The psychology of making huge career jumps

Some observations on making huge career jumps, your friends, and your own psychology…

It’s easy to go through your career taking the same paths others did before you. But small, simple tweaks can make a huge difference in your lifetime.

One of my readers, Alexander, writes:

“I’m reviewing NIH grant proposals right now and seeing your tweets made me think of something that might interest you — doing the “expected” career progression instead of the one that makes sense. Typically, biologists who want to do research as a career go to grad school ($22K annual stipend; I did this part and learned a tremendous amount) for 5-6 years and then do a postdoctoral fellowship ($40K salary; ridiculously low wages for someone who is now a subject matter expert in their research area) for up to 6 more years before becoming assistant professors ($65-70K or so starting). I skipped that postdoc stage and I’m currently a 33-year-old “senior scientist” with my own research grants, etc (the normal age for that career point is about 42). Although there’s certainly the usual mix of luck and me maximizing my exposure to luck in my having leapfrogged that whole postdoc phase, the thing that I find really jarring is this:

When I talk to friends and acquaintances who are going through grad school now, they frequently don’t even want to entertain the possibility of making this kind of “jump” themselves. I’ve tried to pitch them on it, and been told, “It doesn’t work that way.” When I offer myself as proof, I’m told, “You’re a special case.”

I though that might interest you, given your appreciation for the psychology of success. I’ve personally found it a little tiring, although I have realized that the set of peers I chose to spend time with in grad school match my outlook, which makes sense — I picked positive, productive friends (who are now doing quite well in positions at consulting firms and major biotech companies). Still, I find it odd that people don’t like the idea of jumping ahead if it’s demonstrably possible.”

Few things I’ve noticed:

• I used to hear friends complain about money, and I would rush to tell them what to do. Even when I knew the objective “right” answer, they never, ever listened to me. Instead, their eyes glazed over and they ignored me. Eventually I started resenting them for not listening (which is a ridiculous reaction on my part). After 1.5 years of this, I decided to implement what I called the Honey Pot Strategy, where I let the right people come to me, via this blog. It has been a miraculous change. People are smart: Only the right people come, and the wrong people realize this site isn’t for them, and leave (that’s why I don’t mind when people say they’re unsubscribing from this site). Read more: Bob Bly, the noted copywriter, writes about why he never gives unsolicited advice.
• People feel comfortable putting others into buckets. “Oh, you study economics” or “Ah, you’re a product manager.” I do it. You do it. We all do. But when you start doing something “weird” like doing a side job, or earning $1,000 on the side, or even doing a free internship, people generally get uncomfortable. There are a variety of reasons for this, but the most important result is that it makes us question what we’re doing. Yet if you think about it, why would you care what people who are not doing what you want to do say? The reason, of course, is we are profoundly social, and our reference groups are broad. Even if I think your job sucks, you’re still my friend, and I’m still influenced by your judgment. In some of my advanced courses, I teach people how to deal with this.
• Doing offbeat, “weird” things early in our careers can produce huge rewards. Witness this blog, my comedy blog “Things I Hate,” or even the “You have died of Dysentery” t-shirt that I created. None were created to make money. Yet each one played a pivotal role in opening up doors. The challenging thing about doing offbeat, weird things is that there’s potentially huge upside, but you don’t know for sure. In general, people don’t like doing things that don’t have a clear ROI, especially as they get older. That’s why people consistently ask, “Can you guarantee I’ll make $1,000 in Earn1k? How do you KNOW that taking people out to lunch will work?” You don’t know. Otherwise everyone would do it.

I cover specific tactics in my writings on entrepreneurship, my entrepreneurship bookmarks, and my Earn1k course.

I’m speaking at SXSW

I’m speaking at SXSW, the big nerd-fest conference.

As expected, I’m only staying for the tech part of it, then quickly leaving before the film/music stuff starts. I don’t think they would appreciate my taste in Jodeci and Whitney Houston. And I would not appreciate their lack of marketing abilities.

If you’re around, come check out my talk:

What: “Building a Bulletproof Personal-Finance System”
When: Saturday, March 13th at 11am
Where: Hilton G
RSVP: http://my.sxsw.com/events/event/431

Bonuses:
1. Book signing afterwards at 1:50pm (RSVP)
2. I’m revealing 10 things I’ll be covering at the talk at twitter.com/ramit

Excerpts:
- What I’ll cover at SXSW (1/10): How can you use the psychology of money to automate your finances? http://bit.ly/dhEInt #iwillteach
- What I’ll cover at SXSW (2/10): How did I make $127,000 in one hour last month? http://bit.ly/dhEInt #iwillteach
- What I’ll cover at SXSW (3/10): How do you handle irregular income & expenses (e.g., freelancers)? http://bit.ly/dhEInt #iwillteach

Not going to be at SXSW?

• Read my bookmarks on psychology and finance
• Hire me to speak at your event
• Go watch a bunch of videos of me yelling at people

Why do we assume that higher house prices = good?

If the price of toothpaste or a burrito dropped 20%, most of us would be thrilled.

So why is it considered a catastrophe when housing prices drop?

Last week, I asked you to identify the cultural assumption in this screenshot. Here’s what I was thinking of:

Isn’t it funny how “home prices falling” is assumed to be a bad thing?

You never know how American your assumptions are until you go to another country. That’s because in the United States, we have been systematically taught that housing is a good investment and that prices must go up. Ask your parents why they bought their house. One of the top 3 reasons will almost certainly be, “It was a good investment.” Yet I’ve shown very clearly that for many people in many situations, it is not. In fact, housing is often a terrible investment.

Yet the illusion persists, whether it’s my friend wanting to buy a million-dollar house with no research, or people saying things like, “I wish I’d bought more real estate” after incurring a paltry 1.2% return rate over several decades.

As a result, you get media reports that implicitly echo the cultural assumption that housing is a good investment. The way they describe the housing market — oops, “housing recovery” — influences and reflects our cultural assumption. Let’s take a look at a headline from a major national news publication:

Interesting…it’s a “housing recovery” when prices are getting expensive. Would you say that with toothpaste?

Also interesting: Why is it a painful decline when young people and other first-time buyers get more affordable housing?

Alice in Real Estate

What if we discard the assumption? Let’s try: For each of these screenshots from major media sources, I’m including the opposite cultural assumption below it.

As Warren Buffett said in his 1997 Chairman’s Letter to Shareholders,

“If you expect to be a net saver during the next 5 years, should you hope for a higher or lower stock market during that period?

Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall.

This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.”

Why “higher house prices = good” persists

Deep-seated beliefs like this exist for multiple reasons. What might some of them be?

1. American culture believes that home ownership is a right that everyone should have (it’s not).
2. Since most newspapers are written by and read by older people — whose wealth is predominantly (and mistakenly) tied up in their houses, it only makes sense that real estate prices “should” increase. As a result, you see words like “recovery” and “crash” rather than “bargain.”
3. Unlike toothpaste or other commodities, there are ancillary effects of changes in real-estate prices. If one house price declines in a neighborhood, there are spillover effects that affect nearby houses. This is why neighbors and realtors will do anything to prevent a house from being sold at a low price, including throwing in things like cars and TVs instead of lowering the list price.
4. Crooked organizations like the National Association of Realtors and banks use every trick in the book to prevent house prices from actively reflecting the market price. Remember how, in Chapter 6 of my book, I described example after example of how Wall Street firms use disingenuous tricks like survivorship bias to obscure how poorly performing most of their funds are? The same is true of real estate. Where there’s lots of money in commissions, there is virtually always shady behavior, obscured facts, and whispered promises that never turn out to be true.

In fact, this cultural expectation goes to the very highest levels of the U.S. government. In a speech, President Obama said:

“This plan will not save every home, but it will give millions of families resigned to financial ruin a chance to rebuild,” Mr. Obama told a crowd here, in one of the communities hardest hit by the housing crisis. “It will prevent the worst consequences of this crisis from wreaking even greater havoc on the economy. And by bringing down the foreclosure rate, it will help to shore up housing prices for everyone.”

It’s fascinating, but unsurprising, to hear the President’s explicit goal is to “shore up housing prices for everyone” — and, you could argue, maintain unaffordably high rates for most young people.

It’s not that simple

For young people, every time the market goes down, you should be cheering for your own individual finances. You can acquire investments at lower prices and you have a long time for the market to grow.

Yet, paradoxically, lower housing prices do represent a clear risk to the American financial system, whose growth is predicated on consumer spending, which is in turn strongly influenced by housing prices. That’s why this crisis is so serious and confusing. (See the President’s full remarks here.)

Just because virtually every media presentation decries the “rapid decline” in housing values doesn’t mean that applies to you. “Higher house prices = good” is a cultural assumption.

You can read more on my page about real estate investing.

What other money assumptions are there?

I’ll start:

• People who have money waste their money (also known as “It’s OK when I spend my money on something for fun, but not you” — see comments)
• Immigrants are better at money than you are
• People who spend $20,000+ on their weddings are dumb (same as above — see comments)

What money assumptions have you noticed?

Anyone notice something funny about this text?

Can you spot the cultural assumption in this screenshot from the SF Chronicle?

Click for larger image

Why are artists so terrible with money?

When I was a little kid, my mom sent me to lots of extra-curricular activites (as any Indian/Asian mom does).

One of these was art school. After an art session one day, I brought home my drawing of a tree. It was so bad that my normally supportive mom actually said, “Umm…if you’re going to draw a tree, why don’t you make it look like a tree?”

This explains a lot about why I hate artists (and most non-profits).

Not just because I hate art, but because artists are terrible at marketing themselves and constantly adopt worthless beliefs like:

• “Charging for my art is selling out”
• “Good art markets itself”
• “My goal is to get in a gallery”

I wrote about this in detail when I wrote Attention Whiners: Why you STILL aren’t saving money and highlighted that it’s not tactics, but mindset that often separates people who do from people who whine.

So when iwillteachyoutoberich reader Cory Huff read my guidelines for writing a guest post and pitched me on the Myth of the Starving Artist, I jumped at the chance to run it. Yes, he might accidentally teach a lesson to these godforsaken artists, but mostly it’s just a chance to mock these terribly self-destructive beliefs.

Cory, take it away.

Cory Huff: The Myth of the Starving Artist

Last week I heard a story about an artist who makes handmade buttons at parties. For $3 he will come to your party, do a custom painting on a 1 inch by 1 inch canvas, and then turn it into a button for you.

For $3.

I couldn’t believe it. Neither could everyone around me who heard the story. It seems like everyone there knew that this artist should be charging more. Too bad that artist didn’t.

Compare that to my friend, we’ll call him John. John makes sculptures. They range in size from very small to very large. He has a thriving business where corporations call him and ask him to build something for them, and they pay whatever he asks. $30,000 – $50,000 was his last asking price that I heard.

What’s the difference? It’s a matter of beliefs.

The Starving Artist Myth

Many artists have bought into a romanticized notion that art is somehow more legitimate if it is created by poor people. This notion was popularized in the mid-19th century by the writer Henri Murger, who wrote Scènes de la vie de bohème a famous French novel about a group of poor artists living in the Bohemian quarter of Paris. The book was wildly popular and it became trendy to be a poor artist.

Over the last 150 years, Murger’s ideas became entrenched in popular culture, and artists hold to the notion that art is a product of the financially unsound and morally superior.

The Starving Artist Myth forces artists down a path that isn’t helpful.

Recently, a friend of mine mentioned on Facebook that she was trying to raise some extra money because she wanted to move to NYC to pursue her dream. I was really excited for her because she’s a tremendously talented artist. I messaged her and offered to help her come up with some good ways to do that (I do a lot of work with artists, especially in teaching them how to sell art online). A week went by without hearing from her, then two. I messaged her again, hoping to use her as a source for this article, but a week later all I had heard from her is that she’s too busy working at her survival job.

Many artists believe that the poverty and suffering that comes from this kind of busyness is conducive to better art – but I disagree. Being in touch with emotion and having strong technique make better art. Poverty and suffering are distractions that pull us away from being able to do the things that we really love doing.

Artists are not the only people to fall into this trap.

It is my opinion, and some will want to lynch me for this, that artists and entrepreneurs come from very similar backgrounds. They have a passion for something that can make a difference in people’s lives. They want to do that passion all the time – some of them just don’t know how to support themselves while doing it.

How to Dispel the Starving Artist Myth

Remember: Normal = Poor. Crazy = Rich. People expect a lot of crazy, creative things from artists and entrepreneurs, and they’re willing to pay for it. Whatever you do, do it with gusto. Look at Ramit. He teaches people how to be rich, and he does it with flair and excitement, and a lot of passion. He makes people some people angry – but he’s making a ton of money doing it. People love him for the passion that he has. If people love someone like Ramit, they’ll love artists even more (sorry, Ramit – as much as you make fun of us, people love artists).

Do something people love, and eventually it will catch on. When I first saw Etsy.com, I thought it was garbage. All I saw was a bunch of home made doilies that weren’t even all that well done. But you know what, people LOVED Etsy. Artists who turned up their nose at the site now sell original works for over $3,000. Etsy has developed a reputation for having high quality, original merchandise that appeals to buyers of all kinds.

Take advantage of the Warhol Economy. Andy Warhol created a movement that revived New York City. City planners took advantage of the burgeoning art scene to create incentives that attracted more businesses to the parts of New York that were dying. There are cities all over the country that are desperately trying to attract artist communities to their cities. You can read more about it in Elizabeth Currid’s PhD dissertation turned book, The Warhol Economy (which, by the way, is a great example of how to turn your god-given talents in to money).

Give yourself permission to make money. This is one that I struggled with early as an artist, and again as a budding entrepreneur. I didn’t believe that it was possible to make the kind of money that I make now. I would sabotage myself by passing on opportunities because I didn’t think they’d really pan out. When something great would happen to me, I would tell myself it was luck and that it probably wouldn’t happen again. Once I flipped that switch, it changed everything for me.

How did I flip that switch? I’ll simply say that it took two things: changing the connection between my self-worth and money; and learning what I needed to do in order to make money.

Protect your vision. When you aim to change your life many people around you will attempt to take you down. Most of the time it won’t be intentional. Your friends and family, as well as coworkers and other acquaintances, will question your decisions, even your motivation. This can be demoralizing and cripple your efforts before you ever get started. Find people who encourage instead of question and support instead of doubt (or, even better, you can call out whiny complainers before they gain any momentum).

“But I don’t know how!” It’s almost impossible to make it as an entrepreneur without some help. Whether you pay someone or find an amazing mentor who will help you for free, you need someone more experienced than you to help out.

Who knows what the future holds for that $3 painter or my actress friend who wants to move to New York City? It could well be that they find their niche and end up fabulously successful – but first they’ll have to make the decision to be ready for more. They’ll have to stop believing in the Myth of the Starving Artist.

Cory Huff is an actor turned entrepreneur who does freelance social media consulting, and teaches artists how to sell art online at TheAbundantArtist.com.

Wow, look what Earn1k members are already doing

Note: I’m giving 2 talks at Stanford TONIGHT (Monday, 2/22, 5:30pm & 7:30pm). If you’re around, please stop by and say hi.

My Earn1k course — to help you earn your first $1,000 on the side, and beyond — has been live for 3 weeks.

Instead of telling you how it’s going, I thought I’d let my users do the talking.

What have you learned in Earn1k that you didn’t know before? Please be SPECIFIC.

“Having too many ideas is not an acceptable excuse. Also, you don’t need an original idea. Just do better than crappy people.”

“I learned a better process of how to narrow down a niche by what questions to ask. Learning which areas I should devote more my time to (figuring out what is MOST essential for your business) was also a great lesson because I can sometimes get caught up on some of the non-essential things (i.e. go to networking events, get business cards, etc.)”

“-To start with a narrow niche focus and broaden if necessary. The point is to actually start doing things that matter.
-Ask for referrals. Ramit recommends “Referral Flood.” Noah: Ask each client for three referrals, and “Who do you normally hear about this stuff from?”
-From Tim and Ramit: Don’t rely on willpower. Develop habits to avoid having to think about every detail every time you encounter it. Form new habits to create new behavior.”

“I thought that online surveys would work well for getting in the head of your market. I found that there is nothing better than meeting face to face with potential clients. The meetings are so dynamic that the information is so much richer and full of potential products and services that you would never be able to capture with a survey. Surveys have their role, but you can’t design a survey to deliver this much essential information.”

“Step away from the computer and GO TALK TO POTENTIAL CUSTOMERS.”

What have you DONE after watching the Earn1k material? Please be specific: Include details about what ACTIONS you’ve taken.

“I have contacted three potential clients, one of who is very close to becoming a paying customer. I have adjusted my game plan, focused, found a niche that I think is the right size and scope, and learned a lot from my conversations with existing customers.”

“1. Wrote up the 3 most important things to do for my business (price list – which i already have, contact 3 customers, contact 3 mentors).
2. setup a surveymonkey page for customers to fill out
3. Contacted 3 people from my target market. Meeting with two of them this weekend.
4. Also contacted so far 1 person who is in the same business I am interested in and seems to run it very well. Asked for 30-60 minutes time to meet and chat
4. Added my business info to local google information.”

“The number one thing I’ve done is throw most of my planning out the window (swallowing my pride in the process) to start talking to people. I’ve volunteered with a non-profit and planned trips to talk with important figures. I put my website on hold. My interviews and calls are much more concise and market oriented (”what would you like to see?”) instead of my previous questions (”blah blah blah…what do you think of my idea?”). Finally, I’ve done my best to get out of idea-land and make concrete moves. This means less reading/writing time and more email/phone/social time.”

“After watching the videos, I keep the worksheet and pdf files of the lesson open on my laptop as I go through the material again. I also find myself going back to read the transcript the next day.”

“1. Identified an additional service I could offer in my current freelance gig, and negotiated an increase in hours to do this work (grant writing: $500+ this month)
2. Talked with a colleague with a similar market who offers different services than I do, getting her feedback about what she saw the market needing that was not currently supplied.
3. Sent 3 emails to potential clients for coffee/lunch dates
4. Sent a survey out to participants in an event I recently facilitated”

What specific steps will you be taking this weekend to earn more on the side?

“I am replying Sunday afternoon. I have already had my call with Susan, and I gathered a lot not only from that, but from listening to the other people on the call. I will be sending Susan my email conversations with my prospects so she can give me advice on them. I’ve gotten the contact number I needed to proceed with my marketing strategy, and plan on calling that person (non-client) this evening.”

“I will send out at least three emails to current students this weekend. On Tuesday I will be back at school and will actually speak to potential clients.”

“1. Set up a meeting with my current freelance gig to get feedback / testimonials
2. Send 3 more emails to potential clients
3. Outline questions for potential client meetings
4. Do that extra work on grant writing that I negotiated!”

“Just had a great phone conversation with someone I contacted via email. Have another in-person meeting set up for next week. Will prepare some follow-up emails using the techniques/tips I learned in the Office Hours”

I’m so impressed with the caliber of Earn1k members.

Want to earn more money The Earn1k course is closed for now, but you can get on the Earn1k list to get notified next time it opens.

Want to save money? Check out my savings program, The Scrooge Strategy.