The Ten Roads to Riches

by Ken Fisher

  2. Ibid.

  3. Ibid.

  4. “William Berkley Profile,” Forbes (September 14, 2016), http://www.forbes.com/profile/william-berkley/ (accessed September 14, 2016).

  5. “George Joseph Profile,” Forbes (September 14, 2016), http://www.forbes.com/profile/george-joseph/ (accessed September 14, 2016).

  6. “Patrick Ryan Profile,” Forbes (September 14, 2016), http://www.forbes.com/profile/patrick-ryan/ (accessed September 14, 2016).

  7. “Sanford Weill Profile,” Forbes (September 14, 2016), http://www.forbes.com/profile/sanford-weill/ (accessed September 14, 2016).

  8. “Equilar/Associated Press S&P 500 CEO Pay Study 2016,” Equilar (May 25, 2016), http://www.equilar.com/reports/37-associated-press-pay-study-2016.html (accessed September 6, 2016).

  9. “The Forbes 400 2016,” Forbes, http://www.forbes.com/forbes-400/list/# version:static (accessed October 11, 2016).

  10. Robert Berner, “The Next Warren Buffett?,” BusinessWeek (November 22, 2004), http://www.businessweek.com/magazine/content/04_47/b3909001_mz001.htm (accessed April 21, 2008).

  11. Patricia Sellers, “Eddie Lampert: The Best Investor of His Generation,” Fortune (February 6, 2006), http://money.cnn.com/2006/02/03/news/ companies/investorsguide_lampert/index.htm (accessed April 16, 2008).

  12. Berner, “The Next Warren Buffett?”

  13. Ibid.

  14. Sellers, “Eddie Lampert.”

  15. Berner, “The Next Warren Buffett?”

  16. “The Forbes 400 2016.”

  17. Andrew Ross Sorkin, “A Movie and Protesters Single Out Henry Kravis,” New York Times (December 6, 2007), http://www.nytimes.com/2007/12/06/business/06equity.html?ex=1354597200&en=18531ee4bfaf9f2d&ei=5088&partner=rssnyt&emc=rss (accessed April 16, 2008).

  18. Peter Carbonara, “Trouble at the Top,” CNN Money (December 1, 2003), http://money.cnn.com/magazines/moneymag/moneymag_archive/ 2003/12/01/354980/index.htm (accessed April 16, 2008).

  19. Andy Serwer, Joseph Nocera, Doris Burke, Ellen Florian, and Kate Bonamici, “Up Against the Wall,” Fortune (November 24, 2003), http://money.cnn.com/magazines/fortune/fortune_archive/2003/11/24/353793/index.htm (accessed April 16, 2008).

  20. James B. Stewart, “The Opera Lover,” New Yorker (February 13, 2006), http://www.newyorker.com/archive/2006/02/13/060213fa_fact_stewart (accessed April 16, 2008).

  21. Matthew Miller, “The Optimist and the Jail Cell,” Forbes (October 10, 2005), https://www.forbes.com/free_forbes/2005/1010/060a.html (accessed March 13, 2017).

  22. Stewart, “The Opera Lover.”

  23. Bloomberg News, “Two Advisers Defrauded at Least 8 Clients, S.E.C. Says” (November 12, 2005).

  24. Charles Gasparino and Susanne Craig, “A Lehman Brothers Broker Vanishes, Leaving Questions, and Losses, Behind,” Wall Street Journal (February 8, 2002), http://online.wsj.com/article/SB1013123372605057920.html?mod=googlewsj (accessed May 19, 2008).

  25. Ibid.

  26. U.S. Securities and Exchange Commission, “Litigation Release No. 17590” (June 27, 2002), http://www.sec.gov/litigation/litreleases/lr17590.htm (accessed April 16, 2008).

  27. Erik Larson, “Ex-JPMorgan Broker Admits Stealing $22 Million for Gambling,” Bloomberg (November 5, 2015), https://www.bloomberg.com/news/articles/2015-11-05/ex-jpmorgan-broker-pleads-guilty-in-theft-of-20-million (accessed January 26, 2017).

  28. Mark Schoeff Jr., “Florida Congressman Grayson a Victim of $18 Million Stock Scam,” Investment News (December 12, 2013), http://www.investmentnews.com/article/20131212/FREE/131219958 (accessed October 11, 2016).

  29. U.S. Securities and Exchange Commission, “Litigation Release No. 22820” (September 27, 2013), https://www.sec.gov/litigation/litreleases/ 2013/lr22820.htm (accessed October 11, 2016).

  30. Sital S. Patel, “How Madoff Probe Uncovered a Hedge-Fund Scam Led by Ex-MIT Professor,” MarketWatch (August 13, 2014), http://blogs.marketwatch.com/thetell/2014/08/13/how-madoff-probe-uncovered-a-hedge-fund-scam-led-by-ex-mit-professor/ (accessed October 11, 2016).

  31. David Phelps, “Financial Adviser Meadows Sentenced to 25 Years After $10M Theft Conviction,” Minneapolis Star Tribune (June 27, 2015), http://www.startribune.com/financial-advisor-meadows-sentenced-to-25-years-after-10m-theft-conviction/310185051/ (accessed October 11, 2016).

  32. Paul Walsh and Mary Lynn Smith, “Charges: Mpls. Investor Ran $10M Scheme; Some Spent at Casinos, Erotic Venues,” Minneapolis Star Tribune (August 6, 2014), http://www.startribune.com/charges-mpls-investor-ran-10m-scheme-some-spent-at-casinos-erotic-venues/270158961/ (accessed October 11, 2016).

  8

  INVENTING INCOME

  Have a wild imagination? Or none at all? This could be your road.

  Can you invent an endless stream of future income? I don’t mean by inventing—though that can work. Here you make an annuity-like future cash flow from something you create, own, or patent that just keeps spewing cash. A gadget, book, song, movie, or even experience.

  Ever thought, “If only such-and-such existed, life would be better”? Then someone invents such-and-such, changes the world, and gets rich! Why them and not you? The big money is in getting rights, licensed or patented, for future reuse and generating reuse. This is how a very few writers get rich, or how successful song writers do it via publishing rights, like our Chapter 4 hip-hop friends.

  THE TRUE INVENTORS

  Yes, there are true “inventors”—folks who create things so earth-shatteringly life-changing you can’t imagine life without them, like the PC or polio vaccine. There are also mundane, everyday things. The trick is patenting it, so you collect every time your gadget is used or sold.

  Everyone wrongly cites the guys who invented Post-it Notes (Arthur Fry and Spencer Silver) as classic successful inventors—striking it big with a mundane idea. Fry, a 3M chemist, wanted bookmarks to stay put in his choir hymnal. He used his buddy and coworker Silver’s adhesive—sticky enough, but not so much as to tear the page when removed—voila! A pop-culture icon was born.1 But they weren’t income inventors. Being 3M employees, their creation was a “work product”—they couldn’t own it. They probably got a nice bonus but didn’t invent a future revenue stream for themselves. Just “inventing” may not hack it.

  Invent? Market? Do Both!

  Nor will a patent. Lots of people hold patents—tens of millions! To create future income, you must have broad adaptation like our Post-it friends, but you must also maintain control of the future. Successful income inventors have an entrepreneurial soul and can market their ideas. If you can’t preach the benefit, you go unnoticed—marketing is key. You must have broad reach and a compelling story—or a compelling personality, like the father of inventors, Ron Popeil. Ron haunts late-night TV, still pitching products energetically to insomniac audiences.

  As a teen, Popeil frequented Chicago’s West Side flea markets—not to shop, but to watch the hawkers. He built flea market skills to sell kitchen and household wares at Woolworth’s, making $1,000 a week—huge for a 1950s teenager selling blenders (about $8,800 today—$358,000 per year!). Remember from Chapter 7—learning to sell is powerful. Next, Popeil set out on his own to sell his own kitschy inventions at flea markets and carnivals, honing his midway barker style.

  Marketing your product—even if your product is you—is vital.

  Then he turned to TV, still a new medium then. With $550, he made his first commercial. In 10 years, Ron was pure TV. He founded Ronco in 1964 and dedicated himself to inventing and selling. He created Veg-O-Matic—boasting it chopped onions perfectly with no tears. He did the Pocket Fisherman—a fully equipped fishing pole that folded down for those crucial moments you’re driving past a trout pond and think, “Dang! If only I had a pole handy!” (My mother bought one and then another each for me and my brothers.)

  Popeil invented slews of goofy products—an Inside-the-Shell Egg Scrambler, the Smokeless Ashtray, the Electric Food Dehydrator, and the Cap Snaffler. I have no clue what “snaffling” is, but app
arently you do it to caps. As Ron would say, “It really, really works!” He invented goofy products, but also invented or synthesized catchphrases now common to infomercials. He teased, “But wait! There’s more!” He urged buyers to rush because “operators are standing by.” He told housewives they could “set it and forget it.” He touted his bargain prices by asking, “NOW how much would you pay?” He enticed shoppers with low installment payments. A Cap Snaffler may not seem worth $160, but who can’t afford four easy payments of $39.95?

  His real invention was the infomercial—Popeil is synonymous with long-form TV commercials, an insanely profitable marketing vehicle. His products, while cute, weren’t world changing. Who really needs a big, bulky onion-chopping gadget? Don’t knives do that—and fit neatly in a drawer? But Ron’s genius was in making the mundane exciting. His persona was famous enough for Dan Aykroyd to satirize him on Saturday Night Live when he put a fish in a blender and touted the vitamin-boosted benefits of liquefied bass. Aykroyd called it the “Bass-O-Matic.” Laraine Newman purred, “That’s good bass.”

  His net worth exceeds $100 million.2 The best way to emulate Ron’s success is to focus on finding the next efficient way to market something—anything. You can even create your own catchphrase and be parodied on Saturday Night Live.

  WRITING FOR DOLLARS

  Most successful writers don’t get rich. Few books sell many copies—most less than 10,000. At that, if it’s a $20 book, royalties may be $2 per book. The author makes $20,000 for much of a year’s work and remains poor. A tiny percent sell better. Take stock market books, which are mostly what I’ve written. A real monster stock market book may sell 200,000 copies in its life. There are maybe two of those a year at most, and they will make the New York Times Best Seller list, like my 2007 book did. But $400,000 in royalties isn’t enough to get rich on. And that’s before expenses associated with promoting it.

  Writers who succeed keep cranking out best sellers to maintain income and then go down the Road More Traveled (Chapter 10). Broader category monsters like James Michener are statistically and simply way out on the bell curve of success. You’re as apt to become the next Babe Ruth. Long-term top-10 selling romance novelists accumulate $5 million to $30 million in their lifetimes. I know, because two of them are my clients. But that’s it. Nice—but not mondo huge.

  That is, unless you morph otherwise. For example, Stephen King will collect endless cash from royalties on The Shining—the movie, not the book—and subsequent remakes, prequels, sequels, remakes of prequel/sequels, reissues, special-edition DVD box sets, and so on. Ditto for Christine, Stand by Me, Pet Sematary (yes, it’s spelled incorrectly intentionally), Shawshank Redemption, and The Green Mile—to name a few. He could have quit writing 20 years ago and been excessively rich. His book royalties were OK, but he earns exponentially more on licensing rights whenever another of his macabre tales is used as movie or TV fodder and then endlessly streamed on Netflix. Did he intend to write books that translate easily into two-hour movies? Don’t know. But he sure evolved to it.

  King may be king, but JK Rowling is the queen (and, incidentally, is richer than Britain’s queen). JK “Jo” Rowling invented Harry Potter’s magical world and a magical income stream. The film series alone has grossed $7.7 billion so far. Rowling’s currently worth about $1 billion.3 Her books keep selling. In a rather genius move, she kept the Harry Potter e-book rights and distributes them on her own, exclusively. Instead of $1 or $2 per book, she keeps most of the sale price, raking in millions annually.4 Her other bucks come from movies, DVDs, endless Harry Potter lunchboxes, sneakers, backpacks, action figures, skateboards, wallpaper, pencils, Halloween costumes, paper plates, pajamas, you name it. Not to mention Universal’s theme parks in California and Florida, which both have entire sections masterfully designed to make her invention a reality. If it’s inanimate and kid-oriented, it’s been stamped with Harry Potter’s mug—and Rowling collects every time. A plain lunchbox retails for about $5. Embossed with Harry and pals, it’s $25. That’s monetizing your creation.

  If you will write—and want riches—think lunchboxes. After this book I’m starting my next—a made-for-movie adventure novel based on 10-year-olds who embezzle money from their neighborhood bad guys, get caught, flee, and become international spy sensations, saving the world from crooks and having implied (but not depicted) sex with other kids who look sexy to prepubescents. Named The Ten Roads to Recess, I’ll smack it on every lunchbox in America with clip-on action heroes. Only kidding! But, seriously, your chance for big bucks skyrockets if you think “lunchbox” and plan an ongoing after-market.

  You needn’t be a Rowling-scale success. Helen Fielding went big with a little book based on a book by another writer who never got rich in her lifetime—Jane Austen. Yet, Fielding will collect on Bridget Jones books, movies, and Netflix residuals for years. No Rowling, but she’s rich by most folks’ standards. For most authors, writing is a labor of love, not a road to riches. For me, I’m already rich. I love my day job, which is how I got rich. I write because I like to. That’s the right reason for most writers to write. (I’m brutally blunt to help direct you to a more lucrative road.) Simply no one but JK Rowling made the Forbes billionaire list by writing alone. That doesn’t mean you can’t write and get rich—but writing alone won’t make you huge.

  Figure how to monetize your creation.

  Money for a Song

  Songwriting beats performing. Just cobble together some rhyming couplets and a catchy tune. Performers get paid once for an album and collect on ticket sales while touring. They need endless talent (see Chapter 4) and don’t get future income. This is why even mega-stars like the late Whitney Houston can end up destitute (the drug habit didn’t help) and why Barbra Streisand dusts herself off every few years to tour. They lack future income.

  Some performers write music, too. Dolly Parton comes to mind, still prolific (and worth $500 million)5 at 71 years young. But many wealthy songwriters don’t perform at all (or not much), don’t suffer the personal strain celebrities undergo, and have longer shelf lives than performers do—and may not even have any more talent than book writers who never make much money. For instance, Denise Rich, née Eisenberg, never performed. But Rich is rich and more so than almost all nonsongwriting performing artists. Admittedly, she captured money from two roads—her songwriting career and her married-well divorce (Chapter 5) from mega-rich Marc Rich (net worth $1 billion when he passed on in 2013).6

  Aside from her former marriage to Mr. Rich (the Clintons’ commodities trader friend and onetime fugitive who fled America to avoid tax evasion charges, pardoned by Bill Clinton on his final day in office),7 she has a huge career as a Grammy-nominated songwriter. She’s written for Aretha Franklin, Mary J. Blige, Celine Dion, Diana Ross, Donna Summer, Luther Vandross, Marc Anthony, and Natalie Cole, to name a few.8 More recently, she cranked out hits for early-twenty-first-century starlets like Mandy Moore and Jessica Simpson. Her songs get recorded, re-recorded, covered, sampled, and still get radio play every day. Every time, she gets paid. The singer gets paid once! It’s better to write than sing.

  What can you earn as a songwriter? Our government mandates songwriters get paid 9.1 cents per unit sold. So, write one song on an album selling a million copies, you get $91,000. If you write all the songs—maybe 12—that can be over $1 million. Songwriters also get paid when the song is played on radio, used on TV or in movies, or downloaded.9 Every time! From Denise Rich’s first number one hit, “Frankie,” recorded by Sister Sledge, through awards at the American Song Festival, she evolved to be worth $125 million.10 (Aspiring songwriters can find resources at SongWriter101.com—the site details contests, festivals, and agents to whom you submit songs to win money, acclaim, or both.)

  This doesn’t require being a performer or other talent. It requires simple skills at creating simple melodies and poetry-like prose that’s catchy. Then it requires the selling skills to sell to those who may record. Like on so many roads,
the sticky point is the selling. Then, once a talent records it, you have to sell it over and over again for future residual usage. Songwriters who monetize income are as much sales agents as anything else.

  They have long careers. Richard Rodgers and Oscar Hammerstein didn’t perform but created some of the twentieth century’s most memorable songs. Irving Berlin, Jerry Herman, Stephen Sondheim, and Sir Andrew Lloyd Webber (net worth about $1 billion)11 all built huge careers (and piles of dough) writing. Yes, Neil Sedaka performed some of his songs but was bigger and better paid for his decades-spanning songwriting career that included hits like “Love Will Keep Us Together” by Captain & Tennille. Carole King, like Sedaka, performs some but writes more—huge hits for artists like Bobby Vee, The Drifters, Aretha Franklin, Dusty Springfield, and Barbra Streisand, and “You’ve Got a Friend” for James Taylor. Then she remonetized all of them into a Tony-winning jukebox musical, now touring internationally. The soundtrack sold like hotcakes and a movie is in the works—all more royalties for Carole.

  The songwriting career is more business-like, infinitely less self-destructive, more lucrative, longer lasting, and more predictable to plan and build. My editor thought this section should go with the talents in our Rich and Famous chapter. I disagreed. Few are so famous (unless they cross over to reality TV like former American Idol judge Kara DioGuardi), yet are often much richer. You needn’t start so young and need no performing talents. This section had to go somewhere and to me, it’s better here—these folks are perfect income creators.

  Cloning Cash

  On this road, no one tops the Jedi Master income-inventing skills of George Lucas, worth $4.6 billion.12 Lucas also qualifies as a founder-CEO who bootstrapped his way up. After his Oscar-winning success with American Graffiti, Lucas did a switcheroo. Yes, he did Star Wars. But here he went down our road, something directors hadn’t done before—he created an income stream. To get 20th Century Fox to do Star Wars, Lucas waived his director’s fee for 40 percent of the box office and merchandising rights. For Fox, if Lucas’s kiddie space film flopped, it wouldn’t hurt much. And who cared about merchandising rights? No one made money merchandising. So Fox bit, and the Force was strong with Lucas.