Saturday, February 14, 2009

Success Book Reviews: "Rich Like Them"

Ryan D’Agostino’s Rich Like Them: My Door-to-Door Search for the Secrets of Wealth in America's Richest Neighborhoods is a modern-day echo of one of the world’s greatest success books, Napoleon Hill’s Think and Grow Rich! In that classic, Hill describes a 20-year project which he undertook at the behest of steel magnate Andrew Carnegie, to interview the world’s most successful men, Men like Henry Ford, Theodore Roosevelt and Thomas Edison. While I am unaware that concrete evidence exists of Hill’s project, it certainly very well may have taken place. One thing is for sure, Ryan D’Agostino undertook a very similar project. He literally knocked on doors in America’s richest neighborhoods and flat-out asked the occupants of these mansions how they got rich. This then is the “real deal”: actual interview data on how folks get rich and successful in modern-day America.

Here are a few of the success characteristics of these achievers.

Find something you are willing to do for 20 years or more
This may be the central tenet in the book. It is consistent with wealth-building practices of all the “greats”, from Warren Buffett to Steve Martin. Wealth is built over time. Long periods of time doing valuable things. I can’t recall one interviewee in the book who made their money in “one shot”.

Whether it’s deal-making, shrimp-shelling, art gallery ownership or entrepreneurship, the rich people in D’Agostino’s book derive their wealth from many, many repeated transactions. You have to have something, some talent, product, asset or process to sell, and then you have to have the love, or drive, or fascination to do it over and over again. There are no one-hit wonders. Many of D’Agostio’s subjects repeatedly state that, currently, they don’t need the money: they have more than enough money to live comfortably. They do their work because they love it.

Search for and seize opportunity
As in Carr’s How to Attract Good Luck, the successful people of this nation keep their eyes open. They pay attention to their instincts and know, or sense, when an opportunity is unusual.

Consider Real Estate
It is somewhat of a truism that an inordinate number of personal fortunes have been built in this country on real estate. The subjects of D’Agostino’s inquiry are no exception. The rich seem to start accumulating real estate early in their lives, and buy and sell properties regularly. There are two key reasons why this strategy may work: First, the government actively supports home ownership. Mortgage interest deductions, government-backed mortgage entities, etc all exist to foster home ownership which, in turn, fosters industries, trades, and professions of all kinds. Secondly, the leverage available in real estate is often double (or more) than the leverage available in, say, the stock market. You can “play a bigger game” in real estate. In other words, it’s easier to get rich by pyramiding your winnings.

Find a compatible life partner and pick good parents
This trait is not overtly mentioned by D’Agostino, but a careful reading of the text suggests a lot of evidence in its favor. Of course, you can’t pick your parents, however, my offhand guess is that the majority of D’Agostino’s subjects had excellent relationships with their fathers and/or their spouses. Good families that transmit good values to their kids can produce richer kids. It may not be an accident that, besides being great at math when they were young, both Alan Greenspan and Warren Buffet had stockbrokers as fathers. Similarly, you can’t keep a lot of wealth if you’re divorcing all the time. A lot of D’Agostino’s subjects seem to be stable, long-married couples with kids.

Summing up, take the advice of Ryan D’Agostino’s subjects. Start Early. Take reasonable risk. Stay married. Stay the course. And buy real estate. Oh, and read Rich Like Them. It's great.

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