For every 10x engineer, you’re gonna hear a marketing guy say “my equity is in my relationships”. But what does he actually do? As an engineer this was so frustrating. To me, value should be a direct mapping to the output that I produce. I write code, that code gets shipped and provides value. Then I get a piece. Simple.
But real business value is accrued with leverage. Leverage is the ability increase the trajectory of a business through some external force. It could be capital, skill, psychological triggers, or relationships.
First Principles Of Business
Let’s set a dumbed down first principle for business. A first principle is something that you know is true beyond a reasonable doubt. In physics, it would be that energy is a finite resource. In code, it would be that there will always be a tradeoff of space and time. Or that Vercel is undoubtedly the superior deployment engine. JK 😊. This way we have a stable foundation in which to reason upwards.
Let’s say that the first principle, objectively is to make money. This means that the more successful business is going to have a higher profit margin.
What is money though? Is it a tangible thing? We represent it with a numerical figure so it must be. But the value of it is relative. $1000 USD is not worth the same in 2023 as it used to be in 2000. It’s closer to $761 back then. We know that as soon as that juicy bi-weekly direct deposit hits our bank accounts, that starts going down in value due to inflation. Which is anywhere from 2-5% a year in the US.
I’ll give you another example. I bought a Toyota Mirai last month. Probably the only one sold in Northern California in the last few months. It’s not a very popular car, hydrogen is not a popular fuel. When negotiating it, the numerical amount in which myself and my charming salesman agreed on fluctuated a lot.
I posit to you that money is not real or at the very least, not important. The numerical value that money represents the agreed upon value between the parties in the transaction at the present moment. Not in the past, not in the future.
It turns out that with the right socialization strategies, you can influence the present moment value of money. Which is why social skills directly map to amount of money we earn.
This mapping is based on the Myers-Briggs personalities. The first letter in each code “ESTJ” represents Extroverted/Introverted. The chart skews heavily towards extroverts making a lot more money.
The Psychology of a Business Professional
In the US, it’s really about the first principle. You can trace every decision (by this I mean things that professionals do, not say they do) to if they believe that they will make money or save money.
I’m someone (see personality type below) that finds it very easy to emotionally connect with people. I’ve made the mistake in the past that that’s what professional networking is. It’s not. You don’t have to be a jerk and be super transactional, but understand that in it’s core, you should be connecting with someone because you think that it could lead to business opportunity in the future. It almost always does, in my experience.
Assuming that they are influenced by capitalism and incentivized to make professional decisions based on money means, you just have to talk about how you and they can make money and save money together. If in a single conversation you’ve taught them something new about how to do this, then to them you’re a connection worth having. That’s it.
It Just Makes Life Easier
I wish I could say that meeting a new person gets easier, but it doesn’t really. I wish I was like a charismatic Jedi Knight dropping into someone’s life but really, it just feels like this:
But it feels that way for the other side too.
I’ve met some friends through networking, but for the most part, that connection, that email address is just there for leverage. You don’t really need leverage if you’re not going to make some outsized bet. Start a business, make a career change, some risk that carries larger weight than simply going up and down the corporate ladder.
In fact, that’s how me and Andy got our first few clients. Through our network and providing a service that benefits their business.
Innovation isn’t built in a silo, its generated through execution and reflection spanning hundreds and thousands of programming hours and conversations across most of the Stanford STEM dorms most of the relevant tech world.
A great example is mastermind groups. Mr Beast, Peldi from Balsamiq, and even I have one. Professionals that come together to talk about what they learned every week and techniques and insights into how we can generates leverage in your learning trajectory.
It just makes life easier. You might think “I don’t need it to be easy”, but the truth is, if you’re reading this and have an active heartbeat, you’ve quit things because they were too hard before. Earning money is hard. Making expected value calculations about your career and executing on them is crazy hard. You, me, Elon, and even Obi Wan could use all the help we can get.
You Have to Do, Not Think About Doing.
Consider the next step in your career. Maybe you want to build a passive cash flow machine or finally become recognized as the best engineer on your team. Whatever your goal, there’s someone that’s been there and done that. Fastest way to get there is to find a few of those people and ask the question no one asks: “How did you do it?”.
Here are more tangible steps:
- Decide on a net worth number that you want. For tech people, it’s typically around $10-$20 million. This number needs to be exciting enough to keep you motivated through all the hard times.
- Then break it down into steps. For a $10 million net worth, you can probably get away with $5 million and then retire, letting the rule of 7’s double it in 7-10 years if you’re not spending recklessly.
- How do you get $5 million? Well you’re going to need to get to executive level at a startup or start a business. That or you can get into a pre-IPO company and rinse and repeat several times.
- So the next step is to make a leads list and go cold call people on linkedin right? WRONG. Use your leverage. Use your network first. Text people you know and be earnest. “I’m trying to be more thoughtful about my career and my finances for the future. Do you know anyone who has a $5 million net worth? I want to ask them how they got there.”
- Then once you get a meeting ask them who the most successful friend they have is. Then ask them for an intro. You’ll find that the more money someone has, the more easily they introduce you. This is because they understand network creates huge leverage. Btw, this has a 100% conversion rate for me.
- Then make a leads list and cold call people on Linkedin. This converts at 10% for me.
- Ok stop reading. Go make some money.
Also published here.