The Money Cliff

More money is everything until it's nothing.

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A brief story about “money.”

Spotify’s founder and CEO Daniel Ek is a true rags-to-riches story. Growing up in one of Stockholm’s poorest neighborhoods, Ek spent his adolescence tinkering and coding on his high school computers, a pastime that proved valuable in the 90s. As the Dot Com bubble ramped up, startup founders, desperate for their companies to remain relevant, began paying teenage Ek thousands of dollars to design web pages for them. Ek’s business boomed over the next few years, but the Dot Com crash nearly wiped him out, and he was forced to lay off several friends that he had employed.

Desperate to keep his company afloat, Ek began accepting consulting gigs from different clients to maintain some level of revenue. However, many of these startups were strapped for cash, and they instead offered him equity for his services. While this looked like a terrible deal at the time, one of these startups was later acquired for a massive sum of money, and Ek’s previously “worthless” stake made him a multi-millionaire at the age of 22.

And it almost ruined him. The following is a quote about this experience from his recent episode on Logan Bartlett’s podcast:

But no one actually talks about what happens when you get there (rich). Instead, you’re just hearing from these rich people that money doesn’t mean that much. Well, it certainly does if you have none, I can tell you that. And they don’t teach you what to do and what actually matters, so it feels like a foreign concept where you think they are saying that from a false humility to disguise that they’re actually happy about having that money…

And I thought to myself, “I made it. This is the life. I can access really cool nightclubs. I can get all of the girls that I couldn’t get beforehand. I’ll be one of the cool people.” And I thought for a while that this would make me happy. So I spent a bunch of time doing just that. I sprayed champagne on people in central Stockholm, I tried to hook up with the girls that I couldn’t get before…

But I realized they didn’t want me for me. They wanted me for the status that it provided… And I realized that many of these people wouldn’t be there unless I had money. And that made me pretty depressed.”

And now a brief analogy about hiking.

Imagine that a hiker decides to scale a steep mountain to capture the breathtaking view from its summit. The base of this particular mountain is shrouded in fog and clouds, but the view grows clearer and clearer as the climber continues his ascent. While initially, the adventurer sees little due to the clouds…

He eventually reaches the summit, with the whole world before him.

So our climber is sitting at the peak, the view is gorgeous, and he can’t possibly climb any higher. But the climber thinks to himself, “This view keeps getting better and better, perhaps I’ll keep moving.” So instead of remaining in his place or returning the way he came, he continues trudging forward.

Unfortunately, our climber was so distracted by the vast, expansive views that he failed to pay attention to the path itself, and just on the other side of the peak, there was a steep ravine.

As our climber strained to see further and further into the distance, he realized a second too late that the terrain has dropped off before him. By then, it’s too late.

Money, surprisingly, has a lot in common with mountain climbing. Allow me to explain.

When you’re young, broke, and hungry, more money does, without a doubt, improve your life. To the homeless person, more money might mean they can eat that day. To someone riding the poverty line, like a young Daniel Ek, more money means you can move to a safer neighborhood. To the recent graduate drowning in debt, more money represents freedom from loans. To the worker living paycheck to paycheck, more money means that a medical emergency won’t ruin them.

Even after your basic needs are covered, more money still improves your life, for a while anyway, by granting you your wants. Maybe more money means you no longer have to skip vacations with friends to “save money.” Maybe it means that you can enjoy more lavish dinners or live in a nicer apartment. Maybe it grants you the ability to travel more frequently for longer periods of time. Money is subjective, but we can all benefit from it. But these benefits don’t increase into perpetuity.

Money is one way to measure wealth, but it isn’t the only way to measure wealth. You could have a wealth of knowledge, time, health, relationships, or experiences, all of which are much, much more valuable than “money,” no? In fact, I would say that money’s greatest utility comes when it is exchanged for other forms of wealth.

But sooner or later, you reach a certain point where additional money no longer benefits your life. Where it can no longer improve your knowledge, relationships, or anything else. And if you keep pushing, that money can take away from those other forms of wealth that it previously empowered.

Put simply: more money is everything until it’s nothing.

Past a certain point of wealth, new relationships run the risk of being superficial, as your “wealth” becomes an integral part of your identity. Do your new acquaintances like you for “you,” or, as Daniel Ek realized, are they only interested in you because of what your money can do for them?

The pursuit of money and a lack of self-control will push you toward social circles whose identities revolve around the social circles themselves, where you can get stuck in a dangerous cycle of more, more, more to keep up with your peers around you. But the dopamine hits of what each additional dollar buys you get weaker and weaker, because these purchases are no longer enriching your life. They’re draining it.

Of course, the problem isn’t the money. It’s not knowing when you’ve reached the “peak.” And if you’re unaware of the peak, you’ll walk right past it, over the edge.

What happened with Ek wasn’t unique. Guy gets too much money at too young of an age and he doesn’t know how to handle it? It’s a tale as old as time. But the reason that it happened to him was that he hadn’t defined his peak before making the money, which allowed outside influences to push him past it.

Money isn’t inherently bad, far from it. But it is seductive. You have to define your peak before making the money in order to enjoy the view when you get there.

- Jack

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Jack's Picks

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