The Personal Holding Company: Design a Lucrative Skill-Based Career in 3 Steps

Today I'd like to explain to you a simple framework for your professional career. My hope is that this enables you to think of your career as a companion that serves you. A companion teaching you skills and earning you a living.

As long as I can remember, I have been quite ambitious with what I want to achieve in my professional life. Naturally, sooner than later, this ambition pulled me towards entrepreneurship.

I started my Bachelor degree in 2015. Back then, learning about entrepreneurship wasn't something that happened at a traditional educational institution. I was lucky though, thanks to a fantastic initiative called Founders Foundation. It allowed me to get in touch with quite a few entrepreneurs "who made it".

"Making it" usually referred to someone who was able to sell their company. Early on, I identified that having this exit was sort of the end goal in the startup playbook. Starting a company with a scalable business model, growing it, and selling it.

To be perfectly prepared for this life changing event, the common advice was to set up a holding company. A company that owns the shares of the operating company. However, after one failed attempt at creating a startup, I learned that this setup is rather costly for a student. Especially when you have to close down two entities at once.

Luckily, the framework I'm going to explain to you today has nothing to do with legal entities. Better yet, it has been a complete game changer for me. It's a way to translate your ambition into a professional career.

I call it: The Personal Holding Company.

The Personal Holding Company Explained

So what is a Personal Holding Company, or PHC? To me, a PHC is like an imaginary entity that holds all the assets – your projects – you bring to life. Think of it as viewing your professional life through the lens of building your own PHC for yourself.

When you're trying to create a startup the traditional way, you'll soon get to know some investors. Larger investors like venture capital (VC) firms are a special breed. They collected a lot of money from their partners with the goal to find a unicorn business, a real moonshot.

To find that potential unicorn, they have to diversify their investments a lot. They have to spread their capital widely across several companies. To build a successful PHC, you have to adapt this mindset. With one caveat: I assume you don't have that much money lying around to invest in a few companies.

Here's the trick: Instead of money, you invest time in your ideas. There's a high chance that you have to try more than one idea. You become an investor in yourself by launching projects to solve specific problems. And your bet is that if you solve a problem, there will be demand for what you're building. A series of small bets so to say.

In the traditional startup world, this is where the principal agent problem comes in. The investor gets to diversify, but you, the entrepreneur, have all eggs in one basket. Investors demand from you that you focus on this one thing, and one thing only. You're in the risk position.

Making Randomness Your Advantage

Business is full of randomness. You better make randomness work to your favor instead of against you. The truth is: One lucky shot can make all the difference, but we don't know what will work.

It has happened to both you and me. We fall in love with an idea and treat it like our pet – when we should rather treat it like cattle. An idea that turns into a project is but a mere part of your portfolio.

The key is build a wide portfolio of projects with your PHC. Each project of its own is an opportunity for you to learn something new.

Learning something new is a new asset that you can add to your personal stack of skills. With each skill acquired, you can reach for a new level in your projects. In its essence, entrepreneurship is like a game. The question is how long you'll be able to play it.

When I was in my early 20s, the risk question wasn't appealing to me. With all the drive in the world and close to zero obligations, what could go wrong? This perspective isn't even naive – applied to the startup world, it's pretty correct. An indicator for that? Many investors like to invest in founders in that age group, despite their lack of experience.

But: Life changes, and so does your appetite for risk. You only have so many chances to go "all in".

Diversification is not just for the stock market. It's also a good strategy for your career. Your career is something you should approach intentionally. If you’re not setting goals for your professional life yourself, they will be assigned to you.

How to Build Your Personal Holding Company: Create Your Own Career With These 3 Steps

Your PHC will stand on three strong pillars: Active Income, Passive Income, and Content. Together, they create a resilient structure for your professional and personal growth.

With your PHC, you work towards being financially independent. At the same time, you're pursuing your own interests. Only with the time effort you want to commit. Moreover, you're creating assets to decouple your time input from the financial output.

Step 1: Build Your Day-to-Day Fuel With Active Income

The stressor of creating active income through work in your life is a good thing. It gives you the opportunity to test many projects that demand the acquisition of new skills.

With experience and skill, your leverage to create higher active income will increase. Yet, no matter how high you can charge, your active income is bound by a universal limit: time.

Focus on Active Income sources built with code or media. They may allow you to decouple your time from the income generated in the long run. Over time, ask yourself these three questions about your Active Income activities:

1. Can I eliminate any of the activities and get the same results?

2. If I can't eliminate, can I use software to automate these activities?

3. If I can't automate, can I delegate the activity to someone else?

That way, you can create space for new projects in the Active Income pillar. You'll also be in a position to adjust your risk preference.

If you're self-employed, you may have the freedom to choose what project you want to focus on. If so, use it to your favor that you only have to commit to projects for a short-term. You can switch when you get bored or want to learn something new.

How to start a new project:

• Outline it;

• Set an expectation of the target outcome;

• Define how long you want to commit to the project to pursue that outcome.

Remember not to get emotional with your projects. Try out a lot of stuff. Don't spend one year building only one project if there are no signs of demand. Speed is your friend as an entrepreneur who's building a PHC.

For the Active Income pillar, it's also a viable situation to be in an employment relationship. That way, you have an Active Income source that is less flexible, but requires the least risk from you. Of course, you should still be in an environment that lets you grow.

Step 2: Free Up Your Time With Passive Income

You’ve been sold the dream of earning money while you sleep in the past. The truth is, that there are only a few sources of truly passive income. I view interests, dividends, royalties, and capital gains as such. Even cash flows considered as passive such as rental income need a degree of manual labor, albeit low.

Passive Income is where the magic happens in your PHC. Earning without constant effort. Limiting the amount of manual labor to a minimum while ensuring quality is the goal. It's also the reason why even not truly passive income is an important element in this pillar. Embrace automated (passive) income that you can create with code and media.

Invest in things that pay off in the long run. Search engine optimization or a self-referring user base in an app demand effort. But they compound, and thus allow you to be less involved as they take off. The goal is simple: let technology do the heavy lifting, and detach the output from your input.

How to move projects from Active to Passive Income

Apply the three techniques from Step 1 (Eliminate, Automate, Delegate). Start with figuring out what you can leave out (Elimination). If you cannot apply Elimination, see what you can automate with the help of software. If there are no technological options to do that, find out if you can delegate certain activities.

Step 3: Increase Your Odds of Success by Publishing Content

The third pillar, Content, is your big bet. Content is the front-end of the internet. It's how people consume information available to them. Content is media, and media is scalable. Content will demand your most valuable resources: your creativity, energy, and time.

The power of content is that it can help you build an audience. An audience is like fuel for all other assets you build in the PHC. With an audience, you gain valuable distribution in the creator economy.

To become a creator, share what drives you. Give updates on your projects. Let people take part in your learnings. Don't keep your progress for yourself.

The moment you embrace building your Personal Holding Company, you start an intentional career.

Summary

• Outline your projects with intention. What is your expected outcome and how long do you want to commit?

• Build Active Income with skills that you already have. If you lack skills, educate yourself. Then level up your projects.

• Ask yourself what you can leave out, automate, or delegate to move from Active to Passive Income. Invest in things that compound, like search engine optimization.

• Create content to build an audience and secure distribution for all projects in your PHC.