Digital Social Hour - Doing $87M/Year, Best and Worst Investments & Paying $0 in Taxes Legally | Justin Freishtat DSH #342

Episode Date: March 9, 2024

Justin Freishtat comes on the podcast to discuss his best and worst investments, what it was like selling his company and how he saves on taxes. APPLY TO BE ON THE PODCAST: https://forms.gle/qXvENTeurx7Xn8Ci9 BUSINESS INQUIRIES/SPONSORS: [e-mail] SPONSORS: My First Million: https://link.chtbl.com/MFM-AD Opus Pro: https://www.opus.pro/?via=DSH Deposyt Payment Processing: https://www.deposyt.com/seankelly LISTEN ON: Apple Podcasts: https://podcasts.apple.com/us/podcast/digital-social-hour/id1676846015 Spotify: https://open.spotify.com/show/5Jn7LXarRlI8Hc0GtTn759 Sean Kelly Instagram: https://www.instagram.com/seanmikekelly/ Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit podcastchoices.com/adchoices

depreciation to cancel out the taxes I would pay on those gains. Wow. So when was the last time you paid money for taxes? I don't. I do on the active side, but as far as the passive side of the equation, which is that's the goal, right? We work hard for our active income. You need to figure out how to move that to the passive side where it operates on its own. Yeah. And that's something I need to do better at because I'm paying more in taxes than Trump, which is insane. Wherever you guys are watching this show, I would truly appreciate it if you follow or subscribe. It helps a lot with

the algorithm. It helps us get bigger and better guests, and it helps us grow the team. Truly means a lot. Thank you guys for supporting, and here's the episode. All right, guys, we are back. I got my buddy Justin Frechtat here today. How's it going, man? It's another day. It's a beautiful day to be in Vegas, my friend. Yeah, you just moved out here, right? Yeah, it's been about eight months. Nice. How are you liking it? I'm never leaving. Yeah? Dude, I love Vegas. Everyone that moves here has a great time, honestly.

Yeah, it's a very unique place. I just feel like, I mean, past all the money stuff, the tax benefits, all that. I mean, where can you face the wilderness and be 15 minutes from the best action in the country? It's just very unique. Speaking of tax benefits, you are a beast with these tax savings. I'd love to get into some of your tax strategies. Yeah. Yeah. It's all in the private placement side of things. Tax advantage. I mean, most people are looking at their investments and maximizing returns, but if you can't keep all of it, you need to adjust that. So it's really just about how can I get big returns and then also invest in a way that I don't pay any taxes. Yeah. So walk me through your strategy. Say you got some money lying around. What is the way to invest it to save money on taxes? There's a lot of ways to do it. My favorite way is real estate.

Right now, real estate's a little scary. So we're looking at alternative ways to do it. It's really any way that you can depreciate something. So when you depreciate real estate, that flows through on your taxes. If you can depreciate an airplane. So that's what we're doing right now is we're looking at, okay, what's an investment we can put together that's similar to real estate, but doesn't have any exposure to the interest rate problem right now. Real estate's a scary asset class. So we're looking at buying airplanes, refurbishing the turbines, flipping those for the profits. So if you can pay your investors 15% and then flow through an 80% depreciation tax deduction, that's a strong proposition.

Yeah, that's a win-win because you're making money and saving on taxes. Yep, exactly. And Grant Cardone did that too, right, with the jet? Yeah. I mean, he bought personally for his personal side because Because the thing with taxes, I'm not a CPA. None of this is tax advice. Not financially. I'm just telling you what I do.

But yeah, so if you're going to buy an airplane, but you're an investor in the fund that buys the airplane, that's a passive deduction for you. So if you're a passive investor, you can only use passive deductions. Active income can only use active deductions. So you've got to kind of look at those two buckets in the way that you're investing and make sure that the tax benefits you want flow through on the right side of that equation. Absolutely. Yeah. We'll dive into the hedge fund stuff. But first of all, you built a company called Heartland Foods, right? 87 million a year

at its peak. Walk me through that. Yeah, that was a family business. First business for me, my dad was starting a food service while I was in college and dropped out to just go all in on sales. And it took a while to build that thing. I learned a lot. I mean, the food industry is very difficult, thin margins, tough to generate business with the overhead that you have and squeeze out profits. Yeah, that took over a decade to get

that to a point where we were able to sell it to private equity. So it's interesting moving from that to the money world where there's just no overhead compared to a retail type business. So learned a ton, but it definitely forged the skills that translated into the next thing. That's awesome. Do you think the food industry as a whole has a lack of transparency? Yeah. If we want to go down that road. Yeah, I mean, I saw that whole end-to-end production cycle, supply chain. What do those labels really mean? USA Organic? Is anybody even monitoring this stuff? And after seeing it, it's just, yeah, it's all a bunch of garbage.

Dude, yeah, because you pay a lot extra for organic, and then you start seeing all these studies where there's not much health benefit on some organic produce, right? Not all of it, but. Well, it's just the term organic in general, right? Like, let's take something like arsenic, which was one of the original feeds for organic chickens. You know, you can kill yourself with arsenic. It's an organic compound. It doesn't mean it's good for you. Wow.

So they're feeding chickens arsenic? I don't think they're doing it anymore. But, you know, the food industry is always figuring out a way to maximize profits and get around regulations. Now they don't even use growth hormones anymore. They'll put that on the package, like no growth hormones, no steroids, right? Yeah, but they're just genetically engineering the breed of the chicken to get a similar result. So now we're not even really eating real food anymore. Interesting. And now there's all this debate with pesticides too, I'm seeing. Pesticides, I mean, that's the Monsanto, you know, what's it called? Glyphosate's the active ingredient.

It's interesting, right? They make a seed that's genetically modified to be resistant to the Roundup. So they can spray that on mass crop fields. They kill everything there except for what they're growing because it's resistant. Shout out to My First Million, hosted on the HubSpot podcast network. It is one of my favorite shows. The hosts Sean and Sam have both sold their companies for over eight figures to Amazon and HubSpot. They have on guests like Mr. Beast, Rob Dyrdek, Alex Ramosi, and much, much more.

They bring on some of the top guys in their space. They'll help you brainstorm business ideas that you can start tomorrow. It's a very tactical podcast. A lot of advice and tips in there that you can utilize right away. a very tactical podcast a lot of advice and tips in there that you can utilize right away i've literally seen almost every episode it's one of my favorite shows they do it remotely which is super impressive in my opinion most podcasts need to be done in person but these two know how to make it happen so check them out wherever you listen to podcasts my first million into it so when you eat food um that has that pesticide on

it does the same thing to our gut microbiomes, right? So you're destroying your gut. I think that's the number one thing that's leading to all the health problems we have is just your guts, your second brain, if not your first brain. So yeah, if your digestive tract is destroyed and you can't absorb nutrients, you end up, you know, obese. And then you see all these people who are trying to eat healthy and they're not getting to a healthy place. And I think a lot of that's just their gut bombing themselves with pesticides. Wow. That's insane. So when you sold that company, where were you at? Cause I know some people come into a ton of money suddenly and they feel kind of lost. Did that happen to you? Not really. I mean, for me, cause it did happen suddenly. I mean, the pandemic came out of nowhere and we were just lucky to be positioned.

We're in the right industry. We were delivering to the home. Nobody wanted to go to the store anymore. So our business just doubled, tripled overnight. We were able to cut marketing spend and still, you know, just produce ridiculous profits. So yeah, it was a pivot. It just, when you sell it and you know, I wasn't planning on doing that. So yeah, I just went on a rampage of masterminds events, just trying to meet people. And that's kind of how I got into the space of how we met, right. Leading up to the pandemic, I'd literally never gone to an event. Wow. Not something I did, which it's funny how you get forced into progress in your life. Yeah. That's kind of what happened. And that's how I found my partner. It was launching the hedge fund

and natural next step. But, you know, I'd watched my dad be an entrepreneur growing up. I mean, ups and downs, lost a lot of money, made a ton of money several times, you know? So from my position of going through that as a child, I was like, I was more focused on what to do with money than how to make it because I wanted to be in a position of, okay, when I get money somewhere in my life, I want to know what to do with it because making money and then turning it into wealth, totally different skill sets. So I kind of did the reverse because you watch so many entrepreneurs, they get incredible at the making money part and then they lose it all. Yeah. Several times over and over because it's a totally different skill set. Absolutely. I mean, it happens to almost every entrepreneur. I haven't met a single one that hasn't lost it all once that's successful.

Yeah. And what's interesting is you can do all the preparation you want like I did. I was like, I'm not going to be the guy that ever loses money. And then you get into the world of investing. It's going to happen. I said the same exact thing. I was like, there's not going to be the guy that ever loses money. And then you get into the world of investing, it's going to happen to all of us. Bro, I said the same exact thing. I was like, there's no way because you see guys like Ryan Steumann lose it all four times. And they're like, no, that wouldn't happen to me. And then it happened to me, man. I was like, wow, that's humbling.

Yep, happened to me too. And it's kind of a badge of honor. If someone tells me that it's never happened to them, you've never been scammed, you've never lost a lot of money, I just feel like that means you're just not in the game. That's a red flag to me, honestly. Yeah. Like they're either too safe, they're lying, or something's weird about that for sure. But getting into the hedge fund space, I mean,

that's a whole different ballgame. The stakes are high because you're managing other people's money. Yep. So how did you get involved and how has that been going since you started? Yeah. So we were, we're young. We started our funds about a year and a half ago, coming up on that. And all the partners that we started this fund with, we all have a lot of investment experience as limited partners in the private placement space. So it was kind of a natural progression. Cody, my partner, was getting out of the marketing business. I was getting out of the food business. And we wanted to be in this world.

So in the beginning, you don't have track records. So raising money from investors is a lot harder, especially from the institutional and family office level. You know, their parameters are usually you got to have three years of track record, over $100 million under management. So you have to start with retail. And that's what we did. So first fund, we went $0 to $20 million in the first year. So out the gate, I thought, you know, we crushed it. Yeah, raising $20 million first year, that's got to be top 1% of funds probably.

Yeah, so we had a great product. There were issues with that fund. We learned a lot. Second one, we partnered with InnovationX, which is a $5 billion private equity. And again, when you're new and young, you need to leverage other people's track records and build those relationships. So when someone invests with us in our private equity, yeah, you're investing with us, but you're really investing in the track record of InnovationX,

which is 18 years and $5 billion. So it's just a mix of internal funds that we launch, smaller private equity like our aerospace fund, where those raises are $4 million or it's like the private equity we just did with InnovationX around a SpaceX that's $50 million. So it just depends on the deal. Why are you getting into aerospace? Because that's sort of a unique fund. I don't know if there's many of those. Is there a lot of money in that space? Yeah. So it's kind of looking at the marketplace right now. What does the marketplace

need? And we want to offer what the marketplace wants. Real estate's been the hottest thing in the world. Everybody wants to invest in real estate until the last 12 months, right? Now you're seeing tons of syndications blow up, a ton of stress in the space, and you're finding out who the good operators are. So for people who want to invest that are going to be limited partners, they don't have the acumen of a GP. They are terrified to invest in real estate right now, right? So we looked at, okay, what are the reasons why they don't want to invest in real estate? Interest rates, asset values going down, a recession coming, which means cash flow, all these headwinds, insurance costs and multifamily, all these things. I have a lot of multifamily in my personal portfolio when it's under stress.

So we said, okay, you can do the same thing. People want real estate for tax benefits and cash flow. You can do the same thing with airplanes. So one of our partners in our first fund owns an aerospace company. They buy retired 757s. They refurbish the turbines. They sell them. Great margins.

And you can depreciate the airplane like real estate. So we're basically packaging a fund right now where it's just like real estate. 15% PREF, which is better than almost every real estate syndication you'll see. What does pref mean? Preferred return. Got it. A year? Yep. Nice. Yeah. That's great returns for a year for most people. Right. So we're saying a one-year hold, but it takes about four to six months to flip a turbine. Okay. So really, we want to over-deliver. So max a year, but really we'll probably be returning that capital in six months at 15%, which- That's 30% a year then.

Exactly. Yeah. There's not many industries you could do that. Right. And attached to that, you're going to get a K-1 with 80% of your initial investment as depreciation for your taxes. Wow. So you're helping them save money on the gains too.

It's like a real estate deal on steroids. Yeah. I don't imagine funds, most funds don't do that, right? Are you interested in coming on the Digital Social Hour podcast as a guest? Well, click the application link below in the description of this video. We are always looking for cool stories, cool entrepreneurs to talk to about business and life. Click the application link below, and here's the episode, guys. I mean, if you go into syndications that are value-add or development,

you're going to have a good amount of CapEx, capital expenditure, and depreciation. So when you bundle that in, the limited partner still owns a percentage of that LLC, so they get that percentage of the tax deduction. Interesting. Yeah. What I've seen across my multifamily investments is anywhere from 40% to 60% get depreciation in year one. So I look at, okay, how much money have I made passively in this part of my portfolio? And then by the end of the year, I want to make a real estate investment that will give me enough depreciation to cancel out the taxes I would pay on those gains. Wow. So when was the last time you paid money for taxes?

I don't. I do on the active side, but as far as the passive side of the equation, which is that's the goal, right? We work hard for our active income. You need to figure out how to move that to the passive side where it operates on its own. Yeah, and that's something I need to do better at because I'm paying more in taxes than Trump, which is insane. Now, other than aerospace, what other industries? There's a lot of emerging stuff with AI and tech. Do you see potential in moving forward? I mean, we want to stick to what we know, like, and trust,

especially with what we were talking about earlier. Once you've been hit hard, you really want to make sure, number one, you hold custody of your funds. It's one thing that we'll never do is release custody of funds. So even if we use outside traders, they're going to have to API in onto our platform, things like that. But right now, yeah, we see there's a lot of volatility out there and there's a lot of traders are doing very well. So our trading fund is what we're really focused on for high returns. The annual target's 30 to 40% on that.

Wow. Is that stocks or crypto? What is that? So it's a mix. It's futures trading. That's what our traders focus on. So options and futures, that's a portion of the portfolio. So we can use rough percentages because it's a managed portfolio. It's always changing. But about 30% of the account would be high-risk options and futures trading. Got it. And then the rest of it is in traditional hedged positions. We use covered calls, which is you write a call option on a stock,

and then you put a put or a collar. There's all different ways to hedge those positions, and that's for more stability and income within the portfolio. Bonds have been absolutely crushed. High-yield corporate debt is priced right now like 2008. It's like, do you think the world's really coming to an end? So we see opportunities all over financial markets, and we'll diversify that portfolio to hedge the trading, which is going to drive most of the gains.

Yeah. How do you feel about the U.S. dollar? You see guys like Kiyosaki saying it's crashing. Are you feared at all that that's a possibility? I'm not. Yeah? Yeah. It's just the world is king dollar. I mean, to take the dollar down, what's going to take its place? Bricks, right? But who knows?

Yeah. going to take its place. Bricks, right? But who knows? Yeah, I just I think and that's why they can just keep printing trillions and trillions. And then your dollar is getting stronger right now. Is it? It is because it's not about the dollar being strong or weak. It's about where is the dollar positioned to the rest of the world's currencies, right? So the whole world economy is weakening. And ours is too. It's, you know, I'm not a currency expert, but it just seems like it'd be very difficult to take down the dollar. In our lifetime, yeah. But historically, I believe almost every currency has failed, which is crazy to think about.

I don't know if there's ever been one as strong as the dollar, though. That's a good point. Yeah. I mean, you still see central banks, the U.S. central bank, buying tons of gold. Right. I'm a fan of gold. I think it's been here for a while. But you're not going to make a killing off it.

So I think there's better ways to invest. Yeah. I mean, I would have a small portion of my portfolio, something like that. I mean, for me, if it doesn't cash flow, to me, it's not really a business. I like to invest in things that are stable, predictable cash flow generators. Yeah. You know, boring, but I know I'm going to have this income every month and it's going to grow. That's, I think, I'm going to have this income every month and it's going to grow. That's, I think the secret sauce to investing. Some people are all about cashflow or all about growth and you really need both. I need my portfolio to grow, but I need income. I want to live a lifestyle today

that I don't have to just grind all day for on the active side. Yeah. My whole goal is to live off my passive. That's the dream of freedom. Yeah. Because once you're there, you're free. I mean, you don't got to worry. You're living off passive gains on your capital. You don't have to work for money anymore. So if there was a pie chart of your portfolio, what would that look like? 50% real estate, for sure. Long-term, slow, appreciating, cash-flowing, multifamily real estate. I think that's the best asset class for stability and some cash flow.

Very difficult, though, to live off of just that. It's not going to. You would need a lot of real estate. A ton. Yeah, a ton. So I think it's a mix of that. I have some oil and gas. It's more speculative, but, you know, might be paying 7% a month when it's good.

Wow. Yeah. But then, for instance, I'm in an oil deal. There was an explosion, and there goes four months of cash flow while they bring in new equipment or whatever they got to do. So, yeah. But if you have a small percentage of your portfolio and things like that, when those cash flow engines get turned off for a while, it doesn't hurt so bad. That's why diversification is just the most important thing. It's important, but I think people get carried away and diversify too much too quick.

I made that mistake. Once I came into some money, I invested like five things in one week, and that was awful. I lost on every single one. So I think take your time, do your research, invest in the right people. Yeah, and when you get home run investments, take some cash off the table and then put it into that long-term real estate stuff. Those multifamilies I'm in are five to ten-year holds. Once that money's in, it's in and

that's it. So I think it's just taking the fast money and then moving it into long money and just kind of just auditing how much of my portfolio is in really fast money, how much of it is in slow, long-term money and just be in everything. Absolutely. Is becoming a billionaire a goal for you? Nah. You don't care? No. I was watching an interview with the founder of NVIDIA. Yeah. And I've seen this a lot. Social media, entrepreneurs, they always want to tell you the good stuff. Nobody wants to tell you how they really feel.

And he says it wasn't worth it. The carnage, the destruction, the stress. Wow. They're killing it right now too, so that's kind of wild to hear that. Yeah. I mean, watch Super Pumped, the storyber with travis kalanick yeah anybody that's gonna do crazy stuff like that people are gonna get hurt along the way and you're a target right so you got to decide what do you want to deal with how much do you really want need all those different things

and different phases of my life it's been you know all in grind killing myself for a level and then once you get to the level it's like okay what i'm gonna do it again yeah you're never gonna be satisfied with the level for sure it's about finding that balance when ty lopez came on he was saying making 150 to 200k profit a month is like a good spot to be in he called it the prince level because once you hit that king level you're just you're a target man like you see these crypto billionaires getting killed for it it's scary yeah that's why if you have to pick money or the fame take the money every day oh all day people always ask me that like fame or money it's easily money i'd rather make money and be low-key than have followers yeah because it's a lot harder to monetize there's people with tons of followers that are broke yeah everybody's wired different

too yeah there's a lot of gurus who want to tell you like anybody can do it yeah i just totally disagree like your wirings you're wiring you know some people elon musk can just go go go you can do a million things at once yeah like i can't do that no that's just a beast dude i was watching him on lex friedman this morning i mean he's different for sure yeah i think the happiness is found in in figuring out where you are on the spectrum of all this stuff and just being content with being who you are and liking what you do on a daily basis that's the biggest thing i think people work for money but you should just do what you like and find a way to make money off it yeah but at the same time i did something i hated for a long time to get to a place i think that's what you have to do at first to stack some money yeah

i did that too and it sucked but uh now we can kind of choose what we want to do, which is cool. So I think it was worth the sacrifice. What were some of the best and worst investments you made? I would say the best investments I've ever made were in myself or proximity to other people that were doing the things I wanted to do. And that's what's interesting about investing is we don't look at, you know, going to a mastermind as an investment. Everyone's looking at what's the ROI of a dollar to a dollar.

But the best investments are the ones that you can't put an ROI on. You don't know that going to this mastermind puts you in a room with somebody who introduces you to your next business partner. What's the value of that? It's infinite. So those are the best investments. Worst investments, I would say, are giving away custody of funds. Our first fund, that was the worst decision we ever made. Yeah, I lost money on that too.

That was a big learning lesson because I went pretty hard, and that was just stupid. But you learn. It will never happen again. Exactly. So it's almost like maybe that was a great investment because it happened early. Because you put all these things in place in funds, right? Like third-party reporting. This is not something anyone talks about, but we designed the funds

to be safe and compliant as possible as you can in this space, which is hedge funds are the wild west. It's the riskiest space there is in investing. But at least if you put third-party reporting in place, the LPs know, know okay their statements come from a third party yeah right so something like ftx could have can never happen with our fund because we have third-party reporting interesting right so that's just something you know for everybody listening to this it's the number one question i would ask if you're ever looking at a fund who does your third-party reporting call them and verify all the information it's a simple step and if they don't do third-party reporting like to me it's all the information. It's a simple step. And if they don't do third-party reporting, like to me, it's the red flag. You're not getting a dollar.

Absolutely. Now as a partner in a fund, walk me through the mindset and strategy, because I know with angel investors, they're looking at like one out of every 10, I believe, or one out of every hundred. Is it similar mindset with a fund? It's a, it's totally depends, right? Cause every fund hedge fund is a structure, right? 506 C is accredited investors. Only 506C is accredited investors only. 506B is unaccredited, but you have to know the person. There's all these SEC rules. So we call it a hedge fund, but you're just picking a private placement structure. And then the investments within that, everybody does different things, right? It could be VCs.

That's not the world we live in. We're going to place a thousand bets, spray and pray, and one of them is going to go to the moon. We're on the opposite end of that. We're doing late-stage private equity. Got it. In our private equity fund, we might only do two to four deals a year. Wow. But not one in the history of InnovationX in 18 years has lost money. Damn. Yeah.

That's insane. Yeah. So they're looking at a very specific buy box. Okay. So it's unicorn companies. They've got to be private, $3 billion or more in revenue, growing, and they have to be able to get the shares at at least a 20% discount to current market value.

So it's kind of like you hear about people wholesaling houses, stuff like that, all the real estate guys. That's what we're doing with private shares. So if you've got an early VC fund that hit their home run in SpaceX already, they'll take a little bit of a haircut to get the liquidity out of the shares. So we act like a liquidity provider to them. We're buying it at a discount knowing that Starlink's going to be a spinoff or go in IPO in the next one to three years. So we don't hit home runs, but the InnovationX return averages 268% on an IPO.

Holy crap. And you guys just got in Starlink. You were telling me at the airport, right? Yeah. So it's yeah. Before that we did Flexport. So we'll see that one should IPO in the next 12 to 24 months. What's Flexport do? Is that aerospace also? No, they're a logistics company. So they, they're like a FedEx. Okay. So they're trying to compete with FedEx. Yeah. So they're, they're doing 5 billion in revenue last We'll see what they do this year. What? I haven't even heard of them. That's crazy. Yeah. Growing at 30%. So this is kind of how you look at it, right? The public market pays four and a half times sales for a logistics company like Flexport. Damn. We bought the shares at one time sales. Wow. So you got a good deal. You're already up 4X. Right. Right out the

gate. So private equity in companies,' valuations have been hit pretty hard. I think it's a good time for that. So if you bought those Flexport shares at $14, like a lot of big firms did, put billions in a year before us, we bought them at $7. Everyone's like, what's a good asset class? Real estate, private equity, stocks. They're all good or bad. It depends where you buy them. Yeah.

Do you think the stock market was kind of inflated for a bit? Do you think the prices were really high? It's a tough thing because it's, I don't think so at where rates were. Okay. Right. Now you got a run up in rates. Cost of capital is a lot higher. Valuations need to come down.

Yeah. That happened in private equity. It's happening in the stock market's flat over the past two years. It's still fairly expensive right here at current interest rates. But if you think rates are coming down next year, second rates come down, now equities have a new valuation. So you want to be ahead of that curve. If there's short-term pain, I'm buying stocks right now. Yeah? Yeah. Here's the thing that scares me about stocks. I saw a PBD talk about this. He said five or six companies own about 80% of the stock market.

Yeah. So I just feel like the odds are kind of stacked against you unless you have some good intel. Here's some context on that. Yeah. Okay, Vanguard, State Street, BlackRock, right? That's what he's talking about, these big companies. They own all the 401ks. Okay.

Right? Well, that's America's money. So they control that. But the 401k holder is a lot of that money. Oh, interesting. Right. I didn't know that. So it's technically the consumer's investing.

They're just in control of the vehicles that funnel into the stock market. Got it. But at the end of the day, the fund is still making the decisions. Yeah, they decide what ETFs you have access to, what funds you can invest in your 401ks. Yeah. Yeah. They have control. Got it. That's, I think, the big point there is there is mass control of the entire financial system by a couple of companies. And is it like that with equity too? Do you run into the same five funds controlling a bunch of companies? No, I think in private equity, I mean, yeah, you do have the big players, SoftBank, Sandryson Horowitz, the Founders Fund. You see them all in the cap tables of these companies. And that's actually an interesting point because they'll have billions of dollars in SpaceX. Or

if we look at previous exits like Palantir, Uber, Lyft, Spotify, Airbnb, InnovationX was a nine figure position on those cap tables. Wow. One of the smallest. What? Yeah, that's, Spotify, Airbnb. InnovationX was a nine-figure position on those cap tables. Wow. One of the smallest. What? Yeah, that's one of the smallest. Holy crap. Yeah, so access to unicorn companies,

it doesn't happen for the retail investor. Yeah, it really doesn't. To get access to us, to go through InnovationX, to get onto a cap table, it's pretty unheard of. Yeah, so you must be in some crazy conversations with some big players. That's awesome. The networking as a fund owner must be phenomenal.

Yeah, that's leveraging relationships. And just being honest about where you are. When you're a young fund, you're going to need relationships with people who've been doing it for 20 years. Yeah. If you had to guess, I don't know if they publicize this, but what percentage of funds do you think actually profit and make it? I have no clue, but I think it's probably low. That's what deters retail from getting into hedge funds, and they just settle for a low-cost ETF in the S&P 500. You read all these books from Money Master of the Game, Tony Robbins, all these books, and they're not wrong.

The average person should just dollar-cost average into America and just run it out. But if you're interested in beating the market and having outsized returns and getting tax benefits and all these things we're talking about, start to learn because there is a cohort of people who are beating the benchmark. High risk, high return, right? It's a bit riskier, but you have the potential to make X amount. So it's if you're comfortable enough to take that bet. Exactly. And you just got to do it with the right people. And you probably will get hurt along the way.

Even ethical people lose money. It happens. Yeah. There's no scenario where you're just making money every year of your life. I mean, that wouldn't even feel good, I think. I think it takes away the sport of it. Yeah. Because you need some loss.

You need some hardships. You need to get scammed because it just makes you feel alive, you know? When you're making money, like during that last crypto bull run, it didn't feel real. It felt too easy and kind of weird. Did you experience that too? I wasn't heavy in crypto. I was very scared of it because of the euphoria.

But I also realized the opportunity in euphoria. So I actually, I was not very educated on crypto at all. Didn't have cold storage wallets, all these things I know now. So I was like, educated on crypto at all didn't have cold storage wallets all these things I know now so I was like you know what I want to have exposure to this this was when Bitcoin was at like 30,000 and it was just climbing

and everyone was talking about it right so when everyone's talking about it I'm like okay this thing's gonna have some legs before it crashes so I took some money in a tax deferred account and I bought the GBTC what's that it's the Bitcoin Trust. Oh, okay. So you can buy it on – it's not an ETF, but it's like an ETF.

You can buy it on Fidelity, Schwab. Got it, got it. In a retirement account. Okay. So the trust owns Bitcoin, and you're investing in the trust that owns it. Interesting. So I could trade it with liquidity, and I doubled my money in it, sold it all. Wow.

When Bitcoin was at 60. Damn, you timed that super well, man. Yeah, well, I made a lot of bad decisions too, but that was a big win. Yeah. I mean, it's tough to not get emotional about the gains because you kind of want to ride it all the way up and then you get wrecked if you hold it too long with crypto. If you double your money in anything in a short period of time, that's just a rule for me. Yeah. It might triple, but it'll be back.

You mentioned retirement account. What do you think about retirement? Is that in the books for you? Just being done totally? Yeah. Totally done from work. Yeah. I thought I wanted that. It's interesting. Grinded that business 100 hours a week for 15 years, get the big paycheck, take a couple months off. It's when I moved here, right? Yeah. Sitting in the hills. I mean, margaritas by the pool get old real quick. Oh, yeah.

I mean, it only lasted a couple months, and then I was just bored. So, no, I don't think I'll ever stop. I think it'll be kind of like what you said. It'll just be finding what I want to do, things that are rewarding. But right now, I'm just in total, total rebuild mode in my brain of, you know, building this fund. We want to go to a hundred million and a billion after that. Yeah. They're doing a lot of studies on retirement and how it deteriorates your health actually, because you're just lose all sense of purpose, brain activity. It's actually really bad for you

to retire. Yeah. But I also, I don't ever want to be in that mode again where it was just working 16 hours a day yeah i like having some time making sure i get to the gym you know meal prepping my food i'm not one of these people that's going to order order meal prep service to save 20 minutes like that's something i need to work on because i'd be ordering postmates daily man and it's not healthy and it's a waste of money usually i'm spending 100 bucks every time yeah the number one reason why i want to have a lot of money is just so I can spend a ton of money on biohacking and health. Yeah. It's so – You're going to go Brian Johnson on us?

Yeah. Yeah. I've been all deep in the peptides now. They just banned them in Cali. You see that? Yeah. That sucks. That probably means it's coming soon.

Yeah. They take away all the good stuff. That's because people abuse it. They don't use it correctly. Yeah. But, dude, it's been fun. Anything you want to close off with or promote? No, just raising money for Kearns Capital and personal websites, toptierhuman.com.

Awesome. Thanks so much for coming on, Justin. Thanks for watching, guys. As always, it's been a great episode, and I'll see you tomorrow.