A friend sent me this quote the other day:
“Diversification preserves wealth. Focus creates it.”
His interpretation: diversification is for the rich. Focus is for the soon-to-be rich.
This surprised me when I learned about it. Surely the rich are just trying to get richer?
What Most Rich People Do
Years ago, I spent a summer interning at a family investment office.
A “family office” is typically when someone earns a ton of money and sets up a legal vehicle to invest the money or have someone else invest on their behalf. Often, one or more descendants will work there, too.
I learned a few things there, but my biggest surprise was that rich people usually aren’t trying to get richer.
Instead, rich people are trying to protect what they have.
Don’t Ask Rich People What They Do With Their Money
Most aren’t trying to do anything interesting with their cash. If you have a lot of money (I’m talking multi-millions) it’s much, much easier to grow that “easily” compared to when you have nothing. Getting 10% growth on 10 million is a million a year. The same on 10k is a humble 1k.
Same effort, same rate of return, different world.
Once they get money most people aren’t hungry anymore. There’s nothing wrong with that—but you can’t follow their advice if you’re hungry yourself.
More interestingly, you can ask them what they did or how they thought about money before they go it.
Put it another way: don’t listen to experts, but watch what they do.
This creates a conundrum: rich people aren’t hungry or have the same objectives, yet poor people obviously haven’t figured it out yet.
So what do you do?
My personal answer is a combo of observing the wealthy and finding hungry people.
I’m less interested in someone’s net worth than I am in their trajectory. It’s like how one would think about an investment or market opportunity:
- If someone is poor but growing 100% YoY, I want to know what they’re doing.
- If someone is loaded but is also growing 50% YoY, I also want to know what they’re doing.
- If someone has 30 million but is growing 5% a year, I’ll pass.
When It’s Time to Grow Your Money
If you’re poor, it’s time to grow. If you don’t want to stay poor, then you don’t have much of a choice in this.
Growing means leaving comfort, committing to challenge for a period (weeks, years), and then re-emerging with a prize.
It’s like a mini hero’s journey.
You’re going to go down a little bit in the beginning—spending time, money, or just energy without immediate results.
People that give up in the middle are those who did not commit ahead of time to pushing through it, or they didn’t understand this was an inevitable part of the process.
If you don’t have to sacrifice and learn or earn something on the way, then why would you expect any different results?
Focus is Not Optional
You’re allowed to have other interests, but not if it steals your focus. 99% of us are not built like Jack Dorsey, running multiple billion-dollar companies. Twitter was a side project for him and he got lucky with it. Very smart and hardworking guy, indisputably, but also lucky.
Even Zuck wasn’t trying to make Facebook huge. The early founders thought FB was going to be the warmup company they sell to someone else and then do the “real thing.” But because they executed so well, it became the real thing.
For people like me, I have 10,000 things I want to do. I can’t do them all (yet).
If I want any of them to succeed, I have to do one at a time.
If You Want to Get Rich, Say No to 1000 Things
And say a resounding yes to one.
I’ll end with a lines of my favorite poem:
If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss…
If you want to grow, commit to focus.