5 Money Laws That Will Never Change

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Hi everyone, I'm Ryan Daniel moran. Welcome to capitalism.com as I'm recording this, I'm just coming back from Ohio where I was spending a week with my family. I have grandparents that are still alive. They're 93 and every time I see them I pretend like it's the last time and I cry and I say sappy things. And I saw both my parents. My dad came in from Tennessee and it was a wonderful time to visit with family. But for the first time in a long time, I was reminded of what a bubble I live in, of the perspective that I have being a business owner and an entrepreneur. I visited with a friend of mine who I've known since I was five years old. He came in from Washington D.C. to see his family and we connected for the first time in a long time. And he chose a very different life, a very different career. He works for the government and he has for years and that will probably be his lifelong plan. My brother is a police officer. He's been a police officer for 15 years. My sister in law is a nurse practitioner. These are blue collar backbone of America. And sometimes it takes going back home to realize what a bubble you're in. And it made me sort of pause and reflect about different decisions. Not better or worse, just different decisions because I had a family member tell me that they were really impressed with all the wealth that I have built and the difference that we're having here@capitalism.com and we were just talking about our different mindsets again, not better or worse, just different. And I was reminded of a book that I read early in my journey in my career called the Slight Edge. It's by Jeff Olson and it basically has one principle to it, is that life is the result of doing things for a long time, compounding returns. That this idea that you have these big jumps in progress is mostly an illusion. And even when they do happen, they often come on the other side of many years of pounding the pavement, doing a lot of hard work, putting in the time, and then once in a while you get lucky or you have a big breakthrough. And recently a friend that I've known for some time made a comment to me and he said, I hope that some of your financial wisdom rubs off on me. And I've been friends with this person for some time now and I've had enough time to examine and evaluate his mindset and how he thinks about wealth, how he thinks about spending money, how he thinks about savings. And it made me pause and reflect on the lessons that I wish I could have given him when he was growing up or at the beginning of his journey, the beginning of his career, the rules or the mindsets that if you follow them, lead to success. And as I was mapping these out, they were very different than how I had heard anybody else talk about them. As I was mapping out these rules or these lessons that I have learned over 20 years of being an entrepreneur, 20 years of pursuing wealth, it was different than what a lot of people had shared with me along my journey. This is based in not what I read in books, but things that I learned over 20 years of seven figure successes, eight figure successes, seven figure failures, six figure failures, and all of the things that I accumulated along the way. And I boiled them into five lessons that I wish I had known sooner, five lessons that I believe that if you apply them early in your life, or at least now forward, will lead to compounding results. But these five lessons are not necessarily easy to.

Take in. Some of them are hard to implement because they're not safe, because they're not predictable. And it is hard to find that balance between wanting success and wanting it to be predictable. And we'll talk about that in today's class. So I'm just going to walk you through these five lessons. The first being that nothing happens until something is sold.

This came to me as I was talking to this friend who was asking for some of my financial wisdom to affect him because he was sharing with me how hard he works, how hard he's worked at other companies, how he is often the first to show up in the last to leave. But he had never been in a revenue producing role. He was in a role that was about making things work smoother. It was about working behind the scenes. Very important stuff. Believe me, as somebody who employs and works with people who make things happen behind the scenes, I know how important these are. In fact, I really can't do my job unless I have people supporting me making sure that things are happening smoothly. But nothing happens in terms of growth, nothing happens in terms of wealth accumulation, nothing happens in terms of cash flow until things are sold. And a way to think about this is that when someone buys something, that is the point at which they are voting to say this is valuable. For me, no business succeeds without having revenues and cash flows or at least having investors who say this is going to be valuable in the world. I'm going to put my money to work here with the hopes of there being a future or potential profit and even raising capital. As an investor is a sales job, you have to sell somebody on your vision, on how it's going to produce a profit in the future, or at least the difference, the impact it's gonna have in the world. But nothing happens in true productivity until something is sold. So if you're working a job or if you are starting a business, the way that you accumulate more upside, the way that you accumulate more wealth faster, is to think about the activities that eventually lead to sales. Now, I don't mean to insult your intelligence by telling you this, but I know a lot of people who feel frustrated that they're not getting ahead and they're working really hard. But if you're working hard in a role that is not revenue producing or doesn't touch the customer or doesn't lead to more sales, then the best shot that you have at getting a raise or making more money is asking your employer to give you more money. This is when you start getting compensated because you've been there a long time. You're getting compensated because you're working more hours and you're trading your time for money.

That might be safe, that might be predictable, but it doesn't lead to wealth. It doesn't give you control. And this is when you're on the hamster wheel, where you can work more and more, but never really get ahead. And so when you're at the beginning of your journey, if you're early in your life, if you are building a business, the only thing that directly contributes to what you take home to the amount of money that you make is where you impact a sale to an end customer. And again, that sale is where the customer says, this is valuable to me. This is now a in a place where it's valuable to me, it makes a difference in my life. And that's all you have to think about. If you want to be rich, if you want to accumulate millions of dollars over the course of your life, then you have to look at that endpoint. How do I contribute in a way to where the end user says, I want this. This is valuable for me. I once heard Dan Sullivan say that if you're working a job, the first thing that you should do if you want to make more money is go to your manager or your employer and you say, how can I contribute here in a way that will lead to revenue growth? Not how do I make things happen around here smoother? Not how do I do my job better, but how do I contribute here in a way that leads to revenue growth, leads to more customers? That question gets you to that End goal line of being in a position to affect when things are sold. And that's when you're actually producing measurable value for the company. Other than that, it's just a judgment call. I experienced this in my business. I have people that I work with that directly contribute to revenue growth and they're compensated accordingly to that. And then I have people who don't contribute directly to revenue growth, but they support the overall operations of the business. And when it comes time to assess compensation or it's time for raises, it's a judgment call. And that's actually not a good feeling. As a boss, as a leader, I don't like to be in the position of making a judgment call like, are you doing a good job? Are you not doing a good job? It's awkward. Self evaluate you and then I'll evaluate you. It's awkward. But if there is real tangible revenue growth, it's actually very easy and even delightful to reassess compensation. I want people to be compensated for the value that they bring to the business in terms of revenue. And for you, if you want to grow, if you want to make money, the faster way to get there, rather than working more or thinking about working harder, is to think about how do I contribute directly to customers in a way that leads to sales. And that's really the only way that you can measure the value of the productivity that you have in your job or in your business.

The second lesson is related and it's that there is an inverse relationship between security and upside. Now this is not to say that there is a relationship between risk and reward. I don't think that that is necessarily true. More risk does not mean more reward and vice versa. Less risk does not necessarily mean less reward. But there is an inverse relationship between security or predictability and upside. It's nearly impossible to have predictability and for there to be high upside. So again, in the situation in which if you're working at a job in which you are paid for your time or you're on a fixed salary, that is very predictable. It is. You can project that out. If you do a good job, you will get raises, hopefully. You probably are going to stay there for a long time, but you don't control the upside at all. Versus if you're in a sales role, which basically entrepreneurship is. Entrepreneurship is basically a full time sales role. You have no predictability. One month you can kill it and the next month you could not kill it. You have zero predictability, but you have all the upside in the world. And so it is nearly impossible to pursue security, to pursue predictability and ride the upside that doesn't exist. But if you go back to lesson one and you think about how I can contribute in a way that leads to direct revenue for the company, you can thread the needle in having some security if you're not an entrepreneur and having a piece of the upside that you contribute. If you're an entrepreneur like I am, then the way that you have some predictability and upside is getting good at sales, is getting good at a skill set that leads to sales. It's getting good at marketing, it's doing the things, developing a skill set that you can rely on in order to have the upside and have the predictability because you're good at it. That is the only way that you can have some semblance of both being good at the thing that drives upside. It's also true with investments. You know, you can have predictability or you can have upside investing in the s and P500 index funds. If you do that consistently, if you run the numbers, it's about $541 a month. If you contribute $541 a month to the S&P 500 for 30 years, you're a millionaire. That's not fast. It's predictable, though, and it has some upside. Takes a long time. If you are doing the really safe thing where you are buying treasury bills or you're getting municipal bonds. Very predictable, no upside. You're going to get some cash flow. No upside at all. If you start a business, it's the most unpredictable thing in the world. You could go to zero. You could suck at it. People can leave Comments on your YouTube videos about the evils of capitalism, but you have all the upside in the world. You have infinite upside. You can sell that business for millions, sometimes billions of dollars. Elon Musk is maybe will be the first trillionaire ever because he had no predictability. He just created upside. Wealth comes from the upside down, not from the predictability. The only way that you can have the combination of those two is to extend your time horizon. You can invest for a very long time, for 30 or 40 years, and you can accumulate a lot of wealth. But even that is not predictable. There can be recessions, there can be downsides. Companies can go out of business. You can have deflationary pressures in the economy. You can have all of those things. You do not have perfect predictability, but you do have upside. And there is an inverse relationship between those two things. So if your dream is to get rich, to Make a lot of money. You have to be okay not having predictability. If you want upside, you are sacrificing predictability and you have to decide if you're okay with that. You have to decide if you're okay with the downside, the potential for loss.

I have experienced many losses in my career. I've invested seven figures into businesses that went under. I have invested into things that turned out to be raided by the SEC and were Ponzi schemes. I have started projects that took up a lot of time and stress and didn't work out. I have lost sleep. These are not predictable things, but they have upside down. If you can be okay with the uncertainty of it all, that's when you know that you're ready. That's when you've got a shot. But when you're afraid, when you can't live with the downside, then you will subconsciously be clinging to the predictability that you have. And therefore you will fail because you can't have both. So the secret here is, can you find enough security in some other thing? Can you have security in the fact that you can live on $3,000 a month because you're a single 25 year old who doesn't need a lot of expenses to pay your bills?

Can you, can you reduce expenses? Like if you're young and have no kids, can you be okay living on $3,000 a month or 2,500 bucks a month? Can you, like Gary Vaynerchuk says, live in a house with four of your buddies and live on ramen because then you've got predictability? Cause you don't need much now you can ride the upside. Now if you've got kids, like I have two kids, you need a little bit of a different level of security, which just means that you probably are gonna be working a full time job while you start a business until that upside rides enough for you to be able to quit the job. But you can't have both, at least at the beginning. Any entrepreneur who shares their story with you will tell the story about how for 18 months they didn't pay themselves, or that they were scraping it together with their last few thousand dollars to start a business. There's no security in that. Felix Dennis talks about this if you in his book how to Get Rich talks about the person who has the best chance of getting fabulously wealthy is the young guy or girl who has nothing to lose and has, you know, two nickels to scrape together.

All they have is upside. They're not used to having Security. They're not used to having money in the bank. They're not used to having passive income. The person that is the hardest to be able to break out and make a lot of money, as the person who's used to having a decent amount of money in the bank has a nice job.

That person actually has a very hard time living with the insecurity, the unpredictability that is entrepreneurship, or even the unpredictability of making an investment into something because it could go to zero. And they've never had to deal with the uncertainty that happens when you go to zero. But if you got nothing, all you got is upside. So once again, there's an inverse relationship between predictability, security, and upside. That leads me to my third point. And that third point is that as a rule, things tend to go up, things tend to get bigger, things tend to expand. When I was seven years old, I remember having this conversation with my dad at the dinner table. And I remember telling him that I wanted to make all the money in the world. And my dad said, do you know how much money that is? How much money is all the money in the world? He said, it's a trillion dollars.

I'd never heard that number before I was seven years old. But if you look it up now, it's actually true. My dad was right. In the 1990s, when I was seven years old, all the money in the world, the total amount of money that existed in the world was $1 trillion. Well, today, 30 years later, Apple, the company, is worth $3 trillion. There's now $100 trillion in the world in our lifetimes. At some point, we will hit about a quadrillion dollars. That's a thousand trillions. That's insane. We'll see a thousand x expansion in the amount of money that exists in the world. The amount of wealth that is in the world. Now, some people will say inflation, they will say government printing, they will say economic manipulation. But money is a concept, and I don't mean to nerd out with you and get all economics on you, but the amount of money that exists in the world, the amount of wealth that exists in the world, it's just a construct. It's just a concept that we've made up. If it was just inflation, if it was just the amount of money that was printed in the world, then all the goods in the world would be a hundred X what they were 30 years ago. And we know that they're not now. Inflation is a real thing, of course, but we as entrepreneurs are Creating wealth. We're creating the amount of money that exists in the world based on how much other people are willing to value the assets that we create. I know I'm nerding out a little bit, but it comes back to the point that things tend to go up. There will be more money in the world, more abundance, more opportunity in 10 years than there is today. The government will probably be bigger, even though I don't want it to be because I'm a crazy libertarian who thinks the government should be as small as possible and say the hell out of our lives. It will probably get bigger over the next 10 to 20 years than it is now. There will be some inflation. There will be prices that go up. Things tend to go up and they tend to get better. They tend to get faster. There tends to be more innovation. The stock market tends to go up. That doesn't mean it's a straight line. That doesn't mean there's not recessions. That doesn't mean that there's not down times. That doesn't mean that there's not injustice. It just means that over time things tend to go up and they tend to get better. So you might as well bet on that. What does that mean, practically? It means invest. It means that even though there's an inverse relationship between predictability and upside, bet on the upside. Even though the stock market may not be predictable, it's probably going to go up over time. It means that even though real estate can go through down cycles, over the long term, it tends to go up. It means that if you sell physical stuff like I do, if you sell E Commerce, it means that as you improve in your business, the price and your profits will probably go up. It means that if you develop a skill set now, you will probably get better at it in the future. So plant those seeds now. Things tend to go up. So make those investments now. And I wish I could go back 30 years ago and make more investments. How many times have we said that? Wish I had bought real estate at this time, wish I had bought stocks at this time. Wish I had started my business at this time. I'd be so much further ahead. We can't go back in time and change the things, but we can start now and things tend to go up. I remember being on a coaching call with somebody. We were talking about building the valuation of your company. We were talking about how this is how you value a company. This is how in three to five years you can have an exit that's really profitable and change your financial future. And he said, well, I see a flaw in your argument, Ryan. He said, I don't think the economy is going to be so red hot in five years. I don't think people are going to pay the same valuation then as they do now. And I said, well, you bring up a really good point. I guess maybe you should just not start this business at all.

And he kind of scanned the room like, what are you getting at, Ryan? He's like, you're betting on things going down. You're betting on things not working out, but things tend to go up. Things tend to get better. So start acting like. Start preparing for. Start investing as if things are going to go up now. It doesn't mean that you will be richer in five years than you are today, because we might have a recessionary period. You. You might invest into something that goes to zero, but you still bet on the upside. That's how you get rich. That's how you build wealth. And if things go down, you find a better process and you readjust your assessment of how much predictability you need versus how much upside you crave. And that changes based on where you are in life and how old you are and how much upside you're playing for.

So, number one, nothing happens until something is sold. So put yourself in a position to affect the revenue and the cash collection of where you work or the business that you're in. Otherwise, you're kind of wasting your time. Number two, there's an inverse relationship between predictability or security and upside. And three, over time, things tend to go up, so you might as well bet on that upside. The fourth lesson is, since things tend to go up, if you want to build wealth, you have to own things. You're betting on upside, and you're betting on the fact that things are going to go up over time. And the way that you take advantage of that is you own things. It means that you own businesses, you own real estate, you own stocks, you own crypto. If you're into that, you own stuff. I remember in 2015, I was renting a condo in downtown Austin, and I was looking out. I was living on the 12th floor, and I was looking out the whole city. And I was like, man, this city is just exploding. There's so much happening here. I just. I just want to, like, own a piece of it.

And that seems like, elementary. Like, obviously, you should own real estate in places that are booming. But my brain kind of reorganized, and it was like, this place is expanding, and I want to own a piece of it. While the world is expanding, business is expanding, commerce is expanding, and it's going to keep expanding. And if you don't believe me, just remember that 2 billion people still don't have Internet.

I mean, a third of the world is still coming online. The world is still expanding, and it will continue to expand, probably at faster and faster rates. Yes, there will be recessions, yes, there may even be meltdowns. But over time, things go up and you have to own a piece of that. The world's expanding and you want to own a piece of it. The fastest way to do that, start a business, which means you need to sell stuff, which means that it's risky, which means that there's infinite upside and absolutely no security. But if your skill sets improve, but if the world keeps expanding, if you're in an industry that is growing, you're probably gonna ride up with it, you're probably gonna grow with it. So own a piece of that. My playbook for doing that is you choose a person that you serve, one core person that you want to make a difference in their life, and then you launch four products to that person. You choose four products that you know that they would buy, they might already buy those products, and you make them for sale. You get them made, you put them for sale, you get them to 25 sales a day. That's 100 sales a day. At 30 bucks, that's $3,000 a day. That's a million dollar business. And that's a business that you can sell because you own the business. If you only trade your time for money, or if you only have clients that you do work for, or if you only make passive income from treasury bonds, you don't own anything. You don't own anything of value. So you can't build wealth. You build wealth by having things that go up in value that can be sold to someone else. Businesses have the biggest inverse relationship between security and upside. So they can go up with the most value. That leads us to lesson number five, which is that value is subjective. Value is a story. Value is made up. Money is a concept. Price is a concept. Value is a mental construct. It doesn't actually exist. The price of something is 100% determined by someone else's willingness to pay for it. Now, pricing strategy might factor in the cost to make it and the time and all kinds of things, but the only thing that the marketplace cares about is what am I willing to pay to get that value that you created? That's the only thing that determines value. This is why art is worth millions of dollars, it's only because someone else has a subjective value placed upon it. And you could do things like the government does, or you can incentivize certain things that you put more money into that sector. But value is completely subjective to the person who is willing to pay for it. That means that the price that you sell your services or your product or your company is simply a story. It's made up. You make it up, you determine it, as long as you can position it in a way that is more valuable to the other person. You know, when we value stocks, when we value companies on the stock market, what we're really doing is we are looking at what the last price that someone else paid for a share in that company. So when we look at Tesla being worth $500 billion or a trillion dollars, what we're really doing is we're saying the last person who bought a share in this company bought it for $250. So all shares are worth $250. Times that by the number of shares. And this is what that company is worth. That's what the stock market is. Someone else saying, I think it's worth this, and therefore all of your stock is worth this too. It's made up. It's a story. When you go to sell a company or a house, what determines if you get a million dollars or $10 million? Now, there's some fundamentals that play into this, of course, because it's hard to tell a story that a company is worth $10 million when you have no revenue. But it does happen. Why does it happen? It happens because the buyer is buying the talent that works for that company. They buy it because there are customers that would fold over nicely into the buyer's business. It's because they have skill sets that they want to acquire. It's not just the numbers times 5 or times 10. It's not just the profit times whatever number you're going to sell it for. It's a story. It's subjective value what determines your salary. It's a story. It's what your employer believes that the value that your position will bring to the company. But again, if you know that nothing happens until something is sold and you therefore negotiate that you're going to get a piece of the upside. You could probably make more money if you take less predictability and ride more upside. If you're confident that you're going to produce, which if you want to like, make a lot of money, you have to get good at producing. I've Seen a lot of people make way more money by identifying in their job, like their 9 to 5 job, what their core skill set was that drove value for the company. And then saying, I'm going to take a risk, I'm going to leave my job and I am going to apply my skill set that adds to the revenue of the company and I'm going to see if I can create upside for other people. And they start to take on a few clients. Now that is not predictable because in a client relationship you'd be fired anytime. You can have contracts end, but you have more upside. You also have to sell yourself. You can't just go get a job to sell yourself and how you're gonna be valuable to the client. And because things go up over time, they're in a position to where they can raise their fees over time. And because value is subjective, they can set their own price. And because they own something, they own their own business now that goes up in value and they can sell that company in the future.

These are the five rules of wealth. These are the things that if you apply early in your career, you will make more money. Number one, nothing happens until something is sold. Number two, there's an inverse relationship between predictability or security and upside. Number three, over time things tend to go up. So bet on the upside. Number four, since things go up, own stuff because you'll ride the upside. You're buying it. Today's value, it's probably going to go up over time. And number five, value is subjective. It's a story. We're making it up so you can create as big a pie as you want. My name is Ryan Daniel Moran. I help entrepreneurs. I help them cast a vision for a business, launch a brand, get to 100 sales a day, which is a million dollar business, and then have a multimillion dollar exit. And if you're going to do that, you're betting on the upside, not on predictability. You're betting on things going up. You are betting on the fact that you're going to own something that eventually is going to be worth a lot of money. And if you apply these principles, this is how you can basically stack the deck in order to build a company that sets you financially free for life. Thanks for watching. Have a great day. I'll see you next time. If you found value in this podcast and you're ready to go Deeper, here are three resources where we can help you. One, you can grab my book 12 months to 1 million on Audible or Amazon. It has over a thousand reviews and it's the playbook to building a seven figure business. Second, you can join our community of entrepreneurs who are following a plan plan to build a 1% net worth by building businesses and investing the profits. You can get plugged in@capitalism.com 1. And third, if you're looking to go deeper and build a seven figure business that you can sell, you can work closely with us inside the Capitalism incubator and you can get on the waiting list and find out what we do over at capitalism.com Inc. That's capitalism.com Inc.