Transcript for:
You’re First 100 Million

qla mentes and devotees i'm embarking on this new podcast it will be audio only our first project is going to be for me to personally read the first hundred million second edition and i will endeavor to read portions of this from the beginning to the end over the next several months it's going to take quite a long time and i hope you enjoy it your first hundred million dedication in this book um you're about to read i talk about the importance of mentors as a quantum leap to wisdom years ago as a young hot shot in the corporate world i learned the secrets of super success from three gentlemen who mentored me at critical times in my life constantine costa grazos has made his fortune as a lifelong associate of shipping icon aristotle nasus he he took a liking to me became my first mentor and showed me how to swim in the deep dangerous waters of business jim newman the second visionary who created the term comfort zone showed me how to expand my horizons thanks to jim after i attended one of his pace seminars in 1978 i moved out of my comfort zone at bear stearns and became a super successful oil man jerry ormond was already a legendary texas oil man when i met him yet he took the time to introduce me to fine points of the oil business and how to survive and prosper amid the chaos of a rough and tumble industry jerry jim costa this book is gratefully dedicated to you prologue the price of fear the reward of courage as this book goes to press the financial world is free falling through the worst economic crisis since the great depression men of wealth and presumed integrity in the financial world have committed treachery on the scale of uncounted billions of dollars affecting millions of ordinary people around the globe bernie madoff is the most despicable of these pirates in uh pinstripe committing fraud of some 50 billion deceiving even the closest associates and oldest friends by march 2009 bernie was in custody while lawyers bickered over the bones of his frozen estates and he awaited his turn to plead guilty in court so what says his victims our life savings have vanished we cannot change the past only recover from it and perhaps learn its crucial lessons the first lesson is this paralysis of fear can can cost dearly while the rewards of determined courage or incalculable in the meantime concealed amid the carnage of financial ruin there are stocks that dare to offer the prospect of profit b2c our own investing group for example is engaged more in contravesting than investing looking for stocks anywhere in the world that are undervalued most paying dividends we think this period of bear market is an excellent opportunity to reach boldly for the bargains that are out there our advice as you seek to venture into the heady white waters of business acquisitions dream team building and quantum leap expansion is to take courage grasp chaos force change and follow the methodologies you're about to read one day sooner than you could have imagined the financial nightmare of the first decade of this millennium will be a harsh but fading memory and you'll have survived to be super success you know you could be forward by dr klaus kleinfeld former ceo of siemens a.g congratulations you have chosen an extraordinary book that describes a step-by-step framework and methodology for building a super successful business from scratch while attaining the skill sets of a high performance person the precepts described in this book are straightforward yet very powerful the author daniel s pena has put into simple words how he achieved success the highest level starting with nothing more than a dream and a passion to succeed i strongly recommend your first hundred million for those who have a dream little or no capital and desire a roadmap to build a significant net worth and achieve the life of a high performance person it is written in the style that will ingratiate you to the author because he tells it exactly like it is with no varnish or hesitation at times you may even be shocked by how he describes what it takes to be a high performance person and achieve your dreams in today's rough and tumble ever-changing business environment he calls his precepts and methodology qla or quantum leap advantage and it's based on his almost 40-year personal worldwide track record of success over many years dan has become a very good friend i know dan's com comments might often raise your eyebrow with his candor however you will truly enjoy hearing what it takes to succeed from someone who has really lived it and you can tell this isn't theory because it gives you real examples from his life and those he has coached and mentored dan has operated in the same real world you do every day and succeeded against all odds but more importantly countless devotees have used qla successfully and achieved their dreams and goals read this book and i know it can be the first step towards the realization of your dreams and being a successful high performance person all the very best klaus kleinfeld introduction your quantum leap advantage always try to go into business with an unfair advantage you will never have read a business book like this one because you hold the special edition you may have heard me speak you may have even been to my castle you may even be a business partner so you'll realize immediately this book is written the way i talk to audiences at my quantum leap advantage seminars you'll also understand it's not a book for everybody because success and the wealth it brings isn't for everybody but i know you'll profit from it because it captures under one cover all the quantum leap strategies i've been pounding into people's heads for several years now because sections of the bookstores and libraries across america and the uk and europe are packed with books that tell you how to become successful entrepreneur some of them are written by men and women who have achieved respectable levels of success others are written by professors who understand business as as a theory but have never had their own business these books typically take the reader to the step-by-step mechanics of starting growing and ultimately selling a business others are manuals that cover taking the company public tax issues raising capital and other topics uh and entry-level entrepreneur needs to know they include checklists graphs and formats for business plans and letters of intent there are probably nuggets of how-to information in these books but i found most of them to be as flat as the lifeless as roadkill but more to the point none of these books tells you how to prepare your mind for being super successful they skip over how to adjust your perspective just slightly so that you can take what i call a quantum leap make millions of dollars and do it over and over again what if you had success to the secrets of a man who has the strength skills and self-confidence to make a quantum leap one column leap after another even make them simultaneously and knows he will ultimately become a billionaire before he quits what if you could receive in his own words the wisdom of the active multi-millionaire not one of those real estate rich morons or some silk suited seminar mooches but a man who took his own energy corporation from 820 investment to an incredible 400 million dollars in market capitalization in just eight years that's what this book is all about it's about achieving the mental toughness and laser beam focus you'll need to make a ton of money i packed this book from beginning to end with the same strategies i've been thundering across the financial capitals of five continents but i've left most of the detailed checklist to the pedantic crowd of pedestrian business people and dusty professors who write those books how to putting it another way most business writers give you some weapons or at least a weapon manual and send you out to face the realities of business to my quantum leap methodology i show you how to prepare and focus your mind in spirit or executive battle against entrenched institutions vicious corporate assassins in those naysayers of success the purveyors of conventional wisdom don't let anyone tell you you can't do that because you can that's quantum leap difference they used to call me crazy and worse they'd say dan you can't do that and by god i'd do it then when i made my first few million dollars they started calling me controversial the london newspaper labeled me the most controversial man in london in the eighties a public figure is controversial when he's got too much money and influence to be called crazy besides he may be crazy enough to sue you into oblivion my british advisers would shiver and say dan you can't do that so i did it now in my early 50s i'm mellowing into eccentric i thought i would stay retired i sure as hell don't have to work but then i realized what poor advice most people are being fed about success by feel-good frauds in the personal development field you've seen them grinning and charming on tv you know who i'm talking about i've become a business success coach to a selected group of entrepreneurs who i feel have a seemingly boundless energy and determination to become super successful i also conduct seminars in the us united kingdom and eu and at my 15th century home guthrie castle near the north sea above edinburgh scotland through my uk enterprise the quantum leap organization my associates and i identify entrepreneurs and mature them along in pursuit of their dream the success stories come into fruition in scotland and england are proving what i've said all along the quantum leap strategies are universal in their application you can sell a solicitor a proper city gen in london on your dream as easily as you can a lawyer in the united states and you can take 500 000 pounds from the bank of scotland as smoothly as you can from the second vice president of city court i call my basic seminar the quantum leap advantage and i deliver others as well on more specific entrepreneurial topics there are all hard-hitting no-nonsense seminars packed with the brutal truth about making big money and are delivered in your face one attendee wrote on his critique sheet dan pena is the bulldozer of knowledge i like that this book in content and tone is an extension of those seminars it is my answer to the question i get continuously dan you said so much in three days dan do you have something i can take home and read i do have such a book written in the late 90s and the qla strategy methodology how do you make your first hundred million as a relevant as today as it was then like any good recipe the qla recipe for high performance and super never goes out of date but since our first publication so much has happened in the world uh the global economy and the business community so i decided to update the book in time for the second decade of this century and for a new generation passionate fired up entrepreneurial achievers maybe like you bear in mind that i didn't write this book to make you feel good inside or stroke your self-esteem instead i give you the unvarnished truth you deserve about how corporate business really works and how you need to think feel train and be prepared to make the system work for you so you can take your first quantum lead and begin building your own dream chapter one super success not for the touchy feely super success is not for the wishy-washy victory in business like war comes to the toughest son of a in the valley this is a book about making money i don't mean a few extra bucks in your spare time anymore can do that i don't mean increasing your sales 20 or buying real estate or getting into discount mortgage scam i'm talking about making so much money you can't count it you have to weigh it this is no get rich quick book either get rich quick implies get rich easy and if you think you can get rich easy in today's world you're either about to murder your rich uncle or you're stupid nor is it for those wealth without risk books accumulating money without taking risk is a fantasy fed to the faint-hearted or the elderly who are so much interested in achieving wealth as they are terrified of becoming poor the high performers the super successful do take risk i sure did still do anybody who's not taking risks in business is not making real money there is no super success without risk there just isn't and no safety in being a high performance person if you want safety this book isn't for you finally this book is not a book to help you feel better about yourself conventional wisdom is that if you feel good about yourself you'll make money and you'll see if you read on i grew a company to over 400 million dollars in real market value working on the premise that all conventional wisdom is crap the truth is that when you make a lot of money then you feel good about yourself author's note and since this second edition was written uh published in 2009 in the last six years having coached many thousands since then and i'm told hundreds of thousands if not millions have been touched by my material which is all free i'm even more convinced that the conventional wisdom is almost always wrong and the authors know so why should you read on here are some reasons i built from scratch more dollar value than any other personal development or business success coach who'll ever try to sell you a book i've lost more money in just one bad deal than a lot of those slick suited guys on the feel good get rich lecture circuit ever made in their whole lives what else i made over 75 000 business decisions during my 37 year career that's probably 70 000 more than anyone who read this book or anyone selling success books and tapes i've made more than 600 financial presentations on five continents all but antarctica there's no money there raising over one billion dollars during times nobody else could raise a cent and in between i've logged millions of miles in travel thousands of nights in hotels thousands of business meetings and more than 250 000 business phone conversations if anybody wants to talk about more business experience in my past 37 years than dan pena in the trenches or in the peaks let me know author's note it is now almost 45 years that i've been in business and the business decisions i stopped counting at about 85 000 i've been in involved in many more than 600 financial presentations since then but since this book was written uh in 2009 i visited antarctica and the north pole just to see if there was business and then we had my wife and i had our wedding vows renewed there end of author's note you should also read on because if you can handle it this book is written for you i'm writing to aspiring entrepreneurs who have the fire in their belly to achieve super success i'm talking to the owners of small or mid-sized businesses people who are already successful and want more and the ceos directors and other top executives of companies who are now looking for geometric growth in a competitive unforgiving marketplace in short this book is for serious players but beyond the circle of capitalists anyone who seeks a greater degree of success in their life can benefit from this book to borrow from joe batten the advertising legend and mentor to ross perot whose accounts include the united states army i'm writing for you if you want to be all you can be now that you've bought me i assume that you haven't browsed this far let me assure you that i've got more for you between these covers and you'll find in the entire library of sudsy proverbs and platitudes hence the cover price author's note joe batten i had the privilege of being his partner joe batten uh some 20 years ago told me after he heard me speak the first time dan if you stay at it and it's hard to stay at it because it can be an unforgiving business he was talking about coaching other people you'll be one of the best if not the best end of author's note when i retired the second time a few years ago i quickly got bored uh with doing nothing i gradually became interested in sharing the brutal choose i had learned in the business world with others after all i had made tens of millions before i was 40. why not pass along the benefit of years of experience to those who were on the cusp of success so that they could enjoy extraordinary business achievements of their own and quite frankly my ego demanded it author's note two years ago i tried to retire for a third time and i actually had a retirement seminar i believe it was april of 2013 in which klaus kleinfeld came and spoke to the seminar attendees here at guthrie castle but uh during the graduation dinner i i knew that i couldn't quit and so it is now october of 2015 and i'm still working harder than ever at uh seminars here at guthrie castle end of author's note the idea led me to make a commitment to be a business coach i reasoned that if other super successful business performers could deliver their proven wisdom and strategies to a willing and receptive audience of eager listeners ready to take bold action so could i i couldn't have been more wrong the seminar crowd perpetrators of the big lie the nazis taught us how effective the big lie could be they shouted their propaganda so loudly and so often that we in the civilized world accepted their crimes until the brutal truth slapped us in the face today pimple face neo-fascist screamed there was no holocaust and a lot of well-meaning people believe them at the time a much smoother type the success evangelists are infiltrating the country filling conference rooms and convention centers and feeding desperate audiences with the big lie about personal success my introduction to the seminar subculture was a real eye-opener it didn't take more than five minutes for me to realize what a seminar business is all about the sad truth is nearly all seminars look alike most of them are the same distillation of conventional wisdom spoon fed to you in outline form so you can copy it down and if you're too slow or lazy to take notes you can always buy the 495 to 2995 tape set manual and even software packages conveniently set out at the table at the back of the room they take all major credit cards authors note of course now um they have dvds cds podcasts etc all of which you can buy some of which are free and and to reiterate all my uh information all my content is free on my website and people ask me why haven't i ever changed the content and i said because nothing's changed since i produced it in the late 90s end of author's note even more to the point if you listen to the the tapes if you actually read the book you get the overwhelming feeling yeah that's right i guess i already knew that i just never saw it organized so neatly before of course doofus it all sounds familiar because you grew up listening to the same conventional wisdom these guys did now they are making money selling you the stuff that you heard all your life achieve a balance between business and life and your personal life make a list of what's good about yourself and stick it on a mirror make a list of what you need to do this week set achievable goals so you're not disappointed buy a used car because it's already depreciated get a 15-year mortgage instead of a 30-year mortgage crap crap crap you may be one of those people who attend seminars buys books and videotapes and cassettes and the financial device life support systems if you are then i suspect there are all lying around your home or office right now gathering dust thousands of dollars invested in advice your parents gave you for free and against your will years ago authors note during me giving the seminar for 22 years 22 and a half years now i have had uh attendees that have spent more than a quarter of a million dollars on personal development paraphernalia and most of which hasn't even been opened end of author's note but just as important as realizing the content of a typical seminar message is to expose the authority of the smooth tongue performers who deliver their wisdom around the country and on late night infomercials i was appalled at the lack of business acumen of so many of the seminar presenters those personal motivation gurus that come to your city those pearly teeth infomercial guys the so-called authors that line the bookstores with how to success books they're mostly frauds you need to ask yourself how many of these business success experts have made any serious money damn few next ask yourself if they have made their money in the business world how many of them scraped their way to super success in the kill or die corporate environment how many of them started from scratch and built a business empire worth hundreds of millions of dollars don't bother scratching your head the answer is hardly any authors note six and a half years later this is still true with one or two exceptions there is nobody that has made their fortune by any other method than putting asses in seminar seats and selling dvds cds and books end of authors no it didn't take me long to learn that most of the phonies have made what little money they have in seminar business taking your money i quickly discovered that i'm the only multi-millionaire i know of on the seminar circuit who made his money in the real world creating hundreds of million dollar empire as you will learn in the next chapter i wasn't just exposed to 400 million dollars on a transaction one day i created a company that uh catapulted to a worth of over 400 million dollars on a major stock exchange starting with a phone a lease fax machine and 820 another question these people are supposed to be teaching you how to become successful which is a code word for rich but how many of them are multi-millionaires few if any in fact the only one i know is a good friend ted nicholas one of the finest marketing copywriters and self-publishing group in the country maybe in the world a lot of the rest live in rented properties and are dodging the tax man yes they're telling you how to get rich authors note that is still the case except for ted nicholas who's semi-retired now in switzerland he is the only one that i know that has made real money in the in the real world end of author's note before you buy your next uh book or tape consider the author and ask yourself is this guy where i want to be is the success story the blueprint i want to for my success and did he make his money and how did he make his money in the business arena or selling books and tapes and putting butts in seminar seats think about it i'm not going to tell you what i think you want to hear so you'll like me i don't care if you like me or not i also discovered something interesting about the roomfuls of seminar attendees i assume were so eager to take bold action i was stunned to discover that the level of apathy the average seminar attendee most of them are more interested in hearing feel good stories pleasant proverbs than the truth about becoming super successful most of them just want to be stroked to hear you've already gotten within you what it takes to succeed reach inside and draw from the wealth of your own potential they want validation that they they're okay in the tradition of i'm okay you're okay what crap so why did dan pena iconoclastic curmudgeon of the business world decide uh to get into the seminar business and write a book because my goal is to change the way personal success development strategies and business success coaching are communicated in the world and make another ton of money of course authors note uh in recent years having created over 50 billion dollars with my mentees and devotees in real value my goal is to be the most highly rated and most successful high performance coach that walk the planet end of author's note i've implemented my success strategies continuously for most of the past 35 years and made tens of millions in the process but i have another unique advantage that works to your benefit i'm not going to tell you what i think you want to hear so you'll like me i don't care if you like me or not if you want a friend by a dog i don't care if you don't listen to what i have to say i'm not in the business to make friends and to be your friend if you personally knew the very high performance of today guys like donald trump richard branson steve jobs you'd understand they don't give a damn people like them or not personal acceptance by the masses is just not an agenda i'm in the business to give you the opportunity to learn how to be enormously successful even though half truths and misinformation are easier to sell i'm going to give you the no unvarnished truth author's note donald trump and richard branson are still at the top of their game steve jobs passed away a couple years ago god rest his soul but it's even more evident that they don't really care what you think especially with donald trump running for president in the united states and as i read this book for this audio podcast he's leading the polls uh in the republican party and he may very well wind up running uh being nominated by the republican party end of author's note when i first started lecturing i talked to my audiences like i would talk to my staff expletives and all half of those audiences mostly women would get up and leave the first 15 minutes i didn't care because i was speaking with passion and true to life this is the way super successful people talk in the glass towers of success i told them so get used to it if they had seen the movie wall street they had already heard a fairly representative dose of language used in the real world they left anyway and i was amazed to see their naivete authors note the second edition of a movie like wall street the wolves of wall street came out recently in the last couple years and it even reiterated more so how rough the wall street environment although that was a bucket shop and that's certainly not a goldman sachs but the language and the actions of those people are not known or understood by most end of authors no my marketing advisor and the people who schedule seminars finally said to me dan you got to tone it down some of these people are really interested in what you've got to say but you're offending them with your language so i toned myself down to become a kind or gentler damn authors know that may have been the case in 2009 but in 2015 i'm not toned down at all although i don't physically touch anybody in the seminars by hitting them as i did in some seminars or i'm alleged to have done in the 90s but the language is rough as evidenced by my youtube episodes end of author's note paying the price for super success now that i've given you an idea of where i'm coming from let's talk about some of the basics of becoming super successful to begin with it's not easy every worthwhile goal in life has what i call a pay price to action to achieve the goal you must take action that requires you to pay a price in some other area it's a trade-off the mooches in the seminar circuit tell you you can have it all you can be a well-rounded parent make a bundle of money and be loved by all that's crap truth is that you have to give up something to get something throughout this book you've got to ask yourself what are you willing to give up or trade off to get what you want authors know as of late 2015 the pay price to action is even more evident there are new centric shall we call them executives like elon musk who has said pretty outrageous things which i have agree with most of them about work ethic we have mr bebos of amazon who requires 80 hour work weeks end of author's note if you want to become an olympic javelin throwing champion for example your price to action is giving up evenings and saturdays with the boys or girls and throwing the javelin a zillion times you may have to give up a beer and go on special energy building diet you may even have to give up your job and get a new one that enables you to throw the javelin more but you pay that price you want to get to the olympics and you don't want to bring home a bronze or silver medal you want a gold medal and you're willing to pay the price at the olympics beijing olympics in 2008 one superstar emerged at beijing national aquatic center the famous water cube a young man who exemplified paying the price during the years of preparation american swimmer michael phelps sacrificed the carefree life of other guys his age so that he could become a gold medal athlete his motto was east sleep swim as part of this monastic regimen he avoided fans friends and even family members who might divert his time and attention from achieving his goal it was a price he was willing to pay to be the best it is not generally known but phelps was meeting and overcoming challenges long before he ever heard of the olympics when he was a child a few experts doubted whether he would be able to accomplish anything even in preschool teachers complained that he couldn't stay quiet sit still or concentrate your son will never be able to focus on anything one teacher told his parents he was later diagnosed with adhd attention deficit hyper disorder authors note i too suffer if that's the right word from adhd except at my uh age they just said that i was a crazy kid and as you get older uh i've outgrown many of the symptoms but i hopefully have retained hyperactivity end of author's note somewhere along the way young michael learned to focus his typical 18-hour day prior to competition at beijing 2008 began at 5 a.m every morning every hour in minute was scheduled to reduce out of pool time during the olympics to maximize tv viewership in the u.s the preliminary competitions were held at night the finals were held the next morning grueling day even for champions phelps dismissed talk of making schedules less strenuous if you can't get up to a swim in the morning don't go the level of commitment leads to the next lesson super success whether it's the olympics or the boardroom is not for everybody when i was building my fortune one price i paid was not seeing my family and not being home for 242 days the first year of my daughter's life and i was rarely home to celebrate the birthdays of my three kids authors no my daughter just turned 29 and is successful as a manager with a fortune 500 company having received her master's degree about a year and a half ago from northwestern university and is doing well although from time to time when she was younger she did remind me of being gone 242 days end of authors no you may remember how michael phelps commitment paid off he won eight gold medals in beijing eclipsing the record set by american swimming legend mark spitz at the munich olympiad in 1972. i wonder if michael's childhood teachers and their other experts was watching authors note in or about 1982 i had the pleasure of meeting mark spitz while in israel pitching the israeli national oil company about a deal to drill for oil in israel end of author's note the costly pay prior to action may not be for you it isn't for most people that's why there are so few ted turners ross perots and yes mary kay ashes in the world but this is important that's all right mark zuckerberg followed the classic american success formula set by bill gates and other techno whiz kids mark paid the price spending more of his young years tinkering over a computer that he did being a typical teenager the payoff he redefined social networking for the 21st century and founded the enormously popular facebook the phenomenon now claims more than 70 million active users worldwide and gives zuckerberg a 23 year old very eligible bachelor net worth of one and a half billion dollars yet i doubt whether he would recommend his path to super success for everyone author's note facebook october 2015 has a subscriber race that approaches one and a half billion people and he is no longer a bachelor in fact i believe he's married and i believe he's going to have a child soon and his net worth is in the tens of billions end of author's note if you put into action just some of the strategies i give you in this book you'll be a whole lot more successful than you are today and by the way you'll save a lot of money by not buying more tapes and books future seminars a lot of people i talk to assume that you have to incredibly be incredibly intelligent in order to be highly successful i'm living proof you don't but let's suppose for a second that you have a iq of 100 that's average in this example i might be taking some away from you and another hand i might be giving you a little those who spent a lot of time seeking universal truth through seminars books and tapes and those who ask me obtuse questions during seminars probably have what i call a room temperature iq a comfortable 72 let's also pretend i've got 100 iq as well although my old pals from school days would argue the point can anyone have 10 times our iq as far as i know the highest iq ever recorded were in the 240 range 160 will qualify you for membership in the high iq group called mensa so it's not possible for anyone to have 10 times our iq or even five times rrq so how the hell do people make 10 times more money than you make how do people make a hundred or a thousand times what you make if they can't have a hundred or a thousand times your iq how i'll tell you how because they dream bigger than you their expectations are higher than yours that's how one of my colleagues in recent years has been peter sage an energetic and highly successful british entrepreneur adventure and international bon vivald peter says that when he was an inspiration for a new venture when he has an inspiration for new venture if he has an idea of how to bring it to re reality he's thinking too small now that's my kind of thinking author's note yes i do have a significantly higher iq than 100 but uh i'm certainly no genius end of author's note i'm often asked if i had my life to live over again what would i change i'd only change one thing i'd set my goals higher that's right with my all my medical success i'd still set my goals higher what about you super success not for the touchy feely have you set goals that allow you to be all that you can be if not reading this book will be an astonishing revelation at the risk of overstatement reading this book could change your life following the systems and methodology in the chapters ahead could change the course of your destiny i say could because you must take action to change change is absolutely essential i want you to understand right now that doing the same thing over and over like you've always done them and expecting different results is insanity authors note having published the second edition in 2009 refreshing it from the first edition i can say categorically that we have a 100 track record for changing lives whether it's five percent or 95 percent is up to you end of author's note you see these high performance individuals like yourself achieve super success because they want it more than you they forge favorable circumstances by using the two advantages of high performance business people practice skills and force of good habits or as jim ryan the former world record holder in the mile said motivation gets you started habits keep you going trust me on this intelligence has nothing to do with it take some risks the super successful also have a different perspective on risk several years ago a guy named charlie gibbons made a ton of money on a book he called wealth without risk he put together a whole program based on money making money saving ideas hired some used car salesmen and peddled his program in hotel conference rooms all over the country a close examination of the book revealed that virtually all his ideas were little ideas to make a little money here save a little money there stuff any financial advisor could tell you the only people who grew anywhere near super successful were givens and his inner circle of associates his converts saved a few bucks on insurance premiums made a little money in real estate mostly flipping houses and thought they were rich but without taking risks they were all small potatoes and eventually the givens organization was dragged into court and has long since disappeared gibbons legacy is the half hour paid advertising tv program the infomercial and a generation of skilled and dapper pitchmen who still work the seminar circuit trying with only limited success to replicate the givens phenomenon the genuinely super successful understand that risk is necessary to grow in my seminars i refer to the quantum leap an explosive geometric growth in your company that merely more sales or or more locations could never achieve a quantum leap requires risk one of my favorite disciples was a young man named fidel vargas one of a group of mid-90s i call the mexican morons i quickly saw fidel's potential and paid for him to attend a seminar at my guthrie castle in scotland much like myself fidel was a product of the los angeles barrio except that this latino firebrand completed his undergraduate work and an mba at harvard he also made national news several years ago by becoming the youngest man in the united states at age 23 of baldwin park california these days he runs the venture capital fund an investment firm in southern california qla made some lasting impressions on fidel authors note fidel has since left his venture capital firm and is now the ceo of the hispanic scholarship fund where he's helping uh thousands of hispanics get into university every year and offers no dan pena struck me immediately as larger than life fidel said recently somebody determined to squeeze every last drop of juice out of life the lessons of qla are simple but powerful you've got to take risks to be really successful you've got to be willing to throw your hat over the wall and commit yourself to your dream dan also taught me that most obstacles to success are created in an imagination driven by fear of defeat and by listening to the platitude of conventional wisdom if you're already in business you understand risk remember when you first got started didn't establishing that business require risk didn't marriage require an element of risk or raising kids or buying a new home then why do so many people who take risks in other areas of their lives shudder at the taking risks in growing their business no matter how tight your strategy and how sure of success you are on a given deal the specter of risk lurks at your side until signatures are on paper and the money is in your pocket in your bank and preferably spent i believe that if you're not taking risks to grow your business it begins to wither i hate someone to tell me everything is running smoothly by definition i know their business is not growing anymore and probably dying they have forgotten that from chaos comes order some people take a risk or two and fail and retreat beneath their shell of safety failure destroys their self-confidence sometimes for the rest of their life in 1955 at the height of the cold war everybody had atomic bombs in their minds school kids were drilled to hide under their desk so that the 50 megaton bomb detonated downtown would miss them but my father an la policeman was lured into investing ten thousand dollars in the lucky 13 mining company an outfit with the uranium mines in nevada it was a con job a scam and he lost his 10 grand which in 1955 was a small fortune but maybe more damaging to him than the financial loss he was disgraced in front of his family and friends and laughed at for years afterwards 1958 my dad had a chance to buy an undeveloped piece of land northwest los angeles for three thousand dollars the intersection of the panga canyon and ventura boulevards all four corners he turned it down no he's been made a fool of twice he must have figured next time the property was sold it went for six hundred and forty thousand dollars then three point five million and eight million the last time we looked one corner sold for 12 million dollars for the rest of his days dad didn't like to drive up in northwest l.a around woodland hills one failure drained his resolve to ever take another risk never fear failure understand it the super successful also have a different take on failure they understand that failure is what happens when you do something the greatest successes in the world also experience the greatest failures the all-time strikeout record in major league baseball is held today by babe ruth but we don't remember him for strikeouts we remember him for setting a home run record that stood for decades long before performance-enhancing drugs destroyed america's love affair with baseball no one cares about the babe strikeouts the point is that he kept swinging the damn bat most of us never get out of the dugout let alone up on the plate those people not only wonder why they never hit a home run they even begrudged the determined hitters who do donald trump has lost billions in his financial deals but who cares he has made billions more with successful ventures and he just keeps swinging at the bat after stumbling into the new world christopher columbus failed in the subsequent exploration and died a poor and disappointed man but on columbus day do we celebrate his dying destitute of course not we celebrate his success uh author's note donald trump is currently leading the polls for the republican party for president of the united states end of author's note this reminds me of a story about tom watson senior founder of ibm being asked by a young management trainee sir how do i get to the top of the management ladder watson immediately replied double your failure rate son double your failure rate his point was of course that more failures could only result in more tries more initiatives more risk-taking all the actions required for growth most of tom edison's experiments failed miserably thousands of them he thought direct electrical current dc was the answer to lightning in the world and the alternating current ac was passing fad he was wrong and nobody cares instead we're indebted to edison's genius and his determination whenever we turn on a light bulb or hear recorded music or watch a movie for the super successful failure is a valuable lesson it is a road not to take again or at least under the same conditions and then they move on failure is nothing more than testing as edison said success is 99 perspiration and one percent inspiration to the high performance person fear is false expectations appearing real the surefire formula for failure try to please everybody that's the biggest reason most people never achieve success they try to keep everybody happy as a result they fail and people they were trying to please don't give a damn instead of listening to everyone around them they should have consulted with themselves they should have trusted their instincts they should have listened to their intuition as a high performance person you have the confidence in your judgment to stand by whatever decision you made listen to your intuition it's almost always right intuition plays a strong role in the decision-making process of a high performer over the years women have tried to monopolize intuition women's intuition is a given but what about men's intuition i think intuition is what we call instinct in animals a primal survival skill all of us have a sense a gut feeling about intuition affecting our best interest usually we run into problems when we ignore our intuition nowadays the tyranny of computers has undermined our reliance on intuition too often we exhale things to death suppose you're a guy at a party and you meet an attractive woman her smile seems well more than friendly she touches you a lot innocently you know she's hot you don't need to run back to your office and excel it you don't have to think about it you know business is much the same but conventional wisdom dictates we over complicate issues because after all our world is very complicated now the internet personal computers and other electronic breakthroughs we wouldn't have dreamed of 20 years ago uh give us uh to a universe of information we can use i personally believe that the reliance on the computer can be a single biggest drawback to being a high performance entrepreneur but even i got online in april 2001 because it has become an integral part of our personal and business lives forget what others think too many worry about what others think and about their decision that they do the wisdom of the decision itself what are the guys that i play golf with are going to think what will obnoxious cousin rudy say or aunt martha who has cartoons of amway products in her garage come on do you think bill gates gives a hoot what others think uh you think trump gives a damn or the opinions of experts make a fraction of his money of course he doesn't the fact is you should have all the data you need to make a decision you've done your investigation and due diligence you've met and sized up other players somewhere deep inside your gut tells you this is an opportunity you need to seize in contrast the high performance person such as myself measures the risk makes the decision takes action and never thinks well maybe i should have done this or that maybe i made a mistake as a high performance person you have the confidence in your judgment to stand by whatever decision you make and you've got more to do than second guess yourself you've got the important decisions you may move on without looking back i often say i may be wrong but i'm never in doubt how else could i have made those 75 000 business decisions authors note i've made many more than 75 000 business decisions by now approximately 100 000 end of author's note never look back one more prerequisite for super success the high performance person never looks back do you know someone who suffers from terminal buyers remorse that individual shops for a new car new home new dress or new anything and then makes a purchase the next day he or she begins to revisit all the reasons the item they didn't purchase was they better buy soon they're miserable if they can they return the item for a refund and start the same torturous shopping process over again they'll never be satisfied because they don't have confidence in their ability to make decisions make every decision as if it was your drop dead final word on the matter down the line you may have to do a mid-course correction based on the dynamics of business but that's not looking back that's keeping your eyes forward toward where you're headed big difference make the sacrifice a pay price to action take risks don't fear failure listen to your intuition avoid conventional wisdom ignore what others think and never look back as we prepare to launch into the tactics and strategies of the high performers you may have already figured out this is not going to be a comfrey drift to mainstream thinking like they say in texas where i learned the oil business this book is written for those who want to hunt with the big dogs and pee in the tall grass super success is not for the wishy-washy victory is business like war comes to the toughest son of a in the valley not the touchy-feely i cannot think of a single high-performance success who is touchy feely if they exist i never met one high performers are the gladiators of the glass towers they're tough they take action but never take prisoners they make mistakes and never look back and they make a lot of money i don't care if i have to drag push slap kick or cajole you to super success you will not necessarily like me but i don't give a damn what i do give a damn about is making you into super success and helping you make enormous sums of money if you're interested we'll get down to the specifics soon enough but first you need to understand who i am as you know dan pena has the credentials to kick your apathy into action for the next 12 chapters chapter 2 the barrio and the castle if you aren't prepared to die for your dreams you aren't prepared to live for them one of the differences between man and the lower animals is that we humans continue to evolve throughout our lives we have the capacity to make mid-course corrections we experience pivotal life-changing events men for example can be changed forever by experience of war women are often transformed by the experience of childbirth in this chapter i want to trace the path of my own career and its pivotal points of change when you understand the origins of my business strategies you will see more clearly how you can apply them to your business i was not always a laser beam focused goal-driven success motivated individual i am today quite the contrary i spent my adolescent years in a tough predominantly latino east los angeles neighborhood a barrio where you learn street level survival skills early our main competitive sport was bar fights with guys from other neighborhoods three of my closest friends ruben munoz and walt wojack and howard stein by 15 we were laser beam focused and perfecting our nine ball uh pool getting drunk and getting laid the last i knew of reuben he was serving life sentence in florida a railford prison for murder the penis had migrated from spain to mexico my grandfather rode with pancho villa and the only photo we have of him he even looks like pancho villa complete with a droopy mustache my father manulis pena was a los angeles cop when he came home he was a stern disciplinarian which means he beat the hell out of me when i screwed up the house we lived in was long ago boarded up and then torn down after it became a crack house for a local drug dealers authors note the lot of where the house was on berkdale street in east los angeles is no longer empty the lot was bought by an asian and they've built the house on it and author's note my parents tried to get me into a better environment so i wound up attending merceda high school in the san fernando valley in north los angeles but the seeds of her bedding were already planted i caused a lot of trouble during the times when i bothered to attend in may 1963 about three weeks before graduation the vice principal gave three of us our diplomas and told us never to set foot on campus again they were afraid we'd disrupt graduation reuben walt and i thought about it a while then went back and threw art diplomas in his face three weeks later we disrupted graduation on schedule authors note the real disruption of graduation was mostly me i take credit for it and there's nothing to be proud of in hindsight end of author's note in the fall i entered san fernando valley state college today it is california state university at northridge i soon flunked out and drifted through a couple of other colleges over the next two years finally in june 1966 with no goals or ambitions i enlisted in the united states army my father had been an enlisted man during world war ii and an officer during the korean war he gave me some good advice as long as you're going to be in the military he said be an officer by december 1966 i was attending office candidates school at fort benning georgia and earned my second lieutenant uh bars on july 1st 1967. like so many army brown bars in 1967 i could anticipate becoming an infantry platoon leader in vietnam then for some reason long since buried in the pentagon i was suddenly transferred to military police corps and shipped to fort gordon georgia by october i was on my way to europe attached to nato as an officer uh in the 64th military police company for the next two years at stations all over germany my responsibilities expanded beyond the usual mp duties i found myself traveling back and forth to checkpoint charlie involved in various intelligence assignments i was heady stuff for a brash young lieutenant i loved it the military proved to be my first life-changing experience i became part of an organization that depended on personal responsibility and discipline in order to become effective just as it has done for countless other young men before and since the military took an aimless kid and forged a rapidly maturing adult intelligence work led me into the guts of real-life geopolitics i saw that there was no real friends in the arena of world diplomacy only allies of convenience no acts of benevolence only strategies which advance one's best interest the instinctive tactics of survival which had served me so well in the barrio were the same ones nations were using as instruments of policy later when i entered the business world i discovered the corporate america operated the same way by that time i had been well trained i separated from the army in late 1969 and returned to civilian life determined to make up for the lost time i enrolled at cal state at northridge and earned my degree in two and a half years averaging 20 semester units my final semester i made the dean's list with 3.6 average while taking 23 units studying like a man possessed begin the expectations of super success i finally received my degree in business administration in january 1971 and while i worked on my master's degree in finance and waited to get into law school on a scholarship i got a job with land consultants of america a commercial real estate firm in los angeles we were selling land to people interested in investing in california dream kelly norwood the guy i worked for said dan you should sell everybody who comes through the door hell i didn't know any better so i achieved 94.6 closing rate and felt badly about the other 5.4 who got away the experience was an important lesson about expectations i expected to sell everybody who walked in the door so i almost did but what if my boss had said dan real estate is tough a new guy like you should expect to sell no more than 30 percent my expectations for success would have been less one-third of my real potential in april my boss sent me to become sales manager of the san diego office the first thing i did was fire every mooch in the office then i recruited a salesforce of navy pilots who were getting out of the service at san diego naval air station these were hot fighter jocks top guns who had earned their wings over the skies of southeast asia they were assassins in every sense of the word and i was their leader i told them how easy it was to sell civilians on the california dream you ought to be able to sell everybody who walks in the door i said then i proceeded to train my fired up team of jocks and i only had to shift their mindset marginally to turn them into real estate assassins by the summer i was making 10 000 a month in sales commission so even with all this activity i was flying back and forth to los angeles where i was a commuting graduate student in late 1971 i decided to start fishing with nets instead of polls conducting real estate seminars instead of training just a few staff people i was teaching room fulls of hopeful real estate magnets how to peddle dirt and charging them for the privilege by december 1971 i was driving my first rolls royce and had a mercedes for a second car i had long since dropped out of graduate school and forgotten my pursuit of a law degree in early 1972 i was named vice president of life was beautiful i started thinking about marriage and shopping for a big home in lake encino a sort of quasi-beverly hills community in los angeles then the bottom fell out i was about to board a plane to switzerland on a land deal when i got a call at los angeles international airport come to the office the irs has shut us down i raced back to find our office sealed with yellow tapes like some sort of crime scene my partners had decided to skip pain withholding taxes there was an irs investigation i was cleared of wrongdoing but was unemployed i got a job in la as a stock broker at the firm of what would later become payne weber in the summer of 1972. i was sent to new york city i got an apartment in manhattan and spent invaluable time learning the financial business in the toughest most unforgiving business environment in the world ideally every individual pursuing success in the top of his or her industry should come to new york city and master their executive skills sinatra was right if you can make it there you can make it anywhere i made it by all conventional definitions for five years straight i doubled my income but it wasn't until 1976 i was transformed from a micro thinker to a macro thinker and began to redefine my own success the one man who turned me around jim newman became one of my mentors a concept we'll discuss a later chapter in 1977 i left payne webber to join the investment banking firm of bear stearns and company in los angeles where we served as investment bankers and financial advisors for large corporate and private clients across the u.s and overseas it was during this period i met the guy named pat kennedy pat was an oil trader he made his money moving thousands of barrels of crude oil around in an uncertain oil market i was intrigued then in 1979 came the second oil crisis of the saudi arabia cut its production to boost prices i had seen a lot of idiots get rich during oil and bar first in wellingburg of 1973 i quickly decided to make my own ton of money this time around more importantly i recognized opportunity when it came i've long felt that we all have many opportunities presented to us in life doorways that suddenly open and give us a glimpse of what could be achieved but because we are preconditioned and so fearful of failure we stand there each time telling ourselves to let the doorway close rationalizing our inability to take action then the doorway closes forever authors note as i read this we are again in a massive oil decline oil has dropped from in the last 18 months from approximately 110 dollars a barrel to currently 35 dollars a barrel and is expected to even go lower i never thought i'd see this again and i used a phrase my ideally departed father would say dan if you live long enough you see everything at least twice end of author's note i left bear stearns in february 1979 to become president of kennedy industries in los angeles we handled investments in real estate entertainment oil and gas by entertainment i mean we found investors to co-underwrite movies usually in return for getting to rub shoulders and other parts with rising and eager young starlets i knew as much about filmmaking as i did about the oil industry and we lost a bundle of money but we sure as hell had a good time authors note during that entertainment phase i was privileged if you want to use the word to do business with dolly parton hoyt axton robert goulet tony curtis to name a few end of author's note in 1980 we formed jpk industries i was the ceo president and 50 owner pat kennedy used his irish charm and i used my business acumen and grit to forge a vertically integrated oil company from scratch we were running oil and gas exploration and drilling operations production crude refining and marketing the decision to go into the oil business even though i knew not a damn thing about oil was one of those uh pivotal points in my career it didn't matter that i didn't know the oil business my crude business skills my years of financial management and my confidence in being able to focus those abilities in oil industry problems were impetus enough besides if it didn't work out i've been unemployed before authors know as i continue to give the quantum leap advantage seminars here at guthrie castle i explain to the kids and i call them all kids because i'm either old enough to be their father or grandfather that it doesn't matter how much knowledge you have and that's what the dream team the professionals that you'll bring on to your team will allow you to do you'll be able to do things that you really don't have a lot of knowledge about end of author's note i did work out for a while and we made a lot of money it was during this period that i met a gentleman named constantine grazos costa was in his 80s at the time near the end of his life spent as a chief lieutenant and confidant of a billionaire shipping legend aristotle nasus by the time i met costa his old friend had died and from his suite of offices at the top of the 52nd floor of olympic towers in manhattan he oversaw the sprawling of nasa's empire costa took a liking to me and he became my mentor he called me his oil expert and whenever he needed to talk about shipping oil in his tankers anywhere in the world he summoned me to his office author's note in all the time that i knew mr grazos he always called me mr pena i called him mr grazos to begin with then constantine and then at the end of his life i called him costa end of author's note to costa i found myself traveling the world negotiating oil deals with such figures as emil demarcos in the philippines baby doctor valjea in haiti and chile's military strongman general augusto pinochet whenever i was in manhattan i work out of christine o'nasa's office in the towers author's note she had a phone on her desk it had direct lines to the vatican the white house amongst other luminaries and i would push the buttons and pick up the phone and when they'd answer i'd hang up thinking that they'd know that that was me calling and the author's note this was all intoxicating experience for 35 year old or wise-ass oil industry novice it also led to probably the most unlikely international adventure of my life one which for years was closely held secret for reasons which will soon become apparent looking back to write about it so many years later it's almost seems like a dream or a late night b movie to my family was it was a nightmare of apprehension a living hell of dark plans and shadowy figures of which she only has frightening memories haiti was known to have oil deposits but oil had never been produced there because of a lack of expertise and capital although costa was negotiating with the value for oil shipping rights he detested baby dock tyranny and how he kept his nation impoverished while he moved tens of millions of dollars into his own swiss private account costa in the finest greek tradition was a fierce believer in democracy so in the early eighties he decided simply to remove the valiant regime although he conceded that thousands of people could be killed during the armed invasion he calmly justified his idea with a rationale that usually began when human rights are at stake sacrifices are required using his enormous wealth leverage and influence costa convinced three very unlikely parties to co-finance the support and armed invasion of the island nation the cia mobile oil and the vatican mobile oil would in turn get an exclusive on the oil market while the vatican was interested in reestablishing the influence of the church one day i was sitting planning a meeting in custer's office when he turned to me and said something to the effect of mr pena you were an army officer weren't you you were in intelligence were you not yes i had been i admitted well why don't i put you in charge of this project immediately and with all the enthusiasm i could muster i responded yes sir absolutely i'll be honored to lead this project author's note putting together the team for the invasion of haiti was a project of biblical proportion and some of the best times i had were in the planning phase and the recruitment of the team end of author's note events moved quickly through close time at representatives of the co-conspirators including ceo of mobile coaster reassured me mr penny you have my assurance you can trust all these parties except one the vatican don't trust the vatican mr pena though the end of 1980 through the end of 1980 and well into 81 we plunged ahead with meticulous plans greased by enormous resources using french contacts we recruited and armed an assault force of some 300 mercenaries and assassins we hired special talents of the very best freelance demolitions expert and brought in a a widely respected mercenary colonel mike williams who had served as the last commander of the rhodesian cavalry these were men who had lived and fought on civilization's underbelly for uh so long they seemed to squint in the in condense of normal society they chatted idly about jobs in angola or congo or bolivian jungle and getting trigger time in ferocious fire fights just beyond their quiet talk you could almost hear the rattle of automatic weapons fire and the smell of sweat of war they brought to life the cliche a breed apart during our spending spree we also acquired a couple of army surplus helicopters gunships to dubious channels and the vietnam era c47 puff the magic dragon [Music] this unlikely killer designed for target suppression was mounted with three updated gatling guns general electric 7.62 mini guns each mounted and firing from the port side 10 of the 15 of the project's top leadership myself included were spirited away by the cia into a camp cobrae an anti-terrorist school run by lieutenant general mitchell warbell in powder springs georgia working with the cia specialists we practice hand-hand combat and negotiated obstacle courses under live fire we also became skilled sharpshooters we went beyond aiming a weapon and and and learned to free to fire by instinct i got to be such a good shot i could almost toss a dime into the air and hit it authors note during that experience uh at the cobre uh school there was a active duty lieutenant general in the united states army that was going through the school as well the guys there said that he was there to spy but it's the first time i was able to knock around a lieutenant general and the only time actually and uh it was a lot of fun because during the hand combat training end of author's note the plan was to launch overland from the dominican republic with air support and with the element of total surprise blow up the presidential palace and federal reserve of haiti where devalier had stashed 200 million we would liberate the money for our troubles and then install a new president already selected by leaders of the haitian community in the u.s you see we were 15 years ahead of bill clinton authors know we met in new york with the gentleman that we were going to replace duvalier with at laguardia airport at the hilton many many meetings end of author's note although we were only 300 strong our battle plan called for expanding a million rounds of ammunition during the first day of assault thousands including the palace guard and most of hades feared ponton makut would be terminated it never even occurred to us that we might be killed as well we were immortal in those days in fact i made sure i was slated to be aboard the first chopper to hit the ground in the palace grounds in the meantime our designated president-to-be was sitting in new york drawing up a hit list of his enemies it grew from a dozen to hundreds and the cia was getting nervous that our plan was becoming less than a clean surgical strike during the summer of 81 a climatic meeting was held in olympic towers attended by our cia contacts our mercenary commanders and other key players suddenly the ci guys announced they were shutting down the operation talk about chaos mercenaries jumped up pulled their guns cia guys jumped up and drew their guns and my own former fbi bodyguard dave reynolds shoved me under the conference table at that moment costa strolled in the room glanced around and said it looks like i got here just in time for the excitement authors note the uh the words that i wrote here several years ago in no way shaped manor form can illustrate or depict the excitement that was in that room when the cia said that they were pulling out of the deal and everybody else went berserk end of author's note once guns were reholstered and i came out of under the table we accepted the fact that the cia had pulled out of the deal then they added should our mission fail and we are captured they would deny all knowledge of us and uh the project and oh yes they were keeping the money uh now we were furious i told them to get the hell out and that we were going to hit haiti without them authors note i didn't voluntarily get knocked under the conference table my bodyguard former fbi guy was a world-class wrestler from university of colorado i believe he flipped me knocked me into that otherwise i would have been on top of everybody like everybody else end of author's note weeks later i was bound from la to the dominican republic with a stopover in miami international every element was in place i had a message waiting for me in miami that if we insisted on proceeding with the operation that every leader would be whacked by the cia we would just disappear without a trace the project was dropped and my friend and mentor coaster gotchas passed away peacefully a short time after it finally emerged that no less than jimmy carter secretary of state cyrus vance had squashed the project years later at a wedding of one of my of our conspirators i ran into cyrus vance in the receiving line i introduced myself and he said you really screwed me sy the man was taken aback of course but said nothing as i continued you owe me psy haiti 81 remember he stared back and never said a word by the way the vatican pledged 250 000 to the project and i learned then and there what i learned then and there that when a mega successful mentor warns you that you're about to get screwed you either heed his advice or bend over the church never paid a lira and i realized that the whispered stories of intrigue i'd heard about the church were probably true authors note the i paid up the 250 000 that the vatican was supposed to pay up and at that time i learned a very hard lesson and when i tell my mentees now that i suggest that they don't do something or to be careful what i'm really saying listen to me you i know what i'm talking about and of author's note on february 28 1981 newly inaugurated ronald reagan decontrolled the price of oil removing artificial price support that same year while i was involved in the haiti project pat kennedy decided he wanted to take a million dollars out of our company tax-free and unreported actually he didn't want his wife to know about it i had been burned once before by unreported taxes so i wouldn't let him do it a proxy fight ensued and i was ousted by my partners on january 7 1982 a week after dan junior was born my first son i was unemployed again but getting used to being thrown out of my ass create order from chaos and making a killing but now i had oil in my blood my brief initial experience in the exciting arena had confirmed that there was a hell of a lot of money to be made in the industry like this which at the time was in chaos in fact the most valuable lesson i learned from the whole period is still true today uh find an industry in chaos going through the agony of cataclysmic change bring order to that change emerge from the battlefield chaos with a company that provides order and leadership and you'll make a ton of money again authors note the same thing is happening right now again in the oil business with oil hovering around 35 a barrel thousands of men and women are being made unemployed across the world that are supplementary ancillary or complementary uh uh industries uh to oil and of authors note here's an example a dozen years ago the entire field of interactive communication was in absolute chaos uh the so-called information super high was being built outright across an unchartered frontier with no place and specs young geniuses working in their garages develop technology that runs our world today then as savvy entrepreneurs they went out found the the money and created the empire they set up a precedence with imagination innovation and guts then sat back and counted their money while the rest of the pack ran and to catch up asked ted turner about network tv asked bill gates about universal software asked netscape about web browsers how many short years ago was it that google was a theoretical number beloved by nerds that dell was a publisher of comic books and yahoo was something cowboys yelled during sex with a growing network of contacts and sources in the oil industry i decided to go into the business for myself so on friday july 13 1982 i found a great western development corporation at least i'd never be fired again when you're looking to increase revenues quickly who are the dumbest people in in to do business with why the mons who buy those 750 ashtrays of course the us united states government i immediately contacted the defense fuel center the us department of defense the agency bids contracts every february and october to buy jp4 and jp5 jet fuel and diesel fuel we started great western development gwdc with a thousand dollars a friend of mine bob anderson a retired texas oil man former secretary of the navy chipped in 180 and i paid the remaining 120 to bid an initial 20 million dollar contract i later paid bob back his investment i was working in my infant son's bedroom with a spare telephone and at least fax machine that was the total extent of gwdc great western development corporation the beauties of a joint venture other people's money and other people but not even the government does business with a company they've never heard of with no track record that's when i put together my first joint venture i tracked down a marian refining company located in mobile alabama a firm that currently had an excess fuel capacity that means they had more time to refine crude than they had crude coming in to refine the head of the marion was a retired army man so we struck up a relationship based on our common military background arthur's note he was a retired one-star general who coincidentally had graduated from ocs in the same brigade fifth battalion at fort benning georgia that i did end of author's note for the pay for shufflers of the defense fuel center marion finally was a known entity partnering great western with marion gave us an instant track record as a result we landed three fuel contracts totaling 50 million dollars and now with government contracts in hand gwdc was on its way suddenly we were perceived as a company to do business with and as you've heard over and over perception is reality even today i tell audiences with 820 a phone uh at least fax machine uh in my kids bedroom i landed a 50 million dollar contract and launched a company ultimately worth more than 400 million dollars everybody sees or hears that figure and says wow but you know what nobody ever asked me how much a company made on 50 million the answer is about 90 000 authors note today still after 23 years of 22 years excuse me of coaching nobody ever asked me how much money i made on that 50 million dollars and of authors note but how much of my own money did i spend a thousand dollars and who did i use to inflate my company's profile for far beyond its meter size other people with other skills other contacts and greater reputations over the years i've used other people's money opm and other people continuously to grow my company and make millions we'll talk about locating that money and those people in the future chapters at the time i found a great western i set three goals for myself a to grow the company to two billion dollars in assets b to become one of the top five highest paid energy executives in the industry and c to make great western the 50th largest company in the country uh energy company at the time pennzoil was ranked 50th there were thousands of energy companies in those chaotic days i achieved b and c i uh 1.55 billion short of the first goal measured in market capitalization value but so what and what if i had i had set my goal at 20 billion authors note i talk about people say ask me if i had to do over again what would i do uh and i i always say i would set up i would have set higher goals and of authors no i learned a lesson i wouldn't forget about setting goals too low after our initial successes at gwdc entered what i call nurturing period i decided to nurture my company by selling tax shelters remember this was 1982. the tax reform act of 1986 was still four years away both individual institutional investors were clamoring for tax shelters and chaos my favorite business condition ruled the market i know broker or dealer license which would enable me to sell tax shelters so i formed yet another joint venture with a brokerage firm run by one of the best salesmen by the best salesman i've ever met his name is walter levine and he sold me uh a three-year tax shelter on 1.5 million dollars in income uh when i protested he said trust me you grow into it what a guy walter and i formed a little joint venture we called g and j it was our business cards but g j stood for and jew we launched uh our first uh tax shelter venture in december 1982 in the form of an oil drilling fund over the next two years gwdc put together and jng sold three very successful tax shelters the operating capital from the funds came in the form of general and administrative fees payable to gwdc during those tenuous times when we couldn't afford the best new york lawyers and accountants we got them anyway how we hired them is is a secret revealed in another chapter one california day in 1983 while i was running the idea struck me to buy a castle i couldn't afford yes a medieval castle on an island the ultimate in ostentation we were doing well with our tax shelters but we still needed the help of wall street to maintain maintain success and as i knew from my own wall street experience if you wanted to do business with financial institution you had to prove to them you didn't need them my own castle would certainly make the perception a reality in their minds so a castle became my goal and critically important here to understand that my goal was indeed my total focus but we'll get to that discussion later by the following thanksgiving i was shopping for castles in the united kingdom during this period business coincidentally brought me to london a few times giving me more opportunities to browse the castle market then one june morning in 1984 i drove through the ancient stone gates of guthrie castle located in county tayside angus scotland about five miles from the rocky cliffs of the north sea guthrie dating back to the 1460s in a 55 room manor complete with turrets and a great stone tower at its top open parapets built for defense against other clans and no doubt the english look out across the formal wall garden and the shape of a celtic cross and the forested countryside endless corridors and high ceiling rooms almost echo the booted steps of five centuries of guthries and no castle is complete without a ghost guthrie has a ghost maiden who appears periodically and in addition to other sightings authors note uh the first um recorded history of the ghost was in 1629 by the bishop of saint andrews and of author's note adding to its uh p.o guthrie is surrounded by 156 acres of rolling in the state icy streams and the crystal lock perfect for my own golf course i thought i made my first offer within days after negotiations i made my final offer in august which was accepted the interior was stripped of every stick of furniture and decoration even the fireplace manuals had been yanked out for auction to pay taxes the castle was destined to be raised had i not bought it it took a year of living in chaos to rewire we plumb re-roof renovate refurbish and refurnish decorate the place uh in time for my 40th birthday in august 1985. i made a lot of local antique dealers and decorators wealthy during that year-long buying spree the result is an historic castle that is at once that is at once an elegant showcase of finer decor and warm sanctuary in the gentle hills of angus as far as the island uh in the dream we occupy not an island we're on an island this course it's called great britain it occurred to me for it occurred to me how far had come during my first 40 years from latino punk in the hard streets of the urban barrio to the the laird of my own castle in the peaceful scottish countryside here secluded in such timeless surroundings i could ride my arabians or just walk the grounds and the crisp northern air renewing my strength and spirit i would need that strength for the greatest adventure of my life that has just begun author's note um the uh i spoke of my 40th birthday getting it ready well we've just completed my 70th birthday 30 years later the castle has been renovated four arguably five times since i bought it most recently by my lovely wife sally and again it's had a a almost total makeover and and we are again coincidentally in a chaotic time for oil as i've already mentioned and there are going to be fortunes to be made chapter three conventional wisdom the loser's crutch do business the way it's usually done if you're satisfied making the usual money the usual morons do lenin was wrong conventional wisdom not religion has the opium of the people it is injected into our brains from birth by our parents our teachers our chattering neighbors and anybody else who aspires to leading a safe anonymous and respectful life and dying forgotten if you're nice to people they'll be nice to you conventional wisdom stifles the risk-taking required for bold creative action it anesthetizes the mind with mindless platitudes real estate is the best investment after all they don't make it anymore of it conventional wisdom is the scripture of mediocrity fortune cookie proverbs that make losers feel better about themselves your business is doing okay why risk it on some crazy idea better safe than sorry in case you missed the point i hate conventional wisdom and if you're going to make your own quantum leap to super success you'd better learn to hate it too and purge it from your mind as if you'd struck an enema tube in your ear why because conventional wisdom is almost always wrong visionaries have always flown in the face of conventional wisdom columbus don't you know the world is flat mr ford you can make a v8 engine wilbur and orville man wasn't meant to fly all my life i've had people tell me dan you can't cannot do that dan you can't take 26 academic units in one semester dan you can't go into the oil business when you don't know a damn thing about oil and you can't do it in a collapsing market and you sure as hell can't do it in the middle of the worst energy depression in 50 years in fact i made a list of you can't do that people have told me over the years 95 of them and included as an appendix author's note the 95 you can't do that has been expanded to more than 100 end of author's note another phrase i detest is common sense common sense is an excuse for mental laziness common sense is the biggest alibi of all for screw-ups caused by using conventional wisdom well dan if you just made common sense at the time think about this common sense would have to stem from common experience if we were all born raised and educated under identical circumstances what sense we had would certainly be held in common but the fact is we're all from diverse backgrounds and imprinted with a rich diversity of experiences so how the hell do you suppose we all have common sense there is no common sense in this chapter while i continue the great western story you'll see how i constantly flew in the face of conventional wisdom will also begin discussing my seven steps for super success and how to create your personal foundation to build that success building your personal foundation before you can create and run a super successful company you have to recreate yourself you have to cleanse your mind of years of conventional wisdom and in the voids that left build a personal foundation based on all new rules the first rule is an old one there are no rules rules by definition are limiters walls beyond which you don't allow yourself to venture rules even your own put you into a self-imposed box with four sides to become super successful you've got to think outside the box your own mind is the greatest limiting factor there's where all the you can't do that crap will gather to smother your creativity and cloud your vision if you're my age you remember when the four-minute mile was impossible nobody had ever done it then in may 6 1954 an english runner roger bannister finished a mile in 359-4 the very next month australian john landy did it in 357.9 soon a growing number of runners were conquering the impossible four-minute mile beyond challenge of time and distance however was the destruction of the mental barrier that cleared the way to that conquest this story has powerful implications for anyone striving for super success often the impossible in business is a feat that hasn't been attempted takes guts to move beyond the known into the unknown one of the legends of asia was a russian hotelier named boris lezanovic trained in his youth as a ballet dancer he escaped russia during the bolshevik revolution and became a world-class dance performer while touring the cities of the orient he fell under the spell of asia settled in calcutta to run a restaurant in 1951 decided to open his first hotel in the kingdom of nepal his friends in india advised him that it would be impossible after all they pointed out his landlocked himalayan nation was still stuck in the 15th century it was a mythical shangri-la tucked beneath the world's highest mountain range with no telephones access to outside world only by perilous air travel ending on a rough grassy runway outside kathmandu with no roads leading in or out of the kingdom the only automobile in nepal belonged to king trib of huva boros was not to be deterred he bought a rambling run down medieval palace he brought the second car into the country over land through the jungle from northern india using porters disassembling it into dozens of parts and reassembling it on arrival in kathmandu from calcutta he ordered modern plumbing fixtures power generators refrigerator units furnishings and all the other trimmings that turn the dilapidated palace into a first-class tourist hotel since nepalese cuisine consists of rice soup and curry as hindus they eat no meat nor drink liquor boris also had to air freight in all food and drink this simply can't be done they continue to sniff back in india today the most prestigious address in nepal is the hotel yak and yeti a host to royalty and celebrity guests for decades it is a splendid testimony to sheer guts of the late boris lizanovich regarded as the father of tourism in nepal it takes guts to lead the change and guts to change suppose you've got a good business deal clinched and possibility of a better one comes along all around you conventional wisdoms chirps don't blow this remember the bird in the hand takes guts to ignore the advice of the tiptoers and the meek minded and go for the better deal if you've got a good product that's selling well it takes guts to throw it out and introduce even a better product it doesn't matter what the mulan say i don't often pay attention to what others think especially morons several years ago in the box office uh hit evita madonna in the title role sings it doesn't matter what the morons say my definition of a or a doofus pronounced do fuss as anybody whose advice or attitude would limit my success potential mons are everywhere they work with you they commute with you go to your health club live next door and or even in your family they've limited their thinking and would feel much more comfortable if you'd limit yours too you probably even pay for conventional wisdom some professionals exist to keep you in the box of how it is done and typically attract very careful and conservative men and women with button-down minds you've got a company doing several million dollars in business for example but you entrust your accounting tax functions to a cpa accountant who has no more vision than to happily earn seventy thousand dollars a year even worse you pay this furl browed bean counter not to be created but to shake his finger in your face on behalf of the government and say you can't do that after all accountants are trained and certified to follow studiously rules that help the irs get over every dime they can of your money in the large part by making sure you think conventionally about your tax income you also risk the danger of retaining a lawyer whose conventional wisdom is focused on what you cannot do this guy sure isn't going to clear you a path to pursue your objective he's more afraid that you'll take an unconventional step that'll make his job harder over the course of my career i've listened to the advice of scores of lawyers and accountants i respect their knowledge some have been my partners but with few exceptions i know they are conventional people dosing out conventional counsel on how to tiptoe even when my strongest instincts and inclinations tell me to stampede time to kick ass moans and doofuses travel in their guises too stockholders bankers and press thankfully the competition and the conventional wisdom can make a lot of noise if you're behaving unconventionally that's why when you operate under new rules you don't give a damn if you repeatedly embarrass yourself by the way in the beginning this isn't easy one pearl of conventional wisdom reminds us that we don't want to embarrass ourselves by failing at anything you just keep saying to yourself it doesn't matter what the mulan say new habits new companions new rules need the support of new habits and new companions two of the most dynamic business people i know are george and dean verdier they own sugarloaf mountain works in gatesburg maryland they were already successful when they attended the castle seminar in 1994. i hold this highly concentrated week-long seminar once or twice a year in my 15th century home in scotland it is limited to six couples and has launched more than a few quantum leaps in recent years the veneers listened when i said that the friends they had been socializing with might not be suitable companions during their drive for super success authors note the seminar has grown to a couple times a year with six couples to between 20 and 24 attendees in the seminars given between four and six times a year and as of this reading we've just instituted in the new hardcore seminar over christmas from the 24th of december through the 3rd of january which was a great success end of author's note i was right deanna george returned to the castle for another dose of dan in the spring of 1995 they reported that their old friends and acquaintances sort of dropped them we've been so successful that our old circle of friends was no longer comfortable around us according to diane since i went from driving a ten thousand dollar miata to a hundred thousand dollars mercedes convertible we have nothing to talk about but the verdiers and dan pena have a lot to talk about and i'm proud as hell to call them two of a growing group of dan's disciples and just as gratifying their son bob has integrated many of our principles to success in his own life as a youngster in his early teens he was exposed to qla during conversations i had with his parents then in 2000 bob worked with me in a remote internship author's note bob is now approximately 35 about to have his first son has worked on wall street since he graduated from university so he's been there over 10 years he's been very successful and he has dedicated himself to investment banking and his specialty is healthcare and of authors note rarely do young people have a chance to step back evaluate and refocus the direction of their lives said bob dan challenged me to do just that and to develop habits and attitudes that foster success he's not hesitant about pushing you outside your comfort zone but he gives you the skills and the tools to think bigger and dream bigger than you might ever do otherwise dan has been a good friend and a major influence on my life we still get together whenever our schedules permit for a drink and dinner bob verdier has been an investment banker with ubs investment bank in manhattan for several years and today specializing in global health care there's no doubt he's on the fast track on success authors note bob has subsequently left ubs investment bank and is now with i believe the bank of montreal healthcare and investment banking department still based in manhattan and of authors no i've always made a practice of hanging around individuals who were more successful than i at the point in my career when i was just getting started i joined country club in los angeles that i could hardly afford so that i could enjoy expensive golf and free advice from men decades older than i was most of them looked like typical old farts in baggy pants but they were retired ceos and other top executives men with fascinating success stories who love giving back like young buck like me the benefits of their experience on the course and especially over the cold beer at the 19th hole i absorbed a lot of these from these guys they knew what new rules meant and had built a success scoffing at conventional wisdom new habits begin with developing the habits of decision making i've already said that i've made more than 75 000 business decisions in my life i didn't say they were 5 000 correct decisions but i acted decisively and based on the available information and gut instinct i had at the time and i certainly didn't depend on pure logic logic doesn't consider the illogical actions or illogical humans but worse logic is the cut and dried mental process that usually reinforces conventional wisdom authors note i have made way in excess of a hundred thousand business decisions now in the year beginning 2016 but have really stopped keeping track end of author's note making important decisions let's talk about important decisions you may have seen the movie sophie's choice the choice that the lead character played by merle street had to make was between saving the life of her son or her daughter now that's a tough decision but the day-to-day business it's good way to put decision making in perspective ask yourself will anybody die as a result of this decision whether you're deciding on whom to hire as a sales manager or how much office space you need or which markets you're going to expand into or the color of your office walls nobody's life is threatened if you make the wrong decision it's just not a life and death thing you may lose some money you may experience some inconvenience your mooch friends may scoff but so what the most so-called important decision you will ever make doesn't cause a ripple in the cosmos of time the earth won't tremble in its orbit if you screw it up and unless you're a brain surgeon or a cardiologist doing a bypass nobody is going to die based on what you decide the next time you find yourself or agonizing over a business decision ask yourself is it sophist choice if the answer is no make the decision authors know subsequent to this i have had surgeons attend the seminar and they have lost patients and they did experience sophie's choice but certainly none of their business decisions were sofas choice end of author's note another new habit is to listen to legitimate warnings who can give you a legitimate warning somebody who's been there if you're trying to find capital to finance your business listen to somebody who's already bought uh capital if you're about to take on a partner listen to his or her past partners listen to experience not extra comment and don't listen to some seminar bum who's never run a legitimate business in his life or if he has it has pushed cart to nowhere your new personal foundation must include new rules about risk we've talked about risk earlier conventional wisdom says be careful but risk is absolutely necessary in order to become super successful think of it this way you're not taking a chance you're making a chance your risk may even be a bit crazy most big risks in the world were once called crazy sailing off to find india trying to make a heavier than air machine actually fly putting a man on the moon so he's crazy just know the difference between taking the crazy risk and a stupid one and go for it with confidence as i've said for years i may be wrong but i'm never in doubt getting back to those tax shelters that walter levine was selling g j we set a goal a 5.5 million package we only raised 1.4 million during the deal closing the deal new year's eve 1982 tax shelters in those days were a dime a dozen so we had to make each one of ours to be perceived in the bigger and better than the last our second drilling fund was 3.4 million and our third in december 1983 raised 5.4 million our office in palos verdes california eventually continually expanding so that by early 1984 we thousand square feet of space with only six employees these plus spacious offices gave investors the perception a large prosperous firm our research told us that the denver jules berg dj basin in northeast colorado held rich promise as an oil field using funds from our third tax shelter we agreed to drill 24 wells in the dj basin then we decided to take the deal public in march 1984 we purchased 60 thousand dollar six month option to buy a two million dollar dj basin property with great prospects as an oil field then with great western's fourth fund venture we raised another million dollars other people's money was about to make us all rich with two partners whom i discussed later i had purchased a small company in the united kingdom in late 1983 so i had become somewhat familiar with british business and financial practices for several reasons we decided to take great western public not on wall street but in the vulnerable halls of the city the london's financial heart of the empire this proved to be a historic decision because no one had ever taken an option public in the united kingdom so why the uk we had practical reasons of course our offering would have been too small to attract interest in the u.s market even in normal times but these were not normal times you may recall that around 1984 wall street was a flame with junk bonds lbos generating fees in the tens of millions of dollars fees for bankers stock brokers accountants and lawyers and the uk therefore were significantly lower interest in the oil market itself was at a different levels on opposite sides of the atlantic while the u.s oil market had been rung dry and oil was old news investors in the uk had only recently contracted oil fever the first oil had been discovered in the north sea in 1975 and the british were still enthusiastic authors note the founder of the first well in the north sea was robert dyke who was a board member and he went from the nickname of dry hole dyke after drilling some 80 plus dry holes in north sea to father of the north sea end of author's note finally the regulations applying to such a public offering especially by a natural resource company were not as stringent in the uk by avoiding wall street we wouldn't have to put up with a lot of requirements by the securities and exchange commission but one important reason we went to the uk which you won't find in any finance textbooks is the nature of the people who drive the traditional british financial community insecure arrogant chained by tradition and perfect targets for the rough and brazen american oil man in short they were pussycats we decided to go public on my 39th birthday august 10 1984. you can't do that the starchy solicitors in london said that's the day jaguar is going public all the available investment dollars will head for jaguar as a great british institution being sold off by the government they should have told them that was the day great western was going public by the close of business that day great western had 20 million shares outstanding of common stock which closed at approximately two dollars and 50 cents a share beginning with our 60 000 option the market value of great western shares was 100 000 in hard assets soared to 40 million pounds and 60 of the outstanding shares were mined we sold 25 of the company for 10 million pounds and the shares closed at a 25 premium to initial offering price bottom line the company had 10 million pounds in the bank and the cost basis and the stock held by me was 820 next day headline in the london newspapers referring to jaguar red great western resources the one that really roared the paper characterized my impact on the market by concluding the most controversial businessman ever to set foot in london in the 80s was off and running the next month we moved to guthrie castle authors note we've just completed our christmas holidays giving the hardcore seminar here christmas of 2015 so i've been at guthrie castle now a little more than 31 years and it has been our major home ever since end of author's note was all this risky stuff you bet it was could we have fallen on our butts probably the secret is aside from some astute salesmanship possible oil and gas returns in god forsaken colorado we focused on the ends not the means we thought big and moved fast and we were confident that we could outsmart our dullest day any stiff upper lip bowler had a brit in the city and so we did we act as if we had no limits to our abilities which is one of my five credos and for super success we'll discuss it in a later chapter another credo relates to enthusiasm we sold our deal with enthusiasm evangelists throwing fresh meat into the british feeding frenzy for oral exploration it's no different nowadays every year there is a new frenzy as i write it is in internet companies and the commanding insane multiples of real worth authors no relating back to the oil frenzy oral is now again in the mid-30s and having thought that i would never experience the precipitous drop in oil prices again oil has gone from 18 months ago approximately 110 dollars a barrel to now approximately 35 dollars a barrel and similar opportunities i'm sure will avail themselves as they did for me in the early 80s but as my father would say if you live long enough you say everything twice and he was right end of author's note wow how does this apply to me you ask listen i don't expect you to fly to london tomorrow and duplicate our achievement in the city what about your own company your own dream what about those poker face bankers down the street with imaginations of mud hens what about investors looking for a great stock in a company that would look like yours if you gave it a fresh coat of paint and went public in order to remove other people's money from other people's pockets to build your dream you have to build a gold leaf perception of value around your company we'll talk more about that and later under exit strategies keep your eye on the vision and you won't see the obstacles let's talk about michael gerber calls entrepreneurial personality in his book the e-myth gerber explains that the business owner is really sort of a schizophrenic one mind with three personalities and continuous conflict the entrepreneur the manager and the technician while the manager writes business plans and maintains order the technician tinkers for the day-to-day work and drives employees nuts the entrepreneurial personality leaps beyond the present to dream the dreams and focus on the vision of where the company is headed the entrepreneur is impatient with the present he's through with it it's been handled the entrepreneur clearly sees opportunities that are beyond the side of his more myopic counterparts and he understands that he must control both people and events in order to seize opportunities gerber says that entrepreneur who is absorbed in his vision is also impatient with those around him his associates his friends his family even with his other two personalities because they cannot see the vision and become excited by it the persistent foot dragging is keeping him the eager entrepreneur from moving more quickly towards capturing the vision and making it his own as an individual pursuing super success you have to keep your sights above the rush and worries of today and free of the nitpicking details which will be required to realize your vision in other words building your personal foundation includes the newfound ability to focus on the ends and not the means when you keep your attention focused on the exciting successful future that awaits you a strange phenomenon occurs you begin to transport yourself into the future as you keep your eye on the goal the question ceases to be if you can get there it quickly becomes a logical one of how and when you assume success you visualize success as if it were already a reality this truth isn't confined to noble dreams either a few years ago usa today did a management survey about daydreaming it was based on anonymous responses of course but that's a good reason to have faith in the results the question ranged from have you ever daydreamed about getting your boss's job and have you ever fantasized that you're going to quit your job one day and how often have you day dreamed about having sex with a co-worker it was a funny survey to read but it produced a noteworthy fact 71 percent of those interviewed had their daydream come true within 12 months now think about it if a random sample of managers can achieve that kind of success rate with idle daydreams what are the chances of success when you focus on your vision until it becomes an obsession we're not necessarily talking about visualizing years into the future either a salesman who has already visualized a successful sale because he walks into a customer's office is already concentrating on the sale that will be made not if objections will become temporary berries to leap around every no he gets becomes a yes and the prospects just hasn't spoken yet we can even visualize success occurring in the next minute you've seen it happen in sports the incredible putt on the 18th green the home run and the ninth it's 20 seconds to the final whistle of the super bowl a quarterback dodges on rushing tons of defensive linemen spots the receiver downfield and then threads of football through the waving arms and crashing bodies to hit the receiver for the winning touchdown how aside from years of practice for success he has already visualized and completed the past it was a done deal before the ball left his fingertips hell maybe it's only a mental trick who cares i'm telling you it works over and over and has for centuries because the high performance individual is impatient to get to the future he's not afraid to take action he'd rather do it right away instead of doing it absolutely right don't wait until every little detail is nailed down until every variable is perfect eisenhower launched d-day knowing full well the weather was lousy and the seas were rough and expecting at least 50 percent chance of failure but he played the best cars he had he actually wrote an apology note and tucked it into his pocket to read to the world should the allies get pushed off the beaches of normandy into the sea during world war ii arguably the best field general in the last century george patton kept his sights on berlin and blew tank shells to anything that got in his way he was impatient with meticulous planning and plotting of other generals he said a good plan executed right now is better than a perfect plan executed next week authors no it's one of my favorite sayings and i tell my mentees for more than 22 years now that almost everyone over plans and perfection equals paralysis end of author's note back to the story so there we are sitting on millions meanwhile our drillers adjourned to the fabulous dj basin where our illustrious engineers and geologists had told us that without a doubt there should be millions of barrels of oil under the wasteland perhaps they drilled a hole it was dry but it wasn't what it should have been they drilled a dozen more nothing to speak of eventually our high-priced experts reported that virtually the only gas and oil in the area was that they had brought with them in their trucks or in the hair of the british advisors actually we might continue to strike oil but not in the quantities needed to take the company public we had the money to drill another 120 wells but i thought for what it was at this point i called for a halt of the drilling operations i had long thought the internal growth through operating profits would not give the company the exponential quantum success of external expansion even with moderate success we would watch revenues ease up gradually or we could acquire growth and watch our growth curve shoot straight up we needed to bump up revenue my vision for great western told me to go for the latter that's because the name of the game in business is revenue lots of revenue you can control expenses cut costs all you want and you'll realize nickel and dime improvements and profitability in recent years companies as large as ibm general motors starbucks and large financial institutions have been busy downsizing or right sizing to cut salary costs they've instituted stringent cost controls just in time inventory controls and to tqm all to become more efficient and profitable but these are desperate 11th hour measures put in place because companies can't generate revenue sometimes seemingly very smart executives can get overly excited about tiny profit gains i know i once heard a ceo of a box company in california bragg actually bragged to a seminar audience about a 1.8 percent profit margin his firm had attained for years suddenly skyrocketing to two percent i was next on the agenda i stood up and said something to the effect that if this was what the best prophet he could muster he needed to take his gold watch and retire as it later turned out he got the short end of the stick when his company merged with another firm i wonder why so seeking high revenue that our operations couldn't create and not being content to run great western defensively i took up an aggressive offense it was a hell of a mind mid-course correction we began looking for companies we could acquire so that we could grow laterally in oil business this search had to begin quickly so that the poor financial performance of our non-oil producing drilling operations wouldn't clutter our financial statements a high performer is passionate talking about quick decisive action is a good place to bring up an element not often discussed in business admin class passion high performance super successful people are passionate about their business obsessed with the rising revenues and rapid growth like myself these executives don't play not to lose they play to win there's a big difference even successful business people who make it big often begin to play not to lose they lose their nerve because they're not sure if their first win was an accident or a luck of timing they're afraid they can't repeat the success so they fold into the defensive mode to hang on to what they've made that's not passion that's just shutting your eyes ducking your head and hoping to survive but the truth is they're already dead i call it sitting on your assets in the late 70s steve jobs co-founded apple inc the company had brought affordable personal computing to the public years before the ibm pc after losing a power struggle with his board in 1985 jobs was removed as ceo from the company he founded but he would not be defeated and his passion would not be crushed two years later he founded pixar animation studios and remained ceo of the company until the acquisition by walt disney in 2006 meanwhile jobs had returned to become ceo of apple in 1997 a position he still held in 2008 in 2007 jobs was named fortunes magazine the most powerful businessman author's note steve jobs went to his maker i believe in 2012 and was successful and is still considered one of the great entrepreneurs and business minds the last hundred years end of author's note the wealth spring of passion varies with the individual some successful people such as jobs are passionate about computer technology others revel in manipulating the stock market or developing joint ventures or setting the standard for high performance achievement in a given industry i take particular delight in growing a company by quantum leaps then selling it at a very zenith of its performance for tons of money i don't care that what kind of company it is as long as i believe from all available evidence that it has the potential to skyrocket in value at any given time i may own equity in a textile company an auditing firm a real estate organization it doesn't matter as long as it's legal a few years ago i had a colombian businessman come to the castle and offer me millions to make their cartel operate more efficiently i was flattered but i politely declined the source of your individual passion stems from your own personality but whether you love dealing in the manufacture of hard goods or buying or selling real estate or the prospect of striking oil in a remote windswept field you'd better be driven by the relentless fire of hot passion passion comes with the caveat of course paula nelson agrees in her book guide to getting rich the passion equals profit but warns excited entrepreneurs not to invest in personal fancy simply because they happen to love it if you're enthralled with the idea of property in northern california she says buy a lot and build a cabin if you want but don't expect to turn acres of frozen wilderness into profitable venture when you're passionate about business it becomes your mistress you think about it day in and day out you think about it even when you're at home when you're traveling when you're lying in bed at night hell even while you're making love you have to give up other pursuits hobbies and pleasures because your business beckons like a seductress you have to leave your family to entertain themselves drop fans who don't understand your passion forget to eat forget to go home if you drink you keep a bottle at the office if your mind wanders and you dare to think about time off business comes back to remind you for a moment of infidelity passion is required because being a super success is a full-time job there's never been a part-time high performer some of those seminar gurus and infomercial morons will say you can do this or do that part-time to be success work whenever you feel like it grow wealthy that's sure you can make a few extra thousand by pounding old ladies to sell you their mortgage or setting up a 900 number or some other trendy scam but i'm talking about millions and the wealth in the millions it requires a full-time laser beam focused commitment authors note now the infomercials etc have been surpassed by podcasts cds dvds etc telling you how you can have at home business part-time it's my opinion is even more reinforced i've never seen a part-time high performer end of author's note remember what i said super success isn't for everyone but it's for the very few who are willing to build the foundation make those sacrifices and create major sea changes in the currents of their thinking the strength of self-confidence and self-regard the quickest way to begin your quest of a super success is to take action make a decision you've been putting off don't let a ride ride another day like the tv ad says just do it it could be something as elementary as replacing a dead weight a loser in your organization with a bright ambitious firebrand who can't wait to help you accelerate your quest and then take your job authors know since those days when i first wrote this i've now replaced it with just do it and i've more or less become infamous for saying just do it and there's bracelets and it's on my website in many places just do it end of author's note what happens is as soon as you take that action and see how easy it really was you'll have a higher level of confidence to take another action some inevitable decision you've been delaying and another and now you've got your aspirations in gear now you've got the taste of what you can become because success feeds on success it feeds on itself and is insatiable it transcends any lust you have ever had for anything before you know it you'll love the decisive and powerful individual you become when you look at yourself in the mirror you'll really admire what you see i've got to tell you after years of this nobody loves me more than i love myself if that sounds like an ego run amok i don't give a damn the fact is that out beyond the front lines of the big business battlefield in no man's land where the big dogs run and the assassins cut your heart out for a buck you can count on one trusty warrior to lead your change watch your back whack your enemies dead and that's yourself so what have you learned to ignore conventional wisdom because it is almost always wrong and serves only as a crutch to support the weak to build your personal foundation for super success to adopt new rules which means new habits new companions not to treat decisions as life and death situations to focus on the vision not the details to be passionate about your business and to take actions that will raise your own self confidence and self regard immediately what we're doing here is creating a whole new mental arena in which you can not only visualize your success but also predict it after all the best way to predict the future is to create it yourself chapter four getting comfortable with high performance success can be as frightening as failure begin preparing now for the new style and tempo of life that will come with success practice makes comfort forget perfect in an imperfect business world even your sweetest hottest deal is not likely to be perfect frankly i'm always suspicious of a deal that is too perfect but before you can achieve super success before you can run with the big dogs and track down the big deals you have to be comfortable in the environment in which super success occurs and that takes practice so let's talk about getting comfortable with the idea the people the setting and the actions associated with high performance and super success when i was starting out i knew i was going to be successful i knew it because i told myself back constantly my success really big success was not some vague wish some idle fantasy it was my goal set in concrete my inevitable destination if you know you're going to a destination it only makes a sense to prepare yourself for your arrival let's use a parallel example to illustrate the plan if you were going to open a business in say thailand you would begin to prepare yourself well in advance you learn how the culture and the climate you study business conditions and the nature of the economy you probably take language lessons and practice speaking some basic tie you find some thai people and talk to them you no doubt visit thailand getting every insight you could into how thais think and what they value and how they do business in other words you'd be practicing your new life so that once you arrive you'd be as comfortable as you'd always been there super success is the very way a different place with a different life that will be totally new to you your business will make different demands on your time and skills you'll be moving in different circles of friends and associates with different interests than those of the present company you keep so you need to begin getting comfortable with all these differences now expand your comfort zone i mentioned jim newman in an earlier chapter jim founder of pace was a brilliant man a behavioral scientist whose message and motivation have had a profound impact on my life in fact for 20 years before his death in 1997 jim was my mentor to me a topic i'll discuss later gym originated the concept of comfort zone a term which is now part of our language an individual comfort zone is the area in which he or she performs most capably because the person is comfortable in that area or at that level or that intensity of activity or pressure one's comfort zone is not fixed forever like a locked thermostat you can expand your comfort zone by pushing its limits by having experiences beyond its perimeter the problem with many people mostly the doofus's who tell you that you can't do this or that is that they stay encased in a limited time zone they've created just to continue to breathe most americans for example live in the same state work at the same job have the same friends and take the same vacations all their lives their comfort zone is like a coffin in which they live until they die since i knew my destination was to become a stratospheric success i began preparing early as i mentioned earlier i joined a club i couldn't afford in order to hang out with retired ceos who talked about the deals and intrigues of those careers i bought a rolls royce and a mercedes to see how it felt traveling in style like a super successful person i drove around expensive neighborhoods looking at the homes mansions really that i knew one day i could afford because i realized that perception was reality i bought the finest suits from the best tailors so that every first impression i made when i walked into an office was one of high performance individuals who was comfortable with success in other words i practiced being successful with as much determination as a world-class athlete practices skills it's true like a moth to the flame money gravitates to those who know how to handle it with class beginning in a high performance super success is a learned behavior when i was around high performers such as costa gracios i observed how they acted and reacted to the pressures and problems of business i watched him stay cool under fire or go into a rage if more dramatic action was appropriate just as importantly i listened very carefully to what they told me about the practices and politics of super success because i knew they had been there and when my time came i was determined to be just as comfortable as they were in performing under incredible attention and making hard far-reaching decisions in committing millions and ultimately hundreds of millions of dollars with a signature or in handling high wire negotiations without a net without a blink i saw how they earned their penthouse towers stretch limos and exclusive clubs and i wanted to be comfortable with this side of super success as well what are the alternatives to expanding your comfort zone boredom anxiety even fear and the certain death of any growth potential for your company and most assuredly you have you ever seen fear in the eyes of an opponent or enemy it could have been in the boxing ring or in the football field or even on the battlefield you're face to face and you see his eyes flinch and dart around in terror and you say to yourself i've got this son of a he's dead meat in the boardroom those eyes those sweating palms that second of hesitation tell an adversary to go for the kill the doofus is setting with us but he's not one of us rip his lungs out authors know i say uh with a little chuckle in my voice that this is probably one of the best things that i ever learned from costa grazos and some of my other senior colleagues about when you see a hesitation you go for the kill end of author's note even the trappings of super success can be intimidating have you ever seen some walk into a fine hotel or a gracious well-appointed home and gawk around him golly nice place you got here you might say this guy is an embarrassment because he's clearly out of his comfort zone here's my favorite comfort zone illustration if i were to lay ten foot long two by twelve plank on the floor and put a pile of thousand dollar bills at the other end and told you if you walked across the plank you could have the stack of money you'd scamper across in a second wouldn't you what if i took the plank up to the third floor and stuck it out the window and over an adjoining building would you still cross over and pick up your money maybe you might crawl over very carefully on your hands and knees what if i took the plank to the 27th floor and stretched it across the narrow alley to a nearby building hey that's a long way down you might say you think i'm crazy no you're just out of your comfort zone but suppose your darling child was over in the other building and i dosed her with a gasoline and struck a match and told you to come out over that plank 27 stories out you'd probably be right over with little hesitation because of instinctive parental love the super success will operate in a different atmosphere than most they're way up there 100 stories high in rare thin air and they are quite comfortable that's what you have to be able to do conduct business on the high plank without a blink of fear and one way to do this is constantly to expose yourself to situations that by definition make you uncomfortable you have to expand your comfort zone another and easier way to begin getting comfortable with high performance is through visualization clarify your vision one of the best clarifiers is the written word if you talk about an idea or a plan to a dozen people in the same room you create a dozen impressions of your plan but if you write it down one plan exists for a dozen readers similarly in order to clarify your vision in your own mind write it on a piece of paper the act of committing it to paper takes the ambiguity out of your idea you see it before you perhaps for the first time then tuck that piece of paper in your wallet and carry it with you day after day it becomes as much a part of you as your driver's license or your health insurance card or your credit cards john gale wrote if you don't think about the future you won't have one that's another way of saying that if you aim at nothing you'll hit everything every time but beyond thinking about it you just must visualize the details of your future not just the generalizations besides you don't have to know how you're going to get there but you need to know where you're going on may 25th 1961 president kennedy issued an incredible challenge based on his own vision he said i believe that this nation should commit itself to achieving the goal before this decade is out of landing a man on the moon and returning him safely to earth at that time nasa was a fledgling agency with an unimpressive launch success rate the previous month yuri grigorin had become the first space traveler to circle the earth in orbit kennedy had no idea how the u.s planned to land on the moon but his vision illuminated the way so that eight years later that vision was fulfilled this by the way is also the best example i can cite for quantum leap thinking and in macro management but we'll discuss these concepts in later chapters focus so clearly that the day your vision becomes reality you experience deja vu the distinct feeling you already had been there on april 13th 1997 a good natured 21 year old kid and a red polo shirt stunned the world by winning the masters tournament at augusta georgia with a record-breaking 18 under par everyone was surprised but not tiger woods he'd been visualizing the moment all his life earl woods his father said he's been talking about winning the master since he was five years old in his first on-camera interview tiger said he didn't have an acceptance speech prepared because he'd only visualize as far as the 18th hole of the final round years before great western moved into its suite of offices high above the houston skyline i visualized precisely how those offices would look i step into the elevator that speeds me directly to the 17th floor of a downtown glass and steel business tower i step out onto the italian marble tile floor i turn and directly ahead of me is a great golden logo that reads gw underneath it sits a beautiful blonde receptionist i turn left and walk down the long corridor at least 150 feet past the offices of associates until i reach the corner of the building there with the full glass walls on two sides is my office complete with a large mahogany desk richly paneled walls spacious conference room library bar and executive lavatory when the day came in 1987 and we opened our 44 000 square foot corporate headquarters in downtown houston i pushed an elevator button and the above sequence unfurled before me just as it had in my mind for all those years as my shoes clicked across the cool carrera marble toward the young blonde receptionist i felt not so much a feeling of achievement as the one of closure of touching the vision which had already been so real for so long i knew it because i had visualized it down to the smallest detail it was the fulfillment of a dream it was coming to home armando garcia was a successful entrepreneur and recognized specialist in executive sales management long before we met in august 1990 the company he founded our chrome electronics was cited by hispanic magazine as the fastest-growing hispanic-owned company in the country but in the years that follow armada realized that his company could be doing better in 2000 he attended the castle seminar during that experience i started armando by telling him what he needed most to hear we were all sitting there remembers armando when dan suddenly asked me quite loudly if you live in silicon valley why aren't you a billionaire it was at that moment i realized that my set belief system would only allow me to go so far before slipping into idle mode i suddenly realized i had to expand the system armando came away from the castle with an insight he needed to see his dreams ahead author's note in recent years i have stretched to the attendees of the castle experience that it's very easy to go back to default and it's i give them lessons and tips and exercises to keep them from going back to default when they go back to their old comfort zone end of author's note another key lesson i brought home from the castle was the need for laser focus armando said later i immediately applied this lesson to sharpening our product mix and increased our sales by more than 30 percent after we closed rcom during the dot-com bus armando purchased a struggling software company called bottle soft he subsequently lost about a million dollars and lots of sleep but has since integrated another penny-ism into the business thinking investigate before you invest more recently armando has been practicing growth through acquisition with greater wisdom prudence and determination and has purchased two companies to fuel the growth of his computer networking business die car networks five credo's of success since the late 70s i've carried on my person when i call my five credos it's the truth every month i copy them down on my day timer they are an excellent framework for expanding and maintaining your comfort zone in a heady realm of super success number one yesterday's dreams are today's realities this is another way of saying today's dreams are tomorrow's realities dreams come first lighting and encouraging your imagination and gradually crystallizing to reality without dreams you never progress you never make any leaps let alone a quantum leaps instead you trudge through life taking whatever chance has come along like the song says in the musical south pacific if you don't have a dream how you gonna make a dream come true number two seeing your dreams ahead of time now this is a call to action don't just talk about dreaming dream virtually everything i've accomplished of my of any consequence i visualized and dreamed uh before it happened so dream like me about a super successful business career filled with sweetheart deals pride from the clutches of morons and their toady lawyers dream about a larger home in an exclusive gated community dream about a vacation to haiti take another look at the study a few years back in the usa today they asked 1500 readers what they dreamed daydreamed about when they were at work 77 percent said they dreamed about having sex with a co-worker 23 lied and said they didn't 73 daydream about becoming ceo of their company and 69 fantasized about the they'd say to their boss the day they quit the survey also found over a 12-month period daydreams came true for the group a surprising 71 of the time why because the daydreamer had visualized it over and over and had willed that day dream come true so take time to dream now so your daydreams have a chance of becoming fruition three simulation practice within when you're without this goes back to practicing being super successful learn to think and act like a high performance person you'll become so you'll be ready to act when the doorway of opportunity opens this is nothing new these techniques have been used successfully around the world by individuals who become top executives champion athletes and even successful politicians it's also been said that bill clinton practiced being president from the moment he met jfk at the white house as a high school student remember i didn't say practice makes perfect who knows how long hillary practice if your goal is to become chairman of the board start by chairing the committee uh or activity whether it is in your civic club or church volunteer to assume the responsibilities of position practice being the chairperson until you're finally appointed or elected you discover quickly that when you want to work or want to take responsibilities in an organization everyone moves gingerly out of the way so you can do it you want the job be my guest life itself is like that most people don't seek more responsibility more work more success they're humming along nicely at their own comfort level thank you but they'll be glad to get out of the way if you want to hustle in the early 70s i volunteered to be in the board of directors of my california state university northridge alumni association i ultimately became chairman of a key committee the experience of stepping up to the plate and practicing leadership and success was invaluable later in my career four act as if there are no limits to your abilities once you draw the line and say even to yourself that's all i can do after all i'm only human you have set artificial arbitrary limits on yourself why sell yourself short so many times i've pursued a course of action long after my associates have given up and every time i've achieved more than i would have if i had just dropped when it seemed prudent to stop even now as i write this book i am planning a mega project which had been written off by everybody years ago in fact i plan to write another book devoted to can't do projects and call it you can't do that author's note i decided not to write that book and end of author's note this credo reminds me of an interview i was giving to the financial times in london arguably the best financial newspaper in the world i was asked uh how great western had been able to buck the energy depression to become the late uh fastest growing energy company united states i fired back without hesitation we at great western created positive occurrences in our minds and act as if we had no limits to our abilities the reporter shrugged his shoulders and in the subsequent article reported me as saying great western has no limits our stock price jumped 15 the next days you see when you act as if you have no limits to your abilities it becomes a self-fulfilling prophecy and remember and like a moth to the flame money gravitates to those who now know how to handle this class author's note as i read this book again for my devotees and mentees oil has broken thirty dollars a barrel and sits in the 26 27 dollar range and the financial markets are in collapse i never thought i'd live to see the same type of collapse in oil prices i lived through in the 80s and the author's note five enthusiasm comes from the greek word ethos which means god within regardless of your beliefs you have the ability to draw special power from deep within when you harness enthusiasm enthusiasm generates the passion energy and determination to succeed that are absolutely necessary to achieve high performance you can't borrow enthusiasm your enthusiasm can come from deep inside your business partner or your spouse you must generate your own fire and carry its flame yourself ask yourself the question have you ever known a successful person who wasn't enthusiastic remember a man can succeed at almost anything for which he has unlimited enthusiasm one of my most enthusiastic individuals i know is a canadian name andrew reed andrew is a born adventurer and sportsman in the early 90s associated with the world's largest outdoor adventure company he conducted executives into mountains and up the rivers in canada always ready for the challenge andrew and his colleagues pulled together a dragon boat team in the summer of 2000 and just three weeks later captured gold in the 500 meter european dragon boat championships as andrew sees it every day is a race day with that level of excitement that quest for adventure driving his life andrew became one of the most successful graduates of the castle seminar he writes within a few months of taking the qla i had tripled my access to funding made much bolder choices around growth and helped turn my racing team into one of the fastest in the country today andrews is the biggest fish and ceo of big fish interactive one of canada's fastest growing training and consulting firms aside from being super successful andrew is having the time of his life here is a part of a letter i recently received from him i'm having a blast these days as i'm the high performance coach of several directors at international finance firms here in canada these days i receive special invites to executive events to share my message for the positive competitive change my approach has been training on entrepreneurial thinking at these finance companies the past is over time for the new thinking model or just new behavior the qla program has a strong influence on these new thinking models having fun in this very interesting time and the word is getting out today andrew is the biggest fish the ceo of big fish interactive one of canada's fastest growing train consulting companies authors note a few years ago i and my wife sally flew to attend his wedding on an island off the west coast of canada and the and subsequent to that a couple years ago he had his first baby end of author's note mastermind networks a synergy or silliness it is fashionable in executive circles to participate in mastermind groups ceo clubs or other rare atmospheric groups which meet and engage in mutual pontification and backslapping many executives i know have become involved in these networks with varying degrees of success but no super successful individual i can think of has become involved that may be because the really top performers the murdoch branson trump gates are a species of lone hunters they prowl and strike on their own council not the consensus of peers besides consensus decisions are almost always mirrored in conventional wisdom which you know is is what almost always wrong too often what begins as a mastermind network and evolves into a social group the spouses and kids get acquainted and what happens as a productive enterprise deteriorates into the cookouts and golf games if that's what you want to find but it is not a mastermind network with that caveat in mind the rising top executives entrepreneurs or ceo can benefit from a mastermind group to the extent the other members have much to offer as they are willing to take from this relationship in fact if your mastermind group will work if your members bring to the group different areas of expertise if your group consists of five number crunching financial types or six executives from one industry you've limited your base of expertise and potential from a wider perspective on problems you may be seeking answers to diversify your group bring in a retail executive for instance an electronic executive a manufacturing person a joint venture executives with legal accounting and human resource experience the wider your pool of expertise the deeper the wealth from which you draw valuable knowledge your members share a similar level of experience one superstar can outshine a room full of rising stars if one of your members is so successful that he or she intimidates or nominates your discussions your get-togethers become counterproductive participants are naturally going to be more comfortable and forthcoming around others they regard as peers so are either all superstars or none your members work in the same general geographic area you need to make getting together as convenient as possible as you'll find members of the group hesitating to attend even in this age cellular communication many top executives consider travel time as lost time next your members demonstrate a similar commitment if one of your group frequently seems to be too busy that's probably a code for i just haven't got the time you want me to invest in this thing don't saddle yourself and the committed members with having to carry on an individual who is essentially dead weight in the group replace that individual next don't select or gravitate towards one individual becoming chairperson of your group and the ideal network everyone is equal with a responsibility for coordinating meetings and rotating as necessary your members must exhibit more traits of success than your own peers and contemporaries seek out the acknowledged achievers the up and comers in your industry fire brands who are hungry for success and who have ideas and energy to contribute to the network if ideally you can bring together a select group of individuals who are including their own foundations of super success every meeting can be an electrifying synergistic experience and exit the group if your growth process falters no relationship endures forever especially among a group of dynamic peoples such as you hope to attract interest wane agendas change when the nature of the group or the character of the meetings no longer seems to be in your best interest or worth your time and effort get out probably no explanation will be necessary but if you feel one is necessary all you have to say is i'm not going anymore mentors a quantum leap in wisdom the value of a mentor is perhaps the most universally acknowledged truth in the business world a mentor of course is an individual who's been there who's traveled the road you're embarking on and sees the potholes and detours from the other side a chilean poet wrote he who has not been down the road does well to heed the traveler good advice yet very few aspiring entrepreneurs executives ever solicit a mentor relationship i've discussed this topic with countless senior executives retired ceos and others who have experienced represents a storehouse of acquired knowledge and wisdom virtually none of them have ever been contacted about the possibility of becoming a mentor too often perhaps executives feel they would be imposing on the potential mentor but the fact is that most successful seniors are only too glad to pass along their experience to younger people seeking the road of success all it takes is a phone call an introduction and maybe an invitation to lunch which you pay for in a case it needs to be said after all men and women of this stature are forever picking up the bill and you want to experience with you and completely painless i've had three mentors during my career each one came along at the most opportune time for their special expertise to impact my life the benefits i derived from their advice and counsel dramatically affected my life and propelled me toward super success and i'll appreciate them and the contribution to what dan pena became to my dying day i've already mentioned jim newman the founder of pace organization in 1976 i had been a stockbroker for four years i was 30ish making big money and my career was stalled i had skyrocketed in real estate and tasted enormous success by the time i was 25 but now seem to be spinning my wheels lacking the traction to leap forward i heard of jim newman's pace organization his message was endorsed by an impressive list of high-profile executive politicians celebrities and even such personal achievement gurus as dennis waitley author of the psychology of winning so i thought what the hell the pace seminar was another of those pivotal points in my life jim newman showed me how to get my head screwed on straight for super success his concept of the personal comfort zone has been part of my business thinking since the day i walked out of his seminar one extraordinary mental exercise i use in negotiations is to determine the other party's comfort zone i.e what would they accept out of this deal in order to become comfortable with the consummation when i find the perimeters to that zone i picture it as a box inside that box are any number of deal possibilities i could give the other party everything they want to my detriment and placed an offer square in the center of their comfort zone that would be stupid for me to do of course but it would make them very happy some business people so eager to clinch a deal aim for the center of the other guy's comfort zone and give away the damn store i've done it myself back when doing a deal right now was more important than the terms of the deal instead i usually place an offer at the uppermost limit of the other guy's comfort zone at the very edge of what i feel he will accept it works every time he gets what he is comfortable with and i get what i want but even more important than a powerful negotiating skill jim newman taught me how to expand my comfort zone so that i could move ahead rapidly and with solid direction toward my super success i realized with clarity that regardless of my income i had been sitting on dead center for years not crystallizing the dreams i had dreamed for the rest of my life it was shortly after the seminar that i joined bear stearns where i found greater opportunity and expand my horizons and after attending pace alumni seminar in late 78 i left bear stewards to become an oral man and would propel me to super success in the life of the rich and famous i've often returned to jim's methodologies over the years i recommend very few people in the personal and financial development business but here's one he was truly a grand master teacher of motivation and i'm proud today i'm out of jim newman's pace stable of mega successful until his passing jim lived in the semi-retirement hills of north hollywood occasionally holding a seminar or consulting with selected corporate clients i cherish his friendship the next mentor was an oil man named jerry normand it was the late 70s i was in the oil industry and it was in chaos my favorite condition for an industry remember pat kennedy and i had formed our relationship to capitalize on energy crisis by building an integrated oil company the federal government in order to encourage oil exploration for every with a drill bit was granting special dispensation for small refiners producing below 50 000 barrels a day we used the money we made in refining to help build our energy conglomerate the hills were alive with the sound of drilling but wildcatting the business of independent oil exploration production is a risky venture just like the gold rush days of the late 19th century there was precious few glory holes and a shitload of dry holes probably 95 percent of wildcatters went belly up after dropping all their capital and anybody else's they could lay their hands on on down dry holes in the middle of nowhere the big oil companies were making tons of money of course they jacked up the price of oil with the usual excuse of supply and demand and generated the funds to drill more holes than termites if the big companies were the battleship of the oil industry the legions of wildcatters were the pt boats buzzing in and out trying to turn a quick profit on the scraps and droppings that the an exxon mobil couldn't give a damn about as a novice oil man with visions of becoming an oil tycoon i was introduced to jerry ormond founder and chairman ceo of orman industries dallas jerry could have been a prototype for jack ewing his daddy was an oil driller and he roughnecked in the oil fields from the time he was a teenager by the time i met him jerry had operated rigs in kuwait and saudi arabia and out of an office in london negotiated all contracts across africa with from egypt to libya to congo even more important his company prospered during a period of plummeting oil prices although he was a world-class player in the global oil industry jerry took your time to guide me through the intricacies of the oil industry he taught me how to pilot my own little pt boat among the big boys picking and slicing my pieces of action in the chaotic arena hell he turned a wall street stock peddler into a savvy oilman sadly jerry owen passed from this earth in early 2004 until his passing he enjoyed retirement in houston he still did some consulting and remained a good friend in fact he was a second father to me out on the golf course i bounced my latest schemes and ideas off jerry even after 60 years in business combat jerry still had that fire in his belly i've already told you about constantine costa grazos greek shipping icon executive heir to the onassis empire and leading actor in the world stage of larger than life personalities and yet he put his arm around me and brought me on to that incredible stage to learn a part for myself by the time our paths crossed costa had made his fortune and his name had helped the late aristotle nasa navigate the enormous empire through a hundred crisis with all the political skills of bismarck merton niche and machiavelli combined after having succeeded and thrive in a world of assassins he defined his friends by willingness to offer him three things friendship and trouble courage and battle wisdom and rage crosstalk died in 1981 but to this day i often think of him and the genuine kindness he showed me his presence seems to stand beside me at every negotiating table and at the point of every hard decision often i ask myself what would costa say the answer to my uh question is uh is the answer to my problem i told you what aristotle and i did in this situation i can hear him growl now just do it authors know i've elaborated a little on the uh just do it uh with my uh current saying of the last few years just do it but it was a derivative of something that i learned for uh costa and he implemented with great aristotle analysis end of author's note i recommend several requisites for selecting a mentor choose an individual significantly more successful than you are a person who has been there done that and can shed the wisdom of vastly more experience on your present problems and situation seek a senior person who you genuinely like and respect those are two different requirements we all know people we respect for their success but don't like as individuals a close camaraderie can only develop through personal evicability your mentor should have achieved success in the same field or endeavor as your own although this is not mandatory often the lessons you learn from your mentor deal with human relationships decision making and financial strategies which transcend specific industry problems you and your mentor should share common interests beyond the business emilio some of the best advice i ever got was on the golf course mutual interests and pleasures provide a relaxed environment for you and your mentor to unwind and explore ideas minds often work most productively together when you allow them free run of a tennis game or out of the office activity andrew reed summed up the advantage of having a strong mentor he concluded you can't be the best you're not learning from the best putting that thought in the terms of his own life andrew said during the qla course i knew i had met the legitimate mentor who had been there and done that with dan's techniques i found the tools to make my reality uh as a big as my dreams the best way to become a bigger fish is to be trained by one and sometimes that resource is found in a castle in summation then get comfortable with super success before you achieve it by practicing to expand your comfort zone clarify your vision without focusing on how you'll bring the vision to reality instead focus on the details of how the reality will look and feel and step towards clarification uh write down your vision and carry it with you so that it becomes part of your being consider participating in the mastermind network if you feel it meets acceptable criteria and you can benefit then ultimately don't hesitate to exit the group if your own growth process stops finally seek out a mentor some of the greatest minds in the business world are available and would be delighted to become mentors if you pick up the phone authors note my feelings of about mastermind groups have even got more strong you don't see hardly any high-performance people that participate in them eagles fly alone uh anders of authors note now that we've talked about how you can condition your own mind and prepare it for super success let's turn to how you prepare others to see the same successful person you do when you look in the mirror your first hundred million second edition chapter five building perception to become reality super success begins with your masterful illusion that it already exists never underestimate the power of illusion not only does it help create what you'd like for the people to believe it helps you create what they must believe for you to achieve your goals we live in a brutal world made more tolerable by the illusion of reality for centuries as an example the true nature of war was masked in the gran grand illusion of colorful parades splendid uniforms and flying flags the warnings of those who returned from war who quietly described its horror were lost in the trumpet strains of marching tunes only late in the century when tv news brought the carnage of battle home around dinner time did the general public finally realize that all the glory and grandeur was illusion author's note this reality this stark reality that's been brought even more to the public in recent years with the recent war in the middle east and almost countless of tragedies end of author's note illusion is one of the skills of leadership in the epic movie patton the fiery general played by the late george c scott becomes frustrated at being unable to break through german lines to relieve the siege of bastogne suddenly he roars in anger at his staff we're going to attack all night we're going to attack tomorrow morning if we're not victorious let no man come back alive no one moves no one speaks as patent strides past them through the stunned silence then his aide approaches him and says gently general sometimes they can't tell when you're acting and when you're not patton replies it isn't important for them to know it's important for me to know perception is reality in any business when i was a young hot shot real estate salesman in southern california i sold lots of lake havasu an artificial lake on the colorado river between california arizona lake havasu later became the unlikely home of london bridge it was surrounded by miles of desolate desert and wasn't the fashionable resort region it is now i'd take prospective buyers out there and we'd stand gazing across the lake aside from the expanse of water it wasn't a very inviting place so i didn't sell the place i sold them their own perception of their dream i'd say something like look out there you can see the sails of your boat as the breeze nudges you across the lake look over there you can almost see the fishing dock and that luxurious clubhouse where you meet your friends for dinner i sold a shitload of desert in those days illusion is the camouflage behind which we pursue our dreams and goals for super success it is the stage we set the costume we dawn the face we present to achieve our objectives within the bounds of law and ethics illusion is your weapon to build the most advantageous perception you can in the minds of the stockholders stockbrokers attorneys competitors and the public at large all for the accelerating advancement of your company but then you ask are you suggesting i create illusions about my company you're damn right you've got to do what it takes if you run a business your job as head of your company goes well beyond making sure it produces a top quality product or service and sells it at a fair price you've got to spend days and nights continuously pumping credibility into the facade that your company represents to the business community to make it appear on a business skyline not simply as large as it is but a hell of a lot bigger and infinitely nicer to do business with the importance of perception was not lost on the chinese government during the 2008 olympiad in beijing thousands of factories around the city burned cheap dirty and anthracite coal with no thought of incredible pollution it creates diesel trucks and buses and an explosion in private car ownership have helped turn beijing's sky into a perpetual brown haze the foreign community laughingly calls it morning fog or sulphuric sunset sports trainers and sponsors around the world hinted they might pull out of the olympics rather than subject ethics to breathing the brown the government said not to worry meanwhile many of the manicured avenues leading into beijing from the new billion dollar airport pass by the crumbling old villages waste dumps and slums that are part of any asian capital the government said not to worry at the same time millions of chinese people were spitting blowing their nose and taking a piss on the roadsides and against building walls traditional chinese customs all not a problem said the government so in preparation to host the world the chinese government cleaned up their their perception some of the largest factories were literally pulled up and relocated hundreds of miles from beijing so they could harmlessly pollute the countryside other factories across beijing were simply shut down for 10 days by government decree owners of private vehicles with old and even ending license plates were ordered to stay home every other day to carpool or enter the city at risk of heavy fine the skies cleared to make beijing more beautiful the government demolished countless homes and neighborhoods near the major traffic arteries and rail lines construction sites industrial areas waste dumps and apartment towers all over beijing were concealed from the view by enormous temporary billboards promoting the one world one dream theme of the olympics beijing was suddenly neither a city under construction or a city in decline but just about perfect in every way in china if the government tells you not to spit and where to you listen in advance of the olympics the public relations blitz warned beijingers not to spit not to cheat foreign friends or offend them in any way basic ancient phrases were drilled into the taxi drivers bellhops and anyone else likely to come to in contact with foreigners beijing normally about as warm and fuzzy as new york city sparkled clean green and friendly for 10 days and the perception of beijing became the reality that millions took home with them authors note having visited the olympics not the olympics but beijing shortly before the the beijing olympics it was unbelievably clean and pristine just as i described when this was written it is stayed fairly clean but the beige or brown haze but not as bad end of author's note cities with infinite human and capital resources are one thing but what about the perception you are creating personally as an individual and as a representative of the company for starters you only have one opportunity to establish a powerful initial perception of yourself the cliche is correct you don't get a second chance to make a first impression suppose you had a young person call you for an interview appointment 15 minutes after the appointment point of time he shows up in jeans and a bad boy t-shirt his hair should be on his sister's head he's got an earring a menagerie of tattoos and an attitude now this kid could have just graduated from harvard business school but you couldn't care less you've judged him by his appearance and he's out of there you don't give a damn and that is what would have been politically correct for you seriously to consider this bum just to show what an open-minded guy you are as far as i'm concerned political correctness is an idea made up by psychobabblers to make habitual winners and a full-time victims feel better but what the hell do i know i'm just a money-enabled white man authors know having just endorsed publicly endorsed donald trump for president in the last couple of weeks and having been beating my chest on my various podcasts saying that political correctness is a manifestation of the lack of self-esteem this is more set in concrete and has been validated more in recent years than ever before and of authors no the point is the kid created the instant perception of a goofy worthless doofus which was real enough for you to uh believe in when i go to a business meeting and especially an initial meeting with people i've never met i dress for the occasion that means a savile road tailored suit maybe with a waistcoat vest hand tailored dress shirt bow tie antique gold pocket watch and free flowing breast pocket handkerchief the message to those is i don't look like them because i'm not like them and when i walk into the room i want those morons to know at a glance it is a microsecond that their lives and destinies are going to change forever because i walked in author's note having just turned 70 i still wear what is called the uniform and it still works not just for me but for all my countless mentees and devotees all over the world and of authors note but you know what i dressed like that before i was super successful i've used atar to my advantage ever since i returned from europe after working with nato it was there even as a young officer that i first saw how the european well to do dressed and how they created by their actions even facial expressions and immediate perception of calm studied self-assurance and aura of arrogance regardless of how shallow and superficial they might prove to be authors note when i had the privilege of meeting and working with and being mentored by costa grazos the ceo of nasa shipping lines the right-hand man for 60 plus years of aristotle nasus he told me mr pena always remember dress british and think yiddish end of author's note candace knoll remembers i've known canada since 1983 when i was traveling back and forth between london and houston she's a classy lady her company executive lodging was and is an upscale concierge service specializing in accommodating the needs and preferences on top executives she's seen and dealt with plenty of high priced business people when i remember what i remember most about dan was the way he entered a room custom three-piece suit breast pocket handkerchief tucked just right gold cufflinks every detail manicured to perfection how could a banker not be impressed even intimidated by the famous pena presence you bet they were intimidated in the years that followed when i go see a potential lender especially one of those pasty faced loan officers that makes thirty five thousand dollars a year i'd approach his desk like the battleship missouri about to dock the suit the attitude the eat your lunch eye contact the poor son of a would be asking himself why does he need to talk about a loan we should probably be borrowing from him nowadays with a multi-million dollar credit line i send one of my associates over to handle financing transactions that suits the banks just fine they still cringe when they see me walk in authors note as my lovely wife sally would attest to a chartered accountant in our own right in the uk most loan officers or any of the people that we have financial relationships with just assume not me not attend a second meeting end of author's note along these lines a great book i recommend you read is winning through intimidation written by robert ringer it advocates assuming an assertive posture of strength and doing business in order to gain hold the initiative although it was written in the 70s its strategies are still applicable in the 21st century authors note i mean the original winning through intimidation not its derivative copies but the original end of author's note george and d'andra dear my friends who are experiencing a quantum leap in their business travel much of the year arranging and producing upscale craft expositions in major cities dean points out they always wear executive attire to take a commercial flight regardless of the destination of schedule we've avoided the temptation to fly in jeans and sweatshirts for several reasons says the amp first we never know who among our associates or clients we will run into or that the potential business contact will meet on the plane especially while flying first class but we also discovered that the airline people actually treat us better when we're better dressed they're friendlier the service is better and they are more likely to give us a nod if a first class upgrade becomes available but it's more than dress i mentioned attitude and eye contact earlier because they are among the most important non-verbal signals you can send to create a perception of power research has long confirmed that powerful people use eye movements to dominate and control conversation when they speak for example high performers look at others squirrelly in the eye but then look away when they listen an executive who continuously looks another executive in the eye while the person is talking is perceived to be too eager to please and easily manipulated personality development books tell you to smile when you go into a new interpersonal situation make people feel at ease if i'm walking into a corporate office of an executive with whom i'm negotiating or into a cubicle of some doofus loan officer to talk about money i don't want the feeling at ease my intent is to create an instant perception of myself as a super successful individual who doesn't need to impress anybody with flattery i'm not there to be this guy's friend or especially his whipping boy i'm going to intimidate him in his own ballpark so that he has to struggle just to stay on the defensive he has to earn a smile and a pat on the head from dan pena by saying what dan penny wants to hear sounds reasonable doesn't it by the way part of my persona as super successful multi-millionaire is my refusal to carry business cards why not do you think ted turner carries a business card or donald trump the super successful do not distribute business cards instead they say have your secretary call my office they know where to reach me author's note many years ago while in a business relationship with bunker hunt i was at a famous press conference where he commented that he was not trying to corner the silver market and when asked after the press conference for a business card by one of the leading journalists he said i don't carry business cards you know how to get a hold of me end of author's note yes first impressions are important but even more important than the first snapshot of you walking in is the consistency of your impression after all the multi-dimensional image you mold in the mind of the potential investor lender or equity partner is only a compilation of several smaller meetings and contacts each contact adds another facet to who you are another quality of your character personality and business style it's important that as you build this dimensionability you don't create confusing contradictory images every face you show must agree with the overall image you wish to create in the best seller 110 solution mark mccormick made an astute observation about putting first impressions into perspective think about the long-term relationship in your life in or out of workplace the chances are they don't blossom because someone overwhelmed you the first time you met but rather because of the continued influencing you on the second third and fourth occasion consistency of perception is also vital with your own associates employees they need to know action a will generally provoke response a employees perform more effectively when they are not constantly beating their brains out trying to guess what your reaction will be what mood you're in or what executive mass you're wearing today that's not to say you should not cultivate the image of an emotional unflappable boss a little well-placed and justified rage now and then does wonders but save your table-pounding theatrics for special occasions so they'll make a more profound impression mark mccormick recommends some occasional unexpected behavior if your people are expecting you to yell speak softly but forcefully if your counterpart across the negotiating table is expecting a certain tactic change fields and run another pattern while consistency is a virtue certain predictability is boring as hell as far as corporate perceptions some moderately successful corporations maintain an image much like the punk kid i described above at one florida marketing firm the boss comes in the office in a sweatsuit the employees wear jeans or shorts and the atmosphere is more like a factory floor than an executive office all day long the air is filled with chaos sophomoric screaming and cursing to the extent their business neighbors have come over to complain what kind of perception does this create for walk-in clients expecting professional behavior or even suppliers who talk about the company to the competitors the owner a perennial wise guy will never change and his company will never become super successful instead of pulling a company down perception should boost the company up to the plane to which its leadership aspires i related in a second chapter how i tied the great western dinghy to the seaworthy reputation of marion refining it never occurred to the great metal desk government weenies to ask about the size of the worth of great western vis-a-vis marion that i might be just one man working out of his kid's bedroom that simple ploy of associating my company with larger companies in what appeared to be an equal joint venture became the key rung of the ladder of our success they must be legit so the reasoning went look who they're partnering with here's another perception that paid off handsomely for all of us from day one great western resources paid a dividend we had no earnings to speak of but we paid the dividend to shareholders however we could that's because i wanted us to be viewed from the beginning as an income stock that way mutual fund portfolio managers would consider including great western in their more conservative income producing funds when investors looked in the newspaper of great western resources dividends it didn't say dividends paid since 1975 two months ago it just said dividends we had an instant credibility in the market we got bought up by income funds like crazy the stock price went through the roof almost doubling in just four months nobody ever called up not once and asked how long have you been paying dividends perception was reality later after i was gone but still held substantial stock the company decided to stop paying dividends i don't know why as stockholders the new company management were getting dividends too it turned out that they cut their own throats when the dividends ended the stock plunged into the toilet and they lost all a lot of money one of my disciples will call him wilbur was an entrepreneurial pilot he worked out of his house near until his business took off or out of his hotel rooms whatever he happened to be laying over between flights but he was thinking well beyond his career in the cockpit continuously interviewing major accounting firms investment banks and others as he built his dream team and all the while he was creating the clear perception of an established and knowledgeable businessman if you had called wilbur in those days uh he didn't pick up his phone and say hello his calls were routed through an answering service that acted as his corporate switchboard good morning the diversified company the caller once identified would be put to as if wilbur was back in the executive offices even used remote call forwarding so that if he happened to be laying over in some holiday inn the perception was maintained hey he would tell me it cost me about 100 a month and for all they know the diversified company is a large corporation in the executive tower in downtown philadelphia the verdiers work to maintain perception to their craft shows as prestigious events admitting only the most qualified exhibitors and sponsors and a few of our markets our shows have to be staged in fairground arenas that means we have to work even harder to project that upscale image and to put as much distance as possible between our expositions and the other flea markets that come along as our shows have grown in popularity and reputation we've had to be more and more particular about who we accept to sponsor them in each city as part of maintaining our quality perception we limit our sponsors to such respectable entities as newspapers radio stations which appeal to our demographics no wrap no rock banks and soft drink companies george vader points out these perceptions will only endure for so long in order to produce a successful and profitable event he and diane must build the perception of their shows quality and given markets long before the show ever opens once we open image gives way to quality of our performance and we replace our carefully constructed perception with reality and reputations if you can't follow through all the perception in the world is a house of cards early on in the development of great western resources it grew increasingly clear that if any company and i were going anywhere we both had to look as if we were already there i knew that our business partners investors and financial community in general had to see me now as i planned them become in the future or we wouldn't even have a future i needed a quick transfusion of perception one so dramatic that it was virtually inarguable so as i mentioned earlier that's when i decided to buy the castle i could hardly afford it was an expensive project and a huge task emotionally and logistically to relocate from a major u.s city to rural scotland but it worked acquiring a scottish castle quickly becomes grist force conversation and grudging awe even in the jaded corridors and conference rooms of manhattan as soon as wall street realized i didn't need their help i got it it was a case of using reality the purchase to create a perception that drives a greater reality speaking of illusion i decided that in order to accelerate our castle shopping i had to be perceived as a serious potential buyer after all there are those who play let's pretend with high-end properties for sale they read the classifieds of european publications then drive out to view this or that castle or chateau just to gain entry and see what it's like real estate people can smell and imposter instantly and reserve them for special level of disdain so for the purpose of putting separation between myself and the proletariat and to create the perception i could even afford a castle i would hire a chauffeur driven luxury automobile before a reviewing appointment you can't imagine how the appearance of such a spectacle gliding onto your grounds would affect the attitude of a real estate representative i was warmly welcomed and afforded every courtesy of course but more importantly i forced the issue of serious negotiations in this case i used perception to cut to the chase of purchasing my dream castle granted guthrie castle is an extreme example but what about the perception of success you need to cultivate in order to even be more successful when you buy a new luxury car or even an exclusive club as a way to accelerate business success aren't you acting as if your perception you desire is already reality of course you are authors note since the purchase of the castle closing the castle in august 1984 we have had depending on what you would describe as a renovation between five and seven renovations of the castle the old gerald that was originally built initiated the building of in 1468 and virtually everything is state of the art with two gyms and a game room and it is quite a spectacular sight and the authors know sure you could drive a chevy until super successful and then buy roles but not only would you continue to think in a chevy mentality about your success you'd be encouraging others to do the same i notice he drives an old chevy looks like he really needs the money we'd be safer not to approve his loan exceptions to this rule are bill gates who drives a bright blue 99 porsche 911 and warren buffett and steve ballmer ceo of microsoft both whom drive lincoln town cars author's note i'm not sure what bill gates drives but mr buffett still drives lincoln time cars end of author's note another exception rick scott former ceo of a major health care corporation drove a buick with no radio while he was building his empire but his social events were elaborate affairs attended by some of the wealthiest men and women in america author's note rick scott is currently in his second term of sitting governor of the state of florida and also just recently endorsed donald trump rick was my transaction lawyer and in the middle eighties asked me how can i do what you do or make the money you make dan and words of the effect i said rick you have to leave me he said where should i go i said uh healthcare and telco which transformed into the internet and i still tell people 30 plus years later that healthcare and telco stroke internet are the places to go and rick scott was an initial qla devotee end of author's note the lesson here is to position yourself where you believe people will perceive you as being successful the hollywood crowd of course has been doing this for generations this strategy has benefits beyond the doofus lending officer when you're perceived to be a success business people want to be associated with you you become sought out by others with potential deal you spend less time fishing for opportunities because the fish began jumping into your net and even your boat my own perception as a deal maker of course became reality as a result over the years i've been continuously deluge with plans schemes and even a few good ideas presented by individuals and corporations looking for a champion for their venture they know i'm always looking and i'm real serious player authors know i have said for many years decades now that my door being always open and me always turning over rocks and always going to meetings and meeting people at airports etc in my travels is kissing frogs i still kiss frogs even at this stage of my life at 70. i still see people in cities as i travel around because i'm forever looking for the possibility of that great transaction end of author's note using perceptions to create realities is not limited to image building for up-and-coming companies or individuals it permeates every phase of business corporations a successful a successful company needs to pump up its image at strategic at times throughout its corporate life when you're preparing for an initial public offering ipo you want brokers and purchasers alike to perceive an enormously true dynamic and aggressive company poised for skyrocketing success you want editorial columns in the wall street journal and your top executives to be seen as the most exclusive circles excluding acumen confidence and comfort about taking their company public you want stock brokers and potential buyers talking hungrily about you at lunch licking their lips for your stock long before the day that you go public remember the perception of the stock isn't based on any face value but the demand that has been generated for the stock if you do it right the result on the day of the offering as it was with us in london on that august 10th will be that of selling shares at spiraling prices to eager investors quite willing to pay those prices author's note i may have mentioned it but on the day that we went public in august the 10th 1984 my 39th birthday was also the day that mrs thatcher's one of her major privatizations that of jaguar was going public and i was advised by virtually all concerned that we shouldn't go public on the same day because all the institutional money was going into the jaguar flotation and i persevered and sold many of the shares myself to the investment public and the headlines read the one that really roared great western up 20 and i believe jaguar down 20 end of author's note finally well before the time comes to sell your company you begin using a number of proven strategies to build perception of a successful profitable corporation we'll cover those strategies in a later chapter we live in a world of perception virtually nothing is really as it seems only as sleight of hand manipulators would have us believe don't forget that others with whom you deal or would deal are busy building perceptions for your consumption they range from resumes filled with lies to financial statements with more juggling than ringling brothers politics is the continuous example of juggling act of putting a spin on every political event so that even the poor sap that debated with his fly down comes off looking terrific during campaign season when politicians actually want to hear from voters perceptions can make or break candidates authors note during this month's coming to the election here in 2016 donald trump has stood the republican party and politics in general on its head with not believing in political correctness and showing perception is reality and of author's note for years hillary clinton has been perceived by much of the public as cold calculating and ambitious she has polarized americans who either love or hate her during the 2008 presidential election she faced senator barack obama in the democratic primaries a smooth personal and very likable african-american as a result this dapper affable black man with virtually no experience but strong in vague and lofty rhetoric was preferred by democratic primary voters to a woman with several years of experience as a senator from new york a washington insider whose husband bill was a former president these two contrasting perceptions not their stands and political issues swayed primary voters to nominate obama over perhaps the best american woman in the world author's note mrs clinton is now coming up against a similar situation with senator bernie sanders a independent one-time communist now socialist and has lost many of the primaries and it stands to good chance of perhaps having to go to a contested bid in the democratic convention herself end of author's note that's why wherever you're called on to believe a perception it's absolutely vital for you to look beyond the illusion others would have you take as reality in the ideal world everyone would be a forthright and honest in presenting themselves and their corporate entities warts and all but until that ideal comes along perception will be the reality others accept about you so it's up to you to craft that reality to your fullest advantage fortunately you need not to do it alone you can gather around your resources some very skilled individuals in many disciplines the dream team we discuss in the next chapter authors note the qla model methodologies one of the cornerstones is the dream team and it was 20 almost three years ago as i read this and it is today end of author's note chapter six creating your dream team the first method for estimating the intelligence of a ruler is to look at the men he has around him nicolo machiavelli no matter how good you are you can't do it alone you can do the work of two or three people and to achieve super success you work that hard most of the time but you can't be two or three people you can't be in los angeles banking to nail down a financing at noon and sign a deal in manhattan at two the most determined passionate vision driven high performer does not have the expertise energy or hours in the day to carry out every action check every figure and to review every contract generated by a company assuming a growth position your company your entrepreneurial creation is understandably a source of pride nobody else loves it frets over it and perceives your vision for it like you do nevertheless the time comes when you must give up some in fact a significant portion of that creation to others in order for it to become what your dream for it you must relinquish pride of authorship to the hands of others inside and outside your company pride of authorship has been the death of countless otherwise promising companies because its founding father wouldn't let go let's follow the parental parallel for a moment you have a darling daughter you help bring into the world your highest ambition is to nurture that that little girl shape and form every phase of her young life so that she becomes blossoms into a an intelligent happy and successful woman but you can't do it alone along the way you have to entrust her to school teachers piano teachers camp counselors and drama coaches with luck you'll achieve your ambition for her but to do that you have to share control with her with other people carefully selected specialists your entrepreneurial relationship with your company is much the same you have to hire and retain experts in finance accounting and tax law to help give you your enterprise the direction and counsel you can't give you need the skills of stock brokers investment bankers merchant bankers and commercial bankers attorneys accountants and consultants in several fields whose knowledge you value finally the day comes when for the sake of a few million dollars we sell out of peace by peace to legions of profit driven shareholders strangers who view your entrepreneurial creation not with your passion but with undisguised greed or at least as potential source of security for the retirement that's why you use two levers to pry open the way to super success other people's money and other people these other people recruited from a variety of sources are what constitute your dream team let's talk first about board of directors initial dream team members you need to assemble before you can recruit the others the board of directors when i mention the board of directors your first reaction might be hey this is just a little hip pocket company isn't a board of directors sort of premature not at all directors are your first and most immediate requirement you wouldn't think of playing a baseball game and feeling every position with no other players than yourself until about the fourth inning so why would you begin your company with yourself being the one and only expert filling every position of responsibility you may think of your enterprise as simple and uncomplicated but if you're preparing for a quantum leap into the big leagues you've got to fill all the positions on the field now before the game starts so incorporate if you haven't already retained titles of president and chief executive officer and begin to search for your dream team directors authors note subsequent to this i found it easier and more reliable to recruit the board of directors your dream team without incorporating the company first for a number of reasons which i'll only name one that the financing institution or the manner in which you finance may dictate the uh form of the company whether it's an llc or a sub chapter s etc end of author's note the most immediate benefits your board of directors bring to your dream team are credibility and prestige the best source of directors is recently retired ceos and other top executives of local regional and even national companies and they're not inaccessible uh as with finding a suitable mentor pick up the phone and call explain your situation and direction in which you're moving and how you have some fantastic ideas in consolidating the cottage industry or whatever your goal may be express your desire to have the individual add his or her knowledge experience and prestige to your company you'll be surprised at how receptive even high profile people can be one of my partners discovered that email is the most effective way to get their attention how to get their email address call their company and ask and look on their website authors know in recent years linkedin has proven to be an extremely helpful tool to build your dream team and there's various forms of linkedin and the premier linkedin which uh i don't know costs a 100 or something a month i'm not positive about that because my office set mine up normally old time consuming process very short in comparison to build your dream team and of authors no the senior individuals are rich with experience and wisdom you can call on they're probably frustrated because nobody asks them for their opinion anymore and they've got time between golf games to give you whatever time and attention you need and they're not likely to try to interfere with how to run your business one question many senior and retired people ask is how can i contribute i wouldn't want to be involved if i couldn't contribute something it is very disarming to have a former ceo of a fortune thousand firm ask you if you think he can contribute to the success of your company so just flip it around sir i would look to you for recommendations on others we might consider for director positions authors know i've told the seminar attendees and mentees and more recent years the mentees that i mentor for free for a year the magic words you want to hear from them is i'm very interested if i can add value end of author's note select an experienced chairman first an individual with an established reputation though not necessarily in your own industry your chairman should be to the fullest extent possible an executive heavyweight highly experienced person who has done dozens even hundreds of business transactions over the course of uh his or her career in real estate they call him an anchor tenant i myself am a chairman of a number of corporations in every instance was brought in because no matter what comes up for any of these fledging companies i've been there and done that the rest of your board position should be filled with individuals from varying backgrounds who share one common quality they all have more business and financial experience and acumen than you your board ideally should include a financial person an accounting specialist and one or two other individuals who have already achieved what you're trying to achieve in your field of endeavor particularly in growing a company geometrically through acquisition your accounting expert might be a former regional manager of a big four accounting firm your financial base director might be a retired investment banker all these people know more that four or five and a number will inevitably contribute contacts tips and ideas you'd have never dreamed of otherwise they are the core from which you will now proceed to build an aggressive acquisition hungry by the way your board must be what i call lawsuit aware although it may go without saying at some point mention it to them anyway for the record you accept litigation as part of exponential growth you regard litigation as a legitimate business tool and if you don't you should if the idea of filing suits makes them uneasy and the thought of getting sued frightens you away from acting in the best interest of the company stop reading here and go to a romance novel authors note in recent years we have used with many of my mentees in addition to a board of directors a advisory board where an advisory board has no liability in giving advice for the new co and the advisory board instead of getting stock in the holding company or in the company that you're forming will get stock options and we'll talk more about that in later chapters end of author's note in business as in life disagreement happens assassins abound trust me i've been involved in about 200 lawsuits and have only lost a couple of times in the u.s or or the uk the greed arrogance and stupidity of others need to be kicked out of your path to glory without a second thought without a break in stride be mentally prepared to battle in court whenever you have to and have a board of directors prepared to back you up authors no litigation unfortunately is a way of life in the united states whereas in the rest of the world it uh it doesn't abound so the directors that you're trying to recruit to your dream team will be more aware of litigation in the united states and that's where the aforementioned advisory board will probably uh help and assist you in building out your dream team end of author's note as for compensation don't even bring it up the first or second time you and your prospective director's talk whatever you may offer is table scraps compared to the wealth they've accumulated after 30 years in business leadership eventually almost as an afterthought mentioned you'd like to offer each director two to five percent of your company depending on the extent of their time and participation involved offer a few points more to your board chairman based on the prepared projected depth of his involvement then the issue of compensation is covered authors note for a more sophisticated board organization you may even have a chief marketing officer and for sure you'll have a cfo and you may very well have a ceo and or ceo if you're not qualified to be ceo those positions take uh uh require and are are due more compensation than the two to five they may be three six seven eight nine percent uh and in that rega in that time frame or in that instance the uh ceo and chairman will get more than the uh five or ten percent end of author's note remember that you assemble your board of directors before you begin your search for outside accounting and legal professionals assuming your board is complete it's time to continue building your dream team before you make the first phone call to the first accounting firm sit down and write your mission statement to articulate your vision and the overall strategy you intend to pursue in your quest for of that vision the mission statement is important to most professional minds in that it reveals how much you understand about where you intend to take your company and the boldness and clarity of your vision though most mission statements tend to be pie in the sky crap there are some magic words you want to incorporate uh into this brief document to make it stand out from others you want to dominate the industry for example and become a major force in determining the future of that industry we're going to consolidate a fragmented or cottage industry tells the reader you plan to grow geometrically through acquisitions an exciting prospect for any accounting firm that would like to boost billings in the same way do not confine yourself to a time frame that's a detail at this point while you and your directors fine-tune your mission statement also pull together in executive profiles of your directors when all the documents are complete and professionally bound in a presentation handout uh begin setting up interviews with accounting firms your new directors will no doubt have contacts among the big four for those entrees if not pick the phone and start making cold calls on accounting firms authors note in recent years uh we have expanded the mission statement to include an executive summary a generic in scope talking about the industry and uh where it stands vis-a-vis being consolidated in addition as i mentioned before the uh we have used linkedin very successfully not everybody's not on linkedin but certainly big four uh accounting firms are end of author's note retaining the right professionals for the right price what kind of accounting firms for starters you need expertise of a highly reputable cpa firm or chartered accountant firm in the uk uh my contention has always been that you avoid hiring your neighbor or your cousin the accountant or even a hometown cpa company uh from the very beginning use a big four accounting firm how can you afford the best price waterhouse coopers deloitte touch ernst young or kpmg well uh get to that we'll get to that later by the way each of these firms is actually an enormous uh group of companies operating globally uh with between 120 000 and 150 000 employees and annual revenues of around 25 billion dollars authors note the notwithstanding this was written eight nine years ago it is still true and there are still the revenues approximately 25 billion dollars and of authors note set up preliminary interviews with all big four accounting firms with offices in the city in which you'll be doing business if you're not close to a big four you will have to consider a firm in the top ten schedule yourself and one of your directors but not only but not your board chairman if possible have the accountants meet you outside their offices if your new offices don't have a conference room try to arrange one elsewhere if you must meet at the accounting firm make note that the size of the conference room they put you in as well as the seniority of the accountants you're meeting with um i'll indicate their initial as it'll indicate their initial estimate for your potential as a profitable client make sure that the partner is present many successful individuals started by interviewing regional firms and then moving on to the big four when their comfort level increased i strongly recommend this practice the first meeting is a brief one your presentation should last about 20 minutes during which you simply expand and elaborate on your mission statement uh re-emphasizing the fact that you intend to consolidate through acquisition and industry that is fragmented and basically in chaos you also tell them up front you're interviewing for other accounting firms and you'll go with the one which offers your company the best deal the whole meeting should last no more than 40 to 45 minutes it's a beauty contest during the second round of interview uh meetings you may have narrowed the field down there maybe two or three firms you should expect these interviews to be attended by an audit partner and or a tax partner plus someone who has experience in corporate finance when you're obviously an aggressive company seeking growth through acquisitions accounting firms will listen to you for two reasons first they envision their own geometric billings growth riding on top of yours second a company in an acquisition mode is less likely to change accountants once their accounting firm picks up the rhythm of the company understands its vision and pace and tempo this gives you an opportunity to leverage your potential with regard to their fees accountants will work on a contingency fee basis except for auditing with fees linked to success or failure audit independence is important for accounting firms as defined by them in general accepted accounting procedures called gaap nearly all countries have similar rules and procedures authors know words that are more favorable now in uh 2016 instead of contingency fees are in fact are delayed fees uh success fees end of author's note um so so you talk to accountants about value-added fees and success-oriented fees and underlying these terms they are very important phrases for you to use recently i made presentations to a number of accounting firms in every instance the partners immediately responded to those terms big four partner suggested they will bill only fifty percent of their hourly rate until they made a successful acquisition then a hundred percent and then play catch up until they made up their balance another big firm said they would wait for six months after our first transaction to begin full billing point is that accountants are flexible as long as the aura of professional independence is respected uh authors don't there's other combinations that the big four or uh smaller regional firms will use um pushing out fees uh as much as a year with no payment and paying a premium of up to 130 or 150 upon successful transaction end of author's note at each of your uh second meetings uh accounting partners will be selling to you you should expect them to respond to your previous presentation and be prepared to discuss your uh specific needs and expectations of them as a big for four firm but the third meaning you should have the uh the input and intuition to have narrowed your choice is down to one or two firms uh attend these meetings with your board chairman and or another senior director in addition to moving toward your final selection ask for recommendations for the law firm you will benefit from the fluidity of working with accountants and lawyers who already understand one another also request that each accounting firm send you a draft engagement letter filling out the terms of the relationship with the help of your board massages draft to your best advantage and return it to them several times if necessary this document is important that it may be the basis for your your accountant client relationship for the year for years to come then based on which firm has spelled out in writing the best deal for your company make your selection authors note in recent years we have found it based on how accounting has changed to have your cfo director and or your financial director or both uh attend the final meetings with the accountants in lieu of your board chairman end of author's note once your account has been selected you will also want to retain the services of a top law firm i prefer an international law firm but you want one that's at least nationally active our lawyers or solicitors in london for instance were fresh fields now part of an international conglomerate a british law firm that is older than the united states fresh fields also represented the queen and the bank of england i preferred to think that the queen was using great western's law firm they were pretty damn prestigious conventional wisdom in london had advised us these chaps would hardly consider representing you americans i should think but they did of course and at the time when our lawyers spoke the advice or opinion people listened authors note as i used to say fresh fields represents the queen the church of england the bank of england and dan pena end of author's note have i mentioned perception reality lately at the outset our choice of law firms enhance the perception that we were more successful than we were but certainly as successful as we intended to be incidentally one of our lawyers fresh fields was a cocky australian named alan murray jones smart yet converted to become our mole at fresh fields even the moment of business we ran through fresh fields he never did make partner after centuries of tradition fresh trails just couldn't be swayed by enormous billings of an upstart american oil company when jones uh left to join another large international law firm durant peace at the time now part of a much larger firm we followed him and the leverage of our business helped him become partner there here's another tip for assembling your dream team whenever possible within the oak panel offices of any attorneys or cpas i've always sought out a hungry young lawyer or accountant i could trust an up and comer with greater ambition and more talent than his employer appreciated i cultivated such a bright motivated individual because inevitably they become my moles within their own organization their allegiance gradually shifted from their employer to me to that instead of telling me what i cannot do they find ways enable me to do what i want to do now in no way are they doing something wrong but they are now looking at the and digesting information in the in a different light you're no longer merely a client you're their client a caution be kind to your mole in my younger less sensitive days i often screamed unkind language to our mole coopers and live are now pricewaterhousecoopers she served us well enough for years but when i left great western she found ways to repay my verbal indiscretions although i have to say uh she was always a first-class professional author's note i just spoke to the managing partner of the office that we used at coopers and library who that became pricewaterhousecoopers and uh he's now 82 years old and retired i asked him about that uh lady partner who she is now retired uh and a few of the other partners uh and one of the board members that i'm currently serving with who's a former pricewaterhousecoopers partner from texas knew the managing partner from that office and when he called him for a recommendation ronnie recommended us highly end of mothra's note what's in it for the hot shot lawyer and accountant i i continuously remind their employer how valuable they are and how worthy they are of raises and promotions but dearer to everyone's heart given the right individual in the right circumstances i can offer them equity in an entrepreneurial success they're helping me create when that occurs of course you'll find that they almost always leave their firms to join your full time that brings me back to your venture during the early stages of your pursuit when you're just building your dream team how can you afford to retain a top law firm you bring them into the equation come on dan you can't do that you can't walk in and buy them uh with a piece of action that doesn't exist i sure as hell did i also secure the services of blue chip brokerage firms in the same way more than once top legal counsel costs say 450 to 850 an hour or more and i mean uh the clock starts when your lawyer picks up the phone it costs you a quarter just to say good morning but lawyers are not as concerned with independence as they are uh counterparts in accounting regardless of what they say they'd have you think lawyers are people who needs and greeds just like you and they'll listen to a deal authors note lawyers now aren't getting 450 to 850 an hour they're getting more like 450 to 2 000 an hour end of author's note here's how you say you're a good counselor you say you can make this deal happen i believe you can so here's my deal your fee is 475 an hour i'll pay you 550 an hour or even 600 an hour when you're successful or 110 maybe 200 an hour if it crashes the lowest figure is meant to cover their real costs such as paralegal and administrative expenses but any fee must come out of successful transactions and fees for unsuccessful deals are rolled into the next transaction my rationale is that any fee for a deal is too high if it crashes but almost no fee is too high if you score hey if we make 10 20 million i'm delighted to share the wealth with a lawyer who worked nights for six weeks who found loopholes that would choke a nat who worked for me rather than the irs or sec accountants of course are bound by certain restrictions that preclude them from taking direct equity positions and direct contingency fees but they will work with you on non-audit issues believe me they will cooperate in some of their most recent deals my partners and several growth companies have found professionals quite willing to defer fees altogether for six months authors know as i currently sit here in 2016 may we have delayed fees with all big four accounting firms and probably seven of the big ten end of author's note along the way the lawyer will perform feats of acrobatic prowess even he never believed possible why because instead of getting a flat fee regardless of outcome he's got equity in success and believe me since adopting a success strategy i've never had a professional advisor kill a deal in fact i've had them resurrect a number of deals each one a financial phoenix rising from the ashes on the conference room corp carpet authors note the large international law firms are are not as accepting of uh taking equity in deals just as the accountants are precluded from they have to check with their partnership agreements and their partners and most times uh if not always the the big international firms law firms will uh reject the idea of taking equity in the deal and that you will have to go on a strict uh successfully basis end of author's note so you've got an experience in influential board of directors a big four accounting firm and a top perhaps international law firm on your dream team uh you are prepared to begin your quantum leap as anyone uh as anyone on wall street and you're ready to begin your search for financing incidentally the credentials of your dream team will be noticed by every banker you approach they know that ernst young and pricewaterhousecoopers won't accept a client without doing thorough due diligence where the light of powerhouses such as these behind you you cast a hell of a shadow in the offices of banking institutions authors note just not commercial banks although we'll discuss that in later chapters but all financing institutions end of authors no part two continuation of chapter six creating your dream team partners and staff as your enterprise gathers momentum the next person you'll likely to seek out is a partner a co-parent for your venture this should be an individual whose skills talents and temperament complement your own and fill critical gaps in your own range of strengths after all you don't want another you you want someone you're not in as many areas as possible mark mccormick writing in 110 solution pointed out that the individuals perform beyond their normal capacities when they are teamed with a partner who is better than they are in sports competition we we quite often see a tennis player or a golfer stretch their potential to keep pace with a higher ranked player mccormick believed that choosing a superior partner is an instinct we have in childhood the smaller playground team captain automatically chooses the biggest kid for his team as we grow up however we become aware that our own performance is being judged and compared against others self-interest makes us seek weaker partners who make us look stronger by comparison mccormick rather than the big kid who can help elevate our performance as if to reinforce such thinking conventional wisdom dictates that you find a partner that won't show you up or in or even make you look like a fool author's note since i wrote this about seven or eight years ago it has become even more obvious to me that most businesses that are partnerships and even with employees pick people that they feel more comfortable with and even as they struggle to put their boards together they'll pick people again that they feel comfortable with instead of picking people to make them uncomfortable a thing in recent years actually in recent months that we've added to our weekly report is you have to do something and register it and memorialize it in your report to me weekly for the year that you're mentored free what did i do uh that was scary what scary stuff did i get involved in and part of that is picking people that are not like you end of authors know just as important to a dynamic successful partnership is the personal chemistry between you and your partner or partners in sizing up a potential partner you are essentially considering and ultimately proposing marriage a business marriage you go through a period of courtship as you get acquainted with one another's business style goals and operating philosophies if either of you already have employees even got in-laws to fret about uh your best interests and theirs but what if your friends can you be in business partners without destroying your friendship their answer is emphatic yes the fact is that the two or three of you will be spending so much time together that you're going to have to be friends or you will certainly become enemies my partners and i did many things together our respective families became entwined and that is developed a sizable routine section cheering on our success the experience convinced me if you can be friends you can be business partners beyond partners hiring key associates is not for the timid it takes guts to to do it right the temptation for a lot of entrepreneurs is to hire individuals who can be controlled so that their own pride or of authorship can be sustained that's insane why would they bring in some doofus with less imagination less initiative and a dimmer vision uh and think for a minute he'd help them propel their vision forward instead of adding powerful engines to their venture they uh the entrepreneurs are only adding ballast one of the most obvious qualifications is experience read the resumes and read between the lines has this guy spent his career as an executive clerk for some top corporation that read terrific on his resume or has he done deals can you see from a couple of sheets of paper that here's a corporate squad leader who has wrestled through the hell of negotiations and actually won think of your staff as an elite fighting team and to be elite they must have fought authors note a good section of the seminar several slides is about these kinds of elite teams that you build and i have several slides that show a seal team that in their training for that very reason end of author's note there are other considerations as well i seek out potential associates and partners with enormous talent who have strengths i do not whose energy and vision match my own and who nurture enormous egos in short i'm looking for people who want my job but good help is hard to find and bad help is abundant i also hire people more on attitude than credentials you can't brow beat them into enthusiasm you can't pump them up if they were born deflated and have never been pumped up they have to bring a good solid can-do attitude with them so you can harness it to help pull your dream hire people with an appetite for adventure too because that's what they're about to have if they sign up to join your high wire quest for super success when you begin looking for associates and staff personnel you talk to a lot of qualified certified people who prefer the security and the predictability of a status quo they value their safety and security and a lead neatly pattern lies and they're boring as hell in my mind they're already dead lying around waiting for the undertaker but for every 5 15 to 20 of these losers you discover one man woman one uncut jewel who salivates at the prospect of helping you explore and conquer new territory you're the chance they've been waiting for and you can bet they'll forsake everything for a chance to join your adventure another key factor to be considered is bringing in associates is personality like the weather we can't change personality but we can't talk about it growing an idea into a marketable company requires enormous mental and physical energy and a focused commitment of personal time and resources that you cannot allow to be sidetracked by conflicting personalities your key personnel simply must have the interpersonal chemistry to get along if not their ego and personal agendas will divert the energies you need of them toward widening the chasm between them and your dream team will give you nightmares at the same time beware of staffing your organization with people you just because you like them or they get along with one another you're not putting together a social club and a team of dim bulbs no matter how compatible and congenial will never accomplish anything i want to hire people who can't surprise me nothing pleases a high performer more than an employee or partner to have an idea first remember the high performer values the idea the inspiration the solution far more than the pride of authorship personally i'm delighted whenever one of my partners surprises me with a spark of genius it confirms that what a perceptive guy was to bring him or her onto the team and it tells me i'm getting more than my money's worth by the way i use the term partners because all of my staff have equity of some sort finally i look for commitment i don't mean nine to five my people must be willing to work nights weekends holidays or whenever necessary during critical periods of growth they must be instantly available at home on the golf course or in the airport any airport in the world they need to fly to new york city today they need to revise the proposal tonight hammer out the deal tomorrow morning and meet me in houston tomorrow night i don't want to hear about junior's softball game or a home full of company or any other personal i want to hear see tomorrow night when i'm building a dream team i give potential partners what i call the doofus test i put them in a conflict of interest bind or time constriction which requires them to make a decision and take action i schedule meetings on early sunday morning or saturday nights find out when they have birthdays or anniversaries so i can set up meetings that screw up party plans okay i'm a son of a but the doofus test gives me two essential pieces of information about people first how they react under emotional pressure and second how committed they are to me and my agenda sure it's fine if they have promised to take their kid to the ball game and can't change their plans but they can't work for dan pena otherwise down the line they might have that birth of their first child take precedence over all us making millions of dollars having talked in abstracts about personalities and commitment it's time to you've heard about two brothers who years after the fact still personified total commitment in my mind in august 1994 i was holding a board meeting of my holding company great western development corporation at guthrie castle scotland the meeting was set to begin in august 17th it was expected to be a two or three day meeting one of the participants a young man in his late twenties will call him john i had brought him on the team mostly on the recommendation of his older brother adam who already worked with me neither of them was 30 years old unknown to me john confided to one of my assistants that he was a little anxious about a two or three day meeting in scotland because he was getting married on the 20th of august and he never mentioned to me not a word he and adam flew to scotland and gave a great presentation and still no one told me of the imminent wedding john's desire for success enabled him to risk getting home the day his wedding and he never wavered he never asked what if instead he committed knowing he might be racing from the airport to the wedding aisle dressing in the car and missing all the social rituals that precede any formal wedding not a very uh auspicious beginning for a marriage he surely must have thought as it turned out john arrived a full 24 hours before the presentation no problem right but let me ask you what would you have done would you have demanded such commitment and would you have given such commitment had i known i would not have excused john from the meeting i would have left the choice up to him as indeed it was anyway the mark of a high performer is that he both demands and delivers that commitment to the business i never asked any of my team to do something i haven't done in fact i still do whatever it takes no matter what and let's talk about the older brother adam i was holding a quantum leap seminar in may 1995 in los angeles and was expecting about 800 attendees i had met him at a previous jim newman pace seminar and he became a member of my team in late 1994. in fact nowadays i find most of my future business partners during my own seminars i asked the two brothers to be there since we could use any spare time to talk business what i didn't know was that adam's wife was expecting their second child the same week adam didn't hesitate never mentioned the impending baby he arrived for the seminar and stayed to the weekend helping with the seminar and discussing the business issues again what does conventional wisdom say and what would most people have done but the larger question is what do these two brothers possess that generates such a high level of commitment how are they different both had 12 years of catholic school education played college soccer at texas christian university joined a fraternity graduated and married adam with an mba although i've never held it against him then they both left promising positions with large corporations and took enormous pay reductions to join my team i gave them each equity in one of my companies at a time when the company was a little more than a dream of mine with the growing potential to be worth tens of millions of dollars over the next few years we'll talk later about giving equity to achieve your quantum growth once before in my career i had two partners who were as close to the ideal as i can ever hope for they shared my fervor and success and were driven by their own dreams to commit their own lives to great western in fact one arguably gave his life in pursuit of quantum growth mark harrison was a lawyer who specialized in oil and gas and corporate law i met mark wall i was still at jpk industries and he was handling our legal affairs for our nationally known law firm he was a young energetic partner because of his brilliance i sought to cultivate him initially as a mole and ultimately as a partner mark started out with great western development in 1983 on a part-time basis and i gave him a verbal deal for one year and his law firm gave him a year to decide whether he wanted to cast his lot with dan pena and gwdc mark became my chief operating officer of great western and i was given 10 ownership in the company by virtue of his legal background he had the skills to visualize and nitpick every aspect of any issue every phrase in the contract i never once heard him say hmm i didn't cover that i have to get back to you when we came to london guns blazing for great western marks equity had paid off handsomely and that august day we went public at the precious point in time the three of us mark charlie and i were invincible we were like wyatt virgil earp and doc holliday at the okay corral just like the movies where they never ran out of bullets and uh take no prisoners we acted day after day as if we had no limits to our abilities in the coming years differences of management style and opinion would remove mark from operational authority of great western and in 1991 he was terminated with a seven figure goodbye handshake by me i met charlie soliday when he was part of an acquisition team we formed in the late 70s and that he was a partner of coopers and librarian in fort worth office he was an audit partner he knew healthcare best but had good base in oil and gas i was immediately impressed by charlie's highly defined sense of ethics he knew right from wrong and acted accordingly in the business world which normally operates on situational ethics charlie was a refreshing change of pace i eventually winged him away from the big company comfort of his firm took away his safety net made him a chief financial officer and a born-again businessman he was a natural workaholic and as one energy company ceo put it he wore his clothes out from the inside charlie was fine total competent cfo but more important to me uh was the fact that he was a dreamer one who could use his talents and technical skills to make his dreams become realities he was also a great people person and the best numbers man i ever saw but his value to me at gw lay in his wisdom i saw it as counsel i trusted his judgment and his loyalty i knew without a doubt in the heat of the corporate battle charlie would follow me follow my lead and cover my back no matter what i knew if i went into a corporate gunfight he wouldn't leave me to suffer but put me out of my misery grab the flag and run like mark charlie was in for equity 10 ownership but for the first five months i couldn't even pay him he and his family moved to los angeles and lived in a holiday inn and then ran in a small house in case he ever got home at all so many times we would analyze evaluate and plan our strategies far into the night then he would sleep at my place sharing a couch with my two great danes fly off into the early morning to another meeting across the continent and see his family whenever he could from the time we decided to take gw public in march 1984 through two major acquisitions and several smaller ones by the end of 1986 charlie and mark and i blazed like a comet across the financial skies the second acquisition was of the usf city area of a foreign multi-billion dollar natural resource company and involved coal mines and gas and oil properties across the country it was a long tough negotiation i'll get into that later but by the time the deal was closed in december 1986 we were all exhausted our ship had come in and it was loaded with money for all three of us jackpot all the dreams the work the pressure and doing without a normal life with family friends and sleep had paid off my dream team had come through for me we were wealthy beyond dreams of most mortals invincible i went home to guthrie castle on my own camelot to heal wounds and savor our victory we were as the roman legions invictus we were not conquered the next month charlie died of a heart attack at 40 just inside the threshold of his greatest super success it was over john lennon said life is what happens when you're making plans dan pena says man plans god laughs my life was changed forever it took almost three years to recover from an acquisition eight to ten times our size and charlie's death no matter who you recruit for your dream team and how gifted and committed they are they're going to need leadership even more to the point they're going to want leadership and you're the leader it's no wonder reports say that almost 70 percent of fortune 500 ceos have military backgrounds the toughest thing about being a leader is that you're always alone in the lead position leadership is a towering peak with standing room for one sure you can turn and get advice from this or that team member but there's only one captain one driver one pilot in the cockpit you can save your company from mistakes the others may make but the others can't save the company from you the guy who said it's lonely at the top had surely been there i often tell my business partners they must learn to be alone without being lonely you're only a leader if you have followers you can buy quasi loyalty with money and we'll talk about compensation shortly but you can't make people follow you they have to want to another misconception about leadership is that too many entrepreneurs think of leadership as a static condition they sit in a position of leadership and assume that by definition they're leading any ceo is not moving his or her company forward is not leading the word leadership implies action leading is convincing others to move to follow you as you proceed forward in a predetermined direction if you're not moving or if you seem to be moving erratically as you've lost your way your associates and employees immediately perceive that they've lost their leadership and begin to lead themselves in whatever direction they like and i can assure you it won't be the right direction world history has proven time after time people much prefer to follow a madman with a clearly defined purpose than a nice guy with no apparent goals and high performance people are often perceived as mad men conventional business people consider them to be loose cannons eccentrics even buffoons sometimes the most loyal employees stretched on the bone-breaking rack of demands beyond all known capacities are exasperated by working for high performer but they don't quit great entrepreneurial madmen include branson ted turner donald trump rupert murdoch howard hughes was a madman long before he went crazy author's note more recently bill gates steve jobs were also considered madmen and right now as i read this donald trump is at the republican convention and he will be inaugurated as the nominee to run for president in the next day or two and of author's note one of the most demanding high performance was tom edison in 1884 he hired a young croatian engineer named nicola tesla to work in his laboratory in menlo park new jersey edison was convinced that direct electric current dc was the way to light the world tesla believed that alternating current ac would be more practical already a world famous inventor and supremely self-confident edison had little patience with employees and disagreed with him and fired tesla in 1889 tesla patented ac power system and sold the george westinghouse who built an empire generating ac electricity as you work with your dream team toward achieving your super success it's fine to be regarded as a little mad by the world beyond your perceived madness in the minds of conventional thinkers is sure sign that you're on the right track i'd be disappointed if some investment bankers i know didn't shake their heads when they talked about dan pena i relished my reputation but remember edison give your employees the latitude they need to be creative on your behalf exponential creativity and imagination by your people will accelerate your achievements of exponential and quantum growth in fact you can't achieve it without it one of the great lessons i learned from jim newman was to keep my eyes focused on the macro picture and leave the micro management to my staff the dream team you assemble has to be capable of day-to-day micromanagement so that you can press ahead with your job your responsibilities as both leader and player on your own team don't bring me a problem so we can solve it solve it yourself and bring me the the latter currently i've developed and refined this idea especially in the weekly reports that they give me when they have a problem or a challenge that they list at the end of their rather lengthy reports i say i want three alternatives with a problem if you can't give me three alternatives then don't give it to me and they have to pick the best alternative in their mind and then i judge if it is the best alternative when i get back to them with my comments and the authors know as the ceo or president of your company your job is not to design a better product or reduce operating costs or review sales figures you have engineers cost accountants and marketing executives to handle those tasks your greatest danger is getting bogged down in the office and mirrored by manisha you have three jobs they're all outside the office the first one is kissing frogs you gotta kiss a lot of frogs to find a prince i tell my audiences you do not only have to kiss those frogs you've got to love to do it and just love those little pus filled warts on those frogs faces okay i know only toads have warts but it's my story because one day one of those little frogs at a bank at a brokerage firm in a state legislature is going to be able to help you to croak you a good word to give you a nod to become a prince in need to make you millions so get out there smile and start kissing frogs your second job as senior executive is to look for expansion opportunities i'm talking about deals or schemes as they say in the uk that's how you make the big money equity on deals and you won't find hot deals in your own shop so get out into the market go to trade shows over here conversations talk to your moles keep your ear to the earth of the financial world and remember unless you're kobe bryant or madonna you won't get rich from income you become wealthy from equity in a string of transactions pay attention to the industry watching business is like expanding by a river every time you look the water is different keep watching check out rumors and ask questions if you run a mid-sized business right now chances are good there's another mid-sized business you could buy tomorrow with opm other people's money and make a quantum leap quantum leaps are repeatable repeatable and more your third job is finding other people's money opm in chapter nine i will talk about raising capital finding the opm you need to seize opportunities and take decisive action my god there are so many sources of capital out there it should be embarrassing for anyone to say we don't have the money right now as you'll find out it's only because you haven't looked some of the plumpest tastiest frogs you'll ever lay a lip on are sitting in financial institutions all over the country all over the world for that matter just waiting to lend you money and make themselves look good to their bosses help them out as i write this the economy is heading towards a recession the banking industry is more cautious than has been in many years institutions from aig to washington mutual have disappeared from the banking landscape but regardless of the economy whether it is in the clouds or the toilet bankers make their money lending money a nervous frog is still a frog so while you're out looking for frogs deals and money who's running your show well other people are your carefully hand-picked dream team and hopefully with a free hand from you and with their owning a part of it themselves more on that later i discovered long ago that less control not more control is the key to effective management you hire people you trust empower and then trust them to perform if you can't trust them find people you can it's not the end of the world if you brought someone in gave them five or ten percent and then had to get rid of them but then you say now he has a piece of my dream calm down you can draw up a buy sell agreement and you have a number of ways to get around the potential danger don't worry about that just do it anyway being a minority shareholder in the u.s or anywhere else doesn't mean much all minority shareholders can do is see the books and get a chance a share of any dividend paid of course if you don't issue a dividend he gets nothing rules for keeping a good staff and keeping them happy i have four rules for dealing with staff in my organization one pay your people good money and they'll do it and they'll do anything they'll arrive early work late come in saturdays and sundays whatever it takes to get the job done because they are getting good money and they know it you start by paying them the best salaries in the market employers continuously compare their salaries with friends at other companies and you want your employees to win every time give christmas bonuses new account bonuses birthday bonuses whatever you can to assure your people they've got a sweet job worth working hard to keep some bosses periodically hand out unexpected appreciation bonuses strolling from the desk to desk with checks i personally tie compensation to deals and profitability plus you'll recall all my people have equity are equity partners at great western my people knew that peak checks were tied to income so they continuously thought of ways to make money they all worked hard and the enthusiasm was incredible i previously referred to an extraordinary brit named peter sage peter was a spectacular achiever long before we met owning four companies by the time he was 20. today he's a globally active entrepreneur highly sought motivational speaker and a high-end real estate investor a few years ago he decided to reward his staff of 22 and his mother with a christmas party fair enough oh by the way the party was to be held in a seven star bella or arab the most elegant most expensive hotel in dubai for four breathtaking days peter's mom and everyone on his company's reception receptionist sales staff bookkeepers lived in the extravagance of a super rich i've been in two-level suites private butler 42-inch plasma tvs panoramas of the arabian gulf uncommon loyalty was loyalty uncommonly rewarded unfortunately money is used in some companies as a substitute for respect it amazes me how much crap employees will take for the right amount of money from the mail clerk to the executive vice president evp i know a guy who runs a company of about 35 employees he calls his women and his men even in front of clients he abuses and yells at them continuously blames them for his screw-ups and buries them with more last-minute work with no instruction in tighter deadlines than they could possibly handle during one crisis with his office and cass he took off with his pals and went boating but no one quits asked him why well he pays us good money i'd quit but nobody in town would pay me what he does for the money i get he can call me whatever he wants of course i'm not advocating that kind of treatment for any employee in fact i did just the opposite i paid them well and treated them with respect but the point is that employees placed three things at the top of the priority list money money money above pleasant working conditions above packages above health club memberships employees don't want to be your extended family even in the 21st century they want to get paid as much as they can haul down the elevator in a wheelbarrow and when you add respect and recognition the results are tremendous then you've got their loyalty forever as napoleon hill said in his classic thinking and grow rich after some 20 years of interviewing 500 richest men in the world that financial motive must prevail above all it was true 80 90 years ago and it's true now authors know the financial model still prevails but back to peter sage peter sage is still an entrepreneur but he has now uh extended his worldwide speaking and motivational talks and he's a mini me and he runs around the world i am proud to say that i had something to do with this training end of author's note number two never reprimand this is a pretty element stuff but most employers forget in the heat of crisis the cliche criticizing private praise in public but occasionally well placed rage notwithstanding i try not to even criticize my people in private sure dan i can hear them now instead after i've cooled down enough so i won't rip their heads off i invite them in close the door and in the gentlest fatherly voice i ask them questions about their mistake that almost cost me my castle what was your reasoning behind taking this action what happened as a result of this action that was not in our best interest or what action would you take next time given the same circumstances the next time is the operative phrase next time tells them you respect their basic judgment and intelligence enough that there will be a next time since my company doesn't normally employ absolute morons i make the reasonable assumption that a this person has redeemable qualities that make him or her worthy of continued life and employment and b he or she is intelligent enough to learn from the fiasco they've just caused by screwing up orally but more importantly if employees know they'll be reprimanded for mistakes and especially humiliated they'll never venture out of where they can make mistakes they will never get out of their own box they will never expand their comfort zone bill gates pays bonuses for making mistakes it's true gates does this to encourage creativity and imagination he knows good people will make honest mistakes and he doesn't want them to become apprehensive and timid about making decisions besides i found that one of the biggest reasons for employee mistakes is lack of information employees don't make decisions the same way as the ceo because they don't have the same information the days the closed executive office doors are passed corporate paternalism is dead killed by email and ease of information flow up and down the hierarchy we no longer judge the discretion of an executive even the cfo by how much information he or she can keep from the rest of the company today we live and work in information age with staff who has the sophistication to receive and process information about their company and act intelligently based on the input the smart ceo uses the ability to de-control his organization to let responsibility trickle down to competent people eager to accept that responsibility three train one or more employees for your job or your jobs which are to kiss frogs find deals and raise capital you want to train others to do what you do so together you can get to more frogs ferret out more potential deals and getting from more lenders it is essential that you bring your people into the sense of ownership by doing what a ceo or owner is doing they'll work harder longer and with more commitment when you allow them to help steer the future and not just its present four never make decisions for employees once you give them the information they need allow them to make their own decisions at the same time give them the responsibility and the authority to implement their own actions give them chances to make mistakes from which they can learn your employees must grow as your company grows it is far preferable to have the same number of enthusiastic capable employees handling more jobs than it is to hire say seven more people to handle 70 tasks how you present new challenges will determine how quickly they learn you can tell them how to do the job and they'll forget you can show them how to do it and they may still forget but if you involve them in the process they'll understand remember and grow one interesting example of how employees grow to fulfill the expectations you have of them is in spending limits when i increase spending authority in the mid-level managers spending actually decreased to begin to consider every expenditure as a personal one and monitor costs more closely and more conscientiously than ever and when i removed the limits totally the expenses went down even more along those same lines i've found from my own experience that you want every employee to think of themselves as an independent contractor virtually every job can be businessed or turned into a business run by an employee the floor supervisor at the ritz carlton can easily think of himself or herself as the ceo of the fourth floor with this kind of attitude capable people work smarter and with more pride look at the saturn story every auto worker at saturn plant thinks like a ceo of some area of sub-assembly there is no better example of empowerment to work in an american industry when it's time to say goodbye regardless of the health and vibrancy of the relationship with a partner or associate conditioned circumstances and requirements change personalities change and although you and your partners or senior executives may stay together for a lifetime the time may come when you need to get rid of somebody even someone you've been through hell with incident or a pattern of behavior confirms that it's a company's best interest to terminate someone who helped accelerate your super success getting rid of people is one of the hardest jobs for a senior manager executive call it early retirement work furlough downsizing or right sizing it's no fun for anybody and don't think it's any easier just because you don't like someone personally if you're good technically if they're super competent if they can work magic with numbers or negotiations they're going to be hard to replace on the other hand don't delay the inevitable harvey mackey was right in swim with the sharks when he said it isn't the people you fire that make you your life miserable it's the people you don't the individual who needs to be fired is almost begging to be fired but is still around often performs counterproductively just to see how much you'll take however unpleasant the active firing may be as long as you put it off you spend energy in the continuous test of wills an about to be fired employee is like a corpse line in the hallway somehow everyone in the office knows when their associates has become superfluous and tiptoes around the cadaver and the stronger the body lies there for apparently no reason taking calls and drinking coffee the greater the impact of office morale get rid of such a person before it is obvious even to the attempts you need to but haven't but however you approach terminations remember this rule when you get rid of somebody never give them a hook which to get back into your organization make a clean definable and irrevocable break separations at the management level can be very expensive for a company especially where employment agreements are involved but regardless of cost several relationships surgically and completely don't try to save money by offering such hooks as stock options to the person you're terminating any money you think you're saving will be peanuts compared to the expenses and aggravation which inevitably incur later on creating your dream team then is the process of involving others in your adventure to join with you in scaling the heights of super success you won't need all of them all the way up but you'll need some of them clear to the top choose them carefully treat them well give them the chance to make mistakes work their butts off make it worth their while and if the sad day comes let them go swiftly and finally chapter 7 11 steps that make the deal you can leapfrog to quantum success but you still have to do the deals one sure-footed step at a time throughout this book i've told you over and over to make decisions incur risk and take immediate action you can guess by now that i've never been one to sit around and cogitate especially when i knew that swift decisive action would make the difference between a vice-like grip on a multi-million dollar deal and a handful of air i couldn't have made 75 000 business decisions during my career by hesitating in the clutch authors note while i don't keep track as i used to one by one but i am fairly certain that the business decisions i have now made are closer to a hundred thousand end of author's note warren buffett puts it another way never suck your thumb he looks at whatever information he needs makes up his mind quickly and takes action on his decision he calls any unnecessary sitting and thinking thumb sucking when the legendary andrew carnegie asked young napoleon hill if he wanted to embark on the enormous task of distilling the characteristics of the 500 richest men in the world he pulled out a stopwatch and unknown to hill gave him just 60 seconds to make his decision he'll took just 26 seconds to accept a challenge that would take him on a 20-year quest oman carnegie knew the value of decisiveness as an essential attribute to completing an epic task such as hills being careful doesn't mean moving slow any more than taking immediate action means you have to rush in unprepared and do something stupid we all make decisions in our lives even trivial ones based on several types of input information available previous experience intuition and advice of others you decide where to take your car to be serviced you decide how to handle your health insurance and who to hire as an administrative assistant if you take time to weigh the factors involved in these relatively minor decisions how infinitely more complex must the process that takes you and your business from an initial idea to closing of a deal worth tens of millions in this chapter we walk through the 11 steps you need to take hell you'd better take between your bright idea and the time seeming millennium later when an ink hits contract paper or when it's a matter of history at my seminars i look into the hopeful faces of hundreds of modestly successful business owners building entrepreneurs frustrated wannabes and of course the usual seminar groupies perennials who would attend a group dynamic seminar held by mass murder charlie manson unfortunately most of them came to hear me say now you just keep a positive attitude because you're a special person and your dream will come true but you know me well enough now to realize they'll never ever hear that feeling good crap from dan pena not because i wish it weren't true hell i wish it was but life is like a balancing scale you have to balance what you get with what you're willing to give up period regardless of what they expected me to say most if not all of them come into the seminar but at least the germ of an idea for making money at the close of every seminar i solicit their ideas by inviting them to send me a one-page fax that explains their deal not one word more or i should can it and over time i'm deluged with ideas some of them are even good ideas authors note i don't stare into the abyss or the eyes of hundreds anymore this century about since 2000 i only give my seminars at my week-long experience at the castle where we put in something in excess of 20 to 24 people i find it much more rewarding for me and for the students because i can keep them accountable i've also since the writing of this instituted a very strenuous follow-up program where for one year i mentor you for free and i keep track with monthly zoom calls and weekly reports end of author's note the point is that everybody in your life and in your organization has a money-making idea sometime you pick up a tip from a looseless broker if you read a small item on page five of the business section you overhear a scrap of conversation and a small voice inside you says hey that would be good for our purposes a deal is an equity transaction that generates income it could be public stock offering or an acquisition of another company since i've made so many tons of money buying and selling equity i'll use acquisition as an example this is a side note on the page fly first class you're not going to find a deal in row 38 sitting behind joe lugnut and his family the biggest deal in my life at great western resources began with a chance conversation on a commercial flight from houston to denver in the late summer of 1986 charlie soliday my chief financial officer happened to sit next to an executive of mapco a large multinational energy corporation based in kentucky occasionally someone will ask why do you always fly first class that's a lot to pay for free drinks and silverware of course with as much as i travel i upgrade with frequent flyer miles but in case you haven't heard top executives fly first class so they can strike up conversations with other executives and conversations can lead to deals and that lead to more deals and more revenue you're not going to find a deal in the row 38 sitting beside joe lugnuck and his family authors know with recent change in tax laws most of top executives fly first class basically only with frequent flyer miles or they upgrade themselves end of author's note so this energy executive confident and relaxed confided into charlie he was working on a project to acquire the assets of a canadian energy company company's u.s subsidiary a firm called bull valley usa the banks including city corp canada were squeezing bow valley's multi-billion dollar param company for repayment of loans so was planning to liquidate assets to pay down the debt load as usual charlie was paying attention he recognized that this guy in a moment of accidental indiscretion had inadvertently opened a window of potential benefit to for great western to appreciate the significance of what was happening here you need to understand where the oil industry was in the summer of 86 due to the worldwide oversupplies the oil recession was deepening by the day the spot price of oil had dropped from 28 dollars a barrel and january to less than 10 by june that seems like an eternity ago with the present day price around 125 a barrel great western stock had plummeted from three pounds or about 3.50 on the london stock exchange in december 1984 to about 50 pence or 80 cents by late june of 86 even the monetary exchange of dollars to pounds worked against this author's note having thought that i'd never see a the price of oil plummet like that again currently price of oil is approximately 45 dollars a barrel having hit as low as approximately 25 a barrel earlier this year in 2016 down from 120 dollars a barrel approximately two years ago in summer 2014. end of author's note every company in the oil industry was digging in assuming the fetal position and covering its head to wait out the recession that was fine with me i had decided the great western was not going to participate in the recession i knew this was the perfect time to make the quantum leap we've been waiting for if we could just find the right acquisition out there in the bone-filled desert of distressed energy companies i knew the financing was there for the right deal i knew that we could move quickly across the terrain in our search because nobody else was out there looking to expand they were all quivering under their boardroom tables we had already looked at a lot possible deals but so far nothing quite right had come along until charlie met his talkative new friend so as soon as he landed in denver charlie called me in the office in houston and reported what he'd heard mark and i immediately sat down and began to kick around ideas and postulate some possible strategies for somehow getting a piece of what might be a major opportunity for quantum growth that charlie had uncovered what we were doing was taking step one step one identify the idea this is absolutely the first thing you have to do define and clarify exactly what you want to do for the deal you want to develop not only you and your partners have to agree on this basic strategy of the idea you have to agree that it may be feasible and will benefit the company just as important if it proves to be feasible you will have the desire to do it in many cases the major benefit of an idea is not so much profit driven as it is a vehicle to move you closer to your long-range vision of your company my vision for great western was to for it to become a natural resource company and a major player in the international energy industry and my grand strategy for achieving these goals as you may recall was to external growth to acquisition versus internal growth through continuing oil drilling and production we were established in oil and gas but bow valley's assets were based 75 in coal and mining operations was there an opportunity here for us to look beyond our oil and gas based assets to something larger could our little great western snake digest so large an egg or as we often said could the minnow swallow the whale looking through that brief passing window of opportunity we had a lot thinking to do about how to shape an idea into a plan my instincts which i knew were almost never wrong told me immediately that this was the the deal we had to have to make the breakthrough into energy big league as i've said in the previous chapter the deal was obviously hot i didn't have to run to a spreadsheet this was pamela anderson running up the beach dark naked toward me saying dan here i am take me you bet pamela somehow someway we had to make this son of a happen yet another factor that urged me to go for it we had achieved a string of conquests that had begun with taking the company public our people were confident even cocky about taking the whole energy industry we were young undefeated obviously immortal and ready for a title fight the mood at at great western was electric with the anticipation of our victory i would have found it hard to deny them and deny me a shot at the big one a shot at glory but no matter how eager even bloodthirsty we were we still had to follow the 11 steps it was the process we needed to discipline our actions and to train and prepare our minds and spirits for the battle we were contemplating there were even more basic reasons for giving shape and form to our idea if you rush past step one you and your partners may well be hurtling down different paths of thought pursuing different objectives until it's too late to regroup and re-strategize just like getting overrun by the enemy in battle it's nearly impossible to recover your original positions another reason to identify the idea is that you'll need to communicate it to others in your organization you may be working nights and weekends to bring it to fruition and at times like this virtually everybody's working nights in addition of course you'll have to commit your idea to paper with crystal precision to investment bankers brokerage firms nervous shareholders will understand your objectives and support them again we're talking about clarifying your vision funny thing about fuzzy idea it doesn't stick to paper very well once you've identified and agreed upon the nature of your idea not the details it's potential for benefit to your company you're ready for step two step two investigate generalities more specifically investigate before you invest effort and especially money you could more profitably allocate somewhere else any action being taken by another organization group or individual which may impact you or your company raises key questions that must be answered why was mapco a kentucky coal company interested in bow valley oil and gas assets as its co interests we learned that they wanted to purchase the company then flipped oil and gas assets over for resale for a tidy no risk profit why should beau valley sell assets direct to great western they reasoned when they could buy those same assets mark them up and sell them to us more to the point they why sell to a much smaller company such as great western with no apparent financial horsepower and certainly not as strong as mafco that was the conventional wisdom they were using what was bo valley's financial status what was the extent of its operations in canada the u.s and worldwide how strong were its coal contracts with whom the and under what terms we had volumes of investigation to do quickly but we couldn't afford not to turn over every rock and look beneath it investigation is the research for red flags how many red flags do you need to see one read your investigative reports and listen to your intuition when the first red flag pops up when you get an answer you're not comfortable with or don't get the answer at all exit immediately the tiniest wrinkle in the fabric the smallest contradiction can explode in your face later our red flag checklist as well as the 11 steps to execution are listed in appendix c and a investigation is an integral part of the high performance of a high performance and it is vital to protect the interest of the high performance individual who runs the company these days i'm pursuing deals potentially even larger than anything we did at great western so i retain the services of a full-time private investigator even now who looks into every company i even think about seriously and every person i consider hiring or becoming associated with we call them targets that means you do more than call up the references on a resume or chat with a few happy customers who are pre-selected and conveniently listed in a company a presentation piece if you're thinking about doing a deal you need to check out two targets the company and individual principles of the company so where do you start you start with what you know full name of a person address approximate age occupation a name of his or her company basic information can come from business cards industry directories and the standard tours directory telephone directories conversations with other others in the industry and annual reports when you're waiting in the lobby of an outer office don't pick up the damn time magazine check the desks and walls for awards certificates photographs and diplomas with specific information you can jot down authors note in 2016 while that those are still places to get information with google and linkedin i mean every bit of information that you will need almost every bit of information that you'll need will come from public records end of author's note while you're in the executive office look around direct discreetly as you chat compliment your host on some of the piece of artwork or knick knack and get him to talk about himself have you spot evidence of a common interest or background golf phishing travel military expenses experience use that as a lever to pry out more information people even busy executives enjoy talking about themselves and you should enjoy listening information is only hearsay until you confirm it how many times have you accepted credentials on a resume for example without checking them independently you read notre dame bs 78 major structural engineering on handsome resume from a likely prospect you pick up the phone and call the administration office school of engineering at notre dame if they never heard of your prospect that's a red flag and all you need to terminate the consideration begin the verifying process with the names of individual targets the easiest thing in the world is to have business cards printed with an alias call the county register of voters to check voter registration to confirm and complete names addresses and dates of birth a lot of records are filled with at the county level at the county recorder's office you can investigate an individual or a company by calling county recorder and requesting a general index listing all filings involving your targets including document title document number any other parties involved in the date filed filings with the county recorder may include property documents deeds grantee grantor deeds tax liens notices of default judgments and power of attorneys civil suits and criminal records are a valuable source of information but the procedures required to search these files vary from county to county and state to state rather than getting bogged down in infinite number of bureaucratic variables let's talk about the area of investigation in general terms so that you understand why an in-depth investigation is important check to see if the individual has a pattern of litigation civil litigation files are kept in the county level and federal district level while you're checking the individual targets check the company for litigation as well you might find civil suits over breach of contract or debt payment defaults anybody can be sued for anything of course but as the principal of the target company or the company itself has record of breaching contract suits you need to know before you make the decision check to see what law firms they use while uh you're uh added a high profile law firm means they are sued and sue often that's often combative and are willing to pay top dollar to enter and win a suit that's good to know upfront it's also good to know if the guys who may soon be smiling at you from across the table have criminal records check them out long before you sit down at the table you may not realize it but criminal conviction information is available in many county and state levels as well as the federal level arrest information by contrast is not available in most states begin with the county clerk's office and check your target for both felony and misdemeanor convictions check at the state and federal levels as well again procedures vary the point here is to check for past criminal convictions you can do all this yourself of course but by now you can understand why i might have a good experience private investigator expedite the process you can also check at the county tax assessor's office for property ownership verify professional licenses etc real estate brokers building contractors or attorneys at that state level hey dan do you really go through all this investigation you bet by the time i'm sitting down to hammer out a deal with this individual or a team of people i'm going to have a file on every one of them if one of these mooches has a birthday coming up for instance i'll know about it and make damn sure we're still negotiating late that afternoon so he's under pressure to make a deal and get to his birthday party author's note all this investigative procedure almost all of it can be done on the internet by a google and almost all the records that i've mentioned you can find on the internet and authors know step three investigate specifics re-check your your sources for details you might have missed then if you're in doubt about your sources investigate them go deeper if you're about to risk millions don't think twice about probing beneath the calm surface waters of an opportunity straightforward company or individual before you bring in a partner for example check not only with the previous associates who may give you a prepared story but with the employees who might give you an a different perspective does this guy drink too much at parties does he do drugs how is he to work for does he abuse employees does he beat his wife does he chase skirts around the office is he gay remember you're not gathering information for a testimonial dinner in his honor you're just running the fingers over the fabric of his business and personal life feeling for stitches that are out of place maybe you don't care if he's a cross-dresser but you need to know author's note in 2016 obviously sexual bias as long as it stays out of the workplace is of no concern end of author's note by the way in case you haven't noticed i've talked throughout this book and the male gender one reason is that i'm not going to stop and say he or she every time just to mollify the politically correct crowd another is habit it is inescapable fact that 98 of america and the uk and europe's top executives are men this book is not about equal opportunity it's about making money but if you're more concerned about the ditzy details of political correctness you probably already tossed this book away having said that if you're a woman i encourage you to push beyond the gender issue and the knowledge of the number of women business owners and entrepreneurs grow every year and if you're gotten this far you're a serious player and potential to make your ton of money so stick to your guns reinvestigate and continue to check throughout the negotiating period which may follow as a matter of fact your interest once it's discovered could generate a flurry of cosmetic actions by the target filings financial shuffling or other activity you need to know about targets of investigation especially in business are moving targets companies and individuals continue to leave tracks as they move forward in time never take your eye off the target while you're aiming at it step four commit to the idea it's one accomplishment to ensure that every member of your dream team holds the same idea you do your objectives how they relate to your long-range vision your good strategy to achieve your objectives and even some of the tactics and maneuvers you may have in mind it's quite another feat to begin lining up commitments to get into the fight if it begins and to see it through an acquisition deal even for a world-class specialist like dan pena it is not a picnic your partners and your top executives should be required to commit themselves publicly to the project at the outset given the individual knowledge experience and personalities of any group sitting around the conference table in the world you're bound to get variant reactions it's inevitable unless you surrounded yourself with the lobotomized sycophants in if some of your people have reservations if there is some facet of the project they're uneasy over they need to get it on the table so that it can be dealt with and overcome or at least acknowledged even i with all my self-confidence have tinges of misgiving sometimes sidebar stick to the knitting you want to deploy your asset resources and capabilities in your areas of expertise and experience the preliminary decision making time is when you ask yourself is this an area in which i have or have any access to real expertise when pat kennedy and i were partners in building a vertically integrated oil company we strayed into areas of the oil industry we didn't know beans about and paid dearly for the experience one of the lessons i learned was stick to your knitting deploy your assets resources and capabilities and areas of your expertise and experience i thought a lot about that lesson as i now considered moving into the coal business i ultimately decided to proceed with the acquisition on the strength of another pena business rule dream big think big be big besides my instincts and intuition were screaming this one's hot pamela was so close i could touch her there may be cases where one of your key people simply cannot buy into the idea for whatever reason that individual is opposed to the project you know will launch your quantum leap to super success even before you make a final decision you need to ascertain whether the individual is going to perform his duties and responsibilities regardless of personal feelings or whether his opposition is going to become a dead weight a counterproductive stumbling block a negotiating battle that will follow during the preliminary discussions about acquisition of bow valley for example my executive vice president of exploration resisted the idea of getting into the coal business frankly he didn't like the prospect of his oil and gas division taking the back seat to a newly acquired operation when he realized that we were moving ahead with or without him he eventually came over and even convinced himself the project was his idea whatever works step five making the preliminary decision your dream team including those with questions and uncertainties buys into the commitment and makes it their own make it clear that this is not the final decision but a working consensus or agreement to move ahead your investigations thus far have turned up no red flags which would cause you to reconsider or walk away from the deal the deal still looks red hot you have begun to prepare for battle it is at this point in the preliminary stages of the process that your people have to become obsessed with an idea that is now going to rise like a monster assume a life of its own and dominate their waking hours for weeks and months you're the leader so now you have to be the cheerleader i was called the vince lombardi of the oil business you got to help your team get absolutely psyched up generating enough energy adrenaline and momentum so that when the battle is joined they suck up their pantyhose and charge into the cannon with no thought of defeat fatigue hunger sex or any other preoccupation if that means stringing banners across the conference room or pep rallies or promises of bonuses when the deal is done do it do it all but ignite that obsession so that your people from your partners to the mail clerk no it's not business as usual you're on war footing and like macarthur said there's no substitute for victory for the record my warriors at great western made me proud we never lost the battle nor knew how to lose we acted as if we had no limits to our abilities that became our war cry if you want similar results you should act the same step 6 continue the investigation this is not a redundant step frankly your investigation whether staff people or an outside firm should continue their work for as long as your project is a viable one by definition you don't trust the poor bastards you are trying to buy nor those who may be competing with you for an acquisition you simply don't believe anything they tell you or that you hear or read about anyone since all parties are now posturing to be in the best negotiating position over the course of a major deal you'll be bluffed and bullshitted and plain lied to directly and indirectly you'll be lied about as well where hundreds of millions of dollars are on the line or even hundreds of thousands of dollars integrity is usually the first casualty make sure it's not yours if it sounds cutthroat i've made my point it is author's note as i've said from the beginning of my career and from the beginning of my coaching career in 1993 if it's honest legal moral and ethical and you're not hurting anybody's feelings on purpose we'll do it and of authors know as you can see by now those 11 steps are not necessarily sequential in many cases they run parallel investigation never stops affirmations of your goal should be continuous your pep talks your obvious enthusiasm your total commitment all service to replenish the emotional drain on everyone in your organization for as long as it takes even unto death to consummate your deal or in our case for the minnow to swallow the whale step seven formulate your plan there comes a time in your planning and talking when you have to draw the line in the conference room carpet every indicator every director every partner may may say go but you have to push the button or pull the trigger once you're convinced you can do the deal you can almost feel your toes in digging in muscles tightening to make that quantum leap you may have to persuade cajole beg scream and bully whatever it takes to make all the partners step over the line and final commitment chances are however you've chosen partners with the same clear vision and sense of mission you have so at some point in strategizing everybody sort of looks at each other and knows in his gut god we're going for it you put your heads together load your guns and count to three and come out smoking come out smoking like butch cassidy and the sundance kid it's a magical moment but that fusion of mind spirit and souls is a rush you'll continue to search forever authors note in recent years we've adjusted butch cassidy and sundance kid analogy to rush towards a gunfire and kill everything there of course it's metaphor end of authors no and before it's all over you'll be going to need all the magic you can get once you've recommitted and your company is committed it's up to you to keep initial momentum and fever pitch regardless of the roadblocks snags and ambushes you can you run into you never by word or groan express a doubt as i've said before i may be wrong but i'm never in doubt even the slightest negative reaction can rip like wildfire through your company's morale during the periods of high company stress employees who are working hard as hell for you need the constant reassurance that everything's going to be all right like little kangaroos they want to stay in the warm pouch given that pouch i learned this lesson the hard way during the heat of negotiations over bow valley usa i made a usual commitment to one of my associates to the effect it was looking pretty touch and go right now then i flew off somewhere on business my associates mentioned my comment to his wife she ran into another wife over the health club and told her by the time i got back i had all but harry carey in the hallways the word was out that the ceo himself were going to lose this deal we're going down to defeat i stomped through the offices stomped out the fire and we learned a lesson i already knew share hope share a dream but never share a doubt at this point you begin to formulate your action plan this is the blueprint that keeps you pointing in the general direction you want to be headed as you travel through the process of the deal the first step of your action plan is define your a desired outcome what do you want what do you need to get out of the deal the answer is not something big like a lot of money or a bigger share of the market have your pencil neck analysts run several what-if scenarios that spit out your worst case and optimum and best-case results number and write down the elements of your desired outcome start with whiteboard in your conference room in front of your decision makers make hard copies and distribute them to associates and staff all those who are going to be busting their chops for the next several weeks or months need to know what you want come out of the nights and weekends that you're asking them to sacrifice step two in your action plan is define your pay price to action remember your pay price to action is how much you're willing to pay to forfeit in order to achieve growth even the sweetest deal unless you're a purse snatcher requires that you give up something in order to gain something if you don't decide in advance how far you're willing to go how large a price you're willing to pay the momentum of the events later and the heat of negotiation could well push you into giving away the storm define your parameters now and stick with them step 8 establish your critical path by this time in your action plan you and your other decision makers need to chart the critical path the sequence of events which must fall into the place for you to achieve success you also need to set up an instrument by which to measure your progress and towards success how in the hell can you know where you're at at any given time if you don't know where you're supposed to be like a construction manager or a project engineer for example you develop a flow chart an optimum time line for securing the bridge financing nailing down loan guarantees starting face-to-face negotiations you need measurement because it gives you a sense of discipline and order and often battle is joined when the smoke of a corporate combat obscures your field you're suddenly struggling to hand a hand with both foes and fair weather financial friends and you're calling in air support on yourself to kill the bastards so the deal can live you're going to need all the discipline and order you can muster step three of your action plan requires you to modify your plan as necessary the route to the best deal you can make is not a straight shot across open field minds change spirits fail rates rise alliances crumble conditions change and you have to react quickly and cleverly to every twist in the road in my seminars i tell my audiences to think of a rocket that takes off and from earth headed for say a rendezvous with jupiter the son of a is off course 95 of the time technicians on the earth are continuously beaming up mid-course corrections to affect coordinates in deep space they never dreamed of think of your deal as a great juggernaut hurtling through time in approximately the right direction you just have to keep nudging it to hit the ideals expressed in your desired outcome authors note in recent years the rocket ships or the ships that are going to the various places in outer space are not 95 off course technology has gotten much better but the principle still holds true end of office note step nine implement and follow up that means don't take anything for granted or anyone even your key decision makers your most trusted and reliable partner being human can let a detail slip forget a phone call overlook a loose stand even though most solemn pledges of support from others are often made on shifting sand don't take anything for granted or anyone even your key decision makers check every detail yourself in order to relate how mines and loyalties change let me give you a little example we had originally had a mine to purchase just oil and gas assets at bow valley usa but napco shunned our interest in our joint venture acquisition they treated us like pesky little kid pissed me off but i saw their rejection of great western as an opportunity to go for the whole company of course we hadn't set up the financing for the oil and gas we hadn't set up financing for oil and gas assets yet but this was an opportunity steering us in the missionary position and we jumped on it the complexities of pursuing a multi-million dollar business deal are akin to the constructing a giant house of cards every link at every level has to hold in place simultaneously a high performance individual must have the tact patience strength and delicacy to add one card after another without the whole damn thing collapsing and the clarity of eye to catch trembling wavering elements and shore them up before they snap and fall that's where the follow-up becomes a fine art great western largest shareholder was in arm of the kuwaiti government although only one guarantor was initially required the canadian owners of bow valley usa insisted that both our largest shareholder of the kuwaitis and our stock brokerage firm in london guarantee the deal the kuwaitis had reluctantly agreed to guarantee the entire transaction but suddenly they were backing away from their agreement because they didn't want their name disclosed in the documents meanwhile our brokerage firm in london was going through senior personal changes and allies in the deal replaced by other company personnel we weren't so familiar with i flew to london to steady up our friends and negotiations began in los angeles handled for us by mark why los angeles and not our office in denver or better yet our office in houston or london because mark's wife was about to have a baby in la nice gesture bad mistake finally just as i got the guarantees and charlie got the bridge financing in new york negotiations for the parent company beau valley you'll say close their briefcases and walked out on mark in los angeles they were actually heading for la airport while i was holding the board meeting in london to secure approval for the deal the final outcome of what was becoming intercontinental fiasco is not so important here as the fact that i had constantly follow up almost hour by hour on events in new york london where the kuwaitis were in los angeles step nine says you never ever take the smallest detail for granted the greatest victory for final the closest ally for loyal many in the millions turns good men companies and countries into snakes and weasels greed turns men into beasts and beasts in demand you've implemented all the process investigated yet again followed up and checked every commitment for leaks and you're ready to begin step 10 execute bombay's doors open your supporting elements of financing and guarantees are in place hopefully by the time you sit down in the boardroom across from your adversaries to begin negotiations at this point more than any other you have to lead from the front no more phone calls from your home office no more faxing instructions no more emails your intimidating presence your scrolling face your hardened blood splatter termination must stand in person laser beam focus before the enemy across the table if execution still isn't feasible one or more of your previous nine steps was a misstep that's why you need step 11 review and reevaluate return to review every detail on steps one through ten tighten the bolts of every phase chances are you will run across some glitch some uns crossed t or undotted eye from the weeks or months ago which now prevents you from taking this execution step six days had passed since the team from canada had packed up and left mark in la our kuwaiti associates had lost space and were fuming foreign tax issues had arisen now the canadian government ostensibly had to approve any deal my executive ep of exploration was running through the corridors of great work since great western saying i told you so even our own auditors had re-computed real taxable income before and after the proposed acquisition completely changing our projected rate of return the whole deal was disappearing down the crapper conventional wisdom pronounced it dead imagine what dan penny had to say about that author's note i said probably a hundred times end of author's note during those six days of hell i took direct command of the littered battlefield and began defensive of threatened injunctions motions and filings in new york california canada our promises to every mourn on the canadian board of directors their mothers and their unborn children i spent more than a hundred grand at legal fees in 48 hours and on the seventh day at work pouting canadians in great western with key advisors led by dan pena and convened in one room around a 40-foot conference table our team of six good stood against their team of 20 our lead transitional lawyer was rick scott one of my first disciples who went on to found a 20 billion dollar healthcare corporation at one time the largest in the world and author's note i pleasantly say he is rick scott is the second term governor of the state of florida which will be a swing state in the current election between clinton and trump and eventually upon at a closing he said dan i need to make money like you what can i do and i said you got to leave me rick he asked me what should you do and i said health care and telecommunications which meant internet as well and he took the advice of healthcare and the rest is history end of author's note we had met their demand to hold talks at their lawyer's office but i took control i stood looked every canadian in the eye and told them that we would either breathe life back into this deal or crash the son of a out of existence and nobody leaves this room until one or the other has occurred we had trash cans in the corners of the room to serve as urinals period and so it began from the outset no figure no projections provided by vaux valley parent company was taken at face value our accountants coopers and lybron had combed through the financials and the cadeans were required to provide us and by the time that we sat down we had a clearer physical picture of bow valley usa than its own parent company author's note coopers and librarian has since become pricewaterhousecoopers and they've served me very well and charlie solidy was a former partner of coopers and library end of author's note bitter arguments erupted like gunfire at the slightest provocation as an example their books show net operating loss 10 million to 12 million on which we figured to pay maybe 50 cents on the dollar it was built into our purchase price then they announced the new nol estimated at 50 to 60 million and demanded the same 50 cent payment that was insane out of the question to agree to such a demand with jack the purchase price far beyond our ability to pay and the collapse are tediously constructed house of cards we raged in disagreement our attorney advises us don't roll on this damn don't cave in screw him let's walk but we were committed we had to fight so we charged we eventually discovered closer to 100 million dollars in nols even more than the damn canadians had figured and we wound up paying 10 cents on the dollar finally 72 hours and two fist fights after we'd begun the deal was done no one was ready for this kind of gut wrenching ordeal we lived to no previous experience could have conditioned any of us including me for what happened in the name of negotiation anyone who was there during those three day dark day december days we'll never forget it i get goosebumps bottom line great western past paid 116 for bo valley's coal operation and 25 million for their oil and gas injuries additional oil and gas assets cost us another 7 million we raised 168 million in cash 85 million in short-term loans and 85 million from series b preference shares of great western stock which were gobbled up by the kuwaiti friends great western kept another 20 million for future projects authors note the over financing isn't something that i preach today and have since the beginning of my career and if the deals are structured properly and the financial institutions are given the proper information all legal moral and ethical you can over finance transactions and of authors no it was quite a cost to pay it took a minute years to digest the whale but at the interim report great western shareholder holders in march 1987 we presented total assets of 272 million and some change a quantum leap growth of 191 million from the previous fiscal year of 81 million another cost charlie was dead within a month remember you're always responsible for your decisions that's why i put important disclaimers at the front of this book author's note charlie's death shook the company to its very foundation it took us a year or a year and a half to ultimately replace them with four different people and of authors no chapter eight the plan with no escape the leader who anticipates the failure of a bold plan and prepares for it will fail in 2004 bc the chinese general han hisson led his army to a position near a camp of his enemy the army of chao inside of the fortified camp he aligned his army along the length of the riverbank placing their backs to the deep swift waters sun tzu in his classic yard of war relates that the soldiers of chow enjoyed a good laugh watching their enemies line up along the river then almost immediately the army of chao left its fortifications and attacked han shin army with their backs to the turbulent water han shins men fought so fiercely they overwhelmed the army of chow put them to fight and killed their king after the battle some of hans sins officers questioned his strategy the general replied it is written place your army in deadly peril and it will survive plunge it into desperate straits and it will come through safely if i had not placed my troops in a position where they were obliged to fight for their lives but had allowed each man to follow his own discretion we would have suffered a route for five millennia chinese militarists have subscribed to the strategy of burning the boats and breaking the cookie pots acts that told their armies in effect we have no plan b we fight or die my return to military analogies throughout the book is no accident many of my skills and attitudes about leadership originate from my years in the army at the same time of course i know a lot of tough-minded high performers who never saw it inside of a military base i believe strongly in the need for discipline which military training instills in individuals without personal discipline we are a little more than animals a leader with a self-imposed code of discipline commands the high ground to impose discipline on others and to lead whether platoons or corporations by moral force make no mistake much of being a high performance superstar is leading yourself and others against the popular path of conventional wisdom many of the strongest american presidents washington jefferson jackson lincoln were tempered as young men in the fires of war general dwight eisenhower built an enormous fighting force of uneasy allies coordinated the advance of thousands on ground air and sea forces and orchestrated victory on the cool beaches of normandy george herbert walker bush was nothing more than a rich preppy kid until he saw brave men raven die in war against war against dictatorship years later the former navy fighter pilots still had the resolve to craft an unlikely alliance of americans russians arabs and israelis to crush the armies of another dictator saddam hussein in 2004 the elder former president bush still full of fight celebrated his 80th birthday by making a successful parachute jump author's note president bush one who i've had the pleasure of meeting has since celebrated his 90th birthday and i hope he celebrates his 100th birthday end of author's note the military trains you to be decisive quickly to analyze information and take action immediately how else could i have made over seventy five thousand business decisions during my thirty seven year career authors note that thirty seven years is now uh more than forty five years and my business decisions approach a hundred thousand end of author's note during the civil war union general george mcallen looked and talked like a consummate leader to bring the north to quick victory his men loved him his army of the potomac was larger than the forces it opposed but he couldn't bring himself to make the decision to fight he acted as if he didn't believe in his own abilities to conduct war in business as i have said you must act as if there are no limits to your abilities and to that you must act as if failure is not an option in the late summer in 1986 i sent charlie soliday to new york with the instructions not to come back without bridge financing for our deal to buy bull valley usa he stayed 10 days and worked day and night negotiating with city corp our bankers bridging financing and solomon brothers the old line wall street operations firm to underwrite the required loans it was year's end as with all major players in this industry their plates were full with bigger fish than us i knew they'd be listening to our proposal very carefully and watching us closely for heads of beads of nervousness investment leaders use intuition to so our strategy was to act for ask act for an irrevocable position of incredible confidence as the deal was virtually a given the financing was a fairly standard proposition and the chance to participate in the financing was a privilege sweetened with a potential for enormous profit accordingly charlie calmly paid city corp 250 000 and solomon brothers 500 000 up front just to look at the deal the money which would become part of the overall fee if they handle financing was non-refundable even in the 80s 750 000 was an impressive sum and represented a huge portion of the cash for great western to lay out considering we only had about a million total in cash and admittedly this was a radical departure from the way i usually handle fees but in desperate times you got to do what you got to do imagine how those button-down bankers conservative by nature perceived our level of confidence charlie had just pushed them to the table by handing them 250 000 in advance over at solomon brothers meanwhile we had gotten our attention as well i can see them wide-eyed rubbing their little palms greedily saying this would be a hell of a deal for penny to plunk down half male in advance that we better take a look at it at this cold deal look at the fat fee we might be missing now plus all those fees down the road they must have been salivating on their pinstripes but charlie pushed even harder acting as if he had no limits to his abilities he told the bankers if they didn't act in 10 days he has the deal he was taking the deal to our bankers in the uk 10 days by boys or kiss it goodbye but our backs were at to the river we had no backup our bank in the uk sammy montague had already turned us down we were fighting to the nail for the survival of this deal bluff worked and we got the financing 85 million in short-term loans from city corp underwritten by a take-out commitment by solomon brothers with bonds to be issued by early 87. the lesson is that you've got to plan for and expect success this means no backup plans no records no failsafes or you will fail the finest high-wire acrobats working without a net the only faint hearts are in the audience in our opening tale the chinese commander knew that armies fight best on desperate ground with no alternative the hungriest salesman closes the hardest facing death the concerned animal is the fiercest returning to the wisdom of sun tzu the ancient strategist advises advancing generals not to press a desperate foe too hard or block a retreating enemy for he will fight to the death against any attempt to bar his way and it is too dangerous an opponent look for ways to make your people dangerous opponent opponents when the stakes get high by creating for them and yourself a level of atmosphere of risk this goes back to your comfort level for taking risks no matter how many risks you take and how often they're still scary the only risks that aren't a little scary are the ones not worth taking if you're experiencing no anxiety or occasional fear as you grow your business the so-called risks you're taking are probably not worthy of you let's talk about dealing with fear fear and pain are related in their both signals that you cross the line beyond which your mind or body is not comfortable just as blister creates pain risk creates fear they're both natural primal responses the trick is to become comfortable in the presence of those responses the athlete who learns to win regardless of pain has raised his or her comfort level to deal with the pain authors know in recent years i've used the analogy uh that the qla mentees have to become comfortable with being uncomfortable and of authors note there's a story about t.e lawrence known to history as lawrence of arabia he and another british officer stationed in the saudi desert talking about pain lawrence walked over to the candle to demonstrate his disdain for physical pain he held his open palm over the flame until flesh reddened then removed it the other officer was astounded doesn't that hurt terribly he asked the point is that it hurts replied lawrence the point is that you don't mind if it hurts as a high performer you must do the same with fear caused by risk the fear never goes away you just deal with it and become comfortable in the in its presence does dan pena still feel tinge of fear sure but is he ready when it's time to fish or cut bait damn right i've told people for years i was born ready authors know as i read this in fall of 2016 having just turned 71 i still surprise people the amount of pain that i can endure both physical and mental end of authors know but the reality is that i've trained myself by exposing myself to thousands and thousands of uncomfortable even perilous situations so i would be comfortable with my abilities when the testing time came i'm not unique high performance individuals flourish in an atmosphere of conflict crises in trouble in fact progress often masquerades as trouble as an aside i avoid and detest the bastardization of the word challenge and opportunity as synonymous or euphemisms for trouble or problem when some cheery-faced office chirps we've got a challenge to meet i want to throw up did the captain of the titanic waiting in the sea water discuss challenges and opportunities with the crew did custer turn to his troopers at the little big horn and say man with regard to arrows we have a challenge this morning if you're in a big trouble have the respect for your executive staff to say so without having surrogate it is a challenge we'll all talk more about conflict in a moment but now let's examine the relationship of strategy and structure in a high performance environment i'm not talking about sharing doubts here keep your doubts to yourself i'm talking about big problems that need stating up front the solutions to be found strategy and structure and which comes first in the knowledge that unforeseen problems will arise to screw up the best laid corporate plans let's discuss the utilization of two separate elements of company organization structure and strategy structure describes the organized makeup of a firm's being the form and nature of its existence evidence of structure includes such elements as the ubiquitous organizational chart and the chain of command executive committees individual job descriptions typists and posted in every cubicle and the way things have always been done mentally structure requires no human thought to continue to exist on a day-to-day basis structure is a permanent framework within which every project every potential for new revenue every lurch forward must be filtered structure is immovable and inert becomes over time a temple of conventional wisdom and a impediment to quick decisive action the structure that may once have facilitated strategic planning implementation now hinders and discourages it and the larger the company the more complex and intimidating the structure in recent years such corporate giants as sears gm ibm have become classic examples of this truth and of course the federal government plotting through the paperwork and bureaucratic is the granddaddy of them all authors know companies that have not replaced sears gm and ibm but have been added to the list are such as microsoft google and i predict even someday facebook end of author's note having said all that we need to remember that structure itself is not inherently bad indeed it is absolutely necessary in some form so that a company maintains a semblance of orderly operation strategy is entirely different almost the antithesis of structure it requires thought to exist strategy implies movement toward an objective and it is fluid in nature it is a plan created to propel and utilize people and resources efficiently cost effectively and especially profitably whereas structure has no known origin but is framed and hangs in the lobby strategy has many sires and is grappled in a marker on a whiteboard in too many companies today's strategy follows structure executives trying to develop strategy in pursuit of a passing opportunity must scramble through the grid work of existing structures seeking approvals following form and observing protocol the aforementioned corporate entities sears and gm are textbook examples of strategy following structure during the mid 90s this trend debated as companies returned to more flexible more participatory management structures at great western i emphasized continually the dictum of structure follow strategy we maintain a basic organizational structure of course ceo three evps mid-level management etc but as soon as we made the decision to take action on a project such as an acquisition and formulated strategy we had the flexibility to remold structure and streamline into streamline it to meet the needs of the strategy job descriptions changed procedures were compressed and normal working hours became days night and weekends when we were on more footing we defined structure as whatever the hell it took to keep strategy on target and on schedule and our target was winning at all costs even more importantly structure in support of strategy enabled us to maneuver through crisis to handle the ambush of unforeseen problem as quickly as it arose and move on thriving in conflict conflict is part of life it is a natural phenomenon that results when people act in a pursuit of varying interests priorities and desires kids fight over toys primitive tribes fight over territory gangs fight over turf companies fight over market share contrary to what mush-brain idealists would have you believe conflict is not necessarily bad conflict weeds out losers while confirming the right of the superior to prevail is how conflict is managed or mismanaged that defines it its quality it's very evolutionary almost durian how the doctrine of survival of the fittest reveals itself across the corporate landscape in the form of downsizing mergers and major consolidation business deals especially at the high performance levels distill and concentrate conflict because the stakes are so high and global politics when negotiations break down irreversibly and the parties can go to the war since killing in war is not illegal but in the business the force of law and ethics mostly law probably discouraged executives from physically harming one another to get out of their way so the ultimate corporate arena for conflict resolution short of legal action is the negotiating table winning on your terms negotiating like super success itself is not the touchy feely is not for the touchy feely people who'd rather be loved than victorious invariably lose their ass at a negotiating table as another high-performance oil man jay paul getty once said the meek shall inherit the earth but not its mineral rights authors note having never met mr getty but being around at the end of his uh tenure i know he was a legend and i wish i had met him and the author's note i love the dynamics of negotiations skillful negotiators of which i am among the best are uh forceful uh persistent perceptive and patient i thrive on seeking out and defining my opponent's comfort zone the imaginary box we discussed in chapter four and then placing an offer on the inside rim of that comfort zone closest to my own best interest this delicate placement gives the doofus the absolute minimum he'll accept to close the deal and still be able to convince himself he won and he really stuck to it and he really stuck it to me negotiations is a poker game played with fortunes at stake instead of chips to win and this is the key you must make the other guys think that they want what you got more than you want what they've got and in kenny rogers words you gotta know when to hold them and know when to fold them negotiation is ultimate empowered play knowledge of your foe is your most powerful weapon of course and i maintain a full-time private investigator on the staff for exactly this purpose but control of physical element of negotiation is also crucial from the moment you entered the room you want as much accumulated power as your side of the table as possible accordingly i have five ground rules for people and myself entering the negotiation one suits required that seems obvious enough but i've bargained against morons who wore their golfing suit attire to a morning session because they anticipated getting out of in time for an afternoon tee off you think dan penny adjusted his negotiating strategy to make sure that there was no golf that day until he had dan's deal on dan's terms you bet but beyond that your custom business suit and power tie even at six on a sunday morning or 10 sunday night tells your counterpart that you came for business and negotiation is your absolute top priority a clown in a sports shirt tells me that he's got something else on his mind two my place like any other contact sport negotiations favor the home team in my conference room the familiar furnishings the familiar feel of the chair beneath me even the lingering aura of past victories one there all contribute to my power level by contrast my adversaries are on unfamiliar ground they are dependent on me and my staff for coffee and other amenities and to tell them where the restrooms are if i decide to tell them when you're getting ready to hammer a negotiating opponent before he realizes it there's no place like home three my contract always volunteer to drop the contract i'll go ahead and have my people draw up the contract it's no problem it seems innocuous enough to offer the courtesy of handling this detail but now everyone will be beginning with your contract the language your dream team lawyer has carefully cleverly written to earn his equity and you get a first and a longer look at what it says and how it reads enter negotiations with a perfect instrument from your perspective so the burden is on the other side to find in recognized terms terminology and clauses not to your advantage four nobody leaves until the deal is done you tell your counterparts in advance that you expect the deal to get be signed at the end of the upcoming negotiation meeting and for them to make whatever preparation required for non-stop marathon in fact memo them to that effect they'll agree because from the comfort of your own offices they can't envision this type of meeting you're already mentally preparing for five everyone necessary for the final definitive decision must be present at the meeting or there's no meeting it's like a salesman who must have the buying committee president in order to close the sale if one executive is not able to attend the important negotiation where millions of dollars are at stake one of two dynamics are occurring the other party does not want to make a final decision and put ink to paper before the doors are unlocked or a key player is revealing an attitude problem and by the absence is saying i don't like this deal i don't like you and reserve the right to veto every decision and negate all the work invested in both parties either way it's a negative force which must be resolved before serious negotiations can begin with all the ground rules met the other team arrives at say nine o'clock in the morning you greet them with friendly formality offer coffee and escort them to where you want them to sit then you buzz your assistant and instruct that no one accepting calls you ask all present to turn off their cell phones ipods and other sources of interruption you get up go over to the conference room door and lock it saying i know this is important for you as it is for us don't want to be disturbed do we how can you they disagree at the same time message or memo about remaining in negotiations until the deal is consummated is starting to sink in he means it you have to make some allowance for potty breaks after all you did give them coffee that's why the conference room of high performance companies have adjoining restrooms but the point is that you expect no one to leave not for another meeting nor a golf at three or even for meals when you thoughtfully order in in handling the meeting in this way you're exerting total power over these unsuspecting doofuses your place your contract your rules the most successful negotiation is the win-win deal that doesn't mean necessarily that both sides win all of this could be the case as an apparent win-win means that each side believes he got enough of what he sought to declare victory of course there is no real win-win situation the illusionary phenomenon is a product of today's feel-good rhetoric dribbled from the lips of intellectual cream puffs who've never been there and done it negotiating styles range across a fascinating spectrum we americans for the most part except for dan pena have a basic need to be accepted and maintains a low key patience driven style most executives have been conditioned to be comfortable with a genuine win-win that results in everyone's partying filled with satisfaction and mutual perspective not joy and love of all humanity because perception is reality this occurs in theory but rarely in reality the other end of the spectrum is to stay brutal abusive and inflexible such negotiations frankly work on the premise we win and take everything you lose and get nothing during the cold war u.s negotiators played hopelessly by win-win rules against soviet negotiators who wouldn't budge an inch the soviets were absolutists meaning they would settle for nothing but absolutely everything their negotiations with fellow countrymen in chetna in 1995-1996 consisted of level leveling whole cities and killing entire populations this dichotomy of negotiating styles has always worked to our disadvantage and gave rise to the saying before vietnam we never lost the war nor won a peace today's equivalent are despots who rule china north korea and venezuela syria and iran absolutists who only respect power and the will to use it iran will not accept israel's right to exist until israeli bombs use their nuclear facilities to hold in the sand if then i am not a despot but i don't mind being perceived as one in a negotiation with those starting with the usual win-win crap have someone on your team record the proceedings or at least take thorough notes especially on the details of the deal as they're hammered out at the end of negotiations or even at the end of the lengthy session have those notes typed and printed out and hard copies for the two chief negotiators it's amazing how people forget little negotiated points especially concessions they've made in the heat of the moment so memorialize your deal as your notes reflect and leave a little space in the bottom of each page for you and the other negotiator to initial initially such a memo shouldn't be a problem if verbal agreement has already been achieved say something like this is pretty standard we always do it this to protect both parties how sometimes i forget things myself and read the memo first before you hand a copy to your counterpart as if checking your accuracy then you initial your copy first and demonstrate your good faith but dan what happens if they send you a contract later in which minor details have been changed send it back they're testing to see how your resolve ways against the desire to get the deal done and with no further delay send it back immediately you might even attach a copy of the memo they initialed at the conference table highlighting the item they tried to renege on or adjust don't let them weasel out on one percentage point not one digit or dollar sometimes even your most idroid negotiating your cleverest ploy will not dislodge a position taken by your opponent if you can't agree to the point in the deal say no the proposal is unacceptable to us as it stands if you can't work with us to solve uh the impasse we'll have to break off negotiations they'll call you on it by replying something like at this point in the proceedings we're not prepared to compromise on this particular issue but we can talk about it some more at a later date so without a word you gather your papers put them into your briefcase and slam your briefcase shut your associates mechanically do the same then you look at their senior man in the eye and say you can reach me through my office you and your associates stand up and walk out if you in your own conference comb you have left the other side to scratch your head and disbelief and find its own way out or shown out by secretary if the meeting happens to be at their offices or their attorney's office the worst place it's even cleaner for you to just execute your walk out just remember when you get outside keep walking and never never look back they're watching you from the windows then you disappear from their day giving them time and space to reflect on the stupid intransigence the point is don't be afraid to walk out a dramatic exit is a killer because it's always unexpected just like those bastards did to mark harrison in los angeles a a lesser company than great western would have accepted defeat but we wanted that deal no we needed that deal more than blood in our veins and we did what it took to get negotiations back on track walking out is a tactic as surely as sitting with uh the back to the window so that the guys have to squint by the way never make an empty promise or an idle threat mean what you say then do it without a blink as if you're done you've done it a thousand times if you say you're going to walk you better damn well walk no matter what or they'll never believe another word you utter again don't worry you can always resurrect another day i'm not going to get into the nuts and bolts strategy of success on negotiating those books have already been written my message is learn to thrive in the conflict of negotiation know your foe master your tactics enjoy the poker game and win no matter what happens so create a plan with no safety nets no escape make sure strategy drives structure not vice versa learn to thrive in conflict and become a master poker player at the negotiating table now let's go to raise some capital chapter 9 offering lenders the chance to finance your dream team borrowing money from a bank is like having sex you both want it but they need reassurance of your intentions and foreplay no matter what business or profession you happen to be in there are processes and procedures you do so often that you regards as so basic you take it for granted every everyone knows how to do them if you were to ask a master carpenter how to drive a three inch nail through a board he'd look at you funny and say you just do it i feel the same way about raising capital i would almost sleepwalk into a bank and walk out with several million dollars is so basic to what i do that i didn't realize it was a secret i conduct quantum leap advantage seminars at my home guthrie castle scotland this extraordinary week-long castle experience for business owners and entrepreneurs at my storybook home is beyond compare at the conclusion of every seminar i ask attendees to complete critique sheets and to offer suggestions with regard to seminar content delivery and overall value in reviewing these critique sheets i realized that a significant number of the respondents were asking in one way or another the same question how do i get the money i was astounded i assume that when a seminar attendees began thinking like high performance individuals and applied strategies of high performers they would instinctively know how to find and secure the capital they needed to take action authors know in recent years i have started doing podcasts and i have many on my site free and one of them is called how to get the money and authors no two simple facts emerge from these critiques first most potentially super successful people are still held back by a residue of fear about asking for money they still approach even the idea of talking to a lender with a trembling lip sweaty palms and pounding heart if the idea of walking into a banker's office strikes mortal fear and you let's put this in perspective right now and move on not long ago a news article called what kills us listed the statistics for the most frequent causes of death heart disease is the number one killer followed by cancer then stroke and lung disease by not one death has ever been attributed to rejection by a banker or indeed the rejection of any deal presenting a deal is not sophie's choice so get over it the second fact i learned was that the techniques of dealing successfully with bankers remain a mystery even some of the virus proteges were hesitating before the barricades of uncertainty artificial barriers i had trampled to splinters so long ago i'd forgotten about it as a result of these revelations i developed a new seminar in 1995 called the qa raising capital program dealing exclusively with finding and securing capital it focuses on the step-by-step details and techniques of this apparently mystical and forbidding process we even do role playing often with myself cast or miscast as the doofus banker this chapter and next briefly surmise the content of this seminar but if you're serious about giving lenders the opportunity to lend you some of the cash they're sitting on i urgently recommend you attend this 10 hour exponentially explosion of information of course you can also buy the cd my standing guaranteed attendees is that if you stop there moaning get into gear and follow the methodology and don't get their capital funding in one year i'll refund the seminar tuition period author's note while that was true when i wrote the second edition of the book the basics of getting money are still the same very easy but since then i have on my website courtesy of dan lok the raising capital seminar from 1995 1996 where you can get the seminar but where it outlines in detail and of author's note capital finances quantum leaps not pussyfooting as you'll recall the two primary jobs of the ceo are to find money other people's money and to find deals if you're the owner of us or ceo of your company you should leave operations marketing administration and group insurance to the competent people you hired and spend 95 percent of your time kissing frogs and if you don't have any employed yet find people to handle these tasks as quickly as you can and why do you want people money and deals because unless you're selling drugs there's no way you can grow internally faster than you can externally there just isn't forget new sales territories forget new products forget cutting costs all you'll achieve from these piddly efforts is humdrum arithmetic growth widget sales up seven percent thirteen percent less spent on paper clips who cares you want to grow your business exponentially in quantum leaps as fast as humanly possible while arithmetic growth means 1 plus 1 equals 2 2 plus 1 equals 3 etc exponential growth means 1 times 10 equals 10 10 times 10 equals 100 10 times 100 equals a thousand isn't that a little more exciting there's an old chinese proverb you don't leap a chasm in two bounds for high performance business people that translates to you don't pussyfoot yourself to quantum growth after you practice for success flushed conventional wisdom visualized your dream and incorporated new rules and started running toward the chasm between you and quantum success you're probably going to need more money than you've got to finance your lead besides not even the most obliging banker is likely to lend you money just to get your feet wet your whole-hearted enthusiastic commitment is as important to him as it is to you he wants to be assured you're going to use your loan to create revenue so both of you benefit from the transaction locating your financial partner no matter where you live you have a choice of financial institutions to consider when you begin thinking about borrowing capital banks savings and loans venture capitalists finance companies and other sources since banks fund about 60 of the business ventures we'll discuss banks first you'll recall i said that quantum leap strategies can be universally applied the fact is many of my capital raising skills were developed in the united kingdom then perfected in the u.s i know british lending institutions better than most brits that's why i remind my british audiences how many banking officers there are in the uk to approach for capital china's hsbc alone has some 1800 offices throughout the united kingdom approximately as many as barclays and more than standard charter bank lloyd's trustee savings bank who took over hbos halifax bank of scotland already had more than 2 000 offices if you're in the uk don't tell me you can't find a bank to pitch authors note since this writing of the second edition there have been additional foreign banks that have moved to the uk there's also been additional consolidations but there are still in london alone over london proper over 400 banks end of author's note wherever you are look in the phone book read the business section of your newspaper a lot of major metropolitan newspapers published quarterly a list of banks which are looking for borrowers call the business desk of your newspaper and secure a copy of the most recent edition at report ranging further afield such magazines as entrepreneur inc periodically publishers state by state list of financial institutions that seek to publicize their desire to lend capital so you shouldn't necessarily limit your search for financing to your local market or even your state in fact i would strongly recommend you go outside your local market no matter where you are of course those banks aggressively using a traditional advertising have money to get on the street those banks advertising on the internet also have money to lend authors note since the publishing of the second edition of this book and the advent of a more detail-oriented internet based platforms like google it is relatively easy to find financial institutions of all sorts end of author's note in seminar after seminar i have i have the latest special newspaper section of magazine edition with all these listings in the air and asked to see the hands of those business owners and entrepreneurs who have used any of the publications to seek capital i get maybe one hand or no hands it's like these listings were published on mars are race held with the audience and tell them that even today i get an active file on banking news and regularly appears in the wall street journal the new york times the financial times of london and other major publications if they are serious about finding capital they should pay attention to the wealth of information that institutions are disseminating and so should you so using all resources available make a list of financial banks which begins with the first mega bank headquartered in the tallest skyscraper in your state and ends with a community corner bank down to the strip mall and by the tattoo parlor then you do some homework to find out who the managers are of your most likely prospects and who the lending officers are go down the list call each bank and ask the names of these bank officers are not a state secret stop by and ask the reception or even the security guard what financial institutions are most likely to lend you the money you need at the top of the list or any new open branch offices why new banks have no customers they are stacked to the ceiling with money you need to shovel out the door in order to begin generating income and they're run by a shiny new manager who has a desperate need to prove himself by generating loans consider this actual promotion recently written for a new bank in florida mid-state bank of florida is now open at the corner of robinson street and magnolia avenue to handle all your personal and business banking at the mbf our style of community banking is based on building personal relationships with our customers we get to know the needs of your business so we can provide the best mix of financial services adopting them to meet your specific business requirements when you need a loan or a line of credit relationship banking means approvals come quickly from the local management people who are already know you this bank is really saying please give us a chance to lend you money in the words of finance we call this bank a lay down they should have their grand opening in the vault hand out shovels if i were shopping for capital in florida i'll be at this bank like a line on a fleeing wildebeest authors know it is even more blatant than this now as i describe podcast and various pages free again on my website the internet makes it almost a slam dunk to find capital for your new business as i say and as i've said since 1995 somewhere out there there is a bank a doofus banker that will fund your dream end of author's note i recently read where two women banking executives joined together to open their own bank if i were a woman trying to secure funding for my dream i'd be on the phone to them in a heartbeat and that's not a sexist observation who can deny that all other factors being equal a strong chemistry pre-exists between the founders of a bank and any female entrepreneur in the early years michael please react was a dutch radio personality a career he had dreamed since childhood but then in 1998 he quit while he was casting about for his next career his good friend colin met me at a seminar the two of them signed up for the castle seminar but when time came i was too sick to play host to a crowd of eager faces so i cancelled but michael and colin would not be canceled they showed up at guthrie dressed to the nines and ready to become immersed in the deep waters of qla what an incredible experience at michael for three days day and night we had our own private castle seminar we learn step by step how to start our business we learn the importance of staying focused you can't hit two goals with one ball and most important to just do it no fear michael told us how lack of fear and total confidence worked wonders when he went looking for money when he went out offering lenders a chance to finance his dream moved by the conviction that anything i wanted to achieve was possible michael said i went to the bank i had great story and the ability to convince potential lenders of how successful my project was bound to be i got my first half million gilders in a week i made up a business plan and found a partner and an investor i continued to pull funds together and in 2001 signed a contract with a private equity partner for 70 million gilders and this happened within the year after i left guthrie and at the time we were just six people working in a huge empty building within a year we bought several tv production companies had grown to more than 150 employees and were employing enjoying a turnover of more than 20 million gilders it often happens officers brought into a corporation to run have different management styles and goals than the founding entrepreneur and outnumber that individual into forced departure the day after i was given the opportunity to leave i started my next venture seven years later we sold it the company to a major publisher for seven million throughout these experiences dan's lessons kept coming back to me dream big and just do it authors know michael has subsequently come back to the seminar again a few years later i believe it was 2010 and has gone back and after getting wealthy in his publishing business this decided he wanted to give back to the world and he is doing seminars around the world based on his experience in qla and the authors know for lending purposes there are basically two types of banks centralized loan institutions and branch bank institutions the centralized bank pools it's loan requests for several branches and this bundle of requests is forwarded up to people who never heard of you your deal will be weighed objectively in competition with all other requests and regardless of its merits as a splendid opportunity it's likely to get lost among more promising deals backed with a stronger collateral and other advantages instead you want to approach a branch bank institution with local lending approval power like a mid-state bank in florida this is likely to be a community bank or a hometown bank run by neighbors in the banking business loan committee is comprised of your individual banker who becomes your advocate and three or four other bank officials directors or community business people and golf forces to whom bankers looked for guidance suppose you picked five banks which are possibilities which banks do you try first the one that least likely to provide you financing that's because you need to practice your presentation skills both on the phone and face-to-face meetings make all your mistakes expend all your butterflies before you get to the serious prospects what's your first point of contact if you've recruited your dream team i recommend you have your accountant or your lawyer make the first call on your behalf either one of these individuals is likely to have more clout with the banker than you in fact the banker will take the call of your lawyer and accountant long before he'll take and return your call an interessary call made on your behalf suggests you are a significant or at least a knowledgeable player in the local business community remember perception is reality your accountant hopefully a prominent cpa or chartered accountant in the uk association with a respected and even a big four firm uh calls the banker and says as joe jones accounting firm we've recommended that he his company consider your bank to establish a business relationship they're in the so-and-so industry do you foresee any conflicts of course not good i'll have him call you and set up a meeting but suppose you're still selecting your dream team and have to make the first call yourself of course you shouldn't no problem you start with the manager but you may be passed to the vice president of lending most likely however you may find that mr j fred banker is not available and some assistant will take your number do not sit by the phone and wait for him to return your call like most bankers he is very busy individual being phoned constantly by people he already knows who are more important than you a total stranger call him back call him back again and again if he has a voicemail saturate the system with your patient professional messages if i find out he is has no time called indicator i'll call 13 times in 10 minutes finally fred j fred banker will realize hmm this guy's persistent and he's going to screw up my voicemail if i don't call him back so he calls so introduce yourself graciously thank him for returning your call and begin the same basic opening routine i'm in the so-and-so industry and you're experiencing rapid growth with opportunities in several directions i'm looking to establish a financial relationship for my business and i'm in the process of interviewing several banks which have been recommended but rather than go into details over the phone i'd like to set up an appointment to meet and talk personally when when would be the best time for me to come by authors note since writing this and for the second edition kids and i call you all kids because i'm old enough to be your father or grandfather have perfected this system through linkedin and have actually gotten entire dream teams on the phone including accountants and lawyers and even the initial relationships with banks it's a new generation and uh the internet can't be overlooked end of author's note notice you didn't say i need to borrow some money i need it to buy next thursday bankers you see are very much into relationship banking they want to know who you are see your face and understand what the hell you do and begin forming a judgment as to whether you'll be able to pay back any capital they may ultimately lend you personal chemistry not the numbers is absolutely key both for you and j fred banker by the way it's part of your strategy that you inform fred you're interviewing banks this puts him on notice that as far as you are concerned you're the one doing the selecting you're in control of hiring a bank maybe his maybe his to handle your affairs it also tells him you're talking to his competitors and if you are a significant account for him he's going to have to earn it doesn't that approach beat the hell out of how you always thought it would be crawling on your knees to gravel for a loan so in order to begin developing your mutually beneficial relationship you might suggest lunch bankers always pick up the tab it's part of their training i've been dealing with bankers for over 35 years and i've never had to buy a bank or lunch except in scotland it's even better if you can arrange for one banker to see you having lunch with another banker author's note i've now been dealing with banks more than 45 years and the picking up tabs by bankers are still in force but it's hard to get a scottish banker to pick up the tap for anything end of author's note your first meeting is to get acquainted for each of you to see what the other looks like and sounds like so the bonding process between you can you hope begin your initial presentation of your project should still be general and last no more than five to ten minutes you also have two other things to do during that meeting listen and ask questions as you discuss your ideas give the banker a chance to react to what you you're presenting him after all he had a lot of dreams come over his desk some dissolving into smoke others becoming realities this guy can probably offer some suggestions and ideas you can incorporate into your thinking help you sharpen your focus and even give a better presentation to the next banker you talk to his advice is free and it's based on experience so listen to him most want to be borrowers sit in the front of a banker with no idea of what to ask beyond can you help me they don't understand that they should be in the interview mode asking questions to clarify just what this bank is all about and if it's the best bank to fund your project in britain that means you got to know the difference between say the world bank of scotland group and lloyd's tsb let's talk about some questions you need to ask each other with whom you have a meeting and why each question is important one what is your personal lending limit secured and unsecured every bank manager and loan officer has a credit limit that he or she can approve without having to check with a superior ask in fact ask this question on the phone before your first meeting you may be talking to the wrong person and don't let them hedge around with relationship double talk specific number if they tell you it's fifty thousand dollars you're going to probably need about forty eight thousand if it's four hundred thousand dollars your requirement will coincidentally be about 350. but if you determine that this person does not have the authority to approve as much as you may need move beyond him immediately number two who do i have to go to for an approval on the next level of financing when jay fred tells you who the official is at the next approval level that's the person you want to meet don't waste your time making presentations to the wrong people while you're asking about lending limits inquire about the credit limits of the bank itself when you ask a banker about his employer's unsecured credit limit usually one percent of assets he begins to think that you're in terms of maximums number three are you a centralized loan institution that pools the loan requests for a branch-based lender we've already said you're looking for a branch-based lender and why number four is your bank presently in the lending mode or in a downsizing mode this is a code for having made some bad loans in the recent past to the extent that the government is watching your lending practices very closely it's not classified information and your banker will respect you for uh knowing to ask the question if he says something like well we're in a holding process right now that's his coded response for we're in a death spiral right now do you have any openings for for a former banker before you escape you may want to buy his lunch five what type of ventures do you like to make loans on some institutions focus on telecommunications others on healthcare or international trade if you're reopening purchasing or expanding a chain of hardware stores for example you want a bank which had a comfortable lending record to retail ventures if you're in the retail liquor business or want to expand your chain of gentlemen clubs you need to be aware that some banks as a matter of policy try to avoid vice industries the thought of a 20 million dollar deposit however might change that policy six what was the last deal your bank turned down and why another unexpected question but get your banker to tell you about the deal even hypothetically as he relates to you a case of what he was not looking for you gain a new insight into the what he is looking for in a lending relationship seven what was the last five million dollar deal you did you might not ask this question to a vp at ubs bank of america or barclays but for some likely lenders in your community this is a significant question you're asking your banker in effect to demonstrate his comfort level and skills at maneuvering both of you through a the multi-million dollar lending process eight can your institution take me to the next level of the quantum leap how much are their assets once again as a rule of thumb banks can land one percent of total assets unsecured and two percent to three percent of total assets secured authors note these numbers may have changed but they are good for a general rule end of author's note number nine what is your bank's policy on asset lending versus cash flow lending by now j fred banker is sitting up in his chair regarding you with a degree of awe you're already sounding more sophisticated than 95 percent of the mornings he talks to about loans in asset lending the loan limit is determined by the loan to value of asset take 50 percent as an example if you've got approximately a hundred thousand intangible assets the bank will lend you fifty thousand dollars many banks these days steer clear of asset lending because of the past loan defaults have forced them to become reluctant property owners you should look for an asset-based collateralization loan since most banks will bend over backwards to work with you in a pinch rather than take possession of your chain of dry cleaners or pet stores cash flow lending a basis lending parameters on percentages of existing cash flow revenues less operational expenses cash costs and taxes typically between 50 and 65 percent of cash flow without smoke and mirrors if you're already producing income many bankers prefer this basis because they can get their hands on income without hassling property ownership or attempting to realize tangible assets if you're just starting show them how much income your project generates so that they consider giving you the loan based on future cash flow 10. are you an interstate bank or do you operate just within the state i'm talking u.s banks of course you'll already know the answer to this one by the time you and fred banker sit down you will prefer an in trust state bank since it's simpler to deal with an institution which operates in only one state besides inter-state banks are subject to moral federal and red tape and regulations but again you'll bank with whomever has the funds and buys your dream 11. could you give me some recent examples of companies for which your bank has approved business loans come on dan isn't that a little presumptuous asking the banker who he's lending money to damn right so what you're interviewing banks and what do you ask for uh during interview references of course they're going to check yours so check theirs you're not necessarily asking dollar amounts and terms just who i will ask about amounts in fact i'll keep asking questions as long as they keep keep giving me answers if your banker is eager enough to lend money he may actually give you a list of recent lending approvals but even if he mumbles some crap about confidentiality or bank policy the questions keep him sitting up straight and it reminds him who's running the meeting you 12. do you anticipate any conflict with your present clientele in handling my banking business this is an incidental question that signals to the banker your sensitivity to one of his possible concerns chances are slim of a conflict of interest but it's better to have that question and his answer addressed and acknowledged suppose you establish a working of chemistry with an individual banker you meet for lunch periodically you play golf you mature the relationship for months or years and then he takes a position with another bank do you stay with the original bank no the spirit and substance of the relationship is with the individual not the bank the bank is nothing more than a mechanism for getting the capital your banker arranges because he's comfortable with you unless there are unanswered questions about the move always go with the banker instead of the bank otherwise you're back to square one at your present bank author's note the only caveat to that i would add is if he moves banks down not at least laterally or up you would stay with him end of author's note finally under the area of choosing bank don't overlook the option of spending your capital requirement out over two or even three banks we'll talk more about that later how to deal with financial institutions most people make two false assumptions about lending capital first that there is a finite amount of money available for an infinite list of potential borrowers and second bankers are your adversaries using their their office to keep you from borrowing their money if you forget everything else about dealing with bankers remember these two statements one there is more money out there crying to be borrowed than there are people trying to borrow it and two bankers want to lend you money because that's how they put food on their table authors note in recent years with such low interest rates and i've said from oxford university around the world you will kick yourself in the ass 10 years from now for uh not taking advantage of the almost free money there is money to fund anything if the numbers make sense end of author's note their money does not produce revenue sitting in the bank that means if they are even halfway convinced of the viability of your dream they'll give you the benefit of the doubt no wonder most banks regardless of what they have you believe they are laydowns especially with the right romancing an associate of mine at clydesdale bank told me in early 97 they were 788 million under loaned that's a lot of daesh gathering dust bring me a deal he he pleaded and if the numbers stack up the money is yours british entrepreneurs should look across the channel as well where they have access to an enormous wealth of funding sources to an economically burgeoning europe european banks are flushed with capital the fine points of how to deal with your financial institution began to surface during the selection phase we've just discussed the operating premise is that you want to develop rapport understanding and chemistry with the banker from the first words he hears you speak and from the first time he lays eyes on you that's why you practice what you're going to say before you blurt it out to the banker and that's why you dress like a sort of like the sort of business executive that a banker feels comfortable talking to and being seen with in the restaurant where he buys you lunch remember our discussion about comfort zones bankers have comfort zones too want to put yourself smack in the middle of theirs authors know with the recent vote of brexit with the uk leaving the european union some six months ago i made the comment it would have very little major effects other than a few areas one of the areas was currency and that dollar would be looked to for for currency because of the strength and the pound would drop against it this currently down about 20 percent against the dollar at about 120 or 122 per dollar the second thing i said is with the advent of oil dropping from august of 2014 about 120 a barrel to currently in the high 40s a barrel that it would affect prices in prime real estate especially mayfair if it didn't drop the prices in mayfair it would certainly flatten them out because a majority of financing and purchasing of property in central london has been coming from the oil-rich countries in the middle east and russia in both of those countries both of those areas are hurting terribly both of those things have happened and if property prices in mayfair go down or stay flat it will restrict construction not only in mayfair but probably throughout central britain and it may very well affect commercial real estate prices and the authors know let's talk about what you say first words have meanings words are both weapons and tools remember interviews and what it signals to the banker if you haven't guessed it by now bankers like to hear words like relationship partnership long term mutually beneficial when you're communicating to a banker you don't ever need money to a refined and a sensitive banker that's pretty coarse instead you have capital requirements you don't call your accountant a cpa or say my chartered accountant everyone assumes that you have a cpa or equivalent but if you use that that term it sounds like you are impressed you have one use the word accountant in all parts of the world these are details no one would ever tell you but me delivery skills will come with practice after i've been doing this a while i made financial presentations to a large english institution that in my estimation went particularly well i did charts graphs complete dog and pony show one of my little techniques for strengthening my performance is the opportunity arises to ask how i could improve my presentation after the presentation is common custom in england the head of the institution walked me to the elevator in this instance it was lord bearing of the old barren brothers merchant bank i was feeling good about what i just done but i asked the gentleman as i pressed the elevator button how could i improve my presentation the doors opened and he said nothing as as i stepped in then as the doors slid shut just before he disappeared from view he said mr pena could i suggest that you develop a stutter the lesson of course is that there's a fine line between a professional and a knowledgeable presentation and a slick one but that's an advanced lesson you probably needn't be concerned with now you live in laid back southern california or casual steamy florida or in the rural farmland of north cumberland texas or any other place on earth and you need financing for an acquisition in an agriculture related industry what do you wear to see your banker a conservative business suit period i don't care if you're about to open a pig farm in peterhead scotland you show up for your banker meeting in a black dark gray or dark blue suit with a white shirt a yellow or a red pattern power tie dark socks no kidding lace up shoes in short haircut leave your gold chains at home in fact wear no jewelry other than a tasteful a watch with a leather hand band no swatch watch too trendy no rolex too extravagant for a person looking for it for capital your waistband shoes and belt or suspenders braces in london thread needle street must all match preferably black as they may be in the banking business dress british and think yiddish if you're a woman of course you know which business suit in your wardrobe corresponds to the male attire i just described you can bet the top female executives show up for important meetings in their pinstripes you already know why but i need to remind you a banker is most comfortable talking to and being seen with a person looks like him and his associates but you'd be surprised otherwise bright business owners stroll in for a major lending presentation in sports shirts and dockers the omnipotent business plan attendees at my seminars look at me like um either nuts or lime when i say i've rarely relied on a business plan to borrow capital i made over 500 financial presentations and borrowed hundreds of millions during my career in recent years as regulations have tightened on financial institutions more and more bankers routinely expect a business plan a piece of eye wash i often wonder if anybody at any lending institutions ever read soup there are already books and software on the shelf describing the step-by-step textbook procedure for putting together business plans but on the assumption that someone somewhere will actually read it let's talk about how to prepare for preparing your business plan most fretful borrowers go to their first bank meeting with a business plan in their briefcase or under their arm so they can produce it immediately after the initial handshake wrong take nothing but your dream and your most general terms to the first meeting remember this is a get acquainted meeting a first date you talk about your business and where you're planning to take it in the long term but if the opportunity arises you also get the banker to talk about himself what are his leisure interests after he stops being a banker does he play golf fish travel tinker with his 62 mustang the point is take to your first meeting absolutely no information on your financials being with no business plan you don't want the bank to have anything at this early stage they can get a hook on and form a premature opinion in fact if the banker never mentions a plan you never mention a business plan you'd much rather get a loan he can't approve right straight away but suppose he does ask for plan you reply well i'm glad you asked i prepared a plan for you i'd like to know what type of plan you're looking for and when the time comes to acquire growth the minimum rates of return you require okay let's stop banks have several ways to evaluate a deal when they lend for acquisitions to include cash on cash rate of return this measures the revenues of a company you may want to purchase against the total equity of the company suppose the total equity is one million dollars and that revenues or profits after interest rates after interest and tax are about three hundred and thirty thousand dollars this translates it to a cash on cash rate of return of thirty percent next payback period this lending qualifier equates an initial investment amount with future cash flows in terms of annualized paybacks you say you want to borrow seven hundred thousand dollars for example and the bank wants paycheck payback in four years but your best projections of cash returns for those four years a hundred and thirty thousand a hundred and fifty thousand dollars hundred eighty thousand and two and twenty thousand add up to only six hundred and eighty thousand you need to gonna negotiate at least a fifth year arrangement to pay back the 700 000 or reduce the loan amount or go find another banker your banker again startled at your ability to speak his language so fluently tells you his bank will take say 11 cash on cash or a six year payback now you got ammunition for your business plan let's face it the figures in any business plan are only educated guesses the economy fluctuates markets change nothing is certain about business next year so you give the bank what it wants to see by backing into a percentages they're looking for making sure you establish a healthy margin over the minimum that's not in any way dishonest because since nobody can predict the future because since nobody can predict the future anybody can predict the future including you in the future of your quantum leap besides my experience has been that even if all the figures don't exactly stack up and they probably won't you'll find financing somewhere remember any deal can and will be financed somewhere by somebody if you want it done bad enough next you ask the banker about the physical requirements of the business plan you'll be preparing custom-made for the eyes of the loan committee what are they comfortable with have i mentioned comfort zone lately what sort of document would they not be ashamed to pass along to associates and supervisors among the specifics how many pages they'll no doubt want charts reflecting profit loss projections cash flow analysis and pro forma balance sheets all of the f first three years plus a break even projection chart do you prefer bar charts or pie charts do they like full color graphics what kind of color of paper is the powerpoint presentation acceptable do they prefer it in spiral bound or ring binder if this sounds elementary it's because bankers do sometimes receive handwritten plans on yellow illegal paper 300 page full color leather bound tones and everything in between and you'll need more than one version of your plan if you intend to approach more than one type of funding source bankers will be very interested in how solid the security is so your business plan must measure them of your wealth collateral no doubt don't no don't panic when i refer to wealth collateral by this i mean if you only have equity in your house or automobile you'd better be ready to put equity on the table to show commitment on the basis if you aren't prepared to take a risk on your deal how the hell can you expect a bank to back your scheme the venture capitalist on the other hand is more concerned with the nature of the in the extent of the risk involved so a second version should address these concerns john doerr is one of today's most dynamic and successful venture capitalists as a partner in climber perkins clawfield and buyers near palo alto california has seen stacks of business plans and puts them in perspective don't obsess over the plan he advised entrepreneurs in fast company magazine the better plans we've seen are the shorter ones often 30 pages but sometimes just three the intel business plan was one page the sun microsystems business plan was three pages what we're looking for in a plan is how the team thinks about the business we can figure the rest out in the conversion with the founders ask the banker if he can get you a copy of a recent business plan which was approved so you can duplicate the format come on dan you say isn't that a little like ask an examiner if he'll slip you the answers hell no listen these guys will work with you if one won't because he's stupid work down your list to the next one a good savvy banker will be everything he can to help you because he wants to loan you the money an investment banker may even rewrite your plan for you before he submits it an investment banker will certainly write your prospectus in preparation of a public offering remember bankers need to get money out the door they want you to qualify how else can i say it do you recall what i said some about demonstrating your enthusiasm whenever you talk to your potential lender let him see the fire of enthusiasm in your eyes and hear the dream in your voice but enthusiasm also includes the language in your business plan write it like your deal is going to change forever the way people live their lives pump pizzazz into your plan and sell sell sell hire a professional copywriter to punch it up even if they see your touch of hype for what it is they'll appreciate it an expression of your enthusiasm what your banker wants to hear most of all loud and clear all the preliminary stuff lunch meetings chat and if you must a business plan it's four place so the banker becomes comfortable with one fact you fully intend to pay back the money he's going to approve no matter what the amount and paycheck schedule of the interest is negotiable but it's absolutely indispensable to the approval process and his personal comfort zone that he knows his bank is going to get the principal back at the very least and he wants to believe mark this in your book the banker wants to sell you his money he also wants to know that you plan to bring him as much business as possible give him all the reasons you can think of to go to the loan committee before committing more than once if it has to to pitch your deal but you never tell your banker if you are unsure about more element in your plan if you have a seed of doubt that it won't work never mention those doubts to your banker as with your employees who look to you for confidence never share a doubt while you're keeping things to yourself never say something like uh the last time i tried a stunt like this i lost my butt but i think i learned from that and this time it's gonna be different lease ways i'll give it a best my best shot an associate in one of my companies gets to stay home during financial presentations ever since he blurted out hey the last time i went under i took two banks and an insurance company with me one stupid statement like that can spill negativism on your plans like indelible inc so keep the conversation focused on the positive on future success and not past failures you have a couple or three meetings with the promising bank and the requirements become more and more specific they may want to look at your recent financial statements that's fine because your big four accountant not your cpa has prepared audited financial on his firm's embossed letterhead it's an impressive document before the banker even picks it up it spells out your cash flow existing capital long-term debt and short-term debt it is an accurate snapshot of your business and again if you're starting from scratch you will have found a joint venture partner whose track record you can use while you build your own there are several levels of documentation your accountant can provide the most basic is a compilation and review without opinion which essentially reports the figures you give him on a prestigious accountant's letterhead you might get an assurance letter which deals with an isolated specific such as receivables the next level of financial review which is the least expensive document and tells the banker your accountant has not checked the figures but what has prepared and formatted what you have given him according to generally accepted accounting principles which is gaap this says virtually nothing it means nothing to a good banker the most expensive and comprehensive is a full-blown audit with an attached opinion this tells the banker your highly professional accountant has personally audited and checked your figures and they are true and correct to the best of his knowledge pay the fee and take audited financials to any banker who requests financial statements banks will always lend more on audited numbers and bankers will always feel more comfortable with the big four audit numbers by the way of summary as the time approaches for the bankers you've been courting to make their decision they'll have for their consideration any of or all the following your articulated enthusiasm over your project and its overwhelming chance for success your business plan prepared uh formatted and presented exactly the way they want it your audited financials prepared by your prestigious accounting firm and the answers to as many questions as they can think of but suppose they ask you a question you haven't anticipated after all you're not the first sparkling hopeful entrepreneur that we've talked to recently a banker pursued the names on the board the directors of one of my companies in spite of my financial credentials i wasn't in the meeting so he asked my associate why don't you get dan pena to underwrite the uh venture but i'm missing a beat associate reply of course mr penny could write a check for this whole project but he's already generously agreed to give us his time and we'd rather have mr pena's time than his money terrific answer brilliant and it satisfies the banker's curiosity the rule of thumb however is that if you don't have an answer never try to your way through it chances are that they are asking some questions they already know the answers to just to check your bs level simply say that's a good question and frankly right now i don't have an answer but i can seriously get you one and you dutifully make a mental note in one of your on your notepad finally what happens if you get turned down what do you do i'll tell you what i've done in the past i scream what how can you violate the trust of your shareholders by refusing to participate in a deal so obviously in the best interest of your institution and it it has worked but i probably have a little more leverage to scream than you do the reason you've been turned down may well be that somewhere along the way one of your selling points fell through the cracks and no really means no you haven't given us sufficient data to approve your concept you haven't covered every base and done your job adequately your response should be what element do you feel you're missing from the proposal equation where do you have a problem a breakdown of communication is often the simplest of reasons why a deal falls through when great western was negotiating to purchase bow valley for 135 million the deal stalled for some reason the president of beau valley wouldn't return my calls i finally got hold of him and asked him what the hell is going on he said they needed 139 to close the deal damn is that all i thought after all the financial gymnastics we've been through uh another four million was nothing i threw it in the pot and the deal was on again so ask there's a legitimate reason you've been turned down and you're not out of line to ask what the reason is it could well be something you can easily fix here's a great success story to avoid wind up this chapter barbara badi was founder of an employee benefits consulting firm headquartered in brookfield wisconsin barbara came to the castle seminar in may 1995 and following august attended my quantum leap advantage capital seminar in los angeles her company was a growth mode looking for acquisitions after her first dose of dan she went back and formulated her dream team later in the year she decided to approach a bank with which she had a not previously worked to see if she could get a loan she invited the president of the bank to come to her office to talk about the beginnings of a relationship here's what happened in barbara's own words we spent an hour establishing a relationship that means we talked about business generally and the banker became comfortable in the realization that i was a knowledgeable responsible business person with a good business i didn't give him a business plan i didn't give him anything just like dan said i offered the guy an opportunity to grow with us i asked him what his personal lending limit was he told me he could approve 800 000 unsecured which would be no problem and if i worked if i needed more he was confident his board would take his recommendation for more funding containing my delight i told him that 800 000 was all i needed for now besides collateral was such a hassle with that paperwork he agreed he shook hands and he said he'd send one of his lending officers around the next week for the papers to sign that was it all i could think of was dan pena was right i used his method asked his questions and 800 000 for growing my business floated across my desk bankers are not gods regardless of what some of them would have you believe they're people with human needs representing an institution with corporate policies and guidelines which have a great deal of diligency make your banker your partner your co-conspirator in helping you realize your dream if you're prepared if you're knowledgeable and professional and court your banker step by step into what promises to become a long-term mutually profitable relationship it will suddenly seem he's working for you instead of the employer now let's move on to some more so-called secrets of raising capital to launch your quantum leap chapter 10 more capital ideas for financing your deal the business community offers a universe of funding sources and not one will ever come to you editors know as i read this chapter 10 dow jones and most of the major indices around the world are making new highs the market has continued to go up uh since november the 8th in the 20 or 25 of the major industry groups all but two are up somewhere between five and six percent and as much as 30 as i've said before this is the beginning the greatest transformation of wealth on the planet since world war ii end of author's note as i write this the nation is in the depths of the worst economic crisis since the great depression many of our largest banking institutions unable to collect mortgage payments resulting from bad loans have floundered or have been taken over by other banks right now because banks don't trust other banks to repay the loans to them lending from all sources is in jeopardy authors note again when i wrote this in 2009-ish we were in the midst of a great financial collapse but we came out of it in the wrong way in my opinion by not allowing banks to go out of business and end of office no nevertheless the borrowing strategies and tactics i set forth in this and the previous chapter are as valid as ever i encourage you to make presentations to present yourself to shell shock lenders as a competent entrepreneur determined to ride out the crisis and prosper you may be surprised to paraphrase frank sinatra if you can make it now you can make it anytime after conducting the keynote speeches workshops and quantum leap seminars on both sides of the atlantic and pacific i am still amazed at the enormous gulf that exists between attendees academic understanding of searching for capital and their emotional commitment to push that search over and over i ask attendees how many of you have made a financial presentation the last 24 hours raise your hands no hands how many in the past three days no hands the past three weeks maybe one hand maybe each time i'm talking to a room full of ceos business owners and aspiring entrepreneurs who seem to be paralyzed with fear we are not talking about a tightrope over the niagara falls here you may hate rejection but as i pointed out in the previous chapter you will not die or suffer injury from making financial presentations so how do you overcome fear of rejection or fear of presentations practice you raise your comfort level by forcing yourself to make presentations i used to practice my presentations in front of a mirror getting down the content the rhythm of the sequential flow i practice when to talk quietly and firmly when to pause for effect and even when to roar in their faces my people today think i've forgotten all but that that skill nowadays as much as i know about growing the business that's volumes i still prepare and practice before every one of my seminars every time you make your pitch even to your dog you get better smoother and more comfortable with it if you're still nervous take your account with you pay somebody to go along but you must get out and make presentation if you ever want to take a quantum leap to super success and make shitloads of big money with every equity transaction you can't escape you can't circumvent making presentation are we clear on that i hope so i recommend even demand that my proteges make two presentations a week that's two lunches or two meetings with two bankers after about a month you'll get pretty comfortable with your pitch you'll even start to vary it based on what you perceive to be the most important factors to your banker of the day two pitches a week isn't that much some weeks since i owned significant portions of some 20 companies i made five or six presentations keep in mind that uh two measly presentations is a modest pay to price action for a prospect of netting a small fortune through your opponent league for yourself through the quantum leap so get off your dead ass start checking out banks today and begin making those presentations when to begin meeting with bankers chapter nine i mentioned not waiting until you need the money by thursday before you call a banker that was facetious occasionally i'm facetious but the fact is a lot of business people do just that they decide on monday to buy out a competitor grab a hot deal or double the size of their plant and pick up the phone to call the bank where they have a checking account they regard commercial lenders as a multi-million dollar atm machine it doesn't work that way kids with banks you start romancing in may for sex in september during your first conversation with a prospective banker you start positioning yourself say something like in six to 36 months we're going to have a funding need for somewhere in the neighborhood of x xy etc dollars quoting the figure higher than you think you'll need then later you mentioned you may need interim financing in three to six months and after a few weeks after two or three meetings and maybe a round of golf you hit them for the amount you need with your drop dead presentation the value of your board of directors bankers enjoy all the dancing around before they go to bat for you your banker doesn't want to be embarrassed by you or not paying the loan back so when you mention your board of directors he's likely to say oh i'd like to meet your board the next time you get together you think this doesn't believe i have a board you say oh good in fact my board members have expressed an interest in meeting you too if that would be helpful to lending process you'll recall that in the chapter on building your dream team we discussed the value of the board of directors so if you don't have a board director's get one it can be very helpful to you and has virtually no drawbacks but rather than your drinking buddies and cousins go for business people that you that with some recognition in your business community bankers understand that retired successful executives with no financial worries are usually very concerned about their reputation they would not be associated with the company they feel would damage the good name and they built over decades in the business community once again as with a joint venture you're borrowing their credibility to boot strong using your banking business as leverage your present bank may be your strongest possibility for a loan it's currently the most obvious even if all you have is a deposit relationship you should approach them using whatever current business you may be doing as a a stick if your present bank isn't interested and another bank is cooperative even eager for your lending business move all your business down the street your bookkeeper will hate you but who cares then when you have a lending relationship established with your new bank and you're still on your honeymoon with them begin negotiating to move your deposit business payroll other miscellaneous business demand concessions for the inconvenience of moving everything begin with personal lines of credit for all your executive and managers request refinancing of home mortgages at the best possible rate and of course you'll need credit cards for yourself and your people at the highest limits issued in return you may want to accept no interest on your deposits as i did when i was starting out and i don't mean demand deposits or cds types of financing capital part of the expertise of raising capital is understanding what the hell your banker or a specialist and any other type of lending is talking about especially when they discuss such often esoteric items as debt equity and credit for example long-term debt versus short-term debt long-term debt is death to be repaid over a period longer than a year short-term debt is debt to be paid in less than a year usually to raise operating capital to purchase inventory or equipment secured debt versus unsecured debt the debt you are likely to incur at this stage of your skyrocketing career is all going to be secured by collateral business assets and projected cash flow your home automobile other personal property patents you may own and any other items which if worse comes the worst the lender can convert into cover its loan principle unsecured debt is a signature loan the bank's acknowledgment that you have proven yourself as a reliable borrower guarantees i tell my seminars that the definition of a guarantor is a fool with a pen unfortunately the owner of a newly forming or small company you can't avoid getting your name on the paper to be ultimately responsible for the debt repayment so suck up your pantyhose sign your name and go for it are you really prepared to back it yourself this is an asset test of whether or not you believe in your own dream lines of credit you absolutely need an unsecured line of credit or an overdraft in the uk or other parts of the world from a banking institution thanks to tireless marketing virtually everyone has a line of credit these days if only visa mastercard are discovery but as an entrepreneur looking for credibility you'll need something a little more substantial to point to when a potential lender asks do you have a unsecured line of credit when you say yes your lender understands that some other banker somewhere has investigated your credit record and has put enough trust in you to give you unsecured credit it doesn't matter what amount but if you have to say no your lender is likely to sign say well you'll need a secured line of credit and one more asset in your life and business becomes collateral and today's skittish lending market this is especially true start with your own bank even if only people you know there are in the drive-in window tellers they should be able to give you a small line of unsecured credit if they won't get a new bank while we're talking lines of credit and business banking suppose you need to raise your line of credit your banker says no you reply well we need a good relationship here but your bank doesn't fit the profile of the sort of bank we want to be partners with during our period of high growth you just don't fit our pistol anymore i think it's time to withdraw your banker may say then oh how much of a credit line do you need but if he still doesn't budge you must leave and find another bank this reminds me of a story about one of my disciples dr bohakari who is an alumnus of one of my three-day quantum leap advantage seminars he's a plastic surgeon doing quite well these days in dubai when he was setting up his practice he wanted his own operating room adjacent to his offices he went to the bank for a loan they refused him he went to the second bank and was also turned down the third bank he approached agreed to finance his operating room so he switched all the banking to that bank that bakari experience demonstrates two points first he understood that he made the rules not the banks and second even a plastic surgeon who is not primarily a businessman has to go to certain lengths however inconvenient to achieve his quantum leap the care and feeding of your banking relationship once you get your financing from a commercial bank you don't just take the money and run it is in the best interest of both you and your company to nurture that relationship to maintain contact with the banker or bankers who made your loan possible after all you never know when you'll need more financing for another quantum leap in the future in fact if you stay in business i can guarantee you'll need more financing but beyond that you want to give your bankers a call every few weeks have lunch play golf or whatever just to find out how things are at the bank if for example conditions change and they find the need to manage their capital more conservatively your lines of credit could be cut back it just pays to be in touch with your banker i also recommend that you take out a loan and roll it from bank to bank i'll say 50 000 from bank a then three months later ball 525 from bank b and pay off bank a four or five months later borrow 53 75 oh from bank c and paid off of bank b this rotation of your loan and in fact and the act of paying off it off will give you a track record as a reliable ball with several banks follow the original amount from bank a for whatever purpose you may need the capital tell bank b c and d etc you're considering consolidating debt which will be in the truth some business owners worry about bank fees let's face it bankers will smile and say we'll just charge you within the normal range then stick it to you with fees as large as as often as they can back fears are one of life's mysteries and certainly one of the necessary evils but if that's what you worry about you're not entrepreneurial material and need to put this book away bank fees are simply not important in the great scheme of things as long as they have plenty of money all the time as i told my banker and the bank of scotland i really don't care if i pay one or three points over libor their term for prime rate as long as i have the money when i want it i've said before that a deal is either hot or not if your deal is so lukewarm or even cold that the odd percentage point is make or break then you need to find another deal right receivable financing we've talked about asset lending and cash flow lending as two types of collateral financing if for one reason and you can't get these or any type of financing and as newly emerging entrepreneur you might not try for the so-called receivable financing this is borrowing money against the receivables your customers owe some banks will do receivable financing with receivable financing you will normally maintain the credit relationship by collecting and the receivables yourself receivable financing is sometimes referred to as factoring and is usually available from another third-party lender such as a finance companies which lend you the money you need or part of it at interest rates just under what's allowed by usury laws most banks will not enter into factory relationship the advantages of factoring are the finance company becomes responsible for collecting the receivables they buy and for the bookkeeping involved also banks take into consideration that another party has contracted with you to handle collections so they become more comfortable in partially financing your entire required amount remember the main difference between receivable financing and factoring is that with factoring you will normally give up control of the paper there are about six paper classifications of clients who might apply for reasonable financing a through f while ibm might be an a paper borrower you'll no doubt be an f paper borrower it's an expensive proposition but as i've said sometimes you got to do what you got to do debt financing versus equity financing we've been talking about various ways of financing your quantum leap to incurring debt of three ways to grow your business allocation of revenues debt and equity financing the chances are overwhelming you won't be able to accrue the revenues you'll need to finance a quantum leap debt financing is by my least favorite because you're committed to a debt obligation plus interest well into the uncertain future a rise in interest rates or downturn in business could screw up your ability to service your debt also if the deal blows up and you lose your ass your frantic lender will want his money back even out of your flesh i have always taken the position that equity financing is more advantageous and that fresh other people's money is infused into your company in exchange for equity ownership this puts those other people in the same boat you are vis-a-vis the company's survival and profitability they buy into the share of your dream knowing they could lose their investment unfortunately depending on how you structure your equity offering it also gives them a say in how you go about pursuing your dream therefore before you deliver yourself below 50 make sure that you're well on your way toward your quantum lead don't misunderstand you will have to pay some interest on almost all forms of equity infusion and it's often at a higher rate when i started with great western i owned 100 of the company then i gave mark and charles each 10 percent then we sold 25 went public on the london market in 1984 and created a 50 million market cap company that still left me 60 and my two partners with 15 ownership during the process to finance our acquisition of bow valley usa in 1986 we subsequently sold about almost 15 of our company voting shares to the kuwaiti investment office my own percentage dropped to less than 45 even though kario had put up 78 of the money further financial restructuring during the late 80s and early 90s ultimately reduced my portion of my own dream and to just over 15 but it was 15 of 300 million energy conglomerate which would grow to more than 400 million in value market capitalization all from a small 820 investment 1982. during those incredible years we did equity financing whenever we could and debt financing whenever we had to under my leadership every nickel of debt principle was repaid and our shareholders made a ton of money all in all not a bad track record for a punk kid from east la who has expelled from school three times before he was in the third grade author's note it was before i was in the fifth grade not third grade end of author's note venture capitalists lenders with a different agenda venture capitalists are professional management companies who manage high-risk funding the capital comes from such institutions corporate pension funds insurance companies and limited partnerships and they typically concentrate on investment opportunities beginning around five hundred thousand venture capitalists myself included will also use their own money to finance a very promising startup company with high growth potential although a venture capitalist fund will consider many investment instruments it is not particularly interested in fixed income such as interest would generate instead it likes to take equity positions anticipation of taking the company public or selling out in the future then through a public offering it's exit strategy it stands to make a ton of money the timetable for execution of their exit strategy varies but usually between three and seven years venture capitalists prefer to become involved in the early stages of a deal and we are especially interested in small companies with big promise but some venture capitalists are only interested in the second stage funding they look for such indicators as management proven track record if you're just starting out you might consider a joint venture partner in the track record venture capitalists will accept this is primary reason people bring me deals venture capitalists are more comfortable risk takers than bankers too that's because unlike your typical vice president commercial lending at pussyfoot bank and trust venture capitalists are likely to be successful entrepreneurs who tend to make sound decisions more quickly for that reason you should insist from the beginning that the venture capitalists communicate with you clearly venture capitalist john doerr suggests when the first meeting is over the entrepreneur might say i'd like a yes or no right now but i understand that you will need more than one meeting so what's your level of interest and what's the next step author's note the more popular term now as opposed to venture capitalists is private equity funder end of authors no with so many other items on your starting up checklist you would no doubt prefer a decisive no to a long drawn out maybe a few people venture to push for that kind of action besides if one venture capital group decides to pass immediately you've got more time to discuss your courting believe me a quick no is a real blessing there are more than 150 venture capital clubs around the world where entrepreneurs can present their plans and idea to potential investors as a typical monthly meeting an entrepreneur may stand up and explain his need for 150 000 or 500 000 to make a quantum leap although he's probably doesn't call it that at the same meeting a venture capitalist may get up and say he represents a group of investors with 5 million to invest in one or several projects these clubs represent a great way for entrepreneurs and venture capitalists to chat and make contact in an informal atmosphere the national venture capital association in arlington virginia publishes a membership directory with a listing of hundreds of members venture capitalist organizations financiers and individuals including addresses and phone numbers websites and contact names association staff members can also give you information on federal regulation the most recent uh legislation regarding venture capital in the uk get the equivalent a free copy of the british venture capital association manual and the venture capitalist journal is available in both the uk european editions for more information check www.nvca.org pricewaterhousecoopers provides several publications on venture capital including three keys to obtaining venture capital the price of growth and charting a course of corporate venture capital in fact all the big four accounting firms published similar information pratt's guide to private equity and venture capital sources is a valuable resource for any company seeking to raise venture funding it is a comprehensive list of the active venture firms published annually and includes such source data as location investment preference contact persons and capital pool for the most comprehensive listing of venture capital networks and organizations and several discussions on the nature venture capital you can google venture capital and spend the rest of the week getting up to speed on the fascinating topic the internet is flush with venture capital listings in fact two of the leading associations are british and european venture capital associations searching for capital is more than ever a global adventure the point is that venture capital like bank money is not buried in some secret vault known only to a privileged few information is really available from many sources and you need not tiptoe around venture capitalists seek them out and sell them your deal give them an equal opportunity to invest in your dream how much venture capital is available in 2008 more than 600 active institutional venture capital firms were managing over 35 billion of capital available for investment in early expansion and late stage growth companies even in today's gloomy economy these figures continue to rise and indicate the hundreds of billions of dollars are available from venture capitalists nationwide for growing businesses including yours corporate bonds the ious of business issuing bonds or fixed income securities is yet another way for a corporation to raise capital bond holders received a fixed rate of interest coupon rate each year with their original principal being paid back when the bond matures on a pre-determined future date there are a variety of bonds which a company can issue based on the nature and the structure of its business and its capital requirements subordinated convertible bonds or debentures company pays the buyers say 12 interest on bonds sold to a venture capital firm then at some time in the future hopefully when the company takes off the holder can exchange them for common stock or just collect the interest or redeem them for the original face amount when they mature having collected interest among along the way in the meantime the benchers are subordinated in that they usually unsecured and are secondary or junior to bank loans made currently or even later if the company goes belly up the bank has first claim against the assets then comes the subordinated bondholder royalty bonds the holder receives income from the proceeds of royalty on a product or other specific source of income zero coupon bonds this popular type of bond was created in the 80s to attract investors looking for predictable returns on their investments for retirement or a child's college education zero coupon bonds don't pay any interest but they are sold at a big discount these bonds sold by investment bankers to finance a company's growth can be a safe investment if the bankers hold treasury bonds as collateral other sources of capital insurance companies and pension funds often seek out investments among corporations attempting to raise long-term capital although more typically for purchases of equipment or real estate which can be taken as collateral the advantages of this type of funding are usually lower interest rates and long-term maturity of loans angels exist in the corporate world they take the form of individuals or organizations such as private foundations that seek to encourage and underwrite entrepreneurial efforts which prove themselves worthy of angelic support private foundations such as the fort foundation macarthur foundation are often open to funding company growth especially firms which are active in a specific area of interest or commitment to the foundation such as social progress health care or environmental protection finally after the list of possibilities individuals who have amassed personal wealth often put that wealth to work by underwriting carefully selected corporate growth projects w clement stone founder of positive mental attitude is an excellent example of an angel who takes no hand in management and only asks a pro rated share of the corporate profits in return warren buffett the legendary investor is a frequent angel although he might argue the term per se i recently read where if you had invested 10 000 with one of his original buffett partnerships in 1956 and then nine years later and reinvested in the berkshire hathaway stock you'd have earned uh well over 100 million dollars by 1995 and upwards of 270 million today after all fees were paid if he isn't an angel i don't know who no one author's note my experience in almost 50 years in the real world is that there really are no such thing as angel investors end of authors note public versus private funding taking your company public is one of the great and all heady experiences of the free enterprise system the day we watch great western shares make its debut on the stock exchange it was august 10th 1984 was my 39th birthday is memorably engraved in my mind as an experience i hope to duplicate again in my lifetime going public is risky expensive costly and fees and other expenses typically 10 to 20 percent or more of your entire offering or total capital raise depending on where you go public but to you as a founder who has probably made substantial investment to grow your company enough to go public your percentage in return in relation to the net worth value of the company can be incredible a stock share might score a 10 or a 12 price to earnings ratio which means it sells at a 10 to 12 times the company's net after tax profit during a small initial public offering this uh ration may well skyrocket to 30 or 40 times company's earnings that great western returned our initial investment of 60 000 option on the mineral rights to 50 million uh even today it's hard to imagine making that much money that quickly without a mask in the gun it triggers an adrenaline rush with emotion high that cannot be duplicated as with any other business option there are disadvantages to going public all confidentiality is forfeited your business transaction financial records and even uh marketing method must be open to the scrutiny of the government regulators suppliers stockholders prospective stockholders and even competitors a public company also subject itself to internal accountability particularly the transactions between the company and its officers or directors government regulators are forever sniffing around for a conflict of interest inside dealing the special uh favorites which if not legal would be construed to not be in the best interest of shareholders another disadvantage and a supreme irony is that you get the financing to reach your dream you simultaneously lose control of that dream as in the example of great russian resources during the course of the ipo and subsequent offerings every time we made a public offering my own share and my company was substantially reduced finally what i call the dark side of choosing to go public is almost inevitable consequence that one day you'll have to leave your company forced out by many of those you invited aboard your dream along the way the fact is that the days of the entrepreneur with his public company are limited he may be a genius at envisioning searing and breathing life into the dream but unless uh he also has patience and skills to be be a management genius and a great leader and entrepreneur will sooner or later recognize the approach of his own departure the bright side of the dark side he leaves with the pockets stuffed full of lots of money and he can begin accelerating adventure again anytime he pleases the gulf war 1991 was my waterloo i was ultimately removed as a head of great western when my kuwaiti friends preoccupied with the invasion and other internal strife subsequently transferred their loyalties and their voting power to a faction in the company that felt my own time had passed although we had to go to court to settle the issue great wrestling resources paid me handsomely for the golden parachute in the millions plus a startup subsidiary in the textile business and i was the largest individual great western shareholder until the sale of january 1997. questions i'm always asked about raising money aside from the basic how do i get the money seminar attendees inevitably ask other questions over and over to prevent someone from asking one of those questions at a future quantum leap seminar i want to conclude this chapter with a quick q a question how much money should i ask for how do i figure what to ask for answer no matter what your figure acquisition ipo or any other quantum leap is going to cost you you can bet your numbers will be short the only figure you can be sure of is that the bank will loan you a maximum of about two to three percent of the total assets on a secured loan my advice is to ask for three to five times more money than you think you need if you can get it you've got a pot of capital you can always use if you don't you've at least cleared yourself some negotiating room for a smaller loan by the way it's actually easier to finance a larger deal because the bank is more anxious to sell you more money if you're approved bankers have to do less to get more money out the door and their bonuses are tied to how much they lend these are all reasons that ask for more money than you think you will need question i don't have a track record i'm a new company with something nothing's shown in the bank answer find a joint venture partner who does have a track record attach your company to an established name uh you'll recall that nobody at the defense fuel center service center had heard of gwdc but they had done business with marion refining company put together a board of directors which includes prominent and successful business people who can lend their reputation to yours borrow credibility so you can borrow money question how many financial presentations should i make that's like asking if i'm trapped in a burning home how many times should i try to get out as many times as it takes doofus make as many presentations as you can set your goal for at least two presentations a week more if you're trying to raise your comfort level faster question should i fight for a certain number of points over prime of a lending for the or the lending rate answer worry about getting the damn loan not how many points above prime interest is going to be if that's an issue if the amount of interest you're going to pay is a big thing your deal is too tight you're asking for a loan that gives you no room for error and you can bet your executive ass there'll be costs slapping you in the face you never heard of it's just as easy to ask for two and a half or three million as it is 750 000 or 1 million maybe easier go for it question i've made some presentations but i was turned down what's the next step go back to those institutions and try to find out why you were turned down you may have not answered their questions to their satisfaction try to give your proposal to by filling these holes if you can't get back in your next step is to move on to other sources other banks venture capitalists foundations insurance companies pension funds angels the list is endless as your determination should be to get your funding question won't being turned down by a financial institution ruin your credit answer no searching for finance does not hurt your credit in fact i think you must make five to seven presentations before you understand what the procedure is what hurts your credit is proving to be financially irresponsible for whatever reason with the money you do borrow question when is the best time for a loan answer without question the end of the year about 75 of all business loans are made in the final quarter of the year and remember like car dealers at the end of the month bankers are scrambling to boost their own end-of-year bonuses based on how much lending money they've pushed out the door stop writing checks on your emotional bank account i'll tell my seminars we all have two bank accounts financial and emotional as those you think your financial bank account is you may drain your emotional bank account even faster fear of failure drops the balance fear is false expectations appearing real at least in your mind my emotional bank account stays high because years of practicing my skills uncomfortable situation have reduced my fear and anxiety level to virtually zero as i said i may be wrong from time to time but i'm never in doubt i bet you never heard of a high performance individual whine and say well i don't know if we're gonna make it failure is testing failure is learning every financial presentation you make even if they laugh you out of the bank which they'll never do even if they shred your little business plan which you probably don't need and throw it in your miserable face uh is a positive experience and no reason to damage your emotional bank account so get moving make those financial presentations and make some more you'll find somebody somewhere to lend you the money to reach your dream not only that when you see dan penny in a seminar screaming about who is in the room of doofus has made a presentation in the past three weeks you can raise your hand disclaimer i can't advise you on the details of your decisions that's why the disclaimer in front of this book tells you to consult with your own professionals authors note again we're at the beginning early early stages of the greatest transformation of wealth since world war ii take advantage of the trump bump the trump era and allah and god and buddha be with you and of author's note chapter 11 acquisitions the secret of quantum growth for the high performer arithmetic growth is unacceptable geometric growth exponential growth is demanded throughout this book we've talked again and again about quantum growth and making your quantum leap to becoming super successful and by the way enormously wealthy in this chapter let's nail down the specifics of quantum growth and the best way i found to achieve it through acquisitions but first i want to discuss a minute on one of the most abused words of the current generation success has almost become a cliche in a world where everything is relative the feel good mooches in the seminar circus will assure you with a straight face that you are a success if you feel better about yourself if you've achieved harmony hell these days you can be successful if you're happy shoveling horse dung or if you achieve contentment living under an overpass we don't want anybody to think they're a loser that they're basically worthless to themselves and society in more and more elementary schools so-called educators are banning competition sports or at least no one keeps score that way no child loses and everyone wins the precious little self-images are preserved through artificial success what kind of preparation is that for the real world thanks to such inverted thinking nowadays even failure success george orwell's 1984 has come to pass on the playground editors note in this day and age in 2017 almost the summer this is even more prevalent than it ever was when i wrote this several years ago now there is no first second and third place now there is just one medal or ribbon for participation and editor's note in the 90s there a snake oil artist on a seminar circuit who charged seven thousand dollars ahead for taking all your assets away so you can learn to live with nature in abject poverty and the morons bought it it should be illegal to be that stupid so let's get back to reality the only success in life and especially in business is that which you can quantify and to measure otherwise you're playing word games i define success in terms of the most universally accepted qualifier of all money cash nobody argues with cash money talks and walks if you're making quantum leaps and pulling down millions in personal wealth and a lot of people are doing it you are without question successful remember in chapter one we discussed people who were uncomfortable talking about money that's because the morons never had any to talk about you've got to become as comfortable with lots of money as you do with success because real success begins with real money let's define quantum growth by what it's not quantum growth is not making more sales than last year or picking up new clients or adding more products to products or stores or branch offices or reducing costs all of those are indicators of growth all right internal growth and more to the point arithmetic financial growth we've already talked about this one plus one equals two two plus one equals three the healthiest internal growth in any business is always going to produce only gradual long-term arithmetic growth nothing more why do entrepreneurs settle for graduate boring growth the best that can be said for arithmetic growth is that it's better than no growth at all and in fact if your company is only growing arithmetically it's probably dying but why does an entrepreneur an uncommon individual who once had a bold vision to build a company and work days and nights to see this vision come to life why does this same person now accept the humdrum growth of four percent better sales than last year or a two and a half percent higher profit margin it is not as if the person has never known quantum skyrocketing growth the fact is that in the beginning the founder of a successful company did experience quantum growth and it's exhilarating he no doubt spiraled from zero to enormous success maybe growth in the hundreds of thousands of dollars in the first year of business and business was new business all money was new money the growth curve shot almost straight up and soared across the chart like a comet then inevitably the company settled into a routine the entrepreneur became a manager and not mirrored in sales figures group insurance and payroll the growth curve flattened out the comet fizzled and once bold adventurer accepted it all as part of owning a business after all the other companies in his industry were doing about the same so everyone was successful actually everyone was satiated this became part of the less than all you can be heard their expectations settled into average average god how i hate the word if i continue to drill wells in wyoming in 1984 with all the capital we got from the public offering and pump out a respectable number of barrels of oil our engineers had projected great western would have grown internally gradually arithmetically our great western shareholders in the uk still clutching their prospectuses and getting their dividend checks would have been happy as pigs and look we made 12 on our investment those noisy yanks are a bit of all right after all but punching hundreds of holes in wyoming was not where i wanted to take my company myself and my shareholders my vision was light years beyond theirs i knew that quantum growth kind of warp speed financial performance i wanted would only be achieved through external growth and as i said external growth is only possible through the series of equity transactions let's examine the difference between what we'll call a product transaction and an equity transaction product transaction is essentially an even trade the product produced by an almost even trade of goods for money is negligible we use the term profit margin because the dam profit may be a barely visible sliver of the whole transaction so sales people have to do a zillion product transactions to generate substantial profit an equity transaction by contrast creates value a board of directors decides to sell equity to raise capital it votes into existence half a million shares of common stock for a public offering when shares sell value has been created from nothing but the perception of value investors in fact are buying not a product but a future value that may exist it's sort of like buying thin air and paying cash upfront for it the downside of course is that the company cannot go on diluting its ownership indefinitely if you're not willing to risk everything you own don't try to buy a business accordingly the equity transaction which is a real secret of quantum growth is acquisition the purchase of equity assets which enables a company to boost actually to multiply the net worth geometrically so that it can be turned around and sold to generate a ton of money the first years of new century one of the rages among seminar gurus in the u.s was real state investing which is code for buying and selling cheap residential properties or flipping houses with little or no money down those so incline could buy fixer-uppers slap on some minimal improvements sell them to the next buyer and make a quick profit a few thousand dollars then around 2004 the price of residential real estate began to skyrocket out of sight you remember how it was greedy investors large and small bought houses as their value balloon beyond all reason banks joined in by offering subprime interest rates to buyers whose average outran their common sense then bust when the rest of the first decade of the 21st century the real estate market stagnated home values tumbled so those inflated home deals that seemed too good to be true turned out just that there were more for sale signs than trees in some markets in 2008 the big lenders who had been so cavalier with their loans went down the tubes bear stearns fannie mae and freddie mac only to be rescued by the federal government with taxpayers money aig was saved by the intervention of the federal reserve who agreed to lend up to 85 billion to aig and return for 80 stake in the company thankfully that was an election year and congress vowed financial relief for all the ignorant morons who lost their ass and their home to the landmines of subprime mortgages but even in the best of times these types of investments are only the beginning not ends of in themselves flipping houses are the poor man's equity transaction how infinitely more lucrative is the equity transaction in which a company is acquired for say five million of other people's money opm pumped and prettied up and sold for 10 or 12 million the perils of the leap if you're contemplating your first business transaction you need to approach your venture knowing in advance the three greatest personal hazards you face having the will and determination to clear these hurdles as you recall from our first four chapters it is what's becoming a super successful high performer is all about here are the three hazards number one the depth of personal commitment required your acquisition deal must take precedence over normal personal considerations you have to make a total commitment of time and energy buying a business especially the first business is a full-time proposition if you are trying to hold the job at the same time you'll either have to quit the job or give up making your quantum leap through acquisition you'll be spending days and nights figuring refiguring analyzing and strategizing and then doing it all over again because if you do a half-assed job of the planning and calculating every step and every nitpicking detail you're likely to fail all this means no days off no vacations constant travel and continuous meetings remember my doofus test which put a prospective associate under pressure when you're working on acquisition your whole life is a doofus test you sleep on your couch eat at your desk work on your bed your lawn goes to hell your friends think you're crazy and your family stays mad at you or ignoring them forgetting their birthdays and missing their recital you must have commitment of support from your family if not you'll have to make a decision your quantum leap or your family i'm not fooling around here when i hold my week-long seminars at guthrie castle i stress to the importance of couples attending wives or significant others because the depth of the commitment required is such that the other in the personal relationship must be a signatory to the quantum leap his or her partner is about to make on occasion the castle attendee has ultimately divorced his or her spouse or business partner because the the other person was unwilling to make correspondence and commitment to that dream two the total financial risk involved you must be willing to make a total commitment of your financial resources to put everything you own on the table sure a lot of other people's money is available but many sources of opm are looking to see how willing you are to lay your resources on the line first mark this sentence if you're not willing to risk everything you own now and in the uncertain future don't try to buy a business if you can afford to or are unwilling to risk your savings your home your car your child's education everything you own find another way to earn a living and file your dream under nightmares i have avoided three the degree of stress you must endure here's important reason why i practiced being a super successful high performer long before i achieved my greatest success i knew from what i saw and from what others told me that the quantum leap would be no picnic i knew i would have to suck up my pantyhose act tough slash enemies take hostages and kill prisoners to reach my goals i knew almost instinctively the pressure would be enormous to evocate to compromise to surrender i saw times when unless i practiced i would be too wound up too stressed out to beat up or just too damn tired to take action in my best interest so i practice i thrust myself intentionally into one uncomfortable situation after another i led charges when others retreated i picked fights while others prepared to surrender and except for a few modest spices i've kept my body and spirit in peak fighting condition for more than a half century in texas where i battled with the energy giants they call dan twisted stealing panther piss amongst other things sooner or later stress can kill most people stress no doubt contributed to the loss of my dear friend and partner charlie but the fact is life eventually kills us all my feeling is that no blasphemy intended life after death isn't so important as life before death so i live the son of a play the cards and seize the day stress be damned i give ulcers i don't get them if you can't handle stress if your health is a more immediate concern than your quantum leap move away from this terrible chasm once again it isn't for everybody how to find your first acquisition we've discussed in detail the process of raising capital for the purpose of acquisition but well before you arrive at the point of beginning to an interview capital sources there are several basic issues you need to clarify in your own mind you're an energetic ambitious individual with a three-digit iq who sees less capable people than then you run successful businesses live in a luxurious lifestyle then suddenly sell their company and retire early to a tropical island you're an employee now maybe but you have an imagination self-discipline and hood spa to run your own business and you're tired of working your tail off to make your boss rich your first question what kind of business i have some guidelines for answering that question first as i preach to my disciples stick to your knitting look for businesses in which you already have expertise you'll face enough problems not challenges borrowing capital assembling your dream team taking over your company and learning to become a ceo without having to acquaint yourself with the technical process and jargon of a whole new industry do what you know later after you've made several quantum leaps and become more comfortable with the acquisition process you'll see common characteristics and be able to handle acquisitions regardless of the industry much as i do now do what you like as well regardless of the problems you run into your quantum leap will seem less powering when you are making it in an area you know and from which you derive pleasure there are other practical criteria too you want to make your acquisition in the industry which is fragmented and dominated by mom and pop companies you want an industry that's large enough to handle your acquisition aspirations if you're planning to purchase one of three companies that serve that what is essentially a limited market such as a buggy whip repair or carbon paper manufacturing you have nowhere to expand you want industries that enjoy a 20 to 40 percent margin in my own experience these include such wisely diverse industries as retail jewelry landscaping building maintenance publishing home improvements and trailer parks if you get into the business with a three or five percent private margin you'll take forever to build your dream narrow your focus you might be interested in health care for example but you need to find a niche no one else is consolidating such as child care or senior living editors note the margin that i speak of is gross margin and editor's note the size of the business you want to acquire depends on the size of your goal and the clarity of your vision my guess is that if you've read this farm you're looking for more than a steady income and a secure retirement from a couple of dry cleaner operations i sure as hell hope so i want you to be getting ready for the quantum leap to haul in an obscene amount of personal wealth that means your acquisition must be in order of a large manufacturing firm or distribution business that will catch the eye of an investment bankers how big is a company as a general rule you as the owner can reasonably expect to receive income before debt service of about twenty five thousand dollars from intangible services or consulting fees of fifty thousand dollars which there is no inventory and usually no equipment beyond office equipment about twenty five thousand dollars from retail sales of a hundred thousand dollars and the same for manufacturing equipment depending on the degree of automation and the cost of materials the bottom line is take some quality time to define exactly what you want before spending money and effort shotgunning the market ask yourself if you are more comfortable in consulting retail or manufacturing to name but three conducting your research once you've defined the type and size of business that meets your requirements there are several avenues to take for locating likely prospects the most important thing to remember at this point in your eagerness to buy is not to buy the first great deal that comes along if you looked at the 20 houses or more before you purchased your most recent home why would you grab the first business that sticks a for sale sign in your face even if you find the perfect sweetheart deal the first day or you search shop around anyway take the time to analyze and compare several prospects and so you'll know a great deal when one comes along editors know many years ago t.b and pickens told me that danny if you want to deal bad enough you'll make a bad deal and a veteran's note begin by scanning the business opportunities sections of your local and regional metropolitan newspapers and the wall street journal if you don't yet subscribe to such magazines as forbes entrepreneur and inc my first question is why not get current copies of each of these and look for opportunities that match your criteria get companies of trade publications in the industry of which your prime interest and check the marketplace and classified sections of the business for sale editors note now with the internet uh all this is made much more simple and you can get this information online individuals note contact local business brokers and explain in writing exactly what you're looking for otherwise like real estate salesmen they'll show you every listing from ice cream stands to funeral homes typically the seller of a business pays broker commissions so it should cost you nothing for a broker to help you during your search process but don't sign any exclusive contracts one of the largest business brokerages firms in the us is vr business brokers headquarters in newport beach but almost 50 independent offices in 15 states according to vr's chairman don taylor a professional business broker has the expertise to accelerate process leading to an equitable acquisition although vr brokers are reputable my experience in over 25 years has been shabby at best using business brokers i would advise extreme caution editors note and today in 2017 business brokers are even more shabby and editors know it sources of information abound ask your banker your accountant lawyer industry supplier wholesaler for any companies which might entertain a purchase offer as an aside an inside tip gives you the head start on any deal the most direct approach is to contact a list of qualified companies directly a lot of burned out owners are hiding in the corporate jungle desperately wishing they could retire you should be their salvation in fact you'll be amazed at how receptive so many business owners are at least considering selling their business my partner in tax consulting firm decided the best way to approach prospects in the industry was to code phone call to the owner he says that he frequently got a respective response to the effect our company is not for sale we're having a great year when do you want to get together another of my partners was an ambitious publishing entrepreneur he sent out 240 inquiry letters to publishers he found although through dun and bradstreet the letter was intentionally vague as to the size and type of publishing companies he was looking to acquire what it did say was that he was in the process of building a unique kind of publishing company from the 240 inquiries he got more than 80 responses about 35 response rate of those he qualified his pursuit list to about 50 publishing companies which satisfied his revenue parameters and whose principals wanted to discuss selling their firm by the way the first question many of those who called asked was what do you mean by unique kind of publishing company a little teaser on the bait never hurts that partner has continued to refine this simple yet powerful inquiry letter it is so effective that i have included it in the handout of my high ticket doing deals and acquisition seminar as an added value i've included it here for you in appendix m along with other letters and outlines used successfully by my proteges and partners all at the price of this book one another example the fired up philadelphia airline pilot turned entrepreneur sent me a copy of the letter he has sent out under his company impressive letterhood to prospects in his target industry you could literally change the industry in price range and use it yourself the letter is reproduced here below mr winchester healthcare clinical labs corona california dear mr winchester we are interested in acquiring a medical laboratory firm located within the greater los angeles area with sales ranging from two and a half to five million dollars our preference is for a company that supplies the needs of most local physicians however we are flexible and will consider other opportunities we are principals not business brokers with adequate capital and financing and we're prepared to close very quickly on the right situation if you have an interest in selling please call us at the earliest convenience you have our assurance that all matters will be held in strictest confidence we enclose our business card for future reference in the event you have no present interest in selling of course we would greatly appreciate you're directing this letter to any of your colleagues within the field whose business may be on the market sincerely name managing director every element of this letter nurtures the perception of his company as a large professional well-financed organization he assures the reader he's not a broker fishing for leads that he's got capital in the stacks of large unmarked bills sitting on his desk and that he'll buy immediately if the company and terms are right hey if i were mr winchester and wanted to say screw it i'm retiring to barbados i'd pick up the phone and a heartbeat and call this guy one of my finest deal hunting partners was an aussie named martin heller martin was already a committed entrepreneur but after listening to my tapes attending my seminars and reading the first edition of this book he decided he was ready to hunt with the big dogs here's what his letter wrote by the time we meet in london hotel in december 2000 i had fully absorbed his mindset i felt i knew him very well already dan had formed the guthrie group and invested in consortium specializing facilitating transactions i was determined to join them many doofus tests later and after three months of investigation he finally made me an offer to join the guthrie group i stayed with the group for over five years lived in the castle for a time and eventually became one of the principals dan taught me how to best hunt for deals we had over 100 meetings that i set up with banks venture capitalists and private equity firms we interviewed ceos assessed acquisitions and divestments mbos and smbos we worked on industry consolidations and all of us working together sent thousands of emails it was a hard graft but excellent grounding whilst no two deals were the same the credos for success dan teaches never change for anyone interested in super success i recommend dan's training exclusively a few individuals come close to his attitude or knowledge and business classic comments like super success is not for everyone and if you want a friend buy a dog are very unlike those happy sloppy feel-good seminars more important they reinforce the fact that without a series of pay price to action without grit and passion in his words you can forget about it selling the seller on you most business owners particularly those who have founded and grown their own company from scratch are very protective of their baby it is their baby and even though they're entertaining the idea of selling it they want that baby in good hands they want their employees protected and secure they want their customers taken care of the first question they are going to ask at least in their own mind are who are you and how do i know you can run my company the way it should be run they do not want to sell it to a kamikaze pilot who's going to drive it into the ground that's why it may be best for your lawyer or your big four accountant to make the initial call on your behalf to get instant credibility or if you prefer to make that first call and you detect those questions bubbling around offer as reference the names and numbers of your lawyer your accountant and maybe one or two of your directors whose names he may recognize once the prospective seller has chatted with your man at deloitte in touch or ernst young you can bet his diligence is done another method that is equally good is to send a short letter which includes the profiles of your board of directors much as you did when seeking your accounting firm this also gives you instant credibility and should remove any hesitancy on a prospective seller's part what if your prospect cuts to the bottom line just to see if you're serious he says well i may be willing to sell are you willing to pay you say something like oh three to eight times after tax earnings but of course we have to look at the books i probably do an acquisition audit but we can talk about that later you've sidestepped his probe with an answer that tells him that what the hell you're talking about so don't ask any more stupid questions regardless of the deal you eventually hammer out here's a key point make the other side part of the transaction so that his net worth increases if he makes the deal factor the seller into the future revenues for a specified period give him cash or stock or cash and stock pay him a consulting salary for a specified time but give him a spoonful of sugar make this departure from his company as honorable and as painless as you can and most comforting balm you can apply is money what if you find a dream company meeting your criteria beyond your expectations and the owner says it's not for sale and means it you may well move on to the next prospect or you may employ a strategy dan pena uses on occasion especially with companies that are in big trouble but are in denial vis-a-vis their real financial condition virtually every company in the business has debt your target has three hundred thousand dollars of credit with sixty thousand dollars outstanding you find out which bank is holding the paper and paid the bank or a visit can negotiate to purchase the note at a premium from the bank yes you can do that because banks enjoy profit as much as you do and then visit the reluctant prospect you ask him nicely once more if he'd care to sell and when he says no but before he throws you out you advise him that you own his note you're calling it and you demand immediate payment in full now sir let's talk quietly about buying your company that's chilling you think somebody could do that to me not if you have your lawyer drop your own lending documents which is specifically for bids purchased by a third party you don't have to use the bank standard document most companies just do without questioning it and without reading the fine print editor's note i found very rarely that a bank will allow you to write your own documents into better the note another tactic is to contact your prospective customers and offer them a deal which makes you more attractive supplier than the present ownership or you may prefer to move to the next project on the list that's fine but i give you these alternative strategies because business is hardball and if you're more comfortable pitching softballs somebody sometime is going to knock your butt right out of the park speaking of hardball i tell my seminar attendees that any deal there is a high road and a low road you should always assume that the other side will take the high road giving them the benefit of the doubt but if and when they step off the high road be ready i've referred to litigation as a legitimate business tool of course you always want to avoid litigation it's costly and it takes your focus off your real priorities but if the other party even mentions litigation sue the bastard never threaten to sue sue that's because you want to be the plaintiff the plaintiff gets two shots at the jury and picks the venue for the civil trial how do i know dan pena has been involved in more than 250 lawsuits over his career and his record is 253 in u.s and in england so whether they just testing your resolve or maneuvering to stick it to you instruct your lawyer to act quickly and decisively and with sufficient force of how to have them realize their miscalculation then resume negotiations doing yourself doing your pre-purchase homework after you've got some prospective acquisitions identified on the type and size of business take a look at the profit picture of each you want a company which has shown increasing profits over the last past three years look for a trend rather than a sudden spurt in profit comb through the books with a lice comb then invest in the acquisition audit by your accountants since it is a big four firm they will have staff people who specialize in acquisition audits if you have already made a tentative offer and your own audit indicates offers too high adjusted if your prospects protests just tell them that he already knows that the numbers your audit revealed did not agree with the numbers to support your initial offer editors note all offers should be subject to due diligence and finance and the initial audit before your big four or whoever your accountants are is done you should have your dream team with your accountant and your lawyer that are on your board uh conduct a preliminary audit and a writer's note your capital source especially investment bankers who want your annual return on investment after you take your salary and make debt payments to be about 35 regardless of where you get your funding you should accept nothing less than roi of 20 of course there are acquisitions you may consider that have no profit but which you might be able to turn around but i would be hesitant unless i had a couple of buyers tucked into my belt all the answers you're looking for are not in the books books can be cooked and simmered to perfection so begin your investigation immediately check court records for outstanding lawsuits claims against the company or companies in which you have interest investigate the owner and senior management are they honest are they who and what they say they are look for red flags and don't ignore red flags because you want the acquisition so badly be willing to walk away from the most promising deal if a red flag pops up as you can see the financial and legal considerations become complex quickly now you can better understand why you want the best acquisition lawyers and best accounting firm you can get some of your investigation is best done by you once you've narrowed your search to one or two companies and you've made contact with their owner it's time to talk to the key management people if and when the company is purchased do they plan to stay or is their primary loyal to your former owner in instances where highly technical processes are involved in manufacturing how do the skilled technicians feel about staying on there are vital issues because existing customers look for continuity the fact is everybody wants continuity especially you continuity of operations and the strength of continuity to generate increasing profits is what you're buying a quantum leap is actually a direct leap from zero to full profit making capacity giving you opportunity to skip all the growing pains in between and your ability to convince employees suppliers and especially customers that nothing will change after the buyout and make them believe you will do more than anything else to get your money's worth out of the new company unfortunately every predatory corporation which buys out a competitor grins and says we have no plans to make any changes in personal or operations at this time besides you may have a better vice president waiting in the wings so the best you can do is create a perception of continuity and feed it to those who need it your investigation should include a lot of listening as well when i visit a perspective acquisition scenario goes something like this first i'll have dinner with the ceo just the two of us no wise husbands or significant others i listen to where he's coming from and what he's looking for most important i'm trying to get to measure of the individual and i'll soon be negotiating with then preferably the next morning i have breakfast for the company chief financial officer or the equivalent this gives me a different perspective of the same target and i can compare what the finance man tells me against what the ceo said the night before afterwards by prior arrangement i spent the morning talking to employees from several departments meeting with them one at a time behind closed doors i asked them what they do how they like working here other questions that reveal facets of the company from the bottom up ideally i have lunch with a partner in the company or some other key executive as i continue to build my picture of the company finally i try to invite the marketing and sales people always a various bunch out for a few drinks after work on me of course after a few rounds we're all buddies and they do what drunken employees do best about the company this is invariably the most instructive meeting of all you want to acquire a company with a broad customer base the last thing you need after you sit down in your new corner office is to get a call from the customer who represents 40 of your billing say we've decided to move our business down the street the largest customer of any company you consider should account for no more than fifteen percent of the total billings part of your proprietary work should even include a chat with the largest four or five customers to see how they feel about dealing with a new owner if less than 20 or 30 are involved you may want to see them all i buy and operate companies wherever i find them so i fly a hell of a lot but i don't mind because my business life has always necessitated travel and procedures are geared and my procedures are geared to working on planes in hotel rooms and by email one day you may feel as comfortable with out of town or out of state business ownership as i do but right now your first acquisitions should be local if possible otherwise when the inevitable problems arise commuting back and forth will become a colossal pain in the butt if you have a family and want to keep them it's even worse staying local not only means less traveling it also puts you into business where you already know the market you may already know some of the customers and where you're established in the business community finding the best acquisition target is not easy unless you happen to know somebody who knows somebody trying to sell exactly what you want to buy or beginner's luck turns up a gym you can expect your acquisition search to take six months or more even if you find your dream company the second day you still need to validate it by looking for a lot of other companies this process is important because you eliminate half of your problems when you select and go after the qualified target but remember the deal is either hot or it's not pureed you still have to investigate even the hottest deal when you're satisfied with your investigations and the deal looks good on paper and feels hot it's time to tie up and move to closure i use the letter of intent which spells out the specifics and gives me an option to buy at a certain price my letter of intent concludes with a sense of urgency saying in effect please let us know as soon as possible or by such and such a date if you do not intend to act we can move on to our next choice i don't use contracts because a letter of intent is just as effective and less intimidating to the prospect at the same time i have begun the search for my funding since i intend always to use other people's money let's buy a hypothetical company we'll call it rufus electronics my acquisition audit tells me this company is worth 10 million dollars i tell mr rufus who is looking forward to retirement that i can pay him 9 million cash after some requisite hesitation he accepts my offer now all i need is 9 million but i have it all worked out rufus electronics has shown a fairly steady three-year cash flow of almost 90 000 a month that figure supports sixty thousand dollars per month debt based on the penal rule of thumb that cash flow should be about one and a half times debt service since current cash flow determines debt level my banker has determined rufus electronics can support roughly 720 000 annual debt service at 10 of total debt this figure in turn supports approximately 7 million dollars of non-equity loan and as always to preclude escalating debt service i try to borrow at a fixed rate a good rule to remember is that the cash flow will not service the debt you're paying too much of course there are exceptions a company that is losing money but i really want to purchase rufus electronics and to demonstrate how to make the purchase without using my own money so i'll need two million to cover the shortfall what are my options one old man rufus takes back two million in paper a promissory note to pay him in monthly installments for the a predetermined number of years two i generously make mr rufus part of the dream team with 12 or 15 or even 19 of the companies still his based on my accountant's recommendation i give him an office and an emeritus title and the reassurance that when i sell his former company he shares in the profit which might be even more than the paltry 2 million this option is especially attractive for the rufus mooch heirs three i find an equity player a venture capitalist who i'll give 2 million in return for maybe 30 or 40 percent of the company in fact the capital needed might be 2.2 million or 2.4 million to cover all the fees and professional expenses and in many instances a coupon at some fixed rate will have to be paid on the equity portion of the purchase obviously cashflow will have to cover the debt service four i locate another lender who'll take assets as collateral with cash flow as a secondary collateral by the way since i run my figures so cleverly my bank loan is actually 7.2 million and i have 200 000 slush to pay with or even better to distribute as bonuses to my employees who in the sudden burst of love and loyalty for me will forget all about the years that they devoted to the old man rufus the point of all this is to there are many ways and combinations to secure opm you just have to keep probing the financial market until you find the right combination but trust me the money's out there sometimes however in spite of your most adroit deal-making skills a promising acquisition negotiation begins to unravel most people then try to fix the deal it's a natural urge to say hey we've spent too much time on this to let it go uh fall through the now or maybe you hang on because you don't want to admit you've made a mistake the time and expenses you've invested to that point is nothing compared to what you're likely to lose with a patched up compromise deal that closes on crutches step back and give yourself the clarity and courage to cut your losses and move on to the next deal and there will be a next deal the second acquisition not a carbon copy let's assume the best you found the perfect company for your first acquisition you located financing you maintain continuity and this morning sometime later you woke up with the acquisition fever if you're like most budding high performers the fever is really an outgrowth of your realization that you'll never achieve another quantum leap out of your present company until the day you sell it until you make an equity transaction profits are inching up revenues are steady sales are up from the last year and you're bored before mold forms on your elbows it's time for more quantum growth a few years ago this exact scenario was being played out in the business life of a close friend and protege of mine casey stevenson casey who passed away in 2008 was an energetic ambitious guy from hanford california near fresno he owned his own jewelry store by the time he was 21 after a couple of years he had been there done that in jewelry sales and wanted more he tried to grow his company by opening new locations but he was just working harder doing the same thing perpetuating this job at the same level casey attended my seminar in may 1993 and heard me talk about quantum growth through acquisitions i was overwhelmed he told me later the idea would work but how could i use it he targeted the acquisition of a jewelry store two and a half times the size of his own everybody thought he was crazy the owner didn't want to sell he didn't even care for casey as an individual casey remember that dan pena says no means yes so he approached the company's largest jewelry store acquisition company and they tried getting behind his back to buy it for themselves casey wanted the store so he finally made the owner an offer he couldn't refuse in addition to the purchase price the guy would receive 50 of the full profits during the first 90 days after the acquisition when they would liquidate the assets he made the seller a generous part of the transaction sued his pride with money and the deal went through casey later wrote in the following the same steps dan pena did when he was acquiring multi-million dollar companies i was able to purchase the oldest jewelry store in the state of california in just three months after attending dan's seminar battling against the biggest jewelry store acquisition company in the u.s and without using any of my own money or taking on debt minnow swallows whale and the revenues in the business will triple in one year due to the acquisition which is real quantum leap in my success as you consider a second acquisition there are some rules of thumb to consider your first acquisition should have established or continued a profitable track record but that's not mandatory if your first company is struggling for a breath a second company won't pump life back into it automatically a good idea is to give the first company about three years of operation after your acquisition so that you and your cpa can make a qualified judgment about the long-term health also during those three years your first company will have had time to establish a reputation within the business community editors know cpa is sarcastically talking about in this in the uk chartered accountant and the editor's note there are rules of thumb but if you find another hot deal and your instincts say yes go for it in your first business no doubt you'll become a managing owner in your excitement and enthusiasm you got in early every day review receivables walked you in production checked orders talked to the customers and monitored every figure for signs of profitability your employees would look and say here he comes again you can't do that with two plans two stores or even two offices you have to hire or train another individual or several to take over your management duties so you can spend more time kissing frogs for your acquisition your second acquisition in fact signals the end of your role as a hands-on kind of owner otherwise you become company's worst confusion factor and worst enemy you also want to pay off your short-term debt you're going to need plenty of short-term cash during the second acquisition and this time it should come from revenues of the first acquisition not your own wallet so pay down the operating line and do it all over again i'll tell my seminar attendees never apply short-term solutions for long-term problems same holds true here never use operating funds to make the equity contribution in a second leveraged buyout don't use short-term borrowing to make long-term purchase look for a second company that complements the operation of your first stick to your knitting part two at great western we stayed in the energy business expanding only from oil and gas to coal construction pipeline and drilling and marketing our acquisitions were energy support companies so that we were vertically integrating our organization in an area in which we were already familiar casey stevenson the jewel was stuck with what he knew a few years ago time warner already a communications giant targeted turner broadcasting systems and put in a very complex deal very simply disney sought out let's for its entertainment products by purchasing capital cities abc you will have learned volumes from your first acquisition which you can apply to your second at the same time you'll be regarded in a different light by bankers lawyers owners and potential acquisition targets your first time around you were regarded as a novice and given slack in consideration for your lack of experience this time you may be regarded as a greedy capitalist reaching out to grab other men's dreams to extend your own you may be met with suspicion and every word you say or write will be examined for content and implied meaning your best defense is calm reassurance of your intent and the determination to remain fair to all parties once you're done a successful acquisition or two an amazing thing will occur deals will start to seek you out accountants lawyers owners and brokers will bring you deals because you're a proven player the acquisition of a company its development and improvement as a player in the marketplace and it's an inevitable sale for millions of profit that process has been for me the most exciting part of my career and certainly the most profitable i'm a committed fraud kisser i hunt for acquisition deals every day i solicit deal proposals for consideration from those who attend my seminars i'm always ready to participate in any deal which will help an enterprising individual make more money that he or she ever dreamed possible and naturally make a bundle for myself i encourage you to think beyond cost reduction in more sales adjust your thinking and your vision just 10 and look past day-to-day business finalities toward the chasm beyond go for your quantum leap with your acquisition of a company just waiting for your level of commitment and caliber of expertise as casey stevenson said on the heels of his success now i look at everything differently i'm able to see opportunities and there are lots of them around i've got so many things coming at me now people in the industry are calling me to buy their stores it's phenomenal finally when you get just a glimpse of your potential for success qualified and measured by the flow the flood of money into your own bank account i guarantee with no reservation that you'll never ever be the same again chapter 12 your grand exit dying or selling some long for the glories of this world and some sigh for the prophet's paradise to come i'll take the cash and let the promise go omar kyam said that in the rubiate the ceo world is largely populated with careful comfortable founders and owners who were once bold and courageous entrepreneurs no matter where you live their familiar names business leaders who speak to the rotary club and head up the united way drive they run a mid-sized cpa firm or a lumber company a car dealership an ad agency or a manufacturing plant they are all perceived and respected as pillars of the community at one point in their lives they snatched control of their destinies stacked all the chips they had on the table and created or acquired a business of their own they took a ballsy chance and succeeded then recoiling from the shock of their own unexpected success they decided that their one big score was a lucky break a fluke and they could never repeat it so they took up a safe defensive posture to protect what they had miraculously achieved they dug in and frittered away the rest of their career trying not to lose what they had achieved today years or even decades later they're still dug in basking in the respectable mediocrity their names are on the letterhead their portraits are on are in the lobby and their stupid sons are in the vice president's offices down the hall waiting for them to die i've come out of retirement again and committed myself to saving as many energetic determined entrepreneurs as i can from the fate i've just described if i kick you around and hold your attention long enough to inspire your first quantum leap i'll be damned if i'm going to let you do it once then quiver behind your desk for the rest of your career the truly successful high performer understands that the strategies and skills which he marshaled to generate the first quantum leap can be called upon to repeat that success over and over that's why he doesn't hang on his first venture like some sort of corporate teddy bear he's secure enough in all his abilities to build it up then sell it off or a bundle and start the process over again you as a progressing or even entry-level entrepreneur can make a quantum leap hold on to your company and sit on your assets the rest of your life or you can keep your dream humming along for a few years improve profitability then dress it up and unload it for a substantial profit simply put unless you're thrown out by your own shareholders you have two exit strategies options die or sell authors note having been thrown out of uh more than one company myself as a founder i relate to the this section extremely well end of author's note i can't help prepare for the first option fortunately i've never used that strategy nor taunt anyone who did i'm far more familiar with the latter selling and i can give you some pointers on how to puff up the hog ready for the fare and get it ready to bring you top dollar owners sell their companies for several reasons some are simply ready to retire take the cash and enjoy the more leisurely life others want to an injection of capital to continue to grow their company or an affiliation with a larger company with greater distribution marketing and manufacturing resources the best reason i can think of to sell a company is to free up assets and turn equity into cash lots of cash selling is the natural end of a cycle that began when you decided years ago to begin or acquire your first company and make your quantum leap if you're young and energetic enough and most of us are you can take part of your newly liquefied asset or the leverage provide and acquire a second or even a third company and start the process over again one thing i learned quickly making an enormous amount of money suddenly from a single transaction is habit forming absolutely erotic and you're 18 again and you can't get enough the more you do it the more you want to authors know having just had my 72nd birthday and working with approximately 100 mentees yearly which i a result of my four to six seminars a year i can tell you that the uh the kids once they've tasted the quantum leap can't get enough end of offers no pay yourself first before we get into the specifics of implementing your exit strategy let's talk about paying yourself and your people a company owner whose aim is to grow the company arithmetically will characteristically plot profits back into the company to strengthen its financial profile to purchase new equipment or expand however necessary i can't emphasize enough that you as a company owner need to pull money out of the company to pay yourself so you can begin to enjoy the lifestyle that you and your family have earned many owners feel guilty about rewarding themselves as if they're betraying the company the mentality is fine if you never intend to sell but if you plan to sell as i hope you do you'll feel less obligated to squeeze every penny out of the deal if you've been paying yourself all along while you are paying people never forget of the employees who have made your company successful enough to become a marketable item your employees may love you for your charismatic leadership but trust me they're in it for the money if they do everything you tell them to everything they feel is expected of them they don't care if the business is temporarily lousy they expect you to reciprocate they need a bonus now and then especially at christmas or year end of year which confirms their value to the company so take money out and put it aside for you and your employees so you can pay several deserve bonuses in all business conditions and cycles when you borrow money borrow enough tuck away for the employee's bonuses don't make yourself wait and don't make your people wait for the rewards they deserve the cliche is true take care of your people and they will take care of you how much is the company worth the market not you will determine how much you will ultimately get for your company the fair market value is what your company or any commodity can bring in open exchange between a buyer and the seller in an uncontrolled market environment you should bring in professionals to perform valuation so you have at least a ballpark estimate how much to ask be assured that any serious buyer will conduct his own valuations because nobody believes projections or even current figures provided by the seller buyers make their decision based on what they think the projections are after examining your records for the three years back regardless of who does it there are four universally accepted means of value in a company plus one which is all too often used by the business owners number one the asset approach based on fair market values this method adds up the fair market values of the company's assets after netting out the total of the firm's tangible liabilities a real estate holding company might use this approach quite often a company in financial trouble will do an asset-based valuation just before going out of business liquidation sale this type of valuation would be appropriate for an outside manufacturer plant sitting on a valuable piece of property number two the income capitalization approach this valuation method also called discounted value of future cash flows is based on the current worth of economic benefit that will be enjoyed by the buyer in the future it tracks the company's expected future earnings stream over a predetermined payback period expressing the percent values dollars this method is filled with ips because who can predict interest rates inflation or hypothetical future revenues and expenses nevertheless most prospective buyers want to use this approach to assess your company's value since it stresses future performance buyers will typically pay three to five times annual cash flow all other factors being equal accordingly if you use the same type of valuation you get a clear idea in advance of how much a prospect may be willing to pay number three the market comparison approach this method is similar to that used in the real estate market comparing the financial performance and ratios of similar companies i.e return on assets debt to equity ratios return on sales ratios return on equity and price and earnings pe average industry ratios are published by dun and bradstreet and by the u.s bureau of census in their quarterly financial report for marketing mining and trade-off corporations the p e ratio is perhaps the most widely used measure of comparison since it provides the most accurate reflection of a company earnings power and growth possibilities it expresses a company's value as a multiple of net earnings after taxes the higher the key ratio the higher is the firm's growth potential number four the gross revenues approach this method is for companies i like the ones i like to run the gush torrents of income and matching expenses with few if any retained earnings in most cases they have a few assets and a little capital investment examples of these are consulting firms retail companies radio stations employment agencies dealerships professional service businesses and public relations and advertising agencies a specific company's value is expressed as a multiple of annual gross revenues the multiple is based on such factors as the company's reputation time and business sales record and the strength of the industries multiples are very subjective and are based as much on educated guesswork as industry figures this is the best way to value a company which is referred to as a cash cow a company which only requires the buyer to survive and keep quiet to make money on his investment number five but here's how much i want take it or leave it approach some business owners especially those who have developed a deep emotional attachment to their company over the years or who have specific cash needs will begin their evaluation not from the worth of their company but from the amount of money they want or need out of the company unfortunately for them companies are valued on their respective strengths and weaknesses not on the personal desires or agendas of the owner puffing up the hog to take it to the fair puffing the show hog is no ideal phrase as any former 4-h kid will tell you when your prize porker is going to be judged by the pound and the round of its figure you make sure that before the two of you head up to the fairgrounds the fat suckers add to the snout with its favorite corn what better scrap of americana could i apply to your taking your own prize company to market timing search for a perfect way as you will have learned after you've been in business for a while you compete in a cyclical economy and a cyclical industry it grows without saying that you want to sell your business in a strong market the problem is that there are several indicators you need to read and consider before putting your company on the block the ups and downs of the economy sweep over your company like waves influenced by interest rates and periods of stable and general uh confidence in business concurrently your specific industry may be in the upswing or the downswing the mid 90s for example saw such industries as computer technology communication and health care sweep like tidal waves into the hearts of investors others which cater for fairly stable ones and needs hardly feel the bumps and dips add to these variables the condition of your own company and its profit picture over the past three years you're hardly in the position to demand top dollar if your revenues over the past few years have been flaccid achieve at least three years of solid profit make it jump out of your books to grab the attention of the most casual reader you're likely never to ride crest of all three of these ways in the same time nevertheless you need to monitor them the economy the industry your company so that you can at least aim for the seller's market when you decide to sell if your overall plan calls for you to sell in five to ten years you'll track through several cycles of change before you finally sell as a rule of thumb however i tell owners that if you're over 40 years of age to sell during the next upcycle and get the hell out authors know as i said in november of 2016 when president trump won the election in the united states we were going to see the greatest transformation of wealth in the world since world war ii now in end of september 2017 we've seen about four trillion dollars added to the u.s stock markets alone and thousands of jobs and many industries growing again in the united states i believe or i know that we only just begun to see the effects of the trump presidency with all its hazards hand of authors note a clean house brings a higher price the snapshot of your company on any given day its financials its contracts even its physical condition is not the picture you want to present to the potential buyers when a potential buyer strolls to your premises the most insignificant images stick in the mind the receptionist greeting the clutter in the stockroom the dirty carpets the crowd in the lounge the wards on the walls the demeanor and the noise level of the employees remember whether a person is buying a car a house or a business much of the decision is emotionally based above and beyond the financials buyers feel whether a company is right or not just as you the seller can feel whether a buyer is the kind of individual or conglomerate you want to sell your hard-earned company to prior to trying to sell your pride and joy paint and repair is needed clear corridors storage areas of accumulated files and boxes replace out model equipment repave the parking lot if necessary and redecorate your offices to reflect an efficient productive yet warmly human environment this is called puffery now shoring up your organizational structure housekeeping at the most elementary level requires that you update or create salary guidelines board meeting minutes job descriptions in fact even the smallest company needs a policy and procedures manual for employees covering hours vacations health insurance retirement plans and record-keeping procedures an organizational chart complete with the titles and lines of accountability will convey a sense of organization and suggest that you as a ceo are already grooming others for senior executive positions a credible board of directors another proprietary step is one we've discussed relating to establishing your company in the financial community that of assembling a distinguished board of directors in some part of the world these are called advisory boards just as a list of respected executives on your board impresses a banker it also speaks volumes of the potential buyers recruit them carefully person by person as if it were putting together a team of all-stars offer them free stock or options and warrants to compensate them for the use of their name and the time they may spend advising you and your successor far beyond window dressing in fact your board can provide you and your potential buyer with a wealth of business acumen and wisdom well worth purchasing and remember as i say in my seminars i bought my first dream team board of directors authors note by that i mean on the new year's eve of uh i believe 82 or 3 i got a call from a a wealth person that i was in business with to buy a company from him on a fax machine overnight for tax reasons and i did and with that company came a very distinguished board including the founder of the north sea uh robert dyke who was nicknamed dryho dyke for his 88 dry holes in the 89th uh well that he drove and brought in the argyle field which uh arguably saved great britain from bankruptcy under uh mrs thatcher's administration end of author's note corporate literature the company also needs some literature to add to its legitimacy a brochure tells prospective buyers as well as clients of course that the company is prosperous and aggressive in its marketing program brochures for high tech firms are especially effective in explaining uh the company does in pedestrian language an illustrated color brochure will add pizazz to the company's seemingly mundane and complex businesses arthur's note and today uh 2017 in addition to the brochure and sometimes replacing the brochure would be a corporate website which has puts your face in front of not just the prospective buyer but the rest of the world because we are so electronically connected now and the end of authors know clean financials clean up your financials too i'm sure you wouldn't do this but a lot of companies use tax avoidance strategies such as excessive compensation to camouflage earnings from the tax authorities such tactics may well have a negative impact on a potential buyer who says to himself hmm what else are these guys hiding but beyond ethical issues buyers will typically only recognize your taxable profits you're not going to pay for earnings that are invisible or not clearly documented no matter how blatantly uh you uh nudge and wink in order to avoid getting caught between the tax authorities and the concerns of a potential buyer i suggest that in anticipation of putting your company on the market that you invest in taxes for a couple of years yeah when all else fails pay your taxes just keep in mind that your company will be acquired based on multiples of earnings so your investment in one or two years of taxes should bring your multiples of that amount uh when you sell we've talked about audited financials such a report issued under the logo of a respected accounting firm will lend credibility to your company this is another reason to get honest on your tax avoidance schemes since a reputable national cpa firm will will test you for those practices as you recall these eye shattered bean counters are really trained to work for the tax man and against you unless you can convince them otherwise authors know europe or especially the uk they're not going to call cpa firms they're called chartered accountant firms and of authors no during the normal course of business you may have gotten a little loose in collecting your receivables and tightening up your inventory uncollected receivables that you'll never collect should be marked down as should those dated and cobwebbed items in inventory that you'll never sell sure as hell a prospective buyer will dispatch his honor to define these untidy holdovers so you find them first and write them off none of my companies will ever enter into an acquisition audit by a big four firm author's note if the acquisitions as i tell the mentees now currently in the 21st century are small one or two million dollars or one or two million euros or pounds rather than forego a expense of a a full bone audit your uh cfo finance director your industry expert and your ceo should be able to do a preliminary audit enough to purchase the firm or the company end of authors no stable long-term contracts another cleanup chore is to strengthen and lengthen contractual agreements any potential purchaser wants to buy into the same pattern of arrangements which have helped make you successful these arrangements include any property equipment leasing contracts in a union environment any labor contract if you're anticipating selling negotiating ahead of time a long-term labor contract that subsequently gives any buyer a sense of stability uh with regard to his union workers although this isn't always possible it is definitely worth trying customer contracts are equally important when we were negotiating to purchase bow valley usa we looked carefully at the extensive coal contracts and the company had with utility companies all over north america those contracts were part of the firm's assets as surely as it was were its coal mine also solidify any contracts you have with suppliers to provide you with the raw materials or other products at a certain price for a number of years the more contracts you will nail down with every party the more stability your craft into promising deal for a likely buyer cleaning up your paperwork if you're like most owners of private companies operating outside the public spotlight of the sec disciplines you've got a hell of a lot more to do than clean timely records like run the damn company that's fine if you never intend to sell otherwise it's in your best interest to maintain all the data a prospective buyer looks for as evidence of organized and efficiently run operation for example payroll records tax records reflecting up-to-date filings documentation of any bank loans documentation of copyrights trademarks or patents copies of current licensing distribution or franchise agreements all documentation required by osha or epa and other bureaucratic tentacles of government speaking of the environmental protection agency make sure your company isn't in compliance with any appropriate environmental regulations and guidelines hire an outside evaluator to check your procedures and processes for dealing with handling and disposal of any waste your company may be generating and documenting everything information and financial control systems buyers who see a working system of controls in place are more likely to pay a premium for the company they know that your systems will save them the agony of having to install these processes at a time they're going to post acquisition transition i suggest you have your accountants or an external consultant review your controls and data processing systems to ensure they meet your needs the cost of these reviews will be more than recouped from the price paid by a satisfied buyer the transition management team buyers want assurance that you're not going to hand them the key at the closing and disappear along with the expertise which has made your company successful you may now be running your company single-handedly but if you're planning to sell you'd better begin to develop a management team a second level of competent management and a control which will ultimately make you dispensable and raise your buyer's comfort level about people he is inheriting especially key to this management team is a conscientious certified chief financial officer who continuously feeds data into the system in addition almost any buyer will want you personally to be around during the transitional period leading him through the processes you know by heart and helping him establish relationships of his own with employees customers suppliers bankers and anyone else in the business community who can continue to provide him support depending on the size and complexity of the company and the confidence and experience of the purchaser you might be asked to stick around for anywhere from 90 days to two or three years negotiate the shortest period in your buyer's comfort zone you want to get on with your life and begin your next quantum leap besides former owners becoming increasingly irrelevant to all parties tend to take on aura of a ghost from the past if they hang around too long lawsuits in progress while you're tidying up cleaning up your lawsuits if you're a defendant settle wherever possible and put litigation behind you on the other hand if you're a plaintiff keep the suit make sure you advise the buyer of the particulars of the suit and emphasize why you feel it's important to pursue it to the end the buyer will appreciate your being forthright and and you give him the option to continue or drop the action after purchase structuring your deal the financial legal form your company sales takes depends on your liquidity objectives tax strategies and other goals which may or may not be a conflict with those of the buyers the structure that emerges from the acquisition negotiations is typically a compromise of what you need and what the buyer wants there are four basic ways you can structure the sale of your business one the purchase of your corporate stock cash and or other consideration and you pay taxes on the purchase price two the acquisition of your stock in a tax-free exchange of stock three the taxable purchase of all the portions of corporate assets for cash and or other consideration for the acquisition of all or part of your assets in a tax free exchange for stock last corporation with regard to taxes in the u.s if you're at the stage of founding of purchasing the company talk to your accountant about establishing it at the outset as an s corporation this is a vehicle that has been popular with qualifying companies since the tax reform act of 1986. it gives companies a protection and structure of a corporation but a tax treatment as a partner of a partnership the s corporation sells assets passes the gains or losses to individual shareholders who are taking tax who are then taxed at their individual tax rate there are no corporate taxes the law stipulates that to qualify as an s-corporation your firm must have only individuals as shareholders not investment groups for example only one kind of stock and no more than 35 shareholders before you think about converting your existing company or s-corp bear in mind that the irs says you can't sell or liquidate within 10 years of your company conversion so if so you'll be taxed like a regular corporation authors know we are not giving you uh tax guidance you should consider any advice of your own personal tax advisor and if the law has changed uh reference s corporations i'm not qualified to say hand of authors note in summary the time to begin thinking about your exit strategy is at the beginning of your entrepreneurial experience from the first day you open your doors keep full records and documentation maintain written policies and procedures and regardless of how much of a pain it is operate as if you were planning to sell in three months watch and learn to anticipate economic and industry trends and cycles keep an eye on the companies comparable to yours are selling for the whole time you're in business you'll be preparing to exit on your terms and should a buyer happen to appear in your lobby unexpectedly some morning you won't have to scramble around at a disadvantage that could cost you hundreds of thousands maybe millions in purchase price finally whether you're just starting out or you're already in business think of your dream company as a stepping stone not as end product of your dreaming you can grow and nurture it but never develop such an attachment that you cannot bear to sell it someday regardless of your best interest high performers regard companies as a means to the greater end that being enormous wealth and total independence till you pursue further goals in life your quantum leap will have already propelled you further than most dare to dream and put you at the starting mark of a lifetime of quantum leaps authors know as i tell the seminar attendees at the castle that when you start your company you start with a dream but it's in preparation for a sale but the only person that does not look for that in sale is if you are building a legacy business to turn over to your family which we do have some from time to time and of authors no chapter 13 author's note 13 has always been my lucky number my favorite number and this book ends with this chapter end of author's note take action now or never if you don't take action to begin your quantum leap within 21 hours after finishing this book you never will authors know this is a quote by me and it has stood me in good stead all my 24 years of coaching end of author's note if you've read me this far you've had a damn good dose of dan we talked about creating your personal foundation for success by thinking yourself out of the box of conventional wisdom you will recall that i told you conventional wisdom is almost always wrong i'm talking here about doofus wisdom not the expert opinion of people who have achieved success you will know from experience that you can't talk about your goals and aspirations with your business peers your friends neighbors or even family because they're all mirrored in conventional wisdom they also have a loser mentality the only advice they'll give you is you can't do it or quizzical and a good luck pal now you know you can you also know you have to get comfortable with making decisions by realizing that every decision is not a selfish choice and nobody is going to die if you screw up you have to take risk to understanding that failure is only learning opportunity not a social disease risk means you're not taking a chance you're giving yourself a chance for super success there is absolutely not the slightest hope that you will succeed by sitting smack inside the middle of your comfort zone i guarantee that the more mistakes you make the more action you're taking toward achieving your final goal action is the key authors know unless you're in the life death business and we have had physicians medical doctors and surgeons come through over the years nothing you're going to do is going to cause anybody their life for those of you that are in that kind of business take note i'm sure you know how to handle it and the authors know you know that you must focus on the ends not the means think macro and big picture executing a good plan right now to paraphrase patent instead of a perfect plan next week or never as an entrepreneur you've got to think big not only for yourself but for those you take along with you your dream uh and that's what it is must be big enough for everybody to see like the flag at the front of a parade like a beacon of clarity that cuts through the fog of you may have passion and be obsessed with your dream and the values it represents as we learn from president ronald reagan when when values are clear decisions are easy authors note i was also told that by roy disney jr the son of roy disney brother of walt disney end of author's note you know you can't just wake up one morning and be successful any more than you can wake up and play the piano seminar gurus who tell you that you can have it all and instantly are lying and instantly are lying just as surely as the ads that promise you you will be able to play the piano within 10 hours of receiving their course you have to practice success take actions that assume you are successful act as if you have no limits to your abilities put yourself in risky situations and work your way out build your confidence expand your comfort zone and all the time visualize your dream down to the smallest detail the carpet style in your corner office pictures on the wall i agree with the strategy voice by success group dennis waitley write down your dreams keep it in your wallet and read it every day don't just think it ink it find a mentor too a super successful executive or ceo who has been where you're going some of the nation's finest minds are retired from active business and have the time and wisdom they'd love to share with you retired successes are national treasures we ignore claim one of your own while you're taking care of all these substantial tasks you have a image building task as well to create and feed the perception that you already are who you want to be act successful dress and travel in the style of your success never share your doubts like trump in bankruptcy keep on smiling and keep on dealing if you are perceived to be successful people will want to be associated with you authors know when i wrote this originally donald trump who i'd met back in the early 90s and late 80s i had no idea nor did anybody in the world ever think that he'd be president he is our current president he's been in less than a year but mr trump now president trump has personified many of the qla methodologies end of author's note start working on your dream team immediately today make the first telephone call the instant you finish this chapter you'll need a first class accountants lawyers bankers and associates why because you can't do it alone get help and give equity and don't hire credentials so much as attitude people with an appetite for adventure then lead them on that adventure give them responsibility enable them to make decisions and mistakes pay them but pay yourself directors and team first i gave you my 11 steps that make the deal start with identifying your idea and defining the deal then investigate thoroughly and continuously throughout the process then you make the commitment establish your critical path continuously modify as you need to follow up every step to make sure it's taken and execute i forget about plan b or safety nets just like the chinese general who posted the troops were they their backs to the river fight or die commit yourself and your people to fight for the deal your dream if there's no tomorrow if i had to identify one factor which is seriously lacking today it is guts and that grim unalterable determination to fight and win if you are a gutless tree hugger a new age mystic or at all touchy feely then this path is not for you this book will uh have been an individual's aid towards defining what you don't want to be in life super rich and super successful authors know in this day and age in september 2017 with me going around the world speaking at universities and my first university last year was oxford university 2016 one thing is undeniable the snowflakes are gaining in population and that means two things number one their chances for quantum leaps are slim and none and slim lift town and two that means that the universe for us doing deals is that greater so take advantage of it end of author's note as far as reason capital is concerned you have more hard information about how to find other people's money and get your banks on it in chapter 9 and 10 the 98 of the people who ever tiptoed into the bank use it nothing you can do in the business suit is more satisfying than to outflank a doofus banker shake his hand and take his money authors no we're not taking anything from anybody illegally it has to be legal moral and ethical but that's just a phrase that i've used for almost 50 years end of author's note we also talked about the heart of any quantum leap adventure equity transactions this is where the real money is made you should begin immediately to search for likely acquisition targets finally you now know that unless you you plan to hang on to your company uh sit right and be buried somebody under your mahogany desk you should begin planning your exit strategy now there are two main exit strategies one is to clutch at your heart at one day and slump forward face into your file marked cost reduction targets 2010 the second is to find a great fool to offload your turkey and stagger away with a barrel load of green folding liqueur and then start again if the mood takes you you choose author's note nobody falls into their exit basket now now they just fall over dead on their laptop or their hand held hand of authors no with such wealth a trove of information you've no reason not to get off your ass or your couch and get moving adding to your urgency is that once you finish this final chapter a proven countdown kicks in i used to tell my seminar attendees that if they can take at least some small action toward making their quantum leaps within 21 days they never would i've since come to believe that the take action time is far shorter now i'll tell them that if you don't take action within 21 hours it's almost guaranteed you'll never do anything to stick this book in your bookshelf with all those other feel-good volumes you wasted money on call an accounting firm call a local banker uh use chapter nine as a script at least to set up a practice interview call your local newspaper or the nearest metropolitan paper to where you live and ask the business department for the most recent list of financial institutions who are currently begging for a chance to lend you a capital do something for god's sake get off your dead ass now well dan you may be winning in your mind it all sounds good but how do i know what you've said is valid for anyone else but dan pena type a guy with an uh in your face approach to business authors note yes i am a super aggressive alpha male and the kids now come to me from a different demographics when i first wrote this book your first hundred million my demographics were roughly 35 years of age to late 40s in the last five or six years my demographics have now changed from teenagers to 35 with an occasional person over 35 as the last seminar that just ended a few days ago we had kids from 19 to a woman of 52 and of author's note i'm glad you asked such an obvious question after my seminars there's always someone who writes on his critique sheet how does this apply to me a lobotomy would be in the personal development for people like this instead of restating everything i stated so far i want to introduce you to some of the business people i've worked with over the past few years and every instance these people were already successful entrepreneurs individuals running their own companies and making money you've already heard one success story that of casey stephenson the young jewelry mogul in california casey passed away too young and too soon i've always remember him as a minnow who swallowed the whale here are a few more candice knowle whose houston-based company has handled the custom accommodation needs a thousand top executives over the years never attended the castle seminar or to my best knowledge any of my other qla events and since she benefited from qla through direct personal contact back in the 80s dan broaden our caliber and scope of service said candace just by uh requesting many of the same services he has accustomed to receiving uh in five-star hotels of london he and his team really expanded um our idea of premium hospitality with special requests for cable service at the time a novelty advanced telecommunication and other personal requirements inspired and challenged by dan's expectations we moved into a custom furnishing of apartments condos and homes and then expanded into uh residential sales authors note candace attended my 70th birthday to almost exactly two years ago she has sold the business and has moved on to developing real estate projects and when she sold the business her business in the oil belt of houston was the most effective and successful business that there was end of authors know it or asked dean verdier during the mid 90s she and her partner george who happens to be her husband were already making good money and with sugarloaf mountain works organizing upscale craft shows in the mid-atlantic states they were working hard and growing a little each year by every conventional standard they had no reason to change their make their thinking and their mode of operations a year after her dose of dan diane wrote to me saying as a direct result of attending your seminar many changes have taken place on the cash flow front we've already found and instituted a way to increase our cash flow 500 000 this year since our seminar we've also added four new shows uh to our next year's schedule a 50 increase over the number we're doing this year more than a decade later i wrote this chapter the country seemed to be sliding into a recession for the sugarloaf craft festivals were doing good measured as the verdiers say by the new uh good of 2008 they've uh they have ten festivals scheduled for the fall of this year and eight more already in the works for early 2009 and already their market ranges from new england to new york to michigan from maryland to delaware atlanta georgia for almost 20 years 20 shows a year deanne points out that dan's pennyisms are firmly incorporated into their business thinking perception is reality she says share your dreams but never your doubts so ladies i'll repeat this pennyism just for you and i'm sure with diane's blessing act as if there you have no limits to your abilities you can make your quantum leap with your heads down looking at goals in the dirt you've got to see clearly that other side of the chasm and have the unbridled confidence to know that the next time your feet touch the ground it'll be on the other side of the cliff in addition to acquiring a new and bolder mindset qla practitioners come away from my training with a tool kit jam with tidbits of business wisdom my long time hunting partner martin heller sure as hell agrees here's what he says i have personally applied dozens of the killer ideas of my business including an e-commerce startup that soared to 80 000 turnover in just eight months and then to seven-figure total turnover in just 24 months and another current business venture in just a few years we've gone from a company to become one of the leading private health care companies in europe and the uk we focus on sleep disorder breathing sleep apnea a number of the uk and eu exclusive product deals and license rights in our portfolio we are now planning larger acquisitions with the build or buy sell or float focus in mind robert one of my brightest uh stars i've mentored over the years is like so many of the super successful who have passed through the castle laid off in 97 he uh wound up uh washing 18 wheelers on the graveyard shift for a grocery chain but along the way he heard me speak and bought some qla tapes he says that his success has been built on the ruins of many failures but he never gave up a determined entrepreneur he started his own business in 2002 and became quite successful then in 2004 we reconnected the next year he sold his internet business for what he calls a nice sum today he does consulting work and is involved in the sum project in asia where he currently lives robert has attended several capital seminars he says the qla has helped him remove the brakes from his potential we all have limits on ourselves and tragically we also allow others to place them on us if there is anything i have learned from dan is that there should be no limits to our abilities in the heat of the most difficult battle with odds against you you should go in knowing you will win i credit dan with where i am today and i am where i'll be in the future everyone should be lucky enough to have a mentor who pushes you to the place you want to be televox thinks of me as an old friend who once urged her to redefine enough for retirement actually them and i have been friends for 30 years we go back before great western and the castle and the seminars i was just getting into the texas oil business and stayed at her motel and graham for months dan doesn't understand the word enough it says thelma his prodding challenged me to rethink my own definition of enough as a result i more than doubled my retirement funds and now run a personal development program called choices i i want my grandson to look to dan as a role model and mentor in his life but most important i think of dan as a loyal friend one who values a friendship regardless of the divergent past friends often take he certainly changed my life and it left footprints on my heart forever arthur's note falmouth's in her mid 80s now we've known each other uh for about 35 years and i still keep in touch with her she's still running her own program called choices but she's winding down in fact i plan on seeing her early next year end of author's note dr bernie schindler should have retired from his chiropractor practice years ago after all he was running 12 successful clinics but instead he met me several years ago and i told a seminar in los angeles bernie had heard about dan pena so he made a point to attend and bring his five of his children i bought and bring five of his children i bought four of dan's books that day said bernie but more importantly i met a man who inspired me to advance to the next level of business without having to see patients every day along the way i suffered a back injury kept me in bed virtually every hour of the day inactivity and painkillers resulted in serious constipation i retrieved an anti constipation from my interning days in the late 50s taught myself in internet marketing a sales vehicle that was still in its infancy and started a new mail order business bernie was probably one of the oldest entrepreneurs to come to the scotland for the castle seminar but is also one of the most energetic i mean everybody who gets to uh get so excited about or leaving constipation you've got to love today i count bernie is one of my personal friends and a great uh example of how a passion for your business is good medicine at any age tim cohen is a successful marketing consultant a recommended marketing resource for ibm business partners and a certified google adwords professional who handles more than 70 clients from his office in oklahoma in the late 90s before he met me he had a dream to expand his business in tim's words i knew where i wanted to go but i didn't know how to get there dan provided the missing piece of puzzle he uh was the guide also showed he was the guy who showed me how to make high velocity decisions with the skill and confidence of a super performer i heard other experts talk about growing the business but when i met dan i knew he was the real deal one thing tim learned was how to talk to bankers and potential investors when he was ready to open an office in london he took his associates and to meet some of the city gents his secret weapon was he learned at the castle how to talk to those people in their own language his associates were dumbfounded as tim romance the bankers into negotiating the size of a loan then even issued his partners each parked his card with enormous limits i love to hear stories like that today tim cohen is an international expert in earning income based not simply on products or promises but i'm booking transactions in either of the internet i work in a pure mediocracy tim said recently i'm judged solely on the statistical results of my applied knowledge i review about a thousand websites every day to monitor the performance but more importantly in my approach is what i do in fact i act as dan words if i have no limits to my abilities tim found a niche in the internet marketing using a process that is so technical and so esoteric that few including myself could probably understand that the methodologies of qla work in that business environment as they do in every other industry doris permacerio has been operating telephone call centers for more than 36 years starting in the business at age 16. she started her own call center at age 22. her niche is telephone answering service that handles after-hour calls to and from hospitals and doctors her employees are trained to take all types of medical emergency calls and speak knowledgeably with callers to reassure them in a time of urgency her business was moderately successful when she learned when she heard me speak at the hyatt international airport in orlando 1995. i challenged her to expand her business exponentially by buying and merging with other call center operations around the country in recent years doris has done just that purchasing and consolidating those acquisitions in her orlando florida headquarters in fact less than a year ago she went international with a call center in the philippines employing some 50 agents in the meantime she fulfilled one of her long time dreams by attending the castle seminar in early 2008. i love dan pena zims doris said recently one of my favorites is investigate before you invest that's one of us that saved me thousands of dollars in purchasing companies that were not as stable or forthright in their reporting as they seemed on the surface not long ago i challenged my son and jared to memorize the first 21 pennyisms what i didn't tell him was that i would pay him a thousand for every penny-ism he memorized he learned 15 and kicked himself when i gave him 15 000 instead of twenty one thousand he could have earned pennies are the important are that important to me and i want them to be important in business in his personal life as well my only regret is that i waited 13 years to attend the castle i put it on my goal back in 1995 if you are thinking about it or have it on your goal list don't hesitate go to the castle and listen to what dan pena who i call the 400 million dollar man has to say the entire castle experience was absolutely incredible one of the best uh testimonies i i've ever received came from a world-class professional in the field which i am only beginning i previously mentioned ted nicholas one of the few other seminar lecturers active today besides dan pena that i recommended hearing ted who spent a week with me in scotland during the castle experience said i think this is the greatest seminar i've ever attended this information is worth millions of dollars in the right hands you could go to harvard or stanford and never get the practical hard hitting information that dan presented this week it's often said that if you get one good idea from a seminar a time well spent i've counted 103 specific notes of ideas i've gotten from the seminar and i plan to use them authors no ted is uh retired now to nicholas uh he is one of the great marketing guys of the last 30 or 40 years he's a gentleman that taught me that words matter and not just written words but spoken words and he attended my first castle seminar back in 93-94 and i consider him a good friend and of authors no i look for deals everywhere at my seminars where 400 people or more may attend i conclude my lectures with an invitation i tell my audiences established business owners entry-level entrepreneurs and wannabes that if they have a project a deal they think might be interest in uh fax me at one page not two pages but one page single page i can read that it's hot or just a mush brain fantasy if it's hot i can determine in a heartbeat what it needs to take off to become a multi-million dollar quantum leap i no longer extend this offer to people because i only give uh one seminar now and it's at the castle this century since 2000 i've only given this seminar my final words if you've stuck with me this far you've passed a doofus test of your own you're probably a serious individual scratching and clawing your way towards a dream that you may have seemed further away this morning than it did yesterday you may even unconsciously doing the same wrong things over and over and expecting different results as i've often said this is my definition of insanity you've got a good business that is getting by paying the bills you're on the the cusp of giving birth to a new venture but just can't get her going or you got a hell of an idea one you've been work tweaking for years one every expert says will make you rich and famous but after all this time it's just an idea other people are doing it you know something is missing in your formula maybe that's why you go to all the seminars and buy those books and tapes and uh tables uh in the back so what the hell is the answer i had a guy who filled out a critique sheet at the end of the recent seminar and it was like a light of knowledge had just burned right through his eye balls into his brain i've been looking for the secret of raising money and building my super success i found out the secret today there's no secret dan pena explains why people who i never suspect of financial acumen are out there building monster companies and monster deals while i'm in this on the sideline trying to figure out how they did it now i know and now you know and you have no one to blame but yourself if you don't make it happen action really is the key to making it big in this world uh littered with uh lay abouts and armchair dreamers anyone can say they want to want super success anyone can set goals for super success anyone can dream of super success but the rewards come only to those who actually do something not talk about doing something i hope i've made up my point look at your watch your 21 hours have started author's note the book that i've just read the 13 chapters of gives you or allows you the ability now to be able to play the entire financial orchestra heretofore you have had just individual tools now you have the whole i hate to say toolbox to about