Stig Brodersen (03:05):
I want to ask questions that I know that we cannot answer. I’m not doing it to be rude or anything like that, but it’s because I want to see how they react. How do they react in a stressful situation they don’t know how to answer? It was a similar mindset whenever I gave you that pushback on your performance, 5 out of 10. Part of it was because I meant it, but it was also because I want to test how you would react.

Clay Finck (03:33):
Yeah, that reminds me of when you invited me to visit you in Denmark. I was there for a week and I remember a couple specific questions. You were asking me about the balance sheet similar to what you did with Trey. One specific question I believe you asked me was about the SHA-256 and the Bitcoin protocol. It’s like, “I’m no software engineer. I’m an investor,” is my answer to you. And then Sean, when he was onboarded onto the team, he was asking me, “Oh, what things did Stig ask you?” He wanted to be prepared.” I’m just like, “I’m not sure if you can be totally prepared for what Stig is about to throw at you, but be mentally prepared to be challenged is all I’m going to say and good luck.”

Stig Brodersen (04:18):
Again, I just want to stress I’m not doing in any way to be rude or anything like that. I do it because I want to see how the candidate react, because some candidates become aggressive or dismissive or just starts like BS. I mean you just don’t want to work with those people. You want to work with people who have a humble approach and who are very upfront about what they know and don’t know because you also want to work with people who are straight shooters and say, “I don’t know the answer to that question, but could you please tell me or tell me how I can figure it out for myself?” Those are the people you want to attract to your team, those with the right values.

Stig Brodersen (04:59):
You don’t want people with those big egos we talked about before who are just straight up lie to you or BS through. Those are probably not the people you want to work with. So, specifically for Trey, he had this perfect combination of being humble and transparent about what he didn’t know but still have that feeling of I got this, which is very important whenever you are forced to improvise as you sometimes are with a guest. Trey has this likable personality that really wanted to represent the brand and that trait can’t really be trained. Whereas a lot of the technical stuff, let’s say I ask you some stuff about owner’s earnings and I remember I asked you a bunch of that stuff whenever you’re visiting me in Denmark. Bunch of that can be trained or all of it can be trained.

Stig Brodersen (05:44):
Whenever you’re put on display in front of thousands of people listening to your content, you will quickly be on the steep learning curve and learn a bunch of stuff. So, you are not looking for the technical skills. That would come. You’re looking for the right attitude. Back then, I decided to hire Trey for 12 episodes as a test. After that, you just saw how great he was. We quickly agreed that he would continue hosting We Study Billionaires. You can just feel from speaking with Trey that he was a true fan. It was quite important, because I think you mentioned this before, if the host is not a believer, how can you expect the listener to be? You can just tell how important it was for him to get this opportunity to be a host and you want to work with fellow fans of the show.

Stig Brodersen (06:29):
Trey was a fanboy for sure. It was important for TIP at the time and also today that to say that Trey wasn’t offered the job. The way that we see things is that I’m just using Trey’s example, I say the same for you or someone else on the team. But he applied for the job alongside many other fans and he got the privilege to represent the brand for 12 months at the time. And then he’s evaluated by the support team if they still want to continue working with him and they’re also evaluated by the audience because we track performance of those episodes. So, even with William who has a different story and perhaps we can come to someone that later, it’s still that humble mindset we are looking for in the host. They’re there for the audience and they’re there for the team.

Stig Brodersen (07:15):
It’s not the other way around. Preston was very particular about this whenever we started what it was called The Investor’s Podcast back then. I guess it still does even though we interchangeable call it The Investor’s Podcast like we started. Preston had this thesis that most podcasters create their show to massage their own ego and not to empower others. I learned from Preston how important it was to keep your own ego in check and be there for the team, for the audience, and not feel that they’re for you. It’s really the same approach I hope that the host of our network have whenever they go to work. So, perhaps that’s also why it took us eight years to do this episode.

Stig Brodersen (07:54):
We have this humble approach that perhaps the audience are not interested at all about our business and not interested about the hosts and they just want to learn about the financial markets and how to come up the wealth. I mean the last thing the world needs is yet another podcast about the host telling week after week how successful he or she is and from that ivory tower. We don’t want that. So, hey, it might take us another eight years, who knows, before we do another episode like this. Because it might be interesting for some of our listeners, but for a bunch who are subscribed to the show, they’re like, “Tell me how to make more money, dude.” That’s okay. I mean because we are there for the audience. They’re not there for us.

Clay Finck (08:40):
I’ve probably talked up TIP quite a bit up to this point, but really your ability and what you’ve done in terms of bringing the right people on the team is really incredible. I can look just down the line of the hosts you’ve hired for example and just the combination of humility, capability, work ethic, all these traits. Just when I thought TIP couldn’t get any better, you bring William Green onto the team. I actually didn’t know who William was prior to him joining, but I had the chance to visit him to help him get his equipment set up by New York City. Just the content he puts out is fits so well within the TIP brand in my opinion and it’s such a privilege and honor to have him a part of the team as well. So, maybe you can talk about the story behind why and how he joined TIP.

Stig Brodersen (09:38):
Thank you for the kind words about the culture on the team. To your point about William, I mean he really sets an example, I feel like, with the way his ethics and just the quality of everything he does. He’s just a high quality human being. To the point about how we got to work with William, I’ve read this book by Hans Roling called Factfulness, which is a wonderful book in itself. I recommend everyone to read that, but one of the takeaways from the book was how we got to know Melinda Gates, because to me, that back story was just quite interesting. So, she and her, well sadly now, former husband Bill, they were quite fascinated with his work and he’s a doctor. He’s now the late Hans Roling, but did a lot of wonderful work specifically in Africa.

Stig Brodersen (10:25):
So, they invited him for a dinner one day to pick his brain. To me, that was just really inspiring. The whole thing about just inviting really interesting people, not just on the podcast, which we have the privilege to do here, but just invite them to your home and connect a bit more with them and not make it a business transaction. Just more like, “Please come and join me in my home. Can I please learn from you?” That approach, I’ve never heard about anything like that before. So, I was like, “I want to try that with William.” I want to try that with William because he was a guest back in 2015 where he wrote this wonderful book, The Great Minds of Investing. You know this, Clay, from having interviewed a ton of people.

Stig Brodersen (11:07):
There are some guests where you’re like, “Finally, I’m done. Let’s not invite this guest back on ever,” but you also have guests where you don’t even notice that time is just flying by. That was just how it was with William. Back then, Preston and I was still hosting together and we did a double episode with him, which we typically didn’t do or not doing with guests. We probably done that five times or whatever over the past eight years. So, we don’t really do that. But we did that William because we just kept on wanting to talk with him. We probably talk two, three hours. We talked for a long time, and still after that, it was like, “Please can we talk even more with you?” Because everything was just high quality about him.

Stig Brodersen (11:50):
So, I sent William an email and said, “Hey, do you want to spend a few days with me in Denmark. Can I please learn stuff from you? Just ask you questions.” So, as it happened, William sent an email back and he thanked me for the invitation. He was like, “I’m considering setting up my own podcast. Do you have any thoughts on that?” The discussion went from there and we originally sell mini-series. I think we talked about having two mini-series of six episodes each.

Stig Brodersen (12:19):
But after a few episodes with William, he sent me a message and said, “This could be interesting to do on a recurring basis.” I mean, wow, what a message to get. It makes you humble, right? It was just about saying yes and letting William do his magic. I talked about those scoreboards before. Unsurprisingly, William is the very top our scoreboard of downloads and just a wonderful host and setting an example for everyone on the team in his quality and ethics. William is a smartest piece of man.

Clay Finck (12:52):
Transitioning again, when I tell someone about my role with TIP, oftentimes, the very first question I get almost immediately or maybe the question that comes to their mind is, how in the world can someone make a living from a podcast or being a podcast host? Once that’s asked, I’m often reminded of how privileged I am to be in this position where I get to read about investing and finance and talk with these great people. It is my full-time job. So, please tell us what is the business model of The Investor’s Podcast?

Stig Brodersen (13:27):
Clay, my parents ask me the same thing. I remember because they’re like, “You’re doing what now and you can make a living in the how now?” But to answer your question, so the business model is pretty simple. We want to have as many downloads as possible. The more downloads we have, the more money we can make from advertising. We recently branched out to doing a data newsletter. We also relaunched our YouTube channel, but the principle is really the same. Whenever we talk about viewers, readers, or listeners, you are playing a volume game and creating wonderful content. The more eyeballs you have, the more money you make. If we specifically look at podcast advertising, advertisers generally pay $25-ish per thousand times someone’s listening to the ads.

Stig Brodersen (14:13):
We can have multiple advertisers in the same episodes, which I’m sure the audience now have realized. We’ve decided to say typically, six ads per episode. Again, I can give a soft sell. If you really don’t like the ads, we do have the opportunity to subscribe to that free version. I think it’s three or five bucks or something like that per month. But most of the money we make comes from the main show, the show you listen to right now. We are closing in on 100 million downloads, probably going to achieve that sometime in November this year. Aside from the main feed, we also have Millennial Investing.

Stig Brodersen (14:43):
Let’s say that the monthly volume is call it 1/10th ish of the main show or We Study Billionaires, which was the feed that Robert and I set up. So, in rough numbers, I would say that probably 90% of our revenue comes from advertising and then the remaining 10% comes from web application software, TIP Finance, course sales, we’re doing some book sales, bit of affiliate marketing, stuff like that. So, yeah, that’s the short answer of a business model.

Clay Finck (15:12):
I don’t mean to be intrusive in any ways given that many people will be tuning into this, but would you mind sharing how much money TIP is making?

Stig Brodersen (15:22):
Maybe try see if I can size it but still answer your question. I think it’s a big no-no in the states to talk about stuff like that. Being born and raised here in Denmark, I think we are a bit more confrontational than I guess other companies are. I don’t know if confrontation is the right term, but we are quite transparent about it. I feel it’s in everyone’s interest to be very transparent and perhaps some people are even curious. So, I think I briefly talked about some revenue numbers. Generally, I don’t think too much about revenue, I’m more thinking about the free cash flow. So, including this, which is the latest numbers we have, so for the first eight months, we are at $1.74 million free cash flow. So, probably expect to land well above $2 million this year.

Stig Brodersen (16:11):
We’ve seen a decent growth. I want to say in 2021, it was just above 1.1 million and then 2020 was $650-ish. So, it’s a quite scalable business model, because if we get twice as many downloads, we don’t get twice number of expenses. It just doesn’t work like that. So, most of the new revenue falls down on the bottom line as profit before tax. Of course, there is also an element of growth CapEx baked into the numbers you’re hearing. For example, right now, we are spending called a quarter of a million annually on our YouTube project and we’re probably only recouping a 10% of that revenue right now. To think about this, it’s more like a long-term project and it’s also a very scalable model just similar to podcasting.

Stig Brodersen (16:56):
So, if we 10X the viewers, we don’t get 10X the expenses. We more or less just that falls down to the bottom line. So, if we make another 10X from that, that’s really whenever we start making money. Again, this is of course theoretical at this point in time, but it’s really just taking a page from the playbook of We Study Billionaires. I don’t know if it’s being too transparent or how the audience would feel about it, but I guess most of the audience are business people and they might be curious and who knows. They might not care at all.

Clay Finck (17:29):
If someone asked me what are the biggest cultural differences between the United States and Denmark, the most shocking to me is the level of transparency, and like you said, confrontational. I would say confrontational as well for the Danish to the Americans. Like you mentioned earlier, you’re quite transparent about what your thoughts are on what I’m doing well, on what I’m not doing well on. Honestly, as an American, that’s not something I’m used to at all.

Clay Finck (17:58):
That’s one of the unique things of working with people from different cultures, whether it be from the Philippines or from Denmark, Poland, Canada. People just see the world differently. What one person considers normal, another person considers really uncomfortable. So, that’s something that’s just really interesting and something I’ve encountered working with you and that was really shown when I visited Denmark and you were asking me all of these really difficult questions. Again, like I mentioned earlier, definitely an adjustment coming from your typical corporate background.

Stig Brodersen (18:33):
I think you’re right. Danes are probably generally more in your face in many ways. That being said, I also think it’s something that I’ve learned from Ray Dalio. If you want to scale a company and you want your team to take more responsibility and you want to empower your team to take decisions, you also owe them full information. There are very, very little information you should not be able to share with your team and I agree with that. So, Clay, as you continue to progress in your career with TIP, you’ll be taking on more and more responsibility. How can you make the right decisions if you don’t have the right information?

Stig Brodersen (19:13):
I would much rather be upfront with… We definitely had struggled earlier this year with the rising interest rate and we got a bunch of cancellations. I was very transparent about this is how much money we lose every single month. These are the expenses for the team. These are how many hundreds of thousands of cancellations we’ve gotten with advertisers, because I don’t want the team to worry. I know that sounds odd whenever I say I don’t want the team to worry about telling them bad news, but they know that I’m going to tell them the bad news so they don’t have to worry whenever they don’t hear bad news.

Clay Finck (19:47):
I mentioned my trip to Denmark again. One of the somewhat challenging questions you presented to me was, “How much is TIP worth?” It could be challenging for me when I was a new employee. What if I say a number that’s way lower than what he believes the value is worth? I didn’t figure you’d get upset if that happened, but just a thought that crosses your mind. You mentioned the free cash flows. That’s where I start with is one method would be to just put some multiple on the free cash flows.

Clay Finck (20:19):
Some people might be more liberal, say a 20x multiple, some people might say a 10X multiple, but you mentioned $1.7 million free cash flow so far eight months into this year, which is definitely trending in the right direction, which is very good from a value investor’s perspective. I wanted to ask you if you’ve ever thought about selling the company at any point?

Stig Brodersen (20:43):
Yes and no. That was the very short answer. So, we were forced to think about that last year, because we got approached a few times and I would say that it was never really serious. It was just more, “How do you see valuation? What’s the right timing? Could you see yourself?” It was a bit like being on a lot of first dates for the lack of better words. I wasn’t seriously considering it in the sense that I was more just curious and wanted to get a quote and I was like, “What is it worth?” So being value investors, Preston and I always knew that if we were to sell TIP, it would be the top of a business cycle and we were quite sure that last year, we were close to the top of the business cycle. It’s difficult to time.

Stig Brodersen (21:30):
I didn’t know whatever the bubble would pop if you would’ve done it in 2020 and 2021 or if it would last a few more years. But it was pretty clear with the valuations you saw last year that last year could be the right time to sell. I think that the average EBITDA at the very peak was around 15 on Wall Street. So, it was just quite interesting to hear how they would value a small private business. Let me give you an example. I had a call with a major media company among others. I spoke with the CEO and he said 10 to 12 times EBITDA, perhaps a bit more depending on how they saw growth. Historically, that multiple is quite decent you might say. With all the money printing, it wasn’t super high last year, but historically, if you looked at other cycles, it was quite good.

Stig Brodersen (22:17):
But to me and also seeing that we’re doubling every year, I was like if you wanted a two-year earn out and if we’re doubling, then that EBITDA of 10 to 12 was extremely low. My best guess is that if you really wanted to sell last year, again depending on the earn out and all that stuff, we could probably sold it for like 25, 30. Again, it was never relevant. We did have a request for a minority stake of evaluation closer to 50 million, but I really wasn’t interested in that because I always felt that I would just wanted to leave whenever we sold.

Stig Brodersen (22:50):
Preston and I had some conversation about it. I guess if you asked me today, I would say that from a financial perspective, we could likely drive our profit before tax to something like $4 to $5 million with the current side of the team and we would probably need to add a few hundred thousand dollars more in annual CapEx, something like that, plus time for the initiatives to grow. If we did that $25 to $30 million or perhaps even $50 million, I would argue it would be on the low end. I’m super biased as everyone would probably know, but then we go back to the whole discussion about, “What type of life do you want to have?” I don’t think I would enjoy running TIP if we had 100 people on the team. I just feel that would be really bad for the culture we have.

Stig Brodersen (23:36):
So, what would I do for money I don’t need? Anyways, that’s like a part of a longer discussion, but I think more importantly than the price is just I’m not ready to sell TIP. I can’t speak for Preston, but if I should relate it to that, we did put it into to our original contract that we could only sell to each other unless we agreed to sell to a third party. So, I feel that was really nice and I’m really happy that Preston had that foresight to put that in because of situations like this. So, one wouldn’t have to deal with a shareholder who might have different goals, but I’ve said to my wife that I will be ready to look into selling TIP once I stopped being excited about it and it just hasn’t happened yet.

Stig Brodersen (24:17):
Earlier this week, I was speaking with her. It was probably like 9:10 PM so it was long after I was done with work. I told her that I was a bit worried that I couldn’t sleep because I was so excited about what I should do the following day. You might be thinking, “What would you be doing that day? Why are you so excited?” So I was going to work on the offline for this episode. That was one part. The other thing was I had some projects with some team members I had to follow up on. So, for all intents and purposes, it was normal work. What I realized from that happening was just like this is just the best job for me I could ever have. Anyone who knows my wife knows she’s much smarter than me.

Stig Brodersen (24:55):
Whenever I got approached by those potential buyers last year, she repeatedly said that I shouldn’t sell regardless of the price, because it’s about happiness, it’s not about money. I also said to her that I never had this feeling about a job and certainly not it. I never even had a job for eight years straight before. So, I would not consider it before I stopped having that feeling again. I think that’s what Warren Buffet called tap dancing to work. I only have 15 feet from my bed to my desk. So, I don’t know if that’s the best example, but I feel I’m even more excited about working with TIP today than whenever I started. The other thing is that I know a lot of wonderful people have started one company after the other.

Stig Brodersen (25:35):
Don’t get me wrong, I’m not saying there’s anything wrong with that, but it’s just never been the case for me. I just never thought about it like that. I mean I don’t want TIP to be another faceless corporation and living the let’s call it the TIP way of life is just where you’re surrounded by great people. We just talked about Trey. We talked about William, and I could mention you as well, Clay. This is one of why not continue doing that. Another reason why I don’t want to sell TIP is that I’m just worried that the new owner is going to see TIP as a profit making business and see our team as employees and not as wonderful individuals. I mean I’m probably naive, because that’s I guess how 99.99 whatever see business, but I just don’t want that to happen to the team.

Clay Finck (26:24):
So we’ve really dove into the weeds on your thought process on business and how you think about operating TIP. I naturally compare it to Warren Buffet because that’s who TIP was originally founded on studying. Warren is someone who is the master capital alligator. He’s looking for where can he put his money in a place where it’s going to earn him the highest return with a high degree of certainty.

Clay Finck (26:53):
It’s interesting how you’re not really thinking about that when you’re running TIP. You’re not thinking about, “How can I make the most money possible?” Which that’s just something I find really interesting and really butts heads with Buffet’s approach and how he thinks about business. Related to selling TIP, is there any price you’d ever consider selling it or is there a price where you say, “Yeah, it makes sense to walk away?”

Stig Brodersen (27:19):
It’s a difficult question to answer because I don’t want to be the type of person who would not be authentic. I guess it would be very different if you had an offer in front of you and it was not just theoretical, but I mean I probably wouldn’t say no to something like a billion dollars or something like that. I mean that would just be irresponsible to do that, but it’s not realistic because it’s nowhere near worth billion dollars. So, what would be offered for TIP right now, it wouldn’t make a difference. It wouldn’t make a difference if it was 10 million more, 20 million more, because like you said, Warren Buffett has this approach to do different things and I have another.

Stig Brodersen (27:56):
It’s just a question of how you want to live your life. I think there are many ways of looking at this. I mean please do not get me wrong. I like nice things as much as the next guy, but I’m also careful not to be on any type of hedonic treadmill. I’m not saying that I’m doing a wonderful job of that, but it might be surprising to learn to some of the listeners that I never own a car in my life, which is a cost saver. It probably sounds crazy. Well, you visited me in August, the landscape is just different. But even so, obviously, there’s a lot of Danes having cars. It’s just I haven’t.

Clay Finck (28:40):
What I would say to the American audience is that it’s pretty likely if Stig lived in the US, he would in fact own a car. I know what it’s like over there where there’s all these crazy taxes on buying a car and people over there really incentivize you not to own one. So, I will throw that in there too.

Stig Brodersen (28:58):
That’s true. We have a tax of 180%. So, if you think of a car that’s $10,000, it’s $28,000 here. Whenever we hear about gas prices in the states, they are like, “Why are they giving gas away for free, $5 for a gallon? If only it was $5 a gallon here, we would do nothing but drive.” So, it’s just a very different thing. So, a car, that’s one thing. You’ve seen how I live. We were at little less than 900-square feet, something like that. It’s not like the biggest home. I don’t have fancy watches. I still wear my $100 dollars and change watch I got from my wife whenever we were dating in college.

Stig Brodersen (29:40):
Again, I’m not saying there’s anything wrong by having nice things again. I like nice things too, but it’s definitely not the driver, especially not where we are right now, where we are in a more comfortable place financially. We are just optimized very different things, especially right now compared to whenever we are making no money and we’re like, “Let’s see if we can make money to pay rent and stuff.” Now, we’re over that hump, it’s just different the way we think about that capital allocation. I would also say that I don’t think TIP is a great investment case for 99% of buyers. I mean, again, we got approached by few potential buyers last year.

Stig Brodersen (30:25):
So, I called up Preston. I was telling him about it and like me, he said, “I just want to walk out whenever it’s sold. I don’t want the whole 18 months, 24 months earn out, not any of that.” That’s typically what happens whenever you do sell a company. I agree, it’s like, “No, I would rather take a lower price and just walk out. I don’t want to work two years and then I have to report to someone who wants to change the culture.” Just tell me. That in itself would probably make it challenging. We did have a buyer who said it was completely fine if we both walked away. He actually said it would be even more appealing, which I don’t know, it was a big hug or not. Oh, if you leave, it’s so much better.

Stig Brodersen (31:06):
The other thing is that that person, he was very adamant about, “Yeah, you and Preston can leave, but we need to keep the main players there like X, Y, Z.” It doesn’t matter specifically what it was, but for me, it’s a nonstarter for me not to work with Bianca, our first team member. We have big plans for next project. I’ve just said earlier in this episode that how amazing she is and she’s wonderful. I would imagine if I were to acquire TIP, I’d be like, “Yeah, I definitely want her the next 10 years to run the company.” For me, that would be a nonstarter. So, it’s not a great investment case. Yeah, the founders will leave and the CEO would also leave. We don’t want to do an earn out. We just want to work out. It’s not an interesting case really.

Stig Brodersen (31:54):
I might think very differently about this than most others, because if we were to sell TIP, I would give most of that money away anyway. It makes a lot of sense of course to ask for the highest possible amount because then you can give more money away. But in a way, it also doesn’t make sense because you’re not going to keep the money anyway. So, it’s just a very different way of thinking about it. I just don’t want it to come off as I am super altruistic, anything like that. I think I also said that previously in this episode, I’m definitely not. I have very selfish reasons to want to give that money away. I’ve always been very fascinated about accumulating wealth, but I’m equally fascinated about giving it all away, because capitalism is such a great system because it gives you instant feedback.

Stig Brodersen (32:41):
I mean, if we produced a terrible podcast, no one would listen to us and we’ll go out of business soon. So, if you compare that to giving money away, you don’t have the same feedback system. If you give away a million dollars, you give away a million dollars. So, in many ways, it’s just much more challenging. But yeah, ultimately, I would like to focus on that if they would eventually come where it’s no longer fun running The Investor’s Podcast Network. Another perhaps more likely scenario is that because of the talent we have on the team and because of the culture is just so important for both Preston and me, we have so much wonderful talent. Perhaps the right thing would be for Preston and me to step back and someone would take all the operations.

Stig Brodersen (33:24):
Preston and I will continue owning it and just do some board work or whatever people in suits call that. I don’t know. We could probably come up with many different structures if we eventually wanted to spend less time on this. I know that Preston and his wife, they’re also very passionate about philanthropy and have their own projects they want to pursue. I could easily see us eventually go that route. Both my wife and I, we’re both teachers. Bianca mentioned before she loves kids. So, I guess if you ask me today, now that you’re giving me opportunity to talk about it, is that the plan is ultimately to build schools. We are very passionate about leveling the playing field.

Stig Brodersen (34:04):
I would say that especially in developing countries, some live under brutal regimes. So, I think that’s something that’s inspiring for us. I guess I should disclaim this and say, it should not sound like I’m out the door anytime soon. Quite the contrary, I never worked as many hours as I do right now on this podcast network, but this whole philanthropy route and building schools for women in developing countries is something that I think the focus will eventually shift to whenever we have a chapter that’s not operations of TIP.

Clay Finck (34:35):
All right. So, it doesn’t sound like the company will be changing hands anytime soon in terms of ownership. You’ve scaled quite dramatically as we mentioned the last couple of years too. Many people in the audience might be wondering what’s in store for TIP for the years to come if you’re not going to be selling it?

Stig Brodersen (34:57):
I would love to say something super inspirational, Clay. I probably won’t. I would say more of the same in the sense that we want to give our host this canvas where we can attract and hopefully retain wonderful and talented people like you to educate the audience about finance. I would also say that the market might tell us we can do better, but at the same time, it’s also important that we have an inner scorecard that tells us that we are helping our audience. It’s okay if we make less money than we do today. It’s probably not super motivational if I say that, but it’s okay. Let me put it like this. It’s very tempting to follow different growth strategies and start fearmongering on TikTok or something like that.

Stig Brodersen (35:43):
At the end of the day, I don’t feel it’s the right thing to do. I know this sounds spoiled and I know that it’s also because we are in the privileged financial position, but I would rather default by delivering a great product to the audience than thriving financially by creating bad content. For example, Jeff Bezos, he has talked about how it’s only a question of time before Amazon called bankrupt, because that’s just how brutal capitalism is. The best thing that we can do or that they can do at Amazon is that they need to be customer obsessed until they eventually go bankrupt. To me, that’s quite inspirational. Not in the sense of being customer obsessed because I think I’ve made it quite clear that I’m not.

Stig Brodersen (36:24):
But I think it’s inspirational what TIP should do while we are “waiting to go bankrupt”. For TIP, I would say that it’s making a difference to our team and creating a wonderful workplace, and as a result of that team focused approach, create wonderful content for audience. So, again, I would say that this answer very much goes to understanding why we set up the business the way we have and monetize through appetizing this inner scorecard.

Stig Brodersen (36:56):
Because whenever you ask what’s in store, I look at the team right now and I know we have a few more hires planned out for the next few months. I’m not saying that it won’t change, but I think generally, it seems like we are in a spot where it’s good to be. Perhaps we don’t want to grow too much. I mean, if we zoom out, we have two podcast feeds, we have our data newsletter, we have our YouTube channels. So, the plan right now is to double down on those. We don’t have any projects setting up new business units for example.

Clay Finck (37:29):
Many people listening now are probably loyal listeners at this point if they’re listening this far into the episode. Like I was for many years, many of these people might be wondering, I’ve gotten so much value from all these TIP podcasts, interviewed these amazing people, these billionaires, Ray Dalio, you name it. A lot of listeners might not have ever spent a dime for all the great content they’ve got, which is a beautiful thing with the internet and the way the world works today. They might want to support TIP besides just being a listener to the show, support in some way. So, for those that are loyal listeners that would like to support TIP in some form or fashion, what would you recommend they do?

Stig Brodersen (38:14):
Well, Clay, thank you for saying so. Again, if we have been helpful in your journey into finance, wonderful. I think the best way to help or to reciprocate would be to perhaps leave a review or tell us what you like and tell a friend about our content.

Clay Finck (38:32):
I’ll also add that the We Study Billionaire stuff, if you feel like it almost goes over your head or you feel like you’re missing something or you’re not understanding fully maybe how business valuation works, one website I would highly recommend people check out to learn about value investing in general would be the Buffet’s book site. If you’d like to spend money, we also have courses on our website, theinvestorspodcast.com. There are free resources as well, but there’s also paid courses there too. So, if you’re interested in learning more outside of the podcast feeds and you want to dive into a specific subject, then that’s the place to go.

Stig Brodersen (39:10):
Well, Clay, let’s talk about you. You are transitioning into a new role on We Study Billionaires, but perhaps before we get into that, could you talk a bit more about yourself, perhaps also talk to our audience about how you get to work with us here in The Investor’s Podcast Network?

Clay Finck (39:27):
Yeah, so as I mentioned earlier, I grew up in the Midwest. I was someone that was always super interested in math and pretty good at it in school, at least relative to a lot of other subjects. So, I actually went to school to be an actuary. I went to the University in Nebraska. They had a really good program for it. I worked in the insurance field post-graduation 2017 for four years. For those not familiar, an actuary is essentially the business mind of an insurance company. That’s the simplest way I can put it. It’s finance related, but also not finance related at the same time. It’s actually a profession that Buffet thought about getting into in fact. It’s something Alice Schroeder mentioned in The Snowball. Buffet’s obviously someone that really likes numbers as well.

Clay Finck (40:18):
So, throughout college and after college, I passed a number of exams within that profession. They were very math intensive, finance intensive. So, in a way, it did help me learn as an investor, just think about the theory of interest and interest rates and discount rates and valuing something. Actuaries need to learn how to value insurance policies is how that ties together. So, I got credentialed as an actuary. Along the way, I was a really loyal listener of TIP. I was actually going to go to one of your guys’ meetups. I believe it was 2017, but I’m from Nebraska and I knew some people going.

Clay Finck (40:56):
That year, I happened to attend with a family member. So, I wasn’t actually able to meet up with you guys that year, but it’s interesting how TIP and Warren Buffet go hand in hand in that. You get attracted to them because of the brilliant investing knowledge that could be gained, but what really keeps you around is the principles on how to live a good life. I think a lot of the listeners would agree with me in that regard. Zooming out, when I was working my job, in the back of my mind, I knew I didn’t want to work in insurance my whole life, but at the same time, I was making pretty good money and I didn’t really feel the need to change that as I was really enjoying the process of building out my investment portfolio, building wealth.

Clay Finck (41:40):
That all changed when I received an email from Robert and TIP since I was on their mailing list. It said that they were hiring a new host for Millennial Investing. I was actually on vacation at the time and it was sitting in the back of my mind when one of my good buddies that listens to TIP is like, “Hey, you should apply to that position.” Honestly, I just never saw myself as a podcast host at all. It’s probably similar to you, Stig, when you first started, but I ended up applying anyways because I thought, “What the heck? I’m a risk reward type investor, whatever. There’s no downside to applying at least. Worst case scenario, I might get to have a conversation with Robert or Stig and that would be very cool.”

Clay Finck (42:21):
So, fast forward a month or so from that point, it was fall of 2021, I had a few rounds of projects and interviews and I got an email from Robert saying that I had been selected as the new host. So, turned my notice into my employer and transitioned careers to work for TIP. Some people in my life probably thought I was pretty crazy. Honestly, it’s been one of the best decisions of my life. Again, I did not imagine myself being a podcast host, especially working with the people that had taught me so much over the years, but finance was my passion. I love listening to podcasts and I really enjoy learning. So, I couldn’t help but take up the opportunity.

Clay Finck (43:02):
Going back to that worst case scenario, it’s like the pain of regret would hurt much more than taking the opportunity and maybe it doesn’t work out. You just never know. So, we’ve talked a lot about Warren Buffet today and I wanted to bring in a quote from him that I feel had a big impact on me in making that decision. It goes, “Do what you love and work for whom you admire and you’ve given yourself the best chance you can.” Thankfully, I ended up following that advice and I’m really glad I took the jump. So, meanwhile, over the past year, I’ve hosted the Millennial Investing feed with Robert Leonard. It’s just been so fun getting to chat with all these great investors and entrepreneurs and also learning from everyone on the team, including you, Stig.

Stig Brodersen (43:49):
Yeah, and I could definitely say, Clay, well, I think I mentioned before, just let it slide out that you are the most popular host here we have internally on the team. The team absolutely loves working with you. So, thank you for joining our team. Clay, one question I liked and I probably put too much emphasis on this and this probably comes from my value investing background, but I like to hear what people have invested in. I feel it tells me something about who there are as people. Who knows? It might not be the right way of looking at it, but especially for all audience, perhaps if you can talk a bit more about your investment strategy and through that, they can get to know you.

Clay Finck (44:28):
Of course. Since I loved numbers, I just loved learning about investing. Even with that love and passion, I’ve made about as many mistakes as anyone over the years. Happened to buy my first stock when I was 18 years old through the recommendation of a friend, knew nothing about investing at that point. Long story short, it was just a total utter failure. Although it wasn’t a substantial amount of money. For someone that age, it sure felt like a lot at the time. Thankfully, my investment journey didn’t stop there. Eventually, I learned it’s very difficult to beat the market through stock picking. So, as someone that young, I started investing in index funds but also scratched my stock picking itch.

Clay Finck (45:13):
Luckily, I picked Apple as one of my individual investments, just sheer luck, I’ll say. I also added Starbucks, Netflix, and couple others that probably weren’t that great. I can’t remember exactly how I discovered TIP in college, but since I lived off campus, I did a good amount of driving. I took Preston’s advice and turned my car into a learning machine with podcasts and audiobooks. I’m almost certain I discovered TIP by just Google searching top investment podcasts. TIP was one I found and just what I stuck with and listened to consistently. I was highly influenced by Preston in particular. Like I said earlier, he’s just a very likable person and easy to listen to, just a great host. In 2020, he was just going on and on about Bitcoin as we all know. I somewhat followed his lead.

Clay Finck (46:08):
By the end of 2020, most of my portfolio consisted mainly of index funds and Bitcoin. And then 2021, still more mistakes to come. I started allocating a small amount of my portfolio to growth companies. These were going through the roof at the time. The theory was that they’re growing at let’s say 100% per year, the Fed’s printing money like crazy. What could go wrong? Companies like Shopify, Redfin, Square, those type of companies that weren’t yet producing profits, they’re in growth mode. I made the mistake of believing that valuation doesn’t matter as long as you’re buying a quality company. That is true to some extent, but you better be ready to hold on through intense volatility when the inevitable drawdown does come.

Clay Finck (46:56):
Since joining TIP and studying behavioral biases, I realized that I’ve really let my emotions get the best of me during that period and thinking that I was a genius in a bull market. So, that was a really humbling experience for me. Since then, I have been influenced by your approach, Stig, and Ray Dalio’s what he calls the holy grail of investing, which it’s this approach of diversifying into a number of different assets that they’re what we call uncorrelated. So, when one asset does really well, one asset might not do quite as well, it all balances out in the end. Just to give an example, we don’t really know what the economy’s going to do over the next 10 or 20 years. There’s investment cases for all these different types of assets.

Clay Finck (47:43):
Let’s look back at say the 1970s. It was a very inflationary time period. We went off the gold standard in 1971. During the 1970s, the stock market was actually flat, which is pretty crazy to think about. Over a 10-year period, high inflation, stocks were flat. Meanwhile, over that decade, gold went up by nearly 18 times. I think that would blow a lot of people’s minds, because everyone just says gold, it underperforms everything. It doesn’t produce anything. It’s just a hunky metal that sits there. Well, then, why in the heck did it go up by 18 times during the 1970s? I don’t think a lot of people know the answer to that and that’s something I’m still studying myself to this point. I’m not saying we’ll see something similar this decade at all.

Clay Finck (48:29):
It’s not what I’m saying at all, but I want to be prepared if something like that happens again. To add to that, I want to look for things where the holy grail investing just wants to find something where if your investment thesis is wrong, you only lose a little bit. But if your investment thesis is right, then you might make multiples on what you invest. Just in the case of gold, in the 1970s, you would’ve made 18 times your money, whereas your stock portfolio would’ve been flat. So, you’re not going all in on one asset or asset class. So, my portfolio today is still primarily the index funds and Bitcoin. However, I’ve also started positions in physical gold and silver, although they’re still fairly small.

Clay Finck (49:14):
Some individual stocks I really like are Berkshire Hathaway, Google, Amazon, and then I have a small position in Airbnb as well. And then additionally, I’ve allocated towards a couple of uranium funds, an inflation commodity type play and then small cap value and an international fund as well. So, getting spread out gradually over time. So, I guess I’ll also add the caveat that these philosophies are ever changing. I could sell these positions at some point in the future. I might double down on some of them. So, I’m still learning myself. Years down the road, this portfolio might look entirely different. That’s the beauty of the investment journey is you’re always learning and always evolving.

Stig Brodersen (49:57):
It makes me think of a quote of Charlie Munger where he says, as simple as it sounds, but he says, “You have a huge advantage if you continue learning.” It seems so obvious whenever you hear that. Still, you are surprised how many people who invest are not continuing to learn. Clay, I wanted to talk about you, because starting October 10th, your episodes here on the We Study Billionaires feed will be published every Monday. What would the episodes typically be about?

Clay Finck (50:25):
Yeah, so generally, I’ll be coming from a value investing focus. Many value investors know you’re trying to find something that’s trading at a price that’s less than it’s worth or trying to figure out the intrinsic value of something. So, similar to how TIP originally started, it all originates back to Warren Buffet as he’s known as the greatest value investor of our time. So, my first few episodes will be talking about Buffet, how he became who he is today, what his strategy is, how we can apply that strategy to some companies today. And then I’ll probably talk about some other billionaire strategies in investing. I mentioned Ray Dalio, I’ll probably talk about him a bit.

Clay Finck (51:10):
You can just really expect me to dive into these strategies of all these prominent investors. There’s just so many of them to learn from and it’s really cool how TIP started with that value investing framework of looking at Buffet. And then you dive into Dalio’s work and it flips your whole worldview upside down. So, it’s like a take it and we’ll see where it goes, but I’m really excited to dive into all these value investing type strategies. Although I’ll likely talk about some other assets outside of stocks as well as potentially touch on some financial history to help inform us what the future might hold for us as investors.

Stig Brodersen (51:52):
Speaking of Warren Buffet, Clay and I already starting to plan the Berkshire meeting for May 2023. We don’t have a fixed schedule just yet. We hope to have events from Thursday to Sunday night, but we are not really sure where it should be and which hotel to stay at and all that stuff. So, Clay and I will be working on that over the next few weeks. Hopefully, we’ll have somewhat of a schedule we can send out to you call it late October, start of November, something like that. Like this and the previous years, we are going to have a WhatsApp group for our community.

Stig Brodersen (52:26):
Clay, you’ll be the point of contact for our Berkshire event. How can the audience contact you and get access to the group? Could you talk about why it might be advantageous already now or call it late October? We know we don’t have a schedule ready. Why it might be advantageous to be a part of the group?

Clay Finck (52:43):
We will be sending in email out most likely in late October with our plans for the Berkshire meeting. If you’d like to get signed up for our newsletter to stay updated, you can go to theinvestorspodcast.com/newsletter. We’ll also be sure to link in the show notes a link to all the information on our website about the meeting. There, you’ll be able to access the WhatsApp link once we get that website updated later this month in October. If you’d like to get connected with me as we approach the meeting, you can email me at clay@theinvestorspodcast.com. Also, many of you follow me on Twitter. I’m @clay_finck, F-I-N-C-K.

Clay Finck (53:22):
As far as why the WhatsApp group is so important if you’re attending the meeting and want to meet up with us at the Omaha weekend, this is just a great place to coordinate with me and make sure you have everything you need for the meeting. I’ll mention a few reasons that it might be helpful to join. Many people come to Omaha actually on their own and a lot of people are from outside United States to my surprise. So, having the group is a great way for those traveling alone to connect with other members of the audience and meet up potentially outside of the TIP events that we end up having. So, that’s one great advantage. Just know that many people are traveling on their own.

Clay Finck (54:05):
That was what I saw in my experience. This is so people don’t feel like they’re just simply going alone. It makes it more of a community event, which I think a lot of people will appreciate. A lot of people were actually coordinating together outside of the TIP events this year. Just to give an example, on Friday night, Trey, Robert and I met up for dinner and we actually ran into an audience member from Barcelona. He recognized us from the chat. It was great meeting him and getting to chat with him and just essentially learned from some of the listeners in the audience. And then during the meeting, I actually sat with the person from Germany.

Clay Finck (54:43):
So, it’s just a really cool experience to meet these people from all over the world that are actually listeners of the same show you are and likely have a lot of the same investing principles, which is really cool. The second reason I’d give is this is where I will send messages if plans happen to change. For example, this year’s event, we planned on doing a bar crawl downtown Omaha on Saturday night. Well, we ran into an issue. Trey and I showed up to the first bar on the schedule and it was just totally packed, because well, it’s Berkshire weekend and there’s like thousands of people in Omaha more than usual. A lot of people were downtown. So, it’s helpful to be in the group just to see where everyone is meeting up if plans change, because things can change instantly.

Clay Finck (55:26):
A lot of these bars honestly aren’t huge. They aren’t meant for a Berkshire weekend every weekend. So, it’s just a lot of local small bars. So, we’re going to try and plan ahead for that and try and be prepared, but it’s great to be in the chat just to see when things change or even just have a way to message some of the others that are a part of the TIP community.

Clay Finck (55:46):
The third reason is it’s a great place just for questions regarding the weekend, such as what hotels people are staying in, what are the credentials you need to get into the meeting. Again, if you’re interested in attending the meeting and meeting up with the TIP community, keep an eye out on the newsletter or use the link that we’ll provide in the show notes to the page on our website and we’ll be getting that updated here soon.

Stig Brodersen (56:10):
If I can just add one thing to the thing with credentials, because they can be difficult to get because you might buy them through the broker and they get super confused whenever you say, “I actually want to attend one of the annual meetings of one of the companies I invested in.” The support is like, “I’ve never heard about that before.” So what has happened, at least to me, and I heard from quite a few other people attending is that they can’t really get the hands on them or they have to go on eBay and buy them. It’s this weird thing where with some brokers, it’s very easy to get to and they will send you form. Other brokers, they’re like, “I just don’t know what you’re telling me.”

Stig Brodersen (56:41):
So, I’ve never experienced that we didn’t have a ton of credentials, because again, most people go alone and they might bring all four. So, what I would just say is that if you don’t have any credentials, just asking the WhatsApp group, we usually always end up with 100+ extra or something like that. I know it might sound crazy if I say, “Oh, just fly from Germany and we’ll just hook you up.” I’m not going to make any promises at all. I would say I would be highly surprised if we did not have enough credentials when there will be actually get to it. Clay, we covered a lot of ground in this double episode. Do you have anything you wanted to mention here before we round off the show?

Clay Finck (57:20):
I think we’re good.

Stig Brodersen (57:21):
Wonderful. Clay, on behalf of the We Study Billionaires audience, thank you so much for now being a host on We Study Billionaires feed. We are really excited to start listening to the episodes.

Clay Finck (57:33):
Thank you, Stig. I’m super excited to start diving into all these fantastic books and research and all the papers that the great investors put out and help share that with the audience.

Stig Brodersen (57:44):
Fantastic. So, stay tuned for Clay’s episodes that are going to come out every Monday following this episode. So, already October 10th. Clay, thank you for your time today. It was wonderful to have this conversation with you.

Clay Finck (57:55):
Thank you, Stig. It was a ton of fun.

Outro (57:58):
Thank you for listening to TIP. Make sure to subscribe to Millennial Investing by The Investor’s Podcast Network and learn how to achieve financial independence. To access our show notes, transcripts, or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.