Keep your chin up. It could be worse. You could be working for them. Reinforcing failure
Probably the two easiest words to write and the hardest error to avoid in this entire book. We all do it. Even the best of us. And we never stop doing it all our business lives.
Reinforcing failure sounds so easy to avoid. If something fails, stop doing it and start doing something else, right? Er, right. Except, when do you decide you have a failure on your hands? Too late, is the answer.
Ten years or so ago, I invested heavily in a new project, an interactive CD-Rom disc called Blender, based in New York. Blender contained reviews of new movies and albums, electronic games, animated cartoons, video interviews with celebrities and a host of other features. You stuck it in your computer to play it. Or view it. Or watch it. Or listen to it.
It was a pioneering project that made a huge splash in the media world. The idea was to publish this CD-Rom every month, just like a magazine.
I loved it. So did the rest of the media. We won a zillion awards. The designers and editors were fêted and rivals began to prowl around the corridors wondering if Blender meant the death of ink-on-paper magazines. They needn’t have worried.
Blender wouldn’t sell. Whenever we took it to focus groups or gave it away, kids and techies alike whooped and hollered and told us it was “so cool”. I upped the ante. We began advertising it and marketing it. We paid stores to carry it. We worked days and nights.
In our heart of hearts, we believed we were inventing a new medium. Everyone was supportive and applauded this new concept. Everyone except the bloody customers, that is. And every issue sold worse than the last. A great retailer once said: “There is no victory over customers.”
Oh boy, did he get that right. But I was convinced that if only people would sample Blender they would become addicted. Who was I kidding? Did I quit after losing $1m? No. Did I quit after losing $3m? No. Only when I had lost more than $5m did I come to my senses. That was a lot of change for an individual entrepreneur in the 1990s. In short, I fell in love with the project. I did not listen to my financial advisers or my long-time partners in other companies. I just stuck in there and got myself killed.
Thinking small and acting big
When I had my first real financial success in 1974, publishing Kung Fu Monthly, a one-shot poster magazine about the martial-arts film star Bruce Lee, I had already begun thinking big. There’s nothing wrong with thinking big.
The fact that this teeny-weeny one-shot had the word “monthly” in the title caused some mirth in the British magazine business. One-shots are not unknown by any means, but calling them monthlies is coming it a trifle high. Anyway, just how much could hippy journalists who knew nothing about kung fu publish about one man 12 times a year? Even my friendly distributors gave Kung Fu Monthly only a year before it folded.
To everyone’s surprise, not least my own, Kung Fu Monthly continued to be published for 10 years, and each issue was dedicated almost exclusively to extolling the virtues of Bruce Lee. It has to be said that we had one or two things in our favour.
First, Bruce Lee had lived fast and died young, always a great career move for any movie star. Second, it is impossible to libel a dead man, legally speaking. Third, he was popular in almost every country, including the Third World. Fourth, I had obtained a huge stash of Bruce Lee photographs by sending my friend, Don Atyeo, to Hong Kong at the time of Bruce Lee’s funeral.
How else was I thinking big? As soon as the first Kung Fu Monthly was published (it sold more than 100,000 copies), I got on airplanes — dozens of airplanes. In country after country, together with an Australian lawyer friend, Andrew Fisher, I licensed Kung Fu Monthly to foreign publishing companies. Eventually, there was even a Chinese edition of Kung Fu Monthly, along with German, French, Italian, Swedish, Dutch, Spanish and Arabic editions.
Then I flew to America. Economy class. I will never forget the two weeks I spent trudging the streets of the Big Apple looking for a partner to publish Kung Fu Monthly in America.
My hair was still halfway down my back. My high-heeled snakeskin boots, Mr Fish tie and Tommy Nutter knock-off suit were not exactly what American businessmen were used to.
In desperation I went to visit a British expatriate whose name had been given to me by a friend. His name was Peter. Together with his partner, Bob, Peter was just starting up his own magazine company in New York. His office was shared, more of a cubicle really, but respectable. His demeanour inscrutable. But he had two things going for him – he had capital and he had the contacts to make publishing Kung Fu Monthly possible.
Slowly and methodically Peter examined my sample issues of Kung Fu Monthly and began asking me questions about costs, sales and the unusual format of a poster magazine. “Let me get this straight,” he said. “This thing is really an uncut 16-page signature from a normal magazine and yet you charge the price of a whole magazine to the reader.”
“You’ve got it,” I replied. “You can charge that kind of money,” I went on breathlessly, “because when they finish reading it, kids can hang it on the wall as a cheap poster.”
Peter looked up at me and smiled. “I’ll try it. I have to try it. What can we lose?” Peter and Bob are still my American partners 30 years later. Kung Fu Monthly was a success in America. And one magazine led to another. Over the years, Peter, Bob and I have risked hundreds of millions of dollars.
We have created jobs for thousands of Americans. We have become rich. Thinking big — that’s the secret.
But thinking big doesn’t mean you should forget about acting small. Just because you have a success or two under your belt doesn’t mean you have it made. Sir Winston Churchill said: “Success is never permanent; failure is never fatal. The only thing that really counts is to never, never, never give up.” He was bang on the money. Once you begin to believe you are infallible, that success will automatically lead to more success, and that you have got it made, reality will be sure to give you a rude wake-up call.
In the late 1980s and early 1990s I forgot to remember to act small. I spent millions of dollars on drinking, taking drugs and running around with whores. I lost all respect for money and for the blood, sweat and treasure I had expended to acquire it. I was acting big. In a single decade I got through more than $100m living high on the hog. Eventually, I was hospitalised. When the doctors heard how much cocaine and booze I had been imbibing, they went ballistic.
In the end I wised up and began to straighten out my life. I escaped by the skin of my teeth from the consequences of acting big. Almost as if by magic, my business began to make progress again.
Skimping on talent
If you are determined to be rich, there is only one talent you require — the talent to identify, hire and nurture others with talent. Any company managed and run by plodders and jobsworths will be lucky to survive, let alone prosper. Talent is the key to sustained growth, and growth is the key to early wealth.
Sometimes, to ensure that a talented individual will work for you, or will stay working with you, you need to be flexible. Money is not always the great motivator here. Talented people want a good salary, of course, but surprisingly often they are more attracted to new opportunities and challenges.
Stephen Colvin, my chief executive at Dennis Publishing in New York, is a good case in point. A Belfast lad who came to London and made a name for himself selling advertising for Dennis, his obvious talent acted as a magnet for my rivals. In secret, one rival flew him and his wife, Pippa, to the west coast of America and tempted him with a senior position.
Stephen and Pippa were delighted with America and they decided to take the chance to live and work there.
As soon as I heard, I acted. Stephen is not a greedy chap. Putting his salary up would not be enough to hold him. So what did he want? He wanted to live and work in America.
At that time, I was busy losing money on my Blender CD-Rom and working with Peter and Bob on MicroWarehouse, a publicly quoted catalogue reseller of hardware and software we had founded some years before. MicroWarehouse was a $2 billion company and my publishing activities in America were a sideshow.
What could I offer Stephen to ensure I held on to his talent? I asked him to fly and meet me at my lakeside cottage in Connecticut. He wasn’t too keen. He knew I was going to try to “turn” him. And he knew, too, that I did not have a Dennis operation in America that would interest him. Nevertheless he came. When Stephen arrived, I took him down to the dock and we boarded my boat. A few beers and a high-speed ride later, I cut the engine and we sat looking at each other while the boat bobbed gently on Candlewood lake. I was careful not to break the delicious silence. Finally, Stephen spoke: “Felix, I’m not going to stay at Dennis. It’s a great company but I want to move on. Pippa and I want to come to America.”
I nodded. And I swear to God, it was only at that moment that I realised what I might be able to do.
“What is the position they’re offering you?” “Vice-president,” he replied.
“How would you like to be president of an American company?” “What company?” “Dennis Publishing Inc.”
“There is no Dennis Publishing Inc, Felix. Just Blender and a few bits and bobs.”
“Ah, but there will be a Dennis Publishing Inc, Stephen. And soon.” “What is it going to publish?”
“What would you like it to publish, Stephen? You’re the bloody president.”
He couldn’t refuse. This was the chance he had always wanted. And I was going to keep my talent. He went on to build Dennis Publishing Inc for me, brick by brick. And build his own reputation in the process. Remember the simple rules concerning talent: identify it, hire it, nurture it, reward it, protect it. And, when the time comes, fire it. If you can do all these things, I would be truly astonished if you did not become rich. Because the truth is, talent does most of the work for you. Just as it has done since the beginning of recorded history. After all, who built the pyramids? The pharaohs or the engineers? Think about it. Then go hire some talent — just like they did.
NEXT WEEK The art of negotiating
© Felix Dennis 2006
Extracted from How To Get Rich, by Felix Dennis. To be published by Ebury Press on August 31 at £16.99. Copies can be ordered for £15.29, including postage, from The Sunday Times Books First on 0870 165 8585
