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July 2010  
  
When we sold our startup in 1998 I suddenly got a lot of money. I now had to
think about something I hadn't had to think about before: how not to lose it.
I knew it was possible to go from rich to poor, just as it was possible to go
from poor to rich. But while I'd spent a lot of the past several years
studying the paths from poor to rich, I knew practically nothing about the
paths from rich to poor. Now, in order to avoid them, I had to learn where
they were.  
  
So I started to pay attention to how fortunes are lost. If you'd asked me as a
kid how rich people became poor, I'd have said by spending all their money.
That's how it happens in books and movies, because that's the colorful way to
do it. But in fact the way most fortunes are lost is not through excessive
expenditure, but through bad investments.  
  
It's hard to spend a fortune without noticing. Someone with ordinary tastes
would find it hard to blow through more than a few tens of thousands of
dollars without thinking "wow, I'm spending a lot of money." Whereas if you
start trading derivatives, you can lose a million dollars (as much as you
want, really) in the blink of an eye.  
  
In most people's minds, spending money on luxuries sets off alarms that making
investments doesn't. Luxuries seem self-indulgent. And unless you got the
money by inheriting it or winning a lottery, you've already been thoroughly
trained that self-indulgence leads to trouble. Investing bypasses those
alarms. You're not spending the money; you're just moving it from one asset to
another. Which is why people trying to sell you expensive things say "it's an
investment."  
  
The solution is to develop new alarms. This can be a tricky business, because
while the alarms that prevent you from overspending are so basic that they may
even be in our DNA, the ones that prevent you from making bad investments have
to be learned, and are sometimes fairly counterintuitive.  
  
A few days ago I realized something surprising: the situation with time is
much the same as with money. The most dangerous way to lose time is not to
spend it having fun, but to spend it doing fake work. When you spend time
having fun, you know you're being self-indulgent. Alarms start to go off
fairly quickly. If I woke up one morning and sat down on the sofa and watched
TV all day, I'd feel like something was terribly wrong. Just thinking about it
makes me wince. I'd start to feel uncomfortable after sitting on a sofa
watching TV for 2 hours, let alone a whole day.  
  
And yet I've definitely had days when I might as well have sat in front of a
TV all day — days at the end of which, if I asked myself what I got done that
day, the answer would have been: basically, nothing. I feel bad after these
days too, but nothing like as bad as I'd feel if I spent the whole day on the
sofa watching TV. If I spent a whole day watching TV I'd feel like I was
descending into perdition. But the same alarms don't go off on the days when I
get nothing done, because I'm doing stuff that seems, superficially, like real
work. Dealing with email, for example. You do it sitting at a desk. It's not
fun. So it must be work.  
  
With time, as with money, avoiding pleasure is no longer enough to protect
you. It probably was enough to protect hunter-gatherers, and perhaps all pre-
industrial societies. So nature and nurture combine to make us avoid self-
indulgence. But the world has gotten more complicated: the most dangerous
traps now are new behaviors that bypass our alarms about self-indulgence by
mimicking more virtuous types. And the worst thing is, they're not even fun.  
  
  
  
  
  
**Thanks** to Sam Altman, Trevor Blackwell, Patrick Collison, Jessica
Livingston, and Robert Morris for reading drafts of this.  
  
  
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