The Algebra of Wealth (Scott Galloway) - Book Summary & Notes
Scott Galloway writes about building wealth for young people and explains his simple formula for success. The book is full of lessons and tips on how to sustainably build financial wealth while maintaining other forms of wealth such as relationships, time, and health. Galloway is a successful entrepreneur, podcaster, and adjunct professor of marketing at NYU Stern.
Scott Galloway's formula for wealth:
WEALTH= Focus + (Stoicism x Time x Diversification)
⏳The Book in 3 Sentences
- Economic security is a means to an end, but an important one that gives you the time and resources to invest in relationships without being financially insecure.
- Finding your personal competitive advantage and leaning into it will set you up for professional success.
- Everything meaningful in life is about other people, loving others and being loved is the most important part.
🎨Impressions
This is a book about creating a wealthy life, mostly with a focus on financial wealth but also on other forms of wealth such as time, relationships, and physical wealth. The book reads very much like how Scott Galloway talks in his public persona. It is a prescriptive book, trying to cut through the bullshit, and with a hint of provocativeness. The book feels targeted towards young adults who are just beginning their journey to build wealth. Scott takes on the role of a hard but fair mentor, giving counsel while requiring accountability and setting high expectations.
📖Who Should Read It?
As I stated earlier, I think this is a book targeted towards young adults with the ambition to build wealthy lives. However, I need to preface that this might be because I fit into that segment of people and the book resonated with me. There are some great career and life advice in the book that could probably benefit most people. Additionally, I found the parts of the book focusing strictly on financial advice, such as saving in index funds and leveraging compounding to grow your wealth, to be somewhat basic. Therefore, I would recommend this book for those who:
- Have the ambition to build a wealthy life, however, that looks to you
- Are somewhat unsure what you want to do with your career and need some advice on how to tackle a career
- Enjoy Scott Galloway, an entrepreneur and marketing professor who likes to call it like he sees it and wants to help young people lead successful lives
📝Summary + Notes
1. Financial wealth is a means to an end
It can be easy to believe that more money will make you happier, but that is often not true. The book is not trying to say that money and financial wealth are not important. Galloway is saying that money is an enabler to achieve a happy and wealthy life, but it is not enough on its own. Having good finances will allow you to focus on the things that matter most in life, like relationships, creating lasting memories, and having an enjoyable life. The other side of the coin is that if you are constantly worrying and stressing about money, it becomes hard to create a happy life. So don't optimize for the most amount of money instead see financial resources to be leveraged to do the things you want in life.
"the ultimate objective is to enjoy a life rich in relationships, not to die with the biggest number in the bank."
"Economic security is just a means to an end. Specifically, the time and resources to focus on relationships without economic stress."
"Money is the ink in your pen, but it's not your story. It can write new chapters and make some brighter, but the narrative arc is up to you."
2. A bias for action will set you up for success in life
A bias for action is a recurring recommendation for people who have achieved success. I believe the reason for why it is so important is that it speeds up compounding in many facets of life. Think of it like this, the faster you take action the sooner you will get data/results back to interpret which can then help you iterate based on those insights. If you wait around and think about possible scenarios you will not gain those insights as fast. Having a bias for action will allow you to compound lessons learned into knowledge which you can take advantage of.
"None of it matters if it doesn't translate into action. The gap between your intentions and your actions is a decent forward-looking indicator of your future success, emotionally and financially."
"As Carl Jung put it, 'You are what you do, not what you say you will do'."
3. Hard work is a valuable part of life
It is easy to fall into thinking that you will be able to achieve success quickly by making a risky bet and succeeding. In reality putting in the hard work is both valuable and more likely to lead to success. Being able to work hard is a skill that can be trained and will you take you far in life.
I learned about hard work from watching and learning from my older cousin Anders. At age 14 Anders got me a job at the grocery store where he worked and I began working for the great pay of 5€/hour. It was both implicitly and explicitly made clear that my performance would reflect on his standing with our manager and so I started learning from Anders who has an incredible work discipline and who I could see was rewarded for his hard work. Being able to put in another gear when things get tough is incredibly valuable and has benefitted me multiple times in life. It allows you take on things that are outside of your comfort zone and that is how you grow. So start cultivating the ability to work hard!
"First off, progress isn't linear, it's lumpy. People approach me and congratulate me on my overnight success. Not quite. My "overnight success" took thirty-five years of hard work and getting back up after I was punched in the face."
”Hard work is a talent Curiosity is a talent Patience and empathy are talents. For wrestlers and boxers, making weight is a talent If you're a jockey, being short is a talent ”
"In my experience, exercise gives you time back-if you take four hours, six hours a week for physical fitness, you get those hours back because you have more energy, you're more mentally healthy, you're able to work harder."
4. Surround yourself with people you respect and want to be more like
There is a famous old adage that you are the average of the five people you spend the most time with and there is some truth to it. We all take cues from the people we surround ourselves with. If you spend time with people who value fitness and exercise you are much more likely to exercise yourself and the same holds true for many other things like ambition, curiosity, generosity and so forth.
Surrounding yourself with the right people can also be valuable if you want to achieve something or change a behavior. It can be a lot easier to start a new habit by putting yourselves in environments where the people you meet already have that habit. This is something James Clear mentions in his book Atomic Habits. So reflect a little bit on what type of person you want to be and make sure that the people you surround yourself with behave in a manner that aligns with that!
"Seneca wrote: 'Associate with people who are likely to improve you. Welcome those who you are capable of improving. The process is a mutual one: men learn as they teach.' "
"We are heavily influenced by the people with whom we associate. The implication is obvious: give your subconscious the best possible examples to work from."
"Get to a City, Go to the Office Early in your career, you need training, mentors, and challenges. "
5. Find your personal competitive advantage
Finding your personal competitive advantage is a core element in the book by Scott Galloway. Don't follow your passion, instead follow your talents and natural inclinations. It is much easier to succeed in something you like doing and are naturally good at. In fact doing something you are good at will often create a positive flywheel where you like doing it because you are good causing you do it more often and thus making you even better. So spend some time considering where your personal competitive advantages lie and use them. It is not unreasonable to leverage your natural advantages!
The key is to figure out what you can do that others can't or are unwilling to do. … …The point is to cast a wide net and consider not just your skills, but your advantages, your differences, what you can tolerate, what makes you unique. This requires time, flexibility, and self-reflection.
"The path to mastery in our talents mirrors great product design. Innovation is incremental. The key is to ship something and begin improving on it."