Summary and My Thoughts

It took me a little while to come around to this book from the title alone, however I placed the book on my list shortly after finishing Tools of Titans. After reading some reviews for my previous reading, The ONE Thing, one reviewer noted the practical information within the The Four-Hour Workweek, so I decided to move the book to the front of the priority list. The book does contain a great deal of practical knowledge with some passages being almost completely instructional; however I haven’t yet began to work through these instructional passages to verify their effectiveness in this current time. The issue with such specific and detailed instructions is that oftentimes it can become deprecated over time in comparison to its effectiveness at the beginning of the book’s release. You would also have to note how many of these viable routes have been closed off as the strategies have been implemented hundreds-to-thousands of times given that the book is a best seller. Don’t let the skepticism toward survivor-ship bias dissuade you from taking home the central messages of this book, which I feel can be summed up below.

The book seeks to help you re-adjust your thinking toward success under the idea of the new rich. These are people who have effectively minimized their role in producing and maintaining cash flow so that they have a great amount of time to dedicate to finding purpose in their lives in other ways than career or business building; such as unlimited learning, service, or anything else that excites them. To accomplish this lifestyle design, you must first create a successful business capable of consistently generating the income necessary for maintaining this lifestyle (your muse) and then gradually automate significant portions of this business as you scale it up to further increase the income level. If you’re currently employed, you should seek to minimize your physical presence at your employer to allow for more time to focus on building this muse (or your job can become your muse if you’re able to effectively outsource and minimize your involvement remotely without impacting your productivity). Of course the hardest part of the equation is establishing your “muse”, Tim recommends different strategies but primarily recommends testing the demand of a niche market rather than attempting to market a new product that potentially garners no interest. There is a great deal of helpful resources and instructional guidelines within the book and personal anecdotes sprinkled throughout. Do these methods still work? Possibly.

Step 1: D is for Definition

Chapter 1 - Cautions and Comparisons: How to burn $1,000,000 a night.

We’re primarily concerned with two groups of people: the new rich (NR) and the deferrers (D). The deferrers can be characterized as your more traditional corporate journey men or business owners who value very traditional measures of success along your typical materialistic standards culminating in a well-earned retirement to bookend their life. The new rich values experiences, dreams, and freedom and seek ways to minimize their involvement in their production of cash flow while ensuring that such cash flow is always present to finance their experiences. To the new rich, your lifestyle design comes first and your means to financially support this design passively is simply that, passive.

Chapter 2 - Rules That Change The Rules: Everything Popular Is Wrong

The common concept of retirement should be a worst-case scenario rather than an end goal. The typical 30 year retirement plan results in poor health habits and high burn-out rates. You should focus on doing less overall work but more meaningful and productive work. The timing is never right, you should simply take the calculated risk and stop waiting on the perfect conditions to begin your journey. Rather than ask for permission and stalling your efforts on beginning your journey, take the calculated risk and simply ask for forgiveness in the event that it doesn’t work. Instead of trying to address all of your weaknesses, learn to instead emphasize and leverage your strengths. Instead of creating an excess of idle time, you should refocus your priority into creating more “positive” time. Money is not simply the solution if the means to creating money and wealth robs you of all of your available time and mental power. Instead on focusing on absolute income (such as an annual salary), focus on relative income (hourly earning), for example: person A could make $100,000 a year working 80 hours a week where as person B could make $50,000 a year working 10 hours a week, person A would be richer in absolute income ($100,000 > $50,000) however person B would be richer in relative income ($100/hour vs. $25/hour), assuming 50 weeks worked. Distress should be avoided yet eustress should be embraced, as eustress is challenging and stressing yourself for constructive growth similar to breaking down muscle during a workout to promote future growth.

Chapter 3 - Dodging Bullets: Fear-Setting and Escaping Paralysis

Many people fail to take significant steps in the journey of reducing their workload and work life by brainstorming the possible worst case scenarios that could play out from their decisions. Rather than simply developing hypothetically bad situations, push your thinking further and determine how you would resolve these issues if they did in fact occur; this is fear-setting. Sometimes working professionals will bargain with themselves that their current work life will optimistically get better, this positive outlook and sense of complacency is another lesser known and well disguised version of fear just like above.

Chapter 4 - System Reset: Being Unreasonable and Unambiguous

Tim uses a small experiment that he conducted with a group of students to show how many people place unreasonable and artificial limits on their own ability when approaching a challenge or task that seems impossible; it isn’t until it shown that the task is not strictly impossible do these students push through their original perceived limitations and succeed in the challenge. It is easier to do the unrealistic rather than the realistic because the realistic is much more highly competitive due to its lower barrier of entry and its realistic nature does not warrant the same creative and innovative approach that the unrealistic would call upon. Rather than happiness, your goal should be to surround your life and your time with activities, goals, and pursuits that excite you. You should think big and unrealistic, if you fail then try again and fail better, and so forth.

Step II: E is for Elimination

Chapter 5 - The End of Time Management: Illusions and Italians

Instead of using time management to do more in the limited time of your day, rather as the new rich, you should focus on reducing your workload in the day while maintaining or even increasing your income or cash flow. Rather than being efficient, you want to be effective with the work that you do throughout your day; this revisits the common Pareto’s 80/20 principle by focusing on the most effective 20% responsible for the 80% of production and slowly eliminating the remaining 80% of activities that simply crowd your daily activity. Tim’s example of exercising this principle was by either renegotiating or ending contracts with customers that were not producing the 80% of production; this principle can be stretched as far as 95/5 or further in more cases and can be applied to many areas of your business life such as advertising, affiliates and partners, and customers. Another interesting law detailed is Parkinson’s Law which states that a task will swell in (perceived) importance and complexity in relation to the time allotted for its completion. You should either limit tasks to the most important to shorten work time (80/20%) or shorten work time to the most important (Parkinson’s Law).

Chapter 6 - The Low-Information Diet: Cultivating Selective Ignorance

Lifestyle design necessitates effective output to reduce overall work time and to accomplish this involves reducing the amount of time used for information input. You should exercise self-control of indulging in information intake to only read results-oriented material that is most beneficial to you and effective to helping your life. When Tim purchases a book, his criteria includes only reading books relevant to something he wants to do and that the author has done it as well or the book provides a launching point for further questions that he can ask the author or their agents. Tim avoids many information time sinks such as internet browsing, news websites, magazines, and other media.

Chapter 7 - Interrupting Interruption with the Art of Refusal

Interruptions can include anything from time wasters (as noted above), time consumers (trivial recurring tasks that interrupt high quality work), and empowerment failures (where you require permission or approval to make something small happen). Addressing time wasters can include turning off alerts, limiting email to certain times in a day, limit meetings during the day, and limiting physical access to your work space. Address time consumers by batching the trivial tasks so that they may be completed at once rather than dividing up your more meaningful work. Addressing empowerment failure by reducing your own micromanagement and allowing your outsourced work to have more autonomy on bigger decisions.

Step III: A is for Automation

Chapter 8 - Outsourcing Life: Off-loading The Rest and a Taste of Geo-arbitrage

One of the keys of becoming the NR is to build an automated system that effectively replaces yourself; with the assumption that your system is effectively producing enough cash flow to finance your lifestyle design. One important key to accomplishing this is to eliminate any unnecessary features from your system and then delegating the majority of the work to a virtual assistant to minimize the amount that you need to touch or handle yourself. To effectively delegate these aspects of your system, they need to be well-defined and time consuming to avoid your outsourced service from dragging out the task and costing you more than necessary or worse, failing to complete the task altogether. You should choose a team rather than a solo virtual assistant in the case that a single virtual becomes unavailable which could wreck your system. Also, foreign virtual assistants negotiate less pay than domestic virtual assistant. You should also take preventive measures when disclosing personal information or giving private access to your virtual assistant to protect yourself from scams and other criminal activity.

Chapter 9 - Income Autopilot I: Finding the Muse

Tim introduced the concept of a “muse”, essentially this is a business that produces a steady income stream with a very minimal amount of personal involvement in its day-to-day activities. To create a muse, you must first identify a niche affordably reachable niche market that presents a demand that you can actively fill; this may require you to start small. To find a niche market, first search your familiar areas that cover any interests that you have a personal or professional interest in and investigate any reading materials and gather details on advertising costs in said magazines and other materials. Your product ideas should be able to be described in one sentence, cost between $50 and $200, take no longer than 3-4 weeks to manufacture, and be fully explainable in an online FAQ. You can resell a product, licensing a product, or create a product.

Chapter 10 - Income Autopilot II: Testing the Muse

Once you have a product for your muse, you can micro-test your product by gauging the interest and demand of your product. To do this, you must “best” your closest competition by creating a more compelling offering. Next, you “test” your offering using advertising campaigns such as Google Adwords. Then you manufacture the winning offers for a sales roll out. This A/B testing strategy allows you to focus on advertisements that generate the most demand and interest.

Chapter 11 - Income Autopilot III: MBA - Management by Absence

In this chapter, Tim lays out his architecture for a scalable automated business model. His model involves outsourcing the majority of the work to limit his own involvement and to also increase the automation characteristic of the business. In his description, your involvement in the business decreases as the business becomes larger. In the beginning (0-50 units shipped), you handle the majority of set up work, costs, service yourself. Next (> 10 units shipped a week), you begin outsourcing more service-related tasks. The next phase(>20 units shipped a week), you can begin to fully separate from your business as it becomes more profitable to allow fulfillment centers to handle the majority of the business operations. Tim stressed that a business with less options is more ideal for securing a sale and once you have reached the last phase described above, you can begin catering to your more productive customers ala the 80/20 principle.

Step IV: L is for Liberation

Chapter 12 - Disappearing Act: How To Escape The Office

For those currently working a job, Tim recommends using the following approach to negotiate a fully remote liberation from your office environment. First, make yourself incredibly important to the company that you work for, prove your importance. Next, either propose a trial period of remote work or use another tactic to excuse yourself from working in the office for a short amount of time. During this time of remote work, increase your productivity significantly to show the benefits of your working remotely. After showing these benefits, slowly but surely begin increasing your remote days until you’re allowed to work fully remote.

Chapter 13 - Beyond Repair: Killing Your Job

If the remote negotiation method doesn’t work, Tim proposed the option that you can always quit your job. He then proceeds to address some fears that typically hold people back from leaving their jobs. First, quitting isn’t permanent, often times you can pick up where you left off easily enough. You should aim to have an established cash flow before quitting, but if not, you can reduce your spending and live a more lean lifestyle until that cash flow is established. There are different insurance and retirement options available for those not employed. And contrary to popular belief, a large gap on your resume can present an opportunity to share an interesting story with the interviewer if the question arises.

Chapter 14 - Mini-Retirements: Embracing the Mobile Lifestyle

Tim recommends taking mini-retirements throughout your life to travel the world and discover new interests. Mini-retirements are different from retirements and sabbaticals because they are not one-time events. It is also economically feasible to live a luxurious lifestyle in different countries in short spurts of time. Though it may be more difficult with children, it only requires more active planning to achieve the same experience. Also, if you’re worried about traveling for safety reasons, Tim outlined many locations that are relatively safe especially in comparison to the United States. Traveling also provides a rough approach to forcing you to begin living a lean and minimalist lifestyle, dissuading people from shuffling a large amount of belongings from location to location and also showing how much a person really depends on. It promotes the dichotomy between materialism and experiences.

Chapter 15 - Filling the Void: Adding Life After Subtracting Work

Once you have removed the dependence on work and money is no longer an issue, you may find life’s larger questions weighing more heavily on you which can lead to depression during this newfound freedom. Tim recommends finding meaning in unlimited learning and exploration. His approach is to focus on a certain local skill and language acquisition at each location he adventures to. You may be more service oriented and use your freedom for altruistic purposes. If nothing else, use your freedom as an opportunity to search for something rewarding or meaningful in your life; now that you no longer have to worry about employment or financial concerns.

Chapter 16 - The Top 13 New Rich Mistakes

In this chapter, Tim warns against common mistakes that the new rich often make such as: returning to work for work’s sake, filling their time with reading email and doing filler tasks, becoming more involved in the work of their outsourced help, chasing unqualified customers when your current cash flow is enough, working where you relax, not following the 80/20 principle, striving for endless perfection, blowing small problems out of proportion, adding urgency to tasks that are not time sensitive, viewing one job or product as the end be-all of your life, and neglecting the social rewards of your newly gained freedom.