One of the most potent lessons I’ve ever learned (and would love to impart to you) is just how powerful a seemingly simple perspective shift can be.
Dr. Wayne Dyer says, “When you change the way you look at things, the things you look at change.” I hope you realize just how profound that statement is. But just in case you don’t, let me share a personal story about it.
During my first 5 years in business (1994-1998), I lost money every year, turning my $20K life savings into $150K of debt. That’s a net loss of $170K, or $34K per year on average. In 1999 I finally went bankrupt when my credit ran out.
Every year since then, my business made a decent profit.
So I suffered a negative cashflow each year from 1994-1998, and then from 1999 – present (12 years in a row and counting), I enjoyed a positive cashflow each year.
What the heck happened in 1999? What was responsible for this major change in results?
Learning How NOT to Make Money
I can actually pinpoint the exact moment when I felt the shift. I underwent a radical change in my perspective. I turned the way I thought about business upside down. My attitude and my motivation changed.
Obviously there were some catalyzing experiences that led to this epiphany such as getting kicked out of my apartment and going bankrupt, but when the conditions were right for it, the actual mental and emotional shifts happened fast — in a matter of minutes. It was like flipping a switch, partly in my mind… but mostly in my heart.
Here are the main before-and-after differences:
During my first 5 years in business, I focused on making my business successful. I pursued deals, money, and projects as if they were things to be acquired. I wanted to create hit products that sold well (computer games at the time). My motivation had a lot to do with proving myself, with making my mark on my particular field. I visualized my games getting glowing reviews, and I imagined seeing them selling in software stores. Money was a big concern. I always went for the deal that I expected would put the most money in my pocket and lead to the greatest success.
During my last 12 years in business, I focused on having fun, enjoying life, and creatively expressing myself. I stopped worrying about whether or not I was ever going to be successful. The bankruptcy supplied plenty of proof that I’d already failed dismally, so I didn’t see any point in continuing to pursue the same priorities that led me there. I was using a cardboard box as a piece of furniture, a symbol of just how much financial success I’d been able to achieve. Since I’d been soundly thrashed while playing the success game, I decided to change the rules and try my hand at the “let’s just play for fun” game.
A Tale of Two Mindsets
My initial motivation for starting my computer games business was to make more money. For several months before that, I worked as a contract game programmer on the side while going to college. I completed a 4-pack of Windows games, doing all of the programming and much of the design work for a local games company. When the games got published, I received about $1 in programmer’s royalties for every $7 the company received. Other people at the company contributed artwork, music, and some design work, and of course they closed a deal with a publisher too. But these were fairly basic games from a resource standpoint, and it was clear to me that I was doing well over 50% of the actual production work, probably 70-80% in terms of sheer hours invested. I even wrote the help files and instruction manuals.
I recognized that with a bit more effort, and with the help of the right people, such as an artist and a musician, I could essentially do what this company was doing, and I’d get to keep a lot more of the profits. Finding talented people to work with wasn’t too difficult, so soon I was off and running.
I had the technical and design skills to create more games at least as good as those I created for the local game company, but after years of trying, I was never actually able to make a profit.
While running the business for the first 5 years, I was constantly looking for ways to make money. If I smelled potential dollar signs, I’d chase after them. I ran after a lot of elusive deals that fizzled, fell apart, or collapsed, even after some advances were received.
I worked hard, hard, hard, sometimes even sleeping at the office. But I could never get the money coming in with any consistency. Ironically the harder I tried to make money, the faster I lost money. Instead of the Midas touch, I somehow mastered the Medusa touch.
Looking back, I didn’t do that initial contract programming work for the money. I did it for the love of game programming. I was in college at the time, and a friend pointed out a flier about a game programming position. He suggested I take a look at it because he knew I was into computer games, and we were both computer science majors close to graduating. It seemed like a wonderful opportunity to me.
I went for an interview with the company. I felt confident about getting the job, and I really didn’t care how much they paid me. I just wanted to work on games. So when they asked me how much I wanted to be paid, I said “$10 an hour,” which was a ridiculously lowball amount. Game programming may not pay as much as some other types of programming, but it certainly pays more than $20K per year, even for a starting programmer who’s still in school.
That company hired me on the spot, and I must say they got a great deal. I hit the ground running and threw myself into the first project they assigned me. They were stunned that I had a prototype up and running after only 9 days, and they actually pulled me off that project and assigned me something more ambitious.
One time my project manager asked me how many hours a week I was putting in. This was during the summer when I wasn’t attending classes. I told him about 40 hours, which would have seemed reasonable because I worked at their offices Mon-Fri during normal business hours. But I actually lied. In truth I continued working on their game projects at home on evenings and weekends. Realistically I was probably putting in 60-80 hours most weeks. And those hours were dedicated to solid coding work, not to email or any other distractions. I said that I worked 40 hours a week because I didn’t want to make the other programmers in the company seem less dedicated. I was on good terms with them — and I wanted to keep it that way.
I wasn’t working hard and fast for low pay to impress anyone. I did it for the sheer love of the work. I was enthralled by the technical challenges of each game. There was nothing else I wanted to be doing. I probably would have done that work for free.
Within a month or two, I think the management of the company could no longer stomach seeing me do such high quality work for so little, so they voluntarily doubled my pay. I didn’t request it, but I received it with gratitude. $20 per hour is a lot for a college student.
By the time the royalties were added in (after the game hit store shelves the following year), I probably ended up making about $50 per hour for programming those games, even though I only asked for $10 per hour. Plus it was really cool to walk into software stores and see something I created on the shelves.
That’s rather beautiful, isn’t it? I certainly thought so. It’s a classic example of sowing first, then reaping.
And then over the next 5 years, I proceeded to take this beautiful model and completely screw it up.
I underwent a perspective shift that seemed intelligent at the time. The potential for greater success hit me, and I began seeing dollar signs. That local games business immediately offered me another project to work on, and I turned them down so I could start my own game development business. I did that specifically because I wanted to make more money.
It seemed like a good idea at the time. I was simply expressing the American entrepreneurial spirit, right?
Getting My Ass Kicked by Kolrami
After 5 years of total failure, I finally had to admit that my great plan wasn’t working. Going bankrupt was a hint and a half that something went awry. The more I chased after money, the faster it ran away from me, as if screaming, “The horror! The horror!”
So in 1999 I finally gave up. I didn’t enjoy living this way. It wasn’t producing the results I wanted, so for that reason alone I could justify declaring “game over.” But beyond that, those 5 years were very frustrating. I did my best to be positive and optimistic, but seeing some great projects canceled after years of work were serious disappointments.
In my moment of epiphany, I realized that my decision to pursue money was when everything started going kittywompus. Becoming more financially ambitious simply did not work.
In the Star Trek: The Next Generation episode “Peak Performance,” the master strategist Kolrami competes with the android character Data in a game of Strategema. The crew expects Data to win, just as you’d expect a modern chess-playing computer to kick your ass at chess. They confidently advise Data to take the shortest path to victory in order to put a dent in Kolrami’s smugness. However, Kolrami soundly defeats Data without breaking a sweat. Data is stunned by the loss and assumes he must have some kind of programming defect, going so far as to remove himself from active duty until he can figure out what’s wrong with him.
Later in that episode, Captain Picard informs Data that it’s possible to make no mistakes and still lose. This leads Data to challenge his assumptions about the game. He accepts Kolrami’s offer of a rematch, and this time he plays Kolrami to an endless stalemate, leading Kolrami to eventually surrender in disgust. The crew celebrates Data’s victory and asks how he did it.
Data confesses that he couldn’t defeat Kolrami by playing to win because that’s what Kolrami expected him to do. Every advantage-maximizing move that Data attempted was blocked by a superior counter-move from Kolrami. So in the rematch, Data used a different strategy. He bypassed obvious avenues of advancement and played for a draw instead of trying to win. This visibly frustrated Kolrami and allowed Data to theoretically play the game indefinitely, rendering defeat impossible.
This episode may contradict game theory and minimax algorithms, assuming that Data could search ahead more moves than Kolrami could, but setting aside that issue, I found tremendous value in this lesson. It seemed like the perfect analogy for my own situation. I felt like I’d made no serious mistakes, but I still lost. When I reviewed my previous moves, they still seemed reasonable even though they led to failure, and pondering whether I might have a defective brain proved as unhelpful to me as it did to Data.
During my first 5 years in business, I played to improve my financial score. I saw each business negotiation partly as a competition. If I got more money out of a deal, it meant that the other party got less. The more I succeeded in setting things up to maximize my financial score, the more I had to diminish the scores of others. In order to maximally win, someone else had to lose, at least a little bit. The harder I tried to win, the more friction I created that would ultimately cause me to lose.
Maybe some people are good at playing this kind of game. I wasn’t. Someone always had more resources, more time, or more expensive lawyers. The more I pressed for gains, the more I felt an opposing force pushing back against me. This led to many problems such as delays and cancellations. I could blame others for it, but the truth is that I was responsible for creating that reality.
When Internet marketers treat you as a dollar sign, can you sense it? Can you feel that tugging sensation — the sense that their main motivation is to get something from you? How does this ultimately affect your relationship with them?
Bypassing Obvious Avenues of Advancement
In 1999 I decided to stop trying to make money. I stopped trying to achieve success. I had 5 years of failure to convince me that it was time to change my approach. The bankruptcy was like a bonk on the head that told me I’d better not live the next 5 years like I lived the last 5. I had no more credit and no more cash to burn, so I had to make immediate changes. I had little choice but to try a different path.
When I tried to succeed, Kolrami always showed up to kick my ass. I could never defeat him no matter how hard I tried. The harder I tried, the more vigorously he thrashed me.
So I surrendered to his superior skills. I stopped trying to win. I accepted the irony that trying to get a higher financial score actually doomed me to a negative score. The opposing force was always greater than anything I could overcome.
I decided to apply Data’s lesson to my business. Instead of trying to win, I began to play for a draw. I bypassed what seemed like obvious avenues for financial advancement, recognizing that it was exactly what Kolrami expected me to do. If I made those self-maximizing moves, he would simply knock me back, and I’d be worse off than when I started. Again, I had 5 years of experience to drill this lesson into me.
In practice what this meant was that I stopped trying to maximize revenue or profits. In each business transaction, I opted to give more than I received in return. I always sought to leave extra value on the table.
For example, in mid-1999 I priced my next game release at only $9.95, even though I believed a competitive price would have been $19.95. I began writing articles for free. I committed hundreds of hours to unpaid volunteer work. I hosted free discussion forums on my website to help other game developers succeed. I spoke at conferences and hosted roundtables for free. I made it impossible for Kolrami to counter my moves because my moves weren’t competitive.
Last year I uncopyrighted all of my articles and podcasts and donated all of them to the public domain. I also committed to placing my new articles directly into the public domain (including this one). I encouraged people to republish, translate, and/or sell my work for their own financial gain if they wanted to.
I deliberately and intentionally earn less revenue and less profit than I feel I’m capable of earning. When it comes to income generation, I hold back when it seems like the logical move would be to advance. While Kolrami expects me to play to win, I’m actually playing for a draw.
Playing for a Draw
When I played to win, I lost for 5 years in a row. I never actually won. Even when it seemed like I nailed a winning move, it always turned out to be a mistake that led to my being checkmated several moves later.
When I played for a draw, I was able to make money for 12 years in a row. And I didn’t have to work nearly as hard to make that happen.
When you play to win in a competitive game, you’re playing for someone else to lose. If you want to maximize revenue or profits, you need to maximize the amount of money your customers or clients pay you. The more money you make, the less money they get to keep. You can only go so far down this path before you start meeting serious resistance. And the more tactics and techniques you use to try to combat that resistance, the stronger the resistance becomes.
How many businesses have had to learn this lesson the hard way? The more they try to extract the maximum amount of money from you, the more you feel driven to resist them, such as by resorting to piracy to cut them out entirely.
Which businesses do you dislike most? Do you feel those businesses are playing to win at your expense? How does that affect your ongoing relationship with them?
What are your favorite businesses? Why are they your favorites?
One of my favorite businesses is Google. I like them because I feel they give me a lot more value than they ask in return. They provide me with a free search engine, free email, free calendar, etc. I benefit from their engineering expertise every day, and I’m grateful for it. I’ve paid them back in some ways over the years, such as by generating hundreds of thousands of dollars of business for them when I had Adsense on my blog… and probably millions if you include all the referrals I must have sent their way, such as other bloggers who signed up for Adsense after learning about my results with it.
Facebook, on the other hand, left me feeling used and abused after two years as an active user of their service. So I shut down my personal page and my fan page and wrote multiple articles about why I had to abandon them and take my social networking to greener pastures. Ironically, one of those articles racked up 2000+ Facebook likes.
Of course these evaluations are being continually refreshed. Google might screw up, and I may have to bid Larry and Sergey adieu. Facebook might correct its problems, and I’ll have to refriend Zuck. But for now, my perception is that Google is still playing with me, while Facebook still wants to play at me.
Becoming an Enigma
What does it mean to win? What does it mean to succeed? Does it even make sense to pursue these ideals?
I learned the hard way that it’s actually easier to enjoy an abundant and fulfilling lifestyle by playing for a draw instead of playing to win or succeed.
When you play for a draw, you change the way others relate to you. They may not understand this consciously, but they’ll behave differently towards you nonetheless.
Some of your decisions may confuse people at first, especially if they’re used to dealing with businesses that play to win, but generally people seem to respond positively. A business that plays for a draw is a breath of fresh air.
When you leave extra value on the table without trying to extract it, that value rolls over into goodwill, which is the lifeblood of a sustainable business.
For example, by giving away so much free content, my business receives a massive number of referrals. New referrals happen every single day — passively and with zero marketing costs.
I’ve done okay financially too. Not counting income from my workshops or my book, my blog alone has generated well over $1 million in revenue since I started, mostly from joint-venture promotions and affiliate programs. That’s plenty for me to sustain a positive cashflow and to enjoy an abundant lifestyle.
What about the economy? I live in Nevada, which has the highest unemployment rate of any U.S. state, according to the U.S. Dept of Labor. Lots of people here are looking for ways to make money, and they’re getting thrashed by Kolrami. They’re trying to beat a game that they can’t win. The odds are better in the casinos.
The irony, however, is that I perceive my actual income as much lower than it could be if I put more effort into it. There are lots of ways I could potentially earn more money, and some are dirt simple. For instance, for about an hour’s work, I could immediately start earning at least an extra $10K per month in passive income just by putting up Google Adsense ads, which I used to have on the site for several years. See this post if you want to know why I dropped Adsense. I deliberately choose not to earn this money.
Now you might be wondering, What kind of idiot would pass up an easy $10K/month in passive income? The kind of idiot who’s had his ass kicked by Kolrami way too many times. 🙂
You see… I don’t run my business to optimize revenue or profits. When I tried to do that, my real-world results were the exact opposite of what I wanted. So these days I deliberately make business decisions that leave significant value on the table, untapped and unextracted. Kolrami cannot make sense of these moves, and therefore he cannot counter them. Consequently, any potential competition with him remains in a state of perpetual stalemate. He cannot defeat me, and theoretically I can keep playing indefinitely.
Instead of seeing me as a competitor, my peers in this field tend to regard me as a bit of an enigma. Many of them became very curious when I did the whole copyright giveaway thing last year. From their perspective it seemed like a very risky thing to do, perhaps even foolhardy. Some regard it as very brave, while others simply don’t know what to make of it. Most aren’t willing to go down a similar path, preferring to keep all their work copyrighted so they can control it. They know that I’m an intelligent and strategic thinker, but since this action doesn’t really make logical sense from the standpoint of maximizing revenue, they don’t perceive me as any sort of competitive threat, so by default I’m treated as a non-threatening ally. And the truth is that I’m not a competitive threat of any sort because I’m not playing this game to win. I’m still playing for a stalemate with Kolrami, and I plan to continue doing so indefinitely.
Making money is very easy now. I don’t consider myself uber-rich, but I’ve achieved what I consider to be functional abundance. All my bills are paid, and I have sufficient income to enjoy the lifestyle I desire. I can work when I want and take time off when I want. And I feel I can keep this going indefinitely.
Even though I’ve made plenty of money from this business, I always have the sense that I could be earning many times more than what I’m actually earning. But I deliberately avoid that level of success, not because I’m resistant to success but because I recognize that the pursuit of such success is a trap.
It was a major lesson for me to learn that I can actually make more money by trying to make less money. I can achieve more success by trying to succeed less. This is what has actually worked for me in the real world.
The path of abundance isn’t the path that maximizes velocity. It’s the path that minimizes friction. If you try to maximize velocity, you end up maximizing friction too, thereby causing massive amounts of heat. Ultimately, you burn up.
If you race to every destination by driving as fast as your car will allow, is that the optimal approach? Or is it better to intentionally hold back a bit, driving at speeds well below your car’s maximum potential?
Success = Sustainability
Instead of seeing success as some kind of accomplishment, victory, or conquest, I think it’s wiser and more effective to define success as sustainability.
This isn’t just about how we run our lives or businesses. It’s about how we relate to each other and to our planet as a whole.
Is the most successful energy company the one that extracts and sells the earth’s resources as quickly as possible? Is a successful relationship one in which you extract maximum value from your partner, leaving them drained at the end of each day?
I like Stephen Covey’s analogy of the goose and the golden eggs. If you try to maximize all-out production by extracting as many golden eggs as possible, you eventually kill the golden goose, thereby causing your production capacity to crash. For long-term sustainability, you must nurture the golden goose. Getting greedy with the eggs will cause Kolrami to swoop in and turn your goose into foie gras.
The game of business isn’t winnable. No matter how hard you play to win, you’ll always lose in the end. Even if you become an extremely cunning player, laying waste to all who oppose you, eventually you’ll die, and your deathbed score resets to zero. Kolrami always gets the last move.
But if you largely ignore the score and play for a draw instead of trying to win, Kolrami cannot defeat you. You can play the game for as long as you like.
When you seek sustainability, the games of money and business are transformed. Instead of competing for survival and success, you can relax and enjoy yourself. Playing for fun is a whole different ride.
When you play for fun instead of trying to win, most people will relate to you in the same manner. Some players may initially assume a competitive posture with you, but once they realize you’re playing for fun instead of trying to win, they’ll quickly lower their shields, and they’ll begin to play the game with you at your level — for fun. Even highly competitive players naturally sense there’s no honor in thrashing an opponent who isn’t trying to beat them. No real victory can be achieved against a player who stands no chance of winning. Players that try to overwhelm defenseless opponents simply make themselves look ridiculous.
I’m not saying that you’ll never encounter a stubborn victory-minded person who seeks to trounce you anyway, but it’s a lot rarer when you decline to resist them. Competitive people tend to expend more energy on those who resist them. If you offer no resistance, they’re more likely to consider you a potential ally.
When I tried to win in business, I experienced frustration and failure. When I played for a draw, I had fun and enjoyed sustainable success.
If you’re still trying to win, maybe it’s time to give it up. Kolrami is just too good. You cannot hope to beat him. He’ll take all your best moves and turn them against you, causing you to end up worse off than when you started.
As for defeating Kolrami, in the strictest sense, I did not win.
I busted him up. 😉
Thanks for the inspiration, Gene. You are still loved. <3
October 14 - 16, 2016
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