How to Be a Billionaire - Proven Strategies from the Titans of Wealth- Written by Martin S. Fridson
This book looks at the titans of wealth. It was published in 2000 so you won't see some of the new money from Google and Facebook in here but the principles are the same. Whenever you can leverage thoughts from such an elite group of people, it is worth it to take the time to study it.
Quick useless trivia stats to put in perspective how much a million, billion and trillion really are - If you were to count that amount of money and assume that you count $1 dollar every second then here is how it works out:
1. It would take you 12 days to count $1,000,000 dollars.
2. It would take you 32 years to count $1,000,000,000 dollars.
3. It would take you over 32,000 years to count $1,000,000,000,000 dollars.
Let's not even discuss the U.S. debt. I guess we should make all the politicians sit in the room and count until they hit it. It may be a more productive use of their time since they get so much done now!
Why is this important to me? This book may not be important to you for good reasons. It takes huge sacrifice to become a billionaire. These titans of wealth are the elite of money making humanity. This takes work. If you think of the best professional athletes then you will understand the dedication it really takes. Muhammad Ali started boxing at 10 years old and practiced his whole life. Boxing was his life's passion and it took that type of dedication to be the best. He did not just step in the ring one day and become the best. It took him years of self-sacrifice, dedication and sweat equity to get it done. The same is true for all the Billionaires profiled in this book. On the other hand, there is great knowledge to be used if your goals are big but maybe not that big. Let's say you want a more balanced life then you can still use these principles to make a ton of money and garner security and the good things that money can buy without pouring all of your time in the endeavor. The principles you will see in this book take OPM, OPE and OPT to the extremes. I have talked about these concepts in other summaries. It is interesting how you see the same principles pop up in profiling success.
This book is packed with 9 principles used by different people to become billionaires. You may or may not agree but the data is conclusive on their success. I will touch on all of them but dig into the top 3 in more detail
1. Take Monumental Risks- "Fortune assists the brave" - H.L Hunt and John Kluge bankrolled their fortunes at the poker table. These men learned more about deals and money gambling then they did in traditional university. John borrowed $5000 from the bank and only used $1000 of it and then sold the business for $500,000. When he told the bank, the comment was "that is some leverage" - He asked - What is leverage? Years later he was sorry he asked. He amassed his fortune in Radio and LBO's (Leveraged Buyouts)
2. Do business in a new way - Sam Walton and Ross Perot both saw weaknesses in the market that they exploited. They built a culture of execution and market dominance. Wal-Mart may be the first company in history to generate $1 Trillion in revenue. This will summarize everything - According to Ross Perot - "The first EDSER to see a snake kills it. At GM, first thing you do is organize a committee on snakes. Then you bring in a consultant who knows a lot about snakes......Then you talk about if for one year." This is why Perot left GM after selling EDS to them.
3. Dominate your market - John D. Rockefeller and Bill Gates. Both were highly successful and dominated everything they touched. Both men created enemies and people ALWAYS questioned their tactics. With that aside you can't deny what they accomplished. They played to win. The story of Microsoft is one of shear dominance in the market. Gates exploited a whole and created an entire industry out of thin air. People questioned that Monopoly power that Microsoft had and they would be correct in pointing it out. This should be a goal of any entrepreneur - CONTROL YOUR MARKET. If you cannot be in the top 3 in your market then you need to get out of it. Gates lead Microsoft with razor sharp focus and expected the best. He leveraged his strength to branch into other profitable software markets. He read the encyclopedia cover to cover by age 11. You cannot deny his intellect.
4. Consolidate a market - This strategy does create billions of dollars but you need to be careful because most market rollups end in disaster. Read Billion Dollar Lessons. When you do it right like Wayne Huizenga of Waste Management then you create Billion dollar companies and market capitalizations. The key here is if you have two average companies and meld them together then you have one big average. This is not the way to do it. You have to execute and drive a culture of innovation to succeed with this method.
5. Buy Low - Warren Buffett, Carl Icahn, Lawrence Tisch and J. Paul Getty all used this strategy to amass fortune. Warren Buffet always wants to buy $1 and pay 50 cents. This is one secret to his magical fortune. When you dig in you will see he uses the right instruments to do this. He uses Insurance companies to buy whole or controlling interests in companies. This is brilliant because he can use the "Float" or OPM, the tax advantages of the entity and sound financial leverage. How can the little guy use these principles? I recommend checking out my summaries of Robert Kiyosaki's books. He talks about the same concepts but more in tune for the little guys.
6. Thrive on Deals - This is simply love of the game. You see this all the time when you study these billionaire magnets. The key is execution and the ones that are successful do not do deals for the deals sake. This is for all the other idiots that you can read about in the book summary Billion Dollar Lessons.
7. Out manage the competition - First and foremost, hire the right people. Be diligent at doing this. Microsoft used to take out ads that said - "We recruit the best and brightest only." They would give them difficult problems in the interview and tell them "Solve it". They ripped them to pieces before they hired them. This set the tone for the people that did get hired and they made no mistake about the culture. Sam Walton and Richard Branson also use positive reinforcement and entrusting people with a lot responsibility to out manage the competition.
These last two I will not spend any time on because for the other 95% of us we cannot do this and it clouds the game regardless
How to be a billionaire is a simple road map to how the titans of business use certain strategies to amass fortunes. There is nothing better than investing a couple of hours and sucking out the knowledge of 300 man years of billionaire knowledge. This is, in my humble opinion, the best way to use leverage. That is OPE - leverage other people's expertise and use it for your own gain and to better society.
I hope you have found this short video summary useful. The key to any new idea is to work it into your daily routine until it becomes habit. Habits form in as little as 21 days.
One thing you can take away from this book is to buy low. This is probably the easiest thing to do. Invest the same way you buy groceries and good things will happen. One really good deal can have big effects.
I was really lucky in my business; we merged with a company that was going to be dissolved by a much bigger entity. We picked up the company for pennies and added to our team 3 professionals that will enhance us 10 fold. Be patient and keep your eyes open. "Luck favors the prepared mind."
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