How to Get Rich by Felix Dennis Summary
Essential lessons on starting a business from a businessman with over $750 million net worth.
- Try to make $60 to $80 million by the time you’re 35, then retire.
- Anyone who’s not busy learning is busy dying.
- You’re going to die. You might as well take risks. You might as well get rich.
- New or rapidly developing industries generally provide more opportunities to get rich than established sectors. 3 reasons: (1) availability of risk capital, (2) ignorance, and (3) the power of a rising tide. (More in Chapter 4 below.)
- If you’re working a job, you have to decide for yourself if you want to continue to make your boss rich or if you want to get rich yourself. You have limited time to make a decision. Your youth and stamina are ebbing away. You are getting too comfortable.
- If you have a job, you are there for one reason—to be a spy. To learn as much about the industry as possible and to make as much money as possible to start your own business.
- Take risks and subsequently exploit the initial success. Think about your ventures: What got money? What got views?
- Employ people smarter than you.
- “Making money was, and still is, fun, but at one time it wreaked chaos upon my private life. It blocked me from beginning to write poetry until my early fifties. It consumed my waking hours. It led me into a lifestyle of narcotics, high-class whores, drink and consolatory debauchery.”
- If you want to be rich, you need to mentally develop thick skin. Not so thick as to blind you to well-constructed criticism and advice, especially from those you trust. Nor so thick as to cut you off from friends and family. But thick enough to shrug off the inevitable sniggering and malicious mockery that will follow your inevitable failures, not to mention the poorly hidden envy that will accompany your eventual success. There WILL be mockery and envy.
- If the odds of getting rich put you off, then you deserve to stay poor.
- You’ll always regret not starting a business.
- If you care what the neighbors think, you will never get rich.
- If you are not prepared to work longer hours than almost anyone you know, then you are unlikely to get rich.
- If you cannot convince yourself that you are “good enough” to be rich, you will never get rich.
- If it flies, floats, or fornicates, rent it. It’s always cheaper than to buy one.
- If you cannot treat your quest to get rich as a game, you will never be rich.
- If you cannot face your fear of failure, you will never be rich.
- A regular salary becomes addictive over time.
- If you want to get rich, think of traditional jobs as launch pads (to get money, skills, or other benefits) or as a chance to infiltrate and understand a particular industry. Only pretend to be part of the team, you really are only there for what you can benefit from: improving negotiation and communication skills, etc.
- It’s way easier to be successful in non-glamorous and growing industries. It’s simple supply and demand. Everyone wants to be a famous movie director or an Instagram model, not enough people want to dig holes.
- Selling is about generating hype and keeping a straight face as you demand a 50x markup.
- Find a passion. Something that feels like play to you, looks like work to others, and will make you rich. Study your passion, management, sales, and marketing.
- Whatever your inclinations, your aptitude, your abilities or your preferences, never shrink when opportunities arrive. If you have weighed the odds and find yourself convinced, ignore the protestations of sensible people and their conventional caution.
- “Good ideas are like Nike sports shoes. They may facilitate an athlete who possesses them, but on their own they are nothing but an overpriced pair of sneakers. Specially adapted sneakers may be a good idea. But the goal is still to win, and sports shoes don’t win. Athletes do.”
- Cash is a great persuader.
- People often lose because they refuse to emulate success. Watch your rivals closely and never be ashamed to emulate a winning strategy.
- “If a man write a better book, preach a better sermon, or make a better mouse-trap than his neighbor, tho’ he build his house in the woods, the world will make a beaten path to his door.” — Ralph Waldo Emerson
- “If you never have a single great idea in your life, but become skilled in executing the great ideas of others, you can succeed beyond your wildest dreams. Seek them out and make them work. They do not have to be your ideas. Execution is all in this regard.”
- “When going through hell, keep going.” — Winston Churchill
- Get rich or die tryin’. “I would not be a wage slave. I would not take “no” for an answer. I would not give in. I was going to be rich. Some how. Some way. Someday soon. And I would not retreat to the safety of a decent job until I was starved out of house and home.”
- There are always the gentle, siren voices of friends, parents and employers, of reasonable and sensible people, torn between concern for your welfare and the secret fear that you might succeed.
- Read a lot of biographies.
- Read Letters to My Brother by Vincent van Gogh. It’s one if the best biographies.
- “[Van Gogh] would not give in. He would die first. He would kill himself first. And that’s what he did. To our eternal shame, he did just that. He died having written: “I cannot help it that my pictures do not sell. Nevertheless, the time will come when people will see that they are worth more than the price of the paint.”
- Felix faked revenue in the beginning so people and banks thought that his business was successful.
- Monitor and forecast cash flow yourself. Do not delegate it.
- Improve cash flow:
- Keep payroll down to an absolute minimum.
- Never sign long-term rent agreements or take luxury office space.
- Don’t spend I’m fancy office or reception furniture unless your business demands that you make such impressions on clients.
- Pay yourself just enough to eat.
- Call customers who owe you money.
- Walk everywhere you can. Don’t get a car or an Uber.
- Watch staff expenses with an eagle eye.
- NEVER issue company credit cards, cell phones, or cars.
- Turn off electric equipment over night.
- Play one supplier off against another. Ruthlessly. They want your business.
- Think big. Think global. Think higher prices. Don’t be afraid to jump on a plane to get a deal done.
- “Success is never permanent; failure is never fatal. The only thing that really counts is to never, never, never give up.” — Winston Churchill
- You only need 1 talent to get rich: The talent to identify, hire, and nurture others with talent.
- Talent is indispensable, although it is always replaceable.
- Being too nice, comfortable, or sensible will stop you from getting rich.
- It is doubt multiplied by the fear of failure, unconfronted, which leads to the creation of a vicious cycle where self-belief is eroded and nothing is achieved. Doubts can and should be confronted, as should fear. Write down your doubts and fears. Examine them.
- If you have a near death experience, one of two things will happen. Either you become cautious to an absurd degree, or you are liberated from many ordinary fears. With liberation comes the knowledge that nothing is really very important in the lives of men; nothing is as terrifying as the fear itself. And from that, paradoxically, comes self-belief—a belief that anything is possible.
- You are unique. No other human was ever born, or will ever be born, with the same combination of upbringing, flaws and qualities that you possess. Why should you not believe in yourself?
- The biggest business I ever built wasn’t my first or second. It was my twentieth. But if I hadn’t built the second, I would never have reached the twentieth. Make a bunch of businesses like Richard Branson.
- Make a prototype of your ideas. This makes you the inventor and others can not as easily steal it.
- “Luck is what happens when preparation meets opportunity.” — Seneca. Preparation is key. Be prepared. Do the heavy lifting and the homework in advance. Identify and exploit opportunities.
- Stay away from the unlucky and the unhappy.
Part 1: Reasons Not to Get Rich
Chapter 1: Pole Positions
Money is color-blind, race-blind, sex-blind, degree-blind, and couldn’t care less who brought you up or win what circumstances. If you truly believe that your race, sex, or upbringing can keep you from becoming rich, then you had best give up here.
Anyone who’s not busy learning is busy dying.
Curiosity has led many a man and woman into the valley of serious wealth.
Employ people smarter than you. Give them benefits: fulfilling work, congenial collages, status, and the promise of promotions and pay raises.
Similar to Shakespeare’s “Cowards die many times before their deaths. The valiant never taste of death but once.”
Goethe: “Boldness has genius, power and magic in it.”
Always help and wish employees luck who want to leave and start their own business. It’s win-win. If they fail, they’ll like you and come back to work. If they succeed, you now have an ally in your industry.
Chapter 2: A Million to One
If you’re working a job, you have to decide for yourself if you want to continue to make your boss rich or if you want to get rich yourself. You have limited time to make a decision. Your youth and stamina are ebbing away. You are getting too comfortable.
If you’re old, get a young and fearless business partner to fill in your knowledge gaps.
What stops people from becoming rich?
- Poor health
- Age—people who are too old and are having mental handicaps.
- Working for the government.
Felix estimates that the odds of becoming one of the richest few thousand people in your country is about 1 in 1000 (for people who are truly dedicated to becoming successful).
“If I had my time again, knowing what I know today, I would dedicate myself to making just enough to live comfortably (say $60 or $80 million), as quickly as I could—hopefully by the time I was thirty-five years old. I would then cash out immediately and retire to write poetry and plant trees.” — Felix Dennis (est. $750 million net worth)
“Making money was, and still is, fun, but at one time it wreaked chaos upon my private life. It blocked me from beginning to write poetry until my early fifties. It consumed my waking hours. It led me into a lifestyle of narcotics, high-class whores, drink and consolatory debauchery.”
Part 2: Getting Started
Chapter 3: Harnessing the Fear of Failure
The fear of failure is the 800-pound gorilla. It’s the reason you have not already begun making yourself rich.
Prompt decisions, right or wrong, are far better than delayed decision.
To sum up then, if you wish to be rich, you must grow a carapace – a mental armor. Not so thick as to blind you to well-constructed criticism and advice, especially from those you trust. Nor so thick as to cut you off from friends and family. But thick enough to shrug off the inevitable sniggering and malicious mockery that will follow your inevitable failures, not to mention the poorly hidden envy that will accompany your eventual success. Few things in life are certain except death and being taxed. But sniggering and mockery prior to any attempt to better yourself financially, followed by envy later, or gloating during your initial failures—these are three certainties in life. It hurts. It’s mindless. And it doesn’t mean anything. But it will happen. Be prepared to shrug it off.
If you care what the neighbors think, you will never get rich.
If you are not prepared to work longer hours than almost anyone you know, then you are unlikely to get rich.
If you cannot convince yourself that you are “good enough” to be rich, you will never get rich.
If you cannot treat your quest to get rich as a game, you will never be rich.
If you cannot face your fear of failure, you will never be rich.
Chapter 4: The Search
“Team spirit” and not letting your colleagues down is really just fear. Fear of going out and making a winning business. Fear of failure.
Your close friends and family members probably don’t really want you to succeed. They’d rather your failed or only because mildly successful. Because most people never overcome their fear and they don’t think they can be successful.
Dennis’ magazine knew nothing about personal computers but they kept posting articles about them because they were trending: “As magazine publishers, we could not hold a candle to our bigger rivals, and no one knew this better than they. But at least we appeared to know what we were doing, which in turn attracted editorial talent who really did know. Better still, the tide of personal computing technology rose high—higher than anyone could have predicted, and it rose quicker than anyone had thought possible."
Whoever controls a business can force its sale. Whoever controls a business can implement a merger. Whoever controls a business can fire you. Whoever controls a business, even by a pitiful 1 percent, is likely to take a great deal more money out of it than the minority shareholders. Remember, too, that in both private and public companies, not all shares are necessarily equal, either in voting power or financial value. Choosing a growing industry or a growing sector of a static industry can free you from such financial control freaks.
Investors are drawn to emerging industries in the hope of making a fast buck. To get rich, you will need capital, and to acquire capital you need to be where loose capital is searching for a home. In addition, the combination of ignorance and misconception that surrounds any new market or technology works in your favor. If you are quick at grasping concepts and jargon, you become an “instant expert.” The owners of capital love “experts.” Finally, the power of a rising tide masks many start-up difficulties, putting individuals and small companies on a more even footing with conglomerates and established operators; for a while, at least.
If you choose a growing industry or sector, you don’t need venture capital because you can bootstrap it—the rising tide will raise your boat.
“The Search” that the chapter title refers to is “the search” for business success—the search for a niche. The search for funding.
The wit to spot and winkle out talent in young artists. Plus the ability to sell, which is usually nothing more than a talent for hype and keeping a straight face as you demand a fifty times markup from potential buyers who wouldn’t know a Damien Hirst from a pickled sardine.
An understanding and passionate affinity with any subject, in combination with effective management, sales and marketing techniques, could well provide a tailor-made solution to the Search. Cherish your inclinations and affinities. Though not infallible, they may well lead you in the right direction.
So how do you judge your own aptitudes? Trial and error is the only way I ever heard of.
It is the instinct to seize an opportunity when it presents itself that perhaps sets apart the self-made filthy rich from the comfortably poor, the willingness to ignore conventional wisdom and risk everything on what others consider to be folly.
Henry Ford and Bill Gates: “Their ability to take chances and to subsequently exploit initial success counted more than their inclination toward a particular industry.”
But then, in reality, they made their own luck. They never stopped searching. Perhaps they spent months or even years searching in the wrong place.
Chapter 5: The Fallacy of the Great Idea
In the real world, at least, ideas are not hogwash. But they are very unlikely to make you rich on their own. More important, it really does not matter who gives birth to any particular idea. This is borne out by the laws relating to patents and inventions. You cannot patent an idea. You can only patent your own method for implementing an idea. It is for this reason that so many people have become rich despite never having had a single great idea in their lives.
Having a great idea is simply not enough. The eventual goal is vastly more important than any idea. It is how ideas are implemented that counts in the long run.
- Take good ideas from books, podcasts, and people. Then implement them effectively.
Good ideas are like Nike sports shoes. They may facilitate an athlete who possesses them, but on their own they are nothing but an overpriced pair of sneakers. Specially adapted sneakers may be a good idea. But the goal is still to win, and sports shoes don’t win. Athletes do.
Dennis publishing missed out on the licensing of popular games and this is what Felix wishes he did:
“What I should have done was to take my best men and women in the company and send them to Japan, Europe or America. Or anywhere where Sega, Sony and Microsoft and the rest would agree to meet with us. We should have wined, dined and cozied up to them. We should have searched for another vehicle via which the popularity of such games could be exploited.”
- Business is about relationships.
Continued: “If no other vehicle could be found, we should have tried trumping Future’s [the competitor who got the major game licenses] offers worldwide. Cash is a great persuader.”
- Beat your competitors by paying more for working network platforms.
“Ideas are certainly of immense importance, but I have seen so many people attempting to create a start-up company become obsessed with proving that their idea is “right” rather than obsessed with making money. And I have watched them wasting years doing it.”
“Apple’s products were innovative, slick, cool and far, far superior in every way to any other personal computer available at that time. In fact, they were so cool their users often spent a great deal of time proselytizing for the Apple cause.” — Felix Dennis
- Replace Apple with Tesla and personal computer with EV.
Chapter 6: Obtaining Capital
Sharks, dolphins, and fishes
- Sharks are credit card companies and other loan sharks. Stay away at all costs.
- Dolphins are venture capitalists. Stay away if possible.
- Fishes are friends, family, acquaintances, ex-employers, business colleagues, suppliers, and vendors. They are great.
Hedge funds, according to Fortune magazine, by the way, are mutual funds with the “ability to short stocks and deploy exotic financial instruments.”
The only people I ever met who got insanely rich from a hedge fund operation were (you guessed it!) the managers of hedge funds.
Venture capital guys will push you to grow that year. Felix calls them dolphins because they just want to flip (sell out for a profit). They don’t care about long-term prospects. Or long-term shareholder value. He only cares about growth—and he cares about it now.
But sometimes you need some capital to get going: “You will need a degree of success to exhibit to them. And you will need to be somewhat humble—except in your financial projections.”
[Venture capitalists’] first loyalty is to the quick buck. You do business with them at your peril. Be warned: with them, you may have a better than even chance of making your first million. But you will make them many, many more millions in order to do so. And you are unlikely to stay in control of your own destiny with any business they invest heavily in.
Should you decide to approach venture capitalists, and by some miracle should they agree to back you, then I urge you to seek the finest legal advice that your money can buy for the ensuing negotiations. Just one sentence, even a phrase, within the initial contract can make all the difference in the world to the outcome a few years down the road.
It was via the fishes that I made my own first money—the seed capital which ensured that I retained control and ownership of my own business back in the early days of Dennis Publishing. Fishes come in all shapes and sizes. Friends, acquaintances, relatives, business colleagues, small investors, friendly bank managers of the old school, professional advisors, ex-employers, suppliers and vendors are among them.
Chapter 7: Never Give In
What fueled me was the desperation of knowing that unless I found a way around my lack of capital, unless I could pour my energy into a venture of my own, I would be condemned to a life of wage slavery. There is absolutely nothing more likely to dampen the prospects of becoming rich than a nice, fat, regular salary check.
It was depressing meeting with them, listening to stories of their latest promotion, never able to buy a round in the pub as they were so generously willing and able to do.
At age 25, Felix had a girlfriend and she was trying to get him to get a job. She said that he could always start a business later and that she would stay with him if he had a job: “If I had promised her then, sitting by that fire, promised that I would “earn a crust like a normal human being,” then my life would have taken a different course, I think. Yet, like the poet Robert Frost: “Knowing how way leads on to way / I doubted that I should ever come back.” There was the rub. It was now or it was never.”
His apartment had no electricity or gas because he couldn’t pay the bills.
His girlfriend left him for his friend because his friend had a job and Felix wouldn’t get a job.
That is what it is like in the beginning. Always. It is desperate and it is humiliating.
There are always the gentle, siren voices of friends, parents, and employers, of reasonable and sensible people, torn between concern for your welfare and the secret fear that you might succeed.
Chapter 8: The Five Most Common Start-Up Errors
“The history of all human ideas is a history of irresponsible dreams, of obstinacy, and of error.” — SIR KARL POPPER, CONJECTURES AND REFUTATIONS
Felix and another business friend of his would send money back and forth between their business bank accounts to make it look like they had positive cash flow. This allowed them to get overdraft facility from the bank so he could grow his business faster.
Fax machines and cheap airplane trips were “failures one minute, a success the next. It was just a question of timing.”
- How do you know when an idea is a failure? How can you tell the difference between a slow-burn success and something that will never take off?
- So when’s the perfect time? When something becomes a trend. Bitcoin in 2019 (maybe sooner, in the 2017 ICO phase). Blogging in the late 2010s. YouTube in 2015.
Fly the cheapest tickets possible.
Most of the worst errors I have made in my life came from forgetting to act small. It’s hard to do when you’re rolling around in coin and everything is going your way. But acting big leads to complacency, and complacency is the reason that many successful start-ups falter.
Every day you have to hit the ground running, putting in more hours than even your most dedicated member of staff. You have to stay flexible. You have to be willing to listen and to learn and to emulate success elsewhere. If you don’t, if you think you have already made the cut, if you’re thinking “game over: time to party,” then bad stuff begins to happen very quickly.
In a single decade, I got through more than a hundred million dollars living high on the hog. At one time, there were no less than fourteen “mistresses” depending on a regular stipend from my personal bank account. A single evening’s entertainment could come to thirty or forty thousand in the Big Apple, London or Hong Kong. There was nothing I could not do—I was king of the world. Acting big.
Figure out what people’s true incentives are. And make sure you keep really talented employees. Felix had a great employee who was being recruited by an American publishing firm. The employee wanted to move to America. Felix knew that the employee was not greedy and that the position title and location mattered more to him. So Felix made an American branch of Dennis publishing and made the employee the president (the other company had offered him a VP position). Allow your most talented employees to start their own idea (start their own business within yours, essentially). Talent does not always seek high salaries, the opportunity to prove themselves and a chance to run the show on a day-to-day basis, will often do the trick just as well.
My advice on this subject was contained in the second paragraph of this section. You must identify talent. Then you must move heaven and earth to hire it. You must nurture it, reward it properly and protect it from being poached. If necessary, dream up a new project. Better still, get the talent to dream it up.
Youth is a further factor. By the time talent is in its mid-to-late forties or early fifties, it will have become very, very expensive. Young talent can be found and underpaid for a short while, providing the work is challenging enough. Then it will be paid at the market rate. Finally, it will reach a stage where it is being paid based on past reputation alone. That is when you must part company with it.
Part 3: Getting Rich
Chapter 9: Cardinal Virtues
- Self-belief (and, usually, a dollop of arrogance).
- Trust your instincts.
- Make more baskets: diversify! Ideally, disrupt yourself.
If she came to see you and said, “I have an idea for a colored note that can be stuck onto paper, that you can write on, and that can be removed later without leaving a mark,” then she is a fool. She should not have come to you without protecting that idea very, very carefully indeed.
However, if she then brought out a sample that did not work very well, but which worked to some degree, the case is altered. She has executed her idea, however badly. If you wish to invest in the idea, you would almost certainly have to come to a legal agreement with the inventor.
This all sounds hypothetical and theoretical. But it’s not, you know. In more situations than you might imagine, it becomes critical. Ownership is all. When who owns what is in dispute, the only people who are going to get rich are the lawyers. There have been many, many bitterly contested ownership disputes in business which not only wrecked the companies involved, but destroyed the sanity of the main participants. The development of the television set in America was one such.”
Chapter 10: A Few Words About Luck
Army chaplains who have seen bullets fly, sometimes boast that “there are no atheists in the foxholes.”
When you change accounting systems (or accountants), have the numbers checked over and over again.
“Luck is what happens when preparation meets opportunity.” — Seneca
- Prepare yourself for luck, but don’t seek her out. Let her come to you.
- Make your own luck.
- Don’t whine or ever describe yourself as “unlucky.” (You’re alive, aren’t you?)
- Be bold. Be brave. Don’t thank your lucky stars. The stars can’t hear you.
- Stay the course. Stop looking for the green grass over the hill.
- Don’t try to do it all yourself. Delegate and teach others to delegate.
- Remember that most predators are lucky most of their lives, unlike their prey.
- Whiners and cowards die a hundred times a day. Be a hero to yourself. If being a hero isn’t your style, then fake it. Reality will catch up eventually.
- Just do it. It is much easier to apologize than to obtain permission.
- Never take the quest for wealth seriously. It’s just a game, chum.
- Be lucky. Get rich. Then give it all away. (We’ll get to that bit later)
Chapter 11: The Art of Negotiating
The fortress that parleys is already half taken. — Russian proverb
You don’t get rich in management. You may need to do it at times, but it’s best to delegate management.
If you have a small startup and ask a bank for a loan to meet payroll, you definitely won’t get one. But if you need a loan, say, because you wish to take a private company public with a reasonable chance of success in the not-too-distant future (in other words, you don’t really need a loan, it would merely be convenient to be offered one), then loans will shower upon you like confetti.
- Always appear successful. People will want to join, give loans, etc. Everyone is attracted to success. Capital is attracted to success.