by • January 11, 2017 • Career Entrepreneurship, Lifestyle, WealthComments (0)1

Three concepts/books that will improve your life

Brief notes on my top three career/life concepts: the pleasure/purpose principle, black swans, and working to stop working.

1. You can adjust your day-to-day happiness by changing the balance of pleasure and purpose. This is from Paul Dolan’s Happiness by Design.

Activities can be pleasurable (or not) and purposeful (or not). Happiness is some balance of the two, over time. Purpose is the trump card, so stuff that is painful can still bring happiness if it has enough purpose behind it (see Frankl’s Man’s Search for Meaning for an extreme example). This helps understand the way people sometimes talk about children and startups (“toughest years of my life but I wouldn’t change them for the world”).

But taking it too far (all purpose, no pleasure, for too long) will lead to burnout and unhappiness. Similarly, overindulging in pleasure (while being short on purpose) leads to malaise.

The danger-zone is doing stuff both pointless and painful. The ideal option is to stop doing it, but when that’s not possible, the next-best option is to find a way to ascribe purpose to it. For example, while most minimum wage jobs fit the bill of pointless pain, you can add purpose by focusing on the grander goal (get out of debt, support one’s family, become the best at it, etc). In general, you can also make any activity (either pleasurable or painful) more purposeful by doing it in the company of people you care about.

In my 20s I tended to veer too far into martyrdom and really should have relaxed a bit to improve my overall well-being. These days I tend to take it a bit too easy (all pleasure) and need to remind myself to do something I care about when I start feeling jaded. I recommend this book so strongly because it’s transformed my vague feelings of unease (“I feel bad”) and made them granular enough that I know what sort of activity will fix my mood and my energy levels.

2. Protect your downside exposure, maximise your upside exposure. This is from Nassim Nicholas Taleb’s The Black Swan.

To use Taleb’s vivid metaphor, most people approach risk by “picking up nickels in front of a steam roller”. The idea is that while they’ll probably be fine, they only get a small, fixed reward. But if something unexpected happens and it goes wrong, they get flattened. The finance version of this is chasing 10% returns each year only to have something unexpected (2001, 2008, etc) happen and wipe out a life’s savings. The career version is to have a “safe” job that pays a steady salary but might suddenly disappear if something unexpected (2001, 2008, etc) happens. Far better to do something that has a small cost, but might be hugely beneficial, for example searching for oil wells, building products, developing marketable skills, or building an audience. On any given day you expect not to make any nickels, but when something good happens, you get a lifetime supply. In other words, you’ve capped your downside but given yourself lots of upside.

We’re reasonably intuitive about protecting unexpected downsides in the physical domain. On my boat, I don’t expect to fall overboard. And if I do, I don’t expect to be unconscious. But I’ve still taken precautions to stay safe if it happens. The safety equipment cost a fair bit, but I don’t think anybody would question my decision. It’s the same math as getting health insurance. But we’re really bad at remembering it in the abstract. The number of friends who have told me that they “can’t lose money” on their London property because it’s “never happened before” is shocking. Or the number who still think that a corporate job is “secure” despite whole industries getting the axe just a few years ago. As far as I’m concerned, anyone sitting in a job without the skills to make it on their own is sailing without safety gear. If they go overboard, they’ll drown. And their last breath will be spent complaining that it’s not their fault because “nobody could have seen it coming”.

I recommend this book so strongly because it’s what finally convinced me to never go into personal debt for a startup (massive downside exposure if something goes wrong). And it gave me a coherent way to explain my longstanding feeling that the spiky road of being an entrepreneur is actually safer than the apparently stable road of the career-man. While the world was burning down around my corporate friends in 2008, my startup friends didn’t even notice. Jobs and industries may disappear, but customers will always need their problems solved, so the entrepreneur and the freelancer will thrive (similarly, Taleb points out that prostitutes and taxi drivers are recession-proof). If you enjoy The Black Swan (the writing style drives some people bananas and others love it), you should also read Fooled by Randomness and Antifragile, which complete NNT’s trilogy on understanding and benefiting from extreme unpredictability.

3. The point of working is to not need to work anymore, from Robert Kiyosaki’s Rich Dad Poor Dad series.

What a breakthrough this idea was for me. Isn’t it weird that everyone magically stops work at exactly the same age? Mightn’t it be that retirement should be based on your finances rather than your years? And if there are things you want to do in your life other than work, wouldn’t it be nice to get to do them while your joints and genitals are still in working order?

With that goal clearly in mind, the challenge becomes finding the quickest route between where you now are and where you’d need to be to never work again. The paths there are either savings (difficult since you need lots of it) or income streams (take your pick of product income, rental properties, or business dividends). You can get there even faster by aggressively cutting expenses. Earlier this year I reduced my monthly rent from £2000 to £200 by moving out of London and into a sailboat (which I bought for 2 months’ worth of my previous rent; has already paid for itself). Such a dramatic cut might not be for everyone, but there’s always something you can do.

It took me a couple years to jiggle all the numbers and lifestyle issues into the right combination, but I can safely say it was worth the effort. My old plan for retirement was “get rich and then retire”, which is a bit brute force. The reason I recommend this book so highly is that it gave me a well-defined financial goal to work toward, plus a sense of the tools at my disposal. A disclaimer on the book is that the whole thing is a giant piece of content marketing to sell you on Kiyosaki’s extremely expensive (and I’m told, not very good) workshops. Plus his financial advice is heavily based around rental properties, which isn’t my cup of tea. Still, that doesn’t detract from the value of the core idea.

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