By Nathan Latka, Summary by Adam Ferguson (me)
I recently finished the 4 Hour Work Week by Tim Ferriss. It’s a great book with a lot of helpful insights, but a little outdated in terms of the real-world strategies. The book was published in 2007, which feels like eons ago with how fast technology (specifically the internet) has expanded. Don’t get me wrong, the shift in mindset that I gained from the 4HWW will always stand the test of time. It’s just that putting ads in magazines and newspapers may not cut it anymore (or maybe it will, honestly I’ve never done this before so who knows…).
To get a little more insight into the strategies that the New Rich use in more recent times, I turned to How to be a Capitalist without any Capital by Nathan Latka (someone who now has a lot of capital, even a PE company). For those that haven’t read the 4HWW, the New Rich are people that believe in wealth as a means of freedom. They don’t want to be constrained by a 9 to 5 job but instead want to have passive income streams that allow them to travel the world or take kickboxing classes. Anyway, here is my summary of How to be a Capitalist without any Capital.
There are 4 main lessons that Nathan Latka wants you to focus on in order to build successful income streams, be part of the New Rich, and live a life of freedom.
- Don’t focus on one thing
- Copy whatever is successful
- Set up systems rather than goals
- Sell tools or services for already popular items
Don’t focus on one thing
The point of this lesson is that success is partially (if not largely) driven by luck, so having a single point of failure decreases your overall chance of success. Instead, it is better to have multiple income streams and projects running at the same time. That makes it more likely that one of them will be successful.
For example, if you dedicated all of your time to building a product that helps Tik Tok advertisers place ads on the platform and the US bans Tik Tok, then you’re screwed. However, if you worked on a few projects spanning multiple platforms, it’s more likely that one of them will work.
As well, working on multiple things means you fail more often, which will lead to more lessons learned. The example Nathan gives is Thomas Edison, probably the man most notorious for continually failing and learning from those failures. As he said, “I have not failed. I’ve just found 10,000 ways that won’t work.” Keep going and focus on multiple projects and you’re bound to find something that works.
Copy whatever is successful
This section initially comes off as a little sleazy and unethical. He starts out with the example of Facebook and how they completely copied Snapchat. I’m not sure if Facebook is an example that I would use for successfully copying others, as they have been sued multiple times for stealing other people's ideas.
However, the premise of this section is sound. It is difficult to create something completely new, instead focus on what has been successful for others and copy it in your business. A better example that he gives is Wealthfront, where the CEO mentioned that he got the idea for Wealthfront’s sign-up bonus by copying what Dropbox had done and adapted it for his business. Since Wealthfront and Dropbox aren’t direct competitors and what he copied wasn’t identical, there wasn’t any harm to Dropbox and a lot of benefit for Wealthfront.
He goes on to show how this can be done for other areas. For example, if you are listing on AirBnB, look at the other listings that are most popular and see how their listings are formatted. Copy every detail down to the bullet points and photos. Or if you are listing on Amazon, see how other top sellers format their listings. Essentially, find what is working for others and copy that within your business.
Focus on systems instead of goals
Goals are alluring and fun to think about, “I want to make $1 million in 5 years” or “I want to become a best selling author by 35”, but don’t actually help you get there. What does it take to make $1 million or be a best selling author? And if you miraculously do reach your goal, what then?
A better approach is to think in systems. Set up a process that you can take on every day that will lead to $1 million. Then continue that system and you’ll make $5 million, then $20 million, and so on. If you want to be a writer, don’t focus on hitting the New York Times bestselling list, focus on writing 1 to 2 pages of material every single day.
Get detailed with your systems. Go as small as you can go to get started. If you’re starting a business, what is the smallest, most detailed thing you can do every day that will lead to success? Maybe it’s sending an email to a potential investor/mentor every morning. Maybe it’s reading 10 pages a day from business development books. Whatever it is, make it easy to accomplish every day.
Lastly, systems should be set up to run without having to think about it. In business, if there is something you do every single day, find a way to delegate that task or automate it. In my last example, if you’re sending an email to potential investors, try hiring someone on commission for every potential investor they contact. Or set up an automatic email marketing campaign that will send to potential investors at set increments.
This section reminds me of Atomic Habits by James Clear. Atomic Habits is more focused on personal development than business growth, but the concept is pretty much the same. I’d highly recommend checking out Atomic Habits if you want to learn more about setting up systems for success.
Sell tools or services for already popular items
Nathan labels this section as “Selling pickaxes to gold miners”, as his analogy is that the people that got rich during the gold rush in California weren’t the gold miners, but the ones that were selling pickaxes or other equipment to them.
It’s easy to focus on the shiny new thing that everyone is talking about (Crypto, Drones, Dropshipping), but those things are usually ultra-competitive and risky. Since they’re so popular, everyone thinks that they can make a go at it and become rich. However, with so much competition, profits will be hard to come by. Instead, it is better to focus on building tools for those people.
Some examples from the book are selling iPhone cases for new iPhones and selling software to 3rd party Amazon sellers that help them with inventory management. Don’t try to create a new iPhone or become another Amazon seller, instead find ways to build tools or services for iPhones and Amazon sellers.
Don’t try to blaze a trail or hop on a bandwagon. Instead, focus on building tools or products that will help those on the bandwagon. In short, sell pickaxes to gold miners.
The rest of the book
After these 4 lessons, Nathan goes on to detail specific examples of income streams that you can start, such as investing in Real Estate, building your own company, or buying other companies. These sections get specific to those targeted areas, so I’ll allow you to dive into them on your own time. However, if you understand the 4 principles above, you will be ready to make money in whatever pursuit you are interested in.