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How to Become a Billionaire: The Russian Oligarchs

How the Russian Billionaires Became Billionaires: A Loving Portrait of Larceny

Being the history buff that I am, I couldn't help but order this history of the Russian Oligarchs as soon as I saw it. As it will be a week or so before it arrives, I will quote the Amazon product description that sold me on it below. The reviews are also glowing. Since the Russian oligarchs ("billionaires") comprise a Rogue's Gallery of fast thinking opportunists, this should be as fun to read as any bank heist caper or Wall Street investment banking history.

The Oligarchs: Wealth And Power In The New Russia by David Hoffman.

Hailed as "the most dramatic and comprehensive account" of the early years of Russian capitalism (New York Times Book Review)

David Hoffman, former Moscow bureau chief for the Washington Post, sheds light onto the hidden lives of Russia's most feared power brokers: the oligarchs. Focusing on six of these cunning and ruthless men--Alexander Smolensky, Yuri Luzhkov, Anatoly Chubais, Mikhail Khodorkovsky, Boris Berezovsky, and Vladimir Gusinsky--Hoffman reveals how a few players rose to the pinnacle of Russia's new capitalism.

The oligarchs started small. Before perestroika, they lived the lives of Soviet citizens, stuck in a dead-end system, cramped apartments, and long bread lines. But as Communism loosened, they found gaps in the economy and reaped their first fortunes by getting their hands on fast money. As the government weakened and their businesses flourished, they grew greedier. The state auctioned off its own assets, and they grabbed the biggest oil companies, mines, and factories. They went on wild borrowing sprees, taking billions of dollars from gullible western lenders. When the ruble collapsed, the tycoons saved themselves by hiding their assets and running for cover. This is a saga of brilliant triumphs and magnificent failures, the untold story of how a rapacious, unruly capitalism was born out of the ashes of Soviet communism.

About the Author
David Hoffman joined the Washington Post in 1982, and covered the Reagan and Bush presidencies as a White House correspondent. After serving as diplomatic correspondent and Jerusalem correspondent, he moved to Russia to head the Post's Moscow bureau for almost six years, and is currently Foreign Editor of the Washington Post. Get more information.

How to Become a Billionaire: Alexander Lebedev

Alexander Lebedev talks about how he became a billionaire. He's a Russian oligarch and the owner of the London Evening Standard. Click here for video.

Take the first ever course on how billionaires become billionaires.

The Truck Driver Who Reinvented Shipping: Malcolm P. McLean

Malcolm P. McLean is the man who invented the cargo container. Here's a short and very readable account of how he came up with the idea that would revolutionize transport.

Malcolm P. McLean, a truck driver, fundamentally transformed the centuries-old shipping industry, an industry that had long decided that it had no incentive to change. By developing the first safe, reliable, and cost effective approach to transporting containerized cargo, McLean made a contribution to maritime trade so phenomenal that he has been compared to the father of the steam engine, Robert Fulton.

(source)

How to Be Happy in Business

So, what can billionaires teach us?

I believe that they have something to teach us about being happy--at least in business.

I started reading the biographies and autobiographies of tycoons around 1980. In addition, I followed the lives and careers of a few in the business press. What always struck me as the common theme in the lives of billionaires and tycoons is that they had all found a way to make money from something fun that they truly loved doing: deal-making in most cases. By "deal-making" I mean the accumulation of cash flows. Deal-making is a fun business because it brings fresh challenges every day in contrast to building just one company up.

In contrast, the single company owner is rarely happy after five or ten years as burn-out tends to set in rather quickly from the repetition and routine. I base this claim on a sample of roughly 1500 which I have observed over the past 25 years as an entrepreneur, consultant, and business broker.

This Venn Diagram by Bud Caddell illustrates why billionaires are billionaires. They are right in the dead center of the sweetspot.

Go read Bud's piece How to Be Happy in Business.

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How to Become a Billionaire: Poor Steve Schwarzman

FINANCIAL TIMES HITS STEVE SCHWARZMAN FOR SHARING $300 SUBSCRIPTION

This news story gave me a chuckle. Despite the deluge of stories coming out since last September about Wall Street executives ripping off billions, this one manages to stand out. The company of billionaire buyout king,  Steve Schwarzman, who recently blew a cool million on a birthday party for himself, is being sued over the sharing of a Financial Times subscriber account. These accounts can cost up to $300 per annum. The Financial Times claims that a "senior employee" at the firm opened one account under the name "the blackstonegroup" with "blackstone" as the password.  (I need to try logging in with that.) The account then set off alarms at the FT when the "subscriber" accessed far more files than any one mere mortal could be expected to. Apparently, judging by the IP numbers associated with this user, he or she also zipped around the globe at something approaching the speed of light.

A closer look revealed "widespread use of the single, individual account" by Blackstone employees located both in the US and abroad. The suit also alleged the abuse goes back as far as 2002.

Blackstone's penny-pinching ways stand in stark contrast to the way Schwarzman lives. Two years ago, his wife threw a $3 million 60th-birthday party for the buyout king that featured 500 guests, and included a performance by Rod Stewart. A Wall Street Journal story chronicled Schwarzman's fondness for $40 crab legs and for running up weekend food bills of $3,000.

The Financial Times is suing both Blackstone and 100 unnamed individuals, which it refers to as John Does 1 through 100, for copyright infringement and violation of the Computer Fraud and Abuse Act.

The Financial Times said it is currently uncertain of the identities of John Does 1 through 100, but said it will name them personally if granted a discovery process that will allow them to be identified.

There's a very funny picture of Steve Schwarzman with the story.

The lesson here is that wealthy people tend to be very tight-fisted when it comes to parting with money.  Just read their biographies to see that this is an almost universal rule. However, that stinginess is an integral part of what helped to make them multi-millionaires or billionaires in the first place.

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How to Become a Billionaire: Do You Have What it Takes?

This piece was inspired by an email I received a few days ago from a very successful 16 year old entrepreneur.
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Do you have what it takes to become a millionaire or billionaire?

Back in 2003 the BBC aired a 4-part series titled "Mind of a Millionaire".

Five of Britain’s top self-made multi-millionaires are stripped of the trappings of wealth, and mixed in with a group of ordinary people. They then undergo a series of probing tests designed to reveal what they are really like and what motivates them. Can the psychologists find the ruthless qualities they think you need to make a million, and can you?

The number of self-made millionaires in Britain is on the increase. Using a specially commissioned survey of British millionaires, this series explores the lives of some of the most remarkable of this new breed of millionaire - from the boy who made his first million when he was 14, to a man who spotted the potential in mobile phones. Educational qualifications are not necessary, nor do you need to be able to get on with people, but a bit of ruthless arrogance helps.

I'm not sure how people outside of the UK can see these programs. However, there are two online tests you can take to find out your millionaire potential.

What is your millionaire potential?

Can you work your way to success?

These types of tests always bring up a memory from back in college. A group of students were discussing one of those "Do You Have What it Takes to Be an Entrepreneur" tests in a magazine, and a bona fide entrepreneur who happened to be walking past them smiled and said, "If you need to take a test to see if you're an entrepreneur, you're not." 

I couldn't agree more and here's a story from my course that illustrates why:

There’s a similar story about how director Steven Spielberg got his start in the film business. After being accepted at Universal Studios for a short term internship back in the late 1960s, he decided that he loved the business so much that he had to stay permanently. Shortly after making this fateful decision, he found an old trailer which had once been used as an office but now sat abandoned in a back corner of the Universal lot. Spielberg cleaned it up, laid claim to it as his office, and started showing up every morning for work in a suit and tie and briefcase in his hand. The security guards at the gate recognized him from his intern days and assumed that he had been given a paid position with the studio. Spielberg used this opportunity to make the connections which allowed him to start making his initial short films such as Amblin’ which attracted the backing of the studio head. Spielberg became the youngest director to ever sign a long-term deal with a major Hollywood studio.

What a powerful illustration of a man with a calling. I doubt that Spielberg would have taken tests such as "Do You Have What it Takes to Be a Spectacularly Successful Hollywood Mogul?", even if they had existed. He just knew that there was only one path in life for him to follow. Basically, he had no choice in the matter.

So your takeaway for today is this: entrepreneurship is a calling. Either you just know that you have to pursue it, or it's not really your vocation. Or to paraphrase one of the greatest lines in cinema history:

I Don't Need No Steenkin' Tests!!! *

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One more important point if you're planning on being a regular reader of mine. Do not make being a billionaire your goal in life. That's an empty goal devoid of genuine motivating power. Moreover, your subconscious mind will refuse to take it seriously. Indeed it will dismiss it as an unrealistic pipe dream. Instead your goal should be to both learn their business strategies and implement them. It's about playing the game and playing it to the best of your abilities.

So he invented just the sort of Jay Gatsby that a 17 year old would be likely to invent, and to this conception he was faithful to the end. - F Scott Fitzgerald, The Great Gatsby

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* Note to Self: Please Learn How to Use Photoshop.

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Billionaire Lessons from Malcolm Gladwell

Malcolm Gladwell has a new book out titled Outliers: The Story of Success. What inspired the latest book?

"I've always been drawn to those who are exceptional or weird in some way," he says, "and the book is about people whose achievement exceeds every expectation."

So what are some of the key lessons on success presented in the book? Well, a big one is that there's really no such thing as overnight success. In other words, don't hold your breathe waiting to be discovered:

RD: Is there such a thing as an overnight success?

Gladwell: No. And that's my concern with a show like American Idol. It encourages the false belief that there's a kind of magic, that you can be "discovered." That may be the way television works, but it's not the way the world works. Rising to the top of any field requires an enormous amount of dedication, focus, drive, talent, and 99 factors that they don't show on television. It's not simply about being picked. Which, by the way, is why very few of the anointed winners on American Idol have gone on to true success. Most have flamed out and gone away. That should tell us something. (source)

Here are his 5 Steps to Success:

1. Find meaning and inspiration in your work.

2. Work hard.

3. Discover the relationship between effort and reward.

4. Seek out complex work to avoid boredom and repetition.

5. Be autonomous and control your own destiny as much as possible.

Find out more about the book here Malcolm Gladwell's Outliers: The Story of Success.

The Outsider's Edge: The Making of Self-Made Billionaires

If you enjoy reading biographies of successful entrepreneurs and business people--including billionaires--there's a gem you have most likely missed.  Brent Taylor's  The Outsider's Edge: The Making of Self-Made Billionaires makes for a fascinating read particularly if you're interested in the psychology of super-high achievers. The author spent four years running KPMG's Centre for Consumer Behaviour and has served as a consultant to Fortune 500 corporations as well as governments. He is a also a member of the Australian Market and Social Research Society.

As Taylor explains it: "[He] has long been fascinated with extreme achievers and as a researcher he was constantly frustrated by the lack of explanation as to why extreme achievers are as they are. This was the catalyst for the long exploratory journey that has resulted in The Outsider’s Edge."

The book explores the early lives and backgrounds of 17 high profile billionaires and attempts to explain what drove them to such astonishing levels of success. I found the reading especially interesting because the vast majority started from fairly humble origins. (Hint: New York City real estate tycoons whose fathers were already worth 150 million back the 1970s when they started out are not included in the book.)

The 17 billionaires analyzed in the book are:

• The gangly, uncoordinated, mid-western US small town boy who ran away from home and became a great investor.    Warren Buffett – Investment – Berkshire Hathaway.

• The dirt-poor rural African-American woman who went on to become the world’s most recognised talk show host.  Oprah Winfrey – Oprah.

• The dyslexic Swedish farm boy who went on to found one of the world’s greatest furniture chains.  Ingvar Kamprad – IKEA.

• The two Jewish boys unknown to each other, who, after struggling to survive in Nazi occupied Budapest, went on to huge success in international money trading and shopping centres in new countries.  George Soros  – hedge funds and Frank Lowy – Westfield Shopping Centres.

• The butt of bullying with no sporting ability who went on to found one of the greatest sporting franchises.  Bernie Ecclestone – Formula 1 motor racing.

• The dyslexic son of a lawyer who sustained his self esteem by playing golf and selling golf balls who went on to found a great discount stockbroking house. Charles Schwab – discount share trading company called Charles Schwab.

• The runty, unattractive outcast who went on to found a great fashion brand.
  Ralph Lauren – Ralph Lauren fashion chain and Polo brand

• The fractious and unpopular son of a bullying seamstress with no acting ability who became a great entertainment entrepreneur. David Geffen – DreamWorks SKG and partner of Spielberg.

• The anxious small town Californian boy with the sick mother who developed one of the great entertainment franchises.  George Lucas – film producer and director – Star Wars.

• The adopted son of working-class parents who after a period of severe personal hygiene lapses co-founded a great computer brand and later a revolution in portable music.  Steve Jobs – Apple Computers and iPod.

• The super-bright, fractious, unpopular son of a lawyer who went on to found the world’s greatest software house.  Bill Gates – Microsoft.

• The boy who was expelled from a number of boarding schools, one for having sex with the headmaster’s daughter and who went on to found a successful airline.
  Richard Branson – Virgin Atlantic and the Virgin brand.

• The bullied son of a difficult and unlikely union between an artist and an itinerant computer engineer who became one of the most bankable film directors in the last forty years.  Steven Spielberg – film producer and director.

• The adopted, illegitimate son of a sickly mother and unknown father who spun his way to a fortune in computing software.  Larry Ellison – Oracle Software.

• The gangly, unpopular child of dominating parents who became one of the world’s greatest take-over merchants. Carl Icahn – corporate raider

• The sickly, impoverished rural boy with poor school learning who, in his 50s, went on to found the biggest private university network in the world.  John Sperling – University of Phoenix.

This is an outstanding addition to your biographies collection. It comes in an unabridged audiobook version as well.