On a purely materialist level, the three resources we’re all struggling for are money, power, and status.
If you have one, you can leverage it to get the other. If you don’t care about one or more of these, you are immune from its allure—but you still need to be aware of its role if you’re trading with the other two. It’s not too dissimilar to the investment rule of three: it’s all about tradeoffs.
This is all a game.
You do not have to play this game yourself. But if you want to be rich, you ought to understand it.
I know this sounds a little vague and abstract, but let me give a few examples.
All Money, No Power or Status: Hedge Fund Manager
You are a hedge fund manager with $100 million AUM. Not bad.
It’s not your money of course, but since it’s under your control, what’s the difference?
When you have money, you wield influence because other people want your money. The smart way to wield it is to give it to people who will get you more (AKA normal investing). People will trade money for power or status—sometimes as an end to itself, and other times to open more doors to get money later.
For example, buying a membership to a club might be an indulgence for someone who dreamed of getting into that club for years. For others, they strategically buy membership as a way to expand their network and elevate their clientele.
That’s buying status.
An obvious example of lobbying a politician or doing a leveraged buyout of a company is a way to buy power. Warren Buffet famously (and regretfully, in his words) bought Berkshire Hathaway just so he could fire one executive he hated. He regrets his decision because he says he probably lost out on a few billion in opportunity costs.
Nevertheless, is there a clearer example of buying power?
All Power, No Money or Status: Politicians
Politicians don’t make nearly as much as one would expect. A congressman earns around $174,000, with elevated positions (such as speaker of the House) earning $223,500/year.
Spoler alert: Nancy Pelosi does not earn her real money via her salary.
While there is legislation at the moment to curb politicians investing in stocks while in office (which I support), this isn’t the point. It’s more so how any position of power has opportunities to earn money on the side.
Notice the above chart is a very bipartisan picture of elected officials crushing the benchmark.
They know the game. That’s how they got in office.
All Status, No Money or Power: Celebrities
“Noooo, they have tons of money!”
Less than you might think.
Why does someone work for 10 years as a nobody musician performing in dive bars for $100/night? Because there’s still status, even if you’re poor.
A musician running at a loss has more status than a software developer running $100,000/year profit. That’s not saying it’s good to be one and not the other. I’m just pointing out facts.
Of course, status can lead to money. That’s the ideal. But there is a clear order it happens in.
A start football player has incredible amounts of status before they get paid for it. Pay is a lagging indicator. Simply compare the pay from endorsements vs actual winnings/league pay and you’ll get the picture.
Real money comes from ownership, even if you’re banking bank off your status. Sean Combs/P Diddy earns way, way more from his vodka sales (and before that, his music label) than from his songs—and he was topping the charts.
You Are Managing All Three Resources
Maybe you don’t care a lick about status. You just want money.
Cool, status can help you get there. With a even minor celebrity, you can avoid ever having to pay for marketing ever again.
RELATED: You Are a Media Asset
Becoming friends with the right CEO can mean you have a customer or not (or a respected board member, leading to getting funding from that venture fund you’re courting, etc.).
It’s all a game. If you don’t want two of the three, that makes the game 100x easier to play, because every bit of resource you gather in fame or or status can be leveraged towards your real goal of money.