Mike Brown argues that entrepreneurs fixate on ROI while ignoring hidden costs. Time is the real constraint for founders, not money. You might accept lower returns to keep your freedom and mental space instead of chasing higher cash yields.
One of the biggest investing mistakes that I see entrepreneurs make is not understanding the hidden costs. And what I mean is, you know, when you make an investment, there is always a cost when it comes to non-traditional wealth. So if we're only optimizing for return on investment or ROI, we're not necessarily considering the other factors. So I recently spoke to an entrepreneur who was making a bunch of passive investments, but then he decided he wanted to build a portfolio of operating companies. And the questions I asked were, what happens if things start to go sideways? Are you going to step and operate these companies. And the reality is this person needed to solve for time, not necessarily for more money. And time is our only non-renewable resource. And at some point we can actually accept a lower return rather than trying to maximize our bank account because we don't want to give up our freedom of time, our freedom of mind, and our lifestyle in order to just keep generating more money.
