Imagine being having $20 million and being scared of losing it all.
Now imagine having $100 million and “sleeping with one eye open.”
Yet, the scarcity mindset is a terrifying boogieman.
Who strikes at all levels of wealth.
It’s a fear that lurks around the corner. A fear that the “rational brain” can’t overcome by itself.
This conversation took place on a recent episode of the My First Million Podcast.
Scott Galloway is a 58-year-old serial entrepreneur (L2, Red Envelope), business commentator and NYU professor. His net worth clocks in at $100 million.
He’s joined by Sam Parr, who at 32 years young sold his company The Hustle and netted himself a cool $20 million.
And both of these multi-millionaires are paralyzed by the fear of losing it all.
Here’s Scott prepping for the next financial calamity.
“I’m still trying to make a shit ton of money. I still feel financially very insecure. I still worry about a recession becoming a depression and I’m the guy who lost it again.”
Sam is even more blunt in his self-assessment:
“Dude, I’m broken. It doesn’t matter how much therapy I go to. I have a scarcity mindset, and I’m broken.”
WTF is going on here?
Let’s first start by “intellectualizing” the fear of losing it all.
Take Scott. Let’s be generous and say he lives to be 100 years old.
Without accounting for asset growth (or inflation), he could spend $2,380,000 a year and still die with money left in the bank.
(BTW, it’s really hard to spend $2.38 mm when you’re 90 – assuming you’re alive.)
As for Sam, he goes on to say that in addition to his 80/20 portfolio, he’s holding onto two stocks – HubSpot and AirBnB – until he hits his “number.”
Now I can deeply relate.
Growing up, we were lower-middle class.
And New York City was a very different place in the early 90s.
When I was 12 years old, my sister (then 10) and I were walking home from the K-Mart by Astor Place.
(This was wayyyyy before it was home to FaceBook’s NYC headquarters and Jeff Koons statues adorned IBM Watson’s office.)
We were followed by a group of 7 teenagers who were at least 5 years older than us (and probably double our body weight).
They followed us out of the K-Mart. We weaved through the Village, trying to see if we could shake them by taking a different path.
But eventually they caught up.
They formed a circle around us.
They rifled through our pockets.
They took our wallets, Metrocards and my Sony Walkman. They then dashed down Second Avenue – howling and giggling like a pack of Banshees.
(This happened to me two other times, just with fewer assailants.)
Since then, I’ve always equated having more money with feeling safe.
Feeling physically safe.
And I know that when I lose a bunch in the stock market or miss a sales goal – my safety meter goes RED – even though I live in one of the safest zip codes in all of LA.
I share this story because I’ve come to see scarcity through a dual lens.
First, there’s the fear of losing it all. Of “going back.” Reliving prior moments of financial anxiety.
I speak to (and coach) countless successful professionals who have stories of financial anxiety (and trauma) from their childhood.
Some lived in poverty and wondered when they’d get their next meal.
Others saw a parent lose it all either through bankruptcy or addiction.
Many internalized messages from their parents that we live in world with limited resources. There’s just not enough to go around.
So be vigilant.
Let’s examine this graphically.
The horizontal axis is how much money you have.
And the vertical axis is happiness.
Now I want to discuss the shape of the curve (versus the absolute levels).
I think we can all agree that there’s a steep part of the curve (from Point A -> B) where even small amounts of money can lead to disproportionate amounts of happiness.
This part covers the lower rungs of Maslow’s hierarchy – physiological (food, water and shelter) and safety needs (physical and emotional security).
And if you’re scared of losing your house and meals you’d be caught in the Scarcity Spiral.
Now, we can look at the right most part of the curve (from Point B -> C).
Again, we won’t ascribe any dollar amounts – but intellectually we can all agree that the curve flattens.
If you’re Jeff Bezos with $165 Billion in net worth – an extra $2 billion dollars is nothing more than an average day at the office.
You wouldn’t even notice
Now clearly, we’ll all have different dollar amounts for this part of the curve, which we’ll call the Prestige and Prominence.
If you’re reading this you’re at Point B
You may not agree, but I know a few things about you.
You’re educated.
You’re driven.
You understand how business works.
Heck, if you were to get laid-off, most of you (myself included) could move back in with your parents.
Embarassing?
Yes.
Threat to your safety and livelihood?
No.
(In fact, the food would probably be delicious.)
The Scarcity Spiral is off the table for most of you.
So let’s pivot to Prestige and Prominence.
As you move from Point B to C, you get nice stuff. You get a bigger house. You button up your 529 plans.
But I don’t think this paints the full picture. Here’s a quote I encourage successful people to chew on:
Money can only solve money problems.
If we stick to the Maslow’s Hierarchy framework, the next three levels are: Love and Belonging, Esteem and (the elusive) Self-Actualization.
Let’s look at each one in detail and see if money can buy more of it.
Love and belonging is the need for affection, intimacy, and acceptance from others.
(Can it be bought? Sure, on the Vegas strip at 2 am.)
Esteem is the need for respect, recognition, and achievement.
(Can it be bought? Yeah, but it’s like getting the knock-off version.)
Self-Actualization is the need to reach one’s full potential and live a meaningful life.
(Can it be bought? Heck no!)
And we can go a level deeper. Let’s look at some core human fears.
There’s the fear of irrelevance. Of insignificance. Of being forgotten.
The fear of unworthiness. Of being unloveable. Of being alone.
The fear of being a bad person.
Many driven professionals use ambition and money to paper over these fears.
It’s why you strive up the curve of prestige and prominence.
Only to discover that this core fear persists.
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