Patrick McGinnis - The 10% Entrepreneur

Full transcript: Patrick McGinnis on London Real

4:42 This is London Real. I am Brian Rose. My guest today is Patrick McGinnis, the venture capitalist, private equity investor and author. Your book, The 10% Entrepreneur, encourages people to dedicate 10% of their time and money to entrepreneurial ventures outside of their day jobs. While at Harvard Business School, you famously coined the term FOMO, fear of missing out, which was adopted as a word by our very own Oxford English Dictionary in 2013. You’re an advisor to the World Bank and you write for the Huffington Post, Business Insider and Forbes. Patrick, welcome to London Real. Great to be here. Thanks for having me. It’s a big pleasure having you. You and I have been rapping for like the last 40 minutes. We’ll try to bring people into some of our conversation. You know, you live in New York City. I know you spend a lot of time in Latin America. When you come to London, how do we rank when it comes to startups, ventures? I’ll even ask you, capitalism entrepreneurs, what do you see or at least also what do you think about when you think about London? It’s interesting because London was one of those places that was I think under the radar for a long time. When I thought about London, I thought about, you know, it’s a great place to maybe go after pan-regional sort of startup, but there are no global companies that are going to come out of London. And it’s a place where people are risk averse. And that’s something that I think many people in the

6:00 States think about when they think of London. People are too polite to be entrepreneurs in this city, which is not something I believe, by the way, for all of the British viewers. But I think what’s happened with London is that you’ve seen global tech companies coming in and investing and you have such an influx of people from all over the place. FinTech and other industries have come along that you start to think of London as a very credible place to build a business. And when you compare it to a place like Latin America, where I spend a lot of my time, it’s just a lot easier to do business here. And so I’m a big believer that the best places for building startups are the places where you can get the most global talent and you can bring it in from all over the world or all over a region and concentrate that talent. I think London has done that. The question is now, obviously, with Brexit, will that continue? Will companies stay here? And that will be the challenge for the entire startup scene, is keeping that melting pot alive.

6:55 Yeah, it’s got so many things going for it. I think you even said when you gave a talk at Google here that it is probably the most international city that you’ve been to. And you live in New York City. And I had that same realization. I lived in New York for a long time. But I remember driving in a cab with a guy and I’d be like, where are you from? And he’s like, I’m American.

7:12 And I’d be like, well, where are you from? He’s like, no, I’m from Nigeria or Lagos or something. But he was assimilating immediately, which is what Americans always have done when they immigrate, they assimilate. But here, you can see a woman walking down the street in a full hijab. She doesn’t care. You can hear Russian, you can hear Brazilian, you can hear everything. And I feel like there’s an international group of people, obviously, a big talent pool from Europe, some great coders from Eastern Europe.

7:37 It all kind of happens here in London. But yeah, traditionally, you would think risk averse. Although it’s funny, some of the original people like Magellan and stuff, where I think some of the first kind of venture capital agreements where it’s like, we’re going to go get this treasure, you can invest in us, you get a percentage of it. And I think one of the famous like hedge fund guys has like one of the original pieces from one of those guys, because I think it was like the first VC agreement or something like that. But you know, it’s been interesting for me, I’ve actually followed the tech side with our second show called Silicon Real. And I’ve been interviewing people for about three years. And I always ask the entrepreneurs at the end, well, what can we learn from the Yanks? And they usually say, yeah, it’s about pitching yourself, taking risk and putting capital up large amounts of capital for these businesses.

8:23 And I think that’s in the past hindered London, but there are some great things happening now. And it’ll be interesting to see where we come, you know, from here. But I think nowadays, last few years, I’m guessing you’re received much better, because I think people are more entrepreneurial minded here. Absolutely. I think, I think what’s happened is, as we watch the world around us changing, and we see that it’s very easy to start a company for very little money, it’s changed the equation. So if you think about the fact, and when I started my career as a venture capitalist, building a website costs hundreds of thousands of dollars. Now we could probably for about, you know, a couple of dollars a month, you and I put a website up, we carry iPhones in our pocket iPhone is less than 10 years old, that’s a game changer, you’re carrying a computer everywhere you go. And so the decreasing cost, the greater flexibility has made entrepreneurship, something that all of us, I mean, you could put together a YouTube channel and start a business tomorrow, you could start selling things on eBay, those are sort of, I would say, sort of gateway drugs, as it were, to entrepreneurship. And many more people have engaged in entrepreneurship. The big thing is that I try to get people to think about is that it looks really great from the outside, but what is it really like to be an entrepreneur day to day, because there’s this glamorization

9:33 That tricks people into thinking that it’s, you know, it’s what, you know, it’s a good time or something like that when it’s, it’s a lot of work. Yeah, there’s a big media bias. And first of all, you get that the unicorns get talked about. And unfortunately, those are also usually the bad business models, because they don’t really represent some of the real successes. Yeah, it’s glamorized in a crazy way. But the reality is, it’s very hard. It’s lonely. I think you did a quote that said like the average CEO of a startup in New York is making $50,000 a year, which is pretty shocking for most people. And so yeah, it is hard times. And I do want to talk about that later, because, you know, we’re on the one our fifth year here, we’re still kind of in startup mode and expanding. So like, I know what it’s like to build a brand from scratch. And it’s thankless people think you’re insane, especially when you’re broadcasting yourself every week on YouTube. But that’s a whole nother story. I want to talk to you briefly about the FOMO thing, because I got to ask you about it. Because I think it also dovetails a little bit into your career. And then also why you wrote the book. You’re at Harvard 2002. Yes, when you I guess coined this acronym that later became a word. I was down the street in Cambridge at we’re both in Cambridge at MIT, where we were doing real work. Now, I’m just joking. But talk to me about this word and how it came up and how it kind of went viral. And just the whole story

10:51 Find it because it is interesting because it really tells your story. Yeah, it’s really interesting. So I mean, just for background, I’m from a small town in Maine, I grew up in a very middle class, kind of normal people kind of world. And I found myself at Harvard, the business school, and I had worked on Wall Street. So I had been around sort of rarefied heirs, and I’d been doing the, you know, this list more sort of interesting glamour jets at life. But I’m a pretty simple guy at heart. And when I got to HBS, what I saw was that my classmates and I, we were the ultimate in optimizers. And this was before Facebook. So we didn’t even have to, we didn’t have any social media to blame. We had something called Friendster, which I don’t know if you remember that one. Yeah, it’s in the movie. It’s in the Facebook movie, right? Yeah. And so Zuckerberg, you know, he was also at Harvard across the river when you were there. Yeah, he was in fact, he stayed in my friend Claire Marwick summer over the summer, he stayed in her dorm at HBS. So he was over there starting Facebook, I was over at the business school, and we spent our weekends running around trying to go to every event. It’s like, let’s go to the first party here, the drinks thing here, the dinner there. And so I’d have five or six things a night, starting at six and ending at two in the morning and getting up at 7am for class.

12:01 And it was crazy. And so networking or were you just a social? Yeah, network. I mean, I, my view was I studied so hard in college, I was the guy who would have a beer at a party and then go to the library after. Yeah, I tried that. It’s hard. Well, that was a Georgetown.

12:13 It made everything a little more interesting. Okay. But at Georgetown, and so I decided in business school, I was going to learn meet as many people as I could. And so many of my classmates were the same, you know, we’d been living in big cities, we were used to going out and meeting people and being social. And so we were doing all of this, and we didn’t want to miss out on anything. And so I had all these friends and in our ski house, we would talk about FOMO and something else called Fobo, or fear of a better option, which is when you don’t commit to anything. So it’s like, what are you doing for dinner Friday? You want to have dinner?

12:44 Yeah, like let’s soft circle that, you know, I’ll get back to you. Right. Because something better might come up. Exactly. You know, it’s the person who’s, you’re at the cocktail party and they’re looking around to see who’s, you know, they’re going to talk to you next. And so I wrote this article for the Harvard business newspaper called the, the, the harvest. And I called it McGinnis’s two foes, social theory, HBS. And I talked about FOMO and Fobo. And then the combination of the two is FODA, or fear of doing anything. And I talked about how it paralyzed our society.

13:13 It was kind of a jokey article, but people really liked it. It went semi viral at the time, but this was before anything went viral, right? We’re talking 2003, 2004. But over the years, it kind of took on life of its own. And I didn’t really notice it.

13:27 And then in 2000, and I guess, 14, 13 around there, a reporter for Boston magazine called me up and I just happened to be in Boston for reunions. And he said, I’m writing an article about FOMO and I traced it back to you. And he showed me the evidence that it was, I was on the internet with this term three years before anybody else. And so I realized, and then I started reading about it and I found an academic study about somebody who written about it and coined that I’d created me with it. And it sort of just took off.

13:55 And then, uh, the virus, you can trace it back to you. Yeah, exactly. I was patient zero. Okay. And then you could see it spread.

14:02 Yeah, precisely. And Zuckerberg was there at the same time. So it sort of came out of Cambridge. I’m surprised that you didn’t, uh, you know, steal that from me early on, you know, I was there 10 years earlier and you guys were doing the social thing too. So, and it’s spread socially, right? People talking to other people.

14:17 Exactly. I mean, I, I remember, I think I heard Tim Ferriss use it years ago and I think it was, uh, maybe more of a word in venture capital too, as well. Okay. And people, you know, there’s a woman named Katarina Flake who wrote an article about it in 2010. They went sort of viral and people have said, Oh, you started FOMO. And I’m sort of like, here’s the webpage from 2004. But, um, it’s one of those things. They never give you a certificate when you coined a phrase. So you have to sort of go back and look at the evidence, but yeah, it’s, it’s my, it’s my, you know, unexpected little baby.

14:47 Right. And to the core, what does it mean to the average person, person watching this FOMO, if you had to kind of break it down, what is the essence of it? So fear of missing out is something we live in a time where we have more options than we’ve ever had before professionally, personally, socially. And we are aware of those options because technology allows us to understand what’s going around, going on in the world around us and what we’re missing. And so for me, FOMO is the awareness of all of the options that we have and the understanding that no matter what we do, we’ll never be able to sort of enjoy all of them.

15:21 Okay. And that can paralyze us. And that comes because we’re trying to over curate our lives. Yes. Optimization. So it’s okay. It is the idea. You know, that friend of yours, who you go into the restaurant, you sit down and then they sort of look around and say, I wish we were over there. And then they want to hop tables. Yeah. I’m that guy sometimes.

15:38 Yeah. I mean, aren’t we all very feng shui. That’s FOMO, right? And so I think you can end up in a situation and I do this all the time. I have a trick. I don’t have my watch with me today, but I will oftentimes just say, if the number’s on even, I’ll do this. If it’s on odd, I’ll do this because I spend so much of my time worrying about decisions that are completely inconsequential. Okay. Right. And that causes anxiety and you’re not present in all these other bad things. Exactly. It’s just wasted time and energy. Okay. So you’ve learned from coining those phrases not to do these kinds of things. I’d like to think I’ve learned 100%, but of course, I mean, we all go through that. I think my struggle these days is with the FOMO.

16:14 It’s the idea that, you know, I have something in hand, but I’m waiting to figure out which is going to be best for me later on. And I struggle. That’s the worst one, by the way, because it’s very rude and inconsiderate. So I try to be more sensitive to that FOMO. I feel like at this point, I’m at the point in my life where I kind of know what I’m looking for. So I tend to basically say, yeah, it’s okay. I’ve done that already. Or I don’t really want to do that. I remember when Tim Ferriss was talking about FOMO, he said as a guy that was investing, you know, in startups, you know, a lot of times that’s the anxiety that these people have is fear of missing out, probably in this sub-vertical. Like, oh, if I don’t get in on this, you know, whatever it is, like a, you know, TaskRabbit type piece, I’m going to miss that play. There’s only a few out there, and then I won’t have my play. And then five years from now, we’ll be sitting around and all the other guys will have their whatever, dating play or their Tinder play, and I didn’t have it. And he said it’s something that could really make him anxious.

17:05 And I guess there’s lots of examples. I call that the wildebeest. For me, having worked in venture capital and watched this up close and sat in those investment committees, it’s the wildebeest. It’s the idea that, you know, when you see the migration of the wildebeest in Serengeti, they’re in a herd, right? Because if they’re in a herd, nobody can attack one of them, and they follow each other along. And when one stops, they all get together again.

17:26 The wildebeest thing in venture capital is exactly that. It’s like, well, my buddy over at XYZ firm is in this sector, we’ve got to get there, you know, we’ll invest alongside them in this deal. We won’t do diligence, we’ll just invest. And then when the thing goes bad, you know, unfortunately, it’s kind of the opposite because you all go down together. So to me, this idea of following along, it’s great if you’re playing with somebody else’s money, but if you’re playing with your money, you cannot afford to do it.

17:52 Yeah. So if you’re a fund manager, you can do it. It’s not so, yeah, I mean, it’s not good either, but it’s a lot different when you’re writing that check yourself. Okay. Harvard Business School, before we move on, tell me what it’s like. A lot of people, they hear Harvard Business School. I’m guessing most people are pretty impressed.

18:07 When you told me you were social, that makes sense because I’m told that those two years at HBS, it’s that network of people that end up being valuable for the next 20, 30, 40, 50 years. But like in retrospect, and you’ve had like 15 years to think about it now, what is Harvard Business School and what did you get out of it and what is it not at the same time? Yes. So Harvard Business School’s motto is to educate business leaders who will make a difference in the world. And my fundamental belief is, I mean, there are exceptions, right?

18:33 There are going to be people from our school that go out and do terrible things or terrible people. But generally, I would say my experience was 90% of the people who were there were really, really, really smart and accomplished. And you’d say, yeah, that’s fine. I just remember when I went to undergrad Georgetown, I felt like there were a lot of people who weren’t that. I mean, they were smart, but they didn’t necessarily weren’t well rounded or take advantage. At HBS, people have, you know, they’ve been out in the world and they are very driven, very smart, very impressive. That’s number one. Number two, it’s a place where people are extraordinarily engaged with the world around them. They’re looking to win it all the times.

19:11 That’s why they have so much FOMO. But they also are people that I tend to think the school does a good job of making them aware of leadership and impacting the world around them. So I remember graduating and I’m this is super nerdy, but I’d be that guy who if I found litter, I would pick it up because I’d say, well, I learned this at HBS. Always leave a pace better than you found it. So I think that ethos is really important. A lot of people, I think something like, you know, 50% of HBS graduates are on a nonprofit board. And in fact, the school prides itself in being a training ground for all the boards of directors of nonprofits and social institutions all over the world. All of those things are really valuable.

19:49 It’s also incredibly global. So anywhere I go, and I’ve been to, I’ve been in almost 75 countries, I can find people to meet up with. And they treat you like you’re an old friend in general. Okay, so those are all positive. And you do learn lots of things, but you don’t learn facts and figures. You study all these cases. And so you learn how to think through problems, assimilate tons of data, and then make sort of actionable decisions based on what you’ve seen in a quick way. And that’s really, I think, what the school teaches. I think what it’s not, it’s not the kind of place where you’re necessarily going to walk out and in the way an MIT does and become sort of an amazing quantitative trader, right? It’s a little bit more of a general management type of place. And so that’s what I’ve seen. People tend to be a little bit more high level. And there are, of course, examples of people who do do that. But that’s what I see with my friends is that they end up going into things that are much more about management and general management and those types of things.

20:45 And so maybe a Sloan School grad would go into the trading floor and do a quantitative job. Yeah. Because they trained that and specialized and studied that. Yeah, it’s far less prevalent. I mean, I think something like 40% of people start off in consulting out of HBS. The three M’s are McKinsey, married in Mormon, or military in Mormon. Those are the three things that are guaranteed to get into the school. And so you tend to have a lot of people that go into, into consulting and things like that, at least as a beginning and back into their career.

21:12 Okay, cool. So you went into Wall Street afterwards. Six years later, four years later, whatever it was, you found yourself at AIG. Yeah. 2008 financial crisis. Yes.

21:24 What happened? So this is the reason I still can’t watch anything like Too Big to Fail or any of those. I can’t read those books. I’m still, you know, it’s still anyways, those movies. Yeah, I’m, I’m never going to see them. I was working in the private equity division.

21:38 So I had been working in private equity my whole career. Our division invested globally. So I was going to Pakistan and China and Turkey and Columbia and investing in growing businesses. For people that don’t know, how would you quickly explain private equity? We did growth. So private equity is finding great companies, giving them capital to expand.

21:57 And then later on exiting your position, either selling to a bigger company or taking in public. Okay, cool. So I was doing that. Everything was going great. And describe what AIG was at the time.

22:09 So AIG was, you know, when I went there, my view is not the sexiest brand. We’re not going to Goldman Sachs, but it’s a trillion dollar company, stable. I mean, the cool part, you know, I’m doing the fun stuff. So I’ve got this massively stable company. Like this thing will, no matter what happens, you know, it’ll always be there. And I really like that because coming from a small town, you know, if I fail, I’m going to live in my parents’ basement and they don’t have cable down there. So, you know, that’s, that’s my backup plan.

22:35 Who was the chairman of? Great. Well, Greenberg, Hank Greenberg. Hank Greenberg. And it was a triple A rated company, which means it’s super high rated.

22:43 It was an insurer, but they also did a lot of other exciting things. They did. And Hank Greenberg was like a legend in the industry because he had grown that company, even though it was triple A rated. Okay, that says this now. And but what we didn’t know was that there was a section, this group over here in London, actually, financial products, probably somewhere fancy like Curzon Street, I think it was.

23:02 And they were doing all this super risky stuff that nobody realized because Greenberg had been kicked out by Elliot Spitzer. I joined right before he, I joined like a week before Greenberg was kicked out. But I was in private equity. We had nothing to do with any of those things. We were the most stable, steady, eddy, long-term business ever.

23:21 And so, you know, things were going great. I got promoted multiple times. I was the golden boy and I loved my job. I was, you know, it was great. And then 2008 came around, financial crisis hit.

23:32 I remember, well, I was, you know, I watched all this stuff with Lehman Brothers. And I thought like, wow, that sucks for all my friends at Lehman. Thank God I work at a stable company like AIG, right? And then I get up and AIG’s name starts getting mentioned in the press. I go in the morning to the office, pull up the Bloomberg screen and our stock is down something like, you know, 67% or something.

23:55 Yeah, which is like, so people don’t know that doesn’t happen in AIG. It goes down like like 1% and it’s a big deal, right? Yeah, it was really crazy. And in fact, my stock, I had shares, they fell 97% by the end. So people don’t know if it was worth a dollar, it’s worth 3 cents.

24:11 So basically, that company went bankrupt? The government nationalized it. The government gave it a loan. Then all that money went out to Goldman Sachs and all these other, you know, banks. So we were sort of like, yeah, I know, I don’t want to go there.

24:26 So it was a massive collapse. And again, like you said, it wasn’t one of these investment banks that was rated lower. It was like one of these scrappy companies that were just doing this. This was like, you know, really, it was boring company ever. It was the same one of the safest financial institutions in the world, like probably top three. Yeah.

24:42 So this comes crashing down. What happens to your world? What happens to your view of the world at this point? Yeah, so I was two things happen. First, I got super, super sick.

24:52 I basically woke up two weeks later. I was in a hotel room in West Virginia. I remember, you know, I don’t want to know what happened before that. I was nothing. It’s West Virginia, nothing exciting.

25:04 But I woke up at three in the morning and my pillow was soaking wet. And I got up and I looked in the mirror and my face was completely covered in sweat. My hair was completely wet. And the next morning in the shower, I noticed I had this huge swollen gland and I called my doctor. I beat it back to New York. I went to see him and he was like, what is wrong with you? You’re a hot mess.

25:28 Maybe he didn’t say that, but you know, that was what his eyes told me. And they didn’t know what was wrong. They thought I had mono. They had no idea. Everything was a mess. I had blurry vision. I had blurry version for almost six months.

25:40 Basically, all of the stress completely broke me down. And so I had this sort of this, I retreated actually didn’t leave my house for weeks. You know, I go to work, but I couldn’t stay at work because I couldn’t focus on my computer screen. It was terrible. So this is trauma.

25:56 Super traumatic. Yeah. And I’d never experienced sickness like that before. And I didn’t know what was wrong. And I remember, um, this was like around, I remember like going to church. Like I’m Catholic, but I don’t go much.

26:07 And I was like, I went straight to the church and I was like, please help. Wow. So it was pretty, it was pretty dark. Wow. And you think all that stress was just, uh, you were personalizing a lot of the hopes and dreams you had about the company. And then it was just getting to you.

26:21 I mean, it was a hard time for a lot of people. Yeah. I think a lot of people went through that. So I’m certainly not alone, but for me, I had this very, I had a very planned out path and I had never thought of doing anything else. And I realized that I think what was so hard for me mentally was that I had this illusion about stability and about the fact that I had done everything by the book.

26:40 And you had. Right. And then I realized it was completely, you know, at least for me, a total illusion. Okay. And the book was kind of born from that.

26:49 Yeah. Well, the book came later, but the, the, the decision to look for autonomy and diversification came out of that. I mean, that was, that was the beginning of that. So you thought to yourself, here I am, went to Georgetown undergrad, had some, some went to wall street, had some experience there, Harvard business back to AIG. I’ve got my whole life planned out, you know, and then all of a sudden AIG comes crashing down and you’re thinking, wait a second, I need to look after my own interests a little bit more, diversify my personal portfolio and just start thinking outside the box a little bit more and stop modeling my career on all the HBS graduates from the 60s, 70s, 80s, and 90s where that, where that did work. Right. Yeah, that’s exactly right.

27:30 And I think, you know, it was, and then I had this, so I, I knew that and then I thought, well, the, the next struggle is how, what the heck am I going to do? Because I had no idea of what I could do because, you know, even thinking about entrepreneurship, a lot of people say, well, you should just start your own company. I had lived through the tech bubble of 2000. And the reason I didn’t do anything in entrepreneurship out of business school is because I saw all these companies blow up. And so I thought to myself, well, that’s not a good idea either. So I was then, I was at a real loss because I thought to myself, you know, you’ve got these two options and neither one makes any sense.

28:01 So what am I going to do? And you graduated 02 from Harvard or 04. So yeah, you had seen like if you see the tech bubble go burst, it does make you want to stay away from startup culture, doesn’t it? Yeah, I was 23 years old and I was firing legions of people at the companies we’d invested in, you know, in 2001. And then 911 happened. I was there for that in New York.

28:23 I lived downtown. So I had seen all of these things happen. I went to business school as, I was sort of like beating a path to Boston to get the heck out of this crazy world. And then I came back to New York and I thought all the things this, we’re in a new world now, everything’s great and had a couple of years of the, the up movement. But you know, as I think all of us have learned, there is just, there’s just volatility out there. We live in a volatile time.

28:44 It’s not going to change. There will be more. Yeah, there will be more. And we always forget and the financial markets always remind you of that, especially if you look at emerging markets and then you spend time in Latin America, it’s like they seem to forget three or four years later and then it starts all becoming bullish and they have these high credit ratings. And then again, it crashes and it’s very cyclical because humans are emotional. I think that’s what makes markets cyclical. We forget, we, we decide we want to go spend money when we know we shouldn’t.

29:09 And then there’s this natural cycle that happens, you know, just to give my quick recession story. So I had clients here in London at Lehman Brothers. I had like six people, like almost personal friends. I spent 10 years as a credit derivative broker here. And I, I developed these long personal relationships with the head of credit trading at Goldman Sachs, Credit Suisse, Lehman Brothers, Citibank, all of these things. And I would do business with them every day on the phone. And I would just take them in and out of these transactions.

29:35 And I remember when we started hearing some things happen in around 07, 08, and it was just like, okay, this is going bad. And the funny thing is, is for me, it was a boon in business. So I had like my greatest 18 months ever because the volatility was ever, people were trying to get out of positions. I remember one week where I just, I couldn’t, I didn’t have time to eat during the day because I would get in at 7 a.m. We literally on the phones until like seven or 8 p.m. transacting, like more business, more business, more business, more business. And I got to a point where I was like, I don’t even care how much more money I get today. I don’t care. And like for me, that was a big statement to make. And so it was just crazy. But I remember that the six people at Lehman, again, Lehman was on the up and up. They were really coming back and they were very proud and they were walking out of their building with cardboard boxes with their stuff. And I remember people calling me up saying like, do you know Lehman’s going to default? Do you know Merrill Lynch is this? And I remember thinking like, what the heck? So yeah, and it curbed the industry for some time. So where do you go from there? And then how does this whole idea of this 10% entrepreneur start? And can you tell us a bit more about that?

30:39 Because it’s a very interesting concept. So I was afraid. Well, basically where I went from there is on the personal side, I was like, I’ve got to get healthy. I went on this total health regimen, lost 25 pounds, went off and ran a marathon, you know, sort of just took care of myself. Did you keep working at IHG at the time? Okay, I couldn’t, I couldn’t hard, right?

31:00 Yeah, you know, we didn’t do so much back in the we were all showing up, we were waiting to get sold. So we were put up for sale and the sale took a year and a half and, and nobody left and people we spent our hours of our days and we would do our work, of course, but you know, we would spend hours a day behind closed doors complaining, wondering what was going to happen. It was a hard time. And you know, I think there was so much uncertainty, our bosses didn’t know either.

31:22 And this was something that played out all across Wall Street. So I was sort of dealing with that this situation of stasis. And I think that not having momentum in your life, if you’re used to having momentum, is really tough. Yeah. And so I was stuck in that environment. And so I focused on finding momentum, getting healthy again, doing all these sorts of things, which is good, because you’re in a bad state there. Yeah. And so after I, you know, I did this trip to India, believe it or not, about six months after and I had when I left for India, I was still Mr.

31:50 Foggy Vision. And I came back two weeks later, and I could see it was crazy. I think just getting out of New York. And then I stuck around and I actually wanted to quit. And then I was too afraid.

32:02 And I would, you know, I was just boring everybody I knew with how much I wanted to quit. And then I finally said that FOMO or FOBO. That’s just fed up. Okay. But like, you know, you do want to stay, you want to stay and like get them, get that salary for the Wall Street life. And you don’t want to go. And it’s weird. It’s weird. And you can sit there and do the calculation that you have X number of years of rent in the bank. But you also don’t know where you’re going to be going the minute you leave your job, you is then incumbent on you to actually figure out what the heck you’re going to do, right? Exactly. That clock starts ticking. And so what I did, I tried to quit three times. Finally, every time I found some way to stay on, there was an offer made and, you know, we were being sold. So there was not a lot of desire for me to leave. And it would look bad. And then finally, I made a deal with my boss to leave in 2010. And I stayed on all of the, I stayed on as a consultant. And so I gave myself this elegant bridge to go. And so then I took a year off and I did what I call eat, pray, love, eat, drink, love, maybe, because I went to Spain and France. And then my brother who’s a jazz musician told me, you should get up every day for six months not knowing what you’re going to do because you’ve been so programmed. And I was like, you’re an absolute lunatic. And then I did it.

33:17 And I have to say, it really broke me of a lot of my sort of just feelings of FOMO and FOMO, because I really tried to focus on, you know, what I was going to do that day. And so I did that for about a year. And then I got nervous. How do you do that? So you don’t make any plans. Yeah. You just wake up the day and then you do whatever you want to do. Yeah.

33:35 And you don’t have plans the next day or the next day. You may have general plans, but it’s not like you pack your day with 15. I found myself from a control freak type A HBS grad. That’s a hard thing. Yeah. Because you’re interviewing for jobs you don’t even want.

33:49 I remember going to these jobs and I was like, this would be terrible. But you’re in the third round because you’re sort of like, well, I should do this, right? Because you know, I should be going trying to get a job. But I knew I had given myself a period of time to do something else. And so I had to learn how to let myself actually not be on the treadmill for a bit. Okay. And this is after your eat, pray, drink year.

34:11 This is during. During. Okay. And how did you allow yourself to actually do that and just step away and just go to Europe and relax? Well, knowing that I still was a consultant and I had a paycheck coming in, not as much as I made, but knowing I had some income coming in was really critical. And that’s a big lesson is when you’re living out of your savings, nothing feels good, right? Even if you’ve got 25 years of savings in the bank, it just, every time you spend money, you’re sort of like, should I do this? Should I buy this flat white? Like, oh, it’s three pounds. It’s a lot of money. Knowing you have money come in, mitigates that I think it’s more of a mental challenge than anything else. And then I started thinking about what I was going to do next. And that’s where this 10% concept came in, because I didn’t want to be a full-time entrepreneur. And so I started actually, I built a sort of a consulting practice, which is you’re not, you’re working for yourself, but you have clients. And so you’re really just like, you know, in a sense, a freelancer, as it were, right? And I had enough and that was bringing in enough money to pay the bills.

35:11 But having been a venture capitalist, I knew there’s a concept called carried interest. Carried interest is when you’re a VC, you get your salary, right? But then you own a share of every investment that you make. So if you invest in Uber, and it makes tons of money, you get part of those profits. And I knew that when you’re a consultant, you never share in the upside of anything you ever do, right? Because you’re just getting paid by the hour, paid handsomely by the hour, but you can work for 20 companies. And if one of them goes to be a billion dollars, you might get invited to the Christmas party. Exactly. You get, you know, they start sending you like the t-shirt with the logo on it. Okay. Because you had a background adventure cap. You’re like, I’m wasting, I’m wasting opportunities here to own part of the company. Exactly. And also, I’m the real money is made in any business by being an owner.

35:55 You know, the minute you become an owner, if you take two days off, or you go on holiday, or you’re sleeping, your that’s your, your value in your company, the part that you own still grows, because your colleagues and the people who work with you are building the value of that company, and you are part of that, right? And so you become part of something that’s bigger than yourself. And that’s what I wanted. I realized having watched all these people as entrepreneurs make all this money that unless you’re an owner, you can never be part of that. And so then I decided, um, how can I do this in a way that diversifies me, that allows me to still have a day job to because I couldn’t afford to quit and do that full time. And so I came up with this concept of 10%. I started watching friends around me who were way smarter than me, who were investing in companies that an angel investor, who were becoming an advisor, where they traded their time for stock in a company, who were starting things. And I watched them and I thought to myself, like, this is a really smart idea. Yeah, it’s fascinating too, because like you meet him in London and then you meet someone and they’re like, Oh, yeah, I’m an angel investor.

36:56 I’ve been in 10 companies. I’m an advisor. And you meet the next guy and he’s not. And it’s like, it’s like they’re both qualified. They both have the time. They probably both even have the spare income, but one of them kind of gets it. And one doesn’t. It’s weird. I guess you saw that. Well, that’s what I saw. And so I decided I’m going to take the 10% thing comes from the fact that my best friend Jason and I were walking down the street and we were talking about another friend of ours who was doing this. And so I said, I’m going to take, you know, part of my savings and I’m just going to put it aside and like almost like a little family office, you know, rich people have what’s called a family office to invest their money. I’m going to do my version of a family office. And then I’m going to take 10% of my time. And it’s like a tithe. And he was like, that sounds like he then cited a guy named Steve Siegel, who’s very successful real estate exec. He’s like, that’s what Steve does. You know, it’s 10% ish. And that’s how he’s, he’s like, you know, that’s where you make the real money. So I decided to do that. And then I, you know, I later found out that the average angel investor puts 10% of their real assets into deals. Really? So it actually, the market clears at 10%.

37:58 Market clears. And for people who know what that means, that’s, yeah, that’s what the market tells you it is. This is what you did. This is your kind of terminology. As opposed to the speculation. So interesting, 10%, because I would have thought it’d be more because I’m thinking I was calculating the days in my head.

38:10 Say you don’t work weekends, you probably work a little bit on the weekends, but that’s a half a day. Sure. That’s not much time, you would think, to be able to advise companies, et cetera, et cetera. But I guess there’s different ways of doing this, right? Yeah. So I mean, it depends on who you are. So if you’re, if you’re a person, for example, that builds websites or that designs logos, or that maybe you’re a carpenter even, and you build out the headquarters of a company for stock, and that happens all the time.

38:34 Right. Or you’re the, the guy, the graffiti guy. Yeah, David Cho exactly. Right. That’s, that’s different. That may be a, that’s more project-based, but a lot of what I do with companies is I give them an hour of time a month, or maybe two hours of time. We have, they give me, you know, between a half a point and a point of equity, investing, you know, or, you know, I get that over a year and a half or two years. Okay. But an hour, if you’re a startup that’s brand new in your space and you’re looking to meet investors, I don’t need 30 hours to tell you, call these three people, they’re my friends, I’m going to recommend you go have a meeting, right? Right. It’s not time consuming per se. It’s about, you know, using and leveraging all the skills and relationships you’ve built over your career to be impactful in, you know, concentrated amounts of time. Right.

39:17 That’s really the story on the advisor part for many people. Okay. That’s interesting. Do you think everybody listening to us and watching us right now can become a 10% entrepreneur? Yes, I do. And in fact, the reason why I wrote this book, the original version of the book was a lot more about me and my friends. And so that was one kind of 10%. But then once I started really working on writing the book, it was so important to me to have lots of different types of people.

39:44 So I didn’t want just people who went to Harvard Business School. I wanted people who lived in England and worked in, I was an assistant in a consulting firm and started a candle company that’s very successful. That’s one person who’s in my blog. I have a car dealer in Long Island who started a brewery on the side. I have a person who was a reality TV show producer. I have all these different types of people from different backgrounds. And the critical thing is it’s mindset and it’s figuring out what you want to do. And then just doing it. I think a lot of people get caught up in this idea of, oh, that sounds intimidating. Or, oh, I’m not the right background. I don’t have an MBA. The reality is anybody can do this. It’s just, you’ve got to have the right sort of approach. Yeah. It’s almost like your packaging, the value you have, all your relationships, all your experience, and then you’re actually quantifying it in part of inequity. But I think that always confuses people and makes them uncomfortable and makes them weird. Now, just for the people that don’t understand the jargon, you just said, for example, I would give an hour or two of my time for the month.

40:43 And in return, you would take, say, a half to one percent of the stock of that company. Now you wouldn’t get it right away. You’d get it over two years just in case you turn out to be a fruit loop or you want to whatever. Or you don’t like it and you leave. Yeah. Yeah. I mean, maybe that’s that too. Exactly. And so there’s time to, and also ensures that you want the longer term success of the company, not just, I’ll give you an intro. And the company itself looks at that and says, okay, we might be successful. We might not. That one percent of give up of our upside might be worth it because we might have that one introduction or Patrick might give us that one insight. Exactly. And you can also, the other way to do this is to actually run something yourself. And there’s an example in the book about a lawyer here in London, in a Magic Circle firm, who started this really cool company. He’s American by birth, and he went to University of Georgia. And it’s this bracelet that plays the fight song of the University of Georgia. And he started this company while in law school and now runs it full time on the side while being a corporate lawyer, which is a really demanding job.

41:48 But his brothers help him out with it. And so you can also decide, listen, that equity stuff or this advice, I don’t know what I want to do. I don’t know those people yet. I think you will know them later. But you can also find a business that you believe in and started on the side, make sure it works before you get involved full time.

42:04 And then you may someday even decide to jump in and do it full time, but you’ll know that it works. And you’ll know that it’s financially viable before you quit your job and jump in full time. Okay. Now these there’s other five different types of these entrepreneurs. I wonder if you could walk us through these because I think it’s interesting. It’s kind of nuanced and it kind of tells you what you could be and what you might start off being.

42:24 So what are those different types? And again, if you’re a 30 year old, you know, mom, if you’re a 40 year old unemployed ex, if you’re a 60 year old, something, you have value. And it’s funny, I bet, you know, wait, when AIG is crashing down, you’re thinking, and I’ve had this thought as well. I have no other skills. I don’t know what I’m going to do. And I just want to say that as everybody listening, this is a MIT grad who went to Sloan school and a Harvard business grad. And you know, when I when things were going south, you know, at any point in my career, I’m always like, what am I going to do next? Am I going to go back to Colorado and work on my grandpa’s farm?

42:58 But like, we forget all the IP that we have. Yes. And all the relationships we have and all the knowledge you have that you can actually impart on other people. And everybody has it, right? No, it’s I think when you surround yourself with people who do what you do all day, like when you’re on Wall Street, everybody’s good at Excel spreadsheets, right? Like, Excel spreadsheets, that is the language that that’s all you do. And so you think, well, it’s something everybody does. You walk outside your office building, walk a mile down the road, people would be amazed by your skills. And that has real value. And that is like any, I could never, I mean, carpentry, right? I can’t, I mean, build anything. If I was starting a restaurant, and I didn’t have the money to pay somebody to do my carpentry and design, and somebody came in and helped me with it, I’d be happy to give them shares of my company, right? Of course, I would have an ownership stake in my restaurant, right? So the five types are 10% entrepreneurs. And these depend on what you have in terms of resources. But the first is the angel, a person who invests capital in exchange for ownership in a company. So it’s, you know, that startup next door, or that real estate project, I’m going to invest capital.

43:58 And for people that don’t know, why are they called angels? You know, that’s a good question. I think it’s because you’re coming in at the early stages, and you’re, you’re almost like an angel, you’re coming in, and you know, you’re the guardian angel for an entrepreneur who needs capital. Yeah, because usually, it’s, it’s the business is so new, it has no track record, you probably don’t have much of one. And they’re actually being kind of nice to give you the money. They’re really believing in you more than the business model sometimes, right? And again, it’s nothing formal about it. Usually, it’s a friend of a friend or social relationship that does that, right? Absolutely. I mean, nowadays, there are more established angel groups in Angel Network. A lot of people say to me, well, you know, I’ve got the capital to do this, but I’m afraid of the sort of mechanical bits. I don’t know how to do the contracts. There are angel groups now that can help you to do that. The other thing about angels, it’s kind of interesting is that people oftentimes think, oh, I’ve got to be a millionaire, or I have to be sold by have sold my company to be an angel. The reality is nowadays, it’s so cheap to start businesses, you don’t need to write huge checks, you can start in the single 1000s of pounds, and people do that on cedars and other places like that here in the UK. Yeah. So you know cedars? I do. Yeah, my friend, Vana Kutsimidis,

45:09 Who was the runner up on The Apprentice, raised money for her company, Dateplay, on Cedars. Very cool. We know Jeff Lynn, the CEO. It’s a great platform. Yeah, they’ve done an amazing job.

45:19 So good point. You don’t need that much money. You might need thousands of pounds, but you don’t need, you know, necessarily a hundred thousand pounds or more to do this, to be an angel. Okay, cool. That’s the first one. You’re paying for equity. Nice and simple.

45:32 Classic version. Yes. Next is the advisor we talked about. Instead of equity, you’re giving your skills and your time. And the great thing about that is it’s good for people who say, you know, this business is too early stage, I’m just not sure yet, or I don’t have the capital, or you know, it’s just, I don’t know quite what to do, and I want to learn. And you can oftentimes combine that with being an angel to make the capital you invest, sort of value more, or you can combine it with being an angel to learn about a business before you invest.

46:01 So they go really well together. They kind of blur a bit. So you might give them two grand and some advice to show them that you’re vested, or yeah, you might give them a little bit of money and learn at the same time and get some education. I think Tim Ferriss famously was an advisor to Uber and for some consultancy service, got some equity. I think that would be the advisor part. Right. Think about what that’s worth now, right? It can be really powerful. Yeah, I think Tim has pretty much said that, you know, that’s, you know, he retired on that.

46:26 Now everything else is just gravy. And that puts you in this very interesting mindset where I think for Tim, he was like, what do I love doing? Because like, I know it’s considered a high quality problem to have enough money to live the rest of your life in comfort, but it lets him focus like, what do I really want to do? And I think actually he’s stopped investing and he’s really going to write more books. And I think he just enjoys that. So it’s interesting, but that happened to him. So it obviously exists. All right. That’s a second kind advisor. What else is third is the founder. It’s somebody who starts and operates a company on the side while working full time. And then either does that for a while. And then then if they find that they don’t have enough time, they can either choose to go full time if it’s sustainable or bring in a partner. Okay. All right. Cool. That’s the third one.

47:08 Yes. Founder. Okay. Fourth is the aficionado. The aficionado is a 10% entrepreneur who does one of those things, but it’s not just about making money. It’s about passion. So it’s sort of like, I love to cook. I’d love to be a chef, but I can’t live that lifestyle.

47:21 I don’t want to live that lifestyle. Being a chef is super hard and, you know, chances are that you fail. And so I want to be a 10% entrepreneur, but I also want to be sort of doing that. I’m going to go and cook on Saturday night. I’m going to be working at the restaurant when I want to. And so it’s an ability to do something you love and care about at a professional level without actually having to choose it as a career.

47:43 Okay, cool. So there’s no exchange of equity or anything? There is. No, there is. Okay.

47:48 It’s just, it’s a, it’s a slightly different form in that it’s not just about sort of like pure business play. It’s also, you know, it’s, it’s, it’s about the passion and the hobby. Yeah. It was like guys on wall street that used to invest in like a bar in Jersey or a long town. You’d bet. And you’re like, what’s your return? They’re like, I don’t care.

48:02 I walk in and I own the bar. Yeah. It’s like, maybe it’s just fun. And I love seeing these guys succeed and I’m not really in it to make the money, but I’m in it to learn. So, okay.

48:11 Yeah, basically it’s, it’s professionalizing your hobbies and having a mode of an upside potentially and something that you love to do. Okay, cool. And finally, the 110% entrepreneur, which is that entrepreneur who says, you know, I, I’m an entrepreneur. I get it. But I also know that I’ve made a really concentrated bet in one company. And I also know that my skills are valuable to other entrepreneurs and I know tons of other entrepreneurs. So let me be a 10% investing advising and getting involved with new ventures on the side. Okay. So they’re already an entrepreneur and they go and starting their own business and then they give another 10% to other people.

48:46 Precisely. Okay. Interesting. Okay. Right. And you tweeted someone out today, you met with a, a woman here in London and she said she’s 110%.

48:54 Yeah. Vanna, Cedars Vanna. Yeah. She’s, she’s, she’s got a two businesses actually, and she’s doing great. And I think, I think that makes a lot of sense because these, and you see a lot of this is entrepreneurship is high risk. So why wouldn’t you diversify?

49:07 Right. Right. Let me ask you a question. A lot of people are watching us and they’re like, yeah, these guys are all about bucks. Like Gordon Gekko would say, the rest is conversation.

49:15 You know, these guys are talking about this and they want to make more money. They make, want to make more of this. But one of the things you talk about in your book is that this isn’t just about money, is it? No. Can you explain that? Yeah. I think many of us, we’re more than, we’re meant to be more than just our job, right? We’re meant to be more than the financial analyst or the bar owner or the graphic designer. And when we’re kids, at least in the U S this is a very American thing. It’s like being well-rounded is the end all be all. Being well-rounded is what everybody wants their kids to be.

49:46 And then when you’re an adult, you can become so singular in one track and you find yourself at the cocktail party with nothing to talk about except your boring job. Your spreadsheets. Yeah. And so what I, and I remember saying this to friends when I was in private equity, saying to them, I used to be so interesting and now I work in finance and I talk about numbers all day long and I talk about return on equity. And so when I was a bank of trust, I used to say I had more fun on the trading floor than I did at home because that’s where all the fun was because as we were taking risks, because hanging out with the guys, when I got home, I didn’t really know what to do because I was just, I tried my whole life to be this trader and that’s what I did. And then outside, I was trying to explain one day to my roommate in the East village about how I had just lost $50,000 on a bond future trade. And it was like super exciting and I also got chewed out, but it was dope. And he was just looking at me like, what the hell are you talking about? Who cares? Exactly. So go ahead. You were saying no. So and so what I wanted to do is lots of people wait till they retire to do what they really care to do and to be engaged in life in a different way. There’s nothing wrong with working hard and being a little bit focused on your job. That’s fine. And I think a lot of type A people are, but why can’t you do more? Why can’t you have experience that are different,

51:01 That push you in new directions, that allow you to meet new people, but are also business oriented and leverage all the things you’re good at. And you may discover their next path by doing that, right? And that’s what, you know, you can be that executive who’s been in industry for 20 years and you’ve been so far away from making the cake that you forgot what it looks like to need the dough. And this gives you a chance to get back into it. And for the people who’ve never done anything, it gives you a chance to take a little risk, try something new. And if you fail at the very worst case, I call it an experiment failed. I wouldn’t call it a failure. Right. Cause it’s 10% of your time or your money.

51:34 And you can probably get over that. And it is infectious being around people that are excited about their jobs, you know, and it’s rare. And that’s like, so when I started London Real, it was just this whole different experience. You know, the reason I left banking is because everybody really didn’t like what they were doing. We were coming on the phone, getting yelled at by traders, yelling at each other, trying to stuff each other for some income and fees.

51:57 And we did the same thing every day. It was like groundhog day. I still don’t know how these guys still do it. Um, but you know, they, they, they, they know that they’re getting a reward and they’re spending the money and blah, blah, blah. But it is fun to be around people that are creating things, right? If you find a banker, you got out of the city now and you find me some 10%ers and I guarantee there are, and you ask them to talk about business, they will tell you about their 10%. They will not talk about their, their day job.

52:21 And I’ve seen, I have a friend who works in a great private equity firm, very, you know, top five, let’s say, and he will never talk about the big deals he’s doing. He wants to talk about the tequila company he invested in because that’s way more exciting. And by the way, people are way more interested. Isn’t that crazy? And that’s because what he’s got more, more invested. He’s probably got his personality invested in personality. The other people, maybe there is more of a return for him. He just cares more. I think he cares because he chose something. He put his own imprimatur into it and he’s part of a team. He’s growing something. And I think lots of times these days and jobs we do are processed. We’re, we’re stamping one paper and stamping the next and moving them to the side.

53:02 That’s not what building new businesses is. It’s quite the opposite, right? It’s really about taking a blank slate and building something fresh. Yeah. You hit some statistics in your book. Let me, let me just review them because they’re pretty shocking. You said 70% of the American workforce is disengaged. 60% of lawyers wouldn’t recommend their industry. It’s probably higher. Jesus, lawyers are never saying about industry. 46% of doctors wouldn’t recommend their industry. We just had a doctor go through our business accelerator. She was a national health insurance doctor. I’d seen 70,000 patients. She hated it. She hated it. And so she was looking to do something new, actually start a new business. She’s a 10%er. 91% of millennials plan to change her job within the next three years. What does this tell you?

53:42 What it tells me is that they, okay, so they know that there is no loyalty anymore. They know that if things turn, they’ll be out in the street like this. And so why should they bother to be loyal to the companies they work for? That’s what I believe. That’s pretty negative.

53:58 But okay. And this also says what you said before is that many of our jobs have become, I don’t know, like you said, this kind of rubber stamped these processes where, you know, you get to work, you kind of know how to do your job, maybe three hours of the day, the rest of the time you’re dealing with politics or you’re screwing around. You’re on Facebook, Facebook, right? That’s what everyone says. Everyone’s on Facebook, right? And that’s the reality of it.

54:19 How can that work in efficient markets? You know, I think we are at a point now where we are so hyper efficient, where we, many of us go to what we’re expected to do only takes a couple hours a day. And if you look back at some of these, these economists from the 1800s or early 1900s, they viewed our time now as a time where people would probably work two days a week. And the rest of the time would be leisure, but the workforce has not evolved. And so we still go there for hours and hours and sit around because our boss is in their office, right?

54:48 And so why not use that time for something else, right? Why not step and get a coffee and do something else that’s for you? I don’t know what that is. We work hard here every day. Oh, no, that’s obvious. I’m sure also somebody, you know, I mean, that’s the thing is there’s some companies have adapted, but the vast majority have not, right? And so that’s the problem.

55:07 Yeah, no, that’s so true. Let me ask you a question that’s tricky for some people. And I’ll be honest, I think I’ve probably had this experience myself, because I have had some fascinating people come through here. You know, I’ve probably spoken to 400 people and CEOs and astronauts and all sorts of crazy people. And people get enchanted with what we do, you know, because we love doing it.

55:25 We’re super excited. You can probably feel the energy here. And, you know, I’ve had some really interesting guys, you know, that want to help more and want to advise us and introduce us to people. And yet we never seem to have that conversation that says, Brian, why don’t I do this for some equity? Why don’t you give me some shares?

55:44 It starts to get funny, or at least people think it starts to get funny. Also, I’m guessing there’s certain types of investors that want to never give any equity away, because they were grown up in this, I don’t know, scarce world. And there’s other types of investors that are happy to splash it around. I know those are maybe two different things, but let’s talk about it. Because I think, unfortunately, this probably keeps what could be great profitable relationships from being formed.

56:09 And again, I think sometimes you want to give someone a percentage of that company, because that way they’ll really work for it. As opposed to if it’s just goodwill, they got better things to do. Yes. So I think what people do wrong in this space, there’s a couple of things. The first is, a lot of people think, well, I’ll give equity to people whose name look good in my pitch book.

56:27 So I’m going to give, I’m going to find all these people who, I don’t even know that well, it would have no time for me, but I’ll put them, I’ll give them an agreement, give them some stock. And then I’ll have that one page where it says, Board of Advisors, Jeff Bezos, Alan Sugar, whatever. That’s a bad one, because it’s really a waste. Because these people don’t, unless they really care and you know them, you’re just wasting it on basically getting some headlines that don’t really mean anything.

56:53 So it’s like a dream team that you build, but they’re not really going to do much for you. It’s like that guy once who I met a guy who applied to business school at Wharton, and he had a letter from the president of Nicaragua who he’d never really met. Sort of like, well, that’s not going to do anything for you, right? And he didn’t get it. So that’s number one.

57:08 Number two is, I think the big mistake people make is they don’t sit down and actually figure out what the expectations are of both sides. And so it’s like if you, if we were talking and then we had this conversation, it may be a little uncomfortable in the beginning, but if we sat down and said, this is what I need, this is what you can offer, both sides are going to commit to what they’re going to offer. And we’re going to have it written down and we’re going to have expectations that are clear.

57:33 And if we don’t meet those expectations, guess what? You don’t get what you’ve been offered. If we all did that, I don’t think it would be too awkward. The problem is it’s almost like getting into a marriage and talking about a prenup, right? People are nervous about the fact that somebody will be offended.

57:48 But if you can’t have the tough conversation early, you’re not going to be able to have the tough conversation later. And so you might as well find out what people are made of now. Yeah, you said this before, that if you can’t split up the equity when things worth nothing, wait until it’s worth a lot of money. Precisely. You’ve seen Facebook, the movie, then it gets nasty and crazy and weird.

58:07 And that does get weird, right? Definitely. I mean, I’ve seen this over and over again. I’ve had it happen to me, where I didn’t do a good job setting out the terms of a deal early on. And then once the thing is doing well and there’s money to be split, everybody remembers a slightly different conversation, not because people are bad or dishonest, but because you didn’t take the time to write it down when you should have.

58:26 Yeah, and it does need to be written down. Because like you said, everyone will remember a different version because of the way our brains are wired up. Talk to me about basics. Like I’ve had people approach me even recently and said, okay, Brian, I’m doing this company. I would love some advice, maybe some PR, maybe some whatever for London Real.

58:44 You know, would you do it? Like, you know, if I jump on or other people jump on as like non-executive board members, like what’s the ballpark? Like what do you ask for? What’s ridiculously no, I can’t have 50% of the company. And what’s so small that no one’s ever going to be interested?

58:59 Right, so it really depends on how much time you’re spending and what you’re doing. But I’ll give you kind of two sets of ranges. The first is if you’re doing something discrete, say you’re coming up with a marketing plan or you’re designing a website or a logo, what I like to do with that is impute the value of what you’re doing. So you may have an hourly rate or you may have a comp in terms of what you’ve done in the past or what others are doing. That’s the market rate.

59:22 And so say it’s half, you know, $50,000 or something. Then at that point you can say, well, this service is worth $50,000 or $30,000 or pounds. What’s the company worth today? Okay, fine. Then let’s do basically an agreement based on where we think the company’s valued and what I’m sort of contributing.

59:40 And then we will have the percentage and we will vest it over time because, you know, it’s a good idea to always bring people along over time as they deliver a service. So that’s one way to look at it. The second more amorphous thing like, hey Patrick, we need your relationships and advice for an hour a month every month. That one ranges in terms of the stage of the company and the amount of sort of import and value you’re going to deliver. But that can be anywhere from 0.2% all the way to one or one and a half percent.

1:00:10 It depends on how impactful the company thinks you’ll be. And again, that usually vests over a year or two. Okay, and that’s for a couple hours of your time. Now, if you’re on the board, that’s a different thing because you’re probably more involved meeting regularly. You’re putting your name out there.

1:00:24 And then I guess then that climbs up into the single digit percentage. Probably doesn’t get to double digit percentages. It would be extraordinarily unusual. There are some, I think that’s when capital comes. So sometimes advisors will invest or be asked to invest.

1:00:38 If you’re bringing meaningful capital early in the game and being an advisor, then you should get a significant bump in terms of, you know, several percentage points minimum for your contribution. Okay, tell me the story of Zipcar because I think it kind of explains what happens when two people start on things. And yeah, can you explain? It’s a great story. And I got it from a book, actually, by Professor Noam Wasserman.

1:00:59 It’s a book called The Founders’ Dilemmas. And he’s a professor at Harvard Business School who I didn’t know him when I was there, but I saw him speak in New York. And he told the story. I had met one of the founders of Zipcar when I was in school. And this was a Zipcar, was still pretty young and they had a in Cambridge.

1:01:16 I don’t know if you remember, they were in Cambridge early on. Yeah, it sounds familiar. When were they, like 2000 they started? Something around that in 2003 or something. And this was this concept where you would rent a car, it would be parked on the street, you would go with a key, drive it around and then park it somewhere.

1:01:29 It was one of the early ones. Yeah, but it’s one of these ideas of car sharing. Car sharing, yeah. Very early on. And it was a company that went public and was then sold to one of the big car companies.

1:01:39 Hurts or something, right? Something like that. And at the time of the formation, the two founders for both women sat down, came up with this idea, had a handshake deal, 50-50, and then they drew up their contracts and they split the company in half. One of the founders ended up basically leaving very shortly thereafter and the other stuck in it, ran it, took it through the IPO. On the day of the IPO, both of the partners received the same amount of capital because both of them had the same amount of stock because they had never thought through what would happen if one of them left.

1:02:14 And it’s just so unfair. But I’ve seen that happen with sophisticated people, by the way, who do that. Me too. I’ve seen it happen. Now, the alternative from why…

1:02:22 I want to be the one who doesn’t do anything. Right? You want to be that guy. And so again, some people get confused with all these structures and percentages. But again, once you spend a little time on it, it’ll become really obvious.

1:02:33 And also, once you go through it once, you’ll never forget what it feels like to be diluted or what all these things mean. But I think what people do nowadays is say there’s a few founders, say there’s three founders, and they start the company and they say, okay, we all should get a third of the stock, but they vest that over four or five years. So if you leave after six months, then you don’t get all your stock. You get, say, one eighth of it, you know, and then one eighth of the original piece, which means they can then give it away to other things that they need.

1:03:00 But again, I know sophisticated investors that didn’t even write that in there, because it’s… Everything’s great. We’re partying. We’re going fast. I got to worry about marketing.

1:03:07 You got to worry about the product. You get a 30 to 30. Yeah, it looks… That sounds cool. And then like two weeks later, or two months later, somebody blah, blah, blah, and then all of a sudden they’re gone.

1:03:16 And that can screw up your capital structure. That can kill you getting a later venture funding, right? It can kill it. And a lot of times it kills… It could be your best friend.

1:03:25 You’re sort of like, this person, you know, I’m the godfather of their child. I delivered the bait. I don’t know you, and maybe that’s extreme. But you know, these people are my people, and it can ruin relationships. It can ruin funding rounds, or it can be the worst thing is you can end up giving a big chunk of a company to somebody who adds no value.

1:03:42 And it’s a waste, because then when you bring in that awesome hire, you have less pot to go around, less of a pot to go around. Yeah. What happened with Facebook? I mean, in the movie, you know, they had had that, like, I guess the three of them started, or two of them started it. Okay, and in the movie showed, Mark was doing this, and the guy from Harvard was out, you know, trying to get advertisers.

1:04:00 And Eduardo. Eduardo. And Mark went to California, and he was hanging out with Sean Parker, right? I still want to meet Sean. I have him on the show.

1:04:07 Fascinating guy. And so they’re doing that, and then they end up really like diluting him. They give him some b-shares, and then he gets diluted. Do you think that’s, again, kind of like some egos talking, and he’s not helping with the business, and how does something like that happen? It’s interesting.

1:04:20 I met Eduardo at a bachelor party, believe it or not. Okay. And this was before the movie, and I remember- Can you tell us more? No, there’s nothing more to tell us. Okay.

1:04:27 Off the record. But I remember, he’s Brazilian, and so I speak Portuguese, and we were chatting, and I said, oh, what do you do? And he said, well, I’m the founder of Facebook, and I was like, all right then, like, this guy’s crazy. And then I snuck away and Googled it, and it said, he was the founder of Facebook on Google. And I think that kind of thing happens relatively rarely, because I think generally people bring in good counsel, but there is this reality that once things become valuable, people aren’t so nice anymore, and they will find ways to realign the company or whatever.

1:05:08 And that happens, the great example of this is, is these businesses that have raised so much capital over the last couple of years, who reached, I would say, too much capital, say like a fab.com, which was one of these unicorn in the making, and they raised a lot of venture capital. And then the company went sideways, and all of a sudden, the founders are out, the venture capitalists take it over, and then a couple months later, it’s bankrupt. Those things happen. It can look great from the outside, but people, it is still a risky business, and people get hurt all the time.

1:05:35 Yeah. You had a young man come up to you, I think somewhere in South America. I’d love to hear a little bit more about your ties with South America. You’re just speaking fluent, Spanish to Danny and the video team here. And he said something about, I’m going to quit my job and start this company, and I’m going to do all this startup thing.

1:05:51 And our show, Silicon Real, was promoting startups here. And so like every week, we would talk to a founder, I was doing all these crazy things. And I tried not to be part of the media bias and be like, okay, let’s talk about the hard hours. Let’s talk about your friends thinking you’re insane. Let’s talk about the low pay.

1:06:07 But what did you see from this young man when it came to that bias? Yeah, I call that entrepreneurship ink. It’s this idea that, and I think part of it is necessary because you need to get people excited about entrepreneurship. Because it is a passion game. But there is this glamorization and this de-emphasis on the realities of the financial investment, of the personal investment, of the emotional investment that you need to make as a startup founder.

1:06:33 And so I was in Medellin, which is the most innovative city in the world actually. Crazy, huh? Yeah, right. Because it was the most dangerous city, like in the 80s. So you’ve got to be the most something all the time, I guess.

1:06:43 Right. So I mean, that must be an exciting place, right? I’m sure New York City was a dangerous place in the 1800s as well. Precisely. So, all right.

1:06:49 So tell me more about me. So I’m on the board of a seed venture fund there. And so I go down there and I meet with entrepreneurs. And I was talking to this guy. He came up to it because I’d given a talk.

1:06:59 And so he came up and he was a little shy. He said, you know, I’m Alejandro and I was working this week on a hackathon. And I’ve got this really cool business. I believe in this and I’m going to quit my job. I’m going to quit school in Bogota.

1:07:11 I’m a junior. I’m going to move to Medellin, which is on the other side of the country. I’m going to run this company and I want to tell you about it. I want your feedback. So I was happy to hear that.

1:07:21 You know, I was kind of excited for him thinking this must be transformational technology. And he’s like, Patrick.

1:07:30 I was like, what are you going to do? He said, Patrick, we are tinder for perros. Tinder for dogs. And I just sort of didn’t know what to say to that. And I sat him down and I said, listen, man, like, I’m sure you’re a great kid, but you cannot quit college to do that.

1:07:46 Do it on the side. Don’t quit your job, right? Or don’t quit your school because this just doesn’t make sense. There’s no market for this. Where’s the rev model?

1:07:54 Now, I read in the Daily Mail that people are doing it here in London. So I guess somebody’s made it. For dogs or cats? With dogs. Okay.

1:08:00 But it just, I thought that was that was a telling moment for me because I thought to myself, these people are not looking critically at businesses and they’re not thinking about why they should build these. Why should he build Tinder for dogs? He’s not a veterinarian. You know, and so it really bugged me and I thought to myself, somebody needs to step in and make sure that people aren’t throwing everything caution to the wind in an inappropriate way because I’ve seen people on the other side of that.

1:08:23 I’ve seen when they’re living off of their parents’ credit cards and they failed and they don’t have a job and they are depressed. I mean, nobody, I don’t want people to go there. And so I discouraged him. Do you encourage people to really go into businesses that they have knowledge in? Is that almost like a no-brainer for you except for exceptional circumstances?

1:08:43 Yes. There are, I didn’t know anything about broadcasting when I started London Real. Well, not really. Did you make, well, I had made a short film and things like that. But did you, do you feel that if you had had experience, you would have sort of cut years off of the development time of what you were doing?

1:09:01 I don’t think so. I think what we did here had to be organic. It’s so new, right? It’s so organic, it’s so new. And the way we looked at it and the technology and the emphasis, I think any training and broadcasting would have actually tainted the product.

1:09:13 I would have tried to make it like the BBC or all this other nonsense. So I think it was actually good in my sense. But in a weird way, I was kind of 10%ing because I had saved up money from the banking industry. So I was still losing money but still I was just like, okay, I’ve got a little time here. So in a weird way, it was partially funded, if that makes sense.

1:09:33 Yeah, and I think that’s really critical is, I think it adds a lot of value to know what you’re doing because it helps you to vet the business model and it also cuts down the time. And the challenge is when you jump in full time and you don’t necessarily know what you’re doing, the average person can’t live forever, right? You have a set amount of time that you can develop this business and if it doesn’t work, then you’ve got to go back to your job or something. And so the more that you can do to take off that pressure and give yourself more time, the better.

1:10:01 And in fact, there’s a stat from a study of the University of Wisconsin that shows that people who start a company on the side are 50% more likely to succeed than people who just jump right in because they give, and you’ll understand this well, real options. They basically wait till the option is in the money. Right. Before they act on it. Right.

1:10:20 So smart. So smart. And like, yeah, and I also, I see a lot of people that start businesses, I see a lot of people that invest in apps and apps can cost $20,000 to $50,000. And a lot of times they do it without even producing, approving, there’s a business model behind it. And again, that’s almost a weird version of that where you’re going all in on something with no evidence of any traction on that business model.

1:10:42 It’s like, yeah, show something first. Or again, like you said, wait till the options in the money before you exercise it. Well, that’s the thing about investment bankers, by the way, speaking, I have a number of friends who started businesses on the side who work in finance. And they’re the worst because, not the worst, but they tend to be the ones who lose the most money because they, for them, they can afford to make tons of mistakes. And they end up, I have seen people drop hundreds of thousands of dollars on things that they get very little value for.

1:11:09 Right. They ride the dog all the way into the ground. And it’s a pride thing before they pull the plug on it. Is that it? Exactly.

1:11:16 And also because they don’t have to be scrappy. And so they don’t have to say, I have very limited resources. I’m going to do this. I’m going to junkyard dog this one, right? And I think that great entrepreneurs can do a lot with very little, at least in the early stages.

1:11:29 Right. I’m guessing Penguin wouldn’t have published your book unless you’ve been a successful 10% entrepreneur. So tell me about some of your investing. When did they start? And what’s been your successes and failures that you’ve learned?

1:11:43 So I’ve done 20, 21, 10%. Okay. So you have shares in 21 companies? Yes. Okay.

1:11:50 Not all companies. There’s some real estate in there. There’s a play in there. Okay. But the vast majority are technology businesses, early stage.

1:11:57 Why is that? For me, it’s because number one, I’ve worked in that industry, but also because you don’t need lots of money. The money is not the barrier to entrepreneurship in the way that it used to be. It’s more about expertise and making smart decisions. So with, I don’t need to invest hundreds of thousands of dollars to be involved in a really cool company.

1:12:19 I can do that for 10 or $25,000, right? So that’s part of it. That’s where my network is. That’s what I’m most excited about. A place to what I’m good at and what I’m passionate about.

1:12:28 Right. And these companies can scale very fast. They can scale very fast. As opposed to, you know, a small real estate play or a… Real estate’s good in terms of current income, in terms of having some diversification for sure.

1:12:40 And I’ve done some of those, but I’ve done a mix at this point and I’m looking to continue diversifying. In terms of what I’ve done that has been successful, I’ll tell you the successes first and I’ll tell you the failures. Okay. The couple that I’ve done that I think are most exciting, number one is called Ipsy. Ipsy is a company that was started by a YouTube celebrity named Michelle Phan with a good friend of mine named Marcelo Camberos.

1:13:04 Okay. And the company… We love YouTube here. It’s… Yeah, we love YouTube, right?

1:13:07 Yeah. It uses YouTube celebrities to sell a monthly subscription box for cosmetics. And I knew Marcelo. We had been colleagues early in our careers. When I was figuring out what I wanted to do after AIG, he invited me to be an advisor to a company that he was starting in the YouTube space.

1:13:26 And so I learned about YouTube from early on. We’re talking 2011 here and he had worked at Funny or Die. So he understood video and he was sort of like teaching me. Okay. He was the one who gave me my first 10%.

1:13:39 And so when he started Ipsy later on, I was really interested to become an investor and I did. And the company then went on… It’s four years in now. It’s got well over a million subscribers. It’s doing in the hundreds of millions of revenue and it has raised something like a hundred million dollars and it’s become a really major player.

1:13:59 And so that is a transformational 10% for me. Is that your Uber? Is that your Tim Ferriss’ Uber? Yeah, it is I guess. I’d like to think so.

1:14:08 It’s a really great company and it’s taught me so much as I’ve gone along and I’ve brought in a good friend of mine as an early investor. I’ve met the other investors. So it’s been a really important learning experience for me as a 10%er. I mean, obviously you just kind of dropped some dollar figures and it sounds like it’s been a profitable monetary investment. Just emotionally.

1:14:29 Can you just run through the top four things that you’ve learned from, grown from or like some of those big fun emotional moments of being involved in that company? Yeah, for me number one is… And this is the… I didn’t expect but there’s a big event they do in every year called Generation Beauty. They do it in a number of places.

1:14:47 It’s a trade show. It’s a show at a conference center and all these people who love the company, the subscribers come and they meet all of the celebrities that are part of the business. We’ve got all these YouTube celebrities and they learn about makeup and I don’t care about makeup. It’s not something I’m passionate about. It’s just it’s not my thing but to go to this event and meet all these young people who are building businesses on the platform, who are excited, who maybe aren’t the most popular person at their school or maybe don’t have struggled to find something they’re excited about and that are passionate about this business.

1:15:22 And this is a community where you have all these different types of people who love this company and love what it does for them. To me, it just makes me feel like we’re doing something. We’re out there fighting the good fight. That’s number one. I mean, I don’t take credit for that but I love that I’m to be part of something that’s created a place online where people can feel good about being different or having creative interests.

1:15:42 That’s A. B is I’ve been able to get involved a little bit in making some key introductions early on to some clients, potential suppliers. And for me, that was just a lot of fun to be able to actually see that I could move the needle for the business. Bringing in an early investor was really something that got me excited. And the fourth is watching the team and how they’ve grown as a company.

1:16:03 So what I remember when there was two people and I went to their event a couple weeks ago in New York and there were these Harvard Business School grads who were a couple years younger than me who were working there. And I thought to myself like, this company has all these really smart people working here. This is unbelievable that we, you know, that I’m part of something that now has become this magnet for real talent. Yeah. So it’s exciting and I’ve learned about YouTube too.

1:16:27 So there’s a bonus. Yeah, that’s a huge bonus. It’s so exciting watching entrepreneurs grow. I just love it. And I was telling you earlier, we’ve got like a hundred people going through our business accelerator right now.

1:16:38 And just to see, for me, it’s just to see the self-esteem change and like the empowerment happens when they get their first. Who cares? A hundred pounds or a thousand pounds of revenue. And all of a sudden, they’re like, oh my gosh, I’m like personally creating value to the world that people are willing to pay me. And now I can go do something I love to do, you know, whether it’s makeup and make people happy that way and then actually make a career out of it.

1:17:02 I don’t know. There’s nothing more exciting than to see people. And again, I’ve got like housewives here and old men here and young men here. And I got this kid in Botswana who’s doing this thing. And it’s just like, it’s just, I don’t know.

1:17:14 I think it’s one of the most exciting people. That’s why people frame that first dollar, right? I don’t know if they do that here in the UK, but in the US, you go to any business and there’s that first dollar frame because the first time you sell something, and I remember when I did in one of my 10% I sold a piece of business. I’d never done that because, you know, when you’re working in private equity, you’re sitting behind the desk telling people what to do. And when you sell something, it’s electrifying.

1:17:38 Yeah, it’s an endorsement of you. It’s like you have done, we’re buying you a little bit. Totally. Yeah, it feels good. Here they couldn’t frame the pound because it would be like this little coin.

1:17:47 You have to do the fiver, right? The plastic fiver. Yeah, maybe the fiver. Alright, so that’s Ipsy. Other successes and then some failures.

1:17:55 Yeah, so the other companies I’m really excited about, one is called Blue Smart. It’s the first intelligent suitcase. So this was a company where it was the second venture for a guy named Diego Sizheel. I invested in his first company. We sold it to another company.

1:18:09 It was fine. You know, everybody did fine. He was then working at this company and had an idea for a smart suitcase. So it’s a suitcase you can control. You can weigh it, track it, open and close it with your smartphone.

1:18:20 And he came to me early on because I’d been really active with him. Even though I wasn’t an advisor, I was just an angel. He said, would you be an advisor and an angel? And I said, with you, of course. We launched this company.

1:18:32 He brought in a partner who could work on it full-time because he was 110% entrepreneur. Put it on Indiegogo, which is a kind of like Kickstarter platform in the US. And our goal was $50,000 of sales based on a prototype. We did over $2 million. By the end of the month.

1:18:48 And then it went to Y Combinator out in California. Wow. And now the company is worldwide selling in over 100 countries, I believe. They have an exclusive deal with Selfridges. So you can go check it out.

1:18:59 And it’s raised a bunch of capital. And again, you know, that’s one of these ones that I could have never known. But it’s a great investment. Wow. What’s that like when crowdfunding tells you that you’re onto something even bigger than you imagined?

1:19:13 And what’s your take on crowdfunding? I am a fan of crowdfunding. I’m more of a fan of crowdfunding in terms of validating a product. Although the tricky thing about crowdfunding is the amount of people who don’t deliver at the end of the day. And that gives the whole thing a bad name.

1:19:29 And that’s happened in our space as well. But I do think it is a powerful tool for people to connect with potential clients or investors in a very direct way. Of course, there needs to be, I think, better vetting as it goes along. But I think in terms of watching this thing blow up, my mind was blown. But I will say, and I’ve taught some conferences, I’ve taught some courses on crowdfunding a little bit over time.

1:19:56 It should never be a surprise that you meet your goal. So if your goal is 50K, you should have that lined up, locked down, ready to go day one. The virality that happened afterwards was it was great PR. It was just a great product. It was a great team.

1:20:10 You can never know. But if you’re going on there, I mean, if you’re going to do crowdfunding and you go on there not knowing who your first 100 customers are and you haven’t identified them and gotten them to agree to buy day one, you’re in the wrong place. Right. So, yeah, plan it out. The great ones are planned.

1:20:26 Must be inevitable. Yeah, so set it up that way. Definitely. That’s very interesting. That’s pretty exciting to be a part of that.

1:20:34 Bad investments. Yeah, so I’ve only had, I’ll tell you my worst one because this was just so, I’ve had a couple that have failed just because you run through the money, no traction, and it’s over. But the worst one I did was an advisor actually. I had a guy beg me to be an advisor to him. Beg me.

1:20:52 And which I thought was really nice. I was, you know, but I said, listen, man, I’m busy. I like your idea. I like you. I believe in you.

1:20:58 We know people in common. But, you know, I just, but he kept on asking me. So I said, fine, I’ll be an advisor to you. And they used my name to apply to an accelerator, actually, and then he had a business partner come in and his business partner didn’t really know me. But he said, oh, you know, I’ll meet you.

1:21:17 And we had a call and he was just Luke one with me. And then the original founder who I had met, you know, I actually helped them. I spent a lot of time one weekend, for God’s sake, helping them with a pitch deck and everything. And then a couple weeks later, the original founder left without telling me. And the other founder said, you know what?

1:21:38 I don’t really know you. So I’m going to fire you as an advisor. And it was such a great first of all, I was sort of like, I fire you first, right? Like, if you don’t want me, I don’t want you, then no harm, no foul. We’re good.

1:21:51 But what I learned from that experience was, number one, we had never papered the thing. So we never made a contract. Number two is, I kind of did this for the wrong reasons. I did it because somebody begged me to do it and because they wanted to use my name, unbeknownst to me, other than me having strong conviction about the business. And number three, I learned that, you know, entrepreneurs are busy people.

1:22:11 They can be really flaky and you have to sit down and set clear expectations and know who they are, not just go on a little bit of social proof or a couple of friends in common. Yeah, talk to me about that reputation risk as far as downside, because we’re talking about taking small pieces of equity where there really isn’t that much downside. I mean, you could get sued, but limited liability, you’re probably okay. But yeah, I mean, reputation risk can hurt you, right?

1:22:33 It can. And I think I’ve had a number of people that I’ve known who have been blown up in terms of, they’ve done things that are shady and they’ve been caught. And you’ve got to be, number one, no matter, for example, as a 10% entrepreneur, you should never be hiding what you’re doing from your employer. Right. Because your employer may have policies that you must respect, but also because you just have to be respectful.

1:23:00 Your day job allows you to do what you want to do as a 10%. So that’s in the 10% realm. But in general, I have found that people, the people who get into trouble are the people who forget that the rules apply to them and they think that somehow they can operate outside of the rules or that they are above those things. And that’s really bad. Even if businesses go badly, you can wrap things up in an elegant way.

1:23:24 You can do that, but you’ve got to be honest and you have to take the time. And I think a lot of people don’t do that. And those people are the ones who end up getting bit because you will, no matter what happens, life is long. You will see those people again. And if you screw somebody over, chances are they will screw you back at some point.

1:23:41 Yeah, you got to stay in communication. And if it’s time to wrap it up, you got to wrap it up and give people bad news when it’s time to give the bad news. And I mean, if you invest in 21 companies, look, you know, there’s a lot of them that are either going to go nowhere or if you’re going to go bad, so you have to be ready for it. That’s good advice. I’m just thinking of an action item for people watching or listening right now.

1:24:00 If they’re like, okay, Patrick, you convinced me, I’m going to go in 10%. What can they do right now to look around them and see a very high probability of the thing they should 10% on? Should they look at their browsing habits? Should they look on the 10, 20 texts on their phone and say it’s one of those people? Should they look at, I don’t know, the YouTube videos they watch?

1:24:20 Like, I don’t know. So what I did, so I did this, I couldn’t figure it out. And I think we, as we talked about earlier, you it’s hard to figure out what you should be doing, even if it’s obvious to everybody around you. Like if I, if you asked me tomorrow, you know, what should I be doing? I’d be able to tell you, right?

1:24:36 And so what I did was I sat down and took a weekend and I wrote a very long bio of myself. This was starting at, you know, probably high school. What I liked, what I did, what I was good at, every award I ever won, every, every position I ever had. I mean, it was really long. It was a bit, you know, you don’t want to show it to other people unless they think you’re a bit pompous.

1:24:56 But it was, it was an extensive bio. And I, and I wrote it and I refined it. And then I sat down and I read it and I took notes on it. And I wrote down, okay, Latin America, venture capital, these industries. Oh, I like, I enjoy, you know, these things outside of work.

1:25:12 And here’s the people I know. And these are the, oh, that’s right. I worked there for a summer. I forgot about that. And I used that to create a bit of a composite of the things that I had done and the places I’d been and the people that I knew.

1:25:23 And that was the kernel for starting to think about it. Because I thought, oh, you know, Latin America. Okay, I love Latin America. I have a great network there. I, I had worked there.

1:25:32 I hadn’t worked there in years, but I had worked there in the past. Like, that was the time in my career when I felt most alive where I was happiest. That’s where my 10% has to be. It’s got to be something Latin America to begin with. Venture capital.

1:25:43 I love VC. There’s all these opportunities out there. Capital is, you don’t need as much to do things these days. There’s all these advisory things happening. Okay, great.

1:25:52 It’s got to be something with new companies. I put those two together and that’s where I got started. For somebody else, for example, my best friend is a real estate investor. For him, it’s like real estate’s what he loves. So he wants to get involved in real estate stuff in his 10%.

1:26:06 Great. I don’t know about real estate. I called him up and we did some stuff together. He taught me. And so now I can put 10% in real estate in my 10%.

1:26:14 But that’s kind of how you start. You start in your wheelhouse and then as you gain experience and you gain success and you gain relationships, maybe you’ll branch out. Maybe you’ll invest in that play in London. Maybe you’ll do something a little different. But you do something from a position of strength.

1:26:29 Not just sort of like, well, you know, let me start a, you know, a random company that has nothing to do with what I’ve done in the past. Yeah, yeah. I think you have to have something that at least you’re passionate about, which probably is going to be on that long CV. And then something you’re probably, well, it’s somewhat good at, or at least you understand the business to save time. So yeah, those are great indications.

1:26:50 And again, just to reiterate, you think that everyone watching or listening to us right now should just go ahead and do something with 10% to go ahead and advise to go ahead and just do that. I do, because I have seen, you know, I think nowadays, it just blows my mind the stories that you hear. I mean, the nine-year-old girl who gets funded by a Silicon Valley, VC for her juice that she started, things like that. I mean, obviously, that’s a ridiculous story. But again, I’ll come back to the story.

1:27:19 Joanna is a, my good friend of mine here in London works at McKinsey and his assistant Joanna, she’s on the operation side of McKinsey and she loves candles. And she started a candle company on the side, right? Baking candles. She taught herself how to do it. She started making them.

1:27:37 And she now has, she got her company to let her work a day a week from her garage in Wimbledon where she makes the candles because she needed to be able to be there for the shipments and things like that. Her candles were in a national advert that she had no idea, she turned on the TV and there it was. And she’s building a great business on the side. She still got a stable day of a job at a great company. She can sell her candles there if she wants.

1:28:00 And she has all these consultants who can help her with their spreadsheets. So that story, I mean, Joanna is, you know, it’s not like she comes from a finance background or she comes from like, you know, she’s not a pure consultant or anything like that. She comes from working alongside people doing all the logistics. She’s organized. She’s super smart.

1:28:16 And, you know, and she’s built this really great company that is doing really well. And so I think, you know, I see these stories that are so inspirational and so exciting. And it makes me think that it’s a shame not to give it a shot. Yeah, I think you can just grow emotionally so much by just doing it. So I mean, honestly, forget about the money or the upside that maybe make that a long-term play.

1:28:39 But just getting involved with other kind of people, exciting. I had a guest in here named James Altucher and he talks about this concept of idea sex. So like you put all these ideas together or you bridge, you know, a few different industries into one kind of synapse and all of a sudden these crazy things happen when you get different people in the room. And I just, yeah, I’m a big fan of doing this. Yeah, and it’s your point.

1:28:59 It’s a long-term game. So I never promised people you’re going to be rich overnight because I don’t know. I’ve tried to do those things where you’re supposed to be rich overnight. And I didn’t succeed and maybe others do. But I see this as a long-term play that it’s part of your life portfolio.

1:29:14 And obviously I’m enjoying some financial gains from that and I appreciate that. But it also has just made me a much sort of well-rounded, happier person. Yeah, I think honestly you got to kind of stay away from that energy because if you’re people that want to get rich overnight, that means in my opinion they’re not passionate about what they’re doing, which I just wonder. I don’t know many people that are long-term successful and things are not really passionate about.

1:29:35 And you know, and we know as an entrepreneur, it is hard. And so like those late nights and when everyone tells you you suck and no one wants to buy your products and you know your people want to leave you. You got to really love what you’re doing. Totally. So you got to be all around that.

1:29:48 Let me talk to you about books. Your first book, this is the 10% option, right? Penguin, a big publisher. I just want to thank David Overy for having you. He’s the guy over there that’s really embracing new media and got you on here.

1:30:00 What’s it like to write a book? So many people ask me that. You know, I had James Altucher on who’s a huge fan of self-publishing. But of course, he’s a big fan of doing it the right way. So when you self-publish, you know, you put time into it.

1:30:12 You market the book. You design the book to where it actually looks like a publisher. What’s your advice when it comes to writing a book? What’s been your experience about writing a book? And what are the truisms and non truisms about authors?

1:30:25 So I never intended to write. I wanted to write a book some point in my life. In fact, my high school year book, I think my goal was to write a book. And so it was something I believe that coming from you. But I was that guy who in my investment memos at my private equity firm, they read like great, they were sort of like page turners.

1:30:43 You know, I’d make really boring things interesting because I came here. But I didn’t intend on writing a book ever or specifically about business or anything. And I started writing about business and all this stuff as a way to process everything that happened to me at AIG. It was sort of like an output for me and my parents had always been on my back to write. And I wrote half of a terrible fiction book first, which if it ever sees the light of day, my credibility will be gone.

1:31:09 Or not, or not. And so, but I started writing and I had the original book concept was this idea. It was called Don’t Quit Your Day Job. How to build a resilient career no matter what happens to you. And that was the original idea and I was writing about this stuff and it was sort of, you know, it was fine.

1:31:25 And a friend of mine named Zinn took a look at it because he was figuring out his life and I said, you know, you should read this. He read it and he said, well, my best friend Mildred is a literary agent in London and you should meet her. I gave her the book. She got it and she helped me develop into a proposal and then we sent it out to a million people and we got rejected by 33 publishers. Why?

1:31:45 Because nobody knew who the heck I was. I had no platform. And then with the FOMO thing that got me on the radar screen. We signed the book and then I went off and wrote it and they were really hesitant to bring me on because of the fact that I didn’t have this ready-made audience, which is understandable. But I was able to convince them that I was passionate, that I could sell this idea, that I could sit here with you and talk to you cogently about it and they took a little chance on me and the discussion we had was, I was like, you guys are venture capitalists.

1:32:14 Publishers are venture capitalists. You have a portfolio. Take a bet on this guy. I will be, I promise, I will fight tooth and nail to make this happen. And so I pitched him.

1:32:25 I did. I pitched them like basically like it was the, you know, there was my life dependent on it. What did you say in your pitch? Were you like, just what you said, like you can bet on me, but like I’m gonna be touring the world for the next three years talking about this book. I’m gonna blow up once people find out and then you’re gonna be patting yourselves on the back in two years because it’d be the biggest book in your portfolio.

1:32:44 So I’m gonna tell you embarrassing story and I’ve never told this in public before. So I’m giving you inside access. I love it. So I didn’t know a lot about, I hadn’t, I was so nervous about going and I felt so unsure about it that I didn’t do any research on them. I didn’t know who the people in the room were and I knew some of their books, but I didn’t really read business books that often.

1:33:06 And so I walk into this place and I turn up and I’m at this, I was supposed to be me and one person. There were four people in the room. And so I’m like, whoa, this is crazy. And my agent was in London, so she couldn’t come with me. I’m just all alone and I go into the office and they’re like, you know, we love your book.

1:33:24 It’s really cool. And then this very senior guy walks in the room and I didn’t know who that was. It was the publisher. And he’s like, yeah, we like your book, but like, who are you? And he’s like, what do you want to do anyway?

1:33:37 And so I said, and I knew they had published a bunch of Seth Godin. So I’m like, I want to be like Seth Godin. And he’s like, kid, like Seth Godin’s huge. Like, who are you? So then I realized I’d screwed up and I just didn’t know what to do.

1:33:50 And so I kind of put my hands down and I said, I’m going to tell you something. You know Tory Burch? He’s like, yeah. I was like, when Tory Burch walks in the room, she is her brand. All right.

1:34:01 I’m like that. I am this thing. This is what I’ve been doing. This is what I’ve been living for the past five years. I can write this book like no one else can and I will sell it all over the world and I won’t stop until everybody’s doing this.

1:34:12 And I believe in this idea. And if you take a chance on me, I promise you, we will do something special here. You’re a venture capitalist. Make the bet. And I just sort of ranted.

1:34:21 And when I finished Taylor, who’s my publicist now, she kind of looked at me like, whoa. Like, what is this? How long was that? Was that like a 10 minute rant? Or like a five minute?

1:34:30 About like about three hours. It was probably like two and a half minutes. But then the meeting ended super abruptly and Adrian said, thanks a lot. Because you’re American. They were like, oh my God.

1:34:40 Yeah, it was like later. And so then they had all these books that they were, they’re cool. Like publishers give you books and they said, if you want to take these books, please do. And I said, sure, I’ll take them. And I was carrying them and they said, well, we’ll just ship them to you.

1:34:51 And I said, don’t waste your money. It’s okay. I’ll walk out with them. And so I walked with them thinking I had blown it all and I’m carrying all these books and I went to the standard hotel, which is next to my house and I went to the beer garden and I had this big stack of books and like a beer feeling sad. And then I got an email from my agent saying they’ll be making an offer next week.

1:35:10 And so I had never, I had not ever done anything like that before, but I just thought to myself in the meeting, I had this out of body experience. It was weird. I’d never had those either. And I was like outside watching myself failing. And I thought, you will never see these people again.

1:35:26 Do it. Just give it your best try. Leave it all on the field. And so, thank God, it paid off. And then, you know, I would say my advice, back to the advice piece.

1:35:37 And then you become, you start writing it and that’s super hard because writing is hard. And had you written like a rough draft before that or it was just an outline? I had notes. Okay. But I interviewed, I did, I sort of like Michael Lewis-ed it.

1:35:49 I interviewed as many people as I could and I learned from all these people. And I spent a month living in Maine in the middle of the winter. Okay. And yeah, I basically got a first draft in 30 days. Wow.

1:35:59 That was, it was just, I was sort of like, it was like, almost like working on a deal in private equity. Like, I got to close this deal in a month. And I just worked tirelessly. And you’re in Maine. So, you know, there’s snows up to the window.

1:36:11 So you’re not going to go outside. Nothing to do. No. Wow. Okay.

1:36:14 And since publishing, what have you learned? I mean, again, I’m guessing a book is a marketing tool. It is not a way to make money, is a way to spread your message. Or am I wrong with that? You know, I think that where I’m in the process of learning.

1:36:26 So what I have found is where the book has been successful has been number one. It’s going to be published in like nine languages, which is great for a first-time author. I’m very thankful. And we will see. I think Asia is a huge opportunity in terms of volume.

1:36:41 In the US, the numbers aren’t that large in terms of just physical book sales. The UK has been a great market for me. It’s out in Spanish now. What it has brought me is number one, greater visibility, open new doors, professionally and personally. There is an opportunity to make some cash over the long run because these books sell for a long time.

1:37:00 So there can be evergreen. But if you’re looking to make tons of money quickly, publishing is not your industry because it’s slow and it’s old school. But what I’ve learned is that you must be comfortable putting yourself out there. You must be comfortable building a following and something that you’ve done really well and that I am working on doing. It takes time and nothing.

1:37:22 You think, I got this great advice from a friend of mine named Amy Whittaker who has a book out called Art Thinking. She said to me, you think when you publish a book your life is going to change overnight. Wait a year and then look back and see what’s changed. And I think that is really critical is that you almost have a depression. It’s almost like this like postpartum depression when the book comes out and you’re not New York Times bestseller and you’re not on the Today Show every day.

1:37:46 But that’s the reality for 99.99% of writers. Yeah. And you’ll probably be promoting that book for three or four years. Oh yeah. Right.

1:37:54 It’s a never-ending thing. So you better like what you wrote about and you better believe in it. And I do. And so like I had a London reader who sent me an email last week and I said, I’m going to be in London and we got coffee yesterday. And he was really excited and I was like, man, I’m the excited one because like it means a lot to me that you read my book and reached out to me and that you’re actually like putting it into practice, right?

1:38:16 Yeah. One of my favorite hip-hop artists his name is Ice T. Yeah. And he posted a picture I think a little while ago on one of his Instagram feeds or something and he was posing with a fan at the airport and he’s known for always stopping and saying thank you to fans and he’s like, I make fans the old-fashioned way one at a time. Yeah.

1:38:33 And so do we here. It’s just like one and I remember when I had one YouTube subscriber and one Twitter follower and so it’s like, you know, it’s if you want fans that will stay it takes time and you know, anyone that is a flash in the pan or an internet sensation that can quickly die off. So yeah, you really have to just take time spread that message. And enjoy it. If you don’t enjoy it, then what’s the point?

1:38:57 Yeah, this is obviously you and you’re obviously the book. So for you to talk about it, you know, it’s just an extension of you, which is what you want to see. Which was I wanted the whole time so I finally got to do it. Right? Can I ask you a few questions about you and your personal success over the years?

1:39:11 Is there something that you changed up in your game? Maybe it was, you know, post-AIAIG or maybe when you started 10%ing that you were like, you know what? This change in my daily routine or mindset or something had like a step function increase in my happiness, productivity, anything. Yeah. These success secrets are only available on the London Real Academy.

1:39:34 Become a member and get access to live shows, exclusive courses, my webinars, bonus content, meetups, live events, an amazing community, and much, much more. Now back to the rest of the show.

1:39:56 Patrick, I just want to acknowledge you and say thanks for coming on. I love these ideas and I mean, just from a personal perspective, I’m looking back to my days we were talking about Bankers Trust. I started there in 93. I know you almost worked there five years later in New York, but you missed it. And just looking at parts of my life, even when I was a dot com startup CFO, you know, none of these times did I ever have 10% of my life invested in anything because I was all the chips on black number 34, you know, and I was like, we’re going to give it all all the time and that was the only thing.

1:40:26 And by doing that, I think that’s the last thing I did. I think I overdid it. I didn’t have enjoyment outside of that. And I probably ended up hating what I was doing, not liking what I was doing. You know, who knows, maybe medicating myself because I wasn’t doing that.

1:40:39 And so I feel like if I had embraced your principles earlier, I would have, I don’t know, probably made greater relationships, been involved in cool successful stuff and just done more. So I think it’s a great message you’re given. And I think even like my mom and my dad could be doing 10% entrepreneur stuff and all sorts of people, whether they’re 30 or 25 or 35. And I think most people don’t think they’re qualified enough and most people are probably overqualified to advise to a certain number of people.

1:41:09 And so it’s just about realizing that you actually do have value. And again, just go in and help somebody accomplish something, right? And do that and just watch all the good stuff that happens, right? Absolutely. So I just want to say thanks for writing the book.

1:41:24 Thank you. Thanks for being here. I’m glad we took a chance on you even though your social media is still building. Everybody needs to follow me on Twitter. That way I can get invited.

1:41:32 Yeah, everybody follow Patrick on Twitter. Please do that. And yeah, we’re going to give you some tips on YouTube after we’re done. So there you go. Patrick, I always ask everyone at the end a couple of questions.

1:41:41 I’m going to ask you the same. Of course, no one’s ever prepared for this. If you could make a phone call to the 20-year-old Patrick and give that young man a bit of advice, I guess you’d be in D.C. at Georgetown sophomore year. What would you tell him?

1:41:56 Invest in a company called Uber first round. Come on. No, I’m kidding. I think I would say

1:42:05 You don’t necessarily have to grind everything out. Look for the smart way, not the hardest way to do things. I was always the guy over-prepared for everything. And I learned over time you can have fun and succeed at the same time. Good advice.

1:42:18 Spoken from a true type A. That’s good. Second part is the best advice you’ve ever received. It’s probably one of the harder questions I ask. It could have come from, you know, I don’t know, one of those private equity guys that professor at Harvard or so are one of these people you co-invested with.

1:42:32 What’s that one piece that sticks in your mind? I was on a bus trip in Columbia in college. We almost got killed. The bus went off the road. We were searched at gunpoint by the paramilitaries.

1:42:41 Bad things happened. Dogs went to the bathroom all over the bus. It was not good. We got attacked by a bunch of strikers and the bus wouldn’t start. And we were asked to push the bus.

1:42:51 And I said, as I walked out of the bus, I said, which means I can’t believe this. And there was a woman sitting in the front row and she was all dressed up like Sunday best because she was traveling probably to see family. And she looked at me and she said, which means believe it and live it. And I remember this moment. I was like, dude, this woman, she’s got it.

1:43:15 Like, this is like, this woman has been planted by some divine power to give me a sense of perspective. Got out, pushed the bus, we started, got there. What I learned from that is you just, no matter what you encounter in life, you just got to roll with it. You got to live with it. Believe it and live it.

1:43:31 What’s that in Español? Creelo y vivilo. In my Argentine accent. That is nice. I love it.

1:43:38 Last question, you know, to that 20-year-old that’s listening to us, watching us somewhere all around the world. What’s the advice you give to them? You know, they want to grow up one day and be part of these big companies. You know, they want to write books. They want to be famous like you.

1:43:52 What advice do you give to them? Plant seeds. I think it’s about planting seeds. For example, my book, that’s really because of this FOMO article I wrote 10 years ago, not knowing, but I decided I wanted to create content and put it out there and went off and had a little life of its own. It grew into something that helped me.

1:44:08 All of my 10% are seeds that I plant. You never will have everything you want in the moment you want it. That’s just the reality of life. And if everything, if you got everything that way, you probably wouldn’t enjoy it in the first place. So plant seeds, put things out there, give yourself, and then watch them, keep in touch with them, and then be ready when the time is right to harvest them.

1:44:31 Yeah, I love that planting seeds. I always say to the guys around here, we produce so many episodes and so much content, and some are popular and some not. And the Beatles are remembered for their hits. But you don’t remember the 100 songs they produced that no one cared. They were horrible.

1:44:47 And so that’s because they diversified their portfolio and they invested in lots of things, right? And so like you said, plant lots of seeds. And if you go ahead and engage with the world and produce content, and advise that some of those are going to turn into amazing things and life-changing experiences. And for me, it’s rarely the ones I expected. And it’s the ones that I don’t expect that end up becoming the biggest things ever.

1:45:09 And if I had just not bothered that day, that wouldn’t have happened. So it’s good. Engage with the world. Awesome, Patrick. Thanks so much for being here.

1:45:17 Thank you. As we say on London Real, it’s about the journey. I’m sure you’re going to continue on yours. Come back to London and see us sometime. They can get your book, I’m guessing on Amazon and booksellers and everywhere, right?

1:45:27 Waterstones, Amazon, Foyles, all those nice places, yeah. And in the US, Barnes and Noble, Amazon, iTunes, oh yeah. All that good stuff. Audio book as well. Do you read the audio book?

1:45:39 No. It’s hard to do that, right? Do you really want to listen to this for another five hours? No, you don’t. Maybe not, all right.

1:45:43 The 10% entrepreneur. Thank you so much for being here. And I wish you all the best. Thank you so much.