Building infrastructure is one of only three ways to lock in a benefit from a dollar one hundred years in the future. Number one is to build public works that will last for that long. Number two is to use your dollar to invent something that will still be used in a century. And number three is to educate your children and grandchildren so that they see the benefits of knowledge and educate their own children and grandchildren in turn. Do any of these successfully, and you’ve invested wisely. You may even be remembered for it. – Arnold Schwarzenegger
I was in Medellin a few months ago reading Arnold’s biography, Total Recall:
He’s had incredible success in a variety of different areas. Bodybuilding, real estate, acting, business, politics, etc… In the quote above he was actually referring to government spending, but to see into the way he thinks about things, can give you a glimpse at how to replicate success in whatever area you choose. In this article we’re going to talk about how the quote can be applied with how entrepreneurs should be spending their time, and aren’t. Most go against the infrastructures of wealth that Arnold or just about any other wealthy person would advise.
Most people are either selling their time with a boss(9-5ers, aspiring entrepreneurs), selling their time without a boss(people who think they’re entrepreneurs but are freelancers), button clickers(day trading, media buying, poker, fantasy sports, etc…), or making very small advancements to existing products or services enough so that they can make a profit, and if they can, clicking buttons, or hiring button clickers to maximize that profit until it dies and they repeat the cycle.
Building infrastructure is one of only three ways to lock in a benefit from a dollar one hundred years in the future.
Let’s talk about building infrastructure for yourself that will reap you rewards well into the future.
Number one is to build public works that will last for that long.
When applying this to your own life instead of government spending, we could look at real estate investing.
If you invest in real estate there’s a good chance you’ll be making money on it decades from now. My brother invests in a lot of real estate and not only is he making money today, but he can expect the same places he has today will make him cash flow in the future. Not only that, because of the way the math works, he will have built massive equity for himself, with his renters paying him for the privilege.
Number two is to use your dollar to invent something that will still be used in a century.
When relating this to yourself, we could tweak it to: are you creating a product or service that is likely to be used just 10 years in the future?
It’s hot to create marginally better products these days, or just shitty products in general and then market the shit out of them by being a button clicker, or hiring a button clicker. Arbitraging dollars from consumers until it dies, and then jumping to the next arbitrage opportunity.
For example, look at the new amazon bookselling wave:
“Okay, I’m going to write 50 books this year to create passive income and be an entrepreneur”
Uhhhh…Okay, you basically have a job… a shitty one at that, and that “passive” income you seek is not passive. It’s going to last for an incredibly short time…. if you’re lucky, just long enough to write 50 more shitty books.
For people who aren’t that familiar with the amazon book niche- yes, there’s actually people who use this as their business strategy… a lot of them. People will look at a few people doing it “successfully”, and then copy the model as if it’s a good one. They get distracted by the possibility of having those results- that passive income to do anything they want in their free time. They get blinded by the fact they’re creating shit, and it’s not passive income.
See, real estate income for example remains passive as long as a new kind of real estate doesn’t come in and make the current living options undesirable. So, a house that rents for $1,000/month now, will likely rent for $1,000/month or more a decade from now.
Your shitty book you spent a week writing, or outsourcing, may get you some temporarily “passive” income after your “free giveaway” promotion boosts rankings and confuses people into thinking it’s a great book, and over time that passive income will disappear once they realize it’s not.
There is essentially no chance you will be receiving much, if any income from that book in 10 years, and not only that since you will not have income from the asset in 10 years, it is not much of an asset, so you can’t sell it.
A savvy investor will see the declining income and know that it wouldn’t be a good investment. You may be thinking, “hmmm, how can I avoid that?”.
Well, if your first thought is to pump up sales with more promotions, giveaways, etc… it’s an okay thought, but it shouldn’t take you more than a second to realize than it’s exactly the opposite of a passive income stream if you must constantly be active to maintain, or to prop the income back up. So, you can see the flaw there. Your second thought might be to hope that an unsavvy investor who doesn’t understand that you don’t actually have passive income buys it. A better option would be to just stop producing garbage, and start creating real value. When you do that, you’ll have real passive income instead of temporary passive income that’s nothing but an illusion.
You’re making temporary bets and you’ll receive temporary returns in exchange. The problem is you must realize this now, or you’ll be in the same position year after year, getting enough temporary returns to get you to the next temporary bet, but you will have trouble making significant progress. If you’ve been doing things like this for years and wondered why you can’t get ahead despite having many “successful” projects, this is why.
Ask yourself, are you producing something that has a legitimate chance of being around in 10 years? If so, it might be worth pursuing. If not, I’m not saying don’t do it, but you need to consider that the temporary income should make up for the fact it won’t be around long, and realize there’s usually better spots to invest your time for your future.
If you’re thinking about starting a project, ask yourself, “will I be making money from this in 10 years?” or “will this still be of value to others 10 years from now?”. If the answer is definitely “no”, welcome to temporary income land, please spin the wheel again.
And number three is to educate your children and grandchildren so that they see the benefits of knowledge and educate their own children and grandchildren in turn.
Now, we could tweak this quote to look at self education, as well as educating others. Similar to what we spoke about in #2, you can’t expect to make incremental or temporary improvements to receive long term results, for you or others.
If you’re educating yourself, ask yourself: “Am I learning things that will be important to my success 10 years in the future? Or am I learning a temporary skill that will have no real impact on my future success or happiness?”
You can ask the same questions if educating others. Most people who are educating others have no business in doing so. Why? Well, you can ask the same simple question. Is what they’re teaching going to have a significant impact on their future? Will they be using that knowledge 10 years from now, or have produced results from that knowledge that will be significant 10 years from now?
if you’re teaching someone to build temporary knowledge with your own temporary knowledge source, as a byproduct, you’ll also have temporary income. Now, if you’re one of the best button clickers, hire one of the best button clickers, are first to market for that temporary knowledge source, etc…, you can make significant enough temporary income that will allow you to put your money into #1(investing in real estate), companies that do #2, or have your time freed up because of the money you’re able to accumulate over expenses so that you can take your time doing #2 yourself. You could also invest your time in educating yourself(#3), so that doing any of the three you prefer in the future becomes easier for you.
Many people make the flaw of going from temporary income to educating. This is often a comical decision made by people who don’t understand how to make money. They may have made temporary income from a temporary income source, and will use that to convince people that they know how to make money, because selling the dream is often an ‘easier’ way to make money for them.
Others may be confused into thinking that they know more than just temporary knowledge because of significant results, which will entice them to buy future products/services from them even if those products/services do nothing but offer temporary returns, or dreams, whether it’s an incremental improvement over the competition or not.
If you’re doing this, you’re not only delaying their improvement, and negatively impacting their future, but your own as well. You’re on a temporary ego and money driven hamster wheel that confuses you into thinking you know more than you actually know, but at some point you’re going to get off the ride and realize you haven’t improved much as an entrepreneur or in knowledge(or as a person), as you’ve been going from temporary income source to temporary income source trying to convince others to do the same. You’ve invited them to join you on the hamster wheel of temporary income, knowing that them joining you enables you to continue the ride with their funding, and gives you the chance at escaping the ‘dream’ you’ve sold them.
Instead, if you were to educate people how to be in a significantly better spot for themselves 10 years from now, you’ve done them a great service. Now, the confusing part can be that there is usually significantly more temporary income in temporary education. What’s “hot”, is what’s certainly an easier sell, especially for people who have not been educated past the point of understanding you’re even selling the education of a temporary income source. So you sell the dream, and the promise that “you too, can be like me”, but they can’t… unless their goal is to sell temporary income but if you understand economics 101 you’ll realize that everyone is teaching people to teach people to teach people. If everyone learns to do the same thing, they become useless pretty fast. Case in point- traditional education.
Wonder why your $100k degree from traditional education is now just a $0 piece of paper? Ya. The info space is the new traditional education. “Today class, we’re going to teach you things that will be irrelevant soon. But not to worry, I’ll have more classes selling you more temporary solutions very soon, so no matter how many things become irrelevant I’ll always have more!”
The real education is in educating people with knowledge that will still be valuable 10 years in the future. The latest amazon trick, or social media hack, or cheap traffic source will make more temporary income, and will make educators of the temporary income source more temporary income, but 10 years from now, neither is likely to have escaped. They’re both likely to be on another temporary income journey, chasing the dollar from temporary opportunity, to temporary opportunity. Or, they may have jumped off that ride and went back to the time for money hamster wheel, claiming entrepreneurship was too risky, and that the job will protect them. It wasn’t that it was risky. Noticing they were not actually an entrepreneur, or at least weren’t operating as one with long term plans would have been the first discovery to lead them down a better road.
What you spend your time on should be significant enough to give you a return 10 years from now. Take that for what it means to you.
Do any of these successfully, and you’ve invested wisely. You may even be remembered for it.
If you want to be remembered for doing something great, that’s cool. There’s nothing wrong with that. We don’t all have to be Elon Musk or Steve Jobs, but if being remembered is a goal of yours, you’re clearly not going to be remembered for doing temporary shit. You’re also more likely to do very well financially if you do one or more of these three things:
- Invest in real estate(at the right prices), or something else where it’s mathematically likely you’ll reap significant long term returns while remaining relatively passive.
- Build something valuable that improves people’s lives
- Help people to think in a more prosperous way
If you can do at least one of these things successfully, your finances will be in a significantly different situation 10 years from now. Most likely much sooner.