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How Much is Your Time Worth?
Level 2 - Value Investor
Welcome Avatar! Since the day you are born, you’re told the following: “Time is money”. 99%+ of the population always obsesses over “how much do you make per hour”, they obsess over “how long it takes to make it”. This is because they are stuck thinking in linear terms. You put in one more hour you get $$$ extra because of that one hour. They can’t fathom getting a *negative* return because they focused on the wrong thing (which happens every single day in every single business).
For this we’re going to start high-level and work down to a rough framework for the value of your time.
Part 1: Remove Income and Time in Your Mind
This is 1,000,000x easier to say than to do. The vast majority cannot conceptualize removing time from the ability to earn money.
Take Bill Gates for example, he makes “$100+ per second” according to economists. So they claim it isn’t worth his time to pick up $100 off the floor. This makes zero sense. When Bill is sleeping he is generating more money since Microsoft is generating income without him doing anything. Similarly, if he picks up $100 off the ground, he simply makes $100 extra. The money he makes from his massive recurring revenue business (Microsoft), does not go down if he picks up the money. There is no trade off, so this logic is horrendous to say the least.
Somehow this is considered a “fact” despite being entirely wrong.
It is only an opportunity cost if something is lost.
Example for Bill Gates: With that craziness out of the way, an example of true opportunity cost *for him* is as follows: 1) the head of technology suggests working on project A, B and C and 2) he looks at all three and in his opinion A and B are the best options.
Now you are getting to a massive decision. Do you spend your time on project A or project B for the next 6 months? Choose wrong? Revenues go down, income goes down… he is making a *negative* return on his time.
This is an important concept to repeat religiously.
Every single person who wants to get rich (anything above $10M+ is baseline for being rich), needs to get comfortable with *losing valuable time*. Amazon, Microsoft, Apple and all the other major companies have had *negative* yielding ideas. Coinbase’s NFT platform would be exhibit A of a mainstream failure. Both time and money were wasted.
Moving to a Simple Micro Example
One of the things we obsess about here is the ability to make good ads. The reason why is because it’s the only skill you need. If you can convert with good ads, there is nothing left for you to learn. You will eventually get rich and there is absolutely no way to say we’re wrong on this one.
Create Ad: If the ad is profitable you run it forever. Read that again. You run it forever. An ad is just a license to print money. Just like the Federal Reserve.
If you spend $10,000 on Ads and you are making $11,000 in profit how much should you spend on ads?
The answer is obvious, ideally billions of dollars. As long as running the ad is profitable you run it and spend everything you got. You just track it and as soon as the market is tapped, you shut it off as returns sour. (there is no product in the world that would service all 7B people on earth).
Time? Where is the time. There is no time here. The ad runs while you’re eating lunch. While you’re at the gym. While you’re sleeping. You’ve removed the element of time from your ability to make money.
But Wait…: You had to learn how to make ads in the first place! That’s the key. If you never learned how to make good ads you’d never even have this option in the first place!
Which brings us to an important question for you, what skill are you trying to develop right now? Not tomorrow, not yesterday, we’re referring to today as you’re reading this sentence on a smartphone or laptop.
Evaluate this skill. Will it potentially allow you to decouple your earnings from time? If not… It’s not a high ROI decision at all. If you’re studying for some certificate that will increase your earnings by $10K a year, that doesn’t matter. The certificate allows you to trade your time for money at a slightly higher rate. Read that closely anon!
Trading your time for money at a slightly higher rate is still renting out your time.
What Can Scale
There are a million ways to scale:
1) Hiring: you can scale by hiring people for less than they produce. This is standard brick and mortar/trades. You hire electricians for $35/hour but then you find them work and charge $55 an hour. You’re collecting $20/hour off of their time (not your time).
2) Software: You create a software product that is needed to make video games for example. As long as video games exist your software is used every single year and you can charge a boat load for every single subscription.
3) Ads for Consumable products: The most likely scenario for 99% is you sell some popular widget. Cookies, lipstick, energy drink (it doesn’t matter). Anything that is *consumed* so you can get repeat orders. You then sit back and ship products every day/week as orders come in. Eventually an assistant can just help process these basic orders.
As you can see here the common element is removing your time.
Note: trying to sell things like refrigerators isn’t great since it is a long sales cycle. Once you buy a new fridge you unlikely need a new one for years.
Good Chart to Think About Scale
Note: honestly the whole post is pretty good so if you have time definitely give it a read (source)
What Can’t Scale
This Substack is probably a great example of limited scale. You have to constantly create more content to remain relevant, it’s a job. We wouldn’t consider this a business and view it as a hobby since becoming homeless (need something to do before going clinically insane).
1) Lawyers: Unless you start your own practice, charging “by the hour” is by definition trading your time for money. Yes you can charge a lot if you’re an elite lawyer. That said, the real money makers are the ones at the top who employ the lawyers. They bill $1,000 a hour to a client and pay the employee hundreds of dollars pocketing the difference.
2) Books: This is extremely *hard* to scale. Once you sell one, they don’t need to buy another one. Not consumable. Now before the chorus of boos come in, if you are MEGA popular like JK Rowling then you do get rich. We’re simply talking about the concept of avoiding one time sales products.
3) Consulting: Unless you own the consulting firm and hire the consultants like Bain, you’re just trading time for money. Charge an hourly rate. Unless you’re massive, you can’t charge enough to “make it”.
As you can see these “hard to scale businesses” have one thing in common, you must be extremely popular to make a large amount of money. To put a number on it, you would need to have at least 50,000 people with a LTV of hundreds of dollars. Even if you had 50,000 people willing to give you $10, that dies immediately since its a one time income of $500,000 and you’re back to zero. It’s hard.
Autist Note: No worries on BTB ever becoming mainstream. It isn’t possible due to the niche nature of the audience. The way we intend to scale the Jungle going forward is via physical product sales and legacy markets. This allows expansion outside of this initial start period. A whopping 2 years is nothing so far.
Part 2: How Are You Utilizing Your Time
Most won’t listen to our general strategies and some people enjoy learning the hard way (sometimes twice!). An example being: 1) selling half at doubles, 2) never quitting until you make 2x net income from W-2 and 3) not renting out your time for money - focus on scalable talents only.
The main tell we get is all the “comparisons” which have no value at all. Some people are just more talented than others. This is how life works. Not everyone can be a gifted freak athlete who can jump 50” in the air. Not everyone can be the next Tiger Woods. So on and so forth.
The bigger question is what skill are you trying to build. Are you spending your time learning how to be a lawyer? Unlikely great since you will end up hiring a law firm if you have a business. The only exception is if you’re going to start a *law firm*
Sales: Always good use of your time. Even if you don’t see immediate results it doesn’t matter. Sales is the one skill that is “forever”. If you can sell extremely well you will never be out of work. Even if you don’t knock it out of the park every year.
Copywriting/Ads: This is the same thing. Except it can be scaled aggressively. If you can make incredible ads, you will be able to charge boatloads to companies around the world forever. Make the ad, run it and collect money.
People Management: If you’re in a trade you should 100% invest time into people skills. That’s going to pay off 500x fold if you go into trades. Hiring the right contractors would pay off in the thousands/millions since you developed an impossible to replicate skill: ability to hire the right people. Who is going to steal from you, who isn’t, who will put in the most work, so on and so forth. There is no downside in learning how to manage labor.
Ignore The Results
This is impossible for most. While sports are not the focus here they represent a great example of ignoring results. If you swing a golf club incorrectly, no amount of time practicing will allow you to reach your max potential. It just doesn’t exist.
You can tell who has a “winning” mentality by the guys willing to undo all their bad habits. They start playing worse. Until they get everything down. Then 6 months later they are suddenly magnitudes better. How many of these people exist? Probably under 3-5%.
Ignoring the Time Frame: Just like anything else, some people are gifted. Some guys are naturals at sales. Some guys are horrific. It doesn’t matter. Just because your friend learns the ad game in a year doesn’t mean you have to learn the game in a year. You just need to make sure you’re learning it correctly over time.
If you’re constantly tweaking ads for 1, 2, 3 years and seeing *improvement* then you’re good to go. Most can’t do this though. They quit and go back to whatever short term money grab is available (trading time for money).
For the record we wouldn’t even say we’re good writers or advertisers. Practically all the posts have the phrase autism on there so it should give you an idea that social skills is not a “natural” trait. Does it matter? Not really.
Just like social skills, ads can be learned if you’re willing to eat glass for years on end.
Write Down Where You Spent Time
End of each day just have three line items: 1) time spent on health, 2) time spent on money vs. time exchange and 3) time spent working on something scalable.
In 10 years this should read: 1) time spent on health, 2) time spent on working on something scalable.
You will be forced to trade your time for money. Working on projects or being paid by someone else (early in your life). This is just reality unless you were born with a trust fund.
The goal over 10 years is to make sure that time for money exchange is going *down*. If it is not going down you’ve got problems because it will end with 30 minute commutes to go into an office instead of a cube… doing the exact same thing.
Trading time for money.
Part 3: How Much is Your Time Worth
Now that we’ve beaten that dead horse again, it’s time to calculate how much your time is personally worth. This is a difficult calculation due to several factors: 1) declining health as you get older, 2) how free your time is relative to your income and 3) how much you could earn renting out your time currently.
All three are important to understand. If you’re worth $5M at age 35 it is not the same as being worth $10M at age 55. We’d choose to be the 35 year old a billion times out of a billion.
As a general framework, your 20s you should be a combination of trading time for money and learning to scale. Some people are scary talented and can skip it all. We’re talking about the top 5% not the top 0.1% level.
After this, in your 30s, you should be spending much less time trading time for money. You can still do it but it better be a big number in the hundreds per hour ($200K-$1M+ implied salary at minimum)
Then in your 40s you should pretty much be done with trading time for money. Unless you’re doing it as a hobby it shouldn’t be a material part of your time. Coaching your kids Volleyball team is certainly not something you’re doing for “money”. Writing words on a screen as a cartoon bull is also deep into the insanity pit.
Time for Money in 20s: The rule we’d use is as follows. Take your annual salary. At this point if you’re making $50 an hour, we’d estimate your time is worth $150-200/hour. Woah.. Woah why? Well it is simple. You need that time to build skills that are scalable.
If you make $50 an hour and work a second job making $50 an hour you are shooting yourself in the foot. You have built no scalable skills at all. By the time you’re 30 you’ve got nothing but renting out your time.
Time for Money in 30s: Now it “depends”. If you work a W-2 making $100 an hour but already *solved* the WiFi money game and make $100K a year online, we’d say you can take extra work here and there for $200-400 an hour. This is because you should be smart enough to *know* when you’re dropping the ball on the WiFi side.
Time for Money in 40s: It shouldn’t matter. You should just be doing time for money exchanges for fun so that will range based on what the task is. If it’s something family/friends oriented the number is probably really low. If it is something serious, a work related number is probably extremely high (speakers get $5,000+ just to show up to events). So on and so forth.
In your 20s you can both party a bit and invest for your 30s and 40s. Your 30s and 40s should be maximum enjoyment followed by a slow bleed.
Before all the cope and seethe comes in we’re well aware of HRT/TRT/HGH and other extreme forms of life expectancy/quality of life improvement. We’re *PRO* all of those things under the supervision of a doctor. And. Despite all of these crazy advances we still don’t see pro-athletes in their 40s (excludes the 1-2 exceptions to the rule every year). Most peak in late 20s-30s even with elite genetics.
20s: your time should be worth 3x+ at minimum relative to your salary
30s: your time should be worth at least 2x+ with rare exceptions when it’s equal (doing someone a favor)
40s: you should only be exchanging time for income for fun and to “stay sharp”
Part 4: Track Your Time Investment
Now you can see the importance of tracking how you’re investing your time. If you’re in your 20s your time is arguably worth more. If you blow it investing your time in the wrong things, you’re stuck playing catch up in your 30s. If you do it again in your 30s now you’re playing catch up in your 40s. It doesn’t get easier.
In terms of things to spend on as you move up, your highest ROI items are typically *time saving* until you get rich. Time saving would be chores ranging from cleaning to getting groceries. Best to pay the small premium to avoid all of those tasks when you’re working 60-70 hours a week.
Don’t worry though, most will just look for magic pills to TURN $20K INTO $500K USING THIS COURSE. You have nothing to worry about since most will puke after reading the sentence “working 60-70 hours a week”
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Disclaimer: None of this is to be deemed legal or financial advice of any kind. These are *opinions* written by an anonymous group of Ex-Wall Street Tech Bankers and software engineers who moved into affiliate marketing and e-commerce. We’re an advisor for Synapse Protocol 2022-2024E.
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