A Recipe for Riches
by Duncan Greenberg
Want to become a tech titan or hedge fund tycoon? Up your chances by dropping out of college or go to Harvard and work at Goldman Sachs.
Are billionaires born or made? What are the common attributes among the uber-wealthy? Are there any true secrets of the self-made?
These questions come up a lot, so lets look beyond the broad answers of smarts, ambition and luck by sorting through our database of wealthy individuals in search of bona-fide trends. We analyzed everything from the profession of entrepreneurs' parents to where they went to school, their track records in the early stages of their careers and other experiences that may have set them on the path to extreme wealth.
Our admittedly unscientific study of the self-made members of the Forbes 400 yielded some interesting results.
First, a significant percentage of them had parents with a high aptitude for math. The ability to crunch numbers is crucial to becoming a billionaire, and mathematical prowess is hereditary. Some of the most common professions among the parents of Forbes 400 members (for whom we could find the information) were engineer, accountant and small-business owner.
Consistent with the rest of the population, more American billionaires and near-billionaires were born in the fall than in any other season. However, relatively few of them were born in December, historically the month with the eighth-highest birth rate.
Of the 274 self-made tycoons on the Forbes 400, 14% either never started or never completed college. The number of precocious college dropouts is highest among those who forged careers as technology entrepreneurs: Bill Gates of Microsoft (MSFT), Steve Jobs of Apple (AAPL), Michael Dell of Dell (DELL), Larry Ellison of Oracle (ORCL) and Mark Zuckerberg of Facebook.
Forbes 400 members who derive their fortunes from finance make up one of the most highly educated sub-groups: half of them have graduate degrees. Roughly 70% of those with M.B.A.s obtained their master's degrees from one of three Ivy League schools: Harvard, Columbia or the University of Pennsylvania's Wharton School of Business.
Goldman Sachs (GS) has attracted a large share of hungry minds that went on to garner 10-figure fortunes. At least 11 current and recent billionaire financiers worked at Goldman or one of it subsidiaries early in their careers, including Edward Lampert, David Tepper, Daniel Och and Leon Cooperman.
Several Forbes 400 members suffered bitter professional setbacks early in their careers that heightened their fear of failure. Pharmaceutical tycoon R.J. Kirk's first venture was a flop--an experience he regrets but appreciates. "Failure early on is a necessary condition for success, though not a sufficient one," he told Forbes in 2007.
According to a statement read by Phil Falcone during a congressional hearing in November 2008, his botched buyout of a company in Newark, N.J., in the early 1990s taught him "several valuable lessons that have had a profound impact upon my success as a hedge fund manager."
Several current and former billionaires rounded out their Yale careers as members of Skull and Bones, the secret society portrayed with enigmatic relish by Hollywood in movies like The Skulls and W. Among those who were inducted: investor Edward Lampert, Blackstone co-founder Stephen Schwarzman, and FedEx (FDX) founder Frederick Smith.
Courtesy of Forbes Magazine.
SO what can we learn from this? Be smart, that's one thing. Be good at math, in particular. Be born in the fall. If you cannot change the date of your birth, well... at least act like you were born in September!
Another thing is don't give up. Expect setbacks and keep pushing on. Be involved in cutting edge technologies and industries, too. It doesn't have to be "techie," but it needs to be doing something different from everyone else. If you can be involved in finance or the world of money - so much the better.
But above all else... do something. Quit complaining about life or dreaming, and do something, anything, to get you to where you want to be. None of the people we find among the uber-rich got there by bitching or blaming "The Man," "The System, or anything else. They know that is for losers, so they set themselves apart and decided instead to become great. "Let the rest be content to follow," would be a common phrase among them.
If you want to be like them then you must Go, Do, and Become, yourself. Nothing else will do.