The Input & Output Hypothesis
1) Naval Ravikant talks about the Input Output Hypothesis
2) To become Wealthy one needs to be mindful of his input and output connection
3) For example a rickshaw puller sweats a lot, works hard and so does a pilot. So while their inputs are similar their outputs are not
4) A Pilot earns a lot more
5) Most people work from 9 to 5 but a clerk earns less while manager or supervisor makes more money
6) Therefore People invest in themselves by acquiring education that gives them high paying jobs
7) To get a better output for the same input one needs to be famous
8) There are many good singers, but only the famous ones create wealth
9) There are many good cooks but a few become Wealthy Chefs
10) You cook in a dhaba you earn little but if you cook In a 7 Star hotel, you become Wealthy
11) To reach the 7 Star Hotel, you may need skills, connections, education, personality, character and values – You need to attract the world like a magnet
12) Building your Brand makes you a magnet
13) How does one enhance output
14) Enhancing output for the less input is known as Leverage
15) Education is leverage, tools like owning a brand, software, machine, premise are examples of tools
16) Having a team is a huge leverage
17) Having capital, borrowing ability, ideas, creativity are all tools
18) Being a great investor is perhaps the biggest leverage
19) Releasing locked up illiquid asset and putting it to work is a leverage that most people do not understand
20) Expansion of output will happen if
a) Th input belongs to someone else (team, machine, attracting people to work under your magnet (brand) known as franchisee, your money (capital)
b) When your output is valued more – famous doctor, cook, artist, singer, director, dancer and so on
21) Businesses and Opportunities are always equal
22) How we make use of the Opportunities defines our Wealth Creating Ability
23) We can choose to sell a flat or a mansion. Selling a mansion will take the same time but will be more rewarding
24) To have the ability to sell a Mansion would need more skills and connections
25) So ultimately the Asset that matters is YOU
26) How you NURTURE the YOU is directly connected to your Wealth Creating Ability
27) So the Formula for Wealth Creation is (Knowledge (Skills) x Brand x Capital x Team x Technology)
28) You save time and energy when you send your team / your money / your machine / your intellectual property / brand to work
29) The journey to wealth creation is you ability to generate passive income
30) Take the case of a cricketer – First he needs to play well and become a star, then he gets a chance at commentary (less efforts), he can then start a column, podcast (still less effort ) and finally somebody else starts writing and podcasting for his brand (no effort)
