From: alexhormozi
The first $100,000 is often cited as the hardest amount of money to make [00:00:11]. This idea is echoed by Charlie Munger, Warren Buffett’s business partner, who famously stated that “the first hundred grand is a he even says that uh it’s a quote you can look it up” [00:00:30].
Why the First $100,000 is the Hardest
The difficulty of accumulating the initial $100,000 stems from several key factors:
1. Thinking in Time-for-Money Vehicles
When setting a goal of 10 million, one cannot simply multiply $100,000 time-based efforts by 100 [00:00:56]. Achieving larger sums necessitates a different mode of operation, often moving beyond direct time-for-money exchanges [00:01:03].
2. Lack of Leverage
At the outset of wealth creation, individuals typically have little to no financial leverage [00:03:04]. This means they must perform all tasks themselves, leading to significant inefficiency and a large time investment for minimal output [00:03:11]. They must learn every aspect of a business to earn their first dollar [00:03:19].
Once the first $100,000 is accumulated, however, it provides the capital to start paying others to handle tasks, invest in advertising, and ultimately leverage resources for faster growth [00:03:41], [00:03:50]. This shift allows for greater efficiency and the ability to scale efforts [00:03:54].
The Speaker’s Personal Experience
The speaker shares that the first 100,000 was significantly greater than the increase felt when reaching $10 million [00:02:00], [00:02:15].
Skill Stacking and Increased Leverage
As individuals acquire new skills, their base earning potential, or “basement of skills,” continuously rises [00:07:02]. For example, learning how to sell could establish a baseline income of 3 million annually, by enabling the generation of demand at will [00:07:29], [00:07:41].
This skill stacking approach views an entrepreneurial journey not as failures, but as lessons that inherently increase one’s value [00:07:52]. The speed of skill acquisition can be enhanced through deliberate practice, mentorship, and paying experts to learn faster [00:08:51], [00:09:54].
A core principle is that one cannot be both “busy and broke” [00:09:14]. If busy, one should be making money; if broke, one has time to invest in income-generating activities [00:09:16]. The initial phase often requires trading time for money, but this effort builds the foundation for future financial success and the ability to identify and pursue larger opportunities [00:09:09], [00:10:12].