Felix Dennis says you'll never get rich working for somebody. Not rich-rich like he is, to the point where he can only estimate that he's worth somewhere between $400 million and $900 million.
Dennis is chairman and founder of Dennis Publishing, a privately owned, London-based company, which publishes dozens of magazines, including The Week, and which last year sold Maxim, Blender, and Stuff to a private equity firm for about $240 million. His journey as an entrepreneur began shortly after he was briefly imprisoned in England in 1971 for editing a humor magazine that the government deemed obscene. Upon his release, determined not to become "the token hippie in some record company," Dennis began pestering acquaintances for capital and publishing small magazines like Cozmic Comics and Kung Fu Monthly, patching together financing and goodwill from friends, printers, and distributors.
His book, How to Get Rich: One of the World's Greatest Entrepreneurs Shares His Secrets, newly published in America, mostly skips the braggadocio and platitudes typical of self-made-millionaire memoirs. There's entertaining and practical advice for early-stage and growing businesses about raising capital, hiring talent, and negotiating, with particular focus on the necessity of maintaining ownership -- the key to eventual riches. There's a lot about his mistakes, too, including an admission that in the late 1980s and early 1990s, Dennis (now 60) blew through $100 million "on drinking, taking drugs, and running around with whores" before landing in the hospital.
A published poet, Dennis wrote the book without a ghostwriter. He spoke with Inc.com from his New York office.
For a book called How to Get Rich, you spend a lot of time dissuading potential entrepreneurs from trying. You say I'll need to get used to groveling and failing, and I'll need to be so driven, it may put my marriage at risk or hurt my relationship with my kids.
It's kind of a crazy thing to decide that you're going to be worth tens and tens and tens of millions of dollars and set out to do that. It doesn't suit everybody. I warn people throughout the book that if you're not driven by this desire, you really shouldn't try. It will lead to a lot of heartache and a lot of sacrifice -- and not just you doing the sacrificing.
OK, so say I'm ready. I have a great idea. Now what?
I think having a great idea is vastly overrated. I know it sounds kind of crazy and counterintuitive. I don't think it matters what the idea is almost. You need great execution. A lot of people say they've got this great idea, and "if only I had the capital" they'd go out and do it. Usually this is a fantasy. It's just an excuse for not confronting their fear of failing.
How does fear of failure come into it?
You're bound to fail sometimes. It's a 100 percent certainty. You've just got to ignore the fact that some people will laugh at you. It makes them feel better that they haven't even tried.
But a great idea can't hurt, can it?
As long as you do not become more interested in proving to others that your idea was right. I made this mistake with Blender, which in its original form was a magazine on CD-ROM. It wouldn't sell, but I became seduced by the technology -- Instead of listening to what the numbers were telling me and what wiser heads in business were telling me. I was just so in love with the idea -- and proving that I'd been right to back it — that I kept pouring good money after bad. I wasted four, five, six million bucks.
You advise borrowing capital from friends and family and suppliers -- anything to avoid trading a piece of the company for venture capital. Why?
I've seen so many young women, young men who use the shares in their companies as an incentive to employees and to people who are loaning them capital. They should not do that. It's a cardinal error for which you will pay and pay and pay. Getting rich all comes down to ownership. Every single percentage point counts. You don't need to start handing out shares like sweeties, because it will come back to haunt you. In the end, you're going to get your money from the sale of an asset. The less of that asset you own, the less money you will get. It is as brutal and as simple as that.
It can't be fun putting your friends' and relatives' money at risk.
You should tell them you are going to risk losing their money. But if you haven't got the balls to ask people for money because you're going to lose it, then you're certainly never going to get rich. People will surprise themselves at how much money they can raise. There are a lot of vendors who are willing to take a risk on you -- if you are totally up front with them and as long as they don't risk too much. That's the way I did it. There was a printer that I stuck with for 25 years because he was the only guy that would print for me when in the early years he was not entirely certain he would get all his money.
What have you learned about negotiating?
Serious negotiations should be reserved for serious occasions -- when you're selling a company, or buying another company. And the people you use to manage your company, who are constantly "negotiating" with staff -- these wonderful managers who work hard to keep everybody happy -- those are not the people you want in a room when serious negotiations are going on. They're too empathetic with the other side. What you want in the room is cunning. You want experience. And you want an empty, Zen mind.
You have to persuade yourself that you absolutely don't care what happens. If you don't care, you've won. I absolutely promise you, in every serious negotiation, the man or woman who doesn't care is going to win.
You give the impression that you're willing to walk away ...
Not give the impression. Walk away. No deal is a must-do deal.
You write about the need to be ruthless in business, sharpening the "sliver of ice" that you say is inside every successful entrepreneur. But you write poetry and seem like a nice guy. How do we reconcile that?
Because you only need to really be that way in very serious negotiations. On a few occasions. Maybe on 20 or 25 occasions in my business life, and I've been at this for 40 years. You shouldn't go around the world behaving ruthlessly when you don't have to. Sometimes you do have to. There is only so much pie to go around. If you're going to take more than your fair share of pie, as socialists would look at it, then someone else is not getting his. That means you've got to take it away from them.
Last year you sold the U.S. versions of Blender, Maxim, and Stuff to a private equity firm for a reported $240 million. Is this your endgame? Are "lad" magazines -- or all magazines -- a fading business?
I think I've sold about 60 magazines in my lifetime. To me this was just a sale of three more. I still own 50 magazines and Web sites. We have acquired a magazine since then, begun a joint venture launching five ink-on-paper magazines in India, and launched e-zines that reside on your computer, including a Maxim-type e-zine called Monkey that's already making money. It is true that magazines are going through very challenging times, but this is a very slow decline. It is not a collapse by any means, and there are still huge sums to be made.
And then after all the work, you want to give your money away before you die?
Don't forget to give it all away. And, if you can, develop another passion other than your business. If I had started writing poetry when I was 30 instead of when I was 53, I would have been a better businessperson, and I would not have succumbed to the idiocy I did in the middle of my journey, where I threw about millions because I had nothing better to do.
Isn't there a risk then of becoming a starving artist?
There is. I cannot deny it, there is. It's a risk you've got to face up to.