Introduction
What’s in it for me? Learn to make time for the important things in your life.
The four-hour workweek. It sounds amazing, right. It sounds like a dream. Instead of working for 40 hours a week, you only have to work for four hours. And it’s not like you’re losing out on income. Because you make in a month what most people make in a year.
So instead of toiling away at your desk for 35, 40, or even 45 years before retirement, you have the freedom and the flexibility to enjoy your life right now.
It sounds amazing. It sounds like a dream. In fact, it kind of sounds like a pipe dream – like something that might work out for some very, very lucky people but probably will not work for you.
Well, look: it is not a dream. According to Tim Ferriss there is a recipe that anyone can follow – and that includes you – to achieve this. So if you’re ready to get down to work, let’s turn 40 hours into four.
In this article, you’ll learn
- how you can use the 80/20 principle to your advantage;
- how to establish a passive stream of income; and
- where to look for your muse.
Key idea 1
For the New Rich, wealth means luxury in the here and now.
So you’re working 40 hours a week. Maybe you’re working even more than that. You’re constantly exhausted. You’re constantly stressed. You’d give anything to extract yourself from the daily grind – but it feels like you just can’t. You’re stuck in your job. You need your job.
Well, there is a recipe for escaping the nine-to-five. There is a formula. And that’s exactly what we’ll be exploring in these parts. But, before we get to the formula, let’s talk about where you’re escaping to, and how the author got there.
The goal is to become a member of the New Rich. The New Rich is a subculture characterized by mobility and financial freedom. They’re tied down by nothing. They decide where they go. They decide what they do. They’ve realized that the right moment to live your dreams, to really live you life, is now.
But how do you do this? How do you live your dreams, how do you live your life to the fullest, right now? Well, here’s something else the New Rich have realized. Basically, you only need two things to accomplish this: you need more freedom and more free time.
See, what most people associate with millionaires – extensive travels, extravagant hobbies, maybe a butler – essentially add up to two things: more freedom and more free time. And you can have those things without having millions of dollars in your bank account.
So that’s the goal: get more freedom, get more free time, and join the New Rich.
The author got both of these things sort of by accident. Back in 2004, he was in a situation that, maybe, is similar to yours. He was overworked. He was exhausted. He was actually so overworked and exhausted that he suffered a burnout and had to take a break. But this break turned out to be a blessing. During his time off, he traveled around the world and realized that he could run a profitable business from wherever he was. And that he could do it with minimal effort. And, just like that, he joined the ranks of the New Rich.
Sounds like magic – but it’s not. Remember, if you want to live a life of luxury, all you need are two: more freedom and more free time. They are the prerequisites for the ability to do whatever you want to do, whenever you want to do it, and from wherever you want to do it – and neither can be achieved by working a standard 40-hour week.
So let’s get to that formula – the formula that’ll give you all the freedom and free time that you could ever wish for.
Key idea 2
Redefine wealth and happiness.
The formula is called the DEAL formula. And it stands for:
- Definition
- Elimination
- Automation
- Liberation
Let’s start with D: definition. Maybe you noticed – but we’ve already started creating some new definitions. We’ve already begun to redefine wealth. Remember: living the life of a millionaire isn’t about having millions in the bank. It’s about doing the things that millionaires do. In short, being wealthy isn’t about having tons of money. It’s about the ability to do the things that people with tons of money do – like spending months on a gorgeous tropical island or going skydiving whenever you feel like it or even just having more time with your family.
So wealth equals activities, your ability to do the things you want to do. It’s about freedom and free time – not the amount of money you’ve accrued.
Another word you need to redefine is happiness. Most people would say their goal in life is to be happy – but what does happiness mean? Well, according to the author, the opposite of happiness isn’t sadness; it’s boredom. So the best definition of happiness is excitement. To truly be happy, you should dedicate your time to doing things that excite you. For the author, this meant traveling, becoming a kickboxing champion, and setting a world record in tango. For you, it might mean something completely different. But the point is, buying a house, having an impressive job title, retiring with millions in the bank – none of this will bring you happiness if you’re not excited by what you’re doing with your life.
Since happiness isn’t some far-off goal, something that you’ll only fully experience when you have enough money or enough things, and since wealth isn’t about massive piles of cash, the question is no longer how you can earn as much as possible but how you can free up as much time as possible – time in which you can do all those things that excite you!
This is where the E in the DEAL formula comes in: elimination.
Key idea 3
Save time by applying the 80/20 principle and eliminating time wasters.
All right, folks, it’s elimination time.
If you’re anything like the author once was, then roughly 80 percent of your work output results from a mere 20 percent of your effort.
This is called the 80/20 principle, and, at work, you may not have noticed it – because it’s hidden by the standard eight-hour workday. Most employees have to work for eight hours, and so, instead of focusing on productivity, they emphasize activity. They organize their inbox; they futz around with their phone; they walk self-importantly from cubicle to cubicle. And the person who looks the busiest often gets the raise because, at most companies, time spent at work is the only yardstick for performance.
But about 80 percent of that activity is useless.
Spending a lot of time on work doesn’t necessarily mean that you are addressing the right tasks, nor that you are doing them well. Quite the opposite, in fact. Actually, the more time we have to complete a task, the more time we’ll spend on it – a tendency known as Parkinson’s law. So, if we have an hour to turn in our project’s final report, we’ll finish it in an hour. But if we have the entire afternoon, we’ll take the entire afternoon, all four hours of it.
What you have to do is pinpoint and then prioritize the 20 percent of tasks that will yield 80 percent of results.
And this means eliminating all tasks and activities that don’t bring you closer to your personal goals. How can you identify these crucial tasks? Well, go through your list of to-dos and, for each task, ask yourself: “Would I be happy if this task ends up being the only one I complete today?” If the answer is no, then it’s a candidate for elimination.
You should especially be on the lookout for interruptions – things that prevent you from completing important tasks, from start to finish, without pause. Perhaps the most costly kind of interruptions are time wasters. A time waster is any task that you can ignore without negative ramifications. The most common ones aresurfing the web, responding to unimportant emails, and conducting phone calls and meetings.
All time wasters can – and should – be eliminated. But let’s just focus on some tactics for eliminating one of them: email.
A good way to start weaning yourself off email is to read and answer messages twice a day, once in the afternoon and once in the evening. If you can manage that, then why not go a step or two further. See if you can’t deal with email only once a day or even just once a week.
As you do this, keep your friends, family, and coworkers in the loop. You can do this by setting up an auto-response explaining that you’re limiting the time you spend on email in order to serve them better and that it may be a while before you respond. Those around you will adapt and learn that most messages can simply wait in your email inbox or your voicemail while you tackle truly important things. If a request is really urgent, people can always call you or take you aside for a face-to-face conversation.
By letting many small questions and tasks accumulate in your inbox, you’ll be able to deal with them all at once, which will both save you time and liberate you from the interruptions that interfere with more important work.
All these pointers should significantly improve your productivity. But they don’t exactly add up to a four-hour workweek. If you want your daily routine to include more lounging in a hammock on a remote island, cocktail in hand, then you’ll also have to free yourself from the location your work binds you to. And that’s what we’ll be exploring in the next.
Key idea 4
Regular office employees can also live the New Rich lifestyle.
So you’ve applied half of the DEAL formula to your work life: you’ve defined your goals, replacing the goal of wealth with the goal of having more freedom and more free time, and the goal of happiness with the goal of excitement. And you’ve eliminated some time-consuming activities, starting with your email habits. But if you’re an employee, you can’t just jump straight to automation. Employees must first liberate themselves from the office, so that the formula becomes the somewhat less memorable DELA formula rather than the DEAL formula. So, if you’re not an employee, then guess what: you can skip this.
OK, employees, here’s how you liberate yourself from the office.
Now that you’ve defined your goals and eliminated all interruptions, you are much more productive, to the point where you may be able to accomplish in ten hours what your coworkers get done in 40. But remember: most workplaces encourage activity, not productivity, which means that no matter how little time it takes you to complete your work, you’ll always have to put in 40 hours per week.
The solution is to escape the office. Not only will this allow you to work less; it’ll enable you to work from anywhere you want.
So how do you pull off this vanishing act? How do you disappear from the office? Well, there are five steps you’ll have to follow. Here they are:
- Increase your value to the company
- Prove increased output when working remotely
- Quantify the business benefit
- Propose a trial period
- Expand the time you work remotely
To see exactly how this works in practice, let’s meet Sherwood, a fellow who wants to dedicate more time to his side business of selling sailor shirts on eBay. Here’s how he vanished from the office:
He starts by making himself indispensable. He talks to his boss about getting additional training that’d help him better serve the company’s clients. His goal is to increase his value to his employer. The more valuable he is, the more likely they’ll be to let him take liberties, such as working from home.
In the meantime, he conducts a little test: he calls in sick on Tuesday and Wednesday and says he’ll work from home. He chooses these days so that it won’t look like an excuse for a three-day weekend, and also so he can test his productivity without the carrot of the weekend, the promise of two days off, dangling before him.
On these days, he keeps track of how much work he does with quantifiable records and an email trail – and he purposely doubles his work output, which is easy because there aren’t any office-related distractions.
Sherwood then creates a proposal. The proposal shows how his working from home will benefit his boss and why he’s more productive out of the office (no commute, fewer distractions).
At this point, he suggests a revocable trial period: he’ll work from home one day per week for two weeks. The suggestion is accepted, and on these at-home days, Sherwood again ensures that his productivity doubles compared to being at the office, which gives him further proof that his working from home is beneficial to the company.
Now all he has to do is slowly increase his away days until he’s working from home every day. And this should be easy considering the added productivity his boss is seeing. At that point, Sherwood will effectively be able to work from anywhere in the world.
Key idea 5
Build a business that functions on autopilot without any work on your part.
It’s finally time to discuss automation, the A from the DEAL formula. Automation is crucial if you wish to decouple the time you spend working from the money you make. By establishing automated sources of income that can be maintained from anywhere in the world, you – just like today’s New Rich – can lead whatever kind of life you desire, because you’ll generate income without spending all your time at work.
Now, if you want to establish an automated revenue stream, you’ve got to create a business that works without any effort on your part – that is, it should basically run itself. So, instead of personally managing the distribution of your product, you might partner with a company that can handle distribution and hire an agency to maintain your website. You personally should barely play any part in this setup. All you should be doing is reading the reports of your service providers and stepping in when necessary – but only when necessary.
So how can you ensure that work runs smoothly in your absence?
First, everyone involved should have the freedom to communicate independently with one another. You shouldn’t have to relay any messages. Second, you should give as much responsibility as possible to those you’ve entrusted with your tasks. This way, people can solve problems without needing your input or approval, which will save you tons of time and give you far more freedom.
But who exactly should be doing all this work?
One option is to hire virtual assistants. You can contract virtual assistants from almost anywhere – Canada, India, Poland, you name it. As long as the person has the required skills, it doesn’t much matter where they are. In the author’s experience, virtual assistants from India are much cheaper, and they’re often as good as, if not better than, their counterparts from the English-speaking West.
If you’re still worried about the cost, though, remember to factor in the value of the time you save. Let’s say you currently earn $25 per hour, and a suitable assistant costs $30 per hour. This means that for every hour of work the assistant takes over, the effective cost to you is $5. In other words, you could take an entire Friday off for a cost of just $40.
Finding a suitable virtual assistant is largely a matter of trial and error, so be sure to ask other people about their experiences and don’t get discouraged if your first one isn’t a perfect fit. Ideal virtual assistants do exist and finding them is well worth the effort.
Key idea 6
You need a muse for your automated income.
Of course, if you want to create an automated income stream and construct the architecture to support it, you’ve got to have a product to sell. This might be an existing product that you decide to redistribute – like Sherwood and his sailor shirts.
The only problem with this approach is that reselling an existing product comes with smaller profit margins. So it’s better to design your own product, something that will bring in as much money as possible with minimal effort from you.
But how do you do that? Well, the best way to get started is to look at the markets you’re most familiar with and brainstorm product ideas based on your findings.
To differentiate your business from a classic start-up, which isn’t what you’re trying to create, let’s call your best idea your muse. Unlike a start-up, your muse doesn’t have to be run by you. After all, you don’t really want to be an entrepreneur, because you’re not looking to spend all your time on strategy meetings, leadership, and management. You’re trying to set up an automated revenue stream.
The best place to look for a muse is in a niche that doesn’t require you to invest much time or money up front to get started. Sherwood’s idea is a case in point: without investing any money, he figured out that he could resell sailor shirts at a profit. Or take the author, who founded an internet company in 2001 for the dietary supplement BrainQUICKEN® and made a fortune with minimal time investment.
On a practical note, no matter what your muse looks like, it’s important that you outperform the competition and demonstrate to prospective customers that you’re the best person to buy from. This can be done by attaining indicators of credibility, such as a PhD. Or, if you don’t have time to charge through grad school, you can establish your expertise by other means: by attending seminars, for example, or by conducting thorough research with the help of relevant textbooks and websites.
You don’t have to be the greatest expert of all time. All you have to do is outperform your competitors and convince your customers.
Key idea 7
Test the market before making your product.
OK – but how do you know whether your product, your muse, will convince customers? Well, there’s really only one way to find out: you have to ask people to buy it. This is the best test – the only test, really. You’ve got to offer the hypothetical product to actual customers and see how they react.
Let’s return to our shirt-selling friend for a second: Sherwood.
Maybe you’re wondering how Sherwood figured out that his idea was profitable? Well, before he even purchased his first sailor shirt, he began offering them on eBay. Anyone who clicked on his offer was told that it was only possible to “back order” the product. This was a lie, yes, but it was also a way for Sherwood to get a sense of actual demand.
Once he knew how many shirts were likely to sell, he made his first order. Then, after selling 12 shirts in five days, Sherwood ordered 24 shirts and sold them in 12 days. He kept a close eye on demand, and his sales continued to increase until he began considering leaving his other job altogether.
Or consider Johanna, a yoga teacher who came up with a great idea for a muse. She’d noticed that more and more climbing enthusiasts had started coming to her class, and after looking into whether such a thing already existed (and finding that it didn’t), she decided to create a DVD with a special yoga course for climbers.
She set up a website with testimonials from her students and ran multiple ads through Google AdWords. And by analyzing the click and conversion rates, she could better gauge the demand and determine which search terms worked best.
Once she’d collected all this information and was relatively sure that her muse would be a success, she produced the DVD and started distributing it – and sales were better than expected. During the first week, she made back the initial production costs, as well as the $250 she’d spent on testing. Now she’s selling a solid ten DVDs per week, at a profit of $750. Not too bad for a first muse!
Key idea 8
Set a premium price point and make a big promise.
So let’s say you follow in the footsteps of Sherwood and Johanna, and confirm that there’s demand for your product. That’s great! But there are a few things to keep in mind when designing it that’ll help make it successful.
First, you should be able to summarize the product’s purpose in one sentence. When Apple released the iPod way back in 2001, everyone instantly knew what it was for thanks to the accompanying slogan: “1,000 songs in your pocket.”
Second, you should make it as easy as possible for customers to decide to purchase your product. Don’t make them choose between a ton of options. The more colors and designs your customers have to choose between, the more likely they’ll be not to buy your product, because comparing all the options is exhausting.
Third, to attract the right customers, you should give your product a high price point: somewhere between $50 and $200. This will not only give your product a premium image; it’ll also increase your profit margins and decrease the likelihood of complaints. The logic here is that anyone who’s prepared to dish out that much money will be less likely to complain if the product doesn’t live up to expectations; they’ll have money to spare and won’t care enough about the loss to make a fuss.
And, finally, your product should make a big promise – and deliver on that promise. Take Domino’s Pizza, which promises to deliver in 30 minutes or less. If they don’t, your pizza is free. Big promise. And consistent delivery.
Or consider the author’s promise for the product BodyQUICK. He guaranteed that, within 60 minutes of the first dose, it was 110-percent guaranteed to work, by which he meant that if you didn’t see results within an hour after taking your first dose, he’d refund the product price and send you a check for 10 percent of that price.
Such bold promises show your customers how serious you are about your product and give them the added confidence they need to make a purchase.
Final summary
The key message in this book was:
Instead of toiling away for the rest of your days in an office, waiting for retirement, you should join the New Rich and start enjoying life today. Begin by doing some redefining, then focus your efforts on the 20 percent of tasks that are most impactful. Next, liberate yourself from the office by showing that you’re more effective working at home and break the habit of constantly checking your inbox. Finally, automate your income by identifying and testing “muses.” With these habits in place, you’ll be well on your way to the lifestyle you’ve always desired.
And here is some actionable advice:
Create a dream plan.
List everything you want to achieve in the next six months – all the things you want to do and be. Now calculate how much you think this would cost per month. Whether you want a sports car or a personal assistant, the ability to speak fluent Greek or to cook the perfect meal, make a monthly estimate of what you’re likely to spend on it. Then, based on this number, calculate a monthly target income. You now have a concrete figure to aim for to attain your dream life.
