How did you Make your Money?
This might be one of the most valuable questions you are ever going to ask.
But let me explain.
If you want to improve your financial situation and eventually get rich, you are going to need information, advice and insights on how to do it.
There are specific principles that you need to be familiar with in order to make progress in your wealth building journey.
Additionally, after adjusting your money mindset (which is 80% of the game), you will also need to get hold of the mechanics of making money (which accounts for the rest 20%).
So it is perfectly natural to seek this advice in the form of articles, books and video content.
Unfortunately, in the booming era of technology and the internet that we are living in, anyone can claim that he is an expert.
Anyone can write an article, record a podcast or shoot a video, claiming, either covertly or overtly, that he is an expert in his field and that you should listen to what he has to say.
Especially in the world of entrepreneurship and online business, the issue is largely exacerbated.
The reason is that there are “gurus” that are not making money via their businesses, but they are making money by “teaching” other people how to “make money”.
Sounds weird, but it is absolutely true…
So how are we to decipher who is the real deal and who is not?
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The 3 Types of Experts
Recently, I stumbled upon a video from an entrepreneur that I follow and largely admire, Patrick Bet-David.
In that video, aptly named “How to Choose a Mentor – Seek Trifectas”, Patrick goes on to explain how you should approach the concept of seeking mentors and assessing experts.
This is a 7-minute video that I urge you to see:
As Patrick mentions, there are 3 types of experts, each based on a different mode of operation. Here are the modes:
1) Theory: That person has read and studied the topic at hand, without applying it. He might also have made a lot of research on it, but at the end of the day, has no practical experience. Think of it as a professor teaching business and entrepreneurship, without actually having built a successful business. This is the lowest level of expertise, yet most so called “experts” fall into this category.
2) Experience: This mode includes people that have been in close proximity to people that are actually successful in a field. Think of it as a person who has acted as an apprentice or mentee to someone who has successfully built, run and grown a business. This mode is extremely valuable, but again, it is not the “real thing”.
3) Application: This is the highest level of expertise. It is the “been there, done that” mode. For example, it involves people that have actually built successful businesses themselves. Those are the people that can share their personal stories and insights, and whose opinions should bear the greatest importance.
Now, based on this 3-modes framework, you are able to assess the significance of the advice that people share and either accept it, discount it or reject it.
Let’s see some examples to properly understand the concept.
If your uncle, who lives paycheck to paycheck and blames the government for his financial difficulties, attempts to provide any advice on the topic of money and wealth, you know that his “advice” should be rejected outright and his opinion on the topic is worthless.
If your favorite author writes about business and entrepreneurship but has not actually started a successful business himself, you should take his writings with some caution. You do not necessarily reject what he has to say, but you will probably need to discount it.
Finally, if a successful businessman decides to write a book sharing his experience and lessons, then you can be pretty confident that his advice is rock solid.
For example, people like Mark Cuban and Felix Dennis have gone ahead and shared their business wisdom in valuable books (“How to Win at the Sport of Business” and “How to Get Rich” respectively).
The one question to separate the wheat from the chaff
Taking this line of thinking one step further, Patrick shares the one question that you need to ask a proclaiming expert, either directly or indirectly, in order to gauge their level of expertise:
“How did you Make your Money?”
The reason is that “experts” will be talking about a subject and an approach, without having any experience on that subject or having used that approach!
For example, if you are teaching people how to build an online business without currently making money via an online business, then there is a serious issue with your credibility.
You should be teaching only what you are currently applying and having success with.
Now, it is totally understandable that in most cases, you will not be able to directly ask each “expert” how did they make their money.
This is how research comes into play. Since the internet is so transparent, you can fairly easily gather information about people who have a more public persona.
Let’s see some examples.
You know that I am a big proponent of online businesses and building wealth with entrepreneurship. Now, it would be ridiculous if in reality I was an employee in a large corporation or if I was running a small brick and mortar pizza joint, right? Absolutely!
That is why if you check my personal website you will find information about the online media company that I have co-founded, along with the various web properties that I own or co-own. This is something I am proud of, so I mention it on a prominent place.
On the same spirit, Dan Lok, one of the most popular internet marketers and online entrepreneurs, and a guy that I really admire and learn from, has all his companies listed in a web page. You don’t have to look very deep for it, it is right there on his personal website!
On the other hand, you will meet so called “experts” online who will only share generic information about their businesses, accomplishments and achievements, or sometimes even nothing at all.
The differences in transparency and openness are staggering!
Now, a small caveat. Unless you actually see a person’s bank account details or a business’s financial statements, you cannot be absolutely certain about their success. But with a few checks and some due diligence, you can be fairly certain if someone walks the walk or just talks the talk.
In this era of information overload, we are not really in a position to get advice from people that do not deserve to be heard. Our time is limited and precious.
We need a quick way to assess whether someone is really an expert that we can listen to.
For this reason, the best way to determine someone’s credibility is to ask them, directly or indirectly, how they made their money.
If the answer is not clear, or if the way they are making their money is different from what they are preaching, then you know what to do. Mute them out.
Excellent post Ilias. I wish more people were as transparent as you 😉