I’ve been around the tech business world for the better part of the last decade. It’s a fascinating area with enormous growth and innovation. In many different ways, the tech world can teach you some important lessons about building wealth.
Companies build their products today with amazing efficiency. There’s an entire lean startup movement designed around executing on all the right things and ignoring the noise.
The best companies take years to build. Yes, there’s a little luck involved – just like wealth building. However, with extreme discipline and focus, the best companies find a way. They follow a process over many years.
That’s how you build wealth. You build a process into how you live. You budget, track spending, spend less than we earn, and invest wisely. By following that process and staying discipline, you slowly build wealth.
But how do you stay focused along the way? How do you avoid losing sight of the ultimate goal?
The answers are complicated if you try to come up with them on your own. Instead, you can look to successful companies and find lessons in how they behave.
When a company like SpaceX runs into complete rocket failure, how do they respond?
A financial services firm lost $440 million due to a software glitch. When one of your investments takes a nosedive, do you let your emotions take over?
That’s what I hope you find here. These are lessons from some of the world’s top companies.
Best wealth building lessons from big business
1. The journey is important
Imagine you’re driving through your neighborhood.
You’re taking your time and looking around, seeing what your neighbors are up to. You notice your neighbor Joe mowing the lawn. The couple down the street is putting up a fence in their backyard.
One of your neighbors even bought a fancy new car. In your mind, you comment on how nice it looks and imagine what a new car would look like in your driveway.
Take a minute to think about everything you would see driving down your street.
Now imagine doing the same thing, but driving 100 mph. It’s a different experience, eh?
In life and in business, the journey is usually more important than the end result. We can set goals, but if we drive so fast we miss everything around us, is it worth it?
If you want to be a millionaire someday, do you want tunnel vision? If you do, you’ll forget about your family. The only thing you’ll think about is the million dollars.
2. If you fail, fail fast
Facebook and fellow tech companies are famous for the “Fail Fast” mantra. Even Thomas Edison was famous for saying, “I have not failed. I’ve just found 10,000 ways that won’t work.”
The software world is full of failure. Startups come and go faster than popup shops in New York City.
But they embrace failure. Failing is considered a great learning experience. If something isn’t working, it’s better to stop and reevaluate than waste years and years of your life.
Whether you’re investing in the stock market or teaching yourself how to budget, if you don’t think something is working – stop. Step back and take a minute to reflect. Is this working?
If you’re not succeeding, stop and try something new.
Related Reading: You might think you have a perfect retirement savings plan. Think again.
3. The shit will hit the fan
No matter how hard you try, things will go wrong eventually. You can’t hit a home run every at bat. Sometimes you’ll strike out.
Just look at SpaceX, the private company sending supplies to the space station. Their rockets have failed numerous times.
It’s important to realize you’ll face adversity too. That adversity will show up when you’re least expecting it.
As long as you’re ready, you’ll be fine.
Recognize that your journey to financial independence won’t come without road bumps. You will experience major losses along the way.
Emergencies will come when you least expect it and they’ll test your resolve. The best you can do is be prepared and handle it with grace.
4. Iteration is the key to success
Facebook has spent years perfecting the social network. They don’t always get it right the first time.
Just think about how many times the news feed has changed.
That’s the lesson you should be learning here. You should be constantly improving your financial systems.
Get better at budgeting. Improve your investing. Master your savings through new experiments.
Take for example Chris from Keep Thrifty. In 2017, they’re promising a full year of buying nothing new. That’s the essence of iteration.
You may get started on saving by avoiding fast food or becoming a better grocery shopper. Then, you might cut out excessive spending on coffee and soda next year.
Finally, as you become a master of saving money, you promise to completely avoid buying anything new. That’s how you succeed.
Facebook hasn’t become the #1 social network by pure luck. They’ve consistently improved over the years through rounds and rounds of iteration.
Learn from them. Improve your life again and again until you reach your goals. If something isn’t working, try something else. Be willing to change.
5. Look to your past and think, WTF
At some point in your life, you’ll look back on your life and say, “What the hell was I thinking?” It’s inevitable.
Just look at some of these websites you know and love today. Here’s what they looked like years ago.
Your life probably looks similar. I know mine does. I’ve messed up a lot along the way.
I’ve made mistakes financially that I wish I could go back and correct. But that’s not how it works. We can only live and learn.
Reflecting on your past is a good practice, but don’t let it consume you. We can learn a lot about ourselves by turning around and seeing how far we’ve come.
6. Anything that can go wrong, will go wrong
I promise you: Everyone has to deal with random emergencies. It will happen. There’s no way to avoid it.
Expect craziness in your life. Life will throw sticks into the spokes of your bicycle wheels. You will fall off the bike every now and then.
It’s not the end of the world.
Just look at Knight Capital. In 2012, a software glitch caused them to lose $440 million. A new high frequency trading algorithm had a bug in the code which resulted in millions of losses.
You will have bugs in your own code and sometimes they’re out of your control. You can’t control when people die and you can’t control when the market will nose dive into recession.
Just realize you’re not alone in this situation. Warren Buffet has made it through recessions and massive losses.
If you stay the course and prepare yourself for anything, you won’t get stressed in these situations. You can handle them as an adult and live to see another day.
7. Measure everything
Every website you use tracks your visits, your location (to a point), what pages you view, and how long it’s been since your last visit.
Have you ever browsed some products on Amazon and notice how they follow you around for days? For example, if you were shopping for a new pair of shoes, Amazon will seemingly follow you around for days throwing those shoes in your face.
In a way, it’s kinda creepy.
However, you can learn a lesson from that creepiness.
Track everything about your finances. Track your spending. Keep a tally of how much money you’ve saved. Build a leader board and try to break your previous records.
Did you save $1,000 one month? Write it down and use it as motivation to save $1,100 in the future.
Keep a budget for everything. Track every dollar that exits your bank account.
If you see something you aren’t tracking, start tracking it. You never know when you’ll find something useful down the line.
8. The people are more important than the product
It doesn’t matter if your product is amazing and your customer service sucks.
Just look at Comcast. Most people would say their product is pretty good. They provide adequate internet and their television services have mostly kept up with the times.
Then there’s their infamous customer service and how they forget to appreciate current subscribers.
Successful companies focus on their relationships with customers.
Just look at the story of Zappos. New employees to the company get seven weeks of training on how to make the customer happy.
Zappos is known for going above and beyond. They even sent flowers to a woman at one point.
Much like how Zappos treats their customers, don’t forget about your family and friends. If the product is a million dollar retirement, try to realize the people around you are more important.
That’s not to say you shouldn’t strive to become independent in your finances. It just means you should recognize why you’re doing it. If you lose special time with your wife and kids because of it, are you really successful?
9. It’s not possible to set it and forget it
People talk a lot about automating your finances. We tell you automatic bill payment and automatic payroll deductions are the keys to saving money.
On top of that, if you do those things, you can set them up and forget about it. You’ll be a millionaire in no time, right?
There are very few things in software that you build once and reap the rewards.
Just look at Facebook. Did Mark Zuckerburg build the first version and stop working on it? Absolutely not.
To be successful with anything in life, you have to work at it. Fine tune it. If it’s important to you, you’ll tweak it and find new ways to make it better.
You can’t setup automatic contributions to your retirement accounts, stop paying attention, and expect to be a millionaire in 25 years. It just doesn’t work.
Do you have to watch your portfolio every day? Probably not. Should you be reviewing your progress at least once a month? Definitely.
Achieving financial independence will take your time and hard work. You’ll have to stay focused and make it an important part of your life.
10. You can’t make everyone happy
When you build software, you try your best to solve problems for people. You work hard and spend countless hours to build the best product you can think up.
Then you send it into the world and expect that everyone will love it.
Except that’s not how it works.
Some people will hate it and they’ll tell you about it. There are trolls everywhere. They’ll complain and tell you how much your product sucks – even if they didn’t pay a dime for it.
Have you ever ventured into the comments section on YouTube?
That’s how it works with your financial life as well. People will tell you how it’s impossible. They’ll try to project their own life experiences on to you. Since they aren’t able to save money, you’ll never be able to save money either.
If you tell your friends you’re skipping the bar to save money, they’ll throw small jabs at you and sometimes they’ll even be mean.
If you succeed at increasing your income, your friends might be jealous.
Your path to financial independence won’t be all rainbows. Watch out for the haters.
11. Your first plan might not work
There’s a ton of advice out there. You might even use it to develop your first plan toward financial success.
But it might not work.
There are plenty of stories of software products completely changing their strategy.
Here’s a famous one you might know: Pinterest.
In 2010, Pinterest was known as Tote – a shopping app complete with price comparisons. People shared their favorite products and other people could browse and buy them.
Tote didn’t catch on as much as the company wanted, so they changed their strategy. That new strategy was Pinterest – a startup that’s still achieving massive growth today.
Take a lesson from Pinterest and don’t be afraid to change. Your first plan toward financial success might not work.
As long as you continue evaluating your plan, you’ll see new ways to adjust it. Take those opportunities and don’t look back.
You might find your own Tote to Pinterest story. With a successful pivot, you could end up retiring five years earlier than planned.
Watch out for those opportunities. Stick with your gut and if something isn’t working, don’t be afraid to change it up.
12. Get ready for the peaks and valleys
Even if you plan everything, I guarantee you’ll have peaks and valleys.
Humans are special. We have emotions and we’re not always happy go lucky every day. Our moods are effected by the weather and that depressing movie we just watched.
A great example in the business world is General Motors.
General Motors was the cat’s meow. They dominated the automotive landscape for years. In 1970, they owned a staggering 60% market share in the United States.
Now, the market share of General Motors has dropped to 16.8%. Even worse, they needed a bailout in 2008. Talk about a valley.
After the bailout, General Motors has rebounded to profitability. The company is paying out a profit sharing check of almost $11,000 in 2017.
When you look back on your financial journey someday, you’ll notice those peaks and valleys. You aren’t going to post massive returns year after year.
Eventually, you will lose a bunch of money through an emergency or simply the stock market rearing its ugly head. And that’s ok.
As long as you handle those valleys with logic and not emotion, you’ll be fine. Prepare for the worst and hope for the best.
Companies can survive through tough times and you can too.
13. There’s no such thing as overnight success
A few years ago, everyone was so hyped up about Angry Birds. The media dubbed it an overnight success.
Except Angry Birds was far from an overnight success.
In reality, Rovio had spent 8 years in the business until their Angry Birds game gave them success. That’s right – Rovio launched 51 games, all unsuccessful, until they starting to smell a hit.
That’s how you should think of your own finances.
You aren’t going to be a millionaire after one year. Through years of planning and discipline, you might still fail.
But one day, you’ll find your ultimate success. Rovio spent eight years learning how to build games until it finally culminated in a massive victory.
Stick with it. Learn as much as you can about budgeting, saving, and investing. Apply new knowledge as you learn it and learn from your mistakes.
Someday, you might have your overnight success. People may think you hit the lottery or get paid too much. Deep down inside, you’ll know you put in years of hard work and discipline to get to where you are today.
14. The barrier to entry is lower than ever
In the technology startup space, companies can be created out of thin air. You don’t need massive amounts of money to start your business today.
In the past, that wasn’t always true. To start a tech company, you needed massive amounts of capital to get off the ground. Years ago, servers weren’t cheap and the web wasn’t as mature as it is now.
Just look at Instagram and the dating website Plenty of Fish.
When Instagram was acquired, they only had 13 employees. Yeah, that app you’ve been using for years, it was created and run by 13 people.
Then there’s Plenty of Fish which I’m sure some of you have used. It was a dating site envied by the likes of Match.com.
Famously, Plenty of Fish was run by one person for a long time. (By the way, after ten years of courting, Match.com finally purchased Plenty of Fish for $575 million in cash).
I’m not saying it’s easy. I’m just saying it’s getting a lot easier.
We live in a time where you can find education for free. There are YouTube videos teaching you how to fix your toilet and your sink. There’s an entire website, Khan Academy, dedicated to teaching the world about every subject known to me.
That’s why we are progressing so fast. Each of us gets to learn about investing, hacks to save money, and ways to retire early.
We get to connect with others and share our stories. Every day, it’s getting harder and harder to find a valid excuse.
We can fly across the world for a fairly cheap price when you think about it. There are all kinds of books about personal finance at your local library. You can literally read about anything you desire.
Not many secrets exist anymore – and that’s great for all of us. The stock market isn’t this super secret club anymore. Hell, you had to CALL your broker to trade stocks and mutual funds back in the day.
Now, I can sign up for a retirement account in 3 minutes and my money will be in the market a few days later. That’s how easy it is.
15. Just build a damn prototype
Sometimes we take far too long to dive in. Wannabe bloggers plan their blogging strategy for months before they start writing.
People think about starting their own business for years before taking the plunge. They tell themselves that everything has to be in order before they begin.
The best people in the software world just do it. Perfect is the enemy of good.
Much of what you see on the web started as a tiny side project or because someone solved a problem for themselves. Only then did they launch the product to the entire world.
Take a lesson from some of the best software people in the world: just build a prototype and see what happens. Just look at these early iPhone prototypes from Apple.
In other words, just start saving money. Do whatever you know best.
If you have a savings account, start putting money there. If you know how to use Excel, create a budget.
You don’t need to find the perfect strategy start.
Over time, you’ll learn more. You’ll find better tools to improve. Many retirement accounts require a minimum of $1,000, $2,500, or sometimes even $10,000 to get started. Don’t let that hold you back.
Saving $50, $100, or $200 is enough of a good start if that’s all you have. Just do it. Make it happen.
Don’t let perfect hold you back from ever getting started. We were all beginners at some point in our lives. The sooner you get started, the sooner you’ll become an expert.
16. Throwing more money at a problem doesn’t always work
In 2011, the infamous app Color bought Color.com for $350,000. In total, the company received $41 million in early-stage money.
Some of you might know nothing about this and that’s the point I’m trying to make.
No matter how much money you have, sometimes you just can’t solve the problem. You might be trying to throw money at something that simply isn’t going to work.
If you purchase a stock, it might be doomed to fail. No matter how much money you put into that stock, you might be destined to lose it all.
That’s the important thing to learn from Color about your personal finances.
You might think you have a great idea to make a bunch of money. You might think you can beat the market with your amazing strategy.
And sometimes it just doesn’t work out that way. You might be invested in the best company in the world, but the company takes a nosedive because of some outrageous accounting scandal.
Some things are simply out of your control. As humans, we like to think we can control everything around us – we even think we have total control over our success.
Instead, there’s usually a small factor of luck. If the dice don’t roll your way, you might be setup for failure even though you’re doing everything else right.
17. You’re only as strong as your weakest link
In 2008, the Tribune Group declared Chapter 11. They neglected the rise of the internet for years and couldn’t recover until it was too late.
Online advertising was starting to eat into the company’s revenue. It was an obvious weak link in the company’s strategy. They had no idea how to continue.
If you’re trying to retire early but you’re not great at sticking to a budget, you’re going to have some trouble.
That’s why it’s important to strengthen your muscles in all areas and have a balanced financial body.
If you suck at budgeting, put in the work to get better. If you don’t make enough income, spend time educating yourself and gaining valuable skills to get a better job.
At some point, you’ll have to admit your weakest trait exists and fix it. If you don’t, you’ll end up like the newspaper industry – in ruins.
There is good news though.
Some newspapers have embraced the internet and are finding success in different ways.
The Washington Post is a great example. They’ve been able to add so much digital advertising revenue that they’re hiring more than 60 journalists in 2017.
18. The latest and greatest isn’t always the best
A lot of software developers have a craving for using the newest and “best” software on the market. It’s sort of a disease.
Have you ever felt this way? Do you scramble to upgrade to the latest Windows, Mac OS X, or even love updating your apps on your phone?
I have that problem, but sometimes it isn’t the best thing to do.
Case in point, Voyager 1 and 2. The space probes launched in 1977 and continue to operate today. The space probes continue to travel farther and farther from Earth while still sending data back to us.
That software has been working for over 30 years.
When you come up with a system to handle your finances, avoid the temptation to upgrade to something new. If your system is working, there’s no reason to change.
If you upgrade for the sake of change, you might end up wasting time fixing some bugs or inconsistencies. For example, if you budget with your own spreadsheet and upgrade to web based software, you might not know how to use it at first.
Changing your tools isn’t always going to help you. If the tool you’re using solves your problem, why upgrade?
19. Slow and correct is better than fast and wrong
Remember when we talked about the journey in #1?
Imagine while you’re driving 100 mph through your neighborhood, a kid jumps out in front of you and you have to swerve. Now you just hit a parked car.
If you’re still alive, your car is going to be totaled.
That’s why it’s better to drive slow in this situation.
Sometimes it’s better to go slow and guarantee safe arrival to your destination. By taking the slow approach, you have more time to react to the kids jumping in front of your car.
That’s what it’s like making progress toward financial independence. If you’re too aggressive with your investments, you have less time to react to big market changes.
If you wreck your car without an emergency fund, you don’t have time and resources to remedy the situation.
Think of it this way. Which opportunity would you take?
- $1 million portfolio in 2 years. 95% chance of going bankrupt.
- $1 million portfolio in 10 years. 95% chance of success.
In those scenarios, most people would take #2. It’s a slower approach, but you’re much more likely to reach your end goal.
That’s why most of us deal with slow online banking websites. We don’t care how slow it is as long as it’s correct. On the other hand, if my online banking was fast and showed me the wrong balance, I wouldn’t put up with that for very long.
20. One broken window can let the squatters in
Think about your own workplace. Do you have people who come in late?
If one person starts coming in late, it’s more likely other people will follow. Soon after, coming in late could end up becoming the norm.
That’s the essence of the broken window theory. Basically, the theory says one broken window in an abandoned building will lead to other broken windows. Crime leads to more crime.
You can use this theory to watch out for broken windows in your financial life.
If your budgeting is bad, you might let your spending get out of control. You would have turned one problem into two.
That’s why it’s important to always think about how you can improve. Watch out for areas where you struggle and set out to make yourself better.
Don’t let broken windows spread and bring more financial crime into your life.
21. People will hate you, then they’ll love you
In 2011, Netflix announced it was splitting off its DVD service into a completely different offering. They called it Qwikster.
People hated it. There was enormous backlash.
Then in 2013, Netflix killed their DVD service completely. Streaming was growing in huge amounts and it was clear physical media was dying.
Today, we all know Netflix is a huge brand. They have more subscribers than HBO and were projected to surpass total cable subscribers in 2016.
There’s a lesson to be learned here about building wealth. If you begin saving more money, you may have to cut back a little bit on your social life. Your friends may not like it at first. You’ll find yourself saying no to things you usually participate in.
That’s ok. Building wealth isn’t easy. You may start to be the cheap one in your circle of friends. Hell, even your parents might start thinking you’re poor. Stay the course.
If you have the right people in your life, the hate will be temporary. People around you will eventually realize you’re trying to build for the future. Your relationships may become stronger. You might even influence others to become frugal like you.
At first, building wealth can be like the death of Qwikster. It’s an unpopular decision at first. With time, your wealth will shine and the right people will appreciate you more than ever.
You’ll learn a lot about wealth building during the course of your life. You will never know all the answers. With some luck and discipline, you might develop a strategy to greatly build your wealth as you get older.
You might even retire early.
But what do you do when you get stuck? Look to others for help. Some of the best places to look are the companies we invest in everyday. How are they dealing with adversity? What strategies do they follow to build great companies?
Many companies iterate. They start small, build slowly, and eventually turn into a giant. The best companies don’t worry about outside noise and distractions.
Some companies shoot for the moon (or even for Mars), but they don’t let failure stop them. Instead, the best companies embrace failure. They try and try again. They’re not embarrassed when things don’t go as planned.
You can take lessons from their playbook. When you have a bad year, stay focused and continue your discipline. Don’t be afraid of failure when it comes to building your wealth.
When you build wealth, you will fail – a lot. That doesn’t mean you can’t be successful in the end.
Emergencies will popup in your life – sometimes when you least expect it. Sometimes you will overspend. You might forget to keep your spending in line with your budget.
And that’s just fine. The best companies fail too, but they have an appetite for success. They keep coming back for more.
Develop that tenacity for wealth building and success. If you do, you’ll find the light at the end of your tunnel.
When you look down someday from the top of the mountain, you’ll smile. You came a long way, but you made it. You reached the top. What’s next?
What have you learned about building wealth from your favorite companies? Have you had a lot of failure in your life only to ultimately succeed? Let me know in the comments below.