James Altucher joins Sam and Shaan to tell the story of building and losing millions multiple times — from his first web agency in the 90s through the dot-com bust, a hedge fund collapse on 9/11, and eventually finding stability through private investing and writing. He shares his daily practice framework (physical, emotional, creative, spiritual), the ten ideas a day habit that rewired his brain, and his framework for building an audience from scratch.
Speakers: Sam Parr (host), Shaan Puri (host), James Altucher (guest, author/investor/podcaster)
Introducing James Altucher [00:00:00]
Sam: So the background here, by the way, Shaan — I was on James’s show three weeks ago and it actually airs today. I’ve been getting people reaching out to me.
Shaan: James is an oddball. I like him. He’s been around and done all types of interesting stuff. He’s had books, he’s got paid newsletters. I don’t know how you’d describe yourself, but you’re just kind of all over the place. You’ve done all types of stuff and you have a really interesting life. We thought we’d get him on here so we could talk about anything. Do you know about James, Shaan?
Shaan: I know about him. I’ve read about your stuff. I was like, this guy’s the shit. And then I read something — I think you were talking about Bitcoin and crypto at the time — and I was like, wait a minute, is this just a guy who just sells the latest thing? Like, oh, here’s the new thing, cool, I’ll sell that. And I was like, I don’t know how I feel about this.
And then I read some of your stories where you talk about how you made money and lost it all, over and over again. And I was like, this guy is very interesting. You reminded me of like if Tim Ferriss, you know, smoked a bunch of weed and was on the internet. I don’t know, like some variation of a really interesting guy who’s built his brand on the internet. You always had something unexpected. Like even the fact that you own a comedy club — it was never the formulaic thing. That’s what I’ve sort of come to like about you. But you know, that’s my admittedly very loose knowledge about you. Do you want to give some background?
James: Yeah, I mean, it’s kind of what you were both sort of referring to. For better or for worse, I’ve had a lot of different interests, which I turned into a lot of different careers. And I say for better or for worse because a lot of times I would have an interest, build a business, sell it, make money — and then for some reason I would totally blow it and lose everything. And I’m not talking about like, oh I sold something for a billion and ended up with ten million, this is horrible. No. I would sell something for millions and then end up with zero, or less than zero in my bank account.
Shaan: Really? Just zero?
James: Actually, I wish sometimes it’s better to be less than zero than to be zero. Because if you’re less than zero, that means there’s a deal you could work out with somebody — like oh, I owe you ten million, let’s work it out and maybe you give me some capital so I can build. But anyway, I would often end up at zero. And I was depressed to the point of being suicidal. I had kids to feed, I had myself to feed. And it’s really true: when you go from having money and selling a business to broke, you find out who your real friends are. For me, almost every time it turned out I had zero friends. So I had nowhere to go, no idea what to do, depressed, didn’t know how in some cases to put food on the table for my kids — after having millions.
So I had to learn very quickly, over and over again: what are my interests, what can I pursue, what’s an idea, how do I be creative in a horrible environment, and then how do I monetize it.
I was a software guy. I worked in the entertainment industry, I worked for HBO. I started combining those two things — I started a company in the 90s making websites for entertainment companies. Then I became a venture capitalist, then I started a hedge fund, I wrote some software to help me invest, and then I started writing books about that. So I became a writer. Then I became a podcaster. And then, like you were saying, I started writing about much more personal stuff. And everybody who knew me couldn’t believe it. It was like they had never seen anything like this. People would call me up — “James, are you dying? Do you have cancer? Are you about to kill yourself? Why are you confessing to all these things? These are horrible, no one’s gonna do a deal with you again.”
And then those articles became books, and it turned out not only was I building up as a writer and my audience was bigger than ever — I’d previously written about finance, now I was writing about all this personal stuff — my audience became a hundred times bigger. I started getting more investment opportunities. I started a company that became successful. I started getting many more opportunities because I essentially paid with my vulnerability for freedom, and that created a whole kind of career for me.
It wasn’t intentional. I just was sick of writing about all the BS stuff I kept seeing everyone else write about. And if you want to be unique, you have to say what’s unique to you. What was unique to me was all the times I was scared to death and depressed and had to fight my way out of it.
First Business: Web Agencies in the 90s [00:07:30]
Sam: So many things to answer. I have some background questions. If somebody’s listening and they’re like, okay cool, you made millions — how did you go to zero? What was happening? How are you making money and how are you taking it to zero? Were you making wild bets?
James: Yeah, yeah. But I’d say I’ve had like five or six hits. For better or for worse, I needed all five or six. But the first one — I was working at HBO and I made their website. At the time, other entertainment companies didn’t even know what this internet thing was. This was 1995. Companies like American Express would call Arthur Andersen — their accounting firm — and say, can you make us a website? Arthur Andersen would say sure, and charge millions of dollars. Arthur Andersen would then call another software consulting company, who would charge a million dollars. That software company would call me, because nobody knew how to make a website in 1994-1995.
So I would say sure. My brother-in-law and I got paid $250,000 to make AmericanExpress.com. My salary at HBO at the time was $40,000 a year. We made HBO.com, then we made websites for Warner Brothers, Sony, Disney, BMG — all the record labels. We did every gangster rap record label: Bad Boy, Loud Records, Jive, Death Row, Interscope. We did the movie sites for The Matrix and many others.
Sam: Were these built-up sites? If you looked at them today, what would they look like? Like Craigslist?
James: That’s a great question. No, actually they don’t look like Craigslist. Web design back in those days was very heavy — big images, animations using Flash or Macromedia. There was very heavy design, not very usable. But they were admired back then. The website for The Matrix was considered a great website, which you can still find on Archive.org. HBO’s site was considered great too, even if it wasn’t as functional or easy to navigate as everything is now.
Sam: And you walked away with about $15 million at the end of that?
James: Yeah, cash. Not paper. A lot of people went public or sold and got paper, and then the paper went to zero in the dot-com bust. I had enough sense — at the peak in 1999 — to cash out. I had the cash in my checking account.
Shaan: How did you cash out? Were you getting stock in these companies?
James: So a company that was rolling up web agencies acquired us. In a sense, that was how we went public. Some company that made — I don’t know — vacuum cleaners or whatever decided to get into the internet business in 1998 and acquired us. Suddenly they were an internet company. The stock went from three to forty-eight, and I cashed out with literally a little over $15 million, almost $16 million, cash. At the peak.
And here I was, smart every step of the way. I knew the web design and development business was going away because they were teaching you how to make a website in junior high school classes. I sold the business, cashed out as fast as I could. And then — I became everybody’s genius.
When you make money at one thing, suddenly you think you’re a genius at everything. And everybody would come to me and say, hey, you have curly hair and glasses, you must know all this internet stuff — what should we invest in? And I started thinking, oh, I must be really smart at this.
From $15 Million to Zero: Venture Capital and Poker [00:16:00]
James: I literally poured all this cash back into internet investments after I cashed out of the internet. And I also bought a huge apartment in New York City. The one thing I was doing that everybody thought was why I lost all my money — but actually wasn’t — was that I was gambling every single day. I was playing poker 365 straight days, at least 8 to 10 hours a day.
Sam: I was going to ask if you’re a degenerate gambler, because you kind of have that vibe even before you told me.
James: Here’s the thing — poker was the one thing I probably should have stuck with. I was doing well at poker, and it was right before the poker boom took off. Then I decided, you know what, I’m just going to focus on starting new companies and internet investing. I stopped playing poker right at the end of 1999.
I started a venture capital firm and just started investing money.
Shaan: Was it all your money?
James: No, we raised $200 million. CS First Boston, Deutsche Bank — all these major banks gave us money. Then Investcorp, a major private equity firm, gave us $100 million. And then I started investing my own personal money side-by-side with the fund, in other investments, and buying stocks — all the way down.
Sam: So how long was it from $15 million to zero?
James: I was losing about a million dollars a week in the summer of 2000. I just didn’t know what I was doing. It wasn’t even that I didn’t know how to invest — there are so many other skills to investing than knowing what companies are good and what companies are bad. I didn’t understand risk. I didn’t understand money management. I really didn’t understand anything about investing. I was an idiot.
I went to zero by around mid-2001. I was desperately putting my apartment up for sale — maybe I’d have some money left. I stopped paying my mortgage. And we were getting an offer.
September 11, 2001 [00:21:00]
James: We were getting an offer on September 11th. I lived two blocks from a little building called the World Trade Center. Of course, many worse things happened that day than me not getting an offer for my apartment, but 9/11 happened and we couldn’t sell because we were part of the crime scene.
Sam: Were you home?
James: I was at the World Trade Center.
Sam: Oh my god.
James: Which I don’t really talk about, because A, it sounds unbelievable, and B, many worse things happened to many more people than me that day. But my business partner and I — there was a Dean & DeLuca on the first floor of the World Trade Center. We ate breakfast there every day. Then we would go day-trade the markets. At that point I was starting to come back a little bit from day trading. I had written some software.
So we’re walking from breakfast to my home where I had my office, and my partner turns to me and says, is the president coming into town today? Because I look up and there’s this plane that’s just — right overhead. And then boom. We watched it go right into the building. Physically. Not on TV. We watched it.
Everybody on the street instinctively ducked. And your brain does weird things. I started thinking to myself: that was just an accident. Like, no one’s in the building. My brain was telling me this, even though it was a quarter to nine in the morning.
So we ran to the fire station. We said we want to help. These guys throw two fireman suits at us and say get this on, we’re going straight over there. We start putting them on. Then they say, wait a second — are you guys firemen? And we’re like, no, we just wanted to give blood or whatever we could do. And they said, no — only firemen. That fire station, the Duane Street firehouse — 100% of those people who went to the World Trade Center that morning died.
And that kind of clinched me losing everything, because I had been invested in the stock market that morning, and boom — everything went to zero. I was desperate for a year and a half. Couldn’t sell the place. There were no jobs. I was an idiot. I had no friends anymore.
Rebuilding: Quantitative Trading Software [00:27:00]
James: I had to teach myself how to invest. So I wrote some software where I took every piece of data about every single stock since World War II and looked for patterns. I would have my software find statistically significant patterns where trades were good. I tried to model fear and greed in the markets. And it worked pretty well. I don’t think that strategy would work now, but it worked then because there weren’t that many quantitative investors in the markets at the time. This was kind of the beginning of that.
So I was very successful with it, and that kept me alive. That gave me time to actually learn the skill, talk to people who were experts and professionals, and really learn. Then I started writing about investing. I started going on CNBC. I started a hedge fund. I wrote my first book about investing.
Gradually I built two careers: one in the hedge fund business, and the other in writing about investing and going on CNBC. And I was doing deals, making money. Then I built a website that combined my interest in web development with investing — I called it the MySpace of Finance, because MySpace was big then. I sold that site.
Sam: For how much?
James: About ten million. And then a year later I was broke again. Things like that just kept happening.
How James Has Sold So Many Companies [00:33:00]
Sam: Alright. There’s a lot going on here. But you’ve sold two companies so far at this point. And you’ve sold your newsletter business too, right?
James: Yeah, so that was a third company. And I’ve also been an investor in many other companies that have been sold. There’s a lot. I’ve been involved with everything from a mental rehab facility that sold for $41 million — that was in 2004 — then I did go broke after that. Then the stock picker site. Then I was an early investor in Buddy Media, which Peter Thiel invested in. I was one of the seed investors at a $4 million valuation. That sold to Salesforce for about $700-800 million. I have a company today where they just announced a reverse merger going public, so hopefully that will do well.
Sam: Selling companies is hard. Most people will never sell one. How have you been able to sell so many?
James: That’s a great question. Let me ask you — have you ever sold a company?
Sam: I had a small, hundreds of thousands of dollars sale. For The Hustle, we had term sheets and I walked away at the last minute. I’ve had two or three term sheets and walked away from them. I’ve never closed a deal.
James: And I’ve also helped buy companies. It’s similar skills on both sides, maybe slightly different. But people don’t realize selling a company is very difficult. There are three skills: starting a company, building it, and selling it.
Shaan, you sold your company to Twitch, right?
Shaan: Yeah.
James: You know what I’m talking about then. Your company’s up for sale, you meet a bunch of people, there’s this courtship, you kind of fall in love with each other. Just like in a real courtship. And then suddenly you move into a different period where lawyers take over. It’s a waiting period. It’s a due diligence period. It’s a very painful period, because before you were in this massive selling-and-dating mood, but now you’re living together and getting to know each other.
By the way, that’s when I started this podcast — during the due diligence period. I got so itchy because I was waiting and I was like, oh my god, I’m going to jeopardize this deal either because I’m going to push too hard or I’m going to go start another business, which is the worst thing I can do while trying to sell. I needed something to do. That’s why I started the podcast.
Sam: That’s smart. I would just do nothing but wait. It’s a painful process.
James: The way you sell — first off, you have to be sincere the whole way through. You have to have a vision that matches their vision very strongly, and it has to explain why you would sell. If your business is so great, why do you want to sell it? There’s that inherent contradiction. I was always aware that I would be better off with a better-capitalized partner. Maybe I would limit my upside, but the first time you sell a company for millions, and the second time, if you’re broke, you still need a few million. And then the third time, it’s okay to not sell for billions because you want that initial chunk.
But you also have to say, look, here’s how one plus one equals three. You have to be really persuasive on why one plus one equals three — even for you personally. You have to be able to express that this vision is going to benefit you personally if you partner with this other company. And it has to really make sense.
Then of course you have to survive the waiting period. You have to survive the due diligence. You have to keep all your employees because usually there’s some back-end earnout. You have to understand deal structure so you’re not ripped off. It’s very easy to be ripped off by lawyers in a deal, and people don’t realize that.
And you have to have some skills at negotiation. Which, negotiating is one of those things where nine out of ten people think they’re above average — which is impossible. Only four out of ten can be above the median, and only one out of ten is really good enough to sell a company properly.
When they come to you and say, how much do you want for your company — that’s a very hard question to answer. You don’t want to sound greedy. You don’t want to sound desperate. You don’t want to underprice yourself. So there are all sorts of negotiating techniques to help them answer that question in a way that works for both sides.
Shaan: Do you value your companies on a multiple of profit or revenue, or is it more like — if you use our stuff with your audience, it’ll create this much value?
James: Great question. There are three ways to value a company. One is a standard industry multiple on your earnings — and cut it in half, by the way, because no one’s going to pay the maximum. So if you have a profitable company in an industry that trades on the stock market at 20 times earnings, your company is probably last year’s profits times 10. That’s a basic formula.
The second way is what you just described — if we put ads all over here and you’re driving this amount of traffic, and we monetize those ads, this is what we’re worth. Cut that in half. On my second company, I made the mistake of not controlling the variables in that formula. They knew the variables better than I did, so I had to make sure when negotiating the formula that I understood the variables enough that it worked out to what I wanted. I didn’t do that properly on my second negotiation.
The third way is comparable deals in the space. They sold for this, we’re bigger, so we should be this. That’s kind of a BS way to value a company, but it’s how people value companies, particularly in tech. Like Giphy — they weren’t valuing off earnings.
Sam: Because in the internet space, usually the comparable deal happened recently, and it’s the only data point you have.
James: Exactly. And then Tenor, their competitor, just sold to Google the year before for a little less. By the way, is it true that Giphy was the second-largest search engine in the world?
Sam: That’s what they’re saying.
Shaan: I thought YouTube was second.
Sam: YouTube is number two, then three is Amazon, I think. Depends what you call a search engine.
James: I had that issue — I was a seed investor on the board of Bit.ly. Bit.ly had about 5% of the internet’s traffic running through it every day, and for the life of us we just could not figure out how to monetize it. It was impossible. They did exit — a private equity firm bought it — but it was like two or three x, which is not what you’re looking for in an angel investment.
Losing It All Again and Again — and the Pattern [00:45:00]
Sam: So James, when you lose all your money the first time, you come back, make money again doing something else, lose it again — at some point, were you like, okay, rainy day fund, two million bucks going into this account and I’m losing the keys? Surely your life was like, come on man, how did you keep not just saving something?
James: I got divorced and I lost the second house I bought. No, I think it was the third or fourth time that I finally looked back and said: what was I always doing right on the way up, and what was I doing wrong on the way down?
And there were things in common. I would just give up after I made a lot of money. I would kind of say, whew, I did my job as a human — now I can just let my health go, my relationships I don’t care about anymore, I don’t need to be creative anymore, I don’t need to have any kind of sense of spirituality. And I would just lose all sense of things. Not take care of myself — not just physically, but emotionally and creatively.
So I made a very concentrated effort. It sounds almost cliche and self-help-y, but I really did make a concerted effort to keep myself physically healthy, to have only good people in my life and quickly eliminate any toxic people — like at the speed of light, no second chances — and creatively, I started writing down ten ideas a day.
Business ideas, writing ideas, dumb ideas, ideas for TV shows, ideas for how Google could be a better search engine. I would arrogantly send them to Google. But the whole idea was not to have good ideas — it was to just practice this creativity muscle, or else it would atrophy.
Literally within months of writing ten ideas a day, it felt as if my whole brain was rewired. I would just bounce back so quickly with ideas, it was non-stop. And then sometimes I would write ideas for other companies and send them the ideas if I thought they were pretty good. I would always get new opportunities because of that. I visited Facebook, Amazon, LinkedIn, Google, Quora, Airbnb — and just this one process of writing ten ideas a day for the past twelve years has been such an incredible thing. I can’t praise it enough.
So the other day just for fun, a friend of mine recently took a job at Disney+. He was like, because of this lockdown, we’re not getting any good ideas pitched to us. I said, well, what are you looking for? He said we’re looking specifically for unscripted ideas for nine-year-olds. So I wrote my list of ten ideas the next day and sent it to him. He forwarded it to the head of reality programming at Disney. Right after this interview I’m meeting with Disney to go over the ideas.
Happiness vs. Well-Being: The Full Emotional Range [00:51:00]
Sam: As someone who’s gone up and down and up and down, can you explain what your happiness levels were like? What was the range from, say, zero dollars to ten thousand to a hundred thousand to a million to fifteen million?
James: Oh my god. And really, we’re just talking about the first time, because each time is different.
I had zero dollars in the bank and I was living in a studio in Astoria, Queens — which in the early 90s was not a nice part of Queens. Before that I had a roommate in an apartment smaller than the room you’re seeing me in, paying $300 a month. I was working at HBO for $40,000 a year. I had a suit in a garbage bag that I would pull out every day, put on the same suit seven days in a row, and walk over to HBO.
Then we did the very first site — a diamond dealer. He gave me $17,500 in cash. This was 1994. I had never seen any money like this before. I walked over to the Chelsea Hotel on 23rd Street — this sort of famous, artsy, rundown hotel — and I gave the owner a paper bag of $17,500 and said, could I live here for a year? He said, are you a drug dealer? And I said, no, I work at HBO. And he let me live there.
I was just so happy. I’m living in Manhattan now, in this cool hotel, I felt like part of a scene. That was an amazing moment.
And then when I sold the first business, I felt good but it was weird — because there was so much pain closing that deal. I was so stressed out in the months prior and got burnt out. That’s when I started playing poker every single night, just to escape the burnout. So I don’t know if I was happy or just more escapist then.
And then when I started losing — every single time I’ve lost everything, I was suicidal. In part for practical reasons. I thought maybe my kids could live off my life insurance. The first time, they were babies — I figured they wouldn’t remember me, but they would definitely benefit from the life insurance. Fortunately I could never figure out how to do it in such a way as to not hurt myself, and I never did it. I was very depressed for long periods of time.
But each time the period of depression got faster and faster. And I think one of the most important things I’ve been learning — I used to think learning is like school, learn math. And then as you get older you’re like, oh maybe I should learn some skills, like sales or programming. But now I’m like, oh, forget all that. The only skill that matters is managing my own psychology, my own emotions.
Sam: Do you have any things you’ve worked on that help you boost gratitude or get out of a depression funk? Are you conscious about that?
James: Very much so. And that was part of this realization. Every single day — I call it my daily practice. It could be different for each person, but I always have to ask: what am I doing to eat, move, sleep? That’s physical health. I always try to stay healthy. I’m 52 years old, I’ve got to stay as healthy as possible.
Then emotional health — how toxic are the people around me? That is the key to emotional health. Nothing else.
Then creative health — am I writing ten ideas a day? Creativity not only rewires your brain to be more creative, but it also triggers a lot of dopamine when you’re creative. If I work on my ten ideas a day list in the morning, I’ve got this surge of dopamine that carries me at least till 1 or 2 in the afternoon.
And then spiritual health — am I trying to control things I can’t control? That’s a very important part of spiritual health. You see people on Twitter all day long: we need to open up this economy right now, or we need to lock down all the people who are opening up. On both sides, they’re trying to control things they can’t control. Even during this pandemic I felt like I was getting a little into that, and I pulled myself back and realized it wasn’t healthy for me.
Just those four things: physical, emotional, creative, spiritual. If I attend to them every day, I keep myself at a very high state. Contentment and well-being are much more important than happiness. Happiness is very fleeting. Well-being — you build a real foundation of well-being, and that sticks with you.
What James Does Now [01:02:00]
Sam: What’s your business now, James? Like, what’s your job?
James: I do lots of things. I write every day. I just finished a book that will be published by HarperCollins in a year. I do a podcast. I’m still involved in my newsletter business, which I sold. I’m a private investor in about two dozen private companies — but I’m not active in those because they don’t want my advice. I have to make sure I’m enough in the deal flow that each year I can still put a little bit of money to work, because you never know which year you’ll find the next Uber.
And a lot of my time the past five years, until this lockdown, has been on stand-up comedy — which makes minimal money, at best.
Sam: So your nut, for your angel money, that came from your initial sale?
James: Really, the way I make a living and the way I’ve built up is from private investing. Pretty much every company I’ve sold, I ended up losing all or most of the money. But private investing is how I’ve been able to make a living most of all.
Shaan: On the angel front, what percent of your net worth do you put into angel deals?
James: Risk is the most important part of investing — whether you’re investing money or time. Risk has to be managed first and foremost. I remove risk two ways. One is I always invest with people who are smarter than me. I let that outsource some of the risk management to professionals. The other way is position size. I never invest more than 1 to 2 percent of my net worth in any single company.
I’ll let the investment grow to much more than that. It’s like what Warren Buffett says — if you’ve got Michael Jordan on your team, you don’t trade him just because he got better. I like it when good private companies don’t exit, because that means they’re growing at 50 to 200 percent a year. As long as they’re doing that, I don’t want them to exit.
Shaan: What’s your biggest angel or private company win so far?
James: It’s hard to say because a lot of my investments are doing really well but they’re still private. Like, I have deals from 2009 that are still doubling every year. But Buddy Media — four million to seven hundred million — was pretty good.
Ticket Fly was another one I was in the seed round of, sold for $450 million. And I invested in another one that’s public now — a law enforcement company. They have a gun that fires a Kevlar cable at the speed of sound. It wraps around you, and the more you struggle to get out, the tighter it squeezes.
Sam: Straight out of Batman.
James: Yeah. And one of the founders of Taser is now the president of the company. The company’s called Wrap Technology. They’re starting to sell quite a bit. It’s just such a great thing to be part of — something that literally saves lives every day.
The Ten Ideas Practice in Action [01:13:00]
Shaan: Can you walk us through what you actually write? Can we see the journal?
James: A lot of times it’s in my email. I do it in a waiter’s pad if I’m out at a cafe, or in my email if I’m at my computer.
Shaan: As an angel investor and someone who’s always scheming, what do you have your eye on now?
James: I have no problem saying what I’m scheming at, because I haven’t considered starting a new company in a very long time — but I have been considering it now. One of the ideas: I feel it’s a shame that content is not monetized unless you’re in the top one-tenth of one percent of content creators. You have to be like Logan Paul to monetize your YouTube channel. The other twenty billion people on YouTube — even if they have one video that goes viral — can’t monetize it. Even if you have a tweet that 20 million people see but you only have 300 followers, you can’t monetize it. So I’ve been figuring out a way to use these ecosystems to allow people to monetize content. I’m actually physically working on it.
Another one involves making a derivative of a board game that I like.
But in general, I don’t come up with business ideas the way people think. Like the other day I challenged myself to come up with TV show ideas that nine-year-olds would like. I did that and sent it off. Usually I don’t send them off. Sometimes the ideas are ideas for books I could write. If I have an idea for a book, I’ll write out all the chapter titles. Most of the ideas are supposed to be bad — because you can’t come up with 3,650 good ideas a year. I’m just trying to make my brain sweat.
One idea list that’s particularly hard: this morning I wrote ten good positive things that have happened to me because of this lockdown. Those aren’t actionable ideas, but it was actually hard to come up with ten. One through seven is usually pretty easy. Eight, nine, ten makes my brain sweat.
Idea Sex: The Methodology Behind the Ideas [01:20:00]
James: A lot of times I’ll come up with business ideas by asking: what industries are going to be attractive after this, that are unexpected? You can’t say the obvious ones — obviously video communications technology is going to be attractive. Instead I’d say: what are the ten ways I can improve upon Zoom, which is the most popular one right now? That’s how I exercise the idea muscle around Zoom.
And for your content idea, I’ll do something I call idea sex. I’ll take ideas from two completely different industries — and again, fortunately or unfortunately, I’ve been a professional in many different industries — and I’ll combine ideas to see if there’s a little idea baby that could work in what I’m doing.
For instance, if I go to a restaurant and have a pretty good meal, that meal could get monetized. The waiter who treats me nice might have better chances of monetizing their behavior than otherwise. There’s a lot to learn from how monetization works in the bottom third of the economy in other industries. A waiter is in the bottom third of people who work in restaurants. How do they monetize themselves?
There are a lot of industries where you can say: the bottom third of this sector or this space — they don’t make any money, but maybe they could. And you can look at that as a model.
Square is a great example. Square took the mom-and-pop store that couldn’t accept credit cards because no bank would trust them, and enabled them to accept credit cards. They became a twelve billion dollar company because they could monetize the bottom third of mom-and-pop retail. That’s one model for creating a billion-dollar company. And then I use idea sex to generate: how does every other industry monetize their bottom third? Let’s apply it to YouTube and see what happens.
And then I look at competitors. There’s Patreon, but Patreon has various hurdles. You have to already know you’re going to be a good content creator. You have to come up with rewards. You have to interact and create content specifically for Patreon. I find a lot of content creators, once they have a big audience, find Patreon more annoying than helpful. Advertising is also annoying. Finding advertisers yourself is annoying. Outsourcing your advertising to YouTube is also annoying. There are various problems in the current ways people monetize.
Sam: What’s your favorite way for monetizing content?
James: For me, I don’t think I’ve ever really monetized content the way I would like to. But subscription is the best way to monetize most content. You have to plan for that in advance — you have to say, I’m going to make a subscription product with new ideas and trends every week, built by my research analysts, and people are willing to pay ten dollars a month. It’s an annuity that comes in and helps you survive even in a recessionary environment. You’re not always chasing advertisers.
I love subscription. Whether it’s an online newsletter, an online course, or a subscription community like Trends. That’s my favorite way. But it doesn’t solve the problem of monetizing when you’re not already in the top tier of content. You guys are in the top one-tenth of one percent — you’re going to monetize and do well no matter what model you choose. Whereas someone who runs a newsletter about some obscure kind of Taekwondo — they might have one piece of content that really stands out, but they’re not going to be able to monetize a newsletter necessarily.
Building an Audience From Scratch at 22 [01:32:00]
Sam: I think you’re pretty much one of the top one percent of people at building new businesses or audiences. You’ve done an amazing job of building audiences that will follow you through one medium — podcasting, blogging, email, whatever. Let’s say you’re 21 years old again today. You know everything you know now, but nobody knows your name. How would you go about building an audience?
James: First off, let’s assume you have something to say. You have to have a unique perspective.
Take this podcast as an example — My First Million. There are other podcasts about millionaires. There’s The Eventual Millionaire, which talks to millionaires about how they got there. But most of those are started by people who haven’t yet sold their first business or made their first million. Their unique thing is they’re approaching people almost as if they’re asking for advice. Your perspective is different — you’ve done it. So you’re able to drill down on that in a different type of nuance, and you have something unique to bring out of people.
And Sam, for you — you’ve spent so much time studying trends and side hustles and the gig economy. The Hustle is like the best email newsletter out there because the voice is so unique. It’s the go-to, particularly during this lockdown. People ask me, hey, what are some side gigs we could do from home? The first thing I always say is check out The Hustle and you’ll get a ton of ideas. And your podcast just spins out ideas that I’ve literally run with. It’s something I’ve completely stolen from you.
So you have to have something unique to say. At 22, you have to question: do I really have something unique to say? Often when I write something, I don’t hit publish unless I’m afraid of what people will think about me after I hit publish. Because if I’m not afraid, I’m probably not saying something new or different. I have to challenge myself to create unique content.
But let’s assume you have something unique to say, or some expertise built up by 22. Here’s what I would do.
I would go on Quora and answer every question I could. I would participate on LinkedIn groups, answering every question. I would go on groups like the Trends Facebook group. A lot of people ask questions. I would go on Podcasters Paradise — a subscription community about podcasting — and answer every question I could. Establish expertise.
And then — once I had some expertise — I would sprint out. So now you’ve seen me everywhere. Quora, LinkedIn, Facebook. There’s James again, answering questions.
Now I’ll start going on sites with a higher barrier to create content. Forbes.com, Inc.com, TechCrunch, Yahoo Finance. I start writing articles for them. So now people see me in a position of authority. It’s not just I have followers on Quora or Twitter. It’s, I just saw James on Quora and now I see him on CNN.com — what’s he doing there? You establish authority.
Then you create an email newsletter. And ninety-nine percent of your content has to be free. Always, at the end of my articles: hey, you want to hear more from me? I have an email newsletter, sign up, and I’ll give you my book — the Top 20 Hustles for 2020 — for free. Just start putting all your articles into the free email.
And then at some point, when your level of expertise is big enough, you can start a for-pay subscription newsletter. About trends, or stocks, or some physical activity. This is the exact thing you did, Sam. From an outside perspective, your newsletter business looks like it makes tens of millions in subscription revenue.
Sam: Yeah, so I did do that. And it wasn’t the first business I started. That would have been a good first business if the question was, if I was 22, what would I do? But that is how I did build that latest business. And it worked. That model works.
I also think an online course is actually better than newsletters for a lot of people. A friend of mine started an online course — she’s the most introverted, shy person I know — on how to be noticed by the media, how to become a media expert. She priced it at $700. She opens it up for like three days every year, sells another thousand, and makes $700,000 a year. She lives in a cheap country, moved there just to keep expenses down. And it’s just a course. Not an ongoing newsletter.
James: Exactly. I think an online course is better actually than newsletters, and I think affiliate deals are also better than newsletters in a lot of cases.
So if I were to redo my business, that’s what I would do if I was starting from scratch. I’ve seen that methodology work over and over again.
Content creation is king. There’s always demand. How many times have you been asked during this lockdown, what show should I watch, I feel like I’ve watched everything? Content people always want more. The big content creators spend hundreds of billions on content — just on sitcoms this year. There’s so much demand.
And ninety-nine percent of your content is still free — that’s key. But you could provide extra value that’s worth paying for. The quality and the voice of The Hustle convinced me I need to get Trends. And I’m happy to pay for it. But you always have to provide value, and you always have to have a unique perspective.
Sam: I think that is the key, and the hardest part. The unique perspective is hard. Everything after that is sort of the textbook. You run the playbook: how do I get it out there for free, how do I collect the customer relationship, how do I monetize the most hardcore fans? But the unique perspective is hard. How do you even shape that?
James: I’ll give you another example. Matt Berry — the fantasy sports anchor at ESPN, who also hosts The Fantasy Show on ESPN. That guy was a Hollywood screenwriter. He was writing movies and TV shows and he hated his life. He quit that, was making a ton of money, and just started a blog. He just loves fantasy sports. He started blogging about that for $100 a blog post — totally broke after quitting Hollywood. But because he had that writing skill from his Hollywood days, he quickly got a huge audience in fantasy sports. Then he built a for-pay subscription site. ESPN bought it. He kept moving up the ranks. And now he’s done so much better doing what he loves — fantasy sports — monetizing in almost the same way I just described. And he’s so much happier than when he was writing movies, which is what a lot of people consider the dream job.
Wrapping Up [01:52:00]
Sam: I love it. We should wrap up in a second, James. This was awesome. I’ve got to admit, you were way more legit than I expected.
James: Why did you expect me not to be legit?
Sam: Okay, I’ve already called this out — when his company was acquired, Shaan, James was like, dude, my content’s legit, I’m legit, I do it all. But the acquiring company is incredibly aggressive with the advertising, and sometimes that makes me appear as though I’m one thing when I’m not.
James: That’s a very interesting topic — how aggressive you should be with your advertising. There’s this French philosopher, and he has this theory that even the good guys need to use Machiavellian tactics. Because otherwise, if I just said, hey guys, I have a unique perspective on Bitcoin, please listen to me — there was so much aggressive advertising out there that they would have drowned me out. And I would have not succeeded in my mission, which was to inform people what I thought was a correct view of Bitcoin. What would have been the point?
Sometimes it did cost me, though. Because my ads were so good, we dominated. That was part of the reason Facebook and Google shut down crypto ads — because of my ads.
Sam: Yeah, that was definitely a little piece of it. But what I actually meant was — most of the time when a guest comes on, I think to myself, well, there’s a really successful person, but man, they don’t tell great stories, they don’t bring energy and unique insights that I’m imagining the listener would want. But you brought that. Listener number one for this episode would have liked this one. I can’t always say that about all our guests. But you raised the bar for the podcast.
James: Thank you.
Sam: James, if people want to say hi to you, is Twitter your go-to?
James: No, I’m James Altucher on TikTok. My absolute best content. Fifty-year-old dude perspective.
Sam: You’re not dancing, though?
James: I did do one. I danced one time and someone commented, “Dude, this is not why we found you.” I took that one down and I haven’t danced since. Although if push came to shove and I was drunk — when I was twelve years old I was a semi-professional breakdancer.
Sam: Big boy breakdancer. That’s amazing. We appreciate you coming. I’m looking forward to developing a friendship and having you back.
James: Excellent. And Shaan, let’s have you on the podcast as well.
Shaan: Absolutely. Let’s exchange emails and figure it out.
James: Sounds good. Thank you all. Talk to you soon. Bye.