The Business Insider article reminds me a great deal of Napoleon Hill's classic 1937 book, "Think and Grow Rich", which was basically commissioned by Andrew Carnegie as a way to study the beliefs and philosophies rich people of his era had in common in order to see if learning about that would help illuminate ways to help other people to join their ranks. But first, here's a little useful background knowledge on Andrew Carnegie himself!
As most people probably know, Andrew Carnegie grew up incredibly poor.
|Andrew Carnegie at 16 [right]|
By 1861, Andrew Carnegie was asked by his boss Tom Scott to help manage railroads and supply lines for the Union Army's war efforts during the Civil War. Scott had recently been appointed Assistant Secretary for War in charge of transportation, and Scott appointed Carnegie to the position of "Superintendent of the Military Railways and the Union Government's telegraph lines in the East". The transportation of munitions, and communication lines built by Carnegie and his team during the Civil War was unequivocally an integral part of the Union's eventual victory.
Andrew Carnegie was 26, but he was no prodigy. He had accumulated 13 years of working experience and knowledge by this point in his life.
After the Civil War, he left the railroad business and founded the Keystone Bridge Works and Union Ironworks companies and began providing much-needed rail lines and infrastructure to the railroad companies which taught him how to be good at building systems and operating companies. These companies became the genesis of his titanic US Steel and the rest, as they say, is history.
Why the biography?
|Andrew Carnegie at 43|
He worked exceptionally hard. He was smart and enjoyed learning and continued to educate himself throughout his entire life. He consumed volumes of literature. He was friendly and sociable and made sure to do his due diligence and knew who the important players were both geographically and within his industry nationwide... These attitudes and habits pervaded his life, and by the time he was 30 years old, he was doing very well, and by the time he was 50, he was one of the richest men on the planet.
Too often, I find that people don't realize or appreciate that what matters to people's lives is what they believe and which ideas form the basis of their actions.
Becoming an industrial titan isn't merely a matter of luck as perhaps our current President would like you to believe. Nor is it (as Andrew Carnegie's case fairly well demonstrates) a matter of attending a government school, using government roads, benefiting from government funded technologies or drinking clean government-managed water and eating government-inspected and approved food. None of these things were particularly available to Carnegie.
One thing was available to Andrew Carnegie, however... Freedom.
Freedom buys an individual so much more than the roads and schools and all of that other stuff provided by the auspices of politicians spending other people's money, but increasingly few people in the US seem to understand this important fact. Carnegie's father came to the United States for opportunity and a better life. Andrew Carnegie took that opportunity and ran with it like few others in human history have been able to do.
Today, many of the same opportunities don't exist for poor immigrants - and they're getting harder and harder to come by - purely because the state has squashed them, so that's definitely something to consider when reading the rest of this. However, this post is not about those kinds of obstacles.
Today I'm writing about ideas.
Carnegie believed - and I believe - that it was all a matter of the way he thought. And he passed that knowledge on to his employees and friends, such as Charles M. Schwab who started his career as an engineer for one of Carnegie's steel companies. Many of the people who learned from Carnegie became exceptionally wealthy themselves.
What are these ideas? Here are a few of my favorites ideas culled from Napoleon Hill's fine book (this will be a bit plagiarized from a few sources and mixed with my own thoughts, for the record):
- Thoughts Are Things:
Whatever the mind of man can conceive and believe man can achieve. Every person is the master of their own fate - because everyone has the power to control what they think about.
There are no limitations except those we set ourselves. Both poverty and riches are the offspring of thought. Definteness of purpose and burning desire to possess it made all the difference. The real leaders of the world have always been those people who could convert their thoughts into skyscrapers, factories, airplanes and everything else.
Faith is the head chemist of the mind. The emotions of faith, love and sex are the most powerful of all the major positive emotions. The subconscious mind makes no distinctions between constructive or destructive thoughts. It will translate either into reality. Therefore, guard carefully what you think about. You must have faith in your own ability to achieve whatever it is that you want to achieve or you cannot expect to achieve anything.
The imagination is the workshop of the mind where plans are fashioned. Any impulse or desire starts to take shape and form through the imaginative faculty of the mind. Man can create anything that he can imagine. Man’s only limitation lies in the development and use of his imagination.
Procrastination - the lack of a definite decision - is a common enemy that every successful person must conquer. People who are successful have the habit of reaching decisions promptly and changing those decisions slowly if ever.
- Organized Planning:
Everything man can create or acquire first begins in the form of a desire. Desire is the first part of the journey from the abstract to the actual. It’s in the workshop of imagination that plans are created and organized.
Persistence is essential in transmuting desire into its monetary equivalent. Will-power and desire, when properly combined, make an irresistible pair.These aren't the full gamut of ideas found in that book, but to me they are some of the most important... beginning with the first one.
|FREE PDF... Public domain, ftw!|
Take the idea of faith.
Napoleon Hill didn't mean that you needed to have faith in some mystical spiritualism or a god of any kind. He meant that you need to have faith that you are capable of doing what you set your mind to. That's not a question of objectivity, it's a matter of belief and nothing more. You may fail. You may have never been able to do what you want to do... But if you don't believe that you can achieve your goals - if you do not have faith in yourself - you will never succeed.
This, I think, is 100% correct.
So what did Business Insider have to say? Here are their 21 ideas which they believe are shared by modern rich people:
- Average people think MONEY is the root of all evil. Rich people believe POVERTY is the root of all evil.
- Average people think selfishness is a vice. Rich people think selfishness is a virtue.
- Average people have a lottery mentality. Rich people have an action mentality.
- Average people think the road to riches is paved with formal education. Rich people believe in acquiring specific knowledge.
- Average people long for the good old days. Rich people dream of the future.
- Average people see money through the eyes of emotion. Rich people think about money logically.
- Average people earn money doing things they don't love. Rich people follow their passion.
- Average people set low expectations so they're never disappointed. Rich people are up for the challenge.
- Average people believe you have to DO something to get rich. Rich people believe you have to BE something to get rich.
- Average people believe you need money to make money. Rich people use other people's money.
- Average people believe the markets are driven by logic and strategy. Rich people know they're driven by emotion and greed.
- Average people live beyond their means. Rich people live below theirs.
- Average people teach their children how to survive. Rich people teach their kids to get rich.
- Average people let money stress them out. Rich people find peace of mind in wealth.
- Average people would rather be entertained than educated. Rich people would rather be educated than entertained.
- Average people think rich people are snobs. Rich people just want to surround themselves with like-minded people.
- Average people focus on saving. Rich people focus on earning.
- Average people play it safe with money. Rich people know when to take risks.
- Average people love to be comfortable. Rich people find comfort in uncertainty.
- Average people never make the connection between money and health. Rich people know money can save your life.
- Average people believe they must choose between a great family and being rich. Rich people know you can have it all.
For example, how many rich people in 2012 are teaching their kids the tools they need to get rich?
My general observation is that usually wealth that's created in one generation is squandered in the next or in a few generations hence. And when the wealth is substantial (say, Sam Walton's fortune), often the heirs don't do all that much to maintain it but don't need to because their parent or grandparent's company is so well-organized that it remains successful with or without their help.
There may be a valuable Michael Gerber lesson there... but this post probably doesn't need to get into it.
I do think there's a lot here to really consider though. The first several stand out to me a great deal. The "money is the root of all evil" concept is a horribly damaging idea for a number of reasons. First because money is a too, no more good or evil than what it's used to accomplish. Actually a "tool" is even the wrong word. Money is lubricant. WD-40 for trading. It means that I can trade my video production services to someone who needs those for the products a farmer makes which I need to be able to eat and survive.
You might think that a tank blowing up a village is evil, but I think you'd be hard pressed to find anyone who thinks that the axle-grease had any particularly demonic properties.
Poverty is the real evil. Poverty is the material evil that has plagued mankind's entire existence and only goes away when wealth is created. That's it.
A few of these "Average person" attitudes I actually find to be incredibly pernicious. For instance, the "lottery mentality" is an abomination. If you believe getting rich - or simply having the life you want to have by whatever definition that happens to be for you - is a matter luck, you're screwed already. Waiting around for your life to be everything you ever dreamed of is the surest way I can think of to never being happy. It's a life filled with excuses.
So is doing something you hate for a living. If you don't like your job and you're not passionate about it, it's just going to be a miserable influence on your whole life. I just had this conversation with a woman who told me tonight that she basically avoids her work at all costs. She justifies this by believing that not caring about money gives her time to care more about her friends... The thing she's missing is that most rich people or people who have rich-people habits don't work hard because they feel they "have to". They work hard because they love what they're doing.
That's what I do at any rate, and it's what everyone I know who is successful does as well.
Another thing I think is exceptionally important - and which is highlighted by Napoleon Hill and also by Robert Kiyosaki in "Rich Dad, Poor Dad" - is this idea that specific knowledge over "education" is what really matters. In Kiyosaki's book, the "poor dad" was the Superintendent of Schools for the State of Hawaii. He thought that a good life would come from a masters or a Ph.D. My dad thinks the same way.
But I know too many people with multiple masters degrees to believe in that jive.
My own masters was a means to acquire specific knowledge, and I acquired it because I had a vision for what I wanted to do with it. That is how I have always approached my education.
As Sherlock Holmes puts it:
"I consider that a man's brain originally is like a little empty attic, and you have to stock it with such furniture as you choose. A fool takes in all the lumber of every sort that he comes across, so that the knowledge which might be useful to him gets crowded out, or at best is jumbled up with a lot of other things, so that he has a difficulty in laying his hands upon it."I know brains don't really work that way, but my limited time on planet earth does constrain me from learning "everything".
I learn a lot, and I retain a lot, but I'm not generally in the habit of spending my time learning about Kim Kardashian's husband of the week. Why? Because I don't have infinite time, and spending my time on those kinds of things is a poor opportunity cost for me. My education has always been self-directed and even in high school I tended to prioritize the knowledge and skills I believed I would need to achieve my goals. Some things I had to get special permission for. For example, my school had no music theory course. So I made one. A few years later, I earned part of my living as an undergraduate & graduate student by teaching theory to others.
I never went to school or college or did graduate work simply to be "taught" whatever someone else thought I should know. I went because I had a lot of things I personally knew I wanted to learn - and I've kept learning ever since, in and out of the classroom.
Maybe most people who read this won't understand the distinction, but I think it's very important. Specific knowledge matters to success. General knowledge is only useful to the extent that you know how to apply it.
While I'm writing this lengthy blog about thinking and being successful, and now that I've mentioned Robert Kiyosaki, I may as well highlight a few things from his work that I think we should all think about as well. Here are 6 lessons, courtesy of the website, Madame Noire:
- Lesson One: The Rich Don’t Work for Money
"Rich Dad was more focused on ways of creating residual money, money that increases even if you don’t work, rather than waiting for the next job with a pay raise."
- Lesson Two: Learning Financial Literacy
"Developing financial literacy is key to having any success with money. Financial literacy is simply the study of managing one’s finances."
- Lesson Three: Mind Your Own Business
"As mentioned in the previous lesson, the key attribute that must be developed in order to gain wealth is to focus on your asset column. The rich focus on improving the size of their investments rather than simply waiting or demanding pay raises in their income.
This means keep your expenses low, reduce your liabilities and diligently build a base of solid assets."
- Lesson Four: The History and The Power Of Corporation
"By filing as a corporation, the rich are able to mitigate their losses to only the amount they invested in the corporation. They are able to pay taxes after they pay for expenses. For people who have jobs, it’s the opposite case where taxes are taken out of paychecks before one is able to cover expenses."
- Lesson Five: The Rich Invent Money
"... if you truly want to see your investments grow exponentially you must be willing to put in the money in places that show relative risk."
- Lesson Six: Work to Learn - Don’t Work for Money
"As Kiyosaki recommends in the book, take a long view of life. Instead of simply working for the money and security, which are important, take a second job or take classes that will teach you a skill. He goes even further to describe the three main management skills necessary for success:
1. The management of cash flow (assets and liabilities)
2. The management of systems (basic economic theory, political landscape, etc.)
3. The management of people
If one is able to focus getting jobs that develop these three major skills sets, he is well on their way on the path to success."
- Fear - Overcoming the fear of losing money. The fear of losing money is real. Everyone has it. The difference becomes how a rich and poor person handles the fear. Wealthy individuals use failure as a teaching moment and aren’t afraid to fail.
- Cynicism - This deals mostly with those around you. Follow your own path, because at the end of the day, wealthy individuals are a small percentage who go against the grain and don’t follow the crowd
- Laziness - One must be willing to put in the time and effort to build up their financial knowledge. This means being selfish and taking time out to build one’s personal wealth.
- Bad Habits - Reducing expenses is easier said than done, but one must be willing to break those bad spending/investing habits in order to be successful
- Arrogance - Always be willing to reach out to those who are successful and those you want to emulate. To become wealthy, it’s often a collaborative effort, bouncing ideas from prospective mentors.
Ultimately I think there's a lot of value in thinking about thinking in this regard. How do people who are successful think? How do people who are less successful or unsuccessful think? If someone is perpetually making poor choices, I want to know what I can about the way they're making decisions so that I don't fall into the same traps. Likewise, if everything someone touches seems to constantly turn to gold, I want to know how they're thinking and making decisions as well.
Much like some of the other discussions I've had lately, this is one of those areas where a lot of people are just uncomfortable talking about it. But we should be talking about it.
It's ideas that shape the world, and lately it feels like all the world has to offer are very, very bad ones.