Notes: How to Get Rich

If it flies, floats, or fornicates, always rent it instead of buying it its cheaper

in the long run
Confidence they assume that the world was created for their sole benefit
o Being a bit of a shit, stamina, a thick skin, capacity to work hard. Luck
helps, but only if you dont seek it
o People who are utterly determined to be rich
It is a myth that people were only doing what they want to do and they
accidentally became rich. Some people are just good at hiding desire
It is also a myth that people get rich by having great ideas
o The followthrough, the EXECUTION, is way more important
o Dont wait for inspiration, just do it
It is also a myth that you cant become rich because its no longer an easy
time to get rich, theres always a way
When youre rich, you have to worry about taxes, and employ lawyers,
accountants, advisors, and estate planners, etc.
Economists and historians have so many methods of evaluating the
comparative worth of money that they dont matter anymore except to
specialists
Wealth measured by cash-in-hand or quickly reliable assets
o The comfortable poor: 50,000-200,000-500,000
o The comfortably off: 500,000-1,000,000 5 million
o The comfortably wealthy: 5 million 15 million 35 million
o The lesser rich: 35 million 50 million 10 million
o The comfortably rich & rich: over 100 million
o On and on
The reduction of any asset to cash often leads to the imposition of capital
gains tax
o If you wanted to find that kind of money, I would have to borrow it,
then sell assets to repay the debt
Total asset value and or true net worth compared to quickly realizable net
worth are very different in number because of capital gains tax and other
levies, and also planned inheritance schemes and donations to trusts and
charities
The richer you are, the more financial advisors you employ, the less likelihood
that you can discover what you are worth
Wealth measured by total assets
o The comfortable poor: 1 mil 2 mil
o The comfortably off: 2 mil 5 mil
o The comfortably wealth: 5 mil 15 mil
o The lesser rich: 15 mil 40 mil
o The comfortably rich: 40 mil 75 mil
o The rich: 75mil 100mil
o The seriously rich: 100mil 200 mil
o The truly rich: 200mil 400mill
o The filthy rich: 400mil 999 mil

o The super rich: over 999 mil

How rich do you want to be? Correct answer is, rich enough to be happy
Riches do not confer happiness
Availability on Request/Lifetime Spending Totals might be a valid measure of
money as asset value or cash in the bank

Reasons to not get rich

Pole Positions
o People think the most difficult part of getting rich is how to get started
Young people say they dont have enough experience and
capital
Mid-way people say its the loss of what they have already
achieved and the lack of capital
Professionals say they dont want to risk the security of their
family and also the lack of capital
o Young people have the most opportunity to become rich
They have nothing, nothing to lose
Dont listen to conventional wisdom, it often daunts initiative
and offer far too many convenient reasons for inaction
You have stamina!
Conventional wisdom is often right, but when it is wrong, it can
offer extraordinary opps for those too stubborn or inexperienced
to pay attention to well-meaning naysayers
You are not an expert, so more willing to learn
Start early and take lots of risk, listen hard and choose the right
mountain
Slightly better and on the way up
o Enough experience to know how the company works, and they see an
unfilled niche and have an idea to fill it
o But they fear losing what they have already gained
o Go for it, time is running out

A Million to One

3 kinds of lies: lies, damn lies, and statistics

Who can become rich and who cant
o Health
o Mental handicap, growing senility, and the physical decline of old age
If you can afford it, always get someone else to do the grunt work
There are few people who would dedicate themselves to getting rich, many
people let others reap the financial benfits of their work
Making money is a drug, not the money itself, but the making of it
Real winners are people who know their limits and respect them
If the odds of getting rich put you off, youre better off poor

Getting Started
Harnessing the Fear of Failure

Once begun, the jobs half done

Creating a COMMITTEE for a venture is one of the worst ideas ever
o No one can blame one person
o collective responsibility/covering your back side
o A committee is a group of the unwilling, chosen from the unfit to do the
unnecessary
o A robust debate is good, but the pretense that any such debate can
resolve the risks involved in advance
o This is why committees are discouraged in battlefield. Prompt orders,
whether right or wrong, are healthier than endless debate and
prevarication, and so is lack of action
o Fear of failure and blame haunts all of us. Natural desire to avoid
letting ourselves or others down. Exposure of the failure to the outside
world
Embarassment of failure
o The board weighs their own fear while appearing to weigh the fears of
others
o Failing publicly, becoming a laughing stock
o You have to build a mental armor to be rich, not so thick as to blind you
to well-constructed criticism and advice or 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, and others
envy that comes with your success
You stand little chance of getting rich if
o If you are unwilling to fail publicly and catastrophically
o If you care what the neighbors think
o If you cant bear the thought of causing worry to your loved ones
o If you have artistic inclinations and fears that the search for wealth will
coarsen such talents or degrade them
o If you are not prepared to work long hours
o If you cant convince yourself that you arent good enough to be rich
o If you cant treat your quest to get rich as a game
o If you cannot face up to your fear of failure
Getting rich means sacrifices, and its not always you whos doing the
sacrificing
Fear of failure is a nightmare. A mare can be tamed, bridled, saddled,
harnessed, and eventually ridden

Waiting for Godot

We get to choose what we want to do for a living

None of the career choice stuff matters if you want to get rich
If you feel absolutely compelled to move towards a particular vocation, thats
exactly where you should head, but earning a living by slowly swarming up
the greasy pole is not is rarely the way to do it if you want to get rich
Working too long for other people can blunt desire to take risks

The ability to live with and embrace risk is what sets apart the financial
winners and losers
If you wanna be rich, youre not looking for a career, except as a launch pad
or a chance to infiltrate and understand a particular industry
o A job is only for putting food on the table
o It also provides training in man-management and negotiation skills
o It also supplies inside market info
o If you want to get rich, you are NOT a part of a team, although you
may have to pretend you are. You may have to adopt the idea of
teamwork for the time being to help yourself understand how
individuals, departments, companies, or industries function
o Working is a reconnaissance expedition: its a means and not an end in
itself
Team spirit is for losers, financially speaking. Its the methodology employers
use to shackle useful employees to their desk without having to pay them too
much
Those who can never be rich may not want you to become rich
Friends and family may subconsciously not want you to succeed or only want
limited success
Forget glamorous industries, unglamorous industries can also make lots of
money
o You might want to be in it since if you go with the tide, you will benefit
from it like everyone else
o On the other side, those who want to be the best in a glamorous
industry will find it difficult, because of supply and demand. New or
rapidly growing industries, whether glamorous or not, provide more
opportunities. 3 reasons are availability of risk capital, ignorance and
the power of a rising tide
Investors are drawn to emerging industries in the hope of making a fast buck
The combo of ignorance and misconception that surrounds new technology
works in your favor
As a general rule of thumb, growing industries with relatively low start up
costs offer more opportunities, but this is not an iron clad rule
More important than any particular industry are the sectors within each
industry. A sizable fish in a growing sector is better than a fish of the same
size in a diminishing or static sector
All growth is good and all decline is fatal (at least to investors). Even if its
illogical, what the provider of capital believes is important
Whoever takes the most risk gets the biggest rewards, not the one that
comes up with an idea or builds the empire. Money goes to those who
funded the enterprise and own the most stock
Whoever controls a business can force its sale, implement a merger, fire you,
etc.
In both private AND public companies, not all shares are equal, in terms of
voting power or financial value
Few inventors or creative types make good managers or businessmen

3 factors involved in the search: inclination, aptitude, and fate

o What are you inclined to do, stuff you enjoy
o But dont fall into the error of making a fetish of your passion, youre
trying to get rich
o Trial & error is the only way to judge your own aptitudes. We often
create an image of ourselves in our childhood and youth
o Knowing your weaknesses can protect you from spending your life
making other people rich
o Trial & error, dedication, and willingness to throw out images of
ourselves
Luck plays a big role, but you can put yourself in fates way then grab the
opportunity
Luck is preparation multiplied by opportunity
Those who are prepared to analyze the risk, to bear the humiliation, and to
act in deadly earnest are the lucky ones

The Fallacy of the Great Idea

You cant patent an idea, you can only patent your method for implementing
an idea
Having a great idea is simply not enough. Its how the idea is implemented
that matters
You can also emulate others ideas. The original is NOT the greatest
When emulating others ideas, it can be effective if you pull it off with
confidence
Instead of proving that the idea is right, concentrate on making money
Dont think that only your ideas are right
You control and develop ideas or the ideas come to dominate your thoughts
If you never have a single good idea in your life but become skilled in
executing those of others, you can succeed

Obtaining Capital

6 ways of obtaining capital

o You can be given or inherit it - unlikely
o You can steal it you have to worry about getting caught
o You can win it odds are bad
o You can marry it has to deal with relatives
o You can earn it long term game plan
o You can borrow it
Avoid sharks like the plague
o Dont juggle a bunch of credit cards cash limits for a few months to
obtain capital. Your credit rating is extremely precious and the interest
rates on credit cards are too high for businesses to sustain, and a
history of bankruptcy will hinder you
The only people who get rich from hedge funds are the manager of the hedge
fund
If theres a lot of capital, then why is it so difficult to locate it?

The amounts of money you probably have in mind is too small

Many US providers of capital of any stripe now only wish to play ball in
return for a piece of the action as well as guaranteed return of the
capital and interest if no action materializes!
o Venture capital companies are one way to raise capital, but the price
they demand is almost always that you hand over a huge chunk of
equity. They also often insist on a date by which your new venture
must be sold, either back to yourself or to others
This is because their own funds usually come from wealthy
individuals who demand a high return within a limited time
frame. They often have to go from advisory to an operational
role. They will do anything to protect and maximize short-term
returns from your business
They try to flip every deal as quickly as possible sell
They dont care who the venture is sold to (you, or an outside
party), but a return of the investment is necessary
Venture capital money is not the best idea unless you want a
quickish return and a small piece of the action
They dont care about long-term prospects or shareholder value,
they only care about growth within that year, since theyll sell
the enterprise in 3 to 4 years
Usually, you will start out underfunded, on your own or with the
fishes, then go to the dolphins for the injection of capital you
believe will propel you to the next level
If you get a venture capitalist to back you, seek the finest legal
advice for the ensuing negotiations. Just one sentence or phrase
can make all the difference in the world to the outcome a few
years down the road
Fishes come in all different shapes and sizes: friends, colleagues,
acquaintances, relatives, small investors, friendly bank managers of the old
school, professional advisors, ex-employers, suppliers, and vendors
Persistence is a powerful tool in the hands of a hungry young hustler on the
make
Fierce loyalty to old friends is good
Those who wish to start a company and get rich cant get 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
Obtaining capital is the worst part of getting rich, but everyone who wants to
get rich has to do it
o
o

Handstands on the Rim of Hell

Dont give in

The 5 Most Common Start-up Errors

Mistaking desire for compulsion

o Flawed assumptions cause all errors

Wishing for or desiring something is futile without an inner compulsion

to achieve it
o Continuing to wish and never delivering dents your confidence
o Great wealth very rarely breeds contentment. It burdens your personal
relationships
Over-optimism concerning cash flow
o Once you lose control of a business, no one is likely to give it to you
again
o All ventures require positive cash flow to succeed
o Management of cash is very very important
o Cash flow is something any entrepreneur must fully comprehend from
the get-go
o Balance sheets are a matter for accountants, banks, and auditors, but
cash flow is the heartbeat of your company
o If cash flow is good, even if the business is poorly run, theres always a
decent chance of turning its fortunes around. If its weak, it must shut
down or be sold eventually and its assets disposed of to satisfy
creditors
o Cash flow is often the reason for business failure, because either the
business is not a viable one or it has expanded beyond its capacity to
supports its rate of expansion
o Undercapitalisation is a frequent culprit. So is the ostrich syndrome
where inexperienced managers focus only on new business coming in
the door while they neglect mundane tasks like meeting payroll, rent,
and tax demands. They also often refuse to listen to whoever is in
charge of cash flow (customers refusing to pay, bad debt creeps to
unacceptable levels, there are no customers left except for the new
ones, etc.)
o Banks are more impressed with your ability to CONTROL cash flow than
the companys growth
o Only factor in debt at the absolute extremity. Be careful in your deal to
ensure you can release your company from the factoring contract
without forking out a massive penalty
o When you do business with a company that factors debt, you make
over your debt to them and they charge a fee and percentage of the
debt
o Dont delegate the task of monitoring and forecasting cash flow, its
your task
You can improve cash flow by
o Keep payroll down to an absolute minimum. Overhead walks on 2 legs
o Never sign long term rent agreements or take upmarket office space
o Never indulge in fancy office or reception furniture, unless your
particular business demands that you make such an impression on
your clients
o Never buy a business meal if the other side offers to. You can show off
later
o Pay yourself just enough to eat
o

Do not be shy to call customers who owe you money personally. It

works
o In a city, walk everywhere you can. Its healthy and sets a good
example
o Check all staff travel and entertainment claims with an eagle eye
o If youre going to be late paying, call the vendors boss. Give a date.
Stick to it
o Always meet payroll, even at the expense of starving yourself that
week
o Issuing staff credit cards, company mobile phones or cars is the road to
ruin
o Leaving lights, computers, printers, and copiers on overnight is stupid
o A vase of beautiful flowers every week creates a better impression
than fancy expensive furniture
o Get used to groveling. Its effective in a start-ups cash flow
o They want your business. Play one supplier off another. Ruthlessly
o Only entering a factoring deal in extremity. Exit it fast
o Keep your chin up. It could be worse. YOU could be working for THEM
o You must plan for the worst and hope for the best in all matters
relating to cash flow in and out of your start-up company
o Regular, even obsessive monitoring is the key
Reinforcing failure
o If something fails, stop doing it and start something else. But WHEN
do you decide that you have a failure on your hands? Too late is the
answer. Always too late
o Many failures are merely a matter of timing. What used to fail now
succeeds. What once was a sure thing now no longer works
o It is the POSSIBILITY, the chance that we are onto a slow-burn WINNER,
rather than being stuck with an out-and-out LOSER that persuades so
many of us to hang in there with a product in financial trouble
Thinking small and acting big are bad
o Success is never permanent, failure is never fatal. The only thing is to
never give up
o Think big and act small instead
o Act small, remain in touch, remain flexible, constantly examine how
your company could do better, keep a sense of proportion and humility
o Dont throw your weight around and play the great I Am
o Acting small in the early days of your business sets an example around
you
o Acting big leads to complacency, and complacency is the reason many
many successful start-ups fail
o Every day you have to hit the ground running, putting in more hours
than your most dedicated member of staff. You have to be willing to
listen and learn to emulate success
Skimping on Talent
o You need the talent to identify, hire, and nurture others with talent
o

o
o

o
o

o
o

Talented people want to a good salary of course, but surprisingly often

they are more attracted to new opportunities and challenges
When you come across talent, it is sometimes worth allowing them to
create the structure in which they choose to labor. 9/10, by inviting
them to take responsibility and control for a new venture, youll
motivate them to do great things
Talent seeks the chance to prove itself and the opportunity to excel
You must nurture talent, reward it properly and protect it from being
poached. If necessary, dream up a new project, or get the talent to
dream it up
By the time the talent is in their forties or fifties, she becomes very
expensive. Young talent can be found and be underpaid for a short
while, then at the market rate, then based on past reputation alone.
Thats when you part company
Most talent does not survive through mid-40s
Anybody wishing to become rich has to either have talent or use the
talent of others. Talent is indispensable, although it is replaceable

Getting Rich
Cardinal Virtues
Persistence

People can only be improved by action

Stubbornness is not persistence. Stubbornness implies you intend to persist
despite plentiful evidence that you shouldnt. A stubborn person fears to be
shown she is wrong
A stubborn person is convinced that she has been right all along
Dont take the phrase Never give in too literally, but never give in EASILY
If you can, attempt one step further along the road than appears sensible
enough before giving in
Trying again doesnt mean doing something you failed over again
Quitting is not dishonorable. Quitting when you believe you can still succeed
is.

Self-belief

Individuals with ingrained self-belief (and a little bit of arrogance)

Doubts and fears should be confronted

Trust your instincts

You have to become a predator, wait patiently, by remaining alert and sniffing
the air
Trust your own judgments when it calls and leave the pieces for the
managers of your business to pick up

Make more baskets: Diversify!

Eggs will sometimes break. No matter how good your idea, how fierce your
resolve and how lucky you are, you must prepare for the eventuality
With any business or idea, you need focused, tunnel vision to get it on the
road and to begin making some money. You can franchise it, take it to other
places, but its still the same basket with a lot of eggs
Once a brand is established, any attempt to mess with the name reminds the
world just how weird the name is. Not good marketing
Strangling your own baby to grow is more common than you might think
Either you learn to change with the flow or youll be left stranded
How many baskets should you go for? As many as is sensible
In the beginning, it would be best to keep them related to your core business
Of course not all baskets are worth investing in
But during your start-up phase, you concentrate on one basket as if your life
depends on it. But once you have something thats working and making
money
Having lots of baskets gives you the confidence to concentrate on any one
egg at any time. When one of your projects was in trouble and needed more
work, you have other eggs so you can re-engineer or fold that particular one
The other side of the matter is that you dont bring the passion and insight of
those more closely involved in the project. But it lets you make hard
decisions more easily

Listen and Learn

You want to be where people can reach you on certain days of the week,
because you want to hear what others have to say
When you stop listening, you stop learning
Talking to people you dont know, or who work in some obscure corner of your
industry is just as necessary as talking to your own executives and senior
managers
If you have experience, a little investment cash and will make the time, then
the world will bring you an amazing collection of visionaries, con artists,
madmen and budding entrepreneurs. Most of your time will be wasted, but
whats not wasted will make you much richer
Courtesy is not a cardinal virtue in getting rich, but it helps. It works. It
creates a certain image of someone you might like to do business with and
lends a certain gravitas
Americans worship courtesy almost as much as they worship money
But the courtesy for listening is not an excuse for inaction
Business relies on often hard decisions being made in as short a time as
makes sense
Keep them short until your gut tells you that you have stumbled upon a
winner
Set the meeting for 20 minutes. Its better to leave no doubt in your visitors
mind if youre not interested in their project or idea. It might be kinder to say
Ill get back to you, that will just end up wasting more of your time

Piling up meeting upon meeting actually helps. Your visitor sees other people
waiting to see you and will procrastinate less
If you DO need time to mull it over, tell them that itll be YOU getting back to
THEM. People with ideas are desperate and will call and call and call
If someone comes to see you w/ an idea that youre already working on or
considering, stop them and tell them the situation
Ideas cant be owned by anyone. You can only protect the execution of an
idea and trademark the name
If someone who works for the company comes up with an idea and it
becomes a success, the company owns the idea, or you if youre the owner
o The only exception is if the person and the company comes to an
agreement before hand or the person develops the idea outside of the
company in their own time
o You dont owe the employee a single cent for bringing her idea forward
When someone outside of the company comes to you w/ an idea
o How far has she gone towards executing the idea
o If she comes to you with a prototype, you would have to enter into a
legal agreement with the inventor
o When who owns what is in dispute, the only people who will get rich
are the lawyers. The dispute can destroy the companies involved and
the participants
If the person is someone inside your company, and youre a sensible,
worthwhile human being, you should reward her handsomely, promote her,
and thank her publicly

A Few Words About Luck

The Invincible Worm of Doubt

With luck, many people have labored in vain

The nagging feeling that some are born to win or lose, that we can propitiate
Fortune with ritual/prayer/sacrifice infects most of us
What can we do about it: Nothing
Never make your finance director the CFO or MD or president of anything
Never go on a vacation when a deal is going down
When you change accounting systems or accountants, have the numbers
checked over and over again
MDs and presidents and CEOs are paid to shoulder much of the blame when
something goes wrong
Never personally underwrite business loans for your company unless you are
absolutely forced into it. Even then, set limits in the agreements so that as
the loan figure is reduced over time, youre released from your undertakings
commensurately
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
Only truth about luck is that it changes

You need to keep going

Partnering and symbiotic evolution are no way to get rich. They might lead to
a better world or make you a happier person or a better manager
Flight not fight is a sign of a prey animal
To become rich, you must behave as a predator. You must become a predator
Dont think too much before he acts. Dont weigh the options too carefully.
Dont imagine defeat
Very few visionaries get rich
Partnering and share options and employee profit participation should not be
taken in minute detail, especially when its long before any profit is around to
share
Dont be a perfectionist who is unwilling to accept even the second best.
Dont do everything yourself
Let young managers make their own mistakes
Even if youre fair with your staff, they wont love you, because they dont get
the chance to grow
Having too much money isnt important. Breaking your neck is important.
Getting cancer is important. Having nothing to eat is important. Too much
money is just part of the game
The chief value of money lies in the tact that one lives in a world in which it is
overestimated
Dont care what people think about you. Empty your mind during
negotiations
Stop trying to be lucky and just get on with the business of making money
If you repeat something negative enough, then you are training yourself in
the ways of negativity
Fortune scorns those that want money too badly
Laugh in the face of luck. Take what you will when youre lucky and act
swiftly. But never thank luck and forget it as soon as it moves on to
someone else
Prepare yourself for luck, but dont seek it out. Let it come to you
Make your own luck
Dont whine or ever describe yourself as unlucky
Be bold. Be brave
Stay the course. Stop looking for the green grass over the hill
Dont try to do it all yourself. Delegate and teach others to delegate
Be a hero. If being a hero isnt your style, then fake it
Just do it. Its easier to apologize then to obtain permission
Never take the quest for wealth seriously. Its just a game

The Art of Negotiating

The Balance of Weakness

If you are negotiating out of fear, you are not negotiating. You are
surrendering in all but name

Listening to the other side for mutually beneficial agreements is common

sense
Most of us are terrible negotiators
The other side is often as smart or stupid as you are
In the end, the balance of weakness almost always decides the issue
In greed vs. need, greed usually wins
Haggling can be fun, but its only a means to an end
Get used to people thinking of you as a bastard
Serious negotiating should be reserved for serious occasions. Most
negotiations are not negotiations at all but merely a fabric of everyday life.
Most of the time, its just problem solving. Same applies to mid-level salary
negotiations, most human resource issues, job-title dickering, jobperformance reviews and the price of wet fish
Serious negotiations are like falling in love

Management bargaining vs. Serious negotiations

They require very different skills

The acquisition of managers who can bring a sense of mission to even
mundane tasks, who can identify potential candidates, nurture late bloomers,
fire dullards and whiners and adapt to changing circumstances is not about
negotiating. Its about setting a true example of meritocracy in a company
where nepotism isnt a chance
All organizations are a reflection of people who start them
Managers rarely become rich. Most managers are lieutenants.
You have to keep your eyes on several balls
You may have to masquerade as a manager for a short while to become rich.
Even if youre good at it, its better to hire appropriate personnel as soon as
you can afford to
The world is full of aspiring lieutenants. Most people seek job security, job
satisfaction, and power over others far more than they seek wealth
Management efficiency does count, of course. Loyalty, fairness, a steady
disposition, and a sense of appropriate compromise counts. But they are not
attributes that you should invite into the room during a series of tough
negotiations when the big money is on the table and your future is on the
line.
Serious negotiations imply a weakness in the position of at least one of the
parties involved in the negotiations, unlike day-to-day bargaining. The first
thing to be done is to determine exactly where does weaknesses lie
Weaknesses in serious negotiations usually exist in both camps, and its
important to swiftly determine which weakness is most pressing and roost
potentially catastrophic to which party
An IMMEDIATE balance of weaknesses may well prove more decisive than any
long-term balance of strengths. This is the reason that small companies and
individuals have sometimes out-negotiated larger rivals, especially in
emerging markets and tech

Ex: A small company needs to take out a loan to make payroll. The balance
of weakness is on the companys side. Theres no way the bank will allow for
the loan. But if you say you want to take a private company and make it
public with a reasonable chances of success, then the bank will give you the
loan

The Elephant and the Flee

How much would the elephant be willing to pay to be rid of you (the flee), or
to buy you out? Especially if your small business is growing and his is not?
The elephants master: the institutional investor. An institutional investor,
often a pension or savings company, is just jargon for an entity that owns a
big chunk of stock in a publicly traded company
The elephant must show the master that hes up-to-date, savvy, and knows
whats around the corner. Otherwise, he risks his share price dropping and
being replaced by another elephant
Now youre a small company and your idea is a reality, however tiny. The
elephant is worried that his master may hear of the fleas idea and that he
might be punished for not having thought of it himself. He lumbers over to
meet you, because he fears his master more than he hate you
But remember that hes not your friend. He might not hate you, but
remember that he HAD to come
The day he comes is the time when your serious negotiating skills and a
dispassionate understanding of the balance of weaknesses in your particular
patch of jungle at that particular time can change your life overnight
The flea establishes to his own satisfaction the elephants urgent need, learns
to ignore flattery, learns that an elephant cant be your friend in negotiations,
learns that he is not a good negotiator, learns to make himself empty and
makes himself believe that he doesnt care, overcomes his lack of skill by
setting a price he wont deviate from, hardens his heart and walks away
when the price is not met, introduces a rogue element into the negotiations,
weighs greed vs. need, believes need will outweigh greed
Keep the period of non-compete clause as short as possible

A Few Tips on Negotiating

Remember that few of us are any good at negotiating, including your

opponent
If you are a poor negotiator, set a limit on what you will pay or accept on any
conditions attached. Dont deviate. Your first thought is your best thought
Most negotiations are necessary. Dont 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 dont know or havent
bothered to find out can kill you in any type of serious negotiation

The devil is in the details in serious negotiations. Get all the professional help
you can trust, but dont surrender control of the negotiations or the agenda to
such professionals. Youre the one who has to live with the consequences.
If your advisors are leading you down a path you dont approve of during your
negotiations, call a time out and tell them privately that if they continue
down that path youll get yourself some new advisors
Never fall in love with the deal. Its just a deal. There will always be more
deals and opportunities
Avoid auctions in business like the plague unless youre selling something.
Youll almost always pay more than was wise if you are the winner of an
auction process
The negotiator opposite you is not your best friend, or partner, or new
confident. You have no obligation outside of normal courtesy to satisfy his
demands. Hes the enemy
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. Let it show. But leaven emotion with courtesy, and if
possible, with wit. If youre not the witty type, then flattery and selfdeprecation are good substitutes
Listen when in engaged serious negotiation. Then listen some more. Youre
not in any hurry. 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. Youll be amazed at how often this tactic produces results
Divide and rule. It always works. Get to know the other side. There may be
slight differences in the individual approaches of their senior managers and In
their goals. Drive a wedge and keep hammering
Permit no such weakness in your own camp. Ban senior executives from
taking part in negotiations simply to avoid this trap. Better to be there in
your own, outgunned, than to have 2 or 3 of you silently squabbling
If you suspect you perform badly on such occasions, dont attend, even if you
are 100% owner. Get someone to do it after setting out your response to
every conceivable option that might arise. You have to completely trust your
nominee though
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
out to the fight and make a battle plan
Whatever you agree to during a negotiation, fulfil the bargain. Nobody will
want to do business with a weasel.
Dont sow and reap at once. Prepare business and ripen it by degrees

Ownership

Ownership of any kind is nonsensical

Appreciation for the absurdity of the chase of money helps

Why ownership isnt the important thing its the only thing

To become rich, you must be an owner. You must try to own it all, strive with
every fibre of your being, while recognizing the idiocy of your behavior, to
own and retain control of as near 100% of any company as you can.
If thats not possible, in a public company for example, prepare to be hated
by those around you who are also trying to get rich
Its worth suing for, lying for, begging for, even negotiating for
Never hand over a single share of anything you have acquired or created if
you can help it
A good salary and a company car and health plan and pension dont count.
Most share options dont count
If you take what youre given, you will probably not get rich
The best kind of fairness is the kind that makes money
Get a bigger share of the company for yourself. Then you can afford to be
reasonable

The Joys and Perils of Partnership

2 principles as far as sharing the pie goes

o Who is putting what capital into a venture
o Who is doing what work on that venture
Best part of the partnership is that you always have a brother to carry the
load
But you should still insist upon outright ownership, because you can always
walk away from the partnership if you guys fell out
A partnership is not a marriage. In a marriage, you should be willing to die
for your partner, to share everything. But in a partnership, the making of
money comes first. Friendship and affection come later
Establish yourself first, retaining as much control as you can, then seek
partners. Its a great way to spread risk
Ownership buys you the luxury of time. You never have to apologize for a
business not working out. You dont have to spend weeks trying to convince
your partner to take a certain course of action. You can concentrate on
building the business
Minority shareholders are a burden. When they disagree, it causes a long,
tortuous affair of meetings and spreadsheets and jockeying for position,
because forcing the issue would take a lot of precious time and energy. If you
want to be rich, youll be force to take on minority shareholders. Its
unavoidable. Will probably take weeks and months to come to an agreement
Mexican Shootout
o In the Articles of Association of a company, both sides agree to insert a
clause that governs serious disputes. If the dispute cant be resolved,
then 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 doesnt matter how many shares they own,
but they must have access to the sum they have indicated. The

parties go to a neutral lawyer and bring a sealed envelope with nothing

except the sum of money they think the companys worth. Highest
one gets to own the company and must pay the losing side for their
shares, based on the winners valuation
o The drawbacks are that it tends to favor the minority investor. From
the minoritys point of view, it offers the only chance she can own the
company for certain. From the majoritys point of view, it offers the
only certain chance to be rid of a troublesome pest. But the majority
shareholder has more to lose. The balance of weakness is on her court
o If I was the majority shareholder, I would never permit the shootout to
appear in the Articles of Association. If I was the minority shareholder,
I might not invest without it being there
Be very, very cautious before you take up with a partner or invest as a
minority shareholder. At least spend hours with a patient, sensible lawyer
going through the Memorandum and Articles of the new company
Contemplate the end game before taking a plunge. How can it be ended with
least damage to the business and the hearts and minds of the partners?
Unless you already own a successful business outright, then try not to enter
into a partnership of any kind if you can avoid it. Its time-consuming and
distracting

Why Going Public is Different

Theres absolutely no comparison between running & owning a private

company and running a public one
Going public is one way of becoming very rich
Handling the publics money is very difficult
For example, if youre a director of a public company and accept a call or go
to lunch with someone and mention that business was brilliant right now and
that we would be announcing that fact formally in the near future, I placed
myself in peril. You could be in prison if that person goes out and buys your
companys stock
If youre running a public company, nobody gets to know how the companys
doing until everyone gets to know
The more you divest (sell off) your shares of a public company, the richer you
become, because more people bought them and the more the shares you still
have will be worth
In a public company, growth is all that matters and being in the right
markets. Profits were not the issue
Private companies live on profit and reserves. There has to be a balance
between investment and profit-taking. Growth is not a goal in itself. You only
grow if it makes sense to grow
Public company only exists to boost its share price, and its share price is
determined by analysts. Medium or long term strategies were not
considered
It ended when they engineered the sale of MicroWareHouse back to the
private sector via a huge investment consortium.

First few years of a public enterprise are ones of gut-wrenching adjustments ,

soul-destroying workloads and barely concealed terror

The Joys of Delegation

Delegation will take us further than the inexperienced could believe, and it is
by far the most pleasant part of the business
The use of delegation allows you to bring out the best in others and to make
yourself rich in the process
If you own a company and its purpose is to make you wealthy, you will be
content for any amount of glory to go to anyone who works there, PROVIDING
YOU GET THE MONEY. Its in your best interest to delegate whenever it makes
sense in such circumstances
If you dont own the company or a part of it, then its possible youre only a
senior manager because you like the power. You like bossing people about.
In that case, you might be reluctant to delegate real power or opportunity, in
case the person you delegate to proceeds to excel
Bossy people and glory hounds are mostly interested in building a power
base so they can have yet more people to boss about. They know theyre not
going to rise higher, but they dont want you to rise either
Office politics reduce productivity and dent morale, take up a lot of time,
increase the number of sick days in a department
True delegation is an entirely different matter and can often be a joy to be
involved in
Candidate for promotion and delegation are smart, work hard and appear to
love their work, they ask intelligent questions and dont waste time gossiping
and mucking about. They listen and correct their errors and dont 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
Not everyone works to get rich, most people dont. But almost everyone
wishes to be respected.
If your company is young and rickety, meritocracy, delegation, and promotion
are the bricks and mortar that will make it stronger
Dont seek a replica of yourself to delegate to, or promote. You have
strengths and weaknesses in your own character. It makes no sense to
increase the strengths your organization already possesses and not address
the weakness
By setting an example early on with a program of carefully tailored delegation
and well-deserved promotion, youll create an atmosphere of loyalty,
efficiency, and camaraderie that feeds upon itself
Morale is important. It cant compensate for sloppy work, or for lack of
persistence or belief in yourself. It cant compensate for a lack of
determination to succeed or for ill fortune
A good morale, a pervasive feeling of us against the world with the promise
of promotion based on achievement, can move mountains

The work undertaken by your colleagues and employees is more important

than your work. Your job is merely to lead, perhaps just to point in the right
direction
Delegate and ease up on your work schedule. Dont work 16 hours a day
Everything wont work out ok if you just work an insane amount of hours
You learn to delegate wisely through trial and error
He doesnt have to go to all meetings since he is a chairman of his
companies, he does not run the company. Instead, he uses veto power to
maintain overall control
o Without his 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
Whenever someone does excellent work, he writes a handwritten note
Obsessive micromanagement scares away talent

A Piece of the Pie

Sharing and Growing the Pie

Sharing the ANNUAL pie around is good

o Incentives that help concentrate the mind and bring a sense of
competition and purpose to management
o Whats bad is incentives handed over as a kind of sop or the owner
sharing the proceeds of an asset sale unless contractually bound to do
so
o Use the annual profits of a company to grow the business, carefully
craft the bonuses for those who work for you to achieve margin, cost
and revenue targets. This is a great idea even if youre going short at
the time yourself and your sales manager is earning more than you are
that year
o But when it comes to a sale, when you cash in your asset for big bucks,
its necessary or fair to hand over substantial chunks of the big bucks
to people who didnt risk their cash or livelihoods to create the
business
Employees work for a salary, which is guaranteed. They are also awarded
pension contributions from their company and health care and other perks
Exceptions include very senior managers who turned down attractive offers
from elsewhere to stay with the company and grow it. Key employees who
made a crucial difference to the viability and growth of the particular asset
about to be sold
Any fool can cut costs anywhere at any time, but quality can collapse if
managers attempt to reach their targets by simply cutting costs

Keeping costs down is vital in any business except a government, but it

should not be the focus of senior managers. Balance between annual profit
and investment for future growth is the key
Revenues versus costs is important, but the latter shouldnt be cut to meet
management bonus targets
For whatever reason, many first-class employees are not overly motivated by
money. They want security, or respect, or the chance to learn or the
opportunity to shine
You wont get far if you attempt to financially incentivize the salt of the earth.
Praise, the ability to discern when a good job has been done and the courtesy
to say so, fairness, integrity and camaraderie should be employed instead
Dont think too long if you want to get rich

Protecting the Pie

Sooner or later someone will try to steal your pie. This wont be unfair.
A corporation may want to put you out of business by making something
similar
Competition runs capitalism
How you react to competition, how you face up to it, defines whether you can
stay rich and whether you can get rich at all
A public company has to be careful. It cant make alliances like private
companies can
Always ensure that you WANT to fight, and OUGHT to fight on a larger
competitors ground. If hes anxious to buy you, maybe you should let him
for the RIGHT PRICE
If your competitor is smaller, try to hire him or buy him or join with him. If he
wont budge, take drastic action and smash him. If that wont work, then
learn to be friends and collude against the wooly mammoths together.

21 Ways to Make More Pie

Make annual bonuses generous

Ring fence investment costs from ongoing business
o Balance between profit and growth is key. By Ring fencing all
investment money for new projects and growth in your annual
accounts, you can encourage managers to work on margin and profit
from their ongoing parts of the business while offering them the
chance to grow and take some risk
Keep Costs Down
o Prune overhead regularly. Stop only when the pips squeak
Never delegate bonus arrangements
At senior level, insist on collective responsibility for bonuses
o One cant make a senior managers WHOLE bonus rest on this edifice,
but peer pressure is a powerful force

Praise excellent work, but dont waste your praise on ho-hum praise as a sop.
Not all employees respond well to incentive bonuses or a dangled carrot.
They seek recognition, not bribery
Fire malingerers, incompetents, toads, and glory hounds mercilessly
Turn a cold eye on company perks. These can add up to huge sums
(company issued credit cards, mobile telephones, travel and entertainment,
company air travel in anything but economy)
Avoid all jollies (like flying the sales team to Florida in winter to boost
morale. You cant afford these. A day set aside in a quiet environment,
prepared for carefully, to assist sale teams improve their presentations to
clients, is sensible. As is sales training from reputable training agencies
Offer legal perks that you have paid for yourself to employees
o Use of your rolls roys or Bentleys for their weddings, permitting them
to stay at my home around the world if they have performed well, send
every child born to an employee (at least when there arent too many)
a soft toy. Perks like that are legal, because I paid for them myself
from after-tax dollars or pounds
Set an example
o If you want nice furniture in your office, pay for them yourselves. How
can you expect frugality when a junior manager working in a cubicle
comes to visit you knowing that the company paid for the accessories.
Its who paid for them that counts
Encourage senior managers to go over annual results with you one-on-one
o Youll learn more from off-the-cuff remarks and opinions expressed at
one-on-one meetings while looking over financial results than you will
in a dozen board meetings. This produces food for thought on both
sides
Back up your managers
o With delegation comes responsibility. Back up your managers in public
whenever and wherever you have to. If they dont perform, speak
seriously in private to them. If they still dont perform, fire them. But
dont undercut them or engage in meetings that undercut them.
Reprimand other managers who bad-mouths their peers. Nearly
everyones ego and self-confidence is more fragile than the outside
world believes
Search out and promote talent
o Talent comes in all shapes and sizes and is often inarticulate and shy.
It can often be found dressed in t-shirts down in the lower reaches of
your organization. Set a bounty on talent among managers. When
you find it, test it, groom it, work it until its ready to drop, load it with
more work and responsibilities, praise it, reward it.
Interview your rivals talent
o No one in a rival organization, no matter how well paid or cosseted, will
refuse to meet you a quick drink after work. No intelligence-gathering
exercise is ever wasted in business. Theres only so much pie. Talent
bakes that pie

Discourage secrecy
o The more you take middle and senior managers into your confidence,
the more they will respect you and the harder they will work for you.
Dont care about power, care about getting rich
Save a little bit of pie for supliers
o Save a little of the annual pie to wine and dine key suppliers. Or let
them wine and dine you. If you like them enough, invite them to your
home. We all remember to call often upon our major customers, but
the suppliers are also important. And they often have important
market info
Never bad-mouth rivals
o Its a sign of stupidity and weakness. Go out of your way to praise
rivals when you can. They often deserve praise and theyll learn about
your comments sooner than later
Sell early
o Real money rarely comes from horsing around running an asset-laden
business IF YOU ARE AN ENTREPRENEUR. Youre not a manager.
Whenever the chance comes to sell an asset at the top of its value, do
so. Get out while the going is good and move onto the next venture
Enjoy the business of making money
o Theres no amount of pie in the world worth being miserable for, day
after day. If you dont like what youre doing, sell up and change your
life.
Never miss the opportunity to promote your asset

The Power of Focus

Focus on Keeping your Eyes on the Ball

Go to the industry where the money is

Timing
Focus on Creating the Right Environment

You cant get rich on your own, you have to work in the right environment
When enough people share a short-lived delusions, vast sums of money can
be acquired overnight
Its almost impossible to build an individual fortune without colleagues,
confederates, and 1 or 2 professionals on board
Choosing human capital is an art form
Never choose an important employee or a key supplier alone
o Get others to interview them or talk to them as well, although the final
choice is yours
Go further than reading a persons references
o Make an appointment with a potential emplyees last company or with
a suppliers other customers
Make notes, speak little

Good suppliers respect attention to detail

o Constantly request quotes from your suppliers rivals
o Demand refunds if the supplier screws up, not based on the costs of
goods and services, but the financial consequences of the screw up
Pay employees well, bonus better
o You dont want people to apply to work for you because of the salaries
on offer, they should be driven by other desires. But if a salary isnt
commensurate with the market, potential winners wont be able to
afford to work for you
Be alert for crossovers
o Some candidates are more appropriate for another position, even if
that position is already filled. All positions in your company except for
your own are temporary
Only hire winners
o Dont hire losers and whiners
Ignore your prejudices, likes or dislikes
o Loyalty, effectivenss, honesty, integrity, and stamina are crucial.
Cleverness and cunning can be useful. Professionalism is vital
Promote from within when you can
o An external candidate looking for a senior position better be 30%
better than any internal candidate
Dont leave senior employees in any job too long
o After the 1st or 2nd year of the senior position, they enter a comfort
zone
o Consider asking them to create a new division or company for you

Focus on Doing an Outstanding Job

Ownership is half of the law. Doing an outstanding job is the other half
By having a good company, you will attract talent, which means more money
and fewer errors. It puts a premium on your assets.

Troubleshooting and End Game

An Owners Guide to Knowing When to Cut and Run

A failure in the offing represents one of the only times that minority
shareholders or minority investors become a potential boon
Many people underestimate closure costs
Spread out closure costs a span of a couple years
How can you know if something is going to fail. You cant.
Listen closely to your bean counters and accountants. Or seek one out for
advice
You must see how much time is left (burn rate).
Then make an inventory of the thing that you thought would make you
money
o Might it have uses that you havent considered?
o Ruthless analysis. Ask for business advice from ones you trust

Even if its hopeless, at least try to sell it

Facing the Music

If you cant sell it and downsizing and cutting costs wont do the trick, then
youll have to close the business. Declare bankruptcy?
If youre close to bankruptcy, be straight with their suppliers. Be honest with
them and show them youre doing the best, because you cant do more than
that
The earlier you take in the VAT and Inland Revenue people into your
confidence, the more leniently you will be treated. Dont cheat them
Do your best to see that the little people get paid
Screwing up isnt criminal or deliberate or malevolent, but covering up is
Dont take it too much to heart. Theres always a chance of comeback

Keeping it Straight

A limited liability company is a legal entity. It has rights and duties as you do
You are not your company
The company money is not for yours to use unless its paid as salary, bonus,
or as a dividend
Pay the least tax that is lawful, but pay it
If you invest and do business in USA, make sure you become a part of the
non-double taxation treaty
If you find ways of moving the money into your own pocket without reporting
the movement or using a company asset for your personal life, youre almost
certainly milking the cow in a way that is not permitted

A Recap for Idlers

A Health Warning

Your fortress (inner core, integrity, belief in the worth of others and the love
of those dear to you, your own worth, belief in yourself and your own destiny)
Idolatry of money will take down your fortress
Money is never owned. Its only in your custody for a while
Time spent acquiring wealth will mount up
When you have too much money, you will not have independence, the luxury
to choose what you wish to do for the rest of your life, or happiness
You will fear to lose it and must spend a great deal more time to defend it
Terrible cost to health, sanity, and your relationship
Rich are not happy. Pressure to share their wealth. Leads to insulation which
breeds paranoia and arrogance and loneliness and rage
The only people the self-made rich can trust are those who knew before they
got wealthy

Cut loose

Break loose from your family and home

Cut loose from naysayers and negative influences

o They fear that youre putting yourself in harms way
o The fear that if you should succeed, youll expose their own timidity
Cut loose from your previous life
Family, friends, and lovers can be distractions
Cut loose from working for other people
Your job cant define you anymore. Youre an entrepreneur

Choose the Right Mountain

The world is full of money. Some of it has your name on it. All you have to do
is collect it
The mountain that is making a lot of other people rich would be a good bet
Look for new mines where gold is being mined or will be mined soon
New mine where you suspect there is money or an old mine with a different
angle to get rich
You must avoid the trap of going into what you think will make you money if
you have no empathy or feeling for what you are about to do
Dont do anything because you feel you have to do. Go for something that
attracts you, something that exploits your natural talents

Fear Nothing

You cant banish fear, but you can face it down, stomp on it, crush it, bury it,
padlock it
Harness your fear to your advantage
Start now
When opportunities come you must pounce

How to Stay Rich

The Perils of Wealth

Keep giving it away

o The faster you give it away, the more that will come to you, because
you spend less time defending it and more time making it
o When you do start to give it away, find someone to do it for you
As soon as youve spent it, gifted it, loaned it, or invested it, forget it
Never loan it to friends
o Give them whatever you feel like giving, then forget it.
Get first flush barminess out of your system as fast as possible
o Gambling, credit card abuse, expensive clothes, etc.
Your oldest friends are your only friends
Get used to being cut off
o Isolate yourself pronto when you get rich
Avoid developing plate-glass vision
o Chew the fat with employees and managers
o Invite people to your private office

Develop a passion outside of making money

Get your own private advisors
Watch out for fraud in the early days
o Install good accounting systems the second you can afford it
Dont try to be friends with your staff
o Be fair and friendly, but dont try to be one of the boys
Dont sleep with your staff
Choose personal aids with enormous care
o They can be your friends, but try to keep a little distance just in case.
They must work for YOU, not your company
o PA, chauffeur, business manager, etc.
Dont abuse it
o Dont verbally assault your employees
o Being rich doesnt give you the rights to abuse anyone
Be safe
Never stop looking for talent and promoting talent
o As the owner, you have the right to insist that the talent be hired
No deal is a must-do deal
o If you cant get the terms that you know makes sense, then walk away
Lead, dont be lead
o Dont leave an opportunity within the company to be sabotaged, focusgrouped, and committed to death
Stay as healthy as you can
If youre bored with a business, sell it
Try to sell before you have to
o Buyers require what is called Blue Sky (further growth) to get excited
and offer a great price
Retirement will kill you
Remember you are only richer than them, not smarter than them

Remember to duck