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Month: December 2021

Crippled CEO Blog #115: Make your kid a millionaire

Crippled CEO Blog #115:

You can virtually guarantee that your kid is a millionaire by the time she is your age.

I’m not going to talk about anything you all don’t already know.

This isn’t a secret.

But, after setting this up for myself and realizing how stupidly easy it is, I’ve become an evangelist.

We all pretty much know that investing our money is a good idea.

Oh. Real quick. This is not investment advice. This is for entertainment purposes only. I am not a licensed or certified financial planner. Invest at your own risk. May the Force be with you.

Anyways… Investing is smart. We know this.

But what do you invest in?

Stocks are risky. You have to know which ones to pick. You have to time them right. Doing it right requires research and training, and even then, the smartest experts routinely get it wrong.

Real estate takes a ton of capital to get into and managing tenants is a full time job. 

Crypto? I think I like my odds in Texas Hold ‘Em better (though I did make like $7,000 on Bitcoin, but it was pure luck). 

So, what is the best way to invest?

In my opinion, the ideal investment strategy for regular people has these prerequisites:

  1. It’s relatively safe. 
  2. It’s consistent. 
  3. There are no decisions or thinking required. 
  4. You can contribute any amount you can afford, on any schedule that works for you. 
  5. Once set up, it happens automatically. You can just let it go and come back and get your seven figures in a few decades. 

As you may have guessed, I have a suggestion that meets these qualifications. 

But you don’t want MY suggestion. I just make pool fences. What the heck do I know? 

“In the matter of boots, I defer to the authority of the bootmaker; concerning houses, canals, or railroads, I consult the architect or the engineer.” – Mikhail Bakunin

I agree, Mikhail, you zany 19th century anarchist you. Defer to the experts. 

So, who SHOULD we listen to?

How about — arguably — the best investor of all time, Warren Buffett? 

And what does Warren Buffett think you should invest in? 

An index fund. 

“I think it’s the thing that makes the most sense practically all of the time.” Bold claim, Buffett. 

Now, you might be asking: what in the hecking heck is a hecking index fund?

Firstly, you talk weird. 

Second, good question. 

Index funds are a form of passive investing. They hold every stock in an index such as the S&P 500, including big-name companies such as Apple, Microsoft and Google, and offer low turnover rates, so fees and taxes tend to be low as well. When you buy one share in the S&P 500, you actually buy a tiny piece of shares of the five hundred biggest companies in the US. 

“The trick is not to pick the right company,” Buffett says. “The trick is to essentially buy all the big companies through the S&P 500 and to do it consistently.”

Buffett believes in index funds so strongly that he made a $1 million wager: he’d just plop his money into the S&P 500 index, and his opponent could put their money into literally whatever combination of stocks they wanted. Whoever made more in ten years won the bet. 

Buffett crushed them. He won the bet and donated his winnings to charity.

Investing in the S&P 500 index fund fits all of my requirements. It is relatively safe (you’re spreading your money out into the 500 biggest US corporations), it is consistent (it goes up, on average, about 10% per year — this year it went up FIFTY percent, though), you can invest as little or as much as you want, you don’t have any decisions to make, and with an online broker, it can be totally automatic (potentially for free — more on that in a second). 

In the beginning, I led that you can use this to “guarantee” that your kid is a millionaire.

I hate to use the word guarantee when it comes to this kind of thing, but at the very least, in my opinion, if you do what I’m about to say, with enough time, it seems inevitable. Again, though, my lawyer wants you to know that this is not investment advice.

So, why do I say this?

As I said earlier, the S&P has an approximate average annual return of 10%. 

That means that if you put $400 a month (which is only $13 a day) into the fund of your newborn baby, she’ll have $911,000 when she turns 30. At 40, she’ll have $2,500,000. Age 50: $7,000,000 for an investment of $240,000 ($400 a month for 50 years). That is WILD. 

Think about it this way: let’s say you buy an investment property for $300,000. You put $50,000 down and your mortgage is $1,500 a month for 30 years. With interest, insurance, etc., you’ll have spent just over $500,000. And maybe in 30 years that house is now worth $600,000 — and that’s awesome. You now have a paid off rental property that you could sell for $600k if you wanted. 

But if you had put that same cash into the S&P, you’d prooooobably have around $4.4 million or so. 

Can’t swing $13 a day? How about $7 a day? Even at $200 a month, your daughter will have about $1.2 million waiting for her when she hits 40. 

The key to this is that it has to be done consistently for a long period of time, and that’s why the automation might be the most important step.

I haven’t looked into any of the other ones, but I set up an account on E*TRADE that takes money out of my checking account and puts it into the S&P index (stock symbol is SPY) each week automatically. It was about as difficult as signing up for Amazon Prime. I did it once and now I’m just going to let it ride forever. And how much is E*TRADE charging me for this service? Nothing dollars. Zero cents. As far as I can tell, because I’m just doing this one thing, they’re not charging me anything.

But I’m too old. I’m not going to get to see the really crazy gains. It is after the third and fourth decade that this starts getting really bonkers.

But if you have a kid, you could do this for them. You could make sure that they have this massive cheat code in life. If you’re a middle-class American, you can almost certainly afford it. And yet, most of you won’t do it. It’s not hard. It’s not expensive. But you won’t. And that is just so sad to me. My parents didn’t do it. I should have an extra $2 million in an investment account right now. But I don’t. But your kids should. It’s so easy. And if you don’t have kids, do it for yourself. Maybe you don’t have as much time, but you can afford to put more money in. That’s what I’m doing. If I live another 15 years, I should have $1.8 million in there — my brother is going to be stoked when I kick the bucket. 

I’m not breaking any crazy news or unveiling any hidden knowledge here. Investing in index funds is pretty widely known. I really doubt that I’m teaching most of you anything. What I am hoping, though, is that maybe one of you is inspired by this to take the action and set up the automatic plan, possibly changing the life of you or your loved one. That would be pretty cool.

If you do, let me know. I would love to hear about it.

Thanks for coming to my TED Talk. 

(You know who wants me to put big deposits into her little portfolio? That’s right — your mom. She also gets a text from me every Sunday with a link to the latest blog post. Send a text to 561-726-1567 with the word CRIP as the message to get a link to the blog as soon as it’s up.)

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Crippled CEO Blog #114: I worked for a mobster

Crippled CEO Blog #114:

I once did work for a famous mobster. 

Right before I dropped out of high school, I started a web design and computer repair business with one of my oldest and closest friends (to this DAY), Michael McGahee, and another member of our weird computer class. The other guy quickly lost interest, and then it was just Mike and I. 

A handicapped highschooler doing entrepreneurial things was good press, and we got covered by several publications, but the most notable was USA Today.

Our feature in USA Today attracted the attention of one Frank Rosenthal. 

Now, you probably don’t know that name. However, you probably do know Robert De Niro, and there’s a pretty good chance that you saw Robert De Niro in the movie Casino. 

Mr. De Niro plays a character based on Frank Rosenthal in Casino. 

Frank told me all of this when he called me, a barely 16-year-old, and explained that he was firing his fourth web designer in a year and he wanted to hire me for the job.

My Spidey senses tingled and a dozen crimson banners (y’know, red flags) appeared before my eyes. 

And then I said, “Absolutely.”

Frank was upset that I had not seen the movie or read his biography, so he sent me a copy of both and told me it was required that I watch the film before starting the work.

While the book and DVD were on the way, my novice business skills were being tested. I prepared a quote, created a proposal, and asked for a deposit. Frank agreed to everything — no problem. I was pretty pumped. 

When the movie arrived, I watched it with my parents. It’s a mob movie, with mob movie things. Thieving, murdering, car bombs, and so on. At one point, De Niro’s character (aka my client) has a crew beat the tar out of a guy who is putting the sausage in the spaghetti with his wife. 

Meanwhile, the web design is underway and completed. The site was essentially a subscription business where folks could pay a monthly fee to get access to Frank’s (crazy accurate) sports betting picks. 

Frank decides that part of my job as the web designer should be posting his picks every day… at 7 AM. For some reason, I agreed, but unfortunately, I was 16, and routinely failed miserably at transferring the info from his daily emails to the website on time.

Frank was getting angry. At one point, he told me there could be “consequences” if I failed to deliver again. He may have meant just firing me as his web designer, but given his history, the threat felt like it had more weight to it. But what was his history? All I had seen was the movie, and we all know that Hollywood exaggerates everything. Surely this was the case for Frank, as well.

So, I asked him. What did the movie get wrong, Frank?

“Well,” he said, and I imagined he paused to take the cigar out of his mouth on the other end of the phone, “you know how it showed me starting a TV show in the casino?”

“Yeah,” I said. “You didn’t?”

“No, no. I totally did. I hosted that show. It was great. But in the movie, Robert De Niro has me jugglin’ like some kind of clown. 

I don’t fucking juggle.”

“Oh,” I said, swallowing a lump. “But that’s the only thing they got wrong?” I recalled the menagerie of crime and violence that flowed through the movie.

“Yeah,” he said. “That was it. Everything else? Exactly right.”

It was shortly after this that I told Mr. Rosenthal that I wasn’t able to continue being his web designer and I returned a portion of his money.

It was the first time that I learned two extremely valuable lessons in business: some work you should turn down, and sometimes, you need to fire your client.

Very, very politely. 

(You know who wants me to put the sausage in her spaghetti? Your mom. She also gets a text from me every Sunday with a link to the latest blog post. Send a text to 561-726-1567 with the word CRIP as the message to get a link to the blog as soon as it’s up.)

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Crippled CEO Blog #113: Getting dream clients the hard way

Crippled CEO Blog #113:

If you are a business that sells to other businesses, or you’re a nonprofit looking for sponsors, chances are you know which clients are your dream clients — the ones that would really have a profound impact on your business. 

What is interesting, is that even though we know who these clients are, we continue to promote ourselves in general, just sort of hoping that they might come to us. Or, instead, we make a lazy, noncommittal attempt, like a random phone call or email. This way we don’t get upset when nothing comes of it.

But we tend to get the things we focus on. So, why not focus on these dream customers in a real way?

But what to do? Do we call them every day? Maybe stalk them? What’s the strategy?

My favorite tactic for this scenario comes from the book The Ultimate Sales Machine by Chet Holmes. 

Here’s what you do. 

First, make a list of 100 dream clients.

Next, we are going to plan out a creative mail and call campaign that will go to each of them.

Let us imagine that we are a water safety nonprofit trying to secure our dream donors.

First, I would take my list and send each of them a toy Rubik’s cube. Along with it, I would send a letter explaining how reducing the number of fatal drownings is a puzzle, like the cube, and you need her help to solve it.

Next, I would send a cheap compass along with a letter saying how you know which way to go to stop children from drowning, you just need her help.

Then I would follow up with a call.

I would keep sending cheap $1-5 “gifts”, one per week, along with notes connecting them to what you’re doing, like the Rubik’s cube and compass, and then call after every 2 or 3 I sent.

I would do all of the work — picking out the gifts, writing the letters — BEFORE I started sending them. That way, it’s all ready to go and automated. 

If we do this for our 50 or 100 absolute dream customers, week after week (for maybe… 15 or 20 weeks), I feel pretty safe saying that it is a guarantee that we get at least one of them, but likely several. 

Now, you might be thinking that it’s a lot of work, and also a pretty large investment. If we figure $3 per dream client, that’s $300/week. If we go for 20 weeks, that’s $6,000. 

That’s a lot of money.

But if you get two or three of them, what is that worth? If these are life-changing accounts, I’m going to wager that the juice is worth the squeeze.

And the reason that it works is because most people won’t do it. It takes effort and it takes money. 

As the saying goes, “you have to do what most won’t to have what most don’t.“

But if you want the fool proof way to move to the next level, that’s it.

(You know who is always trying to earn my business? Your mom. She also gets a text from me every Sunday with a link to the latest blog post. Why haven’t you done this yet? It’s so easy. Send a text to 561-726-1567 with the word CRIP as the message to get a link to the blog as soon as it’s up.)

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Crippled CEO Blog #112: Babe Ruth was bad at hitting the ball

Crippled CEO Blog #112:

What do you think of when you think of Babe Ruth?

I’m not a baseball fan, or really a fan of any team sport, but I know Babe Ruth as one of the greatest of all time, especially for his ability to hit home runs. I know that his home run record sat undisputed for a long, long time.

But unless you’re a baseball fan, you might not know that Babe Ruth also held the record for striking out for almost 3 decades. He had a career total 1,330 strikeouts. 

And the reason is simple: if you are swinging for the fences, you’re going to strike out. Because that’s what happens when you take big risks. 

But nobody remembers the strikeouts. Despite this shameful badge of being the King of Strikeouts for decades, that’s not his legacy. We remember the wins. We remember the home runs.

This goes for you and me, as well. I might be wrong, but I am pretty sure that people don’t think of me first as a high school dropout, or a college dropout, or identify me with the food delivery service I half started (long before Uber) and never got going, or the web design company I let die, or the thriving e-commerce company I killed. I’m pretty sure that people connect me with my victories, not my losses.

And that’s important to realize. Because if you’re going to hit home runs, you are also going to strike out a lot. But if you’re afraid of striking out, home runs aren’t in your future.

If swinging for the fences means more strikes, I say bring on the strikeouts. No one will remember them anyways once you hit that home run. 

(Do you know who always enjoys playing with my balls and bat? You’re right. It’s your mom. She also gets a text from me every Sunday with a link to the latest blog post. Why haven’t you done this yet? It’s so easy. Send a text to 561-726-1567 with the word CRIP as the message to get a link to the blog as soon as it’s up.)

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