How I built billion-dollar companies after losing everything

When people start getting a lot of money, they make a mistake about it. They start to think the money is their security. It is not true.

The security is the person who made the money. I could lose everything tomorrow, and I promise you I would be pissed off, but I would not be worried. Okay, let's go make some more. I could do it a million different ways.

That is not a slogan for me. I have been back to zero more than once. Here is what those wipeouts taught me, and the two-phase machine I used to build everything back bigger.

Back to zero

I started my first company at 25. I spent six years building it into something beautiful, and I lost it at 30. It took about five weeks to lose what took six years to build, because I had two destructive people working inside my company and I did not know how to identify them.

Around 38 it happened again. I had built something huge, I hooked up with the wrong people, and the man I trusted turned out to be a criminal. He took it, and I was back to zero again. That one really hurt, and I bounced around for a while.

Here is the fact I had to face. There are good people in life and some not so good people. The destructive ones are a small percentage, but they are trying to pull you down, and if you cannot spot them, they will cost you everything. I studied the subject until I learned it well. Once I knew how to keep those people off my lines, I just kept going up.

Know nothing, sell anyway

After that second wipeout I had nothing, so I borrowed some money from a bank. Then I saw an article in the Wall Street Journal about a new industry starting in America. I knew zero about it. The only thing I knew about electricity was that if you flip the switch, the lights go on, and if you push the button, the TV goes on.

But I knew how to be a salesperson, and I knew one thing true of every business on earth: they all need customers. If these companies were doing this job, I could go get customers for them and make money doing it. That was my great business plan, and I jumped in with both feet.

Underneath that, two fundamentals have to be true. First, the product has to be scalable; if only one person wants it you are in a world of hurt, and if millions could want it you are okay. Second, deliver it for less than you sell it. Invoice a customer a hundred dollars and spend ninety delivering it, and you will have a hard time. Sell it for a hundred, deliver it for sixty or sixty-five, and now there is money left over to reinvest and a chance to build a company around it.

Phase one: me, myself, and I

Phase one is you doing all the work yourself. In my first company I had three employees: me, myself, and I. I got in around six in the morning and started working. I did all the selling. In the afternoon I drove around Los Angeles collecting the supplies I had sold, boxed them up, created the invoices, and figured out how the shipping worked. I taught myself how to type. Nobody showed me any of it. I kept showing up.

I would work a twelve-hour day, stop in the early evening, grab some food, go to night school until about ten, go home, fall asleep, get up and do it again.

I built one habit in those years that I keep to this day. I do not let a week go by without completing every cycle of action. By Sunday there are no unanswered emails or texts. On Saturday mornings my friends were at the beach and I was in the office. If I was done by four o'clock, I could go play. If not, I stayed until the work was done, and only then did I go to the beach.

Phase two: pop out the top

Phase two is where the machine takes over, and when I say machine I am not talking mechanical. I am talking humans. You bring people in, you train them, educate them, trust them, give them responsibilities, and they earn that trust. Then a zone of the company becomes their baby, and they take care of it like it is theirs, because it is.

Every company is the same set of parts. An executive area where the planning and the policy come from. Personnel, probably the most important division, because it puts good people in and trains them. Sales and marketing. Finance. Production, which delivers the product. Quality control and customer service. Public relations, so the world knows you are there. In the beginning you do every one of those jobs yourself. Then you put good people on each one, and they push you up, and they push each other up, until you pop out the top and the machine keeps expanding without you.

I founded a company in Florida called American Power and Gas. It has about three hundred employees, and I have not run its day-to-day operations in years. I stop by to give people a hug, I go to the holiday parties, and the machine keeps working. Part of my job as an executive was always to bring security to my people, because when someone knows how to do their job and knows they are appreciated, they feel secure, and secure people produce.

So that is the whole story. Lose everything, learn to spot the few people who can cost you everything, sell before you are an expert, and do every job yourself until you can hand each one to somebody good. Through all of it, remember what your security actually is. It was never the money. It is the person who made the money, and nobody can take that person away from you.