I always thought building a business was out of reach.
As a kid, you don't know any better.
The only thing you believe is possible is what was possible for your parents because that's the only information you had access to. Over time, you develop small yet powerful limiting beliefs as to why you can't have more freedom, more money, and more fulfillment.
That's why I'm writing this letter.
Because everyone has those ideas, you know, the ones you tell all your friends about but never get around to doing anything about.
"Bro, we should build an app that's like Tinder but for food places. Then people don't have to struggle to pick a place to eat."
But you couldn't build the app, or the business, or any of the other things you dreamed of building.
Why?
You didn't have the money.
You thought you needed investors.
You lacked so much knowledge and skill.
You loved the initial idea, but then your mind was flooded with LLCs and S-corps and privacy policies and all this other business bullsh*t you didn't want to deal with.
I thought the same thing.
And I struggled for quite a long time.
That was until I realized that I didn't need startup capital. I needed social capital.
What is social capital?
We'll talk about that soon, but in short, it's having a good reputation with an audience of people who want to pay you for the value you provide.
Once you have that, you have leverage:
- You can become a successful musician without a record label.
- You can become a successful author without a publisher.
- You can become a successful designer, programmer, or polymath without an employer.
- You can start almost any business and have the skill and potential customers to make it a success.
- You don't have to rely on external funding, investments, or anything like that. You can build a team or network fast.
Even further, look at creators who get equity in large companies simply by putting their face on the brand. Think how Marques Brownlee is the creative partner behind the Ridge Wallet. Or how startups are giving creators equity so they can tap into an audience and grow fast, no paid ads required.
In other words, social capital is the currency of the next generation, not venture capital.
In other other words, attention is the new currency, but attention alone can lead to a shallow and vain life.
Social capital, on the other hand, checks all the boxes for purpose, profit, and peace, knowing that you're providing value to the world.
Social Capital: Like Black Mirror, But Positive
Have you seen that Black Mirror episode on Netflix?
The one called Nosedive?
No?
It's about a society that uses a social credit system.
Your reputation and worth are based on a 5-star rating that you hold as an individual.
Every time you interact with another person, they have a chance to "rate" you with 1 out of 5 stars based on their experience with you. You simply select a rating on your phone, swipe up, and the person's rating goes up or down.
Your rating determines what communities you can live in, what jobs you can have, what people will accept you in their social circle, and so on. It's very judgmental. As you can tell, the people with a high 4-star rating are the rich and snobby type. The people with a low rating are the poor and violent type (most of the time).
Now, a question for you:
Does this remind you of something?
The creator economy, perhaps?
Have you seen an uptick in people gloating about having a lot of followers? Or how that one girl disavowed her parents because they had barely any followers?
It's a bit insane if you ask me.
But there's a positive side to it.
The 3 Types Of People On The Internet
To the average person, the internet looks like a place out of Black Mirror.
People praise the influencers and celebrities who don't care about them.
The influencers and celebrities get special treatment. Brand deals. Access to anything they want. They have all of the attention… they're a marketing channel for other brands to speak through.
But influencers aren't the only people on the internet.
And they aren't the only people with power.
The second type of person on the internet is the consumer.
They aren't there to contribute to the online space. They're not there to provide a product or service. They're simply their to be educated, entertained, inspired, and a lot of the time… infuriated. Often by the influencers, celebrities, and politicians.
But there's a third type of person:
The creator.
I know that creators and influencers are somewhat the same, but I'd like to make a distinction between them here.
A creator, for the purpose of explanation, is a value creator.
Someone who doesn't consume to the point of being mentally obese and someone who isn't focused solely on vanity, validation, or seeing their number of likes go up.
A value creator is someone who builds their worth based on the value they create. The words they write. The products they build. The problems they solve. The music they produce. The code they type. In the context of social capital, there's a bit more to the creator story.
They care about impact over likes, depth over looks, and truth over conformity.
In order to create value, there needs to be an audience – small or large – who perceives their creation as valuable.
If a tree falls in a forest and nobody is around, does it make a noise?
If a person creates a product and nobody is around, does it make money? Does it impact their life?
No.
1 X 0 = 0
So what does a creator have that influencers, celebrities, politicians, and consumers don't?
The 3 Pillars Of Ethical Social Capital
Social capital isn't just about building an audience.
Anyone can create viral TikToks and meaningless memes to appeal to the masses and provide nothing to humanity aside from the occasional laugh and cringe.
If you're a writer, designer, programmer, any type of creative, or just an individual who wants to do what they want for a living, social capital is what you must build.
Social capital = distribution + reputation + value.
Here's how to do it right:
Distribution
There are 3 types of distribution:
- Built – like building a following or newsletter.
- Borrowed – like people quoting your book or sharing your post.
- Bought – like paid ads or newsletter sponsorships.
The reason most people fail to build an income source out of a job is because they do everything but attempt to get customers.
They build the app and can't get users.
They write the book and can't get readers.
They make the music and can't get listeners.
But if you simply focused on distribution, you'd be able to get your creation in front of other people. And that's the only way you'll be able to tell if it's decent or useful.
You aren't as skilled as you think you are if nobody likes what you do.
No, this isn't about validation. This is about needing an income so you can sustain your passions full-time. Or else life gets assigned to you. You'll justify how you have to work a job because nobody likes your work just so you don't have to drop your ego and finally help other people.
With that said, everyone should build distribution.
Social media is free. Writing is free. Both are accessible to anyone with an internet connection.
Once you've built distribution and have leveraged that to earn an income, then think about bought distribution.
If you want to learn how to build distribution with writing, check out The Writer's Bootcamp curriculum.
Reputation
You can build a large audience based on looks and likes, but that won't take you very far.
Your building an audience of people who live in survival mode. Chasing that next cheap dopamine hit. They see you but not your mind. They view you as a commodity that can be left in the dust when something more pleasurable crosses their screen.
Value creators focus on depth, creativity, solving complex problems, and long term gratification by distributing insight that aids in understanding, not confusion and overwhelm.
They earn with their mind.
Not their time, looks, or labor.
One is infinite. The others fade with time.
One promotes centropy. The others increase entropy.
One is a net positive for humanity. The others are dragging it down to hell.
You can build distribution without reputation, but you're left in an even worse spot.
Rather than not having any users, readers, or buyers, you have a massive audience of people who care about a part of you that will inevitably change. They don't care about your work, and they won't care about you in the coming years.
Value
You can write, design, build, and create all day long, but that doesn't mean it's valuable, and it doesn't mean it's worth paying for. And if it isn't worth paying for, good luck sustaining your passions independently while having a shred of control over the entirety of your day.
Value = (the measure of how much people care about what you do) X (the magnitude of problems you solve)
Value creators don't just create to create.
They create to solve real, tangible problems.
They don't solve imaginary problems that don't exist with cool startup ideas. They solve human problems. Health, wealth, relationships, and happiness. They remove the barriers to improvement and evolution from an individual.
You can have distribution and reputation, but if you don't solve a valuable problem, you are a commodity, and soon enough, you will question the fulfillment that stems from your work. You will chase quick cash over your life's work just to loop back around – as all burnt-out businessmen do – wondering where your life has ended up.
How To Build Social Capital From Nothing
Let's get one thing straight.
Most people don't have an abundance of money to use as a shortcut in life or business.
They don't see a path toward building the life they want because they think they need to work a job, save their money, invest a few bucks here and there, and so on.
But then their dreams end up in the graveyard with everyone else's. They get wrapped up in responsibilities and consumer culture.
They never build the business. They never have control over their mornings, afternoons, and nights. They get trapped in a perpetual cycle of waking up stressed, working with people they don't care about, and going home too tired to do anything productive.
The fundamental misunderstanding is that the world has changed.
We aren't in the industrial age anymore where the only options are to go to school and get a job to live the American dream.
Money isn't the only form of leverage.
Social capital, on the other hand, can be used as leverage to make as much money as you'd like.
You build social capital by building an audience.
Here's how you do it (and why it matters):
1) Learn A Relevant And Future Proof Skill Stack
When you build an audience, you are forced to learn a general stack of skills that almost anyone can benefit from:
You don't waste time studying one skill that you think will help you become valuable. You build an audience and let the market tell you if it is valuable.
You don't learn these skills in a silo. You learn them in the real world. You skip over the fluff and implement what gets results. And if you don't get results, you're probably focusing on the wrong thing, and realizing that is a personal and professional development journey in and of itself.
And, you don't need permission to start.
You simply start building your own personal brand on the internet. You create your banner, bio, email list, you write posts and threads, you build and sell a product or service.
You do everything that individuals and businesses can benefit from.
Once you have results for yourself, you can offer your skill set to other people or businesses to make an income from.
The best part: by that point you have an audience of people who want to pay you for that.
The second best part: you can build your audience around any other skill or interest that you enjoy. It doesn't have to be about business or marketing. It can be about philosophy, productivity, fitness, programming, or anything else that you already see, follow, and consume online.
In the One Person Business Launchpad, I give you 10 post templates, 3 thread templates, 1 newsletter template, and help you build a micro product and micro service to start quick. Check out it out here.
2) Start Small, Accessible, And Free (Or Very Cheap)
What I just said can be overwhelming.
You may feel like you have to learn all of those skills to build social capital.
Not the case if you're smart about it.
Here's what I would do:
- Start with writing – you don't need to learn video, audio, or graphic design to write on social media. Plus, writing enhances the impact of any video script, audio script, or text within a design that you see online.
- Start with one short form platform – X, LinkedIn, or Threads. You need a way to generate traffic on a platform where people can discover and follow you. Things like blogs and podcasts have terrible discoverability.
- Start with one long-form platform – I recommend a newsletter. This way you keep a dedicated portion of the following you build. Then, you can always turn the newsletters into YouTube or podcast scripts… if you ever even want to do that. Justin Welsh is doing just fine, making $2+ million on LinkedIn and his newsletter alone.
Why do I recommend those 3 steps?
Because they act as a forcing function to (1) get results quickly and (2) learn the skills that actually matter.
If you want your writing to be engaging and impactful, it must be persuasive. If you want to build your email list, you need a basic understanding of marketing and sales.
The thing is, you don't need to formally learn those skills. You just try, fail, and improve. If you quit, it's because you don't see it as the only viable option. You'd rather spend that time distracting yourself from the comfortable life you accepted once you quit.
If you need a new place to write in and capture ideas, try out Kortex (click “Create An Account,” log in on desktop).
3) Build Reputation, Distribute Value
Most people "wait to start selling" because they think their audience doesn't want to be sold to.
The greatest thing I did for my personal and business development was selling a product as soon as I started.
That way, I had an incentive behind my actions. I was aiming to earn an income with a product that helped others.
I had direction.
I knew that if I wasn't earning an income, I wasn't actually valuable. And if my income wasn't increasing, my reputation wasn't increasing.
Free content, writing, designs, and the rest isn't enough to impact others' lives.
They need to intentionally engage in value exchange with you. They need to invest in a product of yours that solves a problem in their life. Because if you don't solve a problem in their life, you are replaceable to them, they will not remember you, and they will not attribute their results to you.
Since I started, I've built and launched a product or service every quarter over the last 5 years. These ranged from ebooks to courses to consulting to a book to a limited edition of that book to cohorts to planners to now a software called Kortex.
This is difficult to comprehend until you do it, but I attribute all of my social growth and perceived success to just that.
When I started, I didn't think it would be possible to end up here. But I can tell you with a straight face that it was only possible by exchanging what I deemed an impactful product or service for money.
That is how you build a reputation.
That is how you "give value."
That is how you break free of the social matrix and contribute to the pseudo free market that is the internet.
If you're afraid of money or demonize it because of your limited programming that you think is higher and more spiritual, I cannot help you, as you can't see that there are multiple perspectives to money, and many of those are overwhelmingly good.
That's it.
Build social capital.
Join the new rich.
– Dan