What Would Bill Do?

MidasMoments: Rob Slee’s Comments on the Nation

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The mental journey of my recent book – Time Really Is Money – began when I first heard the story of Bill Gates and the $100 bill. Apparently Bill was strolling through an airport (as if) when he by chance wandered upon an unclaimed $100 bill. The question before him was: could he—a man who makes well over $1 million per hour each year, which equates to more than $300 per second—afford to stoop and pick up the bill?

Over the years pundits have argued that either Bill should have had an underpaid underling snatch the bill, or that he should just keep walking. The reason being is that literally every step Bill takes is worth far more than $100.

The story got me thinking: shouldn’t Bill Gates, or any businessperson for that matter, have an hourly rate that determines whether to take a business action? I think so. Managers of corporations use similar rates—called hurdle rates—to help them decide whether to invest in a project. A positive investment opportunity generates a return that exceeds the hurdle rate, and vice versa.

Why don’t individuals who own their time use an hourly hurdle rate to decide whether an activity adds personal or business value? I think they should, so much so that I’ve written TRIM to explain how to go about it.

Here are the two key thoughts of TRIM:

Ÿ The market values every business activity, and each activity can be priced by the hour.
Ÿ It follows that everyone chooses their level of wealth based on how they spend their time.

It turns out that most business owners spend almost all of their time on less than $50 per hour activities. These activities are tactical, often clerical, and can be readily bought in the marketplace. When you multiply 2,000 annual hours times $50 per hour, you get $100,000 per year. Yet the typical small business owner earns less than $75,000 per year, and here’s the more important part, they create little or no business value. This is a secret of U.S. business ownership: 90% of owners never create a valuable business. Rather, even in the face of tremendous risk, the typical owner works for a low hourly rate.

Why do tens of millions of people who own their own time work for such low rates? Don’t they know they will never be financially independent unless they work for rates well above $250 per hour? The answer to these questions is found within this book, but—spoiler alert—it centers around the fact that most people don’t associate hourly activities with creating value or wealth. So they will never have wealth.

But the wealthy have figured it out. They only engage in activities that promise to create a certain level of value. Or, stated another way, they only “work” when they can add a certain amount of value to a project. For the people at the top of the Ladder of Success, this hourly number exceeds $5 million. Bill Gates, for example, created more than $5 million per hour in wealth in the year before this writing. Steve Jobs, Warren Buffet, Larry Ellison and hundreds more have similar hourly rates. I have a partner in one of my businesses who will not engage a business discussion unless it promises to add more than $10 million per hour in personal value. And, like the people mentioned previously, he greatly exceeds this figure in practice.

But most owners are lifestylers, meaning that they own their own time so they can live a good lifestyle. These owners forego creating business value so they can live the good life—now. Unfortunately for this group, the Transformation Age is the lifestyle business killer. Most lifestylers will not be able to keep their current level of earnings, let alone create any value.

The mission of TRIM is to show readers that they can have both great lifestyles and create more valuable businesses.

Btw, that’s what Bill did.

– Rob

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