Book review: The 4-Hour Work Week by Tim Ferriss

If you’ve ever searched “passive income” on the internet, chances are you’ve stumbled upon The 4-Hour Work Week. Here’s a review for financial independence.

The 4-Hour Work Week: the general premise

The premise of the book is remarkably simple:

1. Try to be your own boss, if you can. Outsource as much as possible to subordinates and sub-contractors.
2. If you can’t be your own boss, consider outsourcing as much as you can, then persuade your boss to let you work remotely.
3. Reduce friction in your business/ work life as much as possible, cutting out the faff and problem clients that take up your time and focusing only on the most important.
4. Relocate/ geo-arbitrage to other countries, where the money you earn goes a lot further.
5. Profit. Take mini-retirements, go rogue. You’re effectively free.

Seriously, is that it?

Pretty much!

Fortunately, Tim uses a lot of personal anecdotes and walks through strategies and examples to achieve these aims. It makes for a fun read, definitely worth a bit of bedtime entertainment.

I’ll go into a bit more of the details.

1. Being your own boss, if you can

The 4-Hour Work Week relies on you having control of your time and location. Logically, this is easier to do if you are the boss.

Tim recommends businesses that are easily outsourced, or that don’t need you to be actively involved in them. Actually, this is a really cool point, and I’ll break it down a bit further.

The Tim Ferriss ideal business type

Tim recommends either making a unique product or getting exclusive distribution on a product. He further specifies that it should be affordable, but not too cheap. I think his price range is around £30-100, but obviously I’m converting it from US$ and interpreting his words a bit.

The product should be something that either solves a significant problem or that a hobby enthusiast would be willing to spend money on. The logic here is that this gives you a target niche of motivated buyers. People generally find money for their hobbies.

You should then outsource or automate the manufacture, purchase, shipping and returns processes. Think more “drop shipping” and less “home business”.

Note that the product doesn’t have to be tangible, nor does it need to be perfect. The 4-Hour Work Week talks about information products and shipping out home video courses as products, too.

The 4-Hour Work Week approach to testing a business idea

Think you might have an idea, but not quite sure yet?

Tim suggests putting an advert on a subReddit, which links to a “register your interest” page. This is because you hit a niche audience directly and cheaply, but you’re not committing to making anything yet. If you think a good flow of people are registering interest, you’re onto a winner.

I haven’t tried this myself – use at your own risk.

2. If you can’t be your own boss, outsource and work remotely

The key to The 4-Hour Work Week is freedom. Generally, you can’t get much freedom when working for an employer, but this isn’t necessarily true.

Tim suggests incrementally building your employer up to the idea that you can get your job done just fine remotely. I don’t think Tim saw the COVID-19 pandemic accelerating work from home, but I’m pretty confident he’d suggest this as a prime opportunity.

From there (or even earlier), he suggests outsourcing your crap jobs. Literally, sub-contracting your work to staff overseas. This is to get you used to delegation, which is absolutely mission critical to achieving the 4-Hour Work Week dream.

I haven’t tried this. My previous job used to give me lots of delegation opportunities, but my current job less so. Law is still uncomfortable with home working, so it’s probably a step too far at my very junior level. Still, it’s an interesting concept.

3. Reduce friction and optimise

You might have heard of the Pareto rule, also known as the 80-20 rule. For those of you who don’t recognise it, it’s a “rule” based on the observations of an Italian guy called Pareto, who spotted that 20% of the farming population could support 80% of the Italian urban population.

We now use it – and Tim does – as saying that 20% of your best producing sources supply 80% of your product.

Tim gives the anecdote of sacking the 20% of clients that gave him 80% of the problems, focusing instead on the remainder of the clients that included the 20% which generated 80% of the revenue.

This is a similar calculation to James Altucher in Skip the Line, which is in effect the same book written by a different guy. I’ll review that another time!

Tim’s argument is that with this reduced level of stress, you won’t notice the slight drop in income.

4. Relocate / geo-arbitrage

Tim is American, and he’s referring to the stronger buying power of the dollar overseas. Your experience might be better, with the pound.

The loose idea is that you could work in the US via your remote business, earning a decent rate in US$. You then move to Argentina, where you can rent a flat for 6 months (cheaper than a holiday let), get a student visa to study Spanish at the local college, and effectively live like a king on a wage generated by 4 hours of work a week.

Tim claims to have actually done this, becoming a dancer for 6 months. I like it.

5. Profit

Ironically, if you follow the be-your-own-boss idea and geo-arbitrage, chances are that you’ll end up wealthy anyway.

In theory, a successful business is likely to scale up over time, or you’re likely to be able to negotiate for pay rises over time with your employer. Meanwhile, you’re living cheaply elsewhere, and presumably investing any surplus.

Awww yeah. The dream.

The 4-Hour Work Week vs. FIRE

One of the key things about The 4-Hour Work Week is that you’re still working… albeit for 4 hours per week, which is pretty negligible.

Classically, financial independence looks at the “live within your means and invest the surplus” method, a la Your Money or Your Life.

I don’t think these are exclusionary philosophies. The difference here is that Tim is suggesting that you create your own asset, either building up a business or effectively turning yourself into a contractor within a business. Instead of exchanging your time for money, then using that money to buy assets, Tim is just saying to invest your time to build assets then leverage those.

The outcome is effectively the same: financial freedom. It’s just that Tim’s assets are unlikely to be purely passive (unless you build then sell a business) but get you there quicker, while Vicki Robin’s method can build you passive income through investments but requires a bit more of a slog.

Overall assessment of The 4-Hour Work Week

This book is worth a read for anyone interested in financial independence. Even if you decide to go with the conventional earn-invest-retire route, it’s worth thinking about the more entrepreneurial route to FIRE. The 4-Hour Work Week certainly gives you that, and it’s an entertaining read.

I’m not convinced that the 4-hour work week is possible without a lot of early effort. Tim makes the establishment of a business sound effortless, but there is a chapter where he openly admits that his first business made his millions and almost caused him burnout. I can’t help but feel that his memory of building automated, outsourced businesses is a little rose-tinted.

All the same, I’m reasonably confident that the method is possible – although I haven’t tested it, so I can’t be certain.

How I’m using The 4-Hour Work Week in my plan

Simply put: I’m not, really.

That said, I’m aspiring to use parts of it.

I guess the cynic would say that this blog is part of it. I mean, that’s not true – I don’t make any money from the blog, and the “monetisation” doesn’t remotely cover hosting costs alone. Honestly, all these “top 10 ways to make money online” that include blogging as a side hustle are living in the past. Or I really suck at it.

However, I plan to leverage this blog in the future. I’m writing for fun, but if we hit a level of CoastFI that I’m happy with, I can use it as a portfolio piece to look for freelance writing work. That’s important, because I can do it anywhere, even on the move, at a time of my choosing.

Possibly even for four hours per week.

That would top up any shortfall from investments, wouldn’t it?