Sam makes a provocative claim that investing is “stupid,” and the conversation unpacks when that’s actually true — specifically when you have limited capital and are better served betting on yourself. Shaan steelmans investing as a form of leverage alongside media and people, then both hosts converge on the real frustration: not investing itself, but the mental energy drain of financial arbitrage over building things that matter. The episode ends with a shared preference for builders over allocators.
Speakers: Sam Parr (host), Shaan Puri (host)
Sam’s Provocation: Investing Is Stupid [00:00:00]
Sam: You know, I think I’ve changed my mind. I think that investing is fucking stupid.
Shaan: We had a friend who’s raising a fund right now. I would have bet a thousand dollars you were gonna say “stupid.” I would have been wrong — he’s so fucking smart. But why is investing stupid? I would love to hear why investing is stupid.
Sam: Tell me if I’m being like just a baby here, but it’s just — I just find this financial arbitrage stuff to be so boring and meaningless. I watch the TV show Billions and I’m like, “Oh, that’s cool, they’re doing all those big things, it looks exciting,” and then I’m like, “Well, those guys are losers.” They’re not actually adding — I mean, they’re just wealthy and accomplishing dreams, so I respect it, but I’m also like, “Oh my god, that’s so soulless.”
And that’s what I think about a lot of this. I’ve got friends who create these websites, they’re already wealthy, and they’re building these websites that are just hawking shit. And they will admit that. I’m like, “What’s the fucking point of this?” And that’s kind of what a lot of investing is.
Shaan: But the friends hawking shit — that’s different than investing, right? That’s just like selling something for money.
Sam: It’s from a similar vein. Yeah, it’s just like — if you already have a little bit of cash — and look, if you’re still trying to get yours, you got to go for it. But if you already have a little bit of cash, do something cool and meaningful.
The Mentor Story: Investing vs. Betting on Yourself [00:02:30]
Shaan: Okay, here’s what I’ll give you — two thoughts on this. The first is an example that supports your case, and then I’ll give you the feel-good reason why you’re wrong.
So to support your case: I mentor this guy who’s 20 years old, and he’s at this point where he tried to do some stuff, it kind of didn’t work out, and now he’s like, “Do I need to go get a job? I need to pay my bills, I don’t want to go move back home with my parents.” He’s about to take this job, and he’s like, “Should I leave this entrepreneurial path and go get a job? Because I need to pay bills in two months, and I don’t think I can spin something up in the next 60 days that’ll get profitable enough to cover my rent.”
I said, “I empathize with the problem, but let’s just slow down before you go take that consulting job. Let’s talk things through for a second.”
I said, “How much money do you need to live every month? What’s your burn rate?”
He said, “Two grand.”
I said, “Fantastic. So let’s say you wanted a year of runway to go try some stuff — you need 12 months times two grand, you need to come up with $24,000.”
I said, “I know you do some investing in the stock market. You’re kind of a degenerate — you like to pick stocks, you’re attracted to Bitcoin and all that.” Because at the beginning of the conversation he said, “The thing going well is my investments have done well. The thing going bad is I’m about to have to take this job to cover my bills.” I was like, “Well, those two things don’t add up.”
I said, “Do you have enough money in the stock market right now that you could just sell, and use to live off of, to chase your entrepreneurial dreams?”
He said, “Yeah, I could, but I don’t want to sell because I’m getting good returns.”
I said, “Okay, let’s do the math real quick. Take just the $24,000 you need — how much do you think you could generate per year in returns, on average?”
He said, “Fifty percent.”
I said, “Okay, mini Warren Buffett. You think you can do 50% a year. Let’s assume your delusional number is correct, and that you could do it consistently — which is the hard part. You could do it for one year for sure, but let’s say you do it consistently. You invest perfectly, you get your 50% — way above market return — and your $24,000 has turned into $36,000. Fantastic. Congratulations, you made $12,000. You are still nowhere near where you’re trying to get with your goals.”
And I said, “How many years would you have to continue to get this absurd return to be where your goals are?”
He said, “Not that many.”
I said, “But that would never happen. You would never consistently get to 50%.”
So anyway, I said, “You’re talking about this year going and trading all your time for money at a consulting gig, when instead you could just sell some of your stock, get $24,000 of runway, live for 12 months, and give yourself a bunch of shots on goal to try to build something you believe in. You’ll learn way more, you’ll have way more fun, and you’ll have way more upside than if you go take the consulting job. You’re crazy.”
Sam: So he was of the mindset of, “I heard that rich people invest, so I want to invest. I want my money to work for money.” He had kind of heard all these things and was investing for that reason.
Shaan: Right. So I think investing doesn’t make sense when you have a very small amount of capital and you’re trying to invest that capital — because you’re trading your time for dollars in other ways. If you take a normal return, the amount of money you’re making every year is not going to change your life, and you’re locking up money in the stock market.
Sam: What’s the second point? Because I think the second point is gonna be better.
Shaan: The first point was: if you don’t have a lot, I’d rather you use that money — if you’re entrepreneurial, if you’re one of the 5% of people who actually want to build a business or do something on your own — you’re better served investing in yourself and buying your time back, and going and taking a bunch of shots at things.
The Case for Investing: Capital as Leverage [00:08:15]
Shaan: Now the second thought: is investing actually stupid? I think you’re kind of right that it’s not the most exciting thing — but excitement is different for everybody.
Here’s the cool way of thinking about investing: for anything to work, you need leverage. You were running The Hustle, but day to day you write zero emails, probably — you don’t write the daily email, you don’t do the trends report. This podcast is the most active thing you do for The Hustle. Is that correct?
Sam: We could say yes for the sake of argument.
Shaan: Okay. So your leverage is that you’ve got a bunch of humans doing work for you. That’s one form of leverage — people.
Another form of leverage is media. We’re gonna talk for one hour, and then this is gonna get listened to for hundreds of thousands of hours out there. So media is another form of leverage.
And then the last one is capital. Capital is another form of leverage. So here’s the cool way of thinking about it: if you have capital, investing is your way of allocating that capital to things that are either going to return the most, or going to change the world in a way that you care about. Capital is your way of influencing the direction the world goes, because you get to assign units of energy to different companies and causes that are going to go do things.
Sam: I get that. I think that’s a great point. But what I’m completely burnt out on is just lame-ass investments.
Shaan: What’s a lame-ass investment?
Sam: You don’t have to use a name, but — I’ve got a friend who gave a lot of money to some investor who’s going to buy a bunch of multifamily real estate. And it’s simply an asset class. It’s just a thing on a spreadsheet. I’m like, “Oh my god, that’s so boring.”
And I’ve got friends who are buying companies and they just look for anything that checks the boxes — does it have net churn? What’s the acquisition cost? That’s it. Very mechanical.
I get it — it’s a great way to make money. But it’s just so fucking lame sometimes. I’m like, “Can we please do something exciting?”
What Would You Do Instead? [00:12:00]
Shaan: Okay, here’s the rub. Let’s say you don’t invest — you’re either going to park cash on the side and do nothing with it, which is probably lamer than investing and having the cash grow. Or what’s door number three? What would you prefer to do with your capital besides invest or leave it in cash?
Sam: Either start companies — and even if that means I don’t run them —
Shaan: That’s investing.
Sam: I’m not saying investing in general is stupid. I’m using “investing” because I can’t think of a better word. Investing is great — I’m just saying the financial arbitrage stuff is lame. I think you understand what I’m saying.
Shaan: Yeah, I get where you’re coming from.
Sam: I don’t know, it just hit me last week. I’m like, “Oh my god, I don’t want to talk about a carry fee ever again.” It’s just so fucking lame.
And I think it happened when I was traveling. I see these normal-ass people at the gas station, with their wives and kids, and I’m way more fascinated by just making that person a little bit happier or a little bit better — not “how do I squeeze a little more profit out of this service?”
I was at this gas station and I saw this mom give her kid a generic Coke, and I was like — how can we help her make a better decision? Not how do I get 5% more on this investment.
The Real Issue: Mental Energy [00:15:20]
Shaan: I think I actually understand what you’re saying now. It’s not that investing is stupid. It’s not that putting money somewhere and getting a return is stupid. What you’re starting to get tired of is the amount of your mental energy that goes towards thinking about how to optimize returns.
Money’s got to go somewhere — might as well put it in a place that’s gonna grow, might as well fund a company that’s gonna do something. But it’s about mentally spending cycles thinking about how to get 7% versus 8% versus tax-efficient 9% — versus spending those same mental cycles thinking about something else. Reading a book, talking to a person, building something cool, writing a song — whatever it’s gonna be.
Is that more accurate?
Sam: Yeah. Just get out of this financial arbitrage circle-jerk and actually make a difference and have an exciting, wonderful life. I vote for myself and others.
Shaan: I’m with you on that. I catch myself doing that all the time — how many hours is my brain spending on this financial game? There’s some correct amount, but it’s very easy to slip into more than what you need, more than what’s adding value.
I love that TV show Billions, and I’m like, “Oh man, Bobby Axelrod — this powerful billionaire going to war versus other people — that’s fucking awesome.” But he’s also just a guy trying to squeeze pennies out of this thing and that thing, and it’s complete nonsense, you know what I mean?
Builders Over Allocators [00:18:00]
Sam: Yeah. I think what also happens — and this is important — is in your 20s you’re trying to figure out what you like. Your 20s, in many ways, are about feeding the ego. Whether you’re partying, trying to make friends, trying to date people, trying to get your name on the map in your career or your industry — I feel like a lot of people, including myself, spend their 20s feeding the ego.
And then your 30s are spent figuring out that either your ego is full, or it will never be full, and you actually want to feed the soul in some kind of way. Actually become more conscious of how you spend your time and energy.
And then there’s this constant push and pull. Maybe I just want to make a bunch of money. Maybe I’m not ambitious enough. You can over-focus on money, and there are these debates I have in my head — sounds like you do too.
Shaan: I think you can do both. But I guess the point is — I’m beginning to realize I love the builders more than the allocators.
Sam: Yeah. Exhibit fucking A. Builders over allocators all day.
Shaan: Good. That’s a good way to end it.