Hello Dear Friend,
Welcome to Things I Wish I Knew Earlier (TIWIKE), Sunday!
Here are three ideas on making more money for you to ponder in the coming week.
TIWIKE #1: The Entrepreneur’s Craft is Creating Wealth by Solving Problems
When I started my first business, I simply needed to make more money.
I was tired of barely getting by and begging others for opportunities to earn more. I didn’t realize at the time that making more money is at the heart of entrepreneurship.
⚡Our craft as entrepreneurs is creating more money.
Stated differently, the core skill for business owners is learning to generate wealth by creating change in the lives of others.
But wealth might not be what you think.
The notorious physicist and polymath David Deutsch gave what I consider to be the greatest definition for wealth of all-time:
“Wealth is not a number…It is the set of all transformations that you are capable of bringing about. That is your wealth. And if optimism is true, then there’s no limit to wealth.“
Wealth changes form over time (gold, fiat currency, livestock, etc), but the way it is generated remains the same.
⚡Wealth is always generated through changing the way things are.
The elements of the status quo that need to be changed manifest as problems.
According to Elon Musk, the richest man in the world, your income is a direct result of the size of the problems you solve. Also known as transforming the status quo. The harder the problem, the more fundamental the transformation, the more wealth generated.
Elon himself is the best case study here.
He is famous for making a list of what he considered the biggest problems facing the human race when he was in college. The list included making person-to-person payments easy (PayPal), dependence on fossil fuels (Tesla), and relegation to Earth as the human home (SpaceX).
He built companies to solve each problem and is now the wealthiest person on the planet as a result.
If you want to make more money, find harder problems to solve. Turn solving those problems into your primary professional focus. Persist long enough and the cash will start to flow.
The Entrepreneur’s Craft is Creating Wealth by Solving Problems.
TIWIKE #2: Knowledge is the Primary Bottleneck to Wealth Generation
What is the bottleneck for your ability to solve problems?
Knowledge…the amount of information you have at your command. Gathering knowledge makes you aware of more problems that need to be solved and unveils solutions. The logical conclusion is that your ability to generate wealth depends on your ability to gather and create knowledge. That makes learning the central habit that determines the wealth you generate over your lifetime. The more knowledge you have, the more problems you understand, and the better you are at solving them.
Therefore, knowledge, or lack thereof, is the primary determining factor of wealth over the longterm.
⚡The two variables that will govern the amount of wealth you generate over your lifetime are the problems you choose to solve and the rate at which you gather and organize knowledge.
All successful entrepreneurs are voracious learners.
Your central craft as an entrepreneur is solving problems to generate wealth, and you can combine all kinds of sub skills to improve it.
When you solve hard problems, lives change for the better. That’s what we are here to do. We are here to get increasingly good at creating positive change in the lives of other human beings.
And we are here to get paid quite nicely for this noble pursuit.
Knowledge is the primary bottleneck to wealth generation for entrepreneurs because the more you know, the more problems you can identify and solve.
This creates a virtuous cycle.
The more you learn, the better you are problem-solving, the more wealth you generate. Invest the wealth to accelerate learning and improve problem-solving ability, which leads to more wealth. This is the essence of exponential growth in an entrepreneur’s career.
Continuous learning is the most important habit for wealth generation over the longterm.
Gathering and organizing knowledge is crucial for solving bigger and more impactful problems, which in turn drives wealth creation.
Successful entrepreneurs focus on expanding their knowledge to enhance their ability to create value.
Knowledge is the Primary Bottleneck to Wealth Generation.
TIWIKE #3: Ideas+Selling=Transactions
At the most fundamental level of analysis, a business is a bundle of transactions.
Transactions happen when money is exchanged for solved problems. You solve my problem, I give you money. Customers trade their money in exchange for a product, service, or experience.
The point of sale is the focus and end goal of every business.
But how do you go about creating transactions?
As we have seen, knowledge is the primary bottleneck standing in your way. Let’s get more granular. Ideas are information packages. An idea is a set of information organized in a way that is understandable.
Businesses are made of ideas arranged in a purposeful way.
⚡Businesses are manifest ideas that generate transactions. They are representative of a single over-arching idea composed of many component ideas. Ideas shape behavior that leads toward the point of sale, aka the transaction.
The first element it takes to leverage the wealth equation is a method for generating and organizing ideas.
But the best ideas in the world are useless if no one buys them.
That brings us to the second element of the wealth equation: selling. Every business is an idea paired with methods for selling the idea. Every entrepreneur is a professional sales person. If you can’t sell your ideas, then you can be sure no one will buy them.
Selling is the core skill at the heart of the craft of entrepreneurship, which as we have seen is the ability to generate wealth.
If you pair an excellent idea with mediocre selling systems, you get a mediocre business.
If you pair a mediocre idea with excellent selling systems, you get a mediocre business. But if you pair an excellent idea with excellent selling systems, you get a world-class business. Amazon is an excellent idea (the Everything Store) plus masterful selling systems.
The same holds true for Apple and Google just like it does for Mr. Beast and Taylor Swift.
Wealth comes from solving problems.
Knowledge is the greatest bottleneck to an entrepreneur’s ability to solve problems.
The point of sale is the end goal for every business.
Transactions come from ideas paired with selling systems.
Ideas+Selling=Transactions.