Copyright 2013 John T. Reed
My 10/7/13 Forbes magazine arried today. That’s the one with the annual Forbes 400 list. That is the list of the 400 richest people in America.
As I perused it, I looked at each person’s source of wealth. I don’t think I saw a single source that I liked. These people either inherited the money or are busting their asses 24/7 doing all sorts of stuff I would not want to do. Mostly they are going to meetings in offices. I work alone in my home office.
Larry Ellison is 3rd. He just won the America’s Cup for the second time. He made his money in Oracle software.
Is this sour grapes? I mean who wouldn’t want to be rich?
When I was young, I wanted to be rich and famous. Now, at 67, I am affluent and well-known, and have been for 35 years.
Would I like more money? Yes, but probably only a million or two.
As I have written on a number of occasions, wanting money implies you have a shopping list that includes items I want but cannot now afford. If I want $2 million more, I am implying there are $2 million of things that I do not now have but want. I have no such list. Probably, neither do you. And probably, neither do the people on the Forbes 400 list have any reasonable, not-yet-able-to-afford shopping list, yet most keep making more money. Many will tell you they do it because they enjoy making money?
I would ask them why is making money enjoyable? It sounds like a psychiatric defect, or a mindless habit, after you have enough. And the Forbes 400 long ago passed that point. I think they like being on that list—once again—a psychiatric defect.
Furthermore, the shopping list cannot be frivolous like yachts and homes all around the world. You can rent those things for relatively little and when you grow tired of them, you leave and make no further payments.
My middle son is a friend of David Geffen, one of the Hollywood guys on the Forbes 400. He make comments like, “People who think money makes you happy never had money.”
I had supper with Ross Perot once in my capacity as co-president of the Harvard Business School New Enterprise Club. At the time, he was America’s only billionaire, the Bill Gates of 1976. One of my friends there told me to ask him, “Yes, but are you happy?” I did. He said he was, but no happier than when he and his wife were 22-year-olds living in cramped quarters on a Navy base right after he graduated from Annapolis.
He also said he had to send his kids, who were still young then, to a course in kidnapping avoidance. That really creeped me out. I most certainly do not envy that situation. There is a point at which more money does you no good, but money notoriety, like Gates being the richest man in the world, probably creates enormous risk for him or his wife or kids being kidnapped. Forbes 400 people and centimillion-dollar lottery winners are in that situation: more than they could ever spend on things they really need, but so much as to make them and their relatives kidnap targets. One of my bankers once had his wife kidnapped because he was a mere bank branch manager. Moron kidnappers did not understand that branch managers cannot use the money in the vault to pay ransom.
Eonomist Mark Skousen and I were at a long lunch in Tiburon, CA recently and he asked me when I was happiest in my life. I had not thought about it before but after reflecting said, “Probably when I was an MBA student at Harvard Business School. My wife and I had just gotten married. She got accepted into the MBA program there during my first year there. Our future was unwritten but seemed bright. We made a big, prolonged effort to enjoy the moment—being at Harvard, being in the Boston area.”
I was neither rich nor famous at the time, but working on it. A lot of times in life, the journey is more fun than the arrival at the destination. Part of that is ignorance of, and overestimation as to, how wonderful the destination really is. Harvard MBAs are very much in journey mode. During the one year there when we were both full-time students, our net worth was going down, not up, with university spending and loans.
When my best man and I were at West Point and young Army offiers right after West Point, we were preoccupied with making up for lost time at all-male West Point with regard to the opposite sex. We asked ourselves, if we could be dating anyone on earth, whom would we pick. It was not a particular person we were asking about, but a category. My answer was good looking, college grad, lives within 60 minutes of where I live. Then we just made it happen by way of our “System.” That story is part of what’s in my Succeeding book.
If I ask myself that same question today, the answer does not match the Forbes 400 sources. Here are the first 10: Microsoft, investments; Berkshire Hathaway; Oracle; Diversified (Koch brothers); Wal-Mart (4 people); Bloomberg LP.
I really do not want to be running any of those companies. They are all management-intensive businesses. I see these people on TV and in magazines and newspapers. Their lives seem manic to me. They seem driven. I used to think that was virtuous. Now, if I felt driven, I would stop, turn around to look at the “person” who was driving me, and ask, “Who the hell are you and why are you hitting me with that whip?”
I really think a great many on the Forbes 400 need psychiatric help with regard to the lack of balance in their lives and what demons are chasing them to such heights. In the past, the Forbes 400 listed marital status and kids. This issue does not. I think it would be embarassing to many on it and a bit depressing to readers. You can probably sell more magazines with the money CAN buy happiness implication than with the divorce records of the 400.
Gtes and Buffett are maried—once each I believe. Ellison, however, I believe has had a more checkered marital experience. Ditto Bloomberg. Oprah is on the list, but she never married or had kids. To those of us who have, that is really sad. Poor little (?) rich girl.
With regard to a lot of the people on the list, I do not respect them or their success. I think they bullshitted their way to wealth with dubious IPOs—like Zuckerberg of Facebook—a free service and although it is now selling ads, I doubt the net income makes a good numerator above the equity in the company’s stock market capitalization.
Gates strikes me as the beficiary of a true business success story—IBM—done the old-fashioned way, combined with some IBM executives making the monumental blunder of giving control of their PC software to a twenty-something twit in Seattle. I think the wealth of Gates and the other Microsoft billionaires is more akin to inheritance than the “self-made” label Forbes put on it. I suspect these tech billionaires simply looked like the flavor of the month once upon a time and have since been burning their way through the IPO money and its momentum.
Microsoft was convicted of criminal anti-trust violations. When they played Gates’ depositon video, everyone in the court room including his own lawyers was laughing out loud at what an obvious liar he was. The verdict was not overturned as any believe. The new Bush administration simply dropped the break-up-of-Microsoft part of the punishment.
If you let me go off the Forbes 400 list, I can list people whom I would like my life to more resemble. Writers like Stephen King, J.K. Rowling (actually she is at the kidnap-target level), Michael Lewis, Tom Clancy, Dale Carnegie, Bill O’Reilly.
Forbes also has an annual highest-paid-authors list. I am an author. I love what I do. I know how those authors spend their days and that I like it.
But even with most of them, I have a problem. Most are fiction authors. To me, fiction is BS. Like playing tennis without a net. You don’t have to get the facts straight, although many make a big show about researching to sort of get the facts straight. Why? It’s fiction. When Hollywood gets hold of a book they are infinitely less interested in fealty to the facts, and they gross a hell of a lot more money off the stories in question than the book authors did.
I see non-fiction writers as a higher form of life. We do have to get our facts straight. But then I am not just a non-fiction writer. I am a how-to writer, which I see as a higher form of life than non-fiction writers. How so?
We how-to writers tell people how to do something they are extremely eager to do. The first people to buy our books are experts in the field in question. That’s how they got to be experts in their field and retain that status. So they really know their stuff and they will let the world know if you don’t.
The other readers of how-to books are intending to implement your advice in real-world tests. Either what I tell them will work or it won’t. If it does not, they will be pissed and tell their friends. The way books sell—really—is word of mouth. A reads the book, likes it, and recommends it to B, and so on.
If an author does not get positive word-of-mouth, the book does not sell. I have written on six genres—real estate investment, baseball coaching, football coaching, self-publishing, succeeding, and managing the risk of monetary instability (inflation and deflation). The majority of my book are, I believe, now in an edition other than the first. One is in its 19th edition.
Measured at the retail sales price, the total value of the books and newsletters I have sold in my career is probably around ten million or so. I have great testimonials from many of my readers at my web site. That is because my how-to-books give you good stuff that works in the real world. Other types of non-fiction books only need to be entertaining. Ditto fiction.
Another thing I do not like about the highest paid authors is that many of them are there because of their platform. That is, they are famous and sell books as much because of their fame as because of their books’ merit. O’Reilly seems to have both going for him, although I have not read any of his books. Dick Morris was a best-selling author when he was a rgular on Fox News. Then he blew the 2012 election forceast and appears to have disappeared from the best-seller list as a direct result of disappearing from Fox News.
I did a radio show in college—what was known as top 40 deejay format. I really enjoyed it. Today, I think I would enjoy being a radio talk show host like Limbaugh, Levin, Hannity, etc. I am a Libertarian, not a conservative, and my approach would be more like my headline news articles than the way they do it—so I don’t know how that would be received. I would not need to be as big as those guys, just draw a big enough audience to keep going and make an affluent living.
I don’t want to be kidnap rich or a platform author. Iwould rather be a good author whose books sell because they are well researched and well-written.
The pattern in these people whose lives I see as an improved version of mine is they work alone at home. Limbaugh’s radio studio is, I believe in his home. Why not?
Michael Lewis would probably be the one closest to what I would like to be. He appears to have a solid income and excellent recognition albeit without paparazzi or a manic lifestyle. He actually lives near me in Berkely, CA.
I never met him but exchanged emails once. I told him about a book I wrote that I thought he might like (My Contrarian football book) and asked if he would like a copy. He said sure why not. That was several years ago so perhaps I was wrong about him liking it.
He is the author of books like Liar’s Poker, Moneyball, Blind Side, The Big Short—a number of which have been made into successful movies. He has a wife and kids.
His wife is Tabitha Soren. She was the MTV newswoman who delivered the news as if deviating from a monotone or talking other than as if your jaw were wired shut would get you fired. My sense was MTV was trying to be different from grown-up news and adopted that odd style for that purpose. Sort of a “nothing excites us cool guys at MTV” reaction to everything. I know nothing about her other than what I just said. I am sure there is a lot more to her than that youthful indiscretion.
Lewis has kids and wrote a book about fatherhood. That is the sort of balance I suspect is missing in the lives of many of the Forbes 400. Lewis is not in the list of the top 50 richest authors at the celebrity net worth web site—although I suspect they may be wrong about that.
Lewis went to Wall Street right after Princeton undergrad. I suspect if he stayed there he could have ended up on the Forbes 400 list as a hedge fund manager. But he was as appalled by Wall Street as I was about the Army, and he threw it away writing Liar’s Poker on the way out. I was denounced within the Army for “throwing away my advantage” of being a West Point grad. Sunk cost.
My point here is I know many young people look at the Forbes 400 and salivate thinking if they could do that life would be wonderful. If you get what I want you to get out of the article above, you will recognize that I know very well who I am—and who I am not. That is job one. The Forbes 400 is really just a list of unique individuals who fit an extremely narrow criterion: Americans with a net worth of at least $1.3 billion. First, you need to figure out who you are. Then you need to figure out what career that best matches up with, and pursue it.
As far as money is concerned, once you have some as my wife and I did in the early eighties and then again more recently, you will find it has a surprisingly low marginal utility or point of diminishing returns. In my experience, an early 1980s million dollars—about $2.3 million in today’s dollars—quickly exhausted the list of reasonable purchases.
We have an 11-room house. Not long after we moved in, it occurred to me that if my net worth doubled, a 22-room house would be the logical purchase. But what the hell would I do with a 22-room house? Indeed, we had three sons. Know that that means? It means for about 12 years you have three sons living at home going to K-12 school. For us, the youngest went away to college in 2005—8 years ago. We now have a formal living room and dining room we never use and two kids bedrooms that are only used for storage and visitors.
What about cars? If our net worth doubles, what cars would we buy? My wife has a Lexus 430 LS. I have a Lexus 430 SC. For each of us, our current car is the best one we ever had—our favorite. Could we buy more expensive ones or newer ones? Yeah, but how would we be better off really? Barely perceptibly I expect.
My wife could be working five days a week and making 25% more money. She chooses to work four. Next year, she is going to three. That will reduce our income from her salary by 25%. One of the things we spend money on, then, is working fewer days. She likes to do what I call galavanting—lunches with friends, charity work, travel. In other words, we could have more money by the simple change of her working five days a week. But having led affluent lives for decades—including having more income than now—she knows having the money and having the free time and chooses to use our adequate affluence to “buy” more free time.
I work seven days a week, because I enjoy it and regard it as more hobby or fun than work, but my wife would quickly add that she doesn’t think I work 40 hours a week.
Figure out who you are and how you want to spend your days, then pursue that career. Don’t be driven. Lead a balanced life. All of that is what my Suceeding book is about. Being a billionaire or centimilionaire is way too much of a good thing. Having that much money makes you a possible crime target and just managing all that money and possessions is a job itself, probably not one you like or would agree to do for someone else—espeically if you were rich.
Marshall McLuhan said,
To the spoils, belongs the victor.
John T. Reed