Today we're talking taxes and we're talking taxes because taxes are my favorite subject. They became my favorite subject when I paid way too much in tax when I sold my company and I was so happy and so sad at the same time today's guests had the same problem. He sold teachable for over 200 million dollars and then decided you know what he's going to go on a renegade to make sure that no entrepreneur pays more taxes than they need to we basically invited him here and he was like, you know, I can't talk about my story I could talk about
All my life where I got dude talk about taxes. I feel like I could rule the world. I know I could be what I want to conquer. Welcome to the show, man. And
it's long time coming. Yeah. I'm excited to be here. It's weird how I've now cumulated a lot of specific knowledge and this one kind of very narrow topic and I'm excited to share it and the summary of your story and we'll talk about a little bit later in the episode. We want to do my taxes. Somebody's story is Prodigy entrepreneur had a bunch of stuff.
How did the college he started a company called teachable sold it for 250 million dollars in your 31 that was like a courses business. Now, you've got a new thing was called carry. Now our know what's called Ocho now called carry and it's like a 401k like a self directed 401K thing. Yeah. Absolutely. It's basically the bigger vision is how do we help people build wealth by saving money on taxes and the solo 401K is our first product. But yeah, that's the story The quick sort of other bit is I did not grow up in America. So I knew nothing about the US Financial system throughout the country I grew up in
Never had taxes taxes were just not a thing that existed in Oman where I grew up. So the first time I heard about taxes when I was 21 years old, I was like wow you actually to give money that you earned. This is crazy. But yeah, you got most of the story. All right. Let's take a quick break to talk about our sponsor HubSpot, you know, I started a new company recently and I haven't announced it yet. Not
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spot.com sales. All right, let's get back to the Pod. By the way before we talk taxes. I know we're supposed to start with the taxes thing. Yeah, you you you have earned your seat on my first meal. You made your first million bucks when you were like 20 years old right with something her funny. Will you tell that story keeps all the fast version that
story? Yeah.
Lily I was certain I was in college at Berkeley and at the time Facebook released the Facebook platform, so you could you know, send gifts to people answering quizzes and all of that and I built these viral Facebook applications starting from when I was 18 all the way to 20 and it was really fun. I mean, you know, we created personality quizzes like you could answer a few questions and find out how good a kisser you are or which Friends character. You're most like if you have to take a Facebook quiz to
figure out if you're a good kisser probably a bad kisser, right?
Well, the funny thing is I'm not gonna not gonna name names. One of the Facebook founder is actually took that
Quiz multiple times and I know that because you get their Facebook user ID in the database. So user ID number not gonna tell you which number it
is. The thing is it was in our database or like wow this
person really wanted to know but anyways, yeah, so we created these personality quizzes and then friend quizzes and stuff. And yeah, you know millions of daily users was able to make a million dollars before I was 21, which is pretty cool.
Yeah, that's amazing. So you've earned your street cred here for us on my freshman. All right. So let's talk. Let's talk taxes if I'm an entrepreneur what
The biggest things that I need to know about taxes, what are the things I should be knowledgeable of and doing in order to save
money cool. The first thing I think everyone should know even people who are not entrepreneurs yet is the US tax code is rigged in favor of business owners. I'm it's very intentional but you can look at a country's tax code and learn a lot about what it stands for and in America two things stand out. The tax code is rigged in favor of people involved in real estate. It's the most tax advantage asset class and two people who start businesses. So the first thing I tell someone
One is if you are a full-time W-2 employee somewhere. If you are not yet a business owner consider becoming a business owner since it is the single biggest thing you can do to optimize your taxes like that is just written into the DNA of this country and it's something that I never realized until I started digging and was like, wow, there's the playbook for what you can do to pay less in taxes is ten times bigger if you are a business owner the so it's rigged in favor business owners
and real estate and most people kind of ignore this I would say like this
So I got growing up was you know, go to a good school so you can get a good job. That's what winning was and and even the advice around money which was kind of like, you know who tried try to get like a raise maybe 10% you know, try to save but the hard part about saving is that your biggest expense is taxes, right your taxes might be 30 to 50% depending on where you live and how it will bracket you're in that's your biggest expense and that's every single year off every dollar you make unless you're able to Shield it with some of these these things you're talking about.
I think I don't
know if you remember but Warren Buffett back in the day had a famous quote where he's like my secretary pays a higher tax rate than and I do right?
Yeah, what an asshole. I think I
think the issue though. It's an issue just it is what it is. If you have W2 income, I'm almost positive. There's close to no way that you can reduce that your tax liability other than maybe like minor percentage points. You're like you can do crazy stuff by using your spouse you can have your
It's become a real estate professional. So then you as a couple can write it right off real estate depreciation, but you have to get pretty fancy to do things with W-2s. You're right. There is a universe of things such as much smaller and then like let's say I make a million dollars a year as a business owner. Like I guess I actually don't know what the savings can be. I know with Q SBS I saved a huge sum, but I don't know what I could do to reduce my my taxable income by as a business owner, but I know it's a lot whereas the W2 it ain't
well, let's tell the W to store real quick.
Because I know people in San Francisco they have high paying jobs at like it on Facebook or Google and you know, they're marrying somebody and they're like, hey guess what honey, your real estate broker now, they like what I don't want to do real estate. You want your a real estate professional now, it's like they have to get get the status and then they're buying airbnb's in order to offset their their WW2 income.
We literally say that like tongue-in-cheek, right? We have a presentation on like, how do you lower your tax bill as a W-2 professional Point number three?
The marry a real estate professional like it's like tongue-in-cheek, but it actually it actually is one of the very few things you can do is W 2 professional but I don't think anyone pays more in taxes than highly paid Tech employees like in terms of tax bracket, that's about as bad as you can get, you know, two people in San Francisco making four hundred thousand dollars a year together cool, you're paying half of it in
taxes. Yeah, and as before it even comes to you, it's just taken out of your paycheck before you even get it. All right. So let's say we are an entrepreneur Sam mentioned qsb as I'm guessing that's going to be number one on your list.
Because it's such a huge Advantage explain what it is and then explain the kind of beginner level and then the advanced level version of doing it
cool. So for big letters in the US tax code. This may be the single most generous tax break available today. It's called Q SBS qualified small business stock. This is insane. So when you look at all these tech companies being built and sold the reality is most of them are going to have shareholders that pay very little in taxes and that's because of what's called Cube SBS, which roughly says if you hold shares
In a c-corporation for five years you pay no taxes on up to 10 million dollars in gains. It applies to Founders. It applies to employees. It also applies to investors and it's such a generous tax. You're forgetting the up to 10 million or 10 times your basis. Whichever is greater why it's a great point. It's either ten million dollars or ten times. What you pay for the shares as a Founder. It's most likely going to be 10 million since you buy your shares for almost nothing but this is this is massive like when I saw
Oh my company. I live in New York state and in New York state even New York State doesn't charge your taxes. So I only had to pay New York City taxes on the first ten million dollars in games. And this is just by size of benefit. It's observed, right because you think about W-2 employee is getting taxed. So heavily and here you have startup Founders employees investors paying nothing on ten million dollars when they sell their company. Oh Shawn, I think California is the only state that doesn't recognize the u.s. Via. There's actually say exactly six or seven states. There's a couple little parsley don't
At 43 don't 43 you pay no state taxes as well.
If you're not paying any taxes on 10 million in gains you would normally otherwise pay long-term capital gains, which would be roughly 20 percent. Plus there's like a 3.6 percent something extra fee. So it's like, you know, basically 2.3 million is what you get net extra, correct? That's that's the actual
in your pocket New York substantially more. Don't forget. There's another million plus in New York taxes that I'm not paying Okay
cool. So and yeah so for California, you'll pay another 13%
On top if New York, if you're in one of the USPS, you know free states, then you're saving another let's say million two million 1.3 million in in additional state taxes about two-and-a-half to three-and-a-half million dollars in your pocket.
Yep, or or I've got a friend who had a company, who is it? I won't say publicly by Anker you and I are very close friend who had a company that was I think an S corp he converted to a c-corp at a 30 million dollar value.
Action and So eventually when he sells it will be 10 times 30. So three hundred million dollars. So that difference which is I can't do the math but two hundred two hundred two hundred seventy million dollars gain, that will be the tax-free portion. I was I was saving that for the advanced strategies, but yeah, there's a there's a lot you can do to truly like multiply this benefit. So I heard about the 10 million thing and I was like, wow, this is insane like really really cool, but then I found out that the limit is per share holder for a company.
So where this gets interesting is if I give some shares to my mom my brother my dad each of us now have our own 10 million dollar limit. So it's a family we have a 40 million dollar limit or if you go down the estate planning rabbit hole, which it's a little complicated but a certain point, you know, hire an attorney figure it out. You can set up trusts. I set up trusts for my future children trust for charity and each of these trust get their own 10 million dollar benefit which multiplies this theoretically as many times as possible firstly with the what happens if you
What if you set up our three future kids and you only have one feature kit you can basically set up like that. So what I did for instance I have no kids is you can set it up for future beneficiaries as well. So it's any of my future children are entitled to to have the trust what's important is it's an irrevocable gift. You can't take it back you're stable ends. If you don't have kids now it has to go to either my parents my brother. I've named a bunch of different beneficiaries. So there's like a line if there's like a there's like a order order of operations.
Yeah, yeah, you're like the only Brown parents who are like, oh, I'm sure it's okay. If you don't have children, it's
okay. As long as you're happy as long as you're happy,
it's okay. I wish I wish honestly that would be it would be worth the
10 million dollars to not be harassed by my back. So this is called like stackable trust. Right? Like it's called Hugh
SBS stacking. So a couple of things I didn't realize the first time around that I'm doing differently this time around the first time around. I was the only person to hit the holding threshold because I didn't
Realize how this works. But this time around I've given all my early team members shares instead of options so they can start their clock ticking. That's a really important thing that a lot of people don't realize is you have to own the shares for five years not options
the way that companies get around this right is you do the 83-b election, right? You basically buy your shares at those super low price.
We should explain how archaic the IRS is. So there's a thing called the 83-b, which I don't exactly know what it means, but it's basically you make
Whenever I start a company, I have got to write a check to myself for a hundred dollars or I write from sampar to the name of the company ink and I have to mail it to the IRS and I like hand right on it and I write a letter to them and I say this is sampar. I'm writing you one check for $100 and I'm literally writing this out by hand. Will you please send this stamped envelope back to me that has proof that you receive this
is literally like the Tooth Fairy dude. Yeah. It's like the tooth fairy and you write the I we write the address and you just write like
IRS like I forget where it is, it's
California. And by the way, you have to do this three weeks, I think are 90 days 30 days 30 days 30 days after you do this
they have to get it and so right when you file the company you've got to run to the convenient. So I get your stamp and envelope and hurry up and do this thing and then you write this out and somehow this works and what's even crazier is the IRS will check in on you to make sure you did this right unless you get in trouble and you have to like save this like envelope like got you bitch. I got the envelope I filed
It away like it's crazy how this works. And if you don't do it, you have to pay millions of dollars in taxes. Like it's a very hard hundreds of millions. Yeah. It's a very high stakes document. Yeah.
It's a high-stakes document and you're like have to write it. I remember like thinking like I gotta make
sure my 7 is perfectly clear. That's not its key sort of like it's like a very stressful thing and you have to write it up by hand. It's so crazy how like archaic it
is. I didn't understand this rule, but our CFO was like hey, did you do your a 3B and I'm like man I was before Shake. No. No you have to do.
30 day and it is I was like, okay. Well, can you just like, you know, where's the form K send me the link. She's like no, you have to print this out. You got to go take it to the post office and I was like, oh man. She looks at me. She's like you don't do those types of things. Do you guys like know I don't run errands like that. I got it. I just simply don't I'm out of the postal system. Like I don't mail things. I don't check my mail. Like I'm out of that whole system in general. Yeah, you're like, I'm gonna say I'm sweating like 50 40. What part do I lick? It seemed like licking the form. I finally have it and
And I realized I'm on day 37 and so for the next five years, it just haunted me. I was like I didn't do that goddamn form and then when my company finally basically failed I was like they matter I was like it didn't come back to bite me because I was 45 years had been dreading that my lack of, you know belief in doing shit, like doing annoying paperwork things was gonna bite me and I was so happy when that one entity failed and that the other entity was the one that sold I was like this is this
Amazing but here's the crazy part is you can claim you did it in time, right 1070 technically what the document means is it it says I am like tax me on what the value is today. I'm choosing to be taxed up front. But if not for signing this anytime your company grows in valuation. You could theoretically be liable for taxes. Can you imagine what a nightmare that is? Like, let's say you raised a series a series be a series C. Yeah, you wouldn't not you wouldn't have money. You wouldn't have money but you have a tax bill. It's like really really bad.
So there's a dark side to this, which is that
Sometimes if you join a company later, like I think bolt got both pretty popular. This happened at bolts a bolt was like, hey, we are lending are our employees money to buy their cars
that was such a shit
show a day like five billion or 10 billion dollar valuation and there were like see this is great because now they're going to start their clock of owning the shares but people were like, okay. So what happens if the value we should goes down and they're like now not only do my shares become worthless. I owe the money for those shares at that premium valuation and people were like, this is
Going to end. Well, the full story hasn't played out in a bolt. Is it still going so it's unclear exactly what's going to happen with
that. It's trending in the direction. Like that was a bad idea. I think it's undoubtedly a bad idea. It was a 2021 valuation like tens of billions of dollars like it's not good and people saw it coming and it's it's really bad when you now like I'm I'm hoping they forgive those loans because otherwise you have not only remaking nothing and Equity you have you 080 hundred thousand dollars
just for
Being there at our company. Our investor was like here's the promissory note. You don't have to come up with the cash and we'll forgive this if this ever happens and I was like, could he write that? They're like, no, we can't write that down there as I you just trust us. Okay, I do trust you and they did if they if they were to write it
down its tax to you is income. So that's why exactly right? Exactly,
right? All right. We'll take a quick break to tell you about another podcast. You maybe should check out it's called imperfect action
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because a bunch of cool episodes one that you can check out is five things. I'd never do in my business as an online business strategist, and then this episode she sharing five things that she no longer does as a strategist and she covers why wait until your idea is perfect before putting out over the
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So check it out imperfect action by Steph
Taylor. Go ahead and listen to imperfect action wherever you get your podcast now back to
This episode. Okay. All right. I want to go to the counter opinion. So we got friends who you know, they're like, oh the number one thing get out of California. You schmuck come to come to Texas. No, no forget Texas. You're still in the federal paying federal tax come to Puerto Rico. I'll go you think about that. Should you should I move to Puerto Rico to save money in taxes according to
Anthony. So to me this gets to the meta level, right? Like why do we have money? What is the point of money? And I think there's two camps of people camp one is like they look at their life as as this.
Vessel to make as much money as possible and other people look at money as a tool to live the life you want. So I very firmly fit into the latter camp where money enables me to live the life. I want. Yes. I don't want to pay more in taxes than I have to and you know gamifying the tax system is also fun just because like I'm a hustler and it's kind of fun to do but I want to live the life I want and to me that means the living where you want. So I would I would personally never ever move somewhere just to save on taxes. Well you've done
The exact opposite you you live currently and you live in the highest tax place in America, I believe correct add. I'm totally fine with that because again like money names me to live the life. I want I just tend to think and it's ironic because you know, I'm running a company that helps people save money on taxes the kinds of people who spend all their life worrying about taxes or some of the unhappiest people. I know so I don't ever want to get to that point and sometimes when you move to like, you know a Utopia with zero taxes you're surrounded with
Announce that move there for that reason that's your group. Your friends are other people who hate taxes it. I don't know if you know, that's the Social Circle. I want did we had John Lee Dumas on the Pod you remember the Shawn and we're talking about taxes and he was like bragging about how he moved to Puerto Rico or something like that you would
he was glowing I thought he was pregnant. I was like, wow, this guy is so happy. He moved to Puerto Rico
and he was so happy about any bait and then he started making fun of me that I didn't live in Puerto
Rico. Do you remember that? He was like insulting me and I was like, yeah, we're not close.
About that you can make fun of me that hard and it's a fine but here, you know, I think that the thing, you know, a lot of people who listen to podcasts out how we all share one goal. Probably we've been a different goals one. We share is we all want Financial Freedom and most people think Financial Freedom is oh, I'm free to buy what I want. Do what I want is the financial leather jacket. You're a financial badass now. All right cool, but I think the real Financial Freedom is when money doesn't have a hold on you so
About exact you being able to buy and do certain things. Is that money no longer dictates. Your decisions money does not control you or make you do things that you don't want to do and so it's more freedom from money not freedom to spend money you had a point on this thing. I want you to explain and it's really a direct attack at Sam. You said the point of having money is to not worry about money if you are wealthy but still stressed about money, which I see all the time. You're missing the point. All right, Sam. Look this man in the eye and
or tell them to I don't I don't blame you. I don't
blame him if it's him or anyone else because these are beliefs we form very young and life like at to some degree. They're not even fully conscious beliefs. So if they're not conscious police to try and sort of program it but yeah, I have so many like super wealthy friends friends, you know with hundreds of millions of dollars who are stressed about the pursuit of more money. They are hundred millionaires who want to be billionaires or something and and again, like you said it really well, right. The whole point of money is to be free from it and do what you
Like to me the best thing I bought with money was being able to say no to a job that would have paid me tens of millions of dollars in equity because guess what? I don't need it anymore. I just say Sean. So look I let me defend myself. I came on here and I express my belief on money and how I'm fearful of it and how I wanted to make me happy. It doesn't but you did camp at my family told me that Joe gebbia joke Debbie is worth 10 billion dollars and you told me this crazy story to blew my mind about how happy is and everything this it so I radically
Changed my opinion on money and happiness. And now I realize I just need 10 billion to be
happy. That's all I need is ten billion. Like my video has been changed. It's no longer about scarcity mindset. If I have 10 billion, I will be happy. I'm glad gradually go you've been enlightened. All right, give me a couple other quick hot takes before, you know, you're gonna make fun of Sean now, which is there's no
true Alpha it. Let's frame
it. You said there's no true Alpha and investing. I realized that's
A Fool's game. That's why instead. I realized I can I can optimize my tax set up and make more money that way than trying to beat the market as a guy who has been attempting to beat the market for quite some time now and successfully. How's that been going? Wait answer the question.
What are the window? What are the losses and we're not talking about private are talking about. Have you been tried view? Did you try to beat the market in terms of public to he looks kind of sheepish? He looks how you sheepish he's he's just like
that. We're gonna make me cry. What's happening here? No.
No II don't know. I actually
Ali don't know if you pick and choose stocks. I know you pick and choose private companies, but that was like your job.
I agree that most people cannot beat the market. I do not agree that nobody can beat the market over a hypocrite. I know that that's an unpopular opinion. I know that you know the famous Warren Buffett bed. I know all those things. I just refuse to believe that it's not a bell curve. So
I think the people that beat the market spend all their lives doing that with their own Capital right like think about Jim Simmons rightist hedge fund is returned by 40 percent on average. They're
Taking outside Capital. What I think is a little bit of a scam is a lot of the financial services industry that tries to promise you outsized returns who promises that like like like what's that stereotype hedge funds because I've never met like a financial advisor. That would be dumb enough to promise me. I any actively managed fund, right? So yes hedge funds are a big big sort of thing any active stock-picking fund. I mean, there's a lot of stock picking funds to charge. You want to 21 percent a year and their portfolio. They say will outperform or
/ so does every real estate fund Venture fund basically, like anything that charges outside fees anything that charges more than a vanguard's Lon that's crazy. That that people like buy into that though. Correct? So our our thesis is always like okay fine. I do think better tax strategy can actually create alpha alpha is 0, you know Finance firm for like you will outperform and using that tax Alpha to just put more dollars in the market. I think is a smarter approach and the approach I like and you know, I am taking with my money as well
out of 100.
Your
net worth is 100% of it in the S&P
index. Also, he not like I have I have a lot of fit not in the S&P index, but that's my fun money. I think there's a good chance. I don't outperform and a lot of it isn't private private investing which are funds that I own but I think I'm the only person I know who has a fund as big as mine and charges no management fees the average Venture fund charges 20 to 25 percent just in management fees and the average person is not realized that we charge zero percent.
So, do you know how I tell you that? I don't buy individual stocks. Yeah, I realized looked at my portfolio. The other day was first time in a year that I looked at it and I realized I was wrong. I've done it twice or three times
the company that I did it
on. What's play-by-play boy.
I had read I read their annual report. Yeah, you can't just hold her magazine their annual report dude, that's called their monthly calendar. Yeah, but yeah actually there and
For the 11 photos
and Jenny old Jenny McCarthy picture holding up the balance sheet. That's not it
I
did that because I was like, oh well like their prop their their their real
estate asset is worth more than what they're trying to sell the company for and I was like, that's smart. I'll do that did not win on that one. So loss on that one also did coinbase at the IPO egg and then I sold it two weeks before it popped like three months ago or whatever.
Never it was like 400. So I've I've done I've done to know
also that I would HubSpot you got HubSpot stock. You could have sold it and diversified you decided to hold that is a decision to buy.
That's correct. I did and and with Airbnb, yeah,
correct, the two biggest Holdings in your portfolio, correct? So you do it too. We
all know those aren't my those are my two biggest Holdings the my index funds are significantly larger. But yeah, I have done so I've done it as well. So
I'm like you honor I have my fun money thing. It's just that I happen to have a fun money.
Ash that's 80% instead of
20% I made it look at the end of the day as long as we realize we were doing it's fine, right? Like I think we all have to learn this lesson ourselves in 2021. I thought I was a damn genius. I was like these index funds are stupid. My portfolio is I'll put like three hundred percent. I should just be a stock picker for life. And yeah, then you come back to reality and didn't realize what was it was was there a day where you're like, huh? It was away. It was many Seekers again if you remember there's such an insane.
A up for a while. You couldn't lose every company was up 100% day on day it was when investing was the most fun. It should not be that fun. And then yeah, there were numerous days of like cool. I've lost three hundred thousand dollars today cooled down half a million dollars today cool and it just that happening happening repeatedly while the S&P 500 kind of just kept chipping away and growing and you know, Nvidia comes out of nowhere and all these stocks that I only held because it had an index fund. Otherwise I'd know exposure. So I'm let me and Uncle let me tell you this crazy story about
Except that I learned. This is like one of those tax hacks. I'm not the biggest fan of tax tax. This is actually a good one. I met this lady. She was speaking at one of our events and I don't want to say her name of our company, but she was on the commercial for this credit card company because she loved the credit card so much in her business was doing let's say 50 million a year and she was putting a lot of it on a credit card and it was giving her three hundred thousand dollars a year of either points or cash back and according to the IRS a cash cash back.
From a credit card is considered a rebate Quran. I believe you get up to I don't remember what it is. I don't know what it is now, but three years ago when she told me this she said it's three hundred thousand dollars a year of rebates is that you know, what it is nowadays is that same something like that depends on the card itself? But yeah Oh, I thought it was by the government. I thought it was limited to the government must been limited to the credit card. She was getting three hundred thousand dollars a year of cash back of which she was like, that's my salary. I don't take a salary or I take a very on meaningful salary for my company, and I'm
Off my credit card points and that was pretty wild did you know you could actually pay your taxes at a credit card? It is for some people Yes, actually like Arbitrage that where again this is insane. I would never do it, but it's just I just found an interesting. You can pay your taxes on a credit card. There's not a very high extra fee and then in a lot of cases you can actually end up slightly better. It's a very painful thing to David and David. How is your did it David Houser sold his company grasshopper, I think for 200 million dollars and he paid his taxes on his Amex and he called AMX and he told him when he was going.
To do and so I don't remember what the bill is but let's say 20 or 30 million dollars of a tax bill. He paid that on his Amex and he goes, yeah, I've got I just got you know a couple of decades with the flights. That's it. That's it. That's it. That's the other thing with credit card points is once you learn how to use them for travel the cash back feels less good like yes, the cashback has a theoretical value but there's so much more valuable applied to travel once you kind of learn how the game works.
What's the smart way to do it?
Okay. So the thing you always want to avoid is never
In the point on your credit card website. That is the thing almost everyone does and you lose a ton of value there. I do that. Yeah. So what you want to do instead is create an account with an airline like I do remember it's a lot because I fly internationally or with air france-klm. The International Airlines are the best look up a flight on their loyalty program do the transfer. It takes like 30 seconds and you'll probably save 70% points right there. No way 70% Yeah. I've tested this a lot because what
these you don't realize it says
transfer like there's a tiny link that says Transfer Partners and you have to that's where you send your points. You never spend it in the
thing that's going to save you. So I've lied. Yeah, but I've spent hundreds of thousands of dollars on flights over the past ten years through Chase my Chase my firm's hard. I found this out two years ago life-changing. Yeah. Absolutely.
Once you got hoes bro that it's so bad to do it. But you knew that Sean. Yeah. I paid this guy Moe points. He's like this guy who call you who teach you about credit card points are like he'll do
Be like, what's your situation? Here's what your credit card setup should be and here's how to use it it so he showed it to me and I was like, wow, that was like the best $300 I've ever spent because that one session which I thought 300 bucks to do this call. That's kind of a lot. Of course. I mean that the Savings in just an understanding how to book the flights better because he's like, this is luxury travel. You want to travel first class all around the world. Here's what you need to do. And for me, I have an e-commerce business. We're spending millions of a year in ads. So he's like you need this MX gold because it gives you full
4X on every Facebook point that you every dollar you spend on Facebook Google and so you're getting 4X multipliers. He's like, but then you got to transfer it out and then you got to use this website a website like points out me or whatever to be able to search for points across all the airlines.
Yeah. I think I'll just fast bring out is the 80/20 if you want to tell someone in one sentence how to do better transfer your points out. Do you have any more of those little tricks? What
else you got in your
hat?
Magician pulls a
solo 401K. So that's the one that you have on here that I don't know anything about. What is a solo 401K so solo
401K. This is the first product we built in. I had an LLC for a while. I was earning some you know, some random money and I saw I found this account called a solo 401K which is like your own like your corporate 401K, but it exists exclusively for you. And with that you can do really cool things. So one you can put in up to sixty nine thousand dollars a year.
Quickly, if you're maxed out your corporate account. It's very hard to hit the max because your company match is not enough for the solo 401K you can put in 69 thousand dollars a year get that as a tax deduction. The second thing is you could do the whole thing as a Roth contribution. So if you read about Peter Thiel and how we grew as you know billion dollar Roth IRA traditionally with the Roth IRA, you can only put in seven thousand
dollars. Can you tell Peter teal story real quick? How does he use a Roth IRA to make
billions? Oh man. This was both genius and kind of possibly illegal, but what he did, is he bought?
Founder shares at PayPal with his Roth IRA. So he spent like two thousand dollars to buy PayPal shares that became worth twenty seven million dollars when PayPal soul and then yet $27 to just make all kinds of Investments. He allegedly bought his like Facebook shares 10% Facebook from his Roth IRA. So he's gonna turn 59 and a half in a year and he's gonna have five billion dollars tax-free, which is
pretty wild the wildest part about that what you just said is that
Still only made 27 million dollars selling PayPal. Yeah. Yeah.
I realize that
me and Peter teeler sort of we're sort of, you know, apples and apples I guess. Yeah. Yeah. All right, Sam like but the hustle and PayPal netted bounders very similar amounts of money. That's kind of
amazing. Well, what we don't know is if Peter Thiel had other shares not on his Roth IRA, which is quite possible actually.
Damn. There's too good to be true. That's the thing. Yeah, probably not.
Going to do that to me for me to change my opinion. Yeah. Yeah, I'm not gonna let facts
get in the way of be beating Peter teal. What about can a person have more than one 401K? Yeah. So that's what's cool is if you have a full-time job and a side hustle. You can have a solo 401K for your business while still contributing to your employer 401K, but because it's your own 401K, you can invest it in anything right your employer 401K has like a list of very specific assets with the solo 401K you can invest it. However you want if you need liquidity you can
Oh up to fifty thousand dollars from it. It's simply the most powerful retirement account in America, but it's not available. Unless you have your business
isn't the normal 401K kind of a racket like the thing where they're like, you can only buy these These funds using our 401K is that because they get a
lot of that fees. No it comes from the 401K provider. The long answer is Corporate 401 k plans are subject to irisa laws like employment retirement investment something act and those those acts are just there to protect employees.
But as a result employers can do things that help them like their limits on how much you can contribute to yourself. If your employees are part of the same plan limit to Investments, but if there's no employees go crazy.
So the solo 401K you could put that in because you like put in real estate. Could you put in anything? Is it like that just
to me if yeah, the only thing you can't do which is where the whole Peter Thiel thing maybe slightly illegal is you can't have a self-dealing transaction. So I can't invest in my startup. I can invest in Sam startup. That's totally fine, but I can invest in my own company.
I can't invest in my house, but I can do commercial real estate. Gotcha. Okay, let's not sell feeling for him. Is it if you that's just a major Angel investment. He was the founder to which is why it's sketch. He was the founder of PayPal remember if he was just an angel investor. I
was getting too much. He might you know, we might might be an accident for Concord. If you keep talking like this out loud, he's got five billion dollars riding on nobody paying too much attention to this.
Yeah. I mean look so people because no people ask us all the time. Can I
Peter Thiel did and I was like, look, it may be fine. If you don't own over 50% I wouldn't because again like the thing with the IRS is a lot of these things are not clear rules their rules written a certain way. Someone interprets them somehow the IRS challenges at sometimes the IRS losses and Court. That's how loopholes are established. Right? So so like the problem that I have with my my personal bookkeepers or accountants my CPA like they're pretty reactionary. So it's like at the end of the year like we are dealing the problems and then everyone makes
Same thing where they say next year. I'm doing this right but I worry about it and like two or three months and then two or three months becomes like way
later and the real news resolution to be honest is the three we after tax after you file your taxes is the real New Year's
resolution to be honest candidly. That's the problem. We're having because right now we're realizing we have to educate the CPAs a lot and almost everyone that comes to us is the biased sample. They do not like their CPA and we don't do that yet. Right like maybe there's a world will do. So, who do you have like, do you hire like a tax strategy?
Who is like more offensive and do they what they work in tandem with your CPA? What do you do? So for me personally once I've you know gone down this Rabbit Hole we're doing this internally. We have a program where we help people with attack strategy part. We don't do tax filings. I'm basically using our our own services. But yeah, there's a big part that's tax strategy. That is not the person signing off your tax return. Should they be separate the way the world is written today the like this laws and stuff it is because the person filing your taxes typically doesn't do that much strategy.
Yeah, it's sort of just why like even if let's say you want to set up a trust you need an estate attorney who's different from your financial advisor who's different from your accountant and to the average person? You're like why why can't one person do this? And those are the kinds of things were thinking a lot about like, how do we productized this in some way shape or form while still being compliant because compliance is a big big big part any time you try and build these kinds of businesses.
So I was so, you know stressed out last tax season, you know that I was like, okay,
Am I going to do things differently this year? So I was like, I'm going to treat this like it's my own business its own product its own company. I'm starting and so I was like, I'm gonna go on a road show and I'm going to go and basically see who's out there for, you know, go give me your best pitch and I created a data room. I was like, this is my tax set up and I put all the time and be like, here's a flow chart. Here's my prior Year's returns. Here's what here's what I paid in taxes. Here's what my expectation is for next year. I was like, here's a turnkey data.
Room so I don't have to have a phone call with you. I'm like, I have the phone call and I on the phone call. I tell them exactly what I want because some reason I would like go to these tax we want I think it's an insecurity It's like because I don't know as much about taxes as you I kind of defer everything and I almost become like I work for you and then I'm like I splash water on my face. I'm like, well, I don't know I'm paying you hold on. Wait, this is backwards. Yeah. You work for me. I forgot. Yeah, why am I pretending like I have to tiptoe around even asking you for what I want and so I go in and I'm like
I felt this way. I never want to feel this way again. I want somebody who's going to take care of everything, you know everything from I want you to literally I want you to be able to pay bills. If I need you to up to filing my returns for all of these, you know, I got 12 entities all 12 entities, and I need you to do strategy and I need you to be coming to me every, you know, every quarter with proactive suggestions about what I should be doing. That's what I want who can provide me that and I went on tour, basically and
Such a better way than I was doing before I
highly recommend this for anybody who's like
has enough income and kind of business value where that makes sense to do which I don't know what that number is probably different for a lot of people it would have made sense sense for me three years ago to do that. It's like whatever you're paying it, you know a couple hundred K and taxes or even a million dollars in taxes. Probably not worth that much effort to go do but as you scale, I think it's important to do that. I'm realizing
now. Yep, and I also think it has to be a collaboration. It's very hard.
Lot of people are like oh if I had a tax guy that would solve all my issues. But a lot of the best strategies they're like long-term writing. Let's say you want to start a business to get acquired five years later. That's the kind of stuff that you like need a partnership to be discussing and have someone you're working with somewhat at least quarterly, right? Because there's a lot of this stuff that like this the more, you know, the more you push them in the better the things you'll achieve I'm actually going to do that data room thing. That's the second thing that you've said in the last few months that it's like going to have a change in my life. That's really smart the first
thing
A we talk twice a week on this bike is that's the second thing in 20 years. That was good. Yeah. Well the well like a lot of the
stuff you say I'm like, I'm either already doing that or I don't want to do that or like I'm not sure if you're right or that's only okay, but the you said that data route big is actually a really Wise Wise way to look at it. The other thing that you said it was it hit me. I was like that's brilliant and it was when you were selling when you're your house and San Francisco you so like
like I forget what real estate agents make six percent but you're like but 6% is not that the difference between 2 million and 2.2 million is like six percent isn't that meaningful for the realtor but it's really meaningful for me as the owner. That's a six-figure difference. So I'll just give you my real estate agent. I'll tell you hey, if you get anything above my asking price of like 2.1, which is my happy number, but if you get anything above that like to point to I'll actually give you like 30% of the feet. So I'm selling a piece of property now, and that's what I told my eye.
Just right up in the pot. I wouldn't call the right away I go. Hey, how about this?
Yeah, I didn't do 30% That's crazy. But I did more I did more than the six percent. So you you messed that one up a little bit, but that's okay. Well, but but but the thing is is like
even I don't remember what there anything you said like, it's an old dollar right each additional dollar past that as like, yeah, you said like ten percent I think even said like you would buy this person a burka bag. You said something like crazy
had a negative outlook of to no. No I said and if you don't get me the price that you comped me when you when you won this list.
Ting okay, there has to be some incentive or disincentive. If you don't live up to your word what real estate agents do is on the way in there like it will you oh we're gonna this will be great. I've done such similar sales. I think we can get you what price do you think? Oh, yeah. I think we can get you that price and then afterwards two weeks later, they're like, I'll just the market is so you know right now, you know, the thing is Bubba blah, and then then then they're just making you and they're trying to reduce your expectations so that when an offer comes in you'll take it.
It is because they just want to turn the deal over right because they're they're getting three percent on two billion bucks. They don't really care. If it's two point if it's two million and 50 thousand or two million, they'd rather just get the deal done. And so I knew that they do that - so upfront and I said when he's promising me the world I said, alright cool, but if you don't do it, you got to buy my wife this bag and he was like, it's laughing and I was like, I let it sit there for a second. He's like of it. Oh, you're for real just that. I was like, yeah. He's like, okay deal and then literally when the we were going we were coming to do.
The deal he's like, I really do want to buy your wife that bag. Let me go back to them and see if I can get more and he got an extra like 30,000 dollars a half after that. You know that last comment so I appreciated the
reason why it broke my frame was because these are like a realtor is like you think like wolf for some reason you think this is just the law or like there is no negotiating like this is how it's always been done and I must do it this way. I'm just gonna and when I was thinking about I was like know that the way that he actually said is 100% better. I didn't realize that I could like question them, right? You know what I mean?
And there's actually like what's crazy is there's people who do that with the IRS as well. So for example, Sean Parker, I believe is the guy who created either created or he was important with helping create it with opportunity opportunity zones and real estate. Yep, and like I remember like reading about opportunity zones and I'd be like, oh Sean Parker created. I'm like, wait what and I guess like the story is as he was young. He was still in his 20s and he convinced the government that it's wise to invest into opportunity zones, which is real estate that's in areas that are impoverished or
we want them to be better and I'm like how ballsy of that kid to go and convince the IRS or the government that this is the right move and I love like stories like that. And that was it was a while
story. Let's do a couple more before we before we finish so you said owning real estate with your business? What's this one?
Yeah. So another great example, right so Sam said, okay. What if I have a million dollars in business profits like what can I do to lower my tax bill just buying your office building or if you have a physical building connected to
Anything you're doing whether it's our office, whether you have a retail location, do you own that real estate you can use depreciation to offset 20-30 percent of the purchase price as a business loss that year so which is why you'll see a lot of old school businesses actually own their properties. They're not just renting since you just save so much money people take this. You can also do this with cars and you know buy a vehicle attached to your business. You have the whole like insanity where you can actually depreciate more of the purchase price if your car weighs over,
6,000 pounds which is insane and why you have the whole like G-Wagon tax write off me, but you only receive their businesses is math. That's like the classic like immigrant story which is like a mom-and-pop like came here from Vietnam and then they bought they just they eventually bought their Corner Store building and then they the building becomes worth significantly more than the corner store
and then they bothered you again and the G-Wagon.
Yeah. It's like I get attacked like business owners for already very
As we real estate developers, but when Trump was in office, he actually took it to the next level with the tax cuts and jobs act that basically doubled those benefits and gave an extra benefit to business owners where they get to deduct 20 percent of their income called qualified business income deduction and it allowed real estate developers and been your boy Nick Cooper talks about all the time to do what's called bonus depreciation and depreciate twenty to thirty percent of the purchase price up front. I'm so even though the code is already written this way. There's always new incentives.
To further make it even better for business owners and real estate developers.
Let's do some of these other things you you had a good thing on happiness. I want to read it to you. Basically you were like happiness. It's not that complicated. What is the kind of what are the four things that actually matter when it comes to
happiness? Yeah. I mean look after I sold my company I spent two years traveling chilling, you know was like, wow, you know, we spend all our lives waiting to like retire. What if I just lived a retired life now and a lot of it was like, okay fine. What are my happiness triggers? And I found
He was very very simple Amba to to like critical things for like my environment or plenty of time Outdoors. Ideally with sunlight like constant movement. Like Sam didn't believe me when I told him I walk twenty thousand steps a day. I did produce receipts doing worth the same amount that is an insane amount of three and a half years. It's just it's just what keeps me keeps me going my my trailing 90 days because we had the baby was Thirty One hundred steps a day. Yeah that to me. That's a misery like, I just need to I need to be in
motion. What?
What do you do to get those 20,000 steps? I do have did you like replace meetings with walking meetings or something? I would what did you do in your hacking
meetings phone calls like a big part of my routine playing sports every day though again, like it's winter here and that's why I hate winter because like now I'm not getting my outdoor time and my walking has come down a lot. But yeah, so happiness triggers movement being able to spend time Outdoors having a higher purpose for me that's work with meaning but for other people, you know, it's religion. It's just something that
Like bigger than themselves and for is like relationships that count. I can like simplify my life to these four components and like Reaper. Like that's all it takes for at least made to just be very very happy. Are you dating anyone? I'm all right. Now you probably crush it though in that department, right? Yeah it look I mean I get I enjoy enjoy being single but at the same time look, I'm 34 years old and the parental pressure is ramping up. We'll see how it
goes. I feel like I can defeat the IRS but not mother parental pressure. Yeah.
How old were you Sam when you when you and Sarah got together? She was 22 and I was 25. Oh, damn, you're young. It didn't feel that way because I went pretty crazy between like 19 and 24. Like I I did some fun things. Obviously. I've actually drank a beer with you. There's not a lot of people at this chapter of your life that have done that but yeah, that's true. That's true. And I had a lot of fun. I did this cross-country motorcycle trip and after I just sold the company and I didn't sell for a lot of money. I have like 50,000.
Is my bank accounts but I was like 23 riding my motorcycle cross country telling people I just sold my company on Tinder was this apartment Bliss or whatever? Yeah. Yeah. It was to apartment list. Yeah, and I just hosted a conference. So I had money in like it was I was the coolest guy ever for like eight weeks and then I met my wife like right when I get home. But yeah, we've been together for a while. It's honestly awesome. I like I don't even like talking about this because I remember when we got married we had to go to like and talk to a priest.
We got married in Catholic church, and I was like telling her is like telling the priest has a yeah, we you know, we're good partnership. We talked about like business and stuff all the time. He's like, well, what about love? It's so like I don't even like mentioning this but be like basically dating someone who is smart and you eventually want to marry. It's actually makes you more money. That's not the most important thing but I think like what I've learned is having a good relationship. I think actually was the greatest financial decision. I made I made you're not you're probably less distracted right like people in
People that relationships are like eventually like ones are kind of more stable. I think I remember when I was when I was selling my business. I was negotiating with the dude who's like runs General Atlantic big big private Equity Fund and it's like an old-school guy said are you married? I was like, no kids. No, it's like I don't like that. I can't trust single people. You have nothing to lose. I don't like it. I would feel much better about this deal if you were married and had a family because you're scared you'd be more nervous more scared of
stuff. You're like 42 and 50 million.
Ian dollars I can get a 30-day fiance right now, sir. What do you need?
Yeah. Yeah. So Sean when your wife goes out of town or you like me where you're like what the hell am I supposed to do? Like, what do I do? What do I do? It's a
three hours of heaven. But anything beyond three hours, I'm like, ah this boring like this is the size makes it so quiet in here. Like I started walking around in circles like my dog or something. I don't know what to do.
I want to talk about one more thing. We have a large Indian listenership. You're welcome. Yeah. Thank you, Sean.
I feel like everyone in my life is like all my best friends are Indian you're like going on at are on social media saying like particularly, you're like, you know East Asian people we've got to say or type of us not having a lot of muscle in reality it just because we eat like shit or what did you say the Indian diet is just by default not great for building strength for staying in shape and things are really bad right now like an Indian person living in North America rights. We have the same exact like up bringing whatever.
Is anywhere been four to six times more likely to have heart disease diabetes. Like it's just it's real bad. And now that I guess I have more of a voice in social media and people are listening. I feel like it's something worth talking about since I don't know like if I if I could have some impact over the next 10 20 30 years to change that that would go a long way but the hardest part is there's this like cultural like, you know deniability where many people get really mad when you tell them that if every even even now, I mean, you know if you
Tweeting out. The Indian diet is like traditionally unhealthy or something. You'll get all these people in India. I'd like getting super super angry about it. But ask anyone who's ever I don't know. Do you ever account? Macro Sam or Sean? Yeah. I I use my fitness pal every day for like the past four years Okay cool. So there's not one person who's ever counted macros who will fight the indict as healthy like not one. It's impossible. It is actually impossible if you track it to to see it yet it produces this passionate.
I mean I ended up commenting on an Indian cricketers physique
and an Indian newspaper the
Hindustan times 3M dislike article about racing Indian American entrepreneur fat shames like cricketer and I'd like to turn off my Instagram because I got hundreds thousands of comments like just attacking me my family and everything has stood for because I'm not being like, you know, a proud Indian or whatever. So
that's hilarious man. The I went to an Indian grocer. Semi-Pro don't know this. There's actually just an Indian grocery shops step we have our
In separate see ya go to them. Okay, so, Moe don't really realize this but if you walk in
Every single I'll literally is the shittiest food that you could possibly eat and I went in there and I was like, you know Jim Carrey in The Truman Show when he's like wait, this guy is actually like a wall like what is this? What let's I'm gonna get here. Yeah, and I was literally like running down the aisle like what's happening in here. This is why it's all fried. Why is everything fried literally not one
thing and no protein, right? It's like
fried and the Euro team. It's really fried carbohydrates with some fat and like
That's everything and you just see the moms just putting things in there for the kids. I'm like don't don't do this shit man. This is so bad is literally so bad and to the point where I was like should someone create like a just a better for you any food that goes into the Indian grocery store. You're the only skew in the store that is not like deep-fried terrible everything or like, you know, just canned gulab jamun or somebody's like this terrible terrible food, and that's not even like the home food. That's like the grocery store, right? So if you're interested,
Garbage in garbage out. Like if your inputs are all terrible, then the outputs are also going to be terrible
why they just don't care. It's not part of the tradition is not part of the culture protein is just nod to really deeply embedded in Indian food and it is it isn't small parts, but it just not really a big deal and it's compounded when you live in America, but I think about it this way I joked about this. But like I think the spelling bee is the only time I see Indian people on ESPN, obviously an exaggeration.
Let's build some I burn dude. That's so good.
Yeah, ivy look but I as a native person I can say it. I was like you can say it's a get cancelled. But yeah, it's like it's it's really not good. What I think is optimistically my generation were seeing people being aware of this where we're seeing this changing a lot of South Asian people right there. Always like even like Balaji was on a podcast. He's like, oh, yeah, I did like as well as I could for my salvation genetics actually think it's kind of bullshit. I think salvation genetics are honestly not bad at all for people who work out and kind of get clean.
And whatever, I mean all the Indian friends I have that have put in the effort have seen results, but the whole stereotype I think starts because the diet. Yeah. I've been on an Indian food kick lately and it's been all like coconut milk and so just not been using that her coconut curry just all creamy shrimp and and it tastes so good going in but it just a feel wonderful morning and
idiom parents when they feed you in because I'll be like Mom. Why did you give us this and she's like, it's good for you. I'm like, why is this good for you? And she like gives you energy and I think they'll
Really took the idea of calories as like, you know Cal like a measure of energy. It's like yeah, they're like gives you energy this carbohydrate. You're going to have so much energy and I'm like not that's not how it works and they even though I know doll doll has tons of protein is like lentils. Basically, it's like yeah, but has like, you know, the macros on dollar like 20 grams of protein 35 grams of carbs, and then you add butter ghee and like oil to the thing to make it taste good like well, that's not really going to help then write like that.
And dollies your protein in the
rest of your meal. Right seem all this other stuff and you're like, oh for protein I'll have doll. That's a great example. And yeah, like Indian people will like the Indian Express actually ran an article be like, yep. We thought they all had a lot of protein to like the awareness is increasing now, but it's pretty slow. I went to a what's it called the is it Holly or holy holy holy celebration and it was a non with G is a key. So like that clear butter and then tons of
Butter butter chicken, but instead of chicken. It was cheese. I'll go and then it was like that. It was like the dessert was fried dough and maple syrup. What do you guys call that job? I think go on jump and it's delicious but it was delicious. Like don't yeah, it's yeah, it's good for you because it made me smiled smiling is good for you, but it didn't feel great two hours later. Yeah, and here's what's changing though is now Indian people are really well D. There's four million people have an average income of 100,000 dollars.
The wealthiest ethnic group so I do think things will change like noose not be a very viable Market but now there's a lot of fuss and it's a very big market. So I think all of these businesses also make good commercial sense. If you read in our comment section on YouTube the most recurring comment is Sean. You look great Sean. Are you losing weight Sean? That beard looks wonderful. So she's gonna be a sex I
can dollars en hiver. You can get that anybody can get it done for you. Do you need to go pay 50 grand 50 you get people saying how good you look on YouTube I
get everyone's commenting on
On blocks except for like they'll either they'll make fun of his outfit because he wears like a Mickey Mouse t-shirt or they'll be like Sean your workout program. It's working. So well, like people are just sucking up to him so
much. Well, yep. Thank you and Conquer where should people find you where how do they get go and use your product that helps them with taxes?
Yeah absolutely were called carry. We're at carry money.com and if anyone wants to set up a solo 401k or just get better at what they pay in taxes check us out. Appreciate you thank
Thank you. Thanks for coming man. Suite bath. This is fun.
I feel like I could rule the world. I know what I could be what I want to be like a day's travel never looking back.
