But to be successful, to build wealth, you must also increase your income. You might do this by changing careers, or by obtaining for a promotion, or by asking for a raise. You might invest in real estate. Or you might start your own business. I recently interviewed Timothy Ferris, author of The 4-Hour Workweek.
My father was a serial entrepreneur. When I was a boy, he was always starting businesses. As a result, I have the entrepreneurship bug, as do both of my brothers. In many ways, Get Rich Slowly is a testament to his entrepreneurial spirit. I view it as a business. It seems to me that you are very much about entrepreneurship. Did entrepreneurship run in your family?
My father has been in various types of construction and development, and also real estate Ś buying, selling, investing. Heĺs been an entrepreneur for as long as I can remember, in that respect. Heĺs always owned his own business. My mother, on the other hand, has worked for Suffolk County, which is part of Long Island, in health services doing physical therapy for geriatrics for the last thirty years.
I feel like Iĺve seen the best and worst of both of those worlds Ś the highly institutionalized employment and then self-employment. Thereĺs certainly dangers and benefits to both, and I think Iĺve had a pretty good [chance] to see both up close and personal. But entrepreneurship in the sense of starting businesses really wasnĺt something that was recommended to me.
Part of what sparked my interest was Donald Trumpĺs The Art of the Deal. I think most of his books are a waste of time, but that book is extremely good. Itĺs all about the art of the deal and negotiating and so forth. Thereĺs a lot of really good material, especially the dissection of his schedule. He basically walks through a typical day. Very, very interesting stuff.
When I was doing my undergrad and working in the library for $8 an hour Ś with no air conditioning and no ventilation in the middle of late spring Ś I really began to question just how scalable that approach was, even if it were $20, $30, $40, $50 an hour.
I was dyslexic at a young age, and developed coping mechanisms. I ended up being able to read extremely quickly, and to prepare for tests in some unique ways. I had friends saying, ôDude, when do you study?ö There was a lot of classroom reading, and I did it, but very few people ever saw me spending more than a half hour on any given day, whereas a lot of students are spending three or four hours.
After a few people asked me this, I put together a seminar. I did the first seminar with guarantees and so forth. I had very low expectations for it, but I ended up walking out three hours later with $20 bills and checks spilling out of my pockets. When I ran the numbers, I realized that this was definitely a better model, but it was still not scalable because I had to be there teaching the seminars. I became very bored of it. After that, I started fantasizing about the different formats that a scalable business could take.
Thereĺs a book by Entrepreneur Press called The Young Millionaires. Itĺs a really good book. Some of the business models are outdated now, but it basically has two to three page profiles of dozens of late twenty-something and thirty-something millionaires. It really inspired me to brainstorm different options.
So how do you come up with money-making ideas Ś or ômusesö Ś that can supply supplemental income and be easy to maintain and sustainable in the four-hour workweek lifestyle? It seems to me thereĺs no one right answer. It depends on the individual. The Young Millionaires book sounds like it might be a sort of cookbook, or an idea factory.
I recently had the chance to ask Warren Buffet a question about investing.] If I had asked, ôHow should I invest my money?ö I wouldnĺt have received [a good answer]. I had to be very specific: ôno dependents, thirtysoemthing, I can cover my expenses with other income or savings, etc.ö There were a lot of qualifiers. Just like when somebody asks ôHow should I invest my money?ö, thereĺs no way you can answer that in a meaningful way. The same is true with muses.
But in general, I would say studying case studies that youĺll find like mine, or The Young Millionaires would be another example, and then reading books like eBoys. I see my book as a valuable starting point so that you donĺt focus on the wrong types of businesses, but it requires an analysis of your risk tolerance.
Do you have any recommendations for people who arenĺt entrepreneurial, who donĺt have the ability or the interest in creating ômusesö? These people might prefer to save and invest instead, but are still interested in the four-hour workweek lifestyle. Theyĺre interested in lifestyle design.
I think one of the misconceptions with the book is that you have to use everything in the book. Itĺs really designed to be more of a menu of options for people to pick and choose from. I may go to a restaurant that I love, but I may hate half of their dishes. The fact of the matter is thereĺs no requirement to use ômusesö whatsoever to apply the principles in the book. Theyĺre principle-based and not tactical.
The rules in the book are really for increasing output and optimizing results regardless of whether youĺre in someone elseĺs office or your own. That also applies to stocks. If you study The Intelligent Investor, youĺll find that the principles and concepts and the rational deconstruction of things that are made complex Ś because the croupiers and other people can make money by making it complex Ś it reads very similarly to The 4-Hour Workweek.
By focusing within an organization on using the proper metrics to measure your own performance, improving those metrics, doing 80-20 analysis, then you can increase your value within the company, and document it in such a way that you can then have more leverage to do things like take mini-retirements or work remotely one or two days a week or have a four-day work week (which many people have done) or simply to eliminate work on the evenings and weekends.
Then [one can] apply the same rational framework to investment. Theyĺre completely applicable and adaptable to someone who has no interest whatsoever in starting a business. Iĺd say that the vast majority of the people who have used the book work within organizations.