Thursday, July 11, 2019

The Standard Model of Success



In Physics, the Standard Model is a theory that describes three out of the four fundamental forces of the Universe as well as categorizing all subatomic particles. Since the model was created, physicists were able to predict the discovery of the top quark or the famous Higgs Boson that is responsible for objects having a mass.

There is this general idea that success cannot be captured in a universal model because context and culture changes. Books on workplace politics and managing superiors will be totally obsolete once AI takes control, societies implement universal income, and all white collar jobs disappear.

However, my visit to Australia has rekindled my interest in coming with an elegant model for success after reading an Australian business self-help book by Nigel Collins called The Game of Inches. I am not too sure how you can get a copy of this book in Singapore but I like Australian self-help because it is unpretentious and down to earth, quite refreshing change from US self-help that has become very niche, academic, and inundated with angry voices like Mark Manson and Jordan Peterson.

The original book describes a successful initiative as being a result of four simple iterative steps which I think helped clarify my thoughts about being in the training business :

a) Find the gap

You need to find a niche your business is in. There are a lot of trainers who teach value investing. As REITs melt up, expect more REITs courses to be launched in the medium term. By digging my heels into the Early Retirement niche changes the training to focus on outcomes regardless of investing strategies or market conditions. Leverage is an example of how the course is timeless.

It will not end with just leveraging securities for future courses. My vision is a course so effective and counter-intuitive, folks who teach the CFA would willingly pay for it.

b) Take action

Exhorting someone to take action is, in the words of many who work in the judiciary, trite. You need to put in effort to bear fruit. I was not impressed with this suggestion from the author although I agree that this is correct. In less than a year, I have a Early Retirement Masterclass with a walled garden community of over 200+ members. This is clearly a result of taking taking small incremental action to build a community.

Taking action is not enough - the author needs to go beyond this to perfect the Standard Model.

c) Gather feedback

For successful businesses, feedback is absolutely necessary. My class simply had no room to gather feedback for the first few runs because of my inexperience. Feedback allowed me to create a better class. I'll admit it - people still find my teaching blazing fast and I need to slow down in August but my feedback scores have gone from 65+% to 91% after reflecting on every single brickbat thrown at me by paying customers.

d) Enhance / Delete your offering  

Once feedback is obtained you start taking a scalpel to remove elements to your offering to make it better.  One painful I did with the guidance of Dr. Wealth is to remove sections concerning career management and budgetary control. This is because folks consider themselves pretty ace at it and will not pay for it. Instead, I expanded the REITs section to form its own super-chapter. This August, we going really hardcore on fixed income.

Without sharing too much about my private earnings, a combination of all four behaviors is financially rewarding. And here's something more interesting - the portfolios I build with my students have also done better with more investor and macro-economy focused content. The frequency of class increased three fold.

But something is missing.

You can find the missing component in a book called The Flywheel Effect by Jim Collins.

Image result for flywheel jim collins

The first time you take action, you should be launching your business with minimal bureaucracy. This is something I am very grateful to Dr Wealth for. They have a bias for action and more willing to get something going rather than getting it perfect - something which I missed every since I left the private sector.

After you iterate and gain some feedback, the action you take must bias towards scaling your business. I think this is what keeps small companies small. For each crucial feature I remove from my class, I add a new feature that folks benefit from. Folks following my business will know that prices keep going up, but we've onto two hands on exercises on portfolio creation. I'm might also moving into OTC bonds in a very serious way.

My personal philosophy is that financial independence is no excuse not to scale something up. I have come to the conclusion that I might be a compulsive money maker and this is some kind of sick game I'm playing with fellow lawyers to see whether I can outflank their escalating salaries over the next few years.

But that will be another article on another series of books before the end of this week.



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