If you listened to last week's episode on J Paul Getty'sautobiography, you knew that Getty placed a lot of time and energy and money into building relationships with otherentrepreneurs,investors, andexecutives.
He knew that relationships between these types of people often produce non-linearreturns.
He knew that relationships run the world so much so that he bought a 72-room estate that served as what he called a liaisoncenter, essentially a place specifically created to buildrelationships.
I have not bought an estate to help you build relationships with otherfounders,investors, andexecutives, but I do run out entire venues and I host founders events so you can build relationships with otherfounders,investors, and executives that listen to thispodcast.
These events last for two days and they are allinclusive.
That means all you have to do is get there and I take care of therest.
That means your ticketcovers,lodging,meals, and access to every singleevent.
If you want to come and hang out with me and other high-value listeners of thispodcast, for two days make sure you come to a foundersevent.
There is one happening July 29th through the 31st in ScotsValley, California and you can sign up to attend by going to founderspodcast.com for SushEvents.
That is founderspodcast.com for SushEvents.
I hope to see you there and I hope you enjoy this episode on How To Be Rich by J PaulGetty.
The book I want to talk to you about today is How To Be Rich and is written by J PaulGetty.
It did not start out as abook, as a matter offact.
The book that I'm holding my hand was first published over 60 yearsago, but it started out because the founder of PlayboyMagazine, HughHefner, approached J Paul Getty in the 1960s and he asked him to write a series ofcolumns.
He wind up writing over five years 19 different essays with the goal of transferring and educating basically transferring his experience and the knowledge that J Paul Getty had about building businesses to the next generation to what he considered what he called the younger businessmen of hisday.
Now keep in mind when he's writing theseessays, he is 73 yearsold.
So almost everybody else is younger thanhim.
And assuch, this book is very different from the autobiography of J Paul Getty which I covered lastweek.
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 60years, nearly 60 years of buildingbusinesses.
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 doingthis.
So the first is why this is a good use of ourtime.
My entire adult life has been devoted to building and operating businessenterprises.
So he knows a thing ortwo.
This is why he's doingthis.
I and so many other successful businessmen have so frequently noted that many young people today enter upon their business careers without sufficient grounding andpreparation.
They fail to grasp the long rangepicture.
They do not understand and appreciate the universally applicablefundamentals, the basicphilosophies, the endless implications and ramifications and the numberless responsibilities which are the absolute essentials ofbusiness.
And he just says right at the very beginning and something he'll repeat throughout the essays in thebook.
I would like to convince young businessmen that there are no sure fire quick and easy formulas for success inbusiness.
And so that is the first time that he mentions that the fact that there's no surefire, quick and easy formula for success ofbusiness.
But you'll see herepeats.
He's got a handful of principles and he's just going to repeat them in different contexts throughout thebook.
So he does give us some background into hislife.
I'm going to try not to overlap too much for what I covered on hisautobiography.
But I do want to start out because he starts the book with this essay called How I Made My FirstBillion.
And the first part of that essay is thisadulation, thisrespect, this love for hisfather.
His father was hishero.
His father was the best man he everknew.
As we saw lastweek, he credits a lot of hissuccess.
He says over and over in hisautobiography, my seat at the table was set for me and that seat was set by myfather.
Do not compare me to John DRockefeller.
Rockefeller is a eagle and I am but a sparrow is the line that he uses in theautobiography.
He just has this deep respect for the self mademen.
So he talks about this as the son of a successful oilman.
I had been exposed to the virus of oil fever ever sincechildhood.
As you and I talked about in the lastepisode, one of the best things that George Getty his father ever did was expose his son to business at a very youngage.
He's like a10, 11 years old when he's visiting oilfields.
He has all thesequestions.
There's no possible way that a 10 or 11 year old can possibly understand everything that's going on on building an oil business and any businessreally, but it constantly stretches his understanding of theworld.
Then his son is just able to pick up these ideas little by little as he's exposed to more andmore.
I think it's such a goodidea.
As myfather, it was a self made man who had known extreme poverty in hisyouth, just likeRockefeller, John DRockefeller, who obviously was one of Getty's heroes aswell.
My father had a practically limitless capacity for hard work and he had an almost uncanny talent for findingoil.
And it was interesting what popped to mind when I got to thatparagraph.
I'd got it down on the note tomyself.
This is just like William Randolph-Hers'sfather.
I have abook. I did WilliamRandolph-Hers'biography, youknow, I think 200 episodesago, something likethat.
I have a book on the Hearst Family Dynasty that I will eventually read and turn into thepodcast.
But there's a lot ofsimilarities.
Now that I think about it between J Paul Getty and WilliamRandolph-Hers, they were both sons of very successfulmen.
Both of their fathers took an innate interest in developing the talent of theirson.
Getty's father made his money in oil and the fact that a lot of people that ran into and met GeorgeF.
Getty said that he hadthis, youknow, essentially smelloil.
Well, you can go back and read about GeorgeHers, which is WilliamRandolph-Hers'father.
GeorgeHers' wound up founding this thing called the HomestakeMine.
He actually listed it on the Stock Exchange in1879.
That mine produced gold from 1879 all the way up until2001.
I bring that up because Getty's about to mention the similarities between the goldrush, the California GoldRush, and what was happening in Oklahoma about 60 yearslater.
But the similarities between the fathersis,anyway, the met GeorgeF.
Gettythought, youknow, he could smelloil.
He just had this innate capacity to findoil.
The same thing was said about George Hers forgold.
Infact, the Native Americans in the area where he was mining for gold gave GeorgeHers' a nickname and they called him the boy that the earth talksto.
And soJ. Paul Getty tells us what the oil industry was like when he was introduced toit.
He says the atmosphere was identical to that which historians described as prevailing in the California Gold Fields during the 1849 GoldRush.
InOklahoma, the fever was to find oil not gold and it was anepidemic.
And so aftercollege, Getty starts up his own oil company that he tells about how this came tobe.
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 ownliving.
My father did finance some of my early operations but it was solely on a70-30%basis.
So that means that it's his dad put the money to buy the leases and theequipment.
He says if you find anyoil, I get70% of the profits since I'm financing the entire thing and you get30%.
And the difference between the beginning of his father's oil career and his own is his father was immediatelysuccessful.
I think it's something like the first 43 wells that he drilled 42 of them came backproducers.
Getty had like a year when nothing was happening and he'slike,well, I can't quit now and he believed he couldn't quit because he says wildcatting was in my blood and he talks about this little small business that hestarts.
It is going to eventually make him one of the richest people in theworld.
He says at this point I acted as my owngeologist, legaladvisor, drillingsuperintendent, explosives expert and as rough neck and rousedabout.
I operated in much the same manner as most other wildcatters at thistime.
With one importantexception, now this isfascinating.
In thosedays, the science of petroleum geology had not yet gained very wide acceptance in the oilfields.
The oil men sneered openly at the idea that some damn bookworm could help them findoil.
I was among the few who believed ingeology.
I studied the subject avidly at every opportunity and applied what I learned to myoperations.
Then he's going to describe the difference between thewildcatters.
Think of the wildcatters as the startups and then these entrenched bureaucratic oilcompanies.
Something he's going to repeat over and over again in giving different sets of advice is the danger to becomestandardized, to becomebureaucratic.
Even though he's writing about his very early days in business 50 years after ithappened, there's these initial principles that he still adheres to even when his business is much larger or much morecomplex, worth billions compared to a milliondollars, which is what he's going to make rightnow.
He says we all faced heavy competition and opposition from major oilfirms.
He's going to tell several stories about how they do not play fairly to say the least in how he saw some of theseproblems.
Some of these huge companies did not always abide by the rules when they engage in legal or financial infighting to smother an independentwildcatter.
This wind up being a good thing for Getty because it madehim, it made him develop skills that he needed tosurvive.
I'm reading about these techniques that he needs to develop to survive this opposition from these giant oil companies and I'm thinking about Michael Jordan than multiple episodes I've done on MichaelJordan.
If you listen to episode212, which is like this 700 page biography of Michael Jordan that I read in thatbook, it talks about the fact that he could not get past for severalyears, could not get past the DetroitPistons.
They were in his way to win achampionship.
He could not get past them in the playoffs and he constantly had to adapt and change hisgame, hisbody, his trainingmethods, his practice habits to overcome thatobstacle, but on the other side of theobstacle, now he has a skill set that he would not have had if he didn't have that obstacle or that problem to beginwith.
The exact same thing is happeninghere.
Wildcatters developed traits and techniques which enabled them to stay inbusiness.
We becameflexible, adaptable andversatile, adept at improvisation and innovation if for no other reason than because we hadto.
We had to in order to survive the big companies employed vast numbers of specialists andconsultants.
They housed them in large and expensiveoffices.
The Wildcatters found our experts among the hard-bitten veteran oil fieldworkers.
He did our own administrative andpaperwork, keeping both to aminimum.
As foroffices, these more often than not traveled with us in our mud-covered automobiles we drove from one drilling site toanother.
So we are still in hisessay, the firstessay, called How I Made My First Billion and he's going to talk about how a major oilcompany, our collection of major oilcompanies, are trying to squeeze them and how one other major oil company winds up helpinghim.
So he has a collection of wells that he's drilling and each well right now is bringing in thousands of barrels of oil aday.
And all of a sudden he cannot find a buyer for his crudeproduction.
He goes to all the firms and they refuse to deal withhim.
And this is when herealizes,oh, this is a giant oil company that's trying to squeeze me because they want to buy my wells for discountedprice.
The motives behind this boycott becameclear.
When I received several calls from brokers offering to buy the lease at a very lowprice, the brokers refused to name the principles theyrepresented.
Bythen, I was an old hand in the petroleumindustries.
I recognized all the classic signs indicating a well organized squeezeplay.
Certain interests wanted mylease.
Either I sold out at a ridiculously low price or it'd be left without any market for the oil produced by the wells on theproperty.
Unable to sell myoil, I had to find some way to storeit.
And so that is the first counter-move hemakes.
He'slike,okay, no one will buy thisoil.
I'm not going to shut down thewells.
I will lease storage tanks and I will store the oil until I can solve the problem and find abuyer.
But he knows the clock is ticking and hesays, when the tanks are toppedoff, I would have no choice but to shut down my operationentirely.
And the next thing he does is reallysmart.
Go straight to thetop. He goes to the ultimate decisionmaker.
Now keep inmind, he still doesn't know who's trying to squeezehim.
And so at thispoint, the largest oil company is ShellOil.
And so he goes and makes an appointment with the Shell's companypresident, Sir George LayJones.
Hesays, indesperation, I aimedhigh.
Meaning he went straight to thetop.
He asked for an interview with him personally and was informed that he would be happy to seeme.
And so Gettie describes this meeting that he's having with SirGeorge.
Hesays, Sir George listened attentively to what I had tosay.
The deepening scale that etched across his face as heheard,me, was all the proof I needed that his firm was not a party to the boycott and that he heartedly disapproved of suchtactics.
When I finishtalking, hesmiled.
Relax hegrinned. I'll helpyou.
As astarter, the company would buy the next 1.7 million barrels of crude oil that Iproduced.
Inaddition, Sir George toldme, a pipeline would be constructed to link my wells with the Shell Oil Company's pipelinenetwork.
And construction was to commence the very nextday.
And so I just love that simple little story because I think there's two very valuablelessons.
One, you have to stop thebleeding.
The worst thing that Gettie could have done is panicked and then sold out a very valuable leash just because he was getting squeezed and hisreserves, his cash reserves are between thelinks.
I can't sellit. That'sfine.
I'm going to storeit. That at least stops the bleeding fornow.
And then he knows you have to aim straight for thetop.
You have to go to the ultimate decision maker because the president of Shell can look how fast he canmove.
He'slike,OK, you have a commitment right now with my word in this onemeeting.
I'll buy the next 1.7 millionbarrels.
And thentomorrow, tomorrow morning at yoursite, I'm sending a constructioncrew.
So, you're all go straight to ourpipelines.
Before I moveon, there is another note that I left myself in this section and I wrote no wonder he wanted completecontrol.
It is very obvious if you readJ.
Paul Getty'sautobiography.
What did he do during and after thedepression?
He'slike, I'm not just going to be just going to be drillingwells.
I'm going to build a vertically integrated oilcompany.
I'm going to be complete control of my entirebusiness.
And there's many examples in thisbook.
There's many examples in the autobiography byJ.
Paul Getty where he is constantly disappointed by relying on what's going on in the other guy'sshop.
And so at this point in hislife, he doesn't havepipelines.
He doesn't have his own newvineries.
He doesn't have his supertankers, but he's going to getthem.
And I can't help but think experiences like this heavily influenced him in thatdirection.
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 ishappening.
And every all of hisadvisors, he's still a youngman.
All of his advisors aresaying,hey, we need to liquidate everythingnow.
Itsays, many adviseme, liquidate everything to sell out not only my father'sholdings, but my own firms and interests as well aswell.
The business situation can only getworse.
They predicted the economy is going to disintegratecompletely.
Theysaid, I didn't see things that way atall.
This is so miraculous that he goes in the exactopposite.
So the consensusis, youknow, this is the end of theworld.
Sellnow. At least you can convert some of yourassets, even if they're pennies of the dollar into actualcash.
And when I get to this section and when he startstalking, I waslike, you knowwhat, actually I began to envision a completely integrated and self-contained oil business just like JohnD.
Rockefeller. And just as it wasremarkable, the fact that JohnD.
Rockefeller did that in the very beginning of the oilindustry,right?
He got in right at the very beginning when they first discovered oil inPennsylvania, everybodythought,oh, this is the only place it's going tobe.
This is going to be a quick buck and this entire industry is going todisintegrate,right?
And Rockefeller did not believethat.
He believed that it wasenduring.
And we see that Getty has faith in thisidea.
And I want to really pause here because now that I've read hisautobiography, I've read thisbook.
This is one of the most important turning points in his entirelife.
Think aboutthis. Like this decision that he's making as a young man in1930.
Okay. What path before yougetty?
What do you want todo? On the left handside, wegot,hey, we're going to selleverything.
Youknow, the world isending, but at least we'll have a little bit ofmoney.
The right is I'm going to doubledown.
I'm going to make this as my life'swork.
I'm not only not going to sell my oilwells.
I'm going to invest more money inthis.
This is no different than when Steve Jobs said in that commencement address that you can't connect the dots lookingforward.
You can only connect the dots lookingbackwards.
So you have to trust in something because trust in yourgut,destiny,life,karma,whatever.
But what Rockefellerknew, what Gettyknew, what Steve Jobsknew, you have to pitch your faith insomething.
The future is always unknown and so he says inbusiness, it is never easy to go against the beliefs and attitudes held by themajority.
This is exactly what he's doing in this point'slife.
The businessman who moves counter to the tide of prevailing opinion must expect to beobstructed, derided anddamned.
And it's one thing to say for his competitors or people in the media or people he doesn't know to doubthim.
It's his friends and family are doing it aswell.
My friends and acquaintances felt my buying spree would prove a fatalmistake.
And so this idea to listen to your own innervoice, to make decisions based on what you want your life tobe, 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 in1930.
If he didn't think aboutthis, he needed to do what he's going through now where he's verticallyintegrating.
He's taking overthis, this giant OOcompany, he's getting capacities and skills that he did that his company did not possess because 20 yearslater, he winds up getting the biggest deal of hislife.
