We Study Billionaires - The Investor’s Podcast Network - TIP742: Invest like a Business Owner w/ David Fagan

Episode Date: August 3, 2025

In this episode, Stig Brodersen speaks with David Fagan, a successful entrepreneur and investor, about the powerful overlap between building businesses and investing in public markets. They explore why business owners often think differently about diversification, dividends, and risk—and how habits, friendships, and clarity of purpose shape long-term success in both business and life. IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 05:35 – Why some business owners often become better investors through firsthand experience with risk, volatility, and capital allocation. 14:57 – The blind spots business owners have when they enter the world of investing. 23:09 – Why you might shift your attitude toward dividends after experiencing firsthand how brutal capitalism is. 28:30 – David shares the daily habits that help him stay grounded, including exercise, reading, and reflection. 35:49 – A different take on “you are the average of the five people you spend the most time with”—and the tradeoffs of seeking higher-caliber peers. 37:51 – Why financial independence raises deeper questions about purpose, relationships, and long-term alignment in life and work. 59:06 – When (and how) to go into business with friends: lessons from real stories about incentives, equity splits, and mutual expectations. Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join Clay and a select group of passionate value investors for a retreat in Big Sky, Montana. Learn more ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Join the exclusive ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TIP Mastermind Community⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members. Listen to our interview with David Fagan about Buffett’s favorite business book. Check out all the books mentioned and discussed in our podcast episodes ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Enjoy ad-free episodes when you subscribe to our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Premium Feed⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. NEW TO THE SHOW? Get smarter about valuing businesses in just a few minutes each week through our newsletter, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Intrinsic Value Newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Check out our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠We Study Billionaires Starter Packs⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Follow our official social media accounts: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠X (Twitter)⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Facebook⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TikTok⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Browse through all our episodes (complete with transcripts) ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Try our tool for picking stock winners and managing our portfolios: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TIP Finance Tool⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Enjoy exclusive perks from our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠favorite Apps and Services⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn how to better start, manage, and grow your business with the ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠best business podcasts⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. SPONSORS Support our free podcast by supporting our sponsors: SimpleMining Hardblock AnchorWatch Human Rights Foundation Cape Unchained Vanta Shopify Onramp Abundant Mines HELP US OUT! Help us reach new listeners by leaving us a ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠rating and review⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Spotify⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! ⁠⁠⁠⁠⁠⁠⁠⁠⁠ Support our show by becoming a premium member! ⁠⁠⁠⁠https://theinvestorspodcastnetwork.supportingcast.fm⁠ Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. In today's episode, I'm having a conversation with our recurring guest David Fagan, a seasoned entrepreneur, thoughtful investor, and someone I'm fortunate to call a close friend. In this discussion, we examine the intersection between being a business owner and public market investing. We explore how operating a company influences one views on portfolio concentration, risk dividends, and management quality, and how those insights can both be an asset and a liability in public equities. Then we talk about what happens after you reach financial independence and how finding your

why becomes the next big challenge. Since 2014 and through more than 180 million downloads, we've studied the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. Now for your host, Stake Broderson. You're listening to The Investors podcast. I'm your host, Stig Broughterson, and I am joined by David Fagan today. And some of you might know David from episode 639, where he covered Buffett's favorite investment

book together with Clay, others as a thought leader of business. And to me, he's all of that, but first and foremost, he's just my friend, David. So, David, how are you today? I'm doing great. Thank you for having me on today, Stig. You bet. And let's just dive right into the first segment here, because David, here on the show, as you know, we discuss and interact with a lot of investors. And in this episode, we want to turn the

tables and focus on investing, but from the perspective of being a businessman or businesswoman. And, you know, I can't help myself, but say the Buffett family says, I'm a better businessman because I'm an investor and I'm a better investor because I'm a businessman. And so that is our first segment here. And, you know, I like to think that we use the same part of the brain whenever when it comes to investing and when it comes to business, which generally is to our advances as businessmen, but probably sometimes not. We're going to talk a bit more about that. And we have a lot of these conversations here in our mastermind community.

And I kind of felt we should open it up here to the entire TAP community because one thing I very much appreciate about a community is that there's a lot of business owners in the community and I really hope this doesn't come across as if you don't own your own business, it's you're not a good investor or anything like that. That's the very opposite. But I think I want to mention is that there's a lot of investing partners out there and most often haven't run their own business. And I would argue that once you have the opportunity to do that, you might see investing

a little bit differently. And then at the same time, because I know there are a lot of business people out there who run their own business in the audience, you probably also need to unlearn a thing or two if you run your own business and you're like, oh my God, I'm good at this. I need to, I'll be good at investing because Buffett says that, you know, investing is best for the most business like. And then you realize that perhaps your skill set isn't that great because you have other disadvantages. So, anyways, a few observations I wanted to make here before I throw it to you. I think that I've noticed that a lot of people look at business owners and they say, oh, that sounds risky. And then being

on the other side of the table, I would say that knowing a lot of entrepreneurs, they do everything they can to minimize risk. And I think a lot of people would argue they probably take less risk by owning their own business. Also, because a lot of business, especially in the beginning before, you know, the business has been spitting off cash, you know, you can sort of like argue that you have 90 plus 99% of your net worth in one asset. So I think that there's probably an element of a lot of business owners, they are quite comfortable about having a concentrated portfolio because, you know, if they have 10 stocks, they're like, all my God, that's amazing. I used to have one asset. Now I have 10. I'm so diversified.

Also add to that, I would say that as business owners, we also don't get a quote on our business, and we used to see the volatility of business, probably from the inside a little bit differently. And then if I turn the table and then I look at people that, where it used to be in my case and so many other business owners, they often start as employees, collecting a salary, and many tend to invest in index funds. And I, I don't want to make it as simplistic as saying, oh, if you're a businessman, a business owner, you have a more concentrated portfolio, and if you collect the salaries or you do the Inns Fund. I know there's a lot of things in between, so please don't get me wrong. But I think,

one observation is this famous business buying study that talks about how returns primarily come from 4% of stocks, which is just incredible, right? So many people would interpret that and then would say, that is so difficult to find those 4%. So why not just buy an index? And then perhaps business owners who've been successful, they also know how difficult it is to start up their own business and that have gone well. So they're thinking, well, then my job is to go out and find those 4%. You know, why wouldn't I do that? Apparently, that's where all their returns are.

And so I think I want to throw over to you here, David. What advantages and disadvantages do you think that we as small business owners perhaps have investing in public markets? Yeah. Buffett's quote on being a better investor and businessman because he does both to me just frames an intense career of focus and continuous learning, which of course we all know. I mean, whether you run your own operative business or you're investing in the markets, it doesn't matter which side you come from first, whether it's entrepreneurship or investing.

Understanding costs, margins, competitive advantage, these are universal, right? So if you can apply your knowledge across both silos, I can give you a huge advantage, right? And so I think I'll start by answering your question about the advantages and disadvantages from the perspective of someone who started out as an entrepreneur first and then became an investor because naturally that's been my experience stake. So, you know, when you start out as an entrepreneur, you learn some really hard lessons. I mean, and those lessons can kind of battle test you a little bit for your investing career later.

And both business and investing, your temperament really matters. And so if you can learn patience, that's going to really help you as an investor. And, you know, going through some challenging times in business can help you prepare for maybe the fortitude you need to kind of withstand significant drawdown in the market or an individual holding that you had that kind of went sideways a little bit. So, you know, I guess when I think back to some of my more stressful times in my business career, you know, whether I was dealing with tax auditor or being dead wrong on a segment that I was allocating capital to or maybe even having to let go of employees, I mean,

that's never a good day. Those experiences for me were far more challenging than seeing what ends up being a temporary decline of maybe 15 or 20% in my portfolio. So, you know, we learn so much from our mistakes. So how wonderful, really, is it to be able to learn those lessons as an entrepreneur to kind of develop the grit you need to be an investor, you know, because I mean, at some point, you're going to get tested. And to be able to have some of that, those lessons to carry you through and those moments are wonderful, you know, and a couple thoughts too, partly to your point on concentration, being comfortable with fewer holdings because you know your business so well,

being a business owner teaches you the importance of longevity. I mean, I think most business owners would understand this. And I mean, you'd rarely see a 35-year-old full of energy and scaling their business, but also on the same time thinking every quarter about selling their equity. I mean, that just doesn't happen, right? And so, you know, they're focused on building something long lasting and that mindset, you know, the mindset of kind of inaction, that can become an advantage too, you know, learning from, you know, your silo as an entrepreneur and rolling into investments. So, you know, just like, you know, if you own your own business, it might have taken you years to scale it. And, you know, the hidden ingredient really can be endurance sometimes.

And so if we can give that same patience and appreciation to our public. equity investments. I mean, you're giving yourself a lot of breathing room there. So yeah, and I guess, too, if I actually flip it backwards and I think, okay, well, what can we learn on the investor silo that we can kind of move into the entrepreneurial silo? I mean, you know, one of the biggest advantages we have as investors today is access to so much information. And, you know, we can study on companies how they operate and what makes them successful and what pitfalls to avoid. And, you know, we often talk about the power of cloning so much. And of course, William wrote this about Monash's ability to clone so intelligently in his book.

I mean, imagine if you're running a trucking and transportation company. And, you know, how great is it to be able to study companies like Old Dominion or TFI International? I mean, you can read their investor presentations, study their financials. So you can pick up clues on, you know, what they're doing and how you can apply that to your own business. And, you know, Stig, I run a small accounting firm here in Canada. And while I'm not an investor in Kellyan Partners, that's a small public company out of Australia that I think they're actually moving into the U.S. But they're in the accounting world. I mean, I do study them.

I look at their deal flow, how they acquire firms, how they manage margins. and I mean, it gives me great insights that I can reflect on and kind of input it back into what we're trying to do here. So it's, you know, being able to learn from both sides is just, it's just wonderful, right? And so, you know, Stegg, I'm curious, you know, what have you learned from studying companies maybe like Spotify that's helped you kind of grow in your podcast business? I mean, has that been something you've been able to kind of correlate a little bit? Yeah, definitely. And if I was really, really, really smart. I would learn from other people's mistakes and what other people learned,

and I wouldn't have to grow wise out of pain and figure it out myself. I remember it might have been 10 years ago, 8 years ago, something like that. And I listened to this presentation that Reid Hoffman did, the co-founder of LinkedIn. And I think that even that recording was like 10 years old at the time. And you talked about the important of distribution. It wasn't about having a great idea or even to some extent execute on that idea. It was like if you have distribution, that's really where the value is. And I remember it really was something that stuck with me ever since. But then to your question about Spotify, it's almost like you had to experience it yourself.

Or perhaps if you're not as slow learner as I am, you have to experience the power of having the platform. And, you know, there's a lot of things that, you know, this podcast and this podcast network is not. But you know, it's like, but you have so and so many people coming to the platform. And once you have the platform, you can do other things. And you see that for Spotify, for example. So, you know, they started in music and then they got hundreds of millions of people on the platform. And then they said, okay, you know, let's do podcasting.

And then they completely changed the podcasting sector, which is also one of the reasons why I invested in them in the first place because of what was going on. And I could see why there would be the industry standard. And then they said, well, we have all of these people. Let's set up a new vertical, okay? Let's do audiobooks. Sort of like sense. You have music.

You have podcasts, your audiobooks. And now, you know, they're doing all these tasks with education. And they learned that through, actually, from some of the creators that they have because creators are so used to put, you know, different things behind the paywall. You can just think of all the things that a platform like Spotify can do, even though I came for the podcast part. But then you see what's going on. And so I think you can learn a lot from that. And I remember whenever we had Bill Miller on the show, like he's been on a show multiple times, but I think it might be the first time we had him on. When he talked about, there were like two or three key variables. You need to figure out

with the business and then the rest is more or less noise. I'm completely paraphrasing what he's saying here, but that is how I remember it. And to me, like, I have been invested in Spotify multiple times. And then you're like, huh, okay, I feel I sort of understand the podcast business. I feel I also understand Spotify. And then it's just like, it stuck with me, like that Bill Miller quote that I completely butchered. I talked in the show about like figuring out what that is. And I think to some extent, I'm not saying that, you know, I'm the only person in the world who know the key metrics of Spotify. I think it's out there in public space. But I think it's very interesting once you look at this from a perspective of a business owner, it feels a little bit different.

Whereas whenever I started, I had more like the analyst cab on where I was like, okay, I'm going to track revenue and I'm going to check, you know, attract profits. And I guess that's what it's all about. And you're like, well, there are so many of those other metrics that's just not in the in gap accounting. And so, I mean, it's so nice to be able to pick up cues from other companies to be able to imply into your own business. And yeah, it's it's a lot less expensive to learn from other people's mistakes to pick up on something you had mentioned earlier, Stig, about actually unlearning from both worlds. I think that's something that we should probably talk about too. because, you know, one of the hardest things to unlearn kind of in what I've thought about it from merging both worlds of entrepreneurship and public company investing is action. And, you know, entrepreneurship in many ways is driven by action. You know, it's like the hustle and execution. And sometimes you have to pivot really quickly to solve problems. And, you know, like you're launching new projects. And sometimes you're kind of launching these projects on a whim as well, right? And under pressure. And, you know, And, you know, that's almost the opposite wiring that you want for successful long-term investing.

You know, as Munger said it best, you know, the big money is not in buying and selling, but in the waiting, right? And so when you move into investing, you're making a different kind of decision. You're placing your capital with businesses and you're outsourcing the execution of their CEOs and their management teams, right? And so now your job as an investor is to be patient and resist the urge to do something. And, you know, for someone who's hustled as hard as an entrepreneur has done or has to do, that's tough sometimes. And it actually goes against your instincts. That's one thing.

And then the other thing I would say you have to kind of unlearn or maybe to manage when you're kind of merging both worlds is the risk mindset. And, you know, entrepreneurs are often taking risk. and you should, right? Like sometimes you've got to spend money on projects that may not work out. That's actually a great thing sometimes. You got to experiment and you've got to throw mud against the wall and see what happens. But that risk-taking instinct doesn't always translate well into public market investing. And so if you carry that same appetite for risks into your investing world, it could potentially

backfire. I mean, there's no better example than that than using really too much margin or leverage in public company investing, right? So you've got to be mindful to adapt there. I would say the worlds of kind of business ownership and investing complement each other, but you've just got to be really mindful to adapt your instincts. So, David, one thing I would like to add is that, you know, from speaking with successful business people daily, I think that whether you come from respect to being a business owner, just you are in business, you really learn and had this deep research.

respect for how fragile all businesses are. And to your point about, you know, taking risk, and it's actually very risky, not to say risk, even though it probably sounds counterintuitive. And so these models that we have, and I think it's perfectly fine if you extrapolate your revenue and your earnings per shares or whatnot, like, you sort of like need to have an idea of what's going to happen. But of course, the world isn't that kind. And I'm sure the people who prepare those models also know that. You know, the world is just very, very choppy. It doesn't It doesn't go up in a straight line. Carnegie had this wonderful principle of put all your eggs in one basket, then watch the

basket carefully. And I don't want this to sound like an endorsement of just on one stock. That's not at all what I'm saying. But I do think that there is something to be said about watching your basket very carefully. And so I think as business owners, you probably have this or says it need. I probably shouldn't say we as a business owners because I kind of feel like I would be dragging you down, David, to my level. So I can probably just speak to myself.

But I think some business owners, definitely in my case, I think that having that being used to having control, you know, and then go into public markets where you don't have any control, at least with the amount of money that I'm moving around. It's not like Buffett is calling me, asking me for directions for Delaware, anything like that. I'm sure if you have a lot of money and you invest in smaller companies, it might be different, but you don't have any control in public markets. And I find that to be liberating and frustrating at the same time. So it's liberating because you know that having control is time consuming and the buck stops with you.

And that can sometimes be annoying. But then at the same time, the wonderful thing about the buck stops you is that you have controlled. And then all of a sudden you're watching from the sideline and you see the CEO do something ridiculous. You're like, yeah, you can sell. But perhaps the market also thinks it's ridiculous. And it just tanked 20%. And you're like, should I take that loss or is it temporary? or like, it's one of those things where you're just like, yeah, that's, you know, hate the game,

not the player type of thing. So I think there's an element of that. And the other thing I would also say is that I feel sometimes the people who have a, that's called a conventional corporate job, sometimes I feel they have different advantages. Because from running my own business, I think I sometimes have two high standards whenever it comes to other, to management, look in, you know, in various list of companies of how they should behave. And the irony is that whenever I meet, you know, different community members or whatnot, I always, I can't help myself but like Chris them about the business they're in. So regardless

what kind of line of business they're in, I'm just curious about business models and, you know, and then many of them are telling me, oh, no, you shouldn't invest in this business. Like, men's men is terrible. This is terrible. And so I sometimes feel like people with a corporate job have a higher tolerance for poor management because they've seen companies thrive even with poor management. So sometimes it's just easier for them to pull the trigger, whereas I sometimes feel like I'm just way too lazy whenever it comes to that because I said very, very high standards whenever it comes to management integrity and then, you know, sometimes you still get disappointed.

I want to throw to you again here, David. Yeah, I mean, when you think about your own small business, you have something really powerful. It's called perfect information, right? I mean, you know everything. You know your company's strengths, weaknesses, and the imperfections, right? And, you know, the rhythms that it takes to kind of run the day to day. But when, you know, you invest in public companies, you're outsourcing so much and you don't have perfect information. Honestly, Stig, that maybe that's a good thing. If you knew every flaw of a business you wanted to invest in, you could probably easily talk yourself out of investing in it. I mean, I live in a world of small businesses where I think

it's safe to say that no company worth $5 to $10 million, whatever, say they've got a competitive advantage as defined by a moat. You know, even looking at some of the largest companies in the world, I still find myself falling back and asking the question, like, are they executing? Right. And, you know, I think that's something you really appreciate as a business owner, studying public companies is maybe the unsexy idea that just showing up every day and performing and simply executing on your business plan is good, right? And it's definitely something that you can see when you do run your own business and you can kind of identify that with other companies. And you do know all the information with respect to your own company, right? And so I think

those are two kind of important things to consider. And maybe the last, The last thing that I want to mention about merging kind of both worlds of investing in business is the idea that I think it's important for business owners to think about, especially when it comes to investing in the public markets, is how conservative you might want to be with your basket of investments. And this might be slightly off topic a little bit, but oftentimes when you think about it, when you're running and scaling a private business, you're already taking on pretty meaningful risks on the private equity side.

I mean, you're investing capital, you're hiring people, you're assessing new markets, and you know, oftentimes you're carrying debt when you're doing this, especially if you're buying other companies out to scale. And, you know, given that reality, you might want to factor in how aggressively you invest your free cash flows in the public market when you're contemplating the risk that you're taking on your private equity side. So, you know, if you're operating a business and you're making a 20 to 25 percent, what I'd call a working, working investment type return, you don't really need to go out in the public market

and hit home runs to do really well. Honestly, for a lot of business owners who don't want to do the deep company by company work and the deep dive to kind of get into the nitty gritty, you know, you could just have a simple, steady approach. I mean, if you can defer your taxes on active business income, invest those free cash flows into, say, a low-cost index fund with low, turnover and minimal tax distributions. I mean, that can be an incredibly powerful path and wealth creation just by itself, right? And, you know, as Munger said, you know, the first rule of compounding is don't interrupt it unnecessarily. So if you can just let that compounding engine run both inside your business and inside your public investments, I mean, you don't have to make it complicated. You

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sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify. com slash WSB. All right. Back to the show. And David, I think another angle I wanted to include here is dividends. I want to say that it's a topic that that's divisive.

I don't think it is. I think more or less everyone disagrees with me, so it's probably not divisive at all. But I've increasingly starting to like companies paying dividends. And I couldn't understand it at all before. And generally, whenever I see different write-ups, I would read a sub-stack or something to that. And generally, there is a selection bias, and I hope this comes across the right way. A lot of people who do substacks, they're open commerce, and they might not have a huge net worth, but very smart, and they want to find compounders, and they love doing stock research.

And all of that is wonderful. There's a lot of great research out there. And then they don't really understand why a company would pay out dividends and feel like it's hurting shareholders. And very often they're right. So I should also say that. But the premise here for this segment is this premise of, you know, investing is best done when it's most business-like, businessman, investors, and vice versa. And so I think I see dividends a little bit differently after have run my own business for

some time. And I wanted to provide a few different examples. I've tried accumulating cash in the business of TIP, and I've realized whenever I do that, I do stupid things. Because I don't know, it might be a stick thing. and hopefully other managers are doing a better job of that. But sometimes whenever you have too much cash laying around, you do stupid stuff. And so, and like you would start bad projects, for example.

And so whenever you take out cash from a bank account, you impose a bit more fiscal discipline on yourself. I mean, I still make plenty of bad decisions, even whenever we have less cash, but you think about it a little bit differently. And so I think that's part of it. And then there's another part of it where whenever you see enough projects fail and you see how brutal capitalism is, you kind of like to get paid while you wait and while you own an asset. And so if you have, let's say that you have a founder and it might be a listed company. Now the founder might own, I don't know, let's just say 20% of the company. That stay is worth $100 million.

And let's not talk about different share classes, but if you have the founder and perhaps also CEO and chairman, which you can even if you only have a 20% depending on the buy loss and so on and so forth, from his perspective, well, perhaps it's nice to have a two or three percent dividend yield. And you might be thinking there as a budding your stock investor, like, why doesn't he buy back shares? It's like, yeah, you know, no one's crazy. Perhaps he doesn't optimize for your shareholder yield. But, you know, if all of your money is in $100 million listed equities.

And also, remember, you as a buying stock analyst, you also hate whenever they sell stock. So you don't want him to sell stock. And then he's like, you also don't want him to take a salary because, you know, that's not the way to do it. We'll learn for Warren Buffett, not more than $100,000. And you also don't want him to give himself stock options. You don't want any of that. Okay, great.

But then he has a, let's call it 2% yield. It's $2 million pre-taxed. Of course, $2 million is a lot of money pre-tax, but also keep in mind that he has 100% of his net worth in the stock. So if he wants to diversify a little, he probably also wants to enjoy life a little. He might have four kids. So it's like, it sort of makes sense.

From that standpoint, why you might do that. Plus, you know, the idea of reinvesting in new projects always makes sense whenever you're sitting in an Excel sheet. But whenever you run your business, you learn that you don't always have projects for that extra cash. And sometimes you meet or you might have projects, but you don't have the right people on the team to take on those projects. Or like it doesn't really fit for the culture you want to have. And there's so, I don't know, I guess this is just my way of saying that, yes, there's a lot of corrupt management out there. And yes, a lot of them are probably self-serving.

But whenever you are sort of like on the other side of it, you just sometimes look at, those decisions of capital allocation a little bit differently from the other side of being a stock investor. Yeah, no, having a little bit of margin of safety on the manager's capital allocation strategy, I mean, that can definitely bold well over time. So, yeah, I mean, oftentimes when I'm thinking about dividends as a Canadian who runs a small business corporation, I'm always getting into the weeds with taxes on it and stuff. I mean, that's a conversation for another day. There's so many listeners in different jurisdictions and stuff, but tax kind of factors into a big, a big part of that conversation as well.

Yeah, that's a good point, David. And that is very often, you know, why we as investors don't want to save the dividends. So, again, it really depends on how you're being taxed. David, I wanted to jump to the second segment here about successful habits. And I know that you run a very successful business. And I know that you mentioned on one of the calls we have in a. in a mastermind community that you like to exercise and you like to read the first hour of do I say every day? I wish I had that discipline. Could you talk more about your habits?

It's very inspiring. Yeah, sure. So within our TIP mastermind community, I've run some accountability calls quarterly over the last year and a half. So a few of these things I've shared with everyone. I mean, we just finished talking about how your experience. as a business owner can shape you as an investor and vice versa. And as a business owner, executive, you know how much time and energy and intention it takes to move a company forward. I mean, you're systematizing change and you're adopting best practices. And, you know, that takes a lot of discipline to do.

And honestly, that's how I approach my own personal habits. You know, I'm constantly trying to adopt best practices and, you know, ones that work for me and only for me. I mean, you recently did an episode Stig about advice you'd give your 20-year-old self. And it made me really reflect because when I was in my 20s, I probably completely took for granted some of the good habits that I already had. My wife and I, we've always put a high priority on health and wellness, and that's just kind of what we did. And, you know, we weren't, we were always being active and eating healthy and stuff, right? And so fast forward. into my mid-40s and I've come to really appreciate that those habits and maybe the personal

algorithms that I've developed, you know, they've allowed me to produce very consistent in my life, right? And so, you know, I do consider myself really lucky that my first love in life was actually play. You know, I grew up before the technology boom. And, you know, we were in a subdivision with lots of kids and we were always outdoors after school, playing. sports and running around and stuff. And so naturally, that flowed into a lifelong love of sports and activity for me. And, you know, I'm not an expert in many things. And it's funny how the older you get, you kind of realize that.

But I do know what I need for the algorithms that work for me. And, you know, I believe that you can get your personal flywheel spinning in either direction, forward or backwards. And I just put a really high priority on keeping my flywheel spinning in the right direction, right? And, you know, no, I'm not perfect and I don't hold myself to some ideal that I'm 100% compliant on my habits and stuff. But if you can get some things consistently right, you know, maybe with an 80% confidence, that's what I would say is a worthy habit, right? And one of the first things that I ever shared with Clay when I joined the TIP Mastermind community was that I lived a balanced life of work, family, exercise, and spirit.

And I know without bias that I'm directionally correct with this. And, you know, we often talk about financial compounding, but the same is true for our habits. They compound both the good ones and the bad ones, right? And, you know, so, of course, there's some off days. There's travel and family commitments and stuff happens. But, you know, just to kind of drill down to my specific habits, and I know you've shared yours internally with our mastermind community, but I'll just give you a quick rundown of some of my highest confidence habits just to give you a little bit of how I structure

my day. You know, I do wake up around 6 o'clock every morning. I use that first hour of the day to journal and read and write. You know, we're fortunate to have a beautiful. beautiful home gym in our house. So I just walked downstairs at 7 a.m. and I'm working out for 30 to 40 minutes. And I drink a lot of water during that time. Eat a solid breakfast. And I get to my desk around 8.15. And, you know, on a side note, Mr. Warren Buffett and I do have one thing in common. And probably the only thing we'll ever have in common is that we both have a five-minute drive

to the office. And so for me, that's worth its weight in gold. You know, I don't take for granted it the infrastructure that I enjoy, right? And that's also part of your flywheel, right? It's how you can structure things properly. And, you know, naturally getting up at 6 in the morning, I'm to bed around 10.30 or so most nights. And, you know, honestly, I think sleeping well can be a superpower in life. And, you know, that is a habit in itself. And I try to optimize for it. And, you know, I'm probably boring the listeners right now because this is like kind of basic, simple stuff, but that's kind of the point of it, really. I mean, I optimize for sleeping well.

I exercise every day. I eat healthy enough so that when I don't eat healthy, I don't even think about it. And, you know, I try to do something for my spirit every day. And that's the one that's been probably the toughest for me to build an algorithm around. You know, it's taken me a long time to kind of get the same. that one right. But, you know, now for a bunch of years now, I've been meditating around 2.30 in the afternoon for about 20 minutes. And when I get that right, I come out of that meditation and I feel like I've started a brand new day. And for me, it's like warping time. It

kind of resets me and it reshapes the rest of my afternoon. And, you know, by no means am I going to claim to be an expert in meditation. It's still very, very, very much. much a work in progress for me. But when I do settle in and get it right, it's wonderful, right? And here into my mid-40s, you know, the big thing I've learned that it's never just one or two habits that make a difference. It's really the aggregation of all your habits. And no, you don't want to become a robot, but you do want to be directionally correct with your consistency. And just like running a business, you know, consistency can create winners. And I think it's important, right? And so for me, I'm always just trying to

strive for balance in that regard. That is absolutely amazing, David. I wish I had that discipline. You know, one of the, one of the community members and a good friend of my, Thomas, he once said to me, if you don't waste hours, you're going to waste years. And I found that to be extremely helpful, partly because I sometimes needing a excuse for being efficient. So it's sort of like a way of say, oh my God, this is probably because I'm not going to waste years. But I do think that Thomas is right that you want to avoid being in a negative spiral where you're so busy that you don't have time to question if you spent your time the right way. And so one way I would go about this is I would go for a walk.

I think some people generously call a walking meditation. I don't necessarily know if I'm on that level. But there is something to be said about going home or walking home from work. And I should say that I don't have a five-minute drive like you, David. I have a five-second walk from my bedroom to my office. So after I'm done with the day, I actually go for a walk sort of like to walk home from work. Then I feel I can be a better version of myself and a better husband and I can be present because otherwise there's just your business going on in my head.

So I go for a walk just short of an hour after work, going back home from work, and reflecting on what did I achieve that day, what should I achieve tomorrow, start planning the day for tomorrow, and type that up. And so it's a little counterintuitive, but you need to have time not to be efficient

to give yourself an overview to be efficient. And, you know, a successful habit that I would like to explore a bit here together with you, David, this idea of surrounding yourself with people who are smarter than you because you become the average of the five people you surround yourself with. And of course, it's a little bit tricky, you know, whenever you say like what is smart, could you define smart? And all of a sudden, I kind of feel like I've been painting myself into a corner.

But, you know, we have Ralph from our community because we talked about this together. And he said that, I think he called it like a high caliber person or low caliber person. And so perhaps that's a bit more inclusive than saying just smart. But I think that perhaps some of the listeners or perhaps all the listeners can resonate with that you meet a person. And then for whatever reason, you're like, oh, that's a high caliber person or that's a low frequency person because of what they're saying and what they do. And so if I, because I have this excessive need to be very quantitative, so my apologies,

if we say that we then assign a value from one to 10, like what's the caliber of that person. So if you're, if you're an eight, you want to surround yourself with people who are nine. If you're nine, you want to find people who are 10. But then I don't even know if we can agree on the numbers. But then we also run into this issue that we run out of numbers. What do you do whenever you're 10 or whatever? I never had that problem. But how do you think about this idea, David, of surrounding yourself with the higher caliber people than yourselves? And how does the math add up? That's quite a thought experiment. Stig. I'm going to digress just for a minute.

You mentioned of this made me think of a Black Mirror episode that I watched on Netflix. Everyone's personality was arrayed in a public rating system and their mark was listed above their head and people were constantly trying to move up and improve their scores and their social rankings. And needless to say, it didn't really work out well for the main character in that episode. But to your point, though, like this past April during one of these mastermind accountability calls that I was talking about earlier, we had a couple of. conversation about this very idea that you're the product of the five people that you spend the

most time with. And we also talked about actively seeking mentorship, which sounds simple on paper, but it can be hard to put in practice sometimes. You know, it's not easy, it's not always easy to seek out mentors who can help you, right? And, you know, in fact, you know, some of the traits that actually make you a successful entrepreneur, that determination and the grit and maybe even call it stubbornness sometimes, that can actually block you from seeking out mentorships sometimes. And a lot of founders, whether they're running a small business or building something much larger, sometimes they start out with that deep drive for independence. And the I'll figure out myself mindset that kind of fuels their early success.

but I feel like that can also create some blind spots. So, you know, looking back and thinking back to that call that we had, I think many of us don't sync out mentorship early enough because, you know, maybe we're too busy just trying to prove that we can kind of do it on our own, you know, but it really, everyone's experience was obviously different. That's what kind of stood out on the call that there was about 10 of us or so that were on that call. And, you know, some felt it was easier in larger organizations where mentorship was kind of baked into the structure to kind of have a formalized relationship there.

And, you know, others on the call talked about never having a formal mentor, mentee relationship at all. And actually, one of the members even brought up AI as a mentor. And, you know, that, you know, asking life questions, getting perspectives and reflecting through dialogue with like chat GPT. And, you know, I know that's going to be, that's probably a topic for another day, but it's fascinating. And there's some emerging research on, on this. I read a book recently called Co-intelligence by Ethan Mullick. And in it, he talks about AI as a coach to kind of help you think about and reflect and grow. And I thought it was pretty fascinating. And, And, you know, I guess maybe we won't go down that rabbit hole today, but it is interesting,

this gentleman on the call that was talking about how he used that. So, you know, and I partly to your point, too, on kind of the grading system and trying to figure stuff out, you know, I think the other thing to consider about mentorship is in surrounding yourself with people that are smarter than you. Like, that doesn't actually come naturally to everyone right away. you know, I think you have to kind of learn it because you do have to fight imposter syndrome a little bit. And you kind of have to get comfortable being uncomfortable when you're putting yourself in new situations. But, you know, when you hear someone like Christopher Begg talk with William in their latest episode together about how his network of friends has become a superpower in his life, I mean, it definitely inspires you to kind of seek out this level of coordination.

Yeah, I think that you bring up some great points, a very interesting point about AI. It's like, I feel a discussion about how to use chat dbti or whatnot as a mentor might already be outdated whenever we're going to publish this. It's just like, yeah, I don't know how I use chat dbt for everything these days. And it seems like it's getting better every week, not every month now, like every week. It's absolutely amazing. You know, in terms of I once had a like formal mentorship whenever I was a graduate. It was extremely helpful for me and it played a big role in like changing jobs.

And so for me it was very valuable. And then, you know, I like so many others probably listening to the show, I had, you know, Buffett and Mongores. Then they don't know access. But, you know, it's like informal mentors because, you know, you read everything that they have said and done. and you're sort of like having an idea of what they would do in the situation. So to me, that's been immensely helpful too. I want to talk a bit here about friendships and probably not on the note of grading people. I don't necessarily, I kind of feel like my example came across a bit more transactional,

probably that I wanted it. But my point is about friendship is that I think that I've become a bit more pragmatic because I used to think that it was better to have friends from the time whenever you grew up because there were more pure friendships. And I'll be the first to say, if you do have that, I think it's wonderful. So please don't get me wrong as I'm going to bath to say something different here, perhaps, or it's going to sound different. I also think it really depends on what kind of friendships and relationship you want to have.

And so let me give you a mental model here. So say that you are a footballer and you want to play at the best team in the world. Say you want to play for Liverpool FC. I refuse to say PSG for anyone listening to the show. And 99% people have no clue why I would prefer PSD and what we're talking about. And it's not the best team in the world. Anyways, what are the odds that Liverpool is going to win the next Champions League only with local players? It just won't happen, at least not the way football is today.

And so you need to look outside of your local pond to compete on the board class level. And I'm not saying that we all compete on Champions League championship kind of level, but I think it's an interesting mental model where there is something to be said about friendships and loyalty. And I think loyalty is great, but you have to be loyal to another person for the right reason and because it has to be mutual beneficial. And most relationships in life are there for reason or season and not for a lifetime. And I would just encourage people to think that's perfectly fine. And whenever I say mutual beneficial, I'm not talking about it from a money, changing hands

kind of way. But from whenever you meet up with your friends, you should both leave with this positive energy and looking forward to seeing your friend again and not feel like, oh, I just checked off a box of, oh, I'm so grounded and I hang out with my, you know, the kids from the block whenever I grew up. And so now, you know, I reset the counter to zero and then I, in another month from now, I'm going to reset the counter again. Even if you haven't enjoyed it, and they haven't enjoyed it because you feel that there's some kind of moral obligation to do so. Believe me, I made the mistake myself. So that's why I'm saying this. And so it sounds

It's beautiful to have the same friends throughout your lifetime. But let me give you another perspective. Life is like a long train ride. You stop from time to time to pick up different passengers who want to be part of your journey. And then sometimes you also stop and some of those people jump off. And it's not because of a fallout. Could be, but most, most often it's not because of a fallout. It's just you're no longer on the same journey.

Perhaps you chose a different journey. Perhaps your friend wanted to be on another train, and that's perfectly fine. Because the best things in life has come from compounding. And if you're lucky enough to find someone who wants to be part of your journey through life, that's amazing. And if not, that's also kind of fine. So anyways, to me, that has been very helpful to think about friendships that way. Yeah.

Friends for a reason, a season, and a lifetime. That's definitely a mental model that people can grab on to. As you know, Stig, my wife and I have been together for a very long time, almost 30 years. And of course, we're not the same people at 46 as we are at 16. But the one thing we've managed to get right and it's kind of helped us whether all the natural up and downs in any relationship is that we've grown together roughly the same times and the same pace in life. you know, as you mature, you start to understand yourself so much better. And I think it's that deeper understanding that you do want to surround yourself by people who are congruent with your values in your life. And, you know, sometimes that can be your childhood friends and business associates.

And maybe sometimes it may not be. I mean, it's a little bit like your train analogy. You know, we're all kind of moving around and eventually we meet up with people that are in sync in the direction that we're going, right? And, you know, if we rewind back to where we started off this podcast about being a better business owner makes you a better investor and vice versa, well, another trait for both of those realms is the desire to be a continuous learner. And so, you know, when you've committed to continuous learning, naturally you're going to grow and you're going to probably want to connect with people that are on kind of that same path with you, right? And Yeah, maybe a bit of a side note, Stig, but as I think when we get, as when we get older,

I think being a little less competitive can actually be a good thing as well, and that will actually open the door for connections with people. And I'll give you a little bit of a backstory for this. I mean, when I was in my 20s, when someone knew would show up to play basketball with our men's group, you know, I'd always make sure I stepped up to my game and I went at them really hard and as hard as I could. And surprise, surprise, that didn't really win me many friends. And you know, it wasn't really until I moved away and found myself as the new guy in another men's group that I realized just how bad that energy was. And let me be clear, men's basketball in rural Nova Scotia, it wouldn't even qualify for the G-Lig halftime show. So what I was really

doing was blocking potential relationships with like-minded people because of ego, right? And And to be honest, I probably carried some of that mentality into my early business career, that sense of competitiveness. I mean, it's great for some things, but it could actually cost you as well. And, you know, looking, when I look back and kind of reflect, it probably did cost me some mental energy that I could have used elsewhere and maybe even a few meaningful relationships with like-minded people, right? And so, you know, as I've gotten older, I've tried to really think about being.

a little more vulnerable in life and kind of that shift away from always needing to win to kind of slowing down and listening a bit more and being vulnerable. It's been interesting to see kind of how it's played out. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up and customers now expect proof of security just to do business. That's why VANTA is a game changer. VANTA automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform. So whether you're prepping for a SOC 2 or running an enterprise GRC program, VANTA keeps you secure and keeps your deals moving. Instead of chasing spreadsheets and screenshots,

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I can't help myself. And I'm going to reference a bunch of different calls we had people didn't tune into. So it's kind of like unfair. But I do remember we had a call where we talked about financial independence. And one thing that stopped with me was that you said that once you reach your financial goals is really all about your why. And I just think there was such a brilliant observation. And I always, I think I've said that multiple times here on the show.

It's been such a big part of my journey. Like I just burningly wanted to become financial independent. and that feeling and achieving that feeling and the opportunities and so on and so forth. But it also brings you a myriad of different questions you never had before. Like, I was probably naive. I'm probably still naive, but I remember thinking whenever I hit this number, I'm never going to have a care in the world anymore. Like, of course the world isn't that kind.

Like you hit a certain number and you have different problems. It's just the name of the game. And, you know, I feel I've been on this journey with different friends. This is actually something we talked about here before we hit record where, you know, you meet old friends, new friends, on this path to financial independence. And it's just very interesting to see what happens to yourself, but also to other people whenever they achieve whatever their number is. Most people, they lose their drive.

They set a goal, they achieved it, and then they stop. and they say, you only have one life, why spend it on working if you don't need to? And of course, then you also have other people who say, you only have one life, so why wouldn't you spend doing that and changing the world or at least your own small pocket of the world? And there's a self-selection there, of course, because whenever you achieve a financial dependence on certain aids, it's typically because you have that competitive side of you. it's fun to compete, it's fun to win, and most people are just not smart enough to compete

in such a brutal world of capitalism and do that part-time. And then you have this thing where even if they can, like the perhaps don't signal the right thing to their team, oh, I'm just doing this part-time, but you're supposed to do this full-time. It's like, there are a lot of different threats we can pull from this, David.

So I think I want to throw it over to you and sort of like here, what is your why let's stop with that that's a big question i'll see if i can get this narrowed in i mean there are there's so many different paths to financial independence right and you know when you're working towards it it can feel like a destination but if you love the game of business and investing and stagg i've heard you say this many times your natural state is always thinking about wealth creation, right? And so I think when you become financially independent, it's only prudent to ask yourself why, you know, what is it all for? You know, I was listening to

your recent conversation with Monash, which aired during the Berkshire weekend, and he shared in that episode that he was financially independent at 34 years old. And like so many of the greats in business and investing world, I mean, building wealth past financial independence, that really isn't the goal. It's just a byproduct of what they love to do. And so when you've reached that stage, I think it's important to ask yourself what comes next, right? And, you know, while I've reached financial independence myself, I'm certainly not a steward of, you know, significant wealth, but I do think about what that stewardship would look like in the future. How would I manage it? what kind of legacy would I want to leave behind? And, you know, there's a mental model that I

think about often. It's unearned and unlearned wealth can be dangerous for others. And so just to create wealth, just to leave it to the next generation without preparing them for the responsibility of managing that, sometimes that can do more harm than good. And unfortunately, I've seen that situation where there's been a generational shift in wealth and has been a burden more so than an asset. So, you know, I think, you know, probably going in circles here a little bit, but to actually answer your question on my why, I love to work. Maybe it's the accountant in me. You know, I've been in public practice for 25 years and I'm kind of wired a bit for productivity. And I like working. I like, especially when it's creative and value-driven.

And so I need to structure my life to support this rhythm. And not in a way that burns me out, but in a way that most days feel like play, right? And yes, there's some hard days, but you want to be directionally correct with that. And so there's a Japanese term that I really connect with and it's called a key guy. And it's the intersection of what you love, what you're good at, what the world needs, and what you can be financially rewarded for. And in my own small way, I actually use this framework to help focus my why. You know, I love to lead by example.

You know, I wouldn't ask anyone to do something that I wouldn't do myself. I like to teach others about wealth creation and what good financial habits can do, especially when someone's starting off with a zero balance in life. That, you know, that really gets me excited. and I'm deeply rooted in the Canadian small business world, you know, helping people understand how to execute their business structures and corporate and personal tax planning and how to build their own path towards financial independence. So, you know, over the past two decades, I've worked with hundreds of clients and the clients that I've been able to lead them on their

path to prosperity, those are the relationships that have given me the most satisfaction in my career. And, you know, really in a nutshell, that that's my why. Thank you for sharing, David. And I think it's very different from person to person what the why is. And what I would encourage you to not necessarily you, David, but because I think it sounds like you got it covered. But if there was something to clone from the audience, and it sounds very generic, it probably is,

but I would like to sort of like peel a few different layers on that. I often get asked for advice, which is, of course, wonderful. It's also a little ironic. They say that no one's a profit in his own country, and I couldn't imagine people be more unimpressed by the type of advisor give than my family. So whenever I get to ask for advice, it's always wonderful. People think I have something to contribute. But I more or less always say the same thing, which is, I don't know what the decision

is the right for you, but it has to be aligned with your values. And so some people would probably look at the way you structured your life, David, and say, okay, six o'clock in the morning and then, you know, and then exercise and you want to, you want to read and you want to do it. And they're like, oh my God, it sounds so stressful. Well, I think, but it's the right mix for you because that is the way you want to live your life. And everyone loves Buffett, right? But then the hardcore value investors that generally tend to like manga more than Buffett. And one, one quote that's that's getting thrown around a lot is, you know, this manga quote of, I'm going to butcher completely, but like, training small pieces of paper is a wasted life. And so I think a lot of people resonate with, you know, the breadth of manga. And I think that's absolutely wonderful. And then the look at Buffett is like, ah, didn't he really, like, shouldn't he be spending more time with his kids or isn't he too much of a one-string banjo just sitting there reading 10Ks and moody's and whatever? And I don't necessarily think I need to defend Buffett. So, so please

don't get me wrong. Again, he would have no clue who I am. I don't think Buffett wakes up in the morning and thinks, oh my God, if only I was as interested in architecture like my friend Charlie or I would build my own boat. Like, I don't think he wakes up thinking like it. I think he's 100% aligned with his inner scorecard living a life that's true to his values. And so whenever I get I get asked for advice and also why I asked you, David, about your wise. It goes back to this idea of how are you aligned with your values. And if I don't know the values, I can't tell you what to do. But like, that's key here.

And it's probably quite easy to look at different successful people and then say, oh, you know, this person, you know, there's probably also an element of sour grapes there. Like, yeah, but, you know, he doesn't live a good life like I do because, well, perhaps you're right, perhaps that is a deeply broken, terrible person, or perhaps that person just have different values than you, not because he's not enlightened enough or not just because, like, no, he's just why it a little bit different than you. And that's why he's still super happy living a different life than you. And so it's going to sound a bit like a cliche. One point in time, I'm going to try to start a sentence without saying it's going to sound like a cliche. But it didn't happen this time,

David, but I sort of like look at this through the lens of optimizing for happiness, which I think we all do to at last extent, even though we might not think about it like that. And, you know, some people would say, oh, I work hard to make sure I can give my kids, I don't know, $10 million, you know, the time I'm not here, or they might say, I'm doing this and then I make sure to give all the money away because I don't want my, I don't want to spoil my kids, or perhaps Buffett said it best when he talks about giving his kids enough money to do anything but not nothing. And so, the idea of optimizing for happiness is also why I would have friends who say, I reach my number, why would I ever work? And why I have other friends who say, I have so much money. So why wouldn't

I continue working? This is so much fun. It's all a part of the idea optimizing for happiness. And so a big part of my why is I really enjoy being on this metaphorical journey with wonderful people. So, you know, we get wonderful applications from people who have been listening to the show in college, and then they ride out of a very, very nice Ivy League school. They want to join TIP. And I've always said, no. I also said we didn't have a professor from Howard who wanted to join the team. But I believe that all good things in life come from compounding.

And the same goes from relationships. So, you know, whenever I hired Claire or Kyle, you know, I hope they would stay with TAP for at least a decade and way longer. It was the same thing whenever, you know, William joined the team. And I know that the world isn't always that kind and you're not going to work for decades, wonderful people always, but that is the mindset I go into my why with from the professional and from the personal side. And so William taught me this wonderful mental model of don't work with friends before you're 40 and then only work with friends after you're 40. And I think that there is like everything in William says there's an element of wisdom there, a huge element of wisdom

there. And so that is just something that financial dependence allows you to do. How do you look at that framework, David? Yeah, sure. It's funny how we use dates and milestones to kind of anchor wholesale changes in our lives. You know, Daniel Pink actually talks about this in a book that he wrote about when, you know, the secrets of perfect timing. And I guess, maybe it's no surprise stick that you're thinking about this because you just turned 40, right? And you know, you're maybe reflecting through that lens. So a couple things to unpack here. First, the notion of not working with friends before 40, I feel like that's almost the opposite of how things work in smaller communities. I mean, in many cases, those early personal

relationships that you have are the ones that open up the doors for opportunities for you in the first place, right? But eventually, I think what we really want to do is kind of build aligned relationships with people, right? And, you know, we want to work with people who we can build a high degree of confidence with. And, you know, that can only be built from trust and from time, right? And, you know, trust is a form of compounding. Like you said, like we wonderful relationships and like anything that compounds, you can't rush it. And, you know, like most people have probably likely heard of the concept of the trust bank. You know, you build it up by showing up and keeping commitments and hitting milestones

together. But on the flip side, you know, if you're missing expectations and brushing off priorities or more serious missteps, I mean, those are withdrawals and they can cost you. And, you know, that's why, you know, listening to what you said, Stig about wanting to work with Clay and Kyle for a really long time. Like that's wonderful, right? You know, it's like little small, consistent steps that you can kind of build sustaining trust with over time.

I mean, that sounds like a wonderful recipe for success, right? And I'm sure you apply that with many relationships that you have at TIP and among other people. And just to give you a little bit of personal context on this. My business partner, James Allen, joined me back in 2017. And he had just moved back to the area. And, you know, we had worked on a few small engagements together while he was with another accounting firm.

And we didn't really know each other that well at the start, but we had just enough clarity to believe that we were on track informing our partnership, right? And now, eight years later, going into our ninth year, so, you know, getting close to that decade of work together, I can confidently say that we're far better friends and business partners today than when we started and we're starting to see the compounding effects of our partnership. And, you know, we've been battle tested too, which can deepen your relationship. I mean, there was a 24-month period that tested us more than anything. I mean, we had to send our entire staff home during COVID. We had to rehall our systems to allow that to happen.

We were building a new office right in the middle of the pandemic. And we were also dealing with a significant client tax issue that had the potential to go sideways, right? And, you know, fortunately, everything worked out and everything was fine. But it's in those moments that you want to make sure you're surrounded by the right people. And I can remember telling James, I remember the day I told him, I was like, nothing we're going to face together will be more challenging than what we just went through. And we both knew it. We came out on the other side and we had a deeper understanding for each other, right? And, you know, just like a long marriage, you're going to go through your

ups and downs and probably Dahlio said it best when it was like pain plus reflection equals progress, right? And so, but when you go through those moments with someone else and you actually get it right, it doesn't just make you stronger individually. It can really fortify your relationships with people. You know, I'm very happy that you, that you say that, David, you, I kind of feel like I'm a one-string banjo with quote of quote, but like, you can have, you can have anything, but not everything, right? And so if you want to achieve something really valuable in relationships, it's not, I mean, like any wonderful relationship, they're going to be ups and downs,

hopefully a lot more ups than downs, but it's a, it's a packet's deal. And I feel that with myself, I see that with friends where at certain stages of your life, you become a bit more complacent. And there are a different type of pain you're just not willing to do anymore. Someone is probably good, but you can't really, the things in life that you want to do, even if you don't need the money, still come with some pain. You know, like if you want to run a successful business, there are going to be different friction, different things you want to be without. And if you opt out and say, I just don't want those problems, then you can't run the business.

And it's like, it's just that simple. You can't only have all the good stuff. And then something comes in for the left field. And I know like the situation for you guys, of course, was a little bit different because you have an actual office. And, you know, we're a small company with, you know, 20 people and it's all virtual and so on. So it's a little bit different for us. But we didn't have a protocol that said in case of the world shutting down due to a pandemic, this is what you do.

Here are the 12 steps, one, but we didn't have that protocol. So we had to figure that out. So I wanted to go back to this framework here of partnering up. And partnering up, it could be equity. It could be a 50-50 partnership and a trend of partnership. But whatever it might be, it could also be you are being an employer and hiring employee, whatever it is. I look at it as an alliance.

I look at it as a partnership. And so one of the things that I've learned as I've gotten, a little older has been always to look at the track record of that person. Success leaves clues. And of course, this is a little bit different if you're hiring someone right out of college or if you're teaming up with someone who's 60. Of course, there are different types of clues you're looking for. But one example that is top of mind is a good friend I have who at the time in his 40s wanted to run a company and he was looking for a business partner. And, And one of the things I said to him was that he should find a business partner who should put money down to into the partnership.

And my friend was looking at me like, we don't really need the cash. So like, why would it do? Well, you know, it's like, you want to make sure that he's committed. That's point number one. But there are also a different kind of signaling into it. And so it wasn't, I don't know, I don't know if I'm going to offend the one here. But I don't remember it as a big commitment. It was in the $40,000 range.

And of course, we all come from different walks of life and to some people and 40,000 is a lot of people. But I would imagine here if you're looking for a business partner in Denmark and it's in the $40,000 range and he was looking at candidates in their 40s and 50s, it's not a lot of money. And so the person doesn't fork up that money. Like there are different reasons for it, right? Like one of them is the person has the money, but doesn't, believe in the company, probably don't want to partner up with him, or he really believes in the

company, but he doesn't, he hasn't accumulated $40,000, then that's probably also the wrong person to team up with. And so what ended up happening was that he got an exemption for the $40,000, and he turned out to be a terrible business partner, and there were still different issues, and there were legal actions, and it was just absolutely terrible. And so, of course, this is just an anecdote, but to me, I think that there are some things that is somewhat evergreen there. And then I would also say that don't team up with your friends because they're your friends. I have some wonderful friends I would never go into business with because I'm quite sure we would not be friends if we did that. So please don't get me wrong whenever I'm making those

observations. Another observation I wanted to share here with the audience is that if you want a lot out of life and business. You have to ask for it. Don't ask for everything, though, because if you ask everything, you end up with nothing. But if you're like David and me and you like you love working, why not work with friends? And it's probably going to sound a little spiral, but I don't want to be one of those guys to say that I don't have time for my friends because I've worked too much. And I'm like, I love working. I love my friends. Can we get the best of both worlds. And so, of course, make sure it's for the right reason. But I probably, one thing I would say is that people do change, yes, but they don't change because you want them to change or at the pace

you want them to change. Like, it goes to David's point before about a partnership is like a marriage. Like, no, I can say I've married almost 15 years. Like, your wife is not going to change because you want her to change. And you're not going to change because your wife wants you to change. It just doesn't work like that. And so you need to, like every good marriage, you need to be respectful, you need to listen, you need to know how to pick your battles. And one mental model I would like to share up with the audience is that be ready to give in. Like every time I work with someone, I give in a lot, probably nine out of ten times.

And of course, whenever you have that approach, you also need to make sure that you that you, that you partner up with high-calibre people who don't exploit it. But there are different ways you can sort of like identify those people. But I want to give you three scenarios here. So why do I give in so much whenever I work with other people if we have different opinion? Well, your partner's idea might be better than yours. That is definitely possible, especially in my case.

It could also be that your ideas are equally good. But if it's your partner who are executing on it and the ideas equally good, I can guarantee you that you should follow your partner's idea because he's, after all, the guy executing. And then there's also the situation where your idea is still better, but then your partner still has to execute it. So if it's only a little bit better, you're going to get up with a better result for both of you if you give in. And then, of course, you have this one out of ten times where you just have such a high conviction that you're right. And then if you find the right caliber of business partner, you know that he's going to or she's going to disagree

and commit. And that's really where you are being tested. And if you find the right person, that is exactly what's going to happen. Leadership and relationships. They can be complicated, can't they? If you want someone to take real ownership of their work, and sometimes, you know, you just have to sprinkle a little bit of pixie dust, and then you need to step back and just let them own it, right? And yes, it might not be 100% of the way that you would have had it done, but if it's 80% of it, is quote-unquote as good as you imagined it? Well, that's still 100% on something you didn't have to execute on. And to me, that's actually worth a lot, right? And, you know, another thing to

unpack here a bit too, Stig, is you brought up a great point about going into business with someone who maybe hasn't organized their financial life. That's a huge red flag. It's like watching a fitness coach who doesn't work out, you know, most exercise leaders, they can kind of They're the ones that they're developing the content. They can perform the movements themselves. I mean, you've got to be an exemplar of the lifestyle that you're promoting, right? So, you know, if you're considering going into business and partnering up with someone and maybe they've never saved or they're living beyond their means or maybe they don't

understand how leverage works or one of my personal favors, maybe they haven't filed their tax return in three and four years. I mean, there's no debate. You've got to make an automatic no there when you're. are developing these relationships and roles and responsibilities, right? And as we talked about earlier, I mean, our habits, both good and bad, they're super strong. And, you know, it's no surprising that your friend had a rough experience, right, trying to do that. Like you said, I mean, people aren't going to change for you. They have to come to the conclusion that they're going to change themselves, right?

And, you know, I think what makes it easier for anyone to team up later in life with someone is, isn't that you know them so much better? It's that you actually know yourself a lot better. And you know what you need in a relationship to make it successful, right? And I think that awareness helps you clearly recognize what you're looking for in others. And then, you know, kind of divvying up roles and responsibilities and all of that stuff. So, you know, on a slightly different line of thinking, but on the topic of working with others, I mean, one of the models that we use at our firm is helping people find their superpower, right?

And we want to discover what makes someone tick, you know, what they love to do. And we want to help move people from what feels like a job to something that feels like fulfillment, right? And it's kind of like letting your winners ride in your portfolio. I mean, if a person is really good at something and they love it, you don't. I don't want to interrupt it. You just want to give them more of it and you want to let it grow, right? And, you know, I often say that you love your kids for different reasons. I mean, you love them for what makes them special, not because they're the same, right? And I think that same mindset is great for leadership. And, you know, finding each person's superpower, if you can find

each person's superpower, feed them a lot of it and let them thrive. That's going to be fantastic. I mean, you know, of course it sounds great on paper. You don't always get it right. And, you know, to be honest, I still sometimes wrestle with the idea of building integrated teams with different personalities and stuff. And so leadership can be really tough, right? And, you know, as your network grows with people that you're connected with and stuff, and, you know, some of the leadership philosophies out there say you need a diverse mix of people to cross-balanced perspectives within your organization and, you know, but in a highly systemized world like accounting, you know, in our own business, we've got about 25 people or so. You know, I've found that bringing in someone who's overly

free-spirited and non-routine can create some real challenges. So, you know, our teams are actually very similar in size. So I'll throw this back to you. I mean, have you ever thought about hiring someone who you know is great, but who just operates completely different than the rest of the team. Yeah, we have one of those. His name is William. I knew you were going to say that one. But that's been absolutely wonderful.

And, you know, I don't think that there is any, I don't think there's like a one size fits all type solution to that. I think it's very important that you have the same values, though. You still need to have the same values, even if you operate very differently. If you don't have the same values, it's going to be tricky. And luckily, William has the same value, so it's not difficult at all. It really depends on what kind of life you want to live. We have a – it sounds absolutely terrible because all companies, of course, have a culture,

and so many companies feel that they have an amazing culture, and then perhaps that's not the case. And whenever you speak to the founder, sometimes they talk about a culture being better than perhaps other people in an organization. You know, one thing that's very telling of our culture is that what people see is the hosts. And we have obviously way more people than we have hosts on the show. But like the show or the host get all the attention. And so it's very important to have a culture, at least it is for me, where we don't work with big egos. Because it's just not fun. And then it also depends on what is it that you're optimizing for.

So if we were optimizing purely for dollars, there have been different situations in the lifetime of TAP where we could have worked with some high profile names and gone a route that's quite different than what we're doing today. And we could have built up some franchises around different people. And, you know, if we optimize for money, that is probably the way to go. But then it would have rode the culture. And we optimize for a wonderful culture. And so we do different things on the team that's absolutely ridiculous from a profit maximization standpoint.

Like one of the things we do, for example, is that we have the support team rate the host from a scale for one to five. And then we literally have a company handbook where it talks about if the host are not nice to work with, you know, they can't be a part of the team. We don't have that for our support team. We probably should have, but we don't have that. And I would also say we probably don't need that because the people who are who seek a job as, you know, in support are just wired a little bit different than, you know, whenever we would open up, you know, for Clay's position, we got like 100 applicants. A lot of people want to be, you know, minus cyber, just in the value-investing space and be paid to do with a hobby. So, like,

it requires a very special personality such as Clay to stay grounded and sort of like stay humble when a lot of things are happening around you. I kind of feel like I was trying to avoid saying a lot of different things there in what I said before. But it's, it's, it's a lot of It's really important. And so to answer your question and not just in the cheeky way of saying, yeah, we have one of those. His name is William, I think it very much depends on what is it that you're optimizing for. And you just, you have to be aligned with those values and then the rest would take care of itself.

I mean, that's wonderful. It sounds like you're optimizing for the macro level. You know, if you can be directionally correct with values, culture, yeah, you can, certainly merge in a lot of the other characteristics of the people that you work with. Yeah, but you've got to be, at the macro level, you've got to be correct and aligned, like he said. David, this has been absolutely amazing. Thank you so much for making time for us.

And not just on the podcast, but you're also spending time with us in the mastermind community and teaching us about accountability and habits. Where can the audience learn more about you? And do you have any concluding remarks? Yeah, I just want to say thank you so much for the opportunity to chat with you today, Stig. It means a lot. You've given me lots of opportunities within the community. I want to thank Kyle and Clay for their hard work organizing the community.

And just to shout out to the other members that I've connected with in the past and in the future. And I'll just leave it at that. I don't need any personal shoutouts for my rural accounting firm in Nova Scotia. So I just want to say thanks. Thank you. David, what a way to end the episode. All right. Thank you so much.

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