Crawl Before Walking, Walk Before Running

A few years ago, a good friend of mine set a New Year’s resolution of getting in shape. He was planning to hit the gym at least five times a week. On January 1st he went to the gym and worked out hard for two hours.

The next day he was extremely sore, but he insisted on “pushing through the pain.” He went in for another two hours…and ended up pulling his hamstring muscle. He was sidelined for a few weeks, and he never really gave the gym another try.

It was really too bad. He genuinely wanted to get in shape, but the immediate setback really dampened his enthusiasm.

A better approach is to take baby steps: crawl before you walk, and walk before you run. If you haven’t been to the gym in awhile, don’t try to push yourself too hard on the first day. Ease yourself into a routine; do a little bit each day. Over time, your body will get more used to the workout and you’ll be able to step things up a notch. This way, you’ll minimize the chance of injury and maximize your chances of success.

Of course, getting into a good workout rhythm is different from expanding your network and personal brand. These goals are even 

more long-term, and it’s important to constantly be taking little steps in the right direction.

Spend time with a different group of people: Once a month, try to make some new friends. Find people who are outside of your immediate social circle and call them up for lunch. The best part about this is you may even make some amazing relationships or business connections.

Try a different job function: Most people are very good (and are comfortable doing) one or two job functions. See if you can get an opportunity to try something new. For example, if you are an engineer, you might ask to go on a sales call to help explain the more technical aspects of your product. You’ll build confidence and you’ll develop some new skills along the way. As a bonus, your boss will probably like the extra initiative.

When in doubt, just ask yourself “what’s the worst that could happen?” You’ll be amazed at how a little perspective will help you feel more comfortable.

Stop procrastinating: There are two reasons we procrastinate – laziness and fear. Remember that if you are scared of something, putting it off isn’t going to solve the problem. In fact, the stress will only build up over time.

Instead, just do it! Tackle the tough stuff first and get it out of the way. This will relieve your mind of the stress of waiting for something bad to happen.

Over time, you’ll feel more and more confident, and can start taking larger steps. This positive loop will eventually produce big results.

Just remember, any step, no matter how small, is better than doing nothing at all.

The Secret To Maximizing Your True Net Worth

It’s so easy to get comfortable in life. We start out all excited about our relationships and careers. We’re willing to work hard to learn about the other person and develop our skills.

Fast forward five years. We’re set in our ways. Somewhere along the journey, we stopped learning and growing.

How do you fight this complacency? Here’s one trick I use: every so often, take a moment to think about your “True Net Worth.”

Your True Net Worth is what you have left when you strip everything else away – all of your relationships, all of your money and assets. You’re back to ground zero. It’s hard to imagine, but when you take away all the fancy trappings, this is who you are as a person – personality, skills, and enthusiasm.

So how do we boost our True Net Worth? Here are a few ideas:

Continue reading The Secret To Maximizing Your True Net Worth →

How To Build A Great Network

It’s great to meet people, especially successful ones who can help you. But meeting them isn’t enough…your goal should be to build a long-lasting relationship. That’s when you’ll really start getting some value out of your network.

Here are several things you can do to increase your chances of networking success:

Continue reading How To Build A Great Network →

Four Experiments to Help Fight the Downward Spiral

Have you ever had one of those days where you just can’t seem to catch a break? Those days where you feel like you don’t have a purpose and that nothing really matters?

These are the days that can really hurt us. We might make a bad spending decision or say something inappropriate at work. The last thing we want is to damage our earning ability; this is only going to make things worse!

For me, the holiday season is a good time to reflect and figure out how I'm going to fight the downward spiral going forward. Here are four experiments I'm planning on trying next year.

Some people say that the goal should be to focus on positive thoughts. But that’s easier said than done; I don’t know about you, but positive thinking doesn’t come naturally to me when I’m feeling down. I started reading more about the issue and something interesting: it’s not about positive thinking, but instead about positive doing. Here are four ideas to help you turn things around.

Have Something to Look Forward To:

It is MUCH easier to get through the day when we have something to look forward to in the near future. Take a moment to think about the little things that are coming up – maybe a night out with your significant other, a friend’s birthday party, or a fun outing with your family.

What if nothing is coming up in your life? Well, then it’s time to change that! Figure out something that you want to do and make plans to do it. When I was younger, my father used to get energized by planning our family vacations. He worked hard in his day job and our vacations were only once a year, but just thinking about them made him happier and gave him much more energy.

Write About Your Loved Ones:

This is an interesting one. Researchers at the University of Arizona found a few volunteers that took time out of their day to write something about their loved ones. Immediately afterwards, they felt substantially uplifted. Once again, this experiment can make you feel like you have purpose, giving you an instant shot of self-esteem.

Do Something Nice For Someone Else:

Many people believe that we have evolved to be purely selfish creatures. Why should we go out of our way to do nice things for others without getting anything in return? But the research shows otherwise; volunteering time or money for the benefit of others makes us feel much better about ourselves. It gives us a greater sense of self-worth and boosts our confidence. I’m not saying to give away all of your time and money, but do what you can; a little goodness can go a long way.

Write Down Your Problems:

There was an interesting research study done a few years back. They did an experiment where people feeling down talked about their problems. Afterwards, the results showed that they didn’t feel any better. But when people wrote their problems down on people, they actually ended up in a much better mood. This is because writing things down helps put things in perspective. For some reason, your problems don’t seem as bad once you see them on paper.

Have a wonderful holiday season everyone! Here's to a happy new year!

Similarities Between Poker and Business

I’ve been an avid poker player for nearly 10 years now, and it always amazes me how many similarities there are between poker and business.

Many people dismiss poker as a game of luck. Nothing could be further from the truth. Sure, on a given night some people will get luckier than others, but I have yet to meet the poker player who consistently beats the odds just by running well. Over the long run, just as in business, those who are skilled, focused, and knowledgeable will always beat those who are just lucky.

Continue reading Similarities Between Poker and Business →

Are You A Pirate or An Architect?

There are two types of people in the business world: Pirates and Architects.

Architects add value to the world. They design valuable stuff. They create great businesses and build great teams. And they make lots of money.

The ultimate architect is Steve Jobs. He started Apple when he was just a kid, and took it from two kids in a garage to a multimillion dollar computer company. Then, he moved onto Pixar, creating animated movies that made millions of families happy and generated billions of dollars for shareholders. And in the last ten years, he has returned to Apple to execute one of the most amazing turnarounds in business history.

On the other hand, pirates aren’t as interested in making positive difference. Instead, they focus on capturing value for themselves. It sounds selfish, and it is, but here’s the thing: it works.

In the 1980s, a young pirate named Ron Perelman saw an opportunity to take over Revlon, the major cosmetics company. Perelman knew nothing about makeup, but he understood finance, and figured he could make a quick buck by buying the company, making some quick operational changes, and taking the company public.

With the help of his friend Michael Milken, Perelman successfully bought out Revlon. A few years later, he had personally made billions of dollars, making him the richest man in the world at the time.

This works on a smaller scale as well. I was recently talking to an entrepreneur who had personally made tens of millions of dollars investing in foreclosed homes. He was successful because he negotiated lucrative deals with desperate families, taking advantage of their tough financial situation to profit for himself.

I’m not saying that this is right or wrong. It’s simply a choice. Nevertheless, it amazes me that people can make so much money while contributing so little. Perelman was not a brilliant innovator, or even a world-class manager. He was simply an opportunistic businessman who knew how to play his cards right.

Even today, Perelman is more than twice as rich as Steve Jobs.

It got me thinking. For awhile, I believed that people who made the biggest contributions would be rewarded the most. Clearly, I was wrong.

So what actually matters? What is the secret sauce that made some of these pirates so successful?

As I read more about Perelman, I learnt a few interesting things about him…and about pirates in general.

First of all, pirates are amazing negotiators. They understand how to put themselves in the shoes of the other party. They have a deep understanding of any situation, and are constantly thinking about how they can turn it to their advantage.

Secondly, pirates are very impatient. This may seem like a weakness, but it’s actually an unusual strength. By being impatient, pirates are constantly motivated to maximize results.

Finally, pirates are extremely focused on making money. They view changing the world as a distraction, a side effect at best. It sounds cynical, and it is, but it’s this focus that allows them to beat out the competition.

It all depends on your goals. If money is really important to you, then being a pirate is the way to go. Find opportunities and squeeze the value from them. You will do well if you do it right, and honestly, it’s probably the easier road to wealth.

But if your goal is to make an impact, then consider being an architect. This is the only way to make the world a better place. It’s a tough path, but with hard work and a little luck, you can certainly be successful and significant at the same time.

Which are you, a pirate or an architect, and why?

Do What You Love, And Get Paid To Do It

When I was in college, I had one goal: make a lot of money. Then, after I was rich, I could do what I really wanted to do.

Throughout high school and college, I kept asking myself that question: what is my reason for being here…and I could never come up with a definite answer. I was interested in many things: personal finance, entrepreneurship, education, and music.  How was I supposed to find out my primary passion when I had so many different interests?

I started to think differently after reading “The Monk and the Riddle” by Randy Komisar. Randy believes that focusing on just one passion will actually polarize you. You’ll be forced to give up things you genuinely enjoy. The result: lower happiness and decreased productivity.

This made a lot of sense to me. I realized that part of my frustration was that I was afraid to give up interests. Lots of people say that you’ll never be great at something unless you focus on it one hundred percent. Randy challenges this assumption and instead advocates focusing on a portfolio of passions. Find several things that you enjoy and work towards achieving goals in all of them. Our purpose on earth isn’t just to do one thing; there is plenty of time to pursue meaningful opportunities in different areas.

So how do we prioritize? How can we identify a group of activities that makes us happy while still providing us with a good income?

The answer came to me while I was reading Good to Great, the business classic by Jim Collins. Collins talks about a fascinating idea called “The HedgeHog Concept.” The basic idea is to figure out a company’s future strategy by analyzing the intersection of the following three things.

  1. What are your strengths? What are the things that you’re really good at, and with practice can become even better?
  2. What are you passionate about? What are the things that you really enjoy doing?
  3. What is your economic engine? Simply put: how are you going to make money?

While Collins’ book focuses on large organizations, I realized that the hedgehog concept can also be applied to individuals. Looking at the intersection of these three areas can help you define career and life goals, setting you on the path towards earning more money.

Figuring out your strengths

I’m a big believer in playing to your strengths, but it’s not always easy to figure what they are. In general, people aren’t good at self-evaluation – we think we’re good at the stuff we WANT to be good at, not the stuff we’re actually good at.

The best way to figure out your strengths is testing. Don’t just assume that you are good at something. For example, I used to think I was good at memorizing facts. It took a couple of bad grades in my college history classes to teach me that I wasn’t actually that good.

Understanding your passions

When Thomas Stanley was researching his bestselling book, The Millionaire Mind, he found that 80% of millionaires believe that their success is at least partly due to pursuing their passions. Money and security are motivators, but they’ll only get you so far. People who are passionate will go above and beyond to find success.

Conceptualizing your economic engine

This is simple: how are you going to earn money doing what you do? There is no shortage of ways to make money. If you are more entrepreneurial, you can create and market a new product or service. The world today encourages new and unique business models.

For example, there are more than half a million people in the U.S. who make a living blogging. Many people have leveraged the power of the internet to develop personal brands in niches. With tools like Facebook and LinkedIn, it is easier to get in touch with the right people to grow your business.

But entrepreneurship isn’t the only way to make money. There are plenty of organizations – companies, universities, nonprofits – that need diverse talents. Don’t be afraid to create your own opportunities – do some research and reach out to the organizations where you can really make an impact.

No matter who you are or where you want to be, you CAN figure out a way to make money.

What do you love, and how are you going to get paid for it?

Make More Money By Segmenting Your Customers

Several years ago I was talking to a Senior Vice President at a major bank. This guy had been in the business for 30 years and was one of the more successful professionals I’ve worked with; he made a lot of money yet never seemed overworked. When I asked him how it did it, he responded with a single word: segmentation.

In any service business, the most important thing is to segment your clients into two broad groups: those that are making you the most money, and those that are not.

Continue reading Make More Money By Segmenting Your Customers →

Focus on Solving Real Problems: A Dog Food Story

Several decades ago, a dog food company held an internal sales conference. First, the advertising director presented an exciting new media campaign. Then, the director of marketing explained his new go-to-customer strategy that would “change the industry.” Finally, the sales director got up and excitedly talked about how their sales team was the best in the business.

The President listened patiently through all of these presentations. At the end, he got up and said. “Look, I only have one question. If everything we do is so great – our sales, marketing, advertising – then why do we sell less dog food than everyone else in the industry?

The room went silent. No one knew what to say. Finally, someone offered a thought: Maybe it’s because the dogs HATE our product.

The point of the story is that it’s important to focus on the real problems. We often get distracted by stuff that doesn’t really matter. In this case, the company had been focusing on sales, marketing, and advertising. While those are important areas, they should have spent more of their time discovering, defining, and addressing the real problem: a lousy product.

So how do you solve a real problem? How do you create a product that people actually want to buy?

It’s a good question. There’s no secret sauce or magic recipe that guarantees success. But there is one concept that will 100% steer you in the right direction.

It’s simple: make something you’d buy yourself

Sounds obvious? It is! And it makes sense: if you are looking for something to buy, chances are there are others who want to buy it as well.

If you are creating dog food, take a moment to think about whether your dog would actually eat it. If not, you should rework your product. End of story.

This applies to any product. Whenever you create something new, ask yourself one question:

“Would you (or someone who know) actually use this?”

If the answer is no, then think about what you can do differently to turn that “no” into a “yes.”

Be honest with yourself. After all, you don’t want to waste your time and money on something that is doomed to fail.

Over the last few months, I’ve actually been hard at work at developing/expanding some of my own products. I’m not quite ready to share all the details, but needless to say, I’ve been doing a ton of research on what it takes to create a kicka$$ product that will make me lots of money. Here are some of the best writeups I’ve stumbled on:

The No Fail Approach To Product Creation. Pat Flynn over at Smart Passive Income always an amazing job, and this post is no exception. Pat lives by a simple rule – don't create anything you wouldn't use yourself – and it has served him well.

7 Things You Must To Do Make Your Product Launch Easier – Dave Navarro at the Launch Coach has a whole ton of articles on how to conceptualize and market an outstanding product. This is easily one of the best, definitely a must-read.

Don't Just Roll The Dice: This is actually a free e-book about how to set the right price for your product. Very well written, and a good read for anyone who wants to launch something new.

What are some products that you think would solve a real problem?

The Great Fundraising Racket

Happy Halloween! This year, I'd like to scare you all with a terrifying tale about money and mayhem…

Several years ago, a former government employee named Alfred Villalobos quietly left his job to start up a new company called Arvco Financial Ventures. This new business focused on helping large investment funds (such as private equity groups and hedge funds) to raise money from Villalobos’ former employer, the CalPERS pension fund for California State Employees.

A few years later, news broke that Villalobos and his new company had collected more than $58 million in fees.

People were shocked. How could a former government employee be making so much so quickly?

The truth is that it actually made a lot of sense. The CalPERS fund managed more than $200 billion, and Villalobos was strongly connected to the CalPERS board of trustees. When a private equity fund wanted to raise money, Villalobos could pull the right strings…

…for the right price, of course.

Today, the California State Government is actively reviewing this process. However, similar deals have been going on for years. These fundraisers, known as “placement agents,” have been skimming money off the top for decades.

But surely these “placement agents” are doing something right? After all, they must be reviewing the funds to select only the best ones for the shareholders.

Sadly, this is not the case. Placement agents want to see the deal go through…at any cost. They get paid upfront, so they have no incentive to see the fund get returns for the shareholders.

In short, Alfred Villalobos gets to keep his $58 million whether or not CalPERS makes any money.

The amazing thing is that this is only the tip of the iceberg. Take a look at this diagram, which shows how many fees and payments are collected before investors make any money:

Remember that most of these fees are collected regardless of performance. Pension fund managers get paid high annual salaries and bonuses. Private equity investors collect millions of dollars in management fees. Corporate executives get hefty stock option and cash compensation as well.

Now we have two choices. We can sit and complain about it, and hope that someone does something to fix the problem, or…

We can take control of the situation and focus on earning more money so we don’t have to worry about this ever affecting us.

The second choice is definitely the harder path. It takes a lot of work, and a little bit of luck as well. But stories like this are a good way of reminding us that the only way to guarantee financial security is to build it for ourselves.

Happy Halloween everyone!