People don’t get paid in equity because its a loss, they get paid in equity because that is the big win.
I’ll never forget when I posted the “pay me in equity” meme and some of the people on the top financiers of Instagram list posted about how that was stupid. This was around the time when Beyoncé made the “pay me in equity” statement. I saw the big picture, they could only see the dollars and cents in the immediate.
Their thought process was that if you get the cash now then you can invest it and get a return in the stock market versus waiting and maybe never getting your money or worse losing it all if the deal goes bad.
See that kind of thinking is what they want you to have. They want you chasing the money in the here in now while they get that cash on the back end. This is the hustle that your job throws at you and this is the hustle that record labels throw at young men.
Keeping it a buck, as Ericka says, that type of knowledge is salespeople knowledge not rich people knowledge. The kind of knowledge that gets them a commission off your here and now money as they funnel you into mutual funds and life insurance. I am tired of this kind of financial advice and literacy. No thanks. Take advice from rich people, not sales people.
Today we saw the news that Beyoncé made $300m on the Uber IPO and $60m on the Netflix special, all because she got paid in equity. Beyoncé would have been paid $6m at Uber for her performance. She was paid $8m by Netflix. Lets do the numbers, I like numbers.
Beyoncé performed at Coachella one year ago, for $8m. That $8m at 12% is $1.6m or $9.6m. She was $50m short. Where I come from, $50m is a lot of money.
The $6m at Uber netted her 5000% ROI vs the 12% on the $6m that she might have made over five years. $300m is a lot more than $6m at 12% which is $900k for five years, which is $4.5m or a total of $10.5m. I think that $300 is a lot more than $10.5 especially when we are talking millions. The difference is astronomical. That difference is your legacy. That difference is what you give them when you take the cash and not the ownership. Someone is getting that money bro it doesn’t just disappear.
To be clear, equity is more powerful that the front end check and it’s more powerful than a stock market ROI. As John Henry stated, the top 90% of families in America with $10m plus liquid did it through an exit, an IPO an equity play a sale a flip, whatever you want to call it. There are no wage earners on the Forbes list. Taking the cash reduces you to a wage earner, no matter how high the wage. The unpredictability of ownership is the true power.
You have to understand that equity is powerful. A paycheck is for wimps (where is my paycheck). Equity is so powerful that VCs pay money to participate and they pay big money. Equity is so powerful that the team owners, film studios and rap label owners give you the “big check” up front knowing they are going to get the bigger check on the back end. Ownership is more important than money. Beyoncé has been in enough rooms to know this.
As I was reading the Beyoncé post and thinking about how much of a win for her that this was two ideas came to mind, 1) the rich don’t work for money and 2) the Nipsey Hussle mailbox money comment.
King Nip, RIP, said that at the highest level of business it is mailbox money. Equity. They are going to give you that check on the front end to get the check on the back end. He said we have to shift the model and start talking about what you own and what you control. What you can make move. That is the true bragging rights.
Lastly, one thing I noticed is that Beyoncé got into her investment deals with her talent not with money. She didn’t put up money to be a part of those deals, she flipped her talent, talent that costs her nothing and used it to get into a deal worth 300m. This is what I mean when I say that wealth is created and also what I mean when I say that the rich invent money. Beyoncé created 300m with her mind by shifting her resources, taking a few hours out of her day and then being smart enough to go after the equity not the few bucks on the table that have their profit built in..
Remember that any dollar someone is giving you has profit for them built in. You want to be on the profit taking side (equity side) not the dollar taking side. Be great.
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