Mental Model
One unit of work that produces a unit of output will not make you wealthy. Renting out your time only makes someone else rich who knows how to play the game. The wealthy understand that you must productize yourself and then scale unique knowledge non-linearly via the Internet to create the exponential curve that delivers wealth. Wage work may be required to learn unique knowledge, but it’s the owner that has the upside to getting rich. Apply your time, energy, and knowledge to a portfolio of targets that produce non-linear outputs such as wealth and happiness.
Overview
This strategy builds off the ideas of Naval Ravikant in his book The Almanack of Naval Ravikant. There are a few important ideas that will shape your decision process for the work you chose. You have limited time, energy, and knowledge to apply yourself to something you love and maximize the returns you seek. Ideally, you want opportunities that deliver the highest return for the least amount of time and energy. These are non-linear outputs as there is a multiplier between the input and output. Trading your time for an hourly wage produces linear outputs. You need to put in more hours to deliver more income. Traditionally, society reinforced this idea that you work at a job to provide value in exchange for a wage. While this is technically true, you will not get wealthy or experience the freedom you desire.
The box below represents the infinite space where you can apply yourself at work. The “time” box represents those jobs where there is an hourly rate or salary. The output – in the case of money – can grow over time but in a slow linear fashion as your skill becomes more valuable. The “mind” box represents those jobs or opportunities where you are applying your knowledge and capabilities that deliver an exponential rate of return. Think of the expert software engineer who quickly knows the one line of code that resolves the bug. Think of the creator who produces content that is easily consumed by millions of people across the global internet. There are many other examples that produce non-linear returns.
Your job from a long-term viewpoint is to identify multiple work opportunities that deliver non-linear outputs. This is achieved through ownership and doing work that leverages your mind in a way where the impact or delivery is scalable. You must also inspect your time allocation each day to decide what work produces the most value given your inputs of time, energy, and knowledge. That will then provide more freedom to do what you want and freedom “from” what you don’t want to do. Use jobs that have linear outputs for learning the foundational skills and expertise needed to work on projects that deliver non-linear returns.
Directives
1 – View your work as a diversified portfolio.
Embrace the power and freedom that you can apply yourself to anything you want.
The only thing that limits you is your creativity and mind.
Resist the trap to get locked into work that constrains your freedom to build a portfolio of income-producing assets.
Strategically use wage jobs to acquire knowledge.
Use new knowledge to work on projects that leverage your mind.
Eventually, eliminate “time” jobs.
2 – Think long term, execute short-term.
Embrace the fact and be at peace that significant outcomes generally require many years.
The work you choose is more important than how hard you work in the short term.
Inspect your daily schedule to be conscious of how much of your day is working on time vs. mind jobs.
Experiment With This
- Analyze your work and income streams to determine your propensity to build wealth. What parts of my work portfolio are linear – an hour of work produces a direct output of compensation? What parts of my work portfolio are non-linear such as commissions or self-serve subscription products?
- Everything in life is negotiable. Is there a way for you to adjust your current work agreement to incorporate a variable component to your compensation?
Resources
How to be Successful by Sam Altman (1. Compound Yourself)
The Almanack of Naval Ravikant: A Guide to Wealth and Happiness by Naval Ravikant (Part I: Building Wealth)