We raced to find toilet paper.
We panicked as the stock market nosedived in March.
We’ve never seen more fighting going on in our Facebook newsfeeds.
And we’ve never spent more time alone and isolated.
It’s safe to say that we’re never going to forget 2020. We all went through a lot of pain this year. I’ve learned that pain is one of life’s best way of teaching us.
It doesn’t come free, though. You need to sit down and reflect in order to extract these gems.
So I spent several hours reflecting as part of my annual planning.
I wanted to share some of the lessons that I learned from experiencing 2020.
1. Build Up Your Financial Robustness
People think about money as a tool to buy things or experiences. This paycheck goes to rent. That paycheck funds my next vacation!
One area that people don’t think about is their financial robustness.
Shit always happens. Robustness is your ability to handle the unexpected. It’s your “buffer” against life sucker punching you. It’s the “margin of safety” in your personal finances.
We’re all familiar with micro emergencies such as your tires needing to be replaced, or your pet needing surgery. Having an emergency fund means you don’t have to go into debt to handle them.
However, most people are not prepared enough for macro, black swan, holy-shit-what-is-going-on-with-the-world scenarios. And these “once in a lifetime” crises happen more often than we think.
I was born in 1984. Since then, there has been:
- The Dot Com Crash
- The Great Recession of 2008
- The COVID-19 Pandemic of 2020
There’s many more depending on where you live. Hurricane Katrina ruined plenty of lives in Louisiana.
We’ll get over this pandemic soon. But brace yourself: There will be more crises in our lifetime. We don’t know what they will look like or how devastating they’ll be.
We underestimate the impact of the macro events. I remember having a friend in college who didn’t believe in saving money.
If he had an emergency, he could always work extra shifts at the restaurant. But what happened if he got into an accident and couldn’t do any physical work?
Or what if the state made it illegal for restaurants to offer dine-in service? That’s the reality we faced in 2020.
I’ve always believed in practicing financial “defense.” The pandemic made me realize how much more important it is than I originally thought.
Here are some examples on building more financial robustness:
- Having adequate savings in both your personal and business accounts. (I carry 3 months of expenses in my personal. If I actually had an emergency, I have credit cards or I can write a distribution check from my S corporations. I don’t like my money sitting around doing nothing).
- Having insurance beyond the bare minimum. We have high coverage on our cars because the drivers in Atlanta are raging maniacs.
- Safety nets in case of death. Do you have a life insurance policy? Do you have a trust and will established? Does your family have access to your money if something were to happen to them?
- Avoid unnecessary debt.
- Multiple streams of income.
- Having a diversified portfolio. (Domestic stocks, international stocks, BTC/ETH, real estate)
- Some countries have unstable governments and economies. Have a game plan in case shit hits the fan.
It’s not easy. Financial robustness costs money. You have to make some tough decisions and sacrifices.
It means not having that “dream” wedding if you have to go into debt for it. It means not buying too much house even though the bankers and real estate agents are encouraging you to (I wonder why).
It means living with roommates for a few years to pay off your student loans.
Robustness is the difference between getting knocked out by a punch vs. dodging it and throwing a counterpunch.
2. Are You Eating Too Much Mental Junk Food?
Eating junk food is bad for your physical health. No arguments there. But how often have you thought about the information that you’re consuming?
Lockdown happened and it was “OK” to binge on Netflix.
My Facebook newsfeed was full of junk. Too much politics, masks vs anti masks, etc. Every time I logged into Facebook it felt like a “Spin the Wheel” of emotions.
I noticed that I was starting to lose focus. I was being distracted easier. It was easy to blame the lockdown but I realized that I was consuming too much “mental junk food.”
So I made an effort to increase the type of information I was consuming.
- Got rid of several social media apps on my phone
- Removed my newsfeed using Newsfeed Eradicator
- “entertaining” shows
- Video games
- High-quality podcasts
- Harder to read books such as Thinking, Fast and Slow
I used to drink two cans of Coke a day in college. Then I gave it up. I haven’t drank soda in over a decade. You could pay me $500 to drink a can and I wouldn’t do it.
So now I’m trying to catch myself. I view certain behaviors like a can of Coke and avoid it at all costs.
It’s hard to measure the impact of these changes. But I definitely feel more focused, and I’ve noticed it’s easier for me to complete more Pomodoros.
Think about this.
Imagine if you’re spending an hour a day scrolling on Instagram. Instead, you replace it with an hour-long podcast instead for your downtime.
How much better off do you think you’ll be after a year? After a decade?
3. People are Addicted to Clout and Status
We’ve always been status-driven.
Have you heard of the phrase “Keeping up with the Joneses?” It has been around since the early 1900s.
It means wanting to appear to be as well off as your friends.
This feeling has multiplied tenfold because of social media.
People were only trying to impress their friends and neighbors back in the day. Now it feels as if everyone’s trying to impress everyone. (And Louis Vuitton stock has done tremendously because of it.)
I remember when lockdown started, I made a joke to my fiancé, “Oh no, how are Instagrammers supposed to show off how amazing their lives are if they can’t travel anymore?”
People had permission to stay home and be “boring.” Yet, they still found ways to signal. Whether it’s showing off “throwback” photos of themselves or traveling anyways.
Why the addiction to status?
It boils down to insecurity. Social media has made us more insecure than ever before. It’s so easy to look at how “awesome” everyone else’s life is and feel down about it. Then there’s this pressure to keep up.
There’s also this innate desire to “stand out.” No one wants to be seen as average or mediocre. So some people use social media as a way to shout to the world…
”I’M NOT BASIC. LOOK AT ME EATING THIS FANCY DOUGHNUT!!!!”
How does this apply to business?
People are desperate for clout and status. How can you position your product or service in a way that increases their status?
Rolex, Louis Vuitton, Tiffany’s, luxury car companies, etc. That’s pretty much their entire business model.
And it works. Giving people status means fatter profit margins.
How can you tie your product to status?
- When I lived in NYC, I LOVED going to Cha Cha Matcha. Their branding and store designs were super Instagram-able. Everyone wants to be viewed as “interesting.”
Your average person can’t travel to the Turks or have a Hermes handbag like their favorite influencer. But they can have the same drink or desserts that they do!
It’s not “cool” anymore if anyone can get access to it. Think about high end night clubs in Las Vegas.
You can do limited edition or drop models like sneakers/Supreme.
Clubhouse is getting a ton of buzz. You can’t just sign up. Someone has to invite you. Immediately there’s some status there judging by who got you in and how early you joined.
- Influencers. Influencer marketing is still in its infancy. Influencers are the new brands.
Interested in more?
4. Investing for 2021
According to a graph from the Federal Reserve Bank, 35% of all U.S. dollars in existence have been printed in the past 10 months.
There have been government bailouts and multiple stimulus checks. Someone has to pay for them. The government will keep creating more money.
This affects everyone since the world runs on U.S. dollars.
Here’s a simple example of inflation:
Let’s say there are 1000 rare Pokémon cards in the world, and you own several of them. The company creates more of these rare Pokémon cards.
Now there’s 2,000 rare Pokémon cards. Congratulations, your Pokémon cards are worth less now.
Same thing with U.S. dollars. As the government creates more U.S. dollars, the ones we have are worth less.
Even if you put cash in a savings account, it’s losing money due to inflation.
What should you do?
Hedging is relatively simple.
- Don’t have too much cash sitting around. You have to figure out the right amount to hold in an emergency fund.
- Invest in stocks and real estate. They’ll beat inflation.
- I’m not so hot on precious metals. I think there are bigger returns in Bitcoin.
My personal playbook for 2021.
- Max out all retirement accounts. SEP IRA, IRA, HSA. Max out my lady’s 401k. All my investments go into index funds. 75% USA and 25% INTL.
- Everything else goes into dollar-cost averaging Bitcoin. I have a hard max of not letting Bitcoin become more than 15% of my portfolio.
Warren Buffet believes in investing in your core competencies.
I have no edge in stocks, so I invest in Vanguard index funds. I have no edge in real estate, so I don’t own property except for REITs.
Could I learn more about stocks and real estate? Sure. But that’s time I could be spending becoming a better business owner and marketer.
I’m a 2/10 in stocks or real estate knowledge. I suck in those areas. I’m ok with that.
Let’s say I’m an 8/10 marketer.
I’ll make far more money getting my 8/10 marketing skills to 9/10 than I could improving my stocks or real estate knowledge from 2/10 to 5/10.
There are asymmetrical rewards if you can be the best in the world at something.
Anyways, this is not financial advice. I’m just sharing what I’m doing.
5. The Ingredients to Mental Health
I consider myself an introvert. I kinda got excited when lockdown was announced.
“Ah yes, a break from people. I can catch up on my video games backlog.”
But those periods of isolation were tough. I don’t know how I could’ve made it without my fiancé or my cat.
I actually had to sit down and create different routines for my mental health. Here are some of the things I came up with.
- Going outside and getting sunlight. I’d take a walk every day after lunch.
- Avoiding gluttony. It was so easy to over consume junk food and media. So I placed some limits on my consumption.
- Daily exercise. I had a routine where I’d go to Jiujitsu and lift weights. I started running more and doing yoga at home.
- Being proactive about connecting with people. I made a rule to do a phone call a day with someone.
- Avoiding negative news.
- Daily journaling.
Even when things go back to “normal,” I’ll still keep a lot of these routines going.
Everyone’s becoming more stressed out. The news makes money from capturing attention. The easiest way to get more attention is to focus on more click bait-y and emotionally driven articles.
And social media has multiplied distribution a hundredfold this past decade.
So, the ability to stay calm is a competitive advantage. Stay calm and you’ll be able to make decisions with logic.
6. Plant the Seeds Now
Many businesses exploded because of the pandemic.
Zoom stock skyrocketed.
Rogue Fitness sold out of their home gym equipment.
I saw so many of my favorite yoga and cooking channels get millions of extra views.
Here’s the thing:
Zoom started in 2011.
Rogue Fitness was founded in 2007.
The YouTube channels were started years ago.
If you’re jumping on these trends now, then you’re just playing catch up.
This cliché is overused but so true, “Skate to where the puck is going, not where it has been.”
Think about the trends for the next five to ten years and plant your seeds now.
You might be wondering, “How do I predict future trends?”
The good news is there are plenty of tools and businesses based around this.
7. Time Inequality
Everyone talks about the “wealth inequality.” I think a lot about “time inequality.”
I was at a stoplight in 2010. I saw a line of people waiting at the bus stop. The coin laundry behind it was crowded.
That’s when I first thought about the concept of “time inequality.” The people at the bus stop don’t have a car. The ones at the coin laundry don’t have a washing machine at home. I save a tremendous amount of time because I have a car and a washing machine.
And that’s why I’ve worked mostly remote for the past 13 years. I didn’t want to spend hours a day commuting back and forth to work. I’ve saved thousands of hours because I didn’t commute.
Now everyone has discovered the power of remote working, and most workers don’t want to go back. Unfortunately, some offices will force their workers to go back.
They have these leases that they can’t get out of. The old heads in charge think “This is how it has always been done!” Or these companies never had the formal training to understand how to work remotely in an efficient manner.
People look at salary, vacation time, and healthcare as part of the compensation package. Being able to work remotely will be just as important. If I had a job, I’d even consider a pay cut to be able to work remotely.
Technology has accelerated. The culture is slightly different. Think about how you can gain more time.
- I hate meetings. It’s more efficient to send people voice memos or detailed tasks.
- I rarely do grocery shopping because of Amazon Fresh.
- I bought some kettlebells to work out at home. It saves me time going to the gym.
- 95% of my purchases are online.
- I use technology to automate tasks. Zapiers, IFTTT, Apple Shortcuts, etc. It blows my mind that something can take 5 minutes to set up and save me hours over my lifetime.
- I make a note every time I’m annoyed. That’s a signal for me to either delegate or build a system for it.
- Software. I am so much faster with email using SuperHuman. I have text macros set up using TextExpander. The right software is an advantage.
None of this should be surprising to you since this is a younger and more tech-oriented crowd.
But there will still be a ton of people who are set in their ways. They’re going to face a time disadvantage compared to everyone else.
Now people are embracing remote work and ordering everything online.
I’m thinking, what are the newer methods of generating time inequality for myself?
8. Influencers are Underrated
Influencers 1.0: They make money from AdSense revenue. Sponsorship deals. And maybe some merchandise.
Influencers 2.0: They start brands in what they’re famous for.
Influencers 3.0: Now we’re seeing some influencers commanding attention on par with mainstream celebrities.
They may not be as “famous”, but I’d argue that people are much more engaged and connected to them than traditional mainstream celebrities.
Some of them have enough clout to do whatever they want.
Mr Beast makes viral YouTube videos. He launched a Fast Food Chain called Mr Beast Burgers. He’s not a chef.
The Paul Brothers. They’re making more money in boxing than 99% of boxers.. .yet they’re not “boxers.”
The next wave is going to be alcohol, IMO.
It has a high profit margin + is primarily image based + has plenty of “pipes” for plug n play.
We’re already seeing this with The Rock’s tequila, George Clooney’s tequila, and Conor McGregor’s whiskey.
Wait until a TikTok party bro private labels their version of White Claw. Or a female influencer private labels her own red wine.
Anyways, influencers will only become more valuable. People are starting to look at traffic sources outside of Facebook and influencers are viable.
There’s an opportunity in trying to find the sweet spot. Someone on YouTube or Instagram might have inflated prices since they’ve been around the block.
But perhaps another influencer might’ve gone viral in the past few months on TikTok. Their value hasn’t been “tapped” yet.
9. Standing Out in the Attention Economy
It’s getting harder to capture and sustain someone’s attention.
Right now you’re reading my article. I’m competing against email pop-ups, slack messages, your Smart Phone, and the different distraction vortexes. Now imagine trying to sustain the attention of someone from Gen Z.
You don’t have to be an influencer or a media company to care about attention. Brands are starting to boost up their organic efforts to diversify away from Facebook.
So the “old way” of media creation was to be consistent. You didn’t know which article or video of yours could resonate with the audience.
Things are different now. There’s more content to consume than ever before. Every platform has an algorithm and they send their distribution towards “Blockbusters.“
Blockbusters is a mental model that I got from a book about the Entertainment industry. When people have choices, they tend to flock towards the most over the top productions. Prior to the pandemic, I wasn’t interested in going to the movies to watch a small independent production.
I’d only be interested in seeing either a Marvel, Star Wars, or a Christopher Nolan film.
This applies to online content. People can tell if an article is outsourced or half-assed.
Do you remember earlier when I mentioned clout and status? Sharing high-quality articles or videos with others is signaling that you have access to good content.
If you want to understand attention better, go study the YouTube landscape. It’s high competitive. Here’s a framework on how I think about this.
- You can go Extreme. Do something unique that no one’s ever done before. Mark Rober created a Glitter bomb trap for porch pirates. That’s a piece of unique content no one else can duplicate.
- You can with High-Quality production. I watch cooking videos every day. It’s insufferable when I have to watch a low-quality production.
There are hundreds of videos on YouTube on how to cook a steak. But their algorithms favor the “best videos” due to higher watch time, engagement, etc.
Unique Ideas. Your audience are learning machines. They want to learn new things.
No one would give a shit if I wrote a “10 ways to get started in affiliate marketing” post. You have unique experience and unique talents. Show them.
Unique Personalities. This is why Joe Rogan is the top podcaster in the world. There’s no one else like Joe Rogan. His opinions are different from the mainstream.
No one is interested in listening to someone who works a 9 to 5 job, loves watches the Office, and likes Bacon. They’re just like everyone else.
Now that I think about it – unique personalities are pretty much modern-day cult leaders.
10. Changes and Pivots
For some businesses, they couldn’t continue as normal. Either regulations made everything more difficult or demand was slashed drastically.
It felt like 10 years of acceleration in ten weeks.
I learned that no matter how bad things get, there’s always a “best move.”
A few examples of pivots:
- Uber’s transportation business took a hit during the pandemic. They stepped up efforts on their UberEats program and bought Postmates for $2.65 billion.
- Everyone put that travel plans on halt. Airlines and hotels suffered. Airbnb saw their booking rates slashed. They looked at the data and noticed that people were booking Airbnb’s within driving distance.
Basically, people were tired of being stuck at home all day and wanted to travel somewhere closer. So Airbnb adjusted their algorithms to show more local stays.
They also started a new category for “virtual experiences.”
- Some restaurants couldn’t have people dining in anymore. How could they make up some of that lost revenue? Some created “family-sized” take-out options. Other created food designed to be frozen. And some even started selling raw ingredients and acting as an additional grocery store.
Life’s not fair. Shit happens. The only thing we can control is how we react to situations.
A Year to Remember
The image I have in my head of 2020 is that of bamboo.
“The bamboo that bends is stronger than the oak that resists.” – Japanese Proverb
I have conflicting feelings when people say they can’t wait for things to go back to “normal.”
In a way, things will go back to “normal.” Everyone was scared shitless after 9/11. But after a year, people started flying again. The only thing that changed was the airports became a pain in the ass with TSA.
Within a year or two, things will go back to “normal” once the vaccine’s more distributed. People will go to concerts again and people will keep traveling.
But for me, I’m going to keep the lessons of 2020 ingrained in my head.
There will be more black swans in our lifetime, unfortunately. I’ll be prepared for them.
What did you learn in 2020?
Cover image by Pixabay.