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We messed up. An apology from Ramit

Ramit Sethi

I want to apologize for yesterday’s email.

If you’re subscribed to I Will Teach You To Be Rich, you received this email yesterday.

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I see a lot of things wrong in that email.

  • “Guaranteed to beat.” (no, nothing is guaranteed in investing)
  • “People have always been stupid.” (why is this even here?)
  • “Made-up money that only exists on the internet” (all currency is made up…so what?)

Why did we send such an inflammatory email? One that doesn’t even represent what I really think about Bitcoin?

I want to explain how this happened, my actual views on Bitcoin, and finally what we’re doing about this.

First, my comments on yesterday’s email.

  1. It was unnecessarily dismissive of Bitcoin, which has had a major impact on money, technology, and culture in the last few years.
  2. It was over-sensationalistic and clickbait-y.
  3. It didn’t sound like us.
  4. It had nothing to do with the post it was linking to.
  5. It was not aligned with my view on Bitcoin.

In a world of hype, I believe in cutting the B.S. and being honest with you, and this email failed.

That No-B.S. view is why I don’t allow anyone with credit card debt to join our flagship courses, which costs us millions of dollars a year. One of our core values is “No B.S.” (it’s why that phrase is even on the cover of my NYT best-selling book). So when we’re guilty of it, we need to recognize it and apologize publicly. Yesterday’s email was B.S. We messed up. And we 100% deserve the heat from it.

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Plus the tons of responses on Twitter (you can see them using this search).

It’s no wonder that when we sent an email like yesterday’s, people were mad. I don’t blame them.

How this email went out

We have a team of dozens of people at IWT. While IWT started with just me writing, now we have teams of engineers, product developers, and writers. My goal is to share my views with our team, and together, we share them with the world. I do everything I can to empower my staff to create great material. We talk often about our company values, the ways we can push our students to think bigger, and the fun approaches we can use to help our readers live their Rich Lives.

In an effort to push the envelope, we got aggressive and got away from the things that made us who we are. We tried to take a hot topic (Bitcoin) to get you to click on a not-as-hot topic (lazy portfolios). There was no reason to do that. It didn’t add to anyone’s understanding of either topic. We should have led with quality and creativity and let the quality of the blog post stand on its own. We don’t need to resort to clickbait tricks.

Here’s a note from our Editor in Chief. But as CEO, it’s ultimately my responsibility.

Whenever a friend and I have a disagreement, we sit down and hash it out over some buffalo wings. So let’s clear the air. I’m going to share my thoughts on Bitcoin. You might agree or disagree, but you deserve to hear it straight.

A few starting points:

  • Money is a small, but important part of a Rich Life. I believe money is important, but there’s more to a Rich Life than a big bank account. I share this because money is important — but that’s not the sole thing that guides me, or our readers.
  • Investing is one of the most powerful ways to grow your assets. I’m no stranger to investing — I’ve invested millions of dollars, and I believe in investing your money and investing in your intellectual capital through books, training, conferences, and more.
  • Here’s where I invest my money. I invest primarily in passive investments — index funds — and I have a few individual stocks and angel investments. This is exactly what I recommend in my book on personal finance. I could make millions of dollars recommending terrible investments to my readers with fat commission fees…but I will never do that.

“Do you believe in Bitcoin technology?”

  • Yes, I believe in Bitcoin technology. We only have to look at the major impact Bitcoin has had to know that the technology is real. Beyond that, I don’t have a strong opinion on the tech. I have strong beliefs about Bitcoin as an investment — but as for the technology, I respect the technical innovations that are happening in fintech as a result of Bitcoin.
  • I’m critical of Bitcoin when viewed through the lens of asset allocation and personal finance. When I talk about Bitcoin, I’m not evaluating it as a technology. (See my above comment.) I’m critical of it when I see people investing all their money into Bitcoin.

“Do you believe Bitcoin is a good investment?”

  • Maybe. Undoubtedly, it’s beat all other asset classes in the last two years. However, I’m personally not investing in Bitcoin.

“So what is your problem with Bitcoin?”

  • Nothing, if you treat it as an investment in your portfolio. If anyone wants to invest 5% or 10% of their portfolio, great! In my personal finance book, I specifically encourage people to set their portfolios up, and if they want to invest a small percentage in fun investments, go for it.
  • But when people put all their money in one investment, that’s not investing — that’s speculation. 
  • The language around Bitcoin is filled with hype and handwavy arguments. As the price of Bitcoin gets higher and higher, the language used to talk about it becomes increasingly frantic and frenetic. The fundamentals of the investment (which nobody understands) become cloudier and focused purely on the price. If you look at Bitcoin investment communities, a huge percentage of the comments are simply people encouraging others to “HODL” (the community’s word for “HODLing” onto crypto for the long term) and get other people to buy more. There’s little recognition of how Bitcoin fits into an overall portfolio.
  • Your asset allocation matters more than any individual investment. This core investing concept is something I rarely see in the Bitcoin community, along with the core investing concept of risk. (Note: I’m using the term “risk” as the technical investment definition, not just “Can I withstand this going down 30% for a few days?”) Nobody needs to talk about asset allocation while the price of a single investment is skyrocketing…until it isn’t. I’ve had people call me “old man” and “Luddite” for not putting my entire portfolio into Bitcoin. That’s not sound portfolio strategy. There’s a reason why every sophisticated investor understands the power of diversification and asset allocation.

“But Bitcoin has beat everything else.”

  • True. But higher prices create lots of accidental geniuses. The higher the price goes, the more people think they’re geniuses. It’s easy to handwave against all arguments and simply say, “LOL! Look how much money I’ve made!” That sort of argument can seem like a mic drop. Until it stops working. When I’ve asked some Bitcoin investors how they think about their overall portfolio, diversification, asset allocation, a few have had good answers. Most have no answer at all. They simply say, “Dude, look how much money I’ve made.” Again, that’s not investing. That’s speculation. History has shown that long-term investing is more than picking one investment, no matter how high it goes.

“Are you just bitter that you missed out?”

  • No, I’m intentional about my investments. I’m not bitter that I “missed out” on Bitcoin as an investment (nor should you ever invest based on “missing out”). Again, if you’re investing 5-10% of your portfolio in speculative or fun investments, great.
  • I don’t mind if you disagree with me. I’ve taken heat for my views on real estate before. Same for my negotiation techniques. But millions of people read them, many used them, and we had vigorous debates. I don’t mind if you disagree with me, but we should have an honest discussion, not use cheap tricks and insults (like our above email). Investing is fun but it’s also serious, and it involves a lot of nuances. I want to have that kind of discussion with you.

So, to sum up:

  1. I’m sorry for yesterday’s email and I take responsibility for it. In 13 years, this is the second apology note I’ve written. That email didn’t reflect my views or our values as a company.
  2. We’re making internal changes to ensure that all of our material reflects our values. I know you have a lot of choices, and you read our material because you want to know surprising, counterintuitive, but data-backed methods to living a Rich Life. We’ve written about personal finance, business, psychology, careers, and more. And we’re going to keep at it.
  3. Thank you for trusting me and our team with your attention. We’ve got much more coming your way.

-Ramit

P.S. Now it’s time for me to stop talking and start listening. I’d love to hear from you. Do you agree? Disagree? I’m leaving comments open for the next week and I want to hear what you’d like to tell me about Bitcoin. What should I be paying attention to? How has Bitcoin changed the way you think about investing? Please let me know.

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19 Comments

 
  1. Abdo Riani

    Ramit,

    First off, if I ever mess anything up, I will be coming back to this post. No offense taken and I find your approach to addressing issues like this very well managed.

    As far as Bitcoin is concerned, I have nothing to add to your views. I see it more like a speculation but one that’s worth investing in no more than 10% of my portfolio. I find it extremely speculative even more than penny stocks. At least those stocks represent the performance of a company. I am not sure how to value Bitcoins if all it is that I can see is the number of transactions, participants and maybe its potential adoption by big companies like Amazon which signals some trust.

    In my opinion, at the end of the day, an investment in Bitcoin should be made and assumed to be lost. If it hits big, good for me and if it fails completely, that was a risk I was willing to take as long as it is not more than 10% of my portfolio.

    Abdo

  2. Tim Hegberg

    Ramit,

    I’m going to keep this short since I know you and your staff are busy. Disclaimer: I do have a small amount of money in cryptocurrencies (few hundred), but I earned it through mining and a bit of careful trading.

    I have to admit, you and your staff have got balls for sending that apology. As someone who’s f*cked up for clients before, I completely understand how devastating it is to not deliver on their expectations. I applaud you and your staff for putting this out and I’d just like to say that you haven’t lost me as a customer. I love your book, I wish I had the money on hand to take your classes (I’m saving, you’ll see me eventually) and the articles you and your staff put out are pretty good.

    Brief unsolicited advice: I’m honestly pretty skeptical about the value of cryptocurrencies and I refuse to put any of my own hard earned dollars into something that may or may not be worth shit in a few years. That said, I see the potential of the technology and I’d rather have the chance of getting a few dollars out of it than nothing. Maybe I end up with nothing in cryptocurrencies, but at least I have the rest of my portfolio. When it comes to crypto currencies, my strategy is this: Max out my 401k, max out my IRA, let my computer earn a few cents when I’m not using it, see where that ends up in value in a few years, invest whatever I earn back into my portfolio when I hit a few hundred. Simple equation, mostly inspired by information I learned from you.

    Anyways, thanks for all the hard work you and your staff put into this sh*t. Keep up the fight against BS. There’s far too much in the world.

  3. Harshdeep Mehta

    I believe, it's too early to predict Bitcoin as an Investment. Those who have capacity to take risk should try it, for others plain vanilla Index funds are best.

  4. pillow-cases

    I have confidence in, it's too early to predict Bitcoin as an Speculation. Those who have capacity to take risk have a duty to try it, for others plain interesting Index funds are preeminent.

  5. Tim

    I read your book and I basically mimic everything you've said. I also read Unshakable by Toby Robbins and your two books basically shaped my investing portfolio.

    I feel good that I was doing it right (at least in your view) the whole time. I have like 2k invested in bitcoin and I've obviously made a return on it, but some of my employees come in and check it first thing in the morning and I always tell them to be interested in other stuff.

    I'm a huge fan of BitCoin. I think it will level out the economy and make us less dependent on the Federal Reserve, but that's really as far as I go with it.

    Andreas Antonopolis did a few really good podcasts on Joe Rogan Experience which completely made me a fan of digital currency and the potential it has on life and society. You may enjoy it.

  6. DividendFamilyGuy

    I am still unsure of Bitcoin. It is Fiat but more cannot be "printed". I suppose instead of printing more another cryptocurrency will just come into existence. In the end I may use it if I can buy anything in the world with with it which it currently cannot (meaning I can walk down my street and use it for a cup of joe or groceries, etc.)

  7. Carrie

    I'm really impressed by your apology. One of the things I like most about you (other than the excellence of your content) is that you give it straight. No B.S., like you say. You caught yourself in some B.S., said "Nope," told us all about it and apologized. Case study in how to do things right. Thank you.

  8. Jae

    Great post and way to be open and honest when mistakes are made. Lots of people could learn a lot from this post instead of passing the blame along. I actually didn't read that email but this one caught my eye and it makes me trust and respect you and IWT even more. Thanks for writing it and being such a great role model in the business world.

  9. David

    This is definitely the most tactful and best way you possibly could have handled this. Way to take responsibility and be open about your views on bitcoin and the blockchain. In a world where EA is taking away refund buttons just to piss off it's users, as I'm sure you've seen on Reddit, this type of genuine and personal note is wildly appreciated.

    Keep up the good work. No BS.

  10. Omar

    I really don't understand everyone's confusion around bitcoin yet they continue to use green paper with numbers on it in every day transactions.

    A lot of people I talk to in commonplaces just keep saying "Bitcoin, I don't get it." Yet no one takes the time to educate themselves on the topic and what bitcoin and the blockchain really is.

    While they choose to remain ignorant, I'll continue cashing in on this asset and technology.

  11. David

    I will remember this email/post because it teaches 3 lessons in living richly:

    1. Ethics to live a richer moral life.
    2. Awareness of get-rich-quick propaganda.
    3. How to mitigate speculative risk.

    An act of generosity from a company that already adds so much free value.

    Thank you.

  12. JH

    You say you take responsibility, but you also make sure to point out that you didn't write it and it was the fault of some faceless editorial team. If you're going to take responsibility, just say it was your fault and leave the "inside baseball" out of it. Leaders in politics and business are always quick to blame some "group" in the organization and it just diminishes the apology.

    • Nathaniel

      This. Who is sending me emails? The person who's name appears on the signature line isn't even reading them before they are sent off?

      I own 0 bitcoin and don't expect this to change. Bitcoin has changed nothing about the way I invest. I think the blockchain is fascinating but the currency is not.

  13. Paul Singh

    Its funny how investing just 10% of your portfolio in Bitcoin, turns into a 30-40% investment of your portfolio very quickly 🙂

    The only non-believers of bitcoin are the ones that are not invested. Those that are invested and are developing projects on the blockchain (less than 1% of the population) truly understand where this is headed.

    My advice would be to users if you can… try and get your hands on 21 bitcoins (you will own 1 millionth of the bitcoins that will every exist. If that is too much $, try and get just one bitcoin and HODL it. You will be ahead of 99% of the population still as we are still early.

  14. Carmen

    Thank you for admitting a mistake! That is breathtakingly refreshing in today's culture of people refusing to accept responsibility and that they're wrong.

    With that said, I still don't fucking understand bitcoin and I provide no opinion on it.

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  16. Nigel Chua

    Hey Ramit – thanks for the apology heads up, good move to clarify.

    Hmm – I think if there is bandwidth in you/your group to explore alternative/pre-mainstream digital currencies including Bitcoin, there should be exploration there. I believe you're in SF, where all the innovations, tech including crypto is, and it's so wonderful IMO to be able to connect directly with people/engineers who are into crypto.

    Personally, I'm a little too heavy into crypto (about 14% of my total portfolio), and I am 50-50% between awareness of it possibly going down under entirely versus it going mainstream entirely (especially when governments are trying to regulate Bitcoin and other crypto). My layman opinion is given that Bitcoin is just 9 years old, and with the mass adoption that is happening (and what truly changed my mind more is when I see it changing the world for the better – see countries where governments are fucking with their people's money, and the people are turning to crypto for stability), it's more likely than not to be mass adopted.

    Have fun! =DDD

  17. Rado

    Hi Ramit.

    At the beginning, I have to admit I'm a computer geek and I don't own any Bitcoin (BTC) yet.

    Anyway, here are some my notes for people not familiar with BTC.

    1. Is BTC currency or commodity?

    You can look to BTC from 2 different perspectives:

    A) Electronic money (cash)
    Today, all money is just non-existing numbers on some computers.
    (The physical cash is in minority and – in some countries – will be even prohibited by law.)
    Since the national currencies are not covered by gold or any other valuable commodity,
    all money is just imaginary numbers.
    The value of any currency is given by trust of the people. Mostly.
    You can use seashells as money. If you find somebody who will exchange milk for 2 seashells.
    You can use small pieces of clear carbon crystals. If you find somebody who will exchange this small
    carbon crystal for 5 horses.
    To collect some amount of seashells you have to be good in diving and spend a lot of hours
    underwater. Or to grow some fruit and exchange it for some seashells.
    To collect some amount of small clear carbon crystals you have to dig a deep ground hole and spend
    hundreds and even thousands of hours of hard work to find one.
    Or you can make thousands of shoe pairs to exchange it for one crystal.
    That's the reason the people consider a small clear piece of carbon more valuable than seashell.

    But if you will try to pay for a cup of coffee by seashell in London nowadays, you will look pretty weird.
    Seashells are not considered valuable today.

    If the trend of diamond wedding ring will not be cool anymore, maybe also these pieces of carbons
    will lose them value as well. (There are rumors that most of the mined diamonds are secretly stored
    just to keep the value high.) Do you know the book "The Space Merchants"? The oak ring was considered as
    really expensive jewelry.

    What else can we use as a currency?
    What about leaves? Everybody can just take them from the nearest tree. Easy. Thousands of leaves.
    To everybody!
    What will be the value of single leaf? Almost zero. (And the forests disappear even faster.)

    O.K. Let's try something different.

    Numbers!
    Not common numbers (I want numbers 1,2,3,4,11,254 and 10000) but e.g. prime numbers. It's not easy to find a high prime number. To find new and new prime numbers need a lot of effort. Like for seashell or diamonds or gold.

    You can physically hold shells, diamonds, gold. You can write down the prime number on a piece of paper but
    it will not work. Millions of people will create paper with prime number 11.

    (O.K. Bitcoin is not the prime number. It would be too easy. Take it as an example.)

    O.K., let's base a bank for prime numbers and they will be assigned to people instead of salary.
    They can be exchanged for goods and services and this bank will change ownership of numbers accordingly
    by simply moving some records in some database on some computers. Simple.
    Coffee will cost one prime number, lunch 10 numbers and for the new car, you will need 10 thousand of prime numbers.

    But the government will hate such bank. It uses non-official currency! And even worse.
    Trading with numbers is going under the radar of Ministry of Finance! How to collect taxes in the system not fully under control?

    Disable it? Not enough? Put the owner in the jail (https://en.wikipedia.org/wiki/Liberty_Reserve).

    There has to be something better. Not possible to shut down it. Not possible to put the owner in the jail.
    It can be possible just without central database. What's the opposite of central database?
    Database spread over the Internet. The database, where everybody can hold own copy.
    All transactions will be public. There is no way to cheat or steal such money. Or – at least – it will be horribly difficult.

    The concept of the public ledger is great but not the only one. (The concept of public ledger works also in other situations
    than digital currency – read the article about trading with "virtual" Mackrel tins in the jail: https://motherboard.vice.com/en_us/article/4x3pdw/bitcoin-for-prison)

    What if the searching the new numbers is extremely difficult (just for comparison, to seek for high prime numbers is
    easy-peasy) – like mining real gold or diamonds.

    And what if you hardcode anti-inflation to the currency? Paradise!

    At the beginning, it looked just like an experiment of few nerds. To pay by numbers? Are you crazy? Who even will sell you something for numbers? The first trade was 2 pizzas for 10.000 BTCs – probably considered as the fair price for a good joke.
    (How much is it today? Ehm, 82 million USD – 2017-11-23)

    As the more and more people started to use it, the value grew. Remember, currency is about trust.
    And people – even it's very weird – started to trust numbers.
    The people started being willing to exchange goods and services for numbers.

    B) Commodity
    The current hype with the BTC price speculation is not the right usage of BTC. Because it's not used as currency.
    It's used as the commodity. I will buy gold, orange juice, wheat and… …Bitcoins.
    If the value of Bitcoins will grow I'm happy. Otherwise not.

    2. Why is the value of BTC growing?

    The basic principle of BTC tells that the price should rise due the hardcoded limited amount of BTCs.
    The "mining" will stop when there will be about 21 millions of BTCs around the year 2110.
    Call it the anti-inflation feature.
    If you have limited resources with increased demand, the price increases as well.
    (Check the price of orange juice after poor crop.)

    And not only there is the final limited amount of BTCs but also the speed of mining is limited.
    The complexity of mathematical operations for seeking (=mining) new bitcoins vary to not be faster than about 1 TBC per 10 minutes.

    The demand is growing much faster than the amount of available BTCs. What's the result? Skyrocketing the price.

    And more the price is going up the more people demand it. And the price is growing even faster…

    3. Will it grow forever?

    Who knows? Nobody is able to guarantee permanent value growth. What? Didn't I said that the value growth is "hardcoded"?
    Why would the value go down if the anti-inflation is assured by design?
    Easy. People will not trust it anymore or just stop to use it.

    Or the government will criminalize the usage.

    Then all your savings are useless as nobody will want to exchange your numbers for some stuff.

    People who bought a gold at the beginning of the 20th century would be very rich today. (Ups, not if the government steals all your gold.)
    People who bought a bitcoins 5 years ago, would be very rich as well. And the government is not able to steal your money.
    But government can criminalize the usage of bitcoin. Or the people will decide to use some other digital currency.
    Why? BTC is the best. Or not?

    4. Is it currency for terrorist and drug dealers?

    As I have mentioned above there is a high risk of Bitcoin prohibition. The government will explain it by a war against terrorists
    and drug dealers. BTC is untrackable and there is no way to track financial transactions of criminals.

    Really?

    It's a BS. Do you remember? The ledger (database of all transactions) is public. Anybody can have a copy. All transactions
    are recorded forever. Of course, there are no real names in ledger but some IDs in form 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy (https://en.bitcoin.it/wiki/Address).

    It looks like a real anonymous address. It is. Until you will sell some your BTCs for dollars. Or you will order pizza with delivery
    to your flat. There are services that will take your transaction, split it into thousands of other transactions, shuffle them
    with other users, re-send them to different accounts, merge back to the previous value of transactions.

    It makes the tracking more difficult but not impossible. Believe me, NSA has computers for it.

    Terrorists and drug dealers would be crazy to use Bitcoins. They still use good old dollars. And not only cash
    but bank transfers as well (https://www.theguardian.com/world/2011/apr/03/us-bank-mexico-drug-gangs, https://www.huffingtonpost.com/avinash-tharoor/banks-cartel-money-laundering_b_4619464.html)

    Will the government criminalize the dollar ownership? No.

    The reason is completely different. The government wants a control. BTC is not possible to control. Yes, you can track
    the payments but you cannot stop the system.
    The only possible way is to make the BTC usage prohibited. It will decrease the usage but will not stop it.

    And this decreased usage will lower the price/value of the BTC. To use BTC as commodity, you have to watch the situation
    and sell when anything suspicious the government will plan.

    But not only prohibition can decrease the usage and value of BTCs.

    People will just to start demand real anonymity. Not because they are terrorists or drug dealers. But just because
    they can feel uncomfortable if anybody in the World is able to see – among a lot of innocent shopping – one order from (e.g.) a sex shop.

    If there will be (and they are already) the currencies with the same features as BTC plus some level of privacy, they will switch.

    5. What about other currencies?

    Based on https://en.wikipedia.org/wiki/Cryptocurrency there were about 1100 digital currencies in September 2017.

    And to be honest, except few really used currencies, you can divide the rest of them into two different groups:
    – playground – somebody just wants to try to code own cryptocurrency or start it as a small community project with "own gold".

    – scam

    Yes, most of the currencies are the scam. The scenario is very similar. "Hey, we have new cryptocurrency! Buy it now for 1USD and we guarantee you the value will be 1000USD in 1 year. Look for BTC. It's a proof!"

    Or even "New have brand new currency we are mining already. Buy shares of this mining pool and when we will start to sell
    our currency, you will get a percentage of our profit. Of course, people will buy our currency, look BTCs!"

    You will buy a bunch of useless numbers and after some while, you will not find anybody willing to exchange them for anything valuable.
    Not even small coffee.

    6. Use it or not?

    Why not?

    The initial effort is bigger than to put some cash to your valet.
    You have to create digital valet (software or – if you are paranoid enough – hardware). You have to learn how to use it.
    You have to buy some Bitcoins. Ehm. Or millibitcoins. Don't try to "mine" it. You have no chance.

    You have to accept a limited list of places to spend it.
    You have to accept that validation of your transaction will not be faster than 10 minutes. Even more.

    You have to accept that to be more attractive for "miners" to validate your transaction, you will have to offer
    some transaction fee. Bigger fee, your transaction will be more "attractive" for validation.

    Or you can decide to invest in Bitcoin. You don't care whether your transaction takes 10 minutes or half day.
    Wou will buy BTCs and check exchange rate every morning. When you will get retired you can buy a yacht.

    The same as you bought a Nokia stock years ago.
    Hey, Nokia stock? Oh, shit…

    • Rado

      Close to 2k words? Uff. Longer than any my blog post.
      I see what my next one will be…