Building Wealth With The 25% Rule

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What’s the 25% Rule?

It’s hard to be the best at something. I’m not talking “pretty good” or even “scary good.” I’m talking face-melting, hysteria-inducing, “greatest-ever” best.

In every profession, there’s only one. Tiger Woods. Serena Williams. Connor McDavid. Michael Jordan. Warren Buffett. (The late) Steve Jobs. These people are the best in the world within their industry or sport and get paid like it. They’ve created generational wealth by being #1.

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This is very hard to do. It’s almost impossible. The odds of you being #1 are astronomical and unless everything breaks right for you (nature and nurture), it’s just not going to happen.

But there are many self-made, successful, rich individuals who aren’t number one in their industry. How did they get there?

The 25% rule is finding success by being in the top 25% in two or more categories.

Scott Adams, creator of the Dilbert comic strip and best-selling author, breaks this down for us in a conversation with Tim Ferriss in his book, Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons, and World-Class Performers.

Adams says that instead of trying to be the best at 1 thing, you should try and become very good at two or more things. Very good means that you’re in the top 25% in that field. That’s the 25% rule. Adams also calls this “skill stacking.”

Adams explains that he was never the best at drawing, but he was better than most people (top 25%). He wasn’t the funniest person alive, but he was funnier than most people (top 25%). Combine those two attributes with a business background and a history of working in an office, and you have the unique creation of the Dilbert comic strip.

Good drawer (top 25%) + good humor (top 25%) = Great comic strip (top 10%)*

*Not actual math, but you get the idea.

Examples of the 25% Rule

Adams recommends that one of your skills should always be communication – either written or verbal. This is something you can practice and get better at. Then, you can combine your communication skills with your passion and suddenly you have a unique mix that no one else has.

Take chef Gordon Ramsay for example. He’s not the greatest chef in the world, and he’s not the greatest performer in the world. But when you combine his entertaining communication style (top 25%) with his passion for cooking (top 25%), you have the ingredients for a reality TV empire (see what I did there haha).

Same goes for Naval Ravikant. He’s a good philosopher. He’s a good speaker. He’s a good angel investor. When you combine all of these good attributes, you get someone who has built the life he wants (and is teaching us along the way).

The whole is greater than the sum of its parts.

Joe Rogan is another example. He’s a podcaster, comedian, and he’s got a passion for martial arts. This is a unique combination. When you multiply his skills and interests with leverage (his podcast and website), you get something special. Here’s what Ravikant says on the Joe Rogan Experience podcast about Joe’s brand (edited for clarity):

Your knowledge is the knowledge of being Joe Rogan. Who else is involved in that whole [UFC] scene, and a commentator, and a podcaster, and a comedian, and interested in all these things and knows all these people? [No one can] replace you so we have to pay you what you’re worth. Because of this specific knowledge, because of the accountability you have with your name, because of the leverage you have through your media, you’re a money-making machine. I'm sure at this point I could make you start over tomorrow, wipe out your bank account, you'd be rich again in no time because you have all the skill sets.

You can watch the entire episode here:

Rogan has found a way to scale his unique personality. He’s created his own category: podcaster, comedian, commentator, and chill dude (that’s an official title btw). He’s in the top 25% in all of those things, and it has made him worth about $25 million. Not bad.

Creating your own category can make you rich, too. Tim Ferriss quotes a passage in Tools of Titans from a book called The 22 Immutable Laws of Marketing: Violate Them at Your Own Risk! The passage emphasizes the power of category-creating.

The authors, Al Ries & Jack Trout, recommend that in the context of start-ups and launching a product, you shouldn’t be asking how your product is better than the competition. You should be asking what new category your product is first in. You can escape competition by creating an entirely new category. You’ll garner more interest in your product that way because everyone is interested in what’s new (not in what’s better).

Naval Ravikant has his own mental hook for this kind of thinking. He has a blog post called: Escape Competition Through Authenticity. The idea is that no one can compete with you on being you. And when you combine your various skills, stacked one on top of the other, you’ll escape competition through authenticity.

Here’s what Ravikant says:

Everyone has multiple skills. We aren’t one-dimensional creatures, even though that’s how we portray ourselves in online profiles to get employed… As you go through your career, you’ll find you gravitate towards the things you’re good at, which by definition are the things you enjoy doing. Otherwise, you wouldn’t be good at them. You wouldn’t have put in the time…Ideally, you want to end up specializing in being you… Authenticity naturally gets you away from competition.

So, follow your passions and start building skills. Don’t try to be the best at one thing. Just try and get into the top 25% across two or more categories, and you’ll end up creating an entirely new category. That’s how you can get rich. The whole is greater than the sum of its parts.

That’s the 25% rule.

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