You know that moment in a Aladdin, when he first meets the Genie? Genie meets Aladdin and he’s surprised. Aladdin is not the usual kind of guy who gets a hold of this lamp. You know, this clip. He pretty much knows what he wants. And it generally has to do with tons of money and power. Do me a favour, do not drink from that cup. I promise you there is not enough money and power on earth for you to be satisfied. Good? So, what’s your first wish? I know a lot of you say you want to be rich. But, what you really want is wealth. Wealth isn’t cars or yachts or even helicopters. There’s a lot more to it. Here’s why you need to get wealthy instead of rich. And here’s how to actually do it.
First, what is wealth?
Let’s get this straight. Everyone talks about wanting money, but that’s not all there is to it. Paul Graham says, “If you’re in the middle of Antarctica, where there is nothing to buy, it wouldn’t matter how much money you had. Wealth is what you want, not money.” But, if wealth is the important thing, why does everyone talk about making money? It’s kind of a shorthand. Money is a way of moving wealth. And, in practice, they are usually interchangeable, but they are not the same thing. And, unless you plan on getting rich by counterfeiting, talking about making money can make it harder to understand how to make money. Here’s a quote from the philosopher, Alan Watts when talking with some politicians who are absolutely convinced money is real.
“Finally, I said, “The trouble with you gentlemen is you still think money is real”. And, they looked at me and some said, “Ha, ha, ha”. Someone who doesn’t think money is real. Because everybody knows, everybody knows, money is money. And it’s very important. But, it just isn’t real at all because it has the same relationship to real wealth, that is to say to actual goods and services, that words have to meaning. That words have to the physical world. And as words are not the physical world, money is not wealth. It only is an accounting of available energy, economic energy”.
So again, money is not wealth. It’s just really a big integer in a row locked SQL database someplace owned by a bank, sitting in a server farm somewhere in the world. As Paul Graham says, “Don’t get hung up by the money. It only represents wealth.” If you’re focused on the money you’re going to get stuck as a cog in the machine. You’ll end up focused on that next promotion or the trappings of upward mobility. What is far more valuable is to create and own that engine, not just be a small piece in it.
Now that the money myth is dispelled, let’s get into how to create wealth.
The answer is skills.
And people get hung up here and try hard to look like they have skills, instead of actually having it. Paul Graham goes on to say,
“The people most likely to grasp that wealth can be created are the ones who are good at making things the craftspeople who can create it.” Being an engineer, designer, or product person is the easiest way to be a craftsperson in modern society. These are the next generation construction workers of our era, and just frankly, the future. These are the roles that are the closest to the actual creation of the product. When I first started working I was really excited to get a job. I remember when I was growing up our family didn’t have a lot of money. And, at times, I know my parents were really worried about putting food on the table, and barely making rent.
That was it. So at 18, I actually started cold calling because I wanted to help my parents and our family. I cold called the yellow pages in the internet section. This is me in 2015, I got my first job at the age of 21 & It set me on the path that I’m on now. Design coding, and product management, marketing branding. I learned to build my craft. That’s a really big thing that you and I have to talk about. Not all skills are valued at the same price.
Dennis Rodman started his first job as a janitor at an airport as a teenager. Now, janitors are really important and needed, but there are a lot of people who can do that job. So, while there’s plenty of demand there’s also a lot of supply, because it doesn’t require specialized skills to do it. Rodman was lucky. He had a huge growth spurt and gave basketball a chance in college. And, in return, basketball gave him a chance. He ended up being drafted into the NBA Draft by the Detroit Pistons. And, he ended up becoming a Hall of Fame basketball player. How? Rodman developed a skill nobody else had, rebounding at an extreme level.
“And, I said, “Shoot the ball. Just shoot over here, shoot over here, shoot over there, shoot over.” I just sit there and react. React. I just practice a lot about the angle of the ball and the trajectory of it. You’re got a Larry Bird, it’s going to spin. You got a Magic, it maybe spin. When Michael shoot over here, I position myself right there. Now I hit the rim. It’s gone, uh, click, and go back this way. Boom, here, here. Click and go that way. Boom, that way. Click here and go on back this way. So, basically I just started learning how to put myself in a position to get the ball“.
Dennis did something nobody else did, or even knew that they should do. And that won his teams five NBA championships. Five rings! He made himself extremely valuable. Remember, not all skills are valued at the same price. If you can do things nobody else can do you’ll have skills that are literally priceless. And, to be frank, this is one of the more brutal facts of capitalism.
Venkatesh Rao says that you can either live above the API or below the API. API stands for Application Protocol Interface. It’s how programs talk to each other. And now, it’s programs that are governing all aspects of how humans transact business and operate with one another. As a driver for Uber, you end up having to follow the directions of the app, which means you have to work below the API. It’s useful to society, but because there are a lot of other people who can drive too, you aren’t using special skills. If you create Uber and own it, you’re above the API, and you get to build and maintain the systems that give people what they want. So, what is most useful is actually acquiring skills that nobody else has, especially in combinations that are rare. If you can rebound the ball and nobody else does it quite the way you can, you can be a Hall of Fame basketball player. And, that applies to all the things in your career and in life.
I know a lot of people who want to raise money for their startup. But, Investors are busy looking for founders who actually have the skills necessary to build that dream. Why? It’s really straightforward. If I give money to a founder who doesn’t have the skills, they’re going to lose against the people who have the real skills.
So, that’s why it’s so important for people to work on those skills before they raise money, before they start on their startup. And, this is also why good investors look at the skills of the founders and the teams they fund, not just the credentials.
I hate to say it, but they’re definitely people who graduated from Stanford who are not good engineers. Sorry to say. And, investors get tricked like that all the time. They lose money when they only look at the credentials in the resume, when they can’t tell if someone is actually good. All of these things point to the same place. The best way to look like a good startup is to actually be a good startup. It’s actually better to be able to build, and have the skills of the craftsperson and a manager, than to look like one.
The next most important thing is Leveraging Time.
This leads me to our next big principle…You have to transcend your constraints as a limited human being.
Most importantly, this means getting leverage on your time. Apple Computer started almost by accident. Here’s a quote from Steve Jobs talking about how Apple started.
Jobs: “It’s very hard to believe.[that there was no personal computer in 1975] Well, that’s why we made one. We made one ’cause we wanted one, and we, we, there, there wasn’t one. So, we had to make one”.
Interviewer: “Did you know that when you made the personal computer though that this would become a major industry? I mean, did you know like this?”
Jobs: “Erm, No, no. It took about a year before we started to sense it. I had a partner named Steve Wazniak. Who’s a brilliant guy. And he did most of the engineering on the original Apple I, and the Apple II. And, after about a year, we showed it to our, we just made it for ourselves. And, and we showed it to her friends and they all wanted one. And so, we were busy making these computers by hand for our friends. And we, it was taking all of our life, all of our spare time. And so, we decided we better manufacture of these to get, you know, so that we can not have to spend the rest of our lives making them for friends. And that’s how we got into this. We didn’t think about starting a company. We were just doing it for ourselves. And then our friends. And then the circle got bigger, and bigger, and bigger. Now there’s 25 million people”.
They were making computers for their friends, and then it took more and more time to create them. So, they looked to create a company to save time. Which brings me to this point. Naval Ravikant says, “Wealth is about positive sum games.” And that’s about getting out of the sort of finite games, like selling your time. When I got my first job cold calling the yellow pages I was happy getting paid per hour. Then it increased a bit when writing code. But what I wish I knew earlier was that I have a really finite number of hours in the day, and in my life.
You can get the 60 or 70 hours per week of work. But beyond that, you run out. But if you make a product that can make money for you while you sleep, that’s leverage. I remember in my Microsoft days, I got into a cycle where my employer, Microsoft, was buying my time, and working there was tiring. It didn’t feel fulfilling the way I wanted it to. But I got this money, and I turn around and I’d consume. I’d go buy a new shirt at All Saints. Or a nice martini at a swanky bar down the street from my nice apartment. I paid a lot of money to make myself feel better. I was stuck in a consumptive mode. Someone was buying my time, and I was using the money that I got from that to buy things I didn’t need, that in some way made me feel like something was happening.
But in reality, I wasn’t feeding my soul. I wasn’t creating. So, that’s what I have to tell you.
You can be a creator instead of a consumer.
Most people are looking to mainly just make themselves happy by fulfilling various perceived wants that they think they have. But, to be truly fulfilled, I now realise you have to generate and create. The path to wealth is through making others happy.
Make products, find leverage, and solve their problems. I want you to visualize this as a concept, a wealth machine. You put money in and you turn the crank. That machine spits out more money than what you started with. And a machine like that is incredibly valuable because you can take the money that comes out and feed it back in.
You can reinvest that money to create wealth.
That’s a wealth engine.
A wealth machine is different because it provides both money and wealth. Now, this is in contrast to a get rich quick scheme, which provides you money, but no way to get more. There’s no wealth. These are one time things. Remember, lambo’s can be bought with money but they can’t actually be converted into even more money.
It’s money without wealth. If you have a business transaction that is a one-time thing that you can’t repeat, that’s money without wealth. There’s also live action role-play. People who play start-up. And that’s when you can’t make any money and you can’t have any wealth. These are a waste of time. Usually what happens is you hire a bunch of people, you spend a bunch of money, and it’s all a waste. Investments are supposed to pay back. Wasting money, by definition, doesn’t pay you anything back. And, a special form of this is when startups decide to sell $10 bills for $20, or even give them away for free. You got to be careful of those. A truly great startup has both money and wealth. Money goes in. It can be reinvested and you get back, not just more money, but also more of the thing that makes the money. That’s wealth.
You can couple this capital virtuous cycle with two others, talent, customers. The more talented your team is the more likely more talented people will come to work with you. And, when customers and users love you they tell everyone else who could possibly use you that they should. And, that’s another virtuous cycle, more customers. And, then, all of that together allows you to raise more money to put that back into the machine. That’s what product market fit is. And, that’s the key to this whole startup thing. Three virtuous cycles working altogether, talent, customers, and capital. Don’t focus on the money, focus on the wealth. The thing that people want. The problem and the solution.
Here’s another Steve jobs quote:
“…And sometimes people come to me and say, “I want to start a company.” And I say, “Why?” They said, “Oh, I want to make lots of money.” I say, “Forget it. That’s not a good enough reason.” Most people that have started companies because they want to make lots of money, I haven’t seen very many of those succeed.The ones that succeed are people that come, sometimes they don’t even want to start a company, they just have an idea that they want to get out, expressed out into the world. And, oftentimes they have to start a company ’cause nobody else will listen to them”.
So that’s it. Thanks for reading all the way to the end, as usual. I’m so glad you found my blog here on Cloudrovia.
And, I want you to know if you’re learning about this you’re doing the best favor for yourself and the world. The world needs more people who are solving problems. And, I think you can do it.
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Every week I try to put together a post to teach you how to build an Internet business.
And, yes, maybe even a fast growing startup that touches a billion people.
I’ll write you all again next week.
As always, Good Luck.