Key Moments
the 6 traits of people who can’t stop making money
My First MillionKey Moments
Natural money-makers spot opportunities and execute with ruthless rationality, often across diverse industries, but this innate skill can lead to overwork and a disconnect from non-financial aspects of life.
Key Insights
Natural money-makers possess an uncanny ability to "smell" fakes and opportunities, leading to success across multiple categories without necessarily being the best at any single skill.
Unlike many founders who are driven by passion, natural money-makers are "cooler" about money, more rational, and adept at cutting "fluff" and excess, as exemplified by Carl Icahn's approach to a shipping company.
Nick Kokonas, a former stock trader who made tens of millions and generated $100 million from a single arbitrage opportunity, transitioned to successfully build Alinea, one of America's top restaurants, demonstrating a mastery of diverse ventures.
Natural money-makers view diminishing returns as still being returns, not stopping at "good enough" and continually seeking further profit optimization, even in small margins.
People who can't stop making money are comfortable with complexity, able to process highly intricate subjects and future possibilities, unlike the average person who prefers simplicity.
The "natural money-maker" is just one of several archetypes, including "mission-driven" individuals like Brian Chesky, "extreme balancers" like Jesse Itzler, "tanks" like Frank Suttlman, and "tricksters" who find unique market gaps.
Identifying the natural money-maker
The concept of a 'natural money-maker' describes individuals who instinctively excel at deal-making, brokering, and positioning themselves in profitable situations. This is distinct from being a great founder, CEO, or entrepreneur, as natural money-makers often operate behind the scenes, build multiple companies across various valuations, and exhibit a colder, more rational approach to money. They possess a heightened intuition, a "sixth sense" for where money can be made or lost, and a knack for detecting BS and fakes. While they may not be the best at any specific skill like design or management, their overarching talent is this innate ability to generate wealth. Their success rate is remarkably high, often defying expected entrepreneurial failure rates. As the transcript notes, they "smell fakes where they exist and smell opportunities where they exist."
Emotional detachment and rational execution
A key differentiator for natural money-makers is their ability to remain emotionally detached from their business dealings. While they may experience anxiety like anyone else, they channel these feelings into profit rather than letting them dictate decisions. This contrasts with many successful founders who leverage passion and emotion for hiring and motivation. The example of Carl Icahn, who reportedly decided to fire an entire floor of employees within two weeks of acquiring a company because he didn't know what they were doing, illustrates this extreme rationality and focus on efficiency. Natural money-makers are exceptionally skilled at identifying and eliminating non-essential elements and operating with pure logic, unburdened by sentimental considerations about jobs or the status quo. They prioritize data and results: "The numbers make sense, so we do that."
The arbitrage master and restaurant mogul: Nick Kokonas
The story of Nick Kokonas exemplifies the natural money-maker. Initially a philosophy major who loved math, he pursued trading and made tens of millions, with one arbitrage opportunity yielding $100 million by exploiting the nascent ETF market. He recognized a minute price discrepancy between ETF bundles and individual stocks, a gap that existed due to the slow, manual process of trading before high-speed fiber optics connected exchanges. Kokonas installed a dedicated fiber optic cable from the NYSE to the Chicago Stock Exchange to gain real-time data, a move that secured his profits. After this success, he didn't rest. He transitioned to a completely different industry, co-founding Alinea, a Michelin-starred restaurant that became the first outside of New York to achieve this distinction. Despite restaurants being notoriously difficult businesses, Alinea generated $26 million annually with a 20% profit margin. Even during the COVID-19 pandemic, they adapted by offering $35 takeout meals, showcasing their resilience and perpetual opportunity-seeking mindset. Kokonas also continues to identify unique deals, such as acquiring a wine collection for $150,000 that was valued at $1 million, demonstrating his ongoing ability to find profitable ventures in his "free time."
Profit maximizers and relentless ambition
Natural money-makers are characterized as 'profit maximizers' who are never satisfied with existing returns. They embrace even diminishing returns, seeing them as still valuable. This is exemplified by a friend who discovered an opportunity to purchase distressed credit card debt and hire a collection agency, yielding approximately 14% returns. While such a return might seem insufficient to many, to a natural money-maker, it's an opportunity worth pursuing. This relentless drive is further illustrated by Jay Gould, a 19th-century business magnate considered by John D. Rockefeller to have the greatest business mind ever. Even while terminally ill with only a year to live, Gould couldn't resist the opportunity to acquire a failing railroad. His family pleaded with him to stop, but he declared, "I have to get back to my first love, which is making money." He completed the deal and passed away six months later. This extreme ambition signifies that for natural money-makers, the optimal number is always "more," and their pursuit of wealth is unending.
Comfort with complexity and diverse archetypes
A defining trait of natural money-makers is their profound comfort with complexity. While the average person and even many entrepreneurs prefer simplicity, natural money-makers possess high intelligence and can easily grasp intricate subjects and multiple scenarios. They can navigate "if this, then that" possibilities to identify value. This comfort with complexity allows them to tackle ventures that others would avoid. The podcast also introduces various other archetypes of successful individuals: the "mission-driven" (e.g., Brian Chesky), who dedicate their lives to a specific purpose; the "extreme balancers" (e.g., Jesse Itzler), who pursue personal adventures and well-being with intense dedication; the "tanks" (e.g., Frank Suttlman), who are powerful, relentless operators with broad control; and the "tricksters" (e.g., Alex Blanton), who find unique, often unconventional, market gaps and arbitrage opportunities, sometimes creating viral sensations from simple ideas like "pet rocks" or a two-minute meditation app. These archetypes highlight that success can manifest in numerous ways, not just through the natural money-maker model.
The 'second derivative' spending principle
A financial principle shared by natural money-makers is the concept of 'spending only the second derivative,' meaning one should only spend the profits generated from their investments, not the principal income. For example, if one earns $100,000, that amount is invested. Only the returns from that $100,000 are then available for discretionary spending. This strategy ensures that the original capital remains untouched and continues to grow. Over time, as the invested capital compounds, the income generated from it becomes substantial enough to fund a lifestyle without ever depleting the principal. This approach contrasts with most people who spend their income directly, potentially limiting long-term wealth accumulation. While some, like Sam Parr, adhere to a simpler rule of keeping annual spending below 3% of net liquid worth, the core idea of living off returns rather than income is consistent.
Beyond the money: Happiness and trade-offs
The podcast explores whether natural money-makers are inherently unhappy or solely work-focused. While some may fit this stereotype, the speakers suggest it's not a universal truth. There's a risk of projecting negativity onto those who meticulously manage their finances. Many natural money-makers, like Val, are described as happy, generous, and good to their families. However, the discussion also touches on the potential downside of prioritizing business success above all else. Some individuals, having built their identity around business acumen, may continue to make what seem like illogical trade-offs, exchanging valuable time for money they will never need or spend. This can lead to missing out on other enriching aspects of life, such as family time or personal development, which they rationalize as being for their children's benefit or as examples of hard work. Ultimately, the speakers suggest that while natural money-makers are adept at what they do, their lives may not be as balanced as others, and they might avoid areas where they are not inherently skilled, even if those areas could significantly improve their quality of life.
Mentioned in This Episode
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Common Questions
A natural money maker is someone who excels at deal-making, brokering, and intuitively identifies profitable situations, often operating outside traditional roles and demonstrating a cool, rational approach to wealth.
Topics
Mentioned in this video
Founder of CNN, cited as an example of a visionary leader rather than a natural money maker.
Business magnate and hedge fund owner known for his rational and unsentimental approach to business, illustrating the 'natural money maker' trait of cutting waste.
A 19th-century business mind described as the 'greatest commercial mind of all time,' embodying extreme ambition and the drive to make money even in dire circumstances.
Founder of Virgin Group, mentioned as a potential 'extreme balancer' but not fully analyzed due to lack of deep knowledge.
Former CEO of Uber, described as seeing everything as a game and playing aggressively, fitting the 'fierce intellectual' archetype.
A natural money maker whose story as a stock trader and restaurateur is detailed, highlighting his ability to spot opportunities and make quick, rational decisions.
Guest on the podcast who expressed happiness in his chosen endeavors, countering the notion that money makers are inherently unhappy.
Mentioned as a 'Trickster' archetype who creates unique, viral products, like a weighted blanket.
Author of a blog post on 'fierce" intellectuals, mentioned in the context of high-intelligence, competitive, and socially awkward archetypes.
Founder of Method, Olie Vitamins, and Welle, fitting the 'Trickster' archetype with his ability to revitalize products.
Founder of Facebook, used as an example of the 'fierce intellectual' archetype, whose perceived weaknesses mask intense drive and competitiveness.
Host of 'Hardcore History,' cited as an example of the 'Deep Researcher' archetype, with immense stamina for studying the past.
CEO of Airbnb, presented as an example of a 'mission-driven visionary' who is dedicated to improving travel experiences.
Founder of Bridgewater Associates, discussed his belief in personality tests and working with one's natural inclinations for success.
Warren Buffett's long-time business partner, known for his diverse investments and high success rate, embodying the traits of a natural money maker.
Co-founder of Morning Brew, identified as a premier 'Sniffer' or opportunist, adept at spotting trends and talented individuals early on.
Described as an 'extreme balancer' and highly regarded entrepreneur, not strictly a natural money maker, but embodying admirable traits.
CEO of Snowflake, used as an archetype for the 'Tank' or 'Operator' in business, characterized by raw power, resilience, and a commanding leadership style.
Mentioned as a 'Deep Researcher' archetype with a long-distance runner's mentality towards studying history and past figures.
Pioneer of the oil industry, who considered Jay Gould to have the greatest commercial mind.
CEO of Berkshire Hathaway, whose investment success with Charlie Munger is mentioned.
Investment holding company where Charlie Munger and Warren Buffett generated wealth.
A soap company founded by Eric Ryan, an example of a 'Trickster' archetype.
A financial institution that offered job opportunities to Nick Kokonas, contrasted with his path as an independent trader.
A highly acclaimed restaurant founded by Nick Kokonas, showcasing his ability to succeed in a notoriously difficult industry.
A file-sharing service whose potential was recognized early by a 'Sniffer' archetype.
Company founded by Brian Chesky, used as an example of a mission-driven venture focused on enhancing travel.
A vitamin brand founded by Eric Ryan, an example of a 'Trickster' archetype.
Hedge fund founded by Ray Dalio, mentioned in the context of his views on personality tests and natural inclinations.
A bandage brand founded by Eric Ryan, an example of a 'Trickster' archetype.
A newsletter founded by Austin Rief, serving as an example of his success as a 'Sniffer' of opportunities.
Music streaming service that an individual recognized the potential of early, as evidenced by a memo written to its founders.
Social media giant where one individual reportedly made as much money as Zuckerberg, having recognized its potential early.
Company where Frank Slootman serves as CEO, cited as an example of a 'Tank' archetype in business.
A podcast hosted by Dan Carlin, representing the 'Deep Researcher' archetype due to its in-depth historical analysis.
A trading card game mentioned to illustrate the intense competitiveness found in intellectual pursuits.
A character from the video game Overwatch, used as an example of the 'Tank' archetype.
A meditation app created by Alex, an example of the 'Trickster' archetype, which initially featured a simple function of requesting users to do nothing for two minutes.
Content management system used by Sid Balkhi to start a blog that generated income and influenced his subsequent investments.
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