Do you remember when you turned the corner and began to think like a rich man?
Yeah, I do. I can remember banging my head against the inside of an elevator. I had just worked 11 hours at a golf course as an assistant pro, and I was going to work at a high-dollar restaurant that night from 7 until midnight, and I was banging my head against the elevator, thinking, "God, there's got to be an easier way to make money than this." Shortly after that, I decided I was done working for somebody else. I was going to learn how to earn profits. That has made all the difference. From the age of 15 to 25, I worked for wages. At 25, I started working for profits, and at 33, I became a millionaire for the first time.
Many would ask, what's wrong with wages?
When you're working for wages, your income can only go up a little bit over a long period of time. But if you work for profits, your income can go up dramatically in a much shorter amount of time. I really think people can become financially free in the next four to six years if they learn to earn profits. But if they're working for wages their whole life, chances are they're never going to become financially free. It is possible, but it takes 30 to 40 years. There's nothing wrong with working for a paycheck, working for wages, but just make sure some of your mental energy is going toward learning how to earn profits and the day will come when you will become financially free.
You make a case that playing it too safe keeps most people from financial freedom. How do you overcome the fear of risk?
As one of the mentors I spoke with, Nido Qubein, told me, "Keith, if you take risk out of life, you take opportunity out of life." A lot of people don't understand that risk is opportunity. You overcome the fear of risk with three questions: What's the best that could happen? What's the worst that could happen? And what's most likely to happen? If you ask those questions when an opportunity arises, the answers can give you some insight. If the most likely thing to happen will get you closer to your goals and if the worst thing that could happen does happen and you're OK with that, you're willing to live with it or go through it, then you go for it and you take action. But if the most likely thing to happen is not going to get you any closer to your goals, and if the worst thing that could happen does happen and you're not willing to go through it, you simply don't do it.
Most millionaires have made mistakes and learned from them. What's your worst mistake?A Barney's Coffee franchise. I started one and lost about $300,000 in it about two years ago. I found a double drive-through location and I thought it just could not fail. A lot of people think franchises are sure things, but they absolutely are not. I put about $250,000 to keep this thing up and running, and after about 18 months, I finally pulled the plug. There comes a time when you have to pull the plug, cut your losses and go on to the next thing. I had to pay another $50,000 to pay off some equipment leases just to get out of the business.