Bonus: Chad Willardson | Wealth Wired Differently

Bonus: Chad Willardson | Wealth Wired Differently

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[00:00:00] Jordan Harbinger: Welcome to the show. I'm Jordan Harbinger. On the Jordan Harbinger Show. We decode the stories, secrets, and skills of the world's most fascinating people and turn their wisdom into practical advice that you can use to impact your own life and those around you. Our mission is to help you become a better informed, more critical thinker through long form conversations with a variety of amazing folks.

[00:00:22] From spies to CEOs, athletes, authors, thinkers, performers, even the occasional war correspondent neuroscientist or tech luminary. And if you're new to the show or you wanna tell your friends about the show, I suggest our episode starter packs. These are collections of our favorite episodes on persuasion and negotiation, psychology, geopolitics, disinformation and cyber warfare, AI crime, and cults and more.

[00:00:42] It'll help new listeners get a taste of everything we do here on the show. Just visit Jordan harbinger.com/start or search for us in your Spotify app to get started. This particular episode of the show is presented ad free courtesy of pacific capital.com. Today I'm joined by Chad Willerson, the president and founder of Pacific Capital.

[00:00:59] It's a wealth management and family office services company for high net worth entrepreneurs. He's a four time bestselling author, author for Entrepreneur Magazine. My friend's the editor in chief over there, so you've probably heard of that before. Chad manages $1.2 billion worth of investments. That is certainly a lot of responsibility that I would never want for myself, for sure.

[00:01:19] Today we're talking about financial management for entrepreneurs, how it's different, how traditional financial advice fails entrepreneurs and business owners, especially with respect to tax planning, managing on certain cash flow and other topics unique to those who own or run a business. This is a bonus episode of the Jordan Harbinger Show, once again, sponsored by and brought to you ad free by pacific capital.com.

[00:01:39] Now here's Chad Willerson.

[00:01:45] Chad, thanks for coming on the show, man. I appreciate it. Thanks for having me, Jordan. This is great to be here. Now, the first thing that I noticed from your work that I thought, okay, I need to ask you about this, is managing uncertain cash flow. And I think for a lot of people with regular jobs, it's kinda like, whatever, I don't need to worry about this.

[00:02:03] I get my paycheck every two weeks, I'm fine. But as a creator, and stop me if I'm getting too in the weeds on my own personal stuff here, but as a creator, some months it's like you make. X and the next month you make half x and the month after that you make two x and you can't plan that way. Right? If you plan to buy a house and you're like, yeah, I'm used to getting two x and the year after that you make half X, like you're screwed.

[00:02:29] You're in deep trouble. So how do we manage? I guess uncertain cash flow, and I would even push back on the idea that people with jobs have certain cash flow because I'm in the Bay Area. Tech layoffs happened. People found out time on Sunday night emails. 14,000 people found out they didn't work at Tesla at 6:00 PM Sunday.

[00:02:47] Yep. That's uncertain cash flow too, man.

[00:02:50] Chad Willardson: That's true. I think the overarching premise of it is that entrepreneurs are wired differently and therefore entrepreneurial advice for their money and their business needs to also be wired differently. And unfortunately, the financial industry really treats everyone the same.

[00:03:06] And they give this traditional, here's the rule of thumb, here's the pathway for everyone. Entrepreneurs unbeknownst to themselves, really aren't getting advice that's personalized to their situation. And one of those topics where they're missing out on is. On certain cash flow where you have no idea how much you're gonna make next year as an entrepreneur, you could open a new division, you could expand to a new territory.

[00:03:28] You could hire people, you could lay off people. Business could be up in your industry, it could be down. So you've gotta get financial advice that actually can be flexible and move with that rollercoaster that you're on. You're not someone who's getting a paycheck every two weeks with the same dollar amount, and it's just like, all right, if I just put this much money away in my retirement account.

[00:03:48] Then I'm gonna be fine someday. That's not the path and the journey that you're on as a creator,

[00:03:53] Jordan Harbinger: it's really tough, especially as a business owner. Every time I think, oh man, there's a recession coming up. I better be careful. The next year is just, we just crush. And I'm like, oh, was I worried about? And then other years where I'm like, oh man, I.

[00:04:04] We are on a crazy upswing. Nothing can go wrong. It's like I did not see that giant disaster coming with Covid, for example. That year alone was a rollercoaster for pretty much everybody, but I remember in the beginning of that year, my network was like, look, we get a certain guarantee, like we're gonna pay you this minimum amount and then you make money above that.

[00:04:24] They were like, we. Don't know if we can pay that. Can you take a 30% haircut? And I was like, oh gosh, this is tough. I don't want my network to go outta business. So yes, I probably don't have a choice. And then three months later they go, Hey, by the way, ad sales are killing it because everybody's shopping from home.

[00:04:39] So podcast advertisers are just like flush with cash crush. Yeah, crush it. So they're like, not only do you not need a haircut, here's all the pay cut you took before. Like we're making you whole and can you add extra episodes into your podcast feed because we have ads galore and we don't want you to overload your listeners by stuffing eight into one hour.

[00:04:57] Do an extra episode each week so you can keep your lighter ad load. And I was like. What is going on here? And I'm not trying to brag. I know people got hammered during covid, but guys like me get hammered during times when everything else should be stable too. Due due to random fluctuations and things that other people don't care about, like app changes in Apple.

[00:05:13] So I hear you with the advice being wired differently. I. That was something I wish I'd known early on in my business journey because I was doing what my dad did as an auto worker. Man. Throw stuff into a 401k. We can't give financial advice on this podcast directly, but like 4 0 1 Ks are a good idea.

[00:05:32] Asterisk, but the problem is, if you're an entrepreneur and tell me what you think about this, your revenue, if you have a job, it goes up, it peaks, maybe it goes down, and then you retire and it like hits. Dirt, right? Because you're getting social security and maybe a pension if you worked in the eighties and with entrepreneurs, it's like you might make jack squat in your twenties, thirties, and then suddenly you're like, oh, I'm loaded through your forties, fifties, sixties, and then you sell the business in your seventies and you're just like, I'm burying myself in a pile of money.

[00:06:02] And if you're waiting to pay taxes, you just waited until you were making the most amount of money in your life to decide to pay out. And that's, whoops. I did it backwards.

[00:06:11] Chad Willardson: Yeah, and the point you're making, it's not just one case study in one scenario. It's that. It's completely unpredictable. You know, I've got a client who's based in Switzerland.

[00:06:21] He was a surgeon, he had a great business, he had a clinic, he had a couple clinics and he was doing surgeries, and then decided one day, I don't like this, I don't want to be in the medical field. I'm not gonna be wearing a white coat anymore. Went back, got a master's degree, started a consulting firm. Has 1200 employees, has a global business.

[00:06:42] It's nine figures. He loves what he does. He's got offices in New York and London and Switzerland all over the place. Right. I. Who could have predicted that, like traditional advice would've said, you're not leaving, you've already went through medical school. You had tons of training. You were in residency, and now you're a a, an established surgeon in Europe.

[00:07:00] You can't just switch careers. And here the guy is completely different industry. And that's the life of an entrepreneur. It's unpredictable. You have to have creative thinking and strategies to match the way your brain works, or you're gonna constantly stifle or you're gonna have that language barrier between you and your financial professionals.

[00:07:20] Jordan Harbinger: Speaking of different types of styles of investing, I know that you recommend to invest in unique deals and not just stocks and bonds. I'm. Very boring when it comes to my investing. I'm like, I have never met an index fund I didn't like. I'm just like, let me put money into this. There's nothing wrong with

[00:07:36] Chad Willardson: that.

[00:07:36] Jordan Harbinger: I appreciate you saying that.

[00:07:37] Chad Willardson: Yeah. There's nothing wrong with that, honestly, that I'm not saying that I'm like a champion of private investments, and I certainly am not recommending one over the other. But what I'm saying is entrepreneurs should go work with people who are open-minded rather than close-minded.

[00:07:53] So when you're typically working with. A traditional employee advisor, they work at a huge bank or an insurance company, and they've got a very limited menu on their shelf what they can recommend, and I dealt with that. I was at Merrill Lynch for nine years. I was at the Big Wall Street Bank. When I became independent and started working with entrepreneurs and seeing what else is out there, I'm just way more open-minded.

[00:08:14] And so if there's an opportunity for an entrepreneurial client to invest in something that they're excited about or that's interesting. We're gonna take a look at it for 'em. We just introduced this carwash investment to some clients about a year and a half ago. Very stable, steady growing, membership based car wash company.

[00:08:32] I. They're expanding, that they're building another 26 car washes in the Western United States, and they're looking for investors. And when we looked at the deal, I was like, man, this is a great opportunity. So we just sent it to clients. There's nothing to gain for us. But I just said, Hey, if you're interested, I'm putting money in this myself.

[00:08:49] You might want to take a look. We're gonna have a Zoom call and let them present it to us. And guess what? Within I think 14 months, we're already gonna be getting. A very handsome payout with a very high rate of return. And that never would've happened if I was a traditional, just put my head down, put your money into your IRA account and we're not gonna look at anything else 'cause it's too scary and risky.

[00:09:11] So what I'm advocating for is not a specific investment path, but more an open-minded philosophy and approach towards making money decisions as an entrepreneur.

[00:09:23] Jordan Harbinger: The bulk of my investment money goes into index funds because I'm just like, my dad has beaten that into me since I was old enough to know what a dollar looked like.

[00:09:31] And so far, so good. I have taken some W wild bets and won like Tesla and Apple, and I've taken some wild bets and lost like arc funds. Let's not talk about those. But like mostly now my quote unquote wild bets are. Companies that are in the sort of really early stage that come to me and usually say, Hey, we want you to advise us because I know the space really well and I invest in things that I understand really well, like podcasting related SaaS companies, or something like that.

[00:10:01] And that's been good. I've gotten lucky there a couple of times with some exits, which is great. Like I recommend looking at these if you're an entrepreneur because you get to ride along with another entrepreneur while that guy's the one losing sleep at night over a problem, you can go, while I have faith in you, mark, you're gonna figure this one out and then if he does, you get a check for $600,000 or whatever.

[00:10:25] And if he doesn't, you lose 15 grand. But you were along for the ride. You were in on the board meetings and it's fun. Yeah. But it has to be money you can afford

[00:10:33] Chad Willardson: to lose is my 2 cents on that. Yeah, absolutely. Riskier investments have higher upside potential, but they should not be investments that you're depending on for funding your future lifestyle.

[00:10:44] So I think you should have some risk category assets where it's like, Hey, let's aim for some big growth here, but if it doesn't work out, I'm not gonna lose everything because I've put too much money in those.

[00:10:54] Jordan Harbinger: Yeah, your wife's not gonna kick you outta the house or husband. Speaking of which. You have a chapter or a section of the book that is strengthening your family with entrepreneurship.

[00:11:03] That's usually the opposite of what happens if listening to my friends is, is any indication. Yeah. So how does that work? Because I think, like I said, most people tend to accidentally maybe not strengthen their family with their business

[00:11:16] Chad Willardson: or, and the problems associated with it. Yeah. I think a lot of it stems from not understanding the personalities involved in an entrepreneurial family.

[00:11:23] Typically the entrepreneur. Whether it's the wife or the husband, if they're married, but one of them, one person, and the couple in the relationship is very much a risk taker. They're a creative idea person. They like to just fly by to see their pants. They're not as detail focused. And then the other person is typically very careful, thoughtful, gets more nervous, wants to know the details, wants to know the outcome before they do anything.

[00:11:49] That friction rips families apart because there's constantly tension over decision making, over money, over investing, over how to approach the business. And especially when the next generation's involved in the business, when you have employees who are children or even more challenging, if you have ownership, equity interest with children and next generation, you've got relationships that are personal and then you've got business and money and you've got a lot of different dynamics to deal with.

[00:12:17] So. I found that if you can talk with entrepreneurs who understand because they've actually dealt with businesses that have family members involved, you're gonna be able to navigate those things much cleaner. Like we've talked to clients spouses. Really talk them off the ledge when new business opportunities have come up.

[00:12:38] And then we've also said, here's the data and information to help you feel secure so that we're only risking this much. We're not gonna lose everything if this business idea doesn't work out. So we're trying to help satisfy the needs of both personalities in an entrepreneurial couple, because typically they're very much on opposite sides.

[00:12:56] Jordan Harbinger: This

[00:12:57] Chad Willardson: is maybe a little

[00:12:58] Jordan Harbinger: off topic, so feel free to reel me in. But one thing that I've noticed that. Is really hard as a business owner is figuring out large purchases, not just with my spouse, but I mean in general. Because one, I live in the Bay Area and real estate is just absolutely obscene. You have no realistic idea what you can afford in any other part of the world or the country.

[00:13:20] But every time I Google, like how much house can I afford, nothing matches entrepreneur lifestyles. It's always like, what is your paycheck? How much are your credit card bills? And it's like, that's not really how any of this works. And like I've almost thrown my hands up and been like, okay, until I can buy a beach house straight up in cash, I have no idea if I can afford one.

[00:13:39] And it's like, how do you start to make decisions like that are responsible?

[00:13:43] Chad Willardson: Yeah. You're just reinforcing the need to work with a financial professional or a team that. Are also entrepreneurial. Like I have five kids, no offense to my friends that don't have kids, but I'm not asking for parenting advice from someone who's never had kids.

[00:13:58] I love my friends that don't have kids, but there's just some things you don't understand until you've done it yourself. And entrepreneurship is one of those things. It just really is. So if you're a creator and you've got. All kinds of business activities going on, investments, tax planning, and you just go to a bank and you say, Hey, can I get a loan?

[00:14:15] And they're like, show me your last three years of tax returns and show me the books. Show me the p ls. And you have to be able to tell the story. But they have their boxes. They've got to check. And often the traditional banking system doesn't serve entrepreneurs well because you just don't fit into the box.

[00:14:30] And that's something you're probably used to. You never colored inside the lines. That's why you're a misfit creator. That's why I failed kindergarten.

[00:14:36] Jordan Harbinger: It's true. I will tell you, there's definitely been times where you go to the bank and they're like, we need five years of tax returns. And you're like, here's one where I, I guess I didn't make any money.

[00:14:44] I'm not sure what happened there. Yeah. This one says $30,000. But you lived in Manhattan. Yeah, but it was like this thing where I lived in the office and they're like, this guy is a joke. And then you're like, and then here's last year's where I made $4.5 million, and most of it was profit. And then the guy's, hold on, I need to call my manager or something like that.

[00:15:04] And these aren't real numbers for me. I'm just giving an example because I think for listeners, most people probably walk into a bank and go. Here's one for 90. Here's one for 92 and a half. Here's one for 95. This year, I got a bonus. So it was 97. Here's 1 0 5, and the banks, oh, this guy's on an upward trajectory.

[00:15:20] Meanwhile, this entrepreneur guy looks like he just bets it all on black, on roulette, and sometimes he wins and sometimes he loses. And you're like, how does this person stay sane? And should I give this person money or is this gonna be a liability?

[00:15:32] Chad Willardson: Yep. And often they're in that protection mode of like, how do I protect my job?

[00:15:36] I gotta make sure he fills out all the boxes. So if you're not working with financial teams that understand entrepreneurs, it's gonna be a frustrating experience for sure.

[00:15:44] Jordan Harbinger: You're right about parenting advice from people that don't have kids. I have two little kids, two and four. My favorite is when someone comes over and goes, you know, when I was little, my parents just made me eat all my food.

[00:15:53] I wasn't allowed to have throw temper tantrums. And I'm just thinking, oh really? Oh, so I should just tell my 4-year-old, Hey man, you know what, you're not allowed to do that. Yeah, that's, let's see how that goes over. Let's see how that goes. That works. You have five kids, man. That's just. A hell of a lot of work.

[00:16:07] That's a hell of a lot of work. It is a lot of

[00:16:08] Chad Willardson: work. It is. And each of them play two sports. So essentially at night, my wife and I are Uber drivers, taxi drivers to the different sports practices they've got. So yeah.

[00:16:17] Jordan Harbinger: My goodness. Good for you man. I would love to have five kids, but I just don't think I could do it and stay alive.

[00:16:23] Yeah, it's literally a party. Do it. It's not impossible. It just sounds terrible. I guess I should be more specific.

[00:16:29] Chad Willardson: That's funny.

[00:16:30] Jordan Harbinger: Um,

[00:16:30] Chad Willardson: that's funny.

[00:16:31] Jordan Harbinger: You also talk in the book about rejecting the traditional. Career path planning. What does that mean? Because if I'm in a career, let's say I'm in a career right now, how do I do that?

[00:16:41] Or is, is that only for business owners that find themselves being, they're the square peg that's being hammered into the round hole with their financial planning?

[00:16:49] Chad Willardson: Yeah. I think it's being, it's just being open to the fact that things will change. Like I started a business last year and at the end of December, and it's called Platinum Elevated.

[00:17:00] It's a leadership. Group coaching business. We've got coaches who are doing one-on-one coaching every single week, and this is a business that was just an idea at the end of November and December, I was like, all right, let's commit to it. And it's now a full fledged business. Like I hired two more people today.

[00:17:20] It's a multi-million dollar profit, very profitable business, and it was an idea. Over Thanksgiving week with a friend. So if I was stuck in the mindset of, like you described, that tax return of the person at 90, 92, 95, 97, that's a very linear path. And as entrepreneurs and creators, you've gotta think more about what opportunities exist out there and be open-minded to that.

[00:17:42] And because of that. Like I said, in the financial space, you've gotta have flexibility, access to capital, access to lending, good tax planning, and just understanding that like maybe this year I'm not gonna be able to put away or save much, and maybe the next year I'm gonna save and invest millions of dollars.

[00:17:57] And it could be like that. And that's okay. It doesn't have to be this traditional, I'm gonna increase my savings by 5% every year. It's just gonna be a different ride. And that's what we sign up for as entrepreneurs.

[00:18:08] Jordan Harbinger: It is, it's hard to find wisdom in that area and I always find that reading traditional financial advice makes me a little bit anxious because it's like, you need to be investing.

[00:18:17] I. I'm making up the numbers here, but like 20% of your check and it's okay, but my check also includes I'm paying myself as little as I can to minimize tax burden, and then I've got a large amount of money in the company, so investing 20% of what I'm paying myself, I'm gonna be screwed if that's what I end up with at retirement.

[00:18:36] Am I doing that with gross profit from the business? And if so. How does that work with taxes? Like all that stuff just makes me like chew on my fingernails, basically. Yeah, because none of it really applies to and I,

[00:18:47] Chad Willardson: you're not alone. You're not alone, Jordan, because a lot of people feel that same way because those are rules of thumb when you hear things out in the public.

[00:18:55] I had a viral post when I talked about how I disagree a little bit with Dave Ramsey. Nothing against him personally, but I just said you can't ask people to be completely out of debt before they become investors. And I know he has the snowball method and you paid down your credit cards, and I agree you should pay down your credit cards and you, if you don't have to use credit cards, you should try not to.

[00:19:15] But what I was saying in the post was, you need to become an investor as early as possible because compounding interest in growth is where you're gonna see the huge profits come to play. And if you're waiting to say, well, I have to be debt free first, so I'm gonna somehow hurry up and pay all my student loans off and every other loan I've had.

[00:19:34] Eventually, especially you and I living in California, like first of all, you're not gonna be able to pay your house off before you ever start investing a penny. Oh man. So that doesn't make any sense, man. There were people who came after me just like, how dare you? How dare you suggest that you carry $1 of debt as an investor?

[00:19:51] Why would you ever do that? And so. That kind of a rule of thumb, traditional financial advice definitely doesn't apply for entrepreneurs because entrepreneurs, they're just wired differently. They're looking at different opportunities and maybe they use debt to expand their business, which then turns into some massive profitable venture that they never would've had if they stuck to that traditional path.

[00:20:13] Jordan Harbinger: It's interesting to see that. I used to be a lawyer. For the people who don't know that these people make a couple hundred grand a year. And some of them adheres dogmatically to this Dave Ramsey style advice, which look fine. But the problem is I've got people paying off student loans that are something like 3.5% interest or one point whatever, percent interest, really low stuff, super low.

[00:20:36] And they were paying that off 'cause they're like, I don't want debt. I don't want debt. I read in this book or heard on this radio show that I don't want debt. And of course, okay, great. You don't want 14% debt on a credit card. But then if you have an empty 401k and you're 35, this is not good. You are in.

[00:20:52] Yep. And yeah, if you wait, yeah, that's the problem. Yeah, that's the problem. That's problem. And I remember my dad being like, you need to invest in your 401k. And I'm like, dad, I'm 20. I work like 10 hours a week. I make 6, 25 an hour, whatever. And he's like, trust me, do this. So he'd made me throw money in there and then he would like also put money in there somehow.

[00:21:12] For match. Yeah. He would go matches, somehow.

[00:21:14] Bryan Johnson: Match it.

[00:21:14] Jordan Harbinger: And then as I got older, every year he'd be like, did you invest in your 401k? Did you invest in your 401k, but your Roth, I think it was at the time, 'cause I was making jack squat and then when I became a lawyer I was like, I better log into Fidelity and see what's going on.

[00:21:27] Right? And I logged in there and I was like, I got it. 70 grand and I'm 27. Is that good? And I remember the Fidelity guy being like, I can't even get my 27-year-old son to invest anything. Yes, that's good. That's really good. That's awesome. And as I watched my money grow, I remember talking with friends about it.

[00:21:41] And these guys again, now some of these guys are partners at law firms and their argument was, I'm gonna be a doctor. I'm gonna be a lawyer at this law firm, or I'm gonna be a senior partner. I know guys now that make somewhere in the neighborhood of a million dollars a year, maybe $800,000 a year, I guarantee you, just by doing the math, that they have nowhere near what I had in retirement savings before I made even six figures, because they can throw in money and pay taxes on it.

[00:22:09] Sure. Okay. But in their retirement accounts. Right. Those things are damn near empty and they're never gonna catch

[00:22:15] Chad Willardson: up. It's impossible. No, it's impossible. You gotta invest early and invest often, and I think your dad's an amazing mentor, obviously, because he got you started, because that's what happens when you start younger.

[00:22:27] Really, a young entrepreneur out there. Don't use your business as a piggy bank. I wrote an article for Entrepreneur Magazine about the 10 money mistakes startup entrepreneurs and startup founders make, and one of them was, don't use your business accounts as a piggy bank. Treat it as a business, pay yourself something, but you've got to really think about your business as a business and invest wisely.

[00:22:50] Jordan Harbinger: Can you speak to that a little bit more? First of all, I wanna link to that article in the show notes for the episode because I think people are gonna wanna read it, possibly including myself, because my wife used to work for a large. An entrepreneur in the LA area and this guy, she managed all the money and she would have to call him and be like, and by the way, she was like 23.

[00:23:10] You don't wanna hire a 23-year-old to manage all your businesses cash flow, who's an accounting student. But this guy hired her to do that and she'd be like, Hey man, we don't have enough money to make payroll. And then he'd be like, oh, hold on. And then within a few hours there'd just be enough money to make payroll.

[00:23:26] And she's, what is this guy doing? He was always going to like Cannes Lion Film Festival and blah, blah, blah. He bought houses, he bought a boat and all this. And then the business went under and I was like, oh my God, he's gonna lose everything. And she's like, yeah, but he still lives in that house and like he's still, here's a.

[00:23:39] Photos on Instagram of a party on his boat. And I said, how is he doing that? And she goes, well, I know because I'm the one who cut the checks. He asked for owner draws from the business. So this dude ran his businesses essentially into the ground because he would take a draw and then he would use it to buy a house.

[00:23:55] And somehow that money wasn't company money. Now I smell federal prison when I hear stuff like that, but that might just be my lawyer brain. I don't really know.

[00:24:04] Chad Willardson: That's funny. It's a slippery slope when people start getting into using their businesses for all kinds of different reasons. But what's important is that you've got your business as something that is not only cash flowing, but it's on a steady path for growth.

[00:24:19] You're not over overestimating your forecast, you're putting some money in reserves in the business. You're bringing on great people, like I think the successful entrepreneurs that I work with, one thing they all talk about from the very early days is they bring on great people. You don't go cheap with the people right around you.

[00:24:38] We're helping a client sell a business at a $2.8 billion valuation next time. Wow. And they're only selling a percentage of it. They're keeping majority interest, but that's a big number. And they started it from scratch, a bunch of partners, and to be on the inside of these meetings. It's really exciting and fun and these people are really thinking about how to continue building it for the next, probably gonna be an IPO at some point, but for the next generation, for the long-term, employees and team members who've been there since the beginning.

[00:25:12] And I just think that. As an entrepreneur, when you surround yourself with great people, you give yourself a much better chance of success, and whether that's internal in the business or it's the professionals around you, you're getting advice from, you gotta be surrounded by great people.

[00:25:26] Jordan Harbinger: I've always been told a, again, by my dad and traditional financial advice people, Allah, Dave Ramsey, although he was never quite my speed.

[00:25:33] You need an emergency fund, and I get that. That is great advice, period. And I know a lot of people that don't have it, but when you're an entrepreneur, how do you calculate that? Because if it's just, you work at Apple and you make a hundred grand a year, your emergency fund, I don't know, $50,000 or something like that, so you can survive for six months, whatever it is, but when you have a business.

[00:25:52] Do you have a business emergency fund and a personal emergency fund? Because it seems like those should be separate, but I'm not really sure how to wrap my mind around this.

[00:26:00] Chad Willardson: It's a great, I don't know that I've ever been asked that. That's a great question. Thanks. You need a financial runway for both business and personal, separately owned.

[00:26:10] What you really need though is access to capital. So the traditional old school way of looking at it means I have a bank account, I've labeled it my emergency fund, bank account, and I have a certain dollar amount, a pile of cash, and some would say three months, six months. Really conservative risk averse would say one year.

[00:26:30] And how much do I spend every month? If I spend 10,000 a month, I need $120,000 sitting in some bank account, at least in case I have no income for a year. That's especially bad advice when interest rates are like zero. Like we recently went through a time period where bank accounts were paying literally 0.0.

[00:26:46] Jordan Harbinger: Yeah.

[00:26:46] Chad Willardson: And so leaving a bunch of money sitting there while inflation is skyrocketing and your money is just eroding in value, it's not a smart thing to leave as huge heap of money just eroding in value every year. So what I would advise entrepreneurs is you need access to capital. You do need. Potential lines of credit.

[00:27:06] You do need potential business credit cards to access. You should have some cash in reserves, hopefully earning a decent interest rate. But you're right in that you need them separated. If you're relying on the business for your personal lifestyle emergency fund, I think that's a risky decision. It doesn't always need to be sitting in cash.

[00:27:27] If you've got access to capital, access to borrowing, you've got investments. Like for me, I like having money invested. Yeah. So in your ETF example, you got a bunch of money in ETFs. You could easily sell those in a day. They're cash. You could borrow against them and have opportunity to get cash while staying invested.

[00:27:44] So. I don't necessarily believe that you need to traditionally have just this massive pile of dollars because most of the things that you own in your bank accounts, investment accounts, or cards that you have, you can turn it into cash within a day.

[00:27:58] Jordan Harbinger: Chad, you have a ton of good advice, I would say, especially young, but now that I think about it, entrepreneurs of any age actually need this.

[00:28:03] 'cause I know a lot of business owner friends, obviously. I don't know if anybody that really has this stuff on lock that well. Except for guys that have spent like 20 years in the weeds, their financial management stuff is like their hobby as well as running their business. Right? That is not me and pretty much any creator or business owner that I know, they're too busy building a business

[00:28:23] Chad Willardson: most of the time.

[00:28:24] That's right. As they should be. They use their talent and their gift in creating great impact and wealth in their business, that should be where their focus goes. Our job as an entrepreneurial wealth advisor is to help grow everything around them, to reduce the taxes, to grow the investments, to reduce the friction between them and their decision making to help them and their team have like a smooth path for cash flow while it's actually unsteady behind the scenes.

[00:28:51] So I want our entrepreneurs. To do exactly what you just described, to not be part-time, financial experts, part-time tax accountants, part-time, life insurance people. But really to just focus on exploding what they're building. And then we want to add. A bunch of gasoline on that fire and just help support them in every way possible so that they don't have to stress about everything else.

[00:29:14] They just focus on their business.

[00:29:16] Jordan Harbinger: Chad, thank you so much. Book available on amazon@chadwillerson.com as well. We'll link to that in the show notes as we always do. Chad, thank you so much, man. Really appreciate it. Thanks for having me, Jordan. Appreciate it. I've got some thoughts on this episode, but before I get into that, here's what you should check out next on the Jordan Harbinger show.

[00:29:33] You believe human intelligence and AI will essentially be

[00:29:37] Bryan Johnson: symbiotic in the future. We haven't had the tools that actually allow us to be experiencing how these new tools and machine learning can help us in ways we care about the very most. And so these new tools of machine learning and uh, brain interfaces will open up this new era of.

[00:29:55] Human improvement that we've never had before.

[00:29:58] Jordan Harbinger: You'd mentioned that the ability to co-evolve with AI is important if, if humanity were to identify a singular thing to work on. Mm-Hmm. The thing that would demand the greatest minds of our generation, it's human intelligence. That's a big statement.

[00:30:10] Bryan Johnson: The way we are going to survive ourselves and create a thriving future is we have to increase the rate in which we adapt specifically.

[00:30:18] The fastest way to do that is our minds. Our brain tricks us into thinking. At the reality we occupy right now is the only reality that exists. However, I think that could be a false assumption and we need to look back. Like for example, homoerectus 2 million years ago that had very rudimentary language, didn't have abstract concepts like math or other right?

[00:30:41] Physics. Homoerectus did not have the imaginative capacity to imagine the stock exchange. And so we need to realize we are in the exact same position. We have no reason to believe we've reached this apex of reality construction and to imagine that our reality. Could be entirely unrecognizable to us in 30, 40, 50 years, breaks our brains.

[00:31:02] We could, and we may wanna head in this evolutionary direction. The question is, can we replicate 2 million years of evolutionary advance with technology? And I don't know why we couldn't.

[00:31:15] Jordan Harbinger: To learn more about how our brains will eventually be able to interface with computers and other machines, and about how we may quite literally become cyborgs.

[00:31:24] Check out episode 2 23 of the Jordan Harbinger Show. Thanks to Chad for coming out. All things Chad Ardon will be in the show notes@jordanharbinger.com. I'm at Jordan Harbinger on both Twitter and Instagram. Or you can connect with me on LinkedIn. This show is created in association with Podcast one. My team is Jen Harbinger, Jace Sanderson, Robert Fogerty and Gabriel Mizrahi.

[00:31:45] Remember, we rise by lifting others. The fee for the show is you share it with friends when you find something useful or interesting, and the greatest compliment you can give us is to share the show with those you care about. In the meantime, I hope you apply what you hear on the show so you can live what you learn, and we'll see you next time.