Sun 18 May 2003
Category : Commentary/passivity.txt
I believe Robert Kiyosaki has a point. We should try to understand money, learn how to accumulate money wisely and, as a counterpoint, realise how our lives could be destroyed if we let money control us, rather than the other way around.
I've found Rich Dad, Poor Dad and The Cashflow Quadrant very useful and they're things I want to teach my kid, e.g., how to tell the difference between an investment and an expense. Many people commonly get these ideas mixed up, to their life's detriment.
I'm not saying that it's easy to implement these ideas, just because I've read them. I'm finding that it still needs a lot of hard work to, not just accumulate investments, but also to turn them into healthy inflows of passive income.
Passive income is income you earn without being actually "there", e.g. from collecting rent from other people using your physical or intellectual property.
A guy who lives two doors down my street collects rent from properties accumulated by his late father. Nice work (or non-work) if you can get it. The rest of us have to work a bit harder to create assets attractive enough for others to want to employ, for a fee.
It's not that I have anything against hard work. Quite the opposite. But I've seen how you can work yourself into the ground and leave no time for your family. You've got to strike a balance. It takes vision to see a need that people are willing to pay money to satisfy. Then it takes a lot of ingenuity, creativity and management skills to crystallise it into a system that can satisfy that need consistently and (apparently) effortlessly, so that it can be operated by mere mortals and scaled to fit whenever and wherever possible, without your needing to be there.
So there you have it - two essential sets of skills. I believe that, if you can solve a problem at a reasonable cost for others, nobody should begrudge you your wealth. That's the root of capitalism. But it's not enough to want money. You need to see the relationship between passive income (the most efficient way to earn an income) and a system that can generate that income on your behalf, in a way deserving of the adjective "passive". That system is your very own business machine. And, in most cases, you can bet that there's an IT element in there, somewhere.
Thinking for a Living
Category : Commentary/thinkingliving.txt
I thought about calling this weblog "Thinking for a Living" because that's what I do - I get paid for having ideas and figuring out how to get them implemented - initially for an assortment of government agencies, and then, for the company that I helped to start.
After seven years of plenty (even though somebody once told me you can't make money as Mac developers), we're now, the three of us, living off the fat (somewhat) and that's why I've got time to waste writing this weblog.
One thing I've learnt, and I don't know if anyone wants to hear, but here goes (if you've come back, you must have found something interesting) :
One. Michael Gerber (The E-Myth) is right. Most small businesses don't work. In The E-Myth Revisited, Gerber describes, through the experience of a bakery shop owner, how you can start with a bright idea and fall towards despair, chained to the treadmill, doing everything yourself, struggling just to keep from slipping behind.
It was, for me, a powerfully visceral image. Life as an entreprenuer was often like that. Despair was always just around the corner.
I've learnt that you've got to make your business work like a machine, able to make money even when you're not there. The irony was that we did manage to help other people run their business like a machine, through the systems we designed and built for them. While these businesses ran like clockwork, we ran ourselves to the ground.
So, it's time to go back to the drawing board. But how do we build the ultimate business machine of our own? Can we succeed? Stay tuned, to find out.