Cutting your own path

A friend of mine at work was talking about starting his own company. Understand, I work at an old, conservative, very corporate company. He mentioned this idea, this risky play, which could end up making him a ton of money.

This other girl heard him talking about it and said “Why would you want to do that? You’ve got a good, safe job here where you could be really successful.”

His reply was fantastic.

He said, “You can’t expect to follow the same route as loads of other mediocre people and expect to be wildly successful. It’s just not going to happen. You have to cut your own path.

Cutting your own path is always going be harder than following one that already exists. People will question you, wonder why you’re bothering, and convince you to do otherwise. You have to ignore those people. That path is a path to mediocrity – a plain of sheep where it is impossible to stand out from the flock. It’s easier, more comfortable, and much less rewarding than cutting your own path through the forest and seeing where you end up.

How to get rich

I was reading some of the Warren Buffett’s older letters to Berkshire Hathaway shareholders. I love the clarity in thinking that they display. The true mark of an expert is someone who has the ability to take a complicated topic and distill it into simple language, and these letters display that virtue in abundance.

I was reading the 2008 letter because I wanted to see what Warren wrote about the turmoil in the financial markets in that year. This letter contains the following passage, which I immediately saved to Evernote:

In good years and bad, Charlie and I simply focus on our goals:

1) maintaining Berkshire’s Gibraltar-like financial position, which features huge amounts of excess liquidity, near-term obligations that are modest, and dozens of sources of earnings and cash;

2) widening the “moats” around our operating businesses that give them durable competitive advantages;

3) acquiring and developing new and varied streams of earnings;

It’s wonderful in its simplicity. But the best part: you can apply this exact model to your own life.

1) Get your financial house in order. Know where your money is going (I use You Need A Budget, which is fantastic). Make sure you’ve always got enough cash on hand to cover any short-term liquidity problems – and I mean cash on hand, not home equity or available credit cards or money invested in index funds. Don’t get into credit card debt, and limit your other obligations as much as possible. Then, start investing the spare cash to produce additional income.

2) When applied to an individual, this basically means: find ways to increase your earning power day-to-day. For most people, myself included, your main economic engine is your day job. So this means getting great at your job, and taking advantage of the opportunities that arise because of this – promotions, pay rises, and so on. Being great at your job not only means you’ll get paid more, but also means you’re a lot less likely to ever be laid off – a great, protective moat around your earning power.

3) Now that you’re in a healthy financial position and earning good income, you need to redeploy this capital in ways that generate yet more income. That could be shares, bonds, peer-to-peer lending, starting a side business – whatever suits your particular talents and expertise. It’s your job to collect assets that generate excess cash for you, as the owner, to do with whatever you please.

A simple, three step model to becoming fabulously wealthy over time. Get your ship in order to avoid wipeout risk, increase earnings, and invest excess cash into assets that produce even more excess cash. Not easy, but simple.


These are a few issues I’ve thought about enough to have a strong opinion on. I believe these principles provide a useful framework for making decisions, and that using this framework will ultimately make me happier. As with anything created at the grand old age of 25, I’m sure this isn’t the last thing I’ll write about it, and I fully expect to edit, remove or add to these principles over time.

1. Simplicity is good. It saves mental power for other things (this is why Obama only wears two colours of suit, to save decision-making effort for more important issues than merely deciding what to wear).

2. Minimalism – a lack of commitments (financial or otherwise) and a lack of possessions – also reduces stress. Books are the exception to this rule.

3. As a corollary to rules 1 and 2, I am prepared to pay for quality – if I’m only going to have a couple of pairs of shoes, or 4 suits, I want them to be good quality.

4. Likewise, I’m willing to pay other people to do things I could do myself if it reduces stress and frees up time for other things – money is renewable, time is not.

5. Keeping your monthly outgoings as low as possible and maintaining cash on hand goes a HUGE way to reducing anxiety and increasing happiness. Corollary: eliminate and do not use consumer debt. It’s like running with a parachute strapped to your back.

6. What people have actually ACCOMPLISHED is much more important than their qualifications. This is true for me as much as it is for anyone else.

7. Experimenting and tracking results is crucial to improving anything.

8. If we define “rich” as being able to buy anything you want, then there are two ways to do this: get more money, or want for fewer things.

9. Having said that, money is only one of three currencies: the other two, time and flexibility, are often much more valuable (see rule 4).

10. You can be good at more than one thing, and often it helps.

Avoiding the harmful

Happiness: we don’t know what it means, how to measure it, or how to reach it, but we know extremely well how to avoid unhappiness.

- Nassim Taleb, The Bed of Procrustes

I’ve so unhappy at certain times in my life that I’ve had to cry myself to sleep. I got out of it by cutting the harmful out of my life.

This is such a powerful principle that you can apply to a lot of different areas: avoiding consumer debt, avoiding ignorance, avoiding things like cigarettes and drugs.

Three recent news stories brought my mind back to this principle.

Firstly, Andy Coulson of the News of the World was found guilty of phone hacking.

Secondly, Luis Suarez bit an opposition player during Uruguay’s latest World Cup match.

Finally, were found to have sent threatening letters from a fake law firm to encourage their debtors to pay up.

Here’s the thing. Say what you want about the News of the World, but Andy Coulson was a powerful, well-respected guy who had previously worked for the Prime Minister. Without this scandal, he would have been fine. Luis Suarez is undoubtedly one of the finest football players in the world, but this is the third time he’s bitten a player, and it looks like he could be facing a lengthy ban from the sport. And regardless of how you feel about payday loan companies, there’s no denying is the market leader, a growing and profitable company.

But the latest news for these people may ultimately be damning. I’m sure they’ll all survive — for now — but at what cost?

And every single one of these incidents could have been avoided with a moment’s thought. It reminds me of a quote I first heard from Ryan Holiday:

[Here’s] a Spartan anecdote from Plutarch about King Hippocratidas when a youth and his lover met him accidentally in a crowd. The two had turned their faces away and he said “You ought to keep the company of the sort of people who won’t cause you to change color when observed”.

Is there no-one at News of the World or who was sat in a meeting thinking “You know, what we’re about to do is really stupid. I should stop it.” Do they not have a Chief Dissent Officer? Or even a fucking conscience? The Suarez incident is slightly different, as it was a heat of the moment thing, but still, this is the THIRD time it’s happened. After the first two incidents, why not take a minute and think about why you’re acting the way you’re acting?

There’s a reason Google’s motto isn’t “Be good” — rather, it’s “Don’t be evil.” As with seeking happiness, we may not always know the right thing to do — but avoiding the wrong things is a good place to start.

A lesson on the power of incentives

As an Econ grad I love stories like this.

The story of the Honduran railroad epitomises life on the isthmus. In 1870, the government hired an engineer named John C. Trautwine to lay track from Puerto Cortes on the Atlantic to the Bay of Fonseca on the Pacific, but made the mistake of paying him by the mile. When the project went bust in 1880, Honduras was left with sixty miles of track that wandered aimlessly here and there through the lowlands.

That’s from The Fish That Ate The Whale: The Life and Times of America’s Banana King by Rich Cohen. Fantastic book.

Never forget the power of incentives. There’s a reason that Warren Buffett himself puts together the incentive schemes for Berkshire Hathaway managers – it’s hugely important and he doesn’t trust anyone else to do it.

The Obstacle Is The Way

I’ve been reading Ryan Holiday’s blog for about 7 years now. He’s the Director of Marketing for American Apparel, and has worked with authors like Tim Ferriss, Robert Greene and Tucker Max. He’s also a staunch advocate of stoicism as a personal operating system.

His new book is called The Obstacle is the Way: The Ancient Art of Turning Adversity to Advantage. It’s the best book I’ve read in a long time, and it’s a book I will undoubtedly turn to again and again over the next 50 years. Ryan teaches you how to deal with anything in your life, and turn it to your advantage.

There are three aspects to this.

1. Perception

Controlling your perception is key – you have to flip the obstacle around to see how it can work for you. Think: tight deadlines give you the opportunity to practice working under pressure and focus on what really matters. Failing at a business venture gives you more intel about what does and doesn’t work in a particular marketplace. If your computer crashes and you lose all your work: now you have a chance to do it over, even better than before.

What matters most is not what these obstacles are but how we see them, how we react to them, and whether we keep our composure…this reaction determines how successful we will be in overcoming – or possibly thriving because of – them.

2. Action

Every single thing we do is a reflection of who we are as a person. We owe it to ourselves to do our best work, to keep going, to strive and to what it is we were meant to do. And we always have a choice to keep working and to put in the effort and the work required of us.

The great psychologist Victor Frankl, survivor of three concentration camps, found presumptuousness in the age-old question: “What is the meaning of life?” As though it is someone else’s responsibility to tell you. Instead, he said, the world is asking you that question. And it’s your job to answer with your actions.

3. Will

Finally, there is the idea of will, which is what you hold deep inside of you.

True will is quiet humility, resilience, and flexibility…[not] weakness disguised by bluster and ambition. See which lasts longer under the hardest obstacles.

This is what we should all strive to be:

Certain things in life will cut you open like a knife. When that happens – at that exposing moment – the world gets a glimpse of what’s truly inside you. So what will be revealed when you’re sliced open by tension and pressure? Iron? Or air? Or bullshit?

Ryan is also clearly influenced by both Robert Greene and Marcus Aurelius in terms of his writing style for this book – it is simple, clear, direct and practical. I found myself highlighting and marking numerous passages which I will turn to again and again in the future.

Self-awareness is useless on its own

People pride themselves on self-awareness, but it’s bullshit. You can do all the personality quizzes, introspection and discussions with coaches and mentors – you can do as much of that as you want.

But it’s ultimately worthless if you don’t ACT on that knowledge. You know you talk over people too much? Get people to call you on it. You have a tendency to flit from project to project when things get difficult? Strap yourself to your chair and force yourself to finish something for once.

If you’re not using that self-awareness to improve yourself, your life, your relationships, and your decisions, then it’s all just masturbation.