From: alexhormozi
Many young people, particularly 20-year-olds, may struggle financially because they prioritize immediate earning over long-term learning [00:00:02]. A survey found that 52% of high school seniors believe they will be millionaires by age 25, which is described as a delusion [00:00:10]. While some might aim for a quick, high-risk path to wealth, a guaranteed path to becoming a millionaire in a decade is possible through focused learning [00:00:19]. This highlights the importance of learning over earning for young people’s success.
The Pitfall of Prioritizing Earning Over Learning
Consider two individuals of similar age who took different paths:
- The “Earn First” Example: One individual learned basic video editing, secured a job offer for $60,000 at a company with experienced creative directors to learn from [00:00:40]. However, he negotiated for more money, believing he needed to earn rather than learn [00:00:57]. He ended up taking a lead video editing role at a small business with no mentors [00:01:13]. Within 12 weeks, he found himself in a position where the business was primarily extracting value from him, rather than him being able to learn from more experienced individuals, which would have maximized his long-term net worth [00:01:28]. This decision shortchanged his long-term earning potential for short-term gain [00:03:39].
The Power of Prioritizing Learning
In contrast, another individual exemplified the approach to successful learning and competence levels and self-improvement.
- The “Learn First” Example: This 17-year-old had no skills but was advised by a mentor to pursue sales, specifically to double the minimum activity quota [00:01:56]. He made 200 calls a day instead of 100, recognizing that his lack of skill required more effort to achieve the same output as experienced individuals [00:02:04]. He also spent as much time as possible with the company’s top salesperson, listening and observing [00:02:10]. By proving himself at the bottom, he earned promotions, becoming one of the youngest top closers and learning from experts [00:02:27]. Despite being able to start a million-dollar business, he chose to work for a more prestigious company for less pay, seeking even bigger and better experience [00:02:46]. This demonstrates a smart, long-term mindset, prioritizing learning over immediate earnings [00:02:50], which aligns with delaying gratification for greater outcomes.
The Dunning-Kruger Effect
The Dunning-Kruger effect describes how individuals, when they first start learning a skill, tend to overestimate their knowledge [00:01:35]. As they learn more, they realize how much they don’t know [00:01:38]. Socrates famously stated, “The more I know, the more I realize I know nothing” [00:04:40]. Humbling oneself to this reality is crucial for growth [00:04:32].
Compounding Skills and Value Creation
Skills do not just add up; they compound, leading to significantly greater value and earning potential [00:05:57].
- Jay-Z’s Career Progression: Jay-Z first mastered rapping [00:06:05]. He then learned promotion, which earned him significantly more money [00:06:14]. Following this, he learned how to run a record label and distribution, further increasing his income [00:06:17]. Finally, he learned to recruit other artists, leading to even more financial success [00:06:22]. His early skills, though not monetized heavily at first, became immensely valuable when paired with later acquired skills [00:06:31]. This illustrates the compounding effect of skill acquisition and its impact on income.
- From Accountant to Rainmaker: Knowing math is foundational [00:06:39]. Adding bookkeeping makes one more valuable [00:06:40]. Becoming an accountant adds more [00:06:42]. Understanding taxes and insurance can elevate one to a Chief Financial Officer (CFO) [00:06:46]. Further, comprehending Mergers & Acquisitions (M&A) and entity structures transforms a CFO into a “Rainmaker” who can originate and execute deals [00:06:54]. The earning potential difference between an accountant and a Rainmaker can be tens of millions of dollars per year [00:07:01].
Case Studies in Learning Over Earning
Kobe Bryant’s Relentless Practice
Kobe Bryant was renowned for doing two practices a day [00:03:09]. He dribbled himself to sleep in his rec room, discovering a hunger to be the best [00:03:17]. He reasoned that if others practiced once, doing two practices a day would make him better, faster [00:03:31]. While the initial difference was slight, over five to ten years, this consistent, doubled effort made him “unbeatable” [00:03:38]. This illustrates the power of high-volume work in skill acquisition, rapidly reducing “ignorance debt” [00:03:55].
Warren Buffett’s Apprenticeship
After graduating at the top of his class from Columbia Business School, Warren Buffett sought to work for free at Ben Graham’s investment firm [00:07:12]. Graham, a titan of investing at the time, initially told Buffett he was “overpriced” even for free work, understanding the cost of mentorship [00:07:30]. Buffett’s willingness to invest in himself by working for free, recognizing he was in a “season of learning and not earning,” shaped his professional life [00:07:47].
Personal Experience
The speaker, a Magna Cum Laude graduate from Vanderbilt, chose a consulting job that paid less than other offers because it allowed him to work directly with the CEO and learn more [00:08:09]. Later, when transitioning to fitness, he asked 40 different gym owners if he could work for free [00:08:21]. Despite having a strong academic and leadership background, he understood he would gain more from the exchange than the employer [00:08:34]. He accepted minimum wage, swallowing his pride, which he describes as one of the best investments he ever made [00:08:45]. Learning from industry bests, even at a low or no wage, is invaluable [00:08:55].
Employer Perspectives on Learning vs. Earning Seasons
Employers differentiate between “earning season” and “learning season” employees [00:04:49].
- Earning Season: If an employee is in an “earning season” mindset, an employer will primarily seek to extract value, paying them only as much as necessary [00:04:50]. The fundamental business principle is to extract more value than is paid [00:05:07].
- Learning Season: If an employee approaches work with a “learning hat,” employers are often generous in investing in them [00:05:00]. They may offer mentorship, pair employees with more experienced colleagues, and effectively pay them to learn [00:05:25].
Recognizing one’s “season” is crucial in one’s 20s [00:05:28]. Comparing oneself to others who are earning more often means those individuals are shortchanging their long-term potential for short-term gains [00:05:37]. Once someone prioritizes earning over learning, it becomes difficult to revert, as higher earnings can deter continued learning from those ahead [00:05:44].
Earning Respect Through Hustle
Respect is earned, especially when young [00:04:04]. Instead of resenting the world for not giving unearned respect, individuals should actively go and get it [00:04:09]. Hustle is a universal currency, respected across age, gender, and culture [00:04:14]. True success stories in their 20s and 30s are not characterized by immediate displays of wealth, but by a relentless hunger to learn and work [00:04:31]. By being humble and acknowledging the Dunning-Kruger effect—that one knows less than they think—individuals can make long-term investments in themselves [00:09:23]. This creates an undeniable track record of experience and accomplishment, leading to genuine respect based on what has been done, not just what is said [00:09:36].