Felix Dennis's secrets to wealth
Felix Dennis had excelled in the publishing business, starting in the UK and expanding into the US to become one of the 100 wealthiest people in Brittan. He'd had it with all the self-help books out there selling empty dreams to people and decided to rectify that by writing what he calls an anti self-help book and tell the world what the pursuit of wealth really looks like. Spoiler alert: It involves a ton of sacrifice and it is freaking hard!
The author starts by fixing the prevalent misconception that the rich are sitting on piles of cash: The rich don't have cash, they have assets. If they needed immediate cash they'd borrow it and pay it back when they sell part of their assets which they don't do frequently due to capital gain tax. The value of their assets can not be translated into quickly realizable net worth. The rich do not know their exact assets' worth until after they have sold them. If you can count how much money you have, then you're not really rich. The author argues that the rich should legally enforce a will(tax planning) before they die, otherwise the tax man will gobble up a big chunk of their wealth. Wealth can be reduced by half if tax planning wasn't enforced beforehand.
He identifies three kinds of excuses people bring up whenever the topic of getting rich is brought up:
1- I'm penniless and inexperienced: great, you've got nothing to lose, you can take risks, fail as many times as you'd like and you have stamina to keep you going.
2- The slightly better off fear they'd lose what they have achieved so far in their lives so they become increasingly risk-averse.
3- For senior managers, chances are slim, true, but they can still do it should they decided to join forces with a younger partner full of stamina. Stamina is very important in the business of getting rich. You need an endless supply of energy.
Fear is the little death by a thousand cuts.
A quick statistics shows that, of the 0.000016% of the population that are rich, 1/4 of them inherited wealth, contrasting it to 35 years ago, where 3/4 of wealth used to be inherited, shows that more people now can start from zero and make their way up to wealth. What might be hindering people from taking the plunge? The main barriers to wealth are health, desire, age(in the UK for example, 40% of the population are old), and the nature of certain professions(governmental jobs, say: 5 million people in the uk work for the government) which makes it harder to pursue that road. Other barriers include but not limited to: not willing to fail in public; not willing to work long hours; can't stand up to the fear of failure; can't convince self they're good enough; fear that seeking wealth will coarsen artistic talents that they might have, inability to treat it as a game; can't bear the thought of causing worry to family, the thought of letting yourself/others down, financial ruin, and the risk-aversion nature of most people, even though they might be 100x smarter than the rich guy they work for whose only advantage in life was taking risks.
Making money is a drug. Make enough and exit.
The search phase:
-For a rich in the making, pursuing a career temporarily might be away to understand a particular industry and peek into the lives of 99% of people who couldn't do it. Working for others is a reconnaissance expedition, an apprentice ship; a means not a goal . You are there to learn as much as you can and put it in a larger context, your purpose.
-Committees are waste of time.
-Team spirits crush ambitions, bunch of losers that get paid peanuts
-Understand that you're not one of the boys and not "in this together" with boss; don't be conned by the idea of team spirit!
-People who can't get rich don't want you to succeed, even friends and relatives; they don't want you to "change"
-Doesn't matter how glamorous the industry is ( digging holes to bury waste can make you wealthy but is it glamorous? how about ball bearings?). The law of supply and demand: too many people want to become actors and live in Beverly hills. Few ppl want dig holes.
-Choose a growing sector rather than established( risk capital presence, power of rising tide, ignorance).
-Search for loose capital searching for a home
-Be quick in understanding concepts n jargon
-Capital is attracted to experts
- Owner of most equity call the shots=true winners=mostly early investors
- Important factors during the search: inclination, aptitude and fate.
-Selling is the talent for hyping n keeping a straight face while asking for 50× mark-up on an item.
-Affinity with a subject, management, sales n marketing techniques
-Boldness defies conventional wisdom.
-It's how ideas are implemented that counts, not how great the idea is.
-Emulate rivers Winning strategy
-Raising capital: a) sharks: credit loans; hurt credit history
-b) Dolphins venture capitalists: they want massive piece of the action and flipping time set ( 3-4years) and capital return guarantee in case of loss with interest. If you choose them, seek finest legal advice for ensuing negotiations.
-c) Fishes: friends family, previous employers, small investors, vendors,...
Desire vs compulsion
-Monitoring and forecasting cash flow is 🔑 (try not to do debt factoring)
-Reinforcing failure( you can't defeat customers, every product has its timing)
Act small, think big
Most important talent: identify, hire and nourish others with talent and when the time comes( reputation is built) part with it. Give them the opportunity to prove themselves(new project, let them dream up one) and the chance to excel. Talent will do the work for you.
Self belief!(Winston Churchill n his speeches that saved Europe from Nazis) If you don't believe in yourself, why would anyone else?
-Trust your instincts
-Make new baskets( diversify, the barbarians at the gate)
Once your startup is making money, start looking for other opportunitirs( preferable related to your core business)
Ideas aren't owned by anyone, only the execution of them ( patent trademarks)
Idea put forward by an employee is the company's property provided no agreement was made.
Luck is preparation meets opportunity
When investing in property focus on address, paying full in cash, and holding
Be a predator as opposed to prey
-Prepare yourself to luck but don't seek it out
-Make your own luck
Delegate. Don't do it all yourself
Fake being a hero and reality will catch up
Treat acquiring wealth as a game
Get rich then give it all away
Negotiating is all about weakness in one party vs day to day bargaining where none need exist and virtues are present, falling in love
Leave the managing duties to others. You don't have time for the minutae
If you can laugh in the midst of being poor and if you can still laugh when you coin it in then you will keep winning. It's just a game . If you chase money and think you will never be happy without it, you'll never win.
Own as much as you can; never give shares to anyone. In the race to getting rich, ownership is the only thing.
Partnerships qs: who is putting what capital into what venture?
Who is doing what work on what venture?
You build n own your own startup first and only then do you seek other pastures with partners. You need something to fall back on. Beside with shareholders? You face protests.
Mexican clause to reserve disputes between shareholders: highest bid on views of comey win through a neutral lawyer
Before you take up with a partner or invest as a minority shareholder you should thru the memorandum n articles of a new company with a lawyer
Unlike an artist an actor an entrepreneur you should learn to Delegate. Micromanagement scare away talent. Trust your managers, don't Delegate to people like you, choose people with diff strengths.
Make the work environment fun and where people you Delegate to can prove themselves, grow, and make you rich in the process.
How to deal with competition:
-If your competitor bigger than you n wants to buy you, don't fight it unless you ought to an you want to otherwise sell for the right price.
- If competitor is smaller hire them, buy or join with them. If he won't budge take drastic action or befriend them. Don't fight tigers if you want be rich.
Sharing the asset pie don't make sense as the risk taker was you. Some people are encouraged by recognition and congrats and don't care much about the 💰.
An asset doesn't keep going up in value, sell when it's at the zenith.
1-Eyes on the ball: the money is here
3-Environment: colleagues, confederates lawyer accountant professionals
Early days hire people smarter than you. You just have to ask them; They're not rich because they're risk averse.
You don't need to be clever but only a little cunning n massively determined to get rich.
On choosing human capital: make them interview with others before you make decision, go beyond cv( last company), listen, talk little
There ate a lot of hidden costs that comes with closure.. When you sense failure by discussing matters with bean counters/ accountants, make a sell don't throw it like trash. Search for A tiger of diff stripe.
Founding a company doesn't not mean owning it!
-A limited liability company is an entity that has rights and liabilities of its own. It can be immortal. The company's money is not the founders to spend unless they declare it( to pay taxes). The founder can take money in salary, dividend, and bonus but never the company's money. It's illegal. Don't milk the cow without reporting it. Pay your taxes.
Whatever you end up doing, focus on doing an outstanding job!
Lessons learned: the more you give the more you earn. You shift focus to earning more; Don't loan to friends, give them; Forget about the money you spend or invest.; Cut off from the world; Avoid splurging and gluttony.; Install good accounting system to avoid fraud in early days; Buy before it peaks; Security; Keep grooming talent.
The eights secrets:
1-Analyze need. Compulsion is necessary
2-Cut loose from negative influences
3-Ignore great ideas. Focus on great execution
4-Focus on the money is here ball
5-Hire talent smarter than you
6-Ownership is the real secret
7-Sell before you need to
8-Fear nothing and don't forget to give it all away
Grow a mental carapace against mockery, envy and gloat.
Reading this book was a lot of fun; the author is pretty funny. Added to that my tendency to read books written by English authors in an English accent which made the reading even more fun for me. I previously read Richard Branson's books and Harry potter books in a british accent which was really fun. Highly recommend it