BiggerPockets Real Estate Podcast - 688: Scott Galloway (Prof G) on Why Smart Investors Stay Away from “Sexy”

Episode Date: November 15, 2022

Scott Galloway, NYU professor commonly known as “Prof G,” thinks that America is adrift. Communities are dying, young people are feeling helpless, and wealth is slowly being sucked out of the system to give the ultra-rich even more comforts than before. The average American merely wants to make it—having a house, a family, and maybe an ounce of peace. But with mainstream media violently pointing fingers at one another and the modern worker feeling desolate in the daily grind, what can we do to put this country on the correct course? Scott knows that the game is rigged. He has strong feelings that real estate investors, like many of us, are playing with “cheat codes.” But, that doesn’t mean we’re doing anything wrong. Scott dives into his personal philosophy on who has taken advantage of this country, who needs the most help, and how a young, aspiring entrepreneur or investor can build wealth, without blindly buying into “sexy” assets. Although Scott likes real estate (and wishes he bought more of it), he cautions young investors to take a step back and be intelligent with their investments. A few right moves when Scott was young allowed him to live the life he has today—but this was through hard work and taking the right action, not waiting for someone else to save him. No matter what age you are, what side of the political spectrum you fall on, or your feelings toward real estate—Scott has words you’ll want to hear. In This Episode We Cover: Scott’s new book Adrift and why he thinks America’s course needs to be corrected The biggest problems America is facing today and how a specific demographic is rigging the system The bias against boys and how young men are left behind How young people can get ahead and why they should steer clear of “sexy” investments Fiat money, cryptocurrency, and how the American dollar is quickly losing its value The real estate “cheat codes” that any investor can take advantage of How YOU can create change in the world that will lead to more equality, friendship, and connectivity And So Much More! Links from the Show Find an Investor-Friendly Real Estate Agent BiggerPockets Youtube Channel BiggerPockets Forums BiggerPockets Pro Membership BiggerPockets Bookstore BiggerPockets Bootcamps BiggerPockets Podcast BiggerPockets Merch Listen to All Your Favorite BiggerPockets Podcasts in One Place Learn About Real Estate, The Housing Market, and Money Management with The BiggerPockets Podcasts Get More Deals Done with The BiggerPockets Investing Tools Find a BiggerPockets Real Estate Meetup in Your Area David's BiggerPockets Profile David's Instagram Dave’s BiggerPockets Profile Dave’s Instagram Book Mentioned in the Show Adrift by Scott Galloway Connect with Scott: Scott's Twitter Sign Up to Scott’s Newsletter Click here to check the full show notes: https://www.biggerpockets.com/blog/real-estate-688 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 688. What I would tell people, through no fault of your own, the lobbyists who have fomented this notion that buying a house is the American dream and there's been such amazing regulatory capture that if I had it to do again from like day one, I would probably be putting a disproportionate amount of my capital in real estate. What's going on to out, everyone. This is David Green, your host of the Bigger Pockets podcast. the biggest, the best, the baddest real estate podcast in the world. Join today by my co-host, Dave Meyer, as we interview Scott Prof G. Galloway.

Scott is a very intelligent and very successful man who teaches other people how to build wealth, has a lot of experience in the tech sector, has started and sold companies, writes a book a year, has a lot to say about a lot of different things and brings a very well thought out and nuanced perspective to the podcast. Dave, what were some of your favorite parts of our interview with Scott, today. Man, he is, like you said, really knowledgeable about a lot of different topics. And I think it was just interesting to hear from someone who's an investor, a big investor, but not primarily a real estate investor and just get their, you know, opinion and take on the economy, what's

going on in the American society, what's going on in American economy. And he does talk a lot about, he knew more about real estate than I thought he was going to. And I thought he had some really, surprised us at that there. Yeah, he was like, I don't invest in real estate. real estate, but then he was like dropping some bombs right at the end. So I thought it was really insightful to learn from a different type of guests than we have a lot of times on these shows. Well, I think it's important to do that, right? You don't want to end up in an echo chamber of your own, especially when you criticize other people for ending up in their echo chamber, right? So we typically talk about real estate and more specifically, real estate success stories.

This person, House Act, a million houses. This person bought 27 units working as a janitor. And we're like, oh, this is so great. But you don't hear about the. people that didn't make it, right? And the same is true about people that built wealth in other ways that were not specifically real estate investing in the perspective that they have on how wealth creating works, what principles work, what people should focus on, sort of the right path to take as you are looking to improve yourself and build your wealth in the process. It applies to real estate, absolutely. I think it's healthy to get a perspective that's not just the same thing we've had recycled by every single bigger pockets guess that comes in. So yeah, that's exactly what we're trying

to do here is we're trying to bring a more mature and nuanced perspective to what we know works with building wealth, which is real estate and see if there's ways we can accelerate the process, improve the process, or decrease our own risk in the process. And that leads us to today's quick tip, which would be follow some of the best advice that I ever heard Robert Kiyosaki say. So I was listening to Robert Speak at a go-budence event and he said, look, most people are either a Republican or a Democrat. They see heads or they see tails. And they argue over if the coin is heads or if the coin tails and they do not want to acknowledge what the other side also sees. Well, there's a third side of a coin that many people don't realize and that is the edge.

And Robert's advice to us was don't pick a side, stand on the edge and you can look over each side and see what is happening on both sides and then make your decision based on the information you're presented, not the ideal that you identify with. And I thought that that was brilliant advice. So as you listen to today's show, keep that in mind. It doesn't really matter if you're a heads person or a tails person. What matters is you see heads and tails, you know what's going on around you and you make the right financial decision to put you in the best position possible. Dave, any last words before we bring in Scott? Well, well said. I think I believe strongly in objectivity in trying to develop your own understanding of issues. That is right, because you love

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They've partnered with BiggerPockets for over a decade, helping thousands invest smarter. If you want to do the same, visit BiggerPockets.com slash retirement to learn more. Scott Galloway, welcome to the Bigger Pockets podcast. How are you today? I'm doing great. Thanks, David. I'm glad to hear that, and I've got to say your hair is looking fantastic. That's right. Same barber. I'm actually considering copying you. Yeah. No, if we had Dave's hair, we'd be the junior senator from Pennsylvania.

Well, anyways, Scott, thanks for being here with us today. For those of our audience that are not familiar with you, can you give us a rundown of your background, what you're known for, and then the contents of your new book? Sure, so good to be with you guys. I'm a professor of marketing at NYU Stern School of Business. I'm an entrepreneur turned academic, born and raised in California, brief stint in investment banking, then graduate school, then started several consulting e-commerce and business intelligence firms, and then started teaching at NYU about 20 years ago and now do a lot of media,

write books, stuff like that. Awesome. And if you had to say what you're most passionate about, right, now? What's sort of on the front of your heart? I consider myself, you know, my core, a teacher, at least professionally. I think kind of the only business card I think I'll have, and I don't have a business card, but metaphorically will be that I think I'll always teach. I have an online tech company. I'm still on the faculty at NYU. But at the end of the day, I think of myself as a teacher. All right. Well, Scott, I'd love to get into the book Adrift, which I read over the

weekend, really, really fascinating topic. And after reading it, I was just curious why you called it a drift and not something like we're fucked or everything is terrible because it paints a grim picture, right? Yeah. Yeah, I try to, I purposely try to, I force myself now in every presentation and tried to do it in the book to talk about solutions and silver linings. But adrift was, I don't think we're lost. I think all of these problems are of our own making. And that's the best. news. The good news is they can be unmade. And I think we can see land. I think all of our issues are fixable. And there's nothing wrong with America that can't be fixed with what's right with America. I think we see land. I think we know it needs to be done. I think we have to row in unison

or whatever nautical metaphors I can come up with. But I don't think we're lost. I don't think we're, for lack of a better term, I just think we're a bit of drift. And like I said, I'm actually quite hopeful because the incumbents and the kind of what I'll call the entrenched want to create this illusion of complexity and that these problems are intractable. And I don't think there's a single problem that ails us that can't be fixed. And we talk about teen depression at the hands of social media. They will claim it's multi-dimensional and difficult, and it is difficult, but they're absolutely solvable.

There's no reason we can't age gate social media. There's no reason we can't hold these terms accountable. when they are sending email saying, you know, Pinterest sends an email saying to a 14-year-old girl, here's a board with images on suicide you might be interested in. There's just no excuse for that, and we can fix that. We can fix our tax structure. We can make investments in trade schools and junior colleges. We've accomplished much bigger things.

We've stared down much bigger problems before. So I don't think we're lost. I don't think we're a drift. That's a good way of saying it. And yeah, I'm just, I'm mostly kidding, but I agree that, you know, acknowledging what the problems are, probably the first step in towards coming up with some of those practical solutions. So for those of our audience who haven't yet read your book, can you tell us just sort of the big, what are the big problems, some of the themes that you're seeing that are impacting American society?

Sure. So there's several. I'll start with kind of some major ones and what I think is the profound one or the biggest one. We talk a lot about income inequality. That gets a lot of warranted attention. What we don't talk about that I think needs more attention is what I'll call age inequality. And that is a 75-year-old is 72% wealthier than he or she was 40 years ago. Someone under the age of 40 is 22% less wealthy.

The percentage of wealth controlled by people under the age of 40 in the last 40 years has gone from 19% of GDP to 9% In sum, we have, from a legislative standpoint and a fiscal standpoint, decided to transfer money from young people to old people. And again, the entrenched to the old wealthy generation, will say, and I'm a part of that generation, is that these are big problems because of globalization and network effects, which is total. These are concerted decisions. We decided Reagan taxed all income at the same rate, and then we decided I know, let's have a lower tax rate for capital. And then the second biggest tax deduction is mortgage interest rate. So who makes money off of stocks and bonds? Old people. Who makes money off of current income and salary? Young people. They pay a higher tax rate. Who makes, who owns homes? People my age. Who's renting? People your age. Who, Social Security is considered this third rail. I get attacked immediately when I say we should reconsider much harsher means testing for Social Security. The largest transfer of wealth that takes place every 12 months on the planet in history is young people transferring a trillion and a half dollars to the wealthiest cohort in the history of the planet,

seniors in the form of Social Security. But because over a quarter of our elected representatives are over the age of 70, because the first two states that basically set the presidential primary are the oldest states in the Union, Iowa and Maine, we have massively overinvested in older people at the expense of younger. people. And even if we get a chance with the bailouts from COVID to make rich people richer, we decide, okay, we're not only going to fuck younger people, we're going to fuck their kids and their grandkids with unsustainable levels of debt. So pop-bop banana can upgrade from Carnival to Crystal Cruises. So there's been massive age inequality. There is also massive, I think a huge

issue we're going to talk more about is failing young men. The education system is highly biased against women and people are afraid to talk about it. Richard Reeves just wanted wrote from the Brookings Institute just wrote a wonderful book called The Boys to Men. But the moment you start advocating for men, you're labeled a misogynist. People see it as a zero-sum game. You know, when we decided to advance the interests of women when it was 40, 60 women to men in college, when you were in favor of affirmative action, people of color, which I am, I'm a huge advocate of affirmative action, you weren't seen as being anti-white.

So we don't even want to have an open conversation. around how young men are really struggling. And I think it's changing. I think people, mainstream media is becoming much more open and accepting of saying that. It's not immediately, you're not immediately labeled a misogynist. But look, three times more likely to commit suicide, four times more likely to be addicted, 12 times more likely to be incarcerated. Seven and ten high school seniors are girls.

In the next five years, for every one male graduate of college, we're going to have two females. It's going to be two to one. Two to one. So you have, and then you have. you have this kind of war on what I'd call masculinity, or we've conflated toxicity with masculinity. We've decided that masculine attributes, female attributes should be celebrated and protected and honored, and male attributes should be starched out, that there's something unhealthy or dangerous about them. So I think failing young men is a huge one, incredible age inequality. An emerging crisis, loneliness.

people don't speak to their neighbors, church attendants is down, people aren't joining the boy and the Girl Scouts. The number of kids that see their friends every day has been cut in half in the last 10 years. We don't go to work. We don't go to the mall. We don't go to the movie theaters. And when we don't touch and smell each other, we have less empathy for one another. We resent people. When there's immigrants in your neighborhood, you interact with, your pro-immigration, when there are no immigrants and you don't see them, you become very anti-immigrant.

too many people, especially young men, are spending way too much time alone in their parents' basement. And then what I think is the biggest problem is if America's problems were a horror movie, the call is coming from inside of the house. What do I mean by that? Geopolitically or relatively speaking, America, I would argue, it's never been stronger. We're food independent, we're energy independent, smartest, brightest people in the world. All have one thing in common. They all want to come here.

We're the football team that gets every draft choice, the top 100 draft choices every year. But we don't like each other. A third of each party spews the other party as their mortal enemy. 54% of Democrats are worried their kid is going to marry a Republican. We have 20% of Americans would be fine with an autocrat as long as it's his or her gal. So it just strikes me. There's this falsehood, this dangerous falsehood or a lack of recognition that Americans' greatest allies will always be other Americans. And we don't like each other.

People dislike our leaders in the other party more than they dislike Putin or she. That's ridiculous. So, and just to wrap up this world word salad here, I'm a huge fan of World War II history, and there's this wonderful photo generalist. I think her name's Maria Amelow, and she's been colorizing these World War II photos. And I don't know if you guys have seen this, but my favorite is a landing craft and the invasion of Normandy dumps its front doors. see these men waiting through the water, really boys, average age was 26, average salary was

$800, these GIs, and the most unskilled expendable men were sent first because they knew that most of them were going to kill. And they're headed towards Omaha Beach, waiting through this cold water. And two of three wouldn't make it off the beach. And I can't even imagine any of them at that idea for the life of them could have told them, could have told you who was a Democrat and Republican waiting towards that beach. And then I imagine them turning around and being able to suspend the time space continuum as we can looking at the past and they can look and see us and go, okay, teen depression, you know, election interference, polarization. And they would go, you can't fix that. Jesus Christ, look what I'm facing. Look what I'm running into. But you can't face that. So I'm motivated by history to believe that America can absolutely fix all of these issues. But my, I would say the biggest problem, is Americans need more connective tissue and to start joining, you know, hands physically and metaphorically with other Americans

and stopped this nonsense and this polarization and it's just this vitriol towards each other. You know, if I'm hearing you right, Scott, I'm picking up a pattern in what you're proposing here. And I just want to get verification that this is the point you're making. It's that a lot of this is due to policies sort of enacted of that that affect incentives. So we created policies that would incentivize women to attend college, and now it's sort of out of whack. We've created policies that have allowed a certain generation to be able to hold onto and attract wealth at a faster rate than others. And it's created something out of whack. Is that more or less your perspective?

There's some nuance there. So when it comes to education, what we found is when we leveled the field in education, girls blew by boys. Boys biologically are at a disadvantage. An 18-year-old girl and an 18-year-old boy, essentially when they're competing for a college seat, the girl is competing against a 16-year-old. Boy's prefrontal cortex doesn't grow in mature as fast. That kind of the executive function that is sort of gas break, when to play FIFA, when to stop and study. Girls are one to two years ahead of boys. And school and college rewards that behavior, that discipline, that delaying of gratification.

I don't know if you guys have kids or boys, but basically when you're a kid. dad, all you really are is the prefrontal cortex for your boy until he develops his own, right? You're like, okay. By proxy. Yeah, okay, stop playing video games. You have homework tomorrow? No, you can't yell in a restaurant. I mean, you're just kind of sitting there going, okay, I'm the front part of your brain until it actually grows.

And girls, theirs shows up sooner. It just shows up sooner. And also just there's societal reasons. two kids in the principal's office, a boy and a girl, exact same behavior, cheating on a test, exact same test, exact same cheating. The boy is twice as likely to be suspended. Black boys five times as likely to be suspended. And once a kid is suspended two to three times, he's not going to college, 80 percent of primary school teachers are women. And who are they going to champion? And I don't resent them for this. Who do they see themselves in in that little

girl who has the same colored hair that comes from the same background? Two-thirds of high school teachers are women. So there's fewer male role models. We also have 21% of U.S. households are run by a single parent, which is Latin for mom. Girls actually have similar outcomes in single parent homes. Boys come off the track. The moment there's no longer a male role model living with a male, he becomes twice as likely to be incarcerated. So the system, the educational system is biased against boys. Now, having said that, the labor market, there's this moment of equality when when men and women are young. They have about the same wages. Girls or women have closed the gap, which is a wonderful thing. And then the labor market turns against women about the time they

have kids. Wages for women drops the 77 cents on the dollar once they start having kids. Anyway, so there's biases everywhere. In terms of school, I think it wasn't policy as much. It was that we level the playing field and the behaviors that the educational systems value favors biologically women, both in terms of the norms of education and just straight biology. Now, on the age inequality stuff or income inequality, this has been a concerted policy effort by a Congress and a Senate that increasingly looks like a mix between the golden girls and the walking dead. We have, we're just too goddamn old. And it's not surprising that one in five children are living in food insecure households because none of these people have young kids at home.

They just have trouble relating. And old people vote. So we effectively have a geriatric government that is supporting other old people. And it's, you know, that's not to say people can't represent people unlike them. We have the oldest leadership in the world. I mean, think about the presidential race. The two leading candidates, when Marine won, if Biden or Trump win president in 2024, That means the last time Marine One leaves the West Lawn, we're either going to have an 86-year-old or an obese 82-year-old.

That is ridiculous, and we are so worried about being called an ist, specifically an agist, that we don't want to acknowledge that, you know who else is agist? Biology. And the majority of us have this uncomfortable conversation with one of our parents taking their driver's license away, and it usually happens in the 70s. but we're going to have an 82 and an 86 year old running the biggest economy and in charge of 11,000 nuclear weapons. I just, there's a huge problem, I think, around a representative government that does not represent young people. And so the policies you were talking about have been enacted that it just slant, slant money, just the level, the playing field is just taking more and more money from young people and sliding it down to. the entrenched incumbents. So looking at this from the perspective you have, what are some of your recommendations for how younger people can navigate through this environment to put the odds in

their favor to build wealth? Well, one, I think we should have one. I think we need to, just from an economic standpoint, we need to reform the tax code and make it progressive again. Basically, at about 99% your taxes go down. So I'm an entrepreneur. I saw my company, L2 for 160 million. The first 10 million is tax-free. That doesn't make any sense. Why am I not paying any taxes? Why is FedEx and Nike not paying any taxes? If you look, I would like see taxes coming down. Government requires 23% of GDP, and we've been deficit spending, so arguably tax rates should be on average 21%. If you had corporate taxes at 30% and you tax people making over a million dollars, current income, just one income. There's just income. There's just income. I believe in what Reagan did. There's just one income. And you tax people making over a million bucks 30%. That's That means everybody else would pay somewhere between 12 and 14 percent tax.

So you could cut taxes as long as you forced everyone to pay taxes. And as somebody who came into wealth later in life, you just see how the game is rigged. I have these incredibly intelligent people engaging in massive tax avoidance. It's all legal, but it's just striking. My tax rate is between 17 and 19 percent. When I was working my ass off making all my money in current income, living in California, my tax rate was 46%. So we've decided, we've made a concerted decision that if you get the gold medal, we're

going to give you the silver and the bronze. We're not going to say, okay, you're lucky. You need to pay some tax and help get more people on the podium. We need to redo our tax policy. We need to provide double the number of freshman seats at colleges. We have been, me and my colleagues are so drunk on exclusivity that we've created artificial constriction of supply such that we can feel better and better about our degrees. We have a nimbious rejectionist culture. Once I have a college degree, I want admissions rates

to go down. Once I have a house, I don't want any new projects or development projects approved. Once I have a successful tech company, I'm going to weaponize governments such as small companies can't emerge because I engage in monopoly abuse. And the result is the Gale forces of disruption never really get to blow and there's no churn. There's fewer and fewer younger people who have access. We artificially suppress interest rates. Unless you have rich parents, how do you buy a house if you're a young couple? How on earth do you buy a house? Now, that's changing. I think for the better. I'd love to see interest and mortgage rates got to 9% and see housing prices crash because I got to buy a house when I was young and I didn't have

parents that could help me. How the hell does a young couple buy a house right now? Anyway, I think that tax buy simplification of tax code, massive increase in freshman seats, Big investment in our junior colleges and vocational programs and stop fetishizing the traditional four-year degree in elite colleges. There's a lot of job demand for cybersecurity, specialty construction, installation of solar panels. There's a variety of two-year certification degrees, vocational degrees, that would give kids $60,000 to $120,000 day one. But instead, we have this weirdness in the U.S.

where if my kid doesn't end up at MIT or Google or KKR, I failed as a parent. 33 out of every thousand workers in the UK and Germany have the term apprentice. In the U.S. is three. Fifty percent of Germans have some sort of vocational certification. In the U.S. it's five. So I'd like to see national service. I'd like to see similar to what they do in Israel in northern Europe, mandatory conscription of one to two years.

So you meet people from different backgrounds, different ethnicities, different income levels, different sexual orientations. I think we need to establish connective tissue and have a generation of Americans. that see themselves as Americans first, not as Republicans or Democrats or college attendees or non-college attendees. So I think there's a variety of social and fiscal initiatives that we could do to start investing again in the middle class and specifically investing in our younger Americans. Scott, a lot of this advice is like sort of this societal-wide sort of macro ideas. And it's really interesting, your thoughts there. What about some of the,

individuals, because a lot of the people listening to this show are in the Gen Z or millennial age group, and by the fact that they're listening to this show, I'm going to presume that they're very interested in getting ahead financially. What are some of the ideas or paths that you recommend to people who, despite these headwinds that they're facing sort of on the societal level, that they can take as individuals to try and improve their own financial position? Well, I mean, there's a few best practices. So very basic peanut butter and chocolate is certification and geography. And that is we live in a LinkedIn economy. And what is on your LinkedIn profile is very important in terms of access to middle class economy. So if you can, if you have the opportunity to get to college, we all like to say college sucks and people don't need college any longer, but that's mostly a gag reflex because it's because it's become so unattainable for most people.

But if you have the opportunity to go to school, you should take it. And I'm not suggesting you go to a mediocre school and pay $100,000 or issue a ton of debt. You need to be smart about it and make sure it's worthwhile. But if you have access to a good certification at a reasonable price so you can afford it, it's a good plan B. Get to a city. Two-thirds of economic growth is going to happen in 20 super cities. It's like I'm a mediocre surfer, but occasionally I get somewhere with a perfect offshore breeze and perfectly shaped waves, and I believe that I'm a good surfer,

and then I go back and surf in real waves and realize I can't surf. You want to get to where the waves are great. In cities, the waves are just better. You're playing. It's like when you play tennis and you play against someone better than you, your game elevates.

When you get to a big city, you're playing against the fetters of the world. You just have to be better and you are better. You have to work hard. You have to get better skills. So the peanut butter and chocolate of early ascent is certification and getting to a city.

The algebra of wealth, and I think about this a lot, is loosely speaking, focus on your talent, not your passion. So first thing is focus. Find something you think you're good at. This is what you need to do in your 20s. Don't try and figure out what your passion is. That's dangerous. I'm super into sports and I like alcohol. So I should open a sports bar, right? Or I should, oh, I love media. I would love to start a magazine. I would love to start a magazine. You want to open a restaurant, go to work for Vogue, open a nightclub, or go to work in sports. You better get a ton of psychic income because it's going to be a really.

return on investment because those fields are over-invested. Just as Miami real estate, no one wanted in 2010 and the returns were huge. Now everybody wants Florida real estate and the returns have been starched out. The same is true of your own human capital. So your job isn't, you know, be a DJ on the weekends. Find something you're really good at, like I'm good at math or I think I'd be really good selling software. You know, what can you do that you think you could be amazing at? Like, you have some natural inclination. You don't have to, you can't hate it. But you don't have to, when people say passion, people immediately go to, well, I'm really into, I'm really into art. Okay, great.

You know, that's a tough way to make a living. Anyway, find your talent, invest the requisite 10,000 hours and become a great at it, then get to a certain level of stoicism. It sounds basic. Try and figure out a way to make more than you spend. When you're young, before you have kids and dogs, live in a small apartment. spend as little money as you can on your living situation because you don't need to. You should be, if you're young, you should be in your apartment at max eight hours a day, and seven of that should be sleep or six of that.

Try and start saving right away. Try and show a level of stoicism around being really disciplined. Try and work out five or six times a week. You should, before the age of 30, be able to walk into any room and know that if you got real, You could kill and eat everybody or outrun them. And I think being in great physical shape before the age of 30 makes you more confident, makes you more kind, gives you the stamina to work really hard. You bring very little to the workplace when you have no skills in your young.

I joined Morgan Stanley out of UCLA. I wasn't as well educated. I don't think I was as smart as the majority of my classmates or peer group, my analyst class. So I decided every Tuesday morning, I was going to go to work, and I was going to stay to Wednesday at 5. I would work the night through Tuesday night. I would work for 36 hours straight. And I could do it. I was an athlete in college. I didn't have kids. I didn't have dogs. I could go. I could sleep deprived. No problem. And it sent a signal that I came to play. And they're like, oh yeah, that's that kid that went to UCLA who works through the night every Tuesday. And I got

opportunities. People like that. I could not do that now. I'm not physically capable of it. and I want to see my kids at night. So go really hard, be a stoic, try not to let emotions get in the way, try to show real discipline around saving money. I'd say focus very much on work. I think there's a lot of talk about balance. I get that a lot of people work to live.

Good for you. You're going to need to move to a lower-cost neighborhood, and you're never going to get the kind of economic security that most people want. I'm not saying my way is the right way, but most of the people I talk to are very economically ambitious. And then in terms of what you do once you have a little bit of money, diversify.

I think diversification is your Kevlar. It's easy to think, oh, Solana's going to the moon, or Michael Saylor is a genius, and I think he is, and he thinks Bitcoin's going to $400,000, so I'm going to invest everything in Bitcoin. And by the way, he might be right. But diversification is your Kevlar, and that is I've lost everything twice, 2000 and 2008, because I was convinced and I was a genius. e-commerce was everything, then tech was everything. The market is bigger than any individual, and you are putting yourself in a position where if you take a bullet, it can kill you financially.

So now I diversify. I put money in all sorts of different unrelated things. That way, if I take a bullet and my stock goes to zero, it hurts, but I survive. And then time. Find things you want to invest in where you don't have to pay attention to them and ignore them. The best performing cohort of investors are dead people, and there's research here because they don't trade their accounts. So anyways, find your talent, focus, a certain amount of stoicism, save more, you know, spend less than you make, diversification, and then let time take over. And you're going to wake up. You guys are younger than me. I was 22 yesterday. I'm going to see my college buddies in L.A. It's like we're seniors at UCLA. I literally can like almost feel and smell the same things.

and now I'm 57. And just a little bit of money back then, just a little bit of money every month would be millions of dollars right now. And most young people don't believe it because they can't evaluate time. They can't assess time correctly. Or inflation, the way that the actual value of the currency change is so dramatically over time. 100%. Yeah. And I was, I'm always people, I'm always invested.

I'm always in the market because I don't think you can time the market. I just try to diversify. I think the market's going to absolutely throw up in the next 12 months. months, I'm still fully invested because I don't know. I mean, you know, I don't know. I have a gut, but I don't know. I heard a conversation on the Lex Friedman podcast where he was speaking with someone, I couldn't pronounce a guy's name as like Amadeus or something that was talking about. He was a proponent of Bitcoin as well. He's talking about the Fiat standard versus like the gold or he was calling it the Bitcoin standard. And just discussing how in a fiat economy like we have,

which basically means the government can manipulate the money supply. They could just, they can print the crap out of it. And print isn't actually accurate, but it serves the same purpose to fund wars that we're fighting or interests that we have overseas or programs that we have here. Whatever it is that the government wants to do, they can, instead of raising taxes on people, which is unpopular, they just print more money. And for some reason, none of us talk about it. To me, it's amazing that we've done what we've done to our money supply. Maybe like 80% of the entire money supply has been created in the last little over two years probably hardly ever gets talked about at all. but like we'll talk about other things in the news nonstop.

Anyways, his point was savers are punished. If you're just simply making money and saving money and setting it aside, you can never catch up to the rising tide. You are forced to become an investor if you're in a fiat economy, almost just to stay even. And like you were just saying there, Scott, if you look back 30 years, like there's not a human alive who would say, I wish I wouldn't have bought that house.

I wish I wouldn't have invested in that stock. I wish I wouldn't have invested my money. and something prudent. But when we think forward, there's a, I don't know, there's like a form of, there's a disconnect that the same will be true 30 years from now and probably much more dramatic with the way that we're printing money now. Are you of the same opinion that we should be telling people like you have to be investing your money and you have to be holding on to it because you're not going to get ahead if you're just making some money, spending some money and saving a meager amount? So in terms of cat, so let's go BIPC currencies, every Fiat currency

throughout history has eventually failed. Because to your point, the political temptation to spend more money such that you can provide a short-term sugar hit to the economy and not be fiscally responsible, which requires short-term pain and oftentimes means you're going to be booted out of office, requires adults thinking about their kids and grandkids. And the political system doesn't occurs that's sort of long-term thinking. So ultimately over time, the temptation to print money becomes too great and the currency becomes inflated and goes to zero. So by that standard, you probably always want to be in an asset. You don't want to hold on to cash. Now, having said that, treasury bills and bonds for the first time are kind of giving a decent amount of reward relative to

the risk. So I think there's a decent argument. Some people, older people would say it's not a bad time to own treasuries because you can get 4% instead of 1%. But I'm a big believer in always have your money in the market. Diversify. But I would tell young people, you know, Adidas, I was looking at, I'm fascinated with what's going on with Kanye right now. Adidas is at $60. It's off, I don't know, 50 or $60.

It's been cut in half. Alibaba's been cut in, you know, by two thirds. PayPal's off, you know. There's just so many great companies. I don't say they're on sale because they're value. valuation's got so high. But I think a decent strategy is looking at places where it's just location and then buying stock, trying to be really disciplined. I'm going to try and save a thousand bucks a month, which is a lot for a young person. And I'm going to put it in names

I like, or I'm going to, better yet, put it in an index fund or an ETF. The natural trajectory the market is up. And then ignore it. You know what is a low ROI? Buying crypto, the reason I don't like kids buying crypto, it's not that I don't like the asset class. What I don't like is that crypto usually means you're staring at your phone. all day. That's an investment. Well, that does remind me of the older folks that are like, they're retired, they're bored, they have nothing to do, and they

sit at their computer and they watch the tickers and they tinker with their portfolio doing absolutely nothing to benefit, but it's just like their brain needs something to do. It does turn that into the 23-year-old that bought an NFT or some crypto, and now they're doing the same thing. And it gives you this dopamine release as if you accomplish

something. But it's not like you said, this guy, it's not building skills. It's not putting your 10,000 hours into something. It's not putting you on a path that's going to improve your position. It's like a sort of a substitute for it that many of us have just been hypnotized into. Yeah, there's an inverse correlation between how often you check your portfolio and your returns. And I think you mentioned that with dead people, Scott. Like, the less you look at your returns and the more you just allow your investments to compound over time, the better your returns actually become. Robin Hood's tagline,

if it was honest, would be the more you trade, the more you lose. 80 to 95 percent of day traders lose money. If you owned any five stocks in the S&P and you own them for longer in a decade, no one has ever lost money. So now I want to be clear. Occasionally I trade. Occasionally I buy options or I usually write options and I enjoy it. It's like gambling for me. I take a little bit of money and I do it. It's like I love Vegas. I was in Vegas last week. I go with a group of guys. I put on a kilt. I get f***ed up. I go down. I take a thousand bucks. I assume I'm going to lose it all. So if you're trading stocks or you're trading options or doing weird stuff, realize okay, it's fun. It's consumption, but you're probably going to lose most or all your money.

But don't con yourself into thinking that you're learning or investing. I'm not against it. I love to gamble. I love to drink. But neither of those things are going to create economic security for me and my family. They're consumption. What makes wealth is the boring. Buy a reet. You know, you think the future is in e-commerce, buy prologis, and then don't look at it for 10 years. Scott, what do you think about regular real estate, though, in addition to REITs, you know, buying rental properties, how do you view that in sort of the spectrum of potential investments? So I'm now at the age where I think about, well, what if I could do it all over again, right? If I could do it all over again, I'd be a Broadway dancer or a Navy SEAL, so there's still time. But I would also get into real estate. And essentially, if you look at the most valuable companies in the world, they're kind of a thick layer of innovation based on enormous government investment. Google and Apple are built off of GPS and DARPA technologies. Tesla's built off of massive subsidies for carbon credits.

Moderna is built off of NIH investments in vaccine research at universities. So the way to make a lot of money is to be a remora fish on massive investments by other people. And the regulatory capture, the real estate industry, is extraordinary. I don't have any other investment. I wish I'd come into this later. I bought some apartments. And during 2010 or 11 in Florida, the Palm Beach County Clerk's Office was auctioning off repossessed condos. And I was buying these things for 80 or 100 grand.

And I could get $12,000 a year in rent. And I'm like, I don't know real estate, but I can do math. If I can get 12% cash on cash, this is just going to work out. If I can hold onto these things long enough, this is going to work out. And then I find out your industry, I can depreciate these things. I'm like, okay, they're going up in value, but I can depreciate them. I can't depreciate my Amazon or Apple stock. And then if I get a call from an investor who says, oh, you own 30 apartments, I'd like to buy them, I can then, within six months, not incur that gain and roll it into another asset.

I mean, you can't do that anywhere else. You guys have figured it out. So here's the thing. You can be good in real estate, and it's as good as being great in any other asset class. That's true. So what I would tell people, through no fault of your own, the lobbyists who have fomented this notion that buying a house is the American dream, and there's been such amazing regulatory capture that if I had it to do again from like day one, I would probably be putting a disproportionate amount of my capital in real estate.

Now, having said that right now, I wouldn't buy a house right now. I just think, I think there's a kind of a standoff between buyers and sellers because the top is sticky. I love real estate. I'm one of those, an S&L skate where I look at real estate, like a lot of people look at porn. I'm just fascinated at what's selling where and for how much. And I don't think sellers, sellers anchor off the high. They go, okay, my house was worth $500,000. That's now their baseline. Yeah, that's it. Oh, that's the normal market. No, it wasn't. That was the peak. And now your house is worth $3.80. And it's probably going to worth $3.40 in another six months. And then eventually, so eventually there's capitulation, but capitulation usually takes 12 to 24 months. I wouldn't want to buy a house right now. I think with interest rates going up.

What about an investment property that would cash flow positively? It also, you know, it's all about cap rates and specifics and nuance. I started looking at, when I saw the hurricanes coming to Florida, I started looking at Fort Myers. And I love these apartments that I bought. I'm like, oh, maybe there's opportunity. I also, and I'm in a disposition of privilege, I try to pay all equities, so I'm not forced to buy insurance, which is a total f***ing scam. I've heard you talk about, you've saved, what, $200,000 over four years or so of not paying for...

Again, everything we do in our society is a transfer of wealth from the poor and the young to the old and the rich. Okay, let me give you a shocking statement. Me and my family do not have health insurance. Really? Bad dad. Bad husband. Irresponsible citizen. Here's the thing. I'm a narcissist, so I think if I have health insurance, I have to have the best plan. So I got the best plan costing me $48,000 a year for me and my family. $48,000 a year. I am very privileged. I could absorb any health shock. Any rare disease, million, $2 million, I can absorb it. I don't need to worry. And then I did the analysis. Half of our medical expenditures,

we weren't getting reimbursed for because the insurance industry is very good at creating complexity and nuisance and you have to call somebody and they're only there from from 11 to three central standard time and you give up and you don't get reimbursed for going to have that mole removed oh and the dermatologist I want to go to is not covered under their plan there's purposeful breakage so I said get it I'm not having health insurance I did that six years ago I've saved three hundred thousand dollars that will buy a lot of health care 45 percent of insurance premiums go to administration and profit. When I bought these apartments because I paid cash, I'm not getting flood insurance. These things could fly away. Like they could wizard of Oz on me. As long as they don't fly away more than every 11 years, I can afford to rebuild them with the money I'm going to save an insurance. It's this industry that plays on fear and ignorance. And also regulatory. If you get a mortgage from the majority of bulge bracket banks, they're going to have to have insurance. Otherwise you can't qualify for more. So what does that do? It means a guy with some money who's older like me doesn't have to have health insurance, doesn't have to have flood and fire. So again, another transfer of

money. But I think real estate, again, if I had to do it again, the wealthiest families in Manhattan, they don't really talk about them. Everyone's obsessed with tech billionaires. There's like a handful of families in New York that own all the office buildings. They never sell them. They just borrow against them. I mean, if you have the capital and the staying power to survive cycles in real estate, which are very, can be very vicious. You know, those are the people, if you look at the Fortune 400 or the Forbes 400, the two people that populated outside of people who inherited wealth are entrepreneurs, number one, and number two is real estate people.

It's just a great way to get rich slowly. So why did you get out of it? You bought it in a great time in 2010, and you like a lot about it. What stopped you from continuing? Well, in my core, I'm an entrepreneur and I'm fascinated towards e-commerce and growth, and I think I'm seduced by what I'll call the sugar hit of, of investing in Airbnb and seeing it double. And tech is kind of my bag.

It's kind of what I get. You know, I've worked with Ned Speaker at Speaker Properties, and Hamid Mogadam is someone I would call it for him a pro loat. I know people in real estate. And it strikes me that their business is better than my business, but it's just not my business. I've never really done it, understood it. So I've done it.

I did a crash course in it in 2010 because I saw an opportunity. And, you know, now looking back, I wish I bought 300 of these things, not 30 of them. But I think it's, I think it's a fascinating business. And if I were, you know, if I, again, if I do it again, I would probably try and be in and around real estate. I think it's a great business. Well, it gives you some of those advantages you were talking about that might be geared towards older people. But if you're able to buy real estate as a young person does allow you to capture those things. Like you talked about mortgage interest, depreciation, some of these things that you said at the top of the show are more designed to help older folks.

But if you are young and able to get into this industry, it can help you sort of get some of those cheat codes that the older generations are enjoying, right? Well, again, going back to what other asset class can you get five to one leverage on? I mean, better at times. Yeah. And some young people do some, I think government programs can get 10 or 30 to one leverage on. leverage. And again, I think prices have gotten a little too high, so I'd be careful. But if I work with Goldman Sachs, they'll give me two to one on my stocks. And by the way, if my stocks go down, they start issuing margin calls. But I can lever up 10 to 5 to 1 in real estate. And usually

it's if you get a 5 or 10-year mortgage, they can't do margin calls on you. They can't go, your house has gone down in 30% of value, we need you to put more money up. They can't do that. So it's the most tax advantaged. It's the most levered. Now, the bad news is all of those things have probably led to an asset class that I would say, and again, it's so specific, it's so regional in asset class time. But I would argue the majority of residential real estate, you know, you didn't want to be buying six months ago, right?

I'm not even sure you still want to be buying. You guys are going to forget more about this and I'm ever going to know. But I went back to the Fort Myers thing. When I saw the hurricane hit and they were saying insurance costs are going to triple, I'm like, okay, there's opportunity here. I love running into the fire. And I called some brokers down there and said, I'd be willing to buy some apartments or even a small apartment complex. And I thought I was going to get a great deal. And they're like, oh, yeah, like all the guys with the black hats have already shown up.

All the biggest capital in the world is already down here trying to be. It's like, oh, this wasn't an original idea. And they're like, no, the blip, if you will, or the decontents. client and prices in these areas were hit by the hurricane lasted about 48 hours. So, you know, but I love the asset. I think it's a very interesting way to make a living. And the majority of my friends out of business school who went into real estate didn't get as wealthy as I did in the first 10 years, but they didn't get as broke as I did during the downturn. You know, they've just kind of slowly but surely, I think real estate's a great way to get rich

slowly. That's a wonderful line. And that, you know, when you were describing why you didn't get more into it, and I really appreciate your transparency there, which was I heard you say is it's, it's compared to what I'm used to, it's slow and it's boring and it doesn't hold my attention. There isn't as much upside. There's not as much creativity I can exercise. People like you that have the capacity of intelligence that you have, Scott, they know what they can do when they're put in sort of the the highest of stakes environment, which in our modern day environment, I would consider to be tech. You've got the biggest upside. And it does make real estate by comparison just kind of seem, I don't know, a good comparison.

It's like elementary. It's just this is hard for me to follow. I've heard several other people in tech that were pitched real estate opportunities. So you're telling me I'm going to get a 12% return over five years. Like, I just don't really, it doesn't really move the needle for me. It's not a bad idea, but I don't get excited. And that is absolutely true. I look at it like people in your space and a lot of your audience, they're used to throw in haymakers and they're getting big knockouts and it's very exciting and they know they're very talented fighters.

And this is just a steady stream of body shots that don't appear to be very powerful. And until you look over a 20 or 30 year period of time. And like you said, it's very difficult to lose. And your return start to amplify largely because this is David Green's opinion here, inflation. Inflation makes your casual real estate tinkerer look like a brilliant mad scientist because it's so leveraged, right? So you get that. You're putting 20% of your capital into an asset that triples in value. But your 20% down payment would have like a 600% increase.

It's different when you're looking at how quickly you can build equity over real estate. But it's boring. So I often, when I come across the people that are very successful in the tech space, a lot of our audience is sort of they're into podcasts. They're into media. there also, I live in Northern California, so I'm right near Silicon Valley. They're fascinated by innovation and creativity and like what's next, what's a better way to do it, how do you do it more efficient. I look at it like, you got to work this vegetables into the sexy, fancy diet that you're used to. You kind of have to bring this in as a safety net or a baseline on top of what you're already doing.

When we're giving advice to young people about building wealth, are you of an opinion that real estate could be a part of a bigger picture, or are you pick your thing completely double down on that and excel as far as you can in whatever asset you're investing in? So there's your human capital and there's your financial capital. I think with your human capital, you should be 110% focused. And that is, I don't believe in side hustles. I think if you have a side hustle, it means you need to find a different main hustle. And that if you find a good job, that's your main job, that incremental investment and time and

effort and mental bandwidth that you would give to a side hustle, you'll get a greater ROI. In other words, try and figure out a way to be great at your main hustle. The difference between being good and great at your main hustle will produce more than if you're just good at your main hustle because you're on weekends and evening selling, you know, rare tennis shoes or something. Door dashing. I think side hustles are actually dangerous unless you see it as a short-term pivot to something else that'll be your main hustle. So if you like, if you don't like your girlfriend, get a better girlfriend. Don't start dating other girls on the side as a head. show. That's a whole other talk show. But in terms of your investments in your capital, you don't

have to be fully diversified when you're a young person. You can take more concentration risk. But I wouldn't, you know, like a third of my net worth, maybe 40 percent, is in real estate. And a lot of it's around consumption. You know, it's hard to time, should I buy a house right now? I get a lot of that question. I'm like, well, you know, I'm like, what's the situation? I'm like, well, we're in a apartment and we're having a kid. I'm like, why do you make a good living? Yeah, did your microwave? Yeah, I'm like, buy a house.

You need a house. I mean, your family's growing. It's sort of, like, real estate has a different component of it, right? Some of it is about consumption of where you are in your life. But I wouldn't, at a, at a, I go all in and have huge concentration risk around your human capital when you're young to get great at something. And I think focus is a key component of being great at something. But in terms of when you start investing, if you love real estate and you're young, maybe half your money goes into real estate.

But as you get older and especially when you get to my age, you really don't want to have more than my opinion kind of 20, maybe 30 percent in any type of asset type. Because real estate just might get kicked out of it the next 24 months. I don't care what kind of genius you are. Market dynamics will always trump individual performance and genius. And so as smart as you are, as good as the opportunities, your Kevlar is diversification. I invested in an oil companies. I'm investing in aircraft maintenance companies. Another thing you said, David, that I think is really important.

I have a chart that I present at the end of my class at Stern. And on the Y-axis, I have sex appeal. And on the X-axis, I have ROI. I'm sorry, flip that. Y-axis, ROI. X-axis sex appeal, how sexy an industry is. And the line just goes straight down. A friend of mine is starting a members-only club here in New York, just for artists and

entertainment people. It just sounds like it's going to be awesome. No way will I invest. That is way too cool. Another friend of mine starting in a health care maintenance company that uses scheduling to manage workers who maintain health tech equipment. I hear this business. I want to put a gun on my mouth that sounds so boring and so awful.

I am absolutely stroking a check to that guy. The less sexy the business, the higher the ROI, because not every kid's dreaming of going into that business. It will have an underinvestment in human capital and have an underinvestment in financial capital. So there is a inverse correlation between sex appeal and return. And real estate is somewhere in the middle. It's kind of cool, right? It's kind of cool. But I would imagine investing in, you know, sea malls or warehouses is not that sexy.

Everybody wants to buy probably. Self storage, mobile home parks. Whatever it might be. Yeah, that's where the money is. When something sounds awful, that's, you should smell money. And when it sounds boring, right? My dad, it's my dad later in life, you know, four marriages, a total train wreck financially. And he and his fourth wife bought a trailer park.

And it kind of saved his ass. Just saved his ass. And just a weird business banging on doors for rent, collecting quarters from the washing machine. Great business. Like 17, 18 percent a year. Great business. All right. Well, we do have to get out of here soon, Scott.

So I want to bring it back to your book Adrift and some of the sort of high-level, you know, realities that we're all facing as Americans. Is there anything you think real estate investors or the people who listen to this podcast can do to create some of the change that you suggest? It's a thoughtful question. I would just say that, and this is more around, I guess, philanthropy or trying to, I think this notion of third spaces. I think we need more spaces where people who are strangers or maybe don't know each other through the course of their day have a chance to be in physical proximity with each other. Open layouts. I tell my kids, and I say my kids, the kids who work for me, I have about a dozen people. The median age is like 24.

It's like a bunch of kids straight out of college and then a few of us old people. And I say to them, I give my credit card, I'm like, any time you want to get together, if you all want to go to Touloum, if you all want to go have dinner, if you all want to go to a concert, I will pay for anything you guys do together. I think young people need to be in physical proximity. And I worry we're losing our third spaces, you know, our movie theaters, our malls, the workspace. So any opportunity, I think an investment in your culture and an investment in society is to try and to try and figure out really compelling places for people to meet each other, to establish friendships, to establish romantic relationships. But I worry that young people aren't meeting, that they aren't meeting people from different backgrounds. So they don't have the opportunity to develop

empathy to realize that, okay, that guy who just immigrated here, you know, from El Salvador, you know, loves his kids, kind of like me, and you have a little bit more empathy for someone. You run into someone who had a marriage that didn't work out and she was trying to raise a kid on her own. And you're like, this is hard. This is hard. And also have the opportunity to meet people, fall in love, have sex, and get married. I think that's the basis of our society. And we've decided that somehow it's bad, that somehow people getting together and wanting to have romantic relationships,

that that's fraught with all sorts of HR risk. No, that's the whole point of all this. That's the whole point. So, you know, what I tell young men is, there's nothing wrong with approaching a stranger in exhibiting interest. And if you don't have the difference between expressing interest and harassing someone, you've got bigger problems. But I go to, I've had three weddings from my last company, L2, and each of them is a mitzvah. It's wonderful. And they met, and it was, you know, they expressed interest to each other.

They started a relationship, and now they're getting married, and they're going to have kids. you know, that is, anyways, you ask me what real estate people do. Create third spaces. You might already have your mate. You might already have your house. You might already have great places to hang out with people you love. The majority of young people don't. And they've been taken away.

Those opportunities and those spaces have been taken away from them. We need to create more of them. Is what you're talking about here, Scott, really like going down to community, like a lack of community? I think that's right. But you can have communities online. You can have an, you know, what I'm talking about is physical proximity. Online dating, I think, is a disaster for men.

Oh. Because we don't like to talk about it on the left, but women have different criteria for mating than men. Women primarily want kindness, number three, intelligence number two, and number one, resources. And online dating creates this mating inequality where 50 women on Tinder, 50 men, 46 of the women, to all of their attention to just four to six men, leaving 44. to 46 men fighting over four to six women. And the beautiful thing about relationships, friendships, romantic relationships is there's an X factor, smell, body language, movement, your humor, you know, all this stuff, the way you laugh. You just never know the people

you're going to be drawn to for friendships, mentorships, or romantic relationships. And you've got to give the bottom 90% of us an opportunity to exhibit some of those behaviors. And you can't do it online. So I think to your point, Dave, we need to create more opportunities to develop community in person. You know, Boy Scout troops, sports leagues, church groups, if that's your thing, riding clubs, whatever it might be, talking to strangers. I think we're desperate for touch.

I think we're desperate for community. I think we're desperate for affection. Yeah, get out of the YouTube comments. 100%. If you don't mind, I'd like to move us on to the... the last segment of our show before we get you out of here. It is called, Would You Rather in 2023? So Dave and I are going to take turns, asking you questions, and you can give your answer and a supporting statement of which you would choose. So I will go first. In 2023,

would you rather buy real estate or stocks? Yes, whichever declines more in the next four months, whichever, whichever takes the biggest beating in the next four months. Probably real estate, because probably real estate. Because you see what interest rates are doing and it's just creating it. Just there's opportunity in dislocation. I think the next six months we're going to see capitulation and a lot of buying opportunities in real estate. All right. Well, sort of along those lines, which would you rather invest in tech stocks in the next year

or a reet? Probably a reed because I need, at my age, I'm more focused on diversification and I'm just always overinvested in tech. That's wise. Got to eat a little more vegetables. That's my problem. I always want to eat that steak. There you go.

100%. All right. In 2023, would you rather invest in a serious? Series C round of startups or in a real estate syndication deal, which is basically somebody else is buying a property and you are having an opportunity as a limited partner to come in and get access to the equity. Probably the latter because I get a lot of opportunities around Series C investments. I've been investing a lot in opportunity zones. Again, another tax avoidance scheme you guys have figured out. But yeah, probably, you know, I'm at a point in my life, it's all, it's also true.

I'm in a point in my life. I'm not looking to get rich. I'm looking to not get poor. So probably real estate. Yeah, defense. Yeah, that's right. All right. Well, then we might know this answer already.

And Scott, we're going to have to have you back on to talk about your opportunity zone investing. But a short-term rental, like an Airbnb or Bitcoin. Investing? Yeah. Which would you invest in? I know you like gambling. Want to throw some Bitcoin in there?

Oh, no, no, short-term rental. I'm a no-coiner. I've never owned a coin. I don't get it. I just don't get it. It's too sexy. What's there to get? What's there to get?

That's the first thing I thought of when you described your inverse relationship between successful and sexy was all these like cryptocurrencies that were just popping up out of thin air along with the NFT space. And then we found a way to marry them. So you're like, well, if you buy this crypto, it works in this theoretical metaverse that we're trying to create that has an NFT that is the door to get into it. They took all of these things that were sort of inherently useless on their own. and try to make them valuable by turning them into. It's like combining a bunch of alcohol together that should it be good and try to make it taste good. This Voltron of nonsense is how it looked like to be. It was very sexy and we saw what happened.

It corrected very quickly. Yeah, some of it will be enduring. You can't have this much human and financial capital invest in any asset class, not have enduring innovation. But at this point, I'm just sort of, every time I try and understand crypto, I feel like I could slip and break a hip. I just feel old. I don't get it.

I don't, and more power to them. I know some really smart people making big investments in it. I'm on the board of a company called Ledger, which is a cold hardware storage for mostly crypto, but also for identity. And I did it just so I could learn. But I don't. I've never owned a crypto asset. And I doubt I ever will.

So short-term rental it is. Oh, by the way, I should disclose. Airbnb is hands down my biggest holding from investment standpoint. All right, Dave, any last questions for you? No. Scott, it's been a lot of fun, really fascinating. Wish we had more time. But appreciate you coming on the show and sharing some of your thoughts with us.

Well, thank you guys, and congratulations on your success. Thanks, Scott. If anybody wants to look you up and learn more about you or opportunities that you present, where's a good place they could go? God, the resist is futile. I'm everywhere. Prof. Prof. Get my Twitter handle is.

He'll find you first. Yeah. Twitter is Prof. Galloway. I have a newsletter called No Mercy to Mouse that comes out every Friday. I'm about to do a show on BBC. If you want to take a course, I'm involved in an ed tech company called Section 4, so I'm just, I'm everywhere.

Well, we appreciate you. Brother, thanks for coming on. We're going to have you back to talk Opportunity Zones and Tinder Strategy in the future. Seems like you have a lot to offer on every element there. They're related. All right, gentlemen. Thank you. All right.

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Well, first off, we went all over the place, which is pretty cool. Scott gave us some pretty insightful commentary on a lot of different things, a lot to chew on there. And I like his perspective. He's coming from someone that has made a lot of money that has been successful in a lot of different areas of finance and has sort of a nuanced position when it comes to both the individual specific micro ways that we can earn more money for ourselves, as well as the generalized macroeconomic perspective that has to do with government policies and sort of like the unseen pressures that allow wealth to be created in different ways. So I think, I mean, I would love to have talked to Scott for longer. We only had a short period of time, and I'm glad that he did talk to us.

What were some of your favorite things that he brought up? Man, yeah, there was a lot there. And I do agree. I wish we could have a longer conversation. But I think one of the things that really stuck out to me, which I'm not, I have conflicting opinions about it, I should say, is the idea of that he hates side hustles. I think that's pretty contrarian to what we talk about here on Bigger Pockets a lot. And I get what he's saying. And I think there is a for a certain type of individual, it makes sense to do what he's saying.

But I'm not sure that's like advice I would give blanket to everyone. What do you think? Yeah, you're making a good point. See, I think when he said side hustle, we never defined what he meant by that. So I don't know. I'm now speculating for Scott. But when he said side hustle, what I interpreted was don't allow your energy to be diverted in several different ways.

This is like when Brandon Turner would say, don't try to build five bridges to Hawaii at the same time. So if you're in a location, in an opportunity where you can be building your skills, which I am passionate about. And I heard Scott talk about as well, especially when you're young skill building needs to be at the forefront of what you do. I did my TED talk on this. Totally great.

In the next book I'm writing, I'm big into it when we interviewed Cal Newport. So good they can't ignore. He's one of my favorite books. And that's exactly the point he makes is you got to build, got to build your skills like DePaulian Dynamite because girls like guys with skills. What I think what he's getting at is don't try to avoid the work. I'm like,

ah, that's a hard path to take. I'd rather look for the next NFT that's going to blow up. Or I'd rather make my own blog and make my own blog and make my, money that way because it's easy. He was like, no, stay the course, walk the path. But what we talk about with bigger pockets when we talk about a side hustle is probably more geared towards, you don't have a lot of opportunity in your job. You're listening to this podcast and you're picking up shopping carts at Home Depot or Lowe's. And what you really want to do is be in construction. So you like working at Lowe's, but you're not making enough money to really to get anywhere. To you, your side hustle is actually a step up, right?

your side hustle might be a contractor you met coming into Home Depot that hires you to help do some work on the job site. And now you could start to learn a trade. And your side hustle becomes the path, right? So I think that's how I'm looking at what he's saying is it depends on which, which path you're on. And if the side hustle is a step up, which is a good motivation, or if it's a distraction, which would be a bad motivation.

What were your thoughts on that? Yeah, no, I actually think that's a really good way of phrasing it, is that it's really about where your focus is. And if you're in a career where you can make a lot of money and do what he's talking about, where like, if you really focus, your income can go from $50,000 a year to $500,000 a year. Maybe that is a great option for you. I don't know. I don't think there are a lot of those careers out there, though.

And so I think for everyone else who might not be, you know, have that potential. Maybe you're not working in finance or on Wall Street or whatever. Right. You try and find the place, put your attention towards the thing that can offer you, that ability to 10x your income. And if it's not your regular W2 job or whatever job is, maybe real estate or what we were calling a side hustle can be your main hustle. It's just like something you're doing concurrently or at the same time as your real job. So I think that was really interesting. But I completely agree with the sentiment that's like just get really good at something.

I completely agree with. I think that's excellent advice for pretty much anyone. I guess the other thing I was I was sort of interested in was when he was talking about taxes a little bit and about how advantaged taxes. He was really sort of like going off about how amazed he is that, you know, you can depreciate things. You can lever it. And this is for someone who is primarily a stock investor. So I thought that was pretty cool that he was recognizing some of the advantages that real estate investing have. Yeah, and he also made it clear he doesn't operate in this space very often.

He's not a real estate person. He's a stock person. He's a tech person. He's fascinated by like innovation and startups. And if you listen to Scott, uh, prof, G, he talks a lot about like his opinion on Elon Musk for say, right? That space is much more in, uh, creativity. And he mentioned real estate is just completely. comparatively boring. It's a great way to build wealth slow, which was funny. He said that because

that's literally what I say all the time. I say this is a get rich slowly scheme. It's not a microwave. This is a crockpot. And at the very end is where it starts to get really fun. When you're really hungry and you're like, oh, I want to get out of this situation in life. I want to eat. I'm so hungry. No one thinks of a crock pot. You're looking for that hot pocket, right? And you can hit it really big in tech. You can make a lot of money really quickly. When I say a lot of money, we're like, wow, an 18% ROI is fantastic. They're more like it's an 800% ROI. That's just sort of the world that they're used to playing. And I like that he admitted like real estate's amazing. It's just slow. It's not my speed, right? Because not everybody is in that same boat. For some of us, slow is the best speed.

What about you? What do you think? Well, it's funny what he says about what he says about diversification because in the venture capital world, which it sounds like what he operates in mostly, the calculus is very different than real estate. They are. that they're going to hit on one out of 10 investments. And they're hoping that that investment is a huge home run. Like he's, I think he was an early investor in Airbnb. And that's awesome. And he'd probably readily admit that it took him, you know,

failing on 20 investments to hit that home run with Airbnb. That's just like a totally different game than real estate. Like real estate investing is about making incremental progress with every single investment. And hopefully losing on none of them. And you might never hit a. a grand slam. But that's okay. You're the, uh, you're like the utility guy and the baseball team who's just hitting singles every time. That's totally fine. Because for me, especially if you're starting young, that's all you need. If you're, if you're starting your 20s or 30s,

if you do that for five to 10 years, you're going to end up in a good position, like almost guaranteed. You want an analogy I just thought of? Yes, I definitely do. All right. So tech in the world that Scott operates is sort of like animal husbandry. Okay. You are trying to breed a racehorse. You're trying to breed a racehorse that's going to win the Kentucky Derby. Like you're going to go through a lot of duds, but if you get that one that hits, you're incredibly wealthy. You've made a ton of money. You can now stud out that horse and do really well.

Our world is much more like farmers. We're just planting trees. Like we want an almond orchard. It's no one ever said it's really sexy to own a lot of almond trees. And it is a little bit more work to have to harvest those. almonds and then store them somewhere and sell them. Like it's, it's a little more work when you're running a short-term rental or you're managing a property.

It's a little bit more like running a business. And when you hit it big on a property, that doesn't, it's not like you've got this racehorse that you can make a bazillion dollars off of. You're probably going to take some equity out of it by three to four more trees and wait, wait for them to start growing almonds, right? Yeah. But it is so easy to repeat it. It's simple.

I mean, it's the same freaking thing you're doing with a tree over and over and over. And maybe you have some almond trees and some orange trees and some apple trees. You diversify a little bit between a duplex and a short-term rental and a regular house somewhere. But it's all the same type of stuff. Your water and trees, the land works the same. The irrigation works the same. And so to me, the weaknesses of real estate is, yeah, it doesn't scale incredibly fast. The strengths are it's harder to mess up for sure.

You can have a curb where you never lose money on a house ever. And it's much more scalable versus the high risk but high reward element of the work. world this guy lives in. Well, it's kind of interesting. And first of all, if we were playing like the game of bingo where you try and work weird words into the podcast, Animal Husbandry is one I never thought I would hear on this show. But here we are.

Here we are. No, it makes me wonder sort of about his personality. He said several times he really likes gambling, you know? And so it's like, it's interesting if like that kind of high stakes, you know, VC venture capital world is attracted to him. It's like part of his personality trait. I like, you know, people always think like investing. It's so dangerous. It's risky. It's like I have personally, I'm a very financially conservative person. Me too. You know, like I have a lot of financial anxiety and like I just want to keep what I got, you know, and just build it slowly. I just wonder if it, you know, it's comes down to different personalities and what you're looking for. I think that's exactly right. And I'm glad you're bringing it up because I think it creates confusion for the listener who doesn't know that because they're looking for the blueprint. They're like, well, is Scott's the right blueprint? Or is. Dave Meyer the right blueprint or is some other entrepreneur out there?

Is Elon Musk the right blue? Is Gary Vaynerchuk the right one? Like, what am I supposed to do? Well, it spins your personality, right? You're probably going to go in the direction that your personality has bent towards. So figure out how to make real estate work within your personality. You'll have a much more fun time. Absolutely.

The last thing I thought was really interesting is right at the end, he was talking a little bit about community. You know, I asked him like what real estate investors could do. to address some of the challenges that he laid out in his book. And he talked about a lot of different things there. But I think what resonated with me was that if you are into real estate and real estate investing, like create your own in real life community. You know, we just got back from Bigger Pockets Conference where it was a perfect example of that,

being able to meet and connect with people who are like-minded, who can help you reach your financial goals, who you can help them reach their financial goals. goals. I found that personally being at BP con. You know, I work remote. I live in Europe. I found that really energizing to be there and be with, you know, the community in real life. And so I thought that was a really good lesson that people can take or learn something from, especially if you're new. Like, it feels really scary because if you're sitting in front of your computer, you're just listening to this podcast and you've never went out and talked to other people about it and seen and learn

from people directly, it seems like this sort of like, you know, foreign thing that you can't really touch or feel. But like, if you go out there and go to a Rhea, go to a meetup, like, you can see that this is achievable and you can meet people that can help you achieve it. Yeah, it's funny. When I like it real estate, I don't ask myself the question of, is it achievable, which is what the new person would be thinking. It's more, how could you, how could it not be achievable? If you did all the right moves, how could, how would you screw it up, right? You buy the right property, you buy in the right locations, you keep enough money in reserves and you wait. Under those circumstances, it's hard for my mind to conceive of a way that people would lose

money through real estate in the long term. And so there's some hope there if somebody's like, I really want to get into this, but I'm just afraid. The fear is largely based on ignorance or expectations that are incorrect. Like, I got to make 300 grand in my first year because I'm quitting my job in three months. This is not the asset class to do that. It's just you're going to have to take on a lot of risk if you want to do that. And it's probably not going to work out. But if you like the slow and steady approach, we got, we got some ideas for you. All right. Well, I thought this was a good interview. I enjoyed you being here with me, Dave. As always, you always ask really good questions. If people want to follow you, where can they find out more about you? Well, you can find me on

bigger pockets, of course, or my podcast, another bigger pockets podcast called On the Market, or I'm on Instagram at the Data Deli. Thank you very much. I am online at David Green 24. That's it. David Green 24, YouTube, David Green Real Estate. And you can check out my website, which is also Davidgreen24.com. And if you have not done so already, please do me a favor and go leave us a review on whatever

service you use to listen to podcasts. That would really, really help us. So thanks everybody for listening here. We hope you enjoyed this, Dave. Thank you for joining me. I'll let you get out of here. This is David Green for Dave, the scaredy cat investor, Meyer, signing off. So true.

Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calico content. And editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.w.com.

The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Bigger Pocket's LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.