From: alexhormozi
Increasing earning capacity involves investing in oneself to develop valuable skills and solve problems in the marketplace, rather than solely relying on traditional asset investments [00:01:41]. While saving money is important, the primary focus should be on enhancing one’s ability to generate income [00:02:09].
Investing in Self (“S&NME”)
Traditional investments like the S&P 500 or real estate, while safe over long periods, primarily grow existing assets rather than directly increasing income [00:00:30]. The belief is that solely focusing on the asset side of investing indicates a cessation of the desire to make more income [00:00:52]. Instead, individuals should focus on “S&NME” – spending on themselves [00:06:52]. Investing in oneself compounds significantly faster than traditional asset growth, potentially doubling, tripling, or even 10x one’s earning capacity [00:06:56].
Focus on Problem Solving and Value Creation
The fundamental way to make money is by providing value to the marketplace and solving problems for other people [00:01:41]. The larger the gap between a problem and its solution, the more value one can capture [00:01:51]. This principle applies to both services and products [00:02:02]. Your earning capacity is the primary driver of wealth creation [00:02:05].
Strategic Education and Skill Acquisition
It is recommended to live frugally and invest all excess money into education that directly increases earning capacity [00:02:18].
Practical Examples of Skill Investment
- Phlebotomy Certification: A 2-day, 7.50/hour) to 50,000 annual income based on 2,000 hours per year [00:02:29].
- Continuous Learning: Once earning a higher income (e.g., 25,000-2,000 a month) to ongoing education through courses, coaching, mentorships, workshops, and seminars [00:02:41]. This investment can help individuals earn more than those with traditional four-year degrees within four years, often starting to make money by the end of the first year [00:03:29].
- One-on-One Coaching: This is a highly effective way to learn new skills, such as media buying or ad running [00:03:51].
Entrepreneurial Mindset Towards Learning
View paid learning opportunities as “classes in your entrepreneurial degree” rather than expecting a single investment to make you rich [00:04:02]. It’s an ongoing process, similar to how a college degree requires multiple courses, not just one [00:04:10].
Identifying Quality Educators
To reduce risk when purchasing educational content:
- Follow individuals who provide significant free value on platforms like Instagram or YouTube [00:04:41].
- Observe their teaching style and whether their free content provides new, tactical information [00:04:48].
- If you find someone who resonates with you, make a decision within seven days to avoid belaboring the choice [00:05:06].
- Consider purchasing educational products from multiple reputable sources in a particular field to gain a comprehensive understanding [00:05:15].
Replication Before Iteration
When learning from experts, prioritize replicating their methods precisely before attempting to innovate or add your own “sauce” [00:05:35]. Earning the right to iterate comes from successfully duplicating existing processes [00:05:41].
The “Bridge” Analogy and Skill Stacking
Consider the path to making money as building a bridge with many “bricks” [00:05:47]. You must lay all the bricks before the first dollar can cross [00:05:54]. Many people become disheartened and start building new, incomplete bridges, never finishing one [00:06:10]. Speed in crossing the bridge depends on identifying and addressing missing “bricks” [00:06:02].
Skills stack exponentially [00:06:20]. For example, a videographer can stack skills like editing, social media messaging, copywriting, branding, management, operations, and leadership [00:06:22]. Broadening horizons and going deep into different silos allows individuals to become more valuable (e.g., a CMO or entrepreneur), significantly increasing their pay [00:06:33].
Entrepreneurial success often involves actively working in a field (e.g., real estate) rather than expecting passive income without engagement [00:03:09].