The 4-Hour Workweek Tim Ferriss
Operation Value Creation
Website LinkedIn. Twitter Email DreamerWe theme of the month: Passive Income
Book: The 4 Hour Workweek
Author: Tim Ferriss
Abstract
This book is the New Rich (NR) bible, as it covers the what and how of this new generation that’s trading Ferrari’s and Mansions for financial freedom. The subtitle to his book describes it perfectly, “Escape the 9-5, live anywhere, and join the New Rich”.
To most this sounds foreign and unrealistic. However, due to disruptive technologies, mainly the internet, this is reachable for those who understand and can capitalize on the revolutionary ecosystem we operate in.
The days of working for a company your whole life and having a stable retirement are gone. Meanwhile, we’ve been fed advice based on this premise. Thus, our mindset and learned habits are completely unfit and we MUST adapt accordingly. Ferris’s book is a start. It is NOT the end, rather a beginning of the revolution in our thought. I highly recommend the following articles to supplement his book:
Warning
Alright guys, so I’m going to give you two articles on this book. The first is by “branding expert” Dorie Clark. Dorie is a marketing strategy consultant, frequent contributor to Harvard Business Review, and author of the #1 leadership book Stand Out (You can find her bio here). Her article stands to not completely discredit, but warn you of Ferris’s book.
Reference 1: Truth Behind 4 Hour Work Week by Dorie Clark
The second is a bit of the contrary. I’ll be honest, it is a great visual depiction, but I don’t know about the author. He seems to have a reading list with a not finished website. I’m providing you with it so you understand the book, and similar to Rich Dad Poor Dad (Rich Dad Poor Dad Link), understand the principles.
Reference 2: Animated 4 Hour Work Week Book Review
My take, just like Crush It, there’s a lot of smoke but some serious take home content. I mean this in the nicest way possible, 99% of us are not Tim Ferris. He possesses that unique blend of an “FU” mentality with the brains of Thomas Edison. Most of us, myself included, aspire to be one of these personalities or a balanced mix, but Tim manages to be stardom in both. For example, he earned a BA at Princeton yet wasn’t the book worm type. I’ll speak for the majority when I say this just isn’t me. Besides the inherent personality bias, this book hammers the mindset and habits consistent in every entrepreneur. It also gives us his framework which is similar to Vaynerchuck’s in Crush It.
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The Book
His book is mostly motivational, and I believe you guys are already motivated. Thus, instead of wasting your valuable time, I’m giving you his exact framework and will let you control your own pep talks.
His framework is broken up into the acronym DEAL.
D: Definition: Replace self-defeating assumptions
E: Efficiency: Forget time management, learn to forget the unimportant Time
A: Automation: Learn to put cash flow on auto pilot Income
L: Liberation: Create freedom of location Mobility
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click to go straight to!
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D: Replace Self Defeating Assumptions: What is Rich
For those who have read Rich Dad Poor Dad this is going to be very similar. Both hammer the mantra that wealth is a side effect to your process. If you think rich, you’ll be rich. At the heart of this, thinking rich means thinking the opposite as the masses when there is a problem.
An awesome example of this was when Tim was in sales. Getting meetings was the problem. Tim noticed the primary barrier to set these up were the “gate-keepers”- secretaries, etc. To solve this he only made calls from 8-8:30 then 6-6:30. Why? Because they were working 9-5, so he bypassed them, unlike his fellow salesmen who kept calling from 9-5.
Ferris provides 10 ways to redefine and solve life in order to leverage your ability to think against the current:
1: Retirement is worst case scenario insurance. If you love what your doing do you really want to retire?
2: Interest and energy are cyclical. Don’t overwork! Is one week a year really enough to recharge your batteries? Who really thinks making employees stick to a strict schedule is bringing out the best in them? Ferris advises taking mini vacations to constantly be energized. He calls these vacations mini- retirements.
3: Less is not laziness. If any of you have played sports with crazy coaches, you know how ludicrous and pervasive this mindset is. I played division 1 baseball in college, and let me tell you, 12 hour days that could be accomplished in 2 hours are wasting everyone’s time. Our culture suffers from what I call industrial revolution PTSD. The industrial revolution required skill-less jobs in which frequency and volume was all that mattered. Too bad our economy has completely transformed into one with a brain over bronze and winners are those that out think versus out work. Further, how do you out think? By NOT out working.
4: The timing is never right. Self explanatory, might as well just show a Nike T-Shirt.
jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj5: Ask forgiveness, not permission: This is where I disagree. Although it works in some cases, I believe jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjthe focus should be on framing your pitches. D r e a m e r We Proprietary | 8 jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj Back to home! jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj
6: Emphasize strengths, not weaknesses: Weaknesses lead to incremental improvement, strengths are exponential. I believe this depends on the person.
7: Things in excess become their opposite: Too much of anything isn’t a good thing.
8: Money alone is not the solution. This comes into play with your life personally and how you view your customers.
Refer: Value Article, Coined Book Summary
9: Relative Income is more important than absolute income. When we think wealth we generally think of it in a very mundane and one track mind way. Do you make 6 figures? If yes, you’re rich. If your between 50 and 90 your middle class, and anywhere below is working poor (Based off status quo versus actual data). BUT what if that 90 is in the North Carolina versus New York City. Better yet, what if that 90 is in a whole different country. That can be the difference between a closet sized apartment and a full blown mansion. Yet we so often stick to an arbitrary number known as the absolute income to determine wealth. Let’s look closer into this through the story of Billy and Joe.
Billy Joe
Billy makes 30/yr, Joe makes 160/yr. Who’s richer? Our first reaction is Joe….obviously. However, what if Joe works ten hours a week while Joe works 80 (If you guessed Joe works public accounting your right)? This leaves Billy making 58/hour while Joe only makes 36/hr.
Further this, let’s look at the costs associated with Billy and Joe. Billy goes out on a Friday night and it costs him 20 bucks. Joe goes out and it’s minimum 200 bucks (An off night in NYC). We don’t need to get into housing and other costs to understand the power of relativity here. Although Joe makes more, Billy lives richer. Not only is his economic value worth much more in this situation, he has an extra 70 hours to do whatever he wants. It could be family, more businesses, whatever, but due to his abiity to understand relative versus absolute income he’s “bought” himself a much more plentiful life.
10: Distress is bad, eustress is good. jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj D r e a m e r We Proprietary | 8 jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjBack to home! jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj It’s cliché as can be, but the more you study successful people the more you see their work as a continuation of their passion. Ferris proposes this is the difference between distress and eustress.
E: Elimination: Forget time management, forget the unimportant
According to Ferris, the current work model is broke. Why take a creative, productive being and make him/her be at one location for 8 hours. I can tell you from my experience of working at a Big 4 accounting firm to working on my own, although on my own I work more, my productivity is fourfold. If you looked at my intellectual output per hour on my own versus in an office, it would be a tale of two cities. Creativity can’t be planned, and it certainly doesn’t happen while you’re on hour 6 of a day at the office.
Ferris uses the 80/20 rule fathered by Italian economist Vilfredo Pareto as a basis for elimination. Pareto studied the Italian economy and noticed 80% of Italy’s income was received by 20% of the population. If we apply this to a business, 80% of revenues are generally generated by 20% of the customers.
I’m highlighting 2 specific tools:
1: Elimination
This one is pretty straightforward, find your 80/20. For me, I spend too much time on website design. It’s like playing Candy Crush or Oreo’s for me. I get in the zone and before I know it it’s 3 in the morning.
Starbucks example: Before Starbucks was preferred hangout spot it is today they had a business model like Dunkin Donuts. Get your coffee and get out, focusing on turnover and getting people OUT the door jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj D r e a m e r We Proprietary | 8 jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj Back to home! jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj rather than IN. Starbucks noticed that the majority of their income was coming from the small minority of people that stayed there. They put two and two together and attempted an unknown business model of having people stay. The result is evident, but we must understand it was their 80/20 analysis that allowed them to become the giant they are today.
2: Selective Ignorance
Don’t waste time watching the news. I can’t tell you how much this actually helps, but he does have a valid point. If somethings important, you’ll hear about it. My take, I use Twitter and the new Apple news to tailor my news specific to my channels. Do I watch Fox or CNN? Of course not, but I do find valuable info through the Iphone news and Twitter. A: Automation, Putting cash flow on auto pilot
This is the nuts and bolts of his books. I’m giving you guys the exact plan he uses. I’ll be honest, there’s more than one way to do anything in this world, so although his has been proven for himself, you CAN deviate. I personally combine all successful people’s “roadmaps”. Some are more specific, i.e, his, while others like The Lean Startup are extremely broad. There is no exact formula, but through the process we lay out for you guys you can’t go wrong.
1: Become a relative income samurai
This is where you can insert everything from physical products, to apps, to online businesses. The whole purpose of my brand is to help you accomplish this. I personally focus on internet content and ideas I think can change people’s lives. The goal is passive income, the method is rather a mean to this prize.
I’m going to replace Ferris’s content here with knowledge from the industry as a whole, and break it up into the influencers and specific references I follow. These influencers are hand selected by me.
Passive Income Post:
Passive Income Roadmap:
Passive Income/ Internet Businesses: Pat Flynn and Smart Passive Income
Investing/ General Business: Preston Pysh & Stig Broderson at Investors Podcast
2: Outsourcing
Outsourcing means having someone else do your work. Ferris suggests this as much as possible. For example, he outsources his own assistants through the use of virtual assistants. Further, everything besides the actual speaking on his podcast is outsourced. The animation, creation, etc. he puts in the hands of others.
My take, read into the principle versus his actual actions. Outsourcing is at the heart of entrepreneurship and passive income, but to me he goes WAY too far. For example, he uses his virtual assistant to send emails to his wife. This might be a good strategy for some of you but I’d like to keep my relationship free from outsiders! I also can tell you don’t go outsourcing before you have actual traction or the patience to stomach the initial growing pains. From personal experience it isn’t as easy as just jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj D r e a m e r We Proprietary | 8 jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj Back to home! jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj giving someone the reigns and your worry is gone. I remember our graphic design project specifically, I lost sleep and grew serious gray hairs due to the lack of quality and amount of back and forth meetings before getting a subpar result.
L: Liberation, Create freedom of location
1. Disappearing Act: How to Escape the Office
Here Ferris goes over different strategies to help employees find a way to work outside the office. He shows the story of a guy who uses a 5 step approach to gradually ease his boss into it.
It comes down to this, are you producing? Is there quantifiable evidence you’re a solid investment for your company?
If yes, find ways to work outside of the office. If not, you got some work before you start your gradual descent out of the office.
2. Beyond Repair: Killing Your Job
Here Tim uses common fears to squash the fear of quitting your job. He talks about how the more we invest in something the harder it is to let it go. He also talks about the really serious issues like health insurance, 401(K)’s, etc.
To me guys it comes down to this: Do you love your job? If yes, dive head first into it. If no? When your not working (usually 6-12 PM), dedicate time to pursuing your side passion. Don’t just leap because the cool entrepreneurs book say so. Leap because you’ve built your side gig to support yourself.
3. Mini-Retirements: Embracing the Mobile Lifestyle
This is something that large companies are slowly understanding. I started my career interning at Ernst and Young, a big 4 accounting firm, and the stereotypical work 80 hours and pride yourself in being miserable.
Even some Big 4 firms are starting to enact a 5 week vacation policy.
We need a break. A real break. That means significant time in what Tim calls mini-retirements.
4. Filling the Void: Adding Life After Subtracting Work
Get a life! Just kidding.
Here Tim talks about the importance of having a life outside of work. If you’ve checked out Tim’s blog, you’ll surely see he walks the talk on this.
Summary
The 4-Hour Work Week, just like Rich Dad Poor Dad, lies a great foundation. However, until your prove me wrong I don’t believe anything significant can be accomplished by working 4 hours a week.
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What I do believe is this, wealth is the side effect of automation, scalability, and passion.
Wealth= automation x scalability x passion
Ferris draws up great strategies to accomplish this, but when it comes down to it it’s you, yourself, modo-e-modo in a battle to create the life you choose.
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