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This is Moneywise, a podcast where host Daniel Berk is joined by high-net-worth guests to explore exclusive insights into personal finance and lifestyle tailored for other high-net-worth people, or those on their way. They'll get radically transparent about the numbers, revealing things like their burn rates, portfolios, and spending habits. This podcast was made for the Hampton community, a private, highly-vetted, peer membership community for founders and CEOs of fast-growing, tech-enabled startups. Check it out at https://joinhampton.com/.
Daniel Berk (00:03)
Hey, I'm Daniel Berk and this is Money Wise. I want to say something right up front. If you're new here, this show is not what you think it is. Money Wise is not a show about how to make money because there's no shortage of that type of content. You can find it literally anywhere. This show is about what happens after. What do you actually do when the money is real? How do wealthy founders spend it, save it, invest it, and how do they actually feel about their money? The numbers, the psychology.
The conversations that typically only happen behind closed doors. Those are the types of conversations that we're going to have on Money Wise. The show was originally started by Sam Parr. He's the founder of the hustle. He's the co-founder of Hampton and it became something genuinely unlike anything else in podcasting. Wealthy founders have been talking about their actual financial lives on the record with real numbers. There aren't generalities or no, I did well for myself. No, there's actual numbers.
what they spend, what they own, what they regret, what surprised them, and a lot of the learnings that they have from building highly successful businesses. I met Sam Parr a couple of years ago and really started to get to know him when he was actually a guest on my podcast. Fast forward a bit, I loved what Sam was building with Moneywise and at his company Hampton, which brings us here. I am the new host for Moneywise. I'm in the middle of producing a lot of new episodes right now that are full of conversations I think are going to be some of the best we've ever made. But before those drop,
I wanna go back through the archive, all of it. And there are moments in those early episodes, moments that I wasn't actually here for in the room that I think deserve a second listen. So that's what today is. I'm gonna play some of my favorite clips from the first few episodes. I'll set each one up and share some of my own thoughts. And if you haven't gone back through those early episodes, I highly recommend giving them a listen. They're gold. Now let's get into it.
In the second ever episode of Money Wise, we had on a guest, Neil Patel. Neil runs a bootstrapped SEO agency, Neil Patel Digital, which does around $100 million a year in revenue. He also owns Crazy Egg and a portfolio of software companies he rolls up under the parent. His net worth is nine figures, which he confirmed, but wouldn't be more specific. Entirely self-made and entirely from businesses he controls.
Back in 2014, he wrote a blog post called How a Ferrari Made Me a Million Bucks. And in it, he said something Sam Parr remembered for years. Neil claimed he could be perfectly happy on $15,000 a month. And during this episode, it seems clear that he actually meant that. Sam brought him on the podcast and asked, what's change? This clip is the answer.
Sam Parr (02:46)
So when I started this interview with Neil, I told him the reason I wanted him to come on was because of that blog post that I read that was like 10 years old. The blog post that said that he needs to spend only $15,000 a month in order to be happy. Now, let me recap that 2014 blog post that I keep referring to. The blog post is called How a Ferrari Made Me a Million Bucks.
In the article, Neil detailed his frugal lifestyle. He said that he lived at home until he was around 23. Then he moved to an apartment, which as he described it was across the street from a drug park in Seattle. And overall, he spent relatively little money. But then something happened that changed his perspective on money. Someone gifted him a $6,000 watch. And what he noticed was that he got a lot of attention because of the watch. And it was a good type of attention. People who he eventually did business with came up to him and that was like his conversation starter was that fancy watch.
And that insight led him to an experiment where he started spending money on luxurious things to see which stuff would start conversations with the people that he wanted to meet. And eventually what he found was even if he didn't buy these items, even if he was just around luxurious, nice stuff, people started talking to him. He didn't even have to buy it.
Neil Patel (03:53)
I've never owned a Ferrari. I think the Ferrari was me driving a Ferrari on a racetrack. None of them have been mine though. I'm shocked on how many people hit you up being like, wow, cool car. And even if you tell them it's not yours, you're like, sure. You know what I mean.
Sam Parr (04:10)
That's actually a good thing, according to Neil, his lack of Ferrari was probably best for all of us.
Neil Patel (04:15)
I'm a terrible driver, like the amount of times I got into car accidents, almost all of them were my fault.
Sam Parr (04:23)
Hey, I'm happy that he's able to admit that. But I digress. In the article we're talking about, Neil himself said that he really didn't give a shit about most of the stuff that he was buying. And yet he kept spending and kept getting connections because of it. He called it lifestyle marketing. It's got a good ring to it. But then he got sick of it. The whole point, though, of this entire conversation.
is a comment that he made about the blog post years later after the blog went live. He said that he was spending all of this money basically to portray an image of being successful. In fact, he said he spent $250,000 on furniture. However, in reality, he could only have spent $15,000 a month and he would be perfectly satisfied.
Neil Patel (05:01)
And then I give away all the furniture in my apartment too. And then I live there a period of time with no furniture.
Sam Parr (05:06)
So fast forward to 2022 and I talked to Neil and he told me something that blew my mind. He told me how much money he spends per month now.
Neil Patel (05:13)
Right now, if I had to guess on my burn rate, 120 to 180 a month.
Sam Parr (05:18)
That's insane. And that gets us to the answer of the question that I originally asked, which is what changed? How did he start with $15,000 a month and multiply that by 13 times? And that's what he's spending now. The answer you probably could have guessed.
Neil Patel (05:32)
It's called marriage and having kids, so it's not really of choice.
Sam Parr (05:39)
more nuanced answer is that he spends this way because he can. Something important to understand is how much your mindset around spending is shaped by your past. If your whole life you grew up only being able to spend 100 bucks a month at the grocery store and then all of a sudden you could spend as much as you want, that's going to be a direct contradiction to all of those learned behaviors, the way that you used to behave. But, and this is a huge but, spending and not worrying about money is a huge part about why we work so hard to make it in the first place. So if you're not embracing it, and this is something I ask myself all the time, what's the point?
Of course, there's a huge downside to this. There's a huge downside to recklessly spending and throwing your money. But even at the top of his spending, Neil isn't doing that because he understands his own wealth, he accepts it, and he recognizes the fear of losing it is mostly irrational. Listen, I know it can be a tough thing to wrap your head around. I struggle with it as well. But you make money so you can have nice things when you want them. So buy them. Be smart and buy them. That said, there's still a lot to glean from Neil's spending evolution, including how he spends with no budget and while still healthily growing his net worth.
And also, and this is a shock, how his spending of around $200,000 month, how that's nothing compared to some of his friends. But let's find out why Neil's approach to spending shifted from $15,000 a month to the most extravagant era of spending in his life, living in Las Vegas.
Daniel Berk (06:52)
you
Neil Patel (06:53)
In my last house, I spent $2 million on furniture, okay? The one I lived in in Vegas. Literally, you would see it on Architectural Digest if we show the pictures of it. And we refuse to let people take pictures and showcase it. And in Vegas, that house had the highest price per square foot sale in history for a custom house. Like, we spent that much money on it.
Daniel Berk (07:14)
That moment Sam's what that's insane is the show in one reaction This isn't a show where some journalists interview someone for a good quote Its intention is to be two people who are having a healthy conversation about Wealth and one of them who is supposed to be very very wealthy the punchline It's called marriage and having kids is doing more work than it seems when Neil's on the show
Neil is not defensive about $200,000 a month. He's almost shrugging. At a certain level of income, the spending starts happening to you more than you're actively choosing it. The lifestyle expands around you and it appears like one day you just look up and you're at $200,000. But hold that number because I need you to hear where it's actually going. That's next.
Right after the $200,000 reveal, Sam just keeps going. He wants to know where exactly does the $200,000 go? What does $200,000 a month actually look like broken down? Then Neil starts listing things. Housing, cars, staff, food. But then right in middle of the breakdown, something comes up that completely reframes the entire number. Oh, and for some reason he flies Southwest. Economy. But that's on purpose. And his answer is really interesting to that.
Neil Patel (08:31)
I will go Southwest. If I go from here to Vegas, which funnily enough I have to go in a few weeks, I will go economy on Southwest Airlines. don't think Southwest doesn't even have first class, but I go economy.
Sam Parr (08:46)
economy on Southwest with your family.
Neil Patel (08:49)
No.
Sam Parr (08:54)
Neil says he could do 30k a month or so, but he doesn't. Because he doesn't need to. And he's not trying to hide it.
Neil Patel (09:01)
I remember in our old house that we had in Vegas, we're in LA now, I had these amazing bed sheets and they were just so soft. And then I bought more bed sheets enough for my kids and us and multiple pairs because you get them dry clean. I didn't realize I spent $35,000 on bed sheets. You know, I just bought them. like sometimes you just spend money and I don't really think about it. And it's not that I want to spend 35 grand on bed sheets. I like how they're soft. I sleep for eight hours a day. I sleep, you know, every single day.
I'd rather have things like a mattress or bed sheets or whatever be super comfortable versus trying to save a dollar here or there. I've also found in life that it's easier to make the money. I still am quite a bit of a saver. I don't really spend majority of my money by any means, but I do splurge here and there on things that matter.
Sam Parr (09:50)
So even though he said he could do 15,000 or 30,000 a month, in reality he's doing something like $200,000 a month. Let's quickly find out where that money is going and we're gonna start with housing costs.
Neil Patel (10:02)
10 grand a month for HOA at least. That's homeowners association or something like that, right? I think that's what it stands for. Cause I live in a condo. I live in the Mandarin Oriental in Beverly Hills. So they charge, it's not a hotel, but it's only condo, even though the brand is a hotel. But the HOA dues are just expensive. But the beautiful part is the service is really good.
Sam Parr (10:23)
And the way, that cost, that's just for where he's currently living. That does not include everything that he's paying for housing.
Neil Patel (10:29)
I have quite a few homes. We have four homes in Beverly Hills. The property tax alone is through the roof. I don't know how much I spend on property tax a year. Maybe 300, 400 max.
Sam Parr (10:43)
Now, my favorite part, let's talk cars.
Neil Patel (10:46)
We have quite a few cars, even though we have a Honda Odyssey and I mainly drive it. I do have a Mybok. My wife has a Bentley SUV. We also have a big SUV too, think a extended Lincoln Navigator, but the cars aren't that expensive. It's just insurance. I don't know what we pay on insurance.
Sam Parr (11:01)
Well, a Bentley SUV is expensive. think that you're talking about, ⁓ is it called the Coleman? I forget what they're called, but that's like a $400,000.
Neil Patel (11:07)
That's
the rolls. Those are expensive. Those are like a half a million bucks. I think Willie paid 300 grand for ours for the Bentley.
Sam Parr (11:14)
mean 300 grand for an SUV is a lot of money. But at least like a Ferrari sports car you could say that's a toy. An SUV isn't always a toy. That's purely just because it's kind of sick. It's awesome. Now let's get some other stuff.
Neil Patel (11:16)
i know, like, i'm hearing myself say it, like
Staff is always a big expense. have nannies, cleaners, full-time driver, you know, that adds up and we pay staff really well. Assume if someone works for us, they make a hundred grand a year. We typically at least pay a hundred grand per person, no matter what they do. Because we believe that people work hard and they deserve to be paid well.
Sam Parr (11:51)
And of course, there's food. He's not gonna go to McDonald's every day, is he?
Neil Patel (11:55)
Food
is a big expense, you know, going to restaurants. Like a lot of times you go with friends. I don't even drink alcohol. You spend those spending 500 bucks or a thousand dollars between two, three people.
Sam Parr (12:05)
And one of Neil's favorite things to give money to, one of his favorite ways to spend money, which I love hearing, is donations.
Neil Patel (12:12)
We still donate a lot of money. My wife loves donating and I do too. It makes other people happy and hopefully you can change her life.
Sam Parr (12:18)
How much are you spending per month donating?
Neil Patel (12:21)
I don't know, I haven't checked, but if I had to guess, somewhere between 100 and 150 a month.
Sam Parr (12:26)
Okay, so then your real life living expenses are probably 50 to 100 a month and then your donations are double that or triple that.
Neil Patel (12:35)
If I had to guess a real expenditure on a monthly basis, 50 to like 60, maybe 70 max a month.
Sam Parr (12:43)
Those are huge numbers.
Daniel Berk (12:47)
Okay, let me do the math out loud. Neil Patel is spending about $200,000 a month. Of that somewhere between $100,000 and $150,000 is donations, which means his actual lifestyle, which is four homes in Beverly Hills, a Mybok, a Bentley, a full-time driver, nannies, private schools, restaurants, cost him somewhere between $50,000 and $70,000 a month. And he flies Southwest economy.
because he genuinely doesn't seem to care. He spent $35,000 on bedsheets because he didn't notice it happening. And every single month he writes checks larger than most people's annual salary to charity, but he doesn't really talk about it. It's not really part of his brand. He's just doing it. And that I think is what Moneywise Surfaces that no other podcast does. You hear $200,000 a month and you picture one thing, but the reality is typically not so much the same.
The number is real, but the story behind the number is completely different than what you might have assumed. The next episode is different in one important way. The guest actually asked to remain anonymous.
This next episode that we go through, we're gonna call the guy Hank. It's not his real name, he just asked to remain anonymous. Hank is in his 70s at the time of this recording and he made his money in the 1980s and 90s distributing electronics, pagers and cell phones. A lot of times most people didn't really know what a cell phone was at the time. He eventually merged with his biggest competitor and helped build one of their largest distributors in the country, a company doing around $3 billion in annual sales.
In 1996, he exited for around $60 million and then over the next couple of decades, he did something almost no one plans to do. He ended up in a 24,000 square foot house. Here's how that happened.
Hank (14:32)
Yeah, bigger than I ever imagined, that's for sure.
Taylor Adams (14:38)
Yeah.
Sam Parr (14:40)
Then in 1996, Hank exited the company and he made around $60 million. But Hank didn't just get tens of millions of dollars and immediately buy a massive house. Like a video game, he started working his way through the levels.
First, his starter home.
Hank (14:57)
My first house was a little townhouse.
Sam Parr (15:00)
Then the regular old McMansion.
Hank (15:03)
second house when I was married, know, that I was shaking when I signed the agreement. It was like a 3600 square foot, which to me was like, my God, we ran from room to room. It was like, wow, this is a castle.
Sam Parr (15:16)
Then there was his first custom build.
Hank (15:18)
My first house that I built was 11,000 square feet, which also was ridiculously huge to me and beautiful, but in a small light.
Sam Parr (15:27)
And after that, I guess you could say downsized. mean, technically he did.
Hank (15:31)
We ended
up moving on to a different home in a country club myself. Unfortunately, we separated from my wife at the time. That house is like 8,500 square foot.
Sam Parr (15:44)
and then he leveled back up. It was after that house that Hank, with his now fiance, decided to build his current house.
Hank (15:52)
No way did I ever plan to build a house this big. No way. I never even thought about it. I said, look, I don't want to talk about size. I don't want to say, I'm going to build this and we'll fit into it. What I said is, what do we want in a home? What rooms do we want? What's important? What have I always fantasized about having in my once in a lifetime house? And it kind of grew. ⁓ you want a manicure pedicure room? You want a movie theater? You want this? You want that? said, sure.
Sign me up, yeah, it sounds good.
Sam Parr (16:23)
So the process didn't start out with Hank saying, you know what? I wanna own a house the size of a bowling alley. It really just kind of happened because he said yes to everything he and his fiance wanted, right? I mean, when you have the money to put literally anything you want inside a home, why not just go for it, right?
Hank (16:38)
All of a sudden, the house just started growing. And I said, well, can we shave anything off? And we did like most people did. We looked around, tried to find the, this house didn't have this, and this house didn't have that, and this house didn't have enough ground. So ultimately, if you have the time and the ability and the patience, because it takes a couple of years to build a house this size, you really end up getting.
what you want or most of what you want. You still move in and say, I wish I would have put this in. I mean, there's houses in here that have bowling alleys and this and that. I didn't need that. But it's cool. It sounds cool. So we put in what we thought was right. And when we moved in, it was still cavernous. I mean, it was just ridiculous. And we looked at each other and said, like, what did we do? I felt like I was, you know, like we needed a tram to get from one side, but you grow into it.
Sam Parr (17:27)
you
We're going to get to the pros and cons shortly, but let's talk about the thing that you guys love about Moneywise. Let's talk about the money. How much did Hank actually pay?
First, the price for the lot itself.
Hank (17:45)
To me, was just shy of a million dollars for a three-acre lot, which in Florida, in this area, is considered a buy. When the initial plans came out, this development did not sell at all. It was out in middle of nowhere. Nothing was built around it. None of the homes were built. It was just like out in the middle of nowhere. Anyway, to make a long story short, I was able to buy the ground relatively inexpensively compared to what it would cost today. The lots alone are half of what my house costs now.
Sam Parr (18:12)
And then there was the build cost.
Hank (18:14)
The cost to build the house without furnishing was about $8 million, $8.5 million with the ground, with furnishing maybe $10 million.
Sam Parr (18:26)
That's how much Hank paid around 10 years ago. Now, if we simplify this a little bit and we look at Zillow, that price $10 million, that's gonna get you around 4,000 5,000 square foot in the form of a townhome in Manhattan.
Hank (18:39)
I'm walking here!
Daniel Berk (18:42)
Quote, I felt like we needed a tram. He's really not joking. He genuinely felt like he needed motorized transport to get from one side of his own house to the other. And he delivered that line completely straight faced. What I love about this story is that the house wasn't ego. Hank never sat down and said, I want 24,000 square feet. He just kept saying yes to rooms, a movie theater, a manicure pedicure room, why not? A tennis court with a basketball court. Sure, sounds good. Eight garages, a guest house with two bedrooms.
But then one day you look up and you move in and you're standing in a building the size of typical commercial properties and you're looking at your fiance and you both think, my, what did we do? The build cost was about $10 million in cash, which means for him, no real mortgage. And for context, Sam points this out, $10 million is roughly what you pay for a four to 5,000 square foot townhome in Manhattan. But the purchase price is not really the most interesting number in the story.
The more interesting number is what Hank accidentally reveals about his net worth without really saying it and what it costs every month just to keep the thing running. That's what comes next.
Sam asks Hank a question that I think every financial podcast host should ask, but no one really does. He says, when you were deciding how much to spend on a house this size, what percentage of your net worth was that? Hank answers, but in answering without even really ever saying his net worth out loud, he sort of tells you exactly what it is. This segment is edited from two sections of the episode, the ongoing costs and net worth discussion first, then Hank on how much time the actual house keeps to maintain.
Sam Parr (20:18)
What do you think is like a good ballpark for what percentage of your net worth should be in your primary residence? Like when you were doing the math where you're like, I'm okay with 20%.
Hank (20:31)
I mean, I guess in my case, it's, you know, it was, you know, maybe 5 % or 8 % of my net worth. I can retroactively plug that number in. I didn't think about it at the time. And don't forget, there's two people with two different piles of money paying for it. So a couple together, it's their joint money that's spending it. So it's a different calculation for me, you know, not to throw people off and confuse them, but it was just a different calculation for me. I would not, let's go with this, like I would not be living in a house this size.
For me and my grown children, no way would I buy a house this size.
Sam Parr (21:07)
Alright, as promised, let's talk about some of his ongoing expenses for owning this huge, huge house.
Hank (21:13)
I have all kinds of creative ways to make myself feel good about the money I'm wasting for spending, I should say.
Sam Parr (21:20)
We'll start with landscaping. For context, Hank has around three acres.
Hank (21:24)
I think I pay $1,900 a month, almost $2,000 a month.
Sam Parr (21:29)
and then utilities, would be heating, cooling. electricity and water and trash. Do know what that would be?
Hank (21:36)
Truss is included in our taxes here. So electricity is probably around anywhere from $1,500 to $2,000 a month depending on which light bulb is left on. And then there's a gas bill that goes with that. that we use about $400, $500 a month.
Sam Parr (21:44)
That's not bad.
What would gas be?
And then there's repairs, which can add up a lot.
Hank (21:57)
Yeah, maybe 50, 60,000 a year. mean, the pool, because everything is five, $6,000, know, at your pool, it's $5,000 to find a leak. It's a thousand dollars. So it does add up.
Sam Parr (22:07)
and then you probably have a pool cleaning service. What do they charge per month?
Hank (22:11)
They're about $400 and some dollars a month. And they come once a week.
Sam Parr (22:16)
These costs actually aren't that crazy, think. You're not. That's not that crazy for how big it is. I'm shocked that what I would think what would happen is a vendor would come to your neighborhood and be like, whatever our normal rate is, just multiply that by two.
Hank (22:29)
Right, it's just like when you walk in to buy a car. You don't say, me a car, whatever quest I trust you. You do a little research. So by me learning more about it, it's very similar to running a business. You you can be the head of a company, but it's good that you know what everybody's job description is so you understand what they're doing or not doing. Otherwise you have no idea and there's no check and balance. So I'm the check and balance just as much, if not more than the person actually does the fixing.
Sam Parr (23:00)
All that adds up to around $10,000 a month. Real quick pause because this is important. If you're running a company, you already understand leverage. You apply it everywhere in your business. Most founders, they treat health like it's a rounding air. Inconsistent training, reactive eating, good weeks, bad weeks, start, stop, repeat. That was me. I didn't need motivation because I had plenty of that. What I needed was structure. needed...
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It's run by an exited software founder who's already a Hampton member. And yes, a bunch of Hampton members already use it. Everything's personalized. They're coaches. They're available seven days a week and the habits they help you build, survive board meetings, late nights and back to back travel weeks. This isn't about looking good on the beach. It's about being strong and sharp in your forties, fifties and sixties. So if you're serious about it, go to dailybodycoach.com slash Hampton, like dailybodycoach.com slash Hampton.
But what does this kind of money actually get you? If you're gonna have a 24,000 square foot house, you better fill it up with a bunch of cool stuff.
Hank (24:23)
It's approximately 24,000 total 18.5 under air because there's living space and then there's additional. And when your house is built on a decent sized property, which this is, it's about three acres, you have the ability to build all kinds of loges and different things like that. So they count that in total space. The 18.5 would be air, let's say it'd be air conditioned space. Let's talk about it that way. It makes it simpler to understand, but the total includes garages and outside space and all that.
Sam Parr (24:52)
So it's nine bedrooms.
Hank (24:54)
Yeah,
it's seven in the main house and then a guest house with two bedrooms, separate guest house.
Sam Parr (25:00)
and then how many living rooms, how many kitchens, and then what other rooms are there? think, did you say you had a manny, petty room?
Hank (25:06)
I don't, and if I did, I wouldn't tell you, but my mom does, and I've passed through it a couple times. So, yeah, and that's a small room. It's not like a huge commercial place or anything. It's, you know, sink, manicure, pedicure. I don't even know how that stuff works half the time, but it was used, and my mom lived with us for a while, so it was easier for her. She couldn't get out to go to the thing. So I always have to rationalize everything that I put in here for you, because I sometimes am embarrassed about it.
Sam Parr (25:08)
The home does though.
So what are the other rooms?
Hank (25:34)
And then, you we have a movie theater, which is kind of 101, you know, in a big house. I guess there's certain things that we have an elevator, putting an elevator in a one story house would not be a good idea, but we have a couple stories. And we've used it, you know, the kids, they hurt their legs, they do this, they have luggage and they bang up the walls. So there are certain things that just go with a larger house, which add expenses.
and would be very hard to resell a house this size without an elevator. Not that people may never use it, they may use it, whatever, has a movie theater, elevator, a fairly, a very big family room for entertaining that we designed specifically for that reason because we had parties or whatever, which we used to use quite a bit years ago.
Sam Parr (26:21)
How much time per week are you spending or per month making sure everything's taken care of?
Hank (26:25)
I mean, it depends. It's whether it's hiring contractors, evaluating their proposals and, trying to oversee what they're doing. I probably spend 10 hours a week doing it maybe five to 10 hours a week. It's a part time job and I think it makes a difference. I'm just, not trying to micromanage as much as I'm trying to learn what I can do and what somebody else can do. So I guess the fact is I don't mind doing it. I don't need to hire somebody to screw in a light bulb.
Sam Parr (26:38)
So like a part-time job.
And you're semi-retired. Yeah.
Hank (26:57)
Right. mean, I do need somebody to change the light bulb. However, that is 25 or 30 feet high in a high ceiling. And that's a dilemma we're facing now. These are LED lights and we're saying you have to get a structure to stand on just like they do when they're painting and stuff. Just changing a light bulb in a high ceiling house becomes an issue. I'm the only guy that I believe washes and waxes my own cars in the neighborhood to the point where people have driven by and say, hey, what days are you in the neighborhood?
Sam Parr (27:13)
scaffolding. Yeah.
Hank (27:26)
And I said, pretty much every day.
Sam Parr (27:28)
you
Daniel Berk (27:29)
So the house is five to 8 % of his net worth. If the house costs $10 million, do the math. If 10 million is five to 8 % of your net worth, you're looking at somewhere between 125 to 200 billion in total wealth. Hank never said that number, but he didn't really have to. And that's the money wise move. You don't really have to ask the question directly. Sometimes you get the answer and it comes out sideways, but you know, that's what's exciting about these episodes is we have to figure those numbers out somehow.
And it's always creative and fun to get there. The other number that gets me personally, he spends five to 10 hours a week managing the property. That's like a part-time job. This man sold a $3 billion company, exited in 1996, and now a significant portion of his week is spent making sure the landscaping crew shows up and the pool doesn't spring a leak. And he washes his own cars. He's the only person in the neighborhood who does because, and this is the thing we sort of keep coming back to, the work gives him something.
It gives him purpose. It gives him meaning. When you remove the structure that a career provides, you sort of have to find it somewhere else. For Hank, the house became the job and he's not complaining. This is what he chose. It's a version of wealth that I don't think a lot of people talk about. It's not the accumulation of the money, but like, what do you do after? When you have more money than you're ever going to need for many lifetimes, what now?
That's what brings us to the final episode that we're going to highlight here in this episode is the one I'm personally most invested in. Sam came in asking a question I've heard from almost every successful founder I've ever worked with. If you make real money and your kids grow up inside of that, how do you make sure they still have something to reach for? This next guest was Taylor Adams. Taylor is from a multi-generational family in Los Angeles with over a billion dollars in total assets, which includes real estate, industrial, you know, going all the way back to the 1800s.
His great, great grandfather pioneered the bond business in LA and then each generation after built on it. Taylor experienced all of it from the inside, the wealth, the pressure and the absence of sometimes anything that really felt like his own. But in his mid twenties, he got sober. He built a company, Belief Partners. His idea was to help other wealthy families avoid what he had gotten wrong a few different times. And here he is telling his own story.
Taylor Adams (29:52)
you
Growing up in an environment where it's like you're in a business family, in an environment of extreme success, it has a lot of interesting implications, a lot of mandates that were not spoken, but that I internalized. You know, on an emotional level, you think in order to be loved and respected by my family and specifically my father, I need to become as successful or more successful than he was.
Sam Parr (30:17)
That's a real burden because as you have kids, have to imagine that everyone wants their kid to be better than they are in some capacity, whether it's money, happiness, anything like that. You want your children to be better off than you were. But when you have generations of wealth and a lot of luck and a lot of hard work and all that stuff, but when you've been very successful for hundreds of years, that's a ton of pressure on you if you want to achieve something greater than your family already has. On the other hand,
Money is money. And when you're young and it's at your disposal, it can be tempting to buy away that pressure.
Taylor Adams (30:47)
Growing up in Los Angeles, I wasn't immune to the lure of pursuing property power and prestige. Any kid can get naively sucked into fast cars and fancy stuff. That was definitely the case for me. It was a thirst for significance. And that led me down a path that got pretty dark. I basically engineered my world around drinking and partying and chasing girls.
Sam Parr (31:08)
Fortunately, Taylor recognized that his actions weren't providing him with a happy and sustainable life and he decided to make a huge change.
Taylor Adams (31:16)
Driving home from work one day when I was 26, I just, I had a moment of clarity where I realized that the trajectory that my life was on never intersected with the life that I wanted. And if nothing changed, then nothing would change. I had a realization that the most addressable thing in my life was my drinking. So I got sober at 26. Right after getting sober, got a coach and he had me read Victor Frankl's Man's Search for Meaning. And it totally changed my perspective. I was on a pathway of pursuing pleasure.
instant gratification and the impulsivity that comes with that. And then just had an awakening that I realized that fundamentally life is about pursuing meaning and being of service to others and having purpose beyond yourself.
Sam Parr (31:56)
That purpose ended up being very helpful for other families with wealth set up the next generation so they don't feel lost, sort of like Taylor did. He does that with his company Belief Partners. and that idea of finding purpose is paramount to everything Taylor is going to talk about today.
Let's get into what we as parents can do to make sure that our wealth positively impacts our kids instead of holding them back. I once heard someone say, don't rob your kids of any struggle because that struggle is important towards building motivation, towards building grit, all these important things. And that's something that I'm very fearful of is robbing my kids of that struggle. And this is a really common feeling among parents that Taylor works with.
Taylor Adams (32:38)
On a wealth creation journey, we might be motivated by the idea that I want to empower my children to have opportunities that I never had so that they can live a meaningful and purposeful life. And then once wealth is actually created and realized, then it switches to now I'm worried about how my wealth can potentially poison future generations and rob them of meaning and purpose entirely. And when you think about like that flip, it's like, man,
What that tells me is that there's something wrong with how we view and manage generational wealth.
Sam Parr (33:12)
And as a new parent, one extreme that I've considered while raising my daughter is when she gets a little bit older is basically not giving her anything other than education and healthcare, the essentials. Of course, Taylor called me out rightfully so, and he says that I'm bluffing.
Taylor Adams (33:26)
There's a lot of families that I've spoken to where they're like, I've seen what wealth can do to poison future generations and rob them of meaning and purpose entirely. So I'm not giving them anything. And once they finish college, they're gonna be on their own and I won't support them financially. I don't care how much conviction you have as a parent and you're like gonna hold that line really hard. I promise you, whether you realize it or not, it's a bluff. Because what happens is once they finish college and they're like, all right, I'm ready to move.
back to the city I grew up in, parents quickly realized there's no way for them to afford to live anywhere near where they grew up. And very quickly, they're subsidizing rent or justifying decision to purchase a home on their behalf.
Daniel Berk (34:11)
I don't know if you caught this, but he said, the trajectory my life was on never intersected with the life I wanted. He was 26 years old from one of the wealthiest families in LA, but that's what clarity looked like for him. What I find most striking about Taylor is the complete absence of victimhood. He doesn't blame the money. He doesn't blame his family. He just sort of describes in very clear terms what happened and what he did about it.
He got sober, he read Viktor Frankl and he built something. I love something he says in response to wealthy parents who say they're not really going to give money to their children. He calls it a bluff. He says, I don't care how much conviction you have as a parent, you're not cutting your kids off financially. That might be the most honest thing I think anyone has ever really said on this topic. Wealthy parents know it's true, but no one really chooses to say it out loud. What are you going to do? You're really going to let your children become homeless? I don't think so. think
worst case scenario, you're giving your kids money if you have it. In this next segment, Taylor's going to give you the clearest framework for thinking about your wealth that I've heard on most of the episodes of this podcast. Pay attention to the metaphor because I want it to sit with you and then we'll talk about it a bit after.
At this point in the episode, Taylor and Sam are really deep into the conversation. They're talking about shirt sleeves to shirt sleeves in three generation patterns. They're documenting tendency for first generation wealth to be created, second generation to manage it, third generation to spend it down. And Taylor frames it in a way that I think is really important to look at in here, slowly.
Sam Parr (35:44)
Which is basically, you know, I read a ton about the Vanderbilts, the Carnegie's, the Rockefellers, and basically by the third generation, most of the money is gone. Is that the idea?
Taylor Adams (35:55)
Yeah, that's the whole idea. I think we misinterpret the Andrew Carnegie quote and we focus on like the accumulation, the preservation and the destruction of financial assets. I think what Andrew Carnegie was actually talking about is the human capital. Across three generations, you have a first generation that's an active value creator. The second generation transitions from value creation to value stewardship. So managing the wealth essentially.
and then the third generation observes their parents being stewards of wealth rather than value creators, then they can have a tendency to become default value consumers. And so I think it's really important to reframe how we characterize and how we view wealth. Right now we view wealth as the accumulation of financial capital as measured by AUM. And I think it's important to create a culture within your family that that's not how you characterize wealth.
I think it's important to characterize wealth as our ability to create value for others. If we use like a race car metaphor and I asked you what your net worth was, Sam, it's essentially like asking, hey, Sam, how big is your gas tank? And the reality is like, I don't give two shits about how big your gas tank is. Show me what's under the hood. I want to see what your engine for creating value for others is. If that engine is like awesome enough, then.
you can have other people put gas in your gas tank just because they want to see what it'll do. So I think recharacterizing what wealth actually is is super important.
Sam Parr (37:24)
Well, do you define value as ⁓ big scale? Let me give you an example. Have you read the biography of Joseph Kennedy? I haven't. You should, it's pretty cool because it deals with a lot of stuff you deal with. A lot of people don't know this, but Joe Kennedy, JFK's father, he was the seventh richest man in America by the time JFK ⁓ was about to become president. Joe Kennedy was mostly a piece of crap guy. He wasn't a good guy, and there's not a lot that you'd want to copy with him, because he was a bad husband.
His kids got into government, think, he cared about the power and he failed at becoming president, which is what he really wanted to become. But he said, my goal is to get super wealthy so my children can serve the country. There was a lot of other things, like he wanted power, but take that out of the equation. That's like an interesting goal. His kids didn't become business people, they served others. And I love that. I really love that. And so when I'm thinking about it, I'm like...
In one part of me, like, would love my children to be business people so they could kind of be stewards of capital and carry this legacy on. On the other hand, I think that if you think of who the most impactful people in my life is, it could have been my fourth grade teacher. This woman probably has impacted 5,000 or 2,000 children over the course of 40 years. I find that to be very admirable. Or just a good mother, someone who raises four or five healthy kids.
When you think of value, did your family ever look down on someone if they wanted to not pursue business, but instead serve others as a teacher or just being a good mother or being a good whatever it is that impacts people, but maybe on a smaller but more intimate scale?
Taylor Adams (38:55)
Yeah, There's no mandate to build wealth. The ideal is fundamentally rooted in service. And so that's why my father would always share things like, you want to make a million dollars, then find a way to help a million people. It's fundamentally about building your own capability where you can contribute to others and make their life more meaningful. And if you think about business fundamentally from a value creation, value capture standpoint, it's that value creation thing that makes it all work. And then hopefully you capture enough of the value.
that you can continue to create value for others. And there's plenty of family members within our family that have become artists or teachers or done things that you wouldn't consider like pathways to building wealth.
Sam Parr (39:40)
Okay, so what I'm about to say, I realize makes me sound kind of douchey, maybe cringy, and it's easy for me to say is what a lot of people are going to be thinking. But as I've grown, and I've been very lucky and privileged and fortunate in my career, and as I've grown sort of my wealth and some of my successes, I've realized that money is a lot less important than I thought it was going to be. At least, it doesn't make me always feel the way I thought it was going to make me feel.
I'm a new parent, but it doesn't take a genius to think to myself, look, I don't think it's going to necessarily make my kid happy. But what will make them happy is something that my parents did. And you didn't have to have a lot of money to do this, which is they did a really good job of helping me discover the value of my effort of doing things. And it just so happened to be that I like to do business stuff. whether it was sports, arts, becoming a teacher, as long as I had that encouragement from them to do that and I had a positive feedback loop from them.
I think I would be equally happy and have a sense of purpose like I do now.
Daniel Berk (40:39)
This metaphor about gas tanks and what's under the hood. Taylor says he doesn't really care how big the gas tank is. He wants to see what the engine looks like. Show me what's under the hood. Net worth is the gas tank. Value creation is the engine. And the engine is really all that matters. I've been in finance adjacent conversations my entire career in tech. I've never heard that framed more clearly or more memorably.
It's the kind of thing you put on a wall and I feel like you would look at throughout the rest of your life as you start to accumulate wealth. What Sam admits in this segment is also worth noticing. He's sort of self-consciously says that money doesn't make him feel the way he thought it would, which I think is a real moment. It doesn't get a lot of air time, but it's there. And I like when that stuff happens in these podcasts because it's something worth taking note of. And here's the last one that I want you guys to listen to.
And it's again, what Taylor Adams says about the first time he sat down with the trustee of his family's office. There was a piece of paper on the table, face down. After that, Taylor's framework for how wealthy families destroyed themselves. came up with this metaphor called the four horsemen. Every one of them sounds like wisdom and every one of them is a slow moving way to kind of lose what the first generation built. And I really like how Taylor puts this.
Taylor Adams (41:56)
I think I was 23 at the time and I met with the trustee who was the president of our family office and it kind of like this ominous thing where there was a piece of paper.
folded upside down on the table and then he slid it across the table, turned over the piece of paper and immediately went to like the bottom right and looked for bold numbers. I remember in that moment it was like I had this weird thought that and there was like these two schools of thought. One was like whoa that's a big number and the second thought was that's not enough.
Sam Parr (42:32)
You've got to empathize with your kids and understand that they have unique mental hurdle to get over. They have different privileges and a different experience with money than you probably did. And when it comes to their me years, which is probably in their late teens and early twenties, they're going to feel a different sense of entitlement. Your job is to guide them through that, but understand that they're going to make some mistakes and potentially probably have a lot of wrong ideas.
All right, now of all these mistakes that parents make, everything that we've talked about can basically boil down into four things. This is a concept that Taylor calls the Four Horsemen of Destruction. That's a great name. Before we end this episode, we're gonna do this on rapid fire. The first horseman is preservation.
Taylor Adams (43:16)
An entrepreneurial value creator grinds and experiments and takes risks until one day they look around and they're like, holy shit, I've actually built something. And then inevitably, an advisor will whisper in their ear, short sleeves to short sleeves in three generations. And they think to themselves, you're telling me that some entitled little shit two or three generations down the line are going to just destroy everything that I've created. I'm not going to let that happen. So they switch from a strategy of entrepreneurial value creation to one of wealth preservation.
Which I think is crazy because it's in direct opposition to the strategy that created the wealth in the first place. But the most important mistake in that is that it makes the financial capital the priority.
Sam Parr (43:56)
The second, protectionism.
Taylor Adams (43:58)
If the number one priority is preservation of the wealth, then the number two priority is to protect family members from the wealth because we've seen how wealth can rob future generations of meaning and purpose entirely. The problem with that thinking is this preservation mindset. It creates this incentive where we're going to try and set them up for success. But the reality is that what we should be doing is teaching them how to fail while failing smaller and failing forward.
Sam Parr (44:24)
The third is stewardship.
Taylor Adams (44:26)
In my experience, future generations only care about stewarding something that was created in the past when they can't access a vision for their future that's more meaningful than what already exists. And the subtext of stewardship is, hey, something really significant was created before you. And so we don't need you to create anything new. So disincentivizes future value creation.
Sam Parr (44:49)
And last, collectivism.
Taylor Adams (44:51)
a first generation wealth creator can say, man, I've seen what wealth can do to tear families apart. I'm not gonna let that happen. So I'm gonna create really rigid top-down governance structures that prioritize family unity by forcing everyone into a room together where they can make shared decisions around, or collective decisions around shared assets. And the paradoxical outcome that creates is it just accelerates the likelihood that they all end up suing each other, which by the way is par for the course. It's not the exception, it's the norm that family members end up suing each other.
Daniel Berk (45:28)
He says, that's a big number, but that's not enough. Sort of a dichotomy. There's two thoughts that are happening at the same time. He's 23 years old and he's looking at the number in his family trust for the first time. And I don't know that it's ingratitude, not necessarily weakness, but it's sort of what happens when money becomes a primary scorecard in your life. You've been around and surrounded by a very high score for your entire life. And the only way Taylor found out that that loop could be stopped was really to stop using the scoreboard entirely.
The Four Horsemen is this metaphor where he goes through four different tenants of the Four Horsemen. One is preservation, protectionism, stewardship, and collectivism. Every single one of those is a piece of wisdom. They're all, according to Taylor, a slow moving way to destroy what the first generation built. And I think the human capital and the financial capital that comes from framing it as a gas tank and what's under the hood, it's how you survive in a multi-generational wealthy family. The families that survive
three to four to five generations, if you look at history, are the ones that figure out how to keep creating value rather than just protecting the value that was created one to 300 years ago. And that's a show. Real numbers, real psychology, real people talking about honest parts of their wealth and the way they did accumulate it, how they're spending it, the way their lives look after becoming wealthy that I think makes Money Wise a unique and phenomenal podcast that I hope you guys enjoy listening to.
And that's the end of today's episode. went over three different conversations from past Money Wise episodes from Neil Patel, Hank, who is anonymous and Taylor Adams. The numbers and the moments and the things that stayed with them years after accumulating the wealth or inheriting the wealth. Like I mentioned, new episodes are in production right now. And what I'll say is the conversations I'm building are in the exact spirit of everything you just heard. They're founders with real money talking about their actual numbers with real candor.
and they really go into depth and length about what their wealth looks like from the inside. It's the actual thing. What are you doing every day with the money that you have? And speaking of that, if you've been listening and thought, sounds like a conversation I wanna have, I really would like to hear from you. I am actively looking for guests for upcoming episodes. If you're a self-made founder or have been through a significant exit or you've built wealth through real estate or alternative assets or some other thing, maybe you've even inherited it.
If you have a financial story you've never told publicly and you're ready to tell it, please reach out. You don't even have to use your name. Hank didn't and several of our past guests haven't. What matters is the honesty and how much you're willing to divulge about your personal finances. You can find Money Wise wherever you listen to podcasts. And if you're not subscribed yet, do that right now. It's the best way to know when new episodes drop. Again, I'm Daniel Berk. This is Money Wise. If you do have questions and want to reach out, find me on Twitter or X.
It's @danielcberk I'd love to hear from you. If you hate the way that I'm hosting this, I'd also like to hear that. I would like to improve. want this to be the best podcast about money on the entire internet. And I think it will be. If you guys give us a chance, we're going to absolutely blow you away. Thanks for listening.