Investment-Frameworks von Srivatsaa und Hormozi, Teil 1

0:11uh in my opinion is honestly one of the most interesting and influential entrepreneurs i think in the world like just being able to work with and touch the people that he gets to touch um and i hope that you guys get as much excitement and entertainment out of this as i did in the first interaction that i had with him one of the most amazing things about sharon that i know that a lot of people talk about it's like he's the ceo he was the ceo of telus which was the one of the largest property and real estate uh management companies that there is but for me one of the coolest things about this thing is that sharon has really been able to go from real estate uh to being well from really being on wall street to being a real estate broker to now like writing a book and so like sharon to be honest with you is just a man minus the shirt that he has on today sharon is 100 demand i'll piggyback um on that briefly and i'm i'm a numbers guy and so i'm going to brag on charon because he would never do it himself um but tron was actually uh he came so his entire family sold everything they had to just get shiran to the united states and so he's absolutely the truest embodiment of the american dream came here with nothing just two hands and a brain and a lot of work ethic and i was able to build something truly uh spectacular and and was able to do so while maintaining one of the best characters of anyone that i've met as an entrepreneur and i meet lots of entrepreneurs um and a lot of entrepreneurs who are significantly less successful than chiron with significantly greater egos and so uh just a few quick hits on uh sharon's story uh he had his his first exit uh like in his 20s um and it was a 25 it should have i'll say it should have been a 25 million dollar payout just to him but because of how they contract the deal he actually ended up getting screwed on it and only got uh multiple seven figures i'll put it that way um and after that retired and was a professional tennis player and so he's played around the world and he knows the highest levels of competition so he has that side of he has the teeth side of that uh as well and then after you know retiring for five years and playing tennis around the world he's like you know what i should do something cool so he reached out to his mentor they're like you should get into finance and he was like okay and so of all the places he decides to go to the number one bank in the world goldman sachs which unless you're in that world which i came from uh briefly it's hard to appreciate how incredibly difficult it is to get hired at goldman sachs like you have to have cured cancer on the first try uh after you you know won wimbledon by the time you were seven and so he moved in there without any background in finance uh worked his way up and then from one of the companies he was dealing doing a lot of business with they were like you're very smart you should uh come work for us um and so he actually led that company to a multiple billion dollar exit and that was the first multiple billion dollar exit he had after that uh he got into the real estate world and then built telus to another multiple billion dollar exit and so uh he's one of the most successful entrepreneurs that i know um and he's one of the few people that i trust which is saying a lot so anyways i wanted to uh to give you a little bit more color on on who charon is and and how he got here and how why it's so spectacular that he took the time to uh to talk to everybody today one thing i'll just add on top of that um is just you know when we look at like people that we want to associate with and people that we trust to you know mentor us in different areas of life like we never look at someone who's just like solely really good at that one thing because if strong was solely only good at building businesses and entrepreneurship then you know there's lots of people who can make lots of money and be good at that one thing but then the rest of their lives are falling apart and sharon is not that person you know he's a good person he has great values he has a mission he has character he has a great family he's good work life balance and so he's got his together and that's why we respect tron so much because he's done so much in that sector and that area and he has an awesome life outside of that um and so just when you guys uh you guys know like we want to bring you people only that inspire us um and that we admire and he is one of the you know people that we can count on one hand this is kind of fun you guys should keep going like i don't yesterday all my wife told me was hey i asked you to buy this but you didn't buy that like can you go back to the store and you you drop this and fix your clothes like so this is uh this is fun we should we should hey dave we should do this often because uh it's awesome to get it sounds because i appreciate you guys so much and uh just so you guys know i'll say one thing alex and layla have been really great friends and mentors to me um and uh super grateful to be here to share and to support you guys in any way that i can so thank you thank you for that kind words should we jam awesome remember let's go awesome so uh i get excited about this stuff so here's what i'm gonna do uh i i have we have a short amount of time i'm gonna talk fast and the goal here is to provide some level of context so i i prepared the the original conversation that i had with layla was hey let's just do a bunch of q a because everyone's in a different place but i thought well that doesn't really make sense because let's get everyone some context and a few lessons and a few ideas first so i have a few a few notes in a few slides that i'll share with you that i think will provide a really great foundation for how we think about the world and then we can all have uh share ideas have some q a and figure out how we can how we can build and grow this stuff together is that is that cool just give me a wave if that sounds that sounds cool awesome all right so um let me see if i can pull this together um you can see my screen right quick thumbs up if you can see my screen cool so i was i was spending uh time yesterday and i was thinking what is the greatest way that what what are the things that i can communicate to all you leaders that will really dramatically help you not just in three years not just in three months but right now right today and alex and layla and i have talked about several of these concepts which i want to share with you so there's three things i want to get across to you today uh thing number one is how to understand any investment and i think this is the number one thing that uh perplexes a lot of people is like oh what is this crypto what is this airbnb should i invest in that like how do you understand any investment the second thing is well how do you evaluate if it's right for you and the third is if you think it's right for you how do you implement an elegant plan and what i'm going to share with you is a very simple framework on how you can actually work on these things to make all of these three things work um there are three things that are needed all right and i'll give you all the slides and everything you're welcome to you're welcome to chat along if you'd like so here are the three things that need to be at work thing number one thing number two and thing number three thing number one is we need some frameworks because without frameworks it affects our thinking so we need our frameworks to help us think and i'll give you three of them today that will dramatically help you think in a much more elegant way number two number two we need language and today i'm not going to hold back on terminology because the limits of your language are the limits of your world right like if i use a word for a certain reason it's important we all need to know the word and when we have good language don't be afraid about language it's okay to understand the terminology because when you understand the terminology you can communicate really well and when you can communicate about a topic well it dramatically reduces your stress and your fear on that topic and that's a really powerful thing and three people always say well if you can think well and communicate well what about the implementation component well i will tell you this implementation in the investment world is all based on community because when you have a great community they can teach you how to implement there is nothing worse than suffering in silence there's nothing worse than trying to do things on your own there's nothing worse than second guessing when you're by yourself and you're thinking oh my gosh should i should i have bought ten thousand dollars of dogecoin which alex and i did which is crazy but i'll say that differently right uh but does that so so this if we take nothing else away from today let's not be afraid of a few frameworks that help us think better let's not be afraid of language and terms and let's really focus on hey which community can i be a part of what support system can i have that will help me kind of build and grow my the way i implement this stuff so i'll take like a 10 second pause here what what of this what if this resonates with you either put in the chat do a quick wave what if this resonates so far language yeah ed says language for sure jacob says language as well communication totally if you have the language and you can communicate if you know good sales people they have really good great comfort and command over the language right and when you have good language uh at goldman they call this verbal dexterity if you have good verbal dexterity you can do you can do really great things to have great communication uh community to drive implementation a lot of people like the language jody says she likes the community right cool so that that is the framework um let's actually let's actually look at the pieces very quickly and then i'll show you where i'm kind of going to go with all this today so i'm going to talk to you about three key frameworks and these three frameworks are the only three things that you need to know to get you uh eighty percent of the way because we're all in this pareto you know efficiency thing if you get eighty percent of the way would you win so i just give you three really quick frameworks uh and this is what they're gonna look like the first framework is gonna allow you on how to understand any investment the second framework is going to allow you to understand how to evaluate any investment and the third framework is a lot going to allow you to figure out how to implement in the right order okay so let's let's fire through these three frameworks and these what i'm gonna do is i'm gonna do five minutes five minutes and five minutes so i'm gonna fire through the stuff all right here we go so first framework framework number one um on how to understand any investment by the way i'm gonna i'm gonna promise you you're gonna come across an investment in your life that you don't understand and it's totally okay and here are the things that i will actually tell somebody when someone tells me oh you should invest in this xyz thing and he like here are the words that i use hey alex i'm just a simple guy can you please explain this to me like if you say that you completely make the situation so clean and so simple like put yourself hey i'm just a simple guy let me ask a bunch of questions be okay with asking as many questions as you want no one expects you to know everything we think we should know everything you can ask as many questions as you want but the problem is we don't know what kind of questions to ask i want you to think about anytime you have a question think about putting it in the parking lot the parking lot so the parking lot and this is the l o t l i'm not going to go easy on the terminology because we need to know it l is for liquidity o is for ownership and t is for terms any investment to understand it just think about what kind of liquidity do i have what kind of ownership do i have and what kind of terms do i have which is the the l the o and the t all right let's walk through this very quickly and i'll give you a quick example anytime you think about liquidity if you put your 100 000 in the bank at bank of america you have daily liquidity or 100 liquidity means you can go grab it almost any time you want if you put a hundred thousand dollars in apple stock you technically have three day liquidity because uh when you sell some stock it takes three days to settle so you have three day liquidity when you invest in crypto you have 24-hour liquidity because you can sell your bitcoin right then anytime any place if you invest in a real estate deal you may have no liquidity for three years because that's what the deal is modeled on it is really important to know how much liquidity we have because that tells us how much our capital is locked up for this is probably the number one thing that most people need to know when it comes to investment because the higher the liquidity almost always the lower the return so if i have 100 availability that i can pull my cash out at any point like the bank the bank's like well i'm giving you full liquidity so i'm not going to give you a lot to work with this money i always like to ask and the question you would ask is oh so how long is my capital locked up for that's a very fair question to ask and that allows us to know that we are like okay can i deal with me being out of this capital to work with for three years five years except that's number one number two ownership ownership comes in three parts part number one you own it directly part number two you own it indirectly and part number three you don't own you don't own it at all so let me give some very quick examples and they're all okay they all work if you own it directly you buy some apple stock you own some apple stock you win you own the stock directly indirectly here's number two you put a hundred dollars in a fund and the fund invests in a bunch of stuff so you have ownership in the fund and the fund owns a bunch of stuff so you own assets indirectly and the last part is you don't own it at all there's a lot of airbnb strategies where you can go rent an apartment for a thousand dollars and then airbnb that you don't own anything you just own the cash flow and that's okay too but it's important to know what you own at the end of the day here's here's how i think about what i own i always ask somebody so where does my name go on your document that's all i want to know if my name goes somewhere my name goes on the loan my name goes there so i own a piece of that if my name goes in the fund i just want to know where my name goes so ownership is all based on one thing where does your name go in that investment that's number two ownership all right here's number three terms terms are really simple we do terms on our sales contracts we do terms on everything uh terms only have two parts of the puzzle what do i need to do and what do i get hey you need to do 5k a month for six months that's what i need to do what do i get i get a six percent return and that's what i get terms are very simple what do i need to do what do i what do i get a lot of times people say well it's a hundred thousand dollars now you're like okay cool who do i get well you may get your 100k back in like six years like i understand that but that's fine i just need to know terms are always what do i need to do what do i get if you just ask questions in and around this whenever i am evaluating an investment i just go i just go like that i just keep going around and around and i keep asking questions until i can understand and answer the questions of hey do i understand liquidity do i understand ownership do i understand terms so before i go any further liquidity ownership and terms that's your lot in understanding any investment 10 second pause uh questions thoughts does that kind of at a high level give you a way to ask questions to figure out where you where you are when you something's coming up super clear ed likes it awesome i have a question yes sir so with like live stuff for terms so it's like what do i do what do i get would you consider a liability something you receive i say that differently like a term so it's like if we have a like i'm gonna be liable for something or would you consider that under like ownership oh that's totally good so that that that's um uh that the liability will be under the ownership because now i am responsible for something yeah um the alex is a great question because wherever your name is is where it's connected to something so i always think oh am i signing on a loan document on my site where does my name go and if i'm going to sign somewhere what is that what does that make me responsible for always think parking lot liquidity ownership and terms all right let's go to the second one really quick uh it's fun to do uh this is the this is my favorite one i'll actually use an example of of an investment that i totally parched so i love telling you about stuff that i lost money on there is a four quadrant thing alex and i like we've actually played with this often whenever you're evaluating an investment whenever whenever you're evaluating one there's a four very quick things that you think about it is worth doing on paper so there's four quick things and i'll actually go through an example with you the first thing that you want to think about is uh capital preservation so if you're at a bank your capital is fairly well preserved that's number one number two are there any tax advantages number three i'm not gonna mess on terminology the right terminology here is yield yield in our world is interest interest or a coupon or some kind of cash flow that you get along the along the way that's what yield means yield is the right is the right word and actually explain where that word comes from and the last one is growth and how does this investment grow over time so let's take two quick examples i think it'll really um it'll really help you a lot so um my partners and i my partner and i bought an olive farm please don't buy an olive farm ever we bought it all a farm because my partner's son wanted to make olive oil and i found a way i was like okay this will work so we bought this owl farm on this olive farm came with an airbnb without with a with a bed and breakfast on it so we had to hire someone to run it all of that but let's take this olive farm as an example i always put a 25 25 25 25 score that way i end up with a hundred score so if i take my olive farm and i take my capital preservation on it my capital preservation on the oil farm is literally just land so i'm just gonna wager that the capital preservation on my owl farm is probably a i'm just gonna make it 25 out of 25 on the capital preservation i'm making this up tax advantages a lot of people don't know this but in the state of california you have significant agriculture advantages when you own a piece of agriculture land i didn't know that you get a bunch of tax credits from the state for actually owning agriculture land i had no idea so we got a bunch of tax credits so i'm like oh that's cool i'll take a little 20 on the tax advantages then yield yield literally is we were able to plant olives and sell olives while we owned the farm so the farm actually produced some income for us so i'm going to give that's a little 20 score and the growth the farm didn't have a lot of growth we almost sold it for what we bought it for so i'm going to tell you that the growth on that was zero it didn't really grow in any way so let's total that up right so that's 25 45 65.

18:31so it's got a little 65 score very subjective good so far now let's do let's do like uh bitcoin capital preservation on bitcoin i'm going to tell you right now it's pretty volatile but we have no idea so i'm going to give it a score um we may say bitcoin is 10 because you have no idea it can go to zero tomorrow the tax advantages zero yield on bitcoin unless you do something fancy you're probably a five growth on bitcoin hey could be amazing go to 25. so now i'm on the bitcoin of 25 30 40.

19:06while this does not need to be a black and white evaluation it always gives me an understanding of how to put one against the other i know now that net net these are probably compared to the risk yeah i probably had to put a little bit more money on this versus less money on this but at least it allows you to evaluate an investment otherwise we have no way of thinking about it i want us to check the box and i will tell you this if it starts checking all boxes it's starting to be a much you know much more thoughtful investment every time you're going to be able to start doing this uh uh naturally in your head but i wanted to kind of run this through so before i go any further let's take 10 seconds as i went through that what kind of what kind of stood out for you something that stood out something that was interesting something that we're like okay cool i can see how how that i could use something like that can you explain yield yeah for sure so uh think of yield as when you invest something the cash flow that you make back from it so if i put my money in the bank and the bank pays me one percent my yield is one percent uh how the word yield came about was in the olden days where people did crop they would plant a lot of rice and the amount of rice it yielded was the yield what came from the crop so if you put a hundred thousand dollars down and you got six hundred dollars back every month that yield is six six six hundred dollars that kind of makes sense nicholas cool awesome you can take the emotion out of it but at least it gives you a way to analyze it in some way right at least gives you a way to say okay let me at least think through this um because a lot of times we make a very like oh my gosh it's my friend's startup company i'm gonna do it well capital preservation zero tax advantage is zero yield zero growth 25. you have any idea how much money like i've made money in in startup investing i've also lost a lot of money in startup you just know what it is going in that's all that's all i was suggesting all right cool uh last one and then we'll do some cuny all right so here we go last one this is where a lot of you are going to have some um differences in opinion with me and it's totally okay i want to give you one framework for figuring out how you implement any investment strategy in your life but i want to talk about the order the order of what you do so if there's four phases to doing this phase one phase two phase three and phase four right here's phase one i call phase one the safety trampoline alex has talked about this a couple times in his videos first thing that you can do is to put aside a small amount of income that can take care of you for i think alex talked about six months right but six to 12 months of just baseline income i'd say a six month minimum i like the 12 and let me tell you why i like the 12 because in six months if you can live for six months and then use the other six months of income to actually invest to grow a business or something like that you can quickly get yourself out of any hole i will tell you it completely changes your life when you know that if the world goes to hell in the handbasket you still have the ability to completely reinvent yourself before you go out and write a hundred thousand dollars check into a startup please write a hundred thousand dollars check into your startup right i would totally totally do that so the number one thing that i would do fundamentally if you had to live and all your income went to zero could you could you have enough to without dramatically changing your lifestyle could you handle because the last thing you want is to get resentful and depressed when you have to change your lifestyle and all of that could you have enough for six to twelve months whatever that kind of feeling is so that you know that that's the first bucket that needs to get checked hey alex give up you have thought comment on this because i know you've done a couple of videos on this one too yeah and i want to just as from a terminology thing because i like language uh sharon calls it a safety trampoline uh which is has much more positive uh connotation than the the common term which is safety net so we don't just catch someone we want to catch them and then bounce them off um in the video i mean layla and i have a zillion years saved up and that's because we're actually believe it or not very risk-averse um and that's because we feel like we've taken enough risks in our lives that we want to make sure that once we have capital we have something there and we don't have to think about it so we're actually like you know way more than 12 but uh when i'm trying to tell somebody who has zero savings if i say you know 18 months or something then i think people get really disheartened so i try to make three and six months and like it's gained momentum and so for everyone on this call like i think there's this uh demonization of savings uh nowadays and uh i think that that is uh misplaced you know i mean i think it's it's people who are saying don't have savings who have savings and don't even think about that they have savings um but the other piece is that especially if you have a a percentage of your budget that you're putting away every month you have to have that safety trampoline because if your car breaks down or something else that's going to disrupt your percentage of savings pattern and you don't it's just like going to the gym it's like this is just financial fitness it's like you don't want to stop that habit and so it's good to have that net or that trampoline there so you can fix the thing and not disrupt the flow of money to where you have it allocated so that's my two cents on it yeah spot on spot on um if you took nothing away you know i would say by the way and it's totally okay i have eight figure entrepreneurs that that you know will come and hang out with me and i'll be like they have all this other stuff and the reason they're stressed out is because they don't have fixed it if all that goes awry if their facebook ads stop working for three weeks it freaks them out and it's okay like you got to have something to know that your your baseline doesn't change right so that's really important here's number two uh number two is uh what do you buy and i'll talk about the three buys so number one you buy the safety trampoline you wanna you wanna buy that for yourself number two i'd love for you to buy time it is shocking to me how how much we uh minimize the value of buying time and is this if this is getting a va if this get is getting a bookkeeper if this is uh if this is getting a a a driver for your family the buying time and convenience like layla and i chat text about zelda like buying convenience is so important because it does one major thing it allows you to be in a better place and when you're in a better place you make better decisions not that the time is important for you to do more revenue generating activities that is actually a misnomer what you want to think about is when you have time it gives you b in a better place and when you're in a better place you make better decisions so number two would be to buy time so anything that you can say hey how can i write a check to buy this time that's actually a really powerful investment because you're investing in a really great psychology for yourself so you can make better decisions here's number three number three is um alex's favorite is buying cash flow or calling it buying buy income and when i say buy income it is hey can i write a check for a hundred thousand dollars or ten thousand dollars and start to get a thousand dollars back a month i like that a lot even if your ten thousand dollars a hundred thousand dollars does not grow you're buying income because at the end of the day if you're working really hard right now and you can find a way for your work to replace the income that you're making the definition of financial freedom is that your passive income or your leveraged income is greater than or equal to your monthly expenses if you can just get there your life is in a completely different place how you think about it how you work on it how the things that you do et cetera so that is banging on fourth i would say you buy growth when i say buy growth let's talk about that for a second so all i'm saying here is if you don't have your safety's trampoline don't invest in your friend's startup that would be my suggestion it's a suggestion do whatever you want but it would make sense that you would do this first before you did that it would make sense and i'm suggesting an order that will really really help because as soon as you get your safety trampoline in order and if you just follow this heck a lot of people will even just stop here you don't even need to buy growth if you can just if you can just buy cash flow you're fine because if you're if whatever you've invested in is paying you to live and paying you to have your family have a great life you can literally do whatever you want with your life …