Own stakes in various synergistic businesses to buy down risk and increase freedom.

BY JOSEPH DRUPS, CEO AND GENERAL PARTNER OF DRUPS VENTURES

[Photo: Getty Images]

Many successful people make a big mistake: They concentrate risk in one big thing.

One business. One career. One investment strategy “side hustle.”

It seems logical—until it breaks.

I learned this the hard way after building companies from scratch to multi-million-dollar revenues. The more successful I became, the more trapped I felt. Seventy-hour weeks. Weighty responsibilities.

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My one big risk had become my shackles.

There’s an interesting truth I discovered in the process that I call concentrated diversification.

Concentration gives you high returns, and makes you successful by focusing. But it focuses risk on your “one big thing.”

Diversification de-risks, but reduces return. The wrong type of diversification, preached by many Wall Street gurus, gives you what I think are horrendous 10 percent or less public market returns found in stock indices.

The solution? Concentrate your skills on a diversified set eight to 10 uncorrelated, high return, passive assets.

To accomplish this, I built what I call a Freedom Flywheel—a portfolio strategy where each business or investment amplifies the others.........

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