My recommendation: 11/10
Summary of notes and ideas
And they see a niche—as yet imperfectly filled. They have “an idea. Yet they hesitate. They fear losing what they have already achieved more than they desire to enrich themselves.
But is fear really the father of cowardice? Let’s leave that to the philosophers. In business, in the accumulation of wealth, it is an impediment, for sure. But then, so is recklessness. No, I believe that it is the fear of failure which looms largest here.
No matter how much faculty of idle seeing a man has, the step from knowing to doing is rarely taken.
I ask you to consider carefully the short list below. It is by no means comprehensive, nor will it be the last list in this book, but should you find yourself unable to measure up to even one of these initial demands (and I mean just one), then my suggestion is that you close this book and give it to a friend.• 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 neighbors think, you will never get rich.• If you cannot bear the thought of causing worry to your family, spouse or lover while you plow 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.
If you cannot face up to your fear of failure, you will never be rich.
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.
After a lifetime of making money and observing better men and women than I fall by the wayside, I am convinced that fear of failing in the eyes of the world is the single biggest impediment to amassing wealth. Trust me on this.
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 desks without having to pay them too much. While lives may depend on it in a few professions, like soldiering or firefighting, 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.
Which leads us to a note of caution. Those who can never be rich may not want you to become rich. That’s an ugly thing to say, but unless you realize and accept that you cannot be “one of the boys,” that your bosses and you are not “in this thing together,” that only those who refuse to be conned by the idea of “team spirit” in the workplace can succeed—unless you come to fully comprehend and understand all this, then you will only make other people rich. You will receive their heartfelt thanks and maybe a gold watch when you retire. But you will not get the money!
This is one of the factors in stock-market bubbles—all growth is good (as far as investors are concerned), while all decline is fatal. I happen to believe that such sentiments are flawed. But what I believe is immaterial. It’s what the providers of capital believe that counts, no matter how illogical.
It is the instinct to seize an opportunity when it presents itself that perhaps sets apart the self-made filthy rich from the comfortably poor, the willingness to ignore conventional wisdom and risk everything on what others consider to be folly. One could even argue that it hardly mattered that young Henry Ford was drawn to automobiles, or that Ruben Rausing chose packaging, or that Bill Gates gravitated to software to create those vast fortunes. I would be open to persuasion that had their roles, and the century in which they lived, been reversed, they would have done just as well and raised themselves every inch as high from the common herd financially
It is the instinct to seize an opportunity when it presents itself that perhaps sets apart the self-made filthy rich from the comfortably poor, the willingness to ignore conventional wisdom and risk everything on what others consider to be folly. One could even argue that it hardly mattered that young Henry Ford was drawn to automobiles, or that Ruben Rausing chose packaging, or that Bill Gates gravitated to software to create those vast fortunes. I would be open to persuasion that had their roles, and the century in which they lived, been reversed, they would have done just as well and raised themselves every inch as high from the common herd financially. Their ability to take chances and to subsequently exploit initial success counted more than their inclination toward a particular industry. Their execution of a strategy trumped the subject of their obsession
To put it less fancifully, they were lucky in the Search and skillful in their follow-up. Boldness helped. Conquering fear of failure helped. Persistence helped. But, without some luck, no one can get anywhere in the search to discover the exact arena in which to do battle, the arena that suits an individual’s aptitudes and inclinations. Boldness? The most successful generals or admirals in military history shared one characteristic: they were willing to ignore orders and risk utter disgrace in order to exploit rapidly changing circumstances. When the chance came, they recognized an opportunity, weighed the odds swiftly and placed their lives and careers on the line to snatch a victory. (Not to mention the lives and careers of those around them.)
Fortune favors 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.
Fortune favors 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
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.
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.
Ideas are certainly of immense importance, but I have seen so many people attempting to create a start-up company become obsessed with proving that their idea is “right” rather than obsessed with making money. And I have watched them wasting years doing it
If a man write a better book, preach a better sermon, or make a better mouse-trap than his neighbor, tho’ he build his house in the woods, the world will make a beaten path to his door. “There’s the power of a great idea, Felix,” he said with a smile. “Not so,” I countered. The operative verb is “make.” It is not “think up,” or “dream up.” It is “make.” The idea would be worthless, no one would beat a path to any door, unless they heard that the mouse-trap had been made
Ideas don’t make you rich. The correct execution of ideas does.
If you cannot bear the thought of prostrating yourself to obtain the seed corn, then you will almost certainly never own the farm. “To get what you need / You toady to greed.
I went back to the bank. They were delighted that business was booming. They were even more delighted that I was monitoring my cash flow so adroitly. My friend did the same. Eventually, both banks issued each of our companies an overdraft facility. That facility permitted me to grow at a much faster rate than I could have done otherwise, and eventually produced the profits necessary to grow further and to pay off the overdraft
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 cell 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 groveling. Groveling 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 be worse. You could be working for them.
When I had my first real financial success in 1974 publishing Kung-Fu Monthly, a one-shot poster-magazine about the martial-artist film star Bruce Lee, I had already begun thinking big.
Any company managed and run by plodders and jobsworths will be lucky to survive, let alone prosper. Talent is the key to sustained growth, and growth is the key to early wealth. You have to identify and hire talent. You can’t skimp on it.
Right. You need the talent to identify, hire and nurture others with talent. “There is no substitute for talent. Industry and all the virtues are of no avail,” wrote the novelist Aldous Huxley. I have never been much of a fan of his as far as literature is concerned, but in this Huxley is correct. Any company managed and run by plodders and jobsworths will be lucky to survive, let alone prosper. Talent is the key to sustained growth, and growth is the key to early wealth. You have to identify and hire talent. You can’t skimp on it.
They see a rich person with their finger pointing at the sky and, like the saps they are, they stare at the finger. Then they write about the finger and call their books: “Become a Millionaire by Pointing Your Finger at the Sky,” not realizing that their subject was merely attempting to draw their attention to a glorious sunset. No matter; such authors will stubbornly persist in their error. As do most of their readers.
Persistence” 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
This is called the “Barbarians at the Gate” principle. 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.
that we can carry on making money in the way we have grown comfortable with. But things do not stay the same. Either you learn to go with the flow and change as rapidly as you are able, or you will be left stranded, like the last dinosaur, by the last warm lake, on the last continent the ice age has yet to
Listening is the most powerful weapon after self-belief and persistence you can bring into play as an entrepreneur. And yet I’m familiar with numerous senior executives running large companies who might spend two or three weeks in between listening to a “stranger”—or a “minion.”
Ideas, by the way, cannot be “owned” by anyone. You cannot trademark or patent or copyright any idea. You can only protect the execution of the idea and trademark the name. This is an important thing to know in any business and is often misunderstood by people who come to you with an idea.
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 favorite 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.
Albert is so close to the cross currents of the market that his antennae lead him astray. When he hits yet another bump on the road, or has a head-on collision, he attempts to change his luck by changing direction. It’s not that he lacks stamina. Albert has tons of energy and stamina. But he doesn’t, as Churchill put it, “keep going.” Instead, he keeps looking for pastures new—the golden sunlit uplands, the philosopher Leibniz’s “best of all possible worlds.” Perhaps there, in a new place, he will find his fortune and change his luck?
Then again, Albert is more intelligent than I am. He had a grand education and read all the right books at university. He is not a self-taught scholar, as I am. But there is a downside to all this intelligence and imagination. He thinks a little too much before he acts. He weighs the options too carefully. He is capable of imagining defeat.
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. Then again, Albert is more intelligent than I am. He had a grand education and read all the right books at university. He is not a self-taught scholar, as I am. But there is a downside to all this intelligence and imagination. He thinks a little too much before he acts. He weighs the options too carefully. He is capable of imagining defeat.
We shall come to the importance of delegation later in this book (See Chapter 13: The Joys of Delegation), but Albert’s reluctance to permit young managers to make their own mistakes has cost him dearly over the years. Not just in the time wasted, but in management turnover. While he is fair, and sometimes more than fair, with his staff, they don’t love him. They don’t love him because they do not get the chance to grow, and 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.
Fortune favors the brave,” says the old proverb. And that’s right enough. But it seems to especially scorn anyone who wants money too badly. And it positively appears to despise men or women who fear to lose what fortune they already have. As William Shakespeare put it in Othello: Poor and content is rich, and rich enough,
“Fortune favors the brave,” says the old proverb. And that’s right enough. But it seems to especially scorn anyone who wants money too badly. And it positively appears to despise men or women who fear to lose what fortune they already have. As William Shakespeare put it in Othello: Poor and content is rich, and rich enough, But riches fineless1 is as poor as winter To him that ever fears he shall be poor.
So 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 apologize 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. (We’ll get to that bit later.)• Don’t call your son “Albert.” (Just joking!)
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 Negotiating: • Remember that few of us are any good at detailed negotiations. That includes your opponent, by the way.• If you are 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
• 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 along that route 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 is 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 outmaneuvered, 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 bad one.• If you suspect you perform badly on such occasions, do not attend, even if you are the 100 percent 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 trust your nominee completely, 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 light and make a battle plan.• Whatever you agree to during a negotiation, fulfill 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.”
To become rich you must be an owner. And you must try to own it all. You must strive with every fiber of your being, while recognizing the idiocy of your behavior, to own and retain control of as near to 100 percent 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.”
Just how nasty can this all get? Say you have a brother and you want to start a business together. You should begin with the proposition that you will own the business and he will work for it. Fight for this tenaciously. Begin by assuming it
So if this is the case, why am I so insistent upon outright ownership, or, at the very least, as much as you can wangle? It’s simple. I could always walk away from the partnership with Peter and Bob if we fell out. I had my own company doing my own thing under my own control three thousand miles away
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
If you own a company and that company’s purpose is to make you wealthy, you will be content, delighted even, for any amount of glory to go to anyone who works there, providing you get the money. It is in your best interests to delegate whenever it makes sense in such circumstances
How do you learn how to delegate wisely? Trial and error, I would say. I have been constantly surprised all my business life at who faces up to challenges best. It is very often not those who talk the best talk.
My vetoes are carefully explained and very well known to all of my executives, who agree to abide by them before they join the board. It’s a short list, but has worked well for many years. Without my express permission:1. They may not vote anyone on or off the board.2. They may not physically move the headquarters of the company.3. They may not dispose of, or shut down, any substantial asset.4. They may not purchase, or launch, any substantial new product or business.5. They may not award themselves bonuses or salary increases.