book.chapter Breaking conventional wisdom

Affluent individuals often dispense business guidance that is anchored in strategies that were effective in the bygone "old economy." these conventional principles of success typically boil down to a quartet of tried-and-true maxims. However, to align with the "new rich," it's essential to discard these outdated tenets in favor of methods that resonate with contemporary times. This involves embracing a mindset of abundance and self-improvement, altering the stimuli that your brain is exposed to, and consuming educational content that can help in wealth creation and management. It's also crucial to remain composed during financial downturns and to invest in assets that generate income, rather than solely cutting expenses. Educating oneself about financial literacy is a fundamental step in this process, as understanding how money operates is key to making informed investment decisions. Diversify expertise - avoid single-focus approach The traditional approach to career success has often emphasized specialization and investment in top-tier education, such as an ivy league degree, with the expectation of long-term financial returns. However, this strategy is risky, akin to a "single point of failure" in engineering, where the failure of one component can lead to the collapse of the entire system. Engineers avoid this by designing structures with redundancies, ensuring that if one part fails, others can maintain the system's integrity. Similarly, relying solely on one career path or venture for wealth building is not advisable. The concept of the new rich introduces the "three-focus rule," which suggests pursuing three opportunities simultaneously. This involves establishing a new venture, automating it to require minimal monthly time investment, and having multiple ventures contributing to your income. Not all ventures will be highly profitable initially, but they're worth maintaining if they don't consume significant time. The key is to learn from each venture, apply those lessons to future endeavors, and optimize the use of time, energy, and resources for maximum long-term returns. To implement the three-focus rule effectively, one should dedicate 80 percent of their time to the project with the highest potential for significant financial return and allocate the remaining 20 percent between the other two ventures, continually testing new ideas and scaling up what works. Nathan latka, a proponent of the new rich concept, argues that achieving financial success doesn't require an ivy league education, substantial capital, creativity, or a unique idea, but rather a willingness to break the rules and look in the right places. He suggests supporting successful businesses rather than competing with them. Joining the new rich requires a desire for more free time and ambition, with the motivation to design one's own life being crucial. Emulate successful rivals - don't strive for unique ideas In the realm of entrepreneurship, the traditional notion of needing a unique, groundbreaking idea to achieve success is being challenged. A more pragmatic and less risky approach involves observing competitors' strategies, replicating them swiftly, and then adding a unique twist. This method is not about outright copying but about learning from the market's proven successes. For instance, dropbox's business model inspired wealthfront's ceo, andy rachleff, to implement a similar strategy, offering free management for the first $10,000 of investment portfolios, with additional benefits for referring friends. This approach proved successful without detriment to dropbox, showcasing that strategic adaptation can lead to mutual success in the market. The internet has democratized access to information, making it easier to analyze competitors' data, understand their successful patterns, and adapt these strategies to one's own business. Crowdfunding sites like kickstarter and indiegogo serve as inspiration, revealing why certain products succeed, often due to compelling storytelling rather than the product itself. This insight underscores the importance of narrative in product marketing. Moreover, online marketplaces offer a wealth of data on successful selling patterns, pricing strategies, and customer engagement tactics. This information is invaluable for anyone looking to launch a product with a unique twist on existing ideas. The key to building wealth is not in inventing something entirely new but in improving upon existing ideas, creating momentum, and then possibly exploring original concepts once financial stability is achieved. This approach minimizes the risk and cost of innovation, advocating for a more strategic entry into entrepreneurship. Build systems, not goals - disregard goal-setting Setting goals is a thrilling part of wealth creation, but the key mistake is to set goals that limit your aspirations. Think of the goose that laid golden eggs: some focus on the eggs, while the wise invest in the goose's health for better returns. Nathan latka suggests that the new rich work on systems that produce golden eggs with minimal effort. To truly succeed, envision an audacious goal, then shift focus to building a system that can achieve that goal repeatedly. This approach allows for scaling up with minimal input, leading to wealth accumulation. Mastering systems involves a deep focus on details, which might seem dull but is essential for automation and freeing up mental space for further scaling. Billionaires like warren buffett benefit from such systems, evident in their open schedules. To set up effective systems, track daily tasks, create step-by-step instructions, refine them with feedback, and categorize them into inputs, outputs, feedback loops, and stocks. Aim for systems that run on autopilot and directly correlate to cash flow, eliminating those that don't. Start by hiring freelancers for tasks and use automation software to increase efficiency. Sites like fiverr, toptal, and upwork are useful for finding talent. For long-term success, focus on increasing outputs, including your own time and energy. Test potential hires with mini-projects and consider automation for repetitive tasks through services like zapier. Remember, systems enhance wealth, while goals without systems can contribute to the wealth gap. Nathan latka's experience with his podcast, which runs with minimal input and generates significant revenue, exemplifies the power of well-designed systems in wealth creation. Cater to goldminers - don't just satisfy customer demands Generating fresh business ideas can be challenging and fraught with risk. An alternative approach, often favored by the new rich, is to identify what the majority are pursuing and then cater to the market that has already been established around that opportunity. This is referred to as the "selling pickaxes to gold miners" strategy, where you allow the gold miners to do the heavy lifting and then reap profits from the market they've created. This strategy is effective in both b2b and b2c contexts. For instance, while everyone is spending on fidget spinners, you could sell a "fidget spinner sticker kit." as amazon profits from third-party sellers, you could develop an inventory-tracking program for these sellers. Pickaxes are concealed behind every popular marketplace. They may be difficult to spot initially, but the more you adopt this mindset, the more they will reveal themselves to you. There are numerous excellent "pickaxe" ideas, such as selling accessories for extremely popular items like the businesses that generate substantial revenues by selling cases for iphones. Reading the daily news headlines and trying to envision what people desire as a result, observing what's trending in digital marketplaces and identifying the opportunities that arise, taking advantage of the largest online learning platforms, listening to the big influencers, observing what's trending on kickstarter and other crowdfunding sites, and scanning patreon.Com to see which digital products are successful. You should also intelligently replicate patterns from the past. The gold rush in 2018 was amazon.Com. The company is obsessed with saving people time – there's money to be made in doing that, and in supply chain management, and in innovations in consumer delivery systems. "there’s something to learn—and copy—for every successful business in history, no matter how antiquated they seem. Just look for the patterns that kept getting them the wins. They’re always lurking in plain sight," says nathan latka.