Methods of Prosperity 37
TL;DR
Reid Hoffman is a co-founder of PayPal. After eBay acquired PayPal, Reid Hoffman co-founded LinkedIn with Eric Ly in 2003. Reid Hoffman and Eric Ly envisioned a platform that would do three things. Help individuals find jobs. Connect with professionals in their field. Enhance their career prospects through online networking. LinkedIn focused on professional networking and career development. That set it apart from other social media platforms like Facebook and Myspace. LinkedIn would emphasize users’ professional connections. It did this through profile pages. Resumes, job listings, and networking opportunities connected users. In its early days, user adoption was slow. Microsoft acquired LinkedIn in 2016. Their price was over US$26 billion. It was the largest acquisition in Microsoft's history.
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New group chat for self actualizers unlocked 🔐 app.towns.com/t/0x6E0412804dc2281cDF1a7AaD697d883645747721/
Wealth is not measured by how much money one has in the bank account, but by how satisfied one is with what one has.
This is not to say that people should not work hard in order to earn more money, or that people should renounce their material wealth and live lives of poverty.
There is no virtue in poverty. The pursuit of wealth for the sake of having money is empty. Money has no intrinsic value.
The following is an excerpt from Methods of Prosperity newsletter number 32. It was originally deployed January 25, 2024. As of October 3, 2024, original subscribers have received up to issue number 68: Phil Knight (continued).
Thinking from First Principles.
Question every assumption you think you ‘know’ about a given problem or scenario. Then discover new knowledge and solutions from scratch. Forget solving your problems based on prior assumptions and ‘best practices’.
Here’s how you can use this in 3 simple steps recommended by Elon Musk himself.
STEP 1: Identify and define your current assumptions. Do this when you’re faced with a familiar problem or challenge. Start by writing down your current assumptions about them.
STEP 2: Breakdown the problem into its fundamental principles. Fundamental principles equate to the most basic truths or elements of anything. The best way to uncover these truths is to ask powerful questions.
Here’s an example of how Elon Musk used this:
Somebody could say, “Battery packs are really expensive and that’s just the way they will always be… Historically, it has cost $600 per kilowatt hour.
With first principles, you say, “What are the material constituents of the batteries? What is the stock market value of the material constituents?” It’s got cobalt, nickel, aluminum, carbon, some polymers for separation and a seal can. Break that down on a material basis and say, “If we bought that on the London Metal Exchange what would each of those things cost?”
The price comes down to $80 per kilowatt hour.
STEP 3: Create new solutions from scratch. Identify and chunk down your problems or assumptions into their most basic truths. You can begin to create new insightful solutions from scratch.
Remember: Think Different. Good ideas are always crazy until they’re not.
First principles thinking is a powerful way to break away from following the crowd. You must be creative. You’ll discover new solutions to common problems.
Wake up babe! The Fenn Den podcast Vol. III new episode dropped this morning!
Interview with Sean Allen Fenn about how he made his Surplus album.
The pandemic of 2020 jolted everything to a halt. Living in New York City wasn’t fun anymore. In 2021, he wrote 100 songs. Tapping in to his subconscious, the songs came out of his dreams. It turns out that being a good story teller is not his strength. Songs don’t always demand a narrative. They can be abstract and random. They state no facts. They don’t need to be solid like a brick. There are no wrong notes.
Who do you think needs to be on my next podcast episode?
Rediscovered this podcast interview.
I thought she took it down for whatever reason. But here it is!
Methods of Prosperity
Newsletter examining the methods used by historical figures to accumulate wealth.
Here’s a big idea:
What if a user could send money to an email address? That would incentivize the recipient who owns that email address to sign up. The recipient would receive their payment. Sound familiar?
Part 29. Elon Musk of the PayPal Mafia.
TL;DR
Elon Musk grew up in South Africa and later moved to Canada and the United States to study and work. He founded Zip2 with his brother Kimbal in 1995, which was later sold to Compaq for over $300 million.
With the money from this sale, Musk founded X.com which later merged with Confinity to form @paypal. PayPal was later acquired by eBay for $1.5 billion in 2002.
Musk noticed an arbitrage opportunity in developing country debt. The bank he worked for rejected his proposal. He went on to formalize his plans to build an online bank, incorporating X.com in 1999.
His co-founders later wanted to take over and the company split. Undaunted, Musk attracted new funding and restructured to form the successful online bank.
To be continued...
Key lessons:
• Recognize arbitrage opportunities.
• Figure out which questions to ask.
• Beware of the gambler’s fallacy.
• Never bet against Elon Musk.
The fact that you notice this post makes you aware of my newsletter. That knowledge brings you one step closer to helping our community grow.
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If you don’t want generational wealth for your family, will you be the cause of generational poverty?
TL;DR
Last week, I didn’t highlight enough the mindset of Jeff Bezos. Despite the high failure rate of startups, Bezos remains optimistic. Embracing his “Day One” philosophy, he contrasts it with the stagnation and decline of “Day Two.” He also questions the use of proxies in business metrics. Jeff warns that over time, companies may misinterpret these metrics. Doing so leads to poor decisions. Bezos advises focusing on enduring customer needs like low prices and fast delivery. Delegate smaller issues. A perfect example is one-click shopping. He distinguishes between reversible (“two-way doors”) and irreversible (“one-way doors”) decisions. He urges careful consideration for the latter. While his success is inspirational, it’s important to recognize survivorship bias. Most entrepreneurs will fail. Next week, we’ll explore the PayPal Mafia.
