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  Author’s Note and Acknowledgments

  I began work on this book in early 2009, just as the world was coming to understand the full extent of the financial meltdown that took place only a few months earlier. As it turns out, 2009 may well come to be regarded as a historic milestone, marking the end of the longest period of economic expansion this nation has ever enjoyed. For more than half a century, stretching back to World War II, Americans could confidently follow a clear roadmap to prosperity: get a degree from a good school, find a job at a good company, and work hard long enough to fund a secure and happy retirement. That familiar scenario is no longer viable. Today, there are far too many forces—longer life spans, rising health-care costs, vanishing natural resources, and globalization, to name a few—arrayed against such a quaint notion.

  Instead, just as the world continues to become more complex, so must our strategies for success. The time has come to reset our goals and the ways we go about achieving them. Business Brilliant is the story of how wealth is created now. It showcases the greatest success stories of our time because that’s the way good stories are told. Nobody wants to read about the guy who screwed up his courage to ask his boss for a 5 percent raise. We’d rather read about Richard Branson’s exotic adventures to build a global empire. But make no mistake: you, reader, and Sir Richard or any of the other great wealth creators featured in this book, are in the same boat. Each of us must figure out how to use our behavior, attitudes, temperament, and skills to create financial security for our families and ourselves. While this will lead to different results for each of us (because we are all differently abled), the process is fundamentally the same.

  The seven principles for wealth creation identified in this book are not just about getting rich, although for some readers that’s exactly what will happen. They are about realigning our career-development practices with the world we live in today. The opening chapter shares a few stories of people who were willing to look upon old beliefs with fresh eyes. This is the first threshold you must pass in order to achieve financial security in the new economy and your first indication of how you will fare on this journey.

  There are many people to thank for the information you will find in this book. The past half-dozen years have been among the most exciting of my life in terms of my own education as an entrepreneur and as a wealth creator. My teachers include the collaborator on my previous book, Russ Alan Prince, as well as the whole team at Inc. magazine, most notably Bo Burlingham and Bob LaPointe. Also, the great entrepreneurs who are part of the Inc. community, including Norm Brodsky, Jack Stack, Paul Spiegelman, and the rest of the “Small Giants.” Many thanks to Arthur Klebanoff for providing me with great advice and Hollis Heimbouch for spotting the merits of this story instantly and decisively. And Noel Weyrich for his unflinching commitment to excellence.

  Finally, I’d like to offer my deepest thanks to the community of incredible entrepreneurs who make up Inc.’s Business Owners Council. They have taught me what it means to be brilliant in everything I do.

  Contents

  Author’s Note and Acknowledgments

  1 “Business Brilliant”

  2 Do What You Love, but Follow the Money

  3 Save Less, Earn More

  4 Imitate, Don’t Innovate

  5 Know-How Is Good, “Know-Who” Is Better

  6 Win-Win Is a Loser

  7 Spread the Work, Spread the Wealth

  8 Nothing Succeeds Like Failure

  9 Mastering the Mundane

  Notes

  Bibliography

  Index

  About the Author

  Other Books

  Credits

  Copyright

  About the Publisher

  1

  “Business Brilliant”

  The Coach Who Cracked the Football Code

  Football is a warrior’s game. Fans love to watch because every game has one winner and one loser: there’s no in-between. Few have embodied that singularity more thoroughly than Joe Gibbs, the legendary coach of the Washington Redskins. Gibbs was so passionate about winning that he famously slept in his office during football season, such was his dedication to game preparedness. His multiple Super Bowl wins and lifetime game-winning average of .683 (behind only Vince Lombardi and John Madden) earned him a slot in pro football’s hall of fame and the allegiance of Redskins fans everywhere. Charley Casserly, noted NFL analyst for CBS and former general manager of the Redskins under Gibbs, calls him “arguably the greatest coach in the history of the league.”

  Among the many facets to building a successful team is identifying up-and-coming talent and Gibbs’s scouts, like those of other NFL teams, scoured the country’s football fields in search of the next big thing. But Gibbs was frustrated with the limitations of the traditional aptitude tests that were widely used, including the SATs, to measure the abilities of prospective players.

  “We were looking for a test that wasn’t educationally biased,” says Casserly. In other words, one that did not rely upon reading and writing, two skills that are of little use on the field in a game that is won or lost based on split-second decisions.

  Beginning in 1984, Gibbs worked with vision specialists Harry Wachs and Ron Berger, optometrists from George Washington University, to develop a new test that would be customized to the unique aptitudes required for success in football. Gibbs met Dr. Wachs when he had successfully treated Gibbs’s son, improving both his school performance and his football performance. To design the test, Gibbs offered Wachs and Berger four of his best players, those he believed instinctively knew how to make the most of every football play, as baseline examples of the capabilities the test should identify.

  “We specialized in vision, not just sight.” This is how Dr. Wachs, now retired, described his field of study. “For example, you know the expression, ‘I see what you mean’? That’s about vision.” The Wachs-Berger test they created assessed sight, coordination, motivation, and a player’s ability to keep cool under stress.

  The Redskins recruiting benefited from the Wachs-Berger test because it measured a player’s ability to think during a battle whereas the traditional tests just measured the player’s ability to think, period. “Say you’re on defense,” says Casserly. “There’s a call and a player’s in motion. Now responsibilities have to change and the players have to visualize all of that change.” Redskins scouts traveled the country carrying a Wachs-Berger toolkit made up of goggles that distorted lines of vision and small blocks and other plastic shapes the size of tiddlywinks, among other peculiar items. After the scouts started using the Wachs-Berger test to analyze players, the Redskins on to win two Super Bowls (in 1988 and 1992) under Coach Gibbs.

  Wachs told the Los Angeles Times that the test “taps into the human potential anywhere in the world.” Gibbs agreed but he was only focused on one thing: winning football games. Gibbs didn’t need to know if a player was smart in a general way. He embraced the Wachs-Berger test because he believed it could assess whether or not a prospect was truly “football brilliant.”

  Just as Coach Gibbs sought to identify what made certain players brilliant on the football field, this book seeks to identify what makes certain people brilliant in the business field, what it takes to be “Business Brilliant.”

  In the coming pages, you will see how Business Brilliance, just like football brilliance, has little to do with IQ or education. You will learn how Richard Branson became a billionaire because he can’t read a financial spreadsheet. You will discover how a high school–educated circus clown used his Business Brilliance to become the billionaire founder of Cirque du Soleil. You will find why a Brooklyn entrepreneur needed to listen to his lowest-paid employees, and how a $100 million line of business w
as the result. You will see how the famously impulsive founder of JetBlue uses his Business Brilliance to build soaring successes atop his many crushing failures.

  In the process you will witness the debunking of some very popular myths about success. You’ll see how Warren Buffett started getting rich as soon as he stopped investing the “Warren Buffett Way.” How Suze Orman built her personal wealth by ignoring her own gospel of frugality. How Bill Gates made the business deal of the century not because he’s a computer genius or an “outlier” but because he executed doggedly on a simple three-step business strategy that anyone can learn. You will see how Steve Jobs stumbled into his greatest fortune by sheer accident—and then rewrote history so it looked like it had been his plan all along.

  But most important, the seven Business Brilliant principles in the coming chapters will help you learn about yourself. You’ll see why it’s just as important to follow the money as it is to follow your passion. Why a “big idea” won’t help you succeed, but the person in the cubicle next to you probably can. Why your network needs fewer people, not more. And why you’re better off doing only the very few things that you do exceptionally well. You’ll also learn about some behaviors that might be holding you back. Why you fail to ask for what you want at the very moments you’re most likely to get it. Why you feel bad when you win a negotiation. And why failure itself is a bad thing only if, like most people, you try to push it out of your mind by taking on something new.

  I didn’t figure out these principles on my own. They are the products of years of original research, careful study, persistence through setbacks, and lots of help from other people. In fact, the book you are holding is the product of all seven of the Business Brilliant principles it explores. It is a project that had its beginnings a dozen years ago, when I first teamed up with a good friend of mine named Russ Alan Prince.

  The Wealth Whisperer

  We all know people who have a knack for making money. They appear to be naturals at it. Opportunities seem to find them. They always know the right people. Their risks pay off more often than not, or at least it looks that way.

  For the past 25 years, Russ Prince has worked with some of the world’s richest individuals to uncover the secrets behind these behaviors, much the same way that Joe Gibbs reverse-engineered his best players’ performances to discover the fundamental elements of football brilliance. Behind thick glasses and an athlete’s tall and lean frame, Prince, a former mixed martial arts competitor in Hong Kong in the 1980s, operates today out of a well-guarded eighteen-acre compound in rural Connecticut.

  After a chance meeting and subsequent friendship with one of Asia’s richest people during his competitive martial-arts days (he has never revealed who this individual is), Prince was ushered into a realm of wealth most of us will never know. Since then, he has probed and surveyed the best practices and personal beliefs of very successful people, including probably more in-depth conversations with billionaires than any other social scientist on earth.

  “I’m a failed academic,” says Prince, whose thick Brooklyn accent can’t hide a childhood far away from great wealth in the Canarsie section of Brooklyn. “But I know what makes people rich.”

  His lifetime of study has made Prince a “wealth whisperer” of sorts, a coach to some of the world’s richest families who will pay or do almost anything in the pursuit of more treasure. Prince shows his already successful clients how to attain financial goals that most of us can’t imagine, such as making the Forbes 400 list—the annual ranking of the country’s richest individuals.

  Impressed by his years of coaching success, I asked Prince to share his methods for this book. I wanted to identify the kind of brilliance that allows the self-made wealthy to make the most of every business opportunity in much the same way that Gibbs sought to discover what makes some of his players football brilliant.

  Prince and I go back a ways. Besides having spent countless hours over chocolate milkshakes arguing about whether or not the techniques that lead to wealth can be learned, we first worked together in 2000 when we collaborated on a curriculum to teach financial advisers how to support their wealthiest clients. In 2006, Prince and I teamed up again for a research project that resulted in the book now known in its paperback edition as The Influence of Affluence. That project focused more on my own area of interest, related to what the financial services industry calls the “mass affluent” and what we called the “middle-class millionaire.”

  We wanted to look at the thoughts, behaviors, and purchasing decisions of people who had attained millionaire status but hailed from middle-class upbringings.

  We restricted our research only to people who received little or nothing in the way of gifts or inheritance from their families and now have net worths ranging between $1 million and $10 million. For comparison’s sake, our researchers asked the same questions of a sampling of middle-class households with above-average incomes in the $50,000 to $80,000 range—the upper third quartile of U.S. household income.

  From the start, we discovered that the middle-class people whose accumulated wealth puts them in the top 10 percent among U.S. households are, on average, no smarter than the rest of the middle class. In fact, despite the great disparity in household wealth, these two groups have a lot in common in terms of educational attainment and personal values.

  About 90 percent of both groups were college graduates and at least 40 percent of each held graduate degrees. Three-quarters of both groups were married, and just about two-thirds of them were on their second marriages. The middle-class families were slightly bigger on average, but more than 95 percent of both groups had at least one child.

  Even their financial aspirations were similar. In this 2006 survey, a large majority of respondents from both our middle-class and our self-made millionaire groups reported what might be called a typically healthy middle-class respect for money. They agreed with near unanimity that love and health are more important than money, but they also agreed that “money is essential to living a full life.” More than 85 percent of both groups concurred with the statement, “Money can buy happiness.”

  It seemed to us that almost all our survey respondents felt that having money was important to their personal happiness and satisfaction with life. Where they differed was in their beliefs about how best to acquire it.

  For instance, most middle-class respondents believed that if you “do what you love, the money will follow,” but only 2 percent of self-made millionaires felt the same. Likewise, the importance of “cutting back on little expenditures” was embraced by the middle class, but totally rejected by self-made millionaires. The vast majority of the middle class agreed that “putting your own capital at risk,” “diversifying the ways you make money,” having a “success attitude,” and “thinking like a millionaire” are all important ways to attain financial success. And to each of these statements, the middle-class millionaires said: Wrong. Wrong. Wrong. Wrong.

  Instead, we discovered that the self-made millionaires subscribed to a completely different set of priorities. Most overwhelmingly agreed that, among other things, if you want to succeed you should obtain an ownership stake in your work, persuade others to invest with you, get to know a lot of people, and learn from your bad business decisions. And yet, the importance of each of these ideas was rejected by the vast majority of the middle class!

  The starkness of the gap between the two groups was stunning. It was also just a little heartbreaking. After all, the vast majority of the middle-class survey respondents said they wanted to be financially successful. For the sake of their families’ well-being and their own personal happiness, they wanted to make more money. But their ideas about how to achieve financial success conflicted with the practices of those who had actually achieved it. Picture a person who claims a desperate need to get to some far-off city, but refuses to drive on the interstate. That became our image of the middle class.

  The Magic of the Mundane

  In reviewing the s
urvey results from that 2006 project, it became clearer to me why so many members of the middle class might consider the wealthy as somehow a breed apart, as people with unique and even mysterious gifts or talents for making money. Just as the Wachs-Berger test identified football-brilliant skills that traditional aptitude tests couldn’t measure, our survey revealed a gap between middle-class assumptions about money and the actual practices and attitudes of their middle-class peers who had become millionaires. Our middle-class respondents seemed to be blind to the mechanisms of how wealth is produced in ways that our wealthy survey respondents weren’t.

  If financial success remains a mystery to the middle class, it might be because the wealth-creation process practiced by Prince and his clients does not in any way resemble middle-class notions of stable, steady progress. The Business Brilliant system described in this book is characterized by a “synergy” of its various parts. Synergy is a word frequently abused in the business press to describe mergers or acquisitions that purport to make the resulting companies stronger than the sum of their parts. In truth, synergy describes the way complex systems and processes—such as a football play or the way a poison gas combines with an explosive metal to produce ordinary table salt—can produce outcomes that are unexpected and unrecognizable from their component parts. In a synergistic system, a set of simple and mundane individual factors can interact and affect each other in improbable ways, creating results that can seem breathtaking and—to the uninformed—mysterious in origin.

  Later, I commissioned Prince to run another survey—which we called the “Business Brilliant survey.” The new survey, run in the spring of 2009, was similar to our previous work together, but it posed more questions that were based on Prince’s successful coaching methods. We wanted to dive deeply into the details of what it takes to be successful and find out if the earlier pattern of misguided assumptions by the middle class would hold up. We asked questions about goal setting, personal autonomy, work habits, business relationships, retirement, and more. We went back to the same two population groups as in the previous survey, but we added two more groups: self-made millionaires in the $10 million to $30 million range of net worth, and self-made millionaires in the above–$30 million range. Fundamentally, we wanted to find out what beliefs and behaviors separate the mass middle class from the affluent, but we were also curious about what factors might spell the difference between the merely affluent in the $1 million to $10 million range and the truly rich.