The 7 Most Important Factors for Getting Rich
Dr Rainer Zitelmann shares his seven tips on how to get rich with CEO Today.
Some people believe that becoming rich is a question of luck. I disagree. Whether chance presents you with a good opportunity or not is not the key question, but rather:
- Do you actually recognise the opportunity in front of you? Or do you fail to appreciate it for what it is? As the Swiss author Max Frisch once said: “Chance shows me what I have an eye for.”
- And if you do recognise your lucky break, do you take advantage of it? Do you act? Or are you someone who says: “Maybe now is not the right time. Perhaps it’s something to think about one day…”
The likelihood that someone would only ever experience either good or bad luck during their lifetime is very low. Over many years and decades, in most cases, good and bad luck should balance each other out.
Setting big goals is more important than technical knowledge.
Jack Ma failed the test to get into university, wasn’t very good at math and didn’t know much about technology. But, from the beginning, he thought big and set himself very ambitious goals. Shortly after founding Alibaba, he told a journalist: “We don’t want to be number one in China. We want to be number one in the world.” He was so sure of his future success that, in February 1999, he even had one of Alibaba’s earliest meetings filmed — to make sure this key moment was documented to mark the beginning of his success.
Sales talent is crucial.
Two-thirds of the interviewees in my book The Wealth Elite stated that they owed much of their success to their ability to sell. For them, selling is not just about marketing products or services. They define sales far more broadly. To them, selling is all about being able to convince other people, whether it’s getting approval from a government official, persuading the perfect applicant to accept a job, winning over employees, or talking a banker into making a firm financial commitment. “Everything is sales,” explained one of my superrich interviewees.
Nonconformism – taking joy from swimming against the current.
The investor Jim Rogers studied history and philosophy at Yale and Oxford before he took a job on Wall Street in 1968. During hard times for the US stock market, he succeeded in laying the foundations for his wealth and success. Rogers met George Soros at a major investment bank. Together, they founded the Quantum Fund. They tore up the investment banking rulebook, buying stocks, commodities, currencies and bonds from all over the world. They were also among the first to use innovative strategies such as short selling.
Unlike most other investors, Rogers bought shares in companies that were in trouble. In the mid-seventies, for example, he invested heavily in the aircraft company, Lockheed. Rogers once told the story at a fancy dinner with bankers and investors. One of the other guests had heard that Rogers had been buying Lockheed shares. At that time, Lockheed was hit by a number of scandals and getting bad press nearly every day. The company’s share price had collapsed.
“Who would invest in a company like that?”, wondered one of the guests—loudly enough that everybody at the dinner could hear him. The other guests joined in the laughter. Rogers felt humiliated—after all, he was the butt of their joke.
But, “He who laughs last, laughs longest.” Rogers had done his homework and he was right with his positive analysis of the company. The share price shot up and his fund made a huge profit. At the same time, as the S&P 500 Index rose by just 47%, the Quantum Fund managed by Rogers and Soros gained an incredible 4,200%.
Dealing with setbacks.
Most of the superrich had faced serious setbacks and crises. What is striking is their attitude when things go wrong. They never blame outside forces or other people, they always look for the fault in themselves. They do not complain about being the victims of circumstance or the evil deeds of their opponents, they take personal responsibility for their mistakes. Nor do they make excuses for negative market developments. If the market takes a tumble, they blame themselves for misjudging it. This is what distinguishes successful people from unsuccessful people.
The ability to focus is really important.
In early July 1991, Bill Gates Sr. invited some guests over for dinner, including his son Bill Gates Jr. – the founder of Microsoft – and the investor Warren Buffett. These were two of the most successful men in the world, who, for many years, had been at the top of The Forbes World’s Billionaires list. The host asked his dinner guests: “What factor do you feel has been the most important in getting to where you’ve gotten in life?”. Buffett immediately replied; “Focus.” Bill Gates Jr. agreed.
Warren Buffett, too, had focused on a single goal for decades. According to his biographer, Alice Schroeder, even as a child, his dream was to become rich. One of his favourite books was One Thousand Ways to Make $1,000. When he was 11 years old, Buffett announced that he would be a millionaire by the time he was 35. At 16, he had already saved up $5,000. Today, that would be worth about $60,000—not bad for a 16-year-old! His prediction was only off by five years. He made his first million by the time he was 30.
You will never get rich if you can’t win the trust of others.
John D. Rockefeller, the richest man in history, is proof of just how important trust is in business. For the young Rockefeller, a key to his future success was realising that “old men had confidence in me right away.” Throughout his incredible career, he said his biggest problem was always “to obtain enough capital to do all the business I wanted to do and could do, given the necessary amount of money.”
His ability to win the trust of banks and investors was one of his most valuable assets, as Rockefeller knew well: “It is chiefly to my confidence in men and my ability to inspire their confidence in me that I owe my success in life.” So, what’s the best way to get other people to trust you? By acting and—even more crucially—by thinking in a way that inspires trust. Warren Buffett applies the following test to every decision and action: Is it something you would be happy for your wife, family, friends and neighbours to read about the next day in their local newspaper?
The formula for success is persistence and being willing to experiment.
Many books stress the importance of persistence, and that’s true. But staying in power alone is no guarantee of success. It needs to be combined with another very important characteristic: the willingness to experiment. Experimentation is more important than a precise business plan: Michael Bloomberg, number 9 on the Forbes list of the richest people in the world with assets of $55 billion, details the earliest days of his company. One of his key insights is that rigid planning can do more harm than good: “You’ll inevitably face problems different from the ones you anticipated. Sometimes you’ll have to ‘zig’ when the blueprint says ‘zag.’ You don’t want a detailed, inflexible plan getting in the way when you have to respond instantly.” If you want to understand the success of many startup companies in Silicon Valley, you need to understand the idea of “pivoting.” This involves being prepared to radically change your business model at a moment’s notice. The goal is not to stick to an original concept and prove how good it is. The goal is to establish a strong market position. If that means abandoning the plan and giving the company a completely new and different direction, then it’s time to pivot.
About the author
Dr Rainer Zitelmann is a historian and sociologist. He is also a world-renowned author, successful businessman and real estate investor. His most recent books The Rich in Public Opinion: What We Think When We Think About Wealth (https://therichinpublicopinion.com), The Wealth Elite (http://the-wealth-elite.com/), The Power of Capitalism (http://the-power-of-capitalism.com/), and Dare to be Different and Grow Rich: Secrets of Self-Made People Who Became Rich and Successful (http://daretobedifferentandgrowrich.com/), were released in 2019.
Comments are closed.