Damien Grant: Beware false prophets, take beaten track to riches

Sam Morgan, Trade Me founder. Photo / Daily Post

There is a theory that to become wealthy you must build a career or business that is scalable.

Sam Morgan did this with Trade Me. Once the business was up and running, Morgan was no longer selling his time. He was freed from the link between hours worked and income received.

Bestselling writer Stephen King also has a scalable career. The effort to write one book is the same, no matter how many copies he sells. The product of one hour of writing can be sold over and over again. This is smarter than how your dentist receives income - he can only sell his labour once.

So it would seem Sam Morgan and Stephen King are good examples for any young person choosing a career.

But a number of professions where time can be packaged and re-sold, such as music and acting, become the kind of honey trap that has led to many actresses working in some excellent restaurants.

If authors are successful, so the theory goes, they can reach the holy grail of commerce - a perfectly scalable business rendering an annuity income.

The problem is that there are as many people wanting to write books as there are reading them. Take it from me, I have three yellowing manuscripts collecting dust that even my wife has had the good sense not to read.

Heartbreak must surely be the fate for most published authors, whose annual royalty cheques fail to cover even the cost of their annual dental check-up.

Which brings me back to the dentist. He gets paid for every hour he works and there is enough work to go around.

We can all read the works of the best writers, which is why good writers who are not the best go unread and rent a house. We can not all go to the best dentists, which is why merely competent dentists drive nice cars and own property in Coatesville.

Successful business models such as Trade Me are the engines of innovation and economic growth. We all benefit from these winning ideas and the few who make it rich drive others on.

However, the vast majority of people who chase the Sam Morgan dream fail. So pursue the scalable business model if you choose but know it will not make you rich. Best to get your dental degree first. Your mother is right. You will need something to fall back on.

* Damien Grant is principal of Waterstone Insolvency, damien@waterstone.co.nz