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Lessons - The Wealth Paradox: Why Some Billionaires Are Broke (Scott) · Success Story with Scott Clary

0:00
In this lessons episode, I want to speak about the wealth paradox why some billionaires are broke.
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We're going to talk about the true nature of wealth and why most entrepreneurs have it backwards
0:10
because real wealth isn't what you earn. It's what you have minus what you want.
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We're going to cover Morgan Housel's wealth formula, why chasing more never works,
0:18
and three practical steps to fix your relationship with money.
0:21
You're going to learn how to grow your assets while managing your desires,
0:24
a strategy that most founders and entrepreneurs completely miss.
0:30
Today, I want to talk about the wealth paradox and why some billionaires are broke.
0:43
And I know that many people listening to this podcast are not billionaires,
0:47
but the whole point of today's podcast is to help you focus on the right goals,
0:53
on the right definition of wealth, especially when you're first starting out,
0:57
so that you don't end up like billionaires who are quote-unquote broke.
1:01
But let me explain. Most of you are chasing the wrong definition of wealth.
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Every single day, you wake up, you check your accounts,
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your revenue, your profit, your subscribers, your followers,
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and you are constantly monitoring metrics, and you are always anxious about where you stand.
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I know this because I'm that person too.
1:18
And you've read about the founders who've raised millions,
1:20
and they have just by all outside measures and metrics of success made it.
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And you feel envy. You see your competitors buying vacation homes while you're
1:31
reinvesting every single dollar into your business.
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And you're starting to wonder when you'll finally quote-unquote make it.
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But what if I told you that some of the richest people in the world are actually broke?
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Now, not financially broke, but broke in the way that actually matters.
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The whole reason why I put this piece together is because of a quote by Morgan Hausel.
1:48
The best measure of wealth is what you have minus what you want.
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And by this measure, some billionaires are broke.
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And this isn't just some feel-good platitude designed to make you comfortable with mediocrity.
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It is a fundamental truth about wealth that most entrepreneurs completely miss.
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And I believe it is one that will transform your relationship with money success
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and satisfaction if you truly understand it.
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So today I want to break down why the conventional definition of wealth is fundamentally flawed,
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how the wealth, these people that I know measure their success,
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and how you can build genuine wealth even while you're building your business.
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Because once you understand true wealth, you're never going to look at success the same way again.
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So most people get the wealth equation wrong.
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Let's get mathematical for a moment.
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Most people define wealth with a very simple equation.
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Wealth is equal to what you have, which means the more money, the more assets,
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and the more resources that you accumulate, the wealthier that you become.
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Simple, right?
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But the issue is that this equation is incomplete.
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It ignores the denominator of the wealth fraction, what you want.
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So if we were going to redo this formula, the complete equation would look like this.
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Wealth equals what you have divided by what you want.
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And this changes everything.
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If what you want constantly expands to exceed what you have,
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you're never going to feel wealthy no matter how much you accumulate.
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And this is why some people with millions and tens of millions feel broke
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while other people with a modest amount of money feel abundant.
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I know founders personally who built eight-figure businesses but live in constant anxiety
3:20
about the next milestone because they've trapped themselves in this perpetual cycle
3:24
of wanting to keep some feeling poor despite their objective success.
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Meanwhile, I know solarpreneurs with six-figure businesses
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who have designed their lives so intentionally that they experience genuine wealth every single day.
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They have mastered the denominator of the wealth equation.
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So at the end of the day, the problem isn't your revenue.
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It's your relationship with wanting.
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Now, I'm not saying that wanting things is inherently bad.
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I'm just saying that most people don't purposefully map out what they want in life and why.
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And they're playing this game based on someone else's idea of what success looks like.
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And that's why you're unhappy.
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Now, let's look at how this plays out in the real world.
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And I'll give you some examples of people who seem rich on paper.
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But if you apply this equation, they're actually broke.
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And I personally believe this is the most meaningful measure of wealth and the best
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equation that you can apply to your own life.
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So let's tell a story about Elon Musk who is the billionaire who can't stop working, right?
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Elon Musk should be by any objective measure one of the wealthiest people alive.
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And at times, he's been the richest person on the planet.
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But there were times when he still slept on the couch at the Tesla factory
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during production crunches.
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He works 80 to 120 hours a week.
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He describes his life as excruciating.
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And he admits to taking ambient just to sleep.
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Now, this isn't the lifestyle of a wealthy person.
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It's the lifestyle of someone who's fundamentally broke.
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Now, why?
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Because Musk's wants.
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They vastly exceed even his enormous halves.
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His ambitions for Tesla for SpaceX and all of his other ventures.
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They created deficit that no amount of money can fill.
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Now, I'm not criticizing his choices or his ambition,
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but the wealth equation we're discussing.
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He is running a perpetual deficit.
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Now, contrast this with someone like Derek Sivers,
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who sold his company CD Baby for 22 million,
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which is a lot less than a billion.
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He gave most of it the charity.
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Now, he lives a life of freedom of learning and creation.
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Now, these are two opposite ends of the spectrum.
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I would still say a 22 million dollar exit is great.
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Most people would love to have that.
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But the point is, why his own account?
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He feels extraordinarily wealthy because his wants
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are modest and intentional.
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But it's not about how much you have.
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It's about the gap between what you have and what you want.
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And I'll tell you, this pattern repeats itself
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across the entrepreneurial landscape.
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The founder who sells their company for 10 million,
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but immediately feels empty because they've lost their identity.
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The creator who reaches 1 million subscribers,
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but can enjoy it because they're fixated on competitors with 5 million.
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The consultant, who runs 500k annually,
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but works so much, they have no time to enjoy any of their income.
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And they all look wealthy from the outside,
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but they live in this constant state of deficit.
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Now, let's explore how this applies to you directly.
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And now you can start building true wealth right now,
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even if your business is still growing.
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So how do you become wealthy before your quote-unquote rich?
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Wealth creation typically follows one of two paths.
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Path one, you increase what you have,
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while your wants expand even faster.
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Now, this is the default path.
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Each achievement unlocks new desires.
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Each milestone reveals new comparisons.
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Your enumerator grows, but your denominator grows faster.
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And that, by the way, this is most people.
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This is lifestyle creep that a lot of people succumb to.
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They make more money, and they find ways to spend it,
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or want more immediately, right?
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You're never satisfied.
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Now, path two is you increase what you have,
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while carefully managing what you want.
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And this is the path to actual wealth,
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where your enumerator grows through your hard work,
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but you maintain control over your denominator.
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Now, let me be clear, this isn't about limiting your ambition
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or settling for less.
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It's about being intentional about what you really want,
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versus what you've been conditioned to want.
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And there is a massive difference.
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You have to be aware of why you are pursuing the goals
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that you are pursuing.
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Are they actually your goals?
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Are they someone else's goals?
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Are they society's goals?
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Are they Instagram's goals?
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Are they your parents' goals?
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Are they your spouses' goals?
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You have to do an audit.
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You have to do a want audit and a self audit.
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Because most of your wants aren't actually yours.
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They're implemented by comparisons
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to other entrepreneurs or just people.
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Social media highlights, industry expectations,
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status games with your peer group.
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So if you take inventory of what you genuinely want,
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versus what you think you should want,
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start to ask yourself,
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if no one would know about this achievement,
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what I still want it,
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does this desire align with my deeper values,
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or does it just align with my ego,
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and is this something I want,
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or is something I've been told to want?
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When I did this exercise,
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I personally was shocked that about 70% of my wants
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weren't actually mine.
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They were external expectations that I'd internalized.
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Number two, design your enough.
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So the most powerful financial concept
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is in compound interest.
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It's a concept of enough.
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So define what enough looks like
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across different dimensions of your life,
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enough income to support your ideal lifestyle,
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enough working hours to feel productive
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without burning out,
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enough achievement to feel accomplished,
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enough possessions to be comfortable without excess.
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This isn't setting a ceiling on your growth.
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It's establishing a floor for your satisfaction.
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Now when you know what enough looks like,
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you can enjoy everything beyond it
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as a bonus rather than a requirement.
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The wealthiest people that I know
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have a very clear definition of enough.
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Now the broke ones,
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regardless of their bank accounts, they never do.
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After you define enough,
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next you want to practice conscious wealth daily,
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because true wealth is not a future state.
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It is available right now through daily practice.
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That could mean gratitude without complacency,
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so you appreciate what you have
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while remaining ambitious.
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These are not mutually exclusive ideas.
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Experience over accumulation.
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So I want you to prioritize experiences
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that create memories rather than possessions
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that create clutter.
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And lastly, time abundance.
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Guard your calendar as fiercely as your bank account.
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Time wealth is the purest form of wealth.
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And the most reliable way to feel wealthy today
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is to spend a portion of your day in a way
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that would make others envious of your freedom,
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not your money.
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One of my founder friends that I know he's worth about eight figures.
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He still drives a 10-year-old car
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but he blocks off every single Wednesday
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for hiking with no foam.
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That's wealth.
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Now I really want to show you how to apply
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this wealth mindset to your situation
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as a founder, creator,
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or just somebody who's super ambitious.
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I made the argument that true wealth
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requires addressing both sides
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of the equation simultaneously, right?
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Both the what you have and the what you want
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and the balance between the two.
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But the issue is most people only focus on
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the what you have,
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and they never focus on the what you want.
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Most people will focus on the numerator, right?
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The building, the business,
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the developing multiple streams of income,
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the accumulating assets,
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the learning high leverage skills,
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keep doing those things
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because they matter tremendously.
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But I'm telling you they're only half of the equation.
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The whole lesson here is to manage the what you want part, right?
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This is the neglected side of the wealth
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building formula that separates a truly wealthy
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from the perpetually striving.
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This means that you have to distinguish
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between authentic desires and social programming,
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like I just mentioned.
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You have to set clear enough thresholds.
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What is enough?
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If you don't define it,
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you're signing up for infinite dissatisfaction.
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And I know a lot of entrepreneurs,
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they have written thresholds,
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very specific thresholds for income,
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for material possessions,
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for business metrics,
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the happiest entrepreneurs,
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they know their numbers.
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And also, you have to create space
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between stimulus and response.
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So when somebody appears by the larger house
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or raises out a higher evaluation,
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can you witness it without automatically adding it
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to your want list?
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This space is where wealth lives.
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And the growth of your desires
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is truly the silent,
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wealth-killing that no one speaks about.
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Every time your mastermind group
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upgrades their lifestyle,
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you feel the pull to follow.
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Every time you hit a revenue milestone,
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the target immediately moves forward.
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Every single comparison creates a new want
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that has this gravitational force.
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And without conscious management of this process,
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you're building a wealth-destroying machine
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alongside your wealth-creating business.
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So I'm telling you right now,
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don't be like most entrepreneurs
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who try to solve their wealth problems
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exclusively on the numerator side.
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Just make more money,
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but it's like trying to fill a bucket
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with a hole in the bottom.
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No amount of water will ever be enough.
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The truly happy, truly fulfilled people,
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they combine aggressive growth of their assets
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with deliberate containment of their desires.
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Now you may ask,
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well, why is that?
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Why do we keep chasing money status,
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whatever that metric is?
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And really, it's because there's safety
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in feeling broke.
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When you're not there yet,
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you have the perfect excuse
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for grinding yourself into the dust,
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saying no to all these life
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enriching experiences,
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postponing joy indefinitely,
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we're all guilty of this.
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You know, you've said things like,
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I'll relax after the eggs,
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that I'll spend time with family
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after this funding round.
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I'll focus on health when we hit 10 million ARR.
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The vulnerability lies in admitting
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that you might already have enough for happiness, right?
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The life you're living now
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is something that your past self
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could only dream about.
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And when I speak about this perspective with founders,
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I see this raw fear,
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just flash across the rise,
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not fear of failure,
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fear of contentment.
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They are terrified that accepting
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their current situation as enough
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will kill their drive in their ambition.
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But this fear is based on a false dichotomy.
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Ambition and satisfaction aren't opposite.
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They are powerful allies.
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I don't know why people think
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they're polar opposites.
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You can be deeply grateful for what you have
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while enthusiastically building something greater.
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You can find your enough
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for today while creating more for tomorrow.
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This isn't a spiritual bypass
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or toxic positivity.
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It's hardcore strategic wealth management,
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addressing both sides
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of the equation simultaneously.
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The founders with the longest,
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most successful careers
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aren't the most driven
12:57
or the most satisfied.
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They're the ones who've mastered
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the integration of both states.
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They celebrate milestones fully
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before immediately shifting the goalpost.
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They work with an intensity
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that would rival any successful entrepreneur
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without deriving their entire identity
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from their company.
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They enjoy financial success
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without becoming hostage
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to lifestyle inflation
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and they compare themselves
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primarily to their past selves,
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not the peers or competitors.
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These ideas are the fundamental operating system
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of sustainable success.
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So at the end of the day,
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the wealthiest person
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isn't the one with the most zeros
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in their bank account.
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It's the one you can say
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with genuine conviction.
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I have more than I need
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and I know exactly what enough looks like.
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And when you know what enough looks like,
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you can make radically better business decisions.
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You don't make terrible deals
13:40
at desperation.
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You don't compromise your values
13:43
for quick wins.
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You don't burn out your team
13:45
chasing vanity metrics.
13:46
You build from abundance
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rather than scarcity.
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And the ultimate irony
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is this mindset tends to create
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substantially more financial wealth
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over the long term
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because it enables sustainable,
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principled growth
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rather than destructive
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accumulation at all costs.
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Morgan Housel's insight
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that wealth equals
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what you have
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minus what you want
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isn't just clever.
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It's the most
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practical wealth
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building formula ever created.
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So ask yourself honestly
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by this equation
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are you rich
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or broke.
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If you're running a deficit,
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it's time to work both sides
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of the equation simultaneously,
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growing what you have
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while deliberately managing what you want.
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Because true wealth
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isn't having everything.
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It's wanting what you already have
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while building something greater.