TIP530: The Top 5 Billionaire Books w/ Richard Wilson

Billionaires often struggle with investing their wealth once they sell their assets. Richard Wilson, founder and CEO of the Family Office Club, helps them set up family offices and invest their wealth wisely. Wilson has set up over 200 family offices, interviewed 25 out of his goal of 100 billionaires and works with clients ranging from billionaires to millionaires. He stresses the importance of studying billionaires and their strategies and believes that anyone seeking success should do the same. Wilson's insight into billionaires and their investment strategies offers invaluable wisdom for anyone seeking financial success. It also highlights the importance of staying focused on valuable expertise and continuously improving one's knowledge and skills.

Consistently providing thought leadership to a small niche group and enacting different influence principles leads to gaining authority and mass reciprocation. Despite having no authority at the beginning, the key is to work hard and gain experience in the industry. Reading everything possible and sharing the knowledge acquired with others is the shortcut to success. The Family Office Club was started by sharing helpful information on the family office ultra-wealthy niche, which had no other thought leaders. Richard Wilson studied the psychology of influence and structured the business based on Cialdini's influence principles, such as having a position of authority, scarcity, reciprocation, and commitment and consistency. The blog generated significant revenue and exposure, leading to a book deal with Wiley.

One of the most important things for ultra wealthy investors and billionaires is to see deals first exclusively and at a better valuation than others, which helps compound their wealth very quickly. This can be achieved by establishing oneself as a titan in the industry and being an attraction factor instead of chasing people. Another important aspect in managing wealth as one becomes wealthier is setting up a Family Office, which manages various aspects of investment and wealth management. This helps allocate capital, makes things more tax efficient and reduces the risk of making costly mistakes. As one becomes busier and their time becomes more valuable, it makes sense to build teams around them to handle various tasks.

The three main types of Family Offices are virtual, single, and multi-family offices. Virtual family offices are designed for individuals with a net worth of around $10 million or more. Single family offices are created for clients who need full-fledged services, ranging from 2-100+ full-time employees. The multi-family offices are designed for super wealthy individuals, with a minimum net worth of $100 million per client. However, some will take in clients with a net worth of $10 million or more. The decision to set up a family office depends on the complexity of the portfolio and the level of chaos around it. Most ultra-wealthy families specialize in just one or two niches and have a strong defensive team and investment strategy. Family offices can also benefit from having an LLC or a business structure around the actual entity to write off more expenses. Overall, a family office can help in making less expensive mistakes, moving faster, and playing a greater offense.

Setting clear values, objectives, and mission is crucial when setting up a Family Office. These factors will determine the level of cost, complexity, and investment of time needed. Without them, it can be challenging to work towards a family's interests. Customizing strategies and investments based on individual values can also lead to better outcomes. The Family Office can also offer unique investing strategies, such as direct investment in companies and exclusive access to deal flow. Overall, it's vital to have a clear sense of direction and purpose when starting a Family Office to optimize investment decisions and achieve goals.

The key to success in business is to focus on strategic choke points and build a reputation as a valuable strategic partner. Families who have a lot of ownership of choke points, influence, and distribution will get sweetheart deals with better valuations. The most crucial thing is to structure the investment right to ensure maximum benefits for all parties involved. One way to do this is through structuring royalty deals, which can be a win-win solution for both the business owner and the investor. Royalty deals can be structured in multiple ways, and it's important to understand what works best for each party. Ultra-wealthy people should focus on investment structure so that an average deal can turn into an amazing deal.

Royalties can be a great way to protect equity and prevent permanent dilution for business owners, especially in deals involving investors. Structuring royalties in deals can provide multiple benefits, including additional returns for investors, extra equity for owners, and protection against excessive dilution. While dilution can be bad, there are strategic ways to use it as well, especially when dealing with sophisticated investors who may appreciate having gross revenue royalties instead of just equity stakes. The goal is to strike a balance between equity and royalties for both parties to enable growth and prevent excessive dilution while also ensuring investors can get their returns and business owners can maintain control of their companies.

When seeking partnership with big families/investors, one needs to be willing to offer different terms. It's important to prioritize warrants over equity, as they provide benefits to both company owners and investors. Equity warrants have a time frame within which one has to invest a certain amount, whereas if one has the right of participation that doesn't expire at the terminal sale, they won't have to get diluted multiple times. Investors need to compare the term sheets they received from different institutional investors before making any decisions. Skipping college ball and minor leagues would help one reach the major leagues if they want to operate on a bigger scale.

Medical practice owners should explore other equity options to scale their business instead of giving away 20-40%. Right participation can give a share in profits after a sale occurs. Private equity has become increasingly popular over real estate investment. A dip in investment flows can create a discounted opportunity to take risks, as sitting on hands instead of allocating can lead to a 20-25% discount in investments. It's best to look for unique opportunities in areas of high future demand and have a high conviction edge over the masses. The book, 'The Most Important Thing' by Howard Marks, is a surprisingly good read for hedge fund billionaires.

Investing in real estate during times of market uncertainty may require courage, but it also presents opportunities for great deals with high discounts. Investor Residences offers all-cash purchases, eliminating the risk of banks rejecting financing or last-minute changes. Howard Marks advises that the more risk others see in the market, the less risky it actually is. Jeff Hoffman, creator of airport check-in kiosks and early investor in Priceline.com and Booking.com, emphasized that wealth itself is not evil, but how it is used determines its goodness or badness. As business people, we should prioritize backing ethical and honest individuals with good intentions, rather than supporting unethical ones.

It is equally important to work with good people and turn your back on those who may be fraudulent, unethical, or suspicious. Billionaire books, such as Steve Schwarzman's 'What It Takes' and Mark Cuban's 'How to Win At The Sport of Business', provide essential insights into successful business strategies. Schwarzman emphasizes on focusing on one big goal instead of chasing small ones and having an expectation of excellence. Cuban, on the other hand, stresses on the importance of being kind and generous with others while becoming well-informed and networked. Reading books written by billionaires can provide valuable lessons and transform your business.

Success can be achieved through different approaches. Larry, the founder of YouTube's success came from hiring people smarter than him rather than the grind and hustle mentality that others like Steve Schwarzman or Mark Cuban exhibit. He created a unique business model with low production cost and remained humble. Grant Cardone, on the other hand, prioritizes being obsessive and persistent to achieve success. His knowledge transferable skills helped him become a player in the real estate space even though he came from another industry. These takeaways teach us that one size does not fit all when it comes to achieving success. It's important to identify our strengths and work smartly and efficiently to achieve our goals

Being a nice person can get you far in life, even in the business world. Many successful billionaires are known for their warmth and approachability that helps them build relationships with others. However, it’s important to understand the marketing persona of some people, like Grant Cardone, who often say polarizing things to gain attention and promote their brand. When it comes to investing in real estate, single-family homes may not always be the best option compared to multi-family properties that can provide better returns in the long term. However, investors need to be aware of the risks involved, such as the possibility of fluctuating interest rates affecting property values and transactions.

Billionaire entrepreneurs may lack knowledge regarding diversification, deal structuring, and investment terms outside of their niche industry. Trusting whoever has access to them, they may end up making expensive mistakes and investing in deals that don't compare well to others in the market. Therefore, it's important to stay focused on structures that work and maintain a conservative approach while looking for growth capital in various spaces. Investing involves patience and an expert knowledge of the market, including diversification and common deal terms. Sticking to a strategy while continually improving the terms and staying conservative help to grow the balance sheet while identifying opportunities in the market, targeting institutions that seek diversification.

When investing in operating businesses and direct investments, rather than diversifying across various niches, one should specialize in the niche where they created their wealth or have a passion. This involves reading and researching as much as possible, attending events and hiring consultants in the niche, and making small test investments before going for larger ones. It's important to have a strategic game plan and not invest based on what randomly falls in one's lap. Warren Buffet advises waiting for the right pitch and then aggressively investing in it. It's also crucial to prioritize tax-efficient strategies and structuring before exit planning so that one doesn't miss out on opportunities to save taxes.

Proactive tax planning and use of tax-saving strategies can protect high-net-worth individuals and families from capital gains taxation. Qualified opportunity zones can be used to protect a certain percentage of capital against capital gain taxation by investing in institutional QOZs. Manufacturing and software companies can save massive tax through R&D tax credits. It’s essential to avoid clerical errors while filing tax as it can result in missing out on significant tax savings. Familyoffices.com and investorclub.com are valuable resources for raising capital and receiving tax feedback. Private investors can benefit from attending events by receiving quick feedback and relevant advice.