It’s an unconventional book that tells us to change the way we work. This book is filled with timeless wisdom. In spite of the book being written in 2010, whatever is written therein is still relevant and will continue to be useful even in the future. It is written in a straightforward style. This book can be finished in one day or even in three hours if nothing interrupts your reading.
Jason Fried and David Heinemeier Hansson, founders of 37 signals, wrote this book. 37 Signals is a two-decade-old software company that is now known as Basecamp. The authors have shared practical insights in this book based on their own experiences of starting a company from scratch, operating on their own, hiring employees from all over the world, and handling crises as they arise.
In this book, you will find many inspirational lines that you can use in your life and work. These lines can be written on post-it notes and stuck to your desk, so you can get a little inspiration every day. Here are a few of the best:
Be a starter
Scratch your own itch
No time is no excuse
You need less than you think
Start a business, not a startup
You need a commitment strategy, not an exit strategy
Be a curator
Interruption is the enemy of productivity
Meetings are toxic
Good enough is fine
Long lists don’t get done
Make tiny decisions
Focus on ‘You’ instead of ‘They’
Say ‘No’ by default
Build an audience
Go behind the scenes
Show your flaws. Be vulnerable
Press releases are spam. Instead, call someone
Everything is marketing
Hire someone who can manage herself
Send people home at 5 PM
Sound like you
ASAP is poison
Please read this book and let me know what you think about it. If you have already read this book, please let me know your thoughts and experiences in the comments section.
Let me tell you the story of my grandmother! I spent my childhood with her. I have seen her saving one rupee each day which led to huge savings later in her life. She did unbelievable things. She has a lot of patience. She believes in moving mountains even if she is old and sick. She never loses hope. She believes in the idea of compounding. Certainly, she does not understand the economics behind compounding. I have seen her converting hundreds into lakhs bit by bit. You must be thinking why I am telling you this? Recently, I saw a post about a book called, “The Psychology of Money” on Linkedin. This title made me curious and I decided to read this book. While I was reading this book, I realised that these pearls of wisdom on wealth and happiness were always there in front of my eyes. It usually goes unnoticed. The author of this book, Morgan Housel tells you those simple and obvious things about building wealth as Sherlock Holmes once said, ‘The world is full of obvious things which nobody by any chance ever observes.‘ It’s possible that we see these snippets in our daily life, but we never understood their significance of them.
Luck and risk
The book is divided into 20 chapters that take the reader from one timeless lesson to another about building wealth. As per the author, past experiences impact one’s behavior towards money. He believes that financial outcomes are driven by luck, independent of intelligence and effort. Luck and risk both play an important role in someone’s life. Outcomes are not only guided by individuals’ efforts but also by actions outside of our control. One of the best things to be said by the author is this: “Not all success is due to hard work and not all poverty is due to laziness” Therefore, he suggests keeping this thing in mind before judging people. Housel suggests having the virtue of contentment and not to risk what you have. According to him, there are many things that you should never risk. For instance- reputation and freedom, family and friends and happiness are some invaluable things that no one should ever risk in their life.
Things are uncertain and many times not dependent on historical factors. You should always be ready to face surprises in the financial market because no one clearly knows what might happen next. You must always give space to the room for error and be always ready to deal with unknowns. You should be ready to take risks but don’t take a risk that can wipe you from the world. Pessimism is so seductive and believable because setbacks happen too quickly to ignore. In comparison, progress happens too slowly to notice. Improvement is driven by compounding that always takes time. On similar lines, you should be ready to face losses in the financial market. Housel adds that true financial optimism is to expect things to be bad and be surprised when they are not. Nothing is free in life. Market returns are also never free. You should always be ready to lose some money and be ready to face the consequences. It’s like give and take. If the market gives you some returns, it also takes some back.
Compounding is the key
The most important concept discussed in this book is “compounding”. Time is the most powerful force in investing. The duration of investment matters. It takes time to accumulate funds. It makes little things to grow big and big mistakes fade away. However, our minds are not built to comprehend the enormous power of compounding. As I told earlier, I have seen compounding working in my own life. Once my grandmother bought something worth ten lakh rupees when she was earning only 10 thousand rupees per month. It looked totally absurd to me and I tried to stop her from buying something so expensive when her income is so less. But she told she will slowly make this payment. Still, I couldn’t believe it. I didn’t believe till the date she was able to complete the whole payment. So compounding works in a way that our mind is not ready to sense it.
“Staying wealthy is more important than getting wealthy”, says the author. Keeping your money safe and using it rationally is more important than getting more money. Nothing should be taken for granted. Investing requires taking risks, being optimistic, and putting yourself out there but keeping money requires humility, fear, and most importantly frugality. The ability to survive plays an important role in becoming wealthy and in creating happiness. The author adds that sticking around for a long time should be the cornerstone of anyone’s strategy in life. Growth takes time. Be it about money or in career. And growth requires surviving all the unpredictable ups and downs that everyone inevitably experiences over time. Applying a survival mindset means appreciating three things in life:
You need to have enough savings to survive any disruption, pandemic and chaos in your life.
Planning is important but the most important is to plan on the plan not going according to the plan.
You need to have sensible optimism.
Being in control of your life
The best wisdom shared in this book is about how money can give you the freedom to control your time. As the author adds that the highest form of wealth is the ability to wake up every morning and say, “I can do whatever I want today” The ability to do what you want, when you want, with who you want, for as long as you want is priceless. It is the highest dividend money pays. Being in control of your life makes you happy.
Savings are linked not to your income but your humility
Creating wealth has no direct relationship with the income you earn or the investment returns you get. It depends on the saving rate. Saving the money you have and exercising frugality are the ways to build wealth. I have seen this habit not only in my grandmother but also in other family members. They don’t throw old clothes, boxes, and many household stuff and re-use them many times. They don’t go out and spend money to experience things as the new generations want to do. They have their own justification. However, saving money is the only way to build wealth. Spending money is also linked with your ego. If you desire less, you can save more. Housel has something interesting to say about increasing your savings. If you want to increase your savings, raise your humility than your income.
Saving money is the gap between your ego and your income & your income and wealth is what you don’t see.
The creation of wealth is linked to the psychology and behavior of the person. Saving money is like developing a good habit as James Clear shows in his book Atomic Habits. You don’t need a specific reason to save. Savings without a specific goal give you leverage to deal with unpredictable situations. It gives you flexibility and control of your time. The author also adds that you need to focus on being reasonable than rational because ultimately you are a human being who has emotions and feelings. You need to cut down on your expense but it does not mean that you stop living.
People change so do their goals in life
People’s desires and goals change so it is difficult to make long-term plans. The surprising thing is that people themselves don’t realise that how much they have changed in the past and how much they are going to change in the future. The author suggests keeping two things in mind whenever you are making a long-term decision. Firstly, you should avoid extreme ends of financial planning because people adapt to circumstances and the thrill of chasing dollars or living a simple life diminishes after a point. Secondly, you need to accept that things change and be ready to move on. The most beautiful thing author has to say is that you must have humility when things are going right and forgiveness & compassion when they go wrong. Because we never know what will happen and always be grateful for things that we have.
The crux of building wealth is to be humble, practice frugality and make saving your daily habit. Be a Ronald Read and not Richard Fuscone!
“If you can get 1% better each day for one year, you will end up 37 times better by the time you are done”
First, let me tell you the story of this tiny plant. Last year during the lockdown, I was spending good time gardening, writing, and clicking pictures. I reused an old plastic bottle and filled it with some soil and planted a small stem of my favorite plant-pothos. I fastened it in my balcony grill. Every alternate day I was watering it. But after some days, I saw it drying. I got disappointed and stopped thinking about it. I also reduced the frequency of giving water. Days and months passed. One day on a weekend, I saw a tiny green stem inside the old plastic bottle. I couldn’t believe it. It felt like some extra grass grew. I went closer to the bottle and there was a sweet smile on my face. I finally knew that my plant survived. It survived: because of everyday’s care & nurture that got accumulated for days. On similar lines, your good habits are like these tiny changes you make every day that leads to a bigger change later in your lives. (Scroll it down to see the beautiful plant as of today)
Reading this book makes you believe that small habits can make a big difference. And what is a habit? A habit is a behaviour that has been repeated enough times to become automatic. James Clear believes in incremental change. He feels that success is the product of daily habits-not-once-in-a-lifetime transformations. The interesting thing about this book is that it not only tells you how to create good habits but also how to break bad habits. He also warns the readers to be careful about the future trajectory of their lives as it will be dependent on their daily habits.
To me, this book feels like the combination of popular books Sapiens (A Brief History of Humankind) and Nudge(Improving Decision about Health, Wealth and Happiness)Like Sapiens, this book tells us that we have the brains of our ancestors but temptations they never had to face. We still crave calorie-dense foods because our brain’s reward centers have not changed for approximately 50 thousand years. Like Nudge, James Clear argues that the environment matters more than motivation. As Richard H Thaler talks about the concept of “choice architecture” that shapes people’s behavior, James Clear believes that every habit is context-dependent. People often choose products not because of what they are, but because of where they are. Accordingly, we need to design our environment such that we pursue our good habits. For instance- if you want to hydrate yourself, you must keep the water bottlers near you. We have to create space for every habit. A stable environment where everything has a place and a purpose is an environment where habits can easily form.
Our daily habits(positive/negative) compound for us and lead to a bigger change. And the thing is that whenever we have breakthrough moments, we don’t realise the reason behind them. The author has talked about the concept of “plateau of latent potential”. This is that moment where we get breakthrough results, but the thing is that we human beings generally don’t have patience. We can’t wait. I can share from my own personal experience. When I started preparing for civil services, things seem insurmountable and I also felt for some time that I don’t know if I can do this. But I got results. I couldn’t even clear prelims in my first attempt. But in my subsequent attempts, I cleared prelims and mains both. And it does not mean that I didn’t work hard in my first year. My result was a cumulative effect of all years and not only of the current year when I cleared the examination.
The author challenges the norm of setting goals if anyone wants to succeed. He adds: “If you want better results, then forget about setting goals. Focus on your system instead.”
There are three layers of behavior change:
Outcome-based habits: What you get
Process-based habits: What you do
Identity-based habits: What you believe
The ultimate form of intrinsic motivation is when a habit becomes part of your identity. The more pride you have in a particular aspect of your identity, the more motivated you will be to maintain the habits associated with it. True behavior change is identity change. It means that to make your habit permanent, you must make your habit part of your life and identity.
One of the best things Clear has to say is that you need to unlearn and continuously edit your belief systems to upgrade your identity. And this cannot happen overnight. For instance- doing exercise is a good habit but to build a healthy body, you have to get out of your bed every single day at the same time. Go for a walk. Repeat this every single day despite all odds.
As per Clear, there are four simple steps to build a better habit: Cue; Craving; Response & Reward The cue gives you an indication about reward, craving makes you feel like getting that reward, the response is the actual habit you perform and rewards are the end goal of every habit. This whole process is also called a feedback loop.
Developing good habits or changing habits first and foremost requires you to understand what you are actually doing. The author tells us to create a list of our daily habits so that we can observe our thoughts and actions. We need to ask this question after making our daily list, does this habit help me become the type of person I wish to become? Below are the laws that we need to apply to cultivate good habits and eradicate bad habits.
Even our family, friends, and people we follow play an important role in shaping our behaviours. We pick up the habits from the people around us. As the author adds that ‘ we don’t choose our earliest habits, we imitate them’. We imitate the people we admire. The best strategy to develop a good habit is to surround yourself with the people who have the habits you want to have yourself. Sticking with good habits requires you to create short-term rewards. As our brains are still tempted towards instant gratification, we need to create a habit tracker. The author adds that a habit tracker makes you believe that you are working towards becoming the type of person you wish to become.
In the end, the author talks about ‘the Goldilocks Rule’ that will help you to stay motivated in life and work. As per this rule, humans experience peak motivation when working on tasks that are right on the edge of their current abilities. Not too hard, Not too easy, Just Right. Reaching the goldilocks zone makes you achieve the state of flow. Flow is something one achieves when they have immersed themselves in what they are doing. But doing the same thing or following the same habit can also bring some boredom. The biggest challenge for self-improvement is dealing with this boredom. “The only way to become excellent is to be endlessly fascinated by doing the same thing over & over. You have to fall in love with boredom”, adds the author. Mastery requires more practice than planning. Though habits are important, they are not enough. You need to have a combination of automatic habits and deliberate practice. And most importantly, you need to review and reflect on these habits to continuously fine-tune them as one thinker has rightly said” a genius is not born, but is educated and trained”.