The Moment I knew I was going to be RICH | Jaspreet Singh

That's what happens to people that really get blown up. They don't follow any diversification rules, and they end up with one or two stocks representing 40, 50, 60 percent of their net worth. And when they correct, they get killed.

In order to be successful as an entrepreneur, you need to know people. There's nothing wrong with day trading, and I think there obviously there's over 20 million people doing it right now, just on Robin Hood alone. So it's been a very successful platform, but that's not the same as investing.

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So I want to start by going back in time a little bit. When did you know that you were going to be rich? Did something happen when you were a kid, or did you always dream of being rich, or was it just kind of luck? You know, it was never the pursuit of money that drove me into entrepreneurship. It was the desire for personal freedom. Because I had a rather, I'd call it a traumatic experience when I was young, but it really set me on the right direction.

And it was very simple. I got one of my first jobs in high school, and I was at a shopping mall. I'll never forget the experience. I was an ice cream scooper. So I was scooping ice cream for people, and I got that job because the girl I was interested in, in high school, was across the mall in the shoe store. She was working there, and I kind of wanted to see if I could, you know, stay close to her and see if we could work things out and go to work together, et cetera.

So my first day on the job, and she was looking at me from across, you know, right out the other window. The owner of the store said to me, "Look, see what happens when people sample ice cream? They take their gum out and throw it on the floor, because you're getting a little sampler on a little piece of wood. And so by the end of the day, the floor is completely black with gum plastered all over it."

So she said to me, "Listen, before you leave today, get down on your knees and scrape the gum off the tile." And you have to do that every day. And the girl I was talking about was watching me, and I said, "Wait a second! You hired me as an ice cream scooper, not a gum scraper. I mean, I'm happy to, you know, scoop ice cream, but I don't want to get on my knees and wash the floor."

And she said, "You're going to do whatever I say. I own this store; you're my employee." And I said, "Well, I'm not doing it! My job description was an ice cream scooper." She said, "Well, how about this? You're fired!"

And I didn't even know what 'fired' meant, but I figured out pretty quickly, and that was very humiliating for me. I had to ride my bicycle home and tell my mother what happened. And so at that moment, I realized something very important. It was a big lesson in life for me that there are two types of people in the world: there's people that own the store and there's the people that scrape the gum off the floor. And you have to kind of decide which one you are.

And it doesn't mean that being an employee is a bad thing. You can have a fantastic life as being a great employee and working for somebody, supporting your family and everything else. But that's not for me! I don't want somebody telling me what to do. It's that simple. And that was the beginning of my path.

Now, the day I became wealthy was, I never saw it coming. You know, someone bought our company for 4.2 billion dollars: the Mattel toy company. And the ten of us that started it, the next morning were at a huge liquidity event. I didn't stop working; I've been working ever since that day.

So your success, in a big part, was attributed because you got a job to impress or be with a girl, and because of what happened at your job, that was kind of your "wow, I can either own the store or I can be the one working at it." Right? That's basically what happened. But it was a very tough lesson because it really showed me the differences between the pursuit of personal freedom and, you know, that.

That's what I think when I let guest lecture now to graduating cohorts of engineers mostly. I tell them, you know, it's never about money; it has nothing to do with money. Personal freedom is a burning desire for many people, and the only way you can get that is to achieve success as an entrepreneur, unless someone just gives you, you know, enough money to live freely, I don't know... that's not easy to do. But to me, it was the pursuit of that freedom.

And then along the way, I was very fortunate, and I think that's always been my burning desire. I want to be able to spend my time doing the things I want to do. I don't... you know, one of the great outcomes of entrepreneurship is the ability to decide how to spend your time. And so I want to be doing this with you today. There's no reason I wouldn't. But if I didn't want to, I don't have to. And that's the whole point of it.

That's why I tell, you know, young entrepreneurs to understand what the goal is: it has nothing to do with greed; it has to do with personal freedom.

I want to dive a little bit deeper into your time in high school because I want to know kind of who were you in high school. I know you used to have a beard, which you no longer have. Maybe one day it'll come back. But what kind of person were you in high school?

Well, I also used to have hair, and I don't think that's coming back. So it's sort of... I was, you know, I wanted to pursue photography and cinematography and, you know, be a commercial photographer and film producer; that's what I really wanted to do. And my stepfather said to me, "Look, you're not good enough in those fields. They're highly competitive. You're probably going to starve to death; maybe you should pursue a business degree."

This is after I graduated from undergrad because, you know, basically I spent my undergrad in arts and psychology, you know, chasing girls and doing what all college students do: having a great time. But when I graduated, I really had nothing to show for it. I mean, I'm happy to get a degree. That's great, but it was not in a discipline that I could find a living or a formal living.

And so he said, "Look, you should go and get a business degree, and then no matter what discipline you pursue, at least you'll have the building blocks for business." It was great advice. That was the next path. When I got out of business school, then I formed a television production company, and I was able to start doing sports programming for the networks around the original six hockey teams in New York, Detroit, Boston, etc. And that company was quite successful, and we sold it. Then I started the learning company next, which was called SoftKey first and then the Learning Company, and that's the one we sold for 4.2 billion.

So it's kind of a serendipitous path. You never know how it's going to turn out. On that point, I think a big point of debate now amongst a lot of people is college. And my question is, does college matter? And the reason why I'm asking is because I grew up in a traditional Indian house. My parents are immigrants from a state called Punjab, and like a lot of Indian immigrants, my parents always told me that if you want to become successful, you have to become a doctor. It's like the, you know, the path to wealth; that's what I was always taught.

Now for me, I went through schooling; I don't use any of my degrees. But what value does college have nowadays? Does it still have the same value it did when you were in college?

Well, you know, those are great observations you're making because I'll tell you the truth: I don't use my degrees either. I don't even remember anything about what I took in my MBA. It doesn't matter. What the value is, is the people I met during that program ended up being very important to me in my career.

And I've always thought of education really as a chance to expand your contacts. Whether it's undergrad or, you know, graduate work, you're creating a network, a social network. And in order to be successful as an entrepreneur, you need to know people that can help you in different disciplines. And I never realized that when I was going through it. But I don't remember anything of, you know, some basic variable cost analysis or something. I don't really remember or care, but I can tell you my success in business had a lot to do with the contacts I met there.

And when I teach now, I recently taught a graduating class at Harvard just this week, and I told them the same lesson. You know, the prof didn't like to hear that, but it's the truth. I said, "It's the people sitting beside you right now; some of you are virtual, some of you physically there, that are going to be the most important thing you get out of this education, not the actual coursework or cases." It's kind of you, real life will teach you that, but the contacts you have are extremely valuable.

So I would argue that there is value in college. There is value there. But while you're at it, you know, pick a discipline. I know your parents told you, "Doctor." But I told my kids "engineering." Like I said to them, "Look, if you want a great outcome for what you're borrowing for, college is engineering, engineering, and engineering. And if you have time at night, do some engineering."

But, you know, these days, artists are becoming very valuable because of the digital economy. So it's always different for each generation.

I want to go back to when you were selling—when you sold The Learning Company for four billion dollars. Because you said you sold the company, and now you finally have some liquidity. So when you were building the company, I'm assuming you must have had a lot of revenue to sell the company for billions of dollars. When you made your first one million dollars, did you think you were rich?

You know, it's a great question. The way that happens, and I've talked to many other entrepreneurs that have had big liquidity events, you know, at the time The Learning Company was acquired, it was the largest publisher of educational software in the world. It did business in, I think, 46 countries, and we're the number one supplier for Apple and schools and all kinds of different products. We had hundreds of different products, including big titles like Rieta Rabbit, Carmen Sandiego, Oregon Trail, and Mavis Beacon. I mean, those are still out in the markets today.

When you're really passionate about what you're doing, you don't really notice how this wealth thing occurs. Because, you know, I owned a lot of founders' shares; I was one of the founding members of the company; and one day, you know, they were turned into cash through an acquisition.

And I remember we all sat around the next day and said, "What do we do?" I mean, we all just went back to work. We didn't know what else to do. And so it's sort of, you know, provided for a lot of different things for my family and everything else. But it's never been my motivation. I mean, I don't do things I don't want to do. And luckily I've, you know, I’ve made plenty of bad investments too, but, you know, fortunately, I know I make enough good ones that I have all I can use, and I don't need more money. I want to do things that I really enjoy, and that provides me the ability to have those opportunities.

And by the way, now I'm completely back into photography again. I've got a huge guitar collection. I was actually a shareholder of Fender for a while, so I got my dreams in a reverse order. You know, I wanted to be a rock star, but it took me a long time to get there.

You're going to have to regrow the hair, man!

Yeah, I have to do that. But it's really interesting, you know, I just… I do a lot of work with the guitar companies now. And I'm, you know, I'm very big in watch collecting and things that I really have a passion for that this freedom provides me.

Especially nowadays we talk about entrepreneurs making their first one million dollars and what does that mean? When you make a million dollars, I think a lot of people have the kind of misconception that, "Oh, I made a million dollars; now I must be rich!" But for a lot of entrepreneurs, you make a million dollars, and all of the million dollars goes right back into your company because you want to grow it bigger.

So is the way for someone to now build a business and sell it? Or how do you now kind of pull out some of the capital from a business that you're making money on?

You know, my mother taught me something that I really didn't value until later in life. But she, as a young working woman in her 20s, used to take 20 percent of her paycheck, and she would invest it in two things: telco bonds—because back in those days, she said people would rather turn off their heat than not be able to talk to people—so in those days, those bonds would produce six or seven percent, you know, for five to seven year duration; and the other half was in dividend paying S&P stocks.

And when she, you know, all through her working career, she just put 20 percent into that and never took it out. She lived off the interest or the dividends. And what happened when she passed away, I was the older brother; I became the executor for the estate. And the lawyer called me downtown and said, "Listen, your mother died a very wealthy woman, and you're the executor." And I said, "That can't be." Well, she kept that account secret from both of her husbands—she was married twice.

You're kidding me.

No! And she did it for herself, and I always wondered how she could afford to take care of her whole family, put my brother and I through college, and you know, all kinds of just, you know, myopic focus on keeping herself financially independent and not even disclosing it to anybody.

And when I called up my brother and I said, "You can't believe this! Her portfolio was very conservative, but over the 50 years that she had it, it grew immensely because she just compounded those interest payments and dividend yields." And that's the magic of, you know, what I've learned. In fact, there's a hundred million Americans today that do not have anything set aside for their retirement in their 60s. And that's one of the initiatives I've started. I have a product called Bean Stocks to kind of emulate what my mother did: take a minimum of a hundred dollars a week, put it aside, and we put it into indexes and ETFs in the market, and it grows with you your whole life.

If you want to end up in a good place when you're 65, you need, you know, if you put 100 bucks a week aside in your early twenties, you'll end up with about a million five, million seven, if the markets do what they've done for over a hundred years. Kind of give you six, seven, eight, nine percent, you know, returns each year, and they go up and down and everything else. But the point is, you're constantly putting that hundred bucks in a week. So Bean Stocks was my answer to that to say, "Look, this is something you do anyways. Even if you're an entrepreneur, you still have that nest egg that you're putting aside for."

And that's what my mother taught me. And I always had that: I always tried to put enough aside just in case the poopoo hit the fan.

That's a great point, and it's a great transition into what I want to talk about next, which is how somebody young who is now getting started into investing—because there's a lot of people getting into the investing space—we've been seeing a massive boom in the retail trading and investing space. How should a young person invest their money? Because your mother clearly was big on dividend stocks, things that pay interest. Is that the best way to go forward now for a young person?

Well, there's a difference between day trading and investing. There's nothing wrong with day trading, and I think there obviously there's over 20 million people doing it right now just on Robin Hood alone, so it's been a very successful platform. But that's not the same as investing. It's very, very difficult over a long period of time to beat the index when you're day trading because you have, you know, you tend to be concentrated on just a very few names and you're constantly trading them in and out. I think it's fun in some ways, and there's nothing wrong with it, but I always tell people if you get winnings from day trading, take them and put them into an index of some kind that you just store away, that you don't risk; you just let it sit there and grow, whether that's ten or fifteen percent—whatever it is—that's investing.

When you do that, day trading is a form of gambling, which is really exciting, and there's nothing wrong with it. I think it's a wonderful thing that people do it, but it's not going to help you long term because very, very few people can beat the indexes over a long period of time day trading.

So you're saying if somebody made a lot of money off of the GameStop saga, take some of that money and put it into an index that's going to help you make money for the long term?

Exactly! That's the right strategy, and that's the right thing to do for your retirement. You’ve got to have that thing just compounding. You know, get any one of the robo apps and do it that way because a trading platform where you're picking a name and day trading in and out is very, very difficult to grow wealth with.

Are you worried at all about the health of the stock market because of all the retail trading going on? We have so many people entering the stock market; maybe they know what they're doing, maybe they don't, but a lot of people are trading with leverage. I think we have the highest margin trading ever, and a lot of people are coming into the market with very high expectations hoping to double their money in a very short amount of time. Is the stock market going to crash because of that?

Well, markets always correct, and sometimes as much as 40 percent. I don't see that anytime soon because we have a very, very buoyant economy, and we're about to get a $1.9 trillion stimulus package, and now a rumor of a $3 trillion infrastructure package. That's a tremendous amount of stimulus. So, you know, asset classes like stocks are likely to do well during that period. But there are times when markets do not do well, and you have to live through that. It doesn't bother me that, you know, people are actively day trading; I have no problem with that. I think that, you know, is just bringing more people into the educational side of investing. And I'm not sure, you know, that we're going to have a crash anytime soon. Nobody knows with certainty. But my point is these are environments that are very good and very, you know, productive for stocks. And so my anticipation is they will tend to turn higher.

So what advice would you have for someone who is new into the workforce in their late 20s or early 30s? What should they be doing? Would you follow your mom's advice of 20 percent into the stock market, into an ETF or what would you recommend?

Well, you know, I have some basic rules. I always say this: never more than five percent in any one stock. So if you look at a portfolio, you never want one stock to represent more than five percent of it. You never want a sector like energy or technology to represent more than 20 percent of the portfolio, and have some allocation of fixed income.

I'm currently 70 equities, 30 fixed income because fixed income is very expensive these days, and I anticipate as interest rates go up, it won't do that well. But the point is, it provides stability. The whole idea of investing is diversification. You really want to be diversified. And so I use exchange traded funds for that; that works for me. People can pick their own stocks if they wish, but, you know, there's all kinds of different philosophies. But at the end of the day, you know, if you want to build a nest egg, you've got to have the discipline of diversification and monitor your portfolio so that no one position gets too big.

That's what happens to people that really get blown up; they don't follow any diversification rules, and they end up with one or two stocks representing 40, 50, 60 percent of their net worth. And when they correct, they get killed.

Can somebody still follow the model today and become wealthy? I mean, we're in an environment where a lot of people, millennials especially, are having a tough time being able to pay their rent. They're having a tough time just being able to get by. How does someone who's now essentially living paycheck to paycheck start putting aside money to invest and become wealthy? Do these kind of rules—those of them still apply today?

They do! Because the majority of people—and obviously, there's exceptions to every rule—but the majority of people spend too much money on crap they don't need. I've noticed that for years. And so I'm very disciplined. You know, I don't buy clothes I don't need. I don't wear… I learned that from my mother. I wear the same—I've got 25 of these suits, 25 of these ties, 25 of these shirts; I do a huge production run. This is my Shark Tank outfit. I also wear it all the time. It's sort of the same. I don't have to choose what I'm going to wear each day; I already know. And it sounds boring, but it really works for me, and I save a ton of money.

And so, you know, I'm still saving money when I can. I don't see any reason to waste it. So there's a lot of change in behavior to save money. I can guarantee you don't need to buy three coffees a day at seven dollars of coffee; that's a total waste of money. I see that all the time. And people go and pay 25 dollars for lunch. How dumb is that? I mean, I don't do that. You know, it just… it offends me. It's bad karma to just waste money like that. So I'll bring some lunch with me. I can't stand spending seven bucks for something that costs 18 cents to make. That's so stupid.

Yeah, you know, I think a lot of people look at America, the United States, as one of the richest poor countries in the world. Because, so I'll give you an example: my grandparents from the state of Punjab, they were refugees because the state was severed, and they lost their homes, they lost their family, they lost their land, they lost everything. And my grandfather came to his new home running with no shoes on. And so they were raised with the discipline of you don't need a bunch of stuff in order to survive; you kind of learn to live with very little.

And so I was raised with them, and then when I was going to school, I know just the basic things. Like I would go to lunch with a brown bag, and I would make sure they had to take my brown bag home the next day because I would use the brown bag for the whole semester. You know, it's the little things that, you know, we're in such a rich country where we don't realize that maybe we're being wasteful. And I think, you know, is that… so it sounds like that's what you're saying is we're spending a lot of money on things we don't need. We have so many luxuries, a higher standard of living, which is causing people to live broker.

Well, the average salary in America is about 56,000. And so there's no question in my mind you can cut ten percent of your costs. You are wasting money on something; you're buying a third pair of jeans; you don't need it. You're buying a fifth pair of sneakers; you don't need it. You're buying some crap you don't need. Everybody buys crap because our whole society is designed to get you to spend money from the day you're born. But you don't need to. It's not necessary. In fact, less is more.

There's something beautiful about having a minimalist life and having things that you really cherish. And that was also my mother's philosophy. She would save up for a whole year to buy a Chanel jacket and buy nothing else. And I mean that was her whole thing! I want to own this jacket the rest of my life. And when she passed away, there was a huge fight amongst the women in the family trying to get her collection of Chanel jackets, which she'd only buy one of every two years. But she bought the highest quality items and not a lot of them; that was her philosophy, and I think that really works.

So now it looks like, you know, someone wants to become wealthy in this day and age. First thing you got to do is you got to cut some of the expenses. Second, continue investing your money just like your mother told you to do and like how you said. The third thing is now, what about in terms of making money? Because you built your wealth as an entrepreneur, and obviously now things are very different because we're in a very technological age. If you were stripped of everything—all of your money today, your fame—what would you do to rebuild your wealth?

I would go back to what I know, and you know, that's… I'm a salesman; I'm a marketing person. That's I've been my whole life. I would go back and find a product or service or a company that required a good salesperson, and I would go work. I mean, that's what I'm used to! I mean, I've been working, you know, I took some time off right after the liquidity event at The Learning Company, but I went right back to work and never stopped. And today, you know, I'm very, very busy scheduled doing a whole wide range of things, but they're things I want to do that I really enjoy doing.

But I'm basically at my core a marketing and sales person, so that's what I would rely on. I think those are the hardest jobs in the world because salesmen are the only people—and saleswomen too—that start at zero each month and have to build back their business. You always start the next month at zero, and then you have to go sell again. And you can't even have a company without a great salesperson. You have to sell, sell, sell; that's how it works.

What about cryptocurrency? A lot of people are now jumping into cryptocurrency. Do you think that cryptocurrency, Bitcoin, is the future? Is that a way for someone to now build wealth quickly?

Well, it is, but it's, you know, highly valued now. I have a three percent allocation in Bitcoin in my own portfolio. I have a five percent weighting in gold, so I look at it as a property, and it's performed very very well. But, you know, the point is Bitcoin is going—it's a very early nascent asset class—lots of issues with it. The one that's cropping up its head right now that people should be, you know, concerned about is institutional clients do not want to own Bitcoin mined using coal to burn for electricity; and that kind of defines what much of how Bitcoin is mined, particularly in countries like China where, you know, they're not compliant on human rights issues, they're not compliant around tariffs; they've got all kinds of issues there.

And so there may be a premium coming into this market where original virgin coin that's not mined using coal—that's mined sustainably with hydroelectric or some other form of sustainable energy—are going to be worth more than the blood coin mined in China, which is where the majority of coin to date have come from.

I also see that now you've also jumped onto YouTube. Welcome to YouTube! Is that a feasible way, do you think, for now someone who's looking for a creative way to make money to do that?

I think so! I think everybody that wants to play as an entrepreneur going forward after this pandemic has got to have a direct-to-consumer digital strategy. I mean, even if you're just B2B, business-to-business, you still need a digital strategy. The whole world has pivoted to using technology to communicate with each other and sell products and services, and so you're going to have to learn how to use social media, how to actually build websites or at least manage that process so that you get something very compelling for people to see your product and service and buy it direct from you. That's the new model. All the companies that I'm invested in that survived figured that out, and so that's a new change in the American economy.

And also there's no barriers to entry for that, so you're going to have lots of competition from Mumbai, Shanghai, you name it. If you're not willing to work 25 hours a day, eight days a week, they are, and they'll kick your butt!

You now have been investing in dozens of companies on Shark Tank. How many companies do you now have an ownership or stake in currently?

The portfolio is about 36.

So how do you manage a portfolio of companies that large?

We use a very simple method: we track sales and cash flow because the private companies—we don't… there's no share price to track. We look at discounted free cash flow; that's how we manage the portfolio. And we monitor—we have a weekly call amongst the management team of O’Leary Ventures every Tuesday morning; had it this morning. And we go right through our portfolio—the good, the bad, and the ugly—because at any one time of the portfolio that big, there are euphoric outcomes occurring and also disasters happening. It's like a giant passion play; it's happening all day long. I'm getting calls of, "Look, our somebody wants to buy our company!" On the other half, "We're going bankrupt!" You know, that's sort of the nature of the ebb and flow of the volatility involved in owning so many companies in so many different sectors.

But you know overall, it's a very successful group of entrepreneurs. They use the Shark Tank platform to reduce their customer acquisition costs, which is really magic. My job as sort of an investor is to let the world know that I've made this investment choice. I have millions of followers on social media; it usually helps the company raise more money. It works in a big symbiotic relationship, and we add a lot of value to these companies, and we expect to be paid for it.

So I think that the trend of having multiple streams of income now—because you’re invested in dozens of companies, and each one of these companies are now paying you—that's a very attractive thing. I mean, everybody loves the idea of multiple streams of income. Obviously, one way you can do that is through dividends, but because of Shark Tank, I think a lot of people want to be sharks; they want to be like you. What do I need, or what does somebody need to be a shark? Maybe on a smaller scale? Like, is there like a certain amount of capital somebody needs? Or how can somebody start doing what you do?

You know, I have a bit of an advantage because companies approach me all the time and say, "Look, would you like to invest in this next round?" And I say, "I have, you know, your round means nothing to me. I know what I bring in value; I know what happens when I invest in companies; I know what I can do to get your message out and help you sell the product."

But I don't do that for free, so if you want me to be an investor, let's negotiate a very attractive package that aligns my interests with yours. And that may be through royalties or warrants or convertible debentures or straight equity or straight debt. There's a wide range of different outcomes and structures, but I don't want to be viewed as just another investor because I’m not.

And it may sound arrogant, but the facts are I can change a company's trajectory just using my team and my millions of followers to get the message out there—not just domestically, but globally. And so, you know, I'm very, very selective on which companies I invest in. I want to be able to take it from this platform to this one, and everybody benefits from that, including me.

And as a result, I don't negotiate too much. I say, "This is what I think I'm worth," and if you don't want to pay that, I'm okay with it. I'm just going to move on to the next opportunity.

And that sort of may sound arrogant, but my best salespeople are the men and women, my CEOs. When someone comes to me and says, "Look, we'd like to make you an offer to invest," I say, "Why don't you just talk to some of my CEOs and see what value I bring?" And then you decide if my offer is too rich or you don't want to do it. But, you know, I've got a great team I work with. I've been doing this for almost 20 years. I have some great outcomes; I have some big disasters. I mean, you know, when you have a portfolio that large, you're going to have a lot of bad outcomes, but you're also going to get a few that are just stratospheric, huge hits. And luckily, those pay for all your mistakes.

That's again the idea of diversification. And so, you know, every day I'm examining deals. I look at sometimes two or three a day, as I did today. And, you know, most of them we don't do because they don't fit. But when we find something interesting, we get right into it, and we try and come to an arrangement with the CEO and put them into our portfolio and do everything we can to explode their business.

You know, it's interesting you mentioned your mom and the importance of dividends to your mom. And anybody who watches Shark Tank knows how much you like royalties. Is that partially influenced because of your mom? Or is there a different reason why you are such a big fan of getting royalties out of your deals?

No, it's probably again from my mother. She always said, "You need to get paid while you wait." That was her mantra: get paid while you wait. Because either she owned a stock with dividends, or she owned a bond with interest. Getting paid while you wait was her whole thing. And never, never spent the principal, just the interest. That was the other lesson she taught me.

So my portfolio is like a chicken on a spit, dripping cash. Everything pays me something each month, and that's how we perform at the operating company. We look at our cash flows every single week; it works for me. Remember, in venture investing, it's not return on capital that matters; what matters is return of capital. You haven't made a dime until you get your principal back in a venture investment, and that's very hard to do.

So if I use a royalty, great! You know, people say to me, "Oh, royalty, why don't you just do equity?" Because a royalty is even better than equity. When the company gets sold, the acquirer, if I have a perpetual royalty on board, comes to me last and says, "How do we buy out this royalty?" or "How do we incentivize you to work for us going forward and continue the royalty?" Both outcomes I really like, but I'm staying in the game. Cash is flowing, as I always like to say—what matters in business is cash flow!

Just say it like that: cash flow!

Exactly! If you don't have any cash flow, it's no go. You're not going to make any money; it's that simple.

I love that! I love that! So a lot of people look at you on Shark Tank as this mean, cold-hearted person. I mean, when I told my mom that I was doing this interview, she was like, "Oh, you're interviewing the mean person!" And so I want to ask you, are you this person with a cold ice heart, or are you a big teddy bear that people just don't see on Shark Tank?

Well, I'm the only shark that tells the truth. I don't worry about your feelings; I worry about your money. And I think it's so disingenuous when, you know, Barbara or Lori says, "Look, you keep going; you know you keep mortgaging your house." I'm not going to invest in it, but I think what you're doing is just wonderful! I don't say that. I say your idea has no merit; it's going to go bankrupt. You're going to bankrupt your family; you're going to zero. It's a terrible idea. Why don't we deal with it right now? Why don't you take this behind the barn and shoot it and start something else? Because it's a horrible outcome for you if you completely put your family in debt because of your really horrific idea.

Now you may not want to hear that message, but it's still the truth. And if you think I'm bad, wouldn't you see what happens in the real world afterwards? Bad ideas go to zero whether I tell you that or not; that's just a fact. So it's better that I just deal with the truth. And this, again, goes to something my mother taught me years ago. She said, "Always tell the truth, and you'll never have to remember what you said."

And that is why I do that. You know, it's sort of, I don't have to remember the truth; it's going to be the truth when I told it to you; it's going to be the truth ten years from now; it's still the truth. If you lie to people, you're going to get caught in that lie, and you're going to trash your relationships with them. So I'd rather just deal with the trauma right there and then. And then they call me the mean one. I'm the nicest guy because I'm the only one telling you the truth.

So the question I want to ask you now about Shark Tank, because you have been very tough on your negotiating deals. What is your biggest regret or kind of missed deal, would you say, on Shark Tank?

Well, you may not be surprised when I tell you this, but I don't have any regrets. And I'll tell you why. Because with Shark Tank—and which is why I think so successful—we're going into our 13th season. I have no idea what's going to come through the door in the next 20 minutes. No idea! I don't get to see these deals first; but they're so incredible. Each year they get better, more unique.

We have everything now; we have technology, we've got, you know, consumer goods and services; we have mechanical products; we've got so much diversity in the opportunities that if I miss one, I know in a couple of hours I'm going to get another one. I've just... it just... there, I have no regrets. I've got a fantastic team.

I've had really incredible outcomes. I still have the largest exit in Shark Tank history, the sale of Plated to Albertsons, which was my deal for $320 million. Nobody's exited anything that much before or ever since we started Shark Tank. So I'm pretty happy; you know, with the outcomes, and I've made plenty of mistakes—plenty of mistakes.

And so, you know, they go to zero, and that's tragic too! I hate when that happens, but overall, I'm managing diversity in portfolio, which I think everybody should do. You know, that's kind of the way it works.

One of the reasons I became a shareholder in StartEngine, which is a company that funds with crowdfunding, equity crowdfunding, and on their paid spokesperson is, listen, I don't want just one deal; you can go on a StartEngine and invest in ten companies, put a hundred dollars into each one because you don't know what the outcomes are gonna be. It's so serendipitous; you need a portfolio, and that StartEngine has 400,000 investors plus, so it gets all the deals on their platform and people look at them and shop like they’re in a grocery store saying, "I like that! I like that! I like that! I like that! I'm going to build a portfolio of their products and services I understand. I'm going to diversify my risk."

That's the whole idea of investing the way I do.

So when you say diversification, do you mean investing in multiple companies or across multiple different sectors? So some tech companies, some consumer goods companies, apparel companies? So what does that mean?

Both! It's a very astute observation. I have diversification in both. I have investments in every sector; there are 11 sectors in our economy, and I have multiple companies in many sectors. And generally speaking, if you look at a portfolio of many companies, as I have, and you try and guess the winners, you'll never get it right. It's like trying to get the grid right in March Madness, the brackets— you'll never solve for it. You just don't know!

You have to have diversification, and I urge people that are going to invest to make sure they don't just do one company. You just don't know what's going to happen!

So let's switch careers gears a little bit before we get to the end. I know you like nice things, and I know we talked about this earlier. You like nice watches, nice cameras, nice wines. When is it okay for somebody to now start splurging their money? I mean, we talk about, you know, the state of a lot of people's finances right now. When is it okay for someone to go out and buy themselves a ten-thousand-dollar watch or a new Gucci purse? When is that okay?

You know, again, I'm going back to the source of my mother's advice. She told me, and I use this philosophy in all the things I buy, when you know that that analogy of don't buy a lot of stuff, buy very little stuff. But what you do buy, make it very high quality and treat it like an investment in your head.

So when I buy a very expensive watch, I'm extremely selective because I want that watch to appreciate. Now, I have many, many watches; I have a very large watch collection. But to me, it's an alternative asset. My watch collection is up 114 percent year over year because I buy very, very selective pieces, and I'm extremely fortunate to be part of that global watch community.

When a Rolex or a Patek or Audemars Piguet or FP Journe—I mean, oh my god! You know, all these different watch brands, I'm very familiar with them because I'm a very active collector, and I select my pieces. And you know, I'm wearing an AP right now. This watch is, is, not an AP; this is an FP Journe, actually. And this is a very rare piece that is up about 80 percent over last year. So I've owned it for two years.

FP Journe is the living Picasso of the watch world; he only makes 900 watches a year. You have to be part of his society to petition to buy them. That may sound really corny, but I love to work with that company and to build my calibers across all their different designs.

He's noted for his absolutely crazy dials! I mean, you know, people look at this and say, "How do you tell the time?" I said, "I don't tell the time with this. This is a piece of art! I use my phone to tell the time. That's always with me."

This is… and the whole point is this dial creates conversations. I remember I was flying to Dubai, and a woman beside me getting on the plane said, "That's crazy! That watch! How can you tell the time?" I said, "You're talking about this watch! We're now in a conversation." This watch has done its job; it's a piece of art, and you're enjoying it and it's controversial for you! I think that's fantastic! That's why I own it.

And by the way, it's up over, you know, 80 percent this year in value. So all that's in my head when I do that with guitars. I have a very large pen collection; you know, there's companies like Montblanc which build certain pens for their collectors, and they preview them years ahead. So if you find one you really like, and you know, I like to buy number 13 out of 98 pens and I have some extremely rare pieces, but they go up in value—that's my whole point. I don't buy junk!

So if you think that way, there's nothing wrong with, you know, splurging once in a while. But if you're strategically buying things that appreciate value, you're actually investing and enjoying yourself at the same time. So, you know, people come and look at my watch collection because I, you know, I love to talk to the watch community, but I'm very, very strategic. Each style is unique and has a story.

Interesting! How much did you pay for that watch?

Oh, this watch was probably, I'm going to guess, probably 60 or 70 thousand.

Wow.

Yeah! I think the issue—so I talk about this a lot on our YouTube channel. The issue, the kind of concern that I have is when the stimulus checks go out. You have a $1400 stimulus check go out; you see a line out the door at Gucci and Louis Vuitton, and we saw this exactly happen when the $600 check went out. Gucci started putting the $600 purchase on display, and you see a line at the door as soon as that stimulus check goes out.

Yeah, that's tragic. What people should do is take at least half of that and invest it in themselves. You put that into an index fund and just let it appreciate over time. I mean, this is a once-in-a-lifetime gift from the government. Why would you just piss it away? Why wouldn't you take some poor? I take all of it and invest it; just forget about that money and let it accrue over the next 20, 30 years until you retire. You'll be so thankful you did that! I mean, you know, I don't think this was—I think they put too much money in the economy, actually, because there are a lot of people who have full-time jobs that are getting these checks. Why we're doing that, I don't know, but the decision has been made.

Is my point, you should take this opportunity and invest it in yourself. You're not giving it away to somebody else; you're investing in yourself. That's the whole point.

Yeah, I mean, I think this is why a lot of people are looking at it like a K-shaped recovery. You have some people that are doing very well in this economy; they've benefited because of the pandemic, while others not so much. But everyone, everyone is getting the money whether you benefited or not, and it's really kind of creating a strange system in our economy.

No question! Very strange! And I think this is something we've got to think about because it could be inflationary down the road, and you're starting to see that pick up when you watch the tenure go from 0.9 percent to 1.7. That's pretty scary!

Are you worried about the long-term strength of the dollar, or, you know, you mentioned inflation? Do you think this is going to have a big impact on people's ability to afford life?

Well, I do! I worry about that. I mean, this is so over stimulating, and now we're talking today about another $3 trillion in infrastructure. That's really, really inflationary in my view. But you know, again, diversification. I invest in Canadian dollars, American dollars, Swiss francs, euros, British pounds, and Bitcoin. I mean, and I have gold as well.

I want diversity! That's the whole idea because I don't know what's going to happen next! Will the dollar be up? Will Bitcoin be up? Will the euro outperform with the Swiss franc, which it's done before? Become the, you know, the fiat currency of choice? You just don't know! And that's why there's a lot of room—I would, you know, argue one thing about Bitcoin, which you know, I've spoken of many times now. When I made my declaration I was going to a three percent weighting, I got all these calls from institutions saying, "Do you know where your coin was mined?"

And I said no! You know, I've just bought Bitcoin. They said, "Well, we don't like coin mined in China or anywhere that's mined using coal to burn electricity to burn to make electricity; that's very pollutive." And so, I think there's going to be distinction around sustainability around Bitcoin mining in the years ahead. So, the premium for a clean coin, virgin coin versus a blood coin from China—

Interesting! Very interesting! I actually didn't even know that! I'm glad you brought that up.

So the last thing I want to go over today—we asked our audience, our viewers what they would like to ask you. And so I have five questions from our audience.

Sure!

Question number one from CaseyBurns206 on Instagram: What is the most garbage investing advice you see out there on the internet?

The get-rich-quick day trading stuff! Again, there's nothing wrong with it if you treat it for what it is—it's almost entertainment! But it's not investing! It's really, really hard to do that and make money long-term. It doesn't mean you don't learn from it, but it's not investing.

So that's—I see all that stuff all the time. You know, use leverage—borrow money to trade—that's crazy! I don't agree with that.

Number two is from Deepti Rao on YouTube: What three keys would you give to a beginner investor who is 20 or 30 years old to start investing?

Number one: never more than five percent! It lets you build a portfolio with a minimum of ten stocks in it. Never let any one of those stocks be more than… I would let me… let me start from scratch on that one! Start with 25 stocks, because that's enough diversity! Okay?

And then never let those any one stocks be more than five percent of the portfolio. Never let a sector like technology become more than 20 percent. Keep trimming. As one goes through the roof, you have a Tesla, and all of a sudden it's 10 or 20 or 30 percent of your portfolio—trim it back to five. You still own Tesla, but you've taken a lot of profit, you've taken a lot of risk off the table, and you've got more capital to put to work in other stocks.

So I kind of like portfolios in that 20 to 25 names, and then using those rules: five percent in any one stock, never more, and never more than 20 in any one sector, and then you get diversification. Those are—that's what I'd say.

That's if you're going to pick stocks yourself. I much prefer to just pick exchange-traded funds (ETFs). That's what I actually use: ETFs.

Awesome! You have an ETF yourself too, don't you?

I do! I have an ETF company. I'm very proud of it; that’s why I have it.

Awesome! And next one from Instagram: Michael Sabando1: What should one do to impress a shark quickly?

The best thing you can do is articulate your opportunity in 90 seconds or less. Learn to explain exactly what you can do in 90 seconds or less because it's really about the opportunity. And then explain why you're the right person to execute on the idea. Because there's a million great ideas and very few people can execute on them. Executional skills are rare; great ideas are a dime a dozen!

And lastly—know your numbers! If you get past the first two, and you’re on Shark Tank, and you've got the lights on you and everybody wants to invest, and then you don't know your numbers, you deserve to burn in hell, and I'll put you there myself.

The most popular question I got, this was asked dozens of times, and I know we talked about it today, but we'll just kind of go over it quickly was by Page22 on Instagram: What do you think of Bitcoin, crypto, and the future of Bitcoin? Is it going to crash, or is it going to take over our currency?

No! I think it's going to become a property much like real estate or gold is. I'm not sure it's stable enough to be a currency; it's too volatile! For example, people won't take large payments in it most of the time because they don't know if it's going to be down 30 in the morning. But that may also resolve itself over time.

Right now, the biggest issue around Bitcoin for institutions, because less than five percent of the institutions that could own it own it, is basically the regulator, which in most countries like Canada and Switzerland and France, New Zealand, are starting to relax the rules around crypto because they know it's here to stay or that, or we speculate that Canada has ETFs now with Bitcoin in it.

I think the U.S. regulator will slowly move in that direction, but also this idea of sustainability; most institutional investors have sustainability committees, ESG committees, compliance committees around, you know, things like human rights and all that. And I agree with that!

And so you have to be compliant. And so, you know, coin-mined in China, which is where the majority of Bitcoin is mined, is not made on a compliant basis. And so, you know, that's an issue, and I think it's going to become more and more of an issue. So you're going to see virgin coin become more valuable because you can't tell the provenance of a coin; you don't know where it's been, you know, when it was born. But you don't know if it was part of a nefarious, you know, illegal scheme or whether it came from China or not.

But that's why if you have the provenance, and you know it's virgin, then it's more valuable. I think that's going to occur; there's going to be two markets for Bitcoin. That's something to think about.

So I've restructured my strategy; I'm investing in miners now themselves, and then asking them to pay me in virgin coin. So if you're a miner and you want to expand your operations, come to me; I'll fund it, and then you'll pay me a royalty in virgin Bitcoin. And that's the kind of arrangement I'm building right now—royalties!

Love it! You got to have royalties! Cash flow as you like to call it!

And number five, from Masked Media on YouTube: Besides money, what keeps you motivated every day to get up and keep working instead of just being comfortable with where you are?

Well, I want to do things that keep me really stimulated. I'm very interested in engaging in entrepreneurship; I help many entrepreneurs. I'm very interested in photography; I'm very interested in recording music; you know, I have a passion for wine. I have a very big wine business. I'm an investor in over 20 vineyards.

And so these things are things that balance my life because I've always said the best managers in business have yin and yang. They have the idea of the discipline of business, which is very binary: either you make money or you lose money. But they also have the chaos of art. And that helps them become more creative as they try and solve business problems. The greatest managers I know have a little bit of both. They really enjoy something they're passionate about—music, or they're passionate about, you know, painting or something—but they're also great managers, so they can do the discipline of business along with the chaos of art.

Combining those talents—they're the people I tend to hire. I think they're great at sort of being masters of achieving things because they find different ways to do it, and you require some discipline in the arts to do that.

If you like that video, wait! Did you see my next one? Don’t forget to click right over here and subscribe! I don’t care where you went to high school; I don’t care the name of your dog; I don’t care about any of that. What I want to know is, you know, what can you do for me or one of my companies to make our job easier?