Drop servicing is the practice of selling a service to a customer for a certain price (say $100). Then hiring someone else to provide the service for the client at a lower price ($50), and pocketing the difference.
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To build wealth, you want to expose yourself to situations where uncertainty (unpredictability) is a positive force for you, not a negative one. You want to make bets in areas where surprises push to the upside because of positive Black Swan events.
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Inversion is the practice of thinking through problems in reverse. It’s the practice of “inverting” a problem - turning it upside down - to see it from a different perspective. In its most powerful form, inversion is asking how an endeavor could fail, and then being careful to avoid those pitfalls. As Warren Buffett likes to say when it comes to investing: “Rule number one is don’t lose money. Rule number two is don’t forget rule number one.”
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At the end of Felix Dennis’s book, How To Get Rich, he outlines eight “secrets” to getting rich. In terms of actionable advice on wealth creation, these are right up there with Naval Ravikant’s must-read How To Get Rich tweetstorm, along with his accompanying podcast episodes. Despite the name, though, the reality is there are no secrets to getting rich. There are only models that push you in the right direction. And these will do just that…
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The ideas you learn compound over time. One idea doesn’t stay as one idea - it gets mixed with other ideas and produces new ideas on top of each other. I call this process idea compounding and those who do this actively idea compounders. An idea compounder is someone who layers ideas on top of each other to find new ideas and ways to apply them.
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It's hard to get other people to care about what you do. And it's almost impossible if they don't have the same "skin in the game" - if they aren't rewarded or punished directly based on the outcome of their decisions. It turns out this is a very old problem. It's called the principal-agent problem. And if you're an owner or an employee, you have to understand it.
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After a year of reading, writing, and applying the models of wealth creators, here are the top 20 ideas that have changed the way I think about the world.
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If you are going to become wealthy, you need help. You only have so many productive hours in a single day, which puts a cap on your productivity. What you need is a way to compound your efforts. You can do this with leverage. There are four different kinds of leverage: capital, labor, code, and media. Here’s why media is the most useful to you.
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“Seven Cures for a Lean Purse” from The Richest Man In Babylon overviews the basic financial principles of getting rich. Author George Samuel Clason delivers these through the wealthy and wise character of Arkad, who lives in the ancient city of Babylon 4,000 years ago. Not only are these principles still relevant, but they are also easy to understand and apply.
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Yes, you should work hard. But, what you choose to work on and the quality of your decisions matters far more to your success and wealth than hard work. It’s better to be patient and calculated as you wait for the right opportunity to come along than it is to work yourself to the bone on the wrong thing.
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