My First Million: #116 with Kelly Erb - Tax Expert Breaks Down Trump Taxes and Big Businesses Ran by Few People

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Back to the show.

Okay.

Okay, sweet.

So I'm here with Tax Girl.

I'm here with Kelly Irb, who has a great handle and domain.

I got to give you credit.

You branded the hell out of yourself.

So you have at taxgirl on Twitter, and you have taxgirl.com.

So already you're my kind of person for having this kind of pretty interesting self-branding

plus just being, you know, most people who understand taxes don't understand social media

and content, and you seem to do so.

So am I right in that assessment?

I hope so.

Thank you for saying words.

By the way.

Yeah, no.

I actually started out, I think, pretty early on in the kind of the tax-writing business.

I was an attorney that just started writing about tax, and at the time, I think a lot

of people were writing really technical pieces, and I didn't think that made sense.

So I was trying to be more accessible.

So that's kind of how that evolved.

And when I'm on your Twitter right now, it's showing me at taxmama and at taxtweet as people

I may like.

Are these your rivals?

Is it taxgirl versus taxmama?

No.

I mean, first of all, taxmama is awesome.

That's a good reason, but she's amazing.

No, actually, what's really cool about tax Twitter, which is our little sub-Twitter,

is that they're really great people.

So we're not so much rivals as we are colleagues.

Great.

Okay, I love it.

And you had this Forbes article go viral recently.

That was, I'll read the title.

The Ordinary Taxpayers Guide to the Extraordinary Story of Trump's Tax Returns, and I was looking

at Forbes and basically I would say you've been a contributor and I would say your normal

post will get thousands of reads of views, I guess, it shows it on the site.

And this one has over 200,000 views.

So this one definitely hit a nerve, which I'm guessing you kind of had an inkling it

would or did this exceed your expectations?

So the thing about tax coverage that's really tricky is that when you talk about views,

if you were to look at my articles in March, it's not unusual for one to get a million

or two views, right?

I see.

But this time of year, people don't talk about tax in September, just as a general rule,

like people are over it by now, so the coverage doesn't usually start up again until December

when people are thinking year end.

So yeah, to have a lot of views on something that doesn't directly impact you as a tax story

is pretty unusual, I'd say.

I did expect some coverage of it.

I think the thing that I got a lot of impact on social media, because actually I think

it's probably been shared more than it's been read, is that people were interested in the

fact that my, that particular article is more about the mechanics and not about the politics.

And so I think that that was something that kind of caught a lot of people's eye, because

I think right now, a lot of people feel like the information that they're getting is just

so filtered that they sometimes just want to know the, you know, they just want to know

the stuff.

They don't want to know all the extra and they don't want this perspective.

This wasn't Trump is evil or Trump is the best.

This was, hey, here's how you should think about this information that was released and

what you can and can't draw from it, which I thought was a good kind of like, just the

information part that you're talking about.

Okay, so yeah, this got a bunch of views.

It's like, you know, selling a Christmas tree in May, you sold a lot of Christmas trees in

May randomly.

So I think that's the, that's what's interesting about doing this article, not during tax season.

So I think there's two things that I wanted to talk to you about.

Number one was, you know, you say in this post, you're like, you know, I'm not going to kind

of comment on, you know, this is not an opinion piece on, you know, to give you my take on

Trump's tax returns because I haven't seen them and you should go read the article.

So I do want to get your opinion on it.

So even though in this thing you said you don't want to talk about it, I am curious,

like what was your, what was your personal reaction when you, when you read the news

that are the New York Times article?

So one of the things that's really interesting is if you've been following the, the Trump

tech story at all, and I've actually written about it as far back as 2015, you know, a

lot of this information is not new to us.

I think the thing that's so extraordinary about what the Times did is they have packaged

it all at once, right?

So I think a lot of the information, we've been hearing bits of this for, you know, years,

a page or two leaks out and somebody talks about it on Rachel Maddow or people of, you

know, Michael Cohen talks about it in his book.

I mean, a lot of this information that we're hearing isn't new, but again, I think what's

extraordinary and what the Times did is they took other information and that's what I think

sometimes we lack, right, as just readers.

You don't know if somebody, if I were to give you my 1040 and you were just looking at it

in a vacuum just for this year, you wouldn't really know a lot about me.

You might could tell how many kids I have where I live, like there are things you can

glean from a tax return, but you might look at my business.

What if my business last year was phenomenal and this year it's not, you're not going to

know that from that one tax return.

So I think that what the Times did and looking at so many years and then also looking at

additional information and comparing it to FBC filings and SEC filings, it was a lot of

information that they digested for the reader, which I think is really something that we

haven't seen before.

And you know, to the point about a lot of people have said, well, why do we need to

see it now?

You know, I don't know that that's a personal decision on your part, but I will say that

usually when you are evaluating presidential candidates, you'd like to know what the economics

and what the finances are, not just in terms of are they successful or are they not, but

you know, where are their business interests?

What kinds of money do they owe?

You know, who do they owe that money to?

And we've seen that from other candidates and we haven't seen it from this president.

And so I think that's what's really, you know, both interesting and extraordinary about

what the Times did.

And were you surprised, okay, you know, the kind of the catchy headline was Trump paid

750 bucks of federal income taxes or federal taxes in that year, I forgot what year it

was, 2016, maybe 2017, something like that.

Was that a surprise to you or you were like, no, that's not shocking?

No, actually, the only, I will say the only thing that I read that actually truly triggered

a, and again, this is probably from a tax geek standpoint, but truly triggered a hmm

from me is, you know, we've known, I mean, the business loss is nothing new, right?

We've known this, good years, bad years, we've known this, we've known there's a lot of bad

years, you know, no matter what has been portrayed, we knew there were a lot of bad years.

But I think what was really interesting to me is when you look at the refund piece, which

is kind of what everybody's talking about right now, there was one year in particular

where the president was able to take advantage of Obama era bailout provisions to extend

what's called carrybacks, which is where you can recover.

If you have like a really good year when you're at that you've had a couple of bad years,

you can balance those out so that you can either lower your tax bill going forward or

you can get a refund based on years previous.

The fact that he did that isn't the part that I found interesting.

What I found interesting was he was entitled to a large refund, which he got in 2010, according

to the Times.

Right, this $72 million one?

Yeah, yeah, and so that's based on several years from he got a refund based on some losses

to recover from years that he had done well on the apprentice.

He had paid some taxes in 05060708 and then he has a bad year.

He can kind of apply that bad year backwards and get a refund.

That part didn't surprise me either, but the part that I found really extraordinary when

I was reading is that he, that went to a joint committee for review because the number is

so big.

That's actually by statute.

Once the refunds hit over $2 million, they go to a committee, so people are like, let's

look at this and make sure it's legit, right?

So that's what happened, and that was kind of the crux of the audit that the president

kept talking about every year when he says he couldn't release his returns because they

were on audit.

Now we know that that's what triggered the audit was that year, because that's separate

from the piece about presidents get audited every year because he wasn't president.

Right.

This is unrelated.

But when you get audited, sometimes that can go on for a while, but it's extraordinary

for it to go on this long.

According to the times, that's because they were unable to reach a deal and the president

kept consenting to extend the time to assess, which is like a move that you can do for all

kinds of reasons.

But the thing that's interesting to me is they say that in 2014, at least the time says,

that in 2014, they were close to a settlement.

And that's what I found extraordinary because as a business person, and I run my own share

as well, you know, you don't typically like to have that kind of uncertainty, especially

on the financial side, go on for that long, right?

So that was the piece I have to say out of the entire report and the follow up.

It wasn't the losses of the depreciation or any of that.

It's the idea that as a business person, you would be close to a settlement in 2014 and

then six years later, still be hashing that out.

And you know, we don't know why it fell apart.

We don't know the details.

I'm not going to speculate, but I will just say again, as someone who runs my own show,

if I knew that I might have to pay back $100 million, I think I would want that resolved

sooner rather than later.

I see.

Okay.

All right.

Well, tax side of things and the other piece of this is just we have a lot of people that

listen to this that have their own businesses that, you know, taxes tends to be your biggest

expense the more successful you get because it scales up with success in many ways.

And I know for myself, I've spent the last six months trying to figure out how do I reduce

my own tax burden because, you know, it's, it's large and I want to be smart about it.

And I started from a place of completely zero education around it.

And now I'm like, oh, can I go buy a building, put solar on the roof to get some credits

to appreciate the bill?

You know, I'm trying, I'm trying to think through what are all my options here?

You know, should I be living in the Caribbean type of thing?

And, and so I just wanted to get from you kind of like, I don't know, is there a one

on one?

Is there a dumbed down version of it that you could sort of walk people through of things

that they should be thinking about or looking at if you are a business owner and you're

trying to think about what trying to think about tax strategies that you think work work

well.

So we'll first of all, there's two things.

So the first thing is that I kind of just to tie back to the Trump piece as well.

You know, as you mentioned, taxes are a big part of being a business owner.

It's rare that you're going to have a $750 tax bill, I mean, no matter what you do over

and over and over.

So I think the one thing people need to think about is not to compare their tax liability

to other business owners because your circumstances are very different, right?

Even if you have two website owners, they're, it's still going to be very, very different

what you do, how successful you are, how you spend your money.

So the first thing I would say is just be careful about comparisons.

But then one of the other things that you said, which I thought was really interesting,

like you mentioned solar credits, I'm like, yeah, like as you're talking, I'm like, absolutely,

those are things you can do.

Yeah, because there are definitely things that you can do depending on the kind of business

that you have that will reduce your tax liability.

But you shouldn't as a business owner be too quick to focus on lowering your taxes because

as a business owner, you want to maximize your profits, right?

Not necessarily just focus on taxes.

And a lot of times to lower taxes, you have to spend money.

So you want it like those solar panels, right?

So you need to figure out, is that going to be a return on investment that makes sense?

Am I going to earn enough tax credits to make up for the outlay of the funds in the beginning?

And I think that that's sometimes where people get stuck because they start thinking to themselves,

I'm going to buy a car for my business because somebody told me if I get a car, I can write

it off.

I'm going to buy a new printer and a third monitor and they start adding all these things

because they're deduction.

All these expenses.

Yeah.

And if you could see me, I'm doing like little air quotes, I'm like, collections.

But those are also spending money.

So you shouldn't get so lost in the idea that you want to lower your tax bill that you go

down the road of spending money.

What you should do, and this is, I think, where you are going, is that you should think

of things that will make your business better that are also tax beneficial.

And that's where I think people get sometimes confused, does a third monitor make your life

easier?

If it does, then that's a really smart expense because it helps you be a better business

owner and it's a deduction.

So that's, I think, my big takeaway would be to think of areas where if you spend the

money to get the deduction or the credit, you're also getting a benefit to the business.

It shouldn't always be focused on just lowering that tax number.

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Great.

By the way, welcome Sam, Sam just joined and so Sam, we're talking to Kelly about all

things taxes.

She is at taxgirl on Twitter and I think you have a podcast, right?

Taxgirl podcast, is that right?

Yes.

Okay.

So if you like this, you can get more there.

So I'm a big fan of this rule called the 80-20 rule and the 80-20 rule for those who don't

know is basically, you know, how do I get 80% of the results with 20% of the effort?

And if you look at any project you do, it tends to be that 80% of the outcomes come from

about 20% of the inputs.

It's this common pattern you'll see.

If you invest in your venture capitalists, you invest in portfolio companies, it will

tend to be that 80% of your returns will come from 20% of the companies.

So I'm curious, Kelly, is there 80-20 if you're talking about, you know, if you're somebody

who's looking for, what is the 80-20, what are the 20% of efforts I would take?

Or, you know, what are the first few things that come to mind when you're talking to somebody

about their tax strategy, that if you can't learn the whole tax code book, but if you

really just looked at these, if you focused on these handful of inputs, you can kind of

get a reliably large chunk of results from it in terms of, you know, being smarter about

your taxes.

What comes to mind if you're talking to a business owner?

Where do you point them to first?

What's kind of one, two, and three?

So I think first is business expenses, which is something that people are talking more

and more about right now.

And they can be, you know, office supplies, they can be new cars, they can be lots of

things.

But I think that one of the things, it's funny because when we talk about taxes, a lot of

people assume that, you know, people over deduct.

This is, I think, a myth, especially amongst business owners.

I find that business owners are so worried about being audited that they actually under

deduct.

And to qualify, though, for business owner, you're referring to LLC or can that include

C Corp as well?

So all of them, I think.

I think LLC is, I think, but I think especially on the LLC and the sole practitioner, so somebody

who is filing like a Schedule C on their tax returns, because I think when you have a corporation

and I have an actual corporation as well, mine's an S, but still, when you have a corporation,

I think that you think about things a different way in terms of how you separate home and

business.

When you are a smaller entrepreneur, maybe you have an LLC or you're filing on a Schedule

C, I think the fear, at least amongst my clients, the fear is a lot greater because

there's more, it feels like there's more at risk, right?

You could lose your house if something goes wrong as opposed to just the assets inside

the C Corp.

So I typically talk about LLCs and pastors and Schedule Cs, because those are the most

common, probably if you throw S Corps in there about 80%, but not a lot of people anymore

do C Corps just because of the, they're actually tax disadvantages and more tax training required,

if that makes sense.

But yeah, like a business person, I'm thinking somebody who owns their own company, again,

usually as an LLC, they use it as pass through because that's an easy way to do your taxes

and you talk about expenses, that's another example.

If you're a single member LLC, for example, just by ticking a box, you can actually eliminate

an entire tax return, which saves you money because you don't need another step along

the way so you can eliminate an extra.

So I think a lot of times, business owners, again, especially smaller businesses, worry

a lot more about, because they're looking at the numbers a lot.

I think that people who are more involved in the day to day, they're looking at the numbers

more.

And so they're worried, they're the ones who are wondering whether or not that printer,

because they also use it to print out their kids' homework, really was a business deduction

so they don't claim it.

So in terms of what I would say yes to, I would say look at the ways you spend money

and see if they could be re-characterized as business expenses because I do think that

more people under-deduct than over-deduct.

I would imagine, and Sean, what do you think that most of the people listening are C-Corp

people?

It'll be a mix, right?

So anybody who's kind of venture-backed will be C-Corp, but I think...

Yeah, I think there would be because of the issues with transfer.

But I think for the majority of listeners, I mean, of course there are venture-backed

founders listening to this, but I think the most people are, I own a roofing company,

I'm a consultant, I have an agency, I, you know, whatever, like I have an e-commerce

store, and those will not be C-Corps, typically.

Yeah, so can you kind of quickly say what the...

You kind of gave a good 80, 20, I mean, basically you said that most people under-deduct.

What about for C-C folks?

I think the difference is, and again, this is some of its semantics, I understand, because

it's really sort of all the same pot of money, although my corporate lawyer husband would

argue with that characterization, but when you have a C-Corp, the difference in separation

is a lot more, right?

You typically don't use your personal credit card for your C-Corpsation.

You're going to have the C-Corpsation credit card, even if it's in your name.

So even if it says Kelly Irb, and then it says text girl on the bottom, it's still probably

registered through the corporation.

It's a lot more tricky when it's an LLC that you run yourself, maybe you're paid as a consultant

or a freelancer or a gig economy, and the money comes to you directly.

I think that that's where kind of the difference, where you see the difference, because it's

a lot, if you have an American Express card that you only use for your C-Corpsation, you

know, and you buy things in the name of the corporation, the separation is a lot more

apparent.

So when you go to put things on your tax return, you see, here's the credit card.

Now, I advise my other business clients who are in LLCs or Schedule Cs, solo practitioners,

all of those folks' partnerships, to also keep things separate.

But I do think it becomes a lot more tricky, especially now in a COVID world, right?

Because a lot of us are working from home.

So all of a sudden, you know, I have a microphone set up in my office, because that's the work

that I do.

My husband, however, hasn't been able to go into his office on a regular basis.

So now he has one too, even though that wasn't his deal.

So that's where I think it gets tricky.

I think it's where when things kind of overlap between home and business, you know, how do

you draw those lines?

And I think that that's where, when I say that I think C corporations probably deduct

more reliably than other kinds of businesses.

I think that's sort of where I'm going, is that I think it's that when there's not as

clear a separation, it can sometimes be really easy to say, oh, I don't know, I drive my

car for home and business, I'm just going to say it's personal, rather than deducting

those miles.

But if the company was a company car, of course you're deducting it.

So I think that that's where you see kind of the shades of gray.

And so Kelly, let's say, here's my experience, here's my experience.

So I have, I've had people who just kind of like do the company books, have an accountant

who, you know, helps me with my taxes every year.

I've done TurboTax on my own in prior years.

What I really want is I want somebody who I could say, hey, I'm paying a million dollars

in taxes in 2019.

How do I not pay a million dollars in taxes in 2019?

And I want, you know, who's Trump's guy?

I want Trump's guy to come to me and basically be like, oh, here's what you need to do.

You need to, you know, blah, blah, blah, blah, establish some domicile somewhere else.

You need to buy this piece of heavy machinery and you'll get paid for it every month.

Plus you're going to be able to write it all off for this year and next year we'll do something

else.

Where do I find that person?

Is that a tax strategist?

Is that a pipe dream?

And do I have to be 10 times richer than I am today?

What should I do?

So it could be your accountant.

It could be a tax planner, it could be a tax attorney like me.

I think that where people, especially in when you're getting started in business, kind of

fall down on that is that you don't want to spend a lot of money, right?

So you do the TurboTax, you do the accountant.

And what you do is you see that accountant one time a year.

You see that accountant in March or April and then you never see that person again.

That's kind of like going to the doctor when you're sick, but then never going for anything

else.

Like you've had a, you know, you've had a cough, but you didn't really want to look

at it because it's not a full-blown cough yet and you're thinking you'll get it looked

at eventually.

That someday isn't a good thing to do.

It's the same kind of thing with business.

You know, the person who knows who sees your books probably has a really good idea of

areas that you could possibly get a better deduction.

You could recharacterize into a credit.

You might qualify for a deferral.

They might have all kinds of suggestions for you, but if you're only seeing them when

you're handing over your data and signing your return, you're not really getting the

benefit of that.

You should at a minimum be meeting with your tax person once a quarter and let them look

at your books and say, you know what, turns out that because of COVID and the CARES Act,

you may qualify for PPP money, which is the paycheck protection program, which also not

only for people that had employees, but also for self-employed persons was applicable.

That money was a loan, but it was a forgivable loan, so it's tax-free to you.

So it's income tax-free.

You could have gotten paid to keep running your company during COVID and not have to

pay that back.

You might not have known that or whether you can qualify for it without talking to your

tax person because you're not going to get that in term by tax.

And so I think that when you say, like, who's Trump's person, it's not that he has a person,

it's that he has a team.

He has accountants, he has an accounting firm, I think it's Mazers.

He also has tax attorneys, they, I happen to know, one of them is William Nelson because

I always remember that his tax attorney was Willie Nelson.

So there's lots of, you know, he has people.

And I think that that's sometimes where business owners skimp because they don't want to pay

for people.

But just like any other thing, like you talk about efficiencies and how you can spend money

to get a benefit, those, that people, that team could maybe help you figure out strategies.

Think about it.

And actually, to Sam's question earlier, should I be a C or should I be an LLC?

Does it make sense to, you know, again, generally a C corporation is less tax advantageous,

not the reason people do it is because they're, like you mentioned venture, they're going

to sell or they have foreign investors, like there's reasons why that might happen.

But if that's not you, if you're listening and you are the roofing company that you mentioned,

maybe you want the LLC and you have somebody give you that information.

Sean, do you know what QSBS is?

I do, but I'd love for Kelly to say it better than I will.

I would love that as well.

Kelly, and here's how I, I mean, this is how we've been thinking about it.

It's this magic pill you take, you don't have to pay $10 million in taxes.

Yeah.

I mean, basically, you have, as long as you own a small business stock for four years,

five years, you, you don't have to pay federal capital gains tax up to $10 million, $10 million

of the gain.

Correct?

Well, I mean, sort of, I mean, there's a lot of rules and it's actually a relatively,

it's funny.

It's, in the, in the tax world, it's actually a relatively new rule because it's only been

around since the 90s, so that actually makes it a bit of a new rule.

But yeah, so it basically allows you to recharacterize stock that you have so that you can get a

tax benefit for it and it only applies to small businesses.

The QSBS part of it, obviously, is qualified small business stock.

So, but you have to be a C Corp for that, which is, I guess, we were going with that.

So there is ways to, it is a way to reduce your tax liability if you want to get, you

know, down the C corporation route.

Yep.

I have friends who have done this and it's amazing and you should just look up the rules

of if you qualify or not.

You don't have to do anything in advance.

I think you do it sort of at the end when you do have that, that those gains.

The other thing I thought was interesting.

That was the last thing I wanted to ask you about.

I had heard the story that there's this guy, Peter Thiel, he was the first investor in

Facebook.

He was the former founder of PayPal and that his investment, he put 500K into Facebook

and he put it in through like an IRA or something like that.

Like he's been investing out of a retirement account so that his gains in Facebook were

tax free essentially.

Do you know about this?

I've had people do that with our company through IRAs.

Yeah.

So I think it was probably, I'm guessing a self-directed IRA is my guess.

And yeah, so, and there's actually, it's interesting because I haven't done it as much

right now because those kinds of plans have been under attack from the IRA because a lot

of the, sorry IRS, because a lot of them were perhaps being used in ways that they weren't

intended to be used.

And I actually used to represent a lot of folks who did that with artwork.

They did, and real estate, that was also self-directed IRAs were being used.

It was art and being funded by art and real estate.

But what you're talking about is when you have a retirement plan, and the reason I jumped

in and said tax deferred not tax free is because when you have a retirement plan, the growth

inside the plan isn't taxable to you until you pull it out.

And so you can absolutely put certain kinds of assets inside the plan that might be appreciating

quickly.

And it doesn't even have to be your company.

It could be something like Amazon.

You know, if you had bought Amazon back in the day and it was in your retirement account,

it doesn't get taxed to you as it grows.

It only gets taxed to you when you take it out.

So it is a really good way to invest long term.

Now, where it gets tricky is like when you mentioned if you're going to be, there are

rules, and this is where the IRS is looking, you know, there are rules about the kinds

of assets that can be contributed, whether or not there are other people in your company

and what kinds of contributions they're also making.

And then you have to be careful about exchanges, like whether or not you're exchanging one

asset inside the plan for another.

So there are a lot of rules that govern them.

But yeah, there are absolutely people who are also doing this with crypto.

They're doing it with gold.

There's a lot of, you don't have to have a Vanguard account to have a retirement account.

There's absolutely ways that you can fund them on your own.

And again, the particular thing I think you're referring to is called a self-directed IRA.

Gotcha.

Okay.

Well, Kelly, this has been great.

I appreciate you coming on and dropping some tax wisdom on us.

As you can see, we are pretty novice.

You know, what's before a white belt, like we're just signing up for the free seminar

right now.

We don't even have our white belts yet.

I appreciate you coming on.

And I love, I love, I love that you took expertise in one place and then build an online presence

around it.

Like if, if I was going to learn one thing from this, it actually wouldn't be anything

about tax.

It would be about, wow, look at this, a tax attorney created an online brand around tax

girl.

And I've seen doctors doing this too, and they're making YouTube channels, breaking

down sports injuries and getting millions of views by being a doctor who creates content.

And I think that there will be more content creators who are, you know, specialists and

professionalists and other like verticals that, that do this and you're a great example

of one.

Thank you.

I appreciate that.

And if I could lead one piece of wisdom though, just would be absolutely kind of going back

to the thing that you mentioned before is just if you have tax questions, whether it

is a website or whether you go to YouTube, it pays to get good information.

And no matter how you consume it, because I do think that using those kinds of strategies

is what can make you successful, because again, you don't want to focus on paying the least

amount of taxes you want to maximize your profits.

Right.

Yeah.

And free tax advice is expensive.

Yeah.

Absolutely.

Okay.

Sounds good.

All right, Kelly.

Thank you so much.

Thank you.

Sean.

Okay.

I've got something I want to ask you about.

Yeah.

Okay.

So I was thinking about this course thing we're putting together.

There are a significant amount of companies that look like they are one thing on the outside,

but behind it, it's just a bunch of people doing all the work.

And I wanted to give you three examples.

The first is I found a website online that you pay $150 and you get a cartoon dog canvas.

And so what you do is it's like, and I made a website to test it.

All it is is you upload a photo of your dog, they send it out to like fiverr.com.

They get the cartoon made for five bucks.

And then you can get it put on canvas for like $25 myself or 150.

The second one is, you know, pitchbook.com pitchbook.

Yep.

Okay.

They do like 150 million a year in sales.

A lot of their data they get because they hire these guys in India to like just go out

and cold call people and ask for like, that's all it is.

I mean, at this point, I think it's a little, it's far more sophisticated than I'm dumbing

it down to.

I believe how they made a significant amount of money.

And the second one or the third one is summarizing books.

So we are, well, this is a two part one.

We were talking about this company called card munch and the way it started was this

guy would, he built this really simple app where you would take a picture of a business

card and then on the back end, there was human beings that would transcribe that business

card and upload it to your contacts.

Same with summarizing books.

So like, okay, Cupid started this way where they just outsourced it and they just had

someone summarizing all these books for like so cheap, like 50 bucks.

Okay, what do you mean?

I'm sorry.

The guy who started okay, Cupid had another company called spark notes.

Okay, gotcha.

Yes.

Spark notes.

Sorry.

Yeah.

Anyway, what else have you heard of that was like that where it's, we have a friend who

did this in the textbook summary space.

Yes.

So he did the same thing.

One of the, one of the, I will ask him afterwards if we can run any of this, I'll cut it out

otherwise.

But one thing that, you know, you go buy a textbook, you, it's a math calculus book for

your college class.

And then there's like at the end of every chapter, there's these like problems with,

and they typically, the textbook has like a solution at the back, right?

You go look up the answer in the back, see if you got it right.

But the answer is like one line.

It's like, you know, the answer was C, but you don't know why it was C. You don't know

how they arrived at C. And so he got a bunch of smart people in India to like go through

and actually hand solve all the, all the chapter one, two, three, four, five, all the questions

in there with the actual show your work.

And people would buy these like course notes solutions based on the textbook solutions that

were actually like fully written out, which they can either use to just like fill in their

homework without doing their homework or to learn and be like, oh, that's how you actually

solve that problem.

Cool.

This is like a tutor, but way cheaper.

And so that was, I thought, a really good hustler solution to, to that problem.

What I think someone can do, and I think I personally, I don't want to do this.

I think I could do this in a matter of 30 days is build a company by going to fiverr.com,

finding one of two things, one, the most impressive $5 bit of work, right?

Something that like, I would see this and I'd be like, are you kidding me?

This is only $5.

Then I would make my own website and make it look amazing and sell it at a massive up tick

and then just manage the contractors to get it done.

The second thing that I would do is find talents on fiverr.

Fiverr, for those listening, it's a marketplace for jobs that cost $5.

Of course, now they do like more than $5.

Now nothing costs $5.

Everything's $20.

Right.

So it's, but it's like, like someone's like, oh, I'll narrate your 30 second commercial.

Right.

I'll make a podcast intro.

Yeah.

Which is, I think, how this one was done, or at first maybe.

But I would find a fiverr job that was positioned poorly and I would reposition it and market

it just like that.

So for example, I found this guy who would do cartoons.

I would just say, oh, I'm just going to make it strictly dog cartoons, send me a picture

of your dog.

Like, you know what I mean?

Or I will narrate this thing for you.

I'm going to turn it into like custom voicemails by the guy who sounds like blank or like Donald

Trump impression voicemails.

Right.

So the impression guy who does a good Donald Trump impression, you're like, okay, cool.

This is Donald Trump wishing you happy birthday for $35 as a service.

Exactly.

And so you just fix the positioning, right?

I'm looking through fiverr right now and looking at the popular categories.

So a lot of them are on like, like basically some kind of either it's a lot of like creative

art.

Like, online music, video, things that people typically don't have the skill set to do themselves.

So it could be like package, like coming up with your brand packaging, fixing up your

personal website, your portfolio, creating a logo for your brand, right?

That's like one of the most common fiverr jobs ever.

And so there's a bunch that are like that.

There's like hand illustrated portraits of you.

There's voiceovers.

There's impressions.

There's, I think there's a lot of these, somebody called this, I think productized services.

Basically, it's something that's traditionally done as a service, but you productize it.

So it seems like, oh, I clicked this button and I received this product back.

I received this end output.

And underneath the hood, you, you're farming it out to fiverr and Upwork and you're just

connecting the dots for people that don't know that that's where they should go look.

They don't want to take the time to go find the right person and write a brief and all

that stuff.

And you sort of automate that workflow.

Yeah.

And it's not like a scammy thing.

I kind of presented it as a get rich, quick, kind of lazy way to do it.

Of course, there will be work, like you have to vet the people.

You have to make sure it gets done in a timely manner.

If there's revisions, you've got to handle it basically, but the vetting the part, vetting

the person.

I remember Ryan Beagleman was the first person who I heard talking about this.

I forgot what he called it, but he had a great example.

He had an example of some businesses doing like millions of dollars a year.

That was literally just what you're talking about.

I like, I didn't, I definitely oversimplified pitch book, but I was like reading about it.

I'm pretty sure they just have a team of like literally 300 guys in India who are just scraping

massive amounts of data.

Right.

Scraping it by cold emailing and cold calling people and then like writing things down.

And also probably just like aggregating, which is a technical skill, but yeah.

Yeah.

Actually, I think scraping would be a great one for this, which is like, Oh, I need a

list of this number of lead leads about this, and it's just like, cool, just describe what

you need.

And if you pay me $200, I get you a list of 150 people that are like that.

Or if you want a thousand people that fit that criteria, great.

And it's just basically saying, I can go scrape this for you.

You don't know, you don't know how to do web scraping, but I do.

So you only have a few minutes.

You said, right?

Yeah.

So I was, I, I did something the other day.

I asked people how they would describe the podcast on Twitter.

I said, how I hate the name of my first million and how it's stupid and how I hate explaining

to anyone who I don't know about what I do and like how I co-host this, but for the

rare person who like is like you and I, it's like an addicting thing, which is what we

hear consistently.

And I said, so how would you explain the podcast?

And I got maybe 200 responses in a short amount of time.

And one bit of feedback you and I got, and I rarely give into this shit, but they are

totally right, which is we have had almost all dudes on this podcast.

We definitely need to get different types of people.

Have you noticed that?

So yes, I've noticed that that was feedback we got pretty early on.

We made an effort to try to balance that out as best as we could, but also we got rid

of guests.

I mean, literally on this episode, we had a female guest from a totally different background,

right?

Tax, tax attorney, very different.

So I don't know.

I think yes, the feedback is valid, but also yes, we're aware of it and have tried to make

strides on it.

And yes, we probably also have a long way to go.

And yes, I also am kind of exhausted by it and don't even like having guests on anyways.

So I don't know how I feel about it overall.

I like having guests.

If they're like huge, interesting people like the Tai Lopez thing, like we got so much

can I read your conversation from this morning out of slack?

This is this is the same par experience.

Okay.

So Sam goes, where is it?

This is what it's like to work with Sam.

So a brain who says, good news, we're about to sell out of ads for the rest of the year

and into next year.

And just goes, well, how much money also we need banger guests once a week, like the founder

of Shopify, Google famous people.

And then everybody says how much and then says who's buying it out, Sam, that's fucking

bullshit.

That's way too low.

Period.

No, no solution offered a very, well, okay, also for guests, we have the founder of Lambda

school and the CEO of Shopify coming out next week.

Those are getting interesting.

So how about bigger, like fucking Hillary Clinton appears like, I don't know, dude, talk

to sales.

I think the rate we're getting is pretty good.

We just need to blah, blah.

And then he says, by the way, today we have a tax lady on who's going to talk about Trump's

returns.

I just thought it was so funny.

I was like, man, working with Sam is like, it's like working with the weather.

It's like some days it's sunny and bright and you're like, I love the weather.

And then some days it's, it's like a thunderstorm and you, but you don't blame the weather.

The weather's just the weather.

You don't get angry at the weather.

It's like,

The thing about me is like, I'm not actually like, I'm like one of those guys, I'll yell

and then it's like, you good?

Yeah.

What's going on?

You know what I mean?

Yeah, for sure.

You're not actually angry at anybody.

I just thought it was really funny the way that you reacted.

Actually, let's bring a brain you in a brain you.

What was that like to be on the receiving end of that, of that response?

This is now an intervention for Sam.

I'm surprised you brought it up because like, I just thought that was like normal Sam.

Like if he had responded a different way, I would have been surprised.

You're concerned?

No, I'm like, yeah, this is the reaction you get.

I know.

Yes.

This is the normal Sam, but is this the normal of what you are used to or do you like it?

Do you dislike?

Cause some people might be like, yeah, I'm fired up.

I like that.

I like talk and tell it like it is and don't sugarcoat it.

So where do you, where do you stand?

How does it feel to be on the receiving end?

It feels normal cause I think I get Sam's personality.

So like when he says that, I'm like, yeah, it's normal.

And I know how he would say it.

I know how you react to it.

So it's, it's not like, I'm not like, oh, Sam's the only, I'm like, oh yeah.

We were recording this course yesterday and like midway through I'm like, I don't, I don't

fucking have it today.

This is horrible.

And so we just had to end it.

So yeah, I would say I'm, I'm, I've up and down ups and downs, but it's a very transparent

how Sam feels.

Like I don't like people who like kind of hide or like their personality changes.

So like, you hate to guess how somebody's feeling about, about something about your

work, about you, about whatever.

And I would say Sam doesn't make you guess.

Do you want to, I don't want to make this about me, but this is for anyone who's like

crazy.

So, and I know you had to go, so I'll make it quick.

I'm hiring, um, what I call as a COO in reality, this person's going to be my CEO of the company.

Why don't you just call him CEO?

I told them, I go, I'm going to call you COO at first so I can fire you really easily

if you suck.

And then after a while we'll transition you to CEO.

Frankly, it's going to be a CEO.

And um, the job description says like, don't take this if you, and I like, like it's the

job, the job description is literally just reasons why you should not take this job.

And people have liked it.

And one of the things that it says is you just got to be like the straight woman or

straight man to like me being nuts.

And this, the whole interview, I'm just like telling these people, I'm like, so I'm like

kind of crazy and you're going to have to like just figure out how to handle that a

little bit.

And I was like, I'm not like actually like an ass or I'm not actually nuts, but like

I'm very creative and whatever.

And so it's very creative.

I don't know.

What do you want to call it?

I'm just like high energy and very humble, super good looking and you miss the best part

of that slack exchange, which is the post it on Twitter.

Like right before you started reading the picture that he posted on Twitter.

Oh, I thought he was going to get roasted.

I didn't even see this.

What is this?

Who is this?

What are we looking at?

It's a photo from a conference.

So I had a fly somewhere to speak at a conference and it was like, it was in a different country

and I was exhausted in the morning and they're like, all right, come take your picture.

And I was like, I don't want to do this.

And so they took a picture of me and I look like a grown up Bart Simpson.

Okay.

Yeah.

Okay.

So yeah, there's a shot of there's like a professionally done photo of Sam and then

a brain says, you look like a bootleg Carl Lentz and you're about to drop the worst gospel

album of all time.

And then this is what I missed this whole exchange and then Sam posts a topless picture

of Carl Lentz where he's just absolutely ripped.

He's like, you're right.

For similar, man, the whole slack that people should pay to just be in the slack.

I think that's ultimately, by the way, slack.

I've decided is a cancer to my business.

I hate slack.

I hope, I hope they're not sponsoring it.

Whatever.

Sorry.

That's how the bag.

I think slack is the worst.

It has ruined my work life.

Do you like slack?

I love slack.

Dude.

Oh my God.

I don't want anyone talking to me.

I have people who messaged me on Facebook messenger, Twitter, DMs, text message, slack, email.

What else is there?

That's it.

It's the worst.

It is the worst.

It is horrible.

I hate all these messages.

And then slack.

Six.

Right.

Well, to the future CEO of the hustle.

Good luck.

Dude.

We're interviewing a bunch of ballers.

We're interviewing all these people and I'm like, why is this guy talking to me?

That's great.

I love it.

Okay.

One last thing about CEO ship.

You saw this Coinbase letter memo that went out.

What was your reaction to it?

Totally on board.

Okay.

So, so I'll explain it for those who didn't see it.

So just go look up Coinbase memo or something like that.

You'll find it.

The CEO of Coinbase basically emailed out like kind of a confusing little email.

But like what he was basically saying was it was definitely poorly written.

It's poorly written, but he was like, Hey, at work, like Coinbase is not going to like

take political stands around causes.

And also like when you're at work, just be at work.

We don't want to be debating politics and social issues.

Like that's kind of a distraction from our mission.

And if we do put resources and donations and we do care about causes, it's causes related

to our mission, which is let's say, I don't know, like an open financial currency system

or something financial system, which is like, you know, the crypto world.

So like we're all about growing the crypto economy.

That's what we're going to focus on.

That's what we're going to do at work.

We're going to talk about at work.

Those are the causes we're going to support.

And everything else doesn't have a place here.

If that's not a place you want to work at, like there's a meeting with your manager where

you can go and get another job.

And so that's kind of what he said and people were really split on this totally polarized.

So I would say like, there was like Paul Graham and who's the founder of my commentator who

was pretty much anyone who's libertarian, like probably me, definitely me, probably you.

I don't know what you consider yourself was like, Oh yeah, this guy's awesome.

And then anyone who's liberal or I'm generalizing was like, you know, how dare you not support

X, Y and Z.

Right.

But there was like, you know, a bunch of prolific people chiming in and it was just interesting

to see how split the opinions were.

You know, Dick Costello, the former former CEO of Twitter was like, this is not good leadership.

This is like, this is basically saying, you know, shut up and dribble to your employees.

And there was other people that were like, like, yeah, dude, I want work to be about

work.

And I don't want it to be about all these other things.

And I don't think that we should be taking these stands.

And I also just, I don't want that it's already in my world everywhere else.

I don't want to infiltrate work.

And I don't work.

The whole shut up and dribble analogy is actually stupid because he didn't say he doesn't want

his employees to mention anything.

He just said the company, like the company's going to not stand for anything, but you can

do whatever you want.

And don't say don't talk about it at work.

Yeah.

I don't think that's the same as shut up and dribble because it's just says while you're

on my time, shut up and dribble while you're on your own time.

I support you as a human.

You can do whatever you want.

I think that my thinking is if you have shareholders other than one person, you should try to,

your only job is to make that share, your shareholders wealthier and all you should

care about is business.

And if you only care about business, you'll likely have happy employees because they'll

feel like they're succeeding and things like that.

If you own the whole company, I think you could, you should make it as political as

you want.

You know, like this could be your vehicle.

This could be the Sean vehicle to do, to do anything he wants.

And so the other argument is no, we live in a society and like companies should basically

be helping society.

And if there's societal issues, like we should have the courage, we should have the backbone

to stand up and say when something's wrong, kind of like that old quote, I don't know

the quote exactly, but it's sort of like, you know, they came for the Jews, but you

know, but I'm not Jewish.

So I didn't say anything.

They came for the, for the bankers, but I'm not a banker.

So I didn't say anything.

And it's like, they came for me and there was nobody left to say anything.

It's sort of like that where if, if there are wrongs happening in a company, you know,

people and companies, people of power, which is in some ways organizations, don't say anything,

don't do anything, don't, don't use their, their platform and their influence, then that's

a shame.

It's like that.

That's, that's another take that people have.

And I think it's going to get split.

I think you're going to get two types of companies.

You're going to get companies that lean into the activism and people work there because

they're like, yeah, that aligns with my values.

And then you're going to get other people who are like, I don't want my work life to

be so political or like to take a social stance on everything.

I want work to be about business and I want, you know, I want it to be about the actual

mission of the business.

And I think it's going to get split and then people will self select where they want to

work.

And by the way, I think that last argument you made is actually a really good argument

because in my head, I'm like, well, we would hopefully know like what's actually serious

and what you should like say no to.

And then maybe a lot of people will be like, well, this is serious.

Like why aren't you saying, and I'm like, I would have to actually walk through that

exercise and how to figure that out.

Right.

And the other interesting thing was the sort of rumor mill was basically because it was

like, why did you get, why did you post this like really weird thing?

It was sort of weird because it was like, this is something he was saying to his company,

but he published it and was like, I want other leaders to learn from what we did.

And everyone else was like, you know, so split that it wasn't like this great example of

anything.

And then some, some, somebody on Twitter and her name's Erica Joy.

She's a black woman on Twitter and she was basically saying, by the way, the inside scoop

of this is that he was like, you know, his hand was being forced, the engineers walked

out because he wasn't saying X, Y, and Z. He wasn't saying Black Lives Matter.

He wasn't, the company did nothing when all the other companies were standing up and saying

something.

And so he was being pushed.

And then this was his like tantrum back of like, okay, you forced me three weeks ago

because the weird thing is like three or four weeks ago, he posted on Twitter, I want to

unequivocally say back Black Lives Matter.

And here's, you know, here's why that's here's, here's what's wrong in the world and how we

should work to fix it.

And so she was basically saying like, he didn't want to say anything.

He was being pushed to say it.

Engineers walked out.

So then he put that statement up.

But this is like the retaliation weeks later of like, look, that's not going to happen

again.

Like that's not how our company's going to run.

If that is true, and I'm going on Glassdoor right now, I'm going to click in most recent.

If that's true, then that's awesome.

I think that's baller.

I think that like, yeah, of him, if like someone threatens you, like, you know, if you don't

do this, I'm out.

In most cases, you should say, all right, bye.

Like just for that, just like that, I would say that's, that's kind of the point I agree

with you the most, which I think we both believe you should run your company the way you want.

And then you should deal with the consequences of running your company that way rather than

this general idea of everybody needs to run every company the same way, which is the right

way as dictated by the mob of Twitter or the mob of, you know, X group.

And then people doing shit that they don't actually even believe to be the right way

to do things.

It's not even actually what they want to do, but feeling like they're going to get canceled

or fired or whatever if they don't.

So I think the better world is people do what they actually think they should do and then

let the chips fall where they may.

And then people will self select around, around joining companies that are the way they want

to be, you know, the type of company they want to join.

And by the way, I don't entirely buy that story simply because I'm on Glassdoor is like

the point of the best place to get information on and learn all about a company.

Typically the reviews are too good or too bad, but so you got to like divide by half to get

the middle.

And anyway, I looked at the reviews, I don't see a thing on that that is this is the type

of thing that an employee would quit or get fired over.

And that's the first thing they would complain about.

And I don't see one thing since March that relates to that topic.

Well, I think some of it's definitely true.

I think there definitely was a walkout.

The question is, did he do this because he learned, Oh, the company feels this way and

decided made it made some decisions or is it truly like a kind of a retaliation or response

to that?

I don't know that part, but I think the walkout part was sort of confirmed by lots of people

who worked there.

Now, I also would say you love Glassdoor.

I never use Glassdoor.

I don't know anybody who writes on Glassdoor.

I'm sure obviously people do, but I don't know how on the pulse Glassdoor is let's say,

I'm not sure it's like in the same way that I don't think Yelp is.

I don't agree with Yelp most of the time, and I know what it's like in our company.

And I don't know if I would agree with the Glassdoor reviews of it either.

It's a signal.

It's not the answer.

It's a signal.

Right.

But what you're saying is if nothing's there, then it's a lack of signal.

Yeah.

Yeah.

I mean, like it's a signal.

Like for example, if something on Yelp has 10,000 reviews and they're all positive and

something has only three reviews or rather 10,000 reviews and it's only okay versus 10

reviews and they're all like perfect.

They're like, what's going on here?

Like this 10,000 thing actually might be pretty good if it's so popular.

You know what I mean?

Yeah.

You don't look at the number.

You look at the variety of factors and that's how I use Glassdoor and I think that it's

like a fantastic way to do a figured out.

Very cool.

All right.

I got a run, but interesting episode.

It's going to be a very different episode.

We got the tax thing and then we got just kind of random shoot the shit at the end.

So I think we kind of crushed it in the last episode, although I didn't get a ton of feedback.

It just went out today.

Okay.

We're going to get, I haven't gotten any wop low over, which is what I was expecting.

Yeah.

Where are the tweets?

Okay.

I got to go.

Okay.

Bye.

Bye.

Machine-generated transcript that may contain inaccuracies.