I was out with an old friend the other day. We’ve known each other since high school days but then lost in touch. Somehow he discovered my site through one of the articles I wrote and contacted me to meet up. I agreed.
We sat down in a coffee shop and ordered coffee. He asked me what I’ve been up to these past years. I replied that for the past couples of years I’ve based myself in Eastern Europe and that last year I spent half a year in Asia. I also told him that I’ve been nomadic ever since quitting my job back in 2008 and making ends meet by running various websites that sell different products and services.
“You’re lucky,” he responded.
“Why?” I asked.
“Well, you were able to start it back in 2008. I’ve been thinking about starting something myself, but it seems it’s much harder to do it now than ten years ago,” he answered solemnly.
I nodded my head in agreement. I didn’t really have a response. He had a valid argument. Perhaps things were “easier” back in 2008. After all, there were a lot fewer travel/entrepreneurial blogs than they’re now. There were also fewer people competing for your attention, so it was a lot easier to get noticed.
After all, maybe he did the right thing by sticking to his safe and comfortable job instead of risking it all by starting a business.
In the subsequent weeks, I couldn’t stop thinking about that conversation. Something about it bothered me. It was as though there was a little rock stuck inside my shoe that I couldn’t get rid off anyway I tried. I was deeply affected and didn’t know why.
Finally, about a month later as I was coming back from a coffee shop after an especially productive day, I had an epiphany.
The first thing I realized is that my friend was wrong. In order to understand why my friend was wrong, it’s important to understand the concept of capital and how it works both in an economic and personal sense.
I read lots of books, and one of the more interesting books I’ve read in the last five years is The Mystery of Capital: Why Capitalism Trumps in the West and Fails Everywhere Else by Hernando De Soto. De Soto’s main argument is that everything (or almost everything) in the West can be turned into capital and serve as financing for something else. For instance, the house you’re living in can be turned into financing for your new venture by getting something called a “home equity line of credit” or “heloc.” The bank is happy to give you credit because if you default on your payment, they can simply repossess your house.
This doesn’t just apply to houses—it applies to everything. That’s because in a modern Western country, all assets—whether it’s a piece of land, a house, or a business—have a title of ownership on them. And, thanks to a modern system of property rights and a legal system that enforces those rights, there is never any confusion who owns what and who will repossess the asset if the lender doesn’t pay the creditor.
In the rest of the world, things aren’t so clearcut. If I gain ownership of a piece of land in a country like Ukraine or Russia through inheritance after my grandmother passes away, I may have problems capitalizing that asset because I gained ownership of it when Ukraine was still part of Soviet Union and property laws may have changed significantly now that each republic is an independent state. Or, if this specific law is crystal clear and rich with precedents, a related law or a proposition that isn’t might still make my life miserable later on.
Therefore, the house that I’m living in is essentially “dead capital.” Sure, I can live in. But I can’t squeeze money out of it unless I sell it. It’s illiquid. I can’t use it as a hedge for some ambitious venture because no one can be completely certain who’ll get the money when the shit hits the fan, and I can’t repay my loan.
The success of the West is really about turning everything and anything into an asset that can quickly and easily finance something else and create even more capital. When the rules of all the participants are straightforward to understand, money is able to move from one area to the next with ease. The result is economic growth.
Dead human capital
The concept of dead capital is also applicable to people. If you have a skill or knowledge in a particular area, but you’re not exposing that skill to the world in the form of products or services that help others achieve their objectives, then you’re essentially dead human capital. You have a skill that you’ve spent lots of time acquiring, honing and perfecting, but you’re not getting any use out of it. (Unfortunately, working as an employee doesn’t count because you’re still trading your time for money and not leveraging your skill to the max.)
This applies to each one of us, including my friend. As a result of his 33 years on the planet, he has amassed a certain level of knowledge and experience. He has certain hobbies and interests. He has particular things he enjoys and particular things he detests. For instance, one of his hobbies is photography; he knows a ton about all the cameras on the market and how to get that perfect shot.
And this is precisely why my friend was wrong: he was wrong because he wouldn’t be starting from scratch. Unless you were just born, there’s no way you could start from scratch. Nobody really starts from “scratch.”
When people say they’re afraid of starting from scratch, they’re automatically discounting the skills and knowledge they spent many years acquiring. As a result, they’re discounting the most important weapon in their arsenal.
Lately, I’ve become interested in photography and video-making. I figured making videos would nicely compliment my brand and content. (After all, I travel all the time). Naturally, I’ve been scouring YouTube for tutorials on how to make the perfect video.
As someone whose job it’s to grow businesses, I also pay close attention to the size of a particular channel and how quickly it has grown. What I’m discovering is, that the people who were able to build their channels quickly are those who are already pretty good at their core skills. Most of these guys have been doing photography for many years before starting a channel.
So, although they may have recently started their channel (or brand), they were able to grow them fairly quickly because all they were doing was exposing their comprehensive existing skills to the world. This allowed them to quickly build a following of loyal fans.
This is why your thinking is completely wrong. Your problem is not that you would be starting from scratch; your problem is that you don’t know how to package all your existing knowledge and wisdom in ways that it’ll reach the people who care (e.g., your target audience). Your problem is that you don’t know how to package all that knowledge and experience in ways that’ll appeal to someone else.
Your problem isn’t that you somehow missed some mythical “Internet wave,” it’s that you simply don’t know how to make your skills appealing to people besides your annoying boss who signs your paycheck every two weeks, which isn’t saying much anyway.
Let’s say you’re really into photography and videography. Your preferred camera for stills is the Canon 80D (or the Canon 70D), but your preferred video camera is Panasonic GH4/GH5. You mostly shoot in aperture priority but switch over to manual mode for those quick-moving action shots. You love the micro 4/3 system but are now contemplating moving to a bigger image sensor in order to have clearer low light shots without having to boost the ISO every time. While you love your GH4 to death, its annoying autofocus is making you consider the Sony A6500 with its always-reliable 49-point autofocus system. Oh, and, lately you’ve been considering the new Fujifilm X-T20 exclusively for street photography for its small form factor and excellent JPEG reproduction.
Most people will have no clue what I wrote above. That’s fine. But if you read the above paragraph and nodded your head after every sentence (or disagreed with it), congratulations: you probably have the knowledge and experience that many people do not. The problem is that if you’re not leveraging that knowledge to help others — you effectively have “dead personal capital.” That’s not good. You should find ways to turn it into “live personal capital.” Whatever you decide to do, it’s physically impossible to start from scratch.
This is applicable to virtually any domain of knowledge, whether it’s helping others master landscape photography, helping them learn a new foreign language rapidly, or assisting them in starting a new life in Rio de Janeiro, Brazil, Shenzen, China or Bali, Indonesia. Doing any of this wasn’t even possible even twenty-five years ago, but, now, thanks to the Internet, turning the knowledge packed in your head into “live personal capital” is pretty much down to a science.
The Internet revolutionized distribution making us all on an even playing field. So, unless you were born yesterday or have lived a sheltered life and possess zero marketable skills because you have zero interests in anything (hard to believe with the world’s information at our fingertips), you have zero excuses to not leverage the greatest weapon in your possession.
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