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Daily Blog #6 – On Being Rich

by wforbes

On Being Rich

Earning money is important in our society. It decides your freedom by giving you more choices. It’s not everything, but it can really change things. From the places you can afford to visit, to the things you can afford to buy… earning more money can provide you with a better life. For most of us, we earn it a few thousand at a time. If you reach the pinnacle of your career and you’ve really got things going well for yourself – you might be able to clear $20,000 per month. That’s just about $200,000 per year after taxes and to most people – that’s rich. With that kind of money coming in, for the vast majority of people on the planet – you’re considered wealthy. With the proper spending/saving habits, you’ll be a millionaire in less than 10 years.

Yet, that’s the ceiling for someone who only earns their living by working a job that pays a salary. Sure there are plenty of careers out there with big bonuses and stock options that can substantially increase your earnings… but for the most part – if you only earn money by working at a job, even as a Doctor or a Lawyer… it will be difficult to earn more than $400,000 per year.

So after a couple decades of working a high earning career, you can expect to have a few million dollars in net worth, a house or two, a great car, and some nice vacations. I think this is what we all aim for, and a few of us actually accomplish that level of success in life.

If you do more than this, and work at earning more money outside of your career the ceiling raises. With proper investments into the financial markets, real estate, and starting/running businesses… you can multiply your earnings and the money you’re saving in the bank. With your money in stocks you can expect to earn 10% of the money you invest every year, at the most. Put $100k in, and you get $10k more out of it. With your money in real estate, buying houses to fix them up and sell them, or buying houses to rent them out … and some combination of the two… you can earn up to 30% to 50% on your investments depending on your strategy over the course of several years. Put $100k in, and you get $50k more out of it. Starting a businesses could earn more or less depending on how well you do, there are so many variables that go in to it. You can invest in other’s businesses and lighten your workload. You can buy an established business and take over running it… or simply hire others to do that. With all the options it’s hard to pinpoint a rate of return, but over the long run this can earn substantially more if you’re lucky.

So if you earn $500k in your career, and you invest a large portion of that you might earn an extra $100k on top of that in a given year if you’re extremely successful in your investments and other ventures. That can snowball into earning more if it’s reinvested. Your investments and opportunities can grow as you make the right decisions over the years. Eventually, you might be able to end up with a net worth of $10 million .. or even $100 million after enough time. This would be incredibly “lucky”, to say the least. There are so many risks and problems that arise from them. Businesses fail, houses go unsold, the stock market is volatile and your business partners may rob you blind. Even if you try to make every ‘right’ decision and devote your entire life to it, there’s still a chance that you’d never be able to be worth that much.

To you or me, the average Joes, the thought of $100 million is an astronomical figure. It’s a life’s work of endlessly and consistently putting in 100% effort in everything you do. But on the world’s scale of wealth… that’s just getting started.

If you had $100 million by the time you were 70 years old, you’d need another 100 lifetimes to earn $1 billion dollars. We hear the word ‘billion’ so much, that I don’t think it carries the weight and impact it really should. It’s hard for our minds to wrap around the concept of a billion. The only way I’m able to get close is by remembering that 1 million seconds is equal to 11.5 days… but 1 billion seconds is equal to 31.7 YEARS.

Even if you earn $10 million per year, it might take 100 years to eventually save up and accumulate $1 billion. Well, perhaps not… given that idea that the more money you have, the more money you earn. So maybe you land on an amazing idea that revolutionizes an industry, or you’re born into wealth, and you begin your adult life earning $10 million per year. By your 40s or 50s it’s possible to be worth $1 Billion … or perhaps multiple billions of dollars. You could do so much with that much money. Buy a chain of islands or a skyscraper in New York… and still have plenty left over to live an extravagant life off of interest alone. You could afford to give everyone in America $3, or give $1 million to 1000 different charities… and still have $50 million left over from one year’s interest earnings if you held the money for a year first. One billion dollars is truly an other-worldly sum of money, so far removed from the earlier concepts of earning just $200k per year which most of us won’t ever be able to manage successfully.

That’s why, while having many millions of dollars is impressive and difficult to achieve… it’s not necessarily “rich”. Especially not when you place it on a scale with the most wealthy people alive today.

The richest people in the world (that we know of) have over $100 billion. That means … well… I looked up videos about it, and you can see for yourself:

Jeff Bezos, the richest person on the planet until recently, focused on business in his career. He started an online book business with the vision of turning it into an online marketplace, and that vision erupted into the Amazon we know today which not only provides an online marketplace but many other verticals like an online cloud platform that powers many thousands of websites, logistics, warehousing, delivery, smart cars, and who knows what else. He has a hand in other ventures as well, including BlueOrigin which is developing spacecraft and flights.

Yet, our boy Elon Musk, now the richest person on the planet, has held a different strategy throughout his career – hyper-specializing in multiple disciplines of computer programming, physics, engineer, and aeronautics. Building many different businesses that are focused on advanced/next-level ventures and helping to grow them into incredible success, instead of focusing on just one, the list of work he’s be involved with is exhaustive. He was behind early internet companies that included PayPal. He was an early investor and CEO of the most popular electric vehicle company Tesla. He was a major part of the solar power company SolarCity. As well as the first and most successful commercial space flight company SpaceX that created a self-landing reusable rocket and internet based high speed internet network StarLink. He started a company focused on underground high-speed transit The Boring Company. He started a company called Neural-link which is working on connecting computers to our brains (whoa). Finally he helped found OpenAI a non-profit artificial intelligence company that’s recently released GPT-3, one of the most advanced AI products known to date. Altogether, he either created, ran, funded, or developed so many businesses and so many products that are truly “ground-breaking” in so many industries… I can’t even imagine attempting one of them if I had 20 lifetimes to plan for it.

I mean, he created a video game when he was just a kid… on technology that was far more difficult to work with than I have at my disposal. Yet I’m still tinkering with getting my simple video game off the ground.

I think the juxtaposition of these two ‘richest people’ is interesting.

On one hand, we have a man of business and on the other hand, we have a man of science. You can speak endlessly about the money Bezos has raised, the companies he’s acquired with Amazon, the companies that Amazon has run out of business, the working conditions of his employees, and so on… yet the focus of his accomplishments are relatively singular. He runs Amazon. Amazon has changed our lives and given us convenience, but it’s just doing what was already done… only better, and all at once. It’s highly possible that Bezos had limited contributions to producing the technology and inventions involved, he simply paid people to do it and followed his goals. Admirable and inspiring, but singular and focused on combining what’s already been done to make something larger.

When you dig in and talk about Elon, the conversation is different. What’s notable isn’t that he run a successful business and made money, instead the focus is more closely tied to the actual accomplishments and technology that his business ventures were based on. He’s the Chief Engineer in at least some of his companies, he was directly involved with the invention of the products. He learned the rocket-science, he plans the Mars missions, he conducts the interviews to hire the scientists, he wrote the code for the early website businesses that led to PayPal.

The focus in many of Elon’s public talks is about broader concepts, about making science-fiction a reality. About the end game. Not just the end game of his life, or the next few decades, or even the next century… but about the true destiny of humanity. Do we want to keep using old motorized vehicles or do we want to revolutionize how we drive to reduce death and increase efficiency? Do we want to stay on Earth and wait to get hit by an asteroid, or do we want to settle other planets to spur the expansion of humanity to other stars? He talks about the pure notion of doing things to excite and inspire people, and being guided by that vision.

Even when you hear Elon talk publicly, which he does often, his thought process is expressed in a slightly scattered way, he explains and communicates the core principals of the subject, he describes the foundational elements of what’s being presented and the underlying reasoning for the claims he makes. Compared to Jeff Bezos, it’s almost like night and day. Bezos speaks in prepared speeches, broad basic concepts, and with curated ideas that are composed to speak to a point that usually isn’t ‘backed up’ by the same rigor that Musk communicates with on the fly. He talks about products and business strategy, marketing and earnings, monetary value and service like a somewhat interesting pamphlet that’s handed out at a seminar. These are just my impressions, but even if you disagree – you must admit that the differences are stark.

Still – both of them are famously wealthy. Wealthy beyond reasoning. Their net-worth is tied up in stock, ownership stake in their companies, so it’s not quite “real” in the same way as having money in the bank. With that type of wealth, you can certainly do anything someone with hundreds of millions of dollars can do, you can just comfortably do more of it. You’ll be living off of substantial amounts of interest and capital gains that your stock and notoriety can earn… with the benefit/responsibilities of calling the shots at just about anything you desire… with the notoriety of having all eyes fixated on your existence. Want to start a new global company? You can do it. Want to rebuild an entire city with a charitable foundation? No problem. Want to buy or create any material item or group of items on earth? There’s probably a way. However, in the case of Musk or Bezos, if either of them sold off their stocks/ownership and liquidized their finances to actually have $100+ billion to spend all at once… the companies value would tank, the American economy would react negatively, and things might not turn out very well for any of us. The entire global economy might crash if you went around spending it aimlessly. The same can’t be said for Alphabet/Google’s founders, who have taken a FAR less of a public-facing appearance… or the Koch brothers, who you’ve probably never heard of, yet still were in the list of the top 10 richest people in the world for years.

Much of Google’s technology relies on algorithms and inventions made by people neither of us have probably ever heard of, either. For instance, a technology called Spanner, which is what makes it possible for you to store data on Google from one location and have it instantly available across the world. I can type into a Google Doc here in California and people anywhere in the world can see my changes to that document instantly. It’s stored instantly. It’s replicated in all of Google’s data centers immediately. So if one goes down, it won’t disrupt it’s availability. This type of technology had already been invented, but it took time for all those things to happen. Time to save changes and distribute them, time to reliably provide access to it, and time to shift it around in data centers correctly. To allow for the instantaneousness of Spanner, a ground-breaking technology called TrueTime was invented.

I brought this up because the inventors of Spanner and TrueTime are virtually unknown to the common person. Names on the Spanner research paper “JAMES C. CORBETT”, “JEFFREY DEAN”, and others allude to some high values of wealth, with Jeffrey Dean being worth $500 million … but when reading about all the names on this list – they allude to far less wealth but so much more knowledge, research, PhD.’s and academic achievement. The products and services that companies like Google provide run our world. If Google went down or tech like Spanner stopped working… we would be virtually lost for a while, businesses would fail, ads would go unclicked, and soon enough we’d lose far more than just the values of stock crashing… we’d lose the tools we need to do almost everything in the professional world we’re accustomed to.

I’m starting to see more and more that these companies that run our world, and the “richest person” faces that are plastered on them, have so many unseen people that actually do the work and revolutionize their industries. They contribute to the actual value of Bezo’s billions. The thought of people that discover new things, invent or build new solutions and products make looking up “Richest person” and naming their ownership stakes as a valuation of their contributions begin to mean less and less. Bezos and Musk, Jobs and Gates, Buffet and the Koch brothers, as skilled and dedicated as they are… only direct and pay the people who actually develop the science and build the products required to make those famous names what they are. Without the James Corbetts of the world, who would the Donald Trumps really be?

This last year I read two books that gave me food for thought on the less known artifacts of the life of the rich. Namely, Kochland by Christopher Leonard and American Oligarchs by Andrea Bernstein which both use their many hundreds of pages combined to drudge through the family histories, personal lives, and business decisions of some of the most wealthy families on earth. The Koch brothers are oil tycoons and the Trump/Kushner families have each amassed a vast real estate empire. I won’t go into the rather unsettling details involved, but I will say that what we publicly know about the rich – what we see in news headlines and on the TV – only scratches the surface of what they’ve done to create the wealth they have. Now, I acknowledge that it’s probably not easily possible to become a multi-billionaire by never doing anything to harm anyone in any way. It’s probably more efficient to cut corners than to neatly fold them away. Especially in a world where everyone else is cutting corners too.

I have a lot of other thoughts on this topic and I’m sure I’ll come back to it some other time, but for now, I’ve got to get back to work. Today I intend to meditate on all this. I hope someone invented something today.

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