Preparing Your Kids for Financial Success

I love this answer from Quora; I don’t love how the question was about “being a billionaire,” but the advice in this response is gold.

I once had a venture capitalist (VC) tell me that I had come up with more legitimate billion-dollar concepts than anyone he’d ever known. I have friends who went from zero to billionaire status. So, I feel qualified to give you a straight answer. My answer will assume you want them to have the know-how, creativity and value systems to pull it off on their own. Plus, I raised my three sons this way.

Make them aware of the full range of life options. I told my sons of a remote beach in NW Australia where the climate is magnificent and you can pull lobsters out of the surf two at a time. Build a grass shack. Find a good woman. You’re set. At the other end, how did that guy build his love of crafting musical instruments into a $100M business? Take the mystery out of the steps it takes. The world abounds with opportunity to lead whatever life you want, but you have to demystify, demystify, demystify for them to be able to see what makes go businesses go.

Do NOT send them to public school NOR to the prep schools that are just our public schools on steroids. If you want conventional minds, get them a conventional education. Our oldest started working professionally at age 12. He skipped high school to work. He worked at a corporate branding company in SF Media Gulch. He did at least one project a year with an itinerant filmmaker. He traveled the Maya for several months assisting a woman writing a book, lived with Maya families and interviewed children in Spanish on their beliefs about different plants and animals and the Quiche (or Yucatec or Mam) name for them. He spent two winters in Luzern captaining a dive boat mapping wrecks in the lake. He shot a documentary film in Cuba. (This was not a rich dad buying opportunities for his sons—it was opportunities they earned.)

Teach a love of work. After you get rich you can coast some. Getting rich takes work. They will need to excel at physical work and have stamina. They will especially need to excel at mental work and be both flexible and tough.

Teach a love of people. The only way you get rich is by serving the real needs of others. You must have an affinity for others. My household was famous for all the people who came trooping through. People I met stranded at the airport. Japanese Homestay girls. Aux pairs. Local homeless guys dropping by for a shower and a meal. Chinese physicists and Eritrean guerillas had meals with us. Our sons’ friends were welcome at any time without prior arrangement. Make sure they understand that they are not above or below anyone else.

Teach generosity. Those who would receive much must be able to give much. My middle son (11 or so at the time) and I walked across Embarcadero from my office to look at SF Bay. There was one sole figure there, a man in his late 40s with one entire seam of his jeans ripped open. He was playing the spoons and playing them well. We got to chatting. He’d just been let out of San Quentin Prison that morning. I told him time to celebrate. We took him up to my office for a shower, out to buy some clothes and to dinner and gave him money for a room for the night. On the way home, I pointed out to my son that the money I gave the guy was nothing compared with the time we gave him. The only real wealth is the time you have, and whenever you have a chance to use your time well for others, do it and do it fully. Giving money without time can be a way of creating distance.

Teach the mental nexus. Here falls the shadow. Rational people do not become entrepreneurs. Like combat officers, one is constantly making critical decisions on partial information. One has to take steps without being able to see if there is support there. One must taste failure time and again and be inspired by it. One must be armed with a variety of rationalizations for continuing on despite doubt, buffeting, adverse opinion. Every successful new business gores someone’s ox, and those people react in nasty ways. The faces you see each day are now depending on you to make payroll. Pediatric oncologists must be mentally tough to deal with the suffering of others; entrepreneurs must be superhuman to deal with the tragedies they themselves can be the authors of. Trick is, you can’t teach that mental nexus if you have not lived it yourself. If you haven’t, then apprentice them to someone who has.

Lie, cheat and steal. I was shocked at my mother’s funeral when a brother flatly stated that he’d had a difficult time in life because he’d just assumed everyone was as wonderful as she was. The world is full of assholes and swindlers and your kids will need a radar for it, and they need to suffer the consequences so that they develop an arsenal of techniques for dealing with it. They need to be superb judges of character. You can’t teach good behavior by isolating them from bad behavior. There’s no satisfactory example here; let’s just say that April Fools was big in our house, and not just once a year.

Make them teen outcasts. Correlating highly with successful entrepreneurs is unfulfilled teen years. Basically, those who are dialed in by 18 stay comfortably dialed in. This is another reason to keep them out of high school. Another high correlation is Fs. Entrepreneurs are highly results-oriented and have little patience with those as process-oriented as teachers. I’ve talked with VCs who confessed to being a little disappointed if they don’t see an F or two on a possible CEO’s college transcript. I know I had ‘em.

Teach numeracy. Anyone who can’t do math in his head on the fly is going to have a difficult time being an entrepreneur and putting deals together. Schools don’t teach this; it’s a special, long-term effort.

No allowances. No “Joe” jobs. Nobody ever got rich working for a living. Trading your time for money is a loser’s game. An allowance just teaches a kid to lack resourcefulness—same for teen jobs. My wife and I played VC to our kids. They could ask for any amount of money they wanted but what’s the plan? what’s your purpose? what are alternatives? etc. etc. They learned to recognize opportunities and pitch them. [Add: If you are going to help them get job jobs, make it in sales—they won’t get far without the power to persuade, and it’s another thing they won’t learn in school.]

Get a grubstake. Fortunately, my kids went to school with the children of an immigrant couple who left the kids with relatives two straight summers while they went to live in a tent in Alaska and can salmon. They each cleared a wad of cash each summer, and after two years they had a grubstake with which to get into the start-up world. They found some scientists with a bright idea (one that everyone reading this is impacted by many times daily), started the company, got backing and they are billionaires. No grubstake. No billionaires. You can’t be a capitalist without capital and the willingness to put it all at risk. 

Worthy. Finally, the most important thing is they must be worthy. No backing comes to those who lack abundant evident character. I have found the best way to fine-tune morality is to put it entirely on them. Each time a moral decision is called for, it’s “Search your heart, son. You have to build your life around what is important to you. The only way I can help you is to tell you how I screwed up sometimes. But the sooner you learn to get in touch with your own feelings of what is right and what is wrong, the better.” (But be sure to model right over wrong like crazy to them.)

There is only one path to getting wealthy: exploit opportunity. The whole purpose of what I’ve stated above is to equip your children with the tools to spot and build on an opportunity to add value to the world. 

How will you know you’re on the right track? The vast majority of people you meet are inert. One in ten or twelve has scalar energy—they liven up the event. One in a thousand or so has vector energy—the ability to channel effort to a purpose and pull others in their wake. The only way a human being begins to become a vector force is to Find and Embrace His or Her Passion, and that can be a bit quirky. For example, our youngest has long been the butt of family jokes for his inability to tell a story. What did his passion turn out to be? Turns out his head was too crammed full of details for each story. Once he learned to animate, his stories were incredible!

You should be getting glimpses of that talent to pursue purpose with passion all along, but it doesn’t mature until adult years. It is such a rare thing that schools are not at all equipped to teach it. Even the best MBA programs teach you how to go to work for that guy rather than be that guy. So, if you can pull it off, you will not only have enriched your children, you will have enriched the world.

"I Don’t Like Small Talk"

Self-entitled misanthropes love thinking that they are “above” small talk. What they fail to see is the importance of small talk in assessing a person’s personality, mood, etc., especially if they are new to you. This comment outlines what I mean perfectly:

Small talk is about more than exchanging useless information. It is a means of assessing other peoples general disposition and sociability. It is a means of beginning dialogue with strangers or semi-strangers that may lead to an actual exchange of important or interesting information. It is a means of establishing commonality with others. Non-verbal cues can exchange much more information than the words you actually say.

Nobody cares about the weather, but learning how to communicate through small talk is actually a very helpful social skill to learn.


Funny that it’s always people with piss poor social skills who think they are beyond small talk.

I understand that it’s no fun to talk (or be talked to) for the sake of talking or killing ‘awkward’ silence, but understand that “interesting” conversation is dependent on the audience. In a recent article on being happy, I even examined research that proves deeper conversation is a must.

Most people are willing to open up after you’ve gained their trust with small talk, so why do so many awkward people think that they can just dive into these deep topics without breaking the ice first?

Don’t be apart of the introvert-industrial complex; make small talk work for you by working on your ability to handle small talk.

Bad people, in one sense, know very little about badness

Some very true words by C.S. Lewis:

No man knows how bad he is until he has tried very hard to be good.

Only those who try to resist temptation know how strong it is. After all, you find out the strength of the German army by fighting it, not by giving in. You find out the strength of the wind by trying to talk against it, not by lying down. A man who gives into temptation after five minutes simply does not know what it would have been like an hour later.

That is why bad people, in one sense, know very little about badness. They have lived a sheltered life by always giving in. We never find out the strength of the evil impulse inside us until we try to fight it.

Or a Rosa Luxemburg would so beautifully put it: Those who do not move do not notice their chains.

Writing Tip: Gary Provost on Varying Sentence Length

Creating flow in your writing can be difficult, and I found this advice from Gary Provost to be quite useful:

This sentence has five words. Here are five more words. Five-word sentences are fine. But several together become monotonous. Listen to what is happening. The writing is getting boring. The sound of it drones. It’s like a stuck record. The ear demands some variety. Now listen. I vary the sentence length, and I create music. Music. The writing sings. It has a pleasant rhythm, a lilt, a harmony. I use short sentences. And I use sentences of medium length. And sometimes, when I am certain the reader is rested, I will engage him with a sentence of considerable length, a sentence that burns with energy and builds with all the impetus of a crescendo, the roll of the drums, the crash of the cymbals–sounds that say listen to this, it is important.

One Statistic is Displayed Above Everyone’s Head: What Would You Choose?

I absolutely loved this thread on r/AskReddit the other day, where users replied to a question on ‘What one life statistic would you want displayed above everyone’s head?’, but I was particularly fond of this reply (slightly edited):

[I’d pick] a seemingly randomly generated number. Millions will attempt to discover what the number means, how it is made and how it is projected.

New societal norms and fads will revolve around ones number, making these numbers a new way to depict coolness, beauty, genetic viability, etc… but in actuality it will be nothing but an elaborate experiment in psychology.

As a psychology nerd, I imagine this inevitable worldwide obsession over one’s number (be honest, you know it would happen) would be one of the most interesting cases of perceived value (like money is now) to ever hit the human race!

What do you think?

10 ‘Life Statistics’ You Should be Tracking

Tracking behaviors, patterns, and habits is something that has helped me a lot in figuring out how to improve my day-to-day activities.

Let me explain.

It seems overly grandiose at first, but as I wrote about in my post on the “Science of Productivity,” we often overestimate just how much we’ve ‘done’ in any individual activity (like how much actual work we finished during our work day).

With tracking, there’s just the objective data to look at, so there’s no lying to yourself and no bias.

What If You Tracked These Behaviors?

Food for thought: what if you tracked these behaviors over the course of an average month?

Would you be happy with the results if you could see your hours spent on paper, with no bias to cloud your judgement?

  1. How much money you spent
  2. How long you spent talking with loved ones
  3. How much time you spent working on your “passion”
  4. How far you walked each day
  5. How much you time you read OFF the computer
  6. How much time you spent on ‘administrative’ work (bills, etc)
  7. How many calories you ate per day
  8. How much time you actually worked at work
  9. How much time you spent watching TV
  10. How many of your short-term goals you accomplished

How This All Started

This whole thought process started when I began truly thinking about the Pareto principle, instead of just simply accepting that it’s a good idea and never putting it into action.

I noticed that while working at my SaaS startup, I became so focused on what our competitors were doing, I was missing out on really drilling down on that 20% of effort that achieves 80% of the results.

And then I thought, has this sort of thinking permeated other parts of my life?

Am I really spending my time focusing on the things that get ‘80% of the results?’

When we talk about “results” in this context, it’s quite different from business goals, but the focus on doing what matters remains the same—putting relentless effort in The Daily Decrease so that we can systematically stop doing the things that aren’t really to our benefit.

Things like mindlessly watching TV when we don’t really want to watch TV (I’m not one of those people that villainizes TV, it’s just the de facto example).

Things like putting off work, getting that uncomfortable “I still have this task hanging over my head” feeling, and sabotaging our own progress by doing stuff we only tolerate instead of the stuff we love.

Anyway, I’ll be tracking some of my daily behaviors, how about you? :)