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June 23, 2024 • 1hr 4min
#353 How To Be Rich by J. Paul Getty
Founders
This episode discusses key lessons from J. Paul Getty's book "How to Be Rich", published in 1965. Getty wrote the book as a series of essays for Playboy magazine, aimed at educating young businessmen based on his decades of experience building a vast oil empire. At the time of writing, Getty was 73 years old and one of the wealthiest men in the world.
The host emphasizes that Getty's advice remains highly relevant today, focusing on timeless principles of business success rather than get-rich-quick schemes. Getty draws on both his personal experiences as well as lessons from studying other great entrepreneurs throughout history.
#353 How To Be Rich by J. Paul Getty
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Key Takeaways
- Optimism is a moral duty - Pessimism aborts opportunities. There are always opportunities for businessmen who recognize and seize them.
- Focus on the task at hand - 98% of attention should be devoted to the job at hand, not what lies dimly in the distance.
- Control as much of your business as possible - Don't rely on what's going on in other companies. Build a vertically integrated operation.
- Be where the work is happening - Executives should spend time on the front lines to truly understand the business.
- Get rid of bureaucracy - Minimize administrative overhead and paper-pushing. Focus on productive work.
- Stay calm in crises - The great leader views setbacks calmly and coolly, knowing they are inevitable.
- Think long-term - Focus on owning assets long-term rather than trading. The real money is made over decades.
- Resist conformity - Success comes from being different and thinking independently, not following the crowd.
- Cultivate the "millionaire mentality" - Look for employees who think like owners and align incentives accordingly.
- There are no shortcuts - Success requires hard work, discipline and perseverance over many years. There are no quick formulas.
Introduction
This episode discusses key lessons from J. Paul Getty's book "How to Be Rich", published in 1965. Getty wrote the book as a series of essays for Playboy magazine, aimed at educating young businessmen based on his decades of experience building a vast oil empire. At the time of writing, Getty was 73 years old and one of the wealthiest men in the world.
The host emphasizes that Getty's advice remains highly relevant today, focusing on timeless principles of business success rather than get-rich-quick schemes. Getty draws on both his personal experiences as well as lessons from studying other great entrepreneurs throughout history.
Topics Discussed
Getty's Background and Early Career (2:00)
Getty discusses his background as the son of a successful oilman. His father was a self-made man who had known extreme poverty in his youth and had an incredible work ethic and talent for finding oil. Getty was exposed to the oil business from a young age, which sparked his interest.
As a young man, Getty started his own oil company with financing from his father on a 70/30 profit split basis. Unlike his father who found immediate success, Getty struggled initially but persevered. He says: "I acted as my own geologist, legal advisor, drilling superintendent, explosives expert, roughneck and roustabout."
Overcoming Challenges in the Oil Industry (8:01)
Getty faced heavy competition and opposition from major oil firms as an independent wildcatter. This forced him to develop skills to survive, becoming "flexible, adaptable and versatile." He gives an example of overcoming a boycott attempt by going directly to the president of Shell Oil for help.
This experience reinforced Getty's desire to control as much of his business as possible. He says: "You don't want to have to worry about what is going on in the other guy's shop." It motivated him to build a vertically integrated oil company over time.
Optimism and Focusing on Opportunities (20:00)
Getty emphasizes the importance of optimism and seizing opportunities, even during difficult times like the Great Depression. While others advised liquidating assets, Getty doubled down and expanded his oil business. He states:
"Optimism is a moral duty. Pessimism aborts opportunity."
He studied the lives of great men and women, finding that those who succeeded "did the jobs they had in hand, with everything they had of energy and enthusiasm and hard work."
The "Millionaire Mentality" (27:00)
Getty describes the "millionaire mentality" as a key trait to look for in employees and executives. These are people who may not want to start their own business, but who think like owners when employed by others. They want to earn in proportion to what they produce.
He gives an example of realigning incentives for a site manager by switching him to profit-based pay instead of salary. This dramatically improved the manager's performance and attention to detail.
Leadership Principles (34:00)
Getty outlines several key leadership principles:
- Lead by example - "Example is the best means to instruct or inspire others."
- Take full responsibility for your team's actions
- Never ask subordinates to do something you're unwilling to do yourself
- Be fair but firm with subordinates
- Praise in public, criticize in private
He emphasizes clear communication, noting: "The good executive is one who can explain things and tell people what needs to be done quickly and clearly."
Being Where the Work Happens (41:00)
Getty strongly advocates for executives spending time on the front lines of the business. He repeats two key principles:
- Be where the work is happening
- Get rid of bureaucracy
He criticizes the trend of building "paper shuffling empires" and says: "Years ago, businessmen automatically kept administrative overhead to an absolute minimum. The present day trend is in exactly the opposite direction."
Dealing with Problems and Setbacks (50:00)
Getty emphasizes the importance of staying calm during crises and setbacks. He states:
"The truly great leader views reverses, calmly and coolly. He is fully aware that they are bound to occur occasionally and he refuses to be unnerved by them."
He notes that "there is always something wrong everywhere" and that occasional crises can be good for keeping a businessman sharp and focused.
Long-Term Thinking (51:00)
Getty advocates for long-term thinking and avoiding interruptions to compounding. Key points include:
- Focus on owning assets long-term rather than trading
- Keep a fortress of cash
- Reinvest in your business
- Use debt sparingly
He gives an example of making $800,000 over 12 years on an oil lease that the previous owner sold after just 24 hours for a quick $4,000 profit.
Resisting Conformity (54:00)
Getty strongly advises resisting the pull to conform and imitate others. He states:
"You'll go much farther if you stop trying to look and act and think like everyone else."
He criticizes the "cult of conformity" and says the successful entrepreneur is exceptional and non-conformist. Getty notes that "the line that divides majority opinion from mass hysteria is often so fine as to be virtually invisible."
Characteristics of Successful Businessmen (56:07)
Getty outlines key traits of successful businessmen:
- Dissatisfaction with the status quo
- Constant seeking of new and better ways to do things
- Strong, individualistic personalities
- Reliance on own judgment rather than surveys and committees
- Broad understanding of all aspects of the business
- Ability to make decisions and take responsibility
He concludes: "To be truly rich, a man must live by his own values."
Conclusion
J. Paul Getty's "How to Be Rich" offers timeless wisdom on building wealth and business success. Key themes include optimism, long-term thinking, hands-on leadership, and resisting conformity. Getty emphasizes there are no shortcuts - success requires hard work, discipline and perseverance over many years.
The host highly recommends reading the full book, noting it can be read straight through or essay by essay. He believes Getty's advice remains extremely relevant and valuable for entrepreneurs and businesspeople today.
The episode concludes by promoting the host's "Founders Notes" tool, which allows subscribers to search and access insights from many historical entrepreneurs and business leaders that Getty studied and referenced. This is positioned as a way for listeners to gain similar leverage from studying business history that Getty found so valuable.