What is a wealth machine, and how can you get it?
A wealth machine is a company you own that operates a scalable product or service. The profits or proceeds from an exit should flow to you or partially to you.
A wealth machine grants you:
More time to re-invest in other projects
In the first 3-5 years, building your wealth machine will cost you most of your time. Eventually, you’ll be at a stage where you’ve made your position in the company replaceable, and that’s the moment when you get most of your time back. Because when you are disposable in your own company, you can take a back seat and let it run and grow on its own. You’ve now created a self-perpetuating machine.
More disposable income to re-invest in more assets.
Again, in the first years, a wealth machine will most likely cost you money in opportunity costs. For example, a great sales associate can make 90k a year, including their bonus, but she’ll maybe have to get by with less than 25k in the first years when building her wealth machine. Eventually, that opportunity cost will get paid back in the form of equity value because the business produces stable profits that you can then re-invest into new wealth machines without spending much time in the company.
So how do we get such a wealth machine?
Leverage your Hard skill:
In Level 4 of the investment hierarchy post, you’ve picked a hustle or a builder/manipulator skill. Next, you need to apply this Hard skill that you’ve mastered to start a business.
My Hard skill is selling. I used this skill to bring in customers when we had zero products to show. While getting our first customers, we only had a scrappy demo to convince our first customers to work with us. That is how we kick-started our business.
When you’re a coder, build your own MVP without hiring anyone else to grow the business. Don’t invest money into marketing; instead, learn how Product Hunt works, document your journey in a newsletter and create a product with an appealing referral feature built inside the product to organically grow the business.
What time frame are we talking about?
Most wealth machines take 3-5 years to build when you’re lucky (with no crisis, pandemics or fall out with investors/ cofounder). But, always start your wealth machine during your current job or gig.
The difference with a lifestyle business?
A lifestyle business supports a lifestyle. A wealth machine grants you more and more wealth over time because scale and automation are your most significant focus areas.
It sounds simple, and it is. But, again, it’s a game.
You need to be patient and stay in the game.
Also, have fun.
Everything gets easy when you’re having fun.