Guest Post: James Altucher is an entrepreneur and bestselling author who has founded over 20 companies, failed with most of them but managed some big wins including founding and selling StockPickr and Reset, each selling for approximately $10 million.
James is an Angel investor and was one of the first seed investors in Buddy Media which sold to Salesforce for $745 million and managed to get angel investments in Bit.ly, Ticketfly, CTera, Acebucks, Cancer Genetics and Optimal.
He has published 11 books including Choose Yourself, 40 Alternatives to College, How to Be The Luckiest Person Alive and is a frequent contributor to publications including The Financial Times, TheStreet.com, TechCrunch and The Huffington Post.
Ed: You may have read some of my rants of recent times about talented would be entrepreneurs working on non problems and the dearth of investable startups as a result. I asked James if we could share his idea machine post to help those of you trying to start new businesses so that you don’t get too locked into to your initial (and possibly suboptimal) ideas.
The Ultimate Cheat Sheet for Becoming an Idea Machine
The way to have good ideas is to get close to killing yourself. It’s like weightlifting. When you lift slightly more than you can handle, you get stronger.
In life, when the gun is to your head, you either figure it out, or you die.
When you cut yourself open, you bleed ideas. If you’re broke and close to death, you have to start coming up with ideas.
If you destroy your life, you need to come up with ideas to rebuild it.
The only time I’ve been FORCED to have good ideas is when I was up against the wall. My life insurance policy was like a gun to my head: “Come up with good ideas… OR ELSE your kids get your life insurance!”
At an airport when I realized a business I had been working on for four years was worthless.
Or when I was sitting in the dark at three in the morning in the living room of the house I was going bankrupt and losing my home, my brain figuring out how to die without anyone knowing it was planned.
Or when I was getting a divorce and I was lonely and afraid I wouldn’t make any money again or I wouldn’t meet anyone again. Or my kids would hate me. Or my friends would be disgusted by me.
The problem is this: you’re NOT in a state of panic most of the time. States of panic are special and have to be revered. Think about the times in your life that you remember – it’s exactly those moments when you hit bottom and were forced to come up with ideas, to get stronger, to connect with some inner force inside you with the outer force.
This is why it’s important NOW to strengthen that connection to that idea force inside of you. This post is about HOW.
Nothing you ever thought of before amounted to anything – that’s why you are exactly where you are at that moment of hitting bottom. Because all of your billions of thoughts have led you to right there. You can’t trust the old style of thinking anymore. They came, they saw, they lost.
You have to come up with a new way of thinking. A new way of having ideas. A new ways of interacting with the outside universe.
You’re in crisis. Time to change. Time to become an IDEA MACHINE.
People know what “runner’s high” is. It’s when you are running for a long time, at the point of exhaustion, and then something kicks in and gives you a “second wind”.
400,000 years ago people didn’t jog for exercise. They didn’t even have jogging shorts. Or sneakers.
400,000 years ago people need to eat and live. And either you’re running to catch a prey, or you are running from a lion. You’re the prey! And you need that second wind in both cases or you DIE.
The same thing happens in the brain. When you are about to die, a second wind kicks in. Ideas, experiences, opportunity, and probably hidden forces and neurochemicals we don’t understand.
But you can’t get runner’s high unless you’re ALREADY in good shape. Unless you are already able to run long distances.
This is why it’s important to exercise the idea muscle right now. If your idea muscle atrophies, then even at your lowest point you won’t have any ideas.
How long does it take this muscle to atrophy? The same as any other muscle in your body: just two weeks without having any ideas. Atrophied.
If you lie down in a bed for two weeks and don’t move your legs you will need physical therapy to walk again.
Many people need idea therapy. Not so that they can come up with great ideas right this second (although maybe you will) but so that people can come up with ideas when they need them: when their car is stuck, when their house blows up, when they are fired from their job, when their spouse betrays them, when they go bankrupt or lose a big customer, or lose a client, or go out of business, or get sick.
Ideas are the currency of life
Not money. Money gets depleted until you go broke. But good ideas buy you good experiences, buy you better ideas, buy you better experiences, buy you more time, save your life. Financial wealth is a side effect of the “runner’s high” of your idea muscle.
Whoah! That was a big intro. Depending on where I post this, some people will write “tl;dr” which I had to look up and it means “too long, didn’t read.” I encourage those people to stop reading here and save yourself the trouble. It’s ok. I’m not mad at you. I’ll write smaller articles also. I’ll even draw cartoons.
I’ve often written about the idea muscle as part of what I call my “daily practice”. Every day I have to check the box on physical, emotional, mental, and spiritual health.
And I get a lot of questions about it so I will try and answer them here. If you have more questions, ask in the comments and I will answer.
Sometimes people ask, “did you only start coming up with ideas because you already had it made?”
ANSWER: I was on the floor crying because I was dead broke and dead lonely and had no prospects so that’s why I had to do it.
So now, 1000 words in (“tl;dr”) The Ultimate Cheat Sheet for Becoming an Idea Machine
The below is what I do and what works for me. If you have anything to add, please add them in the comments, I need all the help I can get.
What do you mean Idea Machine?
You will be like a superhero. It’s almost a guaranteed membership in the Justice League of America.
Every situation you are in, you will have a ton of ideas. Any question you are asked, you will know the response. Every meeting you are at, you will take the meeting so far out of the box you’ll be on another planet, if you are stuck on a desert highway – you will figure the way out, if you need to make money you’ll come up with 50 ideas to make money, and so on.
After I started exercising the idea muscle, it was like a magic power had unleashed inside of me. It’s ok if you don’t believe me. Or maybe you think it’s bragging. There are many times when I don’t have ideas. But that’s when I stop practicing what I am about to advocate.
Try it for yourself. I’m not selling anything here. I have no reason for you to try this. I just want to share my exerience. It’s like part of your brain is opened up and a constant flow of stuff, both good and bad, gets dropped in there.
From where? I don’t think about it and I don’t care. But I use it.
In early 2009 was one of those times when I desperately needed to do this. I was fulltime either trying to find a girlfriend or I was trying to start a business or both. I was also going broke in the stock market and losing my home (until I personally saved the entire stock market – see my book).
Every night, I’d have waffles for dinner and a bottle of wine and start writing ideas down. This is before I went paleo (no waffles!) and stopped drinking alcohol (five years sober!) and I was writing 10-20 of the most ludicrous ideas a day down.
And you know what ? It worked.
How do I start exercising the idea muscle?
Take a waiter’s pad. Go to a local cafe. Maybe read an inspirational book for ten to twenty minutes. Then start writing down ideas. What ideas? Hold on a second. The key here is, write ten ideas.
Why a waiters pad?
A waiter’s pad fits in your pocket so you can easily pull it out to jot things down.
A waiter’s pad is too small to write a whole novel or even a paragraph. In fact, it’s specifically made to make a list. And that’s all you want, a list of ideas.
A waiter’s pad is a great conversation starter if you are in a meeting. Someone at the meeting will eventually say, “I’ll take fries with my burger” and everyone will laugh. You broke the ice and you stand out.
A waiter’s pad is cheap. You can get about 100 for $10. This shows you are frugal and don’t need those fancy moleskin pads to have a good idea.
Oh, and I just found out another reason for a waiter’s pad while I was writing this. Someone with alcohol on his breath, a bottle in hand, looking like he could crush me with one hand, just came up to me in the cafe I’m sitting at and asked for money. I held up my waiter’s pad and said, “Can I take your order?” and he said, “OH!” and he walked away.
Why ten ideas?
If I say, “write down ten ideas for books you can write” I bet you can easily write down four or five. I can write down four or five right now. But at six it starts to get hard. “Hmmm,” you think, “what else can I come up with?”
This is when the brain is sweating.
Note that when you exercise in the gym, your muscles don’t start to build until you break a sweat. Your metabolism doesn’t improve when you run until you sweat. Your body doesn’t break down the old and build the new until it is sweating.
The poisons and toxins in your body don’t leave until you sweat.
The same thing happens with the idea muscle. Somewhere around idea number six, your brain starts to sweat. This means it’s building up. Break through this. Come up with ten ideas.
What if I just can’t come up with ten ideas?
Here’s the magic trick: if you can’t come up with ten ideas, come up with 20 ideas.
But if I can’t come up with ten, how am I supposed to come up with 20?
For the obvious reason. You are putting too much pressure on yourself. Perfectionism is the ENEMY of the idea muscle. Perfectionism is your brain trying to protect you from harm. From coming up with an idea that is embarassing and stupid and could cause you to suffer pain.
We like the brain. But you have to shut the brain off to come up with ideas.
The way you shut the brain off is by forcing it to come up with bad ideas.
So let’s say you’ve written 5 ideas for books and they are all pretty good. And now you are stuck. “How can I top this brilliant list of five!?”
Well, let’s come up with some bad ideas. Here’s one: “Dorothy and the Wizard of Wall Street”. Dorothy is in a hurricane in Kansas and she lands right at the corner of Broadway and Wall Street in NYC and she has to make her way all the way down Wall Street in order to find “The Wizard of Wall Street” (Lloyd Blankfein, CEO of Goldman Sachs) in order to get home to Kansas. Instead, he offers her a job to be a high frequency trader instead.
What a bad idea! Ok, now go onto the next 15 ideas. (and it anyone wants to buy the movie rights to “The Wizard of Wall Street” please contact Claudia.)
How do I know if an idea is a good idea?
You won’t. You don’t. You can’t. You shouldn’t.
Let’s say you come up with ten ideas a day. In a year you will have come up with 3650 ideas (no breaks on weekends by the way if you want to get good at this). Maybe more if you are trying to do 20 ideas a day.
It’s unlikely that you came up with 3,650 good ideas (after you become an idea machine your ratio goes up but probably in the beginning your ratio of bad ideas to good is around 1000:1).
Don’t put pressure on yourself to come up with good ideas. The key right now is just to have good ideas. When Tiger Woods is practicing he doesn’t get disappointed himself if he doesn’t hit a hole in one every shot. You’re just practicing here.
Practice doesn’t make perfect. But practice makes permanent. So that later on when you do need good ideas to save your life, you know you will be a fountain of them.
When there’s a tidal wave of good ideas coming out of you, you only need a cup of water out of that to quench your thirst.
How do I execute on my idea?
Here’s what I do often when I am writing down ideas that I think I might want to act on.
I divide my paper into two columns.
On one column is the list of ideas. On the other column is the list of “FIRST STEPS”. Remember, only the first step. Because you have no idea where that first step will take you.
Imagine you are driving 100 miles to your home late at night. You turn on your headlights so you can see in front of you. All you can see is about 30 feet in front of you but you know if you have the lights on the entire time, you’ll make it home safely, 100 miles away.
Activating the idea machine is how you turn the lights on so you can get home. But you don’t need to do any more than that.
One of my favorite examples: Richard Branson didn’t like the service on some airline he was flying. So he had an idea: I’m going to start a new airline. How the heck can a magazine publisher start an airline from scratch with no money?
His first step. He called Boeing to see if they had an airplane he could lease.
No idea is so big you can’t take the first step. If the first step seems to hard, make it simpler. And don’t worry again if the idea is bad. This is all practice.
For instance, let’s say one of my ideas is: “I want to be a brain surgeon”. My first step: I would buy a bunch of books on how to do brain surgery. I don’t have to plan my whole way through medical school.
Wait!? Did I just say I would be a brain surgeon without a medical degree? No. I simply had a bad idea and the first step I would take if I was going to “execute” on that idea. And, yes, I’m absolutely confident I would be able to do successful brain surgery before someone throws me in jail (hence, the bad idea aspect of it).
A real life example: In 2006 I had ten ideas for websites I wanted to build. I knew how to program but didn’t want to. So my first step was to find a site like Elance and then put the spec up and find programmers in India who could make the websites for me. One of them I paid $2000 to develop and sold for $10,000,000 9 months later. (this is not bragging – I went dead broke about 2 years after that).
Nine of the ten ideas were BAD. But you only need one.
But if I’m coming up with business ideas, how do I know if I’m on the right track?
There’s no way to know in advance if a business idea is a good one. For instance, Google started around 1996 but didn’t make a dime of money until around 2001.
Here’s my favorite example. A company called Odeo was a software company to help people set up podcasts. Since I do a podcast now this seems like a great idea to me. So they raised a ton of money from professional venture capitalists.
Then one of their programmers started working on a side project. The side project got a little traction but not much. But the CEO of Odeo decided to switch strategies and go full force into the side project without having a clue if it would work.
He felt bad since this isn’t what the investors invested in. So he called up all of the investors, some of the best investors on the planet, and described the side project to them and all the traction they were getting, etc and then made an offer, “Since this is a different direction, I’d be willing to buy all of your shares back so nobody will lose any money.”
100% of his investors said, “YES! GIVE IT BACK!” and so he bought all of his investors’ shares back. Now, Ev Williams, the founder of Twitter (which was the side project), is a billionaire as a result.
Nobody knew. Nobody knows. You have to try multiple ideas and see which ones gets the excitement of customers, employees, and you can see that people are legitimately using it and excited by it.
When I started Stockpickr someone once wrote me and said, “please block me from the site. I’m too addicted to it and it’s ruining my life.” That’s when I had a sense that I had a halfway decent idea. And that was one of ten ideas I was trying simultaneously. The rest failed.
So don’t be afraid to test, fail, test, fail, try again, repeat, improve, test, fail again, and keep improving. The way to keep improving? Keep coming up with ideas for your business and for other new businesses.
As your idea muscle improves, so will your ability to “fail quickly”. Failing quickly is a better skill than executing quickly.
When do I shut down an idea?
In 2009, I started The Leading Love Site on the Net. It was going to be a dating website where your twitter feed was your profile. Everyone I spoke to say, “that’s a great idea!” I had already raised money and was raising more.
Then, on the day I was going to close the fundraising round I woke up shaking. I had this vision of myself a year from now explaining to all of the investors why it wasn’t going to work. I returned all the money. I was out the money I had spent to create the website.
I can guess why it was a bad idea (people on dating sites want to be anonymous, for instance) but I didn’t really know. I just knew I had to return the money.
When your idea muscle is developed and the other legs of the daily practice are fully developed (Phyiscal, Emotional, Spiritual) you’ll have a better idea when you should shut things down. When you are shutting them down for the right reasons. When you are “failing quickly” as opposed to self-sabotage or fear of success or you’re just stupid.
That was the last time I tried to start a business. Since then I’ve done very well by not starting businesses. Starting businesses is not the only way to make money in this world. There are many ways.
How do you keep track of your ideas?
I make a list of ideas and then I usually just throw them out.
The whole purpose is to exercise the idea muscle. I know most of the ideas are bad ideas so I there’s no sense keeping them around.
If one of the ideas is good then I will probably remember it and build on it for the next day. Sometimes it’s kind of funny when I come across an old list of ideas to see what I was thinking. Every now and then I think I find a good idea in my old lists but it’s rare.
And then what do I do with that rare good idea? Probably nothing.
Are all of your ideas business ideas?
No. Almost never. It’s hard to come up with over 3000 business ideas a year. I’m lucky if I come up with a few business ideas.
The key is to have fun with it. Else you don’t do it. People avoid things that are not fun.
Here’s some types of lists I make:
- IDEA SEX. Combine two ideas to come up with a better idea. Don’t forget that idea evolution works much faster than human evolution. You will ALWAYS come up with better ideas after generations of idea sex. This is the DNA of all idea generation.
- OLD TO NEW: 10 old ideas I can make new. (Dorothy, Wall Street, etc). Similar to idea sex.
- 10 ridiculous things I would invent (the smart toilet, etc).
- 10 books I can write (The Choose Yourself Guide to an Alternative Education, etc).
- 10 business ideas for Google / Amazon / Twitter / you
- 10 people I can send ideas to
- 10 podcast ideas I can do. Or videos I can shoot. (“Lunch with James”, a video podcast where I just have lunch with people over Skype and we chat).
- 10 industries I can remove the middleman.
- 10 Things I Disagree With that everyone else assumes is religion (college, home ownership, voting, doctors). Or, for any one of those ideas. 10 ideas why!
- 10 ways to make old posts of mine and make books out of them
- 10 ways I can surprise Claudia. (Actually, more like 100 ways. That’s hard work!)
- 10 items I can put on my “10 list ideas I usually write” list
- 10 people I want to be friends with and I figure out what the next steps are to contact them (Azaelia Banks, I’m coming after you! Larry Page better watch out also.)
- 10 things I learned yesterday.
- 10 things I can do differently today. Right down my entire routine from beginning to end as detailed as possible and change one thing and make it better.
- 10 chapters for my next book
- 10 ways I can save time. For instance, don’t watch TV, drink, have stupid business calls, don’t play chess during the day, don’t have dinner (I definitely will not starve), don’t go into the city to meet one person for coffee, don’t waste time being angry at that person who did X, Y, and Z to you, and so on.
- 10 Things I Learned from X. Where X is someone I’ve spoke to recently or read a book by recently. I’ve written posts on this about the Beatles, Mick Jagger, Steve Jobs, Bukowski, the Dalai Lama, Superman, Freakonomics, etc.
- Random: 10 Things Women Totally Don’t Know About Men. (that turned into a list of 100 and Claudia said to me, “uhhh, I don’t think you should publish this”).
- Today’s list: 10 More Alternative to College I can Add to my book: “40 Alternatives to College”.
- 10 Things I’m Interested in Getting Better At (and then 10 ways I can get better at each one).
- 10 things I was interested in as a kid that might be fun to explore now. (Like, maybe I can write that “Son of Dr. Strange” comic I’ve always been planning. And now I need 10 plot ideas).
- A problem I have and ten ways I might try and solve it. This has saved me with the IRS countless times. Unfortunately, the Department of Motor Vehicles is impervious to my super powers.
This is just a sample. Every day, 10 ideas. The other day, “10 ways I can release more endorphins into my body”. Today is, “10 ways I can help people build their idea machine”. Tomorrow is “10 Ways I can turn my next book into a webinar for Oprah.” The day after that: “10 things I can talk about in my next talk on May 3” (which means, developing an entire standup comedy act from scratch since I have a rule, “if it’s not funny, then a tree fell in the forest and it didn’t make a sound.”)
Is the idea muscle the most important part of what you call “The Daily Practice”?
No! They are all EQUAL.
Imagine you’re sitting on a stool. By the way, I only see stools in bars because you have to be drunk to sit on a stool. It’s so uncomfortable. And then invariably, someone falls off a stool and then half the people laugh and half the people say “is he ok?” but everyone crowds around because we smell blood.
So, now you’re on a stool with four legs. If someone pulls away one of the legs you might still balance and the stool stays up but it’s tricky. If someone pulls two legs off, you’re down for the count.
The Daily Practice is to be: Physically, Emotionally, Mentally (the idea muscle), and Spiritually healthy.
If you aren’t physically healthy you won’t come up with ideas. You’ll be coughing and vomiting.
If you are around people who hate you, you won’t come up with ideas. Because they will be yelling at you while you are trying to think.
And if you aren’t feeling grateful and calm in your life on a regular basis, then you will be anxious and it will be harder to come up with ideas.
So all four parts of the Daily Practice work together to come up with great ideas.
Do I really do this every day?
Let’s say you get tired for a day of writing ideas. Try something different. The key is to keep activating parts of your brain that have atrophied.
Sometimes if I don’t feel like writing down a list of ten ideas I’ll do something else.
Like I’ll draw ten eyes.
Or I’ll make a collage.
Or I’ll take photographs of the ten most beautiful women I see today. Or the ten ugliest men (if I take picture of the ten most handsome men then I might get jealous and that’s a whole other thing I’d have to deal with).
Or I might come make ten prank calls (well, when I was a kid I did that. I never do that now! Maybe).
Is it important to read before writing?
I don’t know. But I do. Here’s what I do:
At any given point I have about 10-20 books on my “to go” list. Books that I can just pop in and continue reading.
Every day I read at least 10% of a non-fiction book that gives me tons of new ideas, an inspirational book, a fiction book of high-quality writing, and maybe a book on games (lately I’ve been solving chess puzzles). And then I start writing.
Right now the inspirational book is “The Untethered Soul”. The non-fiction book is “Antifragile”. The fiction book is “Blind Date” (Kosinski) and the games book is actually my chess app (“Shreder”) which has non-stop puzzles. But this list changes almost every day.
How long does it take?
It takes at least six months of coming up with ideas every day before you are an “idea machine”.
Then your life will change every six months. I’ve said this before but my life is completely different than it was six months ago, and six months before that, and so on. So different there is no way I could’ve predicted the differences.
Six months ago I had no podcast. Now it’s a big part of my day. Six months before that, “Choose Yourself” had not come out. Six months before that, several I had not yet gone on several board seats that have done well for me. And so on.
Do I give my ideas away for free?
When you come up with ideas for someone else, always give ALL the ideas away for free if you think they are good ideas (remember: six months).
I read recently one person said to give HALF of your ideas away for free and make them pay for the other half.
This is very bad. This guarantees you will only come up with bad ideas. Because you will hoard your ideas. You will develop a SCARCITY COMPLEX around your ideas.
Ideas are infinite. But once you define your capacity of good ideas (“half”) then they instantly become finite for you. Not for anyone else. But just for you, your ideas will be finite.
If you stick to an abundance mentality, and be grateful for the ideas that are flowing through you, then they will be infinite. Where they come from, nobody knows. But they will be infinite and lucrative for you.
So give ideas for free, and then when you meet, give more ideas. And if someone wants to pay you and your gut feels this is a good fit, then give even more ideas.
I keep coming up with ideas and they keep failing. What do I do?
There’s this “cult of failure” that has popped up recently. That you need to fail to succeed.
This is not true. Failure really sucks. You don’t want to fail. There is an easy way to solve this. Take the word “fail” out of your vocabulary.
Everything we do in life is a success. We breathe, we love, we practice kindness, we deal with other human beings. We improve. We have experiences. This is magnificent and abundant success. Just even being able to try new things is something to celebrate every day. To smile at another person. To play.
Most things I try to do don’t work out as I planned. But who am I to predict the outcomes of my preparation. My only job is to prepare.
Everybody, EVERYBODY, is a poor predictor of outcomes. From the weatherman, to the stock analyst. But we can all be good at preparation.
And once I prepare, I show up at the starting line. Then the whistle blows, the race begins, I try my hardest with the most amount of integrity, and the results are not up to me.
Then I go back and learn from the race, I prepare more, I love more, I celebrate more, and I shop up for the next race. The whistle blows, and eventually good things happen. Preparation leads to Faith in yourself.
I used to think good things never happen. I saw my father die without anything good happening to him. I thought my fate was going to parallel his. But every moment, this moment while you are reading this, you get to choose abundance, gratitude, kindness, integrity, “goodness”. Only you get to choose what is in your universe.
When you don’t choose, you excuse.
Is it really worth it to become an idea machine?
Every day I come up with ideas. I haven’t had a business since 2009. And it failed, as mentioned above.
Since then I’ve made more money than I know what to do with because I come up with ideas for people, for companies, for me, for people who have no idea who I am, for random anonymous things.
I then get invited to share my ideas. Sometimes I get paid for them. Sometimes I give them for free. Sometimes I get more introductions to people and sometimes I get a chance to advise companies that do well and make me money. And sometimes I write books.
When you’re an idea machine, everything you look at breaks down into a collection of ideas, just like physical objects ultimately breakdown into collections of particles if your eyes were subatomic microscopes. Your eyes and brains become sub-idea microscopes that see the ideas that become the building blocks for everything in society.
See them, build them, change them, seed them, birth them, love them, live them. Ideas are the dark matter of the universe. We know it’s there but only those “in the know” can see them.
– – –
What do you do once you become an idea machine?
This is what I don’t know the answer to.
Now you have super powers. Now you’re ready to take your unique place in the world. You will know how to get to the Justice League satellite that orbits the Earth and solves problems at a moment’s notice.
You will know what to do. I don’t know. Nobody else knows. You’ll do it and the world won’t be the same.
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