Why People Dumber Than You Are Millionaires (And What You Must Do Now!)
Summary
TLDRIn this video, the speaker recounts a personal encounter with a high school classmate who, despite not being academically inclined, became a successful entrepreneur. The video challenges the notion that intelligence is the key to wealth, citing a Swedish study that suggests the top earners are not necessarily the smartest. It explores reasons why smart people may not achieve financial success, such as rationalizing their income needs, fear of failure, overestimating risks, and a lack of self-confidence in their business acumen. The speaker emphasizes the importance of taking risks, having a clear purpose, and persistence as the true secret to success, regardless of one's intellectual capacity.
Takeaways
- 😯 Success in business isn't necessarily tied to intelligence; the wealthiest individuals may not be the smartest.
- 💡 It's a misconception that being smart is the only path to wealth; many successful entrepreneurs come from diverse backgrounds.
- 💭 Smart people often rationalize that they don't need much money, which can limit their ambition to grow wealth.
- 🏠 The desire for financial freedom can be a powerful motivator, such as the need to provide for a family.
- 🤔 Many intelligent individuals are afraid of failure and looking 'stupid,' which can prevent them from taking risks.
- 🚀 'Dumb' people often have the advantage of being underestimated, which can motivate them to prove others wrong.
- 🧐 Smart people tend to overestimate risks, while less intelligent individuals may underestimate them, leading to action.
- 🛑 Engineers, as an example, often overanalyze and hesitate to start businesses due to fear of failure.
- 🤷♂️ The Dunning-Kruger effect suggests that less knowledgeable people may overestimate their abilities, leading to action.
- 🔄 Successful people often learn by doing and adapting, rather than having a perfect plan from the start.
- 🔗 Persistence is key to success; many successful entrepreneurs continue despite initial failures and setbacks.
Q & A
What was the narrator's initial assumption about his high school classmate's career based on his academic performance?
-The narrator initially assumed that his high school classmate, who wasn't known to be the brightest, was working in a dead-end job making minimum wage.
How did the narrator's perception of his classmate change after learning about his success?
-The narrator was shocked to find out that his classmate owned multiple apartment buildings and his own construction company, which contradicted his previous assumption.
What was the narrator's previous world view regarding intelligence and wealth?
-The narrator believed that one had to be smart to make big money, which was challenged by his classmate's success despite not being academically inclined.
According to the Swedish study mentioned, what is the relationship between intelligence and wealth among the top earners?
-The top 5% of earners in the world are slightly less intelligent than those just below them on the economic ladder, suggesting intelligence is not the sole determinant of wealth.
What is the first reason the narrator gives for why smart people might not accumulate wealth?
-Smart people often rationalize that they don't need much money, as they already have a decent paying job and can afford a comfortable lifestyle, thus not feeling the need to 'rock the boat'.
What realization did the narrator have when his wife became pregnant with their first child?
-The narrator realized the importance of financial freedom to have the flexibility to spend time with his family without being tied to a traditional job.
What is the second reason the narrator identifies for smart people not getting rich?
-Smart people are often afraid of looking stupid and failing, which prevents them from taking risks and trying new ventures.
How does the narrator describe the advantages of being underestimated by others?
-Being underestimated can motivate individuals to prove others wrong and provides a 'nothing to lose' mentality, which can be a powerful driving force.
What cognitive bias does the narrator mention that affects smart people's perception of their own abilities?
-The Dunning-Kruger effect, where people with low ability or knowledge overestimate their competence, while smart people tend to underestimate their abilities due to awareness of what they don't know.
What is the narrator's advice for smart people who want to achieve financial freedom?
-The narrator advises smart people to take risks, try new things, and not to be deterred by the fear of failure or the need to know everything before starting.
What is the secret to success that the narrator has learned from running his own businesses?
-The secret to success, according to the narrator, is persistence and not quitting, as most successful people are those who keep going despite initial failures and challenges.
Outlines
🤔 Challenging Assumptions About Intelligence and Wealth
The speaker recounts a surprising encounter with a high school classmate who, despite not being academically gifted, became a successful entrepreneur owning multiple properties and a construction company. This challenges the speaker's preconceived notion that intelligence is directly correlated with financial success. The paragraph discusses a Swedish study suggesting that top earners are not necessarily more intelligent than others, and it introduces the theme of the video: explaining why some less intelligent individuals excel in business. The speaker also reflects on their own life, realizing the importance of financial freedom for personal fulfillment, such as spending time with their newborn child, and encourages viewers to consider what they would do if not limited by money.
🧐 The Paradox of Intelligence and Business Success
This paragraph delves into the reasons why many intelligent people do not achieve the same level of business success as those who are less academically inclined. The speaker talks about how smart people often rationalize their financial situation and are less likely to take risks due to fear of failure and the desire to maintain a certain image. The narrative contrasts this with the approach of 'dumb' people, who, because they are underestimated, have a strong drive to prove others wrong and are more willing to take risks without being held back by the fear of failure. The speaker also touches on the tendency of smart people to overanalyze risks, which can prevent them from taking the first step in business ventures.
🚀 Overcoming Limiting Beliefs for Entrepreneurial Success
The final paragraph of the script focuses on the importance of perseverance and action in achieving success. The speaker shares personal anecdotes about their struggles and the challenges they faced when starting their online store, emphasizing that success rarely comes to those who do not take the initiative to start. The paragraph also discusses the Dunning-Kruger effect, highlighting how smart people often underestimate their abilities due to their awareness of what they do not know, while less knowledgeable individuals may overestimate their competence. The speaker concludes by stressing the importance of not quitting and taking action despite the fear of failure, using their own YouTube channel and other ventures as examples of persistence leading to success.
Mindmap
Keywords
💡SAT scores
💡Apartment buildings
💡Construction company
💡Intelligence
💡Rationalization
💡Financial Freedom
💡Risk
💡Underestimation
💡Dunning-Kruger effect
💡E-commerce
💡Resilience
Highlights
Encounter with a successful high school classmate who was not academically inclined challenges the assumption that intelligence is directly correlated with financial success.
Swedish study reveals that the top 5% of earners are slightly less intelligent than those just below them, suggesting intelligence is not the sole factor for wealth.
Many smart people rationalize not needing much money, believing they have a decent life without the pursuit of wealth, which can limit their financial growth.
The realization that financial freedom is important for personal freedom, such as spending time with family without being tied to a job.
Fear of looking stupid prevents many smart people from taking risks and trying new ventures, unlike those who are underestimated and have less to lose.
Dumb people have the advantage of being underestimated, which can motivate them to prove others wrong and take more risks.
Smart people often overestimate risk due to their analytical nature, which can lead to inaction and missed opportunities.
The Dunning-Kruger effect is discussed, where less competent individuals overestimate their abilities, while smart people tend to underestimate theirs.
Successful people often start without a concrete plan and adapt as they encounter problems, emphasizing the importance of perseverance.
The speaker's personal experience of starting an online store with handkerchiefs, initially facing failure but eventually achieving success.
The importance of not quitting and sticking with a venture until it works, as illustrated by the speaker's various business endeavors.
The common belief among smart people that they need to know everything before starting a business can be a hindrance to taking action.
The contrast between smart people's tendency to overanalyze and dumb people's willingness to take action despite limited knowledge.
The speaker's experience with an acquaintance who successfully started an e-commerce store by taking pre-orders and managing risks.
The idea that smart people's fear of failure can prevent them from taking the risks necessary for financial success.
The final message that success is about taking action and not quitting, regardless of initial intelligence or knowledge.
Transcripts
so about 20 years ago I went back home
to visit my mom over the summer and I
happened to run into an old classmate of
mine from high school and back in the
day this classmate of mine wasn't known
to be the brightest guy in school I
remember one time a group of us were
discussing our SAT scores and he blurted
out that he got a 700 on the test and
when we asked him whether he got a 700
on verbal or a 700 in math he just said
yep anyway I naturally assumed that he
was working in some dead-end job making
minimum wage but I was shocked to learn
that he owned multiple apartment
buildings and his own construction
company this guy was loaded and even
though I was doing okay making about
100K as an electrical engineer at the
time I was a popper by comparison and at
that point I remember thinking to myself
what the hell is this guy's secret how
did he start a successful Construction
Company because it was dumb as rocks in
high school and this threw me for a loop
because my whole world view at the time
was that you had to be smart to make big
money but the truth is the richest
people in the world aren't necessarily
smarter than you or me in fact according
to a Swedish study the top 5% of earners
in the world are slightly less
intelligent than those just below them
on the economic ladder so in this video
I'm going to break down exactly why
people who are likely dumber than you
are killing it in business and then at
the end I will share with you the secret
of success that I've learned from
running my own businesses so let's start
with reason number one many smart people
rationalize that they don't need much
money to to live they already have a
decent paying job go on a yearly
vacation own a car and can afford to go
out to eat every now and then so why
rock the boat in fact this was my exact
thought process back when I worked my
day job as an electrical engineer back
then I thought that the only people who
cared about getting rich in business had
to sacrifice their social lives their
family and devote their entire future
towards the pursuit of wealth and this
is one of many excuses that I had to not
start a business or try to make money
outside of my day job and the result was
that for nearly a decade I lived a
listless life without purpose I
basically woke up in the morning went to
work came home had dinner watch TV rinse
and repeat now I had money to provide
for myself but I was living life like a
zombie with the exact same daily routine
now it was only after my wife became
pregnant with our first child did I
realize a fundamental truth in order to
have freedom to spend time with who you
want and not have to go to an office for
eight hours a day making money is
important like it or not you need money
to improve your life which in my case
was spending time with my newborn child
once I had a purpose for the money I was
able to unlock my full earning potential
so the first question I encourage all of
you to ask yourself is is if you weren't
limited by money what would you be doing
now my answer to this question was to be
present with my kids every day and have
the freedom to coach their sports teams
and help them out with school now your
definition of winning might be different
but the goal for most people is to get
to the point where money is no longer
the limit factor in the decisions that
you make however to win you're going to
have to put yourself out there you're
going to have to take some risks and
actually try which leads me to reason
number two why many smart people can't
get rich even if you have a purpose
you'd be surprised how many smart people
I know aren't willing to try to start a
business or go out on their own because
they are afraid of looking stupid now I
used to have this mentality in high
school when I grew up I was regarded as
one of the smartest kids in school in
order to maintain that reputation I
didn't want to fail I couldn't fail so
what ended up happening was that I often
stuck to easy things that I knew I was
good at rather than push myself to my
limits I was reluctant to try anything
new because I didn't want to fail and
ruin my image but for dumb people they
don't care because they are already
being underestimated now remember my
high school friend who I thought was
dumb as rocks well dumb people have two
huge advantages over smart people first
off being constantly underestimated puts
a chip on your shoulder to prove
everybody wrong and that can be a
powerful motivator second you've got
nothing to lose because who really cares
if you fail people have already written
you off you're like the eighth seed in
the NBA Playoffs nobody expects you to
win you've got nothing but potential
upside smart people on the other hand
have the opposite problem they have
nothing but downside because everybody
expects them to be wildly successful in
everything they do which is impossible
if a smart person tries something
outside of their comfort zone and then
fails then their reput ation as a smart
person is at risk now the path of least
resistance for a smart person is to
follow the traditional path you go to
school you get your job you spend the
next 40 years in an office and then you
retire now I used to think that my job
provided everything that I needed and
for most people it can be but if you
want to Achieve Financial Freedom and do
whatever you want you can't follow
common wisdom and expect to get uncommon
results you have to do something
different now the other thing I've
noticed about dumb people is that they
tend to underestimate risk whereas smart
people tend to overestimate risk now I
mentioned this in the past but the most
problematic students in my profitable
online store course are Engineers
whenever I try to teach an engineer how
to start an e-commerce business they are
always running mental simulations in
their heads to predict the probability
of failure they want all the answers
before they start and I'm not
criticizing Engineers because I am one
but the problem with trying to
overanalyze everything is that that
turns you into a pessimist you start
thinking about everything that could go
wrong instead of the opposite thinking
about everything that could go right if
you succeed by the way if you're
interested in learning how to start your
own e-commerce store make sure you sign
up for my free 6 day e-commerce mini
course below now for this Behavior I
blame Darwinism and evolution back in
the stone ages it was all about survival
and being cautious otherwise you could
die and being smart was valuable because
you could calculate all the things that
could potentially go wrong and avoid the
risk that could get you killed but today
no one's going to die from making a
wrong business decision and being your
own boss isn't about life or death maybe
you lose some money or some of your
dignity maybe you have to move back in
with your parents for a while but taking
risk to make money assuming you're not
doing anything illegal is unlikely to
end in anything that you can't recover
from but what about dumb people most
dumb people are completely ignorant of
all the things that could go wrong
meanwhile smart people are busy
analyzing all the potential pitfalls and
it stops them from ever getting started
one time I had an acquaintance come to
me for help to start an e-commerce store
and the problem was that he had no money
heck he didn't even have enough money to
buy a sample of the product that he want
to sell so what did he do he took
pre-orders for his product collected
money from customers and then bought a
bulk shipment of products from Alibaba
sight unseen so many things could have
gone wrong he could have been shipped
junk from Alibaba the shipment could
have arrived late it might not even have
arrived at all the product might not
have functioned as he intended but
luckily everything turned out fine and
he end up making multiple six figures in
profit in his first year business here's
the thing as a smart person you're
probably very good at imagining all the
things that can go wrong but the reality
is that people are terrible at
calculating the probability of those
events actually occurring the worst case
scenario almost never happens and you
spent all this time worrying that it
keeps you from taking actions that could
change your life and lead to something
amazing now I still struggle with this
today and I constantly have to remind
myself of my overarching goal I want to
make money so I can do whatever I want
and hang out with whoever I want without
worrying about the money and I never
want to spend 40 hours a week in an
office which leads me to the next
limiting belief of smart people they
never think that they know enough to be
successful now there's an interesting
aspect about people that I've learned
over the years that is just so
counterintuitive that I still don't
really understand why it happens and
it's called the Dunning Krueger effect
the Dunning Krueger effect is a
cognitive bias where people with low
ability or knowledge in a particular
area tend to overestimate their
competence people who are less skilled
or knowledgeable mistakenly believe that
they're more competent than they are due
to a lack of insight into their own
limitations but the opposite is true of
smart people smart people rarely think
that they are the expert in any given
field and therein lies the problem the
reason smart people struggle to make
money is because they get hung up on the
fact that they know that they don't know
enough to succeed for example I have
friend who's an amazing engineer and
he's either built or been the lead
developer for many famous apps that we
all use today on our phones he clearly
has the skills to start a very
successful company but he's terrified
about the business aspects of running
his own company now because the relative
gap between his extensive knowledge of
engineering versus his lack of knowledge
for business is just so large that he's
discouraged from taking action meanwhile
a dumb person who has very little
engineering or business experience
usually thinks to himself I don't really
know anything but how hard could this
possibly be and then what happens is
that the dumb person takes action and
gets into the ring while the smart
person is busy second guessing himself
on the sidelines now in general things
rarely end up as badly as we think they
will and there's so many external
factors outside of just knowledge and
strategy that the dumb person stumbles
upon success because he tried so bottom
line if you take anything away from this
video here's what I want you to remember
when I first started my business and I
followed a bunch of experts and gurus to
learn I was under the impression that
all these successful people knew what
they were doing from the start that they
never made mistakes but I've come to
learn from interviewing over 500
successful entrepreneurs in my podcast
that almost everyone had no clue what
they were doing in the beginning they
didn't have a concrete plan and if they
did it never went as expected most
successful people are just going with
the flow in solving problems as they
arise and the main reason why they are
successful is because they are too dumb
to quit
heck the reason I started an online
store selling handkerchiefs was because
I thought to myself how hard could this
possibly be you just buy stuff at a low
price and sell it at a high price simple
right well I overestimated my abilities
early on and didn't understand all the
subtleties of selling online I didn't
understand everything that could go
wrong and the first 3 months after I
opened were horrible I didn't make any
sales hell I don't even like
handkerchiefs but I stuck with it
because I wanted my wife to stay at home
with the kids and believe believe me I
was teased by my friends all the time
for having a master's degree in
electrical engineering from Stanford and
selling handkerchiefs for living for
most of my first year in business I felt
like an idiot I felt like I was wasting
my time until things started to actually
work after we made six figures in our
first year and then seven figures years
later all of a sudden I look like a
genius which I am not I just kept with
it until it worked the same goes with my
YouTube channel my blog my podcast and
everything that I've ever done in life
remember you can't win if you don't
start and you can't lose if you don't
quit this is all you need to know now
that you understand the secret to
success watch this video here to learn
how to get started with your first
business
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