Today I am going to write about a book which I quote often in my presentations. The book I am talking about is "How to be Rich" by J. Paul Getty. For people who are in the Los Angeles area, you might have heard about famous Getty museum in LA. Back in the 60s, he was named richest man in the world. I learned that How to be Rich is essentially a series of articles that Getty was commissioned to write by Playboy magazine. His intention was to explain himself and why he was a businessman, and secondly to get behind the myths of what it was like to have great wealth. Hence the title of the book: not to get rich, but to be rich.
Wildcatter to mogul
J. Paul Getty's (JPG) father, George Getty had grown up poor on an Ohio farm, but managed to get through law school supported by his wife. He became a successful Minneapolis attorney and did well in the Oklahoma oil rush.
JPG was born into this relative prosperity in 1892, an only child. He writes fondly of a teenage apprenticeship of a roustabout in the oil fields, then very much a dusty frontier place of rough men, "where gambling halls were viewed as the ultimate in civic improvements." In utter contrast, he then spent two years at Oxford University in the UK before returning to the States.
He had planned to enter the US diplomatic service but at 22 went into business on his own as a wildcatter (an independent oil driller and speculator) and got lucky with some oil leases. He was a millionaire by age 24. Deciding to "retire" he enjoyed himself for a couple of years, but his parents were not pleased, his father telling him that he had a duty to build and operate businesses that created wealth and better life for people.
The oil rush had shifted to California and Getty decided to invest in new oil leases near Los Angeles. His business rapidly expanded over the next few years, but his father's death in 1930 was a setback. It was said that Getty Sr. left JPG $15 million. Actually it was $500,000.
During the Depression of the 1930s, Getty came up with the idea of an integrated oil company spanning exploration, refining and retail marketing. He bought up oil stocks, which were now very cheap, purchased the Pierre Hotel in New York at a bargain price, and began a difficult 15-year take over of the Tidewater Oil company, then one of California's largest. After the Second World War Getty Oil gambled $12 million on oil concessions in Saudi Arabia. Though it took a further four years and $18 million for the wells to produce, by then the world had become aware of the vast reserves in the area, and the gamble paid off handsomely.
In 1957, Fortune magazine named Getty the richest man in America with an estimated worth of $1 billion. He would from then on receive an average of 3,000 letters a week from strangers requesting money.
JPG's tip on success in business and in life
Beat your own path
How to be Rich was written at the zenith of large-company capitalism, when the species "organization man" evolved to make the most of his small place in the corporate machinery. Getty described this person as "dedicated to serving the complex rituals of memorandums and buck-passing." In contrast, Getty's "office" in his early years in the oil fields was the front seat of a battered Model T ford.
Most executives, Getty observed, would rather become "boot-lickers" to those above them than risk rocking the boat. This was actually counterproductive, because the only real security in the workplace was reserved for those who demonstrated that they could add value. Successful businesspeople, he believed, were usually rebels of some description whose wealth was built on rejection of the status quo. For example, Getty does not mention his purchase of low prices after the Wall street Crash as a boast, but to demonstrate that the person who does not follow the pack often "reaps fantastic rewards"
Getty had invited an outspoken socialist to a dinner party at his Sutton Place mansion just outside London. Another guest, a fellow American, was appalled. Getty did not apologize; in fact he felt he was honoring the great American tradition of encouraging dissent. Hearing views different to your own, he believed, "adds spice, spirit, and an invigorating quality to life."
Writing at the beginning of the 1960s, he correctly forecast that the "vanished dissenters" would soon reappear, and knew that the economic future would brighter because of it. Getty's moral was that wealth was only ever generated by open minds, because only such intellectual openness enables us to see opportunities that others do not.
Get the facts, then act
In a chapter titled "Business blunders and booby traps," JPG says that many mistakes in business and in life result from a failure to distinguish between fact and opinion or hearsay.
He once commissioned a geologist to report on the potential of an oil lease. The report said that there was little chance of finding oil, so Getty sold the lease. It later turned out to be part of the huge oil pool. Yet Getty did not blame the expert, only himself for accepting his view without question and not getting another opinion.
Businesspeople frequently accept as fact what they have heard or read without doing their own investigation or study. This is not so bad on its own, but when the results will affect a whole enterprise and the livelihoods of workers, it is an important point. If you have made a decision that is based on facts, stick to it. Have the courage of your convictions. The relaxed business person, Getty says, is always much more effective, and if you have done your homework your resolve will be less likely to be sabotaged by worry.
Getty notes that of the tens of thousands of Americans who take their lives each year, a significant number are classed as "economic suicides." His point is that many scramble for and achieve financial success, but when they get it they find that it lacks meaning. People need to believe that their efforts are increasing value and enriching the world in some way, that they are engaged in real creative effort and not simply status seeking.
Getty himself gained a reputation as a miser because he famously put a payphone in the hall of his Sutton Place mansion. (Guests had been using the regular phones to make transatlantic calls). Yet with the passage of time, we can see that if it were not for the man's dedication to eliminating waste and maximizing resources, millions of people would not be enjoying what he left. He is now, after all, more famous as an art collector and philanthropist. The collection he created is one the world's best-as anyone who has been to the Getty Museum at Malibu, California will attest.
Getty was a great believer in the free enterprise system, but was the arch capitalist that many people think. He never complained about high wages, taking the Henry Ford view that a work force that was not well paid would not buy the products you were trying to sell.
A millionaire had to accept everything with good humor, Getty realized. When he was named "richest man in the world," he had a hard time explaining to journalissts that he did not sit on mountains of cash; nearly all his wealth was tied up in infrastructure and operations, and he was working 16-18 hours a day to keep it all going. He admits that his marriages suffered and fell apart as the result of his dedication to work, and there were books he had wanted to read and didn't have the time for- but on the whole, he reflected, he had led an exciting and rewarding life.
This concludes the nuggets from books part for now. Will continue back on the same after a break.