Spend 5% of your money foolishly


Hey Reader,

Have you ever spent money on something and immediately felt guilty afterward?

Will Guidara spends his money foolishly on purpose. And he thinks you should too.

He once bought an entire barrel of whiskey and put it in his basement. He also put a skee-ball machine in the office.

Is he going to get a monetary return on either of these things? No. But that’s kind of the point.

He calls it the 95/5 rule:

Manage your money and time like a maniac 95% of the time (no expense is too small—every penny counts), but do it so you can spend the other 5% foolishly.

So long as you’re responsible with the 95%, Will says it’s reckless not to spend the last 5% foolishly.

Go on the trip. Make the “unreasonable” purchase. Give random gifts to your customers or employees.

He says a surprise like that can buy the kind of loyalty that takes a long time to erode.

Often, it’s the investments you can’t necessarily measure that bring the greatest return.

My version of this is similar. My rule is to save and invest at least half of what I make and then spend at least 10% on things that are pure fun. Things that are splurges I can’t justify and don’t even try to.

A few years ago that looked like chartering a small plane out of Boise with a group of friends to reach a place we couldn’t get to on a commercial flight. If you split the costs between everyone, it actually cost less than you’d think. Everyone who went on that trip still brings it up.

Kit has a version of this at a bigger scale: Kit Studios.

We built world-class recording studios in three major cities that are completely free to use for customers.

That’s the kind of decision that doesn’t make sense on a spreadsheet. But that’s why it’s a 5% decision. And now creators fly across the country to record there and leave more connected to Kit than any ad could ever make them.

Your 5% (or 10%) doesn’t have to look like mine—and it shouldn’t.

Pick one splurge this year. Stay disciplined with the 95% that pays for it, and then spend the rest foolishly, on purpose.


video preview

PODCAST

The $10 Offer That Made $750,000

What do you do when your identity is tied to what you’ve built and it’s no longer the thing you want to do?

Shawn Blanc has run every business model there is. Affiliate income, sponsorships, an ebook, a flagship course, memberships, and in-person retreats. I sent the whole Kit team through his Focus Course years ago, and it was fantastic.

Now he’s shutting down that course. When Shawn looked for what was broken in the business, he came to a much more difficult question: what if the thing limiting it was him?

We talk through that decision, the imposter syndrome that followed, and the $10 product that made $750,000 in nine months.

Watch or listen to episode »

X POST

Thoughts on the creator economy

David Perell posted a set of notes on where he sees the creator economy.

He covers:

  • Why scarcity is what separates the creators who last
  • How platforms capture more of the value the bigger you get
  • Where video is headed as small teams make cheap feature films

There’s more in the full post, including his case for why subscriber count is a vanity metric.

View X post »

—Nathan

P.S.

Last week, we had Kit’s team retreat in Toronto. We paid out our biggest profit sharing to the team and held an Accelerate Week where everyone focused on making progress on projects that will make a real difference in the business.

Something else we did that was new was we brought a bunch of local creators to a retreat session for breakout groups where the team could learn from how people are using Kit and where we can improve.

We also had a 5k, pickleball and cornhole tournaments, and some volleyball that were all a lot of fun.

Profit sharing
5k
Volleyball
Creator breakout session

Nathan Barry

I'm a designer who turned into a writer who turned into a startup CEO. My mission is to help creators earn a living. Subscribe for essays on building an audience and earning a living as a creator.

Read more from Nathan Barry
Potential vs realized leverage

Hey Reader, Have you ever spent a whole day on something almost nobody saw? It's painful when the whole reason you worked hard was because you wanted to reach people. If you teach a workshop in person, you reach the 20 people in that room. But if you record that same workshop once, you can keep teaching for years on autopilot. This is the concept of leverage, and it's something I talk about in my upcoming book, The Ladders of Wealth (you can pre-order it now). A lot of people will look back...

Hey Reader, “But you’re a software company…” That’s what Tim Grahl said to me over dinner the night before Craft + Commerce a couple years ago. I had just walked him through everything we were about to announce from stage the next morning. Changing our name to Kit. Launching an App Store. Building recording studios for creators. The first two made sense to him. But the studios didn’t. Back in 2018, I pitched our team on physical locations for creators. I had a slide presentation and...

Kit Subscriber Signals

Hey Reader, When you hit a wall in your business, your first instinct is to ask what: What strategy am I missing? What should I do differently? Those are good questions. But there’s a shortcut. Ask who: Who already has the relationship I need? Who has the audience I want to reach? Who could open the door I’ve been knocking on? If just one of the right people started paying attention to you, it could make a huge difference in your business. Maybe it’s a sponsor, evaluating whether your...