Consider the framework that everything you have and everything you want in life is in simply a currency. It’s something that you can exchange for another good or service.
If we start from this framework that everything is a currency then we can map these currencies across a continuum of legibility.
It might look something like this:
More legible currencies are typically things like cash and physical objects. It’s very easy to quantify how much cash you have.
More illegible currencies are things like meaning, attention, willpower, time, and relationships.
What’s interesting is that we all naturally have illegible currencies (time, attention, willpower) which we then trade for legible currencies (like cash) only to trade them back for illegible currencies (like relationships or freedom of time).
Let’s use an example of a knowledge worker to illustrate. He starts with his knowledge, time and energy (illegible currencies), he then exchanges those for money, health benefits (legible currencies) and then trades that for another illegible currency like freedom of time (to go on vacation).
However, he pays an exchange rate on each of these transactions. And the conversion fee for converting an illegible currency like into a legible currency like cash is absurdly high. So high in fact, that I think it’s fair to claim cash is in a bubble.
Why Is Money So Important?
Cash is in a Bubble
You can model this simply to show how expensive converting things into cash can be. For example if someone wanted to optimize for freedom of location and they can choose between a mid-level professional job at say $60k/year and a lifestyle design job as outlined above at $24k/year.
The professional could have optimistically 4 weeks of vacation/year (most of my friends have more like 2). They also pay a lot for that vacation because everyone else is over-invested in cash and under-invested in travel. Everyone has to fly home on the 23rd of December and back on the 2nd so flights are expensive. If you have freedom of location in your work, you can travel at off-peak season when flights and lodging are cheaper.
On the other hand, the lifestyle design job can work from home for 8 hours/day for a month, travel at off-peak times, etc.
So if you’re maximizing for freedom to travel. Making $24k/year can make a lot more sense than making $60k/year because you’re accepting payment in illegible currencies.
This is over simplified, but I think you get the idea.
Recognizing this is the whole genesis lifestyle design movement. By skipping the conversion of time and attention into cash and trading it directly for desired outcomes, you can get much better exchange rates. A freelancer working remotely might not be able to charge as high of a rate (in legible, cash terms) as an agency in the geographic location of the client but he can still earn more if he views his freedom not to work a set schedule or in a set location as a currency.
Meaning or Purpose as Currency
Successful non-profits manage volunteers better than most businesses manage employees because they trade in an illegible currency – meaning or purpose.
They understand that volunteers want a clear mission statement. They’re looking for a way to find meaning in their work.
Instead of fundraising a bunch of money to pay qualified people, most successful non-profits simply find qualified people and pay them in fulfillment. Many of the non-profit volunteers work in jobs where the legible currencies – cash, benefits etc. are all good, but they volunteer after hours anyway. Successful non-profits Start with Why.
They get better ROI by giving volunteers meaning or purposes.
When volunteers are asked why they said that they want to be challenged and engaged to they feel like they’re giving their best efforts and can see the difference their making. They want “Flow” work on challenging problems, not just tasks. That’s a more valuable currency
Meaning is the currency that successful non-profits are able to leverage and avoid the expensive conversion into cash.
I was talking to Mark Manson a few months ago and he said something profound – “Meaning is the new luxury.” Unlike what we traditionally think of as luxury goods though, you can trade for it directly without converting it into cash.
It’s valuable to think of it as a currency, because that’s how individuals businesses in the modern economy can leverage it.
You can pay people in lots of currencies as well and lots of smart businesses do this, though not as explicitly as they should.
The compensation in currencies for an entrepreneurial, lifestyle design job or consulting gig could be stated explicitly as:
- Expanded freedom of location
- Expanded freedom of time
- Expanded freedom to choose the projects you want to work on (and thus gain meaning)
- Training at Altitude – (Improving you personal longterm trajectory by working on bigger problems)
- Work with like-minded people (meaningful relationships)
They’re willing to take less money in return for expanded freedom, the opportunity to work on bigger businesses that improve their longterm trajectory.
So, if you’re hiring, realize that more qualified people are willing to accept less legible currencies and work more if they’re able to connect their work with their desired outcomes without having to go through the expensive conversion into a legible currency like cash.
If you pay people well enough and offer good enough benefits that they don’t have to be worried about not being able to afford basic necessities rent or making ends meet, which if they’re living in a place like Vietnam, which they should, is not a whole lot.
Once you get to that point though in terms of cash payment, you can get better ROI on your hire not by offering more money, but by structuring and framing the position in such a way that it’s an opportunity for them to find meaning and purpose, to gain freedom, and to train at altitude.
Both parties able to come out better off by avoiding the extremely expensive conversion to a legible currency like cash.
Time as Currency
Perhaps the most obvious example of under valued currency is time. The vast majority of people under-value their time and over value cash.
KFC ran a promotion a few years ago where they gave away free chicken buckets. I remember the pictures of people that waited in lines for hours to get $5 of free chicken.
If you make that legible and convert that time into cash, it’s stupid. If those people had a minimum wage position of at least $10 hour and they wait for 3 hours then you could argue they paid $25 for chicken ($30 of time -$5/chicken).
Why Is Money So Important ? Money is a useful baseline to use to measure illegible currencies, because it’s so tangible. So you can correlate an illegible currency (like time) with a limited resource (like cash) to figure out how much it’s worth to you without ever having to actually go through the exchange.
Willpower as Currency
Willpower is a limited resource that everyone needs to achieve desired outcomes. So it makes sense to pay to preserve it – often by paying not to do something. I use a program called Self-Control to block myself of sites I use to procrastinate when I would rather be working.
It’s free, which makes no economic sense. With the amount of distractions available to me right now, something that lets me easily preservce my willpower is extraordinarily valuable. If I gain 1 hour of quality work a day through conserving willpower and I value an hour of your work at say $50, then it would be a no brainer to pay $10/day to use.
I’ve started paying for grocery delivery, partly for the convenience, but also for the willpower it saves. I don’t have to walk past all the shelf displays strategically positioned to make you likely to buy stuff I don’t want or need. I pay $10 for delivery, but you trade that for say an hour of time and a good chunk of willpower. That’s a no brainer.
Relationships as Currency
It’s interesting how most successful people are incredibly generous in their time and building relationships.
I had an hour long chat with a guy who had a start-up that got acquired recently in a related industry. I know the guy is extremely busy, but he was more than happy to carry on a conversation for an hour and give me a lot of good advice and feedback. Let’s say his time was worth $100/hour.
Thought it’s not immediately legible to him that talking to me for an hour is worth $100, it’s probably worth far more. It’s correlative, but people that are extremely successful in my experience and incredibly generous with their time, especially considering how much their time is worth. They’ve realized that there’s ROI on that even though it’s extremely illegible how that comes back.
This is why it makes sense to me to model behavior based on people that have achieved my desired outcomes. There’s hidden economics there that aren’t legible, but I’m certain exist.
Of course, there’s synergy and it can be hard to reduce exchanges to individual currencies. For example, time and attention aren’t that valuable without energy. So I’m willing to spend time and attention to get energy. Going to the gym takes time, but I feel it gives me more attention and energy so it’s a good trade.
Illegible Investments Always Have Better ROI
Illegible investments in almost any field always have better ROI. Because the majority of the market can’t understand it, the ROI is much better. No one understood online adverting or marketing 10 years ago so the ROI was outstanding. As more businesses come to understand it, the ROI decreases.
Figure out your desired outcomes and see how you can utilize less legible currencies to get them by avoiding the extremely expensive conversion into cash. If we view everything as a currency, cash is in a massive bubble because it’s so legible.
So if you can deal primarily in illegible currencies, which in the end, is actually what most people want, you can see a lot higher returns.
Why Is Money So Important ? Sometimes it makes more sense to accept payments in illegible currencies.
Last Updated on July 30, 2019 by Taylor Pearson