Over the last few months, I’ve interviewed a bunch of financially successful people for my podcast Deep Dive With Ali Abdaal. I’ve spoken to millionaires, multimillionaires, entrepreneurs, creators, authors, and people who’ve just generally been successful at making money.
Of course, there are a lot of things in life more important than money. But there’s no getting around the fact that financial independence is something that many of us are striving towards. Having wealth unlocks autonomy and the freedom to live life on our terms.
In this article, I’ll share five principles of financial success. Of all the interviews I’ve done so far, these are the tips that most resonated with me.
5) Invest in yourself first
“You’ll get a significantly higher return investing in your own ability to make money than you will in any market.”
Alex Hormozi
Alex Hormozi is an absurdly successful entrepreneur. He’s made over $100 million in his career so far. During our conversation, Alex spoke about what you should prioritise when you’re figuring out how to invest your money.
One classic piece of advice is to invest in index funds. Let’s say you put money in the S&P 500 index fund. This’s made up of the 500 biggest companies in the United States (US). You’ll essentially be investing a bit of your money into each of them.
This means your investment portfolio is diversified (at least as far as the totality of the US stock market is considered ‘diversified’). But Alex’s point diverges from this traditional wisdom and has really changed the way I approach investing.
The basic question here is: what is the point of investing money? When we invest, we’re hoping that we’ll get financial returns in the long run that’re more than the money we originally put in.
For example: on average, the S&P 500 returns about 9% a year. So if you invest $100 this year, it’ll grow to $109 next year.
The principle that I took from Alex is that there’s a far better use of your money than putting it into the S&P, which’s putting it into the S&Me. Basically, Alex is saying: “Invest in yourself, your ability to make money, and your own skills.”
Why should you invest in the S&Me?
Let’s say you invest in something that’ll level up your ability to make money. You might buy a new piece of software or take a course. This’ll probably generate way more than the 9% returns you’d get from the S&P 500.
For example: you spend $100 on a course about copywriting. Then you land a client who agrees to pay $500 for your copywriting skills. Now you’ve immediately generated a 500% return on your $100.
This’ll also compound over time because you’ve levelled up your ability to make money.
This tip is especially relevant if you’re at an early stage in your career. It’s also useful regardless of what your work is. You could be a freelancer, entrepreneur, creator, author, or working an office job. You might even be a student. Investing in yourself will give you skills that’ll stay with you for the rest of your life.
So before you invest in an index fund that you have no control over, ask yourself: what can I invest in that will improve my ability to make money?
If you’d like to hear more from Alex, check out our conversation on Deep Dive With Ali Abdaal.
4) Find work at a startup
“I would highly recommend (to) anyone who wants to start a business: first do two years working in somebody else’s small business.”
Daniel Priestley
Daniel Priestley became a multimillionaire at the age of 23 by starting a marketing agency. But when he was 19 years old, Daniel joined a small startup and spent two years working with them.
During our conversation, I asked Daniel if there’s any value in working for someone else’s startup. He was of the view that there’s incredible value in working for a small business or a startup, especially if you’re aiming to become an entrepreneur.
Daniel picked up countless skills while working for a small startup. These directly translated into his becoming a multimillionaire at such a young age.
How will you benefit from working at a startup?
Universities often have career fairs that showcase corporations with thousands of employees. If you’re one cog in such a massive machine, you don’t really get to learn very much. You pick up very narrow and specific skill sets.
Perhaps you become adept at using Excel and making PowerPoint presentations. But you’ve no idea how the business actually works. You’ve no idea what the top-line revenue is or how much the bottom-line profit is. Basically, you don’t learn anything about how to run a business.
In the United Kingdom, there are about 8000 businesses that have over 250 employees. On the other hand, there are about five million businesses that have fewer than ten employees. So there are plenty of opportunities to work in an environment where you’re an integral part of the team.
Working in a smaller company gives you an understanding of how the business world works. You’ll have access to information about revenue, profits, and costs. You might participate in meetings where negotiations happen. You’d learn much more than you would from sitting at a desk making specific presentations for a big firm.
If you’d like to hear more from Daniel, check out our conversation on Deep Dive With Ali Abdaal.
3) Take the third door
‘It’s gonna happen, we just gotta figure out how it happens.”
Tim Armoo
Tim Armoo told me a story that illustrates the third-door principle really well.
Tim started his company at the age of 21 and sold it when he was 27 years old. He wasn’t allowed to say exactly how much the company sold for, but it was somewhere between $20 million and $50 million 🤯. Either way, that’s an immense amount of wealth to unlock at such a young age.
In the interview, Tim talked about his journey and how being a broke kid drove him to develop entrepreneurship skills. One story from Tim’s early life stuck with me and is a great example of taking the third door.
As a teenager, Tim started an entrepreneurship magazine for his school. He was trying to land interviews with famous entrepreneurs to print in the magazine. There was an entrepreneurship conference happening in London with big names like Richard Branson in attendance.
Tim did whatever he could to get a backstage pass for this conference. He found out who was in charge of running the conference. He emailed them repeatedly, offering to help out however he possibly could.
Tim offered to show up the day before the conference and lay out all the chairs and tables. In return, he asked for a chance to meet the speakers. The organiser did take him up on the offer.
So Tim came to the venue a day before, set up as he’d promised, and subsequently got backstage access at the conference. He also got to interview Richard Branson who he put on his magazine’s cover.
That’s a level of tenacity that I certainly haven’t ever acted on myself. I don’t see it in a lot of other people either. Tim was willing to do anything just to get access to this conference. For me, the principle that this story illustrates is what author Alex Banayan talks about in his book The Third Door.
So what is the Third Door principle?
Alex compares life to a nightclub that you can enter by either of three doors. You can queue up outside the main door and wait for hours with the rest of the crowd. If you’re a billionaire or a celebrity, you can walk in through the VIP door.
But what no one tells you is that in life and business, there’s always a third door. There’s always a little side door in the alley next to the nightclub. Or maybe there’s a kitchen window you can sneak through.
The point is, there’s always a third door. It may not be immediately obvious but you can always find it one way or another.
In his journey of interviewing successful people for the book, Alex found that a lot of them used the third door. They didn’t stand in a queue and weren’t necessarily privileged enough to walk in through the VIP door. But they managed to find the third door.
When Tim was telling me his story, it made me think of Alex’s book. It was a great example of Third Door thinking.
If you’d like to hear more from Tim, check out our conversation on Deep Dive With Ali Abdaal.
2) Everything’s downstream of lead generation
This principle completely blew my mind when Daniel Priestley told me about it during our interview. Daniel was talking about his work with companies that were struggling to build a customer base. Daniel’s business would generate leads for these companies.
Let’s say you’ve got a financial planning business. Daniel would run introductory events to generate interest in your services. His team would invite people to attend these events for free.
Attendees would learn the basics of investing and budgeting. Some might come away interested in hiring a financial planning business like yours. This is lead generation. It’s the process of catching the interest of potential customers.
You’re not telling people to buy your financial planning services. You’re offering to teach them the basics of investing at a totally free event. Then maybe some of them will develop an interest in financial planning services.
What Daniel found is that when you turn on the lead generation tap it just completely blows up your business, in a really good way. What I learnt from Daniel is that everything is downstream of lead generation.
You could be the best business in the world at doing the thing but if no one knows you’re doing the thing, if you don’t have any leads, your business is going to completely fail.
Is lead generation really such a big deal?
As entrepreneur Justin Kan once said, “First-time founders are obsessed with product, second-time founders are obsessed with distribution.” The first time you build a business, you focus on making a really good product. You hope that if the product is good enough, it’ll automatically attract customers.
By the second time you start a business, you’ve realised you need to focus on distribution. You focus on lead generation and making sure people will come to the product. You can always keep improving the product down the line.
We’ve applied this principle to everything that we now do in our business, especially the courses that we make. Before when we’d come up with an idea for a course, we’d spend ages designing it. Then we’d think about whether it was actually going to be useful.
Whereas now everything is downstream of lead generation.
Before we begin working on the course, we get signals from the market. We gauge if it’ll attract our audience’s interest. We might generate a scorecard and put out a quiz on social media. Based on these signals, we decide if the course is worth making or whether it’d be a total waste of time.
If you’re coming up with a business idea, ask yourself, “How can I validate this idea?” Before you worry about making the product, think about how you can generate leads.
I’ve recommended Daniel’s episode of Deep Dive to so many people. Every single person has come back to tell me that their mind is blown by how much value they were given totally for free in this podcast. So you should totally check it out =).
1) Extraordinary results require extraordinary inputs
My number one principle of financial success is a lesson I learnt from my conversation with Arun Maini. Arun runs a YouTube channel called Mrwhosetheboss and has over 13 million subscribers.
My interview with Arun wasn’t exactly about how to get rich or grow a business. We spoke specifically about growing a YouTube channel. But he shared something that really resonated with me.
I’ve been thinking about it ever since I interviewed him, which was about a year ago.
I asked Arun how he manages to make videos that get millions of views and make him so much money. Firstly, he’s been doing this for a very long time. He started his YouTube channel over ten years ago.
For the first several years, he wouldn’t even show his face in videos. He was too scared his schoolmates would bully him about it. So he made hundreds of videos with just his hands and voice, reviewing different kinds of tech.
But then I also asked him how long it takes to write one script and his answer blew my mind. For one video, Arun can spend up to eight days – roughly 100 hours – working on the script. Still, to this day, I cannot believe just how long Arun spends writing his scripts.
I spend maybe an hour writing some of the scripts for my YouTube videos. Even this seems like too much time to me. Mostly, I go off bullet points and speak from the heart.
Arun spends anywhere from 40 to 100 hours scripting his videos. That effort seems to directly translate into the success of his YouTube channel.
When Arun said this to me, I found myself thinking of Raymond Teller’s quote, “Sometimes magic is just someone spending more time on something than anyone else might reasonably expect.” That’s the formula Mrwhosetheboss is using.
Arun’s just putting more time and effort into his videos than is even remotely reasonable. It’s almost impossible to compete with someone who’s putting in tons and tons of time and also seems to enjoy the process.
But what about the work-life balance?
This is an idea that other guests on Deep Dive have also spoken about: if you want extraordinary results, you need to have extraordinary inputs. It’s really hard to achieve disproportionate levels of success without putting in equally extraordinary amounts of work.
Nowadays it seems very fashionable to criticise hustle culture and advocate for work-life balance. But people who achieve extraordinary financial success don’t really have a work-life balance at the beginning of their careers. They just put inordinate amounts of time and effort into doing the work.
By doing the work, they got ahead in life. Now they’ve got the luxury of potentially having a work-life balance.
So I often ask myself, “Do I want an extraordinary outcome? If so, am I putting in the extraordinary effort required to get the extraordinary outcome?” Because if I’m putting in the same work as everyone else, I can’t expect to “succeed” beyond the level of where everyone else is at.
If you enjoyed this article and are interested in learning more about this entrepreneurship stuff, check out Deep Dive With Ali Abdaal on YouTube. The podcast is also available on Spotify, iTunes, and any other podcast app.
Deep Dive’s YouTube channel recently hit 150,000 subscribers and we’re doing a giveaway in celebration. We’re giving away Airpod Pros and a bunch of books that have been recommended by guests. These include several categories including health, wealth, love, happiness, and impact. If you’re interested in joining the giveaway, visit our page on gleam.io.
