Wealth and What is Value?

When I look at the wealthy people I know, few of them ever achieved wealth by working for someone else. But at a young age with no capital other than my labor to sell, I had to work for others. Through this, I began to understand the limitations of employment capital. A clever and impatient person will not achieve happiness working for someone else. Leaving the employment capital world can be painful, though, and working for yourself is no guarantee of success; you'll just like your boss a lot more. 

The deal you make with an employer has no bearing on the value you add to a business. I remember regularly working into the small hours of the morning - my salary worked out to $8.25 an hour - gaining nothing except a possible raise, promotion, or bonus. That's how it works. For an employer, the trick is to get employees to buy into the extra effort, or to extract the most work at the lowest possible cost. 

This is, in a way, a business. You sell your labor. Because you compete with others who are also selling their labor, jobs always pay less than you need to live the way you want. You justify this compromise by rationalizing the current rate of pay with future growth. Even the most elementary entry-level job offers advancement. There is a pathway to sufficiency, if not wealth. You play the long game; year after year managing your expenses, saving what you can, living within your means, hoping for a windfall. 

Some people have made the long game work and lived happy lives. It takes a particular person, the right circumstances, and patience. But the long game can collapse with unanticipated events or even the most measured risk. 

The collapse didn't take long to happen for me. Though I was trying, I didn't have the patience for the long game. I'm glad for it now. My personal life made it go sideways, but it forced me to look for more financially rewarding ways to sell my labor. 

When I think about my relationship with wealth, I remember that even as a child I wanted the trappings of wealth. I didn't see the path to get there. It's like the joke; It's easy to be a millionaire. First, get a million dollars...

Looking back as far as my early childhood, I see now that I was being taught lessons about business and wealth, but I wasn't learning them. I didn't have a mentor to point out flaws in my thinking, show me the ropes to maximize opportunities, or tell me when it was time to take a partner. These are among the successful entrepreneurs' basic building blocks I missed. While I achieved some success, missing these impeded my accumulation of significant wealth. 

When I was a child I collected stamps. It was a  hobby. But like any collecting, it can generate income and wealth if you treat it like a business. You get skills along the way. Stamp collecting develops organizational skills for business. You have to categorize, inventory, manage duplicates. 

Entry-level stamp collecting requires almost no capital. You get letters by rummaging through discarded papers. Then you carefully steam and remove the canceled stamp from the envelope, inserting in your collection. Hours of fun!! In a short period of time, you start to realize certain stamps never appear on envelopes; rare items. To complete my collection I needed to purchase a rare stamp. This is where I missed the business proposition. I only thought of the buy-side of the equation. 

A good mentor would have taught me to evaluate the cost of the stamp in the context of what value making the purchase added to the collection. Was the collection now worth more, or did I just buy the stamp? Did I pay too much for the stamp? Is there another way to get the stamp? Can I create value by taking another approach, such as more systematically sourcing my raw stamps? Could I go out and find people like I am today; someone with a stamp collection with a potential value just sitting on the shelf?

This is the rich dad-poor dad experience. The poor dad rents the college dorm; the rich dad buys the building as an investment. The poor dad gives the kid money; the rich dad invests in the kid's business. You spend the same amount of money, but with the intent to invest instead of just spend.  

For me today, I still need to learn how to ascertain value. What is something worth? How do you sell it? Does it make more sense for me to sell my business or ride out the cash flow? I could have learned the skills to address these challenges as a young stamp collector. After all, I did the same thing as the young stamp collector. I started with something no one else thought was valuable and spun it into a business.