It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.
It’s a strategy I went on to use throughout my career: there’s no harm in asking.
This was how every business worked—creating the demand, building the systems and processes, hiring other people to do the work, then charging enough for whatever it is that you’re selling that you turn a profit. Counterintuitively, you didn’t actually do most of the work yourself, and yet you earned the profits for putting it all together.
After learning my lesson with the JavaScript project, I decided to charge customers $60 an hour for my programmer’s time. In doing so, I had the realization that if you sell your own time hourly—say, as a contractor or employee—you can only ever sell eight to twelve hours in a day. You’re capped. But if you sell other people’s time, or better yet, a service with a markup on your cost, you can grow your income infinitely without doing the actual day-to-day work.
My sales technique was simple: be fun to drink with and ask a ton of questions about whomever I happened to be talking to. It worked surprisingly well. At conferences, I quickly started to learn that the most important business connections were made in bars, gossiping with drunk executives. Buying a round of drinks often generated a huge return on investment.
But all businesses—even terrible ones—teach you something, and I realized that I had gotten extremely lucky with my first business. Partly because it was astonishingly simple, with an uncomplicated formula: Find clients. Charge them an hourly rate. Pay contractors a lower hourly rate. The difference was all profit. There was no office or physical location required, just a computer with an internet connection. My biggest overhead was an Adobe Photoshop license. If business slowed down, my contractors found other work and I could always cancel my software subscriptions. It was almost impossible to fail.
What people fail to realize is that businesses are like tapeworms—they have to grow in order to stay alive. Without growth, there’s no additional revenue to increase salaries over time. If a star employee came to me asking for a promotion and I told them, “Oh, we decided to stop growing this year, so I can’t,” would they stay? Unlikely.
As I rifled through the pages of the book, I came to realize a whole new way of thinking about business. I had gotten it all wrong—his approach was so much less painful. I was building businesses from scratch when it was so much easier to buy a company that already worked and leave it to grow.
Buffett liked to invest in businesses with what he called “moats.” If we imagine that businesses are castles, moats are the qualities that protect them and make them particularly difficult to attack. Take Coca-Cola, which is one of his largest investments. Coke has a ridiculously strong brand that makes it near impossible to compete with. Sure, you can make a cola that tastes just like Coke, but if McDonald’s doesn’t have real Coke, customers are going to be livid. Coke is the consumer’s default, and this moat makes it what he would call a “no brainer” investment with an incredible brand moat.
What’s sad about this mimetic phenomenon is that it convinces people to sacrifice their own happiness to achieve whatever goal their peers have assigned value to, even when it’s not an authentic desire of theirs. ... In Burgis’s book, he tells a story about a chef in France who had won two Michelin stars, one of the highest honors in the restaurant industry. Michelin requires its awardees to maintain a strict standard and operate in very specific ways, and their critics frequently visit at random to ensure the standard is being upheld. Tablecloths need to be a certain way and service needs to be impeccable. Paradoxically, after winning the Michelin stars, the French chef was more miserable than ever, fixating on maintaining his restaurant to Michelin’s standard and obsessing over the risk of Michelin stripping him of a star should he step out of line and spill some gravy, instead of focusing on the thing he loved: cooking incredible food. The chef was living according to external scorecards, terrified of losing the arbitrary award that his peers had decided was valuable.
“It is difficult to get a man to understand something when his salary depends on his not understanding it.”
We’d learned that you didn’t need to come up with a brilliant startup idea to get rich. You didn’t need to buy a broken business and rack your brain for how to fix it, either. All you needed to do was find something that you believed in, and loved, and then see where you could make it just a tiny bit better.
After the meddling that I had done myself, and the million dollars flushed down the toilet, we decided on a rather simple management philosophy. We summarized it as follows: when it came to mistakes, we would allow “flesh wounds, not mortal wounds.”
As I surveyed where I was spending, I thought about what had actually moved the needle for me. Across the board, almost everything I had purchased had made my life worse. Sure, it was nice to have a beautiful waterfront home and drive a fancy car, but I adapted to it so quickly. It was amazing how fast something luxurious just became the ordinary fabric of life. In reality, the things that had made me happy were simply moments of meaning. Pushing my sons on the swings at the park. Enjoying a sunset over the lake at my cabin. Laughing over dinner with old friends. A particularly challenging game of tennis. Chopping vegetables quietly while the kids laughed and played in the yard.
After a decade of trying all these things—crazy shopping sprees, sports cars, mansions, and ridiculously expensive boats—I came to a fundamental realization. My ultimate goal was freedom of time and freedom from worry. And, ironically, spending and tending to my expensive toys actually ate into my time and stoked my worries. It was a pyrrhic victory: the supposed win cost me massively. It’s trite to say, but the old adage rings true: “The things you own end up owning you.”
More money was just a number in the bank. It didn’t change my day-to-day. During a lunch the week before, a similarly overworked friend had shared a quote by John D. Rockefeller: “I know of nothing more despicable and pathetic than a man who devotes all the hours of the waking day to the making of money for money’s sake.”
I felt that people viewed this billionaire problem in a strange way. If a local woman starts a beloved restaurant and she makes $250,000 in profit, nobody thinks she’s evil. But if she takes that same concept and turns it into a chain, she might become a billionaire. Is she suddenly evil? Just because her restaurant is…larger? If her customers were satisfied and she charged a reasonable price, and her employees were paid fairly and treated well, I didn’t see the harm.
As I read more and more biographies of famous businesspeople, I found deeply sad and complex stories: Steve Jobs was put up for adoption by his mother at birth. Oprah Winfrey was badly abused in childhood and left home at just thirteen years old. Elon Musk was subjected to physical and emotional mis-treatment by his father and is on the autism spectrum. Their complex lives formed these extreme personalities, which resulted in an obsessive drive to move the world forward.
We all struggle with this type of conundrum in one form or another. A CEO friend once said to me: “Some mornings I wake up and I want to work my ass off day in and day out to be the next Steve Jobs. Other mornings I wake up and daydream about buying a tiny house, an old beat-up car, having no overhead, and leaving the stress of the business world behind.” A by-product of capitalism is wanting everything, or believing you can only have that—everything—or nothing. Too often, we press forward and double down into new stress when we would have been happy—in fact, happier—where we were.
I had read that GiveWell, an organization that conducts research to identify highly effective charities for donors to support, estimates the cost of saving a human life in the developing world is around $4,500. I punched the math into my iPhone’s calculator, then wondered aloud: “Is it ethical to build a $500 million yacht for twelve people to vacation on a few times a year when that same amount of money could be used to save 111,000 lives in the developing world?
“Okay, imagine this: you’re dressed in a beautiful outfit and designer shoes, when you see a child drowning in a nearby pond. What do you do?” “Wow. Good morning to you, too,” she replied. “Obviously, you jump in and save the kid.” “Right. Obviously. Even though you’d ruin your expensive designer shoes.” I said. “The child’s life is more important than designer shoes.” ... I told her about the book, an essay called Famine, Affluence, and Morality, by Peter Singer, an Australian philosopher who argued that anyone with the means to do so has a moral obligation to give to those in need. He suggested that when faced with the choice of spending money on anything in excess of what we need versus donating the equivalent amount to help someone in need, the morally correct choice should be clear. However, this decision becomes complicated when the suffering is often out of sight, happening far away in the developing world, making it easier to ignore. When the kid is drowning in front of you, it’s obvious. When you read a story in the newspaper, your brain abstracts it away and ignores it. I read Zoe a quote: “If it is in our power to prevent something bad from happening, without thereby sacrificing anything of comparable importance, we ought, morally, to do it.”
The emptiness of making money taught me something I had been so slowly learning: that the payoff wasn’t the point—it was the process. The act of building something. Of designing the life you wanted. Scratching itches and solving problems. The struggle of creativity. Helping people reach their potential. The flow state. The journey itself. It’s all so obvious in retrospect. If a million dollars didn’t give me joy, why would a thousand more millions? We all know this. We’ve heard it a million times. And yet, everybody—myself included—seems to need to learn the lesson the hard way. As G. K. Chesterton put it: “To be clever enough to get all that money, one must be stupid enough to want it.”
This quote by John Rawls succinctly captures what drives our giving: “Those who have been favored by nature, whoever they are, may gain from their good fortune only on terms that improve the situation of those who have lost out.” We have been incredibly fortunate in life, and much of our luck has been due to circumstances outside of our control. The opportunity we now have, to support those who have not been so fortunate, is one we find impossible to ignore.