PRIORITIZE AND FOCUS
I’ve encountered plenty of bad luck along the way. The first little fortune I made I instantly lost in the stock market. The second little fortune I made, or should have made, I basically got cheated out of by my business partners. It’s only the third time around that has been a charm.
Even then, it has been a slow and steady struggle. I haven’t made money in my life in one giant payout. It has always been a whole bunch of small things piling up. It’s more about consistently creating wealth by creating businesses, creating opportunities, and creating investments. It hasn’t been a giant one-off thing. My personal wealth has not been generated by one big year. It just stacks up a little bit, a few chips at a time: more options, more businesses, more investments, more things I can do.
Thanks to the internet, opportunities are massively abundant. In fact, I have too many ways to make money. I don’t have enough time. I literally have opportunities pouring out of my ears, and I keep running out of time. There are so many ways to create wealth, to create products, to create businesses, and to get paid by society as a byproduct. I just can’t handle them all. [78]
Value your time at an hourly rate, and ruthlessly spend to save time at that rate. You will never be worth more than you think you’re worth.
Value your time at an hourly rate, and ruthlessly spend to save time at that rate. You will never be worth more than you think you’re worth.
No one is going to value you more than you value yourself. You just have to set a very high personal hourly rate and you have to stick to it. Even when I was young, I just decided I was worth a lot more than the market thought I was worth, and I started treating myself that way.
Always factor your time into every decision. How much time does it take? It’s going to take you an hour to get across town to get something. If you value yourself at one hundred dollars an hour, that’s basically throwing one hundred dollars out of your pocket. Are you going to do that? [78]
Fast-forward to your wealthy self and pick some intermediate hourly rate. For me, believe it or not, back when you could have hired me…Which now obviously you can’t, but back when you could have hired me…this was true a decade ago or even two decades ago, before I had any real money. My hourly rate, I used to say to myself over and over, is $5,000 an hour. Today when I look back, really it was about $1,000 an hour.
Of course, I still ended up doing stupid things like arguing with the electrician or returning the broken speaker, but I shouldn’t have, and I did a lot less than any of my friends would. I would make a theatrical show out of throwing something in the trash pile or giving it to Salvation Army rather than trying to return it or handing something to people rather than trying to fix it.
I would argue with my girlfriends, and even today it’s my wife, “I don’t do that. That’s not a problem that I solve.” I still argue that with my mother when she hands me little to-do’s. I just don’t do that. I would rather hire you an assistant. This was true even when I didn’t have money. [78]
Another way of thinking about something is, if you can outsource something or not do something for less than your hourly rate, outsource it or don’t do it. If you can hire someone to do it for less than your hourly rate, hire them. That even includes things like cooking. You may want to eat your healthy home cooked meals, but if you can outsource it, do that instead. [78]
Set a very high hourly aspirational rate for yourself and stick to it. It should seem and feel absurdly high. If it doesn’t, it’s not high enough. Whatever you picked, my advice to you would be to raise it. Like I said, for myself, even before I had money, for the longest time I used $5,000 an hour. And if you extrapolate that out into what it looks like as an annual salary, it’s multiple millions of dollars per year.
Ironically, I actually think I’ve beaten it. I’m not the hardest working person—I’m actually a lazy person. I work through bursts of energy where I’m really motivated with something. If I actually look at how much I’ve earned per actual hour that I’ve put in, it’s probably quite a bit higher than that. [78]
Can you expand on your statement, “If you secretly despise wealth, it will elude you”?
If you get into a relative mindset, you’re always going to hate people who do better than you, you’re always going to be jealous or envious of them. They’ll sense those feelings when you try and do business with them. When you try and do business with somebody, if you have any bad thoughts or any judgments about them, they will feel it. Humans are wired to feel what the other person deep down inside feels. You have to get out of a relative mindset. [10]
Literally, being anti-wealth will prevent you from becoming wealthy, because you will not have the right mindset for it, you won’t have the right spirit, and you won’t be dealing with people on the right level. Be optimistic, be positive. It’s important. Optimists actually do better in the long run. [10]
The business world has many people playing zero sum games and a few playing positive sum games searching for each other in the crowd.
There are fundamentally two huge games in life that people play. One is the money game. Because money is not going to solve all of your problems, but it’s going to solve all of your money problems. People realize that, so they want to make money.
But at the same time, many of them, deep down, believe they can’t make money. They don’t want any wealth creation to happen. So, they attack the whole enterprise by saying, “Well, making money is evil. You shouldn’t do it.”
But they’re actually playing the other game, which is the status game. They’re trying to be high status in the eyes of other people watching by saying, “Well, I don’t need money. We don’t want money.” Status is your ranking in the social hierarchy. [78]
Wealth creation is an evolutionarily recent positive-sum game. Status is an old zero-sum game. Those attacking wealth creation are often just seeking status.
Status is a zero-sum game. It’s a very old game. We’ve been playing it since monkey tribes. It’s hierarchical. Who’s number one? Who’s number two? Who’s number three? And for number three to move to number two, number two has to move out of that slot. So, status is a zero-sum game.
Politics is an example of a status game. Even sports are an example of a status game. To be the winner, there must be a loser. I don’t fundamentally love status games. They play an important role in our society, so we can figure out who’s in charge. But fundamentally, you play them because they’re a necessary evil. [78]
The problem is, to win at a status game, you have to put somebody else down. That’s why you should avoid status games in your life—they make you into an angry, combative person. You’re always fighting to put other people down, to put yourself and the people you like up.
Status games are always going to exist. There’s no way around it, but realize most of the time, when you’re trying to create wealth and you’re getting attacked by someone else, they’re trying to increase their own status at your expense. They’re playing a different game. And it’s a worse game. It’s a zero-sum game instead of a positive-sum game. [78]
Play stupid games, win stupid prizes.
What is the most important thing to do for younger people starting out?
Spend more time making the big decisions. There are basically three really big decisions you make in your early life: where you live, who you’re with, and what you do.
We spend very little time deciding which relationship to get into. We spend so much time in a job, but we spend so little time deciding which job to get into. Choosing what city to live in can almost completely determine the trajectory of your life, but we spend so little time trying to figure out what city to live in.
Advice to a young engineer considering moving to San Francisco: “Do you want to leave your friends behind? Or be the one left behind?”
If you’re going to live in a city for ten years, if you’re going to be in a job for five years, if you’re in a relationship for a decade, you should be spending one to two years deciding these things. These are highly dominating decisions. Those three decisions really matter.
You have to say no to everything and free up your time so you can solve the important problems. Those three are probably the three biggest ones. [1]
What are one or two steps you’d take to surround yourself with successful people?
Figure out what you’re good at, and start helping other people with it. Give it away. Pay it forward. Karma works because people are consistent. On a long enough timescale, you will attract what you project. But don’t measure—your patience will run out if you count. [7]
An old boss once warned: “You’ll never be rich since you’re obviously smart, and someone will always offer you a job that’s just good enough.”
How did you decide to start your first company?
I was working at this tech company called @Home Network, and I told everybody around me—my boss, coworkers, my friends, “In Silicon Valley, all of these other people are starting companies. It looks like they can do it. I’m going to start a company. I’m just here temporarily. I’m an entrepreneur.”
…I didn’t actually mean to trick myself into it. It wasn’t a deliberate, calculated thing.
I was just venting, talking out loud, being overly honest. But I didn’t actually start a company. This was in 1996, it was a much scarier, more difficult proposition to start a company then. Sure enough, everyone started saying “What are you still doing here? I thought you were leaving to start a company?” and “Wow, you’re still here…” I was literally embarrassed into starting my own company. [5]
Yes, I know some people aren’t necessarily ready to be entrepreneurs, but long-term, where did we come up with this idea the correct logical thing to do is for everybody to work for somebody else? It is a very hierarchical model. [14]