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Yes, here I go again, playing the wise old man and posing as a life coach.
I was born in the 1970s, and here I am, brazenly discussing life experience with people born in the late 1990s and the 2000s. It's hardly surprising if they roll their eyes: easy for you to say; times have changed; stop looking at everything through the same old lens. I expect that kind of response.
There have been plenty of older men posing as life coaches for the young in recent years. Some are doing quite well. They can have a terrible reputation in their own industry and still win over students on campus and get glowing reviews. What's the difference? The ones who want to take advantage of young people tell them what they want to hear. Once everyone is comfortable, out come the sickles. The next crop has no idea what happened to the last, so the con can go on. I don't have that talent. I say the things young people don't want to hear, and they ask whose side I'm on.
I'm going to say it anyway.
Young people want someone to tell them how to make money, get rich, spot opportunities, and find people who can open doors for them. That's what plenty of seasoned hands teach. Is that necessarily wrong? There is something to be said for looking on the bright side.
I'll offer something different. The first lesson of adulthood, as I see it, is this: learn to set a safety boundary for yourself.
What's a safety boundary? Let's start with what unsafe looks like.
Last year, in a class for members of my community, we talked about major life decisions. I described four kinds: optimal or perfect decisions, positive decisions, negative decisions, and catastrophic decisions.
Say you trade stocks. You pick the biggest winner on the market and buy it with as much leverage as you can get. That's the optimal decision: you earn the highest possible return.
If you buy a stock that goes up, that's a positive decision. Yet plenty of people regret it and think they were idiots because some other stock would have made them more money. They end up treating their own positive decisions as mistakes.
If you buy a stock that falls while the rest of the market rises, that's a negative decision. You lose money and underperform the market. You'd have been better off leaving the money in the bank.
But if you use heavy leverage to buy warrants on that stock, lose everything, and end up deeply in debt, that's a catastrophic decision. You won't recover from it for a long time.
So what is a safety boundary? When you're young, you won't always make the right call or get a good outcome. Leave room to experiment and make mistakes, but do everything you can to avoid catastrophic decisions. A safety boundary is a way of thinking that keeps you from putting yourself in that position.
Young people tend to be optimistic about their future. Over the long run, their expected income can be much greater than what they own today. A loss that hurts now may look fairly small in hindsight. In my view, for a young person, a loss they can absorb with their income and assets isn't catastrophic. For someone older, whose expected income is falling and whose expected expenses are high, a loss of the same size can be catastrophic.
In my view, the main catastrophic outcomes are these:
1. Facing criminal prosecution with little chance of avoiding a sentence.
2. Taking on debts far beyond what you can repay with your current income.
3. Suffering severe, permanent bodily injury or disability.
4. Causing lasting physical or psychological harm to someone close to you.
Setting a safety boundary means reducing the chances of those outcomes.
1. Don't take jokes too far, especially pranks that could seriously hurt someone.
Some things are unlikely to happen, but the consequences can be severe. If someone misunderstands a prank and reacts strongly, the result can be disastrous for you or for someone else.
2. Don't make decisions when you're worked up.
I've talked about this in a members' class, but it bears saying publicly. When emotions are running high, it's easy to act on impulse, especially when you're young. Tell yourself that now is the time to make no decisions.
Lashing out in revenge can do enormous, irreversible harm to you too.
That includes getting angry with your employer, deleting a database, and walking out.
3. Understand the law, know where to draw the line, and pay attention to legal risks.
Most people just entering the workforce have probably never had a close friend sentenced to prison. They may not know anyone who was barred from leaving the country, or who fled overseas and doesn't dare come back. It's easy to think this only happens to a tiny minority.
I can tell you plainly that I've seen plenty of cases in my own circles. Some people you might consider successful, who are invited to campuses to share their success stories, have been given suspended sentences. There are more of them than you might think. Students have no idea and see them as role models. Most people with suspended sentences won't talk about it publicly, and people who know about it usually aren't keen to expose them.
People who go to prison or receive suspended sentences aren't necessarily monsters. I've talked before about entrepreneurship as a journey from starting up to getting locked up. Lawyers in the field know plenty of cases that would leave most people saying, “Wait, even that's illegal?”
In recent years, copyright, taxes, financial compliance, and user privacy have sent quite a few entrepreneurs to prison. There have also been criminal cases involving aggressive moves against competitors. Information security law needs to be taken seriously too. Another common problem is business with people involved in illicit operations. You might think your business has nothing to do with them, even though they use the tools or services you sell. Those transactions can be hard to explain, and forfeiting the proceeds is the least of what can happen.
People new to the workforce may be eager to make money, get talked into something, or be tempted by a small favor. They get caught up in a scheme and end up with a criminal record that's hard to shake.
Whether you're choosing a job or planning to start a business, know where the legal lines are.
Don't casually lend your ID to someone who wants to start a company or deal with a bank. Don't agree to be the legal representative of a friend or relative's company unless you have final decision-making authority there.
Don't recruit people into a scheme or sell someone else's private information for a small gain.
Don't vouch for people you don't know.
4. In investing, don't chase the perfect decision.
Why? The perfect decision and the catastrophic one aren't at opposite ends of the scale. Often there's barely a line between them.
Say you get an inside tip about good news for a stock. To maximize your return, you borrow heavily and bet on it with as much leverage as you can get. If the news comes through, the return is extraordinary: your perfect decision. But if a new policy comes out at the crucial moment and the market tanks, your entire leveraged position can be wiped out. You're left with huge debts and may not get back on your feet for years. A single announcement can separate the perfect outcome from the catastrophe.
If you took a less extreme approach, put in some of your own money, and avoided leverage and debt, the same bad news would just make it a negative decision. You're young. You can work and start again.
Take buying a home. Some young people earn money early, and some come from well-off families and want to get onto the property ladder. I won't make predictions about prices; it isn't my specialty. But I will say this: don't push leverage to the limit. Make sure your cash flow can absorb a setback.
Yes, lots of property influencers teach young people to buy homes using as much leverage as possible. When the market is rising, that really does maximize returns. But if your cash flow falters when few properties are selling, it can quickly become a disaster.
5. Watch your exposure to debt.
There's nothing wrong with young people using credit cards, but what you owe each month must stay within your monthly income. Apart from a mortgage, I strongly recommend against taking on any debt that exceeds your annual income, including a car loan.
A little secret: I know rich people who drive every kind of outrageously expensive car, and none of them would spend more than a year's net income on one. If you were born rich, of course, you can ignore this rule as long as your dad agrees.
6. Don't sign agreements that make you jointly liable.
Guaranteeing a loan is the classic example. If a friend or relative asks you to guarantee their loan, don't sign. It doesn't matter how close you are.
Founders need to be especially careful. Many investment agreements make founders personally liable and require them to repay the investment if the business fails. Plenty of investors offer terms like this. To be fair, those terms may not be enforced, or not enforced strictly. An investor may tell you it's just a formality and they'll never act on it.
Remember: don't sign. Don't take their word for it.
I've said before that for many founders, their supposed wealth is a liability rather than an asset. There's little to envy. Many founders supposedly worth hundreds of millions earn less and live less comfortably than an employee who makes a million a year. Save your envy for the ones who actually manage to cash out.
Luo Yonghao gave everyone a real example of what that kind of debt looks like. But he had the connections and resources to get Douyin to boost his reach and help him pay it back. Do you?
Beyond setting a safety boundary, my second piece of advice is to be careful about what you let tie you down.
Your partner, parents, or relatives might want you to go somewhere or do something. Unless it's what you actually want, make your own decision. You're your own person. As I've written before, don't let your parents' outlook limit your future. With a partner, try to find something you both agree on. That doesn't have to mean one person sacrificing for the other. If they have no respect for your growth, your future, or your freedom, giving in is unlikely to lead anywhere good.
Housing can tie you down too. Young people ask whether they should buy as soon as possible in a first-tier city. I think you can, as long as you don't let it trap you. If buying means you no longer dare resign, explore other possibilities, or change jobs, and your whole family ends up tethered to the property, I don't think it's worth it. I know plenty of people see it differently.
By middle age your responsibilities grow and so do your constraints: your parents' health, your children's upbringing, the cost of running a household. It's hard to go your whole life without these obligations, and few people stay footloose after middle age. But don't hurry into that position when you're young. Leave yourself more room to grow and more chances to see what comes along.
Third, learn to tell substance from flattery in your relationships.
Here's something every adult should remember: judge whether people treat you well by what they do for you, not by what they say.
People are often very polite to me. “Mr. Cao, you're amazing. That talk was so good.” If we don't work together and have nothing at stake in common, I take it as a pleasantry. It's nice to hear, but I don't read much into it.
I've also had partners criticize me: there are too many bugs in your product; you don't respond quickly enough; your promotion plan is too conservative. Who are these people? They're the ones who work with us and bring in revenue. No matter how critical they are, they're helping put food on my table, and I owe them real thanks.
Whose opinion should carry more weight, and whose judgment should I trust: the people who flatter me, or the people who actually do business with me?
Most people like hearing praise. Give them a few compliments and you're a good person; say a few nice things and suddenly you're the one who really understands them. Then they'll believe whatever you say.
Meanwhile, someone who truly cares about you, makes an effort for you, and supports your growth can say two critical things and suddenly you don't want to hear it. They don't understand you; they're manipulating you; there's always some explanation.
As I said earlier, plenty of so-called success stories go to campuses looking to take advantage of students. The more titles they have, the more suspicious I'd be. Keep your eyes open. They're good at talking and at selling themselves. For God's sake, don't believe everything you hear. Make up your own mind. If you want to experiment, I won't stop you. Just don't go into debt or make catastrophic decisions. Paying a price to learn is part of growing up.
Those are my three pieces of advice for young people leaving school and starting work.