Why The First $100k is the Toughest | Charlie Munger Secrets

What's going on everyone? I have a special podcast episode for you today. What I want to break down is a conversation I was having with a different friend about how a hundred thousand dollars is the hardest amount of money to earn. I was actually talking to him, he's starting his physical therapy, uh, clinical practice right now, um, and he, he, he, you know, he's eating for lack of a better term, you know what I mean, like he's just trying to figure this out and the thing is. is that a hundred thousand dollars is the hardest amount of money to make for a variety of reasons and that's not me, I'm not the

first

person to say that

charlie

munger

said who is warren buffett's business partner said that the

first

hundred thousand dollars are a it even says it's a quote, you can look it up, but anyway, there's a bunch of reasons why I wanted to look into it.

The first is the most important, which is when you set the goal at one hundred thousand dollars, you only think about opportunities of one hundred thousand dollars, right? And what I mean by that is you're not like I told you, hey, you need to make 10 million dollars, you can't 100. great your path times 100 to get there well, you have to think of a different way of operating and doing business to make 10 million dollars right because at that point you know you can't sell your time like it's not going to work out well. you have to do something else, and inherently, when someone puts the restriction on themselves of "I want to make a hundred thousand dollars," they automatically only limit themselves to vehicles where they have to sell time for money, which is inherently restrictive, so It's a right, it's difficult because you literally have to sell your time to be able to do it.

That being said, most people who have made millions started with something that made them a hundred thousand dollars and I will tell you personally the first hundred thousand dollars that I put into my bank account was by far the most significant of all the money I have ever made. won in my life. I remember when I looked at Layla and I had a hundred thousand dollars in my bank account after all. I remember seeing her and telling her everything is going to be okay, we have three and a half years of money now and if we mess up for three and a half years we will still be okay and I remember feeling that sense of relief and the reason I think it was so shocking is that the difference between zero or let's say the difference between a thousand dollars and a hundred thousand dollars is an increase of one hundred x for me to have the same 100x increase that I would have to go from 100,000 to 10 million in my bank account to have the same proportional increase in terms of security and I'll tell you that even after 10 million in my bank account, I still didn't feel as good as the first hundred thousand, okay? and then no matter where you are, I'll tell you if it's hard right now, it's normal, it's supposed to be hard, but it will get better because you'll start thinking differently right now, back to the original.

The thing about why 100,000 is the hardest money to make first is thinking about time vehicles, time vehicles for money, the second is that you have no leverage, so what I mean by this is that inherently all companies arbitrage the right thing you are buying and selling things for less and you are making a difference if you are in a service business, I am buying labor from people and selling it at a higher price in the market because I see the discrepancy between that and I can adding value to a person by training them in certain ways or putting them into a system and then the sum of the individuals or sorry, the sum of the whole is greater than the parts, right, that's essentially what it is, but when you don't have money you have no influence over anything and therefore you have to do everything yourself and again it takes a long time to get small amounts of output and so you are really inefficient because you have to do it and you also have to use everything. hats you have to learn every aspect of the business to really make the first dollar and that takes time and it takes effort, a lot more effort than you think will be right and then once you finally figure out how to make the first dollar you have to keep repeating that action over and over again until you have 100,000 in your bank account, but once you have it, you can start paying people to do things that you can start paying for, you know, advertising and You're not worried about pay the rent or what happens is that now you start to get the big word that is leverage, you can, you can, you can move the world much faster because you can have 10 people doing the outings for you, you can pay a team to do advertising for you, you can set up a video or whatever that gives you a higher ROI or makes your stuff look better and gets more, you know you're going to get more engagement or whatever, but the thing is that first hundred a thousand dollars is very difficult because the vehicles that exist for it require all your effort if you are doing sales correctly you are working all the time if you are doing a job you are working all the time if you know it If you would like to drive uber to earn 100 grand , you would probably work 12 hours a day and it would take time, but the thing is, once you do that, even if you can, you can start breaking up parts of your day and do it the other way around. order of the value you can acquire for that same skill on the market, so let me delve into that for a second.

Let's say in your business you could be doing 15 different things, but you might find that the administrative work of scheduling um and answering the phone may be the least valuable, it may not be what it is, but let's say it is and let's say that in the market you can buy that skill for ten dollars an hour and what that means is you can get it. Let's say four hours of your day for ten dollars an hour and now you have four more hours and if you can make more money in those four hours and this is a key point, I also see it as a mistake, people will outsource certain work that they are doing, but they won't replace time with higher value skills, so basically they just pay people and then they stop working and make the same amount of money, which can be great, but if you want to grow, then you're going to need to continue working and do every more and more value, higher leverage, time at the time you buy back correctly, but fundamentally when you think about your business, what would it take me to make a million dollars?

For me to make 10 million dollars, think about different vehicles to get there and if you don't know the vehicles, I highly recommend you look at the vehicles that already exist, so one of the things here is an interesting nugget for You: There is no reason for anyone in the United States to make less than $25 an hour, because in one day you can get a certification and become a phlebotomist and make $25 an hour, so who wouldn't take one? day education to triple their minimum wage income, who wouldn't do that? The reason people don't do it is because they don't know that people are ignorant, right?

So if you're watching this and you didn't know that. They even existed, there are so many other opportunities that are so you can immediately get more influence in the time right when you're starting out, so if you're working at a job and you're not doing it well, then leave. look, look for little opportunities, look for little mini certifications that you can get that will qualify you. For now, only get a certification if necessary. If you're like, oh, this is safe, don't worry, but if you can find. these small opportunities you know, I'll tell you my plan b, if my business was going to fail, I knew what I was going to do was drive Uber and get naked at night.

It was going to be my 100 job because I knew that if I drove super 12 hours a day and got naked for four hours every night I could make like 200 grand and I knew that even if I started from scratch I could do it again and try and try do again well and the thing is that as your skill set increases, the base level of your building, as I like to think of it, is your skill building, the base level, your basement. It continues to go up and therefore the level you can drop to continues to get higher and higher, so once I learned how to sell, I knew I would never make less than 250,000 a year because I knew I could always do it. go to a car dealership and sell cars no matter what you could go sell cars and make 200 300 400 000 a year.

I knew it because I had that skill and that means that from now on in my life I will never earn less than That's right, but then I learned how to market and as soon as I learned how to market I knew that that would be my problem because now I could take my sales skills and combine them with marketing and then I could generate demand at will. and then that means my new level could be 3 million a year which I will never earn less because I have the skills that even if I have to start over I can end up there and the thing is if you think about your your journey as an entrepreneur in terms of a set of skills by accumulating all you are doing is acquiring skills and putting them in your back pocket put them in your toolbox at that point you become inherently more valuable and stop seeing your failures as failures but rather as lessons along the way where you're trying to get to because you inherently become more valuable because your work works on you more than you work on it, well, I'll say that again your work works on you more than you work on it and So, even if You didn't make a hundred thousand dollars the first year, okay, because you developed a fundamental skill set that maybe got you over 50,000 a year, but as long as you keep gaining skills, that baseline will increase and the speed at which you move up will be the volume you do, so volume of work for a specific skill with deliberate effort will improve your skill set.

Now you can do it faster or slower depending on how fast you learn the skill, but you still have to learn it and usually there is a certain amount of volume that has to happen, which means there is a certain amount of time, but then how do you do it? Some people acquire skills faster than others? Some people are more deliberate with their practice. Some people get mentors and experts who nurture them. in them every valuable skill that I have acquired in my life I have paid someone to acquire it so I can get it faster, so if you say, well, I don't have money, then make the value high, make the leverage do the work of shit now make the first 100,000, that's doing that job now you have to trade part of your life for money and that's okay, that's why I have a saying: "you can't be busy and broke." right, you can't be both, if you are busy you should be making money, and if you are broke you are not busy, which means you have time, so you can always trade time for money, right, if you have more money then , but you're busy all the time, so you can trade some of that money to get some time back, but you can't be busy and broke, so think about that and if you feel like it.

They're busy and broke, I guarantee they're wasting a lot of time, so anyway, closing this loop with a hundred thousand dollars is by far one of the hardest amounts of money to make because we think about it only in vehicles of time. and for many of us it's the first thing we have to do, so just bite the bullet, do it and then you can start leveling up your skill set, you can pay for skills, you can pay for them, to make things happen more fast for you. You can pay other people to do some of the lower-value work that you are doing because they are at an earlier stage in their journey, so you can buy them time that is less valuable than yours and continue working and building the foundation of that. building that eventually becomes a skyscraper of your skills and then you will have the perspective to identify the 10 million, the 100 million, the billion dollar opportunities and take advantage of them because at this point you will have the skills necessary to make it happen.

So anyway I hope it was valuable to you. I hope you're having an amazing day. See you in the next video. Bye bye.