This book, 'How to Get Rich' by Felix Dennis (400M-900M net worth- he doesn't exactly know), published in 2006, basically destroyed my corporate career and put me on the path for 'Start-Up/New Company Hell'. It is an extremely dangerous book and it misses an extremely key business knowhow which I learned the extremely difficult way over the course of the last two years. It is an extreme book.
For this first part, I wanted to grab the bulls by the horns and talk about what no one really wants to talk about, the entire idea of doing business to become Rich. Shocking, rampant materialism and disgusting to most, underlying all of that is a mentality that in doing a business that you own, it takes more than guts and a hope for glory, but to be totally fearless in taking that first step.
The Business of the Mentality
I start off this series of business mentality knowhow with the book that has gotten me in a lot of trouble from my wife and my relatives who basically see me as throwing away my entire stable corporate career to run start-up/new companies.
For me personally there is a distinction between what is a start-up and a new company. A start-up being a high tech or IT based company with a unique product or in a fast growing market, where a new company is simply a new company in a mature or existing market. That being said, I am involved with the running of 4 companies, not all the same time mind you, but I have commitments to all 4 to various degrees. But before all that, what got me on this track off my cushy fat cat corporate career track was this book.
Felix the Coke Snorting Fiend!
Felix Dennis, by his own accounts was a coke snorting, call girl addicted fiend, until he nearly died from that lifestyle. And now he is a patron of establishing forests in English and is a poet. He picked the name, 'How to Get Rich' for his book, not because he has no style, but he just wanted to pick the most direct base name for it. With a title like that, it is an absolutely embarrassing book to be carrying around. I once was flying from London back to Hong Kong on British Airways business class and I was reading this book now for the 3rd time and I fell asleep. In the aisle next to me were two fat Scottish business women who couldn't stop talking and enjoying their trip. They wore big gaudy big rings, heavy makeup and definitely were senior management of some big company. They obviously were use to the finer things in life.
So as I was napping, this book, "How to Get Rich" had fallen in between the aisle. It was tough falling asleep because of the two Scottish magpies, so as I was half dazed, I saw the stewardess pick up the pick and say to the ladies, 'Excuse me is this your book?' and the Scottish magpies look at the cover and started to laugh, 'How to get rich, hahaha, no it is definitely not ours, hahaha', and I in a half daze put up my hand and say, 'it's mine, thanks'. The scottish fattie magpies looked at me still laughing and obviously thought I must have been upgraded from economy and continued their 10 hour cackling. But I didn't care, at the time, this book was haunting me.
In business there are many different fields and areas, each one with their own set of knowhow and procedures and mentality. But among the different fields of industries from accounting firms to manufacturer to media agencies, there is a more fundamental divide, the divide between being an equity holder and an executive staff.
Being Smart Ain't Great
Business is one of those professions where being really smart usually works against you. The reason why is because business fundamentally is about the practical application of theory in tangible phases of development. i.e. mostly about operations (consistency and focus). So if you see an awesome business on the news which is a multi-billion dollar enterprise, or even an international fashion brand, chances are it has been around for 10-15 years and has been built up over time in tiny steps. Sure there is the googles and facebooks, but you can literally count them on one hand, whereas there are thousands of companies that make in the 10-30m region of profit every year with only companies the size of 20-50 people and is nothing to be scoffed at. For the most part, business required dedicated and step-by-step effort, except for one part. The start.
The Black Hole
At the start of a business, there are no employees, no executives, and most times, no capital. At the actual start of a business, is a single person with an idea, passion and will to take a risk. And while it is a calculated risk and may not be seen as a risk to the 'entrepreneur' as they may believe that they have all the bases covered and the new business is not a risk, per say, rather just something that will happen; relative to someone who has always worked to for a monthly paycheck or annual bonus, it is a massive risk. It is a massive risk against that stability of having a monthly paycheck and that risk only increases in size the more you climb that corporate ladder.
Trying to be Rich Sucks
Felix's book really is aimed at flushing out that point and actually starts by saying everything he can to dissuade anyone from thinking that 'getting rich' is a good thing. If you want to plunge right into the deep end of understanding how the business wealthy in the world understand wealth, then this is more than a primer, it is as much personal knowhow as you're going to get from anyone at his caliber.
Fundamental to Felix's outlook to becoming rich is being on the equity/owner side of things; he has no problem giving out big salaries and bonus, but he rarely gives out equity/ownership. For the most part, if you're looking to be stable, being a high paid executive is a crappy way to go as well. But if you're looking to be very stable with the ability to buy most consumer and luxury goods at a whim, then being a high paid executive is the way to go.
From my experience, at 30k a month after taxes, you can pretty much live to the highest middle class standards as possible; you can have a couple of 100k cars, send your kids to private school, buy nearly anything you want without any care, with the exception of couture level goods (D&G, Channel,etc). At 30k monthly after taxes, you usually run out of things to buy by the 3 week of each season and unless you collect watches or cameras (in which you realize 30k isn't that much), you stop thinking about consumer goods after a year at living at that level. Even among the very wealthy, there is very little difference after 100M of liquid (i.e.cash equivalent) wealth i.e. private jets etc (not my personal experience, but what I've been told by clients).
Business Can Make Somethings Better
But for a moment, withhold your judgement as to the gross material consumerism presented here, what if, you actually enjoy doing business as profession? What if all the bells and whistles aren't something you care for and you'd rather just donate the money to charity. I'm not saying I'm not that guy, but my point is that for those not in business, the main reason why we don't even try to learn about the mechanics of business is because we don't want to be associated with the materialism it represents.
Say you are an inventor, having a good business fundamental back your invention allows you to do more and make your products a reality and even allows you to control how your products are used rather than being a slave to your finances.
Say you create local manufacturing businesses that employ the local community, well you're going to have to run it damn well if you're going to compete with countries with considerably lower wages.
Or say, you simply want to be the best in the field, that you really take business as profession like law or an athlete and simply want to be the best at what you do, in this case, wealth is a by-product of that achievement and truthfully, if buying things is really want you are after, making more than 400k annually after taxes does the job.
Without a Safety Net
So for Felix, the entire quest to become rich is not for happiness or fulfillment, rather it is a conscious decision to take a walk without any kind of safety net and go through some serious bruising. He has a check list for the mentality required to proceed with the entire affair. But before I get into that, I'll say that this list and one other thing, was really what I got out of this book. The advice that he gives in later chapters about running a start-up and being focused and delegating etc, you can find in most other high quality books (his advice is no less valid), but what is unique about the book is this following list and that he tackles that fear of the 'start'.
So here is Felix's list from 'How to Get Rich' if you can check even one off, you're disqualified:
1-If you are unwilling to fail, sometimes publicly, and even catastrophically, you stand very little chance of ever getting rich.
2-If you care what the neighbors think, you will never get rich.
3-If you cannot bear the though of causing worry to your family, spouse or lover while you plough a lonely, dangerous road rather than taking the safe option of a regular job, you will never get rich.
4-If you have artistic inclinations and fear that the search for wealth will coarsen such talents or degrade them, you will never get rich. (Because your fear, in this instance, is well justified.)
5-If you are not prepared to work longer hours than almost anyone you know, despite the jibes of colleagues and friends, you are unlikely to get rich.
6-If you cannot convince yourself that you are 'good enough' to be rich, you will never get rich.
7-If you cannot treat you quest to get rich as a game, you will never be rich.
8-If you cannot face up to your fear of failure, you will never be rich.
This is a brutally heavy list, and on my best day, I would barely be able to 'yes' to all of them and on my average days, I could stare at this list all day and probably not come to firm answer. Whether you think this is ballsy or just dumb to have this mentality, honestly, I have to agree with him on these points, if your objective is to be rich and you ain't a nerd who can actually build something.
For those who are in their teens or early 20's, probably more out of naivety would you be able to say yes, or lack of responsibilities, but that isn't a bad thing when really, the one major thing that holds you back is, fear of just starting. Felix does mention, that a few can have their cake and eat it too, meaning that for some they can be rich by doing what they love, but it isn't the norm.
Nerds Rock the Free World, Finally
In many ways, Felix's mentality is a bit outdated because we now have things like crowdfunding like kickstarter.com and also Y Combinator Seed Fund. Technology has allowed the cost of making a mass market product or service considerably less. You can source products from alibaba.com from China with just an email when back in the 90's if you didn't fly there and spend a month sourcing things for quality you just couldn't do it. It isn't a completely a vicious world where only the strong survive to get the cash, the geeks and nerds are doing it really well by essentially harnessing new media and technology. Sure, amassing a large army is great, but if your national banking system gets hacked by some foreign nerd army unit, you're not going to be invading anyone any time soon. So times have changed and those same changes allow me to manage or be a part of 4 different start-up ventures. That being said, I would say the list above is no less relevant and the road no less difficult.
1 in a Million?
The passage that stuck out to me about this book was the following:
"In nearly forty years of doing business, I know of only six senior managers or professionals between forty and fifty who struck out on their own. And two of those were lawyers.
One did very well indeed with his own law firm. Two of them did fairly well. One went belly up and never recovered financially. One threw in the towel and owns a tiny bar on an island in Croatia. The remaining one shot himself when his venture collapsed. None f them became really rich.
Yet you picked up this book. You're still curious. You're still hungry. Read on, my learned friend. 'How to Get Rich' may subvert you yet, though I very much doubt it...
The only question is: will you dare to try? If you will, then you are one in a million. Or two million or three. Your chances are slim, but they are not impossible...(Dennis, How to Get Rich: Chapter Pole Position last 2 pages)."
The problem with me is that I love a good fight, I love to be the underdog and because if you can win as the underdog, you can dominate when you have the advantage and you get confidence in being that guy that takes the buzzer shot. I read this book, cover-to-cover about 8 times. It's not a long book, it will likely take you a couple of days to read, but like everything with great insight or knowhow, you re-read it to really internalize it. That particular passage, I've probably read it 50 times at least. I seriously, hate/love this book, in that order, but after 2 years, I'd say, the chances are near impossible for a senior corporate executive to switch gears like that. I have barely survived the ordeal.
By 33, I'd say I was one of the top executives globally in my field and I wondered if there was more. I read a lot, usually a business book a week, but nowadays not much, unless it is about a major event like the Madoff or 2008 sub prime crash; otherwise, process books on corporate finance, marketing, management, negotiation, etc I could probably write a basic textbook myself at this point. I have little background in finance (stocks, bonds, trading), but I'm fine with that, I've read up on it, but it isn't my cup of tea. Obviously I'm confident, it comes with the territory, I'll be self-depreciating where I can, but hate away cause I really can't fake not being confident, not that I do give a fuck as well.
But, as I've mentioned, I was 'trained' to be the ideal corporate executive; work a like mofo, uber alpha male competitive, brutally honest but political where necessary, quick thinking, decisive, completely results oriented and able to make every resource count. My staff honestly called me Rambo, but they did so with sadness because unfortunately they were the team that had to be dropped(forced) in the jungle with me. I did all this, not cause I'm a robotic corporate mofo, but because it was the arch-type of what I thought was my role in business and the reward was financial stability. I'd say, I was everything my uncle hoped I would be. This book made me question all that, that in being the CEO or managing director of a major existing corporation was the end goal, it made me question, did I want freedom or stability?
Of course, any sane person would say, freedom isn't getting more money or position, freedom is actually taking a step back from it all and striking a balance. For me, I thought of it in terms of getting freedom in being more capable, to master both sides and to take on Felix's challenge. I thought, the longer I stay on, the less chance I will go to a start-up. And even when I quit, much to the protest of my wife, my staff, and my friends, I still considered just going into another big industry/company and it wasn't until six month afterwards did I really start on the path to start-up/new company hell.
As Offensive as a book as any
If you're looking for a book that is offensive and in your face, about business, this is it. But as a really practical guide, it does miss one vital point, and it is something that I have learned over the last two years. No matter how much experience or knowledge you have in your industry, being an executive and running a new company are two totally different skill sets. One will not help with the other in any meaningful way. Executives turn entrepreneurs will come in with a false sense of confidence and expectations and have them crushed.
The other point is, it doesn't matter how confident you are, how big the market is, how good your product is, the market needs to be growing dramatically. You should never launch your first new company in a market that isn't growing dramatically, because timing means so much. It means if you make mistakes you won't get severely punished for them, or your efforts have a direct effect. I could spend a book explaining how important timing is and I don't mean getting lucky with timing, but understanding how timing plays a role in the company you want to start. I get where Felix is coming from, he knows, fear of the start is the #1 factor why people don't go off and 'get rich', but the amount of will power to over come that fear may just blind you to the other real business fundamental of running a start-up which he doesn't cover here.
But why I like this book is that it is unapologetic. This ain't a book for the faint of heart and it doesn't high behind any 'do no evil' 'connect the world' new age silicon valley nerd technology banners. This is business as honest as it can be, and Felix gets right to the points about how he thinks about money and getting rich and what that means. And it is a good place to start, right from the top.
The Corporate Series
Over the course of this series I will be dealing with everything under the sun, success and management in a big company, killing the ladder, experience and of course the knowhow in how to keep on track. We all get fucked, fuck up and so on, but it's ok if we're going to come out on top on the other hand, getting fucked and not getting anything for it, that sucks - is an understatement- but the first bit of knowhow in business that I can share is: don't chase being rich, chase being business smart and that will be enough. Cause if you chase anything else, ego, excitement and dreams will blind you instead of guide and support you.
How to Get Rich, Felix Dennis, Amazon Link