Mowing vs. Projects: Which is Better!? - Episode 074

Welcome back.

Let's go.

Another episode. Seasuit unfiltered.

Where my water go? Okay, whatever. Sorry.

We can get it in the abyss.

It's all good.

We're going to bang this one out. This is going to be a quick in out. You're a busy guy. I got some hot topics here. Our last episode, we were a little bit lawn care heavy.

Okay.

Long talked about a lot of the metrics within the lawn care and landscape industry.

Yeah.

Yeah. All right.

Okay.

We're going to go deeper into the lawn care landscape industry because my guy, my YouTube peer, Keith Kelfus.

Oh, yeah.

Put up a video.

Really?

About a week, two weeks ago.

Okay.

Why I quit mowing lawns and went full time landscaping.

Good stuff. All right.

So he drops this 10 minute video, just him looking at the camera truck. He's thinking thoughts. Thinking thought. He's pondering a thought for a minute.

Yeah.

Alrighty. So Keith goes over the very general kind of top layer of why he's making this transition in his business. Now, I did take a couple of direct quotes from it just so we could kind of discuss and see what his thoughts are on it. Now, he did start in the first 30 seconds. He did say this. If you have pricing dialed in and route density, you can make good money cutting grass. So I do want to put that out there. He did put that asterisk up right at the beginning. He is not saying you can't make money doing lawn care landscaping or lawn care lawn maintenance. He then went on to say $40 a cut is the new 20. What are your thoughts on that?

I think it's the other way around. The like, oh, wait, 20.

Yeah, 20 is the 40.

Okay, sorry.

I see. This is why I have notes. So I don't misquote someone. I typed it wrong.

I would agree. I would agree.

40 a cut.

I would agree.

Or no, 40 is the new 20.

Yeah, 40 is the new 20.

Yeah. Either way, I don't know what I said. Replay 40 a cut is the new 20.

Yes, you're right. Okay.

Yeah. Thoughts on that?

I agree.

I hear.

Yeah. Prices have gone up. Price to go up of a lot of things.

Right.

The cost of equipment has gone up. The cost of fuel has gone up. The cost of labor has gone up. And I would say for lawn care is the same thing with landscaping in terms of finding the skilled labor, like being able to pay them significantly more if they can do like excavation, if they can do those sort of hardscaping things, like it's hard to find them and you got to pay more too.

So yeah, yeah. So he said his business, you know, it was I'll do a $15 cut for the tiny little lawn for the 80 year old lady, I'll do the $20 lawn, I do the $25 lawn just to get in the market. And he said it was a lot of just like spinning his wheels. So this is another quote he said, I crunched the numbers and all the math.

Said at the beginning, if you said that is perfect and that is like A and B and that is like either A, if you're operationally efficient, I. E really route dense, or B, your pricing is dialed in, you have high prices, that's how you make money. Because that's how every business works.

Of course, of course. Yeah. And this is like business fundamentals. But it's good to, you know, have these conversations to see what works for people. And you're clearly kind of on the right train of thought or not right. Same train of thought as Keith because he basically said, he reiterated his first point, the caveat of if you have your pricing dialed in, if you have good density, then you can make good money. However, his kind of back or not backlash to that. But his next comment in the video was but I needed more money now and that's where projects I can get money tomorrow. Yeah, right. So do you see that as something and not saying that this is something Keith did, but do you see that as something that's a commonality in this industry or really home services in general? Well, if I can bang out one project, I can make payroll. If I can bang out, if I can sell one more big job, I can get a deposit and I can cover the cost of my loan payment or whatever it is.

Yeah, well, no, like, look, I agree, like if you have a project, you get 50% down really quickly. It is a short term fix for a lot of like short term money cash crunch problems. And even in our training for, you know, it's one of the three things that we talk about in terms of getting out of a cash crunch is around projects, deposits, wrapping up projects, etc.

Totally.

I think that revenue has three different values. Like not all dollars are created equal when it comes to revenue. So for example, I think it's a matter of one time projects, then reoccurring jobs and then revenue that comes in from recurring work. So if you're trying to build an asset, you want the asset to have a low likelihood of not having money tomorrow. And with projects there's always a likelihood that I will not have projects tomorrow or leads will stop coming in. And so we've seen that mostly in the past 12 months being impacting the project world. Whereas the reason, like the reason that reoccurring is less probable that you're going to have problems when it comes to an economic shift is because it's lower ticket. And it happens like once a year or once every two or three years versus like I need a, a new putting green, I need a paver patio. That's like a one time situation. Like once every 50 years probably you're going to put a new paver patio in someone's backyard. Whereas if it's reoccurring, for example, you're sealing every two or three years that paver patio, that revenue is much more predictable. And then if it's recurring where I'm going to come every single week and blow off the paver patio, even higher valuation is put on that revenue. Right. And so if you look at a, from look at your business as more of an asset instead of a just a cash flow machine, that's when you start to look at the revenue where you collect it a little bit differently. And I personally am interested in growing the, the asset value of my business because the best thing about small business ownership is that valuation increase in a business does not get taxed. So if I take a $200,000 business, I add better streams of income, make it more stable, put management in place, I maybe split it up into two different departments or and have two different general managers or two different locations. If I can create a business that's worth from 250 to then, now it's become a million dollars. That $750,000 of gained equity doesn't get taxed.

Well, if a certain someone gets voted in, he's getting political unrealized gains.

Yeah, unrealized gains will never get passed. Sorry, that's Breastrix. For the sake of the valuation of your business, the sake of being able to hand the business down to multiple generations or give it to a general manager, run without you being there, please create some sort of recurring revenue in the business. In the event that there's an economic recession, in the event that like we've seen over the past two years a credit credit crunch and people's backlogs for projects have gone from 12 months down to 12 days, like please, for the sake of your family, get recurring revenue. And then if you want to extrapolate further to be greedy and be capitalistic for the sake of having a better valuation that you can One day sell the business, please. Like focus on a different type of revenue besides the next one time job.

Yeah, this is totally anecdotal evidence. It's just a story. I mentioned this to you, I think off the pod, but might as well share it. Someone local in our market that strictly does large projects.

I just literally referred him over to someone.

So he, he does it like they don't show up to job site for less than $50,000.

Okay.

So they are going to, they would be massively hurt in a recession. And even this year he's. I ran into him at a gas station. I think I told you the story. And basically he said we would not have enough work if I hadn't secured a couple of very large new like apartment complex designs. And those are backed by large private equity firms or funds or whoever. That's not the individual homeowner. Now like you were saying, once every 15 years, I think you said, you know, a homeowner might do a massive renovation. Well, there you go. That's you know, $50,000 if they rip out all their landscaping reinstall. But those are going to be gone when there's a recession.

Typically, yeah, most, most companies have been really here like Huston, what's his name?

Jim.

Jim Houston. Yeah, Jim Houston.

Yep.

Yeah, he said at Landscape Summit last year and he's like, look, all these big project Companies that had 12 and 24 month backlogs are really, really hurting right now because people are backing out of projects. The cost of capital is too high for these big jobs to go through. People don't want to take a HELOC and get the new $50,000 project done when that cost, that capital is 10%. They were a lot over the past 15, 20 years since the last economic recession because interest rates have hovered between 0 and 4%. So yeah, anyways, yeah, I'm not against projects. I just know people to think about the long term and their net worth and the fact that you build a business to be able to reduce your tax liability when you make money. And so making money today is, is great. But please think about the future. Think about your family. I don't like to see like I've just seen too many times where people put all eggs in one basket. And I would also say like, don't just do recurring, like have projects in there to be able to fill the job, fill a schedule when you need it. Like we use it a lot. Like we might have a recurring that kind of turns down 20, 30% during say the summer months. Well, we need projects to fill that totally. And so I think a good balance between the two in any seasonal business is important. If you don't have a seasonal business, you don't need. You can pick one or the other and you're fine. You have a seasonal business, you need to have a balance of both.

This will make your heart happy. So in our market, our more price sensitive customers or the folks that just don't water their lawn, they. This is when they start skipping asking to go bi weekly. Yeah, but it rained, potentially even canceling. Yes, it did rain, but this is some good news. I heard from one of your general managers. They're almost booked all the way through September with projects really supplementing with projects. Yes. To counteract that, your, your mowing slowly goes down right as it gets later in the year and most after the end of most markets. Almost.

Dude, good for them.

Yeah, that's the first make your heart happy.

That makes it happy. Let's go.

So projects, even your locations like you are the guy probably on YouTube that's known as the proverbial like recurring. Recurring systems recurring. But even your one of your businesses like still supplements heavily with projects. One time projects. Now this is where people would say they're pro project or project. This is where the, this is where the conversation flips this line from Keith. Our average ticket job went from 312. Let me guess, 50 cents.

Let me get to. Let me guess. Let me guess.

Let me.

Yes. Well, what was the first one went from? What got too excited.

300. Now I don't know what the time frame is on this data. If it's including each individual MO. Yeah. So their average ticket job went from $312.50 to.

4,500.

Oh no, a lot less. 1,649.50.

Okay.

Yeah, that's their average. He did say that a lot. They're, they're bread and butter for like multi week projects. Is like a $10,000 job. He said his crews are great at just knocking out like a whole new hedge installation or a whole new landscape redesigned for 10,000 bucks. He said they do a lot of those. The average though. But I mean if you look at that, the average basically increased five and a half X. So I think that alone just that one line in that video is why people are like, oh well then obviously I should go projects. What are your thoughts on that? To the proverbial viewer out there that hears that line and they're well, yeah, I should lean into projects. This isn't towards Keith, I think you.

Should lean into projects. I should also. I also think you should lean into recurring revenue. I think you just make more money. Yeah, whatever makes you more money. Please lean in, baby. Let's go.

Fair enough. So this is, this is one, one kind of little, this is the last thing from his video. It's, it's recurring mowing is like holding a funnel and trying to fill it with these tiny pebbles and they keep falling out the bottom. But imagine it was just bigger rocks.

Yeah, but what happens if the rocks stop falling? Yeah, like that's what I'm afraid. Like. Okay, look, let me be clear. If your average ticket size is $1,000 on projects, you are not doing massive projects.

Right.

So this is very different.

Yes.

This is property cleanups, this is small, this is what we do.

Yes. And it sounds like that's what he does, but he's done mowing like he handed them off.

Yeah, I'm just saying I want to be clear. Like. Yes, that's a different extreme. Like we're not talking about fifty thousand dollar jobs right now.

So I just look at business a little differently. I think it much more from an asset perspective. I think much more about like can I build this to run without me in next 10 to 15 years and if I can't, I have no interest in building it. Because if you're just going to show up to the next project to do the work and earn that money and make good money on it, why not just go to a good paying job? Right? Like, and that, that's why a lot of people will quit this industry and any like home service industries because eventually if you're just doing one time jobs, basically it's like I must work in order to make money. That's what you should do as an employee. And so it's much more stable. You get better benefits. There's a lot of benefits to be able to do that instead of just trying to get the next job and that stress that comes with it. I want to build a business that takes me twice as long to build, if not three times longer to build. But there's systems and people in place that run, make it run without me. And it's easier to do that for the recurring work because I don't have to build an infrastructure and a.

Overhead structure of office and equipment and staff and all this around something that I don't know is there tomorrow. And you just don't know that with projects. And the reason that it is, I've been saying this for like 4 years so it seems like I'm a, you know, crazy guy out in the wilderness talking, but like recessions happen and recessions wipe out projects way more than recurring. And if you don't believe me, look at the top 100 companies. Landscape, Lawn landscape. And just, just so everyone knows, those are self reported numbers. That's why Augusta's not on there, because I didn't report them this year. But if you look at those, look at what percentage of the top 10, 20, 50, 100 are recurring and then look at how long they've been in business. And the ones that have been in business for 30, 40, 50 years and have weathered 2, 3, 4 recessions, they're the ones have like more than 50% of their revenue usually comes from recurring. So I'm not poo pooing projects, but look at valuation. When I look at the ability to scale, when I look at the ability to be able to be an operator or an owner, but not an operator, that is an absentee owner, I know that recurring and the smaller stuff works. And I will say if your average ticket is $1,000, it probably actually falls closer into reoccurring revenue. Because you're doing bush trimming, you're doing stuff that's more maintenance driven, like putting in mulch is more of a maintenance activity in my opinion. Even though it's a project.

Right.

It's reoccurring, it happens every year and it's simple services. So I would just say that, you know, at Augusta we think about business a little bit differently. And if people buy into that logic of building the business the way it should be built, to be able to run without the owner, that's when my ethos comes into play. If you're trying to maximize revenue this year, I can guarantee you if you turn off all your mowing and you focus only on projects, and if you're in any industry and you stop doing maintenance and you just focus on installs, you will make more money this year, but next year you're going to have to find more jobs.

Yes.

And that's the part where I get a little bit antsy about.

And one thing Keith said in the video is that he got really good at sales. Like he really wanted to figure out the sales side. So if you're great at sales, typically that also means you can fight the recession a little bit better. Really, in all industries, if you're good at sales, you can fight whatever negative forces there are impacting your industry. So he did say that, and he did lean into that. But I Think one thing with this funnel analogy that's kind of funny because you said, well, what happens if the, the big rocks stop falling? There's a recession, people, or even a couple.

Yeah, a couple of big rocks.

Don't couple big rocks stop falling. Here's the cool thing about all those little pebbles falling out the bottom. You just plug the funnel.

Yeah. Right.

And that's what we talk about with customer attrition. Like, how can we make so much value that people don't leave?

Yeah.

Right. And I feel like we did that a little bit during the COVID years when you were still more active in your, in your local locations that we really focused on, like high quality, like high touch, like really wanted to make sure the customers are happy with the service. So we did not lose them during the COVID years.

Yeah. And if you look at even the past four or five years, as I have worked less and less and less and less. The Bellingham shop, for example. And now like I don't show up at all. The difference is one thing. We reduced the amount of projects we did and more and more of the revenue became recurring.

Yes.

And that's what allowed every single time a new GM like Liz Lee, Marcus, other people, Corey. Every time it has come through. Yeah. It's like cut out services. Cut out services, simplify, standardize, create systems. Because like that's what works without the owner having to be there being like, oh, do this and like this, and like, oh, whatever this, like, oh, make sure this piece of equipment's done right. Like you've got to simplify things.

Yeah. Well, and that it was kind of a natural progression for your location was. Okay, I moved into the general manager role. So now you had two, like solid, I'd say three solid, like hardscape kind of project managers. Well, now I moved into a manager role. So you just lost 30 to 50% of your capacity to those hardscape, multi day week long type projects. Okay. Then we lost another one of those guys. And then Brad moved on to do the CPA stuff. So then all of a sudden we had one. We had one who could do it. Right. And so it was like, oh no, what are we going to do? Then Marcus came in and like I moved out of the Bellingham shop. So now we didn't even have anyone with like a higher level knowledge of these projects. So Marcus just slashed all hardscaping. So in the course of three years, it was like, okay, we're going to do these huge 20, 30, $50,000 jobs and then three years later it's like we don't even touch pavers.

Marcus is such a goat. Yeah.

Marcus really slashed everything at the Bellingham shop, but increased profits. So it's a beautiful thing. Alright, so that's Keith Kelfus. That is once. That is educational. Keith's a great guy. It's a good video. Check it out. We're not taking a stance here was one thing I did want to share with you though. Scroll through the comments. There's over 120.

Whoa.

I only saw one that was like pro, like hardcore pro. Defending recurring.

Okay. I'm not against.

I know you're not against projects, but does that say anything to you? Going through the comments now?

Like, his audience is project prone and then my. My audience is more recurring. So it's just like there's no right or wrong. It's like, what are you trying to build?

Yeah.

And so I have just found that doing recurring is better from a owner's perspective that wants to not be there. And from a valuation perspective, if you were ever to sell. And I know that I own a business in order to be able to improve my net worth without paying taxes.

Yeah.

Like if I go get a job and I make a bunch of money and I was offered a lot of money to work as an executive, it's like I, when I said that, like, the reason is, is because I don't want 40% of my paycheck going to the government. And so I can protect that from happening as a business owner. And that is my value of my net worth goes through the roof. And last year I'm not paying any taxes. Yeah. And that is, that is only done through business ownership. As that is done through like not having to take a lot out to live on. Because when you do that, you have to take distributions, you have to take income. But if you don't have to take a lot of stuff out of the business, you can let that asset just rise in value without any sort of tax consequences whatsoever if you do it right. And so anyways, that was my little tirade.

You're good.

But nothing against, against.

Keith, I love him and all his audience, they're awesome. But I would just say, please, please, please, we have not seen a recession in 14 years. There will, I can guarantee there will be a recession one day and it'll wipe these people out that don't have any recurring revenue. Yeah. And so I just beg, I beg, if you haven't been in business for 14 years, please, please just add some recurring revenue. Because if you've been in business for more than 14 years. You went through the recession. Actually, I would say 20 years. You need to be in business for 20 years to really understand what a recession actually looks like. And so I talked about this like three or four years ago when we were talking like get ready for something. Get ready for something and like prepare the business for it. And I said like, I interviewed like five.

Six owners that had been in business for like 30 to 40 years in the lawn care and landscape industry. And they all said the same stuff about recessions. And that's when we really started to like, okay, like we got to pull back for projects. Like we got it. Like I'm not thinking about if the whole point in business to win is to sustain business, I should be doing everything to reduce the risk of going out of business. So whether that be key man risk, whether it be services that potentially dry up during a recession, whether that be political things, like things around legislation that could be changing that would completely wipe out my industry. Like, like, oh, we're only gonna do this one type of thing because like it's a law. Well what happens when that law changes?

Right?

Like just take out the, the fragile parts of the business. And so.

Yeah, recession's gonna, it'd be bad. Like people really got a taste of it in 2020 for like two, three weeks. And I had massive companies calling me and be like, we have no project. Everyone just pulled their deposits or told us to keep their deposits. They weren't doing projects. Yeah, the government stepped in. Within a matter of two to three weeks, everything changed. But people forget so quickly what they felt like in those two or three weeks. Because I've seen the same companies that called me during those couple weeks freaking out, going all in on one time jobs and I'm like, what are we doing? And the reason was because when all that money flooded the market, guess really, really, really well projects. Because everyone had HELOC and everyone had free money and not free money and cheap money too, like from loan. So anyways, no, you're good. I just, I just, I will be crazy until that happens. And I'm just saying the reason I'm crazy until it happens is because I don't want you to go out of business and like you just got to play a little bit of defense here, like play offense, play 60, 70% projects. But please have a little recurring to make sure your family is fed during a recession.

Defense wins championships.

Anyways, that was a long tirade.

I loved it. It was fantastic. I wanted to show you. This video, we reset the camera. We're jumping right back in.

Like, the Elon Musk Twitter thing is one of the best examples, right? People argue that you cannot tax billionaires on the shares that they hold in a company because it is an unrealized gain, right? So they go like, yeah, you're worth 300 billion, but we can't tax you on those stocks because you haven't sold the shares. So you don't, like, have the money, right? But you worth the money, but you don't have the money. And so. And I understand the argument, they go.

Like, no, you don't have it.

It's just what it's worth, because it also crash, and then you have nothing, so we can't tax you on it. Then I'm like, okay, I understand that. So you can't text the people on a thing because they don't have it. It's just there. Okay, fine. Then Elon Musk offers to buy Twitter, right? He offers to buy it. And then he says in his offer, he goes, I'm putting up my Tesla stock as collateral. Then I'm like, so you. You do have it?

Then he's like, no, no, no, no, no. I don't have it. I don't have it. I'm just gonna say as collateral. So then they accept the offer. He now buys Twitter. Now that they've accepted his offer, he now goes to private equity and banks and, like, other rich people and whatever. He goes like, can you guys borrow me the money to buy Twitter? And then he's like, I wanna buy Twitter because I don't wanna sell any of my Tesla shares, so I wanna use your money to buy Twitter. And then it's like. But then they're like, what are we loaning against? And he's like, well, my Tesla shares. Then I'm going like, wait, wait, so you.

You can.

You can buy a thing based on what you have? Yes, but when we want to tax you, you can say, I don't have it.

Do you hear what I'm saying here?

I wanted to show you this video because we brought up the whole unrealized gains tax, and we're not gonna go deep into that or whatever Kamala's proposal is. Go check someone else that knows a lot more about it. But this clip from Trevor knows. This is two years ago when Elon Musk bought Twitter. And he's basically saying, okay, so Elon could say, my equity or my shares don't exist if I don't liquidate them. But they do exist as collateral for a loan. And he thinks, he goes on to basically say that's unfair and that's un American and that he should have to pay taxes on it. What are your thoughts on that as it relates to kind of the unrealized gains tax rumors?

Well, let's take off for the second. My thoughts on Trevor Noah. Okay, fair enough. Yeah, we're that over there.

Yeah, we'll just put that aside.

So let's just talk about that. So.

Great accent.

Yeah. Right. So I would say this, this operates in every form of equity, in every sort of getting a loan. You have to have a. You have to have an asset that backs up said loan.

Loan. Yeah.

If something bad happens, I will come and collect this.

Yes.

Okay. So your house is also an asset. And when you want to go at a home equity line of credit, you still have said house. You don't have to sell said house. But what do you do you say if this loan goes bad, you can go get my house? Yes. And here's the thing. You don't pay taxes on the home equity line of credit. You can take the money out of the house and actually have real physical cash and not pay taxes on it. So like every, like our entire economy runs on this. And the reason they do this is because it allows money to move faster inside the economy. The velocity of money or how many times does money change hands is extremely important in an economy. The only way for us to grow out of our debt is either a massive cuts to interest rates and huge amounts of growth or it is tax people to wazoo. Let the current, the, the, the, the value of our dollar get completely demolished and they have to run the balance between those two things. So even before, like when you talked about like Jerome Powell and everything, the reason it is always a game there is because you're trying to balance out the fact that we, we can't let interest rates go flying high because we have this, all this debt and we are paying gazillions of dollars on our debt. But then we can't let it go too low because then people will spend too much money and inflation will continue to run rampant. So. Well, that was like long tirade. All this to say this happens all the time. There's called a loan and there's called equity and that equity can be collateralized and you are not taxed on equity. And if you want to make the argument that we're going to tax equity, get ready for every single billionaire to move their assets offshore.

Totally.

I was on a call Yesterday with an attorney considering the options of moving assets to Cayman Islands. Yeah. Now, it's still not worth it for me, but there's a level of wealth that you get to and it is worth it, and they will do it in a heartbeat. And so the thought, the thought that you're going to tax them and suddenly it's going to fix everything is ludicrous. It would just move billionaires out of the country. They move all of their assets elsewhere or they just move. There are a lot of people that will just move. If the corporate tax rate goes to 35%, the businesses, the same people move from California to Texas. They will move from Texas and like, oh, great, we'll move down to Mexico City. So, like, you have to think about competitive marketplace where these people have options. These are not people that are tied down to any one location. They have four or five jets. They can really live anywhere in the world and be just fine. So the thought that you're going to somehow pigeonhole them by saying, oh, we're going to just tax you for the sake of you having any sort of wealth is so crazy. They'll just move. And when they move, guess where that money goes? Another place. And they'll create jobs there.

So let's. Let's not fight ghosts, as you like to say. Someone comes at you, they just heard you say, I didn't pay any taxes last year. Well, that's so dumb. You have all these businesses. You have all this. You need to pay your fair share.

Yeah. So I would agree with you. You go out and create the jobs. You invest hundreds, millions of dollars into R D and technology. That's losing money. And if you don't, if you take that tax incentive away from me, I will not invest as much as I do into copilot because I know I can take a massive loss against my income. And that's why I will pump massive amounts of money. I will live very frugally. So I don't take any money out of the business because that gets taxed. And. But I will let the businesses have massive losses. Those massive losses. There's a team of 35 people that depend on feeding their family based upon me investing in the copilot, which is a losing business venture. And the only reason I continue to do it at such a high rate is because it offsets all my income in all the other businesses. So go talk to those 35 people when I have to go lay them off, because no longer can I take these losses against my income in other businesses. So of course I'm biased because I'm taking advantage of these things. I think that the people that are criticizing them, for example, his boss does this right? So be very careful about saying this sort of thing because you're buying the hand that's feeding you. And if you're going like, same thing with politically, this is why it'll never get passed because you say that stuff to get the votes, but you'll never actually pass it because the hands feeding you, that is your big donors are all using these exclusions. So I'm actually like, from my perspective, I'm happy to pay taxes. I just need a, I just want a rule book. Give me the rulebook and I'll play by it. And so if you want to call people bad or horrible for getting it, then you need to go vote and you need to get people in there that make the rulebook clear for us. Because as someone with money, you have attorneys and you have tax accounts that are going to give you information and tell you how the game should be played. And we're going to play it exactly to the letter. You can audit me and you will not find something you can audit. Most employees, they're doing side gigs and doing other stuff and they will have to pay more taxes. And so the bottom line is that what they're doing is completely by the book. Change the book, go vote. So if you really believe that there should be a go vote and in my opinion, if that was to happen, it would be bad for the economy because those billionaires have options. They can live anywhere in the world. They can move their assets very easily and they will move that money and take all that R and D. And Tesla will no longer be in Texas, it will be in a different country. They'll just move it. And there'll be other companies, there'll be other cities, there'll be other countries. They'll be like, yeah, we'll give you no tax for like six years if you just move your headquarters over here. Yeah, that will happen. And so if you're going to be anti competitive, get ready for all of our R and D. The reason that we have become the tech, like hub of the universe is because of these policies that allow for these tech companies to be able to hire, allow them to be able to do these things. And if you want to get rid of that and make everything equal, great, just get ready for all of that talent and all of the R and D to go someplace else. Because someone like me is not going to stop. Because someone says, oh, There's a tax policy. Okay, great. Well, we'll go over here. We'll do it. Yeah. So anyways.

Yeah. And at the risk of sounding like an echo chamber, because I do like to play devil's advocate, who are the people employed at the Texas Tesla Gigafactory? Middle class and upper middle class people. So all of those people just lost their jobs. And a lot of the. That's the argument on the right. Which people obviously know. That's where you and I both kind of tend to lean. Generally speaking, that when you impose these new tax laws and all these bans and restrictions on these corporations, you're really just going to hurt the middle class because the middle class are the working force of those big corporations.

Now to be clear, I think there are plenty of loopholes that should not exist. Yes. The thing is that the thing is this. I am going to use those loopholes and I'm going to save money. I'm going to take that money, I'm going to invest it back into the company, I'm going to invest it back into more stuff for them. Now the person is like, well there's are those billionaires are spending money on, on buying jets and guess what? Like someone had to make the jet.

Yeah.

And someone had to like make the pina colada that they're drinking all day long and that money goes down. So like this comes down to trickle down economics, whether or not you believe in that or not. And it's just, I'm not that as much as free market, like don't get involved in our stuff because when you start making artificial things, people that have the resources are going to move away. And like my biggest fear for America is we get so much to do tax the rich. We get so much into even just taxing employees in general. We get so much into the lives of our people. That's why Covid I immediately went like, I'm like, they should not be getting involved with this stuff. This has nothing to do with the government. Like why is this a political thing? This is a health crisis. And so when I saw that, it was like.

I, as someone with resources, you want to run away from it. And if that happens in this country where we make it very difficult to make it economically feasible to make massive losses, the ability to go bankrupt, the ability to be able to tax last tax loss harvest and be able to take losses in one company and apply them to income in another, if you lose that, you will simply move to another country. And like I have researched what it looks like to move to these other countries and it's not that bad. Yeah. They're, they're very open arms to people that have money.

Of course.

So anyways, that was my, why wouldn't you be word of seems.

It almost seems like a land that, you know, used to be the land of prosperity and opportunity should want to embrace people that have lots of money.

Yeah. And if you think that there are bars holding you back from making more money, if you think that there are bars holding you back, back being privileged, quote unquote, if you think that there are bars from holding you back from moving or getting a better job, then guess what, you're right.

Yep. Yeah. One thing I did want to say because you kind of mentioned, okay, corporate tax rate goes above 35%, you're going to lose all these corporations. They're going to move out, they're going to move to the Cayman Islands, whatever it is.

Well, they wouldn't move the Cayman Islands. They would move their tax.

Yeah, their assets and tax. Yes, yes. And I'm not an economist, I'm just a layman here. So now let's, let's flip it. Let's say we go the exact opposite. Like America has this huge economic revolution and they say, hey, corporate profit, like income statements to CEOs, C suite, whatever. Like we're not taxing anymore. We're still going to tax, you know, environmental infrastructure type taxes.

Right.

We should still tax corporations for that. To protect our environment, protect our infrastructure. But they say like gains, profit, we're not taxing that anymore. What happens to the American economy.

If.

You don't, if you don't tax capital gains?

Yes.

Oh, I don't think that's a good idea. No, I'm a big fan of taxing capital gains. Like when you sell things, you should, you should be, you should be paying your fair share.

What about just end of your profits? Corporate, corporate profits.

Well, right now like the, you know, we have a relatively low corporate tax rate and compared to like western civilized countries. And that has allowed for companies to move into and continue to, you know, invest in our country.

There's, there's, there's pros and cons. Like I see both sides of the coin on this in terms of raising corporate tax rates. Keep in mind, like the average middle class person that's like investing and getting dividends is not going to be taxed like an S corp or sorry, a C corp.

Right.

So like a C corp is like, that's corporate taxes. Is that. But like there's so many ways around it. Like, all of this stuff is so funny to me because, like, they're talking about these, like, headlines. It's like, oh, like, so the corporate tax rate, guess what we're gonna do? We're gonna give more money in dividends now because instead of taking corporate profits, we're just gonna do distributions through our share to our shareholders because they'll have a lower. It's gonna look good for us to tax people more personally, but then. Sorry, tax them less and then tax the corporations more. Great. So what are we gonna do? We're gonna take all these profits that we were funneling through our corporate, and we're just gonna funnel them down to their shareholders. And so there's so many ways around this stuff. It's just like when people talk about. It's like, yes, that sounds good, but everyone's going to go right around it. So when they make tax stuff and like, over the next 10 years, we're going to make $200 billion because of this. It's like, no, you're not. Within 12 months, we're going to figure out exactly how to get around it.

Yeah.

And so anyways, this is the joke. Yeah.

The tax code's, what, like 440 pages or something?

Hey, make it longer.

Well, that's. That's the tax code, but then there's all the addendum.

Hire all your IRS agents. Make it more exp. Expensive. Make it really complicated. It'll make it harder to win, and it'll make it. The richer Will continue to get richer if you make it so.