The 6 Levels of Making Money | Ep 955
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What are the four primary ways to make money?
You've heard me say this before, we need to be reminded more than we need to be taught. That's why today's episode is one you may have heard before. I brought it back because it's important. If you've already heard it, take this as a sign that maybe you just take more action. And if you haven't, then welcome to the game. Enjoy. There are only four ways to get money. Steal, inherit, marry into it, trade for it. If you have morals, you probably don't want to steal it. And if you're watching this, you probably aren't going to inherit it. And even if you are, you probably don't want to wait until your parents die to get it. And if you're a guy, you're probably not going to marry into it. And even if you do, do you really want to be owned by your wife's family?
Which means in all likelihood, if you're watching this video, you're likely to only have one option left, which is to trade stuff for it. And trading stuff for money, I made a million dollars 106 times in a row in a weekend. I also own a portfolio of companies that trade stuff for money that did over $250 million in revenue last year at Acquisition.com. Now, within the element of trading stuff for it, there are six ways to structure those trades. And in this video, I'm going to break them all down and show you which ones to avoid and which ones to go for, and I'll do them in reverse order of bestness. Now, I said there are six. The last two are god-tier setups that only can work in very specific circumstances.
But that being said, let's start with number one. So scheme number one is I work, then you pay. This is a very classic arrangement. This is a very standard W-2 employment agreement. So the trade is, no matter what happens, I get paid outside of getting fired. So as long as I don't get fired, I get paid. And so I trade risk for reliability in this construct. And as much as the entrepreneur talking heads want to say, being an employee nowadays is riskier than owning a business, That's not really true. Because if it were, then everyone would own them and be rich. And that is not the case. And as a fun fact, the average business owner, like almost half of business owners don't make any money at all. That means they work the whole year and end up poorer than they started.
Crazy. And that's because them's the stats. But the median is about the same as minimum wage in California. So as much as people want to believe that All business owners are rich. That is not reality. And so this is the lowest risk but most reliable way of making money. The second way of trading stuff for money, a little bit better on our risk reward, number two, is you pay as we go. So if you think about the first one as you work and then you get paid no matter what. This one, it happens in parallel. So as I work, I keep getting paid. This is very typical for contractors. Sometimes it's like half now, half later, or I get paid along these milestones as long as these things kind of occur throughout our time period.
So this is super typical for independent contractors and vendors. So the work is ongoing, you pay me ongoing, you pay me some now, some during, some at the end, half now, half later, et cetera. Now the pros of this is that you front load some of the money. The cons is that people fire vendors way faster than employees. And so let me give an example. So employees have a 3.9-year average tenure, and that's according to the US Bureau of Labor Statistics, versus a three to 12-month engagement for an independent contractor, and only one to three months for a temp gig. So that means that you have five times the annual turnover for vendors compared to an employee. And so as much as people are like, man, it's so much less risky to own your own business, it's like, well, you're turning over five times faster than if you were an employee.
So not actually true. So we covered our lowest tier in terms of risk and reward. I work, then you pay. Now we get paid as we go, which leads us to our third tier, which is you pay, then I work. So for example, I get paid in full upfront, and then I begin.
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