allowed that. Video is obviously super powerful. Sure.

Yeah. What's step 4?

The final step is then launching your product. So this is where we can really beat the big brands. You'll think the major brands out there like Nike or Adidas or whoever is selling on Amazon, you think they'd have these huge marketing departments that go out there and they do a huge launch on Amazon. To them, Amazon is just another channel, another sales channel. They just put a product up there and they hope that people come by because of their popularity. Well, the way that Amazon looks at products nowadays is that there are certain triggers, certain levers you can pull. And if you know what those levers are and those triggers, you can get your product ranking very quickly, usually within a week or two. And it involves— it's not overly complicated either. It involves, you know, getting your product live on a certain date, getting some targeted focused traffic to the product, really focusing on people that you believe are more prone to want your product.

Do you drive that from outside of Amazon or within? Both.

Both internal and external. I mean, Amazon has— Amazon's investing $15 billion this year in tools for sellers just like us. Wow. And those tools allow you to really narrow in on people buying on Amazon based upon their interests, their age, their demographics, the type of products they want. But in addition to that, Facebook makes advertising so easy too. You can also drill down to the demographics to your exact target customer. And once you find that match, you have a product, you have a person that, you know, wants that product, that traffic will convert. And then as soon as Amazon sees a product converting, this is where that— it's a snowball effect. If someone goes to your product and buys it, Amazon says, wow, this is a popular product. Let's move them up in search rankings. That happens again, they move up in the search rankings. And if you know how to make those, those, those triggers get pulled and activated, it's pretty simple now to rank a product on Amazon within a couple of weeks of launching it.

The big thing, though, the crux of this all is you have to have a good product. Yeah. And it doesn't mean like a good product doesn't mean it's the most expensive product, but it's just look at what you're giving the user and make sure you're fulfilling on that. So whether it's a spatula or something much more complicated, just make sure that it's a solid product because no marketing can help a bad product. You might launch and do really well, but then once the negative reviews come in, you're done. And another tip too, especially for people who want to start from scratch, is start with a simple product. Because if you're like, let's say you want, the difference between a spatula and, I don't know, a phone, like any kind of electronic is One of them is going to give you a headache because you're going to be dealing with all these different departments for manufacturing. You're going to be dealing with reviews because of, oh, this electronic part doesn't work. But if you start with something simple, it helps you get going, learn the system, implement it. And then from that point, that's the other thing, you might start with a spatula and end up selling baby supplies.

And that's a really interesting point or a question I have. What's the experience typically when somebody's succeeds with a single product, are they normally then moving to build the next one and the next one?

Or sometimes people focus on the first product is a curse. Yeah, because people can get— I don't want— I hate using the word lazy.

That's complacent. Complacent. Or they think they're better than they are.

Yeah, that too. Like, that is actually, you know, it's— and we have people with one product doing hundreds of thousands a month, and we keep asking them, when are you going to add your next product? And, you know, they just they're doing so well with their lifestyle and it's like, that's a risk.

It's all about calculated risk again. Yeah. You know, so there's 3 ways to really grow. You can sell more of that same product, you can launch more products, or you can expand in other markets. And the easiest one is to sell that same product and people kind of fall into that trap. And it's easy to do because the cash comes in quicker than any other way. But the first step I would do is if you've started, if you've, if you've started a product that you know there's a demand for, simply expand into that same category. Come up with a complementary product. Instead of a spatula, come up with a fork.

Because I'd have to imagine on the sort of on a decay curve, you know, if you've got a single product that you've been selling a lot of for some period of time over, it's got to decay over time.

Yeah, absolutely. I mean, life cycle. Yeah. And sometimes people get lucky, they get a long, long time out of it. But I know all of the products that I started originally selling now are not my top sellers. Some of them we don't even sell anymore. And that's another thing. People seem to make this mental commitment that I have this product, oh, it's gonna be forever. And it's like, no, you can't look at that. Like, it's a business you're building and you want to build— and that's why we say build a brand. Because if you've got, you know, what if it's a spatula? We'll build a brand about that so that you can start relating, you know, build that home improvement brand or the kitchen brand. Because then all your communications, you start because you got to build an audience. Yes, the end of the day. And if you're trying to sell a spatula plus, you know, some kind of baby equipment and then some kind of outdoor, you've got this disjointed message. But if you can keep everything within one kind of niche, it's just so much more effective.

Would you say the value then is more in the brand than it is in the product?

Long-term.

Absolutely. Long-term. Because now you can launch other products under that brand and then you have existing customers that you can convert into the new product.

I can't tell you how many times that we've launched a new product and before doing any marketing, we start selling them. Because you have a brand, you have an audience who trusts you. You know, as long as you have a quality product, you provide stellar customer service, you will build some raving fans out there that'll be advocates for you. I love people who respond to a negative review that our customers mind even before I get a chance to, because they want to say, hey, have you contacted the company? Did you tell them about your problem? Did you give them a chance to take care of it? 9 times out of 10, they haven't. Yeah. And it's nice to see advocates. You build up that camaraderie with your own customers.

Yeah. So as we're having this conversation, in my own mind, I'm sitting here thinking, hmm, I could think of 3, 4, 5 different things that, that this could be kind of fun. And incidentally, this sounds like fun to me. Sometimes I, I hear things, it sounds like work, and of course effort and work is involved in anything that's going to be successful, but this sounds like kind of fun too. Like I'm, I'm, I'm getting tickled by some, you know, I wonder if this would work, I wonder if that would work, you know, different products, different passions, what have you. So what's a proper expectation? Like somebody's watching this, they're saying, hey, I, I, this is a whole new universe to me, and it is really this a universe of its own, right? I think I got an idea or two, I should start researching, etc. What's the right expectation for somebody saying, I'm starting at square one right now, you know, what should I expect as far as outcomes? Of course, you've talked about some pretty extreme examples of successful people, but let's talk typical.

So I mentioned 6 months, and that's kind of how we designed the course. The idea is now you get lifetime access to it, always upgrades but the course is delivered over 8 weeks. But we realize in 8 weeks, you know, you probably don't even have your product in inventory yet because, you know, the first few weeks is all about finding your product. And then once you order your product, depending on where you get it from, if you get it domestically within the United States, for example, you could have it in a week. But if you get it from China, sometimes the lead time, depending on the time of year, you could be, you know, up to 8 weeks. It can be a couple of months. So really, we figure about 3 months from the time you start to have you have your inventory, and then the next 3 months launching the product. So that 6 months is really a good time frame, but that means 6 months of working 1 to 2 hours a day, right? And I think that's very realistic. And at the end of those 6 months, no matter what the level of success, you'll know whether this is working for you or not because You're right, it is fun, you know, and it's, it in a way, it's kind of like the stock market in a way because you're watching these graphs and you're buying and selling stuff and just watching how it improves. And, you know, it's all the science, the analytics behind it. Really interesting.

So yeah, I can't tell you how many times that like on the weekends when I, you know, get together with family and friends, I'm talking about this business. It's addictive. It really is. And we talk about it all the time. You know, we do a lot of training, but we still talk about products. And ideas and new launch strategies. We're always thinking of something new to help out people to get better results. And then we, we spend a lot of our own money and time testing things out. Yeah, we've wasted a lot of money testing things out, but there's a reason.

Yeah, we call it tuition.

Yeah. No, no, no. Someone's going to realize, like, you know, after 6 months, what can they expect, like, financially? The way that we try to narrow in and give people advice on where to, like, start with the product— don't go for a product that's going to make $1 million a month. Don't go for a product that's going to make you $10 a month. You want something very reasonable and realistic and achievable. So we target products that should get you anywhere from $10,000 to $25,000 in revenue a month.

What's the typical margin in that revenue? 25%. Okay, so that's great.

We don't want you going any lower than 25% because then you've got marketing costs and things and you want to be able to put money in your pocket. The other important thing on that too is we recommend give it a full year. And if you like, if you're working already, make your plan to work the whole year. Because what you want to do initially when you sell is reinvest 100% everything back into it. Because you want to, you know, you're gonna, once it takes off, it's gonna take off. You're gonna run out of inventory, you're gonna be panicking, all these kind of things. But it's like, settle down, that's part of the process. But the thing is, if you're trying to spend all your profit right away, you're not going to be able to reinvest and grow. So that's one thing to keep in mind. But yeah, within, I'd say that's pretty reasonable.

And the biggest successes we've seen are those people who've taken their profits They realize potential this business has and they put it right back in the more inventory. They do that a couple of times around and then they put it into a new product. And then after a year, year and a half, then you can really make the decision. How much do I want to pull out for myself, for my lifestyle, for my why? Right. And then how much do I want to continue putting back in the business so that continues that steady climb upwards?

Yeah. And it's important to realize this isn't a hack. This isn't any of those short-term things. You're building a brand, you're building your own physical products. Brand, and we're teaching you how to do that by leveraging Amazon to explode it, you know. And so you're building a real business. So any business takes time, but if you look at the comparison of trying to start a business anywhere else outside of Amazon compared to on Amazon, it's incredible. It really is.

I have to tell you, you know what excites me about this is there's so many times I speak to people who want to become entrepreneurs, you know, sometimes called wantrepreneurs, right? You know, they'll take some training, they'll learn some things, but there's not really a good path for them to leverage things, tools, Amazon environments, what have you, where they have the money, you know, the investment that they can make to get something moving or at least test something to see if it's even viable. So what excites me about this is like, sure, if I want to open up XYZ franchise, yeah, you know, you got $1.5 million, $2 million, you know, and you can get approved for it, etc. You can go and get your franchise and it's a pretty good turnkey business model, etc. But in this case, it's like, yeah, I don't need, you know, I just need a little bit of capital and some time to get this started to see if I can throw my hat in this ring and get it going.

And a huge component that we're seeing exploding right now is selling businesses. So the Amazon, there are so many people looking to buy Amazon businesses that we're having, you know, 4 or 5 times multiples easy of people who are getting, you know, high 8 figure buyouts of a business that they started on $1,000 because they've created this only a year or two ago. Yeah. And they're only selling on Amazon.

Obviously. Now that's even more fascinating then because, and I think a huge benefit because it's one thing to say, hey, I, I'm able to build a cash flow business means I get to make some money over time that I can pull out of it. But if you're saying that you're also building an asset that's, that's saleable, that's extraordinarily attractive. Especially because if you got some, some good history and financials, you can get good multiples on a business like that. Yeah.

And so what I'm doing right now personally with my physical products brand, I don't take any money out of it. I focus it all 100% back in because my plan is in 3 to 5 years I want to sell it for cash out so that it helps me my next phase of life.

So, and that's maybe I'll call it a real business versus a lifestyle business. And there's nothing wrong with either. You know, it's not lifestyle businesses aren't bad, but you know, if you're you're really looking to be a business builder. Then on tax side, I guess you're paying capital gains on that as compared to regular income when you make that transaction. So, you know, there's a whole bunch of benefits to that.

The great thing about this, too, is you don't have to make the decision right away. You don't have to go in wanting either cash flow or lifestyle or a combination of both. You can decide that as you get into the business. We do know a lot of people who want the lifestyle business. They're okay making an extra couple thousand dollars a month in pure income so they can travel, they can pay their house payment. They can get an extra car. And in order to maintain that type of lifestyle business, you can keep going just on a couple hours a week. Once you have your product up and selling, it's really just keeping track of customer, you know, questions and making sure inventory is in stock. If you want to grow it and turn it into a brand that you want to sell as an asset, yeah, you have to put more time into it. Yeah, it's a real business. Yeah, that's what I love about it. It's a real business. You can have both components. Yeah, I just—

one caveat I want to add there. So for example, right now I work 90 minutes a week on my Amazon business. That's it, because I have employees. Now, you can't do that. I don't want someone listening to say, oh, I can work just a couple hours a week. Well, no, no, no. You'll get to that point. When you start, you have to invest the time, you have to get things in place, you have to then get the employees, um, involved. But then it gets to a point, you're right, that's all you have to do is a couple hours a week. You know, it's always wise to know what's going on in your business But it's one of those things you can set up, hire outsourcers, employees, family, whatever you want. It's very doable. That's awesome.

One of the things that we're offering as a bonus for Wealth Breakthroughs is something that is new for you. This, this book that you have created that really gets into the details of what we just talked about. So, let's talk about that book. Sure.

This is the first time we've actually done this. We've created a book that, you know, talks a lot about what we talked about today. The basic training, how to Start Your Own Amazon Business, but it goes into much more detail. We'll go through all the exact steps, all the pitfalls to look for, the ways to, you know, other tricks and tips that we've learned over the years. You know, we, we don't always teach tricks and tips, but we've included in this book because we know these are little things that will help you along, get, get going faster, even better. We've included that all in the book. Everyone's going to get that for free, and it'll walk through the entire process of finding the product, finding a supplier, creating that perfect product listing on Amazon, and then launching it so you can start making sales Immediately, all in one book that you'll get shipped to you.

I think this is a phenomenal high-value bonus for Wealth Breakthrough, so I really appreciate you offering that for our audience. You're welcome. Well, I have to say, this has been a really great peek into a universe of real potential for people that maybe don't have other paths open to them. So your enthusiasm is palpable, so I appreciate you coming here and sharing it and sharing it so openly. Openly. So thank you very much for this time. You're welcome. It was a pleasure to be here. Just because you can generate a lot of income or a lot of revenue or maybe even a lot of investment income doesn't mean you get wealthy. Why? Because the wealth has to be managed in a certain way, and there's things that take away from wealth, one of them being a thing called taxes. So what do you need? You need someone on your team who is a CPA who knows the ins and outs of financial management, legal tax avoidance, and other strategies that not only get you to generate wealth but help you keep your wealth. So next up, we have John Briggs, and he's a guy that knows exactly how to do that. As a matter of fact, that is his specialty. So enjoy this interview. John, thanks for taking the time to sit and talk to us about one of my least favorite and most important subjects. In my life, taxes. So tell me, how, uh, how did you get involved doing the work you're doing?

Um, I, I was fortunate enough to go to a really good university, BYU. They have one of the best accounting programs, and when I started there, I had no idea what I wanted to do. But a mentor told me I should either go into law or business, and it just so happens that the first business class they make you take is accounting. It's the first subject in my life where it like clicked. Just, it made sense to me automatically, which obviously probably tells what type of weird human being I am. But it did, it just clicked. And I just went down that rabbit hole. And through BYU, they give you lots of opportunities. So I've been at Deloitte, I've been on a few smaller businesses, local firms before I branched off on my own. One of the things that in class, I remember one day it was a personal income tax class, and I just realized there's a lot here. And I love the idea, the game of being able to take a number that the $79,000-page tax code, you know, they say, well, it could be this or it could be this or it could be this. And there's an exception to all of those, like, okay, there's, there's, there's room here to help people. Not to mention, one of my beliefs is just that the IRS is a big bully. Mm-hmm. And I don't, I don't appreciate that. I think people need protection. So all those things kind of just were growing in me as I was starting this career. And as I got into it and I got my hands into it, it just stuck. Like, I loved it. I love protecting tax people from the big bully of the IRS, and here I am.

When you started out and you were working in, I think you said Deloitte and other tax firms, you know, they're probably fairly traditional in their approaches and kind of conservative as accountants are known to be. Yeah. So when you branched out on your own, did you say that you had a different philosophy you wanted to adopt toward your clients and how you were going to approach this?

Yeah, you could say there's, there's two major flaws I felt existed in the traditional model. One is on the efficiency of the client's spend. Um, there are a lot of— I mean, they're all structured similar to big law firms where the client pays the billable rate, but what they don't realize is that there's this whole team of people, an army if you will, of different level people, and the ones doing most the work don't control their workflow, but they're also going to be promoted based on how many billable hours they have.

Is that really— so it's not basically on your expertise, but are you just producing in essence?

Yeah, just like an army of monkeys basically. And then you have the one guy who has a relationship with the client and he's the one who signs the return, but I mean, he's not even involved in the process. And so here I was as this new person, this new staff accountant at Deloitte, and I wanted to get a promotion. I wanted to get a job offer. I wanted to, you know, all those things. And if I only had one tax return to work on, you'd take your time because you don't want to be penalized for being smarter than the guy next to you. And so I didn't like— that was one problem I had, is that that inefficiency is passed to the client, and that's not fair. And the other thing was everything was Sally. Same as last year. Like, here you go, get last year's file and plug it in. Like, well, can I ask the client questions? Do I get access to the client? Can I figure out if there's something else that's going on? Because if they were overpaying taxes 5 years ago with this methodology of SALLY, same as last year, they're going to be overpaying taxes every single year because you guys aren't looking into a single thing. All you're doing is, well, that's how we did it last year. That's, that's ridiculous. Has taxes been the same? For those 5 years? Oh no, they haven't. They change every time there's an election cycle. Yeah, I think maybe we could do a little bit more for the client and ask some questions. And because they don't necessarily know— clients don't know when they do a transaction to grow their business. They're not always aware of the intricacies of the tax code, and they're certainly not aware of the exceptions and the different ways that those things could be classified. So they're not going to naturally come out to me and say, hey, just so you know, I, I bought a couple of properties this year and I decided to do a 1031 exchange. And like, they don't— what they are thinking is, hey, I bought some new property. It's our job to ask them the questions so that we can take what they actually did and get the best tax benefit for them. And I just didn't feel like the traditional firms were doing that.

So the tax code obviously is extraordinarily comprehensive might be a kind word, but there's a lot there. And it does change, you know, during varying seasons, election cycles and other changes that might occur to the tax code that has to be kept up with. And then you have these clients that are, as you're saying, coming in. Now, if I'm hearing you correctly, you know, you were kind of— your hands were tied at these firms when you came in to work at the big firms where they just said, you know, more of a factory approach. Let's just move people through last year, same as last year, etc. That became a frustration for you. Are you pretty convinced that, I guess, number one, that you could have saved them more money? And number two, that that's a reason maybe not to use bigger firms? What's your, what's your thoughts around that?

Yeah, knowing what I know now, I am 100% convinced those tax people, those taxpayers could have saved money if there was an approach properly taken. Of course, at the time, all I— the only thing that was rubbing me wrong was, but we're not talking to the client and you're the one having me do the majority of the work. How is that— how can I get any good benefit out of that? Maybe there's big firms out there that have an approach where they focus on protecting the client instead of this idea that they kind of work for the government. Like, if, if an accountant's too conservative what happens is they really just, they want to avoid any sort of conflict with the IRS so that if their tax, if their client's tax work is pulled for audit, they want to be able to not have any change because to them that's the status. Okay, that's how I do this such, I do such good work that when my returns are audited, the IRS doesn't make any changes. Well, they're never going to make changes if you screwed up in the IRS's favor. They are going to want to look at the areas where you're pushing the tax code and saying, look, this is, this is legit tax strategy and the client's not going to pay tax on whatever the strategy is. So I mean, yeah, I haven't seen a big firm out there, but of course now that I'm in my own thing and focused on protecting taxpayers, I don't really know what the big firms are doing nowadays. I kind of have this feeling though they haven't changed from when when I used to work for them.

So what's your philosophy in your firm? Yeah, when you say, okay, we're going to have a guiding set of principles here about how we're going to serve clients relative to their tax needs, you know, how do you approach that?

Our first philosophy is never take a position we're not comfortable defending. But I use those words specifically because it is a defense and the taxpayer deserves that type of representation. Against the IRS. See, a lot of people don't understand is that it's not the IRS's job to interpret the tax code. Courts have done that for us. Their job is to just enforce it. But the issue is that almost all the time in audit situations, they are trying to interpret the tax code. So it becomes our job as the professional for the taxpayer to go in and say, no, This is how the courts have interpreted this. It's not your job to do that. You can only rely on what's been documented. And if you don't like it, then you can take this up further and get a better interpretation.

Well, let's talk about that process. So if there's a debate, because it really becomes a debate, right? Because the tax code is— it's not as much as it's in print, it's not really black and white as far as how you might interpret certain aspects of it and, you know, what, what is intended by it. And of course, every scenario is a little bit different. So, you know, the idea is saying we're going to— here's the position we're taking. It might be a bit aggressive, but we can defend it. What happens, though, in the process with the IRS comes in and says, no, we don't agree with your position. We're going to assess a certain amount of taxes that are owed and maybe penalties, whatever, that go with that. Does it ever end up in court if you don't agree, or, you know, at what point is it finally resolved?

Yeah, it certainly can. But so first they'll typically send you a letter, and the letter already has an assessment without them looking anything at anything in your situation. They're just, we think you owe this much money. Pre-audit. Yeah. And so really you're coming in from a position of having to defend even from the get-go, right? But yeah, you go back and forth, you explain, this is why we took this position, this is why it's allowed. And certainly they can say, we still don't agree with you. At that point, there's a couple of options that you have. What people— a lot of people don't realize is the auditor, part of his job is to keep it out of the courts because then they're already overloaded. And so when you keep pushing back, you can often ask for their supervisor to get involved. Because they also don't want it to get into the courts. They also want to keep it out of the appeals system, which is the next technical step. So there is negotiation back and forth, similar to how people make settlements in lawsuits.

So does the person, the first person that you're interfacing with at the IRS, can they just say, too bad, this is it? Or must, if you request for it to be escalated, must they escalate it?

They don't have to escalate it, but if they don't, then you immediately go to appeals, which is what they were trying to avoid in the first place.

Okay, so you have the right to appeal no matter what? No matter what. Okay, and then if after appeals you can't come to an agreement, you're still at odds, is that when you can push it into the courts?

Yeah, and there's a couple ways you can appeal. There's one method of appealing that's like, it's a one-and-done. If they don't take your stance and they don't agree with it, you're kind of hosed. And then there's the other way where basically you're saying, I am willing to take this all the way through the court system, all the way up to the Supreme Court if we need to. So that, yeah, you have quite a few options. And then in between the appeals process and courts, and even, even from the beginning, anywhere in that whole process, at any point you can reach out to the Taxpayer Advocate group, which is technically part of the IRS, but their job is to kind of be like the lunchroom supervisor, you know. And so they are much more focused on protecting the taxpayer versus the IRS auditor just trying to get a win and boosting his ego.

Now, are the IRS auditors also incentivized? In other words, if they show that they do a bunch of audits and they don't collect any money, that looks That's like having a lack of billable hours or—

I know I can't ever get a straight answer from them, which kind of tells me there's an answer there. Yes. They aren't given commissions or additional bonuses or pay, but I'm confident there is some sort of penalty if they don't have a certain amount of collections.

Would be like a prosecutor not getting convictions, right? Yeah. Yeah. They're supposed to be prosecuting, but, you know, people end up innocent and people might be innocent, but it looks bad for them if they keep getting— Yeah. Yeah.

It's like, I want to be promoted. I want to be thought of for a promotion. So yeah, they're very— yeah. Yeah.

It sounds like a pretty flawed system. It is not in favor of us taxpayers. Definitely not in favor of us. So I imagine there's really two categories and maybe more, but that you have the people who are self-employed, business owners, independent contractors, and then people who are W-2 employees. Do you see that both have a lot of room to save money, or do you think that the W-2 employees are kind of stuck where they are and they don't have much latitude, and, you know, the, the business owners are the people that really can play in the tax system and try to, you know, save money?

Yeah, I love trying to find ways to help people lower taxes so much that I don't want to make the blanket statement that W-2 people are screwed, but they're pretty close to being screwed, especially after tax reform of 2018. There are some changes that there was some benefits they could have gotten and those have just been completely wiped out. So generally a W-2 person pays tax on their W-2 income. Now that being said, I know there are some people out there that push this idea. Well, if you're W-2, get it, join a network marketing company and pay this amount per month and now you're in business. And while I love the aggressive mindset, There are some issues with that that we typically try to help our clients understand. If you're going that route, you have to make a legit effort to try to make money, right? Because it is going to be hard for me to make a— like, defend your position to the IRS if you don't have a website up, you've never gone to a meeting to try to sell your product, you know.

So basically, one of the places where they can start to write off maybe a part of their home for an office, a part of their car, and whatever other things they they could do is if you're a W-2 employee, you create a side business. Yeah. But it's got— you have to legitimize the fact that this is a real side business, not a tax gimmick. Exactly. Yeah.

I would say the safest route for W-2 people is if they can figure out in their financial plan how to get a rental property. That's probably the easiest way to classify yourself as a business owner and then get to take the benefits that are applied to business taxes.

So that's interesting. So basically, because we have, you know, so many people in this series talking about real estate and real estate investment and maybe, you know, getting single-family homes, you know, and renting them out. So if a W-2 employee does that, now they can— I guess they say they have a business, right? It provides income. You know, they got to file all this stuff. Do you recommend they form an entity for that business, you know, or that they just kind of keep it as a personal proprietor?

I mean, it's definitely more of an attorney question. I'm not licensed, so I'll give my opinion though, because I love sharing my opinion. I like having at least a single-member LLC. And the reason I call it that or say it that way is because it doesn't complicate their tax filings. It's still going to be filed on their personal return. But they would get some entity protection should their tenant decide to sue them. Plus, I like the added benefit that from the IRS side, you can say, here's the business name of their real estate business, as opposed to saying, yeah, they have this property, it's titled in their personal name, but they rent it out. So it's just, it's a little bit of a stronger defense for us if that happens.

My show intends saying I plan on getting more properties when I can, and I I want to grow this business. Let's talk about entity structure because that's probably important too. So I heard you say single-member LLC. My understanding was that that's a— increases tax audit risk if they— that the IRS doesn't like single-member LLCs, or do they? You file it as something other than an LLC. Yeah.

So a single-member LLC, the name the IRS gives it is disregarded entity. Okay. Meaning they don't give it any regard. It doesn't exist. It's like the annoying neighbor, like I'm just going to pretend that person's not there. And so the single-member LLC of itself isn't the audit risk. It's the filing on a Schedule C, which is generally where single-member LLCs are filed. That can be some increased audit risk. But with a real estate property, it doesn't go on Schedule C, it goes on Schedule E, which is for rental properties. And In the tax code, you have this— it's kind of geeky. There's really two forms of tax, like income that someone can make. And so they're taxed in two different ways. Ordinary income. So for my tax firm, the service I provide, that's ordinary income. Real estate income is considered passive. The big difference between those two classifications is that my ordinary income is subject to self-employment tax. Which currently is 15.3%, that's on top of the income tax bracket that I'm already going to pay tax on. Passive income doesn't have that self-employment tax tied to it. So the IRS is, as you can imagine, more interested in looking at numbers that have a higher tax rate tied to them. And so a Schedule E, even if it's held in a single-member LLC, doesn't Doesn't increase audit risk.

So that seems like a really good way to, to be a W-2 employee and to still figure out some tax advantages for yourself. Yeah. Let's talk about the other side now. The business owners, you know, people who are self-employed and, you know, maybe dig into that a little bit. First question I have, and this is maybe a general question across the board, regardless of your W-2, you know, 1099, self-employed, what have you. Is it your opinion that the majority of people right now— and I'm not, I'm not asking this as a leading question, even though it sounds like one— but is it your opinion that the majority of people right now are overpaying on their taxes?

Absolutely.

So no hesitation?

No, no hesitation.

So because here's the thing that I find very interesting about this. Imagine that you were finding ways to make more money, right? Can we work extra hours? Can we add another bit? You're looking for ways to make more money when literally you can work no additional time and through tax savings you're making more money. I mean, it's the same thing, right? It's the exact same thing. So now the follow-up question to this. So across the board, most people are overpaying in their taxes. Yes. Second question is how much? I mean, I know maybe it's a wide range, But is it a percent or two or maybe they're overpaying by 20%? I mean, what do you find is typical?

Yeah, I have— there's nothing that's typical. It does depend on everyone's situation because there are some strategies that are just— they're out there and I don't know why more people don't use them. One in particular we like to use in our firm, we call it corporate rent. It'll save anywhere from $3,000 to $6,000 in taxes just by implementing the strategy. But that could be, that could be a 50% savings for them. It could be a 1% savings for them. The way we look at it is cash is king, right? Not necessarily the percentages. So $3,000 to $6,000, that's still nice. Like at a minimum, it should cover at least part of your cost for your accountant to do the work for you.

Right.

Yeah. So I wouldn't, I don't know if there's a typical number. I just know absolutely Whenever we meet with someone, we find something. And knowing how conservative the industry is, absolutely, there's ways that people could find areas. I mean, the issue— here's the issue— is that you really do get to the point where you feel like your accountant is working for the government. They— you come in and you're, I got this business idea, or you already have the business and, hey, I'm looking to do this, can I write that off? The conservative accountant says, no, ask me some questions like figure out the tax code is 79,000+ pages. You can't tell me in there there's not a tax code or an exception to the rules that you think you know that can't help me. I mean, at least say, okay, what are you trying to accomplish? How could we write it off? Now, sometimes we go down that rabbit hole and they can't write it off. But to just have an accountant blatantly just say, no, you can't— come on, let's stop being lazy as accountants and let's protect the taxpayer. They're the ones that pay our bills. They're the ones we should be serving and not the government.

So let's talk about the top 3 or 5 common areas where people are overpaying, you know, where they could have saved money, but they're not.

For sure, the tax strategy I talked about, the corporate rent strategy.

And so explain what that is exactly. So some people call it—

on the East Coast, they call it the Augusta Rule because the Masters Tournament in golf is in Augusta, Georgia every year. And what happens is these people who live there have an influx, literally like 2 to 3 times the amount of people are coming into their little city, and they blow it up. Well, we're like, hey, there's not enough hotels in the area, so let's start renting out our house.

Kind of like Sundance and Park City.

Yeah. Yeah. Yeah, exactly. We should call it that here in Utah. Sundance rule. Yeah. Let's rent out our house. And I am willing to bet because there's wealthy people who live down there that at one point a wealthy person said, hey, you know, I think I have the clout and the strings that I can pull to get it so that all of us who are getting rental income down here just for this short week, that we won't have to pay income tax on it because we don't really have a rental business. And so the tax rule is this: if you have a rental property and you rent it out for more than 14 days in a year, that's, that's the definition of a rental property per the IRS standards. But what people overlook is that it starts at 14 days or more, technically the 15th day. So if I rent a property out for less than 15 days during the year, it's not classified as a rental property. For income tax purposes. And that means I don't have to claim the income that I get from that activity. So that's where the Augusta rule comes in.

Regardless of the amount, you don't have to claim it regardless of the amount.

Now it has to be market rate. Yeah, but yeah, regardless of the amount. So what happens is we say, look, there's no reason a small business can't take advantage of this rule. Let's have the business sign a contract with the individual, which happens to be the owner, and say we're going to have a monthly meeting because we're a business and we should have a monthly business meeting and we're going to have it at your house. But if you do that, that's only 12 times out of the year. So my business gets to expense the rent payment because it's ordinary and necessary, meaning it's something that other businesses do, right? They, they rent out big convention centers and hotels to hold company meetings. That's all you're doing. So instead of the big venue of a conference center or hotel, you chose your house, which is probably cheaper anyway at market rate.

Yeah. And now I guess this is where the arguments come in. What's, what's one day market rate? It's probably kind of a hard thing to, to establish. But so now here's the question on that particular one, and then we'll get on to other ones. Obviously, you know, the person saying, I'm doing this and I'm doing it as a tax strategy, you know, but It's permitted by the tax code, so I could just take advantage of that. So there's no— so you're very comfortable defending that. So we have— yeah. Oh, you have defended it. Okay. And never a problem.

I mean, they fought it for like 3 years, but we won. Like, it's a legit strategy.

So they fought it for 3 years. And why did they fight it? Because the code is clear that you can do it.

Why did they fight it? I mean, exactly. I sometimes I think their tactic is maybe we can wear them down, you know, like, no, forget about— we're the Rocky Balboa of tax, you know, we're going to keep fighting.

I love it. So, so, okay, so that's one where— and it's established now through a 3-year fight. Yeah.

But so to answer your question about the market rate, luckily with Airbnb, it's actually not that hard anymore. Oh, that's true. Airbnb, you just find houses similar in your area and pull a couple, and that becomes your documentation and proof of why you're charging what you charged.

Is there another way to do this? It's saying, okay, hey, I want to do all 14 days at one shot, and, you know, so I'm gonna rent my house to my company for the 2 weeks, but I guess I have to have a reason that the company needed that house for 2 weeks, correct? And that's the thing.

So you definitely can if you had a viable reason for the the 14 days or the 12 days or however many days in a row. So we do get clients at the end of the year who it's the first they've heard about it. I'm like, oh, is there a way for me to get this in? Well, I mean, at the end of the year you do have, you have Christmas holiday parties, you could rent it out for that Thanksgiving. I mean, all those types of things. But yeah, you might want to plan a training seminar just for your team. Even if it's you, you're still part of your team. I'm going to do a training seminar in my house and it's going to be multiple days.

And that's— and this is another part of the question. So let's say I did the 12-day rental, you know, a day a month for 12 days. Do I have to show that I hosted people at the house? That I— I mean, reality is we really do this kind of stuff in our houses. I'm at, you know, my partner's house. He's at my house. We are meeting actually weekly, you know, you know, we alternate. From one to the other. They are typically all-day meetings, etc., etc. So, you know, I guess that kind of stuff would be very, very valid.

That's the funnest part of this tax strategy is when I first teach people about it, a lot of times they're like, that's too good to be true. It doesn't sound right. But then they realize I actually am using my house for business. We all do. Yeah. If you're a business owner, you're using your house for business. It happens. But yeah, I can tell you, based on the audit that we defended you definitely want proof as to the purpose of why you were there. And if you have pictures, even better. But certainly at least meeting minutes that reflect what was discussed, what was trained, all the different— like even if you have different attendees, you want to list all the different people out. Yeah. So the better, the more documentation you have, the better you're going to be able to get through the audit if they audit you. But here's the beauty of the strategy. It's rent expense on your business return. Mm-hmm. That's it.

Yeah. Rent expense. It's a small expense in the grand scheme of things. Typically, if it's only 12 or 14 days.

Yeah. So this strategy alone of itself doesn't raise any audit triggers because it's just another ordinary and necessary business expense that you have. It's not like filing a Schedule C per se, or a business use of home form on your personal return, things like that.

So typically it's going to get picked up when they're probably auditing for other things as compared to it triggering an audit. Correct. That's interesting. All right, so what's another one?

You know, in general, actually, I always start people because they get excited. Oh my gosh, how can I save taxes? Well, it's the first— it's the mindset. I'm in business, and if I spend a dollar for my business, that means it's a tax write-off based on the code. If I'm spending the dollar and it's to help my business grow or help me grow as a business owner or help my team grow, that's a tax write-off for my business. So we always tell clients, ask yourself when you spend money, is this related to my business in any form, shape, or fashion? Because if it is, you can defend the reason why you're expensing it. And if it's not, then of course don't pay it, don't, don't try to expense it. But if it is, pull out your business card and pay for it with that. And honestly, that alone helps people find thousands of dollars a year in missed expenses.

So let's talk about that for a minute, because reality is, for entrepreneurs and small business owners, it's very little that we're doing that's not somehow related to business. And I'm not saying that just for tax purposes, but to legitimately look at, you know, you know, what we do. Uh, you know, when I go out to dinner with my wife, we're very often talking about, we got this trip to make for the business, we got— yeah, we're going through, we're talking about these things. So You know, to me it's like, yeah, you know, that, that, that was a business conversation. And, you know, I work out of the house, I have a home office, I'm buying snack supplies, those are going into my office, you know, I'm eating that stuff all day long, you know, and so on. So is that the kind of stuff you're talking about, saying that, you know, we could really look at a lot of the detail of what we're doing, and if it somehow touches the business, you, you want to write it off? Yeah, totally.

Now, there— you brought it up, so I just have to bring it up— there is one very black and white exception when it's eating out. Even if your wife is part of the business and it's just you and her, the tax code is very clear that that can't be a write-off.

So that's new, isn't it? Is that— is that—

that wasn't a tax reform change. Tax reform changed entertainment and they just said you can't write off entertainment basically anymore at all. At all.

Which sucks, but I get it. Is that if you're entertaining at home? What if I'm on a business trip? I have to eat out.

I mean, I don't— meals is different than entertainment for sure. When you're traveling, uh, every day that's a travel day, which is, uh, defined as when you're not sleeping in your bed. So if you have a hotel right next to your house and you sleep in that hotel, that's a travel day. But when you're, when you're on a travel day, all food is a, is a write-off. That's meals. It's the entertainment portion. So if I go to a basketball game, a Jazz game or whatever, I can't write off the cost of that ticket anymore. I can write off my food while I'm there, but I can't write off the actual ticket. It also means if I go golfing, I can't write off the cost of the golf on my green fees.

I can't write that off. So, so this gets interesting. So I'm traveling, you know, east to meet with business people. You have people I have business or a prospective business relationship with. I can write off the plane ticket to get there. Yes, I can write off the meals I'm eating in the hotel. But if I go do something with them, like go to a game or play around a golf, that's—

that's off limits. Tax reform nixed that.

Okay. Yeah. And so, so that's all. But anything that's local, you can't write off meals if you sleep in your bed that night.

You can if there's a business purpose. So Again, if it's just you and your wife, you might want to invite somebody else with you because when you're audited, they're going to look at your receipts or your documentation. You would say who the business meal was with. And so you'd want to make sure that you have someone else that you also as part of that.

But what— so are you saying if I have a local meal with a business partner, that's— I can write off? It's just people in your family is the way the code's written?

Yeah, your immediate family. Immediate family.

That's even if they are business partners. Yeah, that's interesting.

Yeah, we call it the— we refer to it as the spousal rule. I don't know what the IRS refers it to. I don't know, but it's annoying.

Now, on the flip side of this, and this is something that's been confusing for me, so I imagine it's confusing for other people, maybe you can help. The new tax code has, I think, I don't know if they call it pass-through income or, you know, some new form of income that gets taxed at a lower rate, like a 20% rather than regular income. You know what I'm speaking about? Yeah. So talk to me about that.

Well, let me first start with tax reform changed corporate tax structure, which used to be a scaling thing like we have on the personal side, and they just said it's a flat 21%. So when they did that, I don't know what person— which we're all grateful for— said, well, you just gave an advantage to C-corps and not all the other structures, because LLCs, partnerships, S corporations, um, those types of entities don't pay taxes like a C corporation pays taxes. They actually don't pay any income tax. It flows to each individual owner, and then they pay tax based on what portion of the business flowed to their personal return. So there was this, you know, disadvantage for them. They said, okay, well, let's create this new thing. It's Section 199A, and it's also referred to as QBI, qualified business income. And the way it works is if you have qualified business income, there's a bunch of rules and exceptions on it, of course. But effectively, you can take 20% of that and you get it shaved off of your taxable income. So if I have $100,000 and that's my only income and it's also considered qualified business income, I will only pay tax on $80,000 of it because 20% of $100,000 is $20,000.

Right. But so the $20,000 is taxed at the 21% rate and the—

No, $20,000 is not taxed at all. Zero, nothing. Zero. It's just taken directly off of your taxable income.

And then you're just paying regular income tax on the remaining 80%? On the remaining 80%. Yep. Interesting. So that's a weird thing to say. Just 20% of it is no income tax on it. Yeah.

For some reason they just felt like the 20% was equivalent to the tax break they were giving on the C corp side. Is there a ceiling on that? There's not a—

well, meaning like, let's say my income was $2 million, so I could take $400,000. Okay. And I don't get taxed on it. Yeah.

So I don't know if you know this, but The government really likes to screw rich people. Really?

Yeah. I had no clue. I know.

That's probably the biggest, you know, mic drop, mind blown. And so if your income is above a certain threshold, now you get into these exceptions to this 199A. Okay. But that being said, the first exception is the IRS for some reason has 5 categories of businesses that they just hate. I don't know why. So at our firm, we refer to them as the hated group. Accountants are one of them. Doctors, attorneys, I guess typically the professionals who tend to make a lot of money. Now, there are some who successfully lobbied and got themselves as an exception to the exception. But regardless, if I'm in that group, and my income is above— I don't know the exact numbers because it doesn't serve me to have that exact number in my head. Call it $415,000. If my income is above $415,000 on my tax return, they are now going to limit and/or completely nix the benefit altogether. Oh, wow. So as a person in the HADI group, I lose that benefit once I'm above the $415,000, whatever that exact number is. It's around $415,000 if you're filing married. If you're not in the hated group, once you're above that threshold, then they look at, well, how much did you pay in wages?

There's— yeah, because this is only on— I look at it as distributions, but you know, whatever you're on payroll for, that's not included. So it's only income.

Well, so your wages your wages is an expense in the company. But if, if it's your wage, then yeah, you get to reclaim that on your personal return. That goes to part of the calculation, right?

I mean, that on the 199A it does.

Yeah. Okay. And so it's either what you paid in wages or a percentage of your assets that you have on your balance sheet. So as for an example, if there's a manufacturing company, they're not in the hated group. So if they had $2 million of income, I'm assuming a manufacturing company is going to have a decent amount of wages, probably going to be more than 20% of their income, which means they would get, they would get the 20% reduction.

So I guess at the risk of not doing the entire segment on this, I know, you know, so bottom line is, you know, as we're going down this thing, where can we save money? One of the places is saying you might be eligible for this, what you call the 199A. Income where 20% of your income won't get taxed. So, yeah, so basically ask your accountant about that and definitely ask your accountant for your specific scenario.

Yeah, for sure. Because there's probably somewhere in there. Not to mention, you kind of want to do that before the tax year ends because, you know, I've had clients that came in last year and they were right on that 415 bubble in the hated group. And it made a lot of sense for them to accelerate some expenses they were going to have in the following year to get their income underneath it. Because once it's gone, it's like it's not, oh, I get 20% or now I have 19%.

It's you get 20% or zero. Oh my gosh.

And so if you have an asset, you can buy, say, $40,000 worth and that keeps you in the threshold instead of losing it. Like, I mean, that's a massive tax swing. Can I— in the day, that $40,000 purchase, actually sometimes you got it for free just based on the tax savings you kept.

Could I go back and file an amended return for 199A?

You can file an amended return. Okay.

So I can go back and say, oh, I missed that. Now let's amend this and do this. All right. So we've got now this, the Augusta rule. You got the 199A. Where else can I save taxes?

It amazes me how many times I get clients and we say, how many miles did you drive? And they're like, I've never been asked that before. It's one of the like most tried and true tax strategies is writing off the miles you drive for your business. Now people get confused because it's like, well, I've been writing off the miles going like the obvious ones that people think about, like, oh, I drove to that client, I'm writing off those miles. Well, as we talked about in other sections, like everything that we are doing is related to our business. So if I have to go to Home Depot to buy something for my business, the mileage driven to Home Depot is a tax write-off. If I'm driving in my car and even if I have my family in the car, if I'm driving, say, to Southern California to meet with a client, it doesn't matter that my family's in the car. Those are business miles because the purpose was to meet with the client in Southern California.

And those miles are deduction on top of if I'm writing off a part of a lease for a car? Not exactly. Okay.

That the tax code, it's annoying. The IRS lets you take a mileage deduction or they let you write off what you actually spent on the vehicle. Okay. So if you're leasing the car, a lot of times the lease is going to give you a better write-off. But in that, you then include your gas. So you would write that off, insurance, whatever, all that other stuff, tire repairs, windshield repairs, whatever. All right.

So we got cars and mileage. Yeah.

What's another one? Travel is a great one. People don't realize that if you have a predetermined purpose to the trip for, for business, then it's— then you can write it off. Now, for example, let's say I fly my family. We want to go to Disneyland. Well, I don't want to go to Disneyland. I want to meet with my clients in Southern California. Right. Or if I'm a— if I have a real estate business, I want to go to California to look at real estate down there to see if I might buy something. So I want to set up a meeting with an agent down there to get the landscape. Now, it just so happens that my family is going to come with me. Well, that's a business trip. Now, while I can't write off like the cost of their plane tickets because they're not part of my business, if they were part of my business, though, I could. You know, those are areas that we're going to stay in a hotel. Well, I'm going to stay in a hotel if it's just me or my family is with me so I can write off the cost of my hotel because that's an expense I would have had anyways. And so there are often percentages of family trips that with a little bit of preparation you can justify as business and you can get that written off.

So basically your family can piggyback on, on a business trip. But you just can't write off their direct expenses, I guess. Right. Yeah. So now we see, okay, these are some things that are areas where you can pick up and maybe reduce your taxes by reducing your income through the deductions. Any common mistakes you see people making where they're doing something on their taxes that would be like just a really bad idea? Yeah.

Well, I mean, my first one is, you know, if you're a business owner, Filing your taxes is the number one biggest mistake because you do one a year. And if you find an accountant, they're typically doing thousands a year. So they have a little bit more experience.

So don't waste your time. So don't go to TurboTax and say, I'm going to do—

if you're a business owner, for the love, do not use TurboTax. Oh my gosh. And even H&R Block, I wouldn't— I personally wouldn't go to H&R Block if I were a business owner. Because the people you're talking to don't— they're just not in the right mindset, in my opinion. So other mistakes that we see: Schedule C is, is a big one. And some of the mistakes we see is that we talked about a little bit briefly where I have a W-2 and I want to be a business owner, so I'm going to join a network marketing company. So now I have a really high W-2 and and I have a Schedule C business that has a massive loss because I'm not really trying to grow it or make money. I just want to write off things. That happens to be an audit trigger.

Is it like in one year or if you're filing multiple years and they see just continual losses on a Schedule C?

Yeah, as we look at it on a year-by-year basis, I'm not convinced the IRS has a system sophisticated enough to track people's year over year. Where that gets in trouble, where people get in trouble with that, is that if IRS audits my 2018 tax return and they see something egregious, they're going to then open up audits for '17, '16, and '15 as well. And that's where sometimes people think like it's this history trend thing. But I don't know, I could be wrong. I just, based on my interactions with the government I think they're a little behind on the times and I don't think they have the database to track like, well, this was your number on your Schedule C this year and okay, now we've looked at these 3 years of data. Now we can— well, we'll trigger or not it based on looking at multiple years. I don't— I think it's a single year instance is what they're looking at.

So, John, so far you convinced me that there's a lot to know and I'm not interested in knowing it. I'm interested in running my business. So Let me ask this. How would I vet the right accountant? Because here's the interesting thing. It's like any accountant's going to know more than me. At least they better, right? So I'm going to be somewhat impressed. They know this, they know that, and they're going to have some logic behind what they do. What I really need to know though is that how would I interview or find an accountant that's going to take a more aggressive approach without getting me into trouble?

Yeah, I think people need to ask more direct questions for sure when they're interviewing. There's this element I feel like when I have taxpayers come in, there's— you can tell they're intimidated, not, not necessarily because I'm an intimidating person, but because it's the subject matter. It's like taxes. It's one of those things. Even I, when I get a letter from the IRS, my heart will skip a beat a little bit. I'm like, I got to deal with these people. I can only imagine what that is for someone who doesn't deal with them on a daily basis. And so they have that in the back of their head when they're approaching an accountant. And I think that gets in the way of a good analysis. I would say, like, approach it from a standpoint of, you know, how would you interview an employee? Like, try maybe the same approach and go in and just think of him— this guy is going to be an employee for me. His sole purpose is going to help me save taxes, but, you know, I want to make sure he fits with me culturally. I want to make sure he has some technical knowledge. Obviously, they might not understand the technical knowledge aspect, but you can ask questions. Let's see, what kind of questions should they ask?

So I guess I'd want to know— let me suggest them and tell me if you think these are good questions. One would be, um, how many audits have you been through with the IRS and what were the outcomes of those audits?

That'd be a great question. That's a good question.

And incidentally, if an accountant or a firm, if they're giving me an attitude about wanting to ask these questions, does that automatically disqualify? Totally. Yeah. Yep. Like they should be receptive to being—

You want, you want to feel like when you ask your accountant a question, they're going to respond to you and not make you feel like, oh my gosh, I have to answer this question.

This is going to be a pain in the ass client. Yeah. Yeah.

Okay. Yeah, you— and maybe that's also another thing. Maybe call them. How fast you get on someone's schedule, how fast are they responding to your request to meet them and see if you want to hire them? Send them— get their email address, send them an email with a question, see how they respond to your question and how promptly. I can't tell you how many new clients we get for the sole reason that they say, yeah, after April 15th, my accountant disappears for a month. And then it takes them a month to get back to me. So I'm not hearing from him until August. You know, this is not appropriate.

So a thing that occurs to me based on what you said earlier in this interview that I would want to ask, because I'm curious about this now, I want to go back and ask my accountant, how much are you relying on last year's tax return to develop this year's? Right.

Sure.

Because here's what I do know, you know, approaching April 15th, and there's like an overwhelm of activity at all accountants' offices, right? And I have to imagine a lot of that's because most clients, especially business owners, it's like the last minute, they're like, you know, I'm not thinking about— I'm thinking about so many other things, but now I'm on deadline and I got to get all this stuff in. So I imagine they're getting deluged with stuff. So I have to imagine also that the inclination is to say, well, let's look at last year's return. You know, they probably still have the same house, same mortgage, same— you know, and they just basically start plugging in all the, all the stuff from last year and they're trying to get through it as fast as they can because they got a bunch of other stuff to process. Is that probably an accurate depiction?

That's very accurate. I mean, even in our firm, April 1st to the 15th, it's crazy. But at the same time, that's also— it's a good time to email an accountant if you're trying to vet somebody. How fast are they getting back to me in the heat of their season, April 1st to 15th? Now, Our response is, hey, thanks for reaching out. You're on my agenda now. I will get you a question, but I have to take care of the people who got to me first. You know, and that might not go over well with some people, but I mean, we're at least responding, right? Right. So you want an accountant who's responsive. It's interesting. They— and I wish I had the date or the, the person to tell you who did the survey, but I'm aware of a survey I saw and they asked tax clients What's the most important qualifications in an accountant? Technical knowledge was like number 7. Communication, like promptness, was number 1. Wow. And I think you can vet an accountant pretty good just by how fast they're getting back to you. But at the same time, I would, I would potentially ask questions like, have you ever heard of the Augusta rule? Maybe ask, what do you, what do you do to stay on top of tax reform? And how do you help me as a client when there's tax changes? Like, how do you get me that information? Or do you? And you might, if they kind of like squirm a little bit, they probably don't do that for their clients.

Well, I'll tell you one of the things that occurs to me, again, based on what you said earlier, would be, you know, what type of clients do you mostly serve? Because there's a lot of specialty in taxes. As you said, you know, if they're used to doing like one thing over and over again over here, or as you said, don't file your own returns, work with somebody who's filing thousands of them so they know, you know, kind of what might be there. The— I almost call them tricks, but, you know, best practices. For your type of person. I imagine, you know, it's very different when you're working with, let's call it, a small business owner who maybe has a handful of employees or works mostly with contractors versus, you know, people who have $100 million businesses, offices, you know, payroll for, you know, large employee pools. Those are very different scenarios and very different, I guess, types of approaches. So, are there sweet spots for, you know, different types of businesses and different scales of businesses?

Yeah, I mean, because bigger companies are probably doing stuff that hits more area of the tax code, which means there's possibility for different credits maybe that they might not have been aware of. That someone who's only dealing with small business, their clients aren't even doing like research and development, but the bigger companies are. Well, there's— you, you'd want to know that you're person's familiar with those types of things.

If I were to ask you this question, what's your central focus in tax?

What do you specialize in? Yeah, we specialize in small business. And what I mean by that— I should actually all say flow-through entities. So LLCs, taxed as partnerships, or S corporations, those types of entities, those are the ones we're really familiar with. So there is this idea, honestly, there's about 80% of the tax code that applies to everybody. And so if I have someone who comes up to me and they're a realtor, I— their tax situation we can handle just like we can handle someone who is a beautician, because for them the tax code is almost exactly the same. Obviously, then you'd want to know, like, if I'm a realtor, there are specific realtor rules, especially when it comes to owning rental properties, that you would want to make sure that your accountant knows. And nowadays with Google, like, you could probably Google, like, I'm in my industry, real estate tax specific, and you could get a general idea of concepts and you could just say those concepts to the accountants you're interviewing and see how competent they seem when you bring them up. You don't have to be an expert, right? But with a quick Google search, you can at least know the name, like, words you can use to see if they're even familiar with it. I had a client come in once and he was making really great money filing on a Schedule C, which is a terrible idea. And I'm reviewing his returns and every copy of returns he gave me for the past 5 years, like, you've been filing this way for 5 years? It's like, yeah, my accountant said I don't need to make the switch until I'm at X amount of money. I'm like, Okay, so I gave him some questions to ask his accountant and come to find out the reason his accountant suggested the Schedule C is because he didn't know how to file an S corporation tax return.

Oh my God. Yeah. So that's highly disturbing. And isn't it? Isn't it the accountant's responsibility to say, you know, I'm not really that familiar with filing these returns, let me refer you? Instead, they just said— Absolutely.

Wow. Yeah. So I can tell you, we've had— I— the only client I can recall turning away, uh, he was a microbrewery. And I just— I'm like, I don't understand anything about this industry. I don't have any clients in this industry. I understand manufacturing, but you're— it's just— it's a little bit different based— he's even just in the initial meeting, as he's talking about his process of how they make their product, like, honestly, I'm just not going to be the right fit for you because I'm not going to be familiar enough with the credits that you probably are able to pull. And yeah, your accountant should be honest with you. Like, I can't— that's not in my wheelhouse.

So this begs another question, which to me sounds like it might be a good business practice. Should I be getting second opinions? You know, 79,000-page tax code. Who can know everything? I mean, nobody. Nobody. So, so now it's saying Should I say, you know, I've been working with my accountant now for over 30 years, which I have, and I've got, you know, a lot of returns. Should I be taking maybe my last 5 years of returns and showing up at a place like yours, say, hey, you know, I just want another opinion. I'd like to see what somebody else thinks. Here are my returns for the last 3 years or 5 years. And, you know, just pay some of your— for your time to review these and get an opinion from you if you think that we're doing it right or that you maybe have a different strategy and how we might approach this?

Yeah, I think when it comes to anything with your money, getting a second opinion is good. I'm not saying like every month, even potentially once a year, maybe not, but it's just solid financial advice. Like, always get a second opinion.

But the worry might be, am I— am I like, is it going to piss off my current account? If you had—

how does he know? How would he even know that you got a second opinion?

Well, because if stuff comes back and it says, you know, I think You could have saved money doing this, this, and this. I'm going to be going back to him saying, hey, you know, why didn't we do this? Sure. Okay. That's fair. And so I guess if you were on the receiving end of that, if you had clients that basically took the returns that you prepared and went out for a second opinion, is that something that you'd find upsetting? Or you'd say, you know, I think that that's a reasonable thing for them to do?

Both, right? Like, I think it's reasonable for them to do it. And at the same time, it's like, like, ah, come on, I've been good to you, you know? Yeah. Um, but I don't feel like all accountants have that confidence in there that they've been good to their clients. Yeah. Uh, but we have had clients do that, and a lot of times they send us an email saying, I just want to let you know I got a second opinion, and I just wanted to thank you. Yeah, like, thank you for doing a good job, because this other guy actually was confused with some of the line items. Like, what's this strategy? Like, what is this? You know? And so I'm, I'm sure our clients have taught other accountants the Augusta rule many times because it's one of the easiest ones that we start with. Like, if you're a business owner, it's such a blatantly good tax strategy. But other accountants, I don't know why they don't know it. Yeah. Or if they know it, they convince themselves that it's applied to some other tax code. But yeah, no, we've had that. I, in fact, I even had one guy one year, he literally we prepared his return and then he did his return on TurboTax just to see if he was going to get a deal with us or like save money. And, you know, I'm happy to announce that we did in fact save him more money than him doing himself on TurboTax. But yeah, they— yeah, it's reasonable for them to do it.

Yeah. And I have to imagine TurboTax has to be very careful because there'd be some significant liability, right? So they have to really err on the side of, you know, being conservative. Yeah.

And it's a software. And I know that they have this— the new things where you can talk to a human and whatever and they can review your return. But the software itself, they're just asking you, what's your expense in this category? Right. How do you know that as a taxpayer who doesn't live in this world where us weirdos read words and they come up with weird accounting jargon? Like, you just— you're never going to know. You need the accountant to say, hey, here's this category, this is what it means. Do you think you have any additional expenses that fit this? And that's a conversation that you can't have with a piece of software. So yeah, that, that's one of those reasons why that probably TurboTax would never work.

I don't think for a business owner. Another thing that comes to mind that I think is a booming trend right now with Fiverr and all the online contractor work sites. A lot of people are not business owners per se where they literally have a business, a team, a product, whatever service that they put out in the world. They're just an army of one. They're a graphic artist, they're a copywriter, they're whatever, a coder, they program, they develop websites. Could be any number, thousands of things out there. And I hire these people all the time. So they are not W-2 employees and they are not, you know, business owners, you know, that, you know, they're, they're just one person, but they work for themselves. So the, the, the question I have is, and it's, this is growing like leaps and bounds. So the question I have is number one, should they form an entity as compared to just being, you know, a contractor and, filing a personal return? And number 2, you know, are there a lot of tax advantages for these people because they're living or working in that way?

Here's the beauty of that question. The tax code basically identifies employees and businesses. So if I get a 1099 as an independent contractor, I fall in the category of businesses. And so the same tax code that applies to Apple and Microsoft and Amazon applies to me as an independent contractor.

Even if you're not an entity that, that, you know, you're, you're just an independent sole proprietor, which is the worst way to be taxed, by the way.

So I would— to answer your question about the entity, it does depend on their income level. And is it like a side hobby or is it a legit business?

Let me give you a scenario. So let's say it's not a side hobby, it's, it's how I work now. I, I'm a contractor, I'm a project manager. I've got probably only 3 clients, you know, that I split my time up between, you know, maybe do 15-20 hours a week per client. And I make a total of $100,000 a year doing this. Should I be a proprietor or should I, should I form an entity?

I would definitely recommend in that scenario you be an S corporation.

So, so basically you form a corporation, you file as Subchapter S, and then that's it. So now— and then I want all the income to come into that, that S corp.

Yeah. And it's interesting, a lot of people get confused because it's like, well, I have an LLC here. Might not be surprised. The government can be pretty lazy sometimes. When LLCs came out, the government just said, yeah, we're— especially specifically the IRS said, we're not going to figure out a new way that those need to be taxed. We're going to make you tax it based on something that already exists. So an LLC isn't actually a taxing entity. It can be taxed as a sole proprietor, a partnership, a corporation, an S corporation. All of those are You know, LLC is just— they don't exist. There's not a— this is how an LLC is taxed. They make you choose, right? S corporations, you don't go to the state and say, I'd like to set up an S corporation. They ask you, but you're actually either setting up an LLC or an incorporated business. The S corporation status is the tax filing status only. And so just to be clear, because sometimes people get confused, most of the time people have an LLC taxed as an S corporation. But for all intents and purposes, it doesn't matter what the 3 letters are at the end of the business name. If you've asked the IRS to be taxed as an S corp, we just call it an S corporation. I see. For simplicity. But yeah, in those scenarios, the, the reason is, is because of the way self-employment tax S works, that 15.3% we talked about. If I'm a sole proprietor and I'm making $100,000 and if it's just me, chances are I have really good margin. You know, I might have $50,000 to $80,000 of taxable income on that. As a sole proprietor, I get to pay 15.3% additional tax on that, you know, $50,000 to $80,000. With an S corporation, that's not the case. I do have to follow compliance and give myself a W-2 from my S corporation, but that W-2 doesn't have to be 100% of my income.

So basically, let's say that— let's do the scenario. So let's say it's $100,000 of total revenue. Let's say 20%, you know, expenses. So I'm making $80,000. And I'd say, okay, so I'm going to maybe go on payroll for $40,000 of that. And pay the self-employment tax. And then on the other $40,000, it's going to pass through. So I don't pay that extra 15%, which is substantial. That's right. And now, of course, it begs the question, what is the test for determining how much payroll I have to take?

Well, in the tax code, not very clear. They use the word reasonable compensation. That's it. There's no magic formula. They just say it needs to be reasonable. Well, if you have a conservative accountant, what they deem reasonable might be different than an accountant who— I don't want to use the word aggressive. If you have an accountant who understands the tax code and what you're able to do, they're probably going to come up with a much smaller number than what the super conservative accountant is going to come up with.

Well, I'm told I should be maxing it out at $130,000. Yeah, that's, that's crazy. That's crazy. That's crazy. Yeah. In other words, that's being overly conservative.

You'll never make that payroll tax back on your Social Security benefits when you get older. And it's not reasonable. Yeah, there are factors that have to be considered. And so it is definitely a specific scenario that each person looks at because how much like are you out? Is that person outsourcing any of the work that generates revenue? Do they have any team members? How many team members do they have? How many hours a week are they actually spending in the business? All of those are factors that you have to look into to determine, is this reasonable? Right. And sometimes like, well, what could I pay somebody to do this exact work for me? Not that I think they're going to be as good as me. The tax code is neutral to that point. It's just if I need someone to physically go through the motions I go through, what could I pay that person? If that's less than $130,000, then that's the smaller number.

Well, I guess, you know, if you're looking at the contractor who's the solopreneur, if you will, but if you're looking at, you know, say somebody's making a large amount of income and that's really saying, well, you got to max out at, you know, you know, if you're making, let's say, $1 million a year, you know, should you still max out the, you know, the $130,000 or should you take less. And I guess it depends on— it totally— what would it cost me to replace myself, etc., etc., etc. Yeah, yeah, it totally depends.

But I definitely wouldn't make a blanket statement, hey, if you've had— if you have $1 million, then go ahead and max out your W-2 for the Social Security tax. Like, uh, I would never make that blanket statement because even if you can— even if $100,000 is the correct amount, you still saved 15% on $30 grand.

Isn't it insane how much efforts go into just figuring out taxes? Shouldn't it be simplified? I know, if only.

People ask that all the time. There's a couple— a few election cycles ago, one guy was running on the platform he was going to just have a flat tax.

Yeah, I—

and people get excited about that. And I love the idea that how simple life would be if we all had a flat tax.

But would that put you out of a job?

It wouldn't for me because we can't— we consult with clients on cash flow and other things. Yeah. Okay. I'd be happy to adapt. I mean, right now I feel like I'm the protector of people against the IRS bully. And if that went away, great, I'll find passion somewhere else. And so with this flat tax, the problem with that is that you have politicians and what we might vote in as a flat tax at 12% or 15%, whatever it may be, they're always going to want to figure out how to get votes. And then they're going to start saying, you know what, I'm going to— I'm going to change the tax this way. Really, the tax code is complicated because of all the platforms politicians run on, and they have to give tax benefits to the people, the groups of people they're trying to get to vote for them. A flat tax would never work just because of the corruption that exists with politicians, and they're always going to want more. It's like we got the— we got the whole world to sign off on the 10%. Perfect. Well, guess what? We now have control to raise to 11 and 12. Where do they stop? They're always going to want their entitlement programs because that helps their voter base. And so, yeah, it would just never work in practice.

I always said I think the tax system is more about controlling behavior than it is about collecting revenue because they can collect revenue in much easier ways. Much easier ways.

Yeah, it really is. I mean, if you think about a lot less money, think about Obama Obamacare, he could not get it passed as a law. And so he enforced it as a tax because the tax rules allowed him to enforce it.

But they didn't want to call it a tax.

Right. But, but it is—

forces behavior. And I think that's ultimately what it is. Oh, we want people to own houses. We'll give a break on mortgages. You know, we want— so consumer behavior can be manipulated through tax incentive. Yeah.

One tax strategy we use a lot, especially with tax reform now, is the vehicles. Larger than 6,000 pounds. How in the world, like, why is it 6,000 pounds that you get a better tax break if you buy a car that is like, you know, guzzles gas more versus the other cars that don't?

You get tax break for over 6,000 pounds.

If it's over 6,000 pounds, with now tax reform, you can effectively take the full cost of that vehicle in the year you buy it, where in years past It's limited. You don't even get the full price and it's taken over 5 years.

Are they considering those commercial vehicles or something, which is why they're trying to help?

But they are.

But they also provide a list of 5,999 pounds. No good. No good. Exactly. So I'll fill my tank, hopefully.

Yeah, I'll put, you know, cinder blocks and sand and rocks in my, in my car to get to it.

This stuff is ridiculous.

Like, how do they come up with that number? I don't know, because there must be some behavior, or maybe a car manufacturer who paid money to a lobbyist and said, hey, can you try to push this through? That— I mean, most of the tax code is that.

I'll get an armor-plated vehicle now.

I remember when I was in college, um, the, the professor— we studied a section, he's like, guys, remember this as the Microsoft section. They're the ones who got this tax code implemented into our system because they paid lobbyists. And if you read through it, you're like, Yeah, I can see how this directly benefits Microsoft because now that's a corporation trying to influence consumer behavior through taxes.

Yeah.

So, you know, and increase their profitability at the same time.

I'd love to tell you that, you know, geez, I wish we'd talk about this all day. And in some respects, I do want the information and understand it. And obviously you've given us a ton of information. But in the end, it's really about saying that I am doing my business a disservice if I'm really learning too much about this. I should know enough to know how to find the right expert to work with relative to all this. And you certainly have given me and our viewers a whole lot of food for thought. But in the end, I think one of the worst things an individual can do who's trying to create wealth or have a wealth breakthrough is overpay on taxes. That much I know. And I appreciate the fact that you spend your days every day trying to prevent that from happening to guys like me. So, so thanks for taking the time to sit down and have this conversation.

Thank you. To see the next episode in the Money Revealed series, check the video right there next to me. I think you'll love it. Continue to believe, and I'll see you there.

Once I started to discover what the banks were doing to us, I was like, why don't people talk about this stuff? Like, what are they doing to you? So the banks, I mean, they're taking our paychecks. That's why they set up direct deposits for just about everyone now. Why?