Three Levels of Trades
Progress from selling time to buying time and putting money to work
- Difficulty
- Advanced
- Time to result
- ~ongoing to results
- Steps
- 3
- Confidence
- 95%
The model separates economic activity into three trades. At level one, an employee exchanges time for money; Martell stresses that this is a category, not a moral ranking. At level two, an entrepreneur spends money on employees or contractors to reclaim time, then reinvests that time in work that can create more value. At level three, an investor exchanges money for the possibility of more money by backing assets or opportunities. The mechanism is cumulative rather than automatic: earned income can fund delegation, delegation can free capacity, and surplus capital can then be invested. The model is most useful as a diagnostic for deciding whether the next scarce resource to deploy is personal time, hired capacity, or capital.
Origin
Dan Martell says reading Rich Dad Poor Dad at age 27 helped him understand the investor role. He later built a portfolio of SaaS investments alongside his coaching company. Extracted from The Foundr Podcast.
Core principles
- 01Employment primarily trades time for money
- 02Entrepreneurship can use money to reclaim time
- 03Investing can put money to work for future returns
How to run it
- 1
Locate Your Current Trade
Determine whether your primary income currently comes from selling your time, coordinating hired capacity, or investing capital. Treat the answer as a starting point rather than a status judgment.
Pro tip Look at where the majority of income actually originates, not the identity you prefer.
Watch out Do not assume employment is inherently inferior; Martell explicitly says there is no good or bad level.
- 2
Buy Back Capacity
When the economics allow it, pay another person to take suitable work off your plate. Reinvest the reclaimed time in activities that create more value or improve sustainability.
Pro tip Start with work that costs less to delegate than the value of your reclaimed time.
Watch out Hiring without a clear use for the reclaimed time can add cost without creating leverage.
- 3
Put Surplus Money to Work
Evaluate investments that can produce future returns without requiring an equal amount of your time. Apply judgment to risk, fit, and opportunity rather than treating investment as guaranteed growth.
Pro tip Use expertise in a familiar sector to improve the quality of opportunities you evaluate.
Watch out The transcript presents the trade concept, not a complete investment due-diligence process.
In the wild
Martell says he chose not to start another SaaS company himself. Instead, he runs SaaS Academy, invests through High Speed Ventures, evaluates acquisitions, and can hire CEOs to operate companies. This lets him support software founders through coaching and capital while designing work around his family and preferred role.
→ He describes a portfolio-oriented career that combines coaching, investment, and delegated company leadership.
Common mistakes
Treating the levels as a moral hierarchy
The framework describes different exchanges, not a claim that employment is bad or entrepreneurship is automatically better.
Investing before building a surplus
Moving conceptually to money-for-money does not remove the need for sufficient capital, knowledge, and risk assessment.
Is it for you?
Best for
It is best for entrepreneurs deciding how to use profits and reclaimed time as their business matures.
Not ideal for
It is not ideal as a promise that everyone should or can become an investor, or as a substitute for assessing investment risk.
From the transcript
“level one is employee right where you trade 11 30 your uh time for money”
“level two which is entrepreneurship that's when you start to learn how to trade money for time”
“level three is money for”
From the episode
24: Andy Sheats -The $100 Million Founder Who Didn’t Want to Start a Business