wanna be rich?
A Recipe for Riches
by Duncan Greenberg
Friday, October 9, 2009
Want to become a tech titan or hedge fund tycoon? Up your chances by dropping out of college or going to Harvard and working at Goldman Sachs.
Are billionaires born or made? What are the common attributes among the uber-wealthy? Are there any true secrets of the self-made?
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We get these questions a lot, and decided it was time to go beyond the broad answers of smarts, ambition and luck by sorting through our database of wealthy individuals in search of bona fide trends. We analyzed everything from entrepreneurs’ parents’ professions to where they went to school, their track records in the early stages of their careers and other experiences that may have set them on the path to extreme wealth.
Our admittedly unscientific study of the self-made members of the Forbes 400 yielded some interesting results.
First, a significant percentage of them had parents with a high aptitude for math. The ability to crunch numbers is crucial to becoming a billionaire, and mathematical prowess is hereditary. Some of the most common professions among the parents of Forbes 400 members (for whom we could find the information) were engineer, accountant and small-business owner.
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Consistent with the rest of the population, more American billionaires and near-billionaires were born in the fall than in any other season. However, relatively few of them were born in December, historically the month with the eighth-highest birth rate.
Of the 274 self-made tycoons on the Forbes 400, 14% either never started or never completed college. The number of precocious college dropouts is highest among those who forged careers as technology entrepreneurs: Bill Gates of Microsoft (MSFT), Steve Jobs of Apple (AAPL), Michael Dell of Dell (DELL), Larry Ellison of Oracle (ORCL) and Mark Zuckerberg of Facebook.
Forbes 400 members who derive their fortunes from finance make up one of the most highly educated sub-groups: half of them have graduate degrees. Roughly 70% of those with M.B.A.s obtained their master’s degrees from one of three Ivy League schools: Harvard, Columbia or the University of Pennsylvania’s Wharton School of Business.
Goldman Sachs (GS) has attracted a large share of hungry minds that went on to garner 10-figure fortunes. At least 11 current and recent billionaire financiers worked at Goldman or one of it subsidiaries early in their careers, including Edward Lampert, David Tepper, Daniel Och and Leon Cooperman.
Several Forbes 400 members suffered bitter professional setbacks early in their careers that heightened their fear of failure. Pharmaceutical tycoon R.J. Kirk’s first venture was a flop–an experience he regrets but appreciates. “Failure early on is a necessary condition for success, though not a sufficient one,” he told Forbes in 2007.
According to a statement read by Phil Falcone during a congressional hearing in November 2008, his botched buyout of a company in Newark, N.J., in the early 1990s taught him “several valuable lessons that have had a profound impact upon my success as a hedge fund manager.”
Several current and former billionaires rounded out their Yale careers as members of Skull and Bones, the secret society portrayed with enigmatic relish by Hollywood in movies like The Skulls and W. Among those who were inducted: investor Edward Lampert, Blackstone co-founder Stephen Schwarzman, and FedEx (FDX) founder Frederick Smith.
Parents Had Math-Related Careers
The ability to crunch numbers is typically a key to becoming a billionaire. Often, mathematical prowess is hereditary. Some of the most common professions among the parents of American billionaires for whom we could find that information were engineer, accountant and small-business owner.
Of the 380 self-made American tycoons who have appeared on the Forbes list of the World’s Billionaires in the past three years, 42 were born in September–more than in any other month.
Tech Titans Who Dropped Out of College
Forget everything your guidance counselor told you: You don’t have to go to college to be successful. Close to 15% of the self-made American moguls on the Forbes 400 never finished college. Many of the list’s drop-outs made their fortunes in tech, including Bill Gates (Microsoft), Steve Jobs (Apple), Michael Dell (Dell), Larry Ellison (Oracle) and Mark Zuckerberg (Facebook).
Skull and Bones
Several current and former billionaires rounded out their Yale careers as members of Skull and Bones, the secret society portrayed with enigmatic relish by Hollywood in movies like The Skulls and W. Among those who were inducted: investor Edward Lampert, Blackstone co-founder Stephen Schwarzman and FedEx founder Frederick Smith.
A stint at investment bank Goldman Sachs is a prime credential for achieving greatness on Wall Street. Of the 61 tycoons on our list who derive their fortunes from finance, at least six cut their teeth in Goldman’s investment banking, trading, or asset management divisions. The company’s crown jewel: its “risk arbitrage” unit, which launched the careers of billionaires Edward Lampert and Daniel Och, as well as former billionaires Tom Steyer and Richard Perry.
See the full list of A Recipe for Riches
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Enjoy this video from Steve Jobs speech at Stanford (sorry, it’s long).