There are lots of ways entrepreneurs can make money. Some even have a valid legal status, but with questionable ethics. But all businesses which survive have some kind of value transfer. The real question worth asking is this:
Was there more value in total after we got involved?
If the answer to that is ‘yes’, then we’ve done much more than just make money.
There is a clear evolutionary path for the type of labour that humans have done in our time on this planet. The over riding theme is that work is hard. Survival takes effort and the easier we can make survival, the better our lives will be. All of the tools we have invented from spears, to wheels, to spanners to computational devices have made more possible with less. Famed inventor R Buckminster Fuller called this phenomenon ephemeralization. He said that with enough knowledge, we’d be able to consistently do more with less, until we could eventually be able to do everything with nothing. The exponential growth we have seen with technology has to this point proven his idea to be true.
If we look at our labour, every curve jump in technology has changed what we do. It has also changed where the greatest economic value has come from our work. A basic function of scarcity. The history of labour in short from can be summarised as follows:
Physical Labour: Lifting heavy things. Using our arms, legs and backs.
Intellectual labour: Using our minds and mouths. Organising the factors of production.
Emotional Labour: Art, love, performance, creativity, and the beauty of human irrationality.
While there has always been overlap, it is clear to see where the greatest revenue streams have been. Each step change in technology has removed additional forms of labour scarcity. I believe that emotional labour will have the greatest economic value as we rapidly approach the technology singularity.
While this is an over simplification, if we want to earn more, and or run successful businesses we need to do one of two things:
1. Remove human labour. (The industrial revolution removed large amounts of physical labour. The data industrial complex we are now living in removes intellectual, left brain labour as we outsource this to the microchip. If our startup removes the labour we take the financial upside of the structural shift we create.)
2. Move ourselves up the hierarchy, closer to the emotional level. (That is, the bits of human endeavour which are yet to be replicated, or we don’t want to be replicated by machine.)
While we are on the topic, the real value in emotional labour is the irrational bit. The creative stuff, and all other manner of thoughts and behaviour which we can’t quite understand or justify. This is where the value of tomorrow lies. The over riding thought we should have is this: If what we do for a living can be replaced via automation or technology, then it will be, eventually. The further we are from what technology can replace the lower our income risk. And those are the very things which make us human.
Starting this week my posts on Friday will be 5 cool things to read, listen to or watch over the weekend. So here it is the inaugural 5 for Friday. Enjoy!
1. Podcast with Kevin Kelly: Best podcast I’ve heard in a while – 3 part series with polymath Kevin Kelly, founding executive editor of Wired magazine. Here he is hosted by Tim Ferris. I learned a ship load from this.
2. Why leaders eat last: A great talk by Simon Sinek who finally uncovers why we are so disgusted with Bankers earning bazillions and the truth about what the deal is with leaders. Inspiring and jaw dropping anthropological story telling.
3. Why we should, stop what we are doing and get involved in bitcoin – Nice summary of why it is such an exciting space. here we need to remember that all currency is ‘made up by people’. In fact, each form of currency closely replicates the technology of the time. Coins in the bronze age, fiat currency spread at the dawn of the industrial age. And so it is the time of a digital currency.
4. The top 10 business secrets in the world. All but one of these is a reminder that the thing that makes these firms win is not the secret itself, but the myth. To me these prove success has many moving parts in the marketing mix, the secret sauce is rarely one of them.
5. A podcast on The truth about idea generation - and even some information on how to get some and what to do with them. Via that amazing podcast #BBB.
I have my apps set up so that they will automatically update whenever I am connected to wifi. It’s pretty handy to have the latest version of something, assuming of course they make it better than the previous version.
But what I’ve noticed recently, or more aptly haven’t noticed, is that apps have a habit of changing their logo, or colour scheme. Which most often means I can’t find it, and all of a sudden I have the chance to drop the habit of using their service, or even worse finding a replacement. It’s worth remembering that the shape and the colour of an app’s logo is the cognitive shortcut we look for when we need to use it. And more often than not a logo or colour change is really only serving the people who make it and not those who actually use it. Unlike aribnb (who recently changed their logo) get front page stories when someone in their office sneezes, most app developers and curators are not so fortunate.
Just because we become bored with something we see a zillion times a day, it doesn’t mean our customers want to relearn what to look for.
I’ve been publishing a few thoughts for the good people at Pollenizer – two recent articles are below:
History repeats: The seminal article written in 1960 by Theodore Levitt of the Harvard Business School called the Marketing Myopia is having a sequel. I wrote about it here and why startups are eating the lunch of many fortune 500’s.
Why we don’t have to invent the future: Sometimes it is enough just to participate and facilitate – I wrote about the feeder startup here.
In fact just yesterday I was doing a keynote for the financial services industry and I spoke about the GFD, ‘Great Finance Disruption’, which I believe is on the way given the recent developments in crowd funding, micro payments and crypto currencies. And I got asked a question about it.
And this was the question:
There are many banks in the audience, what advice can you give them to keep an eye on these trends in non traditional banking?
And here is my answer:
It’s not about watching from a distance, it’s about getting involved, even in a small way, maybe set up a skunk works or a division for radical finance for dissident customer groups. Instead of watching it or trying to fight it, get involved and even facilitate it. It’s very difficult indeed to shape or benefit from something when you are not participating in it.
I recently gave a talk at the Melbourne Entrepreneurs Club. It was full of current and aspiring entrepreneurs – so I thought I’d lay out the top 10 things I think matter if we want to lead an independent life. Read here, one where you determine your own destiny, are not reliant on a corporation to feed you, and you have enough money (that little reality checker we have in our modern market place) to serve yourself and your family. It was just 10 ideas I wrote down on a piece of paper. I didn’t write an actual speech or have any slides. I just spoke from my heart after I wrote these 10 things down. Some of the ideas I had around the 10 things I thought had value, so I wanted to share them here, but also write down the thoughts so I didn’t lose them in the ether. Here they are:
1. The word Employee: If you’ve ever wondered why you don’t like how it feels to be an employee, it’s because you were never meant to be one. In fact, employees have only existed for a tiny portion of human existence – around 0.1%. If we look at this graph, you’ll see the word was hardly even used before the Industrial era. It’s totally normal to not want to be one.
2. Boss vs the Market: In a corporation our fortune is determined by our boss. If there is a mismatch, it makes it very hard to progress. There is nothing more frustrating than having a career thwarted by a manager who isn’t supporting us regardless of the quality of our work. In fact, the entire problem is that a sample size of 1 is not very robust. It’s a far better bet to place our skills on the market – to put what we do in the hands of many and let the true value of our work be judged by quantitative sample rather than a single opinion.
3. The Consumption Cycle: Often when we get trapped inside the corporate enclave, a sense of dissatisfaction occurs. I personally believe that we seek refuge through consumption. We buy things to justify the time, effort and pain being directed by others. We enter a consumption cycle to assuage the emptiness of working openly for the pay.
4. Savings and greatness: 20th century industrialist W. Clement Stone said that if we cannot learn to save, then the seeds of greatness are not inside us. It is the ultimate test of patience and delaying gratification. But more than that it opens up the door of possibility. I’ll go one step further and give you my ultimate savings hack. If you can save 50% of your income, you only ever need to work 1 year in every 2. It really is that simple. And during that ‘off year’ who knows what we might become.
5. You’re already an entrepreneur: It doesn’t matter whether we work for ourselves, our startup or a fortune 500. You are the CEO of your own personal services corporation. If you’re an employee, then you are simply an entrepreneur with one really important and big customer. Once we make this mind flip, we do better work and realise we need to invest in ourselves and deliver for others. That’s the start of more independent living.
6. Side Project Power: Side projects often become the front projects. How we experiment with our time invents new unforeseeable and unexpected revenue streams. I now make a living doing things I used to do after work. So the real question is what are you doing from 9pm-12am? If you’re watching TV, then you’re missing the greatest informal education opportunity humanity has ever had. Right now the market pays a premium for informal knowledge because quite frankly formal education is way behind.
7. The Woodchips: Often the wood chips have more value than the table. But we only ever find this out if we endure and make the table. The side effects of what we do has value, but we need to presence of mind to look behind us and see what we have left behind. This blog was a bunch of woodchips from when I left the corporate world 10 years ago. It was the seeds for my new book. You have wood chips. We all do, locate them and see what they may become.
8. Freelance Friction Removal: I’m starting to believe that anything we can get paid for as an employee, we can do as a freelancer. The recent revolution in freelancing websites has taught us we can find people to do for us what we can’t afford to pay for 5 days a week. Maybe we can pay them 2 days pay for 1 days effort, and result in 3 days output? The freelance friction is being removed and once the tasks are taken from the corporate HQ the time wastage also gets removed. The best advice I can give anyone trying to escape their cubicle for the first time is to start as a freelancer. From accounts payable, to marketing director – we can all do it now.
9. A Tools Revolution: We all now have the same super powers that were once the domain of the worlds most powerful corporations. We can connect with anyone, we can access a factory without owning it, the worlds information is available and free on line, we can do e-commerce with zero cost set up, we can advertise to a specific audience with zero wastage. It’s never been easier to start a business at low cost with the gift of free tools. Go.
10. The DNA of Australians: If you’re reading this in Australia (where I live) then entrepreneurship is in your DNA. The fact that you are here, means your forefathers crossed oceans in search of a better life. They probably came with nothing but their wit. We all have entrepreneurship running deeply through our veins. Best we make those who came before us proud.
The journey we are on is often associated with some goal at the end point. But what if the end point was now? What if we took a thought experiment and pretended the journey was unnecessary? Let’s do that and ask ourselves these two seemingly unrelated questions:
- How would you spend your time if you had 6 months to live?
- How would you spend your time if you were a billionaire?
I won’t try and answer these for you, but I’m reasonably certain you’ll find two things. Many of the answers overlap, and that many of the things cost very little money. In the end we remind ourselves that the ultimate asset is time.
Ok, I couldn’t resist to give personal answer here: I know I’d want to invest more time with my family, immediate and wider, and do those projects were the business model is fun and not financial. Oh, and all those billionaires we hear about…. they’re probably off on treks riding motorcycles across China. Something which requires very few zeros in a bank account.
I feel like no one should be permitted to call ‘busy’ anymore. If everyone is busy, then it is as if no one is busy. In classic algebraic form, we can strike it from both sides of the equation and just call it equal.
But it does surprise me that people don’t employ the oldest rule in economics when they get too busy:
Put the price up.
Economics 101 tells us that increased prices reduces demand and equalises supply. And believe it or not we can do it with our time, our job, our freelance work and even our startup.
It seems as though the first rule in economics is the one everyone always forgets.
While success is in the eye of the beholder, I heard an interesting fact recently about intelligence and financial independence. And that fact was that the vast majority of financially independent people have average or below average intelligence. We are talking here about raw intellectual capability. This would seem counter intuitive to everything we are taught to believe in school, the corporate world and life. That we have to be ‘smart’ to accumulate financial advantage. Turns out the opposite is true and social researchers put it down to one simple thing:
“People of average intelligence are not overly impressed with how clever they are.”
Sounds like a silly thing to say, but it gives average people like you and me a big advantage. It means that we know we have to work hard, and maybe even a bit harder. And it also means that we don’t think we know everything already and so we have on open mind to learn new things and methods.
Turns out that some of the key factors in the success equation are about being average.