Mоѕt реорlе I know аrе nоt hарру with thеіr wеаlth.
They wоrk very hаrd, thеу ѕаvе, thеу rеаd books, thеу trу thіѕ оr that, and fоr ѕоmе rеаѕоn thеу аrе stuck.
Martin D.Fridson, the author of “How To Be A Billionaire: Proven Strategies From The Titans Of Wealth” suggests that there be 2 main reasons stopping people from acquiring great wealth.
The following article consists of my notes after having read his book.
So, the two impediments to wealth are called “leverers”
When you enter a market, you are going to have people or businesses with competing motives.
Regardless whether you are a freelancer, a fortune 500 CEO or a small business owner, competition is there to keep you down.
This is especially true for larger corporations, which not only have to deal with their competition but with anti-trust laws too.
Group thinkers have not cracked the Forbes 400 in significant numbers for a single reason:
Thinking just like everyone else is decidedly not the way to overcome the leveling effects of competition.
Any tool, action used by the society or the society’s institutional instruments that keeps you from acquiring wealth belongs in this category.
From government policies to strict taxes to the opinion of your peers, social conventions are engineered to be roadblocks in your way to wealth.
If you want to become wealthy, you might find the tool of “inversion” handy.
Ask yourself: “what choices should I make so I will not become wealthy?
For instance, the following are choices you make that are bound to stop you from acquiring massive wealth:
1. Being a salary earner
In this article I analyzed how any average wager can become a multi-millionaire. I pointed out that you can work at the right job and get rich out of it.
However, if your aspirations are to make it to the Forbes list, it’s unlikely to happen if you forever remain a salary earner.
Forever is the key word here. The right job can help you get far ahead in life, but if you want to become rich you can’t stay at a job forever.
This is proved by Forbes in its list of the wealthiest people in the world. None of the members of the 400 most wealthiest people in the world belong to the salary earning categories.This means that for you to become a wealthy person, it has to be without a salary taking job.
2. Getting wealthy out of stocks
Investing in the stock market as a sole strategy of acquiring wealth is not really smart.
For instance, an $100,000 investment in the stock market will only yield $182 million after 50 years of continually beating the market and you getting 15% returns.
You do not even touch the half billion rank, and perhaps you might be dead before you can enjoy your 182 millions. And that’s the best case scenario of consistently outperforming the market.
Warren Buffet did not become rich by passively investing in the stock market, but by using insurance companies with preferable tax and financial advantages as vehicles for other acquisitions.
What is more he was not involved much into the day to day operations of these companies, but had instead found motivated managers who shared the same drive he did.
Lastly, he considered character and drive much more important than IQ.
3. Seeking advice from non reputable sources
You know, like Uncle Kenny who barely makes $40,000 a year by his 9-5 job yet is an expert in the stock market, retirement planning, accounting etc etc.
Uncle Kenny knows about everything, yet he makes just $40,000 a year because “money doesn’t buy happiness kiddo”.
So, now that you know what does not work, here is what works:
How To Be A Billionaire Rule #1: You become wealthy by creating a money making medium for others to use, not by being a part of the medium.
For example: own the investment firm instead of only passive investing.
I know, easier said than done, however this will put your mindset into the right direction.
Oh, by the way, what’s your opinion on Gary Kildall?
“ewww who the heck is Gary Kildall?”
Oh you know the guy who revolutionized personal computers by inventing the foundation of the Windows’s operating system.
That guy who almost nobody knows, in contrast to Bill Gates who is rich and famous.
Smart Billy bought CP/M from Unknown Gary and used it as the foundation to build DOS.
Which leads me to the 2nd rule.
How To Be A Billionaire Rule #2: You don’t need an original idea to become wealthy. You need to capitalize and improve upon someone else’s.
And don’t feel bad about it because there are not really many original ideas out there. Most things you see, buy and used are copies of someone else’s ideas.
If your idea is truly original, you will have to shove it down to people’s throats to persuade them using it.
Here is a rule of thumb:
See a gap in the market and then fill it, perhaps with an idea or concept originating from another country.
— Damian Pros (@dareandconquer) January 27, 2017
All you need is to find something that does work elsewhere, and bring it where you are, perhaps with a new twist.
Or find something that’s not working properly, improve it and start selling it. The result might be:
How To Be A Billionaire Rule #3: Take monumental risks while keeping the back door open
HL Hunt entered into the oil business by buying the rights of an acre to drill for oil and reselling the rights to someone else.
He could have sold his farming plantations, but he didn’t in order to keep the back door open.
He eventually became a billionaire from the oil venture which he started with $50 he borrowed.
Richard Branson adopted a similar “back door open” policy
When he started his Virgin Airlines, he struck a deal on selling the Boeing 747 back to the manufacturer at almost the same price if Virgin Air failed.
Thus, there was actually no risk involved in his investment, which comes opposite to the notion that entrepreneurs get rich just by taking massive risks.
Most successful entrepreneurs take massive risks but make sure to keep the back door open.
How To Be A Billionaire Rule #4: You don’t have to know what you want to become
Kirk Kerkorian had no idea what he wanted to become when he was a teen.
He initially tried to be a boxer and made it all the way to amateur championships. Trainers dissuaded him from turning professional though.
His business plan for becoming a billionaire?
Fixing broken cars and re-selling them for a small profit.
Later on, he learnt how to fly airplanes and became a pilot at the WWII.
His pilot days earned him a monthly salary of $1000 (equivalent to $10000 in today’s dollars). He saved 12k and with a 5k investment from his sister started a new venture, modeled after his earlier one of fixing and re-selling broken cars.
He started buying and selling surplus military planes.
Planes that cost him 7-10k eventually lead to as much as 60k worth of sales!
(That was before he had to pay for his flying lessons by milking cows and shoveling manure at his instructors ranch)
How To Be A Billionaire Rule #5: Everything is a negotiation, so learn how to negotiate, sell and close the deal
This is funny, but there was a billionaire whose name was Carl Icahn.
Carl used to believe that everything is a negotiation.
He used to say that “everything is for sale apart from your children and possibly your wife”
Learning sales is perhaps one of the most valuable skills you could ever learn.
How To Be A Billionaire Rule #6: Do business in a new way & keep the overhead low are the keys to wealth
Ross Perot’s EDS (Electronic Data Systems) emerged in the 1980s, by offering complex computer services at a time when nobody did that.
Perot’s strategy involved keeping the overhead as low as possible.
In fact, EDS offered computer services without even having bought their own computers!
They used rented equipment and had no offices whatsoever. How cool is that?
People often believe they need stacks of capital to start a business. Not always true.
Cut down unnecessary operational costs (whether that’s offices or employees), and use “razzle-dazzle” to attract attention of paying customers.
When Lawrence Tisch bought Laurel In The Pines, a winter resort at a very low price, everybody else was buying “hot” summer resorts in Florida.
He renovated the property and added luxuries for that time such as an indoor swimming pool and a ice skate rink.
(This is “razzle-dazzle”)
Then he focused on gaining attention by bringing big name entertainers and organizing spectacles such as a a Finlandian reindeer pulling a sleigh…or playing ice skate basketball on the skate rink.
Richard Branson followed a similar“razzle-dazzle” approach to launch Virgin Air and many others of his brands.
Due to lack of funds, Branson did lots of innovative stunts that earned him millions in free publicity.
How To Be A Billionaire Rule #7: Customer Experience + Better Prices
When Branson launched Virgin Air, everybody thought he would ultimately fail.
Yet, he proved everyone wrong by offering superior customer service and much better prices than his competitors.
Branson essentially captured a large market share that way by keeping the prices low in the short term to prevail over the long run.
How To Be A Billionaire Rule #8: Building an effective business comes down to good management
For instance, Sam Walton, the billionaire founder of Walmart, used to call his employees “associates” and take their every one of their recommendations seriously, even if it came from the lowest ranking employees.
Strategies for building an effective business are:
Know that the mere possession of wealth rarely replaces the thrill of the pursuit.
Most billionaires desire to get rich occurred after periods of family financial reversal. Thus a desire for financial security propelled them to wealth.
As I noted when I was interviewed on The Huffington Post adversity can be a powerful weapon to have in your arsenal.
If you are facing difficulties in life, embrace them. Difficulties and pain are what turns rocks into diamonds.
Until Next Time,
Keep Daring And Conquering,