The formula for accumulating wealth fits in a sentence: solve other people's problems and trade them the solution.

This is not motivational fluff. It is a direct implication of how value works, discovered by Carl Menger in 1871 and developed by the Austrian school ever since. Once you understand why this formula works, you will see that most advice about wealth misses the point entirely.

Why Trade Creates Wealth

Most people carry, without knowing it, a zero-sum model of exchange. They imagine that if you gained, someone else must have lost. This intuition is wrong, and understanding why it is wrong is the first step toward wealth.

Value is not objective. It does not inhere in objects or derive from the labor used to produce them. Value exists only in the minds of individuals, and individuals value things differently. When you trade your labor for money, you value the money more than the time. When your employer pays you, they value your work more than the money. Both of you walk away better off than before. No one was exploited. Wealth was created.

Menger saw what Aristotle and the classical economists missed: exchange does not occur when valuations are equal. If two people valued goods identically, neither would bother trading. Exchange happens precisely because valuations differ. Each party gives up something they value less to receive something they value more. Both gain. Every voluntary transaction increases the total wealth in the world, measured in the only currency that matters: human satisfaction.

This is why free markets produce abundance. Not because of exploitation, not because of resource extraction, but because millions of trades per day are each creating small surpluses of value. The entrepreneur who facilitates more of these exchanges, who enables more people to trade what they value less for what they value more, captures a portion of the value created. That portion is called profit.

The Entrepreneur as Servant

Ludwig von Mises described the entrepreneur's position with characteristic clarity. Entrepreneurs are at the helm, steering the ship of production. But they are not captains. The captain is the consumer. The entrepreneur who ignores this, who produces what he wants rather than what consumers want, will find his resources flowing away through losses. The entrepreneur who serves well, who anticipates needs others have not yet articulated, will find resources flowing toward him.

This is consumer sovereignty, and while Murray Rothbard correctly criticized the political metaphor (there is no coercion in markets, unlike in actual sovereignty), the economic reality stands. Profit is a signal that you served consumers well. Loss is a signal that you failed to serve. The market is a continuous referendum on your usefulness to others.

To accumulate wealth, then, is to accumulate evidence that you solved problems for people. The more problems you solve, the more difficult the problems, the more people who had the problem, the more wealth flows to you. There is no other honest mechanism.

Start With Your Own Itch

If the path to wealth is solving problems, the question becomes: which problems? Most people stall here, waiting for inspiration or permission. They survey markets, conduct research, follow trends. This is backwards.

The problems you understand best are the ones you have yourself.

When you solve your own problem, you possess knowledge that no market research can provide. You know the frustration intimately. You know which existing solutions fall short and why. You know what you would actually pay for, not what you claim in a survey. This is what Mises called thymological understanding and what Rothbard identified as the qualitative knowledge essential to entrepreneurial action.

Reed Hastings started Netflix because he paid forty dollars in late fees for a VHS tape. Peter Rahal started RXBar because protein bars tasted like chalk. Paul Graham observed that the best startup ideas grow organically from founders' own experiences. This is not accident. It is the logic of subjective value applied personally. You are the consumer you understand best. Solve your problem first, then see who else shares it.

The objection arises: what if my problem is unique? The answer is almost certainly that it is not. If you are a human being operating in the world, your frustrations are likely shared by thousands or millions of others. And if your problem truly is unique, you will learn this quickly and cheaply by attempting to sell your solution. The cost of trying is lower than the cost of endless research.

The Double Payment

There is a feature of this path that the economists often miss but which makes the whole enterprise sustainable: solving problems feels good.

Psychologists who study intrinsic motivation have documented what anyone who has fixed something knows firsthand. The act of identifying a problem, working through obstacles, and arriving at a solution triggers a sense of competence and satisfaction that no external reward can replicate. This is why people build furniture on weekends, debug code for open-source projects, and spend hours tuning an engine. The work itself pays.

When you solve problems that others will pay you for, you receive this psychological payment and a financial payment. The two reinforce each other. The money validates that your solution was actually useful, not merely self-indulgent. The satisfaction sustains you through the difficulties that any entrepreneurial effort involves. This alignment of internal reward and external reward is not available to those who chase money through activities they find meaningless. They earn only once and burn out. You earn twice and compound.

The Simplicity That Isn't Easy

None of this is easy. Understanding the mechanism does not execute it. Between you and wealth stand a thousand obstacles: finding the right problem, devising a solution, reaching others who share the problem, convincing them your solution works, collecting payment, iterating when you fail. Each step involves uncertainty, discomfort, and risk.

But "not easy" is different from "complicated" or "mysterious." The path is straightforward even when it is hard. You do not need credentials, connections, or permission. You do not need to exploit anyone. You need to find a problem, solve it, and trade.

The Austrians have a phrase for the alternative: political means versus economic means. You can acquire wealth by creating value through production and exchange, or you can acquire it by taking what others have produced. The political means is the way of the state, of the parasite, of the rent-seeker. It produces nothing, only redistributes. The economic means is the way of the entrepreneur. It creates new value where none existed before.

Every problem you solve, you join the ranks of those who build rather than those who take. And in that act, you accumulate not only wealth but something the takers never can: the knowledge that what you have, you earned by making others better off.

Find a problem. Preferably your own. Solve it. See who else needs the solution. Trade.

That is all.