Most people won’t get rich. Most won’t even try to get rich. That’s understandable because trying involves taking more risk, embracing fear and failure until you eventually succeed. Perhaps.
I’m not talking £1 million rich. That’s the comfortably off. Or even £2-3m for that matter. That’s the lesser rich. The tallest dwarf.
I’m talking £10m+ or even hundreds of millions rich. Succession rich. The kind of money that a successful business, or in fact, businesses bring. Measured in liquid net worth, not in a £1m London home.
The How to Get Rich book is a fantastic read. Unlike most self-help books, Felix Dennis, the author, has a net worth of hundreds of millions. Which made it even more intriguing for me to read. I wanted to read a no BS, anti-self-help book, and this is exactly what it delivered.
I won’t get into details why you would want to get rich. That would be silly! The freedom of choices, the wine quality, the sex, the power to influence and the ability to make your own rules are amongst a few I can think of.
How rich do you want to be? Rich enough to be happy! I’ve written before that after a certain level money doesn’t make you happy. Felix repeatedly says being rich doesn’t make him happy. Maybe the only BS in the book? 😉
Money is a drug for him. The more he makes the more he wants to make. It’s not being rich that makes him happy. It’s the pursuit of money that brings him happiness. Not the end result. Funny I know.
But becoming rich means by definition taking the path least travelled. Being on your own when people around you have stable jobs, kids in good schools and nice cars. Not Ferrari nice, but maybe Range Rover nice. Like a doctor, a lawyer, or even a software engineer for that matter who practice their craft well but are not entrepreneurial about it.
It’s not easy. But it can be done and is being done by other people as I’m writing this article. But let’s get things first right. The road less travelled is less travelled for a reason. Because it’s harder.
If you want to get rich you’ll need to:
- work a lot more than almost anyone you know
- be ready to disrupt your personal relationships
- ignore what your friends and neighbours think
- be ready to lose it all if it doesn’t work
- Not be afraid of public humiliation
- Be confident enough and treat money as a game
If you think you’re the exception, think again. Obviously, doing it younger in life is easier to justify than later. But later in life, you’ve got so much experience. You know how the sausage is made. You’ve probably got 1-2 acquaintances who are self-made multi-millionaires but are not as smart as you are.
So smart doesn’t bring riches. So what does? Great ideas? Not really. An ok idea executed greatly is worth much more than a great idea executed ok. I quite like this graph from Sivers:
Being smart and better educated are not requirements either. Smart won’t bring millions. Maybe a few hundreds of thousands, yes. Not millions. Smart people and talent work at top jobs and get paid handsomely for that talent. In fact, a fat regular salary looks to me like the biggest obstacle for making real money.
You have something to lose. And probably an Instagram-friendly lifestyle to support already.
Not everyone wants to take risks. The higher the salary the harder it is to ditch it and go for the unknown. The opportunity cost seems simply too high. That’s my thinking, anyway.
It’s no surprise that people start businesses after a lay off, or during uni.
So if not being very smart or educated or equipped with great ideas can bring money, then what can? Below you’ll find my 7 golden rules for getting rich after reading this insanely good book.
Rule #1: Own what you build
You don’t need to look far to discover business stories of founders getting sacked from the company they started. Even Steve Jobs falls in the category.
Getting capital sometimes means giving away part of their business. In the startup world, VC money and dilution can drive owners out of their own game.
So one of the most important rules of getting rich is having ownership of your business. As much as possible. Every percentage counts.
Felix suggests you don’t even have partners if you can. Pay people handsomely but don’t give away the pie. Self-made rich people don’t start with huge amounts of money or they wouldn’t be self-made in the first place. They have to start somewhere. Businesses require money to hire talent, have good infrastructure, distribution, marketing and operations.
Taking money from the big guys usually means ownership sacrifice. You should always strive for borrowing money from people you love and love you. The least popular avenues first: Friends, relatives, ex-colleagues, small investors may be willing to lend you money without ripping you off.
Take money from people who don’t demand extreme ownership and limit your costs in the beginning.
Ownership isn’t the most important thing. If you want to get rich, it’s the only thing.Felix Dennis
Partnering with others should be the last resort. You first need to learn to delegate to smarter people than you are. Negotiate hard but never give away too much pie.
Rule #2: You can be rich because not everyone wants to
People want job satisfaction, security and a nice paycheck. They want to be appreciated and like meaningful work. You can’t have everything if you take more risk. Not in the beginning anyway.
Some other people, usually some managers, want to have power over others far more than they want money. It’s just the way it is.
The pool of those who want to get rich gets smaller and smaller once you reduce it to those who TRY to get rich. I consider myself smart enough to start a business. I also have a couple of ideas, mainly around investing for companies. But I’m not trying, am I. Or at least not hard enough. That’s one less person reaching out for your treasure.
Luck follows the brave or whoever is open to receive it. This may sound cheesy but it’s true. By writing this article I open myself up to many of you who will reach out to me. Maybe a few of the e-mail exchanges I will have with you dear reader will lead to future business opportunities. I’m increasing my luck surface area.
Don’t go after luck but set yourself up for opportunities. Not everyone does!
Rule #3: Go where the money is
Software companies, not car dealerships.
Biotech, not magazine publishing.
The Internet, not television.
Either go to an industry that’s not mature yet, or to an existing industry with a brand new angle. Beer production was here forever. How did Brewdog with its anarchist mentality succeed so big?
Banking follows the same story. How did Monzo and Revolut become the new way to bank? The same thing is happening with FreeTrade and investing. The reason it achieved a £140m valuation after a few years of opening shop is that it offers a new angle to the cumbersome way of buying stocks.
Rule #4: Don’t try to get rich to be happy
Sure you can buy what you want. Freedom, yachts, mansions, sex, islands!
But the author has met so many rich people who are not happy. Now that’s his words not mine.
Being rich means having people ask you for money constantly. Not being able to tell if they’re just being nice or they want something from you (although eventually, you will find out). The only people you can trust are those who knew you before you get wealthy.
This leads to loneliness and isolation. By the time you’re rich, you will be spending too much time trying to defend your wealth.
That to me looks gloomy and dark. But enough schooling. Maybe rich readers can tell us it’s all a lie we tell people to keep them from rioting 😉
Rule #5: Embrace fear and failure
Learn to live with fear. Failure can come and you should be ok with it. What other people think is one of the most common reasons people don’t make it big. And if your goals don’t scare you they aren’t big enough.
Failure comes in all sort of ways, not just business. If you’re after work-life balance, then leave the road to riches to others. Focus and determination matter more than anything. Family, lovers and the kid’s first school day are just distractions for the purposes of getting rich.
Never yet have I met a self-made rich man whose family or personal relationships were not plagued by the burden of creating a fortune, even a small fortune. A rocky marriage; lack of time spent with their children; the substitution of expensive gifts to repress guilt created by their frequent absences from home; their concern that their children have grown used to privilege and are consequently slacking in their education or lacking ambition – all of these come as part and parcel of self-made wealth.
There is no escape although each of us believes we can be the exception to the rule. Is this a price you’re prepared to pay?Felix Dennis – How to Get Rich
You have to give priority to certain things, which is in my opinion, where (young) partners can help. I don’t fully agree that you should own 100% of the business.
Rule #6: Pay your taxes
The art of taxation consists in so plucking the goose as to procure the largest quantity of feathers with the least possible amount of hissingJean-Baptiste Colbert, French politician, Minister of Finances of France from 1665 to 1683
This means you can pay the least amount of tax that’s legal, but still pay it! Even as a contractor myself, I used to have the freedom of taking out as much money as I wanted from the business. But my business money is not really my money. It belongs to the business unless I pay taxes.
And god only knows how much I hate paying taxes. But it’s the law. I can imagine how many ways bigger corporations have to get around it. Felix suggests that if you start getting rich, stay rich by paying your taxes. Not following his advice is a dangerous game to play. The upside is money, the downside is jail. Pick one.
Rule #7: Avoid the most common mistakes
Being cheap on talent, acting big instead of thinking big.
Not focusing on cashflow. I believe this is common to all new tech startups. They start with huge ambitions burning money in the first few years. But eventually, reality catches up. If cashflow is missing then no VC money will save you.
Cashflow is different from net profit. A company may keep reinvesting all its profits for future growth and may never be profitable (hello Uber, WeWork). That’s a choice, and probably a good one if you want to make it big in the zero-interest-rate world. But having no revenue means that the ship will eventually sink.
Run a tight ship but reward handsomely.
Pay good salaries and bonuses. They will attract the best talent and return a higher ROI. Make bonuses metric-driven and focus on the company. If the company does well then everyone should do well. Then this will drive people to oust slackers and focus on metrics.
Praise people who deliver outstanding results and do it publicly. But only criticise in person, everyone has an ego. Sell early when you’re on the way up. Being emotional with your asset can damage your way to riches. Remember, you want to be rich.
Does this mean that I should sell this blog if they offer me a good price? Feels hard to think about it.
Time to get rich!
As I said, this is a no BS book. It won’t grant you a guaranteed way to riches. But it’ll show you what sacrifices you need to make and what it takes!
There’s no single mention of stock investing. Your company is the stock! There’s one mention of property investing in the whole book – accompanied by the comment that although you can get lucky quickly, the space is crowded for that reason.
If you want to generate a 50000% ROI then you better start a business (and not fail).
Are you ready to get rich?