The Ten Roads to Riches

by Ken Fisher

  MOGUL MEANDERING

  A more reliable way to wealth and celebrity is becoming a media mogul. Moguls straddle the breadth of media and entertainment. They own studios, cable companies, networks, record labels, magazines, and maybe sports teams. Moguls even produce movies and music. As opposed to talents, moguls are far richer. The Forbes 400 is littered with moguls:

  Michael Bloomberg, Bloomberg founder and former New York City mayor ($45 billion)

  Charles Ergen, founder of EchoStar ($14.7 billion)

  Rupert Murdoch, News Corp chairman ($11.1 billion)

  David Geffen, founded Geffen records and cofounded DreamWorks, college dropout and former mailroom clerk, erstwhile friend of the Clintons ($6.7 billion)

  Sumner Redstone, owns major stakes in Viacom and CBS; he gave Tom Cruise a public upbraiding (which Cruise likely deserved) ($4.7 billion)22

  It goes on and on—through George Lucas ($4.6 billion), Steven Spielberg ($3.7 billion), and beyond. You get the point. Not a single pure “talent” among the richest of the rich, yet plenty of moguls. Bigger bucks and longer-lasting opportunity! Murdoch is 85, Geffen’s a spry 73—both in their prime. It requires grit, determination, and business savvy, but not Jennifer Lawrence’s looks or youth.

  Though I’ve listed the biggest of the big, there are obviously myriad minor moguls, too. Consider my friend Jim Cramer (estimated net worth $50 million to $100 million)23—a somewhat older guy (i.e., older than Jennifer Lawrence) who parlayed OPM success (see Chapter 7) into founding TheStreet.com and then moguling into celebrity. There’s no escaping Jim—on TV, in books, everywhere. His high-energy, eclectic TV show makes him a legitimate talent. But Jim didn’t start there. Before TheStreet.com, before his hedge fund, before Goldman Sachs, before Harvard Law, he was a journalist on one of California’s more unsavory beats—carrying a hatchet and gun for protection.24 Multitalented, Jim had big but not super-mondo successes on multiple roads before settling in as a mogul and talent. The point: You needn’t make it huge to make it here.

  You can start small and build. Look at what’s available on cable today—500 channels or more! And with Americans increasingly fleeing high-tax states for less punitive ones, there’s increasing need for regional radio, news, and entertainment. But be warned: To mogul well, you need business skills. Read Chapter 2 on how to run a business and Chapter 7 on private equity. Buy enough little regional media businesses and you become the force to be reckoned with.

  Mistakes to Mogul-ness

  There’s really only one major mistake here—not diversifying. A perfect example is how those who concentrated in newspaper-based media have run aground. Newspapers, once hot, today are not. Yes, Rupert Murdoch may have bought the Wall Street Journal as a toy. But scour the Forbes 400 and you’ll learn lots of lessons. One: Newspapers are now a way to lose money.

  It wasn’t always so. William Randolph Hearst’s fortune spawned generations of wealthy Hearsts—and made young Patty Hearst a kidnapping celebrity in 1974 (like Eddie Lampert in Chapter 7, but Lampert handled it better). Joe Pulitzer, of the Pulitzer Prize, built an empire. So did Si Newhouse, whose fortune continues after his death because he had the foresight to diversify outside papers.

  Newhouse was and remains such a New York City institution—a Staten Island ferry bears his name.25 He became his family’s main provider at age 13 and took over his first newspaper, the Bayonne Times, at 16. (Even though moguls don’t need to, he started young. Like Jennifer Lawrence!) In 1922, at age 27, Newhouse bought his first entire newspaper, the Staten Island Advance, for $98,000, which he owned his entire life.26

  For all his success, Newhouse only founded one wholly new newspaper. He was an acquirer of down-and-out papers he could turn around in an area soon to boom. Newhouse was a bootstrapper— a wise decision for any founder-CEO. (See Chapter 1.) He plowed everything back in, was ever cost conscious, and fought off unions as costly and contributing to poor quality. At one point, Newhouse’s media empire was America’s third largest, behind only Hearst’s and Scripps-Howard’s. Then he diversified—into TV, cable, radio, and magazines. When papers started declining, they didn’t take him down, too.

  When he died in 1979, he left his two sons his firm, Advance Publications Inc., with 6 TV stations, 15 cable stations, a handful of radio stations, 7 magazines under the Condé Nast banner, and 31 newspapers—and the Staten Island Advance. Plus cash.

  Side note: Successful wealth builders tend to have kids who aren’t. Maybe life is too easy for them. But not with Newhouse’s sons. Samuel and Donald kept building, adding high-profile magazines including The New Yorker, Vogue, Vanity Fair, and Gourmet.27 They are among the few who’ve been on the Forbes 400 every year it’s been published (since 1982)—a very tough feat. They’re now each worth $10.5 billion.28

  To build a lasting mogul empire, you must diversify.

  The Newhouse empire thrived only because it diversified away from newspapers. You can’t find big new newspaper fortunes today. Big papers have withered from free Internet news. Small city papers withered further from losing classified advertising to the likes of eBay and Craigslist. The lesson: Don’t concentrate within one media area—diversify and be all media.

  A Hipper Mogul Road

  Much better than newspapers today? Hip-hop—it spawns boodles of cash. And hip-hop fortunes all seem well diversified. (Note: Like our pure talent friends, hip-hop mogul is a highly unlikely road. Start young and get a college degree in case it doesn’t pan out.)

  Sean Combs (aka “Diddy”) founded Bad Boy—a media empire including a record label, clothing lines, a movie production firm, and restaurants. He’s been a performer, music and TV producer, writer, and even appeared on Broadway. In 2016, his business ventures earned him $62 million, and he’s worth approximately $750 million.29 Russell Simmons, another diversified hip-hopreneur like Combs, is worth an estimated $325 million. Simmons built his fortune with two record labels and a clothing line.30 (Hip-hop moguls all seem to have clothing lines.)

  Andre Romelle Young (better known as Dr. Dre) joined the hip-hop mogul elite in 2014 via a slightly different path. Like all good impresarios, he launched his own label, Aftermath Entertainment, in 1996—and he remains CEO today. But the real payday came nearly two decades later. In 2008, Dre suggested he and record producer Jimmy Iovine launch a shoe brand. Legend has it Iovine said, “[colorful epithet] sneakers—let’s make speakers.” Soon they took the world by storm with wireless headphones that actually sounded good. Apple bought Beats in 2014 for a cool $3 billion, netting Dre about $500 million.31 He earned another $33 million in 2015,32 partly from producing the NWA biopic (and his life story) Straight Outta Compton. Today he’s worth about $710 million, and like Diddy, he has high billionaire potential.33

  Also high on the list is Shawn Corey Carter (once accused of stabbing a rival in the stomach, for which he got three years’ probation), also known as rapper Jay-Z.34 When launching his career, Carter wisely took a stab at cutting out all middle men—the record label, distributor, manager, producer—to keep more himself. And it worked and paid off—huge. As a relative unknown, he launched his own record label, Roc-A-Fella Records, with friends. In 1996, they released the first Jay-Z album. In this way, he was a classic founder-CEO bootstrapper. He then started a riotously popular clothing line, Rocawear, which he sold in 2007 for $204 million. Though he sold the rights to the brand, Carter kept his stake in the firm and still directs marketing, product development, and licensing.35

  Like any good media mogul, his income sources are diverse. He was formerly CEO of both Def Jam and Roc-A-Fella Records. He has a successful music career and his gig designing clothes. He owns the expanding sports club chain 40/40 Club. He has a film career, a bevy of hefty endorsements, royalties, publishing rights, and he manages other artists. (They’re called artists even if you can’t see what they do as very arty.) He’s been a spokesperson for Budweiser and serves as a marketing consultant for Anheuser-Busch. Like any true mogul, he bought
a sports team—he owned a sliver of the Brooklyn Nets—but sold his stake in 2013 after launching a sports talent agency, Roc Nation. Now he bides his time with Tidal, the music streaming service he took over (leading a consortium of musicians) in 2015. Forbes estimates his 2016 income at $53.5 million,36 and his net worth is $610 million.37 Movie stars, eat your hearts out.

  At the rate he produces, manages, acquires, designs, and creates—as long as he doesn’t allegedly stab anyone else (unlikely—his wife, Beyoncé, and daughter, Blue Ivy, keep him in check), he should be Forbes 400 material in no time. Like my Mark Cuban comments, my editor winced at the stabbing comments, seeing them as demeaning and mean-spirited on my part and likely to trouble you, my reader. Jay-Z would be actually offended if I covered him and didn’t mention the stabbing as he has promoted it himself as part of his bona fides in hip-hop-reality. If you want to take a stab down this road, you need sharkskin.

  You also need a smart financial plan. Curtis James Jackson III (aka 50 Cent, pronounced “Fiddy Cent”) once seemed a shoo-in for the rapper-mogul hall of fame. His “G-Unit” brand had all the usual—record company, clothing line, sneakers, and licensing rights galore. In 2004, he became the face of Vitaminwater, basically a glorified artisanal Kool-Aid (with extra vitamins for extra cachet). But he skipped the normal cash payout and took a stake in the parent company, Glaceau, which paid out handsomely when Coca-Cola bought it for $4.1 billion in 2007. That bumped his net worth near $500 million, putting him on the road to the Forbes 400.38 But it didn’t last. He filed for bankruptcy in 2015—ironic for a guy who called his debut record Get Rich or Die Tryin.’39 Even big wealth is fleeting if you aren’t careful.

  READ YOUR WAY TO FAME

  As a media mogul, you should flip to Chapters 1 and 2 on being a CEO and read the books listed there—the same lessons apply. For riches on the strictly “entertainment” road, try the books mentioned earlier in this chapter, as well as these:

  Audition by Michael Shurtleff. This is the book for working actors, written by a guy who actually casts shows and films and knows what he’s seeking. Your first stop on the acting road is here.

  An Agent Tells All by Tony Martinez. To act or be in any “entertainment” field, you need an agent. This book gives you valuable shortcuts from someone who knows.

  Swimming with Sharks directed by George Huang. You got me, this isn’t a book. It’s a must-see movie for anyone considering a Hollywood career. This just may cure you of your obsession if you aren’t sufficiently and deeply motivated.

  It’s Not about the Bike: My Journey Back to Life by Lance Armstrong and Sally Jenkins. Think you’ve had it rough? Try being told you’re as good as dead at 25. If you seriously want to be a professional athlete, read Armstrong’s tale to see if you have the grit. Don’t be deterred by Armstrong’s later admission of steroid use. The mental and physical struggle of his cancer recovery is still real.

  The Rich and Famous Guide

  This is the toughest road. For all who successfully navigate it, there are thousands (or millions) who fall off and flame out. The rewards of being rich and famous remain enticing, so folks keep trying. It’s a sort of American Dream—one culminating in a house in Malibu and security guards protecting the privacy you spent decades desperately trying to abdicate.

  But there are steps to increase the odds of being either a rich and famous talent or mogul. It’s not easy. Otherwise, we’d all be Jennifer Lawrence.

  HOW TO BE A RICH TALENT

  Start early. Nearly universally, talents of all stripes start very young and stick to it. The few “discovered” late in life (in their late 20s or beyond) almost all toiled from a young age.

  Have responsible parents and/or management. Talents who don’t have a mid-20s meltdown all seem to have fairly responsible parents and/or ethical, responsible management. Talents lacking guidance from a parent or elder tend to end up in rehab repeatedly. With good parents, you’re Natalie Portman. Without them, you’re a tabloid tragedy.

  Talents may also find themselves toiling with little to show for it if their management pockets the profits. As with hiring any professional, your manager must have a demonstrated history and transparent fees. (Creative Artists Agency and William Morris Agency are two of the largest and most respected artist agencies.)

  Be responsible for yourself. Garnering huge paychecks for movies or records doesn’t matter much if they’re all blown on stupidity and rehab. I needn’t list the near-infinite examples of talents who’ve blown ungodly amounts on not only the tacky and tasteless, but also on drugs, lawyers, and more.

  Understand how much you’ll need. Talents likely wouldn’t waste as much money on diamond jewelry and lawyers if they prepared a budget. Just because you make $10 million a movie doesn’t mean you can spend $15 million a year. Just ask 50 Cent. The rules of math apply even if you’ve won a Super Bowl.

  Because the talent road is short-lived, talents must understand how much they must amass to support themselves, families, first few wives, kids from the first few, and a bevy of girlfriends. If you need a driver, bodyguards, cook, masseuse, and yoga instructor as part of your regular staff, make sure your annual costs don’t exceed about 4 percent of your total amassed liquid assets. More than that and you’ll likely have to make do on less.

  Get a big contract. If you can.

  Repeat over and over. Repetition pays. “One-hit wonders” have a nice payday for their 15 limelight minutes, but unless they annuitize their fame (see Chapter 8), one hit won’t support them their entire lives. One-hit wonders should think about reading the other chapters in this book.

  HOW TO BE A RICH MOGUL

  Understand the market. You may think you have the newest technology, best product and programming, and hottest content, but if your target audience is disinterested, then newest, best, and hottest flop. Successful moguls “get” what their market wants and guess well at how that will evolve. They know when to make speakers, not sneakers.

  Buy low, sell high. Think like a private-equity firm. Si Newhouse didn’t care about buying the high-profile properties, and you shouldn’t, either. Identify growth opportunities and invest there. But remember, sometimes emerging markets never emerge, they just submerge. High-profile doesn’t necessarily translate into big profits—just ask the New York Times.

  Diversify. Media is fickle and technology is ever-changing. It’s tough to know where media might be in two years, let alone ten. Broadly and widely diversified moguls are best positioned to profit from changing trends. You can go deep, as long as you also go broad.

  The most successful moguls today have exposure to TV, cable and satellite, radio, movies, and online, as well as traditional print media.

  Buy a sports team. Even if it’s just one-fifteenth of one percent, like Jay-Z. No idea why this is important, but it must be since it’s a unifying factor for moguls.

  NOTES

  1. “The Forbes 400 2016,” Forbes, http://www.forbes.com/forbes-400/list/#version:static (accessed October 6, 2016).

  2. Lauren Gensler, “Martha Stewart Is Selling Her Empire for $353 Million,” Forbes (June 22, 2015), http://www.forbes.com/sites/laurengensler/2015/06/22/ martha-stewart-living-omnimedia-sequential/#1dce89c848f5 (accessed September 7, 2016).

  3. “Mary-Kate and Ashley Olsen Net Worth,” Richest, http://www.therichest.com/celebnetworth/celeb/actress/mary-kate-and-ashley-olsen-net-worth/ (accessed September 7, 2016).

  4. “The Forbes 400 2016”.

  5. “Cuban Slammed with $25,000 Fine,” ABCNews (June 20, 2006), http:// abcnews.go.com/Sports/story?id=2098577&page=1 (accessed April 11, 2008).

  6. Associated Press, “Mavs Owner Serves Smiles and Ice Cream,” Daily Texan (January 17, 2002), http://media.www.dailytexanonline.com/media/storage/paper410/news/2002/01/17/Sports/Mavs-Owner.Serves.Smiles.And.Ice.Cream-505789.shtml?norewrite200608240019&sourcedomain=www.dailytexanonline.com (accessed April 11, 2008).

  7. Cathy Booth Thomas, “A Bigger Screen for Mark Cuban,”
Time (April 14, 2002), http://www.time.com/time/magazine/article/0,9171,230372-1,00.html (accessed April 11, 2008).

  8. Mike Morrison and Christine Frantz, InfoPlease, “Tiger Woods Timeline,” http://www.infoplease.com/spot/tigertime1.html (accessed April 11, 2008).

  9. Associated Press, “Madonna Announces Huge Live Nation Deal,” MSNBC (October 16, 2007), http://www.msnbc.msn.com/id/21324512/ (accessed June 9, 2008); Jeff Jeeds, “In Rapper’s Deal, a New Model for Music Business,” New York Times (April 3, 2008), http://www.nytimes.com/2008/04/03/arts/music/03jayz.html (accessed June 9, 2009).

  10. U.S. Department of Labor, Bureau of Labor Statistics, “Actors” (December 17, 2015), http://www.bls.gov/ooh/entertainment-and-sports/actors.htm#tab-1 (accessed September 7, 2016).

  11. “Dell Dude Now Tequila Dude at Tortilla Flats,” New York Magazine (November 7, 2007), http://nymag.com/daily/food/2007/11/dell_dude_now_tequila_dude_at.html (accessed April 11, 2008).

  12. Nicole Bracken, “Estimated Probability of Competing in Athletics Beyond the High School Interscholastic Level,” National Collegiate Athletic Association (February 16, 2007), http://www.ncaa.org/research/prob_of_competing/probability_of_competing2.html (accessed April 11, 2008).

  13. Major League Baseball Players Association, “MLBPA Frequently Asked Questions,” http://mlb.mlb.com/pa/info/faq.jsp (accessed September 7, 2016).

  14. Bracken, “Estimated Probability of Competing in Athletics Beyond the High School Interscholastic Level.”

  15. “The Celebrity 100, 2016,” Forbes, http://www.forbes.com/celebrities/list/#tab:overall (accessed September 7, 2016).