Scott H Young

Posts Tagged ‘money’

Could You Walk Away From $8 Million in Easy Money?

Tuesday, May 24th, 2011

One of my favorite stories comes from Zappos CEO, Tony Hsieh.

Tony sold his first company to Microsoft shortly after graduating from college. One of the conditions was that he stay for another 12 months. In exchange, he would walk away an extra $8 million richer.

The work conditions weren’t strenuous, as Tony himself recounts, “I just had to do the bare minimum amount of work so that I wouldn’t get fired.”

He quit after three months.

Could You Turn Down $8 Million?

The story has an interesting ending. After leaving behind $8 million, Tony spend the next ten years building Zappos, finally being sold for over $1 billion to Amazon.

That means Tony generated roughly $100 million in value per year. Even if you ignore the shares of other investors, that still dwarfs the $8 million paycheck he gave up.

I feel there’s an important lesson of this story. Not so much about the financial wisdom of ignoring $8 million, but in how we think about money itself.

Two Ways to Think About Money

There are two major views people take when talking about money.

The first is money as a means of buying things. Depending on your situation and appetite for material things, this sets a level of money you need to be comfortable.

The problem with this perspective is that it quickly becomes ridiculous. Research shows that happiness stops increasing once income crosses a threshold. Making $6,000,000 is hardly more satisfying than $60,000.

To paraphrase one analogy, money is the gasoline of the road trip of life. You don’t want to run out, but having extra won’t make the trip any better.

But if this is the case, why does anyone try to be rich? It’s too simplistic to just claim people are materially obsessed. Could there be another perspective?

That second perspective of money is using it as a proxy for career ambitions.

Money as a Yardstick of Impact

This second perspective is that money isn’t only to purchase things. It’s also a way of measuring your level of career success.

A programmer who has a $100 hourly rate has some sense that his work is more valuable than a programmer who can only charge $20 per hour. Even if she could be comfortable on the second amount, she might want to earn more as a way of measuring her success as a programmer.

Because judging actual impact is domain-specific, money becomes a proxy. It may be hard for a doctor to judge the impact of a mechanical engineer, but they could easily see differences in their income.

Money is both easy to measure and spans every career. That’s why it tends to be the default yardstick for how successful you are. And since aspirations aren’t about necessity, this explains why people want more money than they need to spend.

My income is modest, but I earn more than I strictly need. Despite this, I want to grow my business for the sole reason that it’s one way to measure the impact I have on the world.

How Good a Yardstick is Money?

In industrialized countries, I would argue this second perspective on money is the dominant one. We want more, not because we need it, but because it’s a proxy for success.

But in realizing that we’re not often chasing money for money’s sake, but as a way of measuring something else, sometimes you can see where the two diverge.

This is why I enjoy Tony’s story. Most of us wouldn’t have hesitated—stick it out for another nine months and keep the eight million dollars.

But Tony could recognize that he didn’t need more money, but he wanted to have a greater impact. Sometimes, like growing Zappos, money paralleled that intangible ambition. Other times, they did not. He chose to walk away because money itself wasn’t driving him.

Walking Away from the Easy Dollars

A few years ago I had a freelance writing arrangement worth roughly $50 per hour, at a time when my annual income was under $20,000.

Ultimately, I stopped freelance writing, even though it was “easy” money. At the time, I was well-fed and materially comfortable. I didn’t need the money.

I realized that money itself was only a proxy for what I really wanted—to grow my business. Even if the money was easy, it wasn’t a good yardstick for my less tangible goals.

Could I have done the same as Tony, and walked away from $8 million? I’m not sure. But it’s good to remind yourself why you’re working so hard. Otherwise you might discover one day that you were chasing after the wrong things all along.


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Posted by Scott Young on May 24th, 2011 in Personal Development | 21 Comments »