My response to Kevin O’Leary | Shark Tank

What's up guys, it's Graham here. So let me just start off by saying this: I've been watching the show "Shark Tank" back when it first came out in 2009. For anyone who's not aware of the show, it's basically where entrepreneurs can pitch their ideas to a group of investors known as "sharks." Then we get to be a fly on the wall to look into some really bad business ideas, some really genius inventions, and the investor Kevin O'Leary always asking for an overly ambitious royalty deal that sends people into tears.

Anyway, I've been a big fan of the show, and I found it insanely inspirational to see and hear about other people's businesses, see how it works behind the scenes, and hear the investors' criticism that people always think their business is worth way more than it actually is. In the back of my mind, I always really looked up to the sharks. To me, they were really like the pinnacle of success and what you could achieve with a good idea and hard work.

So when I found out that Kevin O'Leary was going to be reacting to my episode of "Millennial Money," I knew I had to react to Kevin O'Leary reacting to me. Because no joke, he's someone I absolutely look up to. On the show, he's kind of known for being that blunt mean guy—kind of like the Simon Cowell of business. So I knew this was going to be a really interesting episode.

Not to mention, and he's never going to remember this, but six years ago I ran into him at LAX Airport. I walked up to him and I gathered up the courage to ask him for a selfie, and he was nice enough to say yes. And here's that picture taken all the way back in 2014. So now that he's watched my video, I want to respond to him and address a few of the comments he made about me.

So go ahead, get ready for some good old-fashioned finance YouTuber drama beginning right now.

"Hi there, Mr. Wonderful here, aka Kevin O'Leary. Today I'm gonna have a look at a video I've never watched called 'Millennial Money: Living on 1.6 Million a Year in Los Angeles.' See immediately, right off the bat, he forgot to say—wait for it—'Millennial Money.' You always need that 'wait for it' in there, and for that reason, I'm out."

Just kidding! I've always wanted to say that and I finally said that. Before you start, smash the like button like I'm doing here. That helps the algorithm actually.

Kevin, the new thing is to ask people to destroy and obliterate the like button. The truth is the like button built up an immunity from so many times of being repeatedly smashed that now it just takes a little bit more work to make it turn blue. That's why now we have to practically destroy our phone and computer screens to hit the like button. Only once it turns blue may we proceed with the video.

So I'm a full-time real estate agent, real estate investor, and YouTuber. You know, I just started watching, and I thought this guy's gonna be a dick. But now, as I'm just seeing the first few frames, sounds like he's for real!

You know what? To be honest, I totally understand that. I think it's very easy for people to see a few of my absolutely ridiculous thumbnail pictures that look as though I've experienced a root canal or am in the middle of suffering from a migraine, combined with over-the-top titles with the word "millionaire" written in them, with my monthly income plastered in big bold font. It's really easy for people to miscategorize me—rightfully so.

However, in my defense, I really try to back up the type of content that I make in such a way that's educational, informational, and helpful. The reality is that many times in order to stand out or incentivize people to click on the video, to begin with, you need to go to such extremes. I try to cater my content around what people want to see more of. So I'm totally okay being a little bit shocking for people who only see a title and a thumbnail, as long as that means they actually click on the video, enjoy it, and then stick around for the long run.

My mortgage is just over $2,800 a month. The market value of the other unit next to me is about $2,500 a month. Then, between the equity I get and the tax write-offs from using the garage as my office, it basically works out to be a free place for me to live.

"Okay, that's pretty shrewd. This guy knows what he's doing. He's basically about two properties and he's using the tax code fairly and legally to try and live in his place for free because he's profiting off the amount he's getting on rent after he services the mortgage. Good idea!"

No, it's funny, quickly off-topic here, but I have a feeling he's only wearing a suit top and then down below he's probably wearing shorts and flip-flops. How do I know this? Well, the other week he posted a video about his morning routine, and you know what? Let me just, I'll have you watch this.

"Yeah, I got short pants on and a suit top. Why? 'Cause I'm about to go on a Broadcasting Network. They're not gonna see it; I'm wearing flip-flops."

You know what, though? It's totally okay, I do the same thing! I've worn the same pair of sweatpants for like a week now. Here's proof: That's just what happens when you work from home and don't leave the house and have insanely comfy sweatpants.

I think it's absolutely ridiculous the mark-up of coffee at Starbucks and Coffee Bean and a lot of those places out there, so I just make it at home for 20 cents.

"I love this guy! This is exactly what I'm talking about. He's not an idiot; he knows exactly what he's spending his money on. He's got it down. He's very, very conscious of not wasting a single cent. Nothing wrong with that—that's very smart! Coffee is a big money waster; you get really hosed when you buy it."

See, that's been my philosophy for as long as I could remember. And here's the thing: the truth is, going and buying Starbucks every now and then is not going to make you go broke. But what I have noticed is that overwhelmingly, when you don't budget or pay attention to your spending in one area, it tends to spill over into everything else as well. If you don't pay attention to all the times you go and buy a Starbucks, you're gonna be less likely to pay attention to getting a good deal on your rent. You're gonna be less likely to pay attention to negotiating your insurance cost.

We're trying to maximize the value of a dollar. I truly believe that if you're prudent and you track the small day-to-day expenses like going and buying a cup of coffee, that is going to trickle over into other more expensive things as well, and the net benefit is going to be so much more than just you going and buying a four dollar cup of Smash the Like Button Frappuccino.

Also, designer clothing? Don't see the point in going in $2,700 for a Gucci shoes.

Now, the one thing I would disagree with him on is, you know, buying really cheap clothes. I'd rather say, look, that's okay for jeans and a t-shirt maybe, but every once in a while buy a spectacular piece that’s gonna last your lifetime. I like to buy great suits; I want to look good. But I don't waste money. All my suits are the same; I just have 25 of them. They last forever.

Okay, I'll admit, I know it's a good point about buying high-quality clothing for the appropriate occasions. He's a suit-and-tie guy, and I agree that a good-quality suit could easily last you over a decade versus my $3 H&M shirt where the collar tends to curl a little bit after the first wash.

"Alright, you got it. Oh, there's more. It's Graham as a Realtor. That it's the same fit!"

No, I'm so glad they decided to keep that part in there. I mean, that would be hilarious if just that was the end of the video. It's just me, how much money I make, and then how I refuse to spend any of it on coffee and designer clothing. Well, I mean, actually, that's not too far off from the truth anyway. I guess that would actually be pretty accurate.

The first property I bought was when I was 21 years old. It was a short sale for $59,507. It was a foreclosure that was being sold by the bank. So he took advantage of the dislocated market in 2008, some part of 2009. Housing had been crushed; he took advantage of that. He bought it out of foreclosure from the bank. Obviously, that was a great trade. You can't do it all the time, but he was able to do it because he'd saved his money.

This is something I wholeheartedly agree with. And even though we don't have a lot of these types of real estate deals today, the only reason I was able to do this in the first place is because I prioritized saving as much money as I could. Even now, I still keep the exact same savings habits as I had back then, and I'm sure whenever the next big opportunity comes up, I'll have the money ready to redeploy back into those investments.

Nothing wrong with doing what you're great at; that's clearly what he's doing here. Graham is focused on real estate, bringing in about $15,000 a month.

"But here's what you should be doing while this is happening. Because real estate is just one sector of the economy and goes through cycles too. If you're investing, diversify out of real estate. But it's very prudent sometimes to put something aside and just buy the overall market and index or something so you get diversification of your network."

Alright, you know, I think he wins, and I can't disagree with that. I think he's right. This is something I've slowly started to realize as I began making and investing a lot more money is that after a certain point, it becomes less important to take a risk for a higher return and more important to maintain your investment and have stability.

This is something that I have learned over time. I think in the beginning, for anyone looking to grow their wealth as fast as possible, real estate is a phenomenal way to go. But once you've built that up, everything after that is about maintaining that growth and not necessarily trying to maximize it. And that one for me has been a big realization.

So yes, I've already started taking his advice and I've been diverting a lot of money lately back into index funds. And my entire investment strategy right now is just buy consistently and hold—that's it.

So I started making more videos, and once I started doing about two videos a week, the growth really just exploded. It seemed like, so he's really figured out how the algorithms work and how to produce content that people want to generally check in on every week. If you have a million subs, you basically have a business; you're a broadcaster—that's what you're doing.

So he really has figured that model out. Kid's a hustler.

For anyone who doesn't know this, if you couldn't already tell, I am obsessed with making YouTube videos. But also, the YouTube algorithm for me is like this never-ending game of chess. There is very much a strategy to try to figure out what people want to see, topics people are gonna click on, what thumbnail is gonna get the most attention, how to title the video in such a way that piques people's curiosity to want to click on it, and then you've got to figure out how to keep people entertained the entire time and how long you need to make the video, and all of this is constantly changing.

I found that now what works best on YouTube did not work three years ago when I started making videos. The entire algorithm is constantly changing and adapting, so I dedicate hours every day trying to figure this out and how it works. Even though I'm far away from figuring out all the tricks, it's been an insanely fun challenge each and every day.

So right now, probably like 85 percent of my income is affiliated with YouTube in some way or another, and then the remaining 15 percent is through real estate sales or real estate investments.

"His monthly income is 150 grand. You know from before that he told you fifteen thousand of that came from his rental income. This kid is a YouTuber; he's making the majority of his income running a broadcasting facility. That's the way you should look at it; that's a big number for YouTube. You can only do that if you have a million plus subs, and he does—that's extraordinary!"

So this is something I absolutely want to address because yes, at this point, I make the majority of my money through YouTube. This began to happen about eighteen months ago where all of a sudden I started making more money on YouTube than I did from working as a real estate agent and owning rental properties.

Before that point, I was spending about 80 percent of my time working in real estate and then the remaining 20 percent of my time I spent making YouTube videos very late at night. Once the 20 percent of time I spent making YouTube videos began making more money than the $500,000 a year gross commissions I was making as a real estate agent where I spent eighty percent of my time, I decided to take the risk and flip those around and instead spend 80 percent of my time making YouTube videos and 20 percent of my time in real estate.

I got to say, almost immediately once I did that, the channel took off. I was able to dedicate more time and focus towards making YouTube videos. I was able to go and start up the second channel. I was able to talk about more in-depth topics. I was able to feel a sense of purpose and fulfillment that was so much more than just myself, and that just happened to make more money as a by-product.

Eighteen months ago, I think it would have been short-sighted and irresponsible not to take the opportunity to spend 80 percent of my time on YouTube. But again, I would not have been able to take that jump having not saved and invested the majority of my income prior to then. By the time I focused on YouTube, I was already in a position where the rental properties were covering all of my expenses.

I knew in the worst-case scenario, if YouTube didn't pan out and I didn't earn a single dollar from anything ever again, I was going to be okay.

Total cost of the car, with everything all out the door—with taxes and all of the options—everything was like 44 grand. So I ended up making money from getting the car. I actually don't think a car's that necessary anymore. Cars also have insurance costs to them; you have to store them. I'm not a big fan of owning anything anymore when it comes to transportation, but he's done it well. Nothing wrong with that, and he enjoys driving it.

Now, this is the part I found a bit confusing because I've seen Kevin's videos in the past, and it seems like any time he goes somewhere, he's going and ordering an Uber Lux SUV. Those are not cheap; those could be like 40 to 60 dollars, depending on where you're going.

I think in certain cities where walking or public transportation isn't that good, I think a car is really just a necessity. So if you're gonna have to spend money on a car, you may as well do it in such a way that doesn't cost you a lot of money. If you can't afford a Tesla or use the business tax write-offs, I highly recommend instead you go and buy a car that's 5 to 7 years old that's already seen the bulk of its depreciation and then just drive it until it stops running.

I have an amazing girlfriend, and her and I share a lot of the same values in terms of saving and spending money. It's always great to have a partner that shares your economic values. You really don't want somebody that spends their brains out. That's why he's so happy; she's a wonderful gal, looks like. But she also is in sync with the way he spends money—very smart.

"Oh yeah, I'm sure she's gonna love that frame that they just paused us on. But yeah, I think financial compatibility is something that is so important, and it's vital to find someone who shares those same qualities. He's right; that's why I'm so happy."

Sounds weird too, but I do end up rewarding myself every now and then at McDonald's from the dollar menu.

"Not a chance in hell I'd eat that!"

Look, the guy's in shape, so maybe indulging once in a while—for some reason McDonald's is just like this really good splurge. I even tried this thing on the dollar menu when you take the McChicken and the cheeseburger and then combine them into one. You got to try this thing; it's really good.

So in terms of net worth goals, I really don't have any. I would like to hit 10 million; I feel like that would be just a decent number.

"10 million is a good number. You know, they say it's almost impossible to make the first million; he's already done that. Five million is next to impossible; ten million gets easy. You're actually—once you have five million, you're investing in other things, and it helps you grow your net worth."

This is something I've noticed; it's actually very true. It took me about seven years of saving and investing to hit a 1 million dollar net worth. From there, it only took me 18 more months after that to hit a 2 million dollar net worth. So I was able to do in 18 months what previously took me seven years, which is absolutely incredible.

After that, it only took a year to go from 2 million to 3 million dollars, and two years later I was able to nearly double that to six million dollars. Sure, these last few years had a lot less to do with my investments and a lot more to do with a high surge of income, but still, it goes to show you that once you get the ball rolling, it becomes that much easier for your work and your investments to do a lot of the heavy lifting for you.

And from there, with persistence and consistency, the sky is the limit. You don't need to be as extreme as I am; you don't need to skimp on every purchase at all. You don't need to work 12 hours a day, but you do need to think outside the box.

Yes, you do—you have to do all of that stuff. Don't listen to him; listen to me! Yeah, you gotta skimp! Yeah, you gotta work 15 hours a day; that's what it takes; it's very competitive out there.

I think it really just comes down to what you want. I would argue that not everyone is as extreme as I am, and not everyone thoroughly enjoys saving and investing money. I think there's no sense in being unhappy or feeling deprived just for the sake of saving more money.

So if you want those things, just understand what you're giving up in return to obtain them.

"Well, let me rate Graham on a scale of one to ten—one being a horrible saver and ten being just brilliant. I'm gonna give him an 8.234. He's got a little bit more to go in terms of diversification; he wasn't at ten because he didn't diversify enough. But he's really good at staying focused on saving and making money. I like that."

8.234? I'll take it!

It is mentally hard for me to go and invest in something that I know won't give me as much profit as if I went to go and hunt out a real estate deal myself, personally. But I also agree there’s a benefit to safety, diversification, and stability. So I think it's good feedback, and Kevin, if you're watching this, if you're interested in coming on the channel and doing a collaboration, I would be more than happy. I would love that!

So I slid in your DMs; I sent you a DM on Instagram, so if you're interested, just let me know. And if you are, I could teach you how to obliterate and destroy the like button for the YouTube algorithm. Can't do that, then you're dead to me!

I've always wanted to say that—I'm just kidding.

Yeah, so with that said, you guys, thank you so much for watching. I really appreciate it. As always, if you guys enjoy videos like this, make sure to subscribe and hit the notification bell. Also, feel free to add me on Instagram; I post pretty much daily.

So if you want to be a part of it there, feel free to add me there. That's on my second channel, The Graham Stephan Show. I post there every single day. I'm not posting here, so if you want to see a brand new video from me every single day, make sure to add yourself to that.

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So again, if you want free stocks, use that link down below in the description. Thank you guys so much for watching, and until next time!