How to get rich (without getting lucky)

Credit @naval.

  1. Seek wealth, not money or status. Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth. Status is your place in the social hierarchy.
  2. Understand that ethical wealth creation is possible. If you secretly despise wealth, it will elude you.
  3. Ignore people playing status games. They gain status by attacking people playing wealth creation games.
  4. You’re not going to get rich renting out your time. You must own equity – a piece of a business – to gain your financial freedom.
  5. You will get rich by giving society what it wants but does not yet know how to get. At scale.
  6. Pick an industry where you can play long term games with long term people.
  7. The Internet has massively broadened the possible space of careers. Most people haven’t figured this out yet.
  8. Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.
  9. Pick business partners with high intelligence, energy, and, above all, integrity.
  10. Don’t partner with cynics and pessimists. Their beliefs are self-fulfilling.
  11. Learn to sell. Learn to build. If you can do both, you will be unstoppable.
  12. Arm yourself with specific knowledge, accountability, and leverage.
  13. Specific knowledge is knowledge that you cannot be trained for. If society can train you, it can train someone else, and replace you.
  14. Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now.
  15. Building specific knowledge will feel like play to you but will look like work to others.
  16. When specific knowledge is taught, it’s through apprenticeships, not schools.
  17. Specific knowledge is often highly technical or creative. It cannot be outsourced or automated.
  18. Embrace accountability, and take business risks under your own name. Society will reward you with responsibility, equity, and leverage.
  19. The most accountable people have singular, public, and risky brands: Oprah, Trump, Kanye, Elon.
  20. “Give me a lever long enough, and a place to stand, and I will move the earth.” – Archimedes
  21. Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media).
  22. Capital means money. To raise money, apply your specific knowledge, with accountability, and show resulting good judgment.
  23. Labor means people working for you. It’s the oldest and most fought-over form of leverage. Labor leverage will impress your parents, but don’t waste your life chasing it.
  24. Capital and labor are permissioned leverage. Everyone is chasing capital, but someone has to give it to you. Everyone is trying to lead, but someone has to follow you.
  25. Code and media are permissionless leverage. They’re the leverage behind the newly rich. You can create software and media that works for you while you sleep.
  26. An army of robots is freely available – it’s just packed in data centers for heat and space efficiency. Use it.
  27. If you can’t code, write books and blogs, record videos and podcasts.
  28. Leverage is a force multiplier for your judgement.
  29. Judgement requires experience, but can be built faster by learning foundational skills.
  30. There is no skill called “business.” Avoid business magazines and business classes.
  31. Study microeconomics, game theory, psychology, persuasion, ethics, mathematics, and computers.
  32. Reading is faster than listening. Doing is faster than watching.
  33. You should be too busy to “do coffee,” while still keeping an uncluttered calendar.
  34. Set and enforce an aspirational personal hourly rate. If fixing a problem will save less than your hourly rate, ignore it. If outsourcing a task will cost less than your hourly rate, outsource it.
  35. Work as hard as you can. Even though who you work with and what you work on are more important than how hard you work.
  36. Become the best in the world at what you do. Keep redefining what you do until this is true.
  37. There are no get rich quick schemes. That’s just someone else getting rich off you.
  38. Apply specific knowledge, with leverage, and eventually you will get what you deserve.
  39. When you’re finally wealthy, you’ll realize that it wasn’t what you were seeking in the first place. But that’s for another day.

Success happens in discrete, singular moments

Turning points are everywhere.

You probably don’t know when they’re happening. You see them only in retrospect.

But all the time—every single week—you make decisions that constitute some big turning point in your life.

The mind can never foresee it’s own advance.

F.A. Hayek

Since this is true, it means right now matters. Right now could be the biggest moment in your life. The decision you’ll make after reading this post to push even harder, today, toward your goals, could one day be what you consider the most important decision you ever made.

This post–any post–could be the most impactful thing you ever read. That all depends on what you do with it.

There are some people who believe this—that success is the sum of all small decisions made over the course of many years, even decades. Then there are some people who don’t, and who are wrong about what success looks like.

Until you truly believe, deep down, that success is attainable, and that it’s up to you, and that the first step is pushing harder in this very moment, you’re probably going nowhere fast.

Success happens in discrete, singular moments. One by one by one by one.

A friend and entrepreneur I respect once told me that to begin succeeding in life, I should start by fixing that annoying leak in my bathroom faucet. Forget forecasting, selling, strategizing. Start with things that need to be fixed. Start with the one thing you know you ought to do, but haven’t done yet.

“If you are faithful in little things, you will be faithful in large ones.”

L

One by one by one by one.

My new article, plus working slower

I have a new piece at Startup Grind.  In it, I break down the essentials of designing a basic market research survey for a product or service idea.

Quantitative market research (i.e. surveys) is a great way to validate a product or service concept. Further, investors are impressed if you can show them hard data—real opinions from real people (not just your friends) about your concept.

Key here is to get your concept description right. Ideally you can test more than one. Just remember that your respondents aren’t telling you how they feel about your product, but how they feel about the product you described in the survey.

In other news

Here’s a photo of my son from Halloween. Just had to share. Can he get any cuter? He loved Halloween—fun to be outside trick-or-treating, especially now that the weather is nicer.

The cooler weather energizes me. Summer was hot. Florida is beautiful, but getting used to the heat will take some time, I think. As in, a few years. What I have learned is to stay cool in Florida weather, it’s important to relax and slow down.

That sounds cliche, or maybe odd, but it’s true quite literally. Moving fast or stressing out raises your blood pressure and makes you warmer. Combined with 100-degree heat and high humidity, that’s a recipe for an uncomfortable afternoon going to lunches and meetings with clients.

Relax and slow down to stay cool. The same is true in business.

Over the past 18 months, the dictum “Work smarter, not harder” (which, to be more accurate, ought to read “Work smarter, not faster”) has come to mean a lot. I’ve never regretted slowing down, taking an hour off here and there to reflect and strategize. To “work smarter.” It boosts the return on my working hours.

Think about it this way: The faster you work, the more mistakes you’ll make. This doesn’t just mean errors in your code or typos in your slide decks, but also to your overall strategy. Taking on work too quickly—before really thinking about the rate, the time, the investment, the return—is a mistake, and it hurts you big-time. More than anything, really.

You can work 60+ hours a week on fun projects for awesome clients at 10% margin, but at the end of the week, you’re no better off than someone working for 30% margin for 20 hours total. Or just 12 hours at 50% margin.

Yes, working at break-even can be smart, if you have a very specific plan for leveraging this work to get better deals in the near future. But I’ve found many people—fledgling freelancers especially—who work at break-even do not have a specific plan. They work week after week for almost nothing, jumping on every opportunity to earn revenue, then burn out and call it quits after earning unjustifiably low profits.

So to succeed and stay cool in business, slow down and relax. Think strategically. Build slowly. And take it easy to keep good perspective. This advice may be laughably fundamental, but I make this mistake all the time, and I’m well past the fledgling freelancer phase of my business.

A story to make you think

The owner of a barber shop is cutting his client’s hair when he tells him about a young boy who comes in every day to visit.

The owner tells his client how stupid the boy is and says he can prove how stupid he is if he comes into the barber shop with a simple game.

The boy comes in during the haircut and the owner tells his client to pay attention to their game.

The owner shows the boy a $1 bill in his left hand and a $5 bill in his right hand. No tricks or strings attached.

Without being discrete, the owner puts both hands behind his back and doesn’t give any clues that he is switching the bills in his hands.

Just like he does every day, the owner asks the boy to choose a hand and that he can keep the money.

Knowing what is in each hand, the boy chooses the left hand with the $1 bill and leaves the store without an explanation.

“See how stupid he is. I told you!” Said the owner to his client.

Now, the client agrees with the owner and doesn’t seem to understand why the boy didn’t choose the hand with more money.

After finishing up his haircut, the client sees the boy outside eating an ice cream cone.

The client went up to the boy and asked, “why did you choose the hand with $1 when you knew you could have had $5?”

The boy responded, “the day I choose the $5 bill is the day the game stops.”


I am not the author of this story. I found it on Reddit.

Defining “entrepreneur”

Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled.

I love that definition. “Entrepreneur” is an overused term, but there really is nothing else that encapsulates the idea. And I’ve found no definition like the one above that so succinctly explains what it means to be an entrepreneur.

Since starting my own business almost one year ago, I find myself thinking differently. I think ahead—far ahead—and rarely think about the past. I think about my success in terms of not how many clients I have, or how much money I’m making, but what portion of the possible I’m turning into something real. And what is and isn’t possible means something very different than it did, for me, just a few years ago.

That’s what entrepreneurship is about, and that’s what this definition explains so well. What is possible and impossible is not an objective, set-in-stone list of things. Possible is an relative term. Entrepreneurs simply understand this more than do most other people.

I like to use the following illustration: Go back to an ancient Roman city. Survey the town members on the question: “Is it possible to talk with someone on the other side of the world?” I’ll bet the answer is a resounding no. But today, of course, we do this daily with our phones. It is possible, and it was never actually impossible. It was just beyond the limits of ancient people’s imagination. And probably those who did imagine such an ability, or such a technology, were considered insane.

Thank God for entrepreneurs, like Alexander Graham Bell (inventor of the telephone), who saw nothing impossible about their ambitions to change the world—who pursued an opportunity without regard to resources currently controlled or available.

For those who care, that definition was coined by Harvard Business School’s Howard Stevenson.

Is American entrepreneurship dying?

The Brookings Institution reported on Monday that the American economy is less entrepreneurial than at any point in the last three decades. See chart below:

Washington Post Chart

From WashingtonPost.com

The report continues:

…recent research shows that dynamism is slowing down. Business churning and new firm formations have been on a persistent decline during the last few decades, and the pace of net job creation has been subdued. This decline has been documented across a broad range of sectors in the U.S. economy, even in high-tech… if it persists, it implies a continuation of slow growth for the indefinite future, unless for equally unknown reasons or by virtue of entrepreneurship-enhancing policies (such as liberalized entry of high-skilled immigrants), these trends are reversed.

Given the Bush and Obama administrations’ insistence on trickle-down, faux-recovery policies that inflate asset prices at the expense of small-time entrepreneurs, these results are not surprising. But the authors of this report don’t seem privy to this elementary insight when they write:

Whatever the reason, older and larger businesses are doing better relative to younger and smaller ones.

“Whatever the reason”…not that a steady piling on of regulatory compliance costs (a la Obamacare) has anything to do with keeping young firms out of the market. But of course, these authors don’t cite such costs a single time in their report. Instead, they blame tough immigration laws (go figure). If only we had more entrepreneurial immigrants, they say, our problem would be solved. But of course, this doesn’t address the problem — it’s like your mechanic proposing a new car as a fix for your broken old car, which shouldn’t be broken in the first place.