TJL #4: You get rich by owning things
What Sam Altman can teach us about getting rich
Hi friends,
Welcome back to Today Jan Learned (TJL) #4. In this newsletter I share a new lesson every day, so stay tuned. Today Jan Learned that you get rich by owning things.
This idea comes from the essay How To Be Successful, written by Sam Altman, former president of Y Combinator (YC) and now CEO of OpenAI.
How to get rich
Take a look at this tweet from Bernie Sanders.
Jeff Bezos added $177b to his wealth and Mark Zuckerberg $101b in just the span of 11 years.
Look, I am not going to discuss the morality of whether this is good or bad. I just want you to stop and think of the insane amount of wealth that is being created. If you would’ve given me $2b in 2009, I would not be able to turn it into $100b in 11 years.
Also consider this, if you would have invested $2b in the stock market at a 10% return, which is highly unlikely, you would have roughly $5.7b 11 years later. This is nowhere near the obscene amounts of wealth of Bezos and Zuckerberg. So, how do they do it?
Sam Altman says that’s because they don’t get rich from their salary.
The biggest economic misunderstanding of my childhood was that people got rich from high salaries. Though there are some exceptions—entertainers for example —almost no one in the history of the Forbes list has gotten there with a salary.
They get rich from owning things.
You get truly rich by owning things that rapidly increase in value.
What this is can be anything: a piece of business, real estate, intellectual property, or anything else basically. But somehow or another, you need to own equity in a thing, instead of just selling your. Time only scales linearly.
This sentiment is echoed in You Won’t Get Rich Renting Out Your Time, a series of essays and podcasts on how to get rich by tech billionaire Naval Ravikant.
The first point was about how you’re not going to get rich: “You are not going to get rich renting out your time. You must own equity—a piece of the business—to gain your financial freedom.”
In order to become truly rich, we must own things that rapidly increase in value. The reason for this is because time only scales linearly and is therefore capped by physical constraints. After all, you only have so much working hours in a day, even if you work seven days a week. This even holds true for lawyers and doctors, highly paid but salaried jobs:
In almost any salaried job, even at one that’s paying a lot per hour like a lawyer, or a doctor, you’re still putting in the hours, and every hour you get paid. Your inputs are closely tied to your outputs.
If you look at even doctors who get rich, like really rich, it’s because they open a business. They open like a private practice. And that private practice builds a brand, and that brand attracts people. Or they build some kind of a medical device, or a procedure, or a process with an intellectual property.
Earning money while you sleep
I experienced this myself, though on a much much smaller scale.
This is a picture of my stock portfolio.
Recently the value of my assets rapidly increased. I think three quarters of these gains were just from last month. That means that I effectively “earned” 1k by just owning certain things. That’s both scary and awesome at the same time.
Of course this doesn’t show the whole picture. Because what you don’t see is that my portfolio was in the red for almost a year at -400. Furthermore, it is no guarantee that even though it is up now, it will stay up.
I don’t want to brag or anything. I just want to share my experience with you what it feels like to “earn” money non-linearly. It feels kind of weird honestly, because you’re not doing anything and the value goes up and down like a rollercoaster.
According to Sam and Naval this is how to get rich, so let’s keep at it.
Now what?
Anyway, that’s it! Today Jan Learned that you get rich by owning things. What stuff can you make and own that will rapidly increase in value? Renting out your time won’t make you obscenely wealthy like Bezos and Musk, owning things will.
Thank you for much for reading. See you next time!