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What are you going to unblock for them when you if someone read all your books, listen to your podcast, listen to today's podcast, what are they going to unblock that's been tripping them up, keeping them behind or holding them back? I think they would have clarity on what actions were required to get what they wanted and then at that point they would only have to just think like why am I not doing it which is a separate conversation but there's a lot of confusion I would say around like what are the things that are required in order to create a business in order to create an income I would say that I'm an objectivist and so I just look at what are the things that are observable and I
think a lot of time people spend inside their heads trying to think about manifesting and energy and all of this stuff when it's like we got to let people know about the stuff we have. We got to have something to sell and we got to make sure that what we're charging costs less than it costs to deliver it. And we try and do that as many times as we can. And so each of those pieces obviously has frameworks behind them. But they're all tied to one thing which is just what actions are required. And that's been the single pervasive frame in my life that has made navigating reality significantly easier for me because I was very confused coming up and I was like I don't know what any of this is. And I read all these self-help books and I felt
more confused after the 10th book than I did on the first book. And then it was just like, okay, what do I have to do? And then that is kind of what has started this journey for me. What's that number one misconception you hear when people are thinking about building a business, making money, changing their financial situation? What's the number one thing you hear and you go that's the issue? I think they conflate sequence is probably the first and biggest thing because a lot of people who are wanting to make money believe that the making money comes from
investing and investing is the last thing you do not the first thing you do and so one of the things is they'll look at people who are at the end of their careers and say okay well these guys are making all these you know these bets right I if I just bought this memecoin or I just bought Bitcoin in 2013 I'd be super rich but it actually doesn't take into consideration what a decision-making process like that would create which is if you took a swing at every type of Bitcoin because you can't just say I would only pick this one. You'd have to say I pick every single super long shot. It's like we probably would have lost them 99 of the other bets. And so it's like we have to take it in
aggregate. And so I would say making active income cool again uh rather than the passive bet and really just gambling um is probably the first thing that people mess up is that they're they somehow think that working or active income is not scalable when in reality the people who have the most money typically have tremendously high incomes. And it's because of the excess of cash flow from that income are they able now to make big swings with riskier bets that sometimes pay off and sometimes don't. But you can't take those swings unless you have more cash that's coming in from the things you do every day.
You know what? No one's ever said it that well, like from everyone I've spoken to. And I'm so glad you pointed it out because I completely agree. I have so many friends who when they saw the rise of crypto or whatever it was, jumped in with a large sum of their life savings because they heard of a friend who'd made a killing. Put it all in there. A week later it dropped by like 10k. They pulled it all out. The next week it went up double like and it was just a mess. And so many of them lost like 10 20 30 40,000 dollars. And it's all because you're thinking that's the way to get there and it's cooler and it's smarter and like you're a genius if you and you're right. Actually,
everyone I know that's made amazing money on any of that already had tons of money and it was play money for them. So it just changed into this. So what's happening there? Why is it that we've been led down this thought process and how do we get out of it? I mean I think it's fundamentally the something for nothing fallacy of like how can I get rich quick? How can I do it really easily? And um basically the more it feels like luck is usually where you should have your first red flag. If you I mean I have a belief that if you control all the variables then you can predict the outcome. Now, we don't always control all the variables in any given situation. But the greater number of variables we control, the greater
influence we have over the outcome. And if you're getting into something like this and you're like, I actually don't even know what the variables are. Then it's like you are 100% gambling. And so this is your life savings. Would you put it on black at the casino? Probably not. This is really not that different than that. Except at the casino, you have no nods at least right here. It's like you have no idea. And typically by the time especially genpop uh kind of retail investors find out about something it is the peak and it is too late. And so you have to be at the very beginning of these if you want to be speculative which I wholeheartedly am not a big fan of speculative investments
in general because it's basically the greater fool theory which is what they call in the investment world which is just like we just keep selling to the greater and greater fool until sometime somebody is the greatest fool of all and then it drops right and so I prefer to think about instead of thinking of investments and active income I think of just money per unit of time and that kind of takes out this binary or what I would consider a false binary of active and passive and think well and I feel like I and prove this pretty clearly which is we live in time and we collect money in that period of time and so fundamentally all we want to do if we want to increase our income is just
think what are we earning per unit and this is where again bad piece of advice is like never sell your time it's like okay well if someone gave you a billion dollars for an hour would you not sell that I would right so it's a question of how much is your time worth and then that creates a much more actionable uh decision-m framework of is this worth it or not you can build something very big in about 5 to seven years. And the problem is that I think most people spend that same 5 to seven years reliving the same 30 days over and over again, jumping from thing to thing and never actually getting the root set so that they can pay down their ignorance tax of not knowing enough. Basically, there's I
would say there's five stages that most newer entrepreneurs or people who want to pursue income go through. So the first is um what I call uninformed optimism. So your friend tells you about this thing they made 10 grand on and you're like that sounds amazing. You're uninformed but you're optimistic, right? And so then you get into it and then all of a sudden you get to uh informed pessimism. So you get in and then you put your money in and then it drops and you're like wow this sucks. And then you know people are like buy the dip. And so you're like okay I'm going to put more money in. And so then you get to kind of stage three which is the value of despair where you're like oh my
god I've lost so much money. I have no idea what's what's going on right now. And at stage three there's kind of a fork. And so either people then go, "Well, my other friend told me about this other thing." And they jump back to step one and go to uninformed optimism. And then they just they funnel through that loop over and over again. Now, to break through that dip, you have to basically get to stage four, which is um informed optimism. So now you understand the rules of the game. You understand the variables at play. And it's not as good as you thought it was, but you at least get it. And so from there, then you can get to achievement, right? Which is the fifth step. But the thing is
that you have to stay in that third painful place because staying in the pain is what gives you the catalyst to learn how to get out of pain. And so rather than trying to pull your parachute, it's like I have to trudge through this so that it forces me to learn the individual skills, the individual variables that affect this outcome. And that means I might have to take 20 more lashings to finally get it. And then at that point, it starts to tick up. And then that's when you start to become more of an expert, more of a master at something. People make the mistake where we go, I don't have time to learn, right? So, I'm going to learn from someone who makes me feel like I can learn it in an hour.
Yeah. And then I'm going to do it, which still is uninformed optimism. So, how do we learn? Where do we go? How do you build that time to say, "How many hours do I need to even learn about this? I'm going to put money in it." How would you calculate that? If someone was like, "I'm going to put in a,000. I'm going to put in a $10,000." Yeah. How much time should they put to value that amount of money? So, great question. I would reframe the premise, which would be we'd still be operating under this as I'm going to put money into something. And so, I would reject the original premise and say, well, if you want to get really good at something, then why don't we start with skills that generate income? And so, if
we follow kind of the three elements of a business at its most basic form is you have some element of promotion. So, we got to let people know about our stuff. The second element is we got to have a way to convert them. So we have to be able to sell some sort of exchange mechanism and then finally we have to deliver right so attract convert delivery easy um well easy to say hard to do right within each of those things it's like okay well how do I let people know about my stuff or even before that what stuff do I sell right and so that's where I like to think about it as people try to think man there's so many people and try to boil the ocean like it's impossible to try and like try and think what business
could I possibly start because you're trying to address the world when It's much easier to say what are the problems that exist in my life and I kind of think of it as the three Ps like most businesses come out of a passion. So something that you're just inherently interested in. They come out of a profession. So you currently exchange right now you have a job whatever it is and you get paid maybe not as much as you want but you do get paid uh for exchanging some sort of value with the business. And the third is P which is pain. Right? So there's some deep pain that sometimes you went through. So maybe it's a mom who had to figure out how to um create non-allergenic food for
their kids, right? It's it be something as small as that. And so from that those three kind of uh buckets is I think the best starting point for most people who want to start making an income. It's like okay well if you're inherently interested in this topic it's like can we make can we let people know about stuff around that topic? Can we create solutions around that stuff? Can we create services? Which is where I prefer most people start? Which to be fair in the United States 78% of businesses are service based businesses. And I think it's because they're the easiest to start. You just trade time for money.
Should you do what you love for money and love what you do? I think this is big myth number two. So if we have we start with you know passive versus active is big problem number one. Um number two is follow your passion. I think the reason that this is so espoused I'll start where I think the idea comes from and then kind of break down from there. I think it's because most of those commitment speeches are billionaires or very successful people and they say follow your passion. But if we think through what other advice could they give that would be socially acceptable. They can't say, you know, I got lucky. They can't say, um, I worked, you know, super hard because people were like, sure, you know, like, and so then
it's like, okay, well, they're never going to get attacked for saying follow your passion. But the problem with that is it also assumes that your passion or your interest will never change. And I mean, anybody who's listening to this, just think about what you were really interested in 10 years ago. It's probably different than it is now. And if you extrapolate that another 10 years, it'll probably be different again. And so if we can think about the hypothetical extreme of a really successful person as someone who sticks with the same thing for an extended period of time, which is something that I believe because you learn all the lessons you possibly can in a very narrow field, right? And that you basically try and make as many mistakes
as you can. And if you basically, you know, pay off all the ignorance debt you can, it's like you end up just succeeding by default if you just fail every other way. But if you try and do too many things, you never actually get to to push the road all the way, you know, trudge through the mud and get there because you're only learning one or two mistakes in many fields and not many in one. And so the follow your passion issue is that yeah, number one, the passions will change. Number two is that sometimes you're passionate about things that people don't value. And the thing is there's nothing wrong with that.
It's just that it'll be very hard to make an income that way. The third thing is that I think that it creates an emotionality around business or income which is that the moment it doesn't feel good that you believe the myth that you should stop when I think that oh good you if you and I were to talk about you know the business side of anything there are elements that I love and there are elements that I hate and I see them as both required you know I would love to maximize one versus the other but it's just the cost of doing business literally but I try to reframe that pain that comes from doing the things that I don't want to do the things that I do want to do as the price tag required
to become the person that I want to become. And so if we think about the traits of any person, so it's like if I want to be patient, then I can't expect things to happen faster, right? Like if we were to go to the end of our lives and say, "Hey, I want these character traits." It's like, well, if you had to play a character, you know, in a video game and make them that way, it's like, well, what would you have to put them through in order to get those traits? It's like, well, if you want patience, then you're not going to get things quickly. If you want to have endurance, it's like you have to be able to tolerate suffering, right? If you uh if you want to be wise, it's like you're
gonna have to get burnt and you're gonna have to learn the value of judgment. And sometimes that means you're going to get betrayed in order to learn that pattern. And so it's like we lament the price tag for the things that we want. And I think that at least for me, my ultimate, you know, long-term goal is just to become the person that I the best version of me, right? And I think that in order for that to happen, I will have to go through pain. And so the follow your passion, you know, moniker also creates this emotionality that gets you to quit when you really are on the right path and it's just this is just part of it. And so I think those are probably the big three um that I think about when
it comes to why follow your passion doesn't serve most people. My third myth that I would probably tack onto this as we're building these is um overbelief in idea and underbelief in execution. Oh yeah, so true. And so there's two elements to this. So one is that I think many people who are you know intimidated to start believe that they have to start the next Facebook and you know the Zuckerbergs and the basis of the world are so incredibly rare. The vast majority of people who got into business have many failured and many failures many failed businesses uh that led them to fail into success right and so uh one is that the idea has to be this big amazing thing and the second is
that you shouldn't that the idea itself is the success right because they'll share with as many people as they can and they almost scratch the itch of starting when you haven't done anything I say there's basically four steps to starting a business it's like you have to get an LLC you take the LLC to a bank and then you get a bank account and then you connect that bank account to a payment processor and then you go ask a stranger if you can do something in exchange for money and if you do all four of those things you have a business that's it right and so a lot of people like spend years being like I'm going to start a business one day it's like you can do it tomorrow literally do all of this tomorrow
and then it's like okay well then how do I get the person to exchange money it's like well you reach out to the people you know right you open your phone you look at the 400 contacts you have there you open up your Facebook profile. You have 300 friends. You look at those friends and then you just say, "Hey," you send a personal video, send a personal text and say, "Hey, I am starting this thing. Um, this is what we're doing. This is what I'm solving. Uh, do you know anybody?" That's it. And so, it's not even like you're asking your friends to buy something from you. And what's interesting though is that 90% of the time, the person who responds is, "Oh, you know, you could do that for
me if you want, but that just gives you the easiest way that costs 0." And because we're all connected with the internet and phones, it's like the barrier to entry has never been lower than it is now. It's just the problem is that um the barrier to distraction is even lower. For those of you who are like I don't want to work for free. It's like you're not working for free. You're earning and then you're sorry you're learning and then you're earning. And so we got to go through the learn phase first. And the best way to do it is people who aren't direct connections of yours maybe one step removed. And then at that point they're going to give you very real feedback. And if you do a
good job then after a certain point my goal is to get people to basically shift supply demand in their favor. Like I say the two laws of business that I am the most moved by are supply and demand which is this X right here and then leverage. So that's a fulcrum for leverage. And so I see those are the two biggest forces in business. And so I want to create artificial demand for somebody who's starting out by just saying we'll do a lot of stuff for free. And then what happens is when you have more no more time to give and if people still want you to do stuff and you say hey I can't take any more people. If you want you can pay and people like yeah that's fine. And then boom and then you make your first sale.
And so, and you'll have confidence because you're like, "Well, I just did it 20 other times." And look at the results from those people. And but and the first one, you'll be embarrassed about the 19th one, you're like, "Wow, you're going to already paid down 60 70% of all the mess ups that you were going to do." And then at that point, you're going to start feeling good. And then from there, my way of doing it is just you just keep bumping the price by 20% every five people until eventually people start stop saying yes. And then up, we're like, "Okay, this is the price I can do for now." And that's basically a very seamless transition into how do I go from nothing to making my first dollar.
How do you get over the block of I don't want to work for free? I actually think it's entitlement. I think it's believing that you deserve something for nothing. Like to flip the flip the rules in reverse. Imagine somebody comes to you, they've never done anything ever in this particular space and they say, "Hey, will you pay me to do this thing?" Would you immediately, now maybe some people would be like, "Sure." then it's a charity thing which is different but would you be like you know what I really believe that this guy is the best person that I can get this problem solved from probably not and so to carry some of that risk for yourself you say I'm going to front this but if you want to not do
it for free thing number one is that you're getting educated so like you're you're getting free education which I see is absolutely valuable the second thing is that you can make terms that don't necessarily mean that it's free like there's the price and then there's the terms of the agreement can be if you do this with me, you have to give me feedback uh throughout the entire process and at the end if I do a good job, you leave a review, right? And on three different formats and leave me a video and leave me, you know, a text version of it. That's now absolutely like I'll say it differently, a business owner, they do illegally and so therefore they are very willing to pay
people to leave them testimonials. And so if you'd be willing to pay $500 to get an amazing testimonial, then they're basically you're they've paid you that $500. But I promise you, those first 5 10 reviews will make you so much more than they could ever have paid you and not given you a testimonial. So if we flip it and say, "Hey, would you rather get $1,000 from this person and have them not leave a review versus free and a glowing review, I promise you, you will make so much more from one glowing review than you will from the $1,000 long term." You know, talking to you today and Alex, I watch your stuff all the time. The thing that's standing out to me is you're super tactical. There's all these
methods. there's all these systems, but then when you were talking about your life, you were like, "It's all about who I want to become." Mhm. Is there a number that you stop at or is it actually who you want to become that's your north star? I see entrepreneurship as the single greatest path for personal development because if we define, you know, learning as fast feedback loops, there are very few other, you know, professions that give you that much feedback, that brutally honest, brutally honest feedback as the market will do. And so at every point where I get stuck in a business, I think to myself like what skill do I lack? And I define
everything by skills. So even traits, which is just, you know, a colloquial term, which is really just a bucket of many skills, um I just think, okay, well, in order for me to appear confident or be confident, it's really like 38 things that I have to learn. And all of these things, if I break them down easier, I can do them. So it's like, okay, when I shake hands, I make sure that I web the middle of my hand and I squeeze firmly and I look at the person in the eye. It's like that's thing one. thing too is that when we're talking like you nod because you've been doing this for so long but some people who don't know how to have conversations just stand like this but somebody who's
an active listener will nod they'll say oh that's a great point whatever and so it's like that's a second thing when I walk into a room I'm going to call people by name it's a third thing and so when I try and think about these traits of who I want to become it's like can I break these down into actions that I can actually do and so I think that is that has been a large part of the growth that I've I've hopefully you know been able to uh achieve but in terms of the ultimate goal for me it's always just been to be useful Mhm. And if I think I just do that, then I like that it's such a simplified goal because being useful has uh it actually includes multiple parties because you cannot be useful unless there's someone
else you're being useful to. And so it gives you something controllable which is that I have to learn skills so that I can serve someone else and that is how I can ultimately be useful. And so even when we're, you know, we're making content or whatever it is that we're putting out, I always try to think like is this useful? Like can someone actually will this change someone's behavior? I be like I want to educate. It's like what is education? It just means same condition, new behavior. So if someone has had their same day over and over again, then they're not learning. So if your day looks the same every single day, you have learned
nothing. And so that means that if you listen to this podcast and then nothing changes about your behavior as a result, this was just entertainment, not education. What do you think is the number one emotion that people don't know how to control that leads to failure? That is such a good question. Fear. Because I think one of the most one of the wildest questions um that I read that you know kind of stuck with me was like what would you do if you weren't afraid? And I think that's just a such a powerful question to ask because every
person has the fear is the thing that gives you the hundred reasons. And what's really interesting about this is that we are our brains are exceptionally good at finding problems which is why I'm a big fan of inverted thinking. So, how can I think about all the ways to kill my business and then do the opposite? You'll your brain is so much better at spotting problems than spotting opportunities. And so, it's like use that problem finding thing and then just flip it. And it sounds like, oh, well, I would just think of the opportunities that way. It's like it doesn't actually work. You actually have to think for the threats and then flip them. But that's genius. I love that.
Yeah, that's Charlie Mongers. That's, you know, you know, rest in peace. Um, but from a fear perspective, it's I think it's playing it out. It's like what am I actually most afraid of? And so fear typically only lives in the vague, not in the specific. We tend to catastrophize to death. So if I make this post and people laugh at me, I'll get shunned and then I'll eventually go alone and then die, right? So it's like everything just goes to like death, right? And so playing it out into the specific is like, okay, well, I make this post, some people will like it and some people won't and maybe I'll get some negative comments. If I get negative comments, I'll get more reach.
So maybe that's not a terrible thing. And then that night I will have dinner, right? And that night I will go to bed, right? And so uh making it really specific and then just to add one more thing on that. The other really big downside of being human from an opportunity moneymaking perspective is that we underestimate the upside and we overestimate the downside and that has been incredibly valuable for us to stay alive and not very valuable for us to make money. And so when you if you're in the developed world, the absolute worst case scenario is that you still have I say fortress, you still have you still have a cover and you still have food and you still have air and you still have water because in the
developed world all those things are available to anyone. And so it's like okay so the worst case scenario is that I live and I'm completely free and no one bothers me. It's like you know that actually sounds not so bad when you actually play it all the way out. And so um I think playing it out and actually really thinking what would I then do? Well, I'd probably reach out to Sarah and she would let me sleep on her couch. Okay. So, and I would ask her if you can play. I'd be like, "Hey, Sarah, if I were to do something and I were to fail, how long would you let me sleep on your couch?" She's like, "I'd give you 6 months." And you're like, "Okay." So, it all of a sudden it becomes concrete. And I think that
starts to really evaporate fear rather than like, "Oh, I will die." Alex, we end every episode with a final five. These questions get asked to everyone. Um, and so these are your final five. They have to be answered in one word to one sentence maximum. Okay. So, question number one, Alex, what is the best advice you've ever heard or received? Do so much work it would be unreasonable for you not to be successful. Second question, what is the worst advice you've ever heard or received? Follow your passion. Question number three, a piece of advice you wish you received sooner.
Find people better than you and do whatever you can to get them to help you, including helping them first without expectation. [clears throat] Question number four, a lesson that took you far too many times to learn. Focus. One thing all in. And fifth and final question, we ask this to every guest who's ever been on the show. If you could create one law that everyone had to follow, what would it be? Everyone has to give all their wealth away at the end of their life. I love that one. But not to your kids, but not Oh, no. But it has to Yeah, exactly. Has to be given away to kids or It doesn't matter.
Yeah. Not to your kids. Like your kids. Yeah. Are you saying beyond your kids? Yeah. My friend just told me the other day that his dad just took him out the will and his dad's given all his money away to charity and all the kids are not getting anything. He was heartbroken. He was like, "Oh god, I thought I was going to pay off the mortgage on my house." It's so funny. So there's a Sanskrit saying around that which is um uh if you have a good son, there's no need to accumulate wealth. If you have a bad son, there's no point to accumulate wealth. And so at the end of the day, that's I mean that's my worldview, which is the reason that I want the reason that I would want the game to be structured so that everybody
has to give all their stuff away at the end is because if you look at second and third order consequences of that, the people who are the best at allocating or sorry, aggregating capital, the people are the best at making money uh would be the ones who are also the best at allocating it. And so you would actually have the best tools and the people who are best skilled to use them. And so if you know you have to give it away, then at some point near the later part of your life, you would stop trying to amass um and start trying to you'd focus on giving. And I think most people who do give get addicted to giving because they realize they actually it fills a hole that the wealth never did.
Yeah. Right. And so what ends up happening though is that from a societal perspective is that if all the best allocators of capital then tried to solve all the world's problems with the capital they had, so many fewer problems would exist that would the whole world would get better. The other downstream effect of that is that it would get rid of a huge amount of kind of the cronyism, the nepatism, the things where, you know, these seventh generation massive, you know, wealth uh trust fund, you know, kids who like it doesn't serve the kids either. You look at those families, they're a mess. Um depression, [clears throat] yeah. On so many reasons. Um and so I'm a big believer in equal opportunity, not equal outcomes. And so
if everybody's slate was clean day one because no one got daddy's inheritance, then everyone starts at zero as close as possible. Obviously genetics, you know, can play a factor there, but I think that's as equal of a start as we can get. And then everyone starts at zero and the ones who super win then turn into supergivers. And I like that.
