Transcription
I was stunned at how big your business empire is. You know, even as you're speaking there, you're talking about movies that I've watched that I had no idea that you're involved in. And you're talking about all these other incredible things you've done. And yeah, your company's doing what, what 12 billion dollars in revenue annually?
>> Well, it's a group of companies, not just >> group of companies. Yeah.
And then earlier on, you said you'd spoken to these 50 very, very rich people in the pursuit of writing the books that you've written about wealth and finance and money.
>> Pattern recognition.
>> That's right. What is the pattern that you noticed in those people that you then applied to yourself? What is the pattern? You know, this is called the diary of a CEO. So, I'm sure we have a lot of people that are thinking about building businesses, want to get financially free, especially in a world of AI where they're, they're very uncertain about how they'll make money and how they'll provide stability to their family. What is the pattern that you have found in all of those people that you have met and interviewed? And I know you know some of the most wealthy people on earth because I know you coach a lot of them. Um, I don't think people fully realize the significance of how many of the most influential people on planet Earth you have worked with and continue to work with.
Um, I found it hilarious reading that Bill Clinton called you, uh, the day before he was going to be impeached, telling you that he was going to be impeached and asking you what he should do.
>> Yeah. First, let's say what everybody makes the mistake on. The majority of people, we live in a free enterprise system and we have kids that all think communism is great. I just want you to know I went to the USSR when it was still the USSR. I was 24 years old. I was brought there because of my firewalking experience. And I went on a train from, from Moscow to Siberia and back for two weeks. On the train, we were all fed caviar and the most incredible meals, as were all the Russians on the plane, right? We're supposed to be all equal, right? That's supposedly what communism is. It's everything's fair for everybody. Every single town we'd stop in, the square where the, there and in the square, there's a big building and they wrapped around for about maybe a quarter of a mile. People standing in the freezing cold to get a quart of milk and a half a thing of bread. I left there and I became a capitalist. I didn't know what a capitalist was, but I knew I wasn't a communist. Right? So people in our country are the free enterprise system, but they don't understand it. So what are they making the mistake of? They're consumers. They're not owners. We are a consumer society and we train these kids to be consumers. Adults as well.
So, I'll give you a simple example. I looked, I was trying to give an example to a young kid the other day. So, I actually did the math on it. You have an iPhone?
>> Yeah.
>> Okay. Have you always had an iPhone?
>> Well, yeah. For the last decade or more. Yeah.
>> All right. So, iPhone's around for what, 18 years, 19 years. I went and did the numbers and found out what the cost was for every iPhone. Add it up. If you got an iPhone each time, somebody who's older, you spent $22,000 and some change at the retail price. If you bought the stock, I went and saw what the stock was on the same day the thing came out and you bought the stock. Same amount of money of the stock.
>> Apple stock.
>> Apple stock. $326,000 right now. Instead of out 22 grand, you have 326. If you're going to use an Apple phone, I'm not saying it's Apple specifically. I'm not making a recommendation. Why would you not own the company, right? Because we don't teach people to think that way. And so now they think communism is going to be the answer. They don't understand what that really means. They have no clue. So you have to become an owner. You have, that's what you have to do.
Then the second piece is when I interviewed all these people, I found four things with them. I found number one, their focus, didn't matter if they're a macro trader or if they were value trader, or it didn't matter what their style was. The four things that had in common, I call them the core four, was number one, they all were focused on not losing money. Most people are trying to make money. And the reason is they know if you lose, you know, you, you lose. You got a $100,000 investment and you lose 50%. How much do you have to grow your money to get your money back? And people will say 50%. No, you got to grow it 100%.
>> Right? You get it?
>> Yeah. Yeah.
>> Right. So they know that. So they're first making sure they don't. How do they do that? They do it by asset allocation. Right. They all have different asset allocation strategies, which at the most basic level is you don't put all your eggs in one basket. Most people put all their money in their business or their house, right? They know that that is the kiss of death. And so they look at how to divide their assets where they have a certain amount in a more secure environment, meaning not a lot of upside, but it's like the nest egg. And they have some that are more at risk. And there's different, and I learned what theirs are and I taught those different ones. But the most valuable one I know, you know, because I read it in your book and I was really impressed, asymmetrical risk-reward. Their entire focus is not about taking risks, right? There are few, only a few people. You think you're a billionaire because you took giant risks, right? No, no, no. May have some do, but they don't usually stay billionaires doing that, right?
>> How do they do it?
>> They figure out what's the smallest amount of risk with the most amount of upside that I can do. And so Paul Tudor Jones's approach was five to one. If I'm going to risk a dollar, I want to be certain I can make five. You and I, most average people would normally think, I used to think, well, 12, 15, 20% return, right? But here's how it works. If I risk $1 and I'm certain I make five and I'm wrong, I'm down one. I can risk a dollar and still make four. I can be wrong four times out of five and still be okay. That's how those guys become billionaires. Asymmetrical reward.
I was talking to a gentleman, um, who in 19, 2008, excuse me, he took $25 million and turned into $2 billion in the worst economic time. He [snorts] anticipated what was going to happen with real estate. Everybody thought it was going to keep going up. He used synthetic bets and bet against it. Made $2 billion. Brilliant, brilliant job. And I said to him, you know what? What is the thing that's missing for investors? He goes, "Well, the smartest investors are usually the worst investors because they want absolute certainty. They know everything before they decide. And by that time, the opportunity is gone."
>> Mhm. [clears throat]
>> And he said, "But the most important key for him was asymmetrical risk-reward." He said, "I risked, I think he said he risked six cents for every dollar." He could have been wrong a dozen times, but he wasn't. That's how he did it, right?
And then the fourth one is the obvious one we both know, which is diversification. But this is the real key. You know, Ray Dalio, right?
>> Yeah. Yeah. Yeah, I've interviewed him actually.
>> Yes. So, he's a good friend. One of the questions I asked him was, if we had to reduce it to the single most important investment principle to know, I mean, you're the Da Vinci of investing. No one has made more money than you in this area, you know. I said, "What is it? Is there one? There's got to be one." He goes, "Tony, there is." He goes, "I spent almost nine years refining this, and it's so simple. So the holy grail of investing is to find 8 to 12 uncorrelated investments that you feel strongly about. If you find 8 to 12 of those, you reduce your risk 80% and keep your upside. In fact, you slightly enhance your upside."
>> Uncorrelated for someone.
>> Uncorrelated. That's the hard part today because so many markets are correlated.
>> What does uncorrelated mean for someone that does?
>> Well, for example, stocks and bonds traditionally are thought of as uncorrelated. Meaning, you know, stocks in a tough time, those are the one, excuse me, in a growing time, stocks are where you put your money, but bonds are to protect you when the market goes down. Unfortunately, doing most things like 2008 or 2020, they both go down at that time, but nobody talks about that. They just go, "Oh, it's this weird thing. It happens regularly."
>> So, things that don't move together.
>> That's right. They don't move together. Well, so much is tied together today. But the only way to really do it is you've got to have private investment, private equity, private credit, private real estate. You have to diversify beyond just stocks and bonds. And then you can get that across it by different industries, different elements. Cuz think about this, this will blow your mind. Private equity, basic private equity, not I interviewed 12 of the best in the world. Basic private equity has outproduced every stock market in the world for 40 years. Every single stock market in the world every year for 40 years now. You don't have total liquidity. That's you're giving something up, but your returns are in a different place. They don't have to sell when things are tough. They take advantage. These are the smartest people out there. They're not just trying to get alpha. They're building value, right? They take a company, they put AI in it, they bring new people to it, and then they take it to the public or in most cases, they sell it to private companies. There's fewer public companies than ever.
So, I looked it up and it was fantastic. See, the average S&P for 39 years was 9%. Nice return. If you put a million dollars down, you know, you'd have $28 million, you know, 39 years later without doing anything. But if you put it in basic private equity, basic private equity is average 15.7%. Think about the difference of compounding that every single year.
>> That's crazy.
>> Now it's worth $328 million. That's the difference between the same investment in public versus private. So it's finding these pieces. But when you can do 8 to 12 uncorrelated investments or more, reduce your risk by 80%. That's how you get higher returns and the same time because most people are behind. And so
>> you didn't come from a financial background.
>> No, no, I have no financial background.
>> You didn't study finance in university?
>> No.
>> So, so where did you learn all this stuff about finance?
>> By going to the very best on earth. Like why would I go to university to a professor who's never done anything when I can go to 50 of the smartest people on earth or in private equity? I went to 13 of the smartest ones, most successful in history.
Is your superpower learning?
>> Yes. I think it's that's what I tried to say to you from the beginning. That's what pattern recognition, pattern utilization, pattern creation is. If you don't learn at a rapid tempo in the world right now, you're cheating yourself of an extraordinary life.
Is there a tactic or a strategy to make me a better learner, especially someone that does this pockets, I get to meet people like you. So, I want to store everything. Yes. In this time that we have.
>> Yes. I, I'm I believe in immersion and spaced repetition. So, I believe like did, did you take a language in school?
>> Oh, god. Yeah. German. Can you speak it?
>> Nine. [laughter]
>> That's right. So, most people go to college or high school and college and they take a language, right? And five years later, 10 years later, can't speak a word, right? Immersion is how you do it. So, if I wanted to teach you a language and you had the time and money, I would take you to Italy and I would drop you in the middle of Rome and say, "I'll see you in 90 days." With no one to teach you in 90 days, are you going to be speaking the language?
>> Better.
>> Yeah.
>> You're going to speak the language. You're going to know the nuances of the language. You're going to have a pitch and tone that's more there because it's how you learned originally by total immersion. So the reason I do 12 hours a day for four days, 50 hours in a weekend or 60 hours and most people think I'll never do that, but they're having the time of their life. So time disappears when you're enjoying yourself and you hate it. I mean, it feels like eternity. But the reason I'm able to do that is that immersion is like years of experience and you're in a peak state while you're doing it. So you remember it because it's locked in like 9/11 as opposed to 8/11. So, I love that. The other thing that I do is I'm capturing and I use AI now to do it. I've kept journals my whole life just like you looks like you've done, but I'm building on it, but I have my AI that I've been feeding over and over and over again the things I wanted to remember, the principles, and I create structures to evaluate these things.
And I asked you there about how these wealthy investors make their money. Um, the, the last question I really have around this is how the best entrepreneurs in the world make their money. Um, again, we're called the diary of a CEO. So, there's lots of entrepreneurs and business builders watching. And I know you've worked with many of the world's top entrepreneurs. In fact, one of them wrote you a letter.
>> Oh, which one?
>> Mark Benioff.
>> Oh, I love Mark. He's a beautiful man.
>> For anyone that doesn't know who Mark is. Um, he's the, the founder CEO of Salesforce.
>> Yes. Yeah. He actually came to four, I think, or five of my seminars originally in a row, same seminar. And, you know, Mark's as big as I am. He's a big guy and he was going for it full tilt. And finally after the fourth one, he came up to me and said, "You've convinced me. I'm going to leave Oracle. I'm going to start my own business. I want you to come on the journey with me. It's called Salesforce.com." He said, "We're going to change business around the world." And he said this to me. He goes, "And I promise you, we'll get to a hundred million dollars in business." Now he's doing like 42 billion, right? So, but Mark's what I love about Mark is he's a contributor. He's, he's a social CEO. Like he does things for society. He isn't just about himself. He's an extraordinary human being. He said, "Dear Tony, I am so deeply grateful for everything that you've done for me over the last four decades." He talked about the seminars he'd been to with you and says that you've transformed his life through your inspiration and ideas. He talks about that particular seminar you referenced as the moment that led him to go deeper and deeper and deeper. He said it was at Date With Destiny that I made the firm decision to leave Oracle and start my own company. We even had a brief conversation about it back then. If you remember.
>> I remember.
>> Fast forward 26 years and Salesforce now has 80,000 employees and generates over $40 billion in revenue annually. It stands as the largest enterprise software company in the world. I truly could not have done it without you by my side. And as you always say, we often overestimate what we can do in one year, but we vastly underestimate what we can do in a few decades. Tony, I started this letter with gratitude. And I'll end it the same way. When I reached my most difficult moments, you were there. When I reached my highest heights, you were also there. I [snorts] never forgot that whenever I reached out for help, you returned the phone call or text, always quickly. Business and politics are temporal, but relationships are eternal, and yours is one I carry with me always. Congratulations on everything you're doing. I look forward to a wonderful future with you. Aloha, Mark.
That's very beautiful. It makes me a little emotional, but I just I love Mark. He's such a good man and, um, I was very kind of him to write that letter. He says he gives me more credit than I deserve. Um, but I, I love him personally. I love, I, I love strangers. I'm driven by that. But I love Mark because he's such a giver. I, I see him as a, a role model of what a great CEO is. Someone who understands the social impact of what they're doing as well as the business impact. Um, he's got a heart of gold and of course, we all have ups and downs throughout our lives and, and he thinks he's just, I've just helped him, he's helped me, too. It's like it's never a one, one way piece. It's not like I go around and coach all these people. I'm no idiot. I've learned so much from Mark. Uh, it's priceless. So, I have to, I have to send that thanks right back to him. No question about it.
>> Where does that emotion come from that I see in your face? [laughter]
>> I don't know. I was just like, I'm, I'm an emotional guy. I'm an empathetic guy and I'm, I'm a lover, you know? That's what drives all that I do. And to, um, see somebody I love and to see how far he's come and to know that, um, I've been able to be helpful to him at at key moments, um, is meaningful. You know, it's extremely meaningful because he's provided opportunities for millions of people, 80,000 employees, but millions of people through his creativity and his focus. And we've done a lot of cool things together. I called him one time. I was up in, uh, San Francisco for other business. And, um, I read in the paper that this, this landlord was kicking out these nuns who had the food kitchen in the, the worst part of the city there in the Tenderloin district. And I was like, "This guy's an idiot." I mean, I got to, I got to do something. So instead of leaving, I spent an extra day and I went and met these nuns, most incredible ladies. And they were spending all their time cooking food so they could sell food so they could make money so they could actually prepare food for the homeless there. And in this tiny little building and they were getting kicked out. So I called the owner and I said, "Listen, I own a lot of real estate also. I understand your rights as a real estate guy, but I said, do you want to be the most hated guy in San Francisco?" I said, "I'll give you an option. How about let them stay to the end of the year? I'll pay their lease. I'll pay twice the amount and then I'll get them out." I said, "But you don't push them out now on the street." So we agreed. And so then I said to the ladies, "Let's find a place for you and I'll help you find a place. We'll rent a place for you." And then I started getting phone calls and one of the phone calls I got says realtor and he goes, they're, they're looking to buy a place and I said, I said, well, where are they getting the money? I said, they said, I don't know. So I called and made none up and she goes, uh, I said, you know, I, I was said, I'd, you know, pay for a place for you guys for a year, you know, lease you a place. I said, but I hear you're looking to buy a place. Do you guys have some capital I'm not aware of? And she goes, no. She goes, "We'll provide, Tony, like God will provide." So, so I spent, I don't know, a million two, something like that to find them a place. But then I called Mark because I didn't want them living in the place. I said, "Mark, match me on this." And I mean, he didn't hesitate a second. He had not even met the nuns. Then he went, the nuns, we went, met them, and he went and he bought them a home for them to stay in. And, and then we went through four years of the city trying to not let them take over this place. But that's the kind of guy Mark is. So, he's incredibly generous and I'm very touched that I could count him as a friend and be a helpful to him. And you've been so helpful to me.
>> I've learned quite a lot about you today just from observing you and two, one of the big things that I've learned is the two moments where I've seen tears in your eyes.
>> Have both been moments where people have expressed a huge amount of love and appreciation for you.
>> That's true.
>> And I, I work back through your early earliest years and I, again, it's almost like a, a jigsaw puzzle coming into formation in my mind of how, how much you love love.
>> I do. I think love is life. Love is the driving force in my life for sure. There's no question about it. And that's why I can't, I hate to see suffering because it's the opposite of love. You know, if you love somebody, what do you do? Anything you can. So that's what I'm called to do. And it is, it's a calling. It's not a job. It's not a business. You, I have all kinds of businesses obviously and I enjoy business. But this is my mission. This is what I'm made for. And, um, I'm just one guy. I can't do everything, but I can do a lot. And I'm always figuring how to scale more, right? You know, whether it's feeding people or I'm getting, you know, my wife and I, we were fortunate enough to have our own plane and I, I don't want to just burn up a bunch of carbon. So, I found it's 3,000 trees. I said, "Let's plant a 100 million trees." So, we're up to 75 million. I think we're going to hit the 100 million this year. But we didn't just plant the trees. We taught the farmers, work with an organization about how to build a build a crop not once a year, but to do it across 12 different months so that if something drops, they come out and they go from earning a $125 a day and starving to making $12 a day, which doesn't sound like much makes them rich in that community. So, we're doing that. It's like I just, I love taking things to scale, too. It's like I love the individual impact and I love the, the global impact. The combination of the two make life ever challenging and ever exciting.
With people like Mark and entrepreneurs. My last question about this pattern recognition and my last question is just as me as a, you know, I'm, I'm an entrepreneur. I'm building businesses at the moment. I'm earlier in my journey much earlier than someone like Mark. But what is the pattern that you've seen in these exceptional founders and entrepreneurs as it relates to building great businesses that you would impart on me?
>> I don't think there's anything I'm going to impart on you that you don't already know because the fundamentals are so simple. Um, you have to, the business has to be more than a vehicle for money. And don't get me wrong, I mean, there are people who have certainly succeeded that way. But if you look at the people that build something that's lasting, it has to be a passion where it's something you believe in so much. It's so valuable. It's a contribution sense to you, not just an economic sense. Because in the beginning of a business, it's like having a child. You know, you know, you don't get a lot back. You work around the clock. You'll discover when your first child comes and you love them. It's, it's the pride of ownership. But if you're just, a lot of people start a business think they're gonna get rich overnight or make some, and those people never succeed. So it's like finding something, a vision that not only you believe in, but others are completely moved by because you can attract people. You can't build an organization without great people. And do you think I could run all these companies if I was just sitting there every day? I mean, I've got some of the greatest leaders I could possibly recruit. I'm constantly looking for the second part, which is how do I find leaders? How do I find leaders that are smarter than I am in various areas and where I can pull together the right people together and create a culture that adds a massive value and continually does so until it dominates the, that industry or that market or that marketplace. So I think you have to find something that's more than just a business for you. It has to be more than economics for you. It has to be a mission for the most successful people. You have to be able to have something you can articulate that can attract people. And you have to constantly find the very best that you can. And you got to constantly prune because the law of familiarity shows up. That's what your friends went through, right? They got all these great things, but now how great it is after a while, it's familiar. You know, it's like they don't, they don't have the same hunger. I look for not only wickedly smart people, which I love, but hungry people. When people ask me like, what is the one common denominator of people that succeed on a massive scale around the world, I'd always in the beginning say, well, I love wicked intelligence, but I know a lot of very smart people that can't fight their way out of a paper bag in their relationship or their finances. You know, they're smart in one area, not another. But the one that is absolutely completely accurate is hunger. The hunger to be more, to do more, to give more, to share more. Somebody who has a hunger that doesn't die, not a hunger to get make a certain amount of money or a hunger to achieve, you know, a swimsuit size, but a hunger that's unquenchable. Those are the people that you know their names because they have an impact. So, it's like whether it's Richard Branson who's in his 70s, he has the same hunger today as when he was 16 years old in that crypt in your country coming up with Virgin, right? I mean, it's same level. Let's give it a go, right? He's got that piece, you know? Anybody you see, I look at the people you have on your show and think about how many of them still have that hunger. Kevin Hart is a friend of mine. I know he's been on your show. I mean, he's one of the hardest working guys, but he's hungry. He loves it. He wants, he just wants to do it all. To me, that's the gift. And stoking your hunger or awaking someone's hunger that doesn't have it. That's a real gift. And that's one of the gifts I think I've tried to refine within myself and help people with.
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