How to Get Rich – by Felix Dennis
How strongly I recommend it: 8/10
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Tunnel vision helps. Being a bit of a shit helps. A thick skin helps. Stamina is crucial, as is a capacity to work so hard that your best friends mock you, your lovers despair and the rest of your acquaintances watch furtively from the sidelines, half in awe and half in contempt. Luck helps – but only if you don’t seek it
The follow-through, the execution, is a thousand times more important than a ‘great idea’. In fact, if the execution is perfect, it sometimes barely matters what the idea is. If you want to get rich, don’t sit around waiting for inspiration to strike. Just get busy getting rich.
INTRODUCTION. HOW RICH?
John Paul Getty: ‘If you can actually count your money, you are not really a rich man.’
James Baldwin in his book Nobody Knows My Name, in which he concluded:
Money, it turned out, was exactly like sex. You thought of nothing else if you didn’t have it, and thought of other things if you did.
PART ONE: REASONS NOT TO GET RICH
1. Pole Positions
Young, Penniless and Inexperienced?
Excellent. You stand by far the best chance of becoming as rich as you please. You have an advantage that neither education nor upbringing, nor even money, can buy. You have almost nothing. And therefore you have almost nothing to lose.
Yes, yes, I know you’ve heard all that before. But consider for a moment. Nearly all the great fortunes acquired by entrepreneurs arose because they had nothing to lose. Nobody had bothered to tell them that such and such a thing could not be done or would be likely to fail. Or if they had been told, then they weren’t listening. They were too busy proving those around them wrong – without even meaning to.
Not knowing that something cannot be done, you are likely to waltz into uncharted minefields where angels before you have feared to dance. Astonishingly, you may be fortunate enough to succeed, to some degree or another. Conventional wisdom will then be revised by those around you and the next generation will be taught that what you did can always or often be done – only to discover, when they attempt it themselves, that in reality you every landmine by pure, dumb luck.
Never trust the vast mountain of conventional wisdom. It contains great nuggets of wisdom, it is true. But they lie alongside rivers of fool’s gold. Conventional wisdom daunts initiative and offers far too many convenient reasons for inaction, especially for those with a great deal to lose. Fortunately for you, you do not have anything to lose and can afford to ignore the “jobsworths’ and Jeremiahs who have lived upon the mountain for so long that they have come to worship it
Conventional wisdom is usually right. But when it is wrong, it can offer quite extraordinary opportunities for those too stubborn or inexperienced to pay attention to well-meaning naysayers.
Perhaps most importantly of all, as a young and penniless and inexperienced person, you are not an ‘expert’. Thus you are more willing to learn than those in their thirties, forties or fifties. You are not afraid of making mistakes, admitting them when you do and getting right back on track. (Speaking of tracks, you have no track record to defend, either.)
Anyone not busy learning is busy dying.
The way will most likely be hard, your failures many. It will be fun and it will get a little hairy, even scary, at times. But the earlier you start and the more risks you are prepared to run, tempered by listening hard and choosing the right mountain (we’ll come to that later), the more certain it is that, sooner or later, you will find yourself with a small success on your hands.
And one success, with luck, will lead to another.
If there is a single category of person for whom this book should prove the most useful, it is you: the young, penniless and inexperienced. I know. I’ve been there.
Slightly Better Off and On the Way Up?
Whatever you can do, or dream you can, begin it! Boldness has genius, power and magic in it.
For the Slightly Better Off and On The Way Up, now is the time to consider whether or not you intend to continue making me (and people like me) even richer, or whether you wish to become rich yourself. You have little time left in which to make up your mind. Your youth and stamina is ebbing away. You are getting too comfortable.
It is not a course lor everyone. But I think you can guess what my advice to you would be. What the hell. Go for it!
2. A Million to One
In Europe, believe it or not, there is still an unspoken social stigma attached to wealth; not only being rich, but towards any overt attempt to beccome rich. I could write you a book about what lies behind this cultural idiocy, but we need to move on!
Lastly, in any list of reasons not to get rich, we must come to philosophy and the benefits of hindsight. If I had my time again, knowing what I know today, I would dedicate myself to making just enough to live comfortably (say £30 or £40 million), as quickly as I could – hopefully by the time I was thirty-five years old. I would then cash out immediately and retire to write poetry and plant trees.
PART TWO: GETTING STARTED
3. Harnessing the Fear of Failure
I would use, instead: ‘Once begun – the job’s half done.’ Because taking that first, irrevocable step has proved to be the most difficult part of nearly every venture I have been involved in.
No matter how much faculty of idle seeing a man has, the step from knowing to doing is rarely taken.
“When you got nothin’, you got nothin’ to lose.” —Bob Dylan
If you wish to be rich, you must grow a carapace. A mental armour. Not so thick as to blind you to well-constructed criticism and advice, especially from those you trust. Nor so thick as to cut you off from friends and family.
But thick enough to shrug off the inevitable sniggering and malicious mockery that will follow your inevitable failures. Not to mention the poorly hidden envy that will accompany your eventual success. Few things in life are certain except death and being taxed.
Now comes the hard part. Before we really get started on getting started, I ask you to consider carefully the short list below.
- If you are unwilling to fail, sometimes publicly, and even catastrophically, you stand very little chance of ever getting rich.
- If you care what the neighbours think, you will never get rich.
- If you cannot bear the thought 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.
- 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.)
- 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.
- If you cannot convince yourself that you are ‘good enough’ to be rich, you will never get rich.
- If you cannot treat your quest to get rich as a game, you will never be rich
4. The Search
This is not to say that ‘the Search’ is not important to young people. It’s important and it’s scary and it’s fun and infuriatingly confusing. For most people, it occurs in their twenties or very early thirties.
For a start, the salary begins to have an attraction and addictiveness all of its own. A regular paycheck and crack cocaine have that in common. In addition, and more to the point, working too long for other people can blunt your desire to take risks. This last factor is crucial, because the ability to live with and embrace risk is what sets apart the financial winners and losers in the world.
So if you want to be rich and you are in the Search phase of your life, then get used to one thing. You are not part of a team— although you may have to pretend you are. To put it more politely, you may have to adopt the idea of teamwork, for the time being, to help yourself understand better how individuals, departments, companies or industries function.
You should certainly do so enthusiastically and conscientiously. But in your secret heart, however hard you work (and if you want to be rich, working a damn sight harder than the punk next to you is the only sensible option), you must not be deceived.
Working for others is a reconnaissance expedition; a means and not an end in itself. It is an apprenticeship and not a goal.
Team spirit is for losers, financially speaking. It’s the glue that binds the losers together. It’s the methodology employers use to shackle useful employees to their desk without having to pay them too much. While lives may depend on it in a few professions, like soldiering or fire-fighting, in commerce it acts as a subtle handicap and a brake to ambitious individuals. Which, in a way, is what it’s designed to do.
When it comes right down to it, ‘team spirit’ and not letting your colleagues down is a feeble reason for procrastination when opportunity comes knocking. Nearly always, it is an excuse to avoid the possibility of humiliating failure. If one of the team you work with inherited ten million quid tomorrow, do you really believe they would be checking in to keep up morale? Of course not. Neither would you, or anyone in their right mind.
Should you choose only to work in glamorous, growing industries? Where is the most opportunity to be found?
First off, forget glamorous.
While you may not necessarily want to be in a glamorous sector of any market, and they are often very crowded sectors, it helps to be in one. Swimming with the ride rather than against it, so to speak. A swelling tide raises all boats, including yours.
Too many people want to make a blockbuster movie and live in Beverly Hills. Not enough people want to dig holes.
As a general rule of thumb, then, growing industries with relatively low start-up costs offer more opportunities for those who want to get rich than declining industries, or those that require huge start-up investment. This is not an iron-clad rule, however. While magazine and newspaper sales have been in slow decline in the Western world for decades, this ‘declining’ industry is where I made a great deal of my own money.
More important than any particular industry are the sectors within each industry. A sizeable fish in a growing sector, however small, is more attractive to prospective purchasers and investors than the same size fish in a diminishing or static pond.
Capitalism demands that whoever takes the most financial risk calls the piper’s tune. The biggest rewards go not to those individuals who came up with the idea, nor to those individuals who built the empire. They go to those entities or individuals who funded the enterprise and own the most stock. Always bear this in mind during the Search.
Whoever controls a business can force its sale. Whoever controls a business can implement a merger. Whoever controls a business can fire you. Whoever controls a business, even by a pitiful 1 per cent, is likely to take a great deal more money out of it than the minority shareholders. Remember, too, that in both private and public companies, not all shares are necessarily equal, either in voting power or financial value. Choosing a growing industy, or growing sector of a static industry, can free you from such financial control freaks.
The three great quotes concerning “luck” for me are these:
“Luck is preparation multiplied by opportunity” ‐Seneca, Roman Philosopher
“The harder I practised, the luckier I got.’ ” ‐Gary Player, Golf Champion
“Luck is a dividend of sweat.” ‐Ray Kroc, McDonald’s Founder
Fortune favours not just the brave but the bold. Boldness has a kind of genius in it, as Goethe pointed out. It can lead to complete failure and defeat, because conventional wisdom often proves to be at least wisdom of a kind. But should boldness succeed, should the chance be seized and sufficiently well executed, then success will surely lead to glory.
Whatever your inclinations, your aptitude, your abilities or your preferences, never shrink when opportunities arrive. If you have weighed the odds and find yourself convinced, ignore the protestations of sensible people and their conventional caution.
5. The Fallacy of the Great Idea
Having a great idea is simply not enough. The eventual goal is vastly more important than any idea. It is how ideas are implemented that counts in the long run.
Despite the words of the old rock ‘n’ roll song, the original is not the greatest. Not always. If you want to be rich, then watch your rivals closely and never be ashamed to emulate a winning strategy. They may josh you a little for doing it, but that’s a price well worth paying.
The problem with the great idea is that it concentrates the mind on the idea itself. This is fine as far as it goes. But unless the idea is executed efficiently and with panache and originality, then it doesn’t matter how great the idea is, the enterprise will fail. Ideas are certainly of immense impor- tance, but I have seen so many people attempting to create a start-up company who have become obsessed with proving that their idea was ‘right’ rather than obsessed with making money. And I have watched them wasting years doing it.
Nobody really cares if an idea is ‘right’, except the person who came up with it.
6. Obtaining Capital
“No one would remember the Good Samaritan if he’d only had good intentions. He had money as well”
If you can demonstrate the ability to earn money early on, it does become somewhat easier to borrow from others successfully later. For the majority of people who started with nothing and seek to be rich, borrowing money in one form or another becomes a necessity sooner or later. Let’s explore the various options on the borrowing front.
Firstly, avoid sharks like the plague.
Having avoided the sharks and perhaps swum with the dolphins, we turn to the fishes. How I love the fishes! How you will learn to love them, too!
It was via the fishes that I made my own first money – the seed capital which ensured that I retained control and ownership of my own business back in the early days of Dennis Publishing. Fishes come in all shapes and sizes. Friends, acquaintances, relatives, business colleagues, small investors, friendly bank managers of the old school, professional advisors, ex-employers, suppliers and vendors are among them.
Next, a close friend and colleague, Richard Adams, designed some smart headed notepaper for us free of charge, suspecting (rightly) that we might be able to provide him with work if our venture succeeded. A small printer I had come to know while working for OZ magazine agreed to print this notepaper, knowing full well I could not pay him for it right then.
Then I had an idea. I asked Brian Moore and Charlie Harness, the owners of my potential distributors for the comic, to write to a particular printer, promising that he would be the first to receive money from Moore-Harness when the comic came out, Brian and Charlie did not guarantee the money; they were not exactly idiots. But they made it sound, as a matter of common sense, that at least enough money was likely to be generated by sales of the comic to pay the print and paper bill.
And they stressed that their client, my little company, would only receive any residue when and if the printer had been paid in full. This was the key. Brian and Charlie turned out to be the most effective fishes in the pond of my ambition
Persistence is a powerful tool in the hands of a hungry young hustler on the make.
Above all, I retained control of the company. A company I still own 1OO percent of thirty years later, I had created capital by swimming with the fishes.
Many people are indulgent towards the young – after all, we were all once young ourselves. Those who wish to start a company and get rich cannot expect a free ride. But they might be surprised at the number of fishes in their particular pond willing to help them to some degree or another.
Venture capitalists, major investors and bankers all have their part to play in providing capital for individuals and start-up companies. But if it is at all possible, give me the fish over the sharks and dolphins every time. It may take a mite longer to get there, but you’ll be far richer, or at the very least, happier, in the long run.
“When going through, hell,” Winston Churchill once remarked, “keep going.”
7. Never Give In
But I would not give in.
That was the secret ingredient. I would not be a wage slave, I would not take ‘no’ for an answer. I would not give in. I was going to be rich. Somehow. Some way. Some day soon. And I would not retreat to the safety of a decent job until I was starved out of house and home.
I would not give in.
What fueled me was the desperation of knowing that unless I found a way round my lack of capital, unless I could pour my energy into a venture of my own, I would be condemned to a life of wage slavery. There is absolutely nothing more likely to dampen the prospects of becoming rich than a nice, fat, regular salary check.
If I had promised her then, sitting by that fire, promised that I would ‘earn a crust like a normal human being’, then my life would have taken a different course, I think. Yet, like the poet Robert Frost: ‘Knowing how way leads on to way / I doubted that I should ever come back.’ There was the rub. It was now or it was never.
Money talks. Bullshit walks.
The next day, I went straight back to knocking on doors and punishing the phone, pestering people for capital. Learning how to swim with the fishes. No way was I going to spend my life making other people rich. No way was I going to become a token hippy in some record company. No way was I going to do any damn thing except get on the merry-go-round of making dosh. Real dosh. My dosh.
I would not give in.
That is what it is like in the beginning. Always. It is desperate and it is humiliating. As you will find, in your own way, unless you were born with a rich mummy or daddy or uncle. For the rest of us, if you want to be rich, then you must walk a narrow, lonely road to get the capital to make it so.
Letters to My Brother, Vincent van Gogh
Go buy yourself a copy of Vincent’s letters. If his paintings had been judged to be daubs fit only to kindle a fire, his letters would still shine like diamonds in the mud of everyday life. Go buy a copy, and when the going gets rough, my friend, or appears to be rough to you at the time, think of Vincent van Gogh, tramping his way across a nightmare landscape of destitution and rejection for what he believed in. A man who believed he had failed.
8. The Five Most Common Start-Up Errors
The First Error: Mistaking Desire for Compulsion
All error springs from flawed assumptions. If there are no assumptions, there can be no error.
I am told that during the Vietnam War, a sign was kept nailed on a wall above a particular marine commander’s desk which said: “Assumption is the mother of all f***-ups.”
The Second Error: Overoptimism Concerning Cash Flow
Cash is a serious matter. Its management is utterly vital in any enterprise. If, like me, you have no head for figures whatever, then this is no cause for concern. You simply employ somebody who does and listen to them carefully. Lord knows, there are enough qualified bean-counters in the world and forecasting cash flow is hardly rocket science.
Balance sheets are a matter for accountants, banks and auditors. But cash flow is the heartbeat of your company.
You can delegate many tasks when creating a new business, but monitoring and forecasting cash flow is not one of them. It’s your responsibility and your task. Nobody else’s.
You can improve cash flow by observing the following suggestions in a start-up’s early days:
- Keep payroll down to an absolute minimum. Overhead walks on two legs.
- Never sign long-term rent agreements or take upmarket office space.
- Never indulge in fancy office or reception furniture, unless your particular business demands that you make such an impression on clients.
- Never buy a business meal if the other side offers to. You can show off later.
- Pay yourself just enough to eat.
- Do not be shy to call customers who owe you money personally. It works.
- In a city, walk everywhere you can. It’s healthy and sets a good example.
- Check all staff travel and entertainment claims with an eagle eye.
- If you’re going to be late paying, call the vendor’s boss. Give a date. Stick to it.
- Always meet payroll, even at the expense of starving yourself that week.
- Issuing staff credit cards, company mobile phones or cars is the road to ruin.
- Leaving lights, computers, printers and copiers on overnight is just stupid.
- A vase of beautiful flowers in reception every week creates a better impression than £100,000 worth of fancy Italian furniture.
- Get used to grovelling. Grovelling is an effective tool in a start-up’s cash flow.
- They want your business. Play one supplier off against another. Ruthlessly.
- Only enter a factoring deal in absolute extremity. Exit it fast.
- Keep your chin up. It could he worse. You could be working for them.
Cash flow is the lifeblood of arty business. But just as presidents and prime ministers learn to plan for war and hope for peace, you must plan for the worst and hope for the best in all matters relating to the cash flowing in and out of your start-up company.
The Third Error: Reinforcing Failure
The Fourth Error: Thinking Small and Acting Big
Once you begin to believe that you are infallible, that success will automatically lead to more success, and that you have ‘got it made’, reality will be sure to give you a rude wake-up call. Believing your own bullshit is always a perilous activity, but never more fatal than for the owner of a start-up venture.
The Fifth Error: Skimping on Talent
You need the talent to identify, hire and nurture others with talent.
You have to identify and hire talent. You can’t skimp on it.
Sometimes, to ensure that a talented individual will work for you, or will stay working with you, you need to be flexible. Money is not always the great motivator here. Talented people want a good salary, of course, but surprisingly often they are more attracted to new opportunities and challenges.
What talent seeks, as often as not, is the chance to prove itself and the opportunity to excel.
My advice on this subject was contained in the second paragraph of this section. You must identify talent. Then you must move heaven and earth to hire it. You must nurture it, reward it property and protect it from being poached. If necessary, dream up a new project. Better still, get the talent to dream it up.
Youth is a further factor. By the time talent is in its mid-to-late forties or early fifties, it will have become very, very expensive. Young talent can be found and underpaid for a short while, providing the work is challenging enough. Then it will be paid at the market rate. Finally, it will reach a stage where it is being paid based on past reputation alone. That is when you must part company with it.
Talent is indispensable, although it is always replaceable. Just remember the simple rules concerning talent: identify it, hire it, nurture it, reward it, protect it. And, when the time comes, fire it.
If you can do all these things with talent in the context of building your own company, I would be truly astonished if you did not become rich. Because the truth is, talent does most of the work for you. Just as it has done since the beginning of recorded history.
After all, who built the pyramids? The pharaohs or the engineers? Think about it.
Then go hire some talent – just like they did.
PART THREE: GETTING RICH
9. Cardinal Virtues
“Persistance” is a vital attribute for those who wish to become rich, or who wish to achieve anything worthwhile for that matter. As is the ability to acknowledge that one has made a mistake and that a new plan of action must now be made. Any such acknowledgement is not a weakness, it is a sign of clear thinking. In its way, it is a kind of persistence in itself. Try, try, try again, does not mean doing what has already failed, over and over again.
Persistence had done the trick – but only with Susan’s insight. Do not be afraid to change tack, alter course or make new plans with whatever you are attempting to achieve. Especially if you sense that you are on the wrong track.
Above all, avoid banging your head against the same piece of wall. The wall will not get any softer. And don’t give up – if you want to be rich
“No one can make you feel inferior without your consent.” —Eleanor Roosevelt
With liberation comes the knowledge that nothing is really very important in the lives of men; nothing is as terrifying as the fear itself. And from that, paradoxically, comes self-belief – a belief that anything is possible.
Trust Your Instincts
Trust your instincts. Do not be a slave to them, but when your instincts are screaming, Go! Go! Go! then it’s time for you to decide whether you really want to be rich or not. You cannot do this in a deliberate, considered manner. You can’t get rich painting by numbers. You can only do it by becoming a predator, by waiting patiently, by remaining alert and constantly sniffing the air and by bringing massive, murderous force to bear upon your prey when you pounce.
Make More Baskets: Diversify!
No matter how good your idea, how fierce your resolve and how lucky you are in the early days, you must prepare for that eventuality. It will come. It always comes.
To protect your investment, you would need to create new baskets. Because, sometimes, the new basket will be worth more than the old.
Once a brand is established, any attempt to mess with the name reminds the world just how weird the name is. Not good marketing.
Let’s imagine you have a herd of sacred cows inside a fortress. The barbarians are at the gate and you are under siege. Killing sacred cows is a horrible crime, even though your defenders are running short of food. If the barbarians overrun the fortress, the sacred cows will die anyway. If you kill some of the cows, you will be stronger and possibly able to turn back the barbarian attack. Ergo, you eat one or two sacred cows – even if those same cows were the meaning of life last week. Learning to evolve or die is a cardinal virtue.
Richard Branson has perfected one cardinal rule: he owns or part-owns more baskets than almost anyone alive. It’s certainly one way to become a billionaire.
How many baskets should you go for? As many as make sense. In the beginning, it would be best, if you can, to keep them related to your core business.
Just remember that this advice is not designed for your start-up phase. During the start-up, you concentrate on that one basket as if your life (and the life of your first-born) depends upon it. But once you have something that’s working and making some money, start looking around quickly for another opportunity. The more baskets the better.
When one of my projects was in trouble and needed more work, or needed rethinking, the fact that I had other eggs in other baskets gave me the confidence to do what was right. Like re-engineering or folding it.
One of the problems with being a start-up entrepreneur is that you tend to think of what you have created as some kind of surrogate child. It becomes your “baby”, if you’re not careful. This is dangerous and counter-productive. You are not in the egg-laying and basket-weaving or baby business. You are in the business of getting rich.
Listen and Learn
My advice, based on thousands of such meetings over the years, is to keep them short – unless your gut tells you that you have stumbled upon a winner. Set the meeting for twenty minutes. Have somebody interrupt you after twenty-five minutes and usher the caller swiftly from your room.
It’s usually better to leave no doubt in your visitor’s mind if you’re not interested in their project or idea. In a way, it’s kinder, as well. While the temptation is to say, ‘I’ll confer with my colleagues and get back to you,’ this will eventually come back to haunt you and waste more of your most valuable resource. Time.
I’m feeble at this balance between courtesy and efficiency and always have been, but I’ve got a little better over the years – especially with the help of my personal assistants, Wendy, Caroline and Amy. They’re trained to interrupt me if they sense either my visitor or I is flying on autopilot. And they can be ruthless about it!
10. A Few Words About Luck
Lesson No. 1: Never make your finance director or CFO the MD or president of anything!
Lesson No. 2: Never go on vacation when a deal is going down.
Lesson No. 3: When you change accounting systems (or accountants, for that matter), have the numbers checked over and over again. I’ll eat my hat if errors are not discovered in the next iteration.
Lesson No. 4: Never personally underwrite business loans for your company unless you absolutely, positively, are forced to. Even then, set limits in the agreement so that, as the loan figure is reduced over time, you are released from your undertakings commensurately.
Lesson No. 5: Listen to people who are good with money and always invest in property with a good address – providing you can pay cash for it and will not need to sell it for a few years
One of my favourite philosophers, the first-century Roman Seneca, coined the following: ‘Luck is what happens when preparation meets opportunity.’ I have never come across a better definition – that’s why I’m repeating it. Preparation multiplied by opportunity. Say it again. Learn it off by heart. Let it become a daily mantra. Luck is preparation multiplied by opportunity.
But the original is far more profound and Seneca’s quote is worth a moment of our time. Preparation is the key. Be prepared. Do the heavy lifting and the homework in advance. Get on with the job, but remain alert enough to spot an opportunity when it arrives. Then hammer it.
Good writing skills can be important in our business.
This “flight not fight” behavioural trait is the sign of a prey animal, not a predator. Despite what you will read in many self-improvement tomes, ‘partnering’ and ‘symbiotic evolution’ are no way to get rich. They may be a way to a better world. They may make you a happier person and a better manager. But they will not make you rich – except, perhaps, in spirit.
To become rich you must behave as a predator. I will go further, you must become a predator. Albert is not a predator. By moving so adroitly and so swiftly from one thing to the next, Albert does not place himself in the way of luck. He does not draw luck to him. He does not make his own luck. He is much too much in love with the green, green grass just over the next hill.
If there is one good thing about a well-managed company in a capitalist society, it is the opportunity to groom talent and encourage it to grow. Apart from the money, it’s the best thing about getting rich.
Here are my last thoughts on this vexing and baffling phenomenon:
- Prepare yourself for luck, but don’t seek her out. Let her come to you.
- Make your own luck.
- Don’t whine or ever describe yourself as ‘unlucky’. (You’re alive, aren’t you?)
- Be bold. Be brave. Don’t thank your lucky stars. The stars can’t hear you.
- Stay the course. Stop looking for the green grass over the hill.
- Don’t try to do it all yourself. Delegate and teach others to delegate.
- Remember that most predators are lucky most of their lives, unlike their prey.
- Whiners and cowards die a hundred times a day. Be a hero to yourself.
- If being a hero isn’t your style, then fake it. Reality will catch up eventually.
- Just do it. It is much easier to apologise than to obtain permission.
- Never take the quest for wealth seriously. It’s just a game, chum.
- Next time you bump into Lady Luck, giver her a whack on the rump from me.
- Be lucky. Get rich. Then give it all away.
11. The Art of Negotiating
- Most of us are rather poor negotiators.
- Most negotiations are unnecessary.
- ‘The other side is often just as smart (or stupid) as you are.
- In the end, ‘the balance of weakness’ almost always decides the issue.
- In Greed vs. Need, the former usually “wins.”
Most “negotiations” are not negotiations at all; they are merely part of the fabric of everyday living. The manner in which they are conducted will depend on the parties involved, the subject under discussion, your day-to-day management style and what side of the bed you got out of that morning.
Serious negotiations are like falling in love. You may have fooled around a few times and been strongly attracted to one or two lovers. But when you fall in love, brothers and sisters, you will know all about it. Right off the bat. Boom! That’s what serious negotiations are like. It’s probably happened once or twice, right?
Management Bargaining vs. Serious Negotiations
Please remember: you are not reading this book to become a successful manager. Managers rarely become rich. Most managers are lieutenants. You, on the other hand, have to keep you eye on another ball – several other balls, in fact. You may well have to masquerade as a manager (for a short while) on the way to becoming rich, and you should strive to be a good manager while the role is forced upon you. But even if you discover that you truly have a talent for the minutiae that management: demands, it’s best to abandon the role just as soon as you can afford to hire appropriate personnel.
Personally, I don’t think I was a very good managing director or CEO of any of my companies, so my advice concerning your choice of middle management is limited to the following: the world is full of aspiring lieutenants. Most people seek job security, job satisfaction and power over others far more than they seek wealth. And thank goodness for that. If all the great managers in the world were dead set on becoming rich, and willing to take the necessary risks to do so, there would be little hope for the likes of you and me.
A Few Tips on Negotiatingç
- Remember that few of us are any good at detailed negotiations. That includes your opponent, by the way.
- If you ara a poor negotiator, like me, then set a limit on what you will pay or accept and on any conditions attached. Do not deviate. Your first thought is your best thought.
- Most negotiations are unnecessary. Don’t enter into them. Remember that ‘the fortress that parleys is already half taken’. Save serious negotiations for serious occasions.
- Do your homework. And do it rigorously. What you don’t know or haven’t bothered to find out can kill you in any type of serious negotiation.
- Despite my jungle book examples above, the devil really is in the detail in serious negotiations. Get all the professional help you can trust. But do not surrender control of the negotiations or the agenda to such professionals. They are not the ones who will have to live with the consequences – you are. Professional advisors are there to explain and advise. not to decide.
- If your advisors are leading you down a path you don’t approve of during your negotiations, call a ‘time out’ and tell them privately that if they continue down that path you will get yourself some new advisors. The world is full of them.
- Never fall in love with the deal. A deal is just a deal. There will always be other deals and other opportunities.
- Avoid auctions in business like the plague – unless you are selling something, that is. You will nearly always pay more than was wise if you are the ‘winner’ of an auction process.
- The negotiator opposite you is not your new best friend. He is not your partner. He is not your confidant. You have no obligation, outside of ordinary courtesy, to please him or satisfy his demands. He is the enemy. If you do not understand that real winners and real losers emerge from serious negotiations then you will be robbed, whatever the circumstances.
- Take no notice of management manuals that tell you to leave passion and emotion out of the negotiating room. If you are emotional or passionate about something, then let it show. But leaven emotion with courtesy, and, if possible, with wit. If you’re not the witty type, then flattery and self-deprecation are good substitutes.
- Listen when engaged in serious negotiations. Then listen some more. You are in no hurry. Nobody ever got poor listening. Also, use silence as a weapon. Silences are disconcerting. People tend to fill silences with jabber, often weakening their bargaining position as they do so.
- Choose a rogue element to your advantage and bring it into the negotiation at a late stage. You’ll be amazed at how often this tactic produces results.
- The British created the largest geophysical empire in the world with one tactic: divide and rule. It always works. It never fails if you can get to exploit it. Get to know the other side. There may be slight differences in the individual approaches of their senior managers and, possibly, in their goals. Drive a wedge and keep hammering.
- Permit no such weaknesses in your own camp, I have often banned senior executives from taking part in negotiations simply to avoid this trap. Better you are in there on your own, outgunned, outflanked and outmanoeuvred, than to have two or three of you silently squabbling.
- Everyone thinks they are a great negotiator, but most of us simply are not. If it’s your company, then, for better or worse, you are the final arbiter. That remains true whether you are a good negotiator or a had one.
- If you suspect you perform badly on such occasions, do not attend, even if you are the 100 per cent owner. Get someone else to do it after setting out your response to every conceivable option that might arise. This tactic can be devastating to the other side, and Peter, Bob and I have used it on many occasions in the past. You have to completely trust your nominee, though.
- Above all, establish where the balance of weakness lies in any serious negotiation. Most strengths are self-evident, especially strengths like cash and infrastructure. Weaknesses are usually hidden. Ferret them out, hold them up to the fight and make a battle plan.
- Whatever you agree to during a negotiation, fulfil the bargain. Nobody wants to do business with a weasel or a chisler. Written in the Zoroastrian Scriptures two-and-a-half thousand years ago was this: ‘Never break a covenant, whether you make it with a false man or a just man of good conscience. The covenant holds for both, the false and the just alike.
12. Ownership! Ownership! Ownership!
If you chase money desperately in the earnest belief that you can never be happy without it and seriously think that the chase is a meaningful occupation, I doubt very much you will succeed. You have to be fiercely determined, true. But an appreciation of the absurdity of the chase helps enormously.
Why Ownership Isn’t the Important Thing—It’s the Only Thing
To become rich you must be an owner. And you must try to own it all. You must strive with every fibre of your being, while recognising the idiocy of your behaviour, to own and retain control of as near to 100 per cent of any company as you can. If that is not possible, in a public company, for example, then you must be prepared to make yourself hated by those around you who are also trying to be rich. That is the dirty, rotten little secret of it all, my friend. Just like Gollum, it is your Precious and they are all ‘filthy little thieves’.
To become rich, every single percentage point of anything you own is crucial. It is worth fighting for, tooth and claw. It is worth suing for. It is worth shouting and banging on the table for. It is worth begging for and grovelling for. It is worth lying and cheating for. In extremis, it is even worth negotiating for.
Never, never, never, never hand over a single share of anything you have acquired or created if you can help it. Nothing. Not one share. To no one. No matter what the reason – unless you genuinely have to.
Ownership is not the most important thing. It is the only thing that counts.
In addition, they went on, I should remember that such a ‘dispersal’ (I remember they actually used that word, too) would incentivise them mightily. Such a gesture would never be forgotten. And my remaining 80 per cent of the company would ensure that I was still the boss.
However, should I not ‘disperse’ these shares among them, they intended to leave. And leave immediately, virtually without notice. They would have no option but to do so, although they didn’t want to.
The company would suffer dreadfully – and might even fail altogether. They had already agreed the name of their new company, in case I wouldn’t play ball, and had even registered it. They would set up as rivals. They were serious and they meant business. All of this unpleasantness could be avoided if I would just hand over a pitiful 20 per cent to them, perhaps based on future performance?
Both as friends and colleagues, they earnestly advised me to consider their demands dispassionately and honestly. In my heart, they argued, I knew they were right. It was only fair.
I fired them on the spot. Or they walked away. I can’t remember which – it didn’t matter then and it doesn’t matter now. What mattered is that I held on to every single share in my company. I would run the entire bloody company myself, write the articles, design the pages, answer the phone and sell the ads if I had to. But I would not part with a single, solitary share. Not for love. Nor for fairness. Not for loyalty. Not for anything. And certainly not for moral blackmail
“Why doth treason never prosper? For shouldst thou fail, thou must hang. And if it doth succeed, why, ’twas never treason!”
But I will not give them a share. Not one. Not for love. Nor for loyalty. Not to be fair. Because capitalism isn’t fair. Life isn’t fair. The lottery of what genes we are born with isn’t fair. The moon and the stars and the gas clouds of Alpha Centauri aren’t fair.
“Never retreat. Never explain. Get it done and let them howl”
The Joys and Perils of Partnership
The point is, the partnership held, and has always reflected just two principles as far as sharing the pie was concerned. These are:
- Who is putting what capital into a venture?
- Who is doing what work on that venture?
That’s the best part of a true partnership. You always have a brother to help carry the load. And if things go wrong, you have a built-in drinking buddy with whom to drown your sorrows! And you have a built-in conscience, too. No bad thing.
And I believe the same has been true for them. Despite our close friendship and real affection for each other, this knowledge, that any one of us could walk away from the others if he wished, that illusion of freedom – if illusion it was – made it possible to compromise with each other when things got tough in our partnership business.
A partnership is not a marriage. In a marriage, you should be willing to die for your partner. To share everything. To kill for them, if you have to. But in a partnership, the making of money comes first. Friendship and affection comes later – if you’re lucky, as I have been.
I hope that you too, dear reader, will one day be lucky enough to find such partners and enjoy similar success. But my earnest advice is that you establish yourself
first, retaining as much control of any start-up or acquisition as you can, and then, and only then, seek pastures new with partners in the picture. That’s a great way to spread risk. Partners are a wonderful thing. But they are not a marriage – except of convenience. Ideally, you should keep something of your own to fall back on.
Why else is ownership so vital to anyone who wants to get rich? Ownership buys you the luxury of time.
In the Articles of Association of a company, both sides agree to insert a clause that governs serious disputes. If the dispute cannot be resolved, then the following takes place. Each side in the dispute, each shareholder who wishes to participate, considers carefully what they would be willing to pay for the whole company. It doesn’t matter how many shares they own, but they must have access to the sum they have indicated, less the worth of their own shares valued on an equal basis.
The parties then go to a neutral lawyer or professional on a certain day and bring with them a scaled envelope with nothing inside it but their estimate of the company’s entire worth. Or, at the least, what they are willing to pay in total for the company. The lawyer then opens the envelopes. Whoever has bid the highest amount is now the owner of the company and must pay the losing side for their shares, based on the winner’s valuation.
From the minority shareholder’s point of view, it offers the only chance he or she will ever have to own the company for certain. It’s true that the majority shareholder might consider selling to the minority. But he or she doesn’t have to if the clause is omitted from the Articles. Only the shootout can force the issue, providing the minority bids high enough.
From the majority shareholder’s point of view, providing they have sufficient cash, of course, it offers the only certain chance to be rid of a trouble- some pest. But the majority shareholder has more to lose. The balance of weakness is in his or her court.
If you start off as equal partners with 50 per cent each (and I told you not to da that’.) then the ‘Mexican Shootout’ can save months, even years of weary argument, lost sleep and soul-numbing, teeth-grinding negotiation. If I was the majority shareholder, I would never permit the shootout to appear in the Articles of Association. If I was a minority shareholder, I might not invest without it being there.
In summary, unless you already own a successful business outright, then I do not recommend you enter into a partnership of any kind if you can avoid it. It’s time-consuming and distracting. If you have any choice whatever in the matter, walk your narrow, lonely road to riches all on your little ownsome.
As I mentioned before, it’s a nasty, lonely business getting rich.
13. The Joys of Delegation
Actors, celebrities, kings, politicians, artists and a host of others, either do the job in person, or they lose the job – and the income that comes with the job.
Delegation for many, then, will only stretch so far. But for most of us with a desire to get rich, it will take us further than the inexperienced could believe.
I say this not because I am idle – I’m anything but – but because the exercise of delegation, used responsibly, allows you to bring out the best in others and to make yourself rich in the process. It is the nearest thing to a ‘virtuous circle’ imaginable. Just imagine getting rich while you’re helping others to help you get richer and prove their worth in the process. Magic!
Bossy people and glory hounds are mostly interested in building a power base so they can have yet more people to boss about. It’s pitiful and a tittle sad, but we have all seen it. We saw it in school. We saw it in the playground. We saw it in college. And we saw it in our first job. If you are observant, you have been seeing it nearly all your life.
You can’t deal with bossy, puffed-up sods who won’t train you and won’t delegate. You can only move departments or change your place of work. It isn’t worth the time to do anything else.
The whole point about getting rich is not to have to deal with this nonsense. Office politics can be fun, as can all forms of politics, but to many people they are upsetting. They reduce productivity and dent morale. They can take up astonishing amounts of time. They increase the number of’sick days’ in a department – which is often a good indication that a toad is in charge and needs to be winkled out of its hole.
True delegation is an entirely different matter and can often be a joy to be involved in. On both sides. As an owner, or an owner in training, you must always be alert for the telltale signs that here is a candidate for promotion and delegation. They are smart. Perhaps smarter than you are. They work hard and they appear to love the work they do. They ask intelligent questions and don’t waste time gossiping and mucking about. They listen and correct their errors, and don’t repeat them. They want your job.
Especially in the early days of your company, delegation and promotion are among your most powerful weapons to get rich. Men and women with spirit will be prepared to leave safe, comfortable jobs and work for you, providing the atmosphere of the new operation is loaded with optimism, adventure, the sweet scent of delegation and the promise of promotion.
Not everyone works to get rich. In fact, most people do not. But almost everyone wishes to be respected. With promotion comes respect. And with delegation comes promotion. If your company is young and a bit rickety, meritocracy, delegation and promotion are the bricks and mortar that will make it stronger.
Do not seek a replica of yourself to delegate to, or to promote.
By setting an example early on with a programme of carefully tailored delegation and well-deserved promotion, you will create an atmosphere of loyalty, efficiency and camaraderie that feeds upon itself. An atmosphere poisonous to toads.
good morale, a pervasive feeling of ‘us against the world’, combined with the promise of responsible delegation and promotion based on achievement, can move mountains. And under those mountains is gold. Your gold.
I am not suggesting you will have an easy time of it or that you will not work long and unsociable hours. You will. All of us who made our own money did and it will be little different for you. But I have the benefit now of hindsight, I look back along the years and see myself working like a proverbial Trojan. A stupid Trojan. You can avoid this trap.
I see a young man who would think nothing of working a sixteen-hour day – going out into the London night for a drink and a swift curry, coming back into the office for a few hours’ kip on the office sofa and beginning the process all over again. And I see the same young man, dragging himself in on Saturdays and Sundays, pale with self-inflicted exhaustion. Snappy. Quick to criticise and too slow to delegate and praise others. I see a young man trying too hard, but not delegating enough.
Month after month, in those early days, I battered myself and my staff into setting world records for stamina and effort. Did it make me rich? No. It made me tired, bad-tempered and arrogant. It led me to make errors of judgement which I would have avoided had I gone about it a smarter way.
I only started to get rich when I began to delegate and to ease up on my work schedule.
My company was lucky to survive those early days and I owe a real debt to the colleagues who worked with me back then. It probably helped that my company was a fun place to work, otherwise it might not have survived. Added to which, hard work never bothers the young. They think they are built of steel.
Instead of attempting to stay in day-to-day control, I have devised a system where I keep overall control, but do not involve myself in running a business unless I wish to get involved for a particular reason, I use the power of veto instead.
(I do read all the minutes of these meetings very carefully, and I can get a mite cross if diey are not produced promptly and accurately. For me, they are not a memorandum of past events. They are a tool to understanding current positions.)
Without my express permission:
- They may not vote anyone on or off the board.
- They may not physically move the headquarters of the company.
- They may not dispose of, or shut down, any substantial asset.
- They may not purchase, or launch, any substantial new product or business.
- They may not award themselves bonuses or salary increases.
If things go wrong in a particular part of the business, then I will get involved. When we are about to launch, sell or close something, I am always involved.
One thing I do to compensate for this style of ownership is to look hard for signs of excellent work. When I spot it on one of our websites, or in a magazine, or from management minutes or financial results, I drop a handwritten note to whoever is responsible. And I do it often. I also invite folk who work for me to visit me in my private office, which is about half a mile from our company headquarters, usually after work. And when I visit any particular company in the flesh, it’s usually without warning, on the spur of the moment.
And most of all, because I learned to delegate a long time ago and to accept that you must allow young managers the opportunity to make mistakes without crushing them or blaming them when things go wrong. (You can always fire them if they make the same error over and over.) Because I love to see talent grow in the stable and watch it come hurtling out of the box at full gallop. Because it make me a little proud to be a part of such a process. Because I get easily bored. For all of those reasons.
It enrages me to see senior managers wasting their time (often hours each day) wading through emails, which are often informing them that the receptionist’s sister has just had a baby or some such nonsense. I have been known to wreak physical violence on a cell phone that begins to squawk in the middle of meetings, or on a Blackberry which is being used surreptitiously under the table by its owner. Not only is it bad manners, such interruptions break the flow and concentration necessary for real decision-making.
All this is bad enough. But have you ever considered how the growthof such devices has conspired to damage and corrupt delegation in the work-place? If you go on holiday or a business trip and keep obsessively in touchvia a mobile phone or Blackberry with the office, what does that say about your management style? About the trust you have in your colleagues ‘minding the ranch’?
It says you don’t trust them. It says you cannot delegate meaningfully. It says you are a meddler and a micro-manager So don’t do it!
If you want to get rich, then learn to delegate. Don’t learn to pretend to delegate. Delegation is not only a powerful tool, it is the only way to maximise and truly incentive your most precious asset – the people who work for you.
Real delegation can help make you rich. But only if you work at it.