I’ve been quiet on the blog lately — writing is one of those things that’s hard to build a habit for, but always pays big dividends when you do it. Every time I’ve gotten into a good blogging rhythm I am undoubtedly surprised by the feedback I get (good and bad!), but more importantly, by the ripple effects. Writing is capital — you work to make it, and then it works for you.
As someone who likes to work with his hands (both in the analog and digital worlds), I feel pretty deeply connected to both labor and to capital. The process of making something (a table, an app, a blog post) can be deeply satisfying, and then the follow-on effects from that thing existing can (in the best cases) be very high leverage.
I would say my hands-on nature is both a blessing and a curse when it comes to this. Because I like “making stuff” I’m often drawn into projects where I might be better off hiring (or inspiring) someone else to do it, or delegating it somehow. When it comes to producing capital, sometimes actually the less you “do”, the more you can accomplish. I think of this as learning to develop a Capital mindset, over a Labor mindset.
Of course this relates to money as well. For the longest time — I think this was just my foundational mental model — I intuitively understood the idea that you work, and you get paid. Labor. Paid for your time. Despite the fact that I have worked for a long time in the software economy (and of course now, in venture capital), I had to overcome this idea of labor being the thing. For instance, I spent a lot of time in my early twenties as a freelance developer, building apps (capital) for others, but just getting paid for my time.
Maybe this is intuitively obvious to other people, but it has taken me some time to turn the corner and understand the value of, and the power of, capital. **Especially** capital you can build through your own efforts, like writing, or coding, or making music, art, etc.
I feel like it’s an overall very powerful frame, and is especially helpful when it comes to prioritizing your own time & activities — whether you are the CEO of a company, or a guy/gal sitting in your living room.
With that in mind, here is my first blog post of 2018. Here’s to a great year, everyone.
3 comments on “From a labor mindset to a capital mindset”
Read rich Dad poor dad :)
Yeah I haven’t read it but I can see that
In my case, maybe my dad is poor Dad and USV is Rich Dad :-)
You are 100% correct that having a range of skills and being able to do many things and enjoying it can be a curse. Sure there are upsides to not being what I call ‘a single function machine’. That is someone who is essentially good at one thing and couldn’t repurpose themselves if they lost their job (or business).
The downside is you get drawn into doing things that the big picture person won’t get sucked into. Because they don’t operate at that level.
Separately not entirely clear what you mean by this:
The closest I can come to what I think you are saying relates to things that I do that I make money from. I like things that produce ‘residual’ type income. Not one off gains but something that is earned or built that will continue to (generally) make money over time. For one thing it’s ‘forced savings’. You can’t spend money that you haven’t made and money that you have already made that is in the bank is tempting to everyone. Also money over time is cool to get. Having $1000 paid per month for 60 months is way way better (psychologically) than getting $60k at once (adjust for time value and all that jazz obviously).
In the case of software writing I never did that for someone else; but forever for myself or any company that I had. But if I did that (for others) I would structure it as ‘$x now and then $x per month for maintenance and answering questions and enhancements’. The residual in other words. (That also gives you an asset that you can sell). Also keeps you in contact with the client in some way and builds a relationship.
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