Why People Dumber Than You Are Millionaires (And What You Must Do Now!)

Summary

In 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

00:00

🤔 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.

05:02

🧐 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.

10:03

🚀 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.

Keywords

💡SAT scores

SAT scores are standardized test results that are part of the college admissions process in the United States. In the script, the narrator mentions an old classmate who claimed to have scored 700 on the SAT, but it's unclear whether it was in verbal or math, illustrating the classmate's perceived lack of intelligence. This relates to the video's theme by challenging the assumption that high SAT scores or intelligence are prerequisites for success.

💡Apartment buildings

Apartment buildings are multi-unit residential structures that can be owned and rented out by property owners. The script mentions the classmate owning multiple apartment buildings, indicating his wealth and success in real estate, which contrasts with the narrator's initial assumption about his intelligence and capabilities.

💡Construction company

A construction company is a business that specializes in the building and maintenance of infrastructure. The classmate's ownership of a construction company is highlighted in the script to demonstrate that success in business does not necessarily correlate with academic intelligence or high school performance.

💡Intelligence

Intelligence refers to the ability to acquire and apply knowledge and skills. The video script discusses the Swedish study that suggests the top 5% of earners are slightly less intelligent than those just below them, challenging the common belief that intelligence is the key to wealth and success.

💡Rationalization

Rationalization is the process of justifying or making excuses for one's actions or beliefs. In the script, the narrator talks about smart people rationalizing that they don't need much money because they have a decent life, which is a form of rationalization to avoid taking risks or making changes.

💡Financial Freedom

Financial freedom is the state of having enough wealth to live without having to work actively for basic necessities. The narrator's realization of the importance of financial freedom is a turning point in the script, as it motivates him to pursue success beyond his day job.

💡Risk

Risk is the possibility of an event occurring that will have a negative effect on one's goals. The script contrasts how smart and less intelligent people perceive risk, with smart people often overestimating it and being more cautious, which can hinder their entrepreneurial ventures.

💡Underestimation

Underestimation is the act of regarding something as being less important, smaller, or less capable than it actually is. The script points out that being underestimated can be a motivator for less intelligent individuals, pushing them to prove others wrong and take risks.

💡Dunning-Kruger effect

The Dunning-Kruger effect is a cognitive bias where people with low ability at a task overestimate their ability. The script uses this concept to explain why smart people might not feel competent enough to start a business, whereas less knowledgeable individuals may be more likely to take action.

💡E-commerce

E-commerce refers to the buying and selling of goods or services using the internet, and also the transfer of money and data to execute these transactions. The script mentions the narrator's experience with e-commerce, using it as an example of a business venture that requires risk-taking and perseverance.

💡Resilience

Resilience is the capacity to recover quickly from difficulties. The script emphasizes the importance of resilience in business, as it is the quality that allows individuals to continue despite initial failures, ultimately leading to success.

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