For the past couple of years we’ve had a lot of fun talking about regular people. They are easy to spot as they are entirely driven by emotion, root for the “underdog”, look to gain without adding any value and see everything through two dimensions. Generally speaking, they see the short term gain and lose over the long-term. This results in a constant negative feedback loop where they feel great for short moments in time that are fleeting as the decisions do not compound and don’t give them any momentum. Now… Looking at the bigger issue… lets see if we can spot the mediocre. These guys are much more difficult to catch but once you see it… you can’t “unsee” it.
Ten Common Mediocre People
There is noting wrong with mediocre people, they just don’t have the risk tolerance or belief to really take full responsibility over their lives. Generally, they need more “hand holding” and try to do things through partnerships (never realizing that partnerships almost always fall apart). Instead of actually starting they look for some sort of “angle” in and think there is a class or school that will teach them everything (they’ve followed the rules to the T for the past 25+ years). Again. Nothing wrong with it, the only problem is you’ll have to avoid them when it comes to your actual work. They’ll eat a lot of your time.
1) The Angler: The first tell-tale sign is the angle. If you’ve started something successfully it always goes like this. “Hey i am starting something” the angle person… he says ok cool (thumbs up). Then… After you succeed… Suddenly he wants to know how he can help and obtain *Equity* in the business. Instead of doing the hard work he’s trying to get a slice since he does know that ownership is better than a salary. But. He typically doesn’t have the skills required to be in a position that deserves an equity stake. So the cycle continues for him, just don’t make the mistake of saying ok and offering it to him. You’re better off finding the best suited person. Hiring a bad team member is suicide.
2) The Low Scale Hustler: Low scale hustlers are not the same as big ones. The big hustlers find ways to leverage every idea they have and run around like mad men scraping up every deal for their business. They make it. The low scale hustler is always onto these “gimmicks” that make a few hundred dollars here and there that add up to maybe $15,000 a year or so. Think of the guys who resell hot goods on the internet, or the guys who sign up for rebates for random lawsuits from major corporations. While they do find ways to get a few dollars they are never willing to take the time to build anything or take on any actual risk. These guys are some of the best soft contact people you’ll run into here and there. Shoot them a message once every month or so and they’re full of small ways to make $500-1000 without any effort. Just don’t give them responsibility or else they will shy away from the idea.
3) The Scalper: This guy looks to make small arbitrages all of the time. You name it he’ll be making the similar amount as the guy above. Around $25K a year in extra income. Scalping will range from sporting events to concerts to electronics and collectables (and god knows what else). Instead of creating a product with built in demand (the guy can already tell when things will have demand for crying out loud) he’ll play the spread over and over again. This is not a scalable business since they rely on continuous mini events and if this was done on a bigger platform the inventory risk would run wild. The best part about the scalper is he’ll know when solid products are coming out. If a new gadget is coming out and you want to know if it’ll have a good reception give him a call.
4) The Rule Follower: This guy is an amazing employee. We would say he isn’t even mediocre, if he learned to take risk he would be rich within 5 years easily. The only reason we’re including him in this list is because we’d avoid taking advice from him in terms of scaling an actual business. If you want to know how to move up in the rat race at a rapid pace… he’s your guy. Again. We’re only including him in the mediocre category because he lives a much more predictable and boring life: the bmw 3 series, fast promote to revenue generation and standard house with 2 kids. Nothing to say on the partying and reckless side of life since he’s followed every instruction to the T. Another tell-tale sign for those in banking is the guy who always does everything correctly, he doesn’t even cut corners during “fire drills” everything is somehow perfect triple checked and he has a cabinet of perfectly organized projects for reference. No errors. Just textbook execution. The positive? If you want to know how to succeed in the corporate world he’s your guy. Do not bring up “grey area” topics with him, he’ll point out the ways it “breaks the rules”. One last note, he ends up becoming a millionaire at least.
5) The Penny Pincher: These guys end up being “well off” but never get much further than that. They value their time at nearly zero, however they will go above and beyond to save 3% on any item. This means they’ll spend hours searching for ways to cut their cell phone bills, their grocery bills to their electrical bill (no joke). This constant focus on “guaranteed returns” and ignoring the fact that they are losing money (could be earning instead since they typically make ~$75 an hour or ~$150K a year) causes them to grow “slow and steady”. They believe that all improvement is made in “tiny steps” over time and don’t understand that the focus should be on *event* based income (where you see a one day windfall of say $500K+ due to an *event*). The reason why the penny pincher is so well liked is that anyone can do it. If you make slightly more money than the average person and find ways to cut your costs by 2-3% a year and invest in boring stocks and bonds (5-7% return)… you’ll be well off in a decade or two.
6) The Juggler: This is probably the biggest trap of all of them. This individual has everything the above people do not have. He has risk tolerance, an ability to take action and he focuses on earning money. The problem is that he does too many things at once. He’ll try to start three different websites at the same time. He’ll jump from company to company (ignoring the loss of political capital). He’ll invest in higher risk investments but never get concentrated on one he knows extremely well. This guy ends up becoming well off but never rich because he just never gets scale with any idea. Think about this person as a “mediocre” decathlete. While he ends up being good at 10 different things, he never makes it to the top because very few people are good at 10 events at the same time (most people are good at maybe 2-3 events). This is less to do with talent (he has that) and has more to do with building blocks and focus. The base/foundation was never built correctly so he has to redo the foundation for all of the different ideas over and over again. If you have a friend like this, help him because he has the highest chance of getting rich out of the all of the people on this list. Help him figure out where his real talent is, convince him to quit the ones that don’t work and watch the exponential growth.
7) The Heavy Spender: Heavy spending is relative. If you are a billionaire and spend $5 million dollars every year, that is 100% meaningless. And. The real definition is tied to income relevance. The best way to spot the heavy spenders is to read between the lines and see if they are still earning a high income. The typical heavy spender gets a one time *event* sometimes even two… But. Then takes his foot entirely off the gas. While he can take some time off, going from 100 mph to zero for more than a few months leads to minimal long-term income. He lives a good life but it runs out over the next 10 years or so. The great thing about the heavy spender is he has a much higher risk tolerance. If you have decent ideas (ones he cannot steal) you should run high risk ideas by him and see what his thoughts are. This allows you to think a little bit more aggressively. Just don’t fall into the spending trap (this is more of an art than a science).
8) The Boring Guy: This guy actually gets really rich. In fact the extremely successful boring guys are typically tough to beat on the financial side of the equation. They are always on it. They don’t party. They don’t date attractive women (they are boring after all) and they don’t enjoy anything but reading. If you’re trying to compete with this guy on the money side of the game, best to call it a day because he’s able to stare at a blank wall for 24 hours straight if you paid him enough. The issue with the boring guy is that he’s typically out of shape (typically with a weak frame and body structure) or simply fat. He’ll own tons of homes around the world… However… they will be rented out since vacation properties don’t give him the best ROI. The boring guy wins on the financial side… let him win it’s not worth the money in this case (death of your own personality). If you get the chance to work with him on a project for a short period of time… jump on it. It’ll succeed.
9) The One Hit Wonder: These guys are quite interesting, maybe they do have it right but we’d argue against it. They typically get a one time event, around 7 figures and then call it “a life”. They spend the rest of their days doing random activities from low end traveling to outdoor activities. These are guys who almost seem like hippies but they have just enough to not worry about money. This is more of a lifestyle choice we disagree with (hence we include them in “mediocre”!). If you find a guy who lives “close to a beach” or out in cheaper areas with lots of outdoor activities… and he doesn’t work… you may have touched on these guys. They also smoke quite a bit of weed.
10) The Tech Contract Guy: This is a new breed, the two problems with this person is 1) he never starts a company with his skills that can scale and 2) he typically spends too much time on his technology related tasks at the expense of his health and personality. This is becoming much more common, a specialist is called in for outsourced work and he charges them a fee for a project or based on an hourly rate. Overall, he is talented. He is talented enough to start his own company and teach others while scaling his own talents. The problem is he prefers being alone. Too much time alone means minimal ability to scale. This gives him a heavy wallet and a location independent income. It does come at a cost of scale and his personality since he typically takes on a ton of similar projects at once. The good news? If you need to contract out technology work, now you know how!
On a side note, the questions tab we started has been phenomenal. The questions are significantly better and each person only has 1-2 questions and is set. What we’ve found is that the best questions come from people who read Efficiency in full. After that they typically have 1-2 *specific* questions that we can help with. After that they move on. Some of the other decent questions have been more basic around 1) investing and 2) crypto currencies. What we’ve found is that the specific questions (a near-term decision coming up) adds the most value.