Weird Side Bets That Made Founders Millions

(upbeat music) Building a business and selling it pretends to millions of dollars is one way to make a lot of money. But it's not the only way. And our founders have actually made some good money on the side as well, which is what this list is about. Like somebody who wrote a $10,000 seemingly forget a check and it turned into 1.2 million. A guy who was currently worth about $100 million, but actually made his first million from his basement before he'd actually even started his business. And another guy who's three X's wealth overnight without actually investing in anything. And this list isn't gonna be about the same stuff like index funds and bonds, which I know Sam Parttuts a lot because I mean, it should be an important part of your investment strategy. This is the more fun stuff, the riskier stuff that have actually paid off for a lot of our founders with specific examples. This is Moneywise, a show for founders who have already seen some success and are in the stage of figuring out what to do with it. And I'm Jackie Laport, the producer and sometimes host who happens to have stumped a lot of you in the comments when it comes to my agent gender, which it's very funny to me. So keep guessing. Also, I'm a little bit sick, but we'll go on. So let's do that. Let's go on. (upbeat music) We'll start with one of my favorites. The best $10,000 Jacqueline Johnson has ever spent. - My first ever angel investment was into a wage luggage. It was the friends and family round. I wrote like a $10,000 I think check. And did not have $10,000. Nor was I an accredited investor at the time. I was like just like, I remember my mom being like, what is this check? And I was like, just let it go. I'm helping a friend out and like she helps me out and like whatever. And put to, I don't even know how many years later, maybe like seven, eight years later, was able to be bought out of that investment for close to $1.2 million. - That makes this first item on the list, angel investing. And if you're thinking, yeah, yeah, but that's not a great example because she kind of just got lucky there. I mean, it is kind of how it works, but also you're right and she does acknowledge that. - Obviously I was like, angel investing is the best. (laughs) I was like, that is not normal. I'm like, no, I know. But like here's what I'll say. I think the beauty of angel investing is this. So I have 25 different companies now in my portfolio. And I think of it as my own personal venture fund in a lot of ways, right? Like where I can kind of think about one, like it's always found our first for me. Two, how do I diversify? Three, how do I help sell this company? Like I've been through it now a few different times. I've also seen companies go through it. It's not formulaic in a way, but it is like a way to kind of get there, right? And I think being able to support and help other companies do that now feels exciting and rewarding. Of the 25, I think three have exited successfully where I have made a return, obviously not at the level of a way. And maybe two have like completely gone under and all the rest are kind of still in play. - There are a few downsides angel investing. One, it could be a really long time before you actually see any return. Two, you might not see any return at all because it is quite risky. And three, it can be kind of boring if you're just sitting around and writing checks. The people who we've talked to who have actually had the best experience with it are the people who are in it for more than just the money. For instance, in Jacqueline's case, she is primarily supporting women-owned businesses and helping them grow, because it's kind of her thing. But I hire a math as a similar angle on it. - Like 5% of my net worth is like active investments that I make, like angel investments. And that's like the most fun to me. That's like, okay, I get to invest in these founders, they hit me up, they need help. Like on like 11 PM calls with like two founders who are like fighting about something. It's like actually being involved is like an angel who's like an operator is really fun. - So angel investing can be a nice way to kind of stay in the game without being the CEO or the full owner of something. Also to be a part of the success journey for some up-and-coming founders, which is rewarding. You might also be financially rewarded or not at all. But if you do wanna throw your hat in the ring for a $10,000 check to turn into $1.2 million or something like that, here are some tips for angel investing based on the strategies that our founders have shared with us. First, cap the percentage allocation in your portfolio and stick to it. Don't make exceptions. Second, see it is kind of play money, not a sure thing or retirement plan, because yeah, it may or may not work out. And if it does, that's great. If it doesn't, yeah, you don't want it to know what kind of you're expecting it to. And third, stick to the spaces and the founders and the models that you already know or understand. Also, Orn Hoffman is a really big angel guy and he actually came on, talked all about that and shared all his personal finances. I will link that episode in the description of this video if you're curious. Next up, let's talk about a beach house. What's interesting about this one is that unlike a lot of real estate investments, it was immediately profitable and it resulted in quite a big payout relatively quickly. This one comes from En Malume. On the second deal that I did, which I took nine million, I bought a house in the Dominican Republic like two months after for 3.6 million. And then I sold that 18 months later to Albert Poole's for 5.6 million and I rented that out along the way. So it was a cash flowing property. So $3.6 million in $5.6 million out, that's $2 million profit, not including the cash flow along the way in just around 18 months, which is pretty substantial. But this is not En Malume's only real estate investment, far from it, in fact. It's actually a pretty big part of her strategy. I've done 20 to 22% in real estate. Is that real estate cash flowing real estate? Yeah, it's not cash flowing real estate. So I'll tell you again, and I've done really well in real estate and I've done cash flow real estate in the past. But for where we are, like we have a place in Miami, our primary house, this is public and I have no problem talking about. We bought this house for $12 million. We got a crazy deal on it. It was in probate, fully furnished, $2 million. We used it all the time when we go play volleyball. And I have a place in New York that I bought back in 2018, which we also used. And I'm there for work quite often. And then I bought my dad a house back in 2015. He still lives there. That's pretty much paid off. And then I bought a house that my brother and his wife and the kids live in back in Bismarck. And that's sort of part of my gifting, is that real estate? And then I just put down a deposit on a $14 million condo in sunny Isles called the St. Regis. And that is an investment. I will sell that over, it doesn't finish till 2029. And at some point over from now until then, before the 50% of the payment is due, I will sell that property. And so does that mean something like $25 million in real estate? - Well, yes, it is. I have about $22 million in real estate. - All right, money wise listeners, here's the deal. On this podcast, we talk about money. And that's great. But the one thing that's even more important than money is your health. And a few years ago, I made a change. So I made a change to get fit. I wanted to get fit for vanity reasons. I wanted to look good, but I also wanted to feel awesome and hopefully live a long time. And the way that I made this change after years of struggling was I hired a coach and it changed my life. I went from being like 25% body fat to 13, sometimes 12% body fat. It changed my life. And that's why today's sponsor is Daily Body Coach. It's a premium online coaching service for ambitious entrepreneurs and executives looking to achieve their dream body and perform their best. Daily Body Coach is run by an exited software entrepreneur and Hampton member. And in fact, a bunch of other Hampton members are using Daily Body Coach. And they hook you up with a super personalized exercise and nutritional roadmap to help you achieve your goals. Their expert coaches are available seven days a week. So you can rest assured knowing that you have someone to hold you accountable every single day and to keep you on track. You can have it all. They offer a 100% money back guarantee within 30 days no questions asked. Make a change, check them out. Dailybodycoach.com/moneywise. Again, that's dailybodycoach.com/moneywise. - We've actually had a bunch of founders on who have talked about real estate, not just as a long-term asset strategy, but also as a cash flow strategy. Jeff was one of those people. - The real estate that I own today has is cash flowing real estate. That brings in about two million a year, two and a half million a year with the three main projects I have. - And obviously not everything has to be a sexy as a beach house in the Dominican. Take it from Rajiv Kinesha. - One of the great things I bought a mobile home park was it 12, 13 years ago, that's done really well. That's a great investment, by the way. So that's done quite well. - The downside to real estate is that it is a liquid. So if you do need the money overnight, yeah, obviously that's gonna be difficult. Also as much as it is a passive thing, it also does require active participation. Things break, tenants leave, property managers can make mistakes or also leave. And so yeah, you will need to put some effort into that. However, as a wealth preservation strategy and as a passive income strategy, it's kind of hard to beat, which is why it's so popular and why it's on this list. And now for an entry that you guys have every right to argue with me in the comments about, because this is about the guy who 3X his wealth, without actually technically investing in anything, he just moved. - If I stay in Colombia, I can jump ahead in life, financially, lifestyle-wise, like 10 years. - Rob Hoffman grew up in cold suburban Canada. And privilege wise, it's a great place to come from and a great place to live. However, as someone who grew up only an hour away from him and knows his town quite well, I can confirm that if it's not the lifestyle for you, it can be, yeah, boring. It can be really boring. But instead of moving to the city, which would be Toronto in this case, or even to an American hub like Austin or New York, he decided to move somewhere that was exciting and would also give him some financial runway. Medigene, Colombia. At the time that we interviewed him, his net worth was about 1 million USD, which with conversion turned it into about 3.2. But this isn't just about a one-time conversion. He's also lowering his housing costs, his day-to-day expenses, he's keeping his earning power, and he's letting that gap compound. He says it's due arbitrage. Listen, there's a lot to say about this one, and we did say a lot actually in the episode that we had with him, which I will also link to in the description of this video. But there's a couple things that I just wanna say, really quick. When he first got there, he had $10,000 Canadian in savings, and the goal was to make that last four in entire year so that he could give his business a shot, which also means that he was spending as little as possible, which means that he was living in an apartment that was $50 a month in rent, in a not great neighborhood, and he had some interesting stories. But the most important thing here is that his goal is not to exploit the community or the currency. He genuinely loves it, and so he learned the language, he ingrained himself in the culture, he uses his money to give back to the community, and he plans to stay. So yeah, this isn't about just taking advantage of a currency, and then pulling out once you've had the advantage. But for founders, especially those who are post exit, or who are running businesses that can be run remotely, this is a cool lever because you can do what Rob describes as jumping forward financially, lifestyle-wise, 10 years. You can have your run way go further, so if you have money that you wanna make last, yeah? There you go. And also you can free up cash to put into safer investments. Speaking of safer investments, Love or Hate at this next entry has been a pretty successful one for a lot of our founders. So let's talk about that founder who was worth 100 million, but actually made his first million from his basement long before he'd started his business. Also, he actually didn't realize that he had made his first million when he did it. You can probably see where this one is going, Bitcoin. However, this wasn't somebody who just invested and put it in his wallet or something. This is a guy who got in very early. - I've always been what I tell people is subject matter enthusiast, and so in the libertarian subreddit early days, like 2013, I started mining Bitcoin, and that's actually where I made my first million. - Didn't you forget that you had done that? - I did, yeah. And so there's a lot of people that will claim to, oh, I used to do that, and I lost the hard drives or whatever. Well, I actually have about 300 hard drives that I just, I never throw anything away. And 20 years of creating media and all these other different things, I just completely forgot where it was at. So I hired a company to catalog one of my companies, media storage and everything onto a server, and I was like, hey, could you do this for me personally and do it chronologically by year? 'Cause I knew approximately when I was mining, and they did, and I didn't tell them exactly what I was looking for, and I was able to find it based off of that. (laughing) - And at this point, it's where in March, I think it's like, I don't pay attention to Bitcoin. It's an all-time high, though. - It is. - It is. - Surely you've done well, right? Yeah, yeah. - So yes, sorry to say, but you can't really repeat that one. However, crypto still is a part of a lot of the portfolios that we've broken down on the show. The thing is, when people talk about it, it's either just a little, or they refer to it as a bit of a gamble. In fact, Chris Cook literally said, it's like playing at the casino. And Rob Walling's problem with it is, well, that he made too much. - I'll tell you what, there's more in crypto than I would like because it went up so much. It's one of those weird things, or it's like, I'm gonna put three percent of my net worth and then you look and you're like, oh, 30 percent of my net worth is now in this super volatile thing, right? So I've obviously been selling a bit of that over the years. - Oh, and the other thing that I noticed about the people on the show who have been successful with crypto or happy with it, they sold it. And that's not to say the crypto is a dead opportunity. It's more just to say that you've got to know when to get out because the point of it is to make money and it is a gamble. So yeah, take it. All in all, it can be a crazy return, but it's also a bit of a ride. And it can be pretty unpredictable. So have fun and be safe and have fun. - The AI Search is quickly becoming one of the easiest ways for companies to get in front of customers right now. And the best way to take advantage of it is with mentions.so. It was built by a Hampton member and it gives you one simple dashboard that shows you exactly how your company ranks inside LLMs like ChatGPT. And more importantly, what you need to do to get ChatGPT to recommend your product or service to potential customers. Every 10 years or so, a new growth channel is born. And for a small window of time, companies are able to get attention for cheap and drive massive growth. Imagine being able to go back in time and buy Facebook ads in 2007 with all the knowledge that you have now or even being able to go back and create TikTok content in 2017. The companies have took advantage of these growth channels in their early stages experienced insane growth. And guess what, this is exactly the opportunity you have right now with AI Search and the ability to show up right in front of your customers on LLMs like ChatGPT. Mensions.so makes it easy. AI Search platforms like ChatGPT that are so highly trusted, people are using it for everything from relationship advice to legal advice or even as their own personal therapist. That's why many companies are reporting conversion rates of up to 17 times higher when their products are recommended on ChatGPT compared to traditional search on Google. So go to Mensions.so right now and sign up with the discount code MoneyWise for 50% off your first month and a free AI search from the Mensions team who are behind the SEO campaigns of some of the biggest and fastest growing companies in tech like Beehive, Kajabi and American Express. That's Mensions.so code MoneyWise for 50% off your first month and a free search audit. This next item is kind of ironic because we're talking about founders who have sold their successful businesses because this next item is buying successful businesses. This is kind of annual Consonz whole thing. But I decided that I wanted to start investing and I basically copied Warren Buffett and started buying small tech companies and just growing them over time and holding them. I remember in 2021, we had grown a ton and the business was doing tens of millions of dollars of profit and we also took a business public. I remember looking in my trading account and seeing my stock portfolio. And suddenly, this previously private business, which I owned but I didn't really know what it was worth, was worth hundreds of millions of dollars. - Oh, and whether or not you actually plan for this strategy, you might end up doing it anyway. Like Alex Ramose. - Then all I thought was like, well shoot, now I gotta take this cash and go buy that amount of cash flow. - This can also just be your entire business strategy like Cori Mitchell. - We were buying little businesses originally in cash. Whatever cash we made that year, we reinvested it and we bought a demolition business in Iowa. It was a $3 million revenue business. We added environmental service lines to it, gave that team confidence. We gave them a little bit of a balance sheet. And that business grew to 24 million organically over the next three years. - But of course, this is another one where you do need to know what you're doing. So here are some tips based on our guests experiences. Starting with something that you might have noticed. Andrew Wilkinson is a tech guy and he buys tech businesses. Cori Mitchell is a blue collar services guy and he buys blue collar services businesses. So, I don't know if you're sensing a pattern here. Yeah, buy what you know. Other than that, by simple profitable businesses where the revenue margins, customers, that kind of stuff is already there. To have a plan for the business before going into it. So if you want to grow it or continue that cash flow, just think about it before you actually pay for it. And lastly, don't think of it as a passive thing. This is gonna be an active investment now because yeah, you have stakes. So you're gonna act like it. So yeah, number five is buying cash flowing businesses so that you don't have to start one from scratch to get there again. ♪ I swear you've had fun ♪ ♪ I've been running for ♪ ♪ On it back I've got hope ♪ ♪ And one to try ♪ - With that list wrapped, let's point out a few recurring themes here. First, these are all sized and concentrated appropriately. So they're big enough where you can see a nice return potentially, but also if it doesn't work out, well, it's not gonna be the end of the world because yeah, you don't want that to be the case. Second, they're all utilizing pre-existing skill sets. So you're not jumping into something new, expecting it to just kind of happen to work that you understand what's going on. Yeah, do things that you already think you can do. And third, they're built on top of safer things, which we didn't really get into here, but every single person that we've spoken to has that safe bed of index funds, ETFs, those boring things, where their money is safe. Yeah, that's important. And if you do want to get an in-depth look at some of those portfolios that I mentioned, I've linked all of the episodes that we talked about in the show in the show notes. So check that out. Also, this podcast is made for the Hampton community as you probably have heard. It's a community for high-net worth founders and a lot of the people that we speak to on the show are in that community. So if you're looking for some more advice or just to connect with other founders on stuff to do with your business or your personal life or whatever your founder doing, at least $3 million. In revenue, you should check that out at joinhampton.com. Also, if you want a podcast like this one, which is pretty cool, and I'll say, you can check out lowerstreak.co 'cause that's where I work and we made this. So if you want one, go check it out. I'm Jackie Lamport, this is MoneyWires, and I'll see you soon. ♪ For you ♪