How Young YouTube Millionaires Are Lying To You
The Hyperfocused Entrepreneur
August 21, 2023
Read time: 12 minutes
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We’re gonna ruffle some feathers with this one, but it’s gotta be done ‘cause I’m seeing a slew of young millionaire YouTubers out there slinging all sorts of business, investing, and financial advice, and the truth is…
The majority of these influencers are straight up lying to you.
And the others, well, they might not be lying, but they are wrong.
Now, we’re not gonna bother with the blatant offenders who are typically pretty easy to weed out with a little digging.
These are the guys renting out airplanes, lambos, and fancy watches so they can sell you on their course which, if anything, is either content they ripped off from someone else, or it’s just some garbage they’ve slapped a pretty little bow on.
(By the way, don’t take this to mean I’m against online courses. I’m not. I’m against shitty online courses from people teaching things they know nothing about)
The guys we’re gonna focus on in this article aren’t actually bad people. And in a lot of cases they do have some genuinely valuable insights to share…
But, even with these guys who are wickedly successful despite their age we need to tread lightly, because often they’ll say things (without even realizing it) that are just flat out wrong.
With many of these guys, I genuinely don’t think they’re trying to mislead anybody.
They’re just… young… and they don’t quite see the full picture yet.
So please, don’t take this as the rantings of a disgruntled old man bitter at the youth for kicking ass, but here’s how Young YouTube Millionaires lie to you and why you probably shouldn’t take advice from them.
Lying with Numbers
Over the past 3 years I’ve raised ~$30 million of capital from private investors to purchase a bunch of commercial real estate.
Often, when I sit down with a new or first time investor, they’re eager to jump straight to the return projections.
Which makes sense… of course you want to get an idea of how much money you could potentially make in a deal.
But it’s the wrong place to start and the reason is this:
Numbers don’t lie, but I can make them say whatever I want.
So when I show you my return projections and all my fancy spreadsheets, if you don’t TRUST me, you can’t trust my numbers, because I promise, inside all those rows and columns and assumptions, I can hide pretty much whatever I want.
Think about this the next time you’re watching some young youtube millionaire ‘cause at some point they’ll use numbers to drive a point home or impress you and if you don’t speak the language of those numbers, then you can very easily be misled.
For instance, one of the most popular video titles out there is:
How I became a millionaire by *insert some age**.
(Full Disclosure: I have a video just like that on my channel about how I went from $80 in debt to a millionaire in only 3 years. You can check it out here. Watch it and notice how I also use the technique of vaguely describing numbers that I’m about to describe below).
Now, ask yourself…
What does it really mean to be a millionaire?
Pretty straightforward question, right?
Well, not really.
Even amongst individuals who are HIGHLY sophisticated in the ways of making/managing money, there’s massive disagreement on the proper way to answer this question.
(Seriously, I saw a Twitter fight breakout this weekend between a mortgage broker with a large audience and the rest of the internet on how to define this simple term).
When it comes to answering the question, What’s it mean to be a millionaire?, there are a couple different lenses we could use.
Are you an Income Millionaire (meaning you made $1M of income in the past 12 months)?
Or are you a Net Worth Millionaire (which means if we add up the value of all your assets, minus all your liabilities, they’d be worth > $1M)?
This, by the way, is how the IRS defines a millionaire.
Or, are you the rarest of all breeds, the Liquid Millionaire (meaning you have $1M in cash or cash equivalents liquid and ready to deploy at a moment’s notice)?
See? One word. Three definitions.
But you might be saying, Yeah, but Anthony, who cares? Regardless of which definition you use, it’s a lot of money, right?
Maybe… maybe not.
If you’ve got a million dollar yearly income, but your annual expenses are $1.5M, then you actually lost $500,000.
Don’t know about you, but that’s not someone I’d take advice from.
No, the easiest way people lie about being a millionaire is around their net worth.
Again, to calculate your net worth we subtract your liabilities from your assets…
But this gets tricky real quick because on the one hand it’s easy to calculate the value of the cash in your bank account…much harder to value a piece of real estate or a business.
Because here’s another thing you hear people say all the time:
I built a 7-figure business.
Again, what does this even mean?
Is that 7-figures of annual topline revenue? Lifetime revenue? Profit? Enterprise value (which is a fancy way of saying, what could you get for it if you sold)?
This matters because there’s no YouTube police verifying how people calculate their numbers.
There’s literally nothing stopping Young Ricky from starting an Ad Agency, spending $100k to make $50k of revenue, and then saying it’s worth $1M at a 20x multiple.
That’s a pretty ridiculous example, but here’s something I just found to prove the point.
Sebastian Ghiorghiu posted a video last year called Making $10,888 ever 24 hours – A day in the Life and this thing has been viewed 1.4 million times.
Which makes sense, ‘cause this is a bold claim that equated to ~$4M of income/year.
For the record, that’s an insane income.
But, you’ve only got to watch five minutes of this video before Sebastian reveals the dubious accounting principle he’s employing, which, interestingly enough, is the same exact accounting principle that bankrupted Enron back in the early-2000s.
Now, for the youngsters out there unfamiliar with the Enron Scandal, this was one of the biggest companies in the world with hundreds of billions of dollars worth of assets that filed for bankruptcy almost out of the blue when it was revealed they’d been cooking the books for decades and they simply didn’t have the money they said they did.
Okay, so back to Seb and his questionable accounting tactic:
In the video Seb mentions he is currently building his dream home for something like $1.1M, and since he got a cash offer from a potential buyer for $2.8M, he is counting those hypothetical proceeds as part of his income.
See, this is the exact same shady thing Enron did.
They would show theoretical future profits as actual current profits.
For instance: They’d sign a contract with another company that said the other company will pay them $100M in 10 years from now.
Then Enron would say, Hey Look! We just made $100M, and they’d count that future profit towards their current quarterly revenue to drive up their stock price.
Ya see the problem with this, right?
A lot can happen in 10 years and so not only is that money NOT guaranteed, but it’s not even useful because you don’t actually have it.
It’s just a number on a piece of paper.
Alright, so listen… I don’t think Seb is trying to grift anybody, but I do think he’s stretched the truth on this one.
I share this example so you’ll be better armed against one of the more common lies young youtube millionaires will tell you in an attempt to impress you.
For the record: I am a net worth millionaire and ALMOST an income millionaire, but I am not a Liquid Millionaire.
Now, let’s talk about the second way they lie to you, which is when they say things like:
I’m “Just Like You”
Here’s the truth:
These guys are probably not like you and me. They’re outliers.
In fact, they’re extreme outliers.
We’re talking about people in their early-20s who’ve amassed enough money to put them in the top 1% of the 1%.
So in essence, they’re probably not great role models to emulate.
Let’s break it down by looking at the Success Formula:
Success = Skill x Hard Work X Duration X Luck
Or, put another way:
(How Good You Are) x (How Hard You Work) x (How Long You Work) x (How Lucky You Get)
Now, we can immediately discard Hard Work and Duration as the variables of these Young YouTubers success because while I’m sure they work damn hard, in reality, a lot of people work really hard.
All successful people work hard.
That’s not unique.
Also, they haven’t been playing the game very long (given the fact they’re so young) so Duration is largely irrelevant.
So, the two factors that matter most here are Skill and Luck.
Since these guys are such extreme outliers, we can assume they’ve benefited from some hefty amounts of luck (which isn’t necessarily helpful to you and me since Luck is largely unreplicatable).
With that said, there are ways of getting lucky by design.
Check out this video if you want to learn how:
This brings us to the last variable in the Success Formula: Skill.
There’s one component of skill in particular that’s important to understand: Talent or Innate Ability.
The unsexy truth is that these guys who’ve achieved outsized success so young in life probably had some innate ability that gave them a unique advantage.
It’s all but impossible to quantify what this is, but it’s there.
Let’s use an example where innate ability is more obvious to illustrate the problem with taking advice from outliers.
Introducing: Lebron James.
Now, if you’re a kid and you’re dreaming about one day playing in the NBA, then Lebron James would be a very, very bad person to use as a role model.
Why?
Because he’s a freak of athletic nature and unique circumstances that enabled him to go straight into the NBA out of high school.
He is the 1%’er of the NBA and what worked for him is unlikely to work for you, so his advice would not be terribly useful.
No, the guy you actually want to take advice from on how to get into the NBA is the grinder. The guy who was okay in high school and barely squeaked his way into college where, after years of hard work and grinding, he weasels his way into the NBA.
That’s the guy you want to take advice from because his path, though still unlikely, is the one with the highest probability of replication.
And so, yes, we can look to Lebron James and the Young YouTube Millionaires for inspiration, but they’re generally not the ones you should take advice from.
Which leads us to the third big lie these YouTubers tell:
They’re Not Actually Investing
These young bucks talk a good game.
Most of them have obviously done their homework on personal finance and investing best practices, because the majority of what they say is true…
But… It’s in the transition from theory to practice that they screw up.
Here’s what I mean:
Everybody knows you should start investing as early in life as possible to get the powers of compounding interest working in your favor.
And it’s true that even a modest amount of money invested every month for 40 years will ultimately become a very large sum of money…
But here’s where I see these young youtubers go wrong again and again and again..
They confuse Investing with Speculating.
Let’s define some terms so we’re on the same page:
Investors spend money with an expectation of a profit after deploying reasonable judgment and thorough investigation of the probability of success.
Speculators spend money on opportunities with a high probability of failure where success is primarily due to chance or uncontrollable external forces or events.
The primary difference between Investing and Speculating is in the amount of risk being taken.
These YouTubers love to talk about how much money they’ve made “investing” in things like crypto, luxury watches, exotic cars, and flipping houses.
But these are not investments.
They’re speculations.
For example, depending on when you got into crypto, you either made a ton of money or lost a ton of money.
As a general rule, it’s not a good investment if the only way you make money is by getting in (and then out) at the exact right moment.
Let’s go back to our buddy Sebastian Ghiorghiu for an example:
In a recent video he shared a story about waking up at 4am with a gut feeling and decided to short his crypto position…
Wing, bang, boom, next thing ya know he’s made $40,000 in an hour and turned a $30k “investment” into $600k.
But that’s not investing… that’s gambling.
Here’s another thing that looks a whole lot like investing, but in actuality, it’s not.
Buckle up…we’ve got a controversial opinion incoming:
Controversial Opinion
Here’s something else that looks a whole lot like investing, but actually isn’t:
House Flipping
You’ve probably seen this on HGTV, when Chip and Joanna go buy a run down shanty with a porcupine living in the guest bedroom.
They slap some paint on it, evict Mr. Porky, and then sell it for a pretty penny.
Again, our boy Sebastian flipped his first house last year and made a nice little $40,000 profit.
Seriously, that’s awesome. I’m not hating on house flippers
(in fact, I flipped three houses in college and I think it can be a great way to get into the money-making game…)
But it’s not an investment.
It’s a job coupled with an educated guess.
Now here’s an important takeaway:
There’s nothing inherently wrong with speculating.
If you’re looking for incredible, outsized returns, and you’re comfortable with the rest, then sure, you might hop into some speculative opportunities.
But it’s critical to understand when you’re investing vs when you’re speculating, because most people think they’re doing the first, when in reality they are doing the second…
And then when something unexpected happens… they’re screwed.
I mention all this so that you have a new lens through which to look at your investments, because it’s only in understanding the difference that you’ll be able to target the right opportunities for YOU given your circumstances and context.
Which brings us to the big question:
When exactly IS the right time to speculate?
As it turns out, there’s really only two times to speculate.
- When you’re young (‘cause you have the benefit of time on your side to recover if something goes wrong)
- When you have more money than you could possibly need (aka: disposable income)
Interestingly, while our Young YouTube Millionaires are technically wrong in thinking they’re “investing”, they’re not actually wrong in that they’re doing more-or-less precisely what they should be doing given their age and financial means.
But here’s the problem:
Their situation is likely not YOUR situation.
In fact, for most people watching those videos they’d be best served investing in acquiring skills and networking opportunities so that you can improve your earning potential.
And that might just be the most important thing to learn from these Young YouTubers:
Develop A Money Making Skill
If you want to make money, become a millionaire, or win the wealth game… you have to increase your earning potential.
Most people go about this in the worst way possible.
They go to college, get a degree that won’t actually make them more money, then they go to work for some nameless corporation where they work really hard and hopefully get promoted up through the ranks and get a raise.
Truth is, it’s almost impossible to build meaningful wealth playing the game this way.
You’re trading time for money, and you only have so many hours in the day.
The key then is to figure out how to disconnect the money you make from the time you put in.
The core concept to understand is that of Leverage.
See Leverage increases your output per unit of input. So, the more leverage you have, the more money you can make.
And this is what our Young YouTube Millionaires have done so damn well.
First, they developed a skill that the marketplace valued at a premium.
Second, they built systems and teams around those skills so they could scale.
Third, they leveraged those skills and experiences to create content on YouTube.
Seriously, these guys are playing the game so much better than I ever was at their age.
It’s easy to hate ‘em, but I got mad respect for their hustle.
Just be careful what advice you take from them.
Until next week,
Stay Hyperfocused,
AV
From YouTube This Week:
How Young YouTube Millionaires Are Lying To You
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