How To Turn $100K into $4,000,000 with Distressed Investing

Shaan Puri

So after Scott came on the pod and was like, "I have my distressed guy in Europe," I'm like, "Ben, find me the distressed guy in Europe." Scott Galloway is on our podcast, and we asked him about the story that he was buying distressed FTX claims after FTX went bankrupt. Everybody hated it — it was seen as a disgrace, the symbol of a bad business, a bad investment. I heard that he was buying up claims on the cheap and that those claims are now being paid out — in full or even more than full — because Sam Bankman‑Fried, whatever he was doing, had owned enough assets to make all the creditors whole. He tells a story about how he's got this guy who brought him into a couple deals, and he was talking about *distressed investing*.

Sam Parr

And when he told the story, he kind of dismissed it. He said, "I bought $10,000,000 of FTX shares or something like that."

Shaan Puri

Or two million, two million. I think it was something like...

Sam Parr

Whatever it was, it was like a **seven-figure bet**. He sort of just said, "Yeah, I just did this one thing." Sean and I were like, "Rewind—what?" That's when he told the story. </FormattedResponse>

Shaan Puri

Also, there was a moment where it's like, "Hold up—put some respect on the podcaster's name." But I mean, I think a lot of people make fun of Scott. There's like the inverse *Scott Galloway index* and stuff about his bad calls he's made in his life. I think in general people don't really realize that—Sam, you do a good job of this—you were actually an entrepreneur who sold a company for $100 million. He never really talks about it that much. He's done some interesting investing stuff, and I just feel like because he's so good at the *gift of gab*, people sort of bucket him as all talk and no walk. So it was interesting to hear one of his interesting walk stories. So then I got in touch with Tommy and I said, "Tell me about this. I'm interested—what are you doing? What's going on?" He had some interesting stories, so I wanted to invite him on the podcast to do two things. First, teach us about this category of distress. Both Sam and I are pretty much novices in this. We are missionary guys—we like vanilla. We do very basic stuff when it comes to business and investing. This is more exotic and it's got me interested. I want you to start with a little crisp description of the big idea with distressed investing. What are you trying to do? How do we wrap our minds around this? Second, I want to play a game called **"First, Best, Worst, Weirdest,"** where we go through maybe the first play you did, the best play that ever worked out for you, the worst deal that went sideways, and then something where shit got weird while you were doing it. But first, can you just make us a little smarter—teach us *distressed investing one on one*? What are...

Thomas Braziel

Okay, so we're talking about distressed investing. I am at the bottom of the food chain in distressed investing. There is a whole industrial complex of large distressed-investing firms out there: you have **Oaktree**, **Silverpoint**, **Fairlawn**, and—you've all heard of **Apollo**, right? Maybe if you're all into business and investing, I guess. For my part, I came up a different way: my parents were bankruptcy lawyers, so I learned a lot about bankruptcy. Generally, what you're trying to do is almost like value investing—the toolkit is knowing the legal process. The trick I've learned from studying a lot of distressed investing is captured by a famous Michael Price saying, which you guys have probably heard. If you haven't, it goes: "When you're investing, you always want the stake in the sizzle." I think what the okay investors in distress do right is they find the stake—you find something and maybe it's a double. But the guys that really knock the cover off the ball and have outstanding returns are generally looking for that sizzle as well. </FormattedResponse>

Shaan Puri

The **"stake"** is the known value — the substance. It's the thing that gives you a margin of safety when you buy. The **"sizzle"** is the upside: how good this could be if things go right. But you still have the stake even if things don't go great.

Thomas Braziel

Exactly. And that's even what the whole pitch on **FTX** with Scott was: you're buying a stake — you're buying **20¢**, you know you're going to get **30¢** in cash back, plus you have all this crypto sizzle. Unless you're — I don't want to say "a Luddite" — but unless you're just really, really aggressively against crypto, there was a lot of **optionality** built into that. If you look at the history of distressed [investments], some of the best ones have been financial-services bankruptcies, Ponzi-scheme cases, as well as the dot-com cases. You think of things like **Comdisco**, which was a famous large bankruptcy. A lot of those actually kind of petered out because there wasn't as much debt — it was just equity values going to zero. So, if you look at the history, they can be pretty good. That was kind of the playbook. As my friend, who's a pretty smart investor, would say: "you avail yourself to the optionality." Because you set yourself up to either buy that for free, get it for free, or buy it extremely cheaply. That's what we're doing in FTX, and that's what we really try to replicate in almost everything we do, whether it's crypto or just general distressed situations.

Sam Parr

Is your company just you? Are you *just a guy*, or do you have a team?

Thomas Braziel

I'm just a guy. I mean, I have a small team. I think Scott calls me a "lifestyle business guy," but I would describe it differently. What's nice about what I do is I get to choose when I work and how hard I'm working. If there are no deals, I don't have to work on stuff. Also, because I'm in a low-cost jurisdiction, that passes through to my clients. So is Scott paying the usual fees that you would pay if you went to a big distress firm? Probably not. I mean, maybe because they want Scott as a client, but for the most part the fee structure would have to be higher — your cost structure's higher.

Sam Parr

"So, can I dumb this down? In a way, I'm kind of a caveman—tell me if I'm right. Basically, you find **distressed deals**, you convince wealthy people to buy them, and you take a **small cut**. Is that right?"

Thomas Braziel

Yes, or I invest my own capital, but yes.

Sam Parr

Or you *invest your own money*, and you're so good that people come back over and over again.

Thomas Braziel

Well, if you lose money for people, they generally **don't return your phone calls**. Yeah... they might call you, but **they don't pick up when you call**.

Shaan Puri

So let's walk through an example together. I think we should use **FTX** because it's a pretty well-known company and it's kind of what we were already talking about. Walk me through the origin story of the FTX deals so that we can kind of see — we can get a blueprint of the type of thing that you're going to try to do. What is the type of thing that you do? Where does the story start with your FTX interest?

Thomas Braziel

Yeah. So, I had already been involved in a number of crypto-distressed situations. I should back up and say, as a backdrop, having studied so many different investors throughout my life, that's what I was really always interested in: principally, just being an investor. One of the things you'll realize is the guys with really good returns also *invented a category*. I was very interested in **crypto distress** as a category, and I thought, "Hey, crypto's the future—no one's willing to touch crypto." So back in [2014–2015], I was already looking at Mt. Gox. Myself and, at the time, my partner—we were the largest buyer of claims in Mt. Gox.

Shaan Puri

"But before you tell the Mt. Gox story, I just want to double‑click on what you said. Some of the best investors, when you look back, actually **kind of invented a category**. Can you give a couple of examples of people—or guys—who did that?"

Thomas Braziel

So, **Howard Marks** is the prototypical example. He kind of invented the whole idea of an **institutional asset class**—not just him; there were other people, of course—but he was, you know, very early. Basically, he and a group of people invented the idea of an institutional asset class for *distressed investing*. What that does is compress and lower the cost of capital, and it really brings a whole pool of capital that had never invested in this before. Long-term returns might go down, but that's because the actual cost of capital is coming down, so your tailwind returns are just enormous. </FormattedResponse>

Sam Parr

And what does that mean? Does that mean that institutional investors—were they normally afraid of this, and Howard was like, "No, this actually makes a ton of sense and it's actually kind of safe, and here's why," and so he convinced large institutions to buy into that? Yeah, is that what you're saying? </FormattedResponse>

Thomas Braziel

To allocate, and the same thing with early venture guys — I mean, going back to the seventies and eighties: Alan Patricof and people like that. These were guys that really invented the category. And of course they have huge firms now and, you know, the valuations for startups... but it's like this wall of liquidity that creates these kind of *tailwind returns*, which are fantastic. You want it. I mean, you kinda — that's the most amazing thing: catching more of those waves.

Shaan Puri

Like **YC** is a good example of this. **YC** basically created the category of the— you know —the accelerator. It created the category of pre-seed, pre-everything: pre-product, pre-revenue, pre-traction investing. That really wasn't a popular category. Now it's a whole industry: there are angels and super-angels, seed funds and pre-seed funds. There's a whole industry now that specializes in that category. But it really started, even Paul has said this, as an experiment. He was curious: "How early on could you fund somebody? Could you fund a student? Could you fund a grad student?" He sort of thought it might be too early, but he wanted to see what happens when you do that.

Thomas Braziel

Yeah. And even, you know, for me—when I was starting my hedge fund, my very first, when I was really a kid—some of my early investors were Goldman partners. They were partners when I went public, and they were all sort of early LBO guys, like leveraged buyout guys, before private equity became a real institutional asset class. The returns were just *insane*—*insane returns*.

Shaan Puri

Hey — real quick: our sponsor for today, **HubSpot**, actually did something pretty cool. If you like money stuff or investing wisdom — like **Warren Buffett** or **Mohnish Pabrai** — they put together a **nine investment principles** document. It's a free document of frameworks they shared when they came on the podcast. You can get it right now. It's actually just a mental model that separates, I guess, the elite investors from the average investors. To get it, scan the QR code.

Thomas Braziel

Or click the link in...

Shaan Puri

The description. Alright, let me get back to the episode. Okay, so let's go back to your story. You're saying you got excited about potentially being the first in a category of crypto [distressed assets]. Distressed was already a thing, but most people were afraid of crypto in general—especially the institutional guys, who weren't going to go in there. So you're like, "Okay, maybe I can carve out a niche of distressed crypto. We're all looking for a thing; this could be my thing." And you're saying that the **FTX** story actually started before that. Before **FTX**, it was **Mt. Gox**, Sam. Are you familiar with **Mt. Gox**? Do you know the rough story here?

Sam Parr

Yeah, it was sort of Coinbase before Coinbase, but it had some nefarious characters involved. </FormattedResponse>

Shaan Puri

Yeah. So there was a huge, kinda... sort of hack problem with **Mt. Gox**. So, **Tom**, what happened with Mt. Gox? What did you actually do there?

Thomas Braziel

**Let's start back.** Yes. So, *Mt. Gox* was really the main exchange — it was almost 80% of the volume at the time in 2014 when it went under, and it was the largest exchange. I mean, then going peer-to-peer — you know, going to a Starbucks and buying Bitcoin — that was where you traded Bitcoin. They suffered a pretty aggressive hack. They tried to cover up the hack, which was the real crime: the cover-up. Eventually they filed for insolvency in Japan and what's called a **Chapter 15** in the U.S. That's kind of irrelevant; it just recognizes the foreign proceeding as the main proceeding. You could buy claims for a while. You could buy them for about a fifth of the market price of Bitcoin — this was when Bitcoin was about $300. Then, in 2018, the estate actually sold some Bitcoin to have enough to pay people the cash value of their claim at the petition date. When I say "cash" I mean *fiat* — I'll try to use "fiat" — so you could buy [claims] below the cash value and get the Bitcoin for free. </FormattedResponse>

Shaan Puri

Sorry — just to slow this down for a second. When you say **"buy the claims,"** what you're saying is: I was a customer, let's say, of Mt. Gox, and boom—I lost my money. It's insolvent. I don't know what's going to happen with this. It's going to go through a bankruptcy process. I'm hoping maybe in a few years I'll be able to get something out of this. Then guys like you knock on the door and say: > "I'm so sorry for your loss. You know what? I'll offer you something today for the rights to that claim you have as a customer, as a creditor in this bankruptcy thing. It's going to take a long time; it's a little uncertain, you know, so I'll give you..." In that case, for every dollar's worth of claim, what were you buying the claims for at Mt. Gox?

Thomas Braziel

Yeah, so the *original trade*: **Bitcoin** was at about $300, and we were buying the claims for about $80 per Bitcoin.

Sam Parr

"Are you a *Bitcoin* person, or were you just a distress person?" </FormattedResponse>

Thomas Braziel

I would say, yeah — I studied economics. I remember reading about **Bitcoin** when it was like $10, and I was like, "Wow, that's cool if it works." But other than that, I had no... I was like, this is pretty crazy.

Shaan Puri

Alright, so dumb question: they get hacked—yeah, so they don't have the Bitcoin. So what is underneath? I get that in the FTX case he’d invested in all these underlying companies and they still had some assets. What did Mt. Gox have that made you think that the claims would be worth anything?

Thomas Braziel

So, if you want to look at it in Bitcoin terms, there's about **800,000 Bitcoin** that was supposed to be there. But within the first month or two, they basically found **200 Bitcoin**.

Shaan Puri

Found 200 or 200,200.</FormattedResponse>

Thomas Braziel

"Thousand."

Shaan Puri

Okay, so they found **200,000** of the **800** that's supposed to be there.

Thomas Braziel

Yeah, right. So now... this is—this is, you know, distress. Actually, the math, even though I studied math, in distress it's always super simple. Like 200 over 800 — okay, you got 25¢. So guys are gonna get back 25¢. We're basically offering them 5¢. This is on the Bitcoin dollar.

Sam Parr

You bought the assets after you learned that he magically discovered—*yeah, of course*. So you're like, "**minimal downside, potentially high upside.**"

Shaan Puri

That was—so the stake there was: they got **200,000 bitcoin** sitting there. Today it's **$300 per bitcoin**. I can buy it at 25, you know, for **25% of that value**. So that's your **stake**, and your **sizzle** was maybe "they'll find more" or "maybe bitcoin price will go up." Is that right? Is that the right way to think about that?

Thomas Braziel

Basically, yep. Maybe they'll find more, and you get a 5x return on Bitcoin — that was the original pitch. I remember the first hedge fund I pitched it to. The guy literally laughed me out of his conference room. Whenever I saw him around town, he would just be like, "Bitcoin?" I mean, it was like 2015, to be fair, but... hey.

Shaan Puri

Look, it's the Bitcoin loser. I'm imagining, like, *The Big Short* here because I don't know anything about this world, so my only reference is movies. So I'm imagining you're **Michael Burry**: you're sitting in your room by yourself, pouring through the papers with a pen and doing the math. You're like, "2,000 or 8,000? 25¢... we get 5¢" — the equations are popping out of your head. Then you go to the hedge fund and they sort of laugh you out of the room. They're like, "Listen, do you want to just get lunch because we're not doing this? Do you want to make something out of this hour?" Were you just getting laughed out of the room in that way?

Thomas Braziel

Well, I remember the name of the fund. **I won't mention them**—they're out of business now. If that's any... [unclear]. I won't name names; it was a big firm.

Sam Parr

"Name names."

Shaan Puri

Yeah, they're dancing on the graves.

Thomas Braziel

I—the guy won't remember, but the firm was *Southpaw*. I don't know what happened to the guys at Southpaw; it was like a $2 billion hedge fund. Anyway, it doesn't really matter — it was forever ago. And to be fair to the guy, like I said, I told him, "Oh, this crypto exchange might claim a fifth of the market value." He said, "Crypto? You mean like Bitcoin?" I said, "Yeah — yeah, Bitcoin." He asked, "You want me to buy Bitcoin?" I replied, "Well, you know, the claims get five times your money." He started slapping his knee and said, "Tom, that is the funniest shit I've heard all week." He was like, "What else are you working on?" And I was like...

Shaan Puri

Wait—the real idea?

Sam Parr

"Were you an employee somewhere?" "No. We're on our own." </FormattedResponse>

Thomas Braziel

So I had a small hedge fund, and I bought about $200,000 worth—literally nothing. But for my small hedge fund that was like 10% of my money. It was really small, and I thought, I can't make this too big; I could get in trouble. So I'd call some guys I know. When you have a small hedge fund, the nice thing is you can form **symbiotic relationships**. If there's a $10 million deal, you can say to a bigger firm—I'm just making up a name—**Oak Tree** [example firm], "Hey, you want nine of this, I want $1,000,000 of it." You don't even have to pay me anything; I just need the capital. So you make friends and figure out ways to get allocations with some of these cats. It's similar to what people call **"coopetition"**—cooperation and competition. That's basically how I spent my whole career: coopetition with the big distressed firms. They call me with tiny stuff they can't do, and I call them with big stuff I can't do. I ask for either an allocation or a fee, but generally I ask for **allocation** because I'm not a registered broker-dealer.

Shaan Puri

"What did you end up making on the Mt. Gox trade? How much did you end up getting in, and what was the 'in' and what was the 'out'?"

Thomas Braziel

Yeah, they were across a number of different SPVs. We had a later hedge fund—I'm... I'm gonna get to the answer—we had a later hedge fund that was buying all the way up, so they probably made *two to three times* their money because they were literally buying all the way up through the distribution. They still buy claims to this day, but our original investor made about *38 times* their money—actually, it's more than that; it's over *40 times* their money.

Sam Parr

"Over what? Of time?"

Thomas Braziel

Oh yeah... seven years.

Shaan Puri

Wow. Is that because Bitcoin's price appreciated, *basically*?

Thomas Braziel

Yeah. So some of it is about five times—part of that is the discount, and the rest is their appreciation.

Shaan Puri

Right.

Thomas Braziel

But he put it on in 2000. The guy I'm describing was our real first outside LP—outside of the fund, which liquidated, and we sold the claim. I think that claim we bought—the original claim we bought from a Googler—was pretty funny. I always joke: I was a kid and I had my standard documents, but I didn't have documents for, like, a Japanese court. He was like, "So how do we do this, Tom?" I was like, "You know, I don't know." He said, "Why don't I ask?" So I always joke that Google wrote my original purchase documents for the purchase of, you know, like... I don't know the name of the firm—*Step Shoe* and something—or some firm that worked for Google, because this guy was a big up at Google. But yeah, about forty, forty-plus times—much of it is appreciation. The really interesting thing about that guy who originally did the deal with us, the family-office guy, is we were buying the bitcoin for free because he... we put—he put—that trade on in 2018. That was the *big short* moment, because you were getting it for free.

Shaan Puri

"Explain that. Why did you get it for free?"

Thomas Braziel

Okay — because the rough math at the time (in 2018), Bitcoin was like **$10–$12-ish**, and the trustee sold a fifth of the Bitcoin. So that's about **40,000 Bitcoin**, which brought in roughly **$600,000,000** of cash. There was **$600,000,000** of cash and about **$3,000,000,000** of crypto—or *$2.5 billion* of crypto [speaker alternates between these figures]. We were buying the claims for below the cash look-through value on the claims, so we were buying at about a **$400,000,000** valuation. At that point there was **$600,000,000** of cash and about **$2,000,000,000** of crypto. That was the time when I was really "banging the table," because before that it was all Bitcoin: it was cheap but quite directional.

Shaan Puri

"Why do they sell it for *below the cash value* at that? Is it because there's still a *time delay*? Is there an *uncertainty*, like what?"

Thomas Braziel

Yes, and there was uncertainty around who got the uplift in value. So, in 2018 there was this big argument: who gets the uplift in value? Does it go back to Mark Capellas—like the guy that kind of didn't do us right—or does the uplift in value go to the customer account claim? It's the same thing that happened in FTX. The same issue occurs in all the crypto bankruptcies: who gets appreciation and value **post-petition**? [Petition meaning the date the company files for insolvency.]

Sam Parr

As you know, I'm an *absolute outsider* — I'm learning about all of this right now. But **Mt. Gox** and, particularly, **FTX**, were pretty big news headlines. As an outsider, when I see this I just think, "Oh, I'm sure... there's no opportunity, because everything is being taken care of. They're going to catch the bad guy, and all the big dogs are already after this. There's no way to make money; there's no opportunity — not me. Someone else is probably on top of this." But the way you're describing yourself, maybe you're underselling yourself. You're kind of describing yourself as just a smart guy who gets in the mix and figures it out.

Thomas Braziel

"Take out the smart part."

Sam Parr

Well, you're doing it again—you just did it again. But, like, *literally*, how many human beings? How many human beings are actually getting after this? Like, for Mt. Gox, who do you—who do you phone?

Thomas Braziel

Yeah — a lot of questions in there. Okay, so you're right in some sense: all the big firms have a corner on the bond market. If you want to try to play the bonds and stuff like that, you can't just open a **Fidelity** account and trade distressed bonds. You call them and you say, "Can I get a quote on this bond?" and they're like, "Well, that's in default." You're like, "I know it's in default — I'm asking what the quote is." And they're like, "Oh, don't trade in **defaulted bonds**; they're way too risky for you to be looking at." So there you'd have to have real prime brokers, and you have to have serious money to play that game. Also, you have to worry about getting run over by big distressed firms.

Sam Parr

Sort of, actually—just like in *The Big Short*, where the two guys who had the *garage* hedge fund, which was big—I mean big for a regular guy. It was $20 million of their own money they were playing with. They were laughed out of Chase or something like that.

Thomas Braziel

Yeah, yeah. The same thing with derivatives markets. I mean, you have to have serious setups and serious lines. You have to have lines with your PBs to be able to do this stuff. And so I knew the other side of the market are kind of the — that's why I said it's the lowest rung of the totem pole, which is the *claims market*. There are probably like ten firms out there that really do trade claims. And, you know, I say this lovingly because I'm one: most people in that space are not super smart. It's kinda like the... I don't know, in IT maybe it's like the — oh gosh, I'm gonna offend somebody — the network administrator. I don't know, like the lowest level of IT person. This is like the lowest level of distressed person.

Sam Parr

Yeah, I like the rejects a little bit.

Thomas Braziel

Yeah. And so—I kinda like hanging out with the rejects. What can I say, right? Anyway... So you're kinda like—what's that? You know, they're sort of a shark, and they have the thing that lives on the shark—the remora, the fish that eats the food that falls off the shark. You're like that little thing that eats the stuff that falls off the shark, and the shark kinda likes you because you keep the barnacles off it or something. That's you as a **trade-claim buyer**. If you befriend some of these larger trust firms, the cases we're largely talking about are when cryptocurrency exchanges go under. You're talking about **customer account claims**. What's nice about that—like both in FTX, and if you go back to Mt. Gox—the docket was largely customer account claims. So it's all trade claims; there's not a lot of structured debt. Certain setups are just not appropriate for a small person or a home gamer to be trying. But you can literally buy claims—there's nothing that stops you.

Sam Parr

But do you go—do you put out a press release and say, "Hey, all 100,000 FTX or Mt. Gox claim holders: please email me and let's talk," right?

Shaan Puri

"Yeah, if you've been wronged by this *curly‑haired man*, call me—I'm here."

Thomas Braziel

For you. Yeah. So, in—okay, **Mt. Gox** is a good example. **Fortress** was my competitor on that docket, and they were buying up claims too. **Pete Briger** is a big bitcoiner and he's one of the founders of Fortress. They were buying up claims and were my competitor on that case. They were the only two people really buying claims. We almost worked together, but we're still friends and everything. Yeah, we're still friends, and they actually did press releases and tried to get people that way. For myself, this is going to sound ridiculous, but the entire 14,000 known creditors or customers were on a leaked list.

Sam Parr

Oh man.

Thomas Braziel

One of the things about distress... yeah, so you were able to use the leaked list to actually find people. *My favorite* is when you find somebody and his name's some random name, like Erickson — I don't know, make one up — and he's in tech. On LinkedIn he's, you know, part of the Bitcoin group. Then you ping him and say, "Hey, do you have a Mt. Gox claim? If you do, we could buy it from you." He's like, "How did you find me?" You're like, "Well, let me see — you're under 35, you're into tech, and you're part of the Bitcoin group. There are only three people with the same name."

Sam Parr

Man, so you're **hustling**. This is work.

Thomas Braziel

Yeah, yeah. *You're hustling*—there's a lot of work.

Shaan Puri

The work here is: you find the person, you contact them, you get them interested, and you **verify their ownership** — and that they haven't already sold the claim to somebody else. There's a whole bunch of work that you do so that guys like me can just invest in, buy — just buy the claim, and we feel like, "Alright, you've done the diligence on this, you've done the cleanup work on this." That's what we would have to trust you for, and that's why you get paid *a carry or a fee*.

Thomas Braziel

That's why people.

Shaan Puri

From investors.

Thomas Braziel

Yeah, what's interesting is that it is a lot of grunt work. That's why I think sometimes it gets, like, the more—guys holding footballs who played hockey or something in college. It's not the brainiest side of this, but actually there's a lot of intricate—I'll call them corner cases—like claim corner cases, where you really do need to know a lot about the legal side. I mean, with **ChatGPT** it helps a lot, but still it helps to have a bunch of experience. Prompting chat is just as important as anything. So the more you know, the more powerful it is.

Sam Parr

"Doesn't it seem like a good life for you? You're hanging out in Italy. It seems like you work project to project. What's the upside here for you? Like, can you make **tens of millions of dollars** in one year?"

Thomas Braziel

Yes. I mean, I don't know — **seven figures**, definitely. **Eight figures** is pretty hard. What happens is you get people pushing back on your fees. They say things like, "Oh, you're not in New York. You're not a real firm. It's just a few guys. You're just a broker." But you build a reputation over time, and then people will pay you more and more. You can definitely make seven-figures, especially in a good year — especially if you have something work out and you have a promote on it.

Shaan Puri

So, let's walk through that game I talked about — *"first, last, best, worst, weirdest"*, whatever. What was the first [one]? Maybe you were a kid, maybe you were in middle school or something. Like, Sally didn't want her bike anymore and you were like, "Your trash is my treasure." So, what was your first foray into buying distressed assets?

Thomas Braziel

Okay, so my parents really were bankruptcy lawyers—or lawyers. My mom, specifically, was a *consumer bankruptcy lawyer*. I used to hang out at the courthouse as a kid, spending time with the clerk's office and with U.S. trustees and stuff. So I kinda grew up... really.

Shaan Puri

"Did you like it? Or did she just not have daycare and you had to go?"

Thomas Braziel

Yeah, basically... maybe she didn't have daycare. A single mom — basically, no daycare. Tom's got the clip-on tie, and he's in court with me a lot. "Ties?" Yeah — this is my associate. This is like paper files everywhere. I grew up kind of hanging around it; we'd always hear about stuff. I remember when I was a kid first hearing about **HUD houses**. I was like, "What's a HUD house? What's that?" Oh, you can buy these houses — they're really beaten up, but you can get really good deals. I remember my brother and I flipped a **HUD house**. My mom put up the capital. I have no idea what the numbers were. We probably bought it for $20 or $30 — that my mom put up — and we probably sold it for $60. We did the demo/demolition ourselves, which is... I have to say, God love my parents: I'm glad I wasn't injured severely. Doing demolition when you're 14 is probably a bad idea.

Shaan Puri

What was the story of the *baseball card shop* Ben told me? There was a—oh, a card shop story.</FormattedResponse>

Thomas Braziel

So these are the kind of things I was talking about when I was a kid. These deals would come up. There was a whole thing where the baseball-card industry went through this — they were printing cards and then said they weren't printing. I don't know if you remember this, Sean, but there was a bit of fallout in the collectibles market for baseball cards, and I'm sure a few of the companies went under. It's probably like the microbrewery thing, where people overbuilt microbreweries and then I saw a bunch of microbrewery bankruptcies. I remember seeing an entire shop was $3,000, which is a lot of money when I was a kid. My mom was like, "You want me to put up the money and you'd buy the whole thing?" I was like, "We can do that." I would hear about these things as a kid, and I guess it colored my imagination for what was possible. Between that and being really obsessed, I started — I bought my first stock when I was 11 or 12; I can't remember exactly — but I was sort of obsessed with **Warren Buffett** as a kid. Over time I kind of melded the two things together: what would Buffett do if he had the *specific knowledge* [a Naval term, likely referring to Naval Ravikant] of bankruptcy, plus what he knows well, which is valuation and deep-value or value investing. So I kind of melded those two things together.

Shaan Puri

Yeah. It's almost— I actually think there are *three*. **1. Knowledge of the law.** Not being fearful—*I speak the native tongue of bankruptcy court.* So I feel I can get more certainty than the people who hold the claims. I have a better idea of how this will play out, how long it will take, and where the puck will land. **2. Deep knowledge and interest in deep-value investing.** Admiring Buffett, Howard Marks, and a bunch of these guys, and really learning from their playbook. **3. The entrepreneurial hustle.** Going to cold-call, knock on doors, raise the capital, get the claims, do the verifications, travel to wherever, and make it happen. So you kind of needed that Venn diagram to be able to do what you do. That's what I'm hearing.

Thomas Braziel

And I think, for me, I got kind of obsessed with the *adventure of investing*. My very first real distressed investment was this thing called *Ethnx Energy*, where people had all these restricted physical shares. I literally drove around the Northeast and bought shares off people. We'd go into the local bank and get a medallion signature guarantee. I was like, "Oh, I'm just like Buffett and Snowball, where he's going around and buying shares of the hunting lodge."

Sam Parr

He's knocking on the door of **Geico**, like, "Can you give me a tour of the office?" and trying to figure it out. Yeah... if somebody hasn't...

Shaan Puri

"Read *Snowball*. Could you tell us a sort of a Buffett hustle story or a Buffett devalue distress story?"

Thomas Braziel

Gosh — I must have read it at least ten years ago. So yeah, I mean, he was famous for... there was some security, I can't think. It was a hunting club that he joined just so he could buy stock in this. Maybe you guys have heard the story: there was a hunting club that also had oil on its land. It's probably an *apocryphal* story where he, you know, gets all the hunting gear and joins the hunting club. **Buffett doesn't give a shit about hunting.**

Shaan Puri

Hello, fellow hunters.

Thomas Braziel

Hello there. Already he's got his rifle on his, you know, and they're like, "You don't suppose you want to sell some of your shares, do you?" I can't remember exactly what the story was, but it was something along those lines. One of the things I took away from **Warren Buffett** is you're always using your unique competitive advantages—just like in any business. All the lessons from business kind of apply to pure investing. Use those unique competitive advantages at the time. There used to be all this informational arbitrage. That's probably less and less now, but there's still *scuttlebutt*—meaning making phone calls, channel checking, getting out in the field and hustling. Hustling goes a really long way. Now you have other advantages. For example, you can invest in Japanese insolvencies. Buffett couldn't invest in Japanese insolvencies back then because he didn't have Google Translate. So you just have to keep pushing the boat out. To me, that's the real lesson from **Joel Greenblatt** or **Warren Buffett**. Joel Greenblatt was a famous *special‑situation* investor: you play the field and you use everything.

Sam Parr

We just talked to Howard Marks, and both Sean and I have read a bunch of Buffett's stuff. You're doing something — I don't know how great of an investor you are beyond this one topic, which is really fascinating to us — and you seem wonderful. But you're doing something that they do: you use really great language. You've used a few really good phrases that helped me understand things more effectively. For example, "you just gotta keep pushing the boat out," or talking about "scuttlebutt." These words have done a really good job of explaining what you do, which, in my head, means you've done a very good job of creating a **framework** for how to think about this type of stuff.

Thomas Braziel

For me, I think it's all about **valuation**. How you manufacture the valuation is like the *sauce*—how you're making your sauce. With venture deals, so much of it is access, connections, reputation, and being able to get allocation. It's also about being able to vet founders or vet VC firms, and knowing what the documents look like. It's not a Venn diagram, but that whole "soup" that makes it work. That's the same thing we're doing. I mean, **Howard Marks** is an absolute legend. He has a very famous—I'm sure he talked about **Bruce Karsh**, who did a lot of the investing. Howard Marks is the great communicator. One of the things I think people don't appreciate is that you can still work on investments and make really good returns, but those guys are monster communicators. They're great at fundraising and great at what they do. They either have multiple skill sets or partners to back them up.

Shaan Puri

You sent us a list of your core philosophies, and you've told us the first one — the *"stake and sizzle"* philosophy that you live by. Tell us about some of the others. One is *"Shop Madison, not Canal."* What does that mean?

Thomas Braziel

Okay, I stole that one. I like it because what deep-value and distressed investors mistake is they sometimes buy "value traps." They buy real crap. The idea is you want to buy real stuff that is cheap — that could be good. So the phrase is: you don't buy handbags on Canal Street because those are all fake. You try to get a good price on Madison Avenue when they're discounted, not... because you get a fool's gold situation. That's a real problem in distress. You just say, "Oh, this guy put $200,000,000 in it; it's only 10," and it's like, "Yeah, but it's worth zero." So you gotta be careful of this kind of bias that runs into, "Oh, it's such a good deal" — you're like, is it? I mean, right: assets become liabilities, and liabilities can become assets when you get into a restructuring situation.

Shaan Puri

Alright, let's do the next one. You said **"start young"** — **"the first decade is tuition."** I love this. This could apply to any field, by the way. I think that's a great phrase just in general.

Thomas Braziel

Well, you guys—come on. Y'all know a lot of this stuff, but for me, I started when I was 12. I was terrible. I think the first—first stocks I bought: I bought **Home Depot** because **Bob Nardelli**, who was passed over for, whoever—**Jack Welch** or maybe **Immelt** (whoever became the CEO of **GE**)—came over to Home Depot. He was gonna "GE" Home Depot. Well, that didn't work at all. And, you know, I wasn't investing at all in valuation. It was based on a story in **HBR**. There was this huge article in the *Harvard Business Review*, and I was 12 years old reading this, thinking, "Oh yeah—ethos." I didn't even know what the word meant. "He's gonna change the ethos."

Shaan Puri

The culture

Thomas Braziel

It was the first stock. Yeah — I was like, *Ethos*? What's that? I had never heard that word; it sounded smart. So that was the first stock. The other one I bought was *INCO*, which was a large nickel producer in Canada. That actually did work out. It was based on the rising price of nickel I read about in *Foreign Affairs*. The third one was from a *Forbes* article: *EMC*, which is a chip manufacturer. I can't remember what happened to that one. I think... you know, the thing is, this is the thing about stocks, especially when you're young and you've never done anything: you buy them and you're like, "Okay, I bought them," and then day two you're like, "Now what do we do?"

Shaan Puri

My kids are: I have a one-year-old, a four-year-old, and a five-year-old. For my four- and five-year-old, they were trying to earn something — they wanted ice cream, a treat, a toy, whatever. Like, "If we do this, can we have that?" I said, "Here's what I'm gonna give you: I'm going to give you $100." They were like, "A $100?" I said, "I'm going to give you **$100 each**." We were in the parking lot and I was trying to explain what a grocery store is. I said, "Somebody owns this business; they buy the stuff and then they sell it to us." I was trying to explain what a *business* is and I felt like I was failing miserably — I was like, "My god, why is this so hard to explain?" But basically I told them I gave them **$100 each**. This weekend I'm going to present to them five stocks of products that they use and buy. For example, we bought a Nintendo Switch, so I'll say, "Here's Nintendo stock," and I'm going to let them pick and invest it in an account where they're going to start to see whether it's going up or down. I'll have them explain, in their own logic, why they picked, say, Nintendo or Yamaha or whatever stock they choose, and then they're going to get to ride the ups and downs of this. I'm with you on starting young — even younger than you would guess. </FormattedResponse>

Thomas Braziel

Well, yeah. I just think... I don't know — from my own experience, you'll meet guys; this is a common thing. I'll meet guys when I'm here, on holiday, or wherever, and they'll have an exit. For example: I met a guy who was a very early employee at **Airbnb**. He had probably $80 million or $100 million, but he'd never actually invested money. Now he's 45—probably 50—and he's like, "I'm so good at this. I'm gonna buy some **Duolingo** and I'm gonna do this and do that." I'm like, "Well, you just need to **respect the fact that you've actually never invested money**." I mean, you were an amazing operator and you got on a rocket ship. That's awesome.

Sam Parr

Well, we say that all the time on here: there's a **huge difference** between investing and earning via a company.

Shaan Puri

Not just a difference — it's almost like the opposite. Yeah, it's like a powerlifter who then goes and tries to do ballet or something. It's like, "operator" — it's all about *action*. *Action, action, action.* You gotta do stuff, right? You're trying to do as many things as you can, be super productive. As an investor, it's the opposite: **sit on your hands**. *Inaction is your friend.* All the money's made in the holding, the waiting, the observing. As an entrepreneur who was rewarded for taking action, you get punished as an investor for taking too much action.

Thomas Braziel

Yeah, and I'm, you know... *it just takes a ton of experience to be good*, and, well, **even to be okay**.

Sam Parr

A question that **Sean** has asked me before that I love, which is basically: "How do you invest your own money?" I want to ask you the same. Since you are a *professional investor*, do you have 100% of your portfolio in a variety of deals like this, or are you doing any passive stuff, or is it all active?

Thomas Braziel

It's all pretty active. Yeah. I don't — I don't, you know... For me it's like: tax advisors are great people; estate-planning advisors are great, too. But people who *want to manage my money*? *No thank you.* Partially that's because I enjoy managing my own money, but also I don't think I've reached the capacity where I have more money than I know what to do with. I think I can still find a lot of deals. I mean, your opportunity set when you have a million or ten million, or whatever, is just a lot better than if you're, you know, [unclear in original: "a 100 or for it"]. The optimal — the optimal — the optimal strategy changes based upon your capital base.

Shaan Puri

So, when you say "active," do you mean it's all distressed? It's like your specialty—you're putting most of your network there, the majority? Yeah.

Thomas Braziel

"Put most of my money in our own deals."

Shaan Puri

Right. When you were saying, early on with your hedge fund, you were putting *5%* into that deal. You weren't allowed to, because you had—as investors—to, like, maybe match your own conviction in the deal. Now that that's not the case anymore, how concentrated have you gotten? Have you ever been at a point where you're *insanely concentrated*?

Thomas Braziel

I kind of like it when it hurts a little bit because I'm so concentrated. But maybe that's just me—I don't know. *Crazy.*

Sam Parr

You're... *I mean,* it feels like it's a... [trailing off / unintelligible]

Thomas Braziel

A little bit like an **entrepreneurial bent**. If you're not pushing yourself... I wouldn't feel comfortable with it. I mean, I understand if you have a big exit. For me, I'm constantly investing into other deals—friends' deals. I feel like I have pretty good deal flow in the distressed area and in the claims work. I wouldn't say it's free money, but you can almost reliably **compound your money** on a small base — you know, a few million dollars. You can reliably compound that at pretty aggressive rates.

Shaan Puri

What do you mean by **"pretty progressive rates"**? What is that—15%? 25%? 30%? What are you talking about?

Thomas Braziel

Just... *I don't know.* Probably **30 to 50**, depending on the year. You can—you can probably easily get higher than that.

Sam Parr

"There's these guys, Sean. I used to live in Texas, and there are guys who are like, 'I didn't know what their job was.' I'm like, 'I don't know what you do, but you're really wealthy.' I just started calling them *capital men* — they're just capital guys, where they just, like..."

Shaan Puri

Did they like it when you called them "capital men"?

Sam Parr

"It's a good phrase, **Tom**. You're a capital guy."

Thomas Braziel

Maybe. I don't know. I guess, for me, I feel like I've spent my entire life studying the history of modern investing — guys that bought banks out of bankruptcy before, you know, when you could do that. Guys who minted enormous fortunes. There was a guy who bought a tobacco company around the time they were doing the settlements with the tobacco companies and made a fortune. I've studied a lot of these things, and I've always wanted to do just one deal like that. So I guess I've always aspired to do that. But I mean, there's that phrase — what is it? **"A position well bought is already half sold."** I do think when you're doing very special, *deep-value, distressed* stuff, if you're selective, it can work. The problem with funds and the big institutional money-management firms is they always have to constantly be finding deals. The nice thing about being a little bit of a *home gamer* is you can be very selective. You can literally do nothing for six months.

Thomas Braziel

Or a year — if you just can't find anything and, you know, there's still... do client work and bring in income. But you don't necessarily have to swing. I mean, we've seen deals over my lifetime. I've seen deals where guys have turned $2,020,000,000 into $3,000,000,000, and $6,000,000 into $80,000,000 in one year. I mean, you see some incredible deals in the space, and no, you're getting **high optionality, low risk** because of the price you're paying. But it's a ton of work, a lot of brain damage for sure, and a lot of hustle — and that's not necessarily the case.

Shaan Puri

We've kind of hyped up, you know, what you do. We've glamorized it a little bit in this episode. We've glamorized you and what you do. Give us a little bit of the ugly. First, on the asset class in general — for example, *startup investing*. I could tell you it's amazing: you meet these entrepreneurs, they're telling you about the future. These are the smartest of the smart, young, ambitious, creative people. When it works, you might create the next Facebook or the next Airbnb. You can get "10,000x." And then you start doing it and you're like, oh — also, you know, you're going to be wrong most of the time. You think you're going to learn so much from these people, but you hand them the check and then you kind of don't hear from them that much after that. You're not actually going to learn that much, nor do you have any control or say in what's going on in your investment. By the way, even when it works, it's going to take ten years for it to get liquid. You might be rich otherwise — this is not the way you're going to get rich; it's a hobby for people who are already rich. If I was going to give the real talk on angel investing, that's how I would describe it. What would you say is the ugly side or the bad side of what you do? What are the downsides of this asset class?

Thomas Braziel

Well, the stress — the stress in general. As a small player, you can get totally hosed. Every now and then I'll hear someone, even smart friends, say, "Oh, KKR is gonna make sure everyone's taken care of because they don't want the bad press." I'm like, "What are you talking about? It's not Lake Wobegon." They are going to walk all over you in bankruptcy court. I never understand this logic. From many years of experience: no, they're not going to play nice. Don't ever assume that. Sometimes you do get a gift — they'll do things that are a little more generous depending on where you are. If you're in a *preferred* position, or, God forbid, in *equity*, you might see different behavior. But even as a claimant, things like that are inconsistent. That's one of the ugly sides. Another ugly side is that it's very transactional and financial. You don't get people giving you the starry eyes of the future. A lot of times you're sitting across from people arguing over a pie that isn't growing. In fact, maybe the pie is a bad apple pie that's already gone off, so they're really arguing over something that could be dying or shrinking. It has an emotional toll being in distressed investing. You also hear people's life stories. I won't mention names, but companies will go bankrupt and this will be someone's entire life's work. They're describing their "Picasso" for two hours, and you just... you have to let them. You're almost like a guidance counselor, walking them through maybe doing a deal or transaction and trying to be as respectful as possible to the fact this person might have just lost their life's work or their family's fourth-generation business. People are emotionally in distress, so it is a tax on you — but you need to be as respectful as possible. I think, as a small player, it's very hard. I always say investing isn't… I wouldn't say I'm good; I'd say I'm an okay investor. It's a bit of a *disease* — I kind of feel compelled to do it even though sometimes maybe it's not the best thing for me. I always joke that it's kind of a disease: I'm looking at this stuff on nights and weekends, on Sunday morning. Just like you might be on another call with a startup you think is interesting or trying to get an allocation, I'm doing the same thing with my deals — trying to learn a little more and see if I can find something. So, yeah… I don't know if I answered your question.

Shaan Puri

No — you did the second part of the question. We've been glamorizing you a little bit. But you called me, you know, before the pod [podcast] — or you called Ben — and you were like: > "Hey, just know, if you Google me you're going to see some stuff. I want to be able to... do you guys want to ask me questions? Do you want me to talk about that on air? Do you want me to clear the air about this?" So, here's an opportunity: if somebody Googles you, yeah, there's a settlement case. I don't know what's going on with this. What do you want to say about this?

Thomas Braziel

"Yeah, so—and that's why I said, Ben, I got, like, you haven't said anything about this and I'm wondering why you haven't. I just want to put it out there." I was involved in an *receivership in Delaware*, and I got some pretty nasty headlines. As I've gone through my life, I've had a lot of ups and downs—like any entrepreneur—and this was a down one. I'm glad to have it behind me. Basically, I was in charge of the receivership. We hope we made a lot of money for the shareholders. The court didn't like some of the way I went about my activities and *sort of* aggressively slapped me on the wrist—or maybe in the face. I'm glad that everyone in a company called *Fun.com* is getting a good recovery, and I'm glad to have it behind me. I wanted to bring this up because I didn't want to act like it didn't happen.

Shaan Puri

Okay, but what'd you do? You're like, "Isn't that not my best?"

Thomas Braziel

What'd you do? The biggest thing is... I was running this *receivership*, and of course, because of that I was in charge of doing everything — whether it was administrative work, running the bank accounts, or doing the taxes, you know. While I, like... sorry, get one good...

Shaan Puri

"Dumb question. What does *'doing the receivership'* mean? Are you taking it through bankruptcy? Is that what it is?"

Thomas Braziel

It's kind of like a bankruptcy, but it's a state court matter. This was in **Delaware Chancery Court** because the company was a Delaware corporation. My job was to sort of marshal all the assets. There were no assets when I showed up. This was basically a *pump-and-dump penny stock*. I bought up **20%** of the company and then went to Delaware because the guy who was running it actually got arrested for a different fraud — a guy named Jason Golanus. I knew all along that this company likely owned the domain name [fund.com] and had ownership of an ETF company called **AdvisorShares**. I got myself appointed **receiver**. There were no assets in the company, and my remit from the court as a receiver — almost like a bankruptcy trustee — was to marshal all the assets and then try to pay out as much to shareholders as possible. I think I did that. We did do it, but we had a shareholder who was very unhappy with the way I was going about it. He complained to the court. The court looked into my activities and didn't take kindly to some of the things I did — whether it was the tax position, how I was moving money around, or the fact that I was investing the money in deals that I was doing. They pretty aggressively slapped me, and that's where the headlines come from. Of course, the whole time I feel like I did my best to cooperate with the whole thing. I'm glad to see that we have a good settlement with the new receiver of the receivership. The outcome for all the shareholders who were involved is pretty darn good, which I'm glad about, because at the end of the day I didn't want it all to just go to lawyers fighting over this. Not my brightest moment, I would say. I feel responsible as the person in charge to do everything properly, and I don't think I'll be in a receivership of anything anytime soon. I don't think I'll be doing that again.

Shaan Puri

Okay. Well, you know—*sorry to make it awkward.* I just had to ask. Try to understand. What? No.

Thomas Braziel

No, I'm glad.

Shaan Puri

You do.

Thomas Braziel

I just... and I've, you know, my thing is: *reputationally*, as someone who does what I do, it's important that I try my best. But I think, in the end, over time, I'll be able to talk about it more and more.

Shaan Puri

"**Sam**, you look highly amused by this question and answer. What are you thinking?"

Sam Parr

"The headlines aren't good." "Yeah, I saw the headlines. I understand why you'd want it addressed. It's not—it's not a good headline." "Yeah. I'm reading it as you—you spoke. So did you admit guilt? Is that what—" "No. What's implied with the settlement?"

Thomas Braziel

So the settlement is... well, the full settlement, in addition to the fine from the court: the court fined me **$2,000,000**. I paid **$2,000,000** of what they considered were constructive trust profits. I also paid for the special master; that was another **$750,000 or $800,000** [unclear]. So it's basically **$3,000,000**. Then the settlement was **$3,600,000**, plus **$800,000** that was in escrow, plus about **$10,000,000** in claims. I gave them claims that they say were commingled within my personal investments.

Sam Parr

"Did you think there was **no admission of liability**?" "Yeah. So, I don't know how to even ask this question. I can't ask this question. There's **no admission of liability**."

Thomas Braziel

Well, you can ask, because you should. My only thing is—I don't... I've never... I'm glad that it's a **good outcome for shareholders**, and I wouldn't want anyone to be inflamed by the stuff I say. Like any shareholder would be like, "Oh, he's not admitting..." In my estimation, it's a lot more gray than the court tries to make it out to be. But at the same time, I **respect the court**. You know, I was graced by lawyers; if a court says that, I don't care what you're arguing—I disagree with you.

Shaan Puri

We've had a bunch of people who've come on this podcast before who have had stuff. I think it's fairly common in the world of business: if you do business for thirty, forty years, something can go down. It's extremely common for something to happen where you get sued, or you sue somebody, or whatever— that part's not uncommon. What's interesting—Sam, I don't know if you remember when we had **Martin Shkreli** on—is that he sort of got this character where he's the "bad guy," and he leaned into it. He inflamed it and did a bunch of stuff that was really crazy. He got in trouble and was like, "Hey, everybody made money," and people responded, "Yeah, but you went to jail," so, you know, something happened and he paid a price. I remember you were telling him that this was, years later, and he had literally done his time. He's quite a character—**Shkreli** is an actual character. I think he plays a bit; he plays up that persona, and I think he likes it. He likes mixing it up in that way. It's so interesting how to handle something like this. It's such a tricky spot because there are many versions of these situations: I did something wrong not knowingly or unintentionally; I did something wrong intentionally; then there's the Shkreli case, which is kind of like, I did something wrong intentionally but everybody made money, so who knows—so it all worked out, right? Even, for example, **Elon** right now is getting sued in, like, fifteen different courts by fifteen different people, publicly feuding with the president and **Sam Altman** and others. There are a lot of people constantly mixing it up, and I don't know—it's just very interesting to see that side of entrepreneurship, that side of business, that side of investing.

Thomas Braziel

I definitely think it has to have—maybe not as aggressively as mine was—but I do think people, over time, are going to have scrapes with certain stuff and the whole *"bad guy"* thing. I know Scarelli did kind of lean into that. Even now, I feel like... well, I don't know if he does anymore.

Shaan Puri

Kinda.

Thomas Braziel

I don't know. It's a different way to do it. For me, I kind of don't view it as a good thing. I view it as something that, if someone's going to be a business partner to me, I need to be able to explain and, frankly, be *more candid than on air*. At the same time, I try to respect the outcome of the whole thing.

Sam Parr

How long did this last? Gosh... **2022**. Oh, wow.

Thomas Braziel

Three years, *yeah*, till today. That...

Sam Parr

"Has to feel horrible. I've gotten in trouble before when I was in college, and I remember waiting to hear the verdict — I remember that feeling. Mine was not the same. I think your consequences are significantly worse than mine, and I can't imagine *three years* of what's going to happen."

Thomas Braziel

Joe, for me, I tried to resign myself to whatever happened. I had to *accept responsibility* for that. That was a big one for me. I was really bracing for the worst but trying to do the best. Even before the settlement—way before the settlement, during different things that went on in the case—I was doing my best to be constructive and cooperative with what the court wanted me to do. At the same time, not everybody's going to love your decision-making. I grew up in the South where people tend to be, maybe, overly people-pleasing. This experience taught me that sometimes you have to *do the right thing*, whether someone likes it or not, and do what you think is right. That's a lot of what I got out of this. I tried my best. People might not like what you've done or might assume you're hiding something or not cooperating, but you are still trying to find some middle ground. It was a big one—a *big, big* one for me.

Shaan Puri

I wanted to ask—you can end with this—I want to ask you for a bit of a reading list. If I were going to try to get smarter about this stuff, what are the most influential books, blogs, or people that are worth checking out? Give me your *top three*, in no particular order. What's your shortlist of stuff I should go read if I wanted to get smarter about this stuff?

Thomas Braziel

So, I think on the list — because I shared a book list — of course it includes people like **Seth Klarman** and the book *Margin of Safety*. It's a hard book to find, but if you Google around you might be able to find a copy that you can...

Shaan Puri

Isn't it like a $2,000 book now?

Thomas Braziel

Yeah, it's like a thousand-plus. It's good — he talks about different stuff. I just think that he's kind of a *goat* in the deep-value kind of space. You know, Baupost and Seth Klarman are pretty influential. But an easy guy to find — anything by... Marty — not Marty Littman — I'm trying to think of his name from Third Avenue Value. He's written a few books on distressed investing, and he was the one that kind of introduced the idea that "an asset is a liability, and a liability can become an asset in a bankruptcy." It's so true. You think about it with a lease: if you have 50 leases and they're all below market, a debtor can assume, assign, or reject leases. So if you have below-market rents, you can assign them and they can become an asset, even though, leading up to the bankruptcy, they can be a huge liability because of the payments.

Sam Parr

You like Kirk Kerkorian, Sean. Have you ever read about Kirk Kerkorian?

Shaan Puri

"You've told me about him, but I haven't read anything about him." </FormattedResponse>

Sam Parr

Oh my gosh, that's one of the best biographies of all time: *Kirk Kerkorian*.

Thomas Braziel

"Oh, you like that one. That's a real..."

Shaan Puri

Good. Oh.

Sam Parr

My god, yes — **The Gambler**. That's one of the best biographies. Basically, I think he was an Armenian immigrant, raised in the Central Valley, California. He went to the army. When he got back, his first little business was a small airline, which basically just means he somehow convinced someone to lease him a small **Cessna** and would fly people back and forth around California. It sounds more glamorous than it was, but he grew that over something like fifteen years and sold the business to **TWA**, which was the large airline company at the time. He made a little bit of money, but he parlayed that into buying what would now become the Las Vegas Strip. Then he parlayed that into buying this other thing, this other thing, this other thing. He worked his way all the way up from being a nobody — poor, an immigrant with no running water — to owning, I think, **Chrysler**. I think he also owned, like, **Warner**? Did he own Warner? But he for sure owned Chrysler.

Thomas Braziel

MGM, I believe.

Sam Parr

**Sorry, MGM.** The biography is basically his thinking: he's very calm, methodical, and kind of a traditional immigrant—straightforward. *"It is what it is, I don't stress about it."* But he was a total, kind of *degenerate gambler*, and he died with a net worth of something like $10 or $15 billion. </FormattedResponse>

Thomas Braziel

Sounds about right. Wow. Well, you know what I actually love—because you were asking about books, Sean—it's like, I actually think entrepreneur biographies, either autobiographies or biographies, can be amazing. There's one called *Zeckendorf*, by a guy who's a big real estate figure in New York who made a billion and lost a billion. There's one called *How to Lose $100,000,000 and Other Valuable Advice* by Arthur Little. There are all these kinds of entrepreneur books—some are out of print, some are still out there. Of course, there's special-situation investing—Joel Greenblatt's *You Can Be a Stock Market Genius*. These are great books when talking about securities markets. But I actually think the best investors are people you've never heard of, because they make $100,000,000 and then they're like, "I'm out—peace." Their stories aren't recorded. I think I put E.P. Taylor in there. You want to hear the E.P. Taylor story—it's a really great one. So, E.P. Taylor: during the Prohibition he would go around and buy breweries. His whole thesis was, one day this is going to be done; people are going to start drinking again. He would buy up manufacturing, distribution, bottling—that was a play on that. He would roll them up because the capacity was so low he could buy them for peanuts. That was his one trade. Of course it took him 20 years to trade out, but he minted himself some serious dough, and then he wrote a book about it. So I think these guys, you know, you can do the

Shaan Puri

"Book: *The Biography of Edward Plunkett Taylor* — is that him?"

Thomas Braziel

Yeah, that's him — Edward Plunkett, and he founded the Life or Key Club [unclear]. I don't know if you guys have ever been down there, but it's a famous club in the Bahamas, like *Primlatza* [unclear]. Well, Sam Bankman-Fried was across the thing at a place called Albany down in the Bahamas.

Shaan Puri

Did you ever bump into Sam Bankman-Fried? Any good SBF stories?

Thomas Braziel

You know what's funny? I was in crypto, and then Sam became, like, the *Rockefeller of crypto*—like *John D. Rockefeller*, right?

Shaan Puri

And I was...

Thomas Braziel

"Like, *who the hell is this guy?* I never even — I never really ran across him in passing. A lot of people who worked for him were, you know, EA — **Effective Altruism**. Yeah, EA people. So you had a lot of EA people around. I just didn't know any of those folks; they weren't like hardcore crypto people. That's kind of a weird thing. When I saw them coming up, I was like, 'Man, how did I miss this? Where'd this guy come from?'"

Sam Parr

We had Robert Greene from *The 48 Laws of Power* on the pod about two weeks ago or so. And yeah... he kinda—have you ever read *The 48 Laws of Power*? The book is what it sounds like. </FormattedResponse>

Thomas Braziel

I own the book. I think I breezed through it—I haven't read all of it.

Sam Parr

"40 laws on acquiring power or whatever." It's very *sociopathic*, but that's kind of the... which is, yeah, sociopathic, but it's real. One of the laws is to reinvent yourself. Also—wait—so we had talked to him. We were like, when you have social media you can talk to your people or your audience while you're on the toilet. Any hour, you can tweet anything. How do you deal with that? He was basically like this: > "You want to have planned silence. The best way to be loud and in everyone's face sometimes is to just shut up and not say a word."

Shaan Puri

Disappear for a while.

Sam Parr

And disappear for a while. He was talking all about powerful people who kind of come out of nowhere. **John Rockefeller** is one of these guys—he was one of the richest men in the world before everyone, like, no one had seen a photo of him—and it was all part of a plan, I think. It sounds like **Sam Bankman‑Fried**—we didn't give him enough credit. When I saw him coming up, I was like, "Oh, he's just an autist and this typical Silicon Valley type; he just doesn't know, he doesn't have any manners." But it turns out it was probably all planned, where he was like, "I want to appear as though I slept on this bean bag. I want to appear as though I'm playing video games while I'm talking to Sequoia over a $200,000,000 deal." It was straight out of *Robert Greene's 48 Laws of Power*, which is pretty funny.

Thomas Braziel

I mean, I met a ton of people who worked there, of course, and a ton of people who were in the orbit. It's kind of crazy to see the different — I guess Munger does it best, right? The *lollapalooza effect* of the whole thing: everybody's getting drunk off the money.

Sam Parr

Were they straight coming in?

Thomas Braziel

Yeah—like, almost all the people, all these employees didn't know anything was going to happen. They were *nerds*.

Sam Parr

They're *just normal* workers. *Just* normal. They weren't part—no.

Thomas Braziel

I mean, I met the lady—she was the head of payments. She was an expert at getting payment licenses, basically banking licenses around the world. She had worked somewhere, and then CZ pulled her over to Binance. Then she got poached by Sam. She was just the best; of course he had to pay her—she was making millions of dollars a year. Some of their contracts were insane. Sam was giving out ten-year contracts to people—guaranteed ten-year pay contracts. $1 million contracts to salaried employees. It's a little bit like the AI/Meta thing, because he had so much money coming in from VCs, and, of course, he had—not unlimited, but—a big customer base to dip into. So between that, he was making unbelievable, whatever you want to call it, *unconscionable* contracts too.

Shaan Puri

Dude, just to put this in perspective: I think Zuck — I think the news about this stuff kinda came out, you know, let's call it even three or four months ago. Okay? So let's just say that's been going on for three or four months. The researcher stuff — if you go look — four months ago the stock was at about $500. Let's even go April 1, so $586. Today the stock's at $7.84. So he's spending this money, or he's making these offers, which has multiple effects. First, it raises the price for all of his competitors. So it's like, even if they don't take my offer now, they have to pay 100x what they were paying for talent before — like, way to screw up their business and his own business. The stock since then — it's now at $7.84, so it's up **33%**. So what's 33% of it? It's almost a $2,000,000,000,000 stock. [~$2 trillion]

Sam Parr

"$600,000,000,000, or..."

Shaan Puri

He basically offered the equivalent of $20 billion for this talent — maybe $40 billion max. “Cool, I'll put out offers and try to spend $20, $30, $40 billion,” he said. He already made back $600 billion in the market just in that time by strengthening the story of us being all in on **AI**. It's not like the Facebook business changed that much in four months — it didn't go up $600 billion because the user base grew or because revenue or earnings spiked. They had a small beat, maybe around 8%. But the reason it's up is that everybody believes **AI** is the future. Who do you think is going to win in **AI**? You get punished if people think you're not going to win. Apple stock is going down right now because people think, “Apple has no AI strategy — they're going to lose.” Meanwhile, with someone like Meta, at least the story is that **Zuck** is all in and going to win by poaching great talent. We'll see, you know. There's a believability to it. It's crazy that you can spend so much and somehow net out way ahead, like he did.

Sam Parr

It's crazy. That's crazy.

Thomas Braziel

Is "magic of the market"?

Sam Parr

Hey, **Tommy** — we appreciate you doing this, brother.

Thomas Braziel

"Oh, guys — thanks for having me on. It's just *good to meet you* and chat."

Sam Parr

Alright, that's it. We appreciate you. That's the pod.