Why People Dumber Than You Are Millionaires (And What You Must Do Now)

About 20 years ago, I went back home to visit my Mom over the summer and I happened to run into an old classmate from high school. And back in the day, this classmate of mine wasn’t known to be the brightest guy in school.

I remember one time, a group of us were chatting and taking turns sharing our SAT scores and when it came to his turn, he said that he got a 700. And when we asked him whether he got a 700 on verbal or a 700 in math, he just said “Yup!”

Anyway, I naturally assumed that he was working in some dead-end job making minimum wage but I was shocked to learn that he owned multiple apartment buildings and his own construction company. The guy was loaded!

Even though I was doing OK making about 100k as an electrical engineer at the time, I was a pauper by comparison.

At that point, I remembered thinking to myself, “What the hell is this guy’s secret? How did he start a successful construction company because he was dumb as rocks in high school?” And this threw me for a loop because my whole worldview at the time was that you had to be smart to make big money.

But the truth is, the richest people in the world aren’t necessarily smarter than you or me.

In fact, according to a Swedish study, the top 5% of earners in the world are slightly less intelligent than those just below them on the economic ladder.

In this post, I’m going to break down exactly why people who are likely dumber than you are killing it in business. Then, at the end, I will share with you the secret of success that I learned from running my own businesses.

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Smart People Tend To Rationalize

Many smart people rationalize that they don’t need much money to live. They already have a decent paying job, go on a yearly vacation, own a car and can afford to go out to eat every now and then.

Why rock the boat? In fact, this was my exact thought process back when I worked my day job as an engineer.

Back then, I thought that the only people who cared about getting rich in business had to sacrifice their social lives, their family and devote their entire future towards the pursuit of wealth.

And this was one of many excuses that I had to not start a business or try to make money outside of my day job.

The result was that for nearly a decade, I lived a listless life without purpose. I basically woke up in the morning, went to work, came home, had dinner, watched TV, rinse and repeat.

I had money to provide for myself but I was living life like a zombie with the same exact daily routine.

It was only after my wife became pregnant with our first child did I realize a fundamental truth. In order to have freedom to spend time with who you want and not have to go to an office for 8 hours per day, making money is important. Like it or not, you need money to improve your life which in my case was spending time with my newborn child.

Once I had a purpose for the money, I was able to unlock my earning potential.

So the first question I encourage all of you to ask yourself is if you weren’t limited by money, what would you want to be doing?

My answer to this question was to be present with my kids every day and have the freedom to coach their sports teams and help them with school.

Now your definition of winning might be different, but the goal for most people is to get to the point where money is no longer the limiting factor in the decisions that you make.

However to win, you’re going to have to put yourself out there. You’re going to have to take some risks and actually try.

Smart People Are Afraid Of Looking Stupid

Even if you have a purpose, you’d be surprised how many smart people I know aren’t willing to try to start a business or go out on their own because they are afraid of looking stupid.

I used to have this mentality in high school. When I grew up, I was regarded as one of the smartest kids in school. And in order to maintain that reputation, I didn’t want to fail. I couldn’t fail.

So what ended up happening was that I often stuck to easy things that I knew I was good at rather than push myself to my limits. I was reluctant to try anything new because I didn’t want to fail and ruin my image.

But for dumb people? They don’t care because they are already being underestimated.

Remember my high school friend who I thought was as dumb as rocks. Dumb people have 2 huge advantages over smart people.

First, being constantly underestimated puts a chip on your shoulder to prove everybody wrong, and that can be a powerful motivator.

Second, you’ve got nothing to lose because who really cares if you fail? People have already written you off. You’re like the 8th seed in the NBA playoffs. Nobody expects you to win. You’ve got nothing but potential upside.

Smart people, on the other hand, have the opposite problem. They have nothing but downside because everybody expects them to be wildly successful in everything they do, which is impossible.

If a smart person tries something outside of their comfort zone and fails, then their reputation as a smart person is at risk.

The path of least resistance for a smart person is to follow the traditional path: you go to school, you get your job, you spend the next 40 years in an office, and then you retire.

I used to think that my job provided everything that I needed and for most people it is. But if you want to achieve financial freedom and do whatever you want, you can’t follow common wisdom and expect to get uncommon results. You have to do something different.

Smart People Overestimate Risk

The other thing that I’ve noticed about dumb people is they tend to underestimate risk, whereas smart people tend to overestimate risk.

I’ve mentioned this in the past but the most problematic students in my profitable online store course are engineers.

Whenever I try to teach an engineer how to start an e-commerce business, they are always running mental simulations in their heads to predict the probability of failure.

They want all of the answers before they start. And I’m not criticizing engineers because I am one.

But the problem with trying to over-analyze everything is that it turns you into a pessimist. You start thinking about everything that could go wrong instead of the opposite, thinking about everything that could go right if you succeed.

I blame Darwinism and evolution. Back in the stone ages, it was all about survival and being cautious otherwise you could die.

And being smart was valuable because you could calculate all of the things that could potentially go wrong and avoid the risks that could get you killed.

But today? No one is going to die from making a wrong business decision. Being your own boss isn’t about life or death.

Maybe you lose some money or some of your dignity. Maybe you have to move back in with your parents for a while but, taking risks to make money, assuming you’re not doing anything illegal, is unlikely to end in anything that you can’t recover from.

But what about dumb people? Most dumb people are completely ignorant of all the things that could go wrong. Meanwhile, smart people are busy analyzing all of the potential pitfalls and it stops them from ever getting started.

One time, I had an acquaintance come to me for help to start an e-commerce store and the problem was that he had no money. Heck, he didn’t have enough money to buy a sample of the product that he wanted to sell.

So what did he do? He took pre-orders for his product, collected money from customers and then bought a bulk shipment of products from Alibaba sight unseen.

So many things could have gone wrong. He could have been shipped junk from Alibaba. The shipment could have arrived late. The product might not have functioned as he intended.

But luckily, everything turned out fine and he ended up making multiple 6 figures in profit in his first year of business.

As a smart person, you’re probably very good at imagining all the things that can go wrong. But the reality is that people are terrible at calculating the probability of those events actually happening.

The worst case scenario almost never happens and you spend all of this time worrying that it keeps you from taking actions that could change your life and lead to something amazing.

I still struggle with this today, and I constantly have to remind myself of my overarching goal.

I want to make money so I can do whatever I want and hang out with whoever I want without worrying about the money and I never want to spend 40 hours a week in an office.

Smart People Never Think They Know Enough

Which leads me to the next limiting belief of smart people. They never think that they know enough to be successful.

There’s an interesting aspect about people that I’ve learned over years that is so counterintuitive that I still don’t really understand why it happens and it’s called the Dunning-Kruger effect.

The Dunning-Kruger effect is a cognitive bias where people with low ability or knowledge in a particular area tend to overestimate their competence. People who are less skilled or knowledgeable mistakenly believe they are more competent than they are due to a lack of insight into their own limitations.

But the opposite is true of smart people. Smart people rarely think that they are the expert in any given field and therein lies the problem.

The reason smart people struggle to make money is because they get hung up on the fact that they know that they don’t know enough to succeed.

For example, I have a friend who is an amazing engineer and he’s either built or been the lead developer for many famous apps that we all use today on our phones.

He clearly has the skills to start a very successful company but he’s terrified about the business aspects of running his own company.

Because the relative gap between his extensive knowledge of engineering versus his lack of knowledge for business is so large, he’s discouraged from taking action.

Meanwhile, a dumb person who has very little engineering or business experience usually thinks to himself, “I don’t really know anything but how hard could this possibly be?”

And then what happens is that the dumb person takes action and gets into the ring while the smart person is busy second-guessing himself on the sidelines.

In general, things rarely end up as badly as we think they will and there are so many external factors outside of just knowledge and strategy that the dumb person stumbles upon success because he tried.

Key Takeaways

Bottom line, if you take away anything from this post, here’s what I want you to remember.

When I first started my business and I followed a bunch of experts and gurus to learn, I was under the impression that all of these successful people knew what they were doing from the start, that they never made mistakes.

But I’ve come to learn from interviewing over 500 successful entrepreneurs on my podcast that almost everyone had no clue what they were doing in the beginning. They didn’t have a concrete plan and if they did, it never went as expected.

Most successful people are just going with the flow and solving problems as they arise and the main reason why they are successful is because they are too dumb to quit.

Heck, the reason I started an online store selling handkerchiefs was because I thought to myself, how hard could this possibly be? You just buy stuff at a low price and sell it at a high price. Simple right?

I overestimated my abilities early on and didn’t understand all of the subtleties of selling online. I didn’t understand everything that could go wrong and the first 3 months after I opened were horrible. I didn’t make many sales. Hell, I don’t even like handkerchiefs.

But I stuck with it because I wanted my wife to stay at home with the kids. And believe me, I was teased by my friends all of the time for having a master’s in electrical engineering from Stanford and selling handkerchiefs for a living.

For most of my first year in business, I felt like an idiot. I felt like I was wasting my time until things started to actually work. After we made 6 figures in our first year and then 7 figures years later, all of a sudden, I looked like a genius which I am not.

I just kept with it until it worked. The same goes with my YouTube channel, my blog, my podcast and everything that I’ve ever done in life.

Remember, you can’t win if you don’t start, and you can’t lose if you don’t quit. This is all you need to know.

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About Steve Chou

Steve Chou is a highly recognized influencer in the ecommerce space and has taught thousands of students how to effectively sell physical products online over at ProfitableOnlineStore.com. 

His blog, MyWifeQuitHerJob.com, has been featured in Forbes, Inc, The New York Times,  Entrepreneur and MSNBC.  

He’s also a contributing author for BigCommerce, Klaviyo, ManyChat, Printful, Privy, CXL, Ecommerce Fuel, GlockApps, Privy, Social Media Examiner, Web Designer Depot, Sumo and other leading business publications.

In addition, he runs a popular ecommerce podcast, My Wife Quit Her Job, which is a top 25 marketing show on all of Apple Podcasts. 

To stay up to date with all of the latest ecommerce trends, Steve runs a 7 figure ecommerce store, BumblebeeLinens.com, with his wife and puts on an annual ecommerce conference called The Sellers Summit.  

Steve carries both a bachelors and a masters degree in electrical engineering from Stanford University. Despite majoring in electrical engineering, he spent a good portion of his graduate education studying entrepreneurship and the mechanics of running small businesses.