The Butler Project

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.