💰What Relativity & Treadmills have to do with money

I started this week with an $1,800 medical bill in the mail… which means I’ve been thinking about money a lot lately. In the entrepreneur space, there’s no shortage of advice, thoughts, and “best practices” about money (one of my favorites to learn about how entrepreneurs think about money is Sam Parr’s MoneyWise podcast).

There are two mindsets that I’ve been finding most interesting recently because while they’re similar they also contradict each other:

1. Relative Money - much like the proverbial frog in heating water, it’s easy to become comfortable at a new level, but more interesting to me, once you’re at a new level it is “easy” to see other ways of making similar amounts of money

2. Hedonic Treadmill - “is the observed tendency of humans to quickly return to a relatively stable level of happiness [or anxiety] despite major positive or negative events or life changes” (wiki)

Relative money

The book Never Enough by Andrew Wilkinson came out on Tuesday and as part of the “press tour” leading up to the book launch I listened to a few interviews with Andrew on podcasts. In his interview on My First Million, Andrew breaks down the four big level-up changes that he went through as an entrepreneur. For example, the first level-up was going from making $6.50/hour as a barista to $50/hour as a web designer (in case it matters, he’s a billionaire now).

As he reached new levels he started seeing new opportunities to create businesses that had the potential to make similar amounts of money to his new level. The ideas he was willing to try out became relative to how he evaluated what was successful enough to be worth his time.

On a podcast a couple of months ago I first heard about the concept of relative money (sorry don’t remember the pod exactly, I think it was on My First Million tho) and they pointed out the opportunity this mindset creates is that you can “break” your brain to start thinking about the level above where you’re currently at before you get there.

If you’re comfortably making $10k per month, it’s common to think about how you can make 10-20% more (an extra $1-2k per month). Because that’s usually just putting in more effort, or taking on an extra client or two each month. But most of our brains have no idea how to compute what our businesses would have to do to make 5-10x more (going to $50-100k per month). That kind of change is literally impossible by “just doing more”.

Looking at Andrew’s first level up, it was impossible to make $50 per hour working as a barista. In his words, he realized he wanted to be the person sitting at a coffee shop drinking coffee, not the person making the coffee.

Start asking yourself this question every day; what do I / my business need to do to 10x my current income? Eventually, that way of thinking becomes your “relative money”, even if you’re not currently making it (yet). At that point, you’ll start seeing opportunities at the next level that you never would have considered before since you’ve rewired your mindset. It might take a few weeks…

I’ve been on and off asking myself this question since I learned about it a few months ago, and one of the biggest limitations I found myself coming back to was time. It’s would be impossible for us to do 10x the number of branding sessions (we went deep on the private pod about Jo’s burnout last month). This then raised the question; what does our business look like if it’s still focused on photography & our community, but not limited by our 1:1 time?

A few of the options that I thought about:

1. Associate photographers - we could train people to deliver sessions on behalf of our brand, in our style (biz model: profit share of client work) - but that’s basically running an agency, which it turns out is a lot of work that we don’t love

2. Educating photographers - we can teach other branding photographers multiple at a time (biz model: coaching & group program) - we’re definitely leaning into this route right now

3. Build a place for clients to find vetted branding photographers - I’m actually still really interested in this (biz model: subscription, advertising fees, or successful matching fee… honestly so many options) - haven’t ruled this one out yet (open to ideas if you’ve got any)

Hedonic Treadmill

Coming from a lower middle class family Andrew grew up hearing his parents fight about money on the regular. Andrew for a long time had a belief that once he was making “enough” money he would be happy. Enter the Hedonic Treadmill, he soon realized that it only took a short while to acclimatize to each level and then he would be stressed about money again.

In his book Million Dollar Weekend, Noah Kagan talks about the importance of having a “freedom number” or “the amount of money you need to be earning on the side to quit your day job comfortably”(X). It’s a really good exercise to think about before going full-time with your business. It’s also helpful to remember what goes into your freedom number when you start getting to new levels and comparing yourself with other people at your new level.

Andrew spent millions of dollars on things that didn’t end up bringing him much happiness just because other people had those things. In Never Enough he talks about how once he was a millionaire he started researching and watching videos on the best expensive watches, not because he liked them, but because other millionaires cared about expensive watches.

For me, I’ve tried to start thinking from the point of view of what are the things in my/our dream life that would be enough, before putting numbers to it. Based on the dreams that Jo and I have, how can we write them all down. Then we can build an accurate 3 tiered goals system based on what’s (1) the minimum (freedom number), (2) comfortable number, and (3) moonshot/stretch number specific to us and what we care about, not some arbitrary metric that we saw on social media (or what a friend achieved).

Do either of these mindsets pay my $1800 bill? Sadly no. But they do help set us up to build a path forward that is realistic to what’s important to us.

What’s interesting to me is that these two are both great mindsets (in my opinon) but generally they can’t both be “right” at the same time. I’m busy learning when it is best to selectively view a situation in a specific mindset when it better equips me to make a good decision.

In case you’re a book nerd like me, I preordered Never Enough and read the first 100 pages on the day it was delivered. I’ve been really enjoying it and so far I’m probably giving it a 5/5. It’s almost completely memoir/story-based, but I find myself learning as he learned though out the story of his life.

Do you have a favorite money mindset? Hit reply and let me know.

Lyndon

Go Deeper on recent emails:

Two weeks ago I sent out an email subjected “Did you lose yourself?”, based on two car YouTube channels Hoonigan & Donut that had onscreen talent leaving. It’s interesting that Linus of Linus Tech Tips (one of the biggest tech YouTube channels) talked about the same thing from his perspective of turning down an option to sell his channel a few years ago. In case you wanted to go deeper on the topic.

Last week we chatted about the stories we tell. Yesterday YesTheory, one of my favorite community-based travel YouTube channels put up a video called “a new beginning”. As they’re getting close to their 10th anniversary they’re sharing about how they’ll evolve in the next decade. They did this by telling their story: how they started, the three phases of their channel, how their first decade was about building a digital community, and how their goal now i to build a physical in-person community. This teased an idea, brought everyone up to speed no matter when they started following, and created enough curiosity for them to ask people to take an action - fill out a form for them to put together small get-togethers in cities across the globe. I thought it was a great example of storytelling.