Growing A Multi-Million Dollar Empire & Real Estate’s Role

In this episode of the Tax Smart REI podcast, Ryan Carriere, CPA, and Brandon Hall, CPA engage in an insightful conversation with Sam Parr, an internet entrepreneur and founder of several successful ventures, including The Hustle and My First Million podcast.

Sam shares his journey, insights into building businesses, and his evolving relationship with taxes, investments, and real estate.

Sam’s Entrepreneurial Journey

Sam describes his background as a serial entrepreneur, starting with The Hustle, a business newsletter that grew to millions of daily readers. He also hosts My First Million, a podcast with millions of downloads. His current focus is Hampton, a peer group for entrepreneurs and CEOs. Sam candidly shares that while taxes are important, they are far from his top priority when making business decisions. His primary focus is on building great products, hiring talented people, and keeping his businesses financially healthy.

Tax Planning and Business Decisions

Sam explains how taxes influence his business decisions but emphasizes that they do not dictate them. For example, he mentions the significant tax benefits he gained through QSBS (Qualified Small Business Stock) after selling The Hustle, allowing him to save millions in taxes. However, he stresses that his main focus is always on building a successful business, with taxes being an afterthought.

Real Estate Investments

Sam also touches on his brief foray into real estate, including owning rental properties and investing in other people’s deals. He admits that while real estate can be lucrative, he wasn’t good at managing properties and preferred investing passively in other people’s real estate deals, where he saw impressive returns. He emphasizes that real estate is far from passive income, likening it to running a small business.

Starting a Business vs. Real Estate Investment

Sam draws a comparison between starting a business and investing in real estate, noting that starting an online business can often be done with little to no money, while real estate typically requires significant capital. He highlights the importance of playing to one’s strengths, suggesting that those who excel in business creation may not necessarily be great at investing.

Entity Structure and Tax Strategy

The discussion also delves into entity structures, where Sam shares his preference for starting with LLCs and transitioning to S-Corps or C-Corps as needed. He discusses how the C-Corp structure worked well for The Hustle because he knew he would eventually sell the company, benefiting from the QSBS tax break. He contrasts this with his current LLC structure for Hampton, where he doesn’t intend to raise outside capital.

Parting Advice

Sam advises listeners, especially younger entrepreneurs and investors, to take more risks early in their careers when responsibilities are fewer.

He emphasizes that building wealth is about creating freedom, and he encourages people to enjoy the journey of entrepreneurship rather than just focusing on the end goal.

Want to build wealth and reduce tax through real estate?

Request a discovery meeting today.

Transcript

Ryan Carriere, CPA (00:02.375)
Hey Sam, thank you for joining us today on the Tax Smart REI podcast. Would you be able to start just giving our listeners a little bit of background of who you are and where you’re coming in from?

Sam (00:13.23)
I’m an internet entrepreneur. Right now I’m taking this call from Westport, Connecticut So I’m an internet entrepreneur. I’ve started a couple companies including one popular one was called the Hustle. It was a fairly popular daily newsletter. It’s like a business newsletter that was read by maybe three million people a day right now and I bootstrapped it to many eight figures in revenue and sold it for many tens of millions of dollars. And then I also host a podcast that the Hustle owned called My First Million. I think last year, that podcast had something like 90 million downloads and views. And then my latest company is called Hampton, which is a peer group for entrepreneurs and CEOs. And then I’ve got some side projects that I like to work on. One of them being Sam’s List. It’s kind of like Yelp for accountants that I’m just toying around with. That could be a thing. but I can be transparent, but I think it made $27 ,000 in May. So it could be a thing, but we’ll see.

Ryan Carriere, CPA (01:18.915)
Well, I’ll just comment on, we are currently looking into that and I’m going to talk about that more with Brandon as we go along. So we’re in that we’re trying to look into getting more established on that for sure. But yeah, thank you for putting that together and we hope to be one of your top referrals in the future for sure.

Sam (01:37.582)
I hope that you get lots of business from it. Have you gotten any business? Have you gotten any business so far?

Ryan Carriere, CPA (01:39.939)
No, we’re kind of just in the beginning phase of getting that rolling out. Yeah.

Sam (01:46.638)
Cool, yeah, we could talk about it at all.

Ryan Carriere, CPA (01:48.967)
Awesome. Well, I’m going to jump into kind of a tax -ish type question. So you’re a business owner. And one of the things that we talk about a lot on our podcast is not letting the tail wag the dog. So as a business owner of multiple businesses, how much would you say you make decisions for your business investment decisions based on tax outcomes and tax savings? I’m just very curious to hear that from you.

Sam (02:16.654)
very little. The taxes don’t matter. I mean, they matter. But like in terms of where I want to live, like taxes are like, basically not. It’s like the fifth most important thing. The first one being like, do I want to be there? Are my friends there? Is my family there? Taxes are like a cherry on top, depending or it could be really bad. And then when it comes to business, It’s a little important when it comes to deciding if I’m going to be a C Corp because for my last business, the hustle, I got QSBS. So my first 10 million in earnings was tax-free. And then like, I’m kind of aware that you can like stack QSBS, which potentially could be like many, many, many millions in savings. But basically when it comes to running my company, the first thing is like make a product people love.

The second thing is like hire good people. The third thing is like just like don’t run out of business or don’t go out of business. And then like maybe the 18th thing I think about is the importance of taxes.

Ryan Carriere, CPA (03:25.063)
Excellent.

Brandon (03:26.099)
I kind of think that’s how it should be though, right? It’s like Ryan said, you don’t want to let the tax tail wag the dog and you don’t want to make tax decisions that negatively impact your ability to create wealth or build business. And you mentioned like location, you know, we get people all the time that are like, should I move to Puerto Rico? And I think it was, I don’t know if he got it from somebody else, but where I first heard it was Alex Hormozi who said, isn’t the point of making all the money so that you can live wherever you want and to not have to move to save some money and I just think about that too.

Sam (03:56.27)
Yeah, that’s how I think. Like being rich is about freedom and I can choose to live where I want to live. Now, if I want to live in Puerto Rico, which I don’t, but if you do want to, cool. But if you don’t want to live there and you move there for taxes, I think that’s a weak move. I think that’s a small, that’s a small boy move.

Brandon (04:13.555)
Yeah. Now, kind of along those same lines though, you had a rental portfolio and sorry Ryan, if I’m jumping ahead, but you had a rental portfolio. Most people get into real estate to not only build wealth, but mitigate taxes. In my understanding is that you have subsequently offloaded the real estate portfolio. So talk to us about those decisions.

Sam (04:37.87)
Yeah, so I so basically my background is like the first two years of my business, I paid myself like 20 grand a year. And then like the fourth and fifth year, I kind of paid myself the last year I paid myself like something interesting, but still not like crazy. And then all of a sudden, I made a lot of money. And so I was like, poor, poor, poor, not poor. And I was like, what do I want to do with my life? What do I do with this money? And I had a lot of friends in real estate.

And I was sick of playing on the Internet. I was like, I want to do something that’s like real that I could touch. And, so I bought like three different properties or something like that. And then I also invested in other people’s deals. Investing in other people’s deals has been awesome. I’ve had awesome returns there, but I was like, I’m going to get into Airbnbs and I’m going to own land and all this stuff. And I did it. And like they were they weren’t losing money, really. They’re making money.

But I just sucked at it like I wasn’t good at it. It didn’t fit my skill set. And I was like, I had to learn the hard way, but it wasn’t that expensive of a lesson that sometimes you should stick to just like what you’re good at and just invest in other people’s stuff. And like, so I think investing in other people’s deals fits my skill set a lot more than outright owning, which I did, because I was not in love with it remotely. I hated it.

Ryan Carriere, CPA (06:05.927)
So for our audience who’s mostly real estate investors as we were kind of telling you about, so if you’re looking at the difference between kind of pitting them against each other, real estate investing versus say acquiring or starting a new business, how do you see the main differences between those two and maybe it’s more of a question of who should get into either one of those and just how do you see like, this one’s a better investment for this type of person.

Sam (06:32.046)
You mean like starting a product-based company versus investing or like a service or something? Yeah, like man, I’ve created tens of millions of dollars in wealth starting with zero dollars. And I did that with the internet because it’s amazing. The internet’s awesome. And I know how to just like that. I just learned how to do it and it fits my skill set perfectly. What’s crazy about real estate is like, you know, I’m not savvy, like I’m not super savvy.

Ryan Carriere, CPA (06:35.591)
Sure. Yeah.

Sam (07:01.262)
So maybe you guys or your listeners are going to be like, this guy’s an idiot. But you basically need money to make money with real estate. I mean, I guess you could do like some weird like niche things, but you kind of got to be rich to get richer with real estate or at least some type of wealth. And I always thought it was a lot cooler that I could start a business on the Internet with zero dollars or a service and like have like a good ROI.

But it also fit my skill set. And there’s a lot of other guys are like, well, if you’re really good at real estate, you can get whatever 15 or 10 or 20 % returns, just raise a bunch of money and like go and deploy that. And that is cool, I guess it just, I just think it’s cooler to do to start with zero dollars, because that was that was the position that I was in. I also it requires way more analysis. So basically the skill set needed to start a company oftentimes is the opposite skill set needed to run a company. Meaning when you start a company, typically it’s more creative, it’s more art, it’s less analytical. When you run a company, you have to look at process, you have to look at savings, you have to look at a lot of different things. Similar with buying real estate. It’s all about, I didn’t learn this, or I learned this like after I got into it, someone was like, you make money when you buy. And I was like, what do you mean? And they’re like, well, you got to like, do all this analysis and like make some assumptions. But a lot of it’s like just math and Excel work. And I was like, I’m horrible at that. I can’t do that. That’s really hard for me. And so that’s why I don’t really particularly love it. And so when I invest in other people’s deals, it’s basically like, who do I trust? And I’m like, dude, just tell me the most conservative potential returns that you’re going to get. And like, if you’re putting your own money into it, I’ll do it too.

Ryan Carriere, CPA (08:50.119)
That’s awesome. Yep. Another kind of tax -ish type question for you. What is the most common entity structure for your businesses? C -Corps you talked about, I think for Hampton. Doing the QSBS

Sam (09:04.59)
No, no, Hampton’s not a C Corp. Hampton’s an LLC. That’s because I own the business. If you raise money, I think with an LLC, well, you guys know more than me, but if you’re an LLC, you could only have like, what, 100 units. So if you’re going to like raise outside equity, you almost always have to be a C Corp, where I think that’s like the default. I’ve not raised any outside money.

Ryan Carriere, CPA (09:10.787)
Okay. Got it.

Sam (09:32.462)
With the Hustle I knew I was gonna sell it so a C Corp made them that made the most sense to be a C Corp all my other businesses start as an LLC and then eventually they like become and they mostly become an S Corp but They mostly start as an LLC because that’s just a fast and easy way to get started. But maybe you guys can like correct me am I doing it wrong like you could be an LLC and elect a file as an S Corp, right? That’s what I’ve done a lot

Ryan Carriere, CPA (10:00.295)
Yes. Yep. And the hundred units, the hundred shareholders, you’re probably thinking of the S -Corp. The S -Corp is the one. Yep.

Sam (10:05.678)
okay. Yeah, but I just know in Silicon Valley, when I lived in San Francisco, it was like default C Corp, because you’re going to eventually sell the company. And so I think for a company that you’re going to sell, particularly if you’re going to sell it five years after starting, and you don’t intend to take a lot of like profits along the way, C Corp, I think is almost the best, like certainly the best. But if you’re going to like make money along the way, I think it’s also like the worst.

Ryan Carriere, CPA (10:32.615)
Yeah, the default for me is real estate is LLCs. S -corps are for operating businesses that you’re going to keep and C -corps are, I’m going to go start a internet business, some sort of startup company and then go sell it. To me, that’s kind of the default, kind of making it oversimplified for sure. But absolutely. If you’re planning to sell a property,

Sam (10:50.83)
I think what’s it called in real estate a 1031. I think QSBS might be number two, but you could argue it could be number one. In terms of like the best tax savings, QSBS qualified small business stock and then the 1031 are like, they like are go back and forth for like the greatest like tax savings ever created. But the difference is that QSBS is way less known about, talked about.

Ryan Carriere, CPA (11:20.643)
Yeah, 100 % agree. I would say QSBS is one of the most misunderstood. As far as I’m aware, one of the least audited as far as court cases that we’ve seen, things like that, there’s just a lot of like uncertainty around that. So absolutely, if you’re in someone like your shoes, a C Corp, I would have recommended, you know, day one, as far as what I know now and agree. It probably is number one, even above 1031 exchanges. Yep, absolutely.

Sam (11:47.534)
And you can like, you know, stack it in a way where like your family can get I mean, it’s like insane. I remember learning about it. And I was like, how is this legal? Like it felt illegal, like learning about it. So it was ridiculous.

Ryan Carriere, CPA (12:05.223)
Yeah. And like the way I see it and Brandon, you feel free to chime in. The tax code is kind of all about, you know, incentives. So the government is saying, hey, we want to have our taxpayers, our citizens invest money into this. Hey, we want people to build businesses, right? It’s just unique that it had to be these very specific rules of C -Corps and you get 10 X this and up to 10 million days or whatever this like unique thing. But absolutely, it’s about incentives and it’s it’s absolutely to me again, just number one even above a lot of the real estate.

Sam (12:34.702)
I think they missed a mark on that one. I think they missed a mark on that one. The ideal outcome of like incentives, I don’t know if like I was just incentivized to sell my company and make money versus like not pay myself along the way. I mean, I don’t know. That feels like I don’t know if the ideal outcome was what they wanted to.

Brandon (12:53.715)
I guess it all depends on who’s lobbying and how many dollars they have.

Ryan Carriere, CPA (12:58.599)
Ha ha.

Sam (13:00.078)
Because it was insane. That’s like a legal thing. And I’ve got friends that have made tens of millions tax-free via QSBS.

Brandon (13:01.555)
Yeah.

Brandon (13:08.915)
You know, that’s an interesting point. And I actually never thought about that particular incentive like that. It, cause you’re right. It does, it encourages you to sell. And is that, is that what they intended to incentivize? I mean, they intended to incentivize the blood, sweat and tears that you put into building a company, right? But is that, is that overall good for the tax base, you know?

Sam (13:33.006)
Yeah, I don’t understand how that fit the requirement, but I do know that like every couple of years they debate if they’re gonna take it away or not. So I don’t think it’s wise to build your plan according to it. But if it could fit within the plan that you already have, it’s pretty awesome.

Ryan Carriere, CPA (13:50.023)
Yep, similar to a 1031 exchange. They have been talking about taking that away every year.

Brandon (13:53.011)
Mm -hmm. Every year.

Sam (13:54.158)
I don’t think that will ever happen. Like the little that I know about government and taxes is that in real estate is that like America is built on like two people getting married and also people buying real estate. That’s like the two like institutions that like the government holds more sacred than like everything else. Like they want you to get married for whatever reasons and they want you to buy real estate. And the people who own real estate, like particularly investors like their lobbying is so awesome that nothing is ever going to happen. But that’s a very uneducated opinion.

Brandon (14:30.611)
Here’s a question for you. How did you know, so you had the pains of operating your rentals, but how did you know it was time to sell?

Sam (14:41.678)
Because I just so usually when I’m starting a business, I think of like what do I have an edge in? So like the the first thing I like here’s the requirements. It’s like a three -point checklist. What number one would I find joy in this? Like would this be cool and exciting for me? Number two, do I have some type of edge or or unfair advantage? Number three, can this be like particularly big and and when I define big as like tens of millions of dollars a year in profit?

When I got into real estate, I was like, this is really exciting and fun. And then when like things broke or I had to spend more money, I was like, I don’t get joy out of this because I’m not so confident in my analytical ability to like, be able to like, say, there’s a good ROI on this. You know, like I just simply was not confident in my own my own skill set. And so like a year in, I was like,

Even though this is making money, I just, I’m not confident in my ability running this at all. And also I think I’d prefer just investing in other people’s stuff because they’re, I’m getting a 10 % return. I know other people that are getting like 14 or 15 or I invested in a couple of deals that were development deals and we got 28 % returns over three or four years. And I was like, dude, I should just invest with the professionals. I’m not a professional with this just because I have money. Doesn’t mean I’m a professional. I don’t know at all. So I sold it like one year in no, I sold it two years in maybe, but I still own some stuff. I still own some stuff. But the main one that I spent like a million and a half on, I got rid of that after like two years maybe.

Brandon (16:21.427)
So there’s a lot of people online that talk about how real estate is passive, passive income streams, you know, cash flow. Okay. I was about to ask your opinion on that. What do you think about that?

Sam (16:26.318)
Bullshit.

Sam (16:31.136)
No, it’s a small business. It’s a small business. If you’re a real estate professional, you’re just a business owner. No, that ain’t passive. No, it’s passive when I invest in other people’s deals.

Brandon (16:33.363)
small business.

Brandon (16:43.187)
Well, I was just about to ask you, so talk a little bit about that aspect too. Are you investing in large syndicates or are you investing in individuals, kind of like as the money partner? What does that look like?

Sam (16:54.606)
so, one person who I do a lot of deals with his name is Val. I met him in Hampton. he’s in my core group. He, got wealthy starting internet companies. He partnered with, I guess the guy was a general contractor and, we bought, I mean, he’s put in, I’m not going to say his number, but many, many, many millions of his own money. And he, we bought like three or four or five vacant lots in Brooklyn.

And we developed them and the first like two or three projects. The profit was awesome. I think we got a 28 % return over three years, something like that. Like it was like crazy. and then he was, but he was always conservative. He told me going into it, like, I think we’ll get 15 % or something like that. He’s like, if my math is right, like maybe we’ll get 12 or 15, which would be awesome. And I was like, all right, that sounds interesting.

and we ended up killing it. And so I was like, all right, I like how you downplayed it and you were conservative, let’s do it again. And so we’ve done a bunch of deals together. And so I guess I’m just an investor, I guess an LP.

Sam (18:03.502)
Am I an LP? Am I even using those terms correctly?

Brandon (18:06.355)
Yeah. Yeah. Yeah. Yeah, I think so.

Ryan Carriere, CPA (18:06.919)
Sounds like it, yeah.

Ryan Carriere, CPA (18:12.423)
Yeah. Sam, one other question I’ve got for you, other than building businesses, investing in real estate syndications, are you doing anything else as far as like alternative assets, oil and gas, ATM funds? Okay.

Sam (18:24.27)
No, dude. So let me give you I’ve got very strong opinions on that. And these opinions are for me, it’s a very personal thing. But here’s basically what I do. I do some real estate stuff, but like it’s pretty insignificant for my net worth. But here’s how I view like net worth and investing. Every dollar that comes in to my like to my household, 80 % goes to VTI, I think it’s called, which is like a Vanguard total index fund. And 20 % goes to some type of either right now, like the the yield I get on like bank balances is like 5%. But like it’s usually like an 80-20 bond, a bond thing. And I hire I have a professional I have like a banker who does this for me. But it’s just like all you have to do is keep this at 80 20 Vanguard at 20 % bonds. That’s all I want.

And then so my net worth is basically that like lump sum. And then it’s also a whole lot of HubSpot stock, which I received when I sold my company. My wife worked at Airbnb, has worked at Airbnb for many, many, many years. So she owned a bunch of Airbnb stock. So we basically own that lump sum of VTI bonds and then Airbnb and then HubSpot. And that’s basically it. And then I, and then on the other side, I’ve got privately held companies that I take income from and I

deploy it to those things. And that’s pretty much all I do. It’s like the most simple. It’s like the most simple thing because I’m like wholeheartedly against buying individual stocks and stock picking. Because I just don’t think it’s worth my time. And I’m incredibly happy. Like the way that I view my net worth and my growth is my personal businesses, I’m going to grow those quickly. Everything else, I’m more than happy with 7 % returns.

And that’s all I want. And I want those returns while I sleep well at night and I don’t spend one second thinking about it.

Brandon (20:30.451)
It’s wealth preservation, right? I don’t need to take incredible risks with the chips that I’ve already taken off the table. Makes sense to me. Now, I know that you’ve done a bunch of surveys in Hampton on wealth and asset allocation and things like that. Have you looked at any of that data coming back and reallocated your holdings as a result? Or have you thought about it?

Sam (20:52.75)
Well, it solidified the fact that, and this is a really interesting insight, people who are great at making money via starting companies and running companies, they are not necessarily good at investors, but the majority of them, including myself, which I did with Real Estate, think that they are. So there’s this massive delta between being a good investor and starting a good starting a company. So like when you start a company, you’re like thinking like, what does the market want? How do I make like this brand interesting or cool? How do I go and acquire customers? And then once you make money, it’s like, how do I get whatever percent return I need in order to beat like the low, the low effort, low-risk option. And so many people in my position, including me, like I said, think that we are good at investing, the majority of them are not. It’s just that and some CEOs cross that chasm.

of like becoming like, you know, you’ve got like these amazing people like Warren Buffett basically was, I mean, he was an entrepreneur and you’ve got all these like amazing people who start understanding capital allocation. But the vast majority of them don’t quite like it’s like an it’s like a learned skill set that takes a long time. Whereas it’s not just because you’re good at starting a business means you’re automatically going to be good at capital allocation. That is it’s more rare that you have both than you than you have just one. And so

That’s like my big takeaway, which is we think that we are good at it, but the majority of us probably are not unless we put years of effort just like we have at our other skill set.

Brandon (22:26.771)
It’s the capital allocation conversation is an interesting one because I think you see that even outside of just investing, if you’re running a business and you’re starting to build a larger platform and acquiring other businesses, I think you see people falter there as well. It’s actually been the thing I’ve been talking about wanting to acquire other accounting firms. I think that we have a pretty good model that we can deploy and help other firms scale, but that’s my hesitation.

Is this hubris? Like, do I know what I’m doing?

Sam (22:56.078)
Well, yeah, it is hubris, but also you could know what you’re doing. Like I think that like, like anything, it’s a learned, it’s a skill. So like if you run a business, like we didn’t know what we were doing when we started, but we spent years learning it. So I think you can acquire that skillset. It just takes effort and practice. And like, I, by the way, I agree with that premise. I like what I’ve learned with, I have research accounting over the last six months.

You should go and ask. There’s absolutely an opportunity to acquire accounting businesses. The amount of inefficient accounting companies that I’ve seen out there is insane.

Ryan Carriere, CPA (23:35.151)
We can talk about this the rest of the day, like probably.

Brandon (23:37.235)
Man, I know, I was about to say this could turn into a 10 hour conversation here, Sam, you gotta be careful.

Sam (23:40.974)
You should you should 100 % do that. I’d like so I started this website Sam’s List and like I’m not actually going to do this but I’m like, I should buy these accounting businesses because they stink. Like, and that’s another thing like where you have to look at what so I told you that like I think about like what’s my edge when starting a company. It’s so funny, the edge that you need when starting the edge you need to be a good accountant, oftentimes is not the edge you need to be a great business owner.

Right? You want someone like pretty conservative, like who’s dry and slow and steady and doesn’t. Yeah, it doesn’t necessarily adapt to change quickly. And then you like start talking to these accountants and I’m like, yeah, you’re horrible at marketing. You’re horrible at like, like acquiring new customers and things like this. But there’s a massive labor shortage for accountants right now.

Brandon (24:34.259)
Yeah, yeah, yeah. It’s a very interesting time to be an accountant because the leads, like new business, is not too difficult to obtain. Like you really just have to hang your shingle and you can win some clients. What, yeah. Yeah, yeah. What we have learned at our firm, and it took us many, many years,

Sam (24:47.15)
Not at all.

Sam (24:53.262)
That’s what I’ve learned is what people have said. They’re like, they’re like, I’m turning away work.

Brandon (25:03.667)
to get there and if any of our ex-clients are listening, we invite you back. But it took us a long time to figure out the number one issue with accounting firms is how do you run an efficient tax preparation process? How do you do 12 months of work in eight and a half, nine months? And that is like, if you see anybody complaining about their accountants,

That’s what they’re complaining about is like, you know, I uploaded my stuff in January and I got my return on April 15th and I had to run down to the post office and cut a hundred K check the IRS and I’m pissed. So again, you should be pissed. but on the, on the accounting side, it’s like, how do you actually solve that problem? It’s, it’s very challenging to do. we have, I believe for the most part solved it at our firm, over the past couple of years, primarily through pricing, right? Number one, but also making sure that we are.

Sam (25:53.966)
pricing right.

Brandon (25:55.475)
Pricing right? A lot of accountants will under price tax returns. And when you under price tax returns, you have no money for labor that you actually need to get the work done. So that requires the owners and everybody else to work 80 hours a week to get the tax returns out the door. So what we did is we kept increasing the price to try to figure out what is the balance between what somebody, what a client is willing to pay compared to how can we smooth taxes now on our end for our team.

So we were just able to figure that out. It took a long time, but I think now we’re in a really good spot. And what we do is we pre -hire talent. So we go out to the market months and months and months in advance of the actual revenue need. And so they’ll be on our team ready to rock and roll when that next tax season comes. And a lot of accounting firms are not willing to do that. It’s funny, actually, I talked to other accounting firms about this and they look at me like I’m crazy when I start talking about our tax prep margins, because they’re low compared to the industry.

But then you look at our NPS scores and they’re like through the roof compared to the industry. And again, that took a long time for me to figure out. So yeah.

Sam (27:04.014)
Right. Yeah, the accountant like there’s like trends in P .E. like for a minute it was like buying dentists like buying a bunch of dentists and like rolling them up. I think that them buying mom and pop accounting firms is going to be a very popular trend because a lot of these folks are retiring and their kids are like, I don’t want to do that shit like.

That’s, I didn’t, I don’t, the young people just don’t want to do it at the moment. And there’s a lot of old guys who are retiring and they got nothing to do with their businesses. So I think that there’s going to be like some interesting things going on in that space.

Brandon (27:44.307)
Yep.

Ryan Carriere, CPA (27:44.327)
So you think the PE interest is kind of this like cycle of the market where you’ve got all these kind of boomers retiring and that’s just kind of, okay, interesting.

Sam (27:52.206)
Yeah. That’s what I think. Yeah.

Brandon (27:55.891)
Well, I think PE too, I mean, it’s a really simple argument to make, right? Because if you’re running a PE fund, undoubtedly you’ve had a terrible experience somewhere along the line with your accountant. And so you’re like, hey, I can solve this problem. But yeah, I mean, we see PE just, I mean, they’re jumping into the space. We get hit up constantly and it’s just all these searchers just looking for the accounting firms to buy up and…

I think it’s actually a good thing for the entire industry though. There’s a lot of accountants, a lot of firm owners that are very negative towards PE. But I actually think it’s a good thing because these guys will bring a different angle on how to actually run a business. Yeah. It’ll make the incumbents stand up better processes and really try to figure it out. It’s always amazing to me how people just…

Sam (28:36.974)
Yeah, as a customer, I’m okay with it. I like it.

Brandon (28:51.891)
totally trash their clients. Even online, they’re just like, my clients suck. And I’m like, dude, I mean, how, you know, is customer service a value of yours? And man, if you’re willingly talking about it like that, it’s just, what are your customers feeling? You know, and I think, I think accountants lose sight of that. So sometimes, sometimes. Yeah. Yeah. Anyway, you’re building a cool thing with Sam’s List. Very, very, very cool to see that.

Sam (29:08.846)
Yeah, I’m very eager to see what happens. I’m very eager to see what happens.

Sam (29:19.982)
It started as a project. I was, so I hate flying. Like I can’t stand flying. And so I’m completely sober. I don’t do drugs or alcohol, except when I fly, I have prescription medication. And so I get a little hopped up on a very minor dose of Xanax and I’m just like sitting there at the airport and I get a call from my accountant or something like that. And it kind of made me angry.

I was like, this account sucks. I’m so angry. Why are they asking me this question now? They should have asked me this six months ago. And so I just make a tweet and I’m like, who has a tax strategist or accountant that they absolutely love? And I think I got like 300 replies or something like that. But I noticed that I got hundreds of people bookmarking the tweet. And I was like, that’s interesting. Why are people saving this? they have a list of accountants now that other people have endorsed.

Brandon (30:14.963)
Uhhhh…

Sam (30:16.014)
And I was like, that’s fascinating. That’s kind of interesting. And while I’m at the airport, I’m like, I called Joe, my partner, I’m like, Joe, let’s make this into a website. Let’s see if we can get it live in the next three or four days. And so we build this website where we like, get, you know, all 300 replies, we made a website where we looked like the person had gone. So the endorser, so let’s say Ryan’s like, I love Brad as an accountant, for these reasons.

And so we list Ryan’s review on our website where it looked like he actually came to the website. It was really just him replying to my tweet. And you could see Ryan is works in this industry. He does this. So like I can wait if I think his opinion is interesting to me or not. But then we were like. Shoot, there’s still all this information that that we need on these accountants because on their website, they have of them tell us nothing. And so like we called like 200 of them and we’re like, hey, can you tell me like.

how much you charge and what services you provide. What’s like your ideal customer? What customer you would never want to work with? Mostly businesses or mostly personal. And so I like spent like two months like calling all of them. And then we made this website, samslist. And there’s still a lot of stuff we have to add to it. But it was like, let’s just add, let’s just create like a database of like interesting accountants. Because if you Google like best accountant, like I’m currently as of today, I’m

working out of Connecticut, it takes me to like the Connecticut’s website of like Connecticut CPA or something. And I’m like, I don’t know who any of these people are or how I can trust them or anything like that. And so there’s really like no competition. So I hope no one comes to compete with me because right now it’s kind of cool.

Brandon (31:57.203)
But that’s a really cool story. I didn’t realize that it all originated from that tweet. I thought that tweet was like, was like leading you into it, but I didn’t realize that that was just on a whim. And then it was like, wait a second, we’ve got something here. That’s great. That’s great.

Ryan Carriere, CPA (31:58.599)
Yeah.

Sam (32:09.966)
It was on a whim. It was on a whim. Like I tweeted that at the airport and I was like, after one hour, it got if you can go and find the tweet, it got all these bookmarks and people are like, I’m saving this. And I was like, a light bulb. I was like, Joe, we got to turn this into a website. It has to be live like immediately. I got to follow up with this tweet of like how I agree. Originally, I was just going to put it all in Google Sheets. And then I was like, no, this could be a thing. And so we did it.

Brandon (32:35.923)
Huh. I’ve seen some of these other like lists pop up recently too, just with like tech stacks and stuff like that.

Ryan Carriere, CPA (32:36.839)
Well, to bring it full circle.

Sam (32:42.574)
Yeah, my friend Austin Reif and Alex Lieberman started this thing called tech stacks. That’s or I don’t I don’t know what it’s called, but it’s just like, yeah, I like that. I like that. That’s pretty cool. I’m a big fan of that. What they’re doing. That’s really neat. And it’s just like fun, like dorks like nerding out on it on stuff like that and myself included. And so I think it could be a thing. I was like, Joe, we can’t do this unless it makes money. And I think this month it made 26 or $25 ,000. And

Brandon (32:46.675)
Yeah.

Sam (33:11.406)
It cost us like 30 grand to get it started. So we’re almost we’ve almost made our money back.

Brandon (33:17.331)
Good for you. Good for you.

Ryan Carriere, CPA (33:19.463)
Well, to bring that full circle, that’s how we got connected, Sam, with you. A client of mine that I had been working with, he’s like, hey, I gotta introduce you to, you know, Hall CPA. And then I had started emailing with you or your assistant or someone getting information. Yeah, Kimi, yep. Okay.

Sam (33:22.766)
Yeah.

Sam (33:32.43)
Kimi. I did a bunch of the calls at first and then we hired this one woman and I was like Kimi I can’t keep talking like I need help like none of these people will call me back I need help so yeah Kimi help me.

Ryan Carriere, CPA (33:39.047)
Ha!

Ryan Carriere, CPA (33:43.559)
And then I was just like, hey Sam, wanna come on our podcast? And you’re like, yeah, sure. When do you wanna do it? And I was like, awesome. This is great. So that’s full circle context for everyone else listening. How did Sam get on your podcast?

Sam (33:47.63)
Yeah.

Sam (33:53.102)
I’m courting the accountants.

Ryan Carriere, CPA (33:56.935)
Yeah.

Sam (33:59.822)
Because like no one wanted to talk to me at first. And so I was like, I need to become friends with these people.

Ryan Carriere, CPA (34:05.127)
That’s great. You’ve got a friend in the accounting business now. I think that’s…

Sam (34:09.55)
We have a few because we’ve sent, we’ve sent like a bunch of like our site’s tiny, but like the first week we got like 10 ,000 people to come to it. And so like a bunch of, a bunch of, you know, it doesn’t do 10,000 every day, but that week we got 10,000 and like a bunch of accountants got like a ton of customers and they’re like, why didn’t you tell me like, this was going to be a thing. I was like, I tried to, but like,

I tried to tell you that I’m putting you on this website and they’re like, I would have filled out my profile more. I was like, yeah, I told you. But a lot of people got a lot of business from us. So hopefully we have more friends than we did.

Brandon (34:46.579)
awesome.

Ryan Carriere, CPA (34:48.999)
Well, a couple of questions. I know we’re getting closer to our time. Okay, I’m sure you do. Knowing kind of what you know now, Sam, and kind of the businesses that you’ve started and now sold, just kind of like a broad statement like, is there anything that you wish you could change in what you did, say, years ago? Or kind of another way to say that would be like, if you were to talk to your…

Sam (34:53.71)
Whatever, I got all the time in the world, man.

Ryan Carriere, CPA (35:18.343)
10 years younger self, right? I don’t know how old you are, Sam. What would you kind of tell your, okay, your 24 year old self, what would you go back and kind of give advice to your 24 year old self?

Sam (35:22.03)
I’m 34.

Sam (35:30.894)
I got a bunch of stuff. So like to get really tactical, pay yourself more. So I had probably a million dollars in the business bank account. I was paying myself 40 grand a year. And I thought that I was being stoic and cool and all this, but it actually made me make a lot of mistakes because I was always desperate for more money. I should have paid myself a lot more money. Maybe I was paying myself 20, like two or three grand a month.

one year actually. So it was like less than 40 grand a year. I wish so pay yourself more if you can afford it. My plan when I started my first business was I wanted to get like liquid and wealthy by the age of like roughly 30 because I thought if I could set myself up at a young age financially life would be a lot easier which that is a true statement. And so I would tell myself that’s a good plan. Definitely do that.

That said, if you set up your business early on and make decisions differently than I made, there’s a world where you don’t have to sell your company and you could still achieve a lot of desirable outcomes. So my business, we ended up raising a small amount of angel investor money and then I gave equity to employees. I didn’t need to do any of that. That was a big regret of mine. So I don’t regret selling my company, but I regret being in the position where I had to sell.

I think that when you start a business young, when I was a young man, I was 25 years old, I didn’t exactly know what I stood for because I was a young man.

my values change because I was still like my brain was still kind of forming. I wish that there was a world where I could have understood what type of man I was and what my values were and what sacrifices I was willing and not willing to make at a younger age because I didn’t know what I was doing. And so I like when I started my company, I was like, I want to hire 10,000 people. That sucks. Like I don’t want to hire. I’d rather hire 10 people and make way more money if that’s possible. Like hiring people just to create jobs.

Sam (37:54.798)
In some ways, that’s cool. In other ways, that’s just kind of a headache. And I wish I would I would not have been guilty or fallen into that ego trap. I think that making money, a few other things I would tell myself, I think making money definitely will make you happier, but it won’t necessarily make you happy. I also think and this is so cliche that everyone listening is going to be like, that’s easy for you to say. It’s definitely more about the journey.

like you gotta like enjoy this shit while we’re doing it because you don’t suddenly become happy just because you hit your desired outcome. you know, it’s kind of silly to say I’ll be happy when this happens. I’ll be happy when this happens. I can tell you I’ve achieved a handful of things that I thought that was going to happen. and that is not necessarily the case.

Ryan Carriere, CPA (38:45.159)
Do you wish you would have not sold the hustle?

Sam (38:48.406)
No, I was in a position where I owed it to people, including my family to sell. If you take money from other people, you better like I took that seriously. I was like, I’m like, like this person. It’s like letting down your father. It’s like they like they trusted me. I better die getting a return. Like it’s like that’s a big deal. It was a really big deal. I felt like I felt honored that someone would take a risk on me.

I was like, I can’t believe you’re putting your hard-earned money into this. So I owed a return. When I started the company, my goal was to get to a hundred million in revenue. And keep in mind, we were a newsletter. I told people in the media industry, this can get to a hundred million in revenue and that’s what I’m going to do. And they laughed at me. They’re like, that’s the stupidest thing ever. A freaking newsletter. I was like, yeah, if you do the math, I only have three writers. I bet you I can reach.

5 million people and like if I have this many advertisers like just do the math because like it was I was like I already have 50,000 subscribers so if I just extrapolate that out to like 5 or 8 million subscribers here’s the numbers like this is just a math equation and they laughed at me they laughed at me so many people laughed at me a founder of a really large media company that you guys all know of he laughed at me and he hurt my feelings so much and I  was like am I wrong?

Why are these people think I’m so stupid? Like this seems right. And I sold the business the year, I think in year four, we were on track to do 20 million. And I sold the business before I could prove those assholes wrong. But now my dear friends, my great friends, Austin and Alex over at Morning Brew, they’re at roughly 90 million in revenue. And so they proved that theory right. And so I regret that I didn’t.

rub it in those jerks’ faces who all made me feel like I was stupid for believing that this was possible. Because I think that rage and proving people wrong, if you can harness it correctly is like an awesome motivator. And so like I remember I felt so bad that this guy who I admired, who was like 15 years older than me, and so he was kind of like a hero to me, told me he was like, dude, this will never make more than a million dollars a year. What are you stupid? Like this won’t work. I was like, no, you could do it by this and this.

Sam (41:08.91)
So I was so upset that I wasn’t able to prove him wrong, but I’m happy that others have been able to prove him wrong.

Ryan Carriere, CPA (41:16.391)
Yeah, just from a newsletter, 100 million. I can’t even fathom that. But morning brew, yeah.

Sam (41:20.622)
It’s it. It makes so much sense. This is so easy. It’s such an easy. It’s like the easiest, easiest equation on earth. I’ll do it for you right now. Let’s say that you have 100,000 subscribers to your email. Okay, if you send it right the way that email works is you charge per 1000 cents. And so let’s say that if you have a really high-quality customer base, which I did, it was like business readers. So people who buy like enterprise software and shit. So let’s say I’ve got a

100,000 of those people. I send an email six days a week. Okay, I charge $45 per 1000 cents. So when six cents a week, I’m sending 600,000 times. Okay, so can you guys do this math for me? So do six do 6000 times $45. What’s that equal?

Ryan Carriere, CPA (42:12.551)
600 ,000 or 6 ,000?

Sam (42:14.574)
So you do, here’s the equation. 600,000 subscribers divided by 1,000 equals what? 600, right?

Sam (42:27.662)
So 600 times 45 is what?

Ryan Carriere, CPA (42:31.879)
27 ,000

Sam (42:32.942)
Okay, so that’s how much you make per week with 100,000 subscribers. It’s $27,000. Okay, now let’s just amp this up. Let’s say that you have 5 million subscribers and you’re getting $45 per 1000 cents and you’re sending six times a week. What’s that turn out to be? So 5 million would be, so that’d be 5,000 times 45. So what’s that equal?

Ryan Carriere, CPA (43:00.711)
225,000

Sam (43:04.174)
Okay, what’s 225,000 times 52?

Ryan Carriere, CPA (43:10.471)
11 .7 million? Am I off? I feel like I did something wrong.

Sam (43:13.834)
I think you’re off, right?

Ryan Carriere, CPA (43:17.703)
Okay.

Sam (43:20.078)
Are you? Are we off? No, it’s not 100. No, it’s not 100 million. But that would be I believe that gets you into tens of millions that should get you into 10 millions. And then I was like, so if I have this audience of however many people I can create this other product that gets me to this much revenue. So anyway, like I just did all the math where it worked out to where I’m like, dude, this is interesting. So look, it’s five million.

Ryan Carriere, CPA (43:21.703)
I feel like I’m off. Yeah.

Brandon (43:22.483)
Sands are 100 million? We’ll just call it 100 million.

Sam (43:50.286)
5 million divided by a thousand equals 5,000. 5,000 times six is 30,000. 30,000 times 45 is, yeah, so that if you had 5 million subscribers and you’re getting $45 per CPM, that gets you to 70 million in revenue.

Brandon (44:13.171)
Do you think, do you think that, no, no, no, it’s all, that was awesome. You can do it.

Sam (44:14.766)
Sorry, I went on this long math thing, but that I wanted to prove a point that like you could do this math where it’s like that gets you to 70 million in revenue. We’re right. We’re getting close.

Ryan Carriere, CPA (44:17.063)
I got it. I got the same number.

Brandon (44:26.355)
Well, so somebody’s like listening to this and like, man, I want to go launch a newsletter business. Is that a viable business to start today?

Sam (44:32.622)
It’s viable, but it’s harder. So the reason why it worked for us and the reason why this guy laughed at me was because no one was doing it. But when we started, it was basically us, the skim and morning brew. None of us knew each other, but we all came to a similar conclusion, which is if you’re on your iPhone and you click the Apple or Gmail app and you’re looking at a screen of text, why is that any different than if you’re on Chrome or something else? And we’re like,

So with an email, the way it works is someone subscribes to you. So they give you their email. And you only need to send them 1500 words per day to get their attention constantly per day. And when I started the company, I wrote all the emails. But like, once you start making money, you’re like, I should probably get like two or three other writers in case someone gets sick. But basically, you’re sending 1500 words per day. Whereas if you’re BuzzFeed or your whatever website, you have to write

hundreds of articles per day in order to get a similar amount of traffic because each article will get like 20 ,000 views whereas with email just two or three writers can consistently hit however many subscribers you have per day and then you create it you know, you know, you know what I mean? Like you get like the math behind it and that was the conclusion that we all came to independently now because we got famous because morning brew built a huge business because a bunch of a handful of other people built big businesses the secrets out.

And so I think it’s a lot harder in the sense of there’s way more competition for a reader’s attention. When we started, it was novel. It was cute. It was interesting. People thought it was like, this is kind of funny. I didn’t know that this is like a thing. Yeah, I’ll be part of this. I love this. Now there’s way more people doing it. The difference, though, is when we started, there weren’t any software or tools to teach us how to grow.

our subscriber base. So all three of those companies that I mentioned, we all independently kind of came to similar growth conclusions on how to grow. But we had to learn it 100 % by ourselves and there wasn’t anyone teaching us and we just kind of made it up. Now there’s way more playbooks and there’s way more like there’s ConvertKit, there’s Beehive, there’s all this software that has all these cool tools that are built into it. Whereas I had to hire a developer to make all this crap on my own.

Sam (46:54.766)
And so it’s harder in the sense of there’s way more competition. It’s easier in the sense that you don’t need to make anything up anymore. Like it’s all out there. If I were to start a newsletter again, I think that it’s so like when we were growing, I think Morning Brew, the way that they grew was they got to like four million subscribers, subscribers, and then they launched multiple newsletters. So you can either do that or you can do what we did, which was grow one.

newsletter and then launch products to that same audience, which is what my strategy was going to do. That strategy, I think, takes longer, but can build a larger business. Morning Brew’s strategy, I think, takes less time, but you’re building an advertising -based business, which some would say that’s a huge pain in the ass. My opinion is currently, for the people starting right now, the likelihood that you’re going to get to as big as I was or Morning Brew, which is millions of subscribers, I think that likelihood is quite low because there’s just more…

there’s more competition. And so I don’t but but I think it’s cyclical. So I think in a couple years, however long that’s going to be, newsletters aren’t going to be cool again, and then you could you could get into it. But to do what I did now starting today, it’s way harder, I think. And I don’t think you’re gonna ever be as big as I was. And that’s not because I’m more talented. I’m not it’s because timing.

Ryan Carriere, CPA (48:16.807)
Yeah, awesome. Thank you for that, Sam. And two last, that’s all right. And two final questions as we kind of wrap up to be respectful of your time. Any final words for our audience? And keep in mind, they’re real estate investors. Any other kind of parting words, anyone listening to this and what you said?

Sam (48:19.79)
Am I just ranting like crazy about newsletters? I’m sorry.

Sam (48:37.934)
Go big while you’re young. Get after it while you’re young. As I’ve grown and I’ve had a family. Do you guys have families? As I’ve grown, I’ve got a young family. It’s a lot easier when you’re in your 20s and you have zero responsibility. Take more risk while you’re young. And if you’re older with family, with a family and I think you should still take the risk, but you just accept that as you.

grow, it gets harder and harder and harder. So do more today and don’t put anything off.

Ryan Carriere, CPA (49:12.839)
Awesome. Thank you, Sam. Where can people find out more about you, kind of hear what you’re doing, follow up with you, things like that.

Sam (49:20.558)
My podcast is called My First Million. I’m on Twitter, the samparr. The website we talked about was called samslist .com. The company that is my actual focus is Hampton, joinhampton .com.

Ryan Carriere, CPA (49:37.223)
Awesome. And for our listeners on here, if you love our podcast, if you are a current client of ours, please go into Sam’s List and endorse us. You can sign in either through X, Twitter or LinkedIn. We currently have one endorsement so far. I hope by next week when I check this, we’re going to be at 50 is at least my hope. So hopefully it’ll be the top at that point, Sam, and you’ll have no option but to tell all your friends about us at that point.

Sam (50:05.326)
Yeah, I’m gonna look at your profile on here and see if we can get you some more endorsements.

Ryan Carriere, CPA (50:08.551)
Okay. Okay. Awesome. Well, thank you, Sam, for joining us. It’s been a pleasure and we will see everyone else on the next episode of the Tax Smart REI podcast. Thank you.

Disclaimer: This podcast summary and transcript were partly generated and may contain some errors or miss key points from the audio recording.