We asked a $18.9B Investor how to survive the AI bubble

fifteen years ago we set an objective who become the number one performing private we since we set that goal of four funds we invested after that have all done five x or better how do you do five x in six years well you can get navy seals to run plumbing companies that makes perfect sense to it works pretty well in your world there's a bunch of like ai roll up we're gonna buy a company we're gonna throw in it it's gonna be awesome is that a good strategy the venture backed app still have two million of revenue and a five hundred million dollar valuation and they're gonna go to zero how do you see the world in the market where do you see opportunity where do see destruction and where do you see over height okay i'll start with over hike how about that i feel like i could rude world i know i could be what i want to put at all in in like a days off on a less travel alright well listen we have brand weaver here today you've seen this guy all over youtube take talk wherever everybody's been saying what i'm interested is i would have always loved to go to stanford and go to stanford business world there's probably a lot of people listening to this that kinda wonder what would it be like and you know that would be cool to be able to go learn from the best at one of the best schools well we get to kinda do that today we have somebody who not only is out in the field you've got a private equity fund that has almost like twenty billion in assets under management but you also teach at stanford and i think today be fun if we get to hang out and pick your brain and be students like we're in your class love it look looking forward to it you know what what's funny is like you i i've watched your talks for a long time and they're they're amazing how to live in asymmetric life was a really good one how to live your full life i think that that wasn't the exact title one but that was my takeaway from another talk and i was doing research on you and i'm like i didn't even realize this guy had a pe fund and it's and i think that's great that your your ideas are actually what you're known for more than your work so are you besides the talks can you explain with with your fun how how successful are you beyond just the talks about fifteen years ago we set an objective to become the number one performing private fund in the world as measured by net mo c you know the return on capital and our last since we set that goal of four funds we invested after that have all done five x or better or the fourth one's on track to do that so it's been it's been great like it's all the all the content that i try to bring to my talks or to the students at stanford you know i i like to think they're really based in stuff that really works there's a lot of a lot of amazing people that are have a lot of really good motivational content i i like to try mine out in the real world a lot and see what actually what actually works and i've and i think this you know the stuff that i i try to talk about is is exactly what we what we do at alpine but yeah we've had a really great run and i'm really proud of how we've done it too we've done it you know with people treating people really well we bill our entire business around the people at alpine and the people entrepreneurs in our portfolio and you know try to be a force for good the three goals are be the top performing fund be a force for good and be a place where the best people wanna come in works and spend their careers and i think hopefully we've done it that way so you you just said we you set a goal to be the number one performing private equity fund in the world no big deal that's right so and and and you said five x mo mis which is multiple invested capital so and that's over for like ten years or what what's the time frame we're talking here i mean from the day the first dollar comes into the last dollar goes out yeah maybe it might be it it it's probably easier to about a probably averages about six years of the average investment probably about six years that's pretty remarkable so you normally you know sort of rule of seventy two you put your money in the p five hundred in the seven years you should double your money so you should get two x if you're there and you're you're basically in roughly the same time frame i'm trying to get a five x right so you you're really trying to outperform can you in plain english because sam knows i spent the last two days having at forty private equity meetings and you know i'm half the time i'm just like what they're like yeah we're a small fun a billion and a half under management and i'm like that was the story all day was like how much money do you guys have and what the hell do you guys actually do so can you give me the simple what the hell do you guys actually do are you guys buying like hvac companies are you buying software companies so i mean private equity is a very broad classification there's lots of different strategies so i'll tell you specifically what we do i know there's a lot of talk around ai buy and builds if we can dive into in a little bit but we do primarily buy and build so we'll we'll take a we'll find a really amazing ceo that a lot of times has worked with us in a smaller capacity member they were the cfo of a company we had or it came through our training program and then we'll back them we'll go find an industry that we think is really interesting we like the pros industries like the ones you mentioned plumbing hvac we also do software too because there's a number of strategies where roll ups in software can be really attractive so we it's a small part of what we do though smaller than the services stuff and but a lot of these really pros industries are massive you know the plumbing and hvac industry mentions like it's like a hundred and seventy billion dollar industry so it's so if you get it right and you actually figure it out you know you can you can grow you know almost forever because you just don't run out of run out of tam which is why we like the buy bills because we'll get it right once and then we'll stamp it out a number of times the other thing that's really cool about buying bills is it really is plays to our core competence which is just talent you know so we're the buy and bill's strategy the way we do it really is a talent strategy you know we're in a lot of cases we're putting high attribute attributes like military veterans in to go run these a plumbing business and they're just incredible leaders and so our our secret superpower is really training these awesome leaders and giving him an opportunity to do something they might have had the opportunity to do otherwise sam is is hilarious sam but you could be like how do you how do you do five x in six years it's like well you go get navy seals to run plumbing company because that makes perfect sense actually right that's a this be simple simplified express yeah yeah yeah maybe skills run plumbing companies it's it works pretty well the deck is only one slide i like it the navy the navy seal is actually the pro a very common background of our of our leaders in in these businesses and how big of companies are you buying so the add on acquisitions was is primarily what we do i mean the i think the average deal we did is like thirty million dollars so the company might have fifteen million to twenty million dollars of revenue something like that oh it's pretty small do and do do you borrow money to and do borrow money to buy it yeah we do so we'll we've once we get it going we can usually finance all the acquisitions with cash flow and and debt so we don't have to put in any more equity that's important obviously if you're if you're trying to have a high moe the not putting money in part is is a big part the the the main part of your model that's i would say kind of differentiated is is you you kinda of i don't know it's not a search fund exactly but you basically start with a an operator or a ceo in house which most private equity you guys don't do right they're they're mostly like we buy you we hope the management team really stays on that's really important or we're gonna later install and do a search for an executive to run the company but what you guys are doing is you start with the person you kind of run a search with them it seems like tell me what i get wrong is it not like what's different about it than a search fund come in house basically is the difference no sean you nailed it it's like a search fund where we try to improve on the search fund model like if you think about a search fund for those who may not know you know search fund is you're backing a a young person to go by a business and then they're gonna go run it but the the thing where it kind falls down is the first part which is someone has to go source and buy a business they have to go build an entire private equity firm to buy one company so we do all that ourselves because we are obviously doing this repeated on a repeated basis but the general part about having a really high attribute person betting their career on a business is a great formula right probably a lot of what you talk about on this podcast i mean it's it's the greatest formula there is so we love the that part of the dna of a search fund model we're hiring very similar kinda high attribute people maybe a little bit older then the search phone a little more experience with bigger businesses but generally it is what you just said sean it is it is kind of like a super powered search fund model alright so this episode is all about excellence a while back i shared my personal framework for building excellence in my own life and the team at hubspot turned it into a thirty day operating system you can check out right now it breaks down the systems it took me ten years to figure out and shows how i actually use them day to day these are systems that genuinely changed my life so if you wanna build a good life scan the qr code or click the link in the description now let's get back to the show so the simplified way of thinking about this is you find a really high attribute person we'll call them the navy seal for now just so you know somebody who's clearly a a go get a winner organize effective per individual who's willing to work really hard for five six years to create like life changing wealth for themselves and built and own their own business without having to come up with a great idea from scratch you go with you're already looking at whatever hundreds of deals you have thesis around stuff you go and you buy the best deal you could find there and then you do add ons so you go buy the plumbing company it's already a good business that person should operate it maybe to be a better business growing organically then you're gonna buy maybe more tuck in plumbing businesses to to grow the thing using the cash flow from the first business exactly and then the other thing is once you bought ten plumbing companies you know what it looks like to run the best in the world because this one company might do really well on training this other company does great on my acquisition this other company has a purchasing advantage this other one has a training available the super superpower of each exactly you grab and each and usually that's true usually each company has a super superpower but after let's just say ten deals you've got all the superpower you know and and now your next deal your eleventh deal has ten superpower often you can improve that business dramatically really fast just because you you take that playbook and the reason you can make that playbook consistent is because you're putting your own people to run it this took me ten years to figure out but we would we would back founders and then say hey we have all these great ideas and the founders would just smile and write stuff down and never do anything you know and and that's not that we don't love founders but you can't you're not gonna buy a a guy who's running a plumbing company for thirty five years and via and then you know come in and tell them how to run this business that doesn't work so sam should we do grim a favor and make him likable because you're too hate you're happy you're good looking you're super successful you're like we just got this model that prints this is amazing and i'm gonna do a favor here because that's the endpoint but i wasn't where you started like the start of your story is you're mowing lawns in ohio listening to self help tapes on you know in your earbuds while you mow lawns to try to figure out what the hell you're gonna do and i my i my understanding you tell the the fun part of the story but my understanding is you kind of in college bootstrap this with credit cards and went through the financial crisis and a bunch of stuff like that so can you can you bring it down a notch go go to the the part that makes us root for you like the what's what's hard about this and yeah well first of all thanks for the kind words i appreciate them but i grew up in a small town in ohio went to a public school and it was a blue collar town outside of toledo called perry nothing special about it and i i was i was probably just average in just about everything athletic school and this isn't false humility i mean this is actually i didn't make the basketball team i got cut you know from the wrestling team i mean i i just wasn't really and i was i was okay at grades not nothing special and just as you said sean you know i i was mowing lawns and i started the sony walk man came out and i started listening to tapes by guys like brian tracy and tony robbins and earl nightingale and and guys like that and so you're mad imagine you're like a fourteen year old kid and you're literally figuratively it'll be brain i'm brainwashing myself with this content because i listened to so many hours of it and walking back and forth and the two big concept the first concept they that they said was you're either gonna be your own best friend or you're gonna be own worst enemy so fit you figure out you first you know like you think that the world's happening like for example you you think you got cut from the basketball team and you all this stuff happen externally but really it's it's you you know and and that was a very hard message to hear because i was like wait what do you mean i had all these excuses lined up like i wasn't tall enough and i hadn't started playing early enough and my parents didn't get me and wrestling early enough and all the stuff it's like nope you don't get to have any of that stuff you gotta it's like let you gotta you gotta get rid of all that and just you gotta accept total accountability for your life and that was absolutely brutal and i realized they were talking about me and i wasn't doing that and i was i was exactly who they were talking about so if the first thing is kinda get out of your own way the second one was like figure out what you really want and i give brian tracy the most credit for this about like how to set goals and i think he maybe the best you know at least back then was the best in the world at setting goals and so i literally would write down my goals every single day multiple times a day in in high school and it was just incredible the combination of those two things it's like pretty undefeated formula you know get out of your own way don't allow yourself to make excuses and then write down what you want be super clear and then and obviously you gotta go do this stuff you write down but that that formula was like really powerful and there was just something in me i guess that wanted more than what i had and so i so i just kept plowing through and then and then the story is definitely not even close to linear i mean everything you could imagine goes wrong you know i mean i i i wasn't great at wrestling i i cut a ton of weight in wrestling i mean i was a hundred and twenty five pounds at six feet tall i mean do do that math and then and then without alpine i mean our first fund lost money train my savings account then we started connor our way back got smack by the great recession during my savings account again you know it was so it's it's definitely not been a linear story at all but i think the this story is just one of like being clear about what you want and then just this crazy amount of like persistence i love that i wanted to switch gears and ask about ai so what the hell what are we supposed to do so you know like five years ago if if i advising my cousin on what what to i'd be like go study computer science i mean like the technology curves only go in this way learn to code you'll be you'll be set now they're graduating and they're probably like you know you yeah hate the uncle now because uncle sean told him to go and learn to code and maybe that maybe that's irrelevant maybe it's super powerful we can't tell what either way yet and so there's all these kind of there's all this uncertainty i wanna hear from you kind of like how do you see the world in the market and like where do you see opportunity where do you see destruction and where do you see over hype i want those three categories from you opportunity destruction and over hype okay i'll start with over hype how about that you know i i i was i graduated from business school in ninety nine which was like it felt like this exact time right now but it was the dot com era that was the time when you had like pet food dot com and web van and all this nonsense i think the i think there were four hundred companies that went public and the only one that i'm aware of that survive amazon maybe ebay but it was like it was a blood bath and and so people were right that the internet's gonna transform the world and look at us right now we're on a podcast having you know over wifi and by the way i can order door dash just like web might have wanted to do insta right you ideas might have not have been terrible but exactly the way they were burning money and and you know that was and you know you think about today i mean your your mobile phone and you think about like imagine just your wifi doesn't work for a week good luck you know like that so it transformed the world more than people could even imagine back then but there was a lot of like false starts and hype that people didn't really know where to place it and they kinda misplaced it i think that's kinda where we are in ai and my example of i'll just just to backup up i think there's kind of four places you could play an ai you could be in the infrastructure layer which is really you know all the chips and data centers and energy and you know that's a very exciting area that's gonna have growth first as long as we can see then the next is the large language models there's really not a lot of those so you know i don't know that you can really play there unless you're a big business even investing in those like you're already paying a price that assumes success for those so i don't think that's really that interesting then there's the app layer which is where kinda all most of the venture money's is going and then there's the use case layer which is your customer you know like a hvac company and you're gonna use ai and i think and and and that's you know that's why i think a lot of these venture firms are jumping into these ai roll ups because they're realizing that the first three layers are kinda tough and they're gonna play in that fourth one but where the hype is is the third one which is the apps you know i'm gonna be an app that i'm gonna help law firms settle their cases faster i'm gonna make call center software that's gonna allow you to not use humans or i'm gonna whatever i mean there's a million of those applications i think that's where a lot of the hype is we we see all these companies as vendors to our businesses so we they're they're pitching us all the time these venture backed apps and they'll have two million of revenue and a five hundred million dollar valuation and they're gonna go to zero like they're gonna be worth absolutely zero but a lot of them are a lot of them are getting like huge revenue fast are you saying that you think some of those guys are gonna also go like is it is the churn gonna be so high they're gonna go to zero i think that you have to say like ultimately what's the barrier and what's the moat that they're gonna be able to build there are there will be apps that will be successful just like there were dot outcomes that were successful but they're gonna get attacked by above and below you know they're getting attacked below from the companies that can have now they can build their own stuff they're gonna get attacked also from the l who are introducing interfaces and new products that that are like literally just taking the business some of these apps so there's gonna be this constant pressure on them i think if you can build proprietary datasets sets which is harder than it sounds or you can build really deep interfaces with your customers which is also harder than it sounds those are those are mo you can build but really i think sometimes what you're really you know you might be six months ahead of where the l are gonna ultimately go and that you can make a lot of revenue for a short period of time again you going back to the internet there was a ton of businesses in the in the you know nineties where it was like get your marriage license online and those business made a fortune and they grew really fast hundreds and they were growing at hundred percent plus a year they were until google just absorbed all those rents you know i like that and that's a little bit of like the analogy of the elements i think absorbing a lot of the rents so i i'm not making a blanket statement that all apps are gonna fail i just think that's you ask where i think things are over hyped i think that's where they're over hype today's episode is brought to you by hubspot did you know that most businesses only use twenty percent of their data that's like reading a book but then tearing out four fifth of the pages point is you miss a lot and unless you're using hubspot the customer platform that gives you access to the data you need to grow your business the insights that are trapped emails call logs transcripts all that unstructured data makes all the difference because when you know more you grow more and so if you wanna read the whole book instead of just reading part of it visit hubspot dot com and what what about in your world there's a bunch of like ai roll up so it's like oh let's go buy these service businesses smash some ai baby let's put some ai in the front door is there a let's put some ai back there let's lift shove some ai under there right it's like it looks like me with the thanksgiving plate and i'm just trying to put mac and cheese everywhere there's like we're gonna buy a company we're gonna throw ai in it it's gonna be awesome is that a good strategy i think the reason that people are approaching the strategy is because they're probably seeing a little bit of what i was describing about the app layer and saying gosh i'd rather be the person using the ai than someone jet you know developing it so i think that's why they land in these ai roll ups i think you gotta be careful i mean we've been doing roll ups for fifteen years and ai is a a huge thing it's important depends on the industry of course some industries are ai is a much bigger factor than others but the other basics of like getting the talent right getting the company's right integrating doing the transition management having your workforce stay on you know doing training recruiting those are really the core elements the technology i mean here's probably a hot take i think the technology in many many industries is gonna be is gonna be comm you know like like i'll give you an example i'll give you a real example in property management we happen to be in property management i know there's a been a bunch of ai native roll ups launched by venture firms and property management what tech not like what's their real advantage like are they gonna have technology that's better than anyone else i i would say the answer is no so what's the what's the mode than exactly the the moat in property management is all the stuff i was mentioning before you know hiring well building you know good good cultures retaining recruiting but but the technology at least in that particular segment gonna come through the i think the software companies are gonna and and so we're we're all gonna have access and this is this is my take you know it this isn't i mean there there can be other opinions on this but i think ultimately i think most people are gonna have access to the same technology so it'll be a tool and it'll help everybody but it's not gonna be the thing you know it's not gonna be like they'll real differentiator and and so you so like i i still would go back to say if you wanna win in ai roll you gotta win and all that other stuff i was saying yeah that makes sense i i think what some people are doing which is not really the roll up part of it but you know you go buy a property management company that does six million a year in eb and then you use ai to make the business more efficient and now it's doing eight and a half million dollars in eb and you're priced at a five x difference you've created ten million to fifteen million of value just by like running it more efficiently and even though another property manager might be able to do the same exact thing doesn't really matter plus most property managers are gonna be slower to adopt ai then like you might be if you're really bullish on this i i think that's the thesis like what you just described is the thesis and we'll you know we'll see how it plays out we'll see like i'm i'm sure there will be some people that execute really well and have some version of what you said it probably won't be as dramatic and then it's just like where the rents go and do you know just how much that rents ultimately get passed down to the consumer i don't know that you necessarily win on technology per s so you must get this all the time if you're teaching at stanford i'm sure somebody's raising their hand and saying hey i graduate you know next semester what should i go do like where should i go i'm a smart hungry person who wants to be successful you see the landscape and you know what's going on where should i be going what should i do what's the opportunity i would say if i were graduating right now i mean knowing everything i know now i would go do a services roll up because i know how to do that it works really well i think it it i think ai is a tailwind i do that in an industry where you can build real mo and stickiness with the customers not all industries allow that what does that mean like services your time talking about like pest control what are we talking about here like take wealth management for example you know if you go into that business you're like okay i'm helping people buy stocks or whatever but what if you were helping people buy stocks and you were doing their trust and you were doing their taxes and helping them with all their state planning and anne anne anne anne that's your mode against ai it's old fashioned stuff it's it's your mode against ai is like the deep deep relationships with your customers so i would say go into something where you can really build those kind of customer modes and then ai is nothing but a tailwind for you because your customer doesn't care how you're doing your back end you know but i would just be playing around that i think it's like it's gonna be a language that i would advise anyone no matter what age you are but it's certainly if you're a young student graduating like you wanna know that language extremely well you wanna speak that language because that'll also allow you to look at an opportunity and say okay i know i could do this with it because i'm so fa all in these tools so i think so sean and i have both started companies and without sounding to like grand os so i think that sometimes we view ourselves a little bit artist and creative more so than like good or even interested in like financial models and things like that and and because of that i think it's partially because i was jealous and partially because it's true that i thought that pe was kinda nonsense not in the i thought it was very effective but i thought like well buying a company and firing a bunch of people that's not the only value creation is that is for like the the owners of the pe p firm not necessarily like the betterment of the world which there's a million examples of why that's totally wrong but i think what's interesting about you is you're sort of the in ent of that where you're putting out this content that's quite soul and when i talk to you and and when i see your talks i'm like this guy's got it he makes me feel good and yet he's in like the most soul industry because you gotta be good at both right you must be great at the ruthless analysis of business and finding the levers cranking out that gross margin and doing doing all of that stuff while still like clearly not getting not not becoming what the car that sam's yeah you know like if i had to keep it really simple i would i would say like let's pretend for a second that i wasn't interested at all in being a force for good and i was just interested in returns i'd run my business exactly the same way a lot of it is for me is like it's it's having the confidence in building something that's gonna be durable in and and enduring so like i'll i'll use a real example let's say that i have this strategy i i won't use any names but let's say i i'm a i'm a software buyout firm and my strategy is i go into a business i buy a software company i fire people in a double price i'll make money in the short term but you look at a time like now where ai is coming like you really want the the companies that are gonna win in software have incredible teams that are on top they're they're making you know agent products on top of their software and they're gonna they're gonna they're gonna have ai b of this incredible tailwind for them and you know if you if you just destroyed your your your team and your cost structure you're gonna get attacked from from both sides from your customer side and from you know the l so we found that building things is a lot more durable then ripping things apart because you can make like one and a half times your money or maybe you maybe even two times your money ripping stuff apart if you're lucky if you time the exit just right but if you actually build something times your friend and it could be i mean you can make a hundred times your money and so like i i do think a lot of it is time horizon i think underneath that is even deeper like why are you in this business in the first place like if if your goal to be in the business is to make money and you wanna do it as fast as possible then then maybe that behavior does flow from that but but in terms of just being good at private equity i don't think ripping things apart i don't think you're gonna be the best in the world you know doing that what's the best deal you guys have ever done what's the hero deal you know we've had we've had a few really really good ones that rhyme with what i'll describe but you know you picked the plumbing and hvac example at the beginning that's one of our best deals i mean we we back to people that we we hired right out of business school they they joined our ceo and training program they went through that program they became the eventually the c ceos of the business we bought a small plumbing and hvac business that had like eight million dollars of earnings this year that business will do five hundred million of earnings how long how many years did that take it's a six years six years to five hundred million dollars you you have to break that down how hundred million dollars of earnings not earnings yeah yeah three dollars three billion dollars of revenue five hundred million of earnings in and we i think importantly that that happened without us putting in any additional money wow so so an initial buy of like what thirty million or something like that how much put total of fifty in the first deal we might have put in like that first year like another maybe nine or so that first year and then that was it then we never put in anymore what was going on was it that you just you guys just went on an acquisition spree and picked up all the mom pops or was it that they weren't doing any sale they didn't know they didn't have a good website like what was what was missing that you guys added we got we got fortunate that the third deal that we bought we partnered with this guy so the ceo's are named asia brown w and then the the third deal we did we partnered with this guy named ira pruitt it who was like the the g old hvac veteran and just this wonderful guy he had seven of his kids in the business and like and he gave us a lot of the playbook levers and then the next deals after that we were adding to that playbook so eventually we just ended up with this amazing playbook about how to run those businesses and then we began that talent program we were talking about earlier where we started attracting a lot of incredible leaders a lot of not all of them but a lot of them veterans and and then that allows us to go buy businesses that other people can't buy because like really the line of people that wants to go by a twelve million dollar revenue plumbing business in the middle of louisiana that requires a management change is short it's short you have to address this so you just you described one of the guys i forget his name as a g hvac guy which in my head i have them i have a picture in my head of what that is so i googled google so i'm i looked up the company talking about is called apex service partners i assume yeah and i looked up will mats sean go ahead and look up will mats and yeah he probably looks like the opposite of a g he's a baby face guy honestly he he looks and he might actually be twenty years old i i think he he looks very young and he worked at jpmorgan and went to wharton and worked at mckinsey so the g guy is named i pruitt it and and the combination of a aj will and and ira is like amazing so that's what i wanna ask about i wanna ask about what makes this such a high functioning team to go from eight million to five hundred million in profit teach me what makes such a powerful team and what attributes are needed in order to grow a business that fast because these guys look like the fairly odd couple they are they are an odd couple so the combo in this t in this in this particular instance the combo is a aj is incredibly focused on the talent and he's the one that rallies the navy veterans and flies around and gets them excited will does it the finance and the m and a and a lot of the hold c functions and then ira is the one that's like hey this is this is how you actually run a plumbing business here's the playbook we gotta implement so that that's what how the combination works what they all have in common and then to answer your question like what we look for in these leaders number one is just this white hot will to win and that's more important for us we found that to be way more highly correlated than like you know any other factor iq or background or experience but like each one of these three in some version of their life has just demonstrated this crazy will to win we learned this from a book called who which was the sequel to the book called top grading and it's about basically how to hire and so we do like a three hour interview and you start with the person in literally like in high school and you go through yesterday and you're just walking through their background it's kind of a conversation just like this it's not it's not super formal but you're you're collecting data on this person and or you're in in and wool case you know you'll or or ira or really any anyone that had gone through our program you know you're just gonna see example after example of like hey this thing went really wrong and it was a bummer and i here's how i handled it i got i got up you know i plowed through you know i put my shoes boots back on i kept marching forward and you're gonna see that again and again and again we always say like if it'll leap out of that interview like and and if it doesn't then they probably don't have it so speaking of deciding what to do in a bunch of your talks it's basically like i call it my rich life it's like how to live a rich life you call it an asymmetric life and you and you've done a bunch of different talks in on similar topics you have this cool thing called the genie question which i figured exactly how you phrase it but it's basically like what would you do if you couldn't fail and it's an exercise to basically get people to decide truly what they want because a lot of people listening to this sean and i included were ambitious people and sometimes we'll be we only listen to where the where's the money or where can i fit into some traditional sense of success along with a lot of your stanford guys they all think the same thing like we're more fear talks out yeah like i can't do that like i was supposed to like go to business school i gotta go to mckinsey and then i gotta do this i can't do this other thing so you have this question of like what would i do if i couldn't fail what would you say is the most common reason why people are really bad at answering that question so there's a few a few things i'd say first is i think people don't ask the question so that's that's probably ninety percent of people it sounds crazy but they never ask themselves what do i really want you know at and they haven't given themselves like the permission to even think about that or or or like i think it's almost like the highest form of self love is to trust yourself enough to say i'm gonna be on the path that excites me you're asked why people fail safe so i'd start with people haven't given themselves the permission to even think like that so let's let's assume now you have done that but i would say for your audience like give yourself that permission you know to you're you matter like what you what you get excited about in this world matters what are some example answers to that question you've obviously helped a lot of people go through this process i assume it's at at your when you teach at stanford i'll give you a couple just from my class in the last couple of years last year i had a student who's building a theme park in dallas in texas like literally a theme park let's give a a dream well what's that call yeah i think it's called text this land i'm not sure maybe they haven't finalized that as the name but but that was her thing and she's going and doing it i have a student dish year who is he is brilliant he could go to any consulting or finance firm he's going to india where his his families from to help them build free hospitals and like that is his thing like it's super clear that's that's his answers to the question i give him so much credit that he has a courage and commitment to go do that and it's gonna be very hard but that's his answer you know what you guys are doing you guys are building a podcast that's like really helping people and you can just tell from being on this podcast you guys love it you're having a blast like you're doing it right i mean you're you're doing the thing that you followed that energy and give yourselves permission and be like hey that's a good place and i but i almost hate saying it that way because i don't want people to think that there aren't doubts yelling at us or anyone who's successful all the time because i think in another talk maybe the same talk you were like i've do this exercise an alpine is a twenty billion dollar fun and i think you said for the first fourteen years you thought it was gonna fail or you weren't confident that i forget the phrasing but you you weren't confident that it was gonna be a home run yeah i think all of us have these like crazy limiting beliefs like that run through our minds all the time that are like beating us up with like i shouldn't do this i have to do this i i should do that i might fail oh no and the thing about that is that's very normal like having that that fear and the those doubts it's hundred percent normal everyone has it it's just what like what do you do with that and and i think one of the things i try to help my students do is like we have an exercise word literally we like spend an entire class writing all that down like we like like empty your mind of all the limiting beliefs that are getting in your mind just let them flow out okay i might fail i might run out of money just no one might watch my podcast you know alpine might not make it ai might not work whatever it is write all that stuff down and then and then once it's down on paper you've removed it like it does the most damage you when it's in your subconscious and you don't even realize you have it so if you're if you're walking around with some fear and you don't even know you have that fear it just looks like action and paralysis and i'm not gonna go forward and i'm gonna say stay stuck but once you have it done on paper let's say one of your things is i wanna start a company but i don't know how i'd pay myself or pay my loans or whatever okay so fine you for if if that's in your head you're just not gonna start a company but if you write it down you're like you can rep rephrase and say how would i start this business in a way did i could service my business school loans and still pay my rent you know and now that's a problem to be solved as opposed to a fear that is creating complete paralysis and so i like the act of just going right at your fears doubts and living beliefs that's a it's a great exercise i highly highly recommend that i also just think like the the you know you have the blank page and like there's a lot of things you could do with the blank page because i think you said it right i think nineties low probably ninety nine percent of people don't really take the time to examine their life or think about what they really want and actually go answer that hard question because it's a lot easier to scroll it's a lot it's lot easier to worry about what's going on in iran and then what's going on in the market and what's going on everywhere else besides you know here because you know those are those are arms length away whereas it's very very personal to to be here thanks podcast is brought to you buy my friends at mercury they make the world's best banking product i think you know this already i used mercury for all my businesses i think i have like maybe seven or eight businesses we use mercury as our business banking across all of them and now they actually just launched a personal baking account so i have my personal account there i moved off of wells fargo in chase i'm just all in on mercury why i like products that are easy to use i like products that get me and the problems that have so like it very easy to make a joint account with my wife very easy to been up virtual cards one click and i get savings yield it just has all the stuff that i need in one place so if you're looking for the best banking product on the market it's definitely mercury i will fist fight anyway to who dis me on that go to mercury dot com slash personal and learn more mercury is a fintech not an fdic insured bank banking services are provided through choice financial group and call them an a members fdic for the person who's like i wanna build the theme park in texas awesome i wanna build the hospital in india sounds great i've been in that position before where it's like i'm ready to have that answer but i have no idea i'm i'm kinda saying one out loud doesn't even feel right i'm making it up and i had to i've taught myself to basically go through this process of sort of dabbling like you know just take this mentality of a dabble like how do i go and run either lightweight experiments or brainstorm or just not feel like i needed to commit right away but like go try to see where the energy is how do you advise people to if they don't have the answer of oh this is the thing that would light me up like maybe you don't even know where do you go to figure that out yeah i love that well here's an neat here's one idea is maybe don't have one thing make a alyssa like nine things that would light you up you know here okay i i i think i'd like to go to india i also think i'd like to restart a podcast maybe i really wanna i don't know become a dj you know i know what write down your things and then like you said could you know keep your day job and devote x number hours a week to testing those things out maybe you're going to do some work on it take some classes you're gonna start hanging out with people that do it maybe you're gonna get trained maybe you're gonna do podcast and nights and weekends and see if it's as fun as you thought it was and you're not looking there for this is what i think it's really important you gotta you gotta be careful that you're not gonna get a false negative on the outcome so like a student who says okay i wanna start a company so i'm gonna spend five hours a week this quarter and if i get traction i'm gonna do it like no no no you you're gonna get no traction like five hours a week if if you could build a business in five hours a week like it wouldn't be worth bill you know so it's not that you're looking for like does it light you up it like in that five hours a week was that the five hours you were looking forward to that all week or was that five hours where you were like kinda like oh man i gotta do five hours on this thing you know like that's what i think you're looking for in those like experiments because by and large if you are lit up and you i mean you plus being lit up plus a long time frame there's very few things that won't yield to that and that was me at elk you mentioned you know it took fourteen years for us to know was gonna succeed yeah but i was fired up i was willing to do it for a long time and i was in it i was excited and like most things will yield to that formula with enough term was that right in year fourteen were you still like tb if this is gonna work and and what were the numbers can you say whether you what your numbers were then because i would think you would you're were financially successful at that point no well we lost money on our first fund so fun one was two thousand one we lost money that me that how'd did you get a second fund yeah if you lose money on the first one well we were we were very transparent with our investors about what was going badly what we were fixing and what we were learning so they were very like they were like okay we see her on the right trajectory you're transparent you know at one point that fund was marked at forty cents we ended up returning like ninety five cents so they appreciated that and they gave us another shot thank got you know and but but what i was say is so we had fun one was it you know we had that anchor for more than a decade because these didn't you have to go in buy the companies you run the comes you sell the comes it takes probably ten years and then fund two comes along and so it was kind of another ten years after that after fund two where we actually had some success you know where where we could have the outcome of that fun you know proving out that it was working and so that that's the fourteen years i talked about but to give you the numbers we were fourteen years in i wanna say managing maybe two or three three or four hundred million dollars or something like that that sounds sounds it might sound like a lot but we're trying to run an entire team and we have all these portfolio companies and well let's ask the question so we called the podcast my first million and yeah we stuck started there's a tradition we would always ask every guess when and you know when and how did you make your first million and we all we like to really put that reference because a lot of times the answer was longer than people think you try to get you know when you're twenty years old do you think it's gonna be when you're twenty and a half you know think it's right there and it takes a lot longer it took me i was thirty when it happened took sam i think same thing thirty thirty one and so it takes a little longer and also we talk about how did it feel like well do you know what what did anything change and what answer i love i that's such a great question all those are such awesome questions because it's so not what i thought it was gonna be so couple different ways to answer the question one thing to be a millionaire on paper it's another thing to have a million dollars in the bank yeah they're different they're different feelings as you as you guys probably know yeah one peso of rent one dozen yeah so i'll say a million dollars in the bank because i think that's the that's when i actually felt had a million dollars yeah and that was the that was year fourteen that was one we oh shit that was year fourteen of sir so i'm i was twenty nine plus four so yeah i'm in my forties i guess when i when i made my actually had a million dollars in the bank but the but to put that in context by the way that is pretty slow love like having a having like a pe firm your job is to get good returns and to not having like that well yeah i i wanna i wanna say what we had what's called a european waterfall which means we have to return all the money in the fund plus an eight percent return before we take any profit and so we had we had to first of all fund one generated no carry at all and then fund two we needed to sell it was really the very last business in that fund that we sold until until we got paid so it was let that's what i saying like the part about pay on paper versus in the bank you know i was i was a familiar on paper before that but actually in the bank it was it was fourteen years but i wanna i wanna talk about wealth for just one second the interesting thing is like i felt wealthy way before that because my denominator is has always been small so you know like there's two parts of of wealth there's the numerator which is what you make in your denominator what you spend the biggest mistake and this is something everyone who listens to this podcast can benefit from the biggest mistake people make is the denominator and they so they they go like here's a perfect example i really wanna start a business i'm gonna go take this other job first and then i'm gonna make some money and then i'm gonna and then i'm gonna start my business okay that's what they say never happens because they go take that job then they get a new house then they get a new car then they move to this other city then they have kids then they have kids schools then blah blah blah blah and their denominator is keeping pace or even surpassing their numerator and they're never they're never actually feeling wealthy and ironically they're creating less freedom every year you know because there's fewer fewer things they could do to maintain the lifestyle and there's no way they could they could start that business so probably like one of the most underrated things that happen in my life is my wife i married my wife who was a elementary school teacher and made eighteen thousand dollars a year pre tax and like our first apartment that i think was like nine hundred a month you know she thought it was the taj mahal you know and like so we never never the irs just send you money if you're making eighteen thousand tax do you actually just get a bunch of money every april that's awesome they literally should they they should i mean she would drive her on for like thirty minutes to save you know two dollars on parking i was like okay well we gotta not do that but but but that so they had the denominator i so i felt wealthy way before that because i i just had a big cushion between my what i earned in my expenses so there's this story and i don't think at this point that this is true but it's ruben carter have you guys heard that song the her hurricane by bob dylan yeah it's basically about a boxer who great movie too yeah it's a basically a black boxer who is in incorrectly imprisoned for triple murder and he didn't actually do it but it was like a racist thing and there's a story that's part of this that i at this point i think it's fake where he was like i don't belong in prison and i'm gonna take cold showers every day just to remind myself at this ain't home i'm only here for a minute but i'm gonna get out eventually and like i said i don't think it's real anymore but i heard about that story when i was like fifteen years old and so when i moved to san francisco to like start things and like i remember making a little bit of money sometimes and then i go for long droughts so i wouldn't wouldn't make any money because i was trying to start something and i was like when i when the money comes in i still gotta take take cold showers because i can't get used to this i'm not out of it yet and so i was always reminding myself like take cold showers we're not home it's do not get used to this but i remember there was freedom in that i love that i love that and the freedom part is so true sam they know like the steepest curve of utility with money was going from like the first one was having peace of mind of like not having to worry if i had to fix my car whatever you know some some unexpected expense happened but i've got money saved away and i don't have to stress that was that was actually very steep because that wasn't always was true for me you know like my car would break be like oh no you know and and and then the next the next curve that was really steep was i have enough money to do what i really wanna do with my life i mean how magical is that like that's really where the utility it's flattened out after that you know so that's really where the utility of money comes for me but when you're giving advice to your students what do you tell them that number is for example some people say that like financial freedom is twenty five times your annual spending some people have like some people will say like as long as you have six months of savings like that you're good like is there like a like a threshold that you there is i i would say having three to six months of savings is level one which is like the peace of mind because then you know like i said you have some unexpected expense and you're you're fine you don't you don't lose sleep over that you know you don't have to decide if you're gonna pay a rent or fix your car that's like three to six months of savings that doesn't sound like much it's dramatic it makes some huge huge difference in your life and then the next one i think it's lower than that like when i say freedom i don't mean like the like okay i'm gonna live off the interest of my money i have in treasuries you know that that i'm okay sure that that's nice if you get there but but i'm not even talking about that level i'm talking about i'm spending i'm still working but i'm spending my day doing something that i enjoy that is the job that i wanna have i think that's probably nine to twelve months of savings it's not it's not that so i i i think both of those are really within people's grasp people who are like oh i i really wanna get to the like you money where i never have to work or anything and then what you know like then are you gonna like then what you gonna do and i wanna go back to the other question you asked did it feel the same that you thought it was gonna feel no it did not so when i actually had wealth and i'd had worked and i go back all the way back to the lawn mowing and the all the sacrifices i made and getting good grades and getting the right school and then getting the job and then suffering through fun one and then finally getting on the other side and then finally getting this big liquidity event it was it was like the most disappointing and it like it it it because because i thought it was gonna change everything it didn't really change it hardly anything and and like what was still there was like the maybe the thing i'd been running from which is like i'm not enough you know like well so like what what like career what career milestones since everyone listening to this is interested in business but it could and families it's too easy to answer but like what career milestone actually did move the needle unhappiness if it wasn't like a financial thing there anything out like for example you probably have hundreds or thousands i don't know how many employees you have whatever it is like you've created like an institution has that made you feel good what what what teaching at stanford what career milestone have you had that a listener can like be like okay that's like a cool idea on how it act he actually had got happy via career good question the two ways to answer it first is you could one answer is you're not gonna solve an internal problem with the external outcome so like if if i feel like i'm i'm gonna be enough when like whatever you answer that with is gonna be disappointing to you you know so that on on that answer it you can't kinda get there with the career and and you you have to at least for me i had to do a lot of internal work therapy coaching journal meditation and and start to just like let go of this you know i'm not enough part and that that's that's probably created more happiness and peace of mind than than the career the probably the career achievement that i remember the most it wasn't even really an achievement it'd be like my three partners and i up in napa you know together working through something where i would just have the self awareness to look around and just be like wow this is this is really special you know these are people i really love we're doing something we love and we created this together and it so it wasn't like a big wire came through or something it was more just like these little moments can we get some secondhand hand smoke therapy from you so you know you talks about like doing the work kind of like internal work therapy coaching reflection intros intersection all that good stuff you know a lot of people either haven't had the time or don't have the the sort of guts don't make enough time to do that sort of thing but i think you if they're listening right now we can kinda benefit they might i remember we had daniel na mcgraw and one of the great poker players come on the pod and he told us nothing about poker i don't mind anything about poker but i do remember he said the most impactful thing in my life was a mentor a lawyer guy who was really light i thought he lived life well he told me i should go to this event and i went to the self help event i hated every minute of it but they made us to this one exercise about like total radical accountability where you write the worst thing that ever happened to you you rewrite the story where you are the cause of all of that thing you own the the the entire thing yourself you don't blame anybody rewrite the story he's like that changed my life and so like you know i almost secondhand hand got the benefit of going to that seminar just understanding that principle than you know then taking it and doing it myself i'm curious were there any kind of breakthrough really important kind of realizations or exercises or questions or conversations you had anywhere along the way that we would benefit from yeah a hundred percent and i'll give you a couple things that i learned so one is almost all your battles that you have are you against you it's true it seems like this whole thing is happening out there and you're you know you're winning this or you're doing this and like but your remember all that stuff that happens goes through this filter which is called like the store you're writing about it then it goes internal and like you can you can if the easiest part of changing your life is to change that filter you know it's it's way easier than changing what's going on out there it's a lot easier to change how you're interpreting it and so you can either be your own worst enemy or you can actually be your own best friend and i can tell you that i was my own worst enemy like it did it almost didn't matter what was going on out there i would look for what was wrong i would have a bad story about it i would beat the crap out of myself and then i would tell myself another story which is me beating the crap out of myself is why i'm successful total bullshit it was just what made me miserable it's like running through life with your foot on the brakes so one is just that awareness like that wow i'm i'm having more to do with my peace of mind meaning success happiness than anything that's happening external i think if you really think about it you'll realize that's true and then the and then the formula for like actually program it it'll actually changing that i finally understood like in a simple way why to meditate and and how to be how to be how to make it work and and how to have it actually impact your life so you go to the gym and you work your bi and your bi you break it down it gets stronger and then you know it reg grows and is bigger so meditating is very similar accept the muscle you're working is you're basically your mind and your your self awareness as your presence so you pick your meditation you're counting your breath you know that's simple one right you just close your eyes you count your breath and then your mind starts going off and talking about thinking about whatever you know i messed up this conversation or should do this or i'll got some margarita this whatever and then you notice that and you it might take you a while but you you noticed that your mind just took off and you bring it back to your breath and you do that again and then happens again you notice that you bring it back you're basically building this muscle you're building a muscle the muscle is like i'm going to two things one i'm separating from my thoughts i'm realizing in those thoughts that are happening aren't me i'm creating this muscle of observing my thoughts versus just you know succumb to them and second and even more powerfully i'm building the muscle being present like if you wanna have a great life like be present like if if it if everyone in the world was present and here right here all the time and not in their head like people would be like in this great state of joy like and so building that muscle of of watching your thoughts coming back and being present is the same muscle of being your own best friend because you're because you you're you're you're seeing like oh wait i see that this thing happened and i you know maybe i didn't answer this question really well or i could let that thought go and just be here you know and like doing that over and over well it's a great reframe right because normally if you meditate and then you're you're sucking at it you know your mind is drifting and you're not doing it you're not having fun with it you're like i'm i'm bad at this this is not working it's like going to the gym and you know you pick up a way that the those last three reps are hard but you're at the gym you know oh that's great i did exactly the thing i was supposed to do i was building the muscle if i if i just went and i did curls with a three pound dumbbell like i wasn't doing anything then i shouldn't have even been here and so ref framing the meditation of the failure and meditation as more of great i'm building them i'm building this practice this muscle i'm getting better at doing that and how do i get better by i'm feeling at it hey can i ask you really quick before we wrap up about parenting i saw that you've got three kids you blog about how one of your kids went to college do you put do any of these exercises with your children and at what age did you start doing that or were they like you're my dad i ain't listen to you no matter what all of the above my kids are definitely like you're my dad you know it's funny because in most circle like worlds i'm i'm you know i'm a professor i'm running a firm or whatever at home i'm i get you know i have teenagers like they're ruthless right they anything make fun of everything i do and i i i do it in a in a way that's not maybe as obvious but you know i'll give you a real example it's easier you know my son was like trying to decide his he had a really tough year's freshman year and he was deciding if he was gonna play the cross the next year because he had a tough season and it didn't call out we wanted and it was brutal and so you know we i did a exercise with him and we said i said okay blake like let's go through and talk about like like i want you to play out your next three years as though you didn't play lacrosse like let's go through it like i want you to really like think through k we you get home from school here's what you do you know here here's the cross season comes along your friends are playing you're doing this now i want you to go through and you go through the season but it's hard you do this and after that he's like i i definitely wanna play the cross like i know for a fact that's what i want like by the end you know when i get done with my my four years like i wanna have gone through that and so yes i use these tools but it's it's more letting them kind of it it's in service of their their lives and and it comes up more like as when they ask almost when they ask for it versus me saying okay it's tuesday we're gonna sit down and do this having said that my kids also watch you know your kids watch what you do more than they listen to what you say and so you know my kids have goals they work hard they write down their goals they they try their best i like to think but i think a lot of that just comes from osmosis what what about your employees because when i listen to your stuff i listen to your stuff because i'm looking to change my behavior most people don't change their behavior though and you talked about hiring these these operators these like people who have these wonderful backgrounds and who have a track record to where they have this will white hot will to win are you able to change any of their behaviors ever when you hire someone or are you looking for someone who already has it so i'm definitely not looking to teach someone how to be motivated or to care or to run through walls like i can't teach that however we've bought eight hundred companies i've been doing i've been in private with thirty one years we built some incredible businesses so we have incredible frameworks and tools and playbook that we use that have been battle tested and they're if one of the things we're screening for is are they do they have a growth mindset are they open to learning and so our if if you look at our companies that we have in our portfolio there is a pretty much a one hundred percent correlation between how much of the playbook they're running and how successful their businesses are so they're coming into alpine wanting to say hey look i'm thirty two years old i wanna run through walls but i don't know how to run a business can you help me do that and and that's a great partnership because we have so many great tours now now they will take our playbook and they'll make them their own so five years from now they've added to it they've they've you know changed it they've they've they've made them better and they've made them work for them but but we're definitely providing a lot of the foundation of like here's some amazing tools you know like we have kai projects we run we have process mapping we have a one page planning planning tool we use have ever published this and can't i have it it's just like colonel sanders chicken recipe or is this yeah i'd be i'd be happy to share with you it's probably come through in some of my materials but but yeah we've i mean we've we've we've definitely cod a lot of this in over the years and yeah i'm happy to happy to share with you that's awesome man you're you're you're wonderful you know i don't wanna compliment you too much because i've i don't wanna make you uncomfortable but sean and i have this we have this joke where we we call it the total man where like you know we interviewed all these amazing people we've interviewed people who are d a billionaires we've people who whatever so and like we're always nineteen year old just oldest his company you know the whole whole spectrum the whole spectrum and we're always looking for someone who's like this combination of a good parent a good husband a good business person is interesting it looks like it seems like they have fun in life and is kind of one another and i think you've checked a lot of the boxes and it's really cool talking with you because you you i think you're a good inspiration of what like a person should aspire to be oh thanks sam that that really means a lot i i really appreciate that and i really admire you guys a lot and i've i really enjoy your podcast and and this has felt to me just how you said it would which is just hanging out and talking about fun stuff that we all really are excited about and i'm really grateful you had me on happy to come back anytime is really fun awesome thank you so much for doing it where should people where do want people to follow us youtube kind of your main spot or instagram or take talk about yeah probably probably instagram and i mean i'm on i'm all all the platforms but i'm graeme c weaver at i think that's my that's all of i think i'm the same per same username at all of them so yeah well badass brother we appreciate you coming on that's it that's sa mod i feel like i could rule to word i know i could be what i want to put at all in it like a day's off on a road travel never looking back if you made it this far then you're gonna love what i'm about to tell you so there's this amazing entrepreneur name neil bot patel he's been on m mfa he's one of our favorite guests and he has a podcast is called marketing school and it's brought you by the hubspot podcast network marketing school brings you daily actionable and digital marketing less learn from years and years of being in the trenches they have over a hundred million downloads in over twenty five hundred episodes marketing school gives you bite sized marketing wisdom that you can implement immediately whether you have a new website or you already have this huge established business you're gonna learn about the latest seo content marketing social media email marketing conversion optimization and general online marketing strategies that work today you can get marketing school wherever get your podcast