Those Who’ve Gone from Poor to Rich
“I don’t think of myself as a poor deprived ghetto girl who made good. I think of myself as somebody who from an early age knew I was responsible for myself, and I had to make good.”
—OPRAH WINFREY
I’ve gone from rags to riches, so I think I get these rich customers better than any others.
A very significant percentage of the affluent population did, in fact, pull themselves up by their bootstraps, and they strongly identify with that cliché. Many came from stark or relative poverty or other difficult circumstances and are still very much governed by having been poor or put down. They never disconnect emotionally from this past, no matter how successful and wealthy they become. Some romanticize their past struggles. All keep them as touchstones. I doubt it’s a coincidence that Jay Leno’s star on the Hollywood Walk of Fame is located precisely at the street corner where he was twice arrested for vagrancy. Can’t help but think he had something to do with that placement. Or that his massive collection of classic cars may have roots in his having to sleep in his car while homeless, when starting out.
Walt Disney was once driving home from Disneyland® when he saw and stopped briefly to admire a particular new car in a showroom window. Then driving home, he said aloud to himself, “Gee, I wish I could afford one of those.” It was a half hour later that it occurred to him—“Hey, I can afford that”—and he turned around, drove back to the dealership, and bought himself the car. This reveals a little something about self-made affluents: They may have nearly unrestricted spending power in reality, but not necessarily mentally and emotionally. Most are conflicted about money. They know they need to think, feel, and act rich to remain attractive to money, as I explain in my book No BS. Wealth Attraction in the New Economy. But they also battle guilt, fear, anxiety, and abhorrence of waste. Those who have worked for their wealth, rather than inherited it or gotten it in some amazing windfall, as a movie star or athlete signed to a $50 million contract, can be self-indulgent and profligate, but are not casually so. A yacht salesman told me, “I always show them an outrageously pricey one first, a very expensive but slightly smaller and less luxuriously equipped one second, and a stripped-down bargain model third. They buy the middle one and are able to feel good about not spending as much as they could have. They feel like they acted responsibly.”
Selling to the Self-Employed Affluent
A very valuable sub-segment of these self-made affluents is business owners and entrepreneurs. Here you may very well find your best customers, clients, or patients.
Self-employment is one of the most reliable paths to firstgeneration wealth, supplemented by real estate investment. The net worth of a U.S. household in which its head is self-employed is nearly 500% greater than one in which the number-one breadwinner works for somebody else. Frankly, we business owners tend to pay ourselves a lot better than we do anybody else! And among the ultra-affluent, just shy of 50% own a business that is their primary source of wealth. The other 50% is fragmented, with wealth amassed from inheritance, marriage and divorce, pedantic investment over time, and a number of other sources.
The personality of these affluent business owners and entrepreneurs is sharply drawn, with little ambiguity, so they can be the easiest of all affluents to market a wide variety of goods and services to.
One of my multimillionaire clients owns a large home services company. He grew up in a house with no indoor plumbing. He started in business with a box of tools and hard work. Another multimillionaire client was divorced by his first wife and shunned by his own family for being a wild-eyed dreamer who refused to get a decent job. Only when his brother, a doctor, saw an article about my client did the family make overtures to patch things up. Another multimillionaire client now traveling around in his two private jets and living in what can only be described as a palatial estate in Florida was once working as a car mechanic, and recalls having to explain to his wife that they could not afford to have the clothes dryer repaired and having to borrow the money to go to his first seminar on real estate. These examples are more typical than atypical of the affluent entrepreneur profile. They have never been handed anything. They’ve worked and sacrificed for everything they’ve gotten. They got it by “taking no crap” from anybody and have no intention of doing so now.
Won’t Take No for an Answer
First and foremost, they view themselves as fiercely independent. They chafe at rules and tend to exit, stage left immediately upon hearing rules language from anyone marketing to them. The fastest way to repel this customer or client is to tell him, “No, you/we can’t do that,” and when asked why not, say, “Policy.”
I have stayed at every imaginable kind and brand of hotel, from the much-lauded bastion of service, Ritz-Carlton, to the orange-roofed Howard Johnsons; top-rated resorts, city business hotels, rural motels. I and my companies have spent millions of dollars putting on meetings, conferences, and conventions for groups of 20 to 20,000 in these same facilities. Since this is self-described as the service and hospitality industry, you might expect service and hospitality. But you’d be wrong. In 30 years of this patronage, I have been in only two of these places where no matter what I asked, I never heard the words “no” or “can’t.” The properties where this occurs consistently are Disney’s® in Florida, notably Animal Kingdom Lodge® and the Grand Floridian.® Everywhere else, you get nos. I’ve stayed in a lot of resorts once. I take a vacation at a Disney property nearly every year. If not already, I’ll certainly generate a million dollars in lifetime customer value for Disney.® Only $10,000.00, give or take, for just about every other resort I’ve every stayed at but will never stay at again. That’s the value of being able to say “yes” to the affluent.
If They Admire You, They’ll Reward You with Their Business
Second, the self-made affluent are great admirers of the qualities that got them where they now are. Every one of them is doing business with somebody who reminds them of themselves when they were starting out. I got my first bank loan from a 70-year-old entrepreneur who owned the smalltown bank outright, and the mill, and the main street restaurant and hardware store, and most of the real estate as far as the eye could see in any direction. I met him for lunch at his diner on a Wednesday, not knowing his bank was closed on Wednesdays. Afterwards, he unlocked the bank, found its checkbook in a drawer, wrote out a check to me for $50,000.00, and told me he’d have somebody draw up the paperwork and mail it to me to sign. He said I reminded him of himself when he was a young buck too dumb to know what couldn’t be done and tough enough to do it. I regretted not having asked for $100,000.00.
These people reward ingenuity, drive, persistence, and salesmanship. They have a spiritual reverence for these virtues.
An axiomatic example was given to me by a fellow who was charged with selling a new kind of pizza-making conveyor oven to New York restaurants. In the city of pizza, only fixed ovens with real pizza stones were acceptable. To crack the market, he determined he would need the number-one restaurateur as a reference, the owner of a couple famous, high-end restaurants as well as five different franchise chains. It just so happened this entrepreneur had just secured the area rights to a new pizza franchise and would soon be opening dozens of locations. The salesman sent him a letter requesting an appointment. Then he sent him one of his business cards with a handwritten request, along with some brochure or article about the ovens or the restaurant business in general, every day. Every day for two months. Finally, his phone rang and the famous restaurateur asked—in good humor—“What do I have to do to get you to stop sending me your business cards?” The salesman told him he’d bought the cards by the thousand, so there was a long way to go, but a brief appointment would put an end to it. The ending is happy. More than 100 of those pizza locations have the “odd” ovens.
On the other side of this coin, the self-employed affluent genuinely detest sloth, weakness, and wimpiness. They are hustlers who not only respect hustle but find those lacking it pathetic and untrustworthy. That does not mean they respond well to desperate hustle; they don’t. But aggressive hustle, they do.
They Are—More Often than Not—Searching for Value, as They Define It
Third, they know the value of a dollar, and tend to pride themselves on being smart about money, getting good deals and bargains, negotiating successfully, and even being seen as frugal.
One of the richest people in Europe, the founder of IKEA, Ingvar Kamprad, flies economy, eats lunch in the IKEA employee cafeteria, drives a decades-old Volvo, and lives in a modest one-story home. Warren Buffett still lives part of the time in the same home he bought for $31,000.00 in 1958, and has been known to pick up Bill Gates at the airport himself when Gates visits. The late Sam Walton was famously, symbolically frugal: old pickup trucks, off-the-rack suits, even brown paper bag lunches.
Even President Donald Trump, pre-presidency, liked telling the stunts of buying the bankrupt billionaire’s oceanfront manor as a foreclosure bargain; of recouping his investment in his famous Mar-a-Lago resort by replacing all of the antiques, antique furniture, and art that came with it with reproductions and selling the originals; and of buying his huge 727 airplane rather than a smaller private jet because there was less of a market for 727s so it could be had at a bargain price. As president, early, he made much of getting Boeing to withdraw their contract and lower the price for new Air Force One planes.
When you step down from these ultra-affluent business leaders to the merely affluent, you find even more serious frugality. While they all have one or two things they will spend wildly on, most abhor waste and have an emotional need to buy smart with most things they buy. I believe this is rooted in two things: 1) a patch of thin skin about others’ perceptions of the rich-as-drunken-sailor spenders who are fools about money, reinforced by the news stories featuring those who are; and 2) a vivid memoir of and residual paranoia about from whence they came, when spare change from the couch cushions was needed to buy dinner. Most affluent entrepreneurs harbor a nagging fear of losing it all or having it all taken away from them and winding up broke. This anxiety is always there, like a low-grade infection. If they feel they are wasting money, that anxiety flares up.
It’s important to know that the price these people will pay for something has to do with how right and justified or queasy and irrational they feel about it. Not about intrinsic value or their own ability to pay.
In marketing to the affluent, you will mostly be marketing to these people who have made themselves affluent through ingenuity and initiative—not rich heiresses roaming Rodeo Drive between two-martini lunches and hours at the spa, not rappers and rock stars or superstar athletes draped in bling. The way you present yourself to them must be in sync with their values.
Reprinted from: No B.S. Marketing to the Affluent Letter. Diamond Membership, www.NoBSInnerCircle.com
I want to tell you about four people.
One drives a $400,000.00 Maybach (a luxury auto I also own) and a $360,000.00 Bentley, wears a diamond-encrusted one-of-a-kind wristwatch, lives in a two-floor penthouse in New York in which he removed walls in order to create a big home theater. He is as new-rich flashy as can be.
The second guy splurges on $500-a-box cigars, his custom shoes cost $500.00 a pair, his oddball vehicle stable includes an actual M47 tank, and he has ownership interests in over 100 businesses and is a significant stockholder in companies like Weight Watchers and Walmart.
The third guy wears only perfectly tailored Armani suits, has a large motorcycle collection, and has several homes each worth upwards of $10 million.
The fourth calls himself a beer-and-pretzels guy, wears jeans and rugby shirts every day, drives a 5-year-old car, and owns a huge home with only a few rooms in it furnished, but owns and uses a Gulfstream V and famously makes large purchases and investments.
The first guy was expelled from high school and never finished, and after being rejected by every company in his industry that he submitted his demo product to, he produced it himself and started selling it out of the trunk of his car. He is worth an estimated $300 million.
The second guy is an immigrant, was rejected by many potential employers, and made some of his first money with a kitchen table info-marketing/mail-order business. He began buying cheap real estate before he owned a home of his own or even had an apartment of his own, while bunking with friends. His estimated net worth exceeds $400 million.
The third guy grew up in a trailer, with his mother and a series of “stepfathers.” He worked in a rock quarry, as an adding machine salesman B2B door-to-door, and at an ice cream stand, before being hired as an announcer by his biological father—from whom he later bought the small business in 1982, grew it, took it public, and made it a multimillion-dollar enterprise. His estimated net worth exceeds $500 million.
The fourth guy has benefited from a little luck and fortuitous timing—he sold the second company he built to Yahoo! for $5.7 billion, before the dot.com crash. But he’s from a blue-collar family background, and he started his first business after working, selling, scamming, and paying his own way through college. He became a millionaire from it by age 31. His estimated net worth exceeds $1 billion.
The first rich guy is Jay-Z. The second, Arnold Schwarzenegger. Third, Vince McMahon. Fourth, Mark Cuban. You see him now on Shark Tank.
How They Spend Their Money
Cuban is most transparent in not caring about some things and thus being relatively cheap in spending on those things, while caring a lot about other things and spending on them, ludicrously. Nobody needs a Gulfstream V; not for speed, security, or convenience. But if you could closely examine the other three, you’d uncover the same fact. To Arnold, fine cigars and enjoying them is of earth-shaking, prime importance. You can be certain he reads Cigar Aficionado magazine. As Governor of California, he even challenged the anti-smoking rules at the state capitol. He also cares passionately about ownership of iconic American companies and quality real estate, like shopping malls. I am certain we could find other things he has no interest in at all, and may very well be buying ordinary goods at ordinary prices in those categories. Jay-Z is about “bling” impressive to fellow rappers and entertainers, but he is not an accumulator of large residences around the country.
Appearances, status, and peers’ opinions seem to matter to them all, although maybe less to Arnold than the others. Cuban bought an NBA basketball team, McMahon took a stab at a new pro foot-ball league, and his wife poured money into a U.S. Senate campaign. Jay-Z wants to be known as something much bigger than a rap music mogul; he has a vodka brand, an apparel company, and minority ownership in a pro basketball team. The rich and super-rich buy things that reinforce or raise their prestige. The self-made rich tend to (try to) buy respect and respectability. They are also intensely, perhaps obsessively, competitive. Visibly, notably winning, leading, having the biggest, the best, is important to them.
They all indulge themselves, expensively, and openly. There is none of the (artificial) humility of a Warren Buffett here. Schwarzenegger recently retold his story of buying the tank on the Kimmel show—and clearly relished the telling of it. Cuban is happy to have you know his $41 million Gulfstream is the largest online purchase in history. Jay-Z didn’t just buy a fantastically expensive watch—he had a custom Audemars Piguet made.
And what do you think they think about their indulgent and lavish and mostly showy spending? They are obviously uninhibited. I would imagine, if challenged about it, they would say—contrary to Obama’s ideas—that they created it, they built it, they earned and earn it, and they’re fully entitled to keep it and spend it any damn way they please. They share hard-scrabble starts, and they appreciate and respond well to “hustle” and hustlers. They have all been underestimated underdogs.
This gives you valuable insight, as a marketer or sales professional, engaging such people—whether worth a mere million or ten million or hundreds of millions of dollars.