The stories and factual accounts in this book have been fictionalized and altered to protect the privacy of the individuals and their families. Persons referenced in this book may be composites or entirely fictitious, thus references to any real persons, living or dead, are not implied.
Published by Emerald Book Company
Austin, TX
www.emeraldbookcompany.com
Copyright ©2011 Richard Watts
All rights reserved.
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Ebook ISBN: 978-1-937110-13-0
Ebook Edition
To my wife, Debbie, for encouraging me to share my thoughts.
My three boys, Aaron, Todd, and Russell, for honoring their parents.
My father, Tom Watts, for modeling a life of humility.
And to my grandmother, Pokie, for affirming my inner voice.
Special thanks to Sealy Yates and Brianna Engeler
for helping to materialize this project.
CONTENTS
Introduction: Pulling Back the Brocade Curtain
PART ONE: LIFESTYLES OF THE RICH AND FAMOUS
Chapter One: The Hundred-Million-Dollar Definition
Chapter Two: Uncommon Lives
Chapter Three: Giving a Lot for a Little More
PART TWO: SOAP-OPERA FAMILY DRAMA
Chapter Four: The Money-Proof Marriage
Chapter Five: Children of Entitlement
Chapter Six: The Dangers of Inherited Wealth
Chapter Seven: Under the Thumb of Rich In-Laws
Chapter Eight: Bitter Family Battles
PART THREE: LIVING BEHIND CASTLE WALLS
Chapter Nine: Pretend Friends
Chapter Ten: Unrelenting Competition
Chapter Eleven: Inevitable Alienation
Chapter Twelve: Artificial Intelligence
Chapter Thirteen: Myopic Vision
Chapter Fourteen: Leading a Double Life
Chapter Fifteen: Spiritually Challenged
PART FOUR: I’D RATHER NOT BE RICH
Chapter Sixteen: The Myth of Midas
INTRODUCTION
PULLING BACK THE BROCADE CURTAIN
I am a keeper of secrets.
I am silence on the receiving end of a midnight phone call.
I am the facilitator of dreams.
I am a fixer of million-dollar mistakes.
I am a gatekeeper to keep the masses away.
I am paid to keep watch from the shadows.
Do you think you know what it’s like to be rich? The yachts on the Mediterranean … the gold Rolexes and necklaces dripping with diamonds … the thirty-thousand-square-foot mansion complete with servants … the ability to play on private islands or at exclusive gaming tables in Las Vegas … the freedom from responsibility … is this what it means to be rich?
If you believe what you read, the life of the rich must be better than the life of the average Joe. In fact, their lives must be perfect, dappled with the gold of luck and good fortune. If only you could be rich, your troubles would be over, your worries melting away with an instant influx of greenbacks.
But when imagination gives way to reality, it becomes far too easy to look around with eyes of discontent. Why not me? I must not be good enough, smart enough, or lucky enough. Life dealt me a bum hand. If only … If only.
Unfortunately, most of us never know the real story. That’s intentional. Behind the façade of fancy cars, glittering jewels, and designer clothes can be a hidden world of woe. Ruined relationships, shaky self-esteem, and overwhelming obligations head a list of uninvited sorrows that surround many of the super-wealthy.
My clients have experienced one or more of these difficult and heartbreaking lessons. I’ve been encouraged to invite you into the shadows in hopes that you may gain some measure of understanding that wealth has a cost. Let me open the curtains to let you see what the lives of the super-rich are really like. Let me show you a world beyond the tabloids and the “reality” shows. Let me reveal the secret reality behind your fantasy of being wealthy. Expect to find shadows of your own experience woven into one or more of the stories. Being rich may be more costly than you might imagine.
IN THE INTEREST OF FULL DISCLOSURE
This book is not a professional or psychological study of the rich; it is a chance to look inside their world, to ponder questions you have always wanted to ask and find a few answers. I believe understanding the reality of wealth will provide an honest, comparative reflection on your own life.
The names of the characters in the book have been changed to protect their privacy, but they have asked me to tell their stories. Having successfully reached the summit after navigating many of the inherently complex problems of wealth, many individuals I have dealt with have managed to achieve fulfilled and balanced lives in spite of their wealth, not because of it.
They want you to know the truth. Once you see inside their daily difficulties, you might think of your place in life as a safe and welcoming refuge. You may discover your world, in some ways, is actually richer than theirs—in relationships, satisfaction, experiences, and fulfillment.
PART ONE
LIFESTYLES OF THE RICH AND FAMOUS
CHAPTER ONE
THE HUNDRED-MILLION-DOLLAR DEFINITION
My occupation as general legal counsel to the super-rich gives me a window into a lifestyle most people never see and can’t begin to imagine. In our celebrity-obsessed culture, the media focuses on a glittering façade of wild parties, gleaming luxury cars, and giant McMansions. But behind the scenes is another world that makes what we deem “wealth” seem like chump change. It is the world of the “super-rich.”
Who qualifies as super-rich? Forbes magazine has suggested the classification of super-rich requires a net worth in excess of $30 million. The magazine defines net worth as a family’s liquid financial assets—in other words, cash and investments, not including homes or other non-liquid assets.
In my clients’ world having $30 million in liquid assets doesn’t make you super-rich. That level of wealth requires putting a limit on spending. I define the super-rich as those who never have to ask themselves, “Can I afford this?” Their net worth is such that almost anything money can buy is within their reach at any time. They inhabit the economic stratosphere. In a sense, they spend their days shopping at the Mall of Life without ever looking at a price tag.
This stratosphere is rarified indeed, a financial altitude attained by either inheritance or remarkable luck; the V.I.P. lounge of planet Earth; the place where only the super-rich gain entry; an exclusive enclave most of us cannot begin to comprehend. For the great majority of us who deal in denominations of hundreds or thousands, the thought of hundreds of millions of dollars boggles the mind.
To join the fraternity of my clients, you would typically have a net worth of $100 million or more. I consider such people to be super-rich. To get an idea of how wealthy these individuals are, let’s assume they earn three percent per year in passive income. That is $3 million in “mailbox money” coming in every year. My clients earn more in a year, without working, than someone making $50,000 per year will earn in sixty years. Only about twenty thousand individuals on Earth have this kind of net worth. That’s a pretty select g
roup.
Just to make it clear, let’s look at a few examples to contrast the “rich” and the “super-rich.”
Randy’s company nets about $8 million per year from his international furniture-production business. His operation stretches from facilities in Vietnam and China to several in the United States. However, Randy has made very few investments outside the business, choosing instead to use most of the company’s profits to further expand his enterprise. If his company fails, his sole source of income will dry up. When the remainder of his non-business assets is sold, the resulting cash and savings would not produce enough income to maintain his current lifestyle.
However, if he were to sell his company tomorrow and properly invest the proceeds, he would receive an average income of about $1.4 million per year. After taxes, he would have between $700,000 and $1 million of net spendable income. Most of us would wonder, “Who couldn’t live on a million dollars a year?” But in Randy’s case, he couldn’t survive financially. His $18 million home and accompanying $12 million mortgage plus his four $250,000+ automobiles generate a burn rate of about $120,000 per month, not including household needs, travel, clothing, entertainment, and other expenses. In order to stay within his new budget, Randy would have to greatly reduce his spending, sell his home, and learn to live more modestly. By our new definition—quite different from the usual one—Randy is not truly wealthy. In a sense, the demarcation between those who are poor, rich, wealthy, and super-rich is somewhat relative. If Randy decided to take some of his chips off the table by deliberately corralling his extravagance and living in a home with no mortgage, he would be able to reduce his dependence on his company and maintain a fairly high level of wealth.
Unfortunately, no matter how much you have, you tend to want a little bit more. You crave the next level of everything, from golf courses to country clubs, from Mercedes to Bentleys, from ocean-view homes to beachfront homes. Most wealthy people seek to display a lifestyle of abundance, extravagance, and luxury that often borders on wasting money. Randy cannot—will not—let go of what he has now in exchange for long-term financial stability. He is wealthy but vulnerable; everything could disappear in a moment’s time with a single stroke of bad luck.
Now let’s consider some people who are truly super-rich.
On the island of St. Bart’s, Gustavia is the place to see and be seen. Designer boutiques, high-end restaurants, and luxurious hotels come together to create a sought-after playground for the rich. The marina boasts sixty yacht slips and additional moorings in the harbor.
While my wife and I were on vacation, one afternoon we noticed a particularly striking yacht in slip number one. Painted in rich green and glossy white, it boasted twin spiral staircases reaching from the upper deck all the way to the dock. A matching helicopter stood at attention at the back of the boat; a large crew of handsome young men and one beautiful young woman, all dressed in impeccable whites, swarmed over the boat.
As we stood there, admiring the yacht, a crew member jumped down and joined us. “We’ve been here for four months,” he volunteered.
“Really? Your boss must really like St. Bart’s,” I said.
“I wouldn’t know,” said the young man. “He hasn’t arrived yet.”
“What?!” We were speechless.
“Yep. He sent us here four months ago to wait in line for slip number one. We first dropped anchor way out in the harbor. Every night, as boats leave, everyone else is allowed to move up in line. We finally got to number one about a week ago. The boss won’t be seen on the boat unless he’s in the first slip, because it’s the closest to the village and,” he spoke under his breath, “the hardest to get. But today the crew was briefed he has decided to send the boat to Indonesia, so we’re headed there tomorrow.”
“Let me get this straight. Your boss sent you here months ago just to work your way up to this slip, and now you’re heading to Indonesia instead?”
“I guess. The boss hasn’t actually been on the boat in three years. He just sends us to places he thinks he might want to go. The family owns a home on the hillside in Gustavia also. The only one who has stayed in the home, to our knowledge, is his mother-in-law, who spends a week here each year. Last year she hosted a lunch aboard the boat for three of her friends.”
I walked away, thinking hard. The slips started at $600 per day. That crew of ten or twelve worked full-time and traveled year-round. Maintaining a boat that large—not to mention the helicopter, its pilot, and its mechanic—had to be costing the “boss” at least $200,000 per month. And he hadn’t used the boat in three years.
So why does he keep it? Because he can.
BECOMING BULLETPROOF
Let’s consider another example of the super-rich.
A friend invited me to tag along on a weekend hunting trip with a special group of hand-picked “superstars,” individuals with phenomenal success stories. The jet-helicopter sitting on the tarmac when I arrived at the airport was my first clue this would be no ordinary jaunt through the woods with my trusty rifle, a sack of peanut butter sandwiches, and a case of warm beer. Leaving Portland, Oregon, at a speed of 130 miles per hour, we careened east up the Columbia River Gorge. I hung on tight to the seat of the $10 million helicopter, feeling like a contestant in a reality show that allowed me to be president of the United States for one day. Amazing. Exciting. Terrifying!
Forty minutes later, having crossed the entire state of Oregon, I saw the spectacular Highland Hill Ranch ahead, complete with private heliport and attendants anxiously waiting on the ground. When we touched down on the pad at the hunting lodge, I found myself in the company of billionaires, TV personalities, senators, and a celebrity or two. Our accommodations were lavish beyond imagination. We sat down to three-course lunches every day. My dirty clothes never hit the floor; they were whisked away to be washed and pressed immediately. The fields were stocked with prime targets, and as a group we brought in more than 750 birds over the course of our four-day stay.
You’re probably wondering about the cost of our weekend getaway. I watched my host write a check for $90,000. Under my breath, I muttered, “My God, that’s $120 a bird!”
Our host overheard the comment and chuckled, “The cost was actually $45,000, and the second $45,000 was a tip. Do you think they will remember me the next time I call for a reservation during high season? You want to bet they will squeeze me in somehow?”
My thoughts flashed to how generous I always feel when I put an extra dollar in the tip jar at Starbucks. My host planned to return often enough—to re-experience what I considered to be a once-in-a-lifetime event—that he wanted to build a reputation with the staff. I just wanted the ego boost of hearing the employee at Starbucks say, “Good morning, Richard! The usual?” We live in different worlds.
I served with another super-rich individual on the board of trustees of a nonprofit organization. He had sold his grandfather’s company for nearly a billion dollars. My friend owned several extravagant homes, three jets, and more than one hundred collectible automobiles in perfect condition. However, his standard daily attire consisted of an assortment of worn blue jeans, and he much preferred a meal of hot dogs and french fries over filet mignon and foie gras. He often asked his private chef to serve ballpark grub on one of his ready-to-fly jets. This man’s disposable passive income from his assets was in excess of $90 million per year. That’s “super-rich.”
AN ALL-ACCESS PASS
I’ve known Jen for years. She’s an incredible success story—having worked her way up from an entry-level clerking job to become the chief operations officer of a major hotel corporation with several significant properties on the Las Vegas Strip. A few years ago, my wife and I hit Las Vegas for a long weekend of R&R. Jen was kind enough to put us up at one of her hotels, allowing us to stay in a magnificent suite.
We ate lunch together on Saturday afternoon, and as I was telling Jen how much we were enjoying all of the amenities in our room, she grinned. Then she said, “Where
do you think the heavy hitters stay?”
“The penthouse? Right? With the best views, a butler, and maybe a piano? Maybe some great art?”
With a twinkle in her eye, she told my wife and me to follow her. We walked down to the casino floor and stopped in front of a simple door with a single security guard leaning against the wall. As a secret service agent in the White House might do, he nodded to Jen and opened the door to allow us inside.
I felt like I’d entered an alternate universe. A fifteen-foot-wide marble corridor stretched out in front of me; it seemed to go on forever. Every hundred feet or so, the ceilings soared to create a beautiful alcove, and arrangements of fresh flowers stretched at least six feet in all directions. The opulence was staggering. Renoirs rubbed elbows with Picassos and the odd Monet. Jen explained the floor had six rooms, and she opened the first door on the right.
We walked into a suite that had to be at least 5,000 square feet. Glancing around, I saw a stream of water flowing across the room and falling over a spill of river rocks into a crystal-clear pool. A cedar sauna, iridescent-glass hot tub, and heavy iron furniture added to the spa-like atmosphere. Turning around, I saw a 50-foot Bermuda grass putting green, then a music room with a grand piano, and finally a full-size kitchen complete with stainless-steel appliances and granite countertops.
“How much per night?” I asked.
“Oh no, this is all complimentary. These rooms would be at least $20,000 per night if we did rent them, but we don’t. To stay here, you have to lose a minimum of $500,000 per visit. For those hitters, called ‘whales,’ the room is just the beginning. Gourmet dinners? Included. Expensive wine? Included. Fully stocked liquor cabinet? Included. Tickets to sold-out shows? Included. Masseuse? Tennis lessons? Personal shopper? Included. We even find out what thread count they prefer for the sheets on their beds before they get here. It’s our job to make everyone here think they are the richest people in Vegas.”
Fables of Fortune Page 1