Speaker 1One day, you're going to have the opportunity to sell your business for life-changing money. And when that day comes, you'll discover the hardest part isn't getting the wire. It's what happens next. I'm Colin Morgan, executive producer of Built to Sell Radio, the podcast designed to help you punch above your weight in a negotiation to sell your business. And this week's episode is part of our After the Deal series, where we explore life after the exit, including the challenges and opportunities that come when work becomes a choice, not a requirement. Now, before we dive in, if you're getting value from the show, I'd encourage you to subscribe to our YouTube channel. There, you're going to see full episodes, clips, and content you won't find anywhere else. And it's the single biggest way to help support the show. And this week, John sits down with Adam Katz, who spent 20 years advising ultra-high-net-worth families before becoming one himself when he sold his company Core Private Wealth, a $5 billion wealth management company. Now, Adam's the author of Making the Zeros Count, a field guide for decamillionaires, centimillionaires, and billionaires. And in this conversation, he reveals the three-digit rule, why owners anchor to a number and walk away from life-changing money, and why the best part of selling has nothing to do with the money you can buy. Without further ado, here is Adam Katz. Enjoy.
Speaker 2Adam Katz, welcome to Built to Sell Radio. Thanks for having me. Yeah, you are the author of a book that's making a lot of waves. It's called Making the Zeros Count, a field guide for decamillionaires, centimillionaires, and billionaires. It's quite a title. What made you write this book?
Speaker 3So, it's funny. I'll tell you, and if I can, I'll just sort of show it, because I'm pretty proud of the aesthetic. But it starts with, in the back, it says, stop counting all of those zeros. Just make them all matter. And that's a really, really important element, that this book is not about creating the wealth. It's how do you use financial wealth as a gateway to real wealth, which I talk about as time, autonomy, and health. And in fact, that's the first nugget that I call carries in the book, which you can sort of assimilate into your everyday person and carry with you, so that in the moment, you can access them. And I've organized them into advice, mindset, career, and money. Whole book's told in a...
Speaker 2But why write the book? Like, well... What was the, like, was there some sort of trigger, or what happened?
Speaker 3Yeah, so the, yeah, no, the trigger was two things. One is that, you know, in my day job, I work in wealth management industry, and I run a big entrepreneur and founder business. And I have a big team, but I only work with a couple dozen people at a time. But I know over the past bunch of decades that my ideas help a lot and really allow people to have a much different life. So, I want to help tens to hundreds of thousands of people I'll never meet. So, I looked at the book as some type of a megaphone. It was also cathartic and fun to write. And I felt like a lot of times in certain industries, a lagging indicator is what acts as the catalyst. So, you know, a lot of people say, hey, you should write a book to a lot of different people. And I felt like people often say, well, I don't have the time. And then the reality is people sort of run out of things to say when they start writing. And you know this, John, you wrote a book. And I was sitting here a few years ago on vacation, and I said, you know what? I do have the time. In fact, one of my carries is this... And I realized that I felt like I had the room. It wasn't an energetic eye that gave me extra hours, but I found I had a new piece that I could insert to the life pie, which was going to be this book. And I was really disciplined about it. But I felt like at that point, I was about a year and a half or so exited from my own business. And going back to this lagging indicator concept, all the ideas in this book, for the most part, I could have talked about years ago. But there's something about being not only a provider to... lots and lots of founders through the years, but now also being a peer that puts me in a unique spot to write it. So it just felt like the right time.
Speaker 2So tell me more about that. How did you become a peer of the people you write about? You sold a business called Core, which was a wealth management company. Maybe just walk me through that story.
Speaker 3Sure, sure. And if you back up a little bit, I spent 20 years at a national wealth management firm, and I had a little bit of a different path. The first dozen years, I was in leadership before I moved into being an advisor. And I had an unusual perspective in that I was head of sales and business development of this firm's ultra high net worth business. And I was actively involved in recruiting probably 60 of the 160 teams to this firm. So I often joke, I've talked to way more of me than anyone would probably ever want to, and probably ever would. And I have a really good perspective on how advisors act and how in which a client should interview an advisor. And I... I eventually really figured out that source of wealth, stage of life, segmentation really gets you to the homogeneity in the middle of a Venn diagram. Meaning if you have $10 million and you were a real estate developer versus an inheritor versus an entrepreneur like you, the way you think about that money is radically different. And then if you layer on... I think that an inheritor looks at the money almost as not theirs and sometimes can have two very diametrically... Two very diametrically opposed views. They either don't think they deserve it or they're unbelievably entitled. A real estate developer might be worth $10 million, but doesn't really look at liquidity the same way. And let's use a corporate exec who's making millions every year and saving after the taxes. They're just saving, saving. Whereas an entrepreneur may go from having $800,000 in the bank to having 8 million or 18 million. And that's a lot of where the book is stemming from is the sort of step function wealth creation events. And in my mind, as you're sort of thinking about advisors, you always want someone, again, who isn't practicing on you. And the things that you care about, they're talking about all week. And everything you ask them about, they probably talked about yesterday. And so if I... Yeah, sure.
Speaker 2Yeah, no, I was just going to say, so the business that you founded after leaving that national firm was a wealth management company.
Speaker 3Exactly. So to fast forward, that was around 2010. By 2018, me and my four partners, we had a really... We had a really thriving business at the firm. But we felt the longer we stayed, the less relevant we'd be to a growing portion of our clients' lives. And it wasn't going to run us over the next day, but we were being really anticipatory. And we were fortunate that we had a pretty sizable business and we were able to build our own firm with a blank slate. It was called Core Private Wealth. At the time, we loved the name and we still love the name, but we didn't know that Viore made Core Shorts. So it wasn't as unique as we thought it was. But anyway, a few years later, for a variety of reasons, which I'm happy to get into, we realized that we wanted to pull the whiteboard wishlist forward quickly. Meaning there are all these things that we strategically wanted to build over the next three, five, 10 years. And we realized that if we partnered with the right firm and sold ourselves, that we could then instantly deliver these amazing services to our clients the next day. And going back to my concept before, we never had a practice on them while we were building it. And that was a... It was a big deal. And we were a $5 billion multifamily office when we sold, which is pretty sizable in the scheme of things. And now the firm that I'm part of is the largest non-bank wealth manager on the planet with over a half a trillion. And so it has a lot of scale where we need it, has a boutique feel because its roots are the way in which I describe with a big roll-up. But to go through the same process, interviewing investment bankers, doing management meetings with private equity and strategics. You know, really going through it allows you to be an amazing advisor when you've been the peer. So going back to what I was saying is, you know, having my own exit and thinking about things before and after the deal made me feel really well-armed to be able to write a book because I've been testing these ideas out for many, many decades and I have a laboratory on a day-to-day basis. But now to go through it in the first person just made the ideas come alive in a way that maybe they hadn't been.
Speaker 2So you sold a business with $5 billion in assets. I know a little bit about the way financial advisors make money. So I'm assuming that's ballpark $50 million in revenue, give or take?
Speaker 3Not in our business. I appreciate that. But in the ultra-high-end workspace, the fees are a little bit lower than that.
Speaker 2Okay. Okay. But still a sizable business with significant revenue. And you sold that and that was a liquidity event, a life-changing amount of money for you.
Speaker 3Mm-hmm.
Speaker 2You had spent 20 years as a sort of, I don't want to say spectator, but as an advisor in an ecosystem, but not living it. What was the most surprising thing for you of going through an exit, having watched so many other people go through them and advise people? There still must have been things that were surprising to you.
Speaker 3There's a lot. We could probably have a whole session on this. On its own. But I would say, A, it takes years to get used to. And I'm years later and I'm still not probably fully used to it. I think that there's-
Speaker 2What takes years to get used to specifically when you say years to get, like, what do you mean by that?
Speaker 3Yeah. I would say two things. One is, you know, some of the frameworks I have in the book, I have one of my favorite ones is called the three-digit rule. So no one knows their net worth more than three digits from the left. So if suddenly you go from having a six or seven figure to a seven, eight, maybe a seven, maybe even nine figure, you could start rounding by $100,000 units, like if you had 18 million million, $326,222. You're literally just saying I have $18.6 million. You're rounding by hundreds of thousands of dollars. And suddenly life exists in all of those dollars to the right, all of those units to the right, and you can't even see them. So I think readjusting your balance sheet and your relationship to money takes a lot of time. I'm super intentional about it and I have a lot of fun with it, way more on the generosity side with friend support and random acts of daily financial kindness and actual charitable support. But I also do a lot of fun memory making with my family and my kids and all that stuff. So I think that surprises me how even I talk about it all day long and I teach people, but on a day-to-day basis, I think that that part is tricky. I think the other side of it, which I talk a lot about, is what you can see above the surface is the what. And if you don't explain your why, everyone around you will come up with their own narrative that sort of suits them. So they might see you make a donation, they might see you buy something, they might see something on Instagram that you did as a family, and you do your best to shield that. But absent you explaining your why, everyone else will come up with their own narrative. So I think that's been interesting to me, where there's some things we've done that, you know, a best intentions perspective on the charitable side would be, wow, that's so generous. The worst intentions might have reasons that they think you're doing things that are totally radically different. So that to me has been interesting as well. So those are a couple
Speaker 2of things that I would suggest. So if I'm reading between the lines on the second piece, above the waterline is the what, the why is less obvious to folks. And if you don't make that clear, people can fill in their own sort of narrative. Exactly. It sounds like that, you know, it sounds like it's a good idea. But I think that's a good idea. I think it's a good idea. have happened to you personally. Are you willing to share like a specific story of someone?
Speaker 3So one of the things I talk about a lot, so my kids are 20 and 16. So we're all raising kids now in a Zillow world. So when most of us grew up, we knew nothing about what our family was spending on themselves or how they were helping other people. If they were, there was symmetry between those two columns. Now there's asymmetry, meaning your kids can look at you and say, look up everything you spend. Now they only know the numerator and it's absent the denominator of your cashflow, meaning your income or your balance sheet, but they know what the car costs. They know what the vacation costs. I know the jewelry costs. They know everything. So in our family, we're very intentional about telling our kids down to the dollar, how much we donate, because why not even the score? And I sort of joke that if you don't feel that proud about what the scale looks like, you should get going. And so one of the things that we've done, we do a lot of hyperlocal stuff near us. So we did some, we did a lot of hyperlocal stuff near us. And we did a lot of hyperlocal stuff for our synagogue that was pretty grand in what it was. And it was an aesthetic upgrade refurbish. And I think some people were confused because we're not exactly the most religious people and we don't go to synagogue that often. And some people were a little confused why we were doing it. Now, part of me laughed being like, I don't know, aren't you just happy we did it? And of course you could be cynical and say there's tax efficiency, which is an and not the motivator. But eventually I was able to explain the reason why we did it was so that when young families moved to our area and are looking at different synagogues, I wanted people to walk in and say, wow, this place is ready for the next 30 years, not the last 30 years. And it was as simple as that. But I realized that absent that narrative, there were some, some weird ones going around and around about us. So a pretty personal example, but I think is a great one where people can figure out what suits their own narrative and oftentimes makes you feel better. So that's a big one for us.
Speaker 2How did you come to be aware that other people were talking behind your back
Speaker 3about the motivation? Yeah. I mean, I talk a lot about, you know, the judgment expectation, envy dynamic of any exit. And, you know, I would say that for this audience, fortunately, a lot of you are selling businesses that are a little bit under the radar. So I've got a lot of founders that have sold those. And then I also deal with founders that, you know, have super high profile exits and even, and IPOs. And so thank God, most of us don't have to deal with that same thing with my own transaction. No one would be able to figure out what we, what we sold it for, which is great. So there's so some anonymity that way, but I think there's perceptions. Again, it goes back to what's above the line versus what sort of below the line beneath the surface. And we just, you know, candidly sort of start hearing some stuff and, you know, you hear from friends and it sort of sinks because again, your intentions are so pure, but then it made me realize that needed to start understanding our why so that it could be married with the what, and, and it's actually been great because it's allowed us to be a little more proactive to explain it. And we actually explain it now proactively to our friends, because while you're raising kids in a Zillow world, your friends live in a Zillow world with you too. And they also might wonder why you're going on that vacation that way. And, you know, they saw you buy the new car. And, and I laugh a lot that most of the stuff we're talking about is just stuff that's on your body and portable and isn't really the bigger forms of wealth. And so I think that's a big part of it. And I think that's a big part of it. And I think this concept in the book of like, you can see two icebergs from above the water and they look the same, but beneath the surface, one of them is a popsicle stick and the others are real icebergs. So you don't really know what's beneath the surface. And in that way, it's actually, if they're a balance sheet or not, I'm more referring in this part of the conversation to like explaining your why. So, you know, I've a lot of stuff that I do. I just turned 50. So I did a really fun, you know, I think I celebrated 11 days in May, even though my birthday was clearly the standard one. And I did, you know, a pretty blowout trip with a bunch of my friends and made it impossible for them to spend. And that was an important, you know, just, I explained the why of, Hey, I want to make memories and it's fun. And if you guys were in the position I can, you know, my three digit rule, whatever I spent on it, I actually couldn't see in my bank account. And I think that was the important part was if I could take it out of the bathtub, which is where it was sitting, or it was indiscernible. And I moved it into the budget, this memory making 50th birthday party where it had massive impact. That's what I did. And, you know, but again, I had to explain the why to my friends, because I think sometimes people are uncomfortable receiving something that feels so grand, but, you know, felt really proud.
Speaker 2What impact has, has the sudden wealth event for you had on your relationships? The ones, the nine or 11 folks that you took on this trip, right? Like just walk me through what, what impact it's had with those relationships.
Speaker 3Yeah. I mean, I think in general, it's a neutral to positive. I think fortunately I'm, I'm super communicative and because I do this for a living, I'm pretty good, even though the cobbler shoes thing definitely, you know, matters. I started talking to a lot of my friends before the transaction, when it, when it looked like it was going to happen, as a lot of, you know, until that thing is signed, it is a scary bunch of days, especially if you let your brain start fantasizing about what life could look like, which we should talk about because to me, empowering thing is having a balance sheet where you don't really need anyone ever again. Now you doesn't mean you don't want other people in your life, but to not need and be dependent is unbelievably empowering. And I don't think people really understand it until they're on the other side of the deal. I often say that dollars in the bank is worth 10 X, the dollars on your cap table. And so when they're suddenly there and you apply this three digit rule and things like that, it's wild. But I started signaling to friends, things like, Hey, you know, if we wanted to go on vacation and you had the flexibility to come and I, you know, just said, Hey, I'm going to do this thing. I'm going to get an Airbnb, maybe do a plane, do it. Like, would you be willing to come? And people are like, hell yeah. So I think I started previewing it before it happened. And I think, you know, I have this concept called random acts of daily financial kindness. I have a whole tipping structure and all of this is sort of in the book. And my friends know about my obsession with it. My wife clearly knows about it. And so I don't think it really surprised anyone. And what's fun is I talk a lot about a spectrum. I have a few spectrums in the book and one is inspire and shame. So on the donation side, I think, you know, you can inspire people and sort of shame some other people and I actually don't mind it being somewhere in the middle. I think my friends are pretty inspired by a lot of what I do. And it's more of like, when you think about the book and making the zeros count, it's just memory making. And, you know, I've watched a few of my friends since that, fun, big birthday dinners, or maybe some other kinds of trips. It's like, I love it. And again, that's really why I wrote the book is that I know that the concepts in here have enriched so many people's lives. And if I can get a massive force multiplication impact through the book, it's just, it's as hokey as it's going to sound, but it's just to try to make the world a better place. And I've been able to do it on a micro level. And hopefully these ideas sitting on podcasts like this, I have this kind of conversation all day long. I don't always have, you know, the AirPods in. So to be able to talk to, even if it's 10 people at a time or a hundred people or a thousand is what gets me super excited. I guess where I was going with the question
Speaker 2around your, your friends is I've definitely, you know, we've, we've talked to other founders on the show who've had these kind of life-changing amounts of money and it affects not always positively the relationships that they have with their, you know, their friends. So, you know, silly examples, but like, where are we going to go out to eat? And Hey, like, where are we going to all of a sudden, you know, when, when, what did you say? The three digits?
Speaker 3right yeah the three-digit rule like no a lot of what you're saying is real i'd say me personally i've been able to avoid at least from what i can see most of it because i'm so communicative but i can give you you know endless anecdotes of what i've had a coach you know my issue that i find is that there becomes this concept of expectation so people will do the blowout family trip for a 40th birthday or 50th birthday and then everyone's like where are we going when you're 51 and people suddenly have alligator arms at the table at a restaurant meaning you know no one's got a wallet anymore because you took them out a few times or you know you fly your in-laws up to new york city from florida to come see you and you thought it would be really fun for them to stay in this beautiful suite at the saint regis and they think that's now their residence when they come every single time did that happen to you this has happened to all my clients i'm now i'm getting now i'm shifting to anecdotes okay i have endless i have endless anecdotes of what clients go through because i'm always coaching them one of the things i do a lot is you know again it's just about communication of like hey i'm gonna do this for you and here's why and like this is a one and done just to be clear so as awkward as that might sound i think that's helped a lot but again i've seen everything that you are probably bringing up you see a lot of envy you see a lot of judgment and i tell people like vacation's an interesting one because it's a lot of judgment and it's a lot of judgment and so you're either telling them with words or pictures now pictures is confusing these days because of instagram and things like it especially if you have grown kids so you know you can go on the same vacation to the same destination and spend ten thousand dollars or 150 000 and you went to the same island or you went to the same part of europe you just fly really differently you stayed really differently you experienced really really differently so i think what could start happening is if people start getting a sense of the kind of things you're doing that are so far and above them there's the judgment i can't believe they did that you'll see with private school with kids a lot too is i can't believe they're sending their kid to private school they were never private school people on the flip side is i can't believe they're not sending their kids to private school they can clearly afford it so you get to a lot of that i think one of the other things that's that's that's a little tricky is that if you have a lot of friends from other parts of life that don't have a lot of friends that don't have a lot of don't quite have your situation how do you interact on like normal conversation i think college is the easiest one you know college is so expensive you know for folks on this that are listening for folks that i work with it's irrelevant like it's really really expensive and it doesn't matter so you have to be careful if your friends are sort of you know getting upset about where college is or they got the sunday scaries on a sunday night and you can be empathetic but you have to be careful to not look tone deaf and also say i can't believe how expensive colleges were so stressed don't say the so stressed part because that would seem disingenuous you can say i can't believe how expensive it's gotten that's okay so i think there's these nuances that you have to coach people on and again i think when people go through these events the more visible they are the more you got to deal with it but i would imagine a lot of folks listening to this have great cash flowing businesses in some ways sometimes selling a great cash flowing business is almost a downgrade to life meaning your business makes you more money than the money will and you're way more comfortable with how the business makes you money than how a big asset pool will be but again the difference is you're getting rid of idiosyncratic company specific risk that's one of the things that i find a lot is that folks with a great cash flow business get lulled into thinking there's always a buyer for the business at the best multiple they've ever seen delivered with the best micro trends of their company and landing that together is so hard and i've seen some situations where families have beautiful businesses but something idiosyncratic happened and suddenly that revenue or ebita totally craters and the multiple craters and they were really squeezing out very little toothpaste from the toothpaste tube if you will meaning a lot of entrepreneurs don't always take as much out of the business along the way and that can get really really tricky so i often say i have no one who really regrets selling but countless that regret not which sounds extreme and very very binary but i've seen some situations where i would say talk more about that true i think people yeah i think that a lot of times people romanticize different aspects of selling or not selling so you know what i've found is that people have had the opportunity to sell companies but they mentally anchor to what they think it's worth i think it's a 25 million dollar business i think it's 100 million dollars i think it's a bill whatever the number is and if someone comes in at 92 million and you think your business worth 100 million you might actually say no even though the 100 million has nothing to do with any multiple or any growth trends it's just what you've mentally anchored to so i wrote a piece a long time ago which is don't conflate the headline of the deal with the bottom line to your family
Speaker 2and i try to remind you that slowly adam don't conflate the headline of the deal with the bottom
Speaker 3line to your family so in that scenario let's just say hey i thought the business would be worth 30 million dollars the bankers told me worth 30 million dollars but i'm only getting 27 million dollar bids clearly they didn't do their job and the buyers don't understand my business well enough i'm going to walk away but you own 100 of the business and maybe you've even done some cool estate and income tax planning where you know after taxes you have you know 22 million dollars and at the 30 million you would have had 24 million dollars the margin utility of 2 million dollars on 22 is zero there's nothing you can't do with 22 that you could have done with 24 but man if you don't do a deal at all you got 800 grand in the bank because you haven't been squeezing a lot of toothpaste out of the toothpaste tube and i think that's where i try to really get people to remember that you're growing up with a lot of money and you're growing up with a lot of money and you're growing your grandkids your great-grandkids the charity you donated to the vacation that you booked they don't care what your cap table looked like they don't care what your enterprise value was how the money gets to you and how you use it isn't attached to that and the healthy ego element sometimes really really overpowers people so i try to remind people of what that wealth can do in the real world both financially and more important psychologically and i'll go back to what i said is being on the other side of a transaction and being on the other side of a transaction is is unexplainable until you're there and have the balance sheet and say wait without getting out of bed i'm making how much money which allows me to just have flexibility essentially for the rest of my life and i think people don't really get that until they're there
Speaker 2i want to explore more this concept of the feeling of not needing anyone it's a very interesting it when you said it the first time it really resonated for me because i think for a lot of founders their primary motivation the deepest value that they hold dearly is the desire for freedom yes i i've listened to so many founders say it's not the money it's not the zeros in the bank account it's it's this it's what i'm searching for is freedom many of them could have worked at the big national firm or worked at procter and gamble or ford motor company or whatever but for them starting a business was like an expression of freedom so i think it's a it's a really interesting i mean the first
Speaker 3aspiration the first carry in the book is again financial wealth is not a destination it's a gateway to time wealth autonomy wealth and health wealth which i say less eloquently it's getting up every day doing what you want where you want with whoever you want and i think what i mean by not needing anybody what it means is you really can do things and hopefully in a very respectful but not arrogant way on your terms you don't have to there's no wavering around the way you think about how a thing should be done you're not worried about what you're doing you're not worried about a client firing you you're not worried about if you have a boss the boss firing you you're doing things in the purest way and i think people do their best along the wealth creation journey to act as if it doesn't matter but it's hard to really act that way until it truly does not
Speaker 2how do you know when you've got there how do you know like people talk about the four percent rule
Speaker 3like what what is how do you figure out i'll be careful i mean to me what i remind people is like the only competition for an amazing lifestyle and we'll take lifestyles memory making maybe random acts of daily financial kindness charity whatever buying stuff i think people oddly ascribe buying stuff is a bad thing i don't know there's there's a whole luxury goods market for a reason i always say the only competition for all that stuff is some terminal value you care about when you're dead in your account and i don't really need anyone that actually cares about what's left when they're dead if it meant that they shouldn't do what they're enjoying and i also talk about like the 40s 50s and 60s are probably a better bet of being able to do all that stuff than the 70s 80s and 90s so i think people sometimes linearly look at some inflation adjusted spend and it's not nearly as linear if you think about what you can and can't do of course health care will become a bigger piece of the life pie and the spending but absent that you like you just can't do all the fun stuff at 83 that you could do at 43. so part of what i say to people is you know the four percent number i understand the math behind it but a lot of times those calculations are trying to make sure you don't touch any principle and i'm not really sure that's the right move for a lot of people obviously there's definitely people that focus on zeroing out the whole thing i view that as a result of not a goal if you happen to zero it out great but like if you don't sacrifice anything and you still have a ton of money left over whether they're sitting in trust or charitable vehicles are outright. And who cares? That's great. As long as you didn't sack. sacrifice. So for me, when I think about the number, I always talk about the backwards maze, which was another favorite carry in the book, which I tell people when you were a kid and one day you looked at the maze and you realize if I started the word finish instead of the word start, it's a lot easier to figure it out. So I try to fast forward people with time and think about what are the things you love doing. I also think people need to take stuff out for a spin. And that's a big deal for me. Vacation differently, donate differently, tip differently, buy some stuff and see what you think. It's unlikely any of that will derail you over the next 10, 20, 30, 40 years, because usually none of it's recurring costs. It's one timers. So I think that's a big deal for people. And then I think you start figuring out like, what is your number? There's plenty of people who have $10 million in their fifties that that's all they'd ever need. They say, Hey, if I can generate 4% a year in cashflow, maybe a couple of percent of growth, do I care about inflation? Maybe, maybe not. But that 400 grand is great. That's about what I need. Other people would say, no, I need a million dollars a year. And you got to go backwards and say, well, you probably need 25 or $30 million. So I think to me, it's always around, you know, what does lifestyle look like? What is desired lifestyle look like? Where do you want to ebb and flow? It goes a lot to do with that visible and invisible wealth though. And a lot of that tip of the iceberg versus the tip of the popsicle stick. And I think that helps a lot.
Speaker 2The thing said, that I see is the conflict between accumulating wealth, because let's be honest, wealth is how many entrepreneurs and many in society, especially North American society kind of measure oneself and success. And you know, wealth is, is oftentimes still used as a measuring stick. Yeah, for sure. And so the, you know, the, the, the, the idea is that like you have to accumulate, right? So if you've accumulated X, you've got to get, you know, you're going to keep accumulating to the point where at some point, you're going to be able to, you know, you're going to be able to, you know, at some point you will die and, and, and, and you will have created multi-generational wealth and your life will be a meaningful event. And even though you were a kind of a miserly person all the way up, you will be forever remembered as this incredible, you know, person that set their grandkids up for success. There's, there's a way that some people think, which is, which is this creating this, this dynasty, right? And then what I've seen is another way of thinking is like, you know, it's, it's the old die with zero concept, but it's, it's like, Hey, I want to spend this stuff and make memory, especially in my younger years. So that I've, you know, and, and those two things are like diametrically in conflict with one another. Where do you like, have you seen that in
Speaker 3your, in your work? I see, I see, I see it all the time with the entrepreneurs. And I, I would often say like one data point does not a sample size make, although I got a lot of data in one data point with me, both with how I've helped people and how I've thought about it myself. I feel like more and more people are coming out of their entrepreneurial journey at a sale, and they still only ride a one speed bike, meaning everything's the same gear. Everything is the same speed, the competitiveness. And a lot of what I have to do is help you unlearn that mindset. I need at least a three speed on my way to a 10 speed bike because not everything needs to be the exact same speed. I need at least a three speed on my way to a 10 speed bike. Same mentality of win, lose competitive way of being that probably got you there. And that I find takes years to unwire for people. And I think the accumulation is just this inertial force of like, I guess I'm supposed to be looking for the highest returns possible on my new denominator. And I think that's where I'm able to help a lot of people think through, like, even if you only make five or 6% a year, we're going to keep inflation out. Like your money's going to double every 12 to 15 years with the law of seven. And I think that's where I'm able to help a lot of people. And then you fast forward, you know, 40, 50 years. I work with a lot of people in their thirties or forties, but even if you're in your fifties old, like me now, um, you know, hopefully you got another 30, 40 years in there and you start doing the math. And let's say you start with 20 million bucks and I'm like, you're going to go to 40, 80, 160. Now inflation will eat away at what it is. And I'll say that that only takes five or 6%. The return stream you're focusing on is irrelevant. And it's hard to get comfortable with it. And it's hard to get comfortable with that because also it's sort of boring if you have nothing interesting to talk about on the investment side. So I find that for the most part, people are not optimizing for the biggest number possible, but, but I think a lot of times there's going to be money left over. Anyway, I try to focus the most on optionality. I talk a lot about time machines, you know, when I sold core, my portion of the business, I own some of it already in an irrevocable trust, but it's a very flexible trust because I was 46 at the time. Not really sure what I was going to want at 56, 86, but I tried to build an optionality. And my gut is I want my kids to be in a spot where they didn't live in a roach infested apartment like my wife and I did. That's probably, I don't think you need to go through the same mud and uphill to school through a snow storm both ways. I often remind people that I'm like an anti-hazer. I tell people it took me a decade. I'll teach you in a year because even if you went through what I did, you're not going to be able to do it. You're not going to be able to do what I went through. You're almost undervaluing my luck and my skill. So to me, in this way, I feel like with a lot of folks that are going through all of this, they're not really sure what they're going to want. I think people change their mind a lot, especially I work with a lot of folks that are single and don't have kids yet. And it's really hard to know how you feel about kids and leaving money to them until you have them. On the flip side, I think people are terrified of screwing their kids up. If I look for a list of 10 things that are most important, it's the first one. And so we spend so much time. And again, I think a lot of it's that communication, the raising kids in the Zillow world. There's a lot to think about that. But I would say if I was to look at a percentage of who's trying to have nothing left and who's trying to grow it bigger, it's vastly to the majority of growing bigger, but not the biggest. And I think that to me is the nuance of they don't need it. They don't need to win every year against the quote unquote market to feel satisfied. And they're used to having to win against the competition every year to feel
Speaker 2satisfied. So I think it's hard to turn those things, those, those inclinations off in someone who has been successful as you're describing, you know, that it is a sense of competitiveness.
Speaker 3You just focus on the why. And if you could ferret out the why, because the what is that percentage return in the accumulation and outpacing, that's all the what. I go back to the why. And if the, is the why a fear-based discussion, I don't want to run out of money. I don't want inflation to eat away at what I've got. I am competitive. I want my money to work as hard as I do. You know, I've, I've heard all these different things, but I push hard. I, you know, often when I meet people in a social setting, if they ask what I do for a living, much begrudgingly to my wife, I say, I'm a therapist. I joke because most people don't actually really care what I'm doing for a living. And as we all know, a lot of people listening to this, if you say you're a wealth advisor, they immediately think two things. You want to work with them and that you have stock tips. Whereas like, I always say, if I was a dentist, you wouldn't think I want to clean your teeth, but our profession is sort of funny that way. But as a therapist, I think that you're really able to help people ferret out the why. And that's where I find that people really do unlearn some of that wiring when they look at the math, which they've never done before. And they're like, Oh, maybe I don't really need to do it that way. And it's, I have like one client that I've been working with for 15 years, super competitive. And I would say it took him 12 or 13 years to say, why do I need to win every interaction? Let me get off my one speed bike and at least get on it. He's on a three speed bike right now. He's not on a 10 speed yet, but he's on a three speed. And it's amazing to see. And you know, to me, the faster you can compound that type of cumulative impact of small change of even just behavior. Again, you go back to that financial wealth, providing all these other wealths around time, autonomy, and health, both mental health and physical is the big unlock.
Speaker 2Such a good, it's such a good point. I'm dying to ask you about how you're dealing with it with your own kids. So you said you had 16 and 20. Yeah, that's right. I know you, you, you met, you shared earlier, you, you definitely kind of lean into how much you're giving away, which, which is great. So they can see both sides of the picture. Um, you, do you worry they're going to grow up as entitled bricks? Like, is that something that's one through nine
Speaker 3for us too? It's tricky because you know, my, my dad, my dad was a guidance counselor in the Bronx. I have no relation to Katz's deli. And so, you know, for us, that's, that's, that's, that's, that's there was no wealth. I never went on a plane with my family and my kids have traveled more, more already in their lives than most grownups will in their entire lives. And then we travel nicely. My wife actually recently pivoted after corporate America, and she now is a travel agent with our travel agent and it's great. So our kids have traveled a lot. They travel, as I said, nicely. We try to be discreet about things, but we are very into memory making as a family. I think they know there's some version of a safety net and the hardest part is like the survivorship bias of so many things. Like my younger, my younger child doesn't remember life before we had a lake house and it's a nice lake house. It's nothing massively over the top, but she literally was so young that she just doesn't, it was nine years ago. She just doesn't remember. I mean, who remembers life at seven, eight years old? I don't. My son, my son remembers more and he often jokes with her. He's like, you don't even remember what like our vacations used to be like and this and that. And I think to me, I don't know if I'm doing it correctly. I, I actually have a phrase, which is we all practice on our kids. because in what other profession would having two or three or four or six at the Brady Bunch data points make you an expert? No other profession. So I'm really intentional about surrounding my kids with experts. Now, it could be a camp counselor, it could be an art teacher, it could be a soccer coach, and empowering them because they have the data to be candid. And I think that's where a lot of parents sort of could miss. So I think we've done a really good job of like understanding the mosaic of our kids. I think we've done a really good job of just talking about all this stuff. And we do stuff that's confusing. I remember my son wanted to go on a date and it was like his three-month anniversary. He was 16 years old. And he had booked this local steakhouse that like we went to for like celebratory dinners. And we said, what are you doing? And he's like, well, I don't know. I'm like, oh, actually I had a fairness at that point. We were probably going there a little more randomly. And I said, oh, it's confusing to you because we go there on a random Tuesday. So in your mind, it's not that weird. I said, but Ev, like the people that, you know, train me. Whether it's my mental trainer, my physical trainer, like they wouldn't even go there. And you're going to go there for your big three-month anniversary. I said, but I understand how that's confusing. Or, you know, my daughter will sometimes look at, again, sort of the above the surface stuff, what's on people's bodies and be confused. Like, why can't I get some more of this or some more of that? And then I'll be like, well, did you know we donated to the local JCC or what we did for this? And she's like, yes, it's, you know, $25,000. I'm like, do you think that I can buy you a whole wardrobe of Lululemon? Of course, I said, but that's not the value system. And I think that to me is where, I think we're doing a good job of communicating. But I do think that there's that, you know, will they ever go do a thousand in-person meetings a year for a decade like I did and take the training the way I did at two in the morning? Cause I missed the 1 a.m. one and I definitely couldn't afford an Uber if that even existed when I was doing that. That part scares me a little bit, but I don't know if it's, I think it's okay. If they don't do it exactly like I did, because even if they did, doesn't mean you'd get the same result. But I do think that you need to just communicate with your kids on your why. Cause if you don't, it's so confusing to them where they watch you spend on this, but then you're saying, no, no, we're not going to do that. And they're like, but that's $85. I just saw you spend 2000 on that. I don't understand. And I think that's where that raising kids in the Zillow world, absent communication, your kids will start being confused. So I just encourage people fill up the gap with your narrative and your why doesn't mean that it's always going to work perfectly. And also we've acknowledged many times to our kids, like that's pretty confusing or we weren't very consistent with that one. We're working on it.
Speaker 2You got to give us some grace. But it's a really interesting idea to communicate the why, like why, why do we travel in luxury? Why is that important to mom and dad? Why do we give, give to this charity, but not that charity? Or why do we give to, you know, why can I buy this and not that?
Speaker 3And I have one client who he gave me an interesting idea, which we don't exactly do, but he said, whatever we spend extra on first-class travel, we donate like the exact amount. And I'm like, oh, that's cool. It's not exactly what I do, but like, I love the, as I said, to me, it's just about communication. I have so many people that they just don't want to talk about stuff. And I'm like, well, if you're not talking about it, someone else is. And again, they're filling the gap with a narrative that usually suits. To make themselves feel good. And that's the thing. It's not that. It's nefarious, but people tend to, it's easier to just assume someone's doing something for a reason that just makes you feel better about your own decision tree and your own choices. And the one that maybe is more magnanimous and generous, like wouldn't make them feel good. Cause I got, you're actually a really good human. I'd rather you, you know, have these ulterior motives for doing this thing that I'm seeing you doing, or, you know, I, I see you buying this stuff and you know, wow, that's, that's such a waste of money. And it's a really money is a weird thing. But as I say, what you can see on a, on a human being is jewelry clothing. The next is you could see them in an automobile. Eventually, if they invite you over, you can see them in a house. But if you think about all of that, especially with leverage, these aren't, these aren't huge numbers, you know, buying a nice watch, buying a nice piece of jewelry, wearing nice sneakers. Like these aren't really moving the needle of real wealth. It's mostly the beneath the surface, which is the size of the account, the way you're generous with people. When no one's looking, that to me is the big one is, are you generous when no one's looking or only when you get attribution? And that to me is a big deal.
Speaker 2A friend of mine bought a Rolex watch the other day and we were, I would, and he's a very successful guy and I was kind of surprised. I was like, wow, you're, you know, he's my, he's just fifties. And I thought, isn't that interesting that at 50 with, I know enough about him. I know he's this very successful guy that he would want to have that display of wealth, right. To say, Oh, I've been successful. And here's, here's the watch. And it just kind of floored me. I'm not, as I say this and relay it to you, it sounds judgmental. I wasn't being judgmental. I was not trying to be judgmental. I was curious. I was like, wow. Like, cause, cause part of being wealthy, I think you want to have some anonymity, right? Like you don't want to display it.
Speaker 3You don't want to, you know, this is, it's, it's funny. You brought up watches. So first I'm just going to go like this.
Speaker 2Is that a fancy watch?
Speaker 3But what's interesting, what's interesting about this is that I wore an Apple watch for 13 years and still two until two years ago. And my journey around horticulture, I think that's the fancy word for watches at some point, as you accumulate more wealth, it all becomes a cheat. Meaning if you buy a Rolex, it's a balance sheet shift. Not consumption. If you buy a Seiko or even if you buy a Movado, it's going to go down in value immediately. So there's this weird cheat that I teach a lot of my clients about. And I've dealt with is that at some point you start accumulating certain things that look like consumption in the category, but there's a part of the category. That's a balance sheet shift of an appreciating asset. So that's a really weird mindset. And so, you know, the last couple of years, and it's mostly driven originally, by my son who wrote for a school, he went to his essay on mechanical watch movements, mocking his father with his Apple watch. And so I've bought a couple of nice watches that, you know, I could have never gotten my head around these numbers and three digit rule and appreciating asset is a cheat. I had a client recently buy a Ferrari direct from the dealership and similar to the watches or certain bags, you actually have trouble getting the allocation. It's really weird, by the way, where you have a willingness, to pay, but no one has a willingness to, to, to give it to you. And that's a very strange thing about watches. A lot of the nice watch brands, you actually can't go in and buy, even if you have the money. It's a very, very unusual thing, but this particular Ferrari, he was got, he was able to get it directly from the dealer, blah, blah, blah. And it was, I think, seven 50, three quarters of a million dollars. And he looked at me and said, if I don't like it, I could turn around and sell it for 800. Cause there's none of them. He said, the dealer will never sell it to me ever again. He said, but I won't care. Cause clearly, and I said to him, I said, listen, I think you get it. You take it out for a spin, quite literally. I tell people to take everything out for a spin, but with the car, it's actually literal. And then you figure out, how do you feel in it? Do you feel like an asshole? Do you feel like, man, I'm being judged when I pick up the kids at soccer practice. And if the answer is yes, it's not for you, you sell it. But if you like it, I do push a lot that I hope everyone watching this, if they have these events, find something that viscerally makes them excited and feel proud and feel successful. Liking some material stuff does not make you materialistic. I like cars. I like the sound of cars. They make me feel a certain way and I'm not shy or feel bad about it. I now have some nicer watches. As you can tell, I'm a really casual guy though. So I like mixing it up a lot. So I'm usually in a t-shirt and jeans. Um, but maybe I've got some nicer time pieces, which fortunately, I don't think a lot of people even recognize that.
Speaker 2Long-time listeners of this show know that I ask every entrepreneur before we break, what was the trophy you bought yourself? So when you sold core, uh, and, and I know you've got a couple of watches, but was there a specific, you know, trophy that you bought yourself?
Speaker 3My book, I self, I self published this and spent way more money than, I mean, if you look at the book, it looks like it should be sitting at, you know, the, the store in, in, you know, the airport. It looks like it's the right, I have a beautiful website. Which, you know, if people want to find me, it's just, you know, www.makingthezeroscount.com. I have a real distributor and Dana doesn't, you know, my wife doesn't want to know what I've spent, but I've spent way more money on this book than anything. And to me, like that, we had the six figures, Adam. Yes. Yeah. That was the biggest gift. When you look at the coach I hired, who mostly just kept me accountable to do my homework. I obviously had an editor. I have like a general contractor for the self-publishing. I have. I had the printing of really, really high end visual. I have a website of a, like, you know, my website looks like a real website. My son was really trying to do it. I'm like, that's not my speed. Um, so to me, the biggest book I write, the biggest thing I gave myself was the book, which I know sounds like a weird answer, but hopefully after listening to me for a while, you understand it's actually pretty on brand.
Speaker 2Adam Katz, I'm really grateful for you sharing some of the lessons that, uh, that you've learned over the years. The book is called making the zero. And I'm donating, and I'm donating.
Speaker 3I'm donating 100% of any of the book profit to charity. So I'm making the book sale zeros count, embodying everything. So buy it, read it, and share it.
Speaker 2Makingthezeroscount.com. Adam, thanks for those.
Speaker 3Thanks a lot.
Speaker 1And there you have it for today's episode between John and Adam. For show notes, including links to everything referenced in today's podcast, you can visit Adam's episode page over at builttosell.com. Special thanks to our group of advisors who help us bring our message to you. Our advisors are experts in helping you build the value of your company. To get in touch with an advisor or learn how to become one yourself, head over to valuebuilder.com. I'm Colin Morgan. I look forward to talking again next week.
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