book.chapter The seven psychological strategies of the extremely wealthy

The seven mental habits of the ultra-wealthy are as follows: First, they consistently read and learn, prioritizing self-improvement and education over entertainment. Second, they surround themselves with other successful, goal-oriented, and positive individuals to maintain a supportive network. Third, they practice patience and long-term thinking, focusing on investments and goals that have the potential to grow over time. Fourth, they build great teams by focusing on their strengths and delegating tasks to skilled individuals, allowing them to concentrate on the bigger picture. Fifth, they practice dream-setting by defining their own goals and relentlessly pursuing them with passion, even in the face of failure or rejection. Sixth, they prioritize their health, as good health translates to longevity and more time to create wealth. Lastly, they cultivate a mindset that rules don't apply to them, which often leads to innovative thinking and finding ways around obstacles. These habits, practiced by self-made millionaires and billionaires, contribute to their success and wealth accumulation. By adopting these habits, individuals can work towards achieving their own financial and personal goals. Enthusiasm Guy Laliberte, the founder of Cirque du Soleil, is a prime example of the principle of following the money while pursuing passion. In 1983, Laliberte, then 23, was appointed to head the planning of a traveling circus funded by the Quebec government. Despite initial failures and financial setbacks, Laliberte managed to keep the circus going and eventually found success when the group was booked to open the Los Angeles Arts Festival. Recognizing a niche in the market for circus-as-theater, Laliberte invested in enhancing the theatrical experience of the performances, which led to higher ticket prices and increased revenue. He also controversially turned Cirque into a private for-profit company, with himself and two other administrators as owners, a move that led to the departure of many original team members but ultimately contributed to the company's financial success. Laliberte's story illustrates the importance of maintaining a focus on financial gain while pursuing one's passion. He understood that real success comes from having a substantial ownership stake in one's work and took every opportunity to increase his stake in Cirque du Soleil. This approach allowed him to overcome the potential paralysis that can come with receiving a paycheck, as he was motivated by the results of his own efforts rather than simply working for a salary. Laliberte's strategy of following the money while passionately pursuing his vision of circus-as-theater has made him a billionaire, with a net worth of around $2.5 billion Prospects The common misconception that wealth can be achieved through saving is debunked by self-made millionaires who understand that the key to wealth lies in earning more, not saving more. While reducing expenses can preserve existing wealth, it does not contribute to wealth accumulation. As Lewis Schiff puts it, "The rich don’t count pennies. Their time is much better spent making money than saving it." This principle is also understood by famous frugality gurus who enrich themselves by earning more. Wealth accumulation occurs in incremental stages, and those who achieve wealth do so by making opportunities count. A clear example of this principle is seen in salary negotiations. Most people do not ask for more money when starting a new job, despite a survey revealing that 9 out of 10 hiring managers would be willing to pay more if asked. A 1995 survey by Carnegie Mellon University showed that male graduates achieved average starting salaries 7.6 percent higher than their female counterparts, despite the women being generally better qualified. The reason was that 57 percent of the male graduates had asked for more money when offered a starting salary, compared to only 7 percent of the female graduates. This revealed a negotiation skills gap rather than a gender gap, with men being eight times more likely to ask for more money. Lewis Schiff notes that in the coming year, 50 million U.S. workers will start new jobs, and most will accept the first salary offer they receive, leaving billions of dollars unclaimed. He further explains that hiring managers often start with low initial salary offers to allow room for negotiation. The difference in negotiation styles between the middle class and self-made millionaires is also significant. While the former tend to avoid conflict and aim to be liked, the latter exploit any weaknesses displayed by the other party. Schiff concludes, "Those unafraid to ask for more, like self-made millionaires, will always earn more than those who fear rejection" Creativity The common belief that groundbreaking ideas are the sole path to success is frequently challenged by the experiences of self-made millionaires. They recognize that it is often those who refine or imitate existing concepts who see the greatest financial rewards. For example, Bill Gates purchased an operating system for $50,000 and developed it into MS-DOS, which led to billions in revenue. Thomas Edison, while credited with inventing the light bulb, actually followed Joseph Swan, who had patented a similar invention 18 years earlier. Similarly, Henry Ford is celebrated for the automobile, yet George Seldon had already patented an automobile concept, and there were thousands of car startups in the U.S. over a century, most of which failed. A Harvard Business School study in 2005 revealed that a mere 6% of the fastest-growing U.S. firms attributed their success to unique products or services, with 12% crediting an unusual idea. A significant 88% pointed to the superior execution of a common idea as their success factor. This underscores the importance of how an idea is executed over its originality. A practical example is Stuart Frankel, a Subway franchise owner who significantly boosted his sales with the "Five-Dollar Footlong" promotion, a concept that Subway later adopted nationally, resulting in a 17% sales increase. This case illustrates that innovative ideas often originate from practical, on-the-ground experience rather than from high-level, visionary thinking. Uncertainty Self-made millionaires often limit their financial risk by getting others to invest in their projects, thereby reducing their downside risk. This approach is epitomized by Warren Buffett, who, after losing his entire investment in a failed gas station venture, raised funds from a group of close friends for his next venture. He contributed a minimal amount of his own money and arranged to charge an annual fee for managing the money, with entitlement to half of any annual returns above a certain percentage. This investment partnership, funded by other people's money, eventually led to the creation of Berkshire Hathaway, one of the most successful investment companies in history. Contrary to popular belief, self-made millionaires do not necessarily have extensive networks. Instead, they often have a small, tight-knit group of trusted friends and associates with whom they work closely. They value the quality of their connections over quantity, focusing on maintaining strong relationships with a core group rather than having numerous casual acquaintances. This approach is supported by the Business Brilliant survey, which found that self-made millionaires typically have fewer people in their networks than middle-class survey respondents. The survey also found that self-made millionaires with net worths of more than $10 million have an average network size of just 5.1 Negotiation In any relationship, particularly in business, the individual with the least interest in maintaining the relationship often holds the most power in determining its terms. This concept, as explained by G. Richard Schell in his bestseller "Bargaining for Advantage," suggests that the party with the least to lose from a failed deal can afford to insist on favorable terms. This might seem counterintuitive, but it is a reality in the business world. The key to securing a better deal in any negotiation is to convince the other party that you don't need the deal. If they want the deal to materialize, they must continue to add incentives to counterbalance your lack of enthusiasm. A prime example of this principle in action is the story of Borland International, founded by Phillipe Kahn in 1983. Despite initial disinterest from investors, Kahn managed to bootstrap his company and cleverly secure advertising credit from BYTE magazine, leading to significant sales. The conventional wisdom of striving for "Win-Win" solutions in business negotiations often falls short, as these solutions can end up being win-lose in disguise. Many businesspeople, in their haste to achieve a win-win outcome, inadvertently disadvantage their own interests. Self-made millionaires, on the other hand, aim for "Wish-Want-Walk" outcomes. This approach involves setting a goal for the negotiation, determining what you need to know about the other party to achieve your goal, and establishing a point at which you will walk away if the deal isn't progressing as planned. The importance of having written financial goals is underscored by the Business Brilliant survey, which found a strong correlation between having written financial goals and financial success. This principle is applicable to a wide range of negotiations, from hostage situations to purchasing a car, as illustrated by Dominick Misino, a former hostage negotiator for the New York Police Department. Empowerment A study conducted in 2005 found that 35% of U.S. small-business owners were dyslexic, compared to about 10% of the general population. The study's author concluded that successful dyslexics became proficient at getting help, a crucial skill in building a business. Some of the most successful dyslexic entrepreneurs include Charles Schwab, founder of the brokerage company that bears his name, Paul Orfalea, founder and CEO of Kinko's Copies, and Sir Richard Branson, the founder of the Virgin Group. Branson, who can't even read a spreadsheet, has a personal net worth of more than $4.2 billion, suggesting that his approach to business, which involves delegating tasks and focusing on his strengths, is effective. In addition to being more willing to delegate, self-made millionaires are also much more inclined to focus on exploiting their own personal strengths rather than addressing their weaknesses. They try to maximize the time they spend doing things they're good at and minimize time applied to everything else. Another noteworthy aspect of delegation among self-made millionaires is that they usually are not driven by a desire to retire early. In the Business Brilliant survey, only 2 in 10 self-made millionaires see this as motivation for their efforts to become wealthy. For the majority, the ultimate reward is to be able to spend more time doing the productive things they enjoy the most. Education Self-made millionaires often attribute their success to learning from failures. According to the Business Brilliant surveys, most self-made millionaires have experienced at least three significant setbacks or business failures in their careers, compared to the middle-class failure rate which averages just under two. This suggests that for most middle-class individuals, failure is a rare or non-existent experience. However, self-made millionaires view failure as a necessary precursor to success, a belief that Lewis Schiff calls the "Failure Faith". This mindset encourages risk-taking and hands-on learning, which can be invaluable for financial success. David Neeleman, founder of JetBlue, emphasizes that failure is not about what happens to you, but how you deal with it and what you make of it. Similarly, author Seth Godin suggests that those who fail more often are the ones who win, as they learn from their mistakes and improve. This is contrasted with those who either don’t fail at all and get stuck, or those who fail so big that they don’t get to play again. A prime example of this principle is Pixar Animation, which started as a computer hardware company and faced numerous failures before becoming the most successful movie studio in history. This demonstrates that understanding what went wrong can be instrumental in figuring out how to improve in the future. In the business world, the greatest potential returns often lie in risky and challenging projects. These risks, which deter others, create opportunities to earn good money by demonstrating your value. This process filters out all but the most tenacious, who rise to the top of their field and reap the rewardss