Leverage: How you actually build wealth

Hello Freedom Seekers!

Thank you so much for subscribing to Buying Freedom, today’s edition is a bit more framework-y and pie in the sky. For context, I’ve been doing a lot of reflecting over the past few weeks on why entrepreneurship, why ETA, why the less clear path…

I’ve also been absolutely slammed trying to launch a new business - DNVR FIT because…

All the points below were good reminders to stay the course. Will plan to be back to more regularly scheduled programming next week.

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Leverage to Get Rich

I recently realized that a lot of my dialogue has been dissuading folks from pursuing this space because of the obvious risk to me inherent to the traditional ETA path. However, after speaking with a group last week I was reminded of one of the strongest supporting points for business ownership (& specifically ETA) over (any) W2…

And that is LEVERAGE.

For those that I don’t know all that well, one thing you should know about me is that Naval Ravikant is my undisputed north star when it comes to mental frameworks and structuring my life. Naval had a (now infamous) tweet storm called How to Get Rich (without getting lucky) that I have probably re-read and re-listened to all the way through at least 15 times now. Some excerpts below (it killed me to only pick 4) that I believe are highly relevant to the case for ETA.

…had to include the last one 😂

The point here is that if you are a W2 or 1099 you CAN NOT apply leverage. You are renting out your time. You trade time for money. Sure, it can be a TON of money for your time, but it’s only made if & while you are “working.” When I first made this realization, it drove me absolutely nuts! I couldn’t get it out of my head that I would never be able to leverage my decision making (to make a disproportionate amount of money) in an employee setting.

ETA is the only path I am aware of that allows instantaneous application of permissioned-leverage: human & financial capital. When you acquire a small business, it is likely that it is heavily financed and there are people working for you.

For this reason & many others, still team ETA. Good point of reflection and I hope the tweet storm drives someone else as crazy as it did to me.

If you are interested in reading / listening to more Naval, Eric Jorgenson collected and curated Naval’s wisdom from Twitter, Podcasts, and Essays over 10 years to produce ‘The Almanack of Naval Ravikant’ essentially as a public service. Him & Naval have made it free everywhere, I can not recommend it enough →

“If you are working for somebody else, they have figured out how to monetize you better than you have figured out how to monetize yourself.”

Another quote that drives me absolutely insane to relentlessly pursue entrepreneurship

You might be closer to your dream life than you think

The following is an excerpt from The 4 Hour Workweek:

An American investment banker was taking a much-needed vacation in a small coastal Mexican village when a small boat with just one fisherman docked. The boat had several large, fresh fish in it.

The investment banker was impressed by the quality of the fish and asked the Mexican how long it took to catch them. The Mexican replied, “Only a little while.” The banker then asked why he didn’t stay out longer and catch more fish?

The Mexican fisherman replied he had enough to support his family’s immediate needs.

The American then asked, “But what do you do with the rest of your time?”

The Mexican fisherman replied, “I sleep late, fish a little, play with my children, take siesta with my wife, stroll into the village each evening where I sip wine and play guitar with my amigos: I have a full and busy life, señor.”

The investment banker scoffed, “I am an Ivy League MBA, and I could help you. You could spend more time fishing and with the proceeds buy a bigger boat, and with the proceeds from the bigger boat, you could buy several boats until eventually, you would have a whole fleet of fishing boats. Instead of selling your catch to the middleman you could sell directly to the processor, eventually opening your own cannery. You could control the product, processing and distribution.”

Then he added, “Of course, you would need to leave this small coastal fishing village and move to Mexico City where you would run your growing enterprise.”

The Mexican fisherman asked, “But señor, how long will this all take?”

To which the American replied, “15–20 years.”

“But what then?” asked the Mexican.

The American laughed and said, “That’s the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich. You could make millions.”

“Millions, señor? Then what?”

To which the investment banker replied, “Then you would retire. You could move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”

Missed the call last week with Puzzle Builders Network? It was a ton of fun. We talked about a number of things including:

✅ 1st & 2nd deal breakdowns

✅ Structuring business criteria based on desired lifestyle NOT cash flow

✅ Near death experience and seeing peers get fired as Search catalysts

✅ Operating an online business with low owner involvement

✅ Contrarian ETA takes & uncovering what the gurus don't wantcha to know!

Watch or listen to it here →
Passcode: RGjq20r&

Tools I am Using: Fear Setting

As I was writing the above post, I was thinking back to when I did my first acquisition and how scared I was about it. I remember one of the things I wrote to myself, was “If everything absolutely falls apart and my operator quits, I can write this newsletter every single day. I can do this.”

This exercise was a part of an absolute gold mine Tim Ferris exercise, called “Fear Setting”. If you do anything today, please watch his Ted Talk on it and read the accompanying blog. 

This exercise singlehandedly allowed me to close on my first acquisition and send a six figure wire out of my checking account when I had just heard about email newsletter as a business maybe 30 days ago. My initial “fear” list was loooooooooooooooooooooong. But man was it so necessary. I hope this speaks to the readers who have been sitting on the sidelines for years - too nervous about the implications. 

Get your thoughts on paper to actually understand what the worst case scenario looks like! You won’t be able to until then. Chances are you will not die!

Apart from SBA acquisition, this is just a good exercise to do every now and again to force yourself to do hard things and say YES! Saying no is definitely the hot thing right now and I get it. But I’d argue a good life is built around the YES’s (especially the ones you're super nervous about and/or where the outcome is uncertain) not the NO’s. I hope someone can leverage this framework to get over the fear hump for whatever it is.

Other Quotes I’ve Been Coming Back To This Week:

“The opposite of courage is not cowardice but conformity”

“God will not have his work made manifest by cowards”

“Life shrinks or expands based on one’s courage”

“Not Dead, Can’t Quit”