The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich

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Author: Timothy Ferriss
Publisher: Crown
Published:
Pages: 320
ISBN-10: 307353133
Category: Array


Contents

[edit] STEP I: D IS FOR DEFINITION

[edit] 1. Cautions and Comparisons—How to Burn $1,000,000 a Night

Who are the New Rich? They are people who make their money (quite a lot of money) by doing the minimum amount necessary to obtain the maximum effect. They do not work for others—others work for them. Their concern for money is not so much to have a great deal of it, but to have enough to achieve their objectives—objectives that are clearly defined. A blind pursuit of money is not their goal. Being financially rich and having the ability to live like a millionaire are fundamentally two different things.

Creating choices is the objective of the New Rich. This book reveals how the New Rich create choices with the least effort and cost. It is very possible to make a lot of money and NOT work 50 to 70 hours a week for the next 20 years in order to make it.


[edit] 2. Rules That Change the Rules—Everything Popular is Wrong

There are some basic rules to follow in order to obtain the New Rich lifestyle:

  1. Retirement is Worst-Case-Scenario Insurance. You have to die to collect life insurance and you have to work through the best years of your life to cash in on “retirement.” Retirement income rarely allows the same standard of living you enjoyed while you were working your 60-hour weeks. In addition, if you were an over-the-top workaholic and your retirement income is sufficient, chances are you will be unhappy and bored to tears with fishing, golf, and watching the soaps from your recliner.
  2. Interest and Energy are Cyclical. Most people go through cycles of being bored/frustrated/fed-up with their jobs. The New Rich aim for “mini-retirements,” NOT vacations, which can last from a few weeks to a few years.
  3. Less is Not Laziness. The New Rich do less meaningless work and focus on the important thus producing results that are more meaningful. They do not work for work’s sake, but for the sake of their objectives.
  4. The Timing is Never Right. You cannot wait for the optimum time. Waiting for “someday” is a long wait and a waste of time.
  5. Ask for Forgiveness, Not Permission. It is easier to stop a horse at the starting line than in mid-course. Don’t give people a chance to stop you. Do it, then justify your actions.
  6. Emphasize Strengths, Don’t Fix Weaknesses. If you spend the majority of your time trying to perfect the things you are lousy at, your overall achievement will be mediocre. Do what you are good at and perfect that strength—delegate the rest.
  7. Things in Excess Become Their Opposite. The New Rich are not interested in creating idle time, they are interested in creating more time to do the things that excite them.
  8. Money Alone is No the Solution. Money is not the root of all evil, nor is it the source of all happiness. Money can, and does, help you pursue those things or activities that make you happy but it is not an end unto itself.
  9. Relative Income is More Important Than Absolute Income. Absolute income is statically based on the dollar. Relative income is based on the dollar AND time. The more time it takes you to earn that dollar, the less value that dollar has.
  10. Distress is Bad, Eustress is Good. Distress is harmful, making you weaker, less confident, and less able and is usually created through destructive criticism. Eustress is healthy stress, contributing to personal growth and is created through constructive criticism. The trick is in learning (and recognizing) the difference between the two.

[edit] 3. Dodging Bullets—Fear-Setting and Escaping Paralysis

Most people remain in their ruts, their boring jobs, through fear and uncertainty about the future. Being miserable with what you are doing, or even semi-satisfied with your life, and waiting for that golden day of retirement is not the way to live your life to the fullest. Things do not improve by themselves. Remember, the goal is choices.


[edit] 4. System Reset—Being Unreasonable and Unambiguous

You are not in the minority if you are insecure about your ability to achieve great things. Most people are and thus pursue the “realistic goals” thus causing “realistic goals” to become more time and energy consuming due to the sheer volume of people trying to achieve them. Unrealistic goals are easier. A large goal actually spurs your energies in order to overcome the problems of succeeding. If your goal is average and mediocre, your effort will be as well.

It is important to define your objectives in specific terms. You cannot fall back on plain happiness. WHAT makes you happy? WHAT will make your effort worthwhile. One of the ways to find your objective is to dreamline—sort of like goal-setting but with some fundamental differences:

  1. The goals shift from ambiguous wants to defined steps.
  2. The goals have to be unrealistic to be effective.
  3. It focuses on activities that will fill the vacuum created when work is removed.


[edit] STEP II: E IS FOR ELIMINATION

[edit] 5. The End of Time Management—Illusions and Italians

The first rule is to stop trying to fill every moment with work. Doing more during your work day is an illusion—a way of “looking” busy—and the majority of what you are doing is meaningless anyway. You have defined what you really want to do with your time. It is time to free up that time.

An employee needs to increase productivity—not the number of hours worked—in order to create leverage to negotiate liberation. Liberation is working from the environment of your choice and working only the hours necessary to achieve the same productivity as was obtained in the office. The entrepreneur’s goal is to decrease the amount of work personally performed and still increase revenue. This is accomplished through efficiency.

  1. Doing something unimportant well does not make it important.
  2. Requiring a lot of time does not make a task important.

What you do is infinitely more important than how you do it.

Using the 80/20 principle for several aspects of your life—not just your working life—is helpful in eliminating meaningless tasks and creating efficiency.

  1. Which 20 percent of sources are causing 80 percent of my problems and unhappiness?
  2. Which 20 percent of sources are resulting in 80 percent of my desired outcomes and happiness?

The goal is to find your inefficiencies in order to eliminate them and to find your strengths so you can multiply them. Slow down and remember this: Most things make no difference. Being busy is a form of laziness—lazy thinking and indiscriminate action. Being selective—doing less—is the path of the productive. Focus on the important few and ignore the rest. Lack of time is actually lack of priorities.


[edit] 6. The Low-Information Diet—Cultivating Selective Ignorance & 7. Interrupting Interruption and the Art of Refusal

Lifestyle design is based on output. To increase your output, you need to decrease your input. Just look at your e-mail. How much of it really requires response? There are three principle ways our output can be disrupted by an overload of input:

  1. Time Wasters: those things that can be ignored with little or not consequence—meetings, discussions, phone calls, and e-mail that are unimportant. Solution: Turn off audible e-mail alerts. Check e-mail only twice a day. Create an e-mail autoresponse. Screen incoming phone calls through an answering machine and only immediately respond to absolute emergencies. Master the art of avoiding meetings—most meetings can be resolved through e-mail or direct phone conversations. Train those around you to be more effective and efficient.
  2. Time Consumers: repetitive tasks or requests that need to be completed but often interrupt high-level work—e-mails, phone calls, customer service, etc. Solution: Batch your projects—all e-mail, all phone calls. Switching from one task to another and back again is the hallmark of inefficiency.
  3. Empowerment failures: instances where someone needs approval to make something small happen. Solution: Provide all necessary information required to get the job done. Avoid micromanaging. Trust your people to get their own tasks done with minimal interference.


[edit] STEP III: A IS FOR AUTOMATION=

[edit] 8. Outsourcing Life—Off-Loading the Rest and a Taste of Geoarbitrage

Get a remote personal assistant, even if you don’t think you need one. Consider it training in understanding a critical New Rich skill: remote management and communication. You are not just trying to just work smarter, you are trying to replace yourself. Do not allow yourself to be afraid of paying someone else to do work you think you can easily do yourself. The point is to free your time so you can pursue more important things—either personal or work-related. Remember the difference between relative income and absolute income.

How do you find a VA? It really depends upon the task. Going with a developing country may be less expensive, but the task involved may be beyond the skills of the people involved. The thing to remember is that your decision should be based on how much it will cost for a completed task as opposed to the cost per hour—if it takes 10 hours at $15 an hour, that is less cost-effective than 2 hours at $30 an hour.

One of the biggest fears people have of outsourcing is the possible abuse of confidential information. Two rules:

  1. Never use a debit card online or with remote assistants. Unauthorized credit card use is easier to reverse.
  2. Set up unique logins and passwords to sites that will be accessed by your VA.


[edit] 9. Income Autopilot I—Finding the Muse

There are lots of ways to make money. Remember, though, you want to own the business, not run the business!

The first thing to do is to find a product to sell. Keep in mind the following:

  1. Too many competing resellers of your product quickly cause your profits to drop as each reseller is competing on price.
  2. Exclusivity to one seller allows for better profits and better leverage.
  3. Start at the end. Decide how you will sell and distribute your product BEFORE you actually produce your product.

How do you find a product? Think about you—what are your interests, your hobbies, your skills? What types of books, magazines, materials, tools, or gadgets do you personally purchase to enhance your interest in your hobby or skill? Try not to be general, be specific. Your goal is to find a niche market of consumers that will also buy these types of products or resources.

Step two is to brainstorm a product. Choose two markets that you are familiar with. Research magazines and websites related to these markets. Look at the advertising. What types of things are offered? The goal is to come up with well-formed product ideas and spend nothing.

There are several criteria that ensure the end product will fit into an automated architecture:

  1. The main benefit should be encapsulated in only one sentence.
  2. It should cost the customer $50 to $200. Why? Higher pricing means selling fewer units. Higher pricing attracts lower-maintenance customers (better credit, fewer complaints). Higher pricing means higher profit margins.
  3. It should take no more than 3 to 4 weeks to manufacture.
  4. It should be fully explainable in a good online FAQ. Remember, your goal is to free up time to pursue more important things, not to spend your time repetitively answering questions.

There are three ways to obtain a product:

  1. Resell a product. Purchasing wholesale and reselling is the easiest start-up but provides the least profit.
  2. License a product. This provides more profit but is much more legally complicated.
  3. Create a product. Not as hard as you think. You can hire engineers to build your invention. You can find generic stock items and slap your label on them. Or, you can, from your own skill and knowledge, provide information—a product that is infinitely saleable.


[edit] 10. Income Autopilot II—Testing the Muse

The third step is to micro-test your product. This is done before you actually produce your product. The test process consists of three parts:

  1. Best: Look at your competition. In what ways can you be better? Differentiate yourself from the competition.
  2. Test: Test the offer using short Google Adwords advertising for a set amount of time—usually a week. Analyze the results.
  3. Divest or Invest: If the response is poor, cut your losses; if successful, run with it.


[edit] 11. Income Autopilot III—Management by Absence

Outsource. How do you get there?

Phase I: In the beginning (up to 50 units), do it all yourself. Take all calls and put the common questions asked into your FAQ. Pack and ship in order to find the most cost effective process and options. Investigate opening a merchant account.

Phase II: When you begin shipping more than 10 units per week add your FAQ to your website. Find a fulfillment company to take over e-mails and phone calls. Research the companies and request net-30 terms for payment of services.

Phase III: When you begin shipping more than 20 units per week. You should now have the cash flow to afford an end-to-end fulfillment house—one that will handle the business from order status to returns and refunds. Again, research the company. Set up an account with a credit card processor.

One key to a successful autopilot business is to keep the choices few:

  1. Offer only one or two purchase options (basic or premium).
  2. Do not offer multiple shipping options. Offer one fast method and charge a premium.
  3. Do not offer overnight or expedited shipping—it is not worth the resulting anxious phone calls.
  4. Eliminate phone order completely. Use online ordering exclusively.
  5. Do not offer international shipments. International tariffs can increase the cost to the customer 20 to 100 percent and time spent filling out customs forms reduces your margins significantly.
  6. Re-evaluate your customers regularly. Weed out the time consumers—those customers who consume more time than their custom is worth. Profile your best customers (those who re-order regularly without repeat advertising) and use your time to find similar profiles.
  7. Do not accept payment via Western Union, check, or money order.
  8. Raise wholesale minimums to 12-100 units and require a tax ID to weed out the ammatures.
  9. Refer all potential resellers to an online order form. Never negotiate pricing.
  10. Offer low-priced products instead of free products to avoid time-eaters (people who will not buy the product).
  11. Offer a lose-win guarantee instead of free trials.

Make your customer base an exclusive club and treat the members well once they’ve been accepted.


[edit] STEP IV: L IS FOR LIBERATION

[edit] 12. Disappearing Act—How To Escape the Office

The new mantra is: Work wherever and whenever you want, but get your work done. More and more companies are finding the economical advantages of ‘sending their employees home.’ While this is a possible goal, our primary objective is to totally own our own time and our own lifestyle, particularly if our job is not the highlight of our life.

There are several fears that keep people from leaving their jobs and setting out on their own. There are also reasons to overcome those fears.

  1. Quitting is permanent. Nope. It is quite possible to stop and later pick up a career. People do it all the time.
  2. I won’t be able to pay the bills. Since this is all about cash flow, the objective is to create a new cash flow BEFORE alleviating the old one. If you do leave before you are completely secure in a new flow, there are ways to survive.
  3. Health insurance and retirement accounts disappear if I quit. Again, nope. Health insurance can usually be purchased for about the same amount you paid through your employer and retirement accounts can be transferred with a few phone calls.
  4. It will ruin my resume. Many resumes have gaps, for one reason or another. Further, many prospective employers, while not appreciating a person who sat on their butt for six months, do appreciate employees who had the nerve and initiative to do something different.


[edit] 14. Mini-Retirements—Embracing the Mobile Lifestyle

When you have eliminated and automated, it’s time to explore your dreams. “True freedom is much more than having enough income and time to do what you want. It is quite possible—actually the rule rather than the exception—to have financial and time freedom but still be caught in the throes of the rat race. One cannot be free from the stresses of a speed- and size-obsessed culture until you are free from the materialistic addictions, time-famine mind-set, and comparative impulses that created it in the first place.”

A mini-retirement is NOT a vacation. It is not subject to time limits—you are automated, there is no office to get back to. My personal philosophy is that life is learning and my enjoyment is learning about the world. I travel. I immerse myself into a location for as long as it takes me learn what I came to learn. I have found, too, that a six-month sojourn to, say Germany, is actually less expensive than the same time spent in the United States—with much more luxurious accommodations and activities.


[edit] 15. Filling the Void—Adding Life After Subtracting Work

You have the money. You have the time. Why are you bored? Several reasons. First, the office is a social setting and you no longer have that ‘stand by the water cooler’ interaction to surfeit your need to communicate. The office provided direct, understandable, predictable tasks to fill your day. The office eliminated the infinite choices you now have available to you.

The New Rich overcome this through the pursuit of either knowledge or service. Travel, go to school, learn to dance, scuba-dive, knit, or become a chess master. It does not matter as long as it excites you and fills you with the satisfaction of time well-spent. You can pick a cause. Don’t just donate money, donate yourself—volunteer, organize, build—just as long as it excites you and fills you with the satisfaction of time well-spent.


[edit] 16. The Top 13 New Rich Mistakes

  1. Losing sight of dreams and falling into work for work’s sake (W4W).
  2. Micromanaging and e-mailing to fill time.
  3. Handling problems your outsourcers or co-workers can handle.
  4. Helping outsourcers or co-workers with the same problem more than once, or with noncrisis problems.
  5. Chasing customers, particularly unqualified or international prospects, when you have sufficient cash flow to finance your nonfinancial pursuits.
  6. Answering e-mail that will not result in a scale of that can be answered by a FAQ or auto-responder.
  7. Working where you live, sleep, or should relax.
  8. Not performing a thorough 80/20 analysis every two to four weeks for your business and personal life.
  9. Striving for endless perfection rather than great or simply good enough, whether in your personal or professional life.
  10. Blowing minutiae and small problems out of proportion as an excuse to work.
  11. Making non-time sensitive issues urgent in order to justify work.
  12. Viewing one product, job, or project as the end-all and be-all of your existence.
  13. Ignoring the social rewards of life.

[edit] THE LAST CHAPTER

There is nothing the busy man is less busied with than living; there is nothing harder to learn.

Seneca
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