Show notes
I’m not really into materialism but I have to admit fast cars are pretty fun.In business and in life it’s important to have a mix of selfish and unselfish goals.Why is capitalism so successful?It’s based around the first cognitive bias – the reward bias.Adam Smith says that you have a reward mechanism built into your mind in terms of what you want to buy and what you want to consume.But more importantly, everything in business is about creating customers. So whether you own your own business or work for somebody else you still have to focus on creating a customer base.“There is only one valid definition of business purpose: to create a customer.” - Peter DruckerA lot of people get confused about what a business exists for. They think it exists for personal profit, or net profit for shareholders, or that it exists for charitable purposes: to save the world.All of those goals are real, some are worthier than others, but at the end of the day they’re there to create a customer.Without customers you have nothing.The most important thing to understand is that you not only have to be able to create a customer, but you also have to be able to capture the value that you create.One of the biggest mistakes people make in business is to create value but not capture it. It’s not enough to have great skills. You need to be able to monetize them.Ideas create value, but creating and capturing are not the same.The average person in Los Angeles makes $52,000 per year, but that’s not enough value. Over 30 years you will capture a value of about $1.5 million, but how much value do you think you’re capturing for someone else? If an employer is willing to pay you $52,000 they’re probably making at least twice that profiting from your work.You can work for other people, it’s good to learn from your competitors, but there comes a day when you have to say, “Enough is enough, and now is enough. Now it’s my turn.”You can do it as a more highly paid employee, as a partner, or as a solo entrepreneur.But make no mistake, you can’t find the “good life” if you don’t capture your own value.Like Henry David Thoreau said, “The mass of men lead lives of quiet desperation. What is called resignation is confirmed desperation.”Some people try to capture value by forming their own business, but that doesn’t always work because you need skills. There are 50-60 skills you need to have to run a successful business.A lot of people oversimplify things. “Everything should be made as simple as possible, but not simpler.” – Albert EinsteinWhat you really need to do is “know thyself”. Peter Drucker says, “Success in the knowledge economy comes to those who know themselves - their strengths, their values, and how they best perform.” Entrepreneurs and people who create wealth and financial freedom always follow the same rule. They follow the rule of knowing themselves.Try taking a personality test. I recommend the Myers-Briggs Type Indicator – it measures the ways in which we experience the world and make decisions.Identify your strengths and weaknesses, and build a business around that.Knowing yourself is the quickest path to not only wealth, but fulfillment. The average person spends only 12% of their life doing something they really care about.What’s more important that the money you make is the quality of the minutes you spend. You don’t want to spend 12% of your life doing what you love, you want to spend 88% of your life doing what you love. You have to invert it; the rest of society is lost. “Wide is the gate and broad is the road that leads to destruction, and many enter through it. But small is the gate and narrow the road that leads to life, and only a few find it.” – The King James BibleThe first step in capturing monetary value is knowing yourself. Peter Drucker says that it is only when you build on your strengths that will you be good enough for people to pay you for what you know.You can’t build on weakness, so take the time to find your true strengths and capitalize on them.Capture your own value by building a business around the things you’re best at and wealth and happiness will come naturally to you.Visit tailopez.com for more advanced material like this.Learn more about your ad choices. Visit megaphone.fm/adchoicesSee omnystudio.com/listener for privacy information.