if you listen to last week's episode on J Paul Getty's autobiography you know that Getty placed a lot of time and energy and money into building relationships with other entrepreneurs investors and Executives he knew that relationships between these types of people often produce nonlinear returns
he knew that relationships run the world so much so that he bought a 72 room estate that served as what he called a liaan center essentially a place specifically created to build relation ships I have not bought an estate to help you build relationships with other
Founders investors and Executives but I do rent out entire venues and I host Founders events so you can build relationships with other Founders investors and Executives that listen to this podcast these events last for two days and they are all inclusive that
means all you have to do is get there and I take care of the rest that means your ticket covers lodging meals and access to every single event if you want to come and hang out with me and other high value listeners of this podcast for 2 days make sure you come to a Founders
event there is one happening July 29th through the 31st in Scotts Valley California and you can sign up to attend by going to Founders podcast.com for SAS events that is Founders podcast.com events I hope to see you there and I hope you enjoy this episode on how to be rich by J Paul
Getty the book that I want to talk to you about today is how to be rich and is written by J Paul Getty it did not start out as a book as a matter of fact uh the book that I'm holding my hand was first published over 60 years ago but it started out because the founder of
Playboy magazine Hugh Hefner approached J Paul Getty in the 1960s and he asked him to write a series of columns so he wind up writing J Paul Getty wind up writing over five years 19 different essays with the goal of transferring and educating basically transferring his
experience and the knowledge that JP Getty had about businesses to the Next Generation to what he consider what he called the younger businessmen of his day now keep in mind when he's writing these essays he is 73 years old so almost everybody else is younger than
him and as such this book is very different from the autobiography of jul GTI which I covered last week really the way I would think about reading this book and what this podcast is going to be is we just have one of if not the richest person on the planet at the time
he's writing this and he is just telling us the lessons that he derived from 60 years nearly 60 years of building businesses and so I want to jump right into why this is a good use of our time and then then J Paul Getty tells us why he's doing this so the first is why this
is a good use of our time my entire adult life has been devoted to building and operating business enterprises so he knows a thing or two this is why he is doing this I and so many other successful businessmen have so frequently noted that many young people today enter upon their business careers
without sufficient grounding and preparation they fail to grasp the long range picture they do not understand and appreciate the universally applicable fundamentals the basic philosophies the endless implications and ramifications and the numberless responsibilities
which are the absolute Essentials of business and he just says right at the very beginning and something he'll repeat throughout the essays in the book I would like to convince young businessmen that there are no Surefire quick and easy formulas for success in
business and so that is the first time that he mentioned that the fact that there's no Shire quick and easy formula for success of business but you'll see he repeats he's got a handful of principles and he's just going to repeat them in different contexts throughout
the book so he does give us some background into his life I'm going to try not to overlap too much for what I covered on his autobiography but I do want to start out because he starts the book with this essay called how I made my first billion and the first part of
that essay is this agulation this respect this love for his father his father was his hero his father was the best man he ever knew as we saw last week he credits a lot of his success he says over and over again his autobiography my seat at the table was set for me and that seat was set by my
father do not compare me to John D Rockefeller Rockefeller is a eagle and I am but a sparrow is the line that he uses in the autobiography he just has this deep respect for these self-made men so he talks about this as the son of a successful oilman I had been exposed
to the virus of oil fever ever since childhood as you and I talked about in the last episode one of the best things that George Getty his father ever did was expose his son to business at a very young age he's like 10 11 years old when he's visiting oil fields he has all
these questions there's no possible way that a 10 or 11y old can possibly understand everything that's going on on building an oil business and any business really but it constantly stretches his understanding of the world and then his son is just able to pick up
these ideas little by little as he's exposed to more and more I think it's such a good idea so it says my father was a self-made man who had known extreme poverty in his youth just like Rockefeller Johnny Rockefeller who obviously was one of Getty's Heroes as well my father had a practically
Limitless capacity for hard work and he had an almost uncanny talent for finding oil and it was interesting what popped to mind when I got to that paragraph I I jot it down in the note to myself this is just like William Randol hurst's father I have a book I did William
Randol hurst's biography you know I think 200 episodes ago something like that I have a book on the Hurst family Dynasty it will eventually read and turn into the podcast but there's a lot of similarities now that I think about it between J Paul Getty and William
Randolph hurse they were they were both sons of very successful men both of their fathers took an innate interest in developing the talent of their son Getty's father made his money in oil and the fact that a lot of people that ran into and met George F Getty said that he
had this you know he could essentially smell oil well you can go back and read about George hurse which is Willam Randolph uh hur's father George Hurst wounds up founding this thing called the homestake mine he actually listed it on the stock exchange in 1879 that mine
produced gold from 1879 all the way up until 2001 I bring that up because Getty's about to mention the similarities between the Gold Rush the California Gold Rush and what was happening in Oklahoma about 60 years later but the similarities between the fathers is anybody that met Georg fetty
thought you know he could smell oil he just had this innate capacity to find oil the same thing was said about George Hurst for gold in fact the Native Americans in the area where he was mining for gold gave George Hurst a nickname and they called him the boy
that the Earth talks to and so J Paul Getty tells us what the oil industry was like when he was introduced to it he says the atmosphere was identical to that which historians describe as prevailing in the California Gold Fields during the 1849 gold rush in Oklahoma
the fever was to find oil not gold and it was an epidemic and so after college Getty starts up his own Oil Company he tells about how this came to be my father rejected any ideas that a successful man's son should be given money as a gift after he was old enough to earn his
own living my father did Finance some of my early operations but it was solely on a 730% basis so what that means is his dad put up the money to buy the leases and the equipment he says if you find any oil I get 70% of the profits since I'm financing the entire thing and you get
30% and the difference between the beginning of his father's oil career and his own is his father was immediately successful I think it's something like the first 40 out of the first 43 Wells that he drilled 42 of them came back producers Getty had like a year where
nothing was happening and he's like well I can't quit now and he believed he couldn't quit because he says wild catting was in my blood and he talks about this little small business that he starts that is going to eventually make him one of the richest people in the world he says at this point I acted as
my own geologist legal adviser drilling superintendent explosives expert and as rough neck and Rous about I operated in much the same manner as most other Wildcats at this time with one important exception now this is fascinating in those days the science of petroleum
geology had not yet gained very wide Acceptance in the oil fields many oilmen sneered openly at the idea that some damn Bookworm could help them find oil I was among the few who believed in geology I studied the subject avidly at every opportunity and applied what I
learned to my operations and so then he's going to describe the difference between like the wildcatters so think of the Wildcats as the startups and then these entrenched bureaucratic oil companies so something he's going to repeat over and over again in different
giving different sets of advice is the danger to become standardized to become bureaucratic and so even though he's writing about the very his very early days in business 50 years after it happened there's these initial principles that he still aderes to even when his business is much larger much
more complex you know worth billions compared to a million dollars which is what he's going to make right now and he says we all faced heavy competition and opposition from Major Oil firms he's going to tell several stories through the book about how they they do not play
fairly to to say the least and how he solved some of these problems some of these huge companies did not always abide by the rules when they engag in legal or financial infighting to smother an independent wild cater this wind up being a good thing for Getty because it
made him it made him develop skills that he needed to survive I'm reading about these techniques that he's that he needs to develop to survive this opposition from these giant oil companies and I'm thinking about Michael Jordan then multiple episodes I've done on Michael
Jordan when if you listen to episode 2112 which is like the 700 Page biography of Michael Jordan that I read in that book it talks about the fact that he could not get past for several years could not get past the Detroit Pistons they were in his way to win a
championship he could not get past them in the playoffs and he constantly to adapt and change his game his body his training methods his practice habits to overcome that obstacle but on the other side of that obstacle now he has a skill set that he would not have had if he
didn't have that obstacle or that problem to begin with the exact same thing is happening here Wildcats developed traits and techniques which enable them to stay in business we became flexible adaptable and versatile Adept at improvisation and Innovation if
for no other reason than because we had to we had to in order to survive the big companies employed vast numbers of Specialists and Consultants they housed them in large and expensive offices the Wildcats found our experts among the hard-bitten veteran oil field workers we
did our own administrative and paperwork keeping both to a minimum as for offices these more often than not traveled with us in our mud covered automobiles we drove from one drilling site to another so we are still in his essay the first essay called how I made my first biling
and he's going to talk about how hey major oil company or collection of major oil companies are trying to squeeze him and how one other major oil company winds up helping him and so he has a collection of Wells that he's Drilling and each well right now is bringing in
thousands of barrels of oil a day and all of a sudden he cannot find a buyer for his crude production he goes to all the firms and they refuse to deal with him and this is when he realizes oh this is a giant oil company that's trying to squeeze me because they want to buy my
Wells for discounted price the motives behind this boycott became clear when I received several calls from Brokers offering to buy the lease at a very low price the Brokers refused to name the principles they represented by then I was an old hand in the petroleum
Industries I recognized all the classic signs indicating a well organized squeeze playay certain interest wanted my lease either I sold out at a ridiculously low price or I'd be left without any market for the oil produced by the Wells on the property unable to sell my oil I had to find some way to
store it and so that is the first counter move he makes he's like okay no one will buy this oil I'm not going to shut down the wells I will lease storage tanks and I will store the oil until I can solve the problem and find a buyer but he knows the clock is ticking and he
says when the tanks are topped off I would have no choice but to shut down my operation entirely and the next thing he does is really smart go straight to the top he goes to the ultimate decision maker now keep in mind he still doesn't know who's trying to squeeze him and so
at this point the largest oil company is Shell Oil and so he goes and makes an appointment with the company president Sir George leay Jones He says in desperation I aimed High meaning he went straight to the top he and asked for an interview with him personally and was
informed that he would be happy to see me and so Getty describes this meeting that he's having with Sir George says Sir George listened attentively to what I had to say the deepening scowl that etched across his face as he heard me was all the proof I needed that his firm
was not a party to the boycott and that he heartedly disapproved of such tactics when I finished talk to he smiled relax he grinned we'll help you as a starter the company would buy the next 1.7 million barrels of crude oil that I produced in addition Sir George told me
a pipeline would be constructed to link my Wells with the Shell Oil company's pipeline Network and construction was to commence the very next day and so I just love that simple little story because I think there's two very valuable Essences one you have to stop the bleeding the
worst thing that Getty could have done is panicked and then you know sold out a very valuable lease just because he was getting squeezed and his reserves his his cash reserves were dwindling he's like okay I can't sell it that's fine I'm going to store it that at least
stops the bleeding for now and then he knows you have to aim straight from the top you have to go to the ultimate decision maker because the president of shell can move look how fast he can move he's like okay you have a commitment right now my word in this one meeting I
will buy the next 1.7 million barrels and then tomorrow tomorrow morning at your site I'm I'm sending a construction crew so your oil goes straight to our pipelines before I move on there is another note that I left myself in this section and I wrote no wonder he wanted
complete control it is very obvious if you read J Paul Getty's autobiography what did he do during and after the Depression he's like I'm not just going to be just going to be drilling Wells I'm going to build a vertically integrated Oil Company I'm going to be in complete control of my entire
business and there's many examples in this book there's many examples in the autobiography by J Paul Getty where he is constantly disappointed by relying on what's going on in the other guy's shop and so at this point in his life he doesn't have pipelines he doesn't have
his own refineries he doesn't have his super tankers but he's going to get them and I can't help but think experiences like this heavily influenced him in that direction and so that is the next part that I want to skip to because he talks about the fact that his father dies and
it's the Great Depression is happening and every all of his advisers he's still a young man all of his advisers are saying hey we need to liquidate everything now says many advise me liquidate everything to sell out not only my father's Holdings but my own
firms and interests as well as well the business situation can only get worse they predicted the economy is going to disintegrate completely they said I didn't see things that way at all he this is so miraculous that he goes in the exact opposite so you have the
consensus is you know this is the end of the world sell now at least you can convert some of your assets even if they're you know Pennies on the dollar into actual cash and when I get to this section and when you starts talking like you know what actually I began to
Envision a completely integrated and self-contained Oil Business just like John D Rockefeller and just as it was remarkable the fact that Johnny Rockefeller did that in the very beginning of the oil industry right he got in right at the very beginning when they first discovered oil in
Pennsylvania everybody thought oh this is the only place it's going to be this is going to be a quick buck and this this entire industry is going to disintegrate right and Rockefeller did not believe that he believed that it was enduring and we see that Getty has faith
in this idea and I want to really pause here because now that I've read his autobiography I've read this book this is one of the most important turning points in his entire life think about this like this decision that he's making as a young man in 1930 okay what do what
path before you Getty what do you want to do on the left- hand side we got hey we're going to sell everything you know the world is ending but at least we'll have a little bit of money the right is I'm going to double down I'm going to make this as my life's work I'm not only
not going to sell my oil wells I'm going to invest more money in this this is no different than when Steve Jobs said in that commencement address that you can't connect the dots looking forward you can only connect the dots looking backwards so you have to trust in something you
have to trust in your gut Destiny Life Karma whatever but what Rockefeller knew what Getty knew what Steve Jobs knew you have to put your faith in something the future is always unknown and so he says in business it is never easy to go against the beliefs and
attitudes held by the majority this is exactly what he's doing at this point in his life the businessman who moves counter to the tide of prevailing opinion must expect to be obstructed derided and Damned and it's one thing to say for his competitors or people are
the media or people he doesn't know to doubt him it's his friends and family are doing it as well my friends and acquaintances felt my buying spree would prove a fatal mistake and so this idea to listen to your own inner voice to make decisions based on what you want your life to be
not with the consensus or the prevailing opinion at the time or your friends or acquaintances is so important because he didn't make his first billion in 1930 he if he didn't think about this he needed to to do what he's going through now where he's vertically integrating he's
taking over this this giant oil company he's getting capacities and skills that he that his company did not possess because 20 years later he winds up getting the biggest deal of his life he gets the concession of the neutral zone the Saudi Arabia's portion of the
neutral zone Getty talks about the fact that you know 20 years after he bucked this consensus decided no I'm not selling out I'm doubling down I'm investing more of my assets he gets this concession from the king of Saudi Arabia and what's crazy is in the neutral zone
they're going to wind up producing Getty's going to wind up producing 13 billion barrels of oil I just love thinking about that story there's the idea behind it you know there's a handful of decisions that we make that will change the trajectory of our entire
lives and when we make those decisions usually we don't have the data we don't know we have to put our faith in something so I'm going to move on to the next essay and really the next essay to me it's it talks about the fact that optimism is a moral duty and he's
writing to the young businessmen of that day and so many of them are saying like there's no more opportunity this is 1965 so he says there were always be room for the man with energy and Imagination the man who can successfully Implement new ideas into new products and services anyone who has achieved
success is frequently asked the same question by the people he meets how can I do this too and then he runs into all these pessimistic young people that you don't have to worry about as competitors because they won't they're so pessimistic they won't even start but
you were lucky you started in business at a time when it was still possible to make millions you couldn't do it nowadays no one could I never cease to be astounded by the prevalence of this negative and totally erroneous attitude among supposedly intelligent people so
something that I picked up over and over again I think the the single best description of what a business is I've ever heard I read several years ago it actually came from Richard Branson and he says that a business is just an idea that makes someone else's life better
and I think that's such an important thing to remember because not just for this the statement I do think that's a statement of fact but the reason that there will always be unlimited opportunity is because there's unlimited ways to make other people's lives better so the reason that there's always
unlimited opportunity is because a business is just an idea that makes somebody else's life better and there's always ways to make other people's lives better so imagine being this negative pessimistic young person in 1965 the name of this essay is you can make a
million today and their response is no you can't and one of the most remarkable things about reading books you know they're 607 years old 400 years old as you just see people say the same things over and over again and so he's going to talk about some of the the reasons that
these people say no you can't do this today you got in right at the right time but that time has passed so he says I consider myself neither a prophit nor an economist nor a political scientist I speak simply as a practical working businessman I believe the outlook for
business is good and that it will become even better as time goes on we can see from our vantage point that that prediction was accurate right I feel that American businessmen have simple reasons to be optimistic about their prospects and profits for years and even decades to come he's also true about
that he was also right about that rather I say this fully aware that in some American Business circles it has long been fashionable to bemoan a lack of opportunity and so what he means by that is all this list of excuses about what's happening now and these are impossible
problems for the the businessmen of today to overcome so it talks about high taxation excessive labor cost unfair foreign competition creeping socialism and his response to this is is also another benefit of reading this book and his autobiography J Paul Getty is going
to hold the reader hold you and I to a high standard he does not like excuses I said last week his favorite saying was the sign that was on Harry Truman's desk the buck stops here you it's clear that Getty believes in extreme ownership so this is what he says to my way of
thinking all of this is sheer nonsense the complaints are merely convenient Alibis for the unimaginative the incompetent the nearsighted and narrow minded and the lazy I can't see any validity to the arguments Advanced by the pessimist and the defeatist but then
Calamity howlers have always been with us chanting one dismal and discouraging chorus or another again something he repeats over and over again he is a voracious reader of history and just like in Getty's day just like before Getty's day just like in the day that
you and I occupy you're always going to have the pessimist the de Feist they're always chanting one dismal and discouraging excuse or another and so the way I think about what Getty is teaching us right now is that optimism is a moral duty and that pessimism aborts opportunities this what he says
there are always opportunities through which businessmen can profit if they will only recognize and seize them the last things that American Business needs are complaints aliis and Deus philosophies what American Business does need and in an ever increasing numbers
and I believe this with my whole heart by the way what not just American business but business all over the world does need and in an ever increasing numbers are young businessmen who are willing and able to assume the responsibilities of progressive vigorous
Industrial and Commercial leadership the rewards awaiting such men are practically Limitless many young qualified highly qualified young applicants give up before they start and so then Getty has advice for young entrepreneurs that don't give into pessimism don't give into defeatism and
actually try to seize opportunities and so he actually starts out by quoting Harry Truman He says Harry Truman said I studied the lives of Great Men and famous women and I found that the men and women who got to the top were those who did the jobs they had in hand with
everything they had with energy and enthusiasm and hard work and so when I got to that line that says those who got to the top were those who did the jobs they had in hand with everything they had it made me think of something that Charlie Munger would repeat he said that
him and Buffett believed in carlile's prescription and Munger said that 98% of our attention was devoted to the task at hand we are believers in carlile's prescription and then he defines it that the job a man is to do is the job at hand and not see what lies dimly in the
distance back to Getty there are absolutely no safe or Surefire formulas for achieving success in business I believe that there are some fundamental rules to the game which if followed will tip the odds for success in your favor these are rules which I've applied and
which every millionaire businessman with whom I am acquainted has also followed and so he actually makes a list there's 10 different things number one choose a field which he knows and understands so figure out where your circle of competence is number two you should
never lose sight of the central aim for all businesses which is to produce more and better Goods to more people number three a sense of thrift is essential for success in business the businessman must discipline himself to practice economy wherever possible number four be always
be on guard against the temptation to over expand or launch expansion programs blindly forced growth can be fatal to any business new or old I got to repeat that forced growth can be fatal to any new business to any business New or Old there's a great line from David Packer
the founder of HP where he says that more companies die from indigestion than starvation and I think that's exactly what gett is getting to there for number four number five a businessman must run his own business he cannot expect his employees to think or do as well as he
can he must maintain close and constant supervision over the entire business number six the businessman must be constantly alert for new ways to improve his products and services and increase his production and sales so really what he's saying there is you should invest
in technology that is something that the great entrepreneurs before Getty during Getty and after Getty all believed in fact if you read Andrew Carnegie's autobiography was probably published 80 years before this book came out or maybe 60 years something like that but one of
the main lessons when you study the early days and as Carnegie uh built his steel Empire uh there's a there's a theme in that book which is invest in technology the savings compound it gives you an advantage over slowing moving competitors and can be the difference
between a profit and a loss number seven borrowed money was always be promptly repaid nothing will destroy a career faster than a bad credit rating number eight a businessman must constantly seek untapped or undere exploited markets number nine guarantees should always be
honored in the customer's favor the business that is known to be completely reliable will have little difficulty filling its order books and keeping them filled and number 10 no matter how many millions in individual masses if he is in business he must always consider his
wealth as a means for improving living conditions everywhere and number 10 is just a lesson that his taught him the fact that you know don't just sit on a bunch of gold coins like your Scrooge McDuck you have more money than you'll ever need reinvest that into making more
products and services that make other people's lives better so then I want to skip ahead he has an essay called the millionaire mentality there's a lot of the ideas in here that I've picked up on reading these books uh reading these biographies and I call this founder
mentality but I just want to tell you a quick story that comes from this essay it's about the importance of incentives and then making sure that you have people because you don't have to be a Founder to have founder mentality but your top talent should all have founder
mentality or what or what J Paul Getty describes as millionaire mentality and so he goes and he realizes as he's got you know over 200 different businesses by the time he writes this book and he talks about this site visit and his he his top guy running the site he's like
you know the guy's got a brain what's going on here he's here every day and yet as soon as I get here within an hour I see a list of things that could be improved and so he's having this conversation with them and he says hey I only need to spend an hour on one of the
sites and I spot several things that we could do better or cheaper and increase production in profits I told him frankly I can't understand why you don't see them too and this is the response but you own the properties the superintendent declared you have a direct personal interest in everything
that happens that's enough to sharpen any Man's eyes to ways of saving and thereby making more money and Getty's response he's really good with people actually he's not he doesn't get angry he's like well I pay you to do a job doesn't start yelling at him doesn't fire him what does he do what did
Michael Jordan say successful people listen those that don't listen don't last long so Getty hears this response he goes oh truth to truth to be told I never thought of it quite in that way before so he molded over what this guy George said for a couple days he's like
okay how can I realign our incentives so George starts thinking like an owner and so he he proposes an idea he goes back and he says hey George I got an idea instead of paying you a salary I'll give you a percent of the profits and we can just consider this a test it's not
permanent but if it works out you'll make more money and so what happens is he comes back he says I inspected my property properties again some 60 days after George Miller took over under this new incentive relationship I checked the operations minutely but could find
nothing wrong and the reason Getty is telling that story because he believes that most of the people in your organization fit into a handful of categories and so he's going to describe some of the categories the first category is the entrepreneur he says in this first group are those individuals
who work best when they work entirely for themselves when they own and operate their own businesses such men do not want to be employed by anyone their desire is to be completely independent care nothing for the security that a salary job offers they want to create
their own security what a great line they want to create their own security and build their own Futures entirely on their own but every business is going to have one or maybe two you know there's only going to be a handful of co-founders but his whole point is the
next segment this second group of people may never want to build their own business or found their own business but they're excessively talented if you give them the right incentive structur so he says next are the men who do not want to go into business for themselves but who
achieve the best and sometimes spectacular results when they're employed by others and share in the profits of the business they want to earn in proportion to what they produce with neither floors nor ceilings on their incomes George Miller was one who fit into this category and so Getty's
advice to entrepreneurs is really spend a lot of time cultivating and maximizing the talent and that's in the second group then he's got the third and fourth group the fourth one is really funny he calls it like the postal clerks really what he's telling us is like don't waste
waste your time with these type of people and one thing he says is that there's some people that just do not have the ability or the desire to learn and you run into these people in business all the time where they're like I have 10 years of experience and what
Getty realized this is hilarious I chuckled when he said this he says many a man who is supposed to have 10 years experience really has only one year's experience repeated 10 times over and then that kind of person is related to the fourth category which is really the
opposite of this idea that Getty repeats over and over again that the buck stops here that the truly talented person wants to take ownership of the outcome he wants to take responsibility for the mistakes he wants to take responsibilities for the successes but then you have a lot of people which he
calls the poster clerks which essentially don't care at all about how the business performs they just want their paycheck they're not really paying attention and he says these are the ones who do the least and demand the most they view the company for which they
work as a cornucopia from which good things should flow to them rather than as something to which they owe loyalty and which they should strive to BU build so again those are don't waste your time with that kind of person but then he goes back to the most important category
which is that category number two you have that executive you have that talented person you have somebody in your company they have this millionaire mentality even if they're not the founder of the company they may not be the CEO of the company but they have
that founder mentality and one way they reveal themselves is by thinking small which is really fascinating this will make more sense in a minute it's more important for the man with the millionaire mentality to be able to think small in the sense that he gives
meticulous attention to even the small details and misses no opportunity to reduce costs in his business this is such an important Point what might seem to be penny pinching at one level might be large scale economy at another I have an excellent story from rockefeller's
biography Titan which I'll which will illustrate what he means there I'll get there in one second the giant that he talks about this example of a giant us corporation that actually made a study of the contents of the trash baskets so the waste baskets in its administrative
offices so each night for a week they actually had a team of workers come in empty the waste and then they'd sort out the usable items and the company property which had actually been tossed into them so like paper clips rubber bands erasers stuff like that stuff that
could be reused they took an inventory there everything in the trash then they multiplied that total by 52 to estimate what this was costing them for a year and they figured out that more than $30,000 was being wasted each year and so then Getty has an example that
happened inside of one of his own companies he says a bright Junior executive this guy had the millionaire mental mentality the founder mentality he devised a shortcut in a production operation which saved half a cent per unit but added up to a total yearly savings over
$25,000 which is remarkable is again this is how they reveal themselves to you right this Talent is in your organization and there's clever ways in which they reveal that they are possessed of more talent and drive in the position that they currently have because this guy winds up saving the
company $25,000 a year that was more than twice of his annual salary this young man quite definitely has what I term the millionaire mentality he is the ownership mentality the founder mentality right he is incidentally no longer a junior executive and so this
idea about teaching everybody inside your organization to think small and so there's a great example in the biography of Rockefeller called Titan where Rockefeller is thinking small and I think demonstrates the principle that gett is trying to teach you and I and
I'm just going to read from Titan says after watching machine solder caps to the cans he asked the the expert how many drops of solder do you use on each can 40 the man replied have you ever tried 38 Rockefeller asked no I have not would you mind having some sealed with
38 and then let me know when 38 drops were applied a small percentage of the cans leaked but none leaked when they applied 39 drops hence 39 drops of solder became the new standard instituted at all standard oil refineries that one drop of solder said Rockefeller still smiling in retirement
saved $2500 the first year but that export business kept on increasing after that and doubled and quadrupled and became immensely greater than it was then and the savings has gone steadily along one drop on each can has amounted since to S to a savings of many hundreds
of thousands of dollars and so the next few essays Getty keeps going back to what are the kind of people like what makes a great executive what makes a poor executive what makes a person that you want on your team what is makes a person that you want to fire and he
warns about this type of organization man that you're going to see there's just a bunch of them out there they reappear in every organization and they have such the the worst traits that an executive can have and anytime the Getty finds people like these in his organization he removes them from his
organization and so the the two terrible traits that they have is the way they speak to subordinates and the way they kiss ass to the bosses and so he describes this reoccurring management personality that he sees over and over again he personifies the two worst qualities
anyone holding down a managerial job could possibly possess his attitude towards his subordinate is clearly that of a slave driver his attitude towards his Superior is that of a complete bootlicker utterly devoid of imagination or common sense and so immediately after
describing the kind of executive you don't want he talks about the kind that you want the very first thing you should look for in your the executives that you're hire and the team that you're building is the ability to think and act for themselves
without constantly running to the superiors for advice this is his he make he loves making lists which I love as well so this is Getty's five lessons on leadership and these leadership traits are not only for your executive team but also for you yourself number one example
is the best means to instruct or Inspire others number two a good executive accepts full responsibility for the actions of the people under him how many times repeat see that over and over again his autobiography he's repeating in every single essay you must have extreme ownership you must take
responsibility for your actions he talks about people that make excuses he uses different words but he essentially he's like the people that make excuses are just losers they're never going to do anything number three the best leader never asks anyone under him to do
anything that he is unwilling to do himself one of the things that gidy Prides himself is that on an in an oil business he can do every single job he knew he knows his business from A to Z therefore there's no problem he can't solve Number Four The Man In Charge must be fair but firm with his subordinates
he does not pamper them and he always bears in mind that familiarity breeds contempt he believes that you should treat them fairly that you hold them to high standards that you don't pamper them but you don't become friends with them he does not believe that leads to a
good outcome number five praise should always be given in public and criticism should always be delivered in private and what I love is he makes this list as like a summary for his experiences and then he summarizes the summary so he says I learned my own lessons in
leadership many years ago in the tough non-nonsense School provided by the oil fields and so he talks about from a from an employes perspective the best kind of boss and leader you can possibly be so this is an oldtime rigger once told him this okay so he says the best boss is
one who knows the business better than I do but trust me that's the kind of man I'll work my tail off for knows the business better than me but trust me and so then Getty gets into the fact that Executives must have the skill they have to communicate clearly and quickly this
is something Napoleon was gifted at in fact I pulled a a quote when I got to this section about Napoleon that I think of all the time I'll get to in one second so it says time is money in business misunderstandings in the interpretation of requests usually it's
over complicated right misunderstandings in the interpretation of requests reports or instructions are very costly the good executive is one who can explain things and tell people what needs to be done quickly and clearly need to repeat that the good executive is one who can explain things and tell
people what needs to be done quickly and clearly I don't think anybody else was better at this than Napoleon I'm going to read something from one of Napoleon's biographies long orders which require much time to prepare to read and to understand are the enemies of speed
Napoleon could issue orders of a few sentences which clearly expressed his intentions and required little time to issue and to understand time is money and business right that's exactly what Getty just said Napoleon was able to get his point across in little time to make
it to issue and to understand and so what I think about when I got to that quote in the Napoleon biography is clear thinking plus clear writing equals more speed and so another talent and skill that you want your top team and Executives in your company to have is
this idea of frugality in fact Getty says that he's looking for the habitually Thrifty person listen to this an individual who is naturally Thrifty will have an infinitely greater chance for Success than another of equal ability who does not possess this quality the habitually Thrifty person
will be able to immediately recognize opportunities for lowering overhead how many times we're not even halfway through the book He's just repeating this over and over again you've got to watch your cost you've got to be efficient the person who has formed
Thrifty habits will always have a fluid Reserve to meet contingencies and carry him through slack periods in fact when I got to this section there's two things that popped to my mind that I never forgot it's it's fascinating how you can read a book you know spend 25 hours
reading a book maybe read four or 500 pages whatever the case is and you know just there's maybe a sentence in there that that you can read one sentence that you never forget one paragraph that you never forget and so immediately what came to mind when I got to this part is
there's this book called a few lessons from Warren Buffett it was episode 202 and something Buffett and Monger notice is that there is this being costc conscious being Thrifty it is habitual it is a habit listen to what he says our experience this is Buffett writing now
our experience has been that the manager of an already high cost operation frequently is uncommonly resourceful in finding new ways to add overhead to add overhead it is he's habituated in adding expenses while the manager of a tightly run operation usually continues to find
additional methods to curtail costs even when his costs are already well below those of his competitors Buffett's not the only person that noticed that throughout history it's not the only sentence where I haven't read the book in years and I still remember Sam Walton
in his autobiography says it as plainly as you can possibly say it you can make a lot of different mistakes and still recover if you run an efficient operation or you can be brilliant and still go out of business if you're too inefficient I love that idea that your
Brilliance can actually be negated because you're too in efficient another thing that can negate Brilliance is the fact you just aren the right temperament you get when something bad happens you panic you get scared so something that Getty preaches over and over again and
Buffett says this as well is that you have to stay calm you cannot panic and he was actually getting this advice as a young man from an older businessman and this is what the older businessman had told him because problems are obviously inevitable trouble stress all that is
inevitable so he says always think of yourself as a man who has just Fallen overboard in the middle of a lake if you keep your wits about you you can always swim to Shore or at least float until someone fishes you out but if you lose your head in panic you're finished
you'll drowned that's very similar to when Buffett says that you know ordinary intelligence not being an absolute like that's table Stakes but once if you have at least ordinary intelligence what then you need to build a successful career in business is you need temperament to control the urges that
actually get other people into trouble and so other people let stress defeat them other people start to panic other people are incapable of staying calm and making the the right decision and we already saw that Getty developed that Talent earlier in life when he was
talking about the fact that imagine being a young man with not a lot of resources you think you hit Pay Dirt you have all these Wells producing thousands of barrels of oil today and then suddenly one of your unknown and unnamed big competitors completely squeezes you
and cuts off all your ability to sell your oil what they wanted gy to do was the opposite of what he did they didn't expect him to stay calm they wanted him to panic and then fire or sell his his very valuable assets to them and he didn't he had the right temperament to
control the urges that get other people into trouble and so I've skipped ahead to another essay that's called business blunders and booby traps and he just recounting a bunch of these reoccurring mistakes and problems that you're likely to run into and so not only is this
section great writing but it reinforces two of his principles that one you need to be where the work is happening and two get rid of the bureaucracy get rid of the paper Shuffling no work about work just work no work about work just work and he's noticing because you have
these rise and all these business school graduates that they're just building paper Empires and he hates it the writing is hilarious young men generally start out in the business world today as strictly disciplined and passively obedient to some Pagan cult by the time
they leave College where they receive overspecialized educations they are virtually sacrificed to the organization organization is capitalized and put in quotation right so as the the head of this Pagan cult and they are dedicated to serving the complex rituals of
writing memos and buck passing they are and remain forever cloistered from the unano lady of the rank and file production workers procedural rules are their most honored fetishes they are conditioned to meet periodically in a solemn conclave and pour over the esoterica of statistical tables and
committee reports they are far removed from the harsh mundane realities of Commerce I made my first million dollar in the front seat of a battered secondhand Model T Ford this Model T served as my executive office and field headquarters and sometimes even as my
bedroom almost every other Wildcat operated in much the same manner he had no fixed hours no 5-day work week he had to be his own promoter his own geologist legal advisor explosive expert drilling superintendent and jack of all trades most of his time was spent in the field
working alongside his men we wildcatters eliminated all unnecessary administrative overhead expenses in our operations we familiarized ourselves so he's comparing and contrasting with the business education that these young guys had which he finds relatively useless to
the business education that he got actually working we familiarized ourselves thoroughly with all aspects of our business and kept all of our costs down by exercising unceasing and Vigilant supervision over every phase of our business years ago businessmen
automatically kept administrative overhead to an absolute minimum the present day trend is in exactly the opposite direction the modern business Mania is to build greater and ever greater paper shuffling Empires I still believe that the less overhead there is in a business the better and he's not
done he does not hold any punches here this reminds me a lot of Les Schwab highly recommend reading Les Schwab's autobiography if you can get your hands on one Charlie Munger recommended multiple times reading that book and at the very minimum just listen to the
episode I did un Schwab which is episode 330 he's gonna he's going to sound Getty sounds a lot like Schwab and swab sounds a lot like Getty and so Getty's going going for it here he says any executive can do much better job if he peels off his business suit once in a while climbs
into a set of overalls and gets his hands dirty down in the plant the Vice President in charge of purchasing who has fed the raw materials he buys into a processing vat or a molding oven can do a much better job of purchasing he can often learn more by listening to the
conversation of a few production workers for an hour than he can by reading 10,000 specification seats advertising and sales managers who have operated a lath or a punch press and have actually made a component of the product about which they advertise will be much more
convincing and successful in their sales campaign the employee relations expert will have a much clearer and better understanding of employee problems in Psychology if he spends more time among the employees and less in his panel office dreaming up new morale building gimmicks if you have a
business make sure you're the one who's running it if you don't want to accept the headaches of being the boss then either close the business down or sell it to someone who will accept the responsibilities and then of course course he ends the essay with a list of
History's Greatest entrepreneurs that he studied that did exactly that they accepted the responsibilities they paid attention they were where the work happens talks about Andrew melon he talks about Andrew Carnegie he talks about Henry Ford talks about George Hartford he talks about Samuel Crest he
talks about John D Rockefeller in Getty's mind is all the information that he learned from reading and studying the great entrepreneurs of the past so then he could use it and building his own company gett is a perfect illustration of that line that's in Port Charlie AMAC
the fact that there's ideas worth billions and in Getty's in Getty's life and career that is literally true there's ideas worth billions in a $30 history book and one of the things I love about Getty is that he's got this like you know deep historical knowledge
he reads viciously on a topic but then he he's just he has common sense that he learned in just dealing with normal workers and being where the work is done and you just see that he uses a lot of like what I would call Common Sense and psychology and in in direction to get
his point across without harming his relationship with his employ employees he's really really good at that in fact I love his definition of how he thinks about management he says the primary function of management is to obtain results through people the primary
function of management is to obtain results through people and so it gives a great example of how he does this and again he just it's like how to win friends and influence people he understood how to influence and to build relationships with with his subordinates with people that work for him and so he
talks about in one of his companies that employee morale was sagging and he soon found out why said several Executives had gotten into their heads that they could arrive for work anywhere from 30 minutes to an hour late each morning naturally this did not set very well
with the rank and file workers who were required to punch time clocks and were docked pay if they were tardy I've always felt that bad management psychology is best countered by forcefully positive applied psychology listen to what he does here it's very
fascinating I did not waste time issuing threats of disciplinary action I simply announced that I would now be holding daily conference in which I expected all management Personnel to be present and the conference would begin 45 minutes before the start of the regular working day I
lost a bit of sleep in the next two weeks or so but I won a major battle my Executives got the idea there was no more habitual tardiness and worker morale was restored and so then Getty provides another example of hey we need to meet bad management uh psychology with
forcefully positive applied psychology and so he says I learned an executive had taken some company-owned Lumber and nails with which he constructed a dog kennel in his backyard I felt that he' set a dangerous precedent which could lead to all kinds of trouble and cause
losses to soar if employees learn that he' gotten away with this since he was a valuable man I did not want to fire him and relied on another applied psychology strategy I sent the man a pleasantly worded memo asking for a detailed inventory of the material he'd taken and
saying I would have it appraised and the value charged against his salary the inventory was prepared the total value was found to be about $4 and this sum was duly charged against his pay I got the point across this message spread throughout the company and the workers
realizing that not even Executives could get away with appropriating company property took the lesson to Heart themselves and something that reappears throughout this book it also has mentioned multiple times in his autobiography that he's really helped out not only like building you know
mentors in historical context by graciously reading history but there's all these like older businessmen that help him out throughout his entire career and he learns a very valuable lesson on business leadership from an older more successful at the time older
more successful businessman and it is related to this idea that you know you have to stay calm you don't panic in that business is problem so the best companies are just effective problem solving machines I remember learning as a youth an invaluable lesson from a man
who even then had extensive business Holdings and who would later become one of America's wealthiest industrialist I ran into him one day in the lobby of a Chicago hotel how are things going I asked him not good terrible in fact he replied with a smile one of my companies
has been shoved into a tight corner by the competition another is operating in the red and a third doesn't have the cash to meet its short-term debts that fall due this month so a young Getty's like what the hell are you smiling about what's happening and Getty ask him like
you don't see you're not acting like you're worried what's going on Hell Paul I'm not the least bit worried he answered to tell you the truth I needed something like this to get me up on my toes everything has been going entirely too smoothly for far too long an occasional crisis is good for a
businessman there's no better exercise for him than to have a few messes to clean up every now and then and this is the punchline the perfect business does not exist the perfect business does not exist snags difficulties and crisis crop up in every business the truly great
leader views reverse his calm and cooly he is fully aware that they are bound to occur occasionally and he refuses to be unnerved by them and so as you and I discussed when we went over J Paul Getty's autobiography he never retired like he worked until the day he died and one of
the reasons I think in addition to him being completely obsessed and workaholic and just completely dedicated to what he was doing I really think that he believed that you should treat your business as like this living breathing constantly changing thing and so there's
one one paragraph that really illustrates his management style and the way he ran his business the concept that any status quo is perfect and permanent that one must under no circumstances raise questions voice doubts or seek improvements can only produce
complacency then stagnation and finally collapse there is always something wrong everywhere and all throughout these essays and throughout the entire book he's constantly giving advice on how he views the accumulation of assets of you want to be investing and not a Speculator you don't want to interrupt
the compounding really the entire book He's just teaching us that it's all about the long term that you should keep a fortress of cash you should reinvest in your business use debt sparingly and doing so will help you survive to reap long-term benefits and this becomes
increasingly valuable because it goes against human nature most people come up to and they like hey you're rich how do I get rich but faster and so Getty's advice is you can use that impulse in human nature to your benefit and so he gives this one story where most of the
people in the early days of the world business they were just trying to sell contracts they had no desire to build a long-term business and they thought oh look look how much money I made in 24 hours and so Getty tells this story about a guy who bought an oil lease for
$4,000 24 hours later he sells it to Getty for $8,000 he's like look look how much money I made I made $4,000 in 24 hours and Getty's like yeah but over the next 12 years I made 800 Grand on that lease all the money is in the long term you want to own not trade he tells this
hilarious story about there's this huge real estate bubble in Miami in the 1920s in fact there's a book written about it that my friend Jason Buck gave me called bubble in the sun I'll eventually make an episode about it but Getty shares an
anecdote from this time period where this realtor brings this client out and he shows him this piece of useless swamp land and the client says you're crazy no one could ever build anything on this land it's worthless so what the realtor replied land down here ain't for owning
it's for trading and Getty's point is you want to own not trade and so I believe embedded in these stories about the fact that human nature will lead you astray it's why most people don't build wealth you have to resist the pool to conform you have to resist to the the
pull to imitate the people around you he has an entire essay called the homogenized man which is just this wave after wave of sameness that he sees of these young people coming into business and it contrasts nicely with one of his last essays which is the art of individuality but Getty has an
incredible ending to this essay that really hammers the point of why it's so dangerous to become standardized to become homogenized he says resist the temptation to force yourself into the pattern of the structured man one needs only to remember that a Groove may be
safe but that as time wears away at it the groove first becomes a rut and then finally a grave and so if you go back to the title of the book how to be rich one of the keys is difference one of the keys is is rejecting what Getty calls The Cult of Conformity the successful entrepreneur
the leader the innovator is the exceptional man he is not a conformist except in his adherence to his own ideals and his own beliefs you will find the conformist the organization man in an ever increasing number in the business world today he believes that
Conformity is essential for success in his career one of these types was complaining to me that he wasn't getting ahead fast enough and asked me if I could offer any advice How can I achieve success in wealth and business he asked how can I make a million dollar I can't
give you any Surefire formulas I replied but I'm certain of one thing you'll go much farther if you stop trying to look and act and think like everyone else the conformist only demonstrates that he is unimaginative unenterprising and mediocre in contrast the successful
businessman's non-conformity is most obvious and evident in the manner and methods of his business operations and activities these will be unorthodox in the sense that they are radically unlike those of his less imaginative and less successful competitors often his innate
impatience with the futility of superficial conventions and dogma of all kinds will manifest itself in varying degrees of personal eccentricity and so he lists examples of other great entrepreneurs that he studies that had these traits he talks about John D
Rockefeller he talks about Howard Hughes he talks about Bernard baroo he talks about Conrad Hilton he says the people people that fall into Conformity they make a massive mistake they fall prey to a fundamental fallacy the notion that the majority is automatically and
invariably right such is hardly the case the majority is by no means omnicient just because it is the majority in fact this is incredible line in fact I found that the line which divides majority opinion from Mass hysteria is often so fine as to be virtually invisible the note I jotted down this is
a note to myself think for yourself don't look around look in don't look around look in the truly successful businessman is essentially a denter a rebel who is seldom if ever satisfied with the status quo he creates wealth by constantly seeking and often finding new
and better ways to do and make things in business the Mystique of Conformity is sapping the dynamic individualism that is the most priceless quality an executive or businessman can possibly possess there are many pressures that Force the young man of today to be a
conformist he is bombarded from all sides by arguments he does not understand that the arguments are those of the almost wor and the never will bees who want him as company to share the misery of their frustrations and failures conforming keeps him a second string player by conforming he misses
the Limitless opportunities which today present themselves to the imaginative individualist I want security he declares it is a confession of weakness and cowardice the men who will make their marks in Commerce industry and finance are the ones with free willing
imaginations and strong highly individualistic personalities they rely on their own judgment rather than on surveys studies and committee meetings they know that every business situation is different from the next and that no, volumes could ever contain enough rules
to cover all contingencies the successful businessman is no narrow specialist he knows and understands all aspects of his business he can spot a production bottleneck as quickly as he can an accounting error the successful businessman is a leader who solicits
opinion and advice from his subordinates but makes the final decisions gives the orders and assumes the responsibility for whatever happens I've said it before and I'll say it again there is a fantastic demand for such men in business today the non-conformist the leader and the originator has an
excellent chance to make his fortune in the business world to be truly Rich a man must live by his own values it has always been my contention that an individual who can be relied upon to be himself and to not conform and to be honest unto himself can be relied upon
in every other way he places value on himself and his principles and that in the final analysis is the measure of the true worth of any man and that is where I'll leave it highly recommend picking up this little book you could read it all the way through you could pick it up and read it
essay by essay but I do think he's got a ton of useful advice in here and I think it's well worth reading if you buy the book using the link that's in the show notes in your podcast player are available at Founders podcast.com you'll be supporting the podcast at the same
time that is 353 books down 1,000 to go and I'll talk to you again soon so real quick I want to tell you about this tool that I built that if J Paul Getty was alive I know he would subscribe to cuz not only in this book on how to be rich but also in his autobiography he's constantly
referencing you heard him say it Rockefeller Conrad Hilton Andrew carnegy Henry Ford Andrew melon he is constantly referencing the fact that he studied these people that he downloaded into his brain the ideas that they used to build their business that he could use to
build his business so after reading the two books that Getty wrote it's obvious that if he was alive I believe that he would subscribe to Founders notes because Charlie Munger said that learning from history is a form of Leverage and Founders not not gives you
the superpower to do this on demand and when I tell you that years and years of my life has gone into making this tool that is not an exaggeration since 2018 I've been inputting all of my notes and highlights for every book that I've ever read for this podcast into this app
called readwise for years I've been posting about readwise on social media I've mentioned readwise on past episodes of this podcast I would talk about rewise when I was interviewed on other podcasts but for years I was the only one that I had access to this tool and
so last year I approached Tristan who's one of the founders of Reed wise I'd built a relationship with Tristan previously and I said hey can we build a tool together because for years people have been asking if they could have access to my readwise and so is there a
way we can build a product that allows other people to see what I see because I think that would be tremendously valuable and the result is that you now have access and the ability to this giant searchable database of the collective knowledge of History's Greatest entrepreneurs so there are two
primary ways in which I use Founders notes and both of these features I think will be excessively valuable for you the first is keyword search so any topic that I'm thinking about any topic that I need help on any topic that I want to know more about I just search that topic
into the search bar the perfect example of this is one time I was asked by a listener how did History's Greatest entrepreneur think about hiring I literally just type in hiring into the keyword search and all of a sudden there's 10 or 15 different examples of History's Greatest entrepreneurs talking
about useful ideas that they discovered on hiring the second feature the second way to search this giant searchable database of his of collective knowledge of History SC entrepreneurs is by asking Sage Sage is the AI assistant that operates on top of Founders notes you
ask Sage a question and Sage will read all my notes all my highlights and a transcripts for every episode and make a concise summary of the ideas for you these two features give you a superpower because it allows you to access the collective knowledge of History graad
entrepreneurs on demand when you need need it and that is not all I just added a new feature as well there is now a private podcast feed with bonus episodes available to every Founders notes subscriber there are already 50 short episodes available this private podcast
feed will be updated with new episodes so all the episodes will be short and focus on one topic so episodes could be about a subject like leadership or about a person like the best ideas of James Dyson in fact that's the the next episode I'm working on right now you can
find instructions on how to set up your private podcast feed when you log into Founders notes but there already 50 waiting there for you and I'm making more right now so in summary if you're going to invest and you're going to spend hours and hours listening to
different Founders podcast episodes I would encourage you heavily to invest in a subscription for Founders notes it makes the lessons that you're learning on the podcast even more powerful and again it gives you the superpower to tap into the collective knowledge of
History's Greatest entrepreneurs on demand and you can do that easily by going to Founders notes.com that is Founders with an S founders notes.com and subscribing today thank you very much for listening thank you very much for the extra support and I'll talk to you again soon