End Poverty. Make Trillions. — Chapter 6: It's a Rich Man's Game, No Matter What They Call It

When you’re poor, few things are more infuriating than rich people telling you that having money is overrated. I ask for forgiveness. While I still don’t recommend it, I’ll share exactly how building generational wealth works for anyone that wants to go down that path. During college, I comforted myself by thinking that although I was poor, my peers and I were all in the same place and therefore equal. After we graduated, everyone in my class gravitated to similar jobs. Everyone wanted to work for big investment banks, consulting firms, law firms, and hospitals. We all went for the money, in one way or another. But something strange happened. After about six to twelve months, all the wealthiest kids from my graduating class quit their jobs. “I got what I came here for,” they’d say. “I’m not slaving away for these guys for so little money.” Next thing I’d hear was that they’d suddenly started their own business or had gotten top jobs at one of their parents’ companies. There was no chance I could do something like that. At twenty-four, it required more than a little seed money and some powerful connections to raise the $5 million needed to start a new company on the scale my former classmates did. Raising money is nothing for wealthy kids who are family friends with all the investment gatekeepers. It no longer mattered who had the

best grades; what mattered was who had access to capital. The game, it turns out, is completely rigged for the rich to stay rich. As they say, it takes money to make money. From the ages of five to twenty-four, I mastered being a student. I wrote papers, took tests, and got good grades. The tasks were concrete, there were rules, and it was usually clear how to move on to the next step. Basically, school is the opposite of work. School teaches you that you can learn everything there is to know about one topic. If I get an A in biology class, that told me I must know all there is to know about biology. Wrong! We take a very tiny slice of whatever knowledge exists about a topic, turn it into a syllabus, and test students on that tiny slice. In the real world, there’s more to know about any given topic than any one person can ever come close to learning. Yet, despite the practically infinite amount of information that exists, the business world is full of arrogant people who think they know everything about everything. The reality is, most of them know very little about the subject matter they speak so confidently about. In an environment like this, people rely heavily on trust. But how do you know you can trust someone you’ve never met? People assume that because a person holds a degree from an elite school or they’ve worked at a top company, they must know what they’re talking about. It’s not true, but alas, people believe it. Consulting companies take advantage of this belief by routinely hiring fresh graduates with impressive resumes, knowing it’ll convince clients to believe whatever the consulting firm recommends. That’s the reason why I was paid an ungodly amount of money to make PowerPoint slides. I told myself that doing that kind of work was okay. “Just put your head down for ten years and you’ll climb the ladder,” I’d say to myself in the bathroom mirror each morning. “You’ll be able to do some good for the world once you have a ton of money to really make things happen!” But I found myself getting sadder and sadder. The partying lost its luster as I saw it for what it was, and my work wasn’t meaningful. How was I

CHAPTER 6: IT’S A RICH MAN’S GAME, NO MATTER WHAT THEY CALL IT | 65 going to do that for an entire decade? It wasn’t as if work-life got much better with each progressing year. When I looked at the people in the top positions at my company sacrificing everything to advance, they typically had no life whatsoever outside of work to demonstrate how ‘all-in’ they were for the company. If anything, they appeared even more lost than I felt. For those that can postpone their lives for ten to twenty years, it’s a comparatively low-risk way to build a net worth in the low eight figures. In an attempt to make it bearable, I scratched and clawed my way into the teams that were working on meaningful problems around poverty, especially in the healthcare space. I was happy to discover that although there’s a lot of bullshit in the consulting world, there are still people who do excellent work and care deeply about driving impact. Those people are rare, but they exist. The company I worked for provided strategy advice to the biggest healthcare organizations in the world. It was interesting to have a seat at the table and talk strategy with some of the most powerful people in wellness. I wanted to try and understand how I could help fix our healthcare system. What I came to realize is that the American healthcare system isn’t broken because we don’t know how to provide good healthcare—we provide phenomenal healthcare to people who are rich. The problem is that we don’t choose to make it accessible to everybody, and we choose to make it extremely expensive so that people in the business of healthcare can generate profit. Everyone was making money off this system: the pharmaceutical companies, the hospitals, the doctors, the insurance companies, etc. And I could see that the system incentivized these individuals and companies to keep things that way. It was a disheartening realization, to say the least. The first key to generating wealth is not being too concerned with the consequences of accumulating it. The leaders of top companies were excellent at that. Although I’d been able to steer my career towards a more interesting path, I still wasn’t willing to wait in line for a decade or two before being

able to advance to a position where I’d be one of the drivers of change. I’d grown up believing that in the real world, success was based on merit, but I saw first-hand how absolutely untrue that was. No one ever promotes their subordinates above them. The jobs themselves aren’t all that hard, so at big companies, most of your energy goes into playing politics as you compete for the top spots. Again, it’s not what you know, it’s who you know. The aspiring billionaire should not fall for the trap of focusing too much on content knowledge or domain expertise. After a few years, I decided to leave the consulting firm and go work for a start-up company. At the time, that seemed like a faster way to the top. I packed my bags and moved to Washington, D.C., only to learn the grass isn’t always greener on the other side. Turns out, no one makes money at start-ups when companies have their initial public offering (meaning when they initially sell a portion of their company to the public on the stock exchange), unless they have meaningful ownership stakes. Typically, the CEO and investors are the only ones who have a large equity stake. Those people putting in 100-hour work weeks to secure the company’s success mostly earn a below-market rate salary and a small number of common shares, while investors who did little more than write checks would make millions off their preferred equity, billions when things really went well. People who own common shares don’t make a dime until everyone with preferred shares get paid out, so oftentimes even with a successful exit, most employees will make little or nothing from their stock grants. So much for hard work! In capitalism, it’s better to invest your capital than it is to invest your labor. What separates capitalism from other economic systems is the privatization of capital. Prior to capitalism, resources were largely controlled by the state. If you wanted to start a business, you had to get a charter (permission) from the government. However, during those time periods, there was also an abundance of commons (shared land and resources). The thinking was that although the king owned everything, people

CHAPTER 6: IT’S A RICH MAN’S GAME, NO MATTER WHAT THEY CALL IT | 67 needed access to resources to survive, so a large portion of the king’s land was available for everyone to utilize for hunting, timber, water, grazing animals, etc. When capitalism emerged, however, those commons were all claimed by individuals. For the first time, everyday citizens were now truly poor. That, of course, had been true of slaves throughout the world for thousands of years, but the concept of citizens having no rights to any natural resources was both new and devastating. We talk about capitalism and the competition it encourages as if it’s this great equalizer, without asking, “How did you get all that capital in the first place?” The majority of wealth in the world comes from land and natural resources. If someone makes a claim on commonly owned land, then uses that stolen wealth to start a successful business, are they really self-made? The key to capitalism is capital. If you don’t have it already, it’s incredibly difficult to obtain. If you do have it, it’s easy to make more of it. All you need to do is go online and see how much more money you can make in interest or market returns by lending to various types of projects. It’s money you’ll make for doing absolutely nothing but handing over money. While I may have thought graduating from Harvard and Oxford had evened things out between myself and my wealthy classmates, I couldn’t have been more wrong. Many of my peers had $50 million trust funds—some much larger than that. At a modest five percent annual return, which requires zero labor, an individual with a trust fund of that size would receive $2.5 million in interest alone, every single year. That’s capitalism. It’s the ability to make money without working—because you already have money. Once you have capital, your job becomes searching for people like me who’re willing to work a hundred hours each week so that your $100 million magically turns into $120 million next year. And that’s exactly what my classmates did. They knew working for their money was a sucker’s game. Since I had no capital, I was the sucker. Or at least, that’s how I felt.

I kept working on healthcare projects and other projects that seemed to help people, but I’d strayed far from a service mentality. I almost never went home to Indianapolis anymore, and I rarely saw my family. I volunteered in low-income communities, but my focus was my career. All my energy went toward getting to the top. I’d long since given up my position in medical school and was fully entrenched in the business world. If ignorance is bliss, knowledge can be painful. I now understood how the sausage was made, and let me tell you, it wasn’t pretty. Once it finally became clear to me how the whole system worked, I became incredibly disillusioned. There is no competition. As D’Angelo Clarksdale so aptly put it, “The king stay the king.”3 There was no sophisticated analysis needed to explain why one country was poor and another was rich. A country is rich because they assert that they own assets, and other countries are forced to agree. If you go back far enough in time, you’ll learn that those assets were almost always taken by force. In the modern world, we don’t see it that way. We don’t question the origins of wealth. Instead, we’re enamored with the occasional rags to riches story. Those stories are used to convince the poor that they too could become rich someday. But the truth is, to build wealth, you need wealth. If you don’t have wealth, you better do whatever wealthy people want you to do. And usually, what they want you to do is to make them wealthier. Jeff Bezos, Warren Buffett, Donald Trump, and virtually every other ultra-rich individual you can think of made their money because a wealthy friend or relative loaned them the money to get started. Wealth begets wealth. It’s cyclical. Armed with this knowledge, I was left to wonder what the hell I was supposed to do. Poverty exists because the people with money choose not to share it. That’s it in a nutshell. If wealth generates more wealth, and everyone had just a little bit of wealth, then no one would be poor. But 3 The Wire, 2002 television series

CHAPTER 6: IT’S A RICH MAN’S GAME, NO MATTER WHAT THEY CALL IT | 69 what we’ve done is allow wealth to become concentrated in the hands of a very small number of people. Which means the financial rewards of capitalism all flow into the hands of the global elite. We all work hard so they don’t have to. As someone without wealth, I still had bills to pay. I wondered what I could do, career-wise, to effect change in an impactful way. Would I try to explain the way the system worked to poor people? I doubted that would make a difference. Most people, educated or otherwise, don’t understand finance and economics, and poor people are no different. And even if I were able to explain it to them, what were they going to do about it? They’re powerless, I thought. I lost faith in my economic development work the more I learned about capitalism. I stepped down from my non-profit organization. It felt like I was just taking crumbs to the masses to placate them in a system designed to impoverish people. Whenever I tried to come up with a new project to help the poor, my analytical mind would reveal it as a facade. I kept thinking a person could hand out food or clean water all they wanted, but until the poor had ownership and equity, they’d always be poor. How could I possibly help the poor gain wealth? I didn’t even have wealth myself. Sure, I was making a good income, but income from labor isn’t the key. It’s income from your capital that matters most in capitalism. I remember sitting in the park in front of the White House feeling completely lost. I’d always made sure I made enough money to feel good about myself, but I’d never fully embraced wealth. I’d told myself I was just having a little fun, but that I’d always stay focused on helping the less fortunate. Now, I saw that I needed power to create change. Money is a form of power, but I had no desire whatsoever to live a life surrounded by people solely focused on making more money. I wanted to walk away from everything. If that was the type of world people wanted, then let them have it. I didn’t want to play anymore. I knew there was no nice way to get to the top. Everyone wants power, and if I wanted it, I’d have to sharpen my elbows and get ready for a fight. The

thing is, at that point, I wondered who I was fighting for? I wasn’t poor anymore, and I hadn’t lived in poverty for a decade. I’d been spending more time thinking about setting up my potential future children for success than thinking about helping the poor. Once you escape poverty, you start to put it out of your mind. Well, at least I did. The system is what it is. Either I had to play along or get tossed aside, right? I stared down the various paths I could choose for my future, and nothing looked interesting. I knew too much to be excited about childish dreams of a better world. I was too far removed from home to ever go back there. It felt less like a crossroads and more like an impasse. And yet, if I considered Maslow’s hierarchy of needs, I should’ve been right up at the top, feeling fulfilled and satisfied with what I’d achieved. My basic needs were met, and I had no concerns about my safety or financial security (though I thought about money now more than ever before). I was accomplished and successful, as were my friends. On paper, and to the casual observer, it appeared I had it all. But there was a gaping hole in my chest. The world wasn’t all that complex. There were boots, and there were asses. We could easily treat each other better, I thought, but enough of us had bought into the idea that people must suffer for others to shine, the concept had become intractable from modern society. Given my position in the world, I had practically no chance of changing that. If life were a test, I wanted to quit. Where was the off switch? How can I stop playing this pointless game? I remember asking myself rationally. I didn’t feel any suicidal urges, just the weight of reality. I felt like Buzz Lightyear from the movie Toy Story when he finally realized he was just a toy. By ignoring the realities of capitalism and wealth generation, I’d fooled myself into believing I could somehow change a system without having any real power and authority within it. America does an incredible job of convincing its citizens that we all have an equal say in how things work, and that the best ideas bubble

CHAPTER 6: IT’S A RICH MAN’S GAME, NO MATTER WHAT THEY CALL IT | 71 up to the surface. But I saw, without a doubt, that wealthy individuals and corporations ran the country—and the world. If everyone is out to generate more money, then who wins? Whoever has the most power to bend the system in their favor. And of course, those who already have wealth have an inordinate ability to shape and reshape the system in their favor. Of course, a very small number of people will rise through the ranks, but the chances of that are practically nil. No one was going to listen to anything I had to say until I had some power. I’d deluded myself into believing my voice mattered before it did. And once I was on the climb, it was clear I couldn’t reach the levels of power necessary for change without going all in on an unrealistic goal. I made up my mind, and thought, well, if you’re going to keep living, why not try to do the impossible? I wondered what the best thing would be for me to do with my life. I didn’t care how good the chances of success were; if there was some chance, I was going to try. The best thing I could do with my life, I decided, was to help everyone get a little wealth, so we could get rid of poverty once and for all. I had no idea how I’d accomplish this, but I figured I was going to need money to do it. I got up from the park bench, went home, and started ordering books on investing and finance. I was done with the development work. If I wanted to help the poor, I needed wealth. The odds of success were low, but I knew the best ways to gain extreme wealth, even if starting off with none, and felt my chances of cracking the code were as good as anyone else’s. Since I didn’t have a significant amount of money of my own to invest, I decided to become an investment advisor. The key to winning in capitalism is to make money using other people’s money. Even as an entrepreneur, your real wealth generation comes from raising venture capital to invest in your business, as opposed to relying on your own money. Capitalists are, in theory, rewarded for taking risks. In reality, the best capitalists don’t risk anything themselves; they finance everything. Don’t spend your highest energy years slaving away for someone else

just to save a few hundred thousand dollars. That’s a complete waste of time. Even if you’re stashing away $25,000 a year, it’ll take you four hundred years to have that initial $10 million to invest. And you’ll still need to multiply that $10 million a hundred times before you tap a billion. Whereas if you’re able to have someone give you $200 million to invest, with a promise to share twenty percent of the profits with you, you can turn that $200 million into $400 million dollars and pocket $40 million for yourself, with your investor taking home $360 million. Both go home happy, and you’re able to skip the multiple lifetimes it would take to luck out and have that $200 million to start off with. Asset management was the elevator I needed. It didn’t matter that my educational background was not in finance or investing. I knew I could learn everything I needed to know if I applied myself. The next thing I did was sell all my things. I was done trying to fit in. I wanted to master finance, and that was it. I wasn’t going to spend my money on buying status. I was going to use it to make a difference. Finance became my life. I worked my day job from 8:00 a.m. to 7:00 p.m. every day, took a two-hour break for food and recovery, and then studied finance from 9:00 p.m. to 12:00 a.m. Monday through Friday. On the weekends, I studied from 8:00 a.m. to 12:00 p.m., took a lunch break, then kept going from 2:00 p.m. to 6:00 p.m. I have always had the ability to maintain focus when I set a goal for myself. The hardest part about learning finance is all the jargon. Jargon isn’t necessarily a bad thing. Once you understand it, it allows for faster communication between two knowledgeable people on a given subject, but in finance, a fair amount of jargon is intended to be confusing. Once I could ‘speak finance,’ however, my learning accelerated rapidly. I’d taken multivariable calculus in college, and compared to that, none of the math in finance was all that difficult. I also found the concepts were significantly easier to grasp than the precepts of physics or neurobiology. After a few months, I was comfortable enough with finance to keep up with a junior investment banker. I was making progress, but that wasn’t my goal. I wanted to master finance and investing. The problem

CHAPTER 6: IT’S A RICH MAN’S GAME, NO MATTER WHAT THEY CALL IT | 73 I had was finance isn’t a science. The quality of a good scientific theory is based on its ability to predict future outcomes. Finance is miserable at this. One of the first things you’ll learn about asset management is that past performance isn’t a predictor of future performance. So, what does that mean? To understand investing, you must understand a little about probability, which is the likelihood of something happening. If I ask a thousand people to guess a number that I have in my head, ranging from one to ten, about one hundred people will usually get that answer right just by guessing. If I take only the winners from the first round and ask them to do it again, about ten people will guess correctly. If I take those ten winners and ask them to guess one last time, one of them is likely to get it correct. That winner has now guessed the correct number in my head three times in a row! Is that person a mind reader? Absolutely not. They’re just guessing. And when enough people are guessing, someone will get it right. To make an informed investment decision, you need insight into things like a company’s products and services, vision statement, market share, target market, governance, and management structure. Without these things, you might as well be throwing darts at a wall. Because of the substantial financial rewards, there are a lot of people guessing about financial outcomes in stock markets, bond markets, real estate, cryptocurrencies, and any other market. Prices in these markets fluctuate because of each decision that everyday consumers make. Many people will claim to be able to predict where these markets will go, but over time, no one truly can. Still, a broken clock will be right twice a day. While predicting the market is impossible, you can change the probability of success by knowing more about the potential investment opportunity. That’ll help you identify significantly over-priced or under- priced stocks in the market. Let’s say you go to a garage sale and are digging through someone’s collection of old baseball cards. You see an autographed Willie Mays rookie card and several other gems. The owner walks up to you and says,

“These were my dad’s dusty old baseball cards. I never understood why he kept these things! I’ll sell them all to you for five dollars.” That’s what investors call information asymmetry. The individual selling the items has no idea what they’re worth in the open market. You wisely make the purchase and can immediately sell the cards online for a profit. These opportunities exist, but usually not for long, and typically they’re rare. Warren Buffett’s mentor, Benjamin Graham, became rich finding opportunities like that in the stock market after the Great Depression. Back then, there were no supercomputers searching for this kind of mispricing, so you could find a fair amount of them. Today, there are few opportunities like this in the world, but those who find them can make a lot of money for themselves and their clients. Now, if you find one of these opportunities, you’d be an absolute fool to write a book about it. As soon as other people learn about your quick trick for making easy money, they’ll start doing it too. Eventually, the sellers get wise, adjust their asking price, and the opportunity goes away. So, as an investor, it’s in your best interest to keep quiet. Why then, do you see so many books and online courses promising to help you get rich quick? It’s because one of the best ways to get rich is by taking other people’s money. Whether your advice is sound or not, if a million people pay you $15 to hear it, you’ve made $15 million. The truth is, most asset managers are selling snake oil. Over time, I became very good at seeing through the veil of most investment pitches. The problem is that most pitches are nonsense. You need to kiss thousands of frogs before you find your prince. I was eventually able to transition into investing full-time. I helped build a small venture capital fund in the healthcare space, where I had the most experience, before moving on to co-found a hedge fund. For those who are unfamiliar with investment terminology, a hedge fund is a partnership of investors who manage a fund (a collection of stocks) with the sole purpose of turning a pile of money into more money. We looked at investments across all industries, so I had the opportunity to learn

CHAPTER 6: IT’S A RICH MAN’S GAME, NO MATTER WHAT THEY CALL IT | 75 about every type of business under the sun. We were constantly on the lookout for mispriced stocks. I kissed a lot of frogs, but I also found a prince or two. This time, I stayed away from materialism and status. I’d still go out from time to time to release stress, but I was focused on mastering finance to be able to make a difference in the world. I kept my cost of living very low and saved most of my earnings. I invested nearly everything I made, and before I knew it, I’d become a millionaire. I didn’t let this accomplishment distract me. I just kept working and saving. I had everything I needed in life, and I had been careful not to attach my sense of self-worth to my income, so the money didn’t excite me. I saw it as the means to an end, and that was it. I was moving toward my goal, but I found no joy in my work life, and it was taking a toll on me. Finding the occasional mispricing was fine, but my heart wasn’t in it. Most of my peers were in the job because they loved money and the status that it brought. All they ever wanted to talk about was money. I knew I didn’t want to fall into that trap again, so I kept to myself and worked. As the years passed, it became harder and harder to get out of bed in the mornings. I told myself I was working to earn enough wealth to be able to change the world, but the reality was I was working to make rich people richer. For every dollar that I earned, some ultra-high net-worth person was earning $10. I volunteered on the side when I could, but it didn’t feel like enough. I knew I wasn’t making any kind of real difference in the world, and that knowledge grated on me. At the back of my mind, I had a plan to use the money I’d been saving to help people in poor communities. But how much money would I need before I could make a real, positive change? Would $100 million be enough? Would $1 billion? I started to wonder what I was waiting for. By that point, I knew enough about finance to know luck was a lot more important than skill. Given my academic pedigree and abilities, making a few hundred million dollars over a thirty- or forty-year career was within reach. If I wanted to make billions of dollars, I’d need a lot of

luck, but in my mind, it wasn’t out of the realm of possibility. Regardless of whatever lofty financial milestone I set for myself, however, it meant I’d spend my entire life doing something I didn’t care about. I started to doubt what sort of impact I could make on the world, regardless of how much money I amassed. How would I be able to help the poor gain wealth? At best, I figured I’d be able to spread my wealth across my family, but that would be about it. It was becoming increasingly clear that my plan was flawed. Then COVID-19 hit, and I watched in awe as world leaders one-by- one announced that their countries would be shutting their economies down. Everyone was locked in their own homes for the foreseeable future. Suddenly, I had no outside distractions. I could see my life for exactly what it was. I sat in front of a computer screen all day looking for mispriced assets. I was wasting my brain on a task that felt utterly pointless to me. There had to be a shortcut to accomplishing what I yearned to do. I decided to turn the problem on its head. Instead of thinking about mispriced assets, what would happen if I started focusing on mispriced ideas? Maybe there was a way to solve this poverty problem that would be obvious to me, but not to everyone else. Instead of spending my whole life trying to get wealthy so I could have the power to make some limited amount of change, what if I could find a mispriced idea that was just lying around? I could bring that idea to the wealthy investors I already knew and get them to fund it. I didn’t care about the money, and I didn’t care about getting credit, so there was no reason it couldn’t work since I at least knew a lot of billionaires and wealthy families. I began to do what I do best: think. I put aside time after work every day again, but I also spent that time thinking about poverty. I knew I’d never be able to change the world with a moral argument. It had to make financial sense. How could I make getting rid of poverty a good investment?