CW 551 - Hoovers Innovation Museum, The Sale of Bookstop with Gary Hoover

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Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on investing, some exciting techniques and fresh new approaches to the world's most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine, self made multimillionaire who's actually been there and done it. He's a successful investor, lender, developer and entrepreneur who's owned properties in 11 states, had hundreds of tenants, and been involved in thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your Financial Independence Day. You really can do it. And now, here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome to the Creating Wealth Show.

This is your host, Jason Hartman, and this is episode number 551. 551. Our guest today will be Gary Hoover. And Gary Hoover, if you haven't heard his name, he is an incredible entrepreneur and just kind of an intellectual, I.

Guess I should say.

He's an avid reader. He sold his first company many years ago in the days before the Internet when valuations weren't just nutty and crazy and weird like they are nowadays, and made a very handsome profit on that and has done some amazing things. He's also the name behind Hoovers. He founded that company and you may have heard of it. That's a company that supplied all sorts of data on other companies to investors and vendors and so forth. And he sold that company as well. That was a very big organization. And anyway, I just think you'll find him to be very interesting. I first met him in New Orleans at a young entrepreneur's organization, Yeo now called EO Conference. He gave a very interesting keynote speech there. And then I saw him keynote at another conference and hung out with him both times quite extensively.

So I always wanted to have him.

On the show for you. So we're finally going to put him on again. This won't be totally on topic with real estate investing per se, but I think you'll still find it interesting. And before we get to Gary, I want to tell you about an amazing revelation I had last night. Now, you may have heard the story that when I was young I was playing Monopoly with my mother and I don't know, I must have been about maybe 7 years old and we were playing the good old Monopoly board game and I often give out the The Monopoly cards, I think it's called Monopoly Deal, which is a card game that you can play pretty quickly. Instead of three hours at the board, you can do this one in about 15 minutes. And it's real portable. And I gave those out at our Meet the Masters event in January and have occasionally given them out at some other events. But my amazing revelation with mom at maybe age 7 is I remember I was playing Monopoly with her and she was just killing me.

She was winning and I was whining about it as kids do.

And I remember her saying, look, Jason, you have to buy more properties. Because when I land on your different properties, if you can have all three and have a Monopoly and put houses and hotels on them, I'm going to be paying you rent every time. And as a kid, I guess what I didn't realize is I was just accumulating cash rather than buying properties. So last night I had another revelation. I'm up here in Orange, California, staying with some friends who live near Chapman University. And last night we went out to dinner. And one is actually a client.

Well, actually two.

They're both clients. What am I thinking? One is actually a former employee of my company. Their names are both Andrew, by the way. Drew and Andrew. And so we go out to dinner last night and then I said, hey, why don't we play Monopoly? And Drew just bought this gorgeous new motorhome. And so I said, well, let's play.

It in the motorhome just for fun. And so we go into his beautiful.

Stunning motorhome and we're playing the Monopoly game. And I hadn't played that card game for a long time, for maybe, I don't know, since it first came out, maybe four or five years. Really like it.

And what I noticed, I sort of.

Forgotten about the strategy. I was a little tired, I wasn't really paying attention. But both Drew and Andrew were doing well at the game. And I noticed a pattern that they had. Whenever a fine would be imposed or it would be someone's birthday, which means all the. When you get the birthday card, all the other players have to give you like $2 million or something like that. And if they had cash down in their bank and they had some properties and say the property card was valued at 3 million or 2 million, say the property card was valued at $2 million, they might have a 5 million dollar card. And instead of giving up the property, both Drew and Andrew would give up the cash. And what was interesting about playing the Monopoly deal game is that even if they had, say only a $5 million bill and a $2 million property, which would have satisfied the fine, the levy, they would give up the $5 million cash and not take change because the properties were so much more valuable than the cash. And what's interesting about that is I started to think, why are they so much more valuable? Now, this may be blatantly obvious to all of you listening and I don't.

Know, but I had a bit of a revelation thinking this because of course.

If you get three monopolies, you win the game. But not only that, the properties are flexible. You can do things with them. If you don't have a monopoly, you can get a wild card and you can add to it. You can get a card that allows you to put a house or a hotel on the property and increase the rent. Of course, the properties produce income, the cash doesn't. There were just so many interesting revelations about that that I just wanted to kind of share that with you this morning. You know, again, maybe no big deal, but really it is such an incredible asset class. And there's my revolution from a Monopoly at age 7 and Monopoly last night, the new version. The other thing is, I noticed on my Facebook memories this morning, and so a 2010 post came up where I happened to post a property performer. And it was a performa at 38% annualized return. And what was interesting about that is that was back in the dark days of the Great Recession and back then we would limit our local market specialists allowance on what they could project in terms of appreciation. And this property was projecting a 38% overall return. And for those of you regular listeners who understand that income property is a multidimensional asset class, you know that that return is not just from appreciation, it's from leverage, it's from tax benefits, it's from inflation induced debt destruction, it's from the income, the cash on cash return on the property or the cap rate. So what was interesting about this is looking at that return, I thought, you know, the performance on our website today, generally we will show somewhere between a 25 or 30% annualized return in terms of the first year projection and maybe up to 40, 45%. And now we are allowing our local market specialists to use 6% as the appreciation metric. And that's sort of the historical number nationwide that so many people agree on. And you know, I don't want to call it the industry standard, but it almost is. If you just look around and you know, see the various studies, they'll say 6 to 6.7% over the course of several decades.

And so now, you know, we do.

Allow them, especially with the inflation fears coming to project 6% again and the returns are somewhere around the same. And so of course, what is the reason for that? Are you thinking about it? Do you know what I'm going to say? Well, the reason is that of course the prices were so much lower then and the cash flow in terms of a rent to value ratio was so much better. So you could have an RV ratio of say 1.4% that was not totally uncommon. And now today you're probably going to get anywhere between 0.9 and 1.1 or maybe even 1.2% if you do well. And you know, of course these vary by market and so forth. And, and these are only in our markets. God forbid, if you're investing in expensive markets like California, South Florida, in those markets your RV ratios will be terrible. They'll be maybe 0.4 or 0.5%. So again, an interesting revelation that the returns, the projected returns haven't changed, changed much even though the market has changed dramatically. Just kind of an interesting thing to point out, especially for those of you clients who've been investing with us for a long time. Of course you had to go against the grain and you know, have a lot of courage in 2008, 2009, 2010. But now, you know, the news is so positive and I think it will be for a while longer. We're not in the point, in my opinion of any really extremely frothy bubble territory, but we'll probably get there because we never seem to learn from history.

Anyway, let's go to Gary Hoover, our.

Guest today and be sure to register for our San Diego event. We're on the second tier of early bird pricing, so that's still a very good deal. Again, that's an all new event, JHU Live. It's a very hands on, practical workshop style event and it's in Mission Valley area of San Diego. We've got a great venue and a great hotel. So I think you'll really enjoy that event. So we'll look forward to seeing you there at the end of August. And do that@jason hartman.com here's our guest, Gary Hoover.

It's my pleasure to welcome a very fascinating man to the show. It is Gary Hoover and he is chairman and CEO of Bigwig Games, former founder of Boy Bookstop and the Reference Pass which became Hoovers and you've probably heard of Hoover's, maybe that was his biggest venture. I'm not sure, but he's always into something. He's got over 50,000 books. Just an amazing guy. Very interesting to talk to. Gary, welcome. It's a pleasure to have you on the show.

Oh, it's great to be here, Jason. Thank you.

So give us the count on your book collection.

Yeah, well, my best estimate, which is probably pretty accurate, is about 56,000 books. I also collect different kinds of historical memorabilia, like World's Fair stuff, so that's not even in the count. And transportation information, railroad and airline stuff, but yeah, about. About 56,000 books. I bought my first one when I guess I was 7 or 8, and I still have it. I've never looked back. It really is an addiction. I always joke that if I was. I was addicted to anything else, they put me in jail, you know, But I've never tried to stop or regret the addiction. I just. I love knowledge. I love information. So it's a. Nonfiction. I set out to create a great reference library when I was a little kid, and I'm. I'm getting there, you know, I have a feeling I'll end up with a lot more than 56,000 books when I'm dead.

Now you're on your sixth startup, right?

The sixth one since I moved to Austin 33 years ago. I did another three with park friends. Three little ones in college, so either six or nine, depending on how you count them.

Amazing. You are always into something, and it's just fascinating to talk to you. We hung out a couple of times at different conferences and spent some time together, and I was just always fascinated by your breadth of knowledge. It's really amazing. I have to ask you, though, Gary, do you have something against. You know they have these books on digital format nowadays, right?

Yeah. No, no, no, no. I get talks about that too. And I'm the entrepreneur in the residence at the School of Information at the University of Texas here in Austin. And that's the smallest school at the University of Texas, a graduate school, one of only a few rated top 10 in the nation. And they're about information and how people use it, information science and librarianship and all that. So we talk a lot about the rise of ebooks and the rise of Amazon, which of course has affected my old industry, the bookstore industry that I love so much. No, Jason, I have a system for digesting the information in books. I guess I've come to realize in the last few years it's very important to me to be very efficient in my learning. And at the same time, that doesn't mean I believe in scanning or speed reading. You really have to allow for serendipity and browsing, but at the same time, I don't want to waste my time. And, you know, most business books, you know, there's two tables or two charts in there that really tell the story, or maybe the first chapter or the last chapter called conclusions. Often they make a point, and then they take 300 pages to give you 120 examples if I don't get it by the second or third example. So I cannot. I have a system, and it's the most downloaded thing on my website. How I digest a book in 15 to 30 minutes. And it's impossible to use that with digital books. They're just way too slow. So I just took Kindle off of my tablet. I love my tablet for browsing the web, but every single book I own is paper and ink because it's so much faster.

Very interesting. Very interesting. Okay, so tell us a little bit about. I mean, everybody listening is into knowledge. That's why they're listening to my shows. They want to learn more. They're curious about the world. You know, give us maybe a little. Just drill down on how you digest a book so quickly.

Yeah, you know, it's. It's really, you know, a book has. And this doesn't work for fiction. This is for getting information. And it varies by the type of book. But most nonfiction books, they've got a message, a point. So the first thing is to get that point and understand the author and where they're coming from. And often I can get that in a few paragraphs or the first chapter, the last chapter. I spend a lot of time looking at the table of contents, because if the book's constructed well, that's an outline of the book. And if there's a bunch of chapters and it says, I don't know the 10 reasons General Motors went bankrupt and one is Japanese competition and two is United Auto Workers. Well, I understand those. You know, I probably don't need to read those chapters because of prior knowledge, but the third one is something I never heard of. So I read that and understand what they're doing. I look at every illustration, photograph, table, and chart in the book before I look at anything else. It's a good book. Those are listed at the front. Otherwise, I got to flip through and find them because they are more concise and efficient deliverers of information. And then I spend a huge amount of time in the index, and I'm looking for things that I already know about because my Ability to remember things goes up dramatically if it links to something I already know. So, for example, I've studied Alfred P. Sloan, the great man who built General Motors, since I was, well, 12 or 13, I guess 12 when his book came out. And I know less about Henry Ford. I grew up in a General Motors factory town, which is what got me interested in business in the first place. So when a biography of four comes out, there are many more of those. I go to the index and I look up Sloan, and then I read those paragraphs, and that way I remember it all, because it's continuing my education. Just like if I get an economics book. I had four of my teachers in college later won Nobel prizes. So you take one of them, Milton Friedman. 90% of any book about economics, they're going to refer to Friedman. They love him, they hate him, whatever.

Was Friedman one of your professors?

Yeah, yeah. He had four teachers who've won Nobel prizes since I graduated. I would say because I took their class, that I was cutting class to start companies.

You had Friedman as your professor. That is just awesome. I'm a huge fan of his work.

And my favorite teacher was George Stigler, who also won the Nobel. And I actually, I didn't have him in class, but later defended Gary Becker, who I believe may go down as the greatest of all those economists, even though he's not as well known by the general public today, but given 100 years in perspective, that they were all wonderful, as was Robert Fogel and Eugene Palmer that also won Nobel.

Was Gary Becker an Austrian school guy or what's his deal?

You know, all of them are either Chicago or Austrian school. It gets complex where the border wine is it Whether Chicago school, Stigler and Friedman. Stigler had been Friedman's teacher, so they were really very key to it. But Becker believed the same things. Vogel was a more iconoclastic and Fama was a finance guy, and still is. He's the only one still living.

Very interesting stuff. Okay, so just wrap it up on, you know, digesting the books. This is. This is interesting stuff because, you know, Gary, I completely agree. You know, why is it that I guess the book industry, and I mean, you. You had a chain of bookstores, so you could probably speak to this pretty well. But why is it that, you know, the industry just evolved to where you got to take, you know, 222 pages to explain something? It's just such a waste of time. You know, I had Ken Blanchard on the show a couple of times, and maybe that's why he became so popular because, you know, he published these really short books. And, you know, people, I guess, they don't feel they're getting value unless they buy pages by the pound. It's just a terrible evolution of that industry, I think.

Yeah. The main thing is just you can't. You can't spy a book that doesn't have a spine. You know, when you display books, they're either face out or their spine out, and it has to be thick enough to show. So that's why, say, Cliffs Notes. Which one of them? You know, I have about 320 business ideas in my little pocket tablets. Started keeping a list 51 years ago when I was 12. And one of them was to create a line of books that was 20 to 100 pages. But if you study like Cliff's Notes, who did the same kind of thing in their own way, they had to create their own lack because their books would never sell if they went on a bookshelf because they're too thin. So that's actually the physical reality of the books won't move if they're too thin.

But nowadays, I mean, I know you just said you can't do what you do with digital, but the fact is, a lot of people read, kids handle books and so forth, and. And I do. Yeah. You know, I'm. I'm going the opposite direction. You are my friend. I was up to about 4,000 books, and I just couldn't stand moving them anymore. Every time I'd move, and so I gave a bunch of them away. I. I kind of considered selling them. I had my assistant going through scanning them on an iPhone app that helps you sell books, but they're not. They don't sell for anything. So I just kept giving them away and got down to maybe. I don't know, I probably. Probably have 1200 or something now with the ebooks, they could be short. I mean, I guess. Well, there are Kindle shorts and there are shorter books, but why is it that a mainstream book by a, you know, a relatively famous or famous author, you know, why does it have to.

Be so long anymore?

Because the physical reality ain't what it used to be.

Right.

I mean, you know, are any New York Times bestsellers 40 pages long? Probably never, right?

Yeah, no, no. I mean, that really goes back to the spine thing. And, you know, at this stage of the game, you know, everything is evolving, but at this stage of the game, they're still selling. Most books sell more copies as physical copies than digital copies. You know, 30 or 40% maybe digital copies. And there are more books coming out that are Kindle only, you know, so if I can get them in a PDF, I download them and print them out. It's probably a business model. There's so, you know, a lot of it is still run by that. I mean, what I'll say now this is more maybe like 100 page books. But Oxford University Press has this amazing series called A Short Introduction to. They do everything, capitalism, philosophy, religion. They must have a thousand of those little guys. No, no, hey, we always can use creativity and new things. I hope for my sake, my reading style sake, that I can get every ebook in paper form. Otherwise I'll just be doing a lot of printing, I guess, because I. But yeah, no, no, and I totally understand the appeal of ebooks. You know, I could have all. Well, I could have maybe a third of my books, you know, in one tablet. Most of my books are not available Z books. And I also have to say that of the books that I buy, I haven't done a hard look in maybe about four months. But I average off my survey just to see and probably.

60% of all the books I buy are not available as ebooks. The categories I'm most interested in have been slower to move over there. And the other thing, my reference books, because I was complaining, you and I Both complained about 400 page business books that should have been 50 pages. On the other hand, books like the Biographical Dictionary of American Business Leaders, which I keep beside my bed, you know, the sucker's got to be 1500 pages or you don't get it. I mean, you know, so a lot of books I do have are 500 up to 3,000 pages as a reference and textbook.

I'll tell you, by the way, listeners, this show is not about books. Okay, so we'll get to some other really interesting stuff here in a moment about Gary's thoughts on business and the economy and so forth and you know, some of the great innovations going on nowadays. But you know, on the book topic, it's also really annoying that if you look at any group of contemporary books, maybe you know, the top 100 best selling books, and you know, I'm trying to get through as many of these things as I could as I can, you know, throughout the year and really dive in and they use a lot of the same examples and sometimes I get really confused, I might listen to them on Audible. We had the founder of Audible Audible on the show too. And I love Audible. You know, I'm hearing the same example. I Just heard in a book I was listening to a few days ago, and I'm thinking, which book am I listening to? You know, they use the same examples so they, you know, it's very incestuous too.

The lemming effect. When I first was starting my first company bookstore and you know, in 1982 and entrepreneurship was not quite as hot then as it is now in general, but. And I remember I got so frustrated because every journalist, every magazine, every general interest newspaper, when they wrote a story about entrepreneurship and how cool entrepreneurs were, they all wrote the same company over and over. And it was company I was not overly impressed with. And it was Ben and Jerry's and you just couldn't get ink space because it seemed like it was the only company on earth.

Ben and Jerry's the company that could do the most for the environment, which is their big cause, if they would just go out of business. I mean, Ben and Jerry's the biggest environmental hypocrites out there, right?

And they had unorthodox way of picking their successor. And the guy didn't work out, it blew up in their face and then they ended up selling out. I think the unilever.

I've just never understood how making ice cream could help the environment. I mean, it could help increase the rate of diabetes. And I bet, you know, being diabetic, there's a lot of environmental cost, certainly obesity, all kinds of health problems. I don't know, maybe if they want to just have people die off so the environment can be better, maybe that's the plan.

But you know, population control, why not?

Yeah, exactly. Which, which is the ultimate scheme of a lot of these left movements, but we don't need to go into that. Very interesting. So your first company was Bookstop and I think you sold that for like four, $42 million or something, didn't you?

Yeah, yeah. Well, the venture capitalist and my investors and I sold it for 41.5 million. And 1989, Barnes & Noble bought it. We were seven years old, we were coast to coast. We were I guess maybe fourth biggest bookstore chain, but we were really the first book superstore chain. So that was really my most successful business. Even though Barnes and Noble over time renamed the stores. We were Bookstop and Bookstar from Miami to San Diego and they closed most all of them and opened new Barnes and Nobles or rebranded them, which I think was a smart thing to do. But that went on to become a multi billion dollar thing and a key part of Barnes and Noble success. And I say they also they were the ones that added the coffee shops and the wood and library.

Field. Very interesting. I mean if you adjust that for inflation nowadays people are so spoiled with numbers in the Internet era and these companies selling, selling for a billion dollars a year and a half after they started type thing, but you know, $42 million back then was a lot of money. You know, not just because you'd adjust for inflation, but you'd also adjust for craziness, you know, crazy.

Valuations. It still is. That's all a bunch of nonsense and bunch of nonsense. A friend of mine was working for someone else on a new project, a startup. And the other fellow, another friend of mine is an entrepreneur and has built a successful company, has turned it over to some people and now running a new one. And they were talking about, they're kind of on the stage or whatever, but they got things out showing customers and they said, well, the customers are asking for this. And the head person said, well that's not where the unicorn is. We've got to go do this instead. And this idea that what we're pursuing as a unicorn, a company that's going to be worth a billion dollars plus, it's crazy. You can't know which ones the unicorns are going to be. Even adopt a name like that and get all obsessive about it. It's like, what are you going to do? Go shoot yourself in a closet if you have 989 million and, and, and, and, and you know, so why not I pretend though? You know, why mess around? You know, you can live a pretty good life in this country. Certainly here in Texas, Austin a little less so in San Antonio or Dallas or Houston. You can live a really Good Life on $100,000 here. And you probably buy everything you want. If you had 2 to 3 million and you might do something that's better for the world now if you do something that's great for the world and makes billions, absolutely. You know, but it's gotten.

Crazy. Yeah, you know, it really has, it really has. But the scale of Internet related technologies and businesses is obviously amazing. You know, the reach we have. What do you think's going on in the world nowadays? You know, Gary, the first time I ever made met you was in New Orleans at a young entrepreneurs organization, Y E O it's now called EO Conference. And you, you, I remember your speech very well. You talked about these eight key things, you know, that we have to have a sense of, a sense of geography, a sense of history. And you know, that was just A fascinating talk. What's your outlook on today's world? What do you think? You know, in whatever category you want, whatever.

Area. Yeah, well, you know, I mean the basic thing, I mean, I've always got to look at the long term. I'm doing startups. You got to think 15 to 20 years out in the take you 5 to 10 years to get her up and cooking. And then it's got to have legs if it's going to have value, whether that sell it or take it public or keep it for your grandkids or whatever. And you know, when I look at the long term, I'm not looking at short term, like, you know, just sits in recession of aid or something.

You know, the world is rising and rising. I've now been to 44 countries. I did the bus from Austin to Mexico City a couple of years. I've been a couple years ago. I've been in 17 of the 30 some states in Mexico, travel. I got added Peru and Panama last year. The whole world is rising and mixed. You know, how the countries compete and what they do to make them less and more effective competitors. But the world, our lives are getting longer, getting healthier, we're getting more affluent. Healthcare globally is getting better. Infant mortality is dropping. Literacy is rising. Even Africa, sub Saharan Africa, which 15 years ago I was the only place in the world I wasn't real optimistic about. But now we have several countries there coming on strong. So, you know, there's never been a better time in history being an entrepreneur, I'm not being a Pollyanna. We have issues and challenges. Every country does and always has. You know, I think our competitors, you know, it's like when I hear people say, oh, you know, why aren't we like Europe where everybody gets eight weeks off? Well, Europe ain't the competition, competition, competitions. Asia, where nobody takes any time.

Off. And hey, I, you know what, I want to, I want to just address that, if I may for a moment, Gary. So I've traveled extensively, I'm up to 78 countries now. But I haven't done it in depth like you have. And let me tell you, I was born in Europe and the standard of living in, in Europe is dramatically lower than the U.S. and that's the first world, okay? I mean, people, the these leftist people in America that think America should be more like Europe are crazy. They're absolutely nuts. Europeans live in, by and large, cheap little houses. They drive cheap little cars. Their health care ain't that great. Okay, so let's get past that one. The Selection. You walk into any store in Europe and, you know, do it to a comparable store in the States and it's dramatic. I mean, the selection here of the choice of products, the choice of opportunities. And every European friend of mine, I asked them the question, you know, where would you rather live? Without exception, they say, I'd rather live in the US where is there more opportunity? Without exception, they say, in the U.S. i mean, it's just, it's just not even a contest. I mean, people have got to give up this. We need to be more like Europe now. I mean, I love Europe. I love visiting Europe. I was born in Europe. It's spectacular. No one would doubt that. But it's also a continent caught up in its history. America's caught up in its future. You know, maybe not as much.

As it used to be, unfortunately, but.

You know, Europe is caught up in the past and it's just the level of opportunity here is dramatically.

Better. If I can pile on. I was just a conversation with a friend the other day and it came up the state of Illinois where I went to college and wonderful state, wonderful people, and I like it. And I'm from Indiana originally, myself next door, and I've been in Texas 33 years. And it came up something about, I mentioned something like, poor Illinois basket case. As you know, they're broke, they're in debt, the city of Chicago's bankrupt, they're not going to be able to pay all their government pensions or even close. A bunch of the politicians are in prison, including governors. It's just very.

Sad. But they have gun control. I'm joking, of.

Course. Well, yeah, yeah, well, I said. And then my friend who I think might not vote the way I vote, I said, well, yeah, the Texas got a lot of issues too. You know, we're 41st in our, you know, payments for age independent children or whatever. I, you know, there's a series of things, people I want to go get down in Texas. And I said, I said, I said, maybe that's. I said, yeah, okay. I said, but I. Look what the people do. I said, the people vote with their feet. Nobody is moving to Illinois from the rest of the US or from around the world. Not net and not on a big basis. Texas cannot, they are flooding in here, documented, undocumented from the Midwest, from California, from Mexico, from Europe. And you know, if you're, and I said, look, if you're a low income Hispanic family, what they call the working poor out in Chicago, would you rather live up there where you have these extra Benefits and there are no jobs. Or you rather come to Texas where we have more jobs than we can fill and you don't have to go on those.

Benefits. But Gary, that's exactly the thing. When everybody talks about raising the minimum wage is such a cruel idea, it's so cruel to people because what it does is it creates higher unemployment, it pushes these companies faster toward robots to replace human beings. You know, in Seattle now there's a whole movement in Seattle and it's like a pretty big movement of people who do not tip servers anymore because they figure, look, you're making 15 bucks an hour. The point of tips was because you have a low wage job, right? And so this stuff, it always backfires, it never works. And the cruelest thing about this talk about raising minimum wage wage is that it affects minorities the most. If you want to see black youth unemployment and crime skyrocket, just make the minimum wage 15 bucks an hour everywhere and it'll.

Skyrocket. No, I, I, you know, I try to sort through that myself and I really think it's kind of, it's a matter of people using emotions versus people using logic. You know.

It is, it's sad. It sounds like you and I are both.

Capitals. Capitalism. What a terrible thing. Well, hey, so, so do you think like, you know, take a look at this country for example. You know, looking at the US We've got this massive amount of debt, we've got all these unfunded mandates coming at us in the future, these unfunded entitlements, these promises the government has made that it cannot possibly keep. Even with, you know, raising the tax rate to 100%, it can't keep those promises. But at the same time, there's all this innovation, this technology and it's kind of an amazing time to be alive. What's your take on.

It? Well, you know, I'd say I am an optimist and probably incurably and genetically, you know, so can't do much about that. I found that optimism and pessimism are, you know, they're frame of mind, they aren't totally based on facts, they're really your attitude and they make all the difference. You know, as I think Henry Ford said, if you believe you can do it or you believe you can't, either way you're right, you know, so, you know, if you're pessimistic about the world, you get up in the morning, what are you going to do? Shoot yourself in the head or sell all your property and go live in a cave? So you know, my thing on the debt and all that, certainly Milton Friedman and all those people were never as concerned about the debt. Now it's a lot higher now. But even so, his he said over and over, the main thing to watch is government as a share of the total gdp and that's gone up, but there have been periods when it's kind of stabilized. The Clinton years are pretty good, if I recall. And then you got to include state and local and federal because they can go different directions. But my bottom line, my gut thing on the debt, it is amazing what a strong economy can do. I was studying how we came out of World War II and some people thought we go into depression, unemployed soldiers, our economy took off, even how New York city rebounded from September 11th. And a strong economy is my dad, he used to have, he was a grocer earlier in his career, a grocery store. And one of their sayings was volume or revenue will cover a multitude of sins. So you can run a sloppy store, but if you crank enough volume, you could live through it. And we can pay down a lot of debt. You know, we need to restructure Social Security, we need to take a hard look at Medicare. I hope that sometime in the coming 4, 8, 12 or 16 years we have, you know, government leadership, the president and the Congress who take attitudes more like you and I have. But we've survived a lot of people who don't. And country's still here, you know, it's still the greatest country on earth. You know, a lot of our issues, we're an older society, our infrastructure's getting older, our population's getting older. You know, we're going to have so many retired people, not enough people paying into the system to cover them. Whereas when I study Mexico, you know, it's going to have all these. It is. And we'll have all these people working age. So, you know, we really, if you combine Mexico, Canada and the United States, you really have a powerful engine that can compete with Europe or Asia or anywhere in the world because of the mix of those three societies. So no, I can't be pessimistic. But hey, we can talk about regulation too, which is what I majored in in college, within economics and antitrust. And there's all kinds of sad and stupid stuff coming out of Washington and the Justice Department. But we'll survive. Entrepreneurs are by nature persistent and durable and pig headed and hard to put down. You find entrepreneurs even under rocks in Cuba, you know.

But it does concern me because, hey, Mexico and Colombia are One of my big concerns is our school system. Until we do something about the monopoly held. And hey, I believed in public schools. My education was public schools. But they are very different. My home high school used to be 70% of the students went on to more education after high school. Today it's the. And I went and spoke to the class back there, economics classes and so on. And you can tell the curiosity has been driven out of the kids heads because it's become a babysitting program and a discipline program and nobody can complain because the parents will get you fired. Whereas when I was down at Columbia the week before in Medellin, there's no way those Indiana kids are going to be able to compete with those kids from South America. They're going to school six days a week, they're wearing uniforms, they really got to learn. It's a more human, less mechanical, less rule driven thing.

We need experimentation and education. We need people to try new things. We need the parents, especially minority parents, to have the freedom to send their kids to the best school they want. Instead of being, think about it. If you had to buy all your groceries at the closest grocery store to your house, and if all the grocery stores in America were operated by the same outfit, government or non government, and all had to follow the same rules, you know, life would be.

Awful. Gary, you're, you're speaker to entrepreneurs, an educator of entrepreneurs, and I would call you at least a bit of a futurist. Okay, I don't know if you ever take that title, but here's something I'm really struggling with and I cannot.

Make heads or tails of.

It. You know, I'm, I'm not too bad at making production predictions and I've been right on a lot of them. And the only one I've really been sort of wrong in a big way on is interest rates. I thought they'd be quite a bit higher by now, but that's, that's, that's. You know, if you asked me 10 years ago would rates be higher now, I would have said most definitely.

Right. I probably would have too. Yeah, yeah. It's hard to stay at zero.

Forever. Yeah, I know, it's, I, I got that one sort of famously.

Wrong. Don't be higher sooner or.

Later. Let me tell you one that.

I'm really struggling with though, and that is.

Robotics. You know, I have read many articles and books and you know, seen various videos floating around the Internet on the robotics revolution saying that within maybe five to seven years, I mean, this is right here, this Is not some distant future thing. 47% of the workforce could be replaced by robots. Certainly Uber is going to have self driving cars and Lyft will have self driving cars soon. And maybe people won't even much need to own their own car. So there's going to be a lot of change just in the transportation business, which is a giant.

Industry. Maybe we're going to have Amazon.

Delivery drones and UPS will do that too, and so will FedEx and displacing all of those drivers. So that just the transportation industry alone is a giant industry. But there are so many others. I mean, computers can write poetry, compose music, you know, write books. Now, now they're writing articles. Computers can write articles on sports, games and financial news and, and you don't need a human. I mean, on one side I think, oh my God, 47% additional unemployment, you know, depending on if whether you believe the government stats or not, that push us up to like what, 50, 53% unemployment or so. That would be terrible. Okay, but maybe really it's not the jobs we need. We just want the things they produce, the wealth, the services, the products. And maybe we're all headed towards some sort of utopian society. Maybe that's really upon us. I don't know. I don't know if this is going to be an epic disaster of unemployment or an epically wonderful time in which to live. What do you.

Think? Yeah, well, hey, I like robots. My new venture, the Spark, is going to be the first museum in America. Real serious museum for profit museum about innovation. And we're going to have a robot ring and a drone dome and a place where the customers, the public can try all that stuff and everything. So I was just. Yeah, I was watching BattleBots here. Well, gosh, I mean, my basic reactions in the series are, first of all, there's no way 47% of people are going to lose their jobs in manufacturing in the next five or even 10 or 15 years due to robotics. I'd have to study it before I draw a curve on it. But you know, hey, in General Motors country, and I remember when they built the big Oklahoma plant, maybe 1985, and it was totally robotic. We have, I was just reading it, I can't remember which book it was, but like where they make Twinkies. Maybe in the Fortune article about the Twinkies guy or the Forbes article. But Twinkies, they produce whatever, 25 million in one plant and has three workers. U.S. steel in Gary, Indiana, the biggest steel mill in the United States. Something I was Shocked. I thought it had all kind of died away. And then I find out, oh, no, no, they're the biggest provider steel to Detroit and they're producing. I forget, like the same amount they did 20 years ago or maybe more. Well, they've gone from whatever I'm Inventing these numbers, 2,000 workers to 50. So, you know, my hometown went from 27,000 General Motors workers to zero. Not because of robotics, other factors. So we're already way, way, we're way down that curve and what's left is going to tend to be things less robotically organized. And then the other thing is manufacturing, I'm pretty sure doesn't even employ as many people as retailing now. And people knock retailing as low wage. But I believe Walmart has created more $50,000 a year and up jobs than any other company in America has created total jobs in the last 30 years. You know, the truck drivers aren't going to go away. The idea of everything's going to be an automated car real soon. No, someday, maybe. But I just saw a few minutes ago 18 Wheeler going down the road with a bulldozer on its back. And I don't want that thing automated when those systems get hacked. And if you saw Chrysler got hacked, you know, it's an extremely high risk, scary thing. And I live out in the country outside Austin. I don't think I'm gonna be robotic cars on my curvy country road for at least 10 years or 15. You know, it's hard to say, Gary, I don't.

Know. I think this is coming faster than.

That. Nobody knows for sure. But it's things, you know, sometimes things move faster than you think. Sometimes they move slower. Technology is always hard to predict.

Overall, it's going to move more slowly. Manufacturing, especially in the United States, is not as many jobs, but there's also going to be a rise in craft manufacturing. It's just like retailing now. People are getting down on the big chain stores and everything. It's only because we're rich, only because we're an affluent society can we really afford to say, oh, I'd rather like to go to a nice little mom and pop store and I'm willing to pay a little more money for my hammer than go to Home Depot and, you know, and independent and mom and pop and antique stores and interesting little shops doing all kinds of cool stuff. That's really booming in this country. It's gonna boom. Well, the same way right near my house is a custom guitar maker or guy who has limited Ones, you know, and that's gonna rise. I would also say the whole thing. I mean, I don't want any robotic surgeons. I don't want any robotic lawyers around me. And there's going to be a backlash against some of this. And to be frank. Now, you and I might not like it, but to be frank, a lot of countries and governments and things will slow it down and try to stop it. And a lot of labor organizations maybe not in favor of all that, but those are other reasons it will. It'll be more gradual. And I mean the whole thing. Okay, the United States, if you moved here in 1800, why are 90% of the people of America were in agriculture? Well, Today it's like 2 or 3% and we're better fed than we've ever been and we help feed the whole world. Now when it happens fast, it's tougher because it happened in Anderson in like 20 years to lose all those jobs. So that was very high speed really. But nevertheless, you know, I guess what I would say is are we training and educating our young people to live in a world like that? Are we turning out people out of even trade schools for jobs from the 50s? But man, they're still, man, the average plumber in Texas like 55 years old. We have a shortage of carpenters. We're importing welders from Mexico because we don't have them. Those are not things. Come fix my air conditioning system. That ain't going to be automated that quickly and that easily. So the main thing is like agriculture, do we have the time to make the transition? I guess. What was it I said a great quote. Mark Twain, I think it was Mark Twain said losing sleep worrying about something is like making payments on a debt that you don't know that you owe. And now I know, you know, we do what we can. Hey. My concerns about our education system is why I last week taught six classes and spent whatever I spent 14 hours in lectures at every level.

University. Yeah. Would it be fair to say then that you believe that just like with all technologies in the past that threatened various jobs that society will just recalibrate and readjust as the robots come online? People, you know, we. I remember the predictions in the 70s of, you know, we're only going to work three days a week because of computers. Well, that didn't happen. We're all working more than ever. And in some.

Ways. Well, and we'd be in a. We'd be in a paperless society with no printers and no inkjet ink. No. And the thing is the idea of what you just described of the society will adapt, that has always happened and that's happened since.

Caveman. I just wonder if, you know, I always wonder if you know those famous last words, if this time it's different because the technology is so extreme.

You know, it's almost never true. And all the people believe our whole environment, Google and everything, everything's different. No, no, you really study. I just did my newsletter. You can see it on Hoover's World. Six key steps to building Great companies. And I really believe if Google's going to be a great company, it'll be the built the way John Deere was, which is 178 years old and on its ninth CEO, if you can believe it. Only ninth. A book. If you want to really look at that hard, get the fourth Grade Awakening by Robert Fogel. He's one of those Nobel prize winning economists I studied under. And in there he has a table which I repeated in my book. And it's so powerful. And he really is a guy that could see the future was he passed away.

I think he was talking 100 years from now. He really believed the entire world would be well fed and have everything we need, our material needs to be met. And the real thing would be we would have a global spiritual shortage and it would really be a quest for meaning and spirituality. And hey, it is not impossible. I don't know if I call it a utopia, but it's not impossible. But you know, 100 or 200 years from now, now we all will work, you know, 15 hours a week and then we'll have to figure out what to do with our lives to make them worthwhile. So you know, you know, that's the way we've been heading. We work less than we ever have in history.

His numbers show that we, you know, especially in America, the number of hours the average person puts in the nonprofits and charitable activities not. And the money too, that's gone way, way up. Look at, hey, where I live, you know, huge church going populations with giant, massive churches that cost millions and millions of dollars. And those people are in those churches, you know, three, four days a week and doing all kinds of cool stuff. No, no, I just, there's just no evidence in human history to be long term pessimistic. It doesn't mean we didn't have Hitler. It doesn't mean Detroit didn't die. You know, Detroit's really sad. They could have done a better job of managing that. You know, the auto industry, US auto industry, and the city leaders of Detroit. It didn't have to be quite as awful as it is and very sad because it's a wonderful historic.

City. Oh, yeah, I was. I was just there last week, literally. And it's an amazing story. I mean, population cut in less than half. You know, the government's model cities program a disaster. You know, the unions push too hard, I think, and you take all those crooked politicians, too, and it's just been a disaster. But. But very interesting, Gary. Give out your website. Tell people where they can find you. Is it. Is it just Hoovers or where. Tell people where to.

Find. Yeah, no, Hoovers was company I started. I don't have anything to do with anymore except my name on the door that went publicly got sold. But, yeah, Hoover's World is my website. My newsletter is there. There's a way to contact me. You can also email me directly. Gary who? My name without the error.

And there's information on Hoover's World about the Spark, my new venture. I have a YouTube channel if you go to YouTube, if you're ever in Austin and want to take one of my live courses, those are on Eventbrite. But Hoover's World generally is the right place to.

Start. Fantastic. Good stuff. So that's hooversworld.com and Gary Hoover. Thank you so much for joining us. Just any quick closing thought to wrap it all.

Up? Yeah. Hey, keep the chin up. Fight the good fight. Try to read my piece on Hoover's World about six simple steps to create a great enterprise. I mean, find things the world really needs. Find things that really make life better for someone. Go after it. Make them better every day. Continually listen to your customers. Wall street doesn't matter. Washington doesn't matter. All that. It's all secondary compared to your customers.

And believe in yourself.

I mean, those are. Nothing's ever stopped those, you know? And I'm not guaranteeing any success. Man, it is. It's tough when people say, why is Michael Bell the richest guy in Texas? Or whatever. It's easy to go out and we'll become billionaires like him. I said, well, he's a billionaire because he took chances. And there are about 100,000 people who all tried to do what he did, and you never heard of them. So that's the odds of that. That long, you know, if you've got the right ideas. And hey, I've had winners, I've had losers. I lost all my money from my first two on my third venture at a travel superstore, which did great revenue but the airline stopped paying commission on airline tickets and either shoot yourself in the head and give up or else you go on to the next thing. Me, I'm really unemployable. So I got to do startups.

Right? Exactly. Exactly. Good stuff. Gary Hoover, again, thanks for joining.

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