April 15, 2020 – Travel Hacker Yan Stavisski and Out-Innovate Alex Lazarow

April 15, 2020 – Travel Hacker Yan Stavisski and Out-Innovate Alex Lazarow

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Yan Stavisski – Director of Business Development at LAToken – Read interview highlights here

I realized I had to stop being a wantepreneur trying to do five businesses at one time, I realized I didn’t have a skill, and I was not humble enough to go learn a business.

Yan Stavisski, Founder of Third Wave Revenue and Director of US Operations at LAToken, is a social media influencer in the Credit & Travel Hacking space with over 450,000 social media followers. Yan’s specialty is his deep understanding of the credit system and how to use it for your benefit. In 2018, Yan quit his 6-figure sales job when he started making more money leveraging credit in specific real-estate & eCommerce deals and in 2019. He has taken over 140 flights and over $500,000 worth of travel for next to free by the age of 25. Yan has co-created proven methods and techniques widely used in the online digital marketing industry. Since 2015, his company has consulted numerous multi-million dollar brands and continues helping Bay Area businesses in the professional service industry grow their brand and monetize their potential with Social Platform Advertising Growth Hacking.

Alex Lazarow – Investment Director at Cathay Innovation

In my book, I talk about creators, entrepreneurs creating industries. They are combing a technological innovation, while targeting the mass market day one, and serve as platforms to help others target that same market.

Alexandre Lazarow is Investment Director at Cathay Innovation, a global firm that invests across Africa, Asia, Europe, and North America. Previously, Alex worked with Omidyar Network, a philanthropic investment firm that has invested over a billion dollars in hundreds of startups around the world. He has served as a Strategy Consultant with McKinsey & Co, as Financial Regulator with the Bank of Canada, and as M&A Investment Banker with the Royal Bank of Canada. He is also an Adjunct Professor with the Middlebury Institute for International Studies MBA program, where he teaches entrepreneurship. Alex is also the author of Out-Innovate: How Global Entrepreneurs–from Delhi to Detroit–Are Rewriting the Rules of Silicon Valley. Filled with rich and wide-ranging stories of frontier innovators from around the world, Out-Innovate is the new playbook for innovation wherever it has the potential to happen.

Highlights from Yan’s Interview

I’m 25 right now but at 22, I finished up school. I went to Berkeley in San Francisco State and got two degrees. I actually started with nursing, simply because nobody told me otherwise; even though I had multiple side hustles and businesses running, that I should not be doing nursing and should probably go into business or entrepreneurship or something like that. But I finished up college with two degrees; one in finance, one in marketing. I can tell you one thing, and that is that I did not learn a single thing from those two degrees, nor could I apply them to anything that I did. So, after college, I wanted to go into entrepreneurship and I really wanted to start a real business, not just any side hustles. At first, I was doing fitness classes, I was doing phone flipping stuff; just side hustles, not a real business, not a real company.

I saw on social media, all these guys just having success with drop shipping, with real estate, with Amazon, doing Facebook advertising for clients. I wanted to do one of these businesses, but I had no idea what to do, so I decided to try all of them. My whole idea was that if I throw all this shit at the wall, something’s got to stick; so, five businesses thrown at the wall, something’s going to stick. Mind you, I’m living in San Francisco, you know how expensive it is out there, and all these side hustles are bringing me maybe $3,000 a month, which was just enough to cover my expenses, my rent, whatever it is. So, I went and started all these businesses.

I started social media marketing agency, I wanted to do Facebook ads for clients in dental; with dentist fitness centers and chiropractors. Then I was doing real estate wholesaling which is something where you can flip contracts for real estate properties and make the profit between the buy and the sell and you don’t have to have any of your money. Then I was doing Amazon, so I was trying to buy products and then resell them on Amazon. Then I was also continuing my fitness business where I kind of expanded it; I was hiring awesome people and trying to take it online. I’m looking at all these people on Instagram and YouTube and they’re all driving lambos and stuff, and I’m like, “I want to do the same thing, so I’m going to do all these businesses and something’s going to stick.”

I had enough money only to cover my expenses, but before I even started all these businesses, I was very into travel hacking using credit since I was 18. When I started all these businesses or I tried to, I was 22. So, for years, I had been doing travel hacking already, which is leveraging credit to give points statuses and as a result, you get free flights and free hotels. The point here is that because I was leveraging credit, by 22, I already had a decent amount of credit lines, I had probably six to eight credit cards at a time.

There are methods to get points and actually spend money without spending anything, it’s basically called credit card churning. You’re making it look like you’re spending by turning credit into cash and then paying back to credit cards, and then this way, getting all the bonuses such as signup bonuses, and this way, earning statuses, and this way you get free flights and free hotels. This is how you leverage it for the travel hacking aspect. But you can also leverage it for business. What that means is, you’re using the available credit that you have to fund whatever business venture that you’re doing, to put it simply. But I had no idea about the business part when I started all these businesses. The only thing I knew was that I had a bunch of credit, I didn’t know how the how the underwriting works, I had no idea how the APR works, how badly I can get screwed if I do this incorrectly. I had a $100,000 in available credit and I thought to myself, $100k is how much money I got to start all these businesses, which is the worst possible mentality ever, looking back at the situation now. So, I had no income coming in besides all the side hustles that were bringing me like $3,800 a month, and that was covering just my expenses. Everything for those businesses was all credit. I started doing all these marketing techniques; trying to hire VAs, doing ad spend, all really without trying to go find somebody or a course or anything like that to go learn from.

My biggest problem was that I thought I was extremely smart and better than everybody else at that time, so that led me to going and doing it myself without learning from anybody or from any courses. Six months down the line of me doing all these five businesses, not really focusing my time fully on any one of them, I ended up in $82,000 bucks worth of credit card debt and paying the banks $4,000 a month in interest when I was only bringing in $3,800 a month; which only covered my expenses, not even the interest. So, at that point, I was just gaining an additional $4,000 bucks a month in debt on top of the $82,000 that I had. I was ignoring that situation for a while. I was traveling for free because I knew how to travel hack, and I was flying first class and whatnot for free, but the reality of the situation was that I was in massive debt.

I was traveling just kind of ignoring it until I finally sat down at my desk, because I came back from a trip and my mailbox was filled with all these red envelopes, and I was like, this is probably pretty bad, so let me just sit down and figure out what this is. All these red envelopes were collection letters. I had a couple of lawsuits at the time, and because of my account, they were sold off to collections because I stopped making payments. I literally could not make payments for even my rent at the time because the interest was just killing every possible dollar that I could have made. I was probably doing like 40 to 60 hours a week in just all these side hustles. I was literally doing all those little businesses which were inevitably just losing money. But the only thing else keeping me alive was my fitness business, which was bringing in a little bit of money. All these side hustle that I was doing were like taste tests, focus groups. I was literally like trying crackers or like putting up some lotion and giving my feedback on it for a $100, and I was doing that with a bunch of different names every single day coming to the same company. They were like, “Weren’t you just here just two days ago trying on this lotion?” So that’s what I was doing, just literally staying alive while trying to build these businesses up.

When I sat down at my desk and I stacked up all the bills and all the collections and all the lawsuits, that was when I found out I was $82,000 in credit card debt, and I was being sued by the banks at the time if they didn’t recoup any of the money or I didn’t start making payments. I checked my credit score and it was at $490; I got collections reporting; I got every possible derogatory mark reporting. At that moment, I realized in how much of a shitty situation I am. I did not even see a possibility of getting out. Because I’m pulling in $3,800 bucks a month that covers just my expenses, and on top of that, I get $4,000 in interest just to keep my bit at $82,000. I’m a very positive person, but at that moment, I felt as hopeless as anybody could possibly feel. That was just the rock bottom for me. I even had a thought of fleeing back to Russia where I was born because at least I got some family and some support back there. Luckily, just sitting there for literally 12 hours just frozen basically because my mind couldn’t even work, something happened and maybe my feeling of hopelessness got so bad that I probably got like a fight or flight instinct in my mind, and I kind of realized what I had to do at this point.

What I had to do at this point was stop being a wantrepreneur, trying to do all these five businesses at one time. I realized, I don’t have a skill and I’m not humble enough to go and learn from somebody to start any one of these businesses, and that’s why I’m failing. On top of that, I have no idea how credit on the business side of works, which is why I’m getting so screwed by the banks. So, my realization was that I needed to do these three things, and those three things were: firstly, I got to drop all these businesses that I’m trying to do. Doing five things at once that I don’t even know how to do, just blowing money on it, that’s what was putting me in that situation. So, I stopped doing everything that I was doing.

Secondly, I dedicated my time to go and find myself a job. The last job I had, by the way, was the lifeguard at 15 years old. So, to me, I thought that’s the end of my entrepreneurship journey because I’m going to work for somebody. But I realized that’s what I had to do because I needed to learn a skill and I needed to figure out how a company works. I got that job, not just for the income, but for the skill, and that skill was sales. I got myself in a sales job for a cryptocurrency company in San Francisco. And mind you, I applied to 150 different places and not a single place even got back to me, even though I had two degrees and I had like a flawless and a bit of a made-up resume. But this sales job that I got was because I went in person to a meetup, and for whatever reason; because of my attitude or because of my perceived work ethic, they wanted to give me a chance.

The third thing I did was, I realized that because I’m being so screwed by the banks, I needed to learn credit; first of all, to fix my credit, but then also, to not get screwed again in the future and not get into the same situation. So, for six months from that day of rock bottom of where I was, I did nothing but hustle at that sales job. In three months, I became a top salesperson at that company. I was making about $12,000-15,000 now every single month and I learned credit. I took a sales job and learned credit. I was not traveling anymore, not doing anything. I wanted to get out of debt, I wanted to learn a skill so I can use that later for my business, and I wanted to get my credit straight. For six months, that’s literally all I did. And after six months, I was worth zero dollars, and I could not have been happier in my life to be worth zero dollars. Because now, I have a clean slate and I’m no longer being brought down by $4,000 in interest, and I now see a possibility for me to go and actually start a business or do something. Because six months before, I couldn’t even possibly contemplate a scenario where I could go and do that.

When six months passed where I was doing sales, now I had a skill which was sales communication. Secondly, I had an income coming in. So now I had disposable income that I can use for testing of the business without getting screwed by the banks and then getting interest racked up. Thirdly, because I was learning credit repair and trying to get my credit straight for six months, I not only got my credit score from a 490 to 750, but more importantly, I realized that I can leverage credit for business purposes in a completely different way than I was doing before. How I started doing this is, there’s something called 0% APR and these are offers that banks provide for new customers or existing customers, where they can give you a line of credit, whether it’s a credit card alone, that you don’t have to pay any interest on for a period of 12 to 24 months.

Now, some of my clients were also in real estate. What I found out is that for real estate flips, they had a hard time getting funding from the bank because this is more of a risky type of investment. So, I said, I understand how to leverage credit where I’m not paying any interest, but I didn’t necessarily tell them that. I just told them that I can fund the deal, because they had a hard time getting money for these flips. Generally, they’re paying a pretty high percentage for borrowing money, whether it’s hard money or whether it’s from the bank. I knew this, but now my percentage that I was borrowing money at was 0%, and I was still charging a percentage that was much lower than they would usually get, but they don’t know that my percentage is 0%, so my cut on these funding deals was quite big. Like, if I funded $150k project and I’m making a cut of 10%, that’s a $15,000 gain without using any of my own money.

I continued doing the sales job, but I started also doing these deals where I’m funding projects once in a while. Probably after 10 months, I realized that I’m making more money leveraging my credit correctly to fund these deals than I’m making at my sales job. Now keep in mind that I was probably making about $150k at that sales job at this point, probably even more. That’s when I quit the sales job and went full time focusing my efforts on credit and funding these deals. Now, I was at the point where I can go and start traveling again. So, I’m back to travel hacking, I’m starting a new chapter where I’m leveraging credit for business purposes and not just travel hacking. One year from that point, I think I traveled 27 countries during that time, making probably two times more money than my sales job. That’s when I opened up my program called the Inner Circle, where I teach how to leverage credit for not only travel hacking, but also for business purposes like real estate or eCommerce. That’s really the main thing that I focus on because I never suggest anybody to leverage credit for something that is not cash flow. If they’re leveraging credit for something that just appreciates, there’s a very high risk they’ll get screwed by that situation because there isn’t a cash flow.

There’s a very high risk in cases where you’re leveraging credit, let’s say you’re flipping cars or something, because cars don’t cash flow; cars depreciate extremely fast. But if you’re leveraging credit for let’s say a real estate property that not only appreciates, but more importantly also cash flows, then you’re able to pay down the debt, even if there’s a scenario where the property depreciates for a period of time. Because when you’re just leveraging credit for a property that maybe you’re living in, and it depreciates under the value that you’re borrowing from the bank, then you could probably get that property taken away. But if the cash flows, you can still pay down the principal with minimum payments. Even in real estate, for single family, it’s more risky than multifamily. Because you have a single tenant or two tenants, and they leave and you’re now at 50% or 0% percent occupancy. So, I’m focusing my efforts right now this year going forward on multifamily. Because at this point, I’ve scaled my credit; my personal and my business, high enough to where I can go and start doing multifamily deals.

Travel hacks work if you spend a lot of money on the credit card. But if you just bounced your balances back and forth, paying off with cash, then you can build up enough so that you’re actually going to accumulate points. Now, let me also say that there’s travel hacking methods that you can leverage credit for, and there’s travel hacking methods that you can do completely without credit. So just to give you an idea of how powerful this is, leveraging non-credit travel hacks and credit travel hacks for the past 18 months, I took probably about half a million dollars’ worth of flights alone, and probably close to a million bucks or so of free travel altogether.

For non-points method, here’s a fairly basic hack. You can have a status for example with a hotel or a car rental company, and that’ll allow you not only to get a very decent discount when you’re booking the car or booking the hotel, but additionally, it’ll give you an upgrade, if you have the highest status, to the best room or the best car. So, an example of that would be, let’s say you’re renting from National or you’re renting from Hertz, and you do something called status matching. Status matching is where a rental company or a hotel chain will match the status of a competitor just to get your business, and you can do that without even having a credit card. This changes all the time, so you kind of have to keep track of it. You can get a couple statuses without proving any competitor status, and then you can go and match other higher statuses just by monitoring which companies will do that and which won’t do that. But the easier way to do it is to get a premium credit card, for example, the Hilton Aspire, which will give you a high status with Hilton. Or if you go and get the Chase Sapphire Reserve or the Amex platinum, those will already give you higher status with a car rental company and with a hotel chain. You can go to a website called statusmatcher.com, and that will tell you which companies will match which competitor. This way, you can go and get a very high status with a hotel and a car rental company. Anytime you go book a hotel or a car, you’re going to be paying significantly less than the average person would, and you’re going to be staying or you’re going to be renting the highest tier product they have for lower than the price of their basic product.

The best thing to do to find out more is to send me a DM on Instagram @yanstavisski.

Highlights from Alex’s Interview

The idea behind the quote “You don’t inherit a family business; you borrow it from your grandchildren” is that when you get the business, it isn’t just yours to spend the money and waste; you also have a responsibility to passing it, to maintaining it and developing it, and passing it on to your children and grandchildren in better shape than you got it. Even if you don’t give them the business or money, you’re still passing on to them values, traditions, and legacy of the family. Very often, the families that I looked at in my study, The 100-Year Family, were less passing the business on and more passing a philanthropic legacy or a values legacy, or just a value to be productive and add to the world rather than just be a consumer.

The Giving Pledge is where people with vast amounts of money pledge to give half that money, at least, to philanthropy. Actually, when you have billions of dollars, you could afford to give much more than half. In my study, I have been in 20 countries, and I interviewed more than 100 families that had succeeded and thrived into the fourth generation. So, I’m looking at the very successful and very wealthy families. What I found, among other things, is that all of these families, by the second and third generation; the young people in the family, they were happy to be wealthy and it isn’t that they were rejecting wealth, but they weren’t excessive about it. Their concern was about sustainability, the environmental future, how they develop their communities, and in the third generation and later, they developed a real social commitment. Largely, the family had that already, but that was what they found most meaningful about the family wealth; not how much they could spend.

Now, there certainly are third or fourth generations that have excessive spending habits and develop next generation family members who are not responsible. But what I wanted to do in my research is study the families that were doing well, so I sought out families that had succeeded beyond the third generation, that had a sense of shared identity as a family, and that were large and had created value over the generations. So, what I was looking at is, what are these successful families all over the world doing to, be successful. One of the things that I found is that maybe not the first generation, but the second generation or third generation developed a culture, where they had a set of standards and values for what they were doing as a family. They committed themselves to developing a great family, they promoted social responsibility and entrepreneurship in the next generations, and they acted very differently than these consumer mentality and spending-oriented people. I wanted to look at what these families did to create a sense of responsibility and values in their next generation. So, the people in the families that I studied all over the world have a very different approach to how they developed and shared and engaged their next generation.

To dive in a little deeper, first of all, what they were doing was they developed a shared culture as a family. So, they said, the wealth in the family is not yours to do with as you want. They create trust, and they also create family agreements to define how they use the wealth and what their wealth is for. These families, for example, have policies about what you’re expected to do. A lot of families have a very clear expectation that people in the family will work for a living or develop and do something that makes a difference in the world. They meet as a family and they talk about what their wealth is for. So, they give, they create philanthropic foundations, they create norms and expectations about working, and they usually don’t just pass on wealth to be used in any way you want; there’s usually limitations. They also have a family culture that says, this is what we do with our wealth.

So, people in third or fourth generation with great wealth, families like the Rockefellers for example, they have an extraordinary record of philanthropy in their three to six generations. It’s not that they’re not wealthy and people don’t have nice houses, but they are not supposed to be spending the wealth, rather they’re supposed to be giving it away and sharing it and doing good things in the world. That’s what many of the heirs in that family do. It wasn’t just the Rockefeller family, all of the families that I interviewed had that sense of responsibility. They grew up not saying how much can I spend and how rich can I be, but they grew up with a sense of, as many families say, to whom much is given, much is expected. They grew up with an ethic that said that we as a family stand for certain things. Because we have so much privilege and we have so much to give, we want to meet together and create an organization and have impact on the world. That’s what the next generation is interested in, not spending and consuming. Then these families create what I call a family organization around those values; a family culture that is about this concept of stewardship.

The story that John D. Rockefeller I made all the money and was a fairly bad person and made some really despicable choices, and his son Jr. was so disgusted with his reputation that he devoted his life to philanthropy, that’s not exactly true. First of all, John D. Rockefeller was a very devout Christian and he taught his family about tithing and about moderation. While his business practices may have been questionable, his philanthropic expectations were very clear and he set the tone. Actually, by the time he was the age of Bill Gates today, he was very committed to philanthropy. His business was broken up when he was, I believe in his 50s. So, he actually ended his life with a commitment to philanthropy which he passed on to his son, and his son certainly wanted to redeem the family name and that was his mission. Then he in turn had five sons; two of whom became governors, one became America’s Vice President, Laurance Rockefeller was one of the first venture capitalists, David Rockefeller was the chairman of the Chase Manhattan Bank. So, they all worked for a living, even though they were immensely wealthy.

The other thing which is definitely not true of the families that I studied, is that wealth is not a one-time event. The people in these families in the second, and especially the third and later generations also are wealth creators. Like, Laurance Rockefeller was a venture capitalist and invested in things that were socially responsible well before that was popular, but also, they were profitable. He bought land and branches and things like that. So, wealth creation is something that is not a one-time event, but something that continues across the generations. Many young people from third or fourth generation are extraordinarily entrepreneurial, and create many new businesses in addition to the original family business. So, these families have continual wealth creation, not just one-time.

The challenge that these families mainly face is to instill that drive and competitiveness and desire to succeed in the next generations who grew up in luxurious houses. The way you do it is, first of all by example, not by telling them to do it; so, the family sets an example. Sometimes these families are a little bit more understated. Also, the older generation in these families is engaged with the younger generation. They teach them, they mentor them, they talk about social projects; not just how wonderful our vacation is and how beautiful our house is, but how can we give back to the world. The younger people in these families often grow up with a little bit of guilt and concern that they have all this money and why have they been so blessed? The family then helps them not to feel guilty, but to say that because of these blessings, you have to do something productive in the world. When you’re a wealthy family, productive doesn’t necessarily mean you have to work for a living; you can work in a social enterprise. Some people become artists and composers and give back to society in that way. Others create social ventures; they create schools and healthcare organizations and workshops.

The older generation in these families is engaged not just in saying that let’s spend, but in talking about what it means to be wealthy and how to be responsible. What is our wealth for is the question that these families talk about. And they don’t start when the kids are 25 or 30 years of age, they start when they’re three, four, six, and eight by talking about how is it that you have this. Because unless the family teaches them, they’re never going to know that there are people that don’t live like this, and that there’s a world out there, unless the family helps them see it. So, these families, for example they’ll do Habitat for Humanity as a family. Even though fabulously wealthy, the family gets together and builds a house and then they have their Family Retreat at a nice place and talk about what they do. They do service work. For a lot of families, part of their annual family meeting is a service day. Some families spend a lot of time talking about the foundation and what they’re going to do with it. So, you have people like the Buffetts and the Gates family and the other people that signed The Giving Pledge. They spend a lot of time like John D. Rockefeller did, training and helping the family members become philanthropists; not to say that you have to go out there and get a job, but that you have to go out there and do something useful with  what we have.

But again, the families that I’m talking about are the 1% that succeed. There are families that have the most disgusting and despicable things come out about them, and then you see the third generation suing the second generation and things like that. But what I’m trying to do in this book is to tell stories of families that are not like that, so that the families that have these tendencies can do things early enough to avoid them. Certainly, it is true that for every family that’s philanthropic and elegant and understated and moderate, you can name five families that aren’t. But the purpose of my research is to offer families a roadmap so that they can go on path two and do what they can to avoid path one. Path one is definitely more likely and doesn’t lead to greater happiness, and it certainly doesn’t benefit society.

What I’m trying to do in my research is to offer positive models to counteract. The media certainly doesn’t have any trouble talking about the families and the spoiled brats and the lawsuits and things like that; you can read about that all the time, but the stories of positive families tend to be more secret. They tend to be more circumspect because they don’t want publicity, they don’t go out tooting their achievements, and they’re quieter. So, what I wanted to do by doing this research is to get the stories of families that are, elegantly and quietly productive, and gest them out front. My book has hundreds of stories of what families are doing, in the hopes that families avoid these lawsuits and avoid these spending and crashing and burning, and all of the terrible things that the families can do. Those kinds of experiences are exactly what led me to write this book.

Apart from the fact that billionaires have a particular I think responsibility and they have incredible impact on the world, any family can learn to be socially responsible and develop statesmanship and stewardship in their next generation, and talk about what do we want to see happen in the world. A lot of families that consider themselves not particularly well, by standards of the world are still very excellent.

I have about 100 or so articles and resources and things that can be downloaded from the website “dennisjaffe.com”. The book is available on Amazon, and presumably in independent bookstores, as well. Also, there’s a Kindle electronic version of the book, but this is a hold and browse through kind of book. The book has got a lot of stories in their own words of what these families are doing and how they’re trying to counteract that ethic of entitlement in their next generation. I think my book is an attempt to tell another story that is quieter, but in some ways more inspiring and more meaningful.