rich in the information age

How to (possibly) get super rich in the Information Age

In my book, Increase Your Financial IQ, I wrote about the four economic ages of humanity.


The Hunter-Gatherer Age:

In the Hunter-Gatherer Age, humans relied on nature to provide wealth. They were nomadic and went where the hunting was good and the vegetation plentiful. You had to know how to hunt and to gather—or you died. For the hunter-gatherer, the tribe was social security. Socio-economically, everyone was even. They were all poor.

The Agrarian Age:

The Agrarian Age saw the rise of classes between people. Due to the development of technology to plant and cultivate the land, those who owned the land became royalty, and those who worked it became peasants. The royals rode horses while the peasants walked. Socio-economically there were two groups, the rich and the poor.

The Industrial Age:

While many people would place the beginning of the Industrial Age in the 1800s with the rise of factories, I actually think of it as beginning in 1492 with Columbus. When Columbus struck out to find the New World, it was to find new sources of valuable resources such as oil, copper, tin, and rubber. During this time the value of real estate shifted from growing crops to providing resources. This led to the land becoming even more valuable. And three classes emerged: the rich, the middle-class, and the poor.

The Information Age:

Today, we are in the Information Age, where information leveraged by technology and inexpensive resources like silicon produce wealth. This means that the price of getting wealthy has gone down. For the first time in history, wealth is available to just about everyone. There are now four groups of people: the poor, the middle-class, the rich, and the super rich.

Today, there are many ways to get rich in the Information Age, and many people are. But the real question is how do you get super rich?

This morning I read about Jack Dorsey, the co-founder of the payment processing company, Square, in Fast Company. (

The article is a fascinating read and shows the collision between old, industrial age ways of thinking and new, Information Age ways of thinking.

It's also a playbook for getting super rich in the Information Age.

Moving from transactions to transformation

Just a few years ago, Square was considered the darling of the Silicon Valley start-up scene. Dorsey himself, with a sharp design eye and grand ambitions has been compared to Steve Jobs.

The company's core business was and is collecting a small percentage of the transactions they help process, primarily for small businesses - a hard business to be in. It takes a lot of transactions to make a profit. As Austin Carr writes:

"Making money from payments processing is a bit like building a business by selling soda simply for the bottle deposit: It takes a lot of effort just to convert a $1 bottle of Coke into a nickel return, and only in extreme bulk can those nickels start to add up. More troubling, with Square's business, the majority of those nickels go to the financial intermediaries it works with. At every swipe, Square takes its small cut of the transaction price, but 70% (or more) of that fee often goes to Visa, MasterCard, and other institutions that handle risk and fraud detection, as well as card-member rewards and services."

This has led some people to criticize the company and its founder, Dorsey, saying it was desperately looking for an exit and would have to make some hard choices.

The criticism, however, is directed at the company's current business model, a model that Dorsey says is simply Step 1 in a much grander vision to harness the vast amounts of data Square collects to build add-on products that move beyond payment processing - and provide higher margins.

As Carr writes, "Dorsey understood payments processing couldn't be the endgame. 'We always knew it was not our core business,' he says. 'We knew the real business was around the data.'"

Whether Carr's company will be successful in its grand ambitions is still unknown, but one thing is clear: It will be the difference between a moderately successful transaction company and a game-changing product company - between being rich and being super rich.

Fight or Flight

The real difference between Dorsey and others who would be content with a safe, moderately successful company is courage.

"With any challenge," Dorsey is quoted in the article, "there's a fight-or-flight psychological reaction: You either continue to fight, or you go away."

As Carr points out, Dorsey has chosen to fight. If he succeeds, that will be the reason why he'll be super rich while others are simply rich.

What are you fighting for?

The reality is that we all probably won't have the opportunity to be super rich in this life (though you may!) But we all have the opportunity to improve our situations today - to continue to grow and never settle, to fight.

The question is, what are you going to fight for to make your tomorrow better than it is today?

Take advantage of these Free Rich Dad tools.

Original publish date: August 19, 2014