(Courtesy of 99signals)
Naval Ravikant has a very clear view of working through financial freedom. Today we will look at his view through examples and decide whether Naval is correct or his view is just a pony show.
Employment Towards Financial Freedom
In most modern time peoples' careers start at getting an education up to college level and then get a paid job. From there work for 40+ years and save for retirement at around 67.5 years. At that point if they do retire they have technically reached financial freedom. Yet what if a person wants to achieve the financial freedom earlier and earn more even before they reach retirement age? This is where Naval explains that people who own businesses have the best chance of reaching financial freedom.
Employee as a Bricklayer
(Courtesy of homebuilding.co.uk)
In construction if you are hired to be a bricklayer you earn a hourly salary. The work you do is not very skilled so the pay will not be high. Meanwhile the accountabilities for being a bricklayer are toward mainly your boss and no one else. Specifically if you do not do a good job you answer to your boss where he or she is responsible for overseeing your work.
General Contractor
(Courtesy of istock building contractor)
Moving up a step in the working ladder would be working as a general contractor (GC). The GC manages people working trades and require more skills than a bricklayer to perform. As a GC pay is higher than a bricklayer because of the increase requirements and increase accountabilities. Still as a GC you would be getting paid a salary.
Developer
(Courtesy of mashvisor.com)
The next level above a GC is being a developer. As a developer you oversee the cost of the project, work toward getting funding for the project, and manage the GCs all workers on the project. A developer has more unique skills than that of a GC which makes developer's salaries even higher than that of GCs.
Venture Capitalist
(Courtesy of entrepreneur.com)
Then there are venture capitalists who specializes in real estate that may have multiple construction projects that they oversee. This means venture capitalists are held with higher accountability since they work on multiple projects. With more responsibilities comes more pay.
Opendoor Real Estate
(Courtesy of Dallas Daily News - Opendoor Story)
To get one step future is to open a company that manages real estate properties just like the latest and great Opendoor platform. In essence users of Opendoor are using leverage and computer skills to earn more.
Conclusions
Each step in the ladder towards earning more in construction business comes down to more earning if your position requires more skills and more accountabilities. In any of the positions from developer to Opendoor owner there is the opportunity to owning one's business. Naval said it best. With owning the business you get the unlimited upside while having a salary you are fix to the amount of earnings given to you.
None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!
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