A Tool, Not a Totem

Welcome back to The Meaning of Money. I'm excited today; I've got a really fun guest, John Coleman. John, welcome. Yeah, Stefan, thank you so much for having me on. It's a privilege to be here. John's a really fun guest today because, more so than a lot of people that I interview, he has actually spent time very intentionally thinking about the meaning of money. He has written, in the Harvard Business Review, Good Money: Six Steps to Building a Financial Life with Purpose. And also, most recently, or before that actually, the HBR Guide to Crafting Your Purpose. As if he doesn't have enough on his plate, he's also the co-CEO of Sovereign Capital. So I thought, let's go ahead and dive in. John, what started your journey in terms of thinking about money differently, and maybe a little more intentionally than the average person who's in the middle of the rat race trying to make it? Yeah, so, Stefan, when I was growing up, money challenges were different. When I was born, my dad was actually a rodeo cowboy. We lived in central Florida, in a single-wide trailer home. So money was really about getting enough so that you could make sure you were stable and that you had good education opportunities. And then, as I embarked on my career, I've spent most of it as an investor with big investment firms; Sovereign is one that I joined smaller, to help grow. And I began to be surrounded by people who weren't struggling to make ends meet; they were actually dealing with the problems that can sometimes arise by having too much. And you start to see what happens when money not only becomes your scoreboard, which it is, for an investor; I do private equity and venture capital, so I'm literally measured by how much money I can make for others every day. But you start to encounter people who have more than they ever dreamed of, and yet you notice their lives aren't always happy. When I was growing up, I thought the solution to a lot of life's problems was money. I was around a lot of people with money and realized, it certainly does solve some problems; when you don't have enough and you can't afford health care, or a house over your head, it certainly is a big problem. But at some point you get enough where your needs are met, and the challenge really becomes how to connect your financial life with what I think of as human flourishing, which is a good life comprehensively. And I just started to notice that as many people allowed their lives to go off track because of money as those whose problems money really addressed. So I started thinking deeply: what is it that can connect this topic of purpose and human flourishing, about which I've thought quite a lot, with a person's financial life? And how can a person dealing with an excess of money actually try and use that as a means to achieving the good life, rather than having it lead them further away from it?

Raising kids who have more than they need

And I bet being a dad also might have served as a catalyst for that. I know there's a parent reliving, in a different lens, things that you learn younger in your life, that sometimes can cause you to wonder, hey, how do I want to do this? Yeah, I've got four kids between five and 13, and their challenges as kids will be different than mine. Like I mentioned, we didn't have enough, that kind of topic, when I was a kid. And now I'm noticing, with their friends, their peer groups, etc., they have more than they need. And so my wife and I started thinking about how do we make sure the kids don't go off track because they have more than they need, and that we can teach them to anchor themselves in a deeper vision of human flourishing that's not connected to their financial lives, before they get older.

Keeping the flame of hustle lit

John, let's talk about that a little bit. One of the things, I also didn't grow up with a lot, and from that was born a natural sense of hustle. You want something, you go, go, go, make it happen. And I look at my own life and feel like that has been an essential ingredient to success, for the simple reason that things aren't just handed to you, at least not outside of the house, out there in the so-called real world, as we like to say to the kids. So for kids like mine, who grow up in a house where all their needs are met, what is your perspective on how we as parents still make sure the flame of hustle is lit and still there? Because outside of our homes, it's a competitive world, whether it's domestically or even internationally, you've got to hustle. Yeah, Stefan, it's a great question we grapple with all the time. Some of it is good, that they don't feel quite as much pressure as we might have growing up. We always want our kids to have a good education, good health care, to be well fed, that's good. But it's very difficult, as a parent, to stand by and not alleviate all the adversity in life. I'm a big believer that adversity, and having to overcome struggle and navigate problems yourself, is the way in which you prepare for the real world, that you do have to develop a sense of hunger to have a successful professional career. And the challenge with having too much, especially for parents, we're uniquely tempted, I think, because we know what it meant to have to struggle through stuff, so we want better for our kids. But sometimes, in trying to make it better for our kids, we handicap them long-term. I was with a family the other day, for example, that's now in the fifth generation of family wealth, and it struck me that not a single member of that generation was full-time employed, because they had just begun to live off this. And it wasn't like their lives were better as a result. People need meaningful pursuits for their time, they need a sense of purpose, they need a sense of accomplishment and of competitiveness. So we grapple with this, both financial and non-financial. One of the things my wife and I talk about is allowing the kids to navigate challenges on their own. We're not quite free-range parents in the way that my parents were, where I'd get kicked out of the house at seven, eight on a Saturday, and I'd see them that night when it got dark, like, hey, be home when the streetlights go on. That's right. We're very intentional with them. Like, we're not going to solve every interpersonal problem you have at school. We are going to let you go unsupervised sometimes and deal with your own problems, and we're not going to help through it. When you have a challenge with a teacher, we're going to ask you to try and navigate that first, unless it gets to a point where it's legitimate for us to step in. And financially, we've tried to structure their financial lives where we're setting the right principles. We term it apprenticeship for kids, because it really is not just telling kids what to do, but helping lead them through what to do. So they each have a ledger, where they keep their earnings, their savings, their investments, their giving money, and their spending. We tell them we'll provide your basic needs, but we're also not going to buy stuff for status. That's a big rule in our house; we never buy something just because someone else has it, we buy it if we need it. And so they know they're not always going to have the nicest shoes, they're not going to have the nicest clothes. And in fact, if they ask for that Yeti bottle or whatever, because somebody else has it or it's popular at school, they're definitely never getting it, because we don't want to spend money just for status competition. And so we hope they're learning the right principles, where their discretionary spending, they do have a ledger, they can spend out of it, and we try and counsel them through those purchases, but at some point that money's gone if they're not responsible with it. And we have some incentives for them to save and invest, and we make them do chores in order to earn into that, at age-appropriate levels. My five-year-old is not hustling quite as hard; he's hustling us sometimes, but he's not hustling in the world quite as much. And the 13-year-old's ready for a lot more responsibility, and a lot more independence. So we are grappling every day to find ways to empower them for independence incrementally, each year as they get older, and to actually expose them to adversity they have to overcome.

Letting kids learn to drive money

There are two additional fun things to throw into the mix there. One is: sometimes a kid will say, hey, I want to buy this, whatever that is, and it might be something that is either outside your budget, or just clearly ridiculous. And I think it's worth thinking about, as a parent, instead of saying no, you say, well, that's not in my budget, but if you want to buy it, and you want to find a way to earn it out of the right bucket, so not just liquidate your college savings on your ledger that we're helping you manage, but if you want to buy it, you can. And, well, why don't I have the money? Okay, well, you need to figure it out; let's talk about what you need to do to earn that money. And that can lead to some really great conversations. For example, if a kid asks for something truly outrageously expensive, I think that's a great opportunity to sit down and help them understand how much work it takes. And then, separately, sometimes if they come to me and say, hey, I want to do something, and it is important, just like we let our kids drive our cars and they learn on that, they've got to learn how to drive money. And the only way they're going to do that is if they're getting some, hopefully not too much starting out, but getting some, to learn how to manage. And just creating that intentional, open conversation that you're doing is awesome.

Money is a means, not an end

Certainly, back to adults for a second, and I want to touch on something you mentioned earlier about having too much. But I want to first start with the positive, which is: there are truly, unquestionably, some beautiful things that money can do, that once you have some, you're like, oh, this is great. I think that makes a great contrast for the second part of the conversation. But where do you see, can you speak to some specific examples of where you see money being spent in a beautiful way, really intentional, getting such a high ROI from a life standpoint? Talk to me about some examples you've seen where people have really done a phenomenal job at using their wealth in solving what money can solve. Yeah, absolutely. And one important thing about this book is, I am definitively not anti-money. I'm a red-meat-eating capitalist, given the profession that I'm in. But I think the important mindset to adopt is: money is a means, not an end, to human flourishing. Money is a tool, not a totem. And if you get that order wrong, if money becomes a focus and end in itself, we go astray. It's just a tool to try and create flourishing everywhere that it touches, whether that be earning, spending, giving, investing, or saving. And I walk through in the book each of those categories and how I think you can connect the use of money to true human flourishing. One example I use in the book, just to give one, is a business partner of mine named Casey, a former NFL player, who started a mortgage company that became wildly successful. And right at the beginning of building that, he had a financial advisor that he leaned into, at a firm he ultimately ended up buying, who encouraged him and his wife to do what they called setting a financial finish line, which was basically saying, this is the lifestyle that we think would be adequate for our family, and after that lifestyle and the ability to sustain it, we're not going to keep any of the money for ourselves. And so he's still going out and building businesses, but the profits of those businesses, he became so wildly successful, I think he hit his finish line in like four or five years, but instead of retiring, which is a concept I don't believe in, he kept building those businesses. But now he just uses those for the benefit of others. So his businesses are very values-oriented. He's earning with purpose, in the sense that he's trying to cultivate cultures within those businesses, that now have five or 6,000 employees in them, that help those employees flourish, that help clients flourish. And then the profits of those businesses he actually directly contributes into a foundation; ultimately the companies will be owned by that. And so he has a foundation that builds schools in the United States, charter schools, public charter schools, as well as churches, and help centers in Latin America and other parts of the world. And so he sees the benefit of this business growing all the time. And he lives a good life, his family lives a good life, they're not paupers by any stretch of the imagination, but now he's even more motivated to build these flourishing cultures. Every time they're profitable, he gets to stand up a new charter school for 500 kids and see those lives change. He gets to install a help center in Guatemala somewhere, where you can see people get medical care. And so he's actually more oriented toward achieving business success now, because it's about more than him. It's about more than money, a total on a spreadsheet somewhere. It's really about changing the lives of an increasing number of people, whether those be employees, clients, or those that he supports through the foundation. And that's kind of a cool orientation, where he's a capitalist, he's grown a business, he's a very good businessperson, but the purposes of that business have gone beyond his own personal enrichment, if that makes sense.

Being on mission in spending, business, and investing

That's amazing. And what's really fun about that, it's one of the few examples I think I've ever heard where there's the oft-quoted, what's your “f-you” number, and it's almost the inverse of that, where it's like, hey, I know my number, but that's when I get to start being 100% invested in my mission. And that's amazing. It's interesting, you can talk to clients and to people about the impact of mission and charity and philanthropy, and I think you get a lot of people that intuitively nod their head and go, yeah, that's good. But I think it's only once people actually make a difference, and see the impact of what they're doing, that they get a taste for how good it feels to help other people. And I don't know that there are many business owners out there who have ever, in their life, if you took all the most successful CEOs, business owners, founders out there, the top 100, and said, how many of those have ever, once in their career, spent a year maximizing their business superpowers for the benefit of somebody else, other than their own P&L, I dare say it's close to zero. Well, and what's liberating about that is it's not just generosity. I think philanthropy plays a huge role, and I think everyone should have habits of generosity, which we can talk about. But you can use that capital to be on mission in your spending, in the way in which you craft your companies or your work, in your investment portfolio. In your spending, we talk a lot about experiences, not stuff, how do you create meaningful experiences that help other people grow, including your own family, rather than just spending on stuff that's going to fade away? In your business, like I said, you can build companies that have great cultures that change people's lives every bit as much, if not more, than philanthropy, whether those are the people you serve or the people within the company. And the stories that come out of those. We own a bunch of companies through private equity, and we get stories all the time of how the company helped someone navigate a medical crisis. We even had an employee of one of our companies lose a young child recently, tragically, and the people within that company rallied around them; the company helped to pay for funeral expenses and walked through it with them. And it was life-changing for them. And then, of course, philanthropy, and even investing, can be a part of that. We've got a small media portfolio with a lot of investors who are just interested in the impact of positive representations in media, and they know it's a bit riskier and more financially tenuous than what they're doing, but they're using investment dollars to grow something culturally impactful. So I would remind people, generosity is essential, I think, to financial flourishing, but you can actually use your capital for good in all of those different areas. And a businessperson should feel liberated by that, because it lets them be on mission at work, in their investment portfolio, in their generosity, everywhere.

Capitalism you don't have to apologize for

Well, it lets you embrace capitalism in its best form. I think there's almost a pressure to apologize, sometimes, for wanting to be successful in business. What I'm hearing you say is, if you align your mission, then they can both coexist in harmony, and I 100% subscribe to that. Businesses exist because they meet a need. There are very few businesses that aren't doing, being a drug dealer is probably pretty tenuous, but just about every other business in the world meets a need for someone, whether you're running a grocery store, a gas station, or you have a mortgage company. You're doing something positive, and people need to reframe the way they think about that. The only difference is regulation, but they're both sort of anxiety, whether your headquarters are in downtown LA or Switzerland.

The problem of having too much

Switching gears. So there is a thing called having too much. And the funny thing is that a lot of people who are sprinting toward that exit, the first-time CEO, owner, they get a big payout, they sell their business, so they've got a bunch of money in the bank, and there was part of them that probably thought that's going to solve all their problems. They wake up a year after the acquisition, they've got a bunch of money in the bank, what's not perfect? What do you see out there that happens that causes people to go, wow, I never expected this? Yeah. There are tons of cautionary tales out there, partially because human desire is insatiable. And so, even though we think the money will solve our problem, it's never enough if we're focused on money. There are great surveys that show, if you make $35,000 a year, you think 50 is enough; if you make 250, you think 350 is enough. And I can tell you, I've met billionaires who thought a billion was enough, and then they got there and they thought, oh, maybe two or three billion would be enough. It's insatiable human desire. And there are a ton of cautionary statistics out there. You look at lottery winners, for example, who have this flood of wealth coming in, as you're describing; they have suicide rates at multiples of the general population, they go bankrupt at multiples of the general population, they have divorce rates at multiples of the general population. The same with professional athletes; I think the average development player goes bankrupt at 14 times the rate of the average other person. And so this flood of money, without the right habits, mindsets, and values to direct its use, can actually be incredibly destructive. And as I mentioned, I work with a lot of wealthy families, and you particularly see this in first-generation wealth, where it hurts marriages, it gets people obsessed with status, they get obsessed with claiming more and more money because they never feel full. And then, with their kids and their families, you see it probably amplified, where, as we talked about earlier, you see kids who never develop a mission in life, they never develop a sense of purpose, which is so essential to human flourishing, they never develop character, because they haven't had to fight through adversity. So they become unbounded, or amoral, and they don't really know how to direct their lives in a positive way. And you see, even right now, what's interesting is, incidences of drug addiction are basically as high amongst ultra-high-net-worth people, their kids, as they are amongst the poorest people. This excess of money can actually lead you down dangerous paths. And so I think, when you think of money as the solution, what you really need to think is: money is good at alleviating pain, it's not good at achieving flourishing. And so, unless you have a conception of the good life to anchor it, you're not going to use that money in the right ways to anchor purpose.

Money solves external pain, not internal

I might also add, it's good at solving external pain, it's not really good at solving internal pain. And if somebody's being honest with you, most people will tell you they've got some kind of baggage, some kind of hurt, some kind of worries or fears or anxiety, today more than ever. And that's the piece that money can't buy. And ironically, I see, you probably see the same, people that have a lot of money now have a new problem, and that new problem is: don't lose it, don't screw it up. Before, you're trying to get it, it's like, how do you lose, I have to make this work. But then, what's the lifestyle creep? They never feel like they're more than a little bit away. You suddenly get more money than you thought, then you start spending more, and so you're on the same financial treadmill you were before, if you don't cap your lifestyle and be thoughtful about it. Yeah. And you're sitting on 50 million, 100 million, and all of a sudden you read the headlines differently. You're like, man, I don't want to lose this. What happens if this, what happens if that? And then, of course, what happens is everybody's knocking on your door going, hey, invest in my new startup, invest in this. And at first it's exciting, put a little here, put a little there. Next thing you know, you've got 30 different private-equity investments. And statistically, we know that a good chunk of them aren't going to work out. And then all those people, ironically, sometimes under a fiduciary obligation, are required to update you and share with you all these sad stories about how it's not working, and it's somebody else's fault, and yada, yada, yada. It's like a full-time job, and it's not fun. And I think it's a lack of intention, or even sometimes chasing higher returns, but why? You don't need to. Why are you doing that? And on pressure, I had a friend who sold his company about a year and a half ago for about $100 million. He had worked his whole life to do this. He's a wonderful guy. And suddenly the number showed up in the bank account, and he kind of panicked a little bit and was like, what do I do with this? I worked my whole life for this. I don't know where to deploy it, or how to deploy it, because I don't want to waste it. And so, talk to the average person about that, and that's certainly a champagne problem, but it is easy to underestimate the anxiety that will hit once you've achieved that goal and you move into defense mode, and are certain to think about protecting it.

Anchoring in the permanent things

You know, I've long said that true wealth lives at the intersection of health, wealth, and purpose. And John, you've got some really great stories that you've shared, and I'm eager to go out and get your book and read a bunch more, and stay in touch. I really appreciate all the work that you're doing out there. One of the things I most appreciate about what you're doing is helping people become proud of capitalism done right. It's not perfect, it depends on execution and implementation, and we're all human, so of course we're going to screw it up sometimes. But there aren't enough people out there talking, modeling, and explaining how we can embrace the best of who we are in America in the context of capitalism, and hold our head high and feel proud about it, not just when connecting with each other here internally, but frankly even when we're traveling around the world meeting with other countries and leaders in different parts of the globe, and feel good about who we are. So I appreciate the roadmap that you're helping lay out for people and the conversations that you're seeding. I think these are the kind of conversations that people need to have, and they need to have them before they exit, because at a personal level, it helps you to better define your own moral compass, your own money compass. But I think, when reading your book, people understand the impact you have on others is so big, even bigger than you might think, that as an owner or a steward of a significant amount of money today, you really have to figure out your purpose and what you stand for. Any closing thoughts, John? Yeah, I think you hit the nail on the head, Stefan. As I mentioned, I'm just a kid from a trailer park who did a lot better than he thought he would do. And that experience led me to write this book, as much for myself as for others: how do we anchor ourselves in the permanent, important things in life? You mentioned them, spiritual, mental, and physical health, meaning and purpose, character and virtue, deep and positive relationships, because those are the things that create a good life. And how do we make sure that the money we've accumulated, and what we're building, enables that in our lives and the lives of others, rather than makes it more difficult to accomplish? And it's so encouraging to me that you, and the audience you're with, are grappling with that, because I think the talents of you and people like you are enormously positive for the world, and we're all working to just figure out how to use that well, and to make our lives and other people's lives better. So thank you for the opportunity to speak into it. You bet. And just a reminder, everybody, if you want to get the book, it's called Good Money: Six Steps to Building a Financial Life with Purpose, published by a little, relatively unknown university in Boston, Harvard Business Review. Check it out. John, great having you on. Look forward to staying in touch. Thanks so much. All right.