The Challenge of Investing When Money Is Scarce

Justin Richmond is the host of the new podcast Started from the Bottom, where he interviews successful people who grew up on the outside, including people of color and people who grew up in places where almost nobody went to college. He's also the co-host of the popular music podcast Broken Record, alongside Rick Rubin, Bruce Headlam, and Malcolm Gladwell.

Motley Fool producer Ricky Mulvey caught up with Richmond to discuss:

• Learning the unwritten rules of business.
• How class and upbringing affect people's attitudes toward money.
• The relationship between musicians, Live Nation Entertainment, and dynamic pricing.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on March 25, 2023.

Justin Richmond: Getting out of college, and I went to go start my first job, and I was signing my onboarding paperwork. And I was doing it while I was at my mom's house, and so I was doing that at her kitchen table. I got to the section where it was asking me about 401(k) contributions. I remember asking my mom, like, should I contribute? She was like, "No, better to have cash in hand, don't contribute."

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Chris Hill: I'm Chris Hill and that's Justin Richmond, host of the brand-new podcast Started from the Bottom. He's also co-host of the popular music podcast Broken Record. Ricky Mulvey caught up with Richmond to talk about the challenge of investing when money is scarce, the rise of dynamic pricing in music and entertainment, and the business rules that aren't taught in college.

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Ricky Mulvey: Maybe an overly broad question, but growing up, what was your family and your relationship with money like?

Justin Richmond: Money felt scarce. We weren't poor by any stretch. But certainly, money felt scarce and it felt like a thing to be respected. There was a high premium put on looking as if you had money, -- not necessarily like in some gross "keeping up with the Joneses" kind of sense, but presenting yourself as you can fit in with people. The way I thought about money for the longest time was that it was a scarce thing, hard to get, but was certainly something to want to collect. It was like if I could somehow manage ... The other thing would be, when you're a kid and you don't have a ton of money in your family. But you're still a kid -- you still want certain things. You see your friends behave in a certain way, and you behave that way. I remember a common refrain in my household was, "You better make a lot of money when you grow up if that's how you're going to behave." If you're going to waste food like the way you do, or want snacks from Trader Joe's, you better grow up to have some money.

Ricky Mulvey: It sounds like your first encounter with social class was in kindergarten.

Justin Richmond: Yeah. First time it occurred to me that racism was a thing, and class, and the two were linked ... in a personal way, I guess I'll say it. Because I also remember, there was a lot happening around the time, like the L.A. riots and all kinds of things. Of course, I knew there was things out in the world, but just in a personal way. But -- first day kindergarten, I turned up to school. We were living in a new place. We had just moved there a couple of months prior. It's 1994, so of course, I got my Power Rangers attire -- shirt, lunchbox. I'm feeling pretty good about the way the day is going to go. Nervous, but feeling good. Feeling like I look good.

And I'll refrain from using the name, but I remember the kid's name. I remember being in line behind this kid, and this white kid turning around and asked me if I was poor. Now, I've been in line. I've been at kindergarten all of five minutes, and I'm being asked if I'm poor. And I remember, obviously, it just made me feel really bad and hurt, and I didn't really get it. What do you mean? Well, you look poor. I don't even understand why. How? What did I do? And then going home that night talking to my mom, and my mom explaining to me that racism is a thing I will encounter, and that in a lot of white families, there's things that people aren't out-and-out racist, it's just sometimes things that are spoken behind closed doors that will sometimes then slip out to me. Yeah, that was my first encounter, and it really felt like it set up my entire public school experience.

Ricky Mulvey: I want to touch on an idea you mentioned earlier about money being a scarce resource, and how that affected your attitude toward it and your relationship with it. Growing up, was the idea of investing, was that an irrational idea for you and your family?

Justin Richmond: Investing was always a mystery to me. I always heard about the market, always heard about investing. I heard about stocks. I don't even think at the time I could have necessarily told you that any of those three things were related. I just wasn't sure what it all was and what it meant. There was certainly no one in my family doing it or could explain that to me. I remember after getting out of college, and I went to go start my first job, and I was signing my onboarding paperwork. And I was doing it while I was at my mom's house, and so I was doing that at her kitchen table. I got to the section where it was asking me about 401(k) contributions.

I remember asking my mom, like, should I contribute? She was like, "No, better to have cash in hand, don't contribute." I spent nearly four years at that place. I spent nearly four years at a company that matches 401(k) contributions, not contributing. With money being thought of as this scarce thing, it's like -- why would you give it away to this imaginary place that maybe you get it back somewhere down the line, but if you really need it, then you're going get taxed on it? And it's like just no, no, just keep the money in your account. You could grow it in a savings account, I guess was maybe the thought. I guess it was thought of as irrational -- and irrational enough that to be honest, I didn't know what it was for the longest time. It just was never even explained to me.

Ricky Mulvey: I guess irrational was a leading way, but I think that our expectations around investing change dramatically based on your upbringing. I think it's easy to say: "Why wouldn't someone contribute to their 401(k)? Why wouldn't they invest?" And for many, it's not only if you don't know, you don't know, but also, why would you give it away to that imaginary resource?

Justin Richmond: Well, I'd also say too -- having gone into college around the Great Recession, too, also completely changed my conception of what money was. If before I thought it was a scarce resource to be hoarding, and I was thinking, "Well, how can I get a career that will make me lots of money?" When the Great Recession happens -- and again, I was 18, 19, 20. I had a little understanding of what was going on, but not a really sophisticated understanding of what was happening.

It appeared to me, from a layman's point of view, that no matter how much money you endeavor to make -- and make -- in your career, it can just be taken away from you in this very unfair way. That's the way I read it as an 18-, 19-year-old. That became, to me... and I think that's probably why I ended up going into  journalism, which just felt more like a passion for me. Because I felt like, well, why would I go into something that makes a ton of money when I'm not even sure that I'm going to end up with all that money that I'm earning over the years?

Ricky Mulvey: Talk to me about your education in investing, and maybe how your mind changed a bit.

Justin Richmond: Certainly my mind's changed a lot. I would still say I'm not necessarily a sophisticated investor by any stretch, but I certainly see the value of it. I certainly see much more of a value in putting a certain amount of money aside every month. I don't do short-term investing. My money's pretty spread thin in my portfolio. But I definitely see it as being much more of an asset than just sitting in a savings account somewhere, collecting very minimal interest. There's times when I invest a lot of my income and then there's times when I pull back and I contribute a little less, but I'm always contributing.

Ricky Mulvey: In your conversation with Malcolm Gladwell, you kind of mentioned that early in your career, you didn't understand the jargon of business and the unwritten rules. What were the unwritten rules?

Justin Richmond: I'm still not sure I know. But imagine me -- I don't know the jargon and I'm showing up to meetings with people with the hair and the way my hair looks. Which is -- I can say it, maybe you can't, Ricky, but I'll say it -- it's unkempt. I have a pretty natural afro going. And I like it. It feels natural to me. But then you go into a place and everyone's suited and they have their hair cropped and coiffed  perfectly, and they're using words and jargon and slogans that you're not 100% -- it becomes a very intimidating experience. For me, it was revealing of something I just lacked growing up, which was a mentor or someone just in my life -- like a neighbor, in my family, a friend's dad, anyone that looked like me that had experience in this arena. Someone at church.

Nowhere did I have anyone that looked like me that had experience in this arena that I could go to and be like, "Hey, I don't feel like these meetings are going the way they should be going. I feel it's partially because I don't understand how to approach them." That was sort of the impetus for this show. I felt like, "Well, I bet if I could just go ask a bunch of very successful black men what they do for a living, or how they got to where they got, I would start to see a path for myself." And as I was talking to other friends from various different backgrounds, and as I was talking to my women colleagues and friends, they felt similarly. They didn't have women role models in their lives growing up or presently, necessarily, that they could go to and confide in in these ways and be like, "I don't know how to approach these scenarios." So I thought, well, maybe this could be useful.

Ricky Mulvey: One thing I've heard you mention in the previous interviews is that you said you were less successful in business professional settings when you code-switched. Why?

Justin Richmond: Obviously, you have to temper yourself. We bring different versions of ourselves everywhere we go. But if the version of yourself that you bring to work or to family or wherever it is, is like really inauthentic... in other words, when you get hired to a position, you should be bringing, I believe now, at this point, something intangible to that position. You were hired to bring you to that position -- not only to fulfill all the generic duties of that position that need to be fulfilled. But you also need to bring that intangible thing that is you, like your unique perspective, to that. I think if you're being inauthentic -- or in other words, code-switching -- you're not bringing your authentic self to that job. Therefore, you're really only doing the bare minimum that that job requires.

Sometimes you find out, like I think I did at NPR, that your authentic self isn't necessarily valued. That can hurt. But it's also a good thing to know, because it's like "Great! This may not be the place for me. Let me go to a place where I am valued, where being my authentic self -- of course, tempered for the workplace, for a professional setting -- provides some extra value."

I landed at a place like Pushkin [Industries] with Malcolm Gladwell where being my authentic self was encouraged and certainly seemed to bring a lot of value. So I don't know how you can be successful when you are code-switching in a place, because ultimately, you're going to be miserable, you're only bringing the bare minimum to that job, and you don't know if you're really compatible.

Ricky Mulvey: Or you're a psychopath and you can be anyone anywhere all at once.

Justin Richmond: Sure, sure, sure -- there's that too. Not many who could sustain something like that.

Ricky Mulvey: You speak to a lot of musicians on Broken Record, and I want to talk about Live Nation and Ticketmaster. There's a lot of headlines. I think Zach Bryan is thumbing his nose at Ticketmaster with his latest tour. Taylor Swift is the biggest controversy. But a lot of artists seem to work with Ticketmaster, and you don't hear much from them. From your conversations, what are the relationships between artists and Live Nation like behind the scenes?

Justin Richmond: I think strained. I think right now, strained. Because, I think, it's very hard to make a living as an artist now, I imagine artists are to some degree OK with making sure they're maximizing the value of their ticket prices for concerts. But I think what's happening now is that we've seen them -- a period of like basically no concerts for two years, people are starved for live experiences. We're coming back. There's this crazy inflation. And now the couple of major ticket services that exist are using dynamic pricing, and I think it's really ticking fans off. And I think, on some level, there's very savvy fans -- the Swifties, the Taylor Swift fans, are a very savvy group of people, and they're sticking it to Ticketmaster with a lawsuit.

But I think a good amount of fans aren't directing their ire at the ticketing services, but at the artists. The amount of people I've seen angry at Bruce Springsteen, in particular, because of the price of his concerts. Or Beyonce. Some of the blowback is getting back to the artists. I would say it's strained right now, and I wonder if that keeps increasing, the blowback that artists are receiving based on ticket prices and ticket pricing strategies, if we'll see the relationship become more and more strained, and if we'll see artists become more vocal. If the ire of audiences are not getting back to the artist, I don't really think it behooves them to be vocal against Ticketmaster or AXS or any of that. But, obviously, if that is coming back to them and hurting them and their image and their fan base, I think we'll probably see artists be more vocal about it.

Ricky Mulvey: Slightly gross way to put it. I can't afford to go to the concert. I wish the ticket prices were lower for Bruce Springsteen. He can listen to them. He's also selling out arenas.

Justin Richmond: But oddly enough, but Bruce is an artist where you're thinking -- I love Bruce Springsteen. In fact, I wanted to go see him on this tour. I don't think I'll get the chance, but like you, we're hearing reports about certain cities where there were tickets ultimately going for like $2 because it wasn't selling out.

I saw Bob Iger, I think, just yesterday was -- this is slightly different -- but talking about how he felt like maybe they were being too aggressive on the pricing for park admission for Disneyland, and for a couple of their experiences at the hotels. Because basically, the hotel experiences were flopping, and prices had gone up perhaps 100% -- I can't remember the exact numbers -- at parks over the last couple of years, and they're maybe looking at revising that. I do think people are trying to make up for lost money coming out of lockdown. But I'm wondering if we're going to have to start changing pricing strategy around tickets. Be curious to see what happens with the movies. I see movie theaters are going to now experiment with variable pricing, and I wonder how that impacts that. It's already hard to get people to get to a theater. Now, if you're not going to know as a consumer what a movie ticket's going to cost, do you go? I don't know.

Ricky Mulvey: My cynical take on the movie theater ones though, is that it's very easy to jump seats in a movie theater compared to an arena or a ballpark.

Justin Richmond: That's a fair point.

Ricky Mulvey: If you're seeing a Wednesday night showing, why wouldn't you just pay for the cheapest tickets and then see what's open at showtime? Do you really think that the guy or woman working at AMC Theaters is going to check your ticket and drag you out?

Justin Richmond: You are very unlikely to have to do the long walk a shame back to your seat in the way you would at like a ballpark or something.

Ricky Mulvey: In working on Broken Record and talking to a lot of these artists, it seems like a lot of musicians have incredible stories and just little anecdotes that are completely unbelievable. Are there any anecdotes, stories from doing that show or maybe not doing that show that you just can't get out of your head?

Justin Richmond: I'm definitely not going to tell it in any way as eloquently as he does, the way he takes you through his moods and such. But in the early '90s, DMC from Run DMC found himself incredibly depressed, very depressed. He has a wife, he has a kid. He has a career. Of course, Run DMC aren't necessarily like the hot new thing anymore, but they're still Run DMC. Get a lot of respect from their peers, and from, at that point, the artists who were a bit younger, and they were still able to go on tour and release records and make money. Everything is fine career-wise, really.

But he's in this deep depression, and he just can't figure it out, to the point where he's suicidal. If I'm remembering it correctly, he landed back in New York from a tour date. And was in the back of a car -- courier service, going back home. If my memory is correct, it's that he was going to go home to kill himself. He's in the car and the Sarah McLachlan song In the Arms of an Angel comes on, and he breaks down crying and has this spiritual renewal, like where all of a sudden his depression -- I don't want to say "miraculously," but it lifts him enough out of the depression that he's now not suicidal. But he goes and he gets the song, and he just plays it on repeat for I believe for months until the song literally lifted him out of a depression. It was amazing.

There's a story we did there about him. There's a bit we did there about him actually getting to meet Sarah McLachlan before he actually is lifted all the way out of his depression. Ultimately, he gets to collaborate with her on a song. But it is just this gorgeous story of someone struggling and trying to find their way, and this song, out of nowhere, lifts them up. I can't listen to that song now without thinking about that -- that song has totally changed in my mind from a song that I didn't take all that seriously or thought of as being that ASPCA-infomercial song, to like a really gorgeous, gorgeous, gorgeous song. I was listening to it actually, like not that long ago. My wife was looking at me like "What are you listening to?" I was like, "Just listen, it's beautiful, OK? Leave me alone." Totally changed my perspective on it.

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Chris Hill: As always, people on the program may have interests in the stocks they talk about. The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill. Thanks for listening. We'll see you tomorrow.