How Idiots Get Rich
If you asked me a few years ago how to make money, my answer would be to sell widgets or services for dollars.
In fact, that is literally the way 99% of companies make money.
But, I’m waking up to realized there are much easier ways for individuals to make money.
And that comes down to two separate ideas:
They sell assets, not items
Use other peoples money
Assets > Items
Some of the smartest people I know are making less than $100,000 per year because they’re selling small items.
But I know idiots who take a fee off of a massive asset sale.
For example, in 2020 we sold our e-commerce company. We spent 4+ years going from idea to reality. Countless late nights. 2 trips to china. Thousands of cumulative hours of work.
When we sold it, a brokerage who I won’t name in this article, did virtually 0 work** and got paid over $100,000.
Fuck!
This reinforces the ideas: if you want to make a lot of money, you’re better off selling larger items.
Assets like businesses and real estate are the perfect “larger item” because you can exponentially increase their value with given how they are valued:
Foe example:
We bought a storage facility in Arkansas this year.
We paid $450,000 and the business does $3,900/month in revenue.
But that’s because real estate has crazy valuations.
Here’s the cool part.
That facility does a little over $6,000/month now. I’d bet a lot of money we can sell that business for well over $600,000 if we desired.
My point is, we are now trading on the asset value. Not the monthly sales. And shifting your mindset from selling assets (storage facilities or e-commerce brands) instead of selling goods/services (storage space & phone accessories) will make you more money.
Truthfully, all of the investment bankers, PE bros and rich guys in suits already know this. I’m just beginning to see it first hand.
Other Peoples Money
Speaking of PE bros, the other thing that I’ve changed my thinking about is that money = a unit of time.
When you don’t use others money as leverage, you need to rely more on your own time versus the time of those before you.
This is why so many real estate investors can flaunt a $10 million portfolio. Most of that is paid for in debt. These investors take other peoples bank deposits and use it to buy assets that they own.
This is a miracle if you conceptualized money as time.
You’re getting access to the money that people spent tens of 1,000’s of hours accumulating.
In days.
This form of leverage allows you to buy the bigger assets we discussed earlier.
So if your goal is to buy and sell bigger assets, you need access to more money.
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** These brokers did some work. I don’t mean to diminish middlemen in this situation, but was it $100,000 worth of work? Absolutely not.