All The Money In The World: How The Forbes 400 Make--and Spend--their Fortunes by Peter W. BernsteinAll The Money In The World: How The Forbes 400 Make--and Spend--their Fortunes by Peter W. Bernstein

All The Money In The World: How The Forbes 400 Make--and Spend--their Fortunes

byPeter W. Bernstein, Annalyn Swan

Paperback | December 2, 2008

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From Wall Street to the West Coast, from blue-collar billionaires to blue-blood fortunes, from the Google guys to hedge-fund honchos, All the Money in the World gives us the lowdown on today richest Americans. Veteran journalists Peter W. Bernstein and Annalyn Swan delve into who made and lost the most money in the past twenty-five years, the fields and industries that have produced the greatest wealth, the biggest risk takers, the most competitive players, the most wasteful family feuds, the trophy wives, the most conspicuous consumers, the biggest art collectors, and the most and least generous philanthropists.

Incorporating exclusive, never-before-published data from Forbes magazine, All the Money in the World is a vastly entertaining, behind-the-scenes look at today's Big Rich.
Peter W. Bernstein and Annalyn Swan are veteran journalists and editors who between them have worked at U.S. News & World Report, Time, Newsweek, and Fortune magazines over the last twentyfive years. Bernstein is the coeditor of The New York Times Practical Guide to Practically Everything and editor of The Ernst & Young Tax Guide. Bern...
Title:All The Money In The World: How The Forbes 400 Make--and Spend--their FortunesFormat:PaperbackDimensions:432 pages, 8 × 5.16 × 0.87 inPublished:December 2, 2008Publisher:Knopf Doubleday Publishing GroupLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:030727876X

ISBN - 13:9780307278760


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Chapter 1Education, Intelligence, DriveThe notion of a good education as a ticket to the good life is deeply ingrained in the American psyche. Studies show over and over that there’s a strong correlation between schooling and future earnings. It’s a central tenet of billionaire Michael Bloomberg, New York City’s 108th mayor, who has taken on the city’s failing education system with gusto. “Nothing is more important than education,” says Bloomberg, “so you’re seeing the better educated getting the greater percentage of the wealth. And education is only going to become more important as we get into a more and more complex world.”If this is so, how did David Murdock, son of a traveling salesman and a high-school dropout, amass a net worth of more than $4 billion in real-estate development and the food business? What transformed onetime welfare recipient Tim Blixseth, a high-school grad, into a billionaire timber lord?And what turned eighteen-year-old Thomas Flatley, who left Ireland with $32 in his pocket and no advanced education, into a $1.3 billion real- estate mogul? One thing is certain: It was not the hallowed halls of an ivy-covered university.For members of the Forbes 400, who have reached the financial apex, you would expect a basic requisite to be a college diploma, if not an MBA—assuming, of course, they didn’t inherit their riches. Yet Murdock, Blixseth, and Flatley all made fortunes with little formal schooling. And they aren’t alone. Four of the five richest Americans on the 2006 Forbes 400 list—software king Bill Gates, casino impresario Sheldon Adelson, Oracle’s Larry Ellison, and Microsoft cofounder Paul Allen, whose combined net worth in 2006 came to a staggering $110 billion—are all college dropouts. The only university grad among the top five is America’s second-richest man, genius investor Warren Buffett, who graduated from the University of Nebraska in 1949. In fact, in any given year over the past twenty- five years, about 10 percent of the Forbes 400 either dropped out of high school, only graduated from high school, or never finished college.If you ask the nation’s richest man, Bill Gates, what’s behind his success, he’ll attribute his accomplishments to a sort of chaos theory: “My success just proves that life is chaotic . . . some butterfly did the right thing for me.” Buffett uses a different metaphor but holds out a similar explanation for his success (and it doesn’t refer to his 1951 master’s degree in economics from Columbia University). As Buffett puts it: “I was wired at birth to allocate capital.” But of course, success is not as simple, or as elusive, as those responses suggest.To begin with, there’s the matter of raw intelligence. For most of the decades prior to the early 1990s, the notion of intelligence quotient, or IQ, was paramount in explaining why some people excelled at certain tasks. But the use of IQ scores as a measure of future success, except for gauging results on academic tests, has since fallen out of favor. It seems hard to argue that IQs don’t matter when you consider that Bill Gates’s score is reportedly a mind- boggling 170, far above the 130 or so required to become a member of Mensa, the high-intelligence society, and even higher than Albert Einstein’s reputed 160. What’s more, Gates’s successor-to-be at Microsoft, Steven Ballmer (2006 net worth: $13.6 billion), is said to have an equally impressive score. But one of the failings of such tests becomes obvious when you consider that not all high-IQ individuals achieve the financial status of Gates and Ballmer, while many people who score poorly turn out to be megabillionaires. “It’s not a magical measure of people’s capacities, but just one more test that you can be good or not good at,” says K. Anders Ericsson, psychology professor at Florida State University.Many researchers, such as Robert Sternberg, author of Successful Intelligence: How Practical and Creative Intelligence Determine Success in Life and dean of the School of Arts and Sciences at Tufts University, agree that the notion of general intelligence alone has little value. “Just as low scores on intelligence tests don’t preclude success,” says Sternberg, “neither do high scores guarantee it.” The whole concept of relating IQ to life achievement is misguided, Sternberg believes, because “IQ is a pretty miserable predictor of life achievement.” Research shows, in fact, that IQ counts for only 10 to 20 percent of career success. More than a decade ago, therefore, researchers shifted their focus to other types of intelligence. Daniel Goleman, author of Emotional Intelligence: Why It Can Matter More Than IQ, says you need to factor in aptitudes such as empathy, interpersonal skills, and self-control. “The road to success will, of course, always include enough general intelligence to do the job,” but being a star also requires a hefty dose of social skills, argues Goleman. As one executive headhunter puts it, “CEOs are hired for their intellect and business expertise—and fired for a lack of emotional intelligence.”But even a lack of emotional intelligence is sometimes no deterrent to success. One look at the Forbes 400 list and it’s easy to spot bosses with reputations for being physically and emotionally removed from their employees. You have to consider other factors, too, says Sternberg—such as knowledge, thinking style, personality, and the business environment. What he terms successful intelligence is actually a “confluence of strong analytical, creative, and practical abilities.” That doesn’t mean superachievers have to shine in all three, but they do have “to find a way effectively to exploit whatever pattern of abilities they may have,” he says. What sets apart the megastars from the mediocre, then, is not one trait or even a bundle of specific traits, but an alchemic convergence of a variety of strengths—as well as the know-how to use them.Yet even when all these forms of intelligence are present, researchers say, success won’t happen without a few other key ingredients, including determination and hard work. “It all has to come together for people to reach the Forbes list,” says Anthony Mayo, director of the Leadership Initiative at Harvard Business School. “But, assuming they made it on their own, they had to have had ambition and drive.” While drive alone won’t propel a dullard to success, of course, without it even the most educated, analytic, creative minds won’t get an idea off the ground. All of which goes a long way toward explaining how Murdock, Blixseth, Flatley, and others without advanced degrees managed to strike it rich.Academic underachievers who go on to great business success often have a couple of things in common. They started working at a very young age; and while school may not have been good for their egos, working was. David Murdock is a classic example. As a high-school dropout, Murdock had entrepreneurial drive that more than compensated for his stunted schooling. The son of an often unemployed traveling salesman who peddled everything from insurance to small electric generators, young Murdock, born in 1924, experienced the misery of the Depression years firsthand in rural Wayne, Ohio. At sixteen he dropped out of school. But by the time he would have celebrated his twentieth high-school reunion, Murdock was worth $100 million. As a fit, sharp, and energetic octogenarian who only half jokes about living to 125, Murdock is the sole owner of two huge enterprises: Dole Food, the nation’s largest fruit and vegetable company, and real- estate development company Castle & Cooke. His net worth in 2006: $4.2 billion.A hard-charging businessman, Murdock has a complicated relationship with his past: He once suggested to a potential biographer that a book about his life start at age forty-three. As a child Murdock was short and uninterested in sports, making him a target for bullies. This constant taunting may be what motivated him to do great things. His response to the bullies was, according to his sister, “I’ll make money. I’ll be as big as you are.”Just why Murdock dropped out of high school remains unclear. He has offered several accounts over the years. “I wasn’t motivated,” he once said. A later explanation was that he suffered from dyslexia. It’s also possible that he quit to help out his family financially after a kerosene fire burned down their modest home and seriously burned his mother. Whatever the case, Murdock was motivated to work hard at moneymaking pursuits: at the local duck hatchery, pumping gas, and as a riveter just before he was drafted into the army. It was during military service that Murdock realized several key things about himself. One was that he didn’t want to take orders from anyone. He also learned that although he was a high-school dropout, he was not dim-witted. He once mentioned that he got a “very high rating” on an intelligence test the army gave him. For much of World War II, Murdock was a gunnery instructor traveling from post to post. Along the way an army buddy got him interested in books, especially biographies of business titans like Andrew Carnegie and Henry Ford. “They excited my mind incredibly,” Murdock recalled—so much so that he allegedly began to keep files on the nation’s richest people in an attempt to fathom the secrets to their success.Once out of the military, Murdock bounced around the country and landed in Detroit, where he borrowed a few thousand dollars to buy a small diner. It was his first entrepreneurial success: He sold it two years later, nearly doubling his money. Then, barely twenty-three, Murdock and his young wife drove their trailer home to Phoenix. The city was booming, fueled by the postwar Western migration. He teamed up with a carpenter and started building houses literally from the ground up: He dug ditches, poured concrete, scrapped together construction materials. “Dave was a bulldog with ambition, who struck some people as obnoxious,” a colleague from the early days noted, “but he knew how to take an idea and make it go.” As Phoenix grew, so did Murdock. And as Murdock grew, so did his drive to succeed and to overcome his hardscrabble roots.By the early 1960s, Murdock had arrived. He built up a publicly traded holding company for his thriving commercial real-estate and banking ventures. Time magazine called him one of the West’s brightest entrepreneurs. He formed his own private club, which attracted Phoenix’s financial elite, and he hobnobbed in Rome with an international set. “It was very important to him to be around a certain class of people,” a friend later recalled. But Murdock’s empire collapsed a few years later, when the overbuilt Phoenix real- estate market tanked. That, combined with alleged fraud by a company official (the indictment was later dismissed), forced Murdock to liquidate most of his holdings to pay off debts.“I had all my eggs in one basket and I didn’t even know it,” Murdock admitted about those years. But Murdock, like many entrepreneurs, is nothing if not resilient. He took $3 million in cash that he had stowed away from his private construction company and moved to Los Angeles. This time he invested shrewdly in what to him were sure things—asset-rich, undervalued, and overlooked companies. The strategy worked: By 1982 Murdock’s new empire brought him a $400 million fortune, enough to secure him a place on the first Forbes 400 list.Like Murdock, California billionaire and college dropout Timothy Blixseth is a youthful underachiever who made good. He is the first to tell you that his success in the timber and real-estate industries has nothing to do with talent or formal education. “Some people say you’re just born with certain talents. I’m not sure I have any,” he says matter-of-factly. That’s why he got into timber, he says, the only work he was familiar with while growing up in the lumber town of Roseburg, Oregon. “No one taught me. I had to teach myself by working and learning, working and learning. And I made a lot of mistakes. I say I graduated from UHK, the University of Hard Knocks.”Like Murdock, Blixseth grew up poor, in a family of five children. His father had a heart condition, the result of a serious childhood illness, and couldn’t provide for the family. But unlike Murdock, Blixseth talks freely and humorously about his early hardships. “I was born on welfare,” he says. “I can’t tell you how many ways you can eat Spam.” Ask Blixseth what his nickname was in school and he quips: “I was so poor they wouldn’t give me one.” Boyish and casual, the fiftysomething Blixseth can, of course, laugh these days about his family poverty—now that he dines regularly at the swanky Beverly Hills restaurant Spago, takes his Gulfstream G550 from Los Angeles to Paris, and skis at his own Yellowstone Club in Montana, an exclusive members-only retreat.Not bad for a kid who, also like Murdock, was humiliated daily in school. At lunchtime, as Blixseth tells it, teachers separated the students on welfare who got a free lunch from those who could afford to pay. “The kids in the welfare line got heckled every single darned day,” Blixseth says. Finally, “A spark plug went off and I said, ‘This is not what I want to do. I’m going to show you guys that I’m as good as you are.’ ” After school let out, Blixseth took whatever odd jobs he could find, from boxing groceries to working at a nearby lumber mill on the four-p.m.-to-midnight shift. He started honing his marketing skills as a teenager. Every day he perused the classifieds looking for ways to make money, sometimes by adding value to goods he could buy on the cheap and sell at a profit. For example, Blixseth turned an easy profit by buying donkeys and creatively reselling them as pack mules (which resemble donkeys but are more reliable and durable on the trail).Such creativity and freethinking weren’t encouraged in the Blixseth household. His father was a minister in a restrictive “offbeat religion, a kind of minicult,” as Blixseth describes it, which prohibited watching television, listening to music, dancing, even taking out insurance. But Blixseth says he didn’t buy into his parents’ beliefs, and at night he listened to music in the dark on a small transistor radio: “Music was my escape; it was freedom to me.” Although college wasn’t encouraged, Blixseth decided to give it a try. He lasted one day at Roseburg’s Umpqua Community College: “The guy started talking about philosophy and I thought, ‘That’s great, but it won’t help me make a living.’ ” He never returned.By this time, however, he was getting a taste of the potential that lay in the tall timbers around Roseburg. At eighteen, he made a quick $50,000 by putting down $1,000 on timberland that he knew a nearby company had been eyeing, and then selling the contract to the company. For a while he used the proceeds to underwrite car trips between Roseburg and Hollywood, where he hoped to make it in his dream career, songwriting. But he never lost sight of the timber business. Whenever he returned home, he spent entire days researching potential deals, trying to match timberland sellers with possible buyers, taking loans, and gambling that he could sell the land at huge profits. His gambles paid off: By the time he was twenty-five Blixseth had made millions.

Editorial Reviews

“Full of rags-to-riches stories and colorful anecdotes that make it . . . compulsively readable.” —The New York Times“Cogent, fluid, encyclopedic in its detail, this book touches on almost every aspect of getting and spending [money].” —International Herald Tribune“A well written and edited compilation of facts and anecdotes. . . . Gilt inevitably produces guilt.” —Providence Journal “All the Money in the World is not just scholarly; it's also highly readable and provocative.” —BookPage