Is Someone Getting The Best Of You?

True story.

I was once working in a hospital that was desperately short of doctors to cover the night shift.  The hospital somehow managed to find a senior doctor to cover one of the night shifts to oversee the work of the junior doctors, admit new patients and ensure patients were safe over night.

Usually the doctors that are hired in short notice get generous hourly pay because the hospital needs the doctor, but the doctor doesn’t need the hospital.

When this particular doctor arrived to start his night shift he was very angry because he was promised hot food and a place to eat.  Because the hospital didn’t organise this for him, he got up and said he was going to leave.  The nurses begged the doctor to stay, but he drove off while all the nurses looked at each other in horror, realising that there was no senior cover for the night.

What’s the lesson?

The person who has the most options always wins.

If you have no or few options in life, then by definition someone has power over you.

boss

A lot of decisions in life come disguised as logical and “safe”.  But they often bring with them hidden pitfalls and loss of optionality.

The person working in a “safe” job in an office making a steady income for example is counter intuitively a lot more vulnerable than an Uber driver.

The Uber driver can earn the same amount as most office workers.  Granted, he may have more variability in his take home pay month to month, thus making his job “unsafe”.  But when the office worker gets fired in his mid 40’s with no transferable skill set he is in a lot of trouble.

The Uber driver by contrast will be able to detect if his livelihood is at stake early and retrain / develop his skill set before getting laid off.  By working with the “safe” company the office worker gave up optionality later in life without realising.

Moral of the story:

In the majority of decisions, the decision which will provide most optionality is the correct one.

*Money is attractive to people as it represents pure optionality.  You can do anything you want with it.  But only if you own the money outright.  Money often has strings attached – either you owe it back, or someone gets a portion of your company or even worse you trade a portion of your life to get a paycheck.

In a startup this matters.  If you take a loan or you raise money, all of a sudden you’ve lost optionality as the people you took money from want it back and often with interest.  This limits your ability to innovate and explore different options.

 

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Have You Ever Found Yourself Driving Down A One-Way Road?

Most of the time when you turn in to a one-way road, you know it’s one-way as soon as you turn in.

The worst kind of one-way roads are those that look like normal roads for a long time.  These roads always take you to a place where you don’t want to be.

Hiring too many people.

Hiring people you don’t like.

Putting in extra features.

Taking outside money.

Getting fancy offices.

Making a promise.

These are all one-way roads.  It is extremely difficult to turn back the clock and reverse the damage once it’s been done.

What’s worse is that if you keep going down that road without realising it’s one-way, you might drive right past where you were aiming to get to in the first place.

“But, Money Can’t Buy Happiness!!!”

It’s interesting to note that the most precious things in life are intangible.  They don’t have a price, they aren’t things that you can hold in your hands and without them life would be pretty meaningless.

Love, family, relationships, purpose, happiness….All intangible.

But there is one thing in life which is intangible, but money can buy.

Time.

Time is impossible to put a price on.  Your time is precious, non-refundable and once you’ve spent your finite time on this Earth it’s gone forever.

Your time is worth fighting for.  Too many people aren’t close to their family and friends, have missed their children’s first steps and words due to not having the time – usually as they’ve tied their time to a 9-5 job.

And for what?

People stick to those 9-5 jobs so that one day they can buy a mediocre car, a mediocre house and receive a mediocre pension so that they can live the rest of their lives out doing what mediocre people do (reading the news, getting angry at politicians, complaining about why their life sucks).

Don’t fall for the “But, money can’t buy happiness*” argument, because no one is arguing for it.  But realise that you can buy one of the most precious things in your life: your time.

And it’s worth fighting for.  Your life is valuable and you can have it back if you create enough value for the world.

*When I first started to have the idea of starting a business when I was a junior doctor, I would always face the “But, money doesn’t buy happiness!” argument from other doctors when discussing my business ideas.  For some reason here in the UK, pseudo-socialist middle class doctors who are in the upper percentiles of income, don’t like the idea of one of their colleagues becoming even richer, as that would just be wrong and socially unjust…  To paraphrase Orwell:

“It’s not because they love the poor, it’s because they hate the rich”

It’s a knee jerk argument/reaction on their part, because they’re not willing to think things and do things which would make them uncomfortable.  It’s a form of laziness and shouldn’t be taken seriously.

If You Keep Doing More Stuff, You Will End Up Poorer, Less Healthy And Less Smart

Subtraction

I would say that around two-thirds of the patients I see in my clinic every day have problems related to something that they are choosing to do.

Chest infections caused by smoking.

Back pain as a result of sitting down all day and even after work.

Diabetes due to poor diet.

I seem to be locked in an eternal battle with my patients. I am continually trying to get them to come off of unnecessary medications, stop taking part in harmful habits and to stop taking antibiotics for viral infections.

Patients on the other hand come to me to take yet another pill for their ailments, seek yet another additional action they can take part in so that they can continue taking part in harmful habits.

I have come to realise that we humans find it much harder to subtract something from our lives than to add something to our lives.

It is easier to take a pill for high blood pressure than to stop doing the activities which has caused the condition.

It is easier to inject yourself with insulin than to stop eating processed foods.

I find it ironic how we take medications, often to mask our problems, which in turn leads to more problems down the line. It is clear that if we were simply to stop doing the harmful activity in question, instead of adding something new into our lives then we would benefit a lot more in the long run.

This got me thinking….

I have noticed that subtracting things from your life more often than not, leads to much greater gains than adding more stuff to it.

This is the type of logic that doesn’t make sense in a class room, but is empirically true.  Say for example you were tasked with building a wall.  In a maths book if a team of three people worked hard for 12 hours a day, you would be able to calculate how quickly each portion of the wall could be built.  Therefore if twelve people were put to the same task who could work at the same rate, you wold expect this team of people to build the wall at four times the speed.

In reality, if you were put in a team with eleven other people, with all the arguments, the organisational problems, the egos etc, it is likely that the wall would take much longer to build.  (If the government were put in charge with building the wall, it is likely that the wall would never get built.  I am sure there would also, at some point be allegations that the wall can be considered discriminatory against blacks/women/immigrants/insert a poorly defined group of people here…..)

I’ve been thinking of three examples in particular which I want to write about.  These three examples have given me more mental energy, made me fitter and made me financially better off.  I’m sure that these principles and concepts can be applied to anyone’s life.

The News & Social Media

Over the last couple of months I’ve stopped reading and listening to the news.  I haven’t used any social media since 2012 when I got rid of my FaceBook account, so I thought I was being smart by only using the Internet for learning, business and keeping up to date with the news.

It’s been an odd sensation since I stopped reading the news. I used to wake up in the morning, grab my smart phone and flick through a bunch of new sites. During lunch time I would revisit these sites to see if anything else was going on. I’d probably check again in the evening time at some point as well.

In total, I wasn’t actually spending much time a day reading and consuming news, but it did strike me at some point that I was not learning or gaining anything by reading it. This particularly hit me when I asked myself the question; “If I read last weeks news today, would I have missed out on anything at all?”. It became pretty obvious to me that the news is largely garbage.  In this respect it’s very similar to social media; It’s designed to cause an emotional (negative) reaction, it’s designed to suck out time and attention from its readers and it’s designed to keep you coming back for more for a quick dopamine hit.

At first I didn’t notice much of a difference in my life.  However, after a couple of weeks I felt a massive difference in my mind.  I found that my mind just had to deal with less noise.  I could stay focused on things that really mattered to me for much longer and I had much deeper insights about my startup due to the extra mental clarity.  In particular, my mornings now just feel much more positive and better.  It’s nice to not be bombarded with scare stories and the worlds problems first thing in the morning.

I now go to check out new sites just once a week.  And when I do visit these sites, I have noticed that I only read a tiny fraction of the stories, as most of it really is just non-stories aimed at getting you to have a negative emotional reaction.

There really is a case to be made about stopping oneself from visiting web sites which are known to be damaging to overall well-being and which we all know distract you from doing what you really want to do with your life.

Really worth a watch if you don’t agree with what I’m saying, because it seems that the ex-president and a previous executive working at FaceBook both agree.

Losing Weight

Here’s an interesting one.  Why is it that when people think about getting fit and healthy they immediately think about exercise*?

Why is it that people think about exotic diets?  Avocado and poached eggs on rye bread anyone?  Or how about a gluten-free, vegan “cake”?  No thanks, I don’t like to eat sissy ass food.

I think that it comes back to adding more things to your life, because it’s easier and somehow it seems “more right” to do something new when an existing diet isn’t providing results.  However, the reality is that subtracting bad foods from your life is actually the easiest, best and the most realistic way of losing weight for the majority of people.

Food is such a personal thing.  I wouldn’t expect anyone to enjoy my diet as much as I do or stick to my diet.  The food we all enjoy is likely a combination of social, cultural personal influences.  And it’s silly to think that you can adopt a random persons diet, be able to stick to it and enjoy it for the rest of your life.

Alan Aragon is a well-respected nutritionist who has coached many superstar athletes, including people like Pete Sampras.  The first chapter in his excellent book was: “What if Everything You’ve Been Told Is True?”.  He was trying to point out that for the most part, we all know what healthy food is.  We all know that a chicken breast is healthier than a french fry.

Here’s how to subtract food from your diet.  Some of my patients with a clinical diagnosis of diabetes have managed to completely stop their medications due to this simple method.

  1. Make a list of foods you enjoy eating, that you currently eat.  It’s very likely that there are a ton of foods that you eat that you know are healthy and that you can eat more of.
  2. Eat more of these foods!
  3. Eat less or get rid of the foods you know are unhealthy.
  4. Keep the healthy foods stocked up and get rid of the unhealthy foods at home to make sure you’re not tempted to just have a quick bite of something unhealthy.
  5. Eat healthy foods for 80% of the time and enjoy bad foods for 20% of the time.  The easiest way to do this is to be looser with your diet for one or two meals over the weekend.
  6. Enjoy the weight loss!

One very easy way of knowing if a food is healthy is if it is a single ingredient food that you can point at and name what it is.  For example: “That’s a piece of fish, that’s a potato”.  If you can’t name the food in single ingredient terms then it’s likely not healthy / is calorific.  For example bread and pasta are made up of lots of ingredients – eggs, flour, milk etc.  When foods are processed like this, they become calorically dense and usually end up being pretty bad for you.  For example, two slices of bread is usually 300-400 calories, which is the same as eating 400 grams of boiled potatoes.  Meaning that you would struggle to eat enough boiled potatoes to put on weight.  Single ingredient foods by their very nature have a comparatively small amount of calories for the quantity you can eat!

Subtractive Business Ideas

It never ceases to amaze me how good business ideas all seem to be subtractive.  I have noticed that my own healthcare business is subtractive by its nature, which may go some way to explaining why it has so much traction in such a short period of time.

This is what I mean by subtractive businesses / technologies / services;  They make life simpler and easier than before.  They uncomplicate processes and procedures.

Let’s take Google.  What did people do before Google was around and people needed information?  The used to go all the way to the library and go through books trying to find that single piece of data that they were looking for.  Or they would go and have a look at their own books.  Google is subtractive in that it has massively subtracted the effort needed to find data and it has made it much simpler to find the information that we’re looking for.

Uber did the same thing.  At the click of a button a taxi will appear.  No more trying to find the number for the local taxi firm, no more trying to figure out what the address of your pick up location is, no more wondering how much longer you have to wait for your taxi and no more worrying about having cash on you to pay the taxi driver.

Amazon.  At the click of a button you can order most of the commodities that you used to have to make a trip to the store for.  At the press of a button your chosen item will appear at your house in a day.

When most people try to think of what the future will look like they start to think about flying cars, talking houses and electrified pants.  Most people take the same perspective when they try to come up with new business ideas.  They start to have ideas which are “additive” instead of “subtractive”.  The best business ideas always go more along the lines of “There is this problem, which I could solve in a better and easier way, which people will give me money for.”

If we look at the successful businesses throughout history and the businesses which are going to be big in the future they have been and will be subtractive in their nature.

*Unless you are an Olympic athlete or a marathon runner, going to the gym and working out really won’t burn many calories at all.  Any fit person will say something along the lines of “abs are made in the kitchen” or “80% of results are from diet”.

Life Isn’t Fair, But If You Don’t Get This Simple Point You’ll Always Be A Sucker

Life is very unfair.  As much as we all wish that the success we enjoy in life is a direct consequence of our well thought out actions and intentions, it probably isn’t.  If you were born poor in rural Bangladesh, could you still confidently say that your quality of life would be as good as it is now?

You’re not pretty enough, thin enough, tall enough, rich enough, you were born to poor parents, you went to a bad school, you were born in the wrong part of the country, you’re the wrong colour…This list of excuses is endless.  It’s undeniable that these characteristics and ones upbringing does indeed have a large impact on your life’s trajectory.

This post isn’t about “victimhood”.  Everyone is aware that you have to hustle to get ahead in life and that without hours of hard work, you simply won’t get anywhere.

This post also isn’t about being “stoic” and just accepting that you can work hard, toil away and yet still achieve very little in life.

This post is about how we can embrace the randomness and entropy that surrounds us every day and use it to our advantage.  In short, this post will teach you how to win at life.  But first, a few illustrations are necessary.

Estimated Time of Arrival

Google Maps has replaced my Sat Nav machine.  I don’t know when it happened, but it definitely beats using a stand alone machine.  I was particularly put off using stand alone Sat Navs ever since someone broke into my car to steal one!  The burglar probably sold it for £20 at the local pawn shop, but left me with a repair bill of £120 for my car.

A few days a week I make a 60 mile commute to my clinic to see patients and make sure everything is running properly.  Get in the car, put my phone in my phone holding thingy and set the destination; “Estimated time of arrival 10.30AM”, it says.

It seems that Google Maps and lots of other navigation apps try to figure out the “quickest route to destination”.  We’ve all probably had instances where we’ve put the navigation on in a familiar neighbourhood and have blindly followed its instructions, even though we just know that if we went our usual route we would have gotten to our destination quicker.

This minor gripe is merely annoying, but the worst kind of problem with Sat Navs is when we go on those longer journeys.  “Estimated time of arrival 10.30AM”, it says, but why is it that most of the time I get to my clinic a few minutes after the ETA?  The worst is when something unforeseen happens, such as an accident on the motorway and I end up at my destination an hour or more late!

Why is it that I never get to my destination an hour or more early?

In England we have roads called “M” roads, which are the largest roads with the highest speed limits.  We then have other major types of roads such as “A” roads and “B” roads.  As you can imagine “A” roads are the next quickest after “M” roads.  Interestingly enough, Sat Nav systems always tend to pick routes with “M” roads whenever possible.

This is an interesting way to get to your destination.  “M” roads are definitely faster, but if there is an accident, then you’re doomed to suffer hours stuck in traffic wondering why that annoying Audi behind you is driving so close when there’s clearly a traffic jam ahead.

“A” roads on the other hand have plenty of tributary roads.  Traffic jam?  No problem, just turn off and join another road and you’ll be on our way with a merely slight delay.

Satellite navigation systems are missing out on a trick in my opinion.  Instead of being able to pick the “fastest route” it should actually give you two options;  “Fastest route, but if something happens on the road you’ll be REALLY late” or “Slower route, but you don’t need to worry about being too late if something goes wrong.”

I wonder how many people would choose the slower route with less variability when it comes to important journeys such as getting to the airport on time to catch a flight?

The Doctor-Patient Relationship

When I used to work as an acute general surgical doctor, we used to quip that it would be more cost effective to carry out a whole body CT scan as patients were carted on to the ward.  Almost, like those body scans at the airport!  It certainly would have made our lives as doctors much easier if we could simply just get the scan done and see whether there was something worrying to operate on straight away, instead of having to sit down with the patient and get their history.

The acute surgical ward was a stressful place to work.  Patients got referred in by the Emergency Department or Community Doctors and then we had to assess the patients and figure out if they needed an emergency operation.

The problem on this ward was that it meant you would have to spend at least 30-40 minutes with the patient, listening to their story, taking blood tests and then you’d have to wait for several hours for the blood tests to come back.  Once the blood tests were back, unless it was an obvious appendicitis or cholecystitis, you would have to organise a CT scan.  If you consider that many patients end up staying in the hospital overnight at a cost of £400, only to be told the following morning that all the investigations were normal and that they can go home, then having a CT scanner placed at the door doesn’t sound like a bad idea as a scan costs around £100 per patient.

You might be thinking that all these tests sound totally unnecessary.  I would agree with you.  The problem in medicine is that when a patient gets referred to you by another doctor, the onus falls on the accepting physician to ensure that nothing is wrong.  In other words the buck stops with you.

What do physicians with this onus do?  Test, test, test!  Do all the blood tests under the sun.  Does this patient actually sound like she has a simple urinary tract infection which can be treated with three days of oral antibiotics?  Doesn’t matter!  We can’t risk it!  We must do all the blood tests which will make sure her bowels, kidneys, liver, pancreas, anaemia levels are all normal and if these all come back normal then she must have a scan of her abdomen as well (exposing her to more than 500 times the radiation of a chest x-ray) to just be safe.

How did medicine get this way?  There seemed to have been a simpler time in medicine, which I personally didn’t get to experience.  My father on the other hand reminisces about those times frequently.  “There used to be a time where doctors were respected and decisions were made mutually with the patient”.  I, unfortunately have been trained and continue to practice medicine in an era of litigation and suspicion.

The threat of litigation and the risk of potentially losing your medical licence with every patient you see causes you to practice medicine a lot more “defensively”.  Even if doing more is potentially harmful, it is often better to be seen to do something (which is defensible in court) than not carrying out an intervention (which is indefensible).  “We might as well as take out that gentleman’s appendix, just in case.”.  If you don’t take out the appendix and then it does turn out to be an appendicitis, then set aside a date for court my friend.

Is This a Good Idea??!!

“Is this a good idea”.  Every budding entrepreneur mutters those words.  Usually, so often that it drives loved ones near to the edge of sanity.

When they ask “is this a good idea?”, what thy are really asking is “will I make tons of money from this?!”.  Many entrepreneurs say ideas don’t mean a thing, but that the execution of the idea is the main thing.  I agree with this sentiment….to a certain extent.  If the person I’m talking to isn’t an action taker, then for definite it doesn’t matter what idea he has, because they’ll never do anything.  Ideas by themselves are meaningless.  But, if I’m talking to a really smart person, who consistently takes action, then yes ideas do matter.

The number of businesses is growing every year.  What’s interesting is how few are successful and how little money most businesses make.  I mean they’re all businesses after all and a lot of them do pretty much the same thing, but why is there such a large difference in revenue between them?

Why is Starbucks so profitable while that small cafe ran by that pleasant family down the road is struggling to make ends meet?

Or better yet, why will that coffee store never become the next Google?  Now obviously, Google are providing a completely different service, but what are the factors that set apart your average family run coffee store to an Internet company based in San Francisco?

The anatomy of a good idea goes a long way to explain whether an idea is worth pursuing or not.

The World Is More Random Than You Realise

The world is a very random place.  We as human beings are predisposed to create narratives to help us make sense of the world.  It gives us the feeling that we can predict the future.  Daniel Kahneman, the Nobel Prize winner, has written about how our brains are wired this way.

I remember when I was in high school and my music teacher played a piece of music to me.  It was a recording of a flute playing random notes, in a random order, with no time signature.  What was interesting about listening to this totally random barrage of notes was how my brain couldn’t help but construct melodies out of thin air.  It was the musical equivalent of “don’t think of a purple elephant!”.  Your mind will construct thoughts automatically and come to conclusions as a reflex.

Apart from my own anecdotes, there have been many studies which have proved how truly random the world is and how poor, we as humans are at predicting outcomes and making decisions.

Philip Tetlock, from the University of Pennsylvania made a landmark study: “Expert Political Judgement: How Good Is It?  Can We Know?”.  In this study he asked 284 political experts to make 80,000 predictions.  In the study he gave the political experts a topic to consider and then gave them three options to choose from.  He later looked at if the predictions were correct.

The experts turned out to be worse than random.  Meaning that if he had gotten a monkey to randomly pick an answer, the predictions would have been more accurate.  One of the reasons that expert predictors get it wrong so often seems to be a result of knowing too much.  Experts seem to over complicate their predictions by looking at too many factors and making too many outlandish correlations.

For business owners / CEO’s and entrepreneurs, the news isn’t too great either.  I love entrepreneur books and biographies of successful people.  But they do for the most part seem more like fairy tales, rather than scientific studies of success.  Which is fine if you’re into that sort of thing.  However, studies have shown that the strength of a CEO and the success of the company that they are running are not well correlated at all.

If CEO’s were really the rock stars they are made out to be in the popular press then there should be a direct correlation between the success of their companies and their skill level.  If you took a really bad CEO running a company in a certain industry and then took a really good CEO running a company in the same industry, you should expect to find that the better CEO’s company is always outperforming the one ran by the worse CEO.  But the correlation hardly exists!  If the correlation was perfect (i.e. a good CEO always producing the best outcomes and beating the competition) then the correlation coefficient would be 1.  In reality, the best estimates place the coefficient at around 0.3, which is only very slightly better than random!

My point is that skill and knowledge clearly exist, but the world is an incredibly random place.  Most people’s ability to make decisions affecting their future are random at best and worse than average at worst.

How To Not Be A Sucker

What do motorways, being an acute surgical doctor and good business ideas have in common?  One word: asymmetry.

Asymmetry means that there is an unequal relationship present.  To compound this, as the world is so random and unpredictable, you never know when the asymmetry is going to hit you and how much of an impact it will have in your life.

Motorways for example have an asymmetry in terms of getting to your destination on time.  Either you’ll be a little early, on time or if something goes wrong on the roads, such as an accident, then you’ll be extremely late i.e. an asymmetry is present here.

In the world of medicine / surgery, there is an asymmetrical relationship between the physician and the patient.  Theoretically if a doctor makes a mistake with any patient they ever see, they can lose their medical licence.  Patients may genuinely come to harm in some cases, however in the UK, the GMC (General Medical Council) have stated that over 90% patient of complaints / litigation made by patients is unwarranted and unfounded.  There is an asymmetry in the relationship as patients can make a complaint which may be false, but there are no repercussions if their complaint is found to be based on a lie.  Patients do not get any financial repercussions or penalties if their complaint doesn’t get upheld.

These asymmetries exist in a lot of different domains in life.  For whatever reason most people are blind to this and are unaware of such relationships.  But if you are aware of these relationships it will cause you to make better decisions.

The two examples we’ve talked about above are what I call negative asymmetries.  Meaning that if a random even occurs then it will make your life worse.  But, you can also use asymmetries to your advantage!

Take for example business ideas.  Good business ideas have asymmetries present which could result in exponential / unlimited financial returns.  Most business owners simply aren’t aware of these principles.  This is the reason why that small coffee store down your road will always continue to struggle and why that pleasant family will never be financially free – even though they could be.

I could speak a lot about great business ideas, but the two main principles in good business ideas are the ability to scale and detach your own time from your business.

Say that you open a coffee store.  Part of your business mission should be to put systems and protocols in place so that every cup of coffee is produced in the same way at the same standard, the store should always be cleaned in the same way up to a certain standard, the way items are procured and how much they should cost should be standardised, the way customers are greeted and treated should be standardised.

Basically every aspect of the business should be run with protocols in place.  This way, if you, the business owner decide to leave for a couple of months for a holiday, your business will keep on chugging along as usual.  In other words, you’ve created a system which is not attached to your time or presence – you’ve just created a money printing machine, which is exactly what businesses are meant to be.

If you can detach your time from your business, then inevitably you have created a business model that is scalable.  There is no reason why you can’t open up another coffee store usinng the exact same training protocols you have already created in your first store to expand your empire.

Business success is random as we have already demonstrated.  But, if you have a well thought out business which can be scaled then randomness can have a positive impact on your business and life.  As businesses which are designed to scale have asymmetrical returns then you could win big and be financially free.

In life if you don’t set yourself up to win and use randomness to your advantage, then you will always be at the mercy of randomness and asymetries.  You will always lose and be a sucker.

Baby Boomers Vs Millennials!! (They’re both wrong….)

I have seen this conversation played out many times.  Both in the press and in real life.

The Baby Boomer generation often accuse the younger generations of being lazy, flippant with their money and devoid of the grit that is needed to succeed in life.

The Baby Boomers often argue that leading a happy, financially stable life is not all that hard.  Just work at a job, work your way up the corporate ladder, put money aside for a rainy day, invest in a house and you’ll be set for life.

The Millenials on the other hand often talk about how things have changed compared to a few decades ago.  Jobs are harder to come by, you require a degree for most things nowadays, people also accrue a lot more debt due to going to University, the cost of living has gone up as well as house prices etc.

The public discourse is interesting.  The Baby Boomers are right to an extent.  There are millenials who are fine (like myself).  I worked a lot harder than most people of my age and I already feel financially stable.  I also made sure that I did a degree which would definitely lead to a stable job (medicine).  Others who I grew up with are in a much worse state and this could be partially explained by their laziness and extravagant expenditures even when being dirt poor.

However, I disagree with Baby Boomers on a lot of things.  Advice such as “work hard, save money, don’t spend money on silly things” is obvious advice.  Young people are aware of these sentiments and it doesn’t explain how a whole generation is financially so well off and another generation is doing so badly.

The Baby Boomers got used to a different world where wages increased year on year for doing the same work.  They got used to a world where with a small amount of effort they could buy a house due to their increasing wages.  But what Baby Boomers don’t seem to realise is that their increasing wages had very little to do with anything that they were actually doing.  The reason that they became wealthy was actually due to technological advancements and massive economic growth during their working years.

As older generations don’t realise that this was actually the reason they became financially stable, they keep giving the same advice; “Do well at school, get a degree, get a job, work your way up the corporate ladder, save money, invest in a house…”.

The millennials that follow the classic advice are obviously not getting the same results as the older generations.  But what no one ever talks about is where wealth comes from and how it is created.

This is what is missing from the argument that is always played out.  Millennials (such as myself) should not be demanding house prices to be reduced, or more handouts from the government – because this is unrealistic and economically non-viable.  Millennials should be concentrating on creating new wealth by creating value.  This is the answer that they’ve been looking for.

Your Perception Of Money Is Why You’re Poor

 A Quick Anecdote About Getting Into Shape

When I was a Junior Doctor, I would often say bye to the receptionists and admin team on my way out for the day.  They’re usually sat near the exit of any given ward or clinic, so it would be awkward to not at least nod and smile.  This was my usual method of exit.  However, sometimes even if you’re in a rush and have had a grueling shift there’s an unspoken expectation that you should spend some time to speak with the rest of the team.

On one of these occasions the conversation turned to my eating habits.  Now I’m a bit of a fitness guy, so I can look at a piece of food and guesstimate it’s caloric content and macronutrient composition.  Anyone serious about reaching fitness goals are aware of these basic concepts and are mindful about what they introduce into their system.

When I was explaining that I had a nice chicken stew with beans waiting for me at home that evening, the receptionist said:

“If I were as slim as you, I wouldn’t watch what I eat…”.

I didn’t think much of it at the time, but I think this single sentence perfectly sums up why so many people are clinically obese, unhappy and poor.

The simple truth is that I am in shape and fit because of my diet and lifestyle.  The very fact that the person I was speaking to would not watch what she would eat if she herself was slim is the very reason she will never be slim.  The outcome is a result of the process.  The process will change the way you perceive food and your relationship with food.  Food for me is a source of energy to allow me to function at a higher level.  Yes it is also a pleasurable experience, but the overall benefits I can feel by consuming wholesome foods far outweighs any short-lived dopamine burst from a diet entirely composed of McDonald’s.

Being healthy doesn’t mean you can’t still derive pleasure from food…

Your Perception of Money

Here’s the thing.  The attitude towards diet illustrated above is the same reason why people don’t get rich.  How many times have you heard people say the following:

“If I were rich I would stop working!”

The very fact that you would stop working is the reason you will not get rich.  Your relationship with money is a destructive, warped one.  In the same way that most people eat for pleasure, most people only use money for consumerism i.e. buying creature comforts.

If one can accept the fact that perhaps people in rural India perceive money in a radically different way to how the majority of the west perceive money, then it is reasonable that the very rich perceive money in a very different way to the majority of the west.

People in rural India see money as a means of survival.  To put food in their stomachs and provide the essentials for their family.

The majority of people in the west see money as a means of consuming ever more products and services.  Most of what is consumed by the majority in the west are non-essential.

How Rich People Perceive Money

I’ve had this conversation many times with different people.  Most people get defensive when I point out that they are not as frugal as they claim to be.  People may believe that the clothes they buy are “essentials”, but when asked how many shirts they have which they do not wear or have not ever worn, they go quiet.  They go quieter still when I ask where they buy their shirts.  “You bought your shirt from Zara?  Why didn’t you get your shirt from the supermarket for a much cheaper price?  Why do you buy branded cereal when the supermarket own brands are basically the same and are much cheaper?”.

If you can answer these questions objectively then you’re getting much closer to how to perceive money.

Most people at this point have a knee jerk reaction.  “Shirts from the supermarket aren’t as durable…..I can taste the difference between supermarket branded cereal and the branded cereal”.  Really?  Have you carried out double-blind randomised trials to prove this point?

Most of the time the difference is zero.  In fact, I know some factory owners who manufacture clothes in Bangladesh (the second largest textiles producer in the world) and most clothes – even a lot of the high-end designer products come from the same place with a different brand stamped on at the end.

No, the reason you purchase the higher end stuff and not the cheapest option is your perceived value of what you are buying.

And this is the closest to the truth.

Money is the exchange of perceived “value”.

And when you realise that “value” is not the cost of the bare components of a product – but the branding, the feel, the service you receive, the customer support etc it becomes apparent that you can actually create value.

What Does This All Mean??!

The point I am trying to make is that money is used by rich people as a means to an end.  It is not the end goal in and of itself.  America as a nation gets this much more than anywhere else in the world.

Money is used by rich people to exchange value.

They hire people with money (aka value tokens) to create their products and services.

These workers create even more value, which society then consumes.

More value for society results in more income for the business which results in more job and more money (value tokens) for everyone in society to create more wealth and value.

Value tokens are used by most people in society to just consume, but this is the same as eating pizza to get slim.

Henry Ford

Henry Ford once famously raised the wages for his workers to $5.  This at the time was double the minimum wage.  The other factory owners were outraged.  “If Henry Ford raises wages, then all our workers will leave!  We’ll also have to raise our wages too!” they said in outrage.

Later on Ford was taken to court for wanting to reduce the dividends provided by his company to certain shareholders and grow his company further.  He understood that giving higher wages would encourage his workers to give their best and that paying less dividends would allow him to create even more value.

There is a transcript from court which illustrates precisely how successful business people view money (Henry Ford in this instance) and how the majority of people perceive money (Attorney Stevenson).  If more people could view money in the way Henry Ford did, then the world would be a much better place.

Attorney Stevenson (AS): “Now, I will ask you again, do you still think that those profits were “awful profits” (Stevenson was quoting Ford from a Detroit News interview)?”

Henry Ford (HF): “Well, I guess I do, yes.”

AS: “And for that reason you were not satisfied to continue to make such awful profits?”

HF: (Ford looking apologetic) “We don’t seem to be able to keep the profits down.”

AS: “…Are you trying to keep them down?  What is the Ford Motor Company organised for except profits, will you tell me, Mr Ford?”

HF: “Organised to do as much good as we can, everywhere, for everybody concerned.”

AS: Stevenson again asked what the “purpose” of Ford’s company was.

HF “Give employment, and send out the car where the people can use it… and incidentally to make money…Business is a service, not a bonanza.”

AS: “Incidentally make money?”

HF: “Yes, sir.”

AS: (In a sarcastic tone) “But your controlling feature…is to employ a great army of men at high wages, to reduce the selling price of your car, so that a lot of people can buy it at a cheap price, and give everyone a car that wants one?”

HF: (Ford destroys the argument by agreeing with it) “If you give all that, the money will fall into your hands; you can’t get out of it.”