“ The men who have succeeded are men who have chosen one line and stuck to it.”
- Andrew Carnegie
[toc] Many explanations have been given for why some of us acquire great wealth while some of us do not. Many have taken certain explanations as persuasive enough evidence to give up trying. We say: “Well, he was born into the money”; “She has talent and charisma that I just don’t have”; “He’s obviously a great leader and I’m not.”Our greatest excuse for not taking action today is that we believe we don’t have what it takes to make it tomorrow.Let’s imagine a parallel universe where some of today’s most successful Wealth Creators ended up taking different approaches when they got started.
What would have happened if Bill Gates adopted for a career as a footballer? Would Oprah Winfrey have made millions as a commodities trader? Could Martha Stewart have made it as a stock market trader?(Actually, we’ll come back to that one later!) Could Warren Buffett have made it big on MTV? Warren Buffett says that in the 1950’s he invested $100 in a Dale Carnegie public speaking course “not to prevent my knees from knocking when public speaking but to do public speaking while my knees are knocking. ”If any of these Wealth Creators had not followed their path of least resistance to wealth, we would not have heard of them today.
Each of us has a path based on our natural habits and talents – the ones we were born with. When we follow our path – and only when we follow our path – do we give ourselves the opportunity to achieve our true potential. Your path will be one of the eight on the following square.
THE WEALTH PROFILE SQUARE
The wealth profile square gives us the relationship between the eight wealth profiles. If you are highest in intuitive thinking, you will float upto one of the high-frequency profiles: Mechanic, Creator or Star. Ifyou are strongest in sensory thinking, you will gravitate to one of the low-frequency profiles: Accumulator, Trader or Dealmaker
Introverts gravitate to the left: Mechanic, Lord or Accumulator, and extroverts gravitate to the right: Star, Supporter or Dealmaker. Each Wealth Creator has an absolute focus on creating wealth in the waythat suits their natural strengths. Can we play more than one game? Of course, but it is only by keeping to one game that we begin to excel. The longer we play, the more distinctions we see, the greater our flow and the more we attract. Here’s how the profiles differ:
“Creating a better product”
Creators can’t resist creating. They keep creating long after they have run out of resources, money, and other people’s patience. In fact,they have their greatest creative breakthroughs after most others would have given up.Before Walt Disney’s first animated movie was finished, his distributor went bankrupt. Before his second movie was finished, he ran out of money himself.
To produce the now famous “Steamboat Willie”featuring Mickey Mouse in 1927, strapped for cash, he wrote to his brother Roy: “Slap a big mortgage on everything we got and let’s go after this thing in the right manner. ”Many creators do not make the best managers as they run faster than their teams, and are often on to the next venture before they have made money from the last one. The world is also full of frustrated Creators who have started a business and are now stuck running it. They did a great job creating it, but now do a mediocre job trying to manage others (often blaming their team for not “keeping up”). They move at speed, but can leave a big wake behind them.
Many Creators fail because of their over-optimism as to what their business and their team can achieve. This optimism has led many to take on far too much, leaving them little time to do what they do best. Successful Creators have delegated everything except the creative process itself – and they focus on creating new products, or new companies, while others take care of the day-to-day business.The successful Creators we will look at, who share a common strategy to achieve their successes, include Thomas Edison, Walt Disney, Bill Gates, Steve Jobs, and Richard Branson.
“Creating a unique brand”
The Creators set the stage, and the Stars steal the show. Stars get their most valuable feedback in the limelight, and find their flow while on their feet. As a result, they are able to evolve their attraction on the fly, and it is their personal magnetism that is their greatest value.As innovators, Stars have an inner confidence that drives them to step up and take the lead.
However, others sometimes see this as over confidence. Reflecting on his outlook, Arnold Schwarzenegger comments, “I knew I was a winner back in the late sixties. I knew Iwas destined for great things. People will say that kind of thinking istotally immodest. I agree. Modesty is not a word that applies to me inany way – I hope it never will.”A Star profile should not be confused with sports stars or rock stars,who tend to get to their position largely on talent. There are Starprofiles in industries ranging from property and media to hospitality who have ended up far wealthier than the most talented entertainers by following the Star profile strategy.
There are also many extremely talented entertainers who have ended up flat broke.Stars are naturals at creating a unique identity for themselves. It istheir personal brand that attracts others. By magnifying their brand,they quickly magnify their attraction. Failed Stars do not realize this and have been attempting to build their wealth by improving their products, their systems or their teams – none of which come as naturally. Stars also get frustrated that others cannot do what they can do, and so make poor managers without the right deputies.Successful Stars are happy to leverage on the products and platform of others in order to perform their magic. They lead from the front with their name shining in lights, while others count the receipts.The successful Stars we will look at, who share the same winning and losing formulas in their path to success, include Oprah Winfrey,Martha Stewart, Arnold Schwarzenegger, Paul Newman and India’s number one superstar, Amitabh Bachchan.
“Leading the team”
While Stars are busy shining, Supporters are busy lighting up others.Supporters are the strongest leaders, as they can translate value into action through people. As Jack Welch says, “Information moves sofast today, and everyone has more information than the CEO does.So the only role of the CEO is to be out there energizing people andturning this information into action.
“The high-frequency innovators (such as the Creators and Stars) runat such speeds that their teams often lose confidence in their ownability to execute. Deal Makers, Traders and Accumulators canintimidate just as easily when they get into their zone. Supporters aremasters at energizing teams by giving them the confidence they needto succeed. Quoting Welch again, “Giving people self-confidence is by far the most important thing that I can do.
Because then they willact.” Supporters supply the glue without which great plans wouldcrumble.Many Supporters struggle to find the right business to start, despitetheir fabulous network. This is because they are asking themselves what business they should start, when they should be asking themselves which value creator they should support.
Rather than asking “What?” they should ask “Who?”Successful supporters continue to play the game with the same valuecreator, building a culture of effective execution. Steve Ballmer hasled Microsoft, giving Bill Gates the space to create, and his shares inBill’s company now give him a net worth of over $13 billion.
Some of the most successful supporters can also be found in theirown businesses – such as in public relations, headhunting andconsulting where others will pay big bucks for access to the peoplethey know. Where others would take months to find the right person,it often takes Supporters just one phone call.Notable Supporters that we will look at include Jack Welch, MichaelEisner, Steve Case, and Meg Whitman.
THE DEAL MAKER
“Bringing people together”
Like Stars and Supporters, Deal Makers leverage by magnifying outin front. While Stars are high in the sky, however, Deal Makers havetheir ear to the ground. Creating value through timing, not innovation,a Deal Maker lives in the present. As Donald Trump said, “I try tolearn from the past, but I plan for the future by focusing exclusively onthe present. That’s where the fun is.”Successful Deal Makers tend to catch the imagination of the businessworld, with their sweeping gestures that make millions in a moment.Of all the profiles, the Deal Makers rely most on the relationshipsaround them. While a Star’s value grows as they become less accessible, a Deal Maker’s value grows as they become more accessible.
They are constantly on the phone and on the move. Theycreate their wealth by spotting connections in the market. Once thedeal is done, the new value created enriches everyone involved.While intuitive thinkers shape their surroundings to suit them, sensorythinkers will shape themselves to their surroundings, letting others dothe talking. They will recognize that often the best thing to do is to donothing. Trump’s advice in deal making: “If you walk into a negotiationand you know nothing about the other party, let
talk. Listen totheir tone; observe their body language. The best negotiators arechameleons. Their attitude, demeanor, approach, and posture in anegotiation will depend on the person on the other side of the table.”Struggling Deal Makers are often stuck trying to start a business orcaught up in detail, as the idea of wheeling and dealing, wining anddining, just sounds like too much fun! Others lose out by makingconnections without taking their share, or lose focus by failing toestablish a niche to operate within. Whether it is David Geffen inHollywood, Donald Trump in New York real estate, or RupertMurdoch in media, every successful Deal Maker has picked a nichefrom which to attract the best deals in their market.The Deal Makers we will cover include Donald Trump, David Geffen,Masayoshi Son, Henry Kravis, and Rupert Murdoch.
“Buying low, selling high”
Traders are masters of timing but, unlike Deal Makers who make theirmoney by bringing assets and resources together, Traders will buyand sell the assets and make their money from the spread. Extroverttraders will do this where they can influence the price through hardbargaining. Introvert traders prefer to trade through analysis ratherthan face-to-face bidding, and include many of today’s successfulmarket traders.As a result of the popularity of online and retail trading, many peopletry their luck as market traders. Unfortunately, most are not, whichresults in them losing more often than they gain. True Traders have been trading all their life.
They love finding the margins in marketvalue and so it comes naturally, whether getting a bargain at the fleamarket or making a billion on the currency markets.While Creators need to immerse themselves to create their wealth,Traders need to detach themselves. If markets were symphonies, theCreators are the composers while the Traders are the conductors.They naturally detach enabling them to remain grounded while others might be losing their heads. Value comes from waiting for and surfing the right wave while others get caught in the current.
When asked ifhe went with the herd or against it, George Soros replied: “I am verycautious about going against the herd; I am liable to be trampled on.The trend is your friend most of the way; trend followers only get hurtat inflection points, where the trend changes. Most of the time I am atrend follower, but all the time I am aware that I am a member of aherd and I am on the lookout for inflection points.”Many failed traders have never taken control of the trade. As reliableand hard-working employees, they may see either the buy side or thesell side of a transaction within the company they work for, but oftennever the two together. Only when they are in control of both sideswill traders become aware of the natural talent that they have.The Trader stories in this book include George Soros, Peter Lynch,John Templeton and Jim Rogers.
“Collecting appreciating assets”
While Traders create wealth by accelerating money flow,Accumulators create wealth by decelerating it. Rather than makingmoney by buying and selling off waves, they make money by buyingand holding on rising tides. Accumulators always prepare and themost successful ones can be found doing their homework.
As WarrenBuffett said in an annual report, “Noah did not start building the Arkwhen it was raining.”Steady and dependable, if the profiles were compared to a footballteam, the Stars would be the strikers while the Accumulators wouldbe the keepers. While Stars are quick to spend, Accumulators arequick to save. Accumulators often fail as a result of keeping too muchto themselves, rather than building the advocates who will network ontheir behalf. They rarely act on impulse, and fail if they have not setthe criteria to take action.
Often accused of procrastinating, they simply need more data to make an informed decision.When Buffett appeared on the TV program, Money World, he wasasked what investment advice he would give a money managerstarting out. “I’d tell him to do exactly what I did 40-odd years ago,which is to learn about every company in the United States that haspublicly traded securities.” Moderator Adam Smith said, “But thereare 27,000 public companies.” Buffett replied, “Well, start with theA’s.”Once Accumulators connect to the right team, they can quickly belifted while keeping the team grounded.
They ensure that everythingis in order and that what needs to get done gets done on time.Successful Accumulators are happy to remain down-to-earth, holdingthe kite strings while others fly high.The successful accumulators we will cover include Warren Buffett, hismentor Benjamin Graham, Sandy Weill, Hong Kong’s richest man, LiKa Shing, and Microsoft co-founder, Paul Allen
“Controlling cash generating assets”
Lords love the detail, and are renowned for their thrift. One of theworld’s most successful Lords, John D Rockefeller said whenreflecting on his life, “How well I remember the words of my mother,willful waste makes woeful want!”Lords can squeeze out the cash flow from assets without needing toown the assets. Rockefeller became a billionaire in the oil industrywithout needing to own a single oil well.
Mittal has become abillionaire in the steel industry without needing to own a single mine.Whether commodity lords or land lords, they have the patience anddiligence to collect and crank up every cent of cash flow they find.While extrovert Supporters value people over numbers, introvertLords value numbers over people, and don’t have time for politics or niceties.
They would rather deal with simple legwork than fancyfootwork. When Rockefeller began buying up other refiners in the1800’s he did not wine and dine them, but instead said simply, “If yourefuse to sell, it will end in your being crushed.” And as he knew hisnumbers, he was right.Lords love certainty and hate risk. They also prefer to keep tothemselves, and those who have not yet found their wealth haveoften failed to see their analytical skills, risk aversion and need forcontrol as their greatest strengths.
When momentum grows, manyLords also cannot resist their tendency to micro-manage, which cashflow responds well to but which people do not.Successful Lords are unrelenting once they find their niche, with theability to consistently generate cash flow without the need for eitherinnovation or timing, weathering market conditions and acquiring thecompetition until they are dominating entire industries.The Lords we look at include Andrew Carnegie, John D Rockefeller,Jean Paul Getty, England’s richest man, Lakshmi Mittal, and Googleco-founder Sergey Brin.
“Creating a better system”
If Creators need to have their head in the clouds, then Mechanics need to have their finger in the pie. While Creators are great at starting things, Mechanics are great at finishing things. They are perfectionists, which is why they cannot resist finding ways to do things better. One of Henry Ford’s maxims was: “Everything canalways be done better than it is being done.”While Stars twinkle, Mechanics tinker. They get hands-on with their systems and prefer to study how to improve things with their hands dirty. As a result, they have little interest in impressing with or indulging in their appearance.
Bernard Marcus, chairman and Co-founder of Home Depot, recalled going out to lunch with Sam Walton – founder of Wal-Mart who became the richest man in the world in the1980’s. “I hopped into Sam’s red pickup truck. No air-conditioning.Seats stained by coffee. And by the time I got to the restaurant, my shirt was soaked through and through. And that was Sam Walton – no airs, no pomposity.”Many Mechanics have yet to get going because they are still trying to figure out what business to start.
Ray Kroc was 52 before he realized he didn’t need to start his own business, he could take an existing business – McDonald’s – and make it better.Many Mechanics have companies with better systems than their competitors, but they have not leveraged these systems with stronger products produced by others, or their business is limited by their autocratic management style and high staff turnover.Successful mechanics remain hands-on, fine-tuning their systems long after they have delegated many other areas of their business.This is where they see the greatest results, and where they gain the most satisfaction.The successful mechanics whose stories we relate include Henry Ford, Ray Kroc, Sam Walton, IKEA founder Ingvar Kamprad, and Michael Dell
THE SIX STEPS TO WEALTH
The eight profiles each follow a common six-step strategy,establishing their value, leveraging that value, and creating a river ofwealth. As we cover each profile in the following chapters, we see them repeating the same six steps, applying them in a way unique to their profile.