The Butler Project

We’ve had a couple of posts featuring my interview with Nate, a technology sales executive who shared with me what it was like to be involved in the tech boom and bust. Later in the interview I asked him (as I ask all of the millionaires) what made him successful.

Mark: The thing that keeps coming up in these interviews that’s so interesting is it seems to me that attaining wealth is very often very boring, and unglamorous. Now, having wealth doesn’t seem to be boring, as I caught you in the middle of a two week heli-ski vacation, but getting wealthy…the people that I’ve talked to have said: “Be smart, hang in there for years, make smart choices and the next thing you know you’ve got something.” Has that been your experience?

Nate: Well, I got into technology in my early 20s, and I rode the wave. And I was smart enough to go where I could get stock options, you know, equity stakes, so I there have been four or five or six days in my life where the equity payoffs were, were financially very good for me (when companies went public or got acquired). I’ve just been really conservative in my approach and tried to get equity, and you don’t have to be overly smart to ride the rocket ship that has been the technology industry for the last 25 years.

I think what I’ve done is no matter what level I’ve elevated to or how much money I’ve made I’ve never forgotten that I’m just basically a lowly salesman and every single day I’ve gotta get up and work and earn my keep, which is why at 7:30pm at night I’m the only guy in the office sitting in Seattle (away from home), it’s just that basic work ethic of every day I gotta deliver, every day I’ve gotta do a good job, you know, so I can feel like I earned my keep.

Mark: And so you’ve spent 20+ years as you put it, as a lowly salesman, doing what you do. What do you think is the biggest or the single most important attribute that you have that’s contributed to your success?

Nate: It’s going to sound like a cliché but it’s 100% perspiration, 10% inspiration - or however they say it. I think it’s really just suiting up every day, reading up on technology, technology you’ve gotta stay up on. You gotta know what your competitors are doing. You’ve gotta know where the industry is moving. You’ve gotta be able to adapt and change and learn new concepts, and you’ve just gotta pick up the phone, go see a customer and stay out with them. Get them to see the benefits of your technology versus what everybody else is doing. I mean that’s ‘Sales 101′ in almost any industry – not just technology.

Mark: Well, it’s basic, but most people don’t do it. Why not?

Nate: Yeah, there are just a lot of lazy people…a lot of lazy people out there.

What I found interesting was how Nate almost downplayed his success by saying that basically any ”dummy’ would have done what he did over the last 25 years if they had been in technology sales. He’s not unusual, this kind of modesty is common in most of the millionaires I’ve talked with.

But it’s ridiculous to say that anybody would have done it, because hundreds of thousands probably started down the path about the same time he did, and they didn’t arrive where he has. That’s what is powerful about Nate’s advice: show up everyday, stick to it, grow and adapt, and you’ll reach your goal.

Since I started interviewing millionaires a few months ago I have been struck by how many of them started their career in sales. I’ve spoken to two who have started selling pest control (and subsequently achieved financial freedom owning pest control businesses), and one who started selling encyclopedias door-to-door and parlayed the income into a portfolio of rental properties that allowed him to retire at a young age.

I spoke to another who learned the furniture business as a floor salesman at a local furniture store and went on to open his own stores, which also allowed him to be permanently financially independent. One of my more recent conversations was with a man who has spent his whole career in technology sales, and although he’s never owned his own company, he’s been able to acquire and sell enough stock options with his company that he could now retire any time he felt like it.

Model the Millionaires - Learn to Sell

I believe everyone should learn to sell.

Now, I’m not talking about selling in the soft sense that you always hear: “everyone is in sales….all communication is sales…if you’re a manager you’re in sales…if you’re a parent you’re in sales…if you’re dating you’re in sales…etc.” That’s all fine and it’s true to an extent. We all have to persuade in our everyday life, and you can call that selling.

But there is a big difference between convincing your subordinates at work to complete their tasks and convincing a real life sales prospect to give you money in exchange for your product. That’s why there are millions of successful managers and millions of washed out salespeople.

Asking people to part with their hard-earned money is not easy, and the truth is they say ‘no’ the vast majority of the time. That’s why so many salespeople quit, and that’s why it pays so well. Early on I stopped caring when people said no, but that’s another post.

Here are three big benefits of becoming successful in sales:

1. Sales allows you to acquire cash much more quickly than a salaried job, and you have much greater control over your income than you would with a salary or hourly wage.

2. Sales requires you learn the some of the most important skills in business: goal setting, persistence, determination, accountability, long term perspective, and a high tolerance for rejection and frustration.

3. Success in sales gives you real flexibility in your work life, allowing you to finally be free of an office and a time clock. I know that’s one of the most cliche statements you’ll ever hear, but it also happens to be true - and thank goodness.

Sales and Entrepreneurship Go Hand In Hand

After I had been in commission only sales for about two years I talked about it with a close friend of mine who had also spent a lot of time in the sales world. He knew about my aspirations of business ownership and this is what he said:

“I’m really glad you got into sales and you became successful at it. Commission sales is the closest thing to entrepreneurship because the skill sets necessary for success are so similar. So many brilliant people have incredible product ideas every day, but their business can never get off the ground because they don’t know how to sell their idea or their product. If you’ve had success in sales you’ve already won most of the battle because it’s just a question of finding the right product and using the skills you already have to sell it.”

That’s one of the most true and significant statements anyone has ever made to me, and I’ve seen it come true in my financial life. I spent four years working for a company, first just as a sales rep and then as a sales manager. I lost all fear of talking to people and asking them to buy my product. When I started in sales I was terrified of the phone. Today I have no fear of calling strangers and striking up a conversation with them.

Thanks to that confidence I had no fear as I walked away from my stable corporate job to start my own business. I knew there might be ups and downs in my income, but I had already experienced that in my sales job. I knew there could be setbacks and disappointments, but I wasn’t worried because those are things I dealt with a thousand times over the last four years.

Confidence and Peace of Mind

What do I love most about my career in sales? Being successful in sales has given me pure confidence and peace of mind. After four years of having my paycheck be 100% my responsibility, I no longer have any concern over whether I’ll be able to pay the bills. If my business fails, I know I can get any one of 1o sales jobs and have my normal income back within 90 days or so. That’s a great feeling.

Looking for money? Aren’t we all? Whether you’re trying to finance a new business start up, consolidate some debt, or looking to get into your first home, there’s an option that you may not have considered before: borrowing from friends and family.

Now, I know, it’s not wise to mix money and relationships (look at the divorce rate in the US and one of the top reasons is money), and I would rarely suggest it to the average Joe. But with the mortgage crisis the way it is and you looking to be frugal and creative with your resources, the idea of borrowing from someone you know might be worth another look.

You have to be committed.

First of all, don’t consider this option if you do not 100% trust yourself to pay the loan back. If you have a history of going back on your word, or starting things you can’t finish, pulling friends or family into your mess is not worth it. Not worth it. If you can’t honestly trust yourself to pay the loan back as promised, don’t go into debt. I don’t care what the interest rate is, or what a deal you’re getting, don’t go into debt.

That being said, if you need a creative source of money to invest in a home or an income producing asset, you might want to consider a personal loan.

The problems with personal loans.

The problems with personal loans are generally tied up in the people: they have different memories of how much and when the loan was to be repaid; they fail to nail down an interest rate; they forget to make payments; they argue over late fees. No wonder personal loans are generally trouble.

The best way to make or take a personal loan.

However, if you have (or are yourself) a willing lender, you can make the process much easier, and safer by making the loan legal with a promissory note. We took advantage of owner financing when we bought some property a few years ago. A local title company drew up the papers and processes the monthly payments. They take care of all the tax documentation for both the borrower and lender. In fact, we have no contact with the lender, and he has no headache with paperwork coming from this loan.

Protect yourself.

Besides the convenience, there are several advantages to putting the loan officially on paper. First of all, with the terms of the loan legally recorded, both parties are safe from the other “forgetting” the original agreement. This will, in theory, save many a personal relationship from the obvious pitfalls of a personal loan. Secondly, the IRS requires lenders to pay tax on interest income for a loan over $10,000, that means more paperwork. Third, if the borrower does default on the loan, the lender can prove it and take a capital gains loss on his/her income taxes.

Put space between the two of you.

If you use a service as we are with our title company, they will, for a small monthly fee, take care of the IRS forms and process the payments. Not only does this save you time working on paper work, it puts some “space” between you and and your friend or relative. The title company will charge the late fees, if needed and make the collections phone calls if it comes to that. The lender then can’t give the delinquent borrower a break as all the terms of the loan are on paper, and therefore legally binding.

If you’re not comfortable finding a local title company, you can find these services on the web. www.virginmoneyus.com has a particularly nice site with many options to really tailor the loan to your needs. Even if you don’t need a loan, I would recommend checking out this site as it is just another example of Richard Branson’s brilliance when it comes to filling people’s needs and making money doing it.

P.S. Mark says this post “reads like sales copy on a loan site” and seems to be keyword stuffed. It was written as neither of those; I just thought personal loans were something our readers might be interested in. Anyone want to chime in on this? Please do.

Mark: I’ve probably talked to well over 1000, 2000 really financially struggling people in my time as a distance education sales rep. And in so many cases, these people tell me stories about “Well, everything was cruising a long, but then THIS [happened].” And, you know a lot of them want it to be 9/11, a lot of them want it to be “my boss,” whatever it was, but they have that moment [where] years ago they just got off track, and they’ve never gotten themselves back on track

Jim: Yeah, and I would point to it and say “Is that really the real problem?”

Mark: Exactly

Jim: And I suggest that that’s not the real problem. The real problem is starting something before you have the strength of character and discipline to see it through. That the true power comes from the ability to make and keep commitments.

$100,000 to bench press 270 lbs? I WILL win that bet.

It’s just like lifting weights

Too often we think, you know, “I’ve never started a company before. I haven’t shown any behavior in my life that shows discipline. I’m lethargic, I’m indolent, and I procrastinate, but all the sudden on one day I’m going to wake up and I’m going to have the ability to be a disciplined decision maker.” That is the great lie that so many people succumb to. Because it’s just like lifting weights. I haven’t personally been in the weight room in three years, so if somebody bet me a thousand dollars that I couldn’t bench 270 pounds tomorrow, it’s not like that thousand dollars could motivate me to do it. If they offered me a hundred thousand dollars to bench press 270 lbs tomorrow, I still can’t do it.

Mark: Right.

Jim: If they offer me a million dollars, it’s not like I can say, “Ohh, now I can do it.” If they make me that bet that I can’t bench press 270 lbs two years from now, they are going to lose their bet because I’m disciplined. I will make it happen. I WILL make it happen. But it’s foolish to take the bet if the bet means I have to do it tomorrow.

Well, similarly, too often people rush into trying to, they foolishly and ignorantly think that they are more disciplined and stronger than they are. And so I think the foundation of preparing to be successful whether it’s starting your own business or successful in anything… is your ability to make and keep commitments.

Put up a good fight for 6 months, a year, two years.

If you can’t be disciplined, then how is it you are separating yourself from your peers? The reality is that most people are not disciplined. Most people do procrastinate. Most people do not have the ability to consistently make good decisions based on good values, day in day out over a long period of time. Most people are good sprinters. They show up at a new job or start a new business and they’re really good for a week. Maybe they’re really good for a month. But… very few people can put up a good fight for 6 months, a year, two years, and that’s my opinion.

Preparing for success

My opinion is that the key to preparing for success is to start making and keeping commitments and developing some self discipline and that gives you the power necessary to see you through the tough times or the “unforeseen tough times.”

Photo credit: ericmcgregor

So much of what our millionaires talk about is getting things done. Jim especially talked about being productive, moving forward everyday and always looking for ways to be more efficient.

Over the past few years in my life, particularly since having my fourth child and starting an online business with my family, I have had to learn to become more efficient and productive with the few free hours I have any given day. I’ve tried many things, but these are the things that work consistently without requiring lots of extra work. They may seem very basic and obvious, but put into action have made an incredible difference in my personal productivity.

1. Get your zzz. Nothing helps me get more done than being fully rested: I’m more positive, I don’t have energy slumps during the day where I don’t want to do anything, my mind is clearer, and I have the energy to physically get up and get busy. Try going to bed earlier (that’s between 9:30 and 10 pm for me) for a month, and you’ll be hooked.

2. Chop it up. I originally discovered the power of breaking big tasks into smaller jobs with housework–instead of cleaning the whole house in one day, I use 6 days of the week. So while my house is never completely clean (a pipe dream with kids anyway), it’s also never completely dirty.

Knowing I wanted to write this post about getting things done would have sent my former perfectionistic self into serious “put it off and try to forget it mode” (which, in it’s worst case includes a lot of junk food and mindless TV.) Instead, I sat down a week ago and put out a very rough draft. I came back 3 days later and made some revisions; then I had only a few changes to make this morning. I had to start earlier, but I had nothing to get overwhelmed about, and nothing to stress over.

I read once that a person can focus on one task for about 90 minutes and then will lose productivity without a break. Breaking bigger jobs into smaller tasks completed over a longer period of time keeps you fresh and limits stress.

Photo credit: laffy4k

3. Watch the clock. Sometimes, when I just can’t stand the thought of the work that has to be done, I give my self a time limit and say, “I have to work on this and give it my all for this many minutes.” (I’ve found I can do just about anything for 15 or 30 minutes.) I use this trick for transcribing our millionaire interviews. Taking those interviews from their audio format and putting them on paper is an overwhelming and dreaded task, to say the least. But even on the worst day, I can do it for 15 minutes. Sometimes after that time is up, I am so happy with the results, or so interested in the interview, I keep going for 15 or more minutes. Other times, I gleefully quit after the timer rings and move on to something more enjoyable, or at least different, to give my mind and wrists a break. I feel good that I did some of the interview and know that I don’t have as much to do the next time I sit down. I’m happy because I did part of something that needed to be done and I’m that much closer to finishing it. That positive energy moves me forward in my next task too.

If I’m working on a task that needs to be done over and over or that will never be finished (think cleaning a bathroom or commenting on blogs), I give myself a time limit and just get done as much as I can. I know I’ll be back and can pick up the slack next time.

4. Offer a reward. Getting things done is a reward in itself, but for those days when you need a little extra encouragement, decide on a reward for yourself when you get your work done. For me, it’s reading, calling a friend, spending time outside, going out to eat, etc.

5. Straighten up. Can you really get stuff done when your work area is messy? Clutter puts me on edge, and is a constant reminder that I have other stuff to do. If I can keep my work space and my home in order, I have a clearer head and less stress; I can work more efficiently and focus on the task at hand. Often, a five minute investment in organizing my desk or office pays off in huge dividends of a clear head and work quickly completed.

Clean up after yourself as you go. It’s much easier to take care of items right after you use them than it is to let a big mess pile up and then take care of it. Force yourself to clean as you go for a week and see if the results aren’t motivation enough to turn that into a habit.

6. Prioritize. Make the most important things to get done the first things you do. I’ve heard it said that each day begins the night before. If you take the time to plan tomorrow tonight, and put an emphasis on the most important things you need to accomplish, you know where to start the next morning when you’re fresh and ready to go (because you went to bed early, right?). If you’re getting the most important things done first, you’re progressing on your goals and moving to where you really want to be.

7. Walk the line. Jim (millionaire business owner) knows the shortest distance between two points is a line. He decides where he wants to get and takes the shortest route to get there. Figure out where it is you want to go and make sure your daily tasks are in line with that vision.

If you’re not consciously moving toward your ultimate goals, you’re probably taking on tasks that you think society requires, not tasks that are important to you. For example: shopping. Do you spend time, money and energy buying food, clothing, household, or electronic items that you think you have to have to keep up with your friends and neighbors? Use that planning time the night before to make sure your tasks are in line with who you really want to be.

These are the things that work for me. Take them, try them, and make them yours. Whatever works for you to keep you moving forward, that’s where you want to be.

Mark’s final question to Jim, multimillionaire pest control business owner was this: If you could only give me one piece of financial advice, what would that be?

Jim: Here it is: I’m worth many millions of dollars; I drive a 2004 four cylinder, white Toyota pickup that’s been used as a pest control truck a full summer in Dallas, Texas, and a full summer in Atlanta, Georgia. That’s my car. That’s it. So if you take that and extrapolate that to the rest of my life, then that’s my bit of financial advice: that it’s not just about making money; it’s about being smart with your money.

Stay away from consumption, especially depreciable [consumption]. If you start thinking about your life and your behaviors of how you spend and what you do with your wealth, making more money is only one part of the equation… spending less money–it totally changes the model.

If you’re going and buying a brand new Mustang, then there’s 20-30 thousand dollars that you could have turned around and put it into an investment vehicle that’s working for you. Whether that’s real estate, whether that’s business, or whether it’s just a bank account. There’s a difference between pissing your money away and putting it to work for you. And understanding the fundamental difference between the two and living it is my advice.

If you’ve read my past posts about Jim, his truck of choice probably is not very surprising to you, but I want to take a minute to compare Jim’s choice with my friend who is a doctor. He’s been in practice about two years now, and I think he’s been really smart about building his business.

Coming straight out of college, he didn’t have a lot of money to start up a medical practice. So, when he moved to town, he bought a modest home and leased an office in an older medical building. The rent was cheap, but the space was really outdated and needed a lot of cosmetic work.

My friend and his wife did that work themselves; with some paint, a little tile, a whole lot of elbow grease, and their fabulous taste, they transformed that old, dingy office into a beautiful place where he works happily and his patients feel comfortable.

**Before I get any farther in this story, let me acknowledge I’m relying solely on my occasionally faulty memory for a lot of these details, and I’ve made some assumptions about the situation.**

With his office ready, my friend began an advertising blitz on the area. He was featured in the newspaper as a new doctor in town; his ads appeared all the time in the newspaper and on the radio in times and places that would best reach his target patient population. Very soon, he secured space in medical offices in two nearby towns allowing him to see patients in each of those towns once a week and effectively doubling his pool of potential patients. He’s busy all the time now, making the most of his working hours.

All of this is great; like I said, I think my friend has done a great job building up his business. Not only that, he’s a nice guy with a big heart. He’s been my son’s doctor and I would recommend him to anyone. I believe he can afford his lifestyle; I don’t think he’s living beyond his means. But I bring up his story to contrast it with Jim, who told us his one piece of financial advice would be to limit consumption, and used his used 2004 Toyota as an example. My friend, the doctor, moved here two years ago driving an old sedan. Very soon after that, he bought his mother’s late model Audi. It was a really nice car, in impeccable condition. I thought it was a great move–he got a nice car for a good deal which I’m sure he can afford comfortably.

About eight months ago, my friend traded in the Audi for a brand new BMW and bought his wife (who had been driving a late model Honda Pilot) a brand new SUV much bigger than her Pilot. The cars are both very nice, and my friend is obviously very pleased with his purchases, but I wonder if he is really designing the life he wants to live. I wonder if his nice, new cars are really moving him toward his goals, or if he took a minute to think about it, if he couldn’t have kept his older cars, invested the money and been that much closer to his dreams.

Don’t think I’m against new cars; I bought one, and I loved driving it off the lot. Was it the best financial decision for me? Probably not. But it is what it is, and I’ll probably make a different choice next time. I’m not against BMWs either; if a fine German sports car is essential to your ideal life, find a way to pay for it and enjoy the sheer driving pleasure.

My point is, Jim thinks about what is important to him, and finds the most efficient way to get there. Driving a fast new car is obviously not one of his immediate concerns. He takes the money he saves on cars and invests it to achieve his life goals. I suspect my doctor friend has a lot of the same life goals as Jim, centered on family and enjoying life. I wonder though, if my friend will reach those goals with the efficiency Jim has, or if he will unknowingly exchange the really important stuff for the thrill of immediate gratification.

Since tomorrow is Father’s Day, I thought I’d take a minute to honor our dad for the sound financial principles he taught us as we were growing up.

1. Always save some money. My brothers and I got an allowance when we were young and then had paper routes when we were older; saving money from those sources was a family requirement. 20% minimum.

2. Interest is your friend. Our dad knew the power of interest, and taught us to look for the best possible rate. We never had our own savings accounts; instead, Dad put our savings in with his because his account, having a much higher balance, always earned more interest. To keep track of our individual savings, Dad would print out spreadsheets for us, showing our deposits, our balance, and total interest earned.

3. Buy smart, which is not necessarily the same as cheap. Dad did not believe that the best deal was always the cheapest deal. He knew to look for quality at a good price so that he wasn’t losing money replacing stuff all the time.

For example, we rode bikes a lot. My dad is into saving money and being in shape, so he often rode his to work. My brothers always rode theirs to do their paper routes. (Mark once rode his into the back of a car, a parked car.) After buying cheap bikes from a discount store and finding they only lasted a summer or two, my dad decided we would fork over the big bucks for quality bikes from the bike store. After saving for several months, we all had quality Specialized mountain bikes that lasted for years. In fact, I still ride the Specialized Hard Rock I got 19 years ago!

Thanks Dad, for laying a solid financial foundation for my brothers and me. Happy Father’s Day; we love you.

Make sure to check out our entry in The Thirteenth Edition of the Carnival of Improving Life!

Nate has been a sales manager and sales executive in the technology sector for over two decades and he’s seen a lot. Yesterday he talked about how he saw fast, easy money go to his friends’ and co-workers’ heads and ruin their lives.

In this part of the interview he talks about the sheep mentality that lead to the whole technology bubble in the first place. We got into the discussion when I talked to him about setbacks in his career that had taught him important lessons:

Nate: Anybody in their technology career had a real setback when the bubble burst – that was a really harrowing time for all of us. We were used to everything being ‘up and right’ (on the stock charts), but I think the lesson I learned from that was just the concept of using sound business principles.

Mark: Tell me what you mean by that. What were you seeing in the industry?

Neal: Well, fortunately the company that I worked for wasn’t caught up in doing a lot of vendor financing, basically paying for all these companies to buy your gear, that would then subsequently go out of business. So you’d lose twice because you had to pay for the raw materials to build the gear and then you had to give them the money to buy it.

Mark: I haven’t heard about this. What do you mean by vendor financing?

Nate: A lot of the technology companies would come to the technology vendors during the bubble and they’d say “Listen, I’d like to buy $10,000,000 worth of gear, can you lend me the money to buy it?” And a lot of the vendors were doing it – Cisco, Oracle. And it was called vendor financing. The customers’ credit wasn’t good so the vendor would finance the purchase themselves, and then of course that turned into massive write-offs when the bubble burst because all of those people went out of business.

Mark: Because most of those companies didn’t really even have earnings did they?

Nate: Right, right. Because some business analyst for Morgan Stanley wrote a paper that said all the traditional business models, and business fundamentals weren’t important. That it was all about eyeballs, and it was like a gold rush and whoever got their first was going to win – it didn’t matter if they had any revenues. Everybody bought into it, including the vendors. And that wasn’t the case. You had to have earnings to have a sustainable business.

Mark: And you were saying that your business chose not to buy into that [philosophy].

Nate: Yeah our business fortunately chose not to buy into a lot of that. Our CEO took a very simplistic look at how that [way of running a business] was going to pan out and just said you know I don’t do things like that. It really worked out for us because we were really able to come through the downturn a lot more unscathed than a lot of other people in the industry.

So how does this relate to you and me? Most of us don’t own technology companies, so we probably don’t have to worry about getting caught up in the exact scenario that Nate’s CEO faced almost a decade ago.

I think the principle here is avoiding the mob mentality, the lemming approach to running a business and running your financial situation. The Morgan Stanley analyst that Nate is referring to here is named Mary Meeker. I’ve been doing a lot of reading about her and apparently she was one of the pioneers of the “new business model” based on nothing but usage statistics for websites. I found this excerpt from an article about how ugly the tech bubble really was (referring to Ms. Meeker):

She often rated Internet stocks not just on traditional balance-sheet measurements, but also on something called “usage metrics,” like website page views and estimates on how many “eyeballs” viewed a particular website. Meeker believed such measurements were the best way to assess money-losing but promising Internet companies because they measured possible future performance, although most small investors had no clue what they meant.

Meeker has been blamed for the entire tech bubble and subsequent crash, but I’m not taking it that far. I just think she gave us an opportunity to see this aspect of human behavior on a huge scale.

People are intoxicated with the idea of a quick buck, a gold rush. I’ve fallen pray to it before - sometime I’ll have to post about how my real life education in smart investing cost me $10,000 and a justifiably irate wife.

Even normally rational people can abandon all reason if there are enough people doing it around them. I guess the mortgage mess we’re in now is a good example of that.

The other day a friend of mine was telling me how his friend was trying to get him involved in some racket where they take control of multi-million dollar homes with distressed sellers (through some mortgage and legal gymnastics) and then refinance out a big chunk of the equity, which they use for hard money lending. The guy pitching the idea to my friend actually said this: “Most of the companies doing this are total scams, but I actually found the one company that isn’t.”

Hmm - think so? Later that night I spoke to my best friend, a real estate attorney, about the whole thing. “Yeah, that one is going around right now. Total fraud, multiple felonies involved. I have a client who did a single deal like that and he is going to do time. I’ve had long conversations with both the FBI and the Criminal Division of the IRS about this. There is no “clean” way of doing that deal, so that guy better steer clear or he’s going to prison.”

For the record, the friend-of-a-friend in question doesn’t seem to be a total idiot from what I hear about him. He’s just caught up in the idea of a quick buck, and he seems ready to risk everything chasing it.

Of course, I’m not saying stick your head in the financial sand (as in putting all your money in a savings account earning 2%). I’m saying slow down and use common sense. If someone presents you with an opportunity for earning returns or income way above what’s reasonable for the market, be wary of them. Especially if they say it’s easy. If you’ve followed this site at all, you’ve heard multiple millionaires talk about how they achieved their success - which could be summed up as “work hard and don’t quit”. My advice would be to read their stories, and act like them.

We all remember the tech bubble, both the insane gains in the market before it burst and the massive losses when it all fell apart. I had the opportunity to interview a millionaire who participated directly in the whole thing, and he has some incredible stories.

“Nate” has spent 25 years or so in technology sales, and he’s been able to make a relative fortune doing it. Not everybody came out of the tech crash as unscathed as Nate. He made it through because of his conservative nature and the guidance of a friend and mentor who happens to be a multi-billionaire.

Some of the first experiences Nate told me about had to do with how his colleagues handled (or didn’t handle) the massive wealth created during the boom:

Nate: I saw the other side people burning through money like [crazy]. There was so much wealth created in the employee base in the [tech] bubble, and it was unbelievable to watch people self-destruct. I had a boss that netted about $40 Million, then bought a big house in Palisades, and then basically blew the $40 Million on coke parties. You would think nobody could go through that much money. After taxes, maybe it was $20 Million he wasted.

Basically he lost his family and then ended up in a shootout with police and then in prison. And it was all based on the fact that everybody in LA knew they could go to his house and get free coke. It was unbelievable. I saw people that were working for me that had a net worth of $50 to $60 Million that are now bankrupt.

Mark: Now why do you think that happens Nate? If we didn’t get anything else out of this interview I think that’s really an interesting thing. People have these massive windfalls - why do they end up in the shootout with the police? Why do they end up bankrupt?

Nate: Oh I think there are people in life that have destructive personalities, and I think there are people that are so greedy that if they have $50 Million they’re not happy until they get $60 Million. And they’re going to push that envelope and try and do everything they can to try and get a little more. You know instead of just recognizing “hey I won the lottery here, I’m going to sell some shares, I’m going to take some off the table and pay my taxes and put the rest away for a rainy day.” They just don’t have anything in their personality to do that.

Mark: And having a lot of money didn’t change them [for the better].

Nate: Nope. They’re gamblers by nature. I have two guys in particular that I can think of that worked for me during that time. And I was screaming at them. I’d say ‘Guys you’re crazy.’ Both of them – one lost his wife and the other’s wife stayed with him. But both of them went bankrupt after having all that money. Unbelievable.

Mark: Well – you’re not bankrupt, I don’t think. Having gone through a crazy time like the roaring ’90s, what were some of the guiding principles that kept you grounded so that whatever your net worth is or was – you’ve stayed solvent, where these other people decided not to be.

Nate: Well for me it was just more basic principles of money doesn’t make you happy. You just have to be conservative and cautious. I certainly didn’t make every decision 100% accurately, but I think my conservative nature saved me. While the whole bubble was going up and going down I continued to sell shares. And I think ultimately that’s what it is. You know that’s what most senior level executives do, they just get on stock programs where they sell a certain amount of shares every month. And I wasn’t a CEO or CFO but I just figured, ‘hey if it’s good enough for them it’s probably good enough for me. So I’m not going to worry about trying to cheat the tax man, I’m just going to sell shares, pay the tax man, and go on with my life and invest in other areas.

Mark: So you secured your gains.

Nate: Yeah and then the other thing is, [my billionaire friend] was actually very helpful to me during that time because when things really started to unravel he told me to just let everything go (sell all my shares). Which I did. You know I figured he’s a multi-billionaire. Why should I think I’m so smart? I’m fortunate enough to have a friend who’s made billions of dollars I think I ought to listen to him.

Nate did listen to him, and as a result he’s far from bankrupt. I had a hard time tracking him down for a while before we talked because he had been on a two-week heli-skiing trip.

Most people will never have the opportunity to waste a $50 Million net worth, but the principles Nate shared with me apply to everyone.

First of all, money is likely to only make you more of what you already are. If you’re a gambler, you’ll become even more reckless with a bunch of money in your pocket.

If you’re conservative, you’re likely to stay that way when you have more money.

The point is, develop good attributes and values, and then stick to them as you have financial success.