What is wealth is not ?
Wealth is not money , though money is how you exchange wealth. Wealth is not social status or power
What is wealth ?
Wealth is having assets that earn you while you sleep , travel or play
Isn’t having wealth unethical ?
Ethical wealth creation is possible by playing positive sum games , instead of zero sum games. Most people think that there is only a fixed amount of money in the world. This is false. If instead of wasting your Sunday afternoon , you instead fixed the old car in your garage , you have now created wealth ! You can sell the car for a higher price , and nobody had to lose money for you to make it. When you sit in front of a computer and write code to create a website that other people use, you create wealth, and nobody had to lose money for you to make it. These are positive sum games. Sure Elon Musk and Jeff Bezos are super wealthy ,but that is mainly because the products they create – Amazon and Tesla , have vastly improved our lives.
How to create wealth ?
Step 1 : You create wealth by making the world a better place and doing it at scale. Solve things , build cool stuff , improve things. People recognize that value and exchange money for the value you provide. This is how you solve the income problem.
Step 2 : Take that money and feed it into the wealth generator machine – buy assets that can compound without your involvement. Use the growth of the assets to cover living expenses and pursue your dreams with the remaining
STEP 1 : SOLVING THE MONEY PROBLEM
Pursue your deepest passion down the rabbit hole to build knowledge and share it with the world. Use permission-less leverage for scale : Write code , write blogs , record videos and podcasts. If you’re going to do something well, do it with leverage and take risks in public. Don’t worry about the critics. History only remembers the optimists , the artists , the creators anyway. Set an aspirational hourly rate. Only work on things that are of high value. Outsource the task if it can be done for less than your aspirational hourly rate. Don’t try to save money by spending time on low value tasks. Save time by spending money on low value tasks so that you can spend time on the harder problems and therefore create more value. Create high value. Always ask yourself : how much value am I creating for others today ? How much effort am I putting towards genuinely providing high value ? Am I a master value creator ?
If you work for a company, the easiest way to know if you create value is to ask yourself if the work you do helps grow revenue and/or profit. At the end of the day, for a company to exist it must make money and you should play your part towards helping the company thrive. Work on the hardest problems , what really sucks about the company’s product right now ? That’s what you probably should be working on. Could you 10x the company/team’s revenue and profit ? Incremental changes usually go un-noticed , but if you can make a 10x improvement it will stand out.
To get rich – you need measurement and accountability. Work in a small team , where the effect of one’s performance on the overall team’s output can be easily measured. Be accountable by taking decisions that will have a direct impact on the direction your team/company moves in. The decision you make should have the element of risk , if it’s the right decision it moves the team forward , if wrong you will be accountable. Living with a sword hanging over your head is crucial to accountability. If you work long hard hours but the job you are doing feels safe, there is no accountability.
When chased by a big fat bully you want to run up the staircase , not down it. Always seek the hardest problems and at every decision point chose the harder option, that is how you avoid competition and stand out. Take accountable risks in public. Do not be afraid to take risks in public , that is where all the wealth is. In most work, output is tied to input. Salary is tied to the hours you put in. You can’t get rich renting out your time. Your wealth should be independent of the input , but dependent on the output. This way you earn with your mind, not with your time.
STEP 2 FEEDING THE WEALTH GENERATOR MACHINE
Now comes the fun part , converting your active income into passive income. Increase ownership in assets that are growing. If you don’t own a piece of business , you don’t have a path towards financial independence. Don’t rent your time for money , instead earn with your mind.
Good judgement is under-rated. A few good decisions when applied with leverage can be life changing. Use leverage to multiply your judgment and take rationally optimistic bets. Assets can grow on their own without you having to do anything, they can grow faster the more you have, and the greater the rate of growth , the faster it grows. Use the growth of your asset to cover your living expenses and pursue your dreams with the remaining.