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Millionaire Money Habits

August 25th, 2008 at 10:15 am

A Debate with Donald Trump

About a year ago I had the pleasure of attending a conference where Donald Trump gave us his wisdom and advice on how to become successful. As you would expect, the discussion was mostly about all the great things that he accomplished and what a wonderful life he lived.

Trump did talk about his failures in the 80′s and his rise from bankruptcy to wealth, which was an inspiring story, and he had some great advice for people at all levels in their entrepreneurial endeavors.

One thing he said really stuck with me. Particularly because I didn’t agree with him and was quite shocked to hear someone with his level of experience give this advice.

Here’s what he said . . . paraphrasing of course. “Do not hire people smarter than you.”

When I heard Trump utter these words, I was certain I misunderstood him. Everything I’ve ever been taught was completely the opposite. I was always taught that your job as a business owner or manager is to delegate and produce results. The way to do that effectively is to get the right people in the right positions. If you are a control freak and try to do everything yourself, you will never succeed.

If you ever read Jim Collins’, Good to Great, I believe he referred to this as getting the right people on the bus.

But I did not misunderstand Trump. He repeated it and went on to explain how people who are smarter than you will steal from you and take advantage of you.

That’s when I started to realize that this is a man that must have really been messed with a number of times in his life. It’s amazing that anyone would try to try to take advantage of Trump knowing his reputation of coming after enemies, but that must be a pattern he’s developed after being taken advantage of multiple times. Unfortunately, it’s probably something that comes with being a celebrity billionaire.

I see his point to an extent, and maybe this is what he meant. You want to know a little bit about all facets of your business, but it is impossible to be an expert at everything. You can’t be an engineer, an accountant, a security expert, and a software developer. But as an entrepreneur you need to know how each piece of your business runs, what it takes to get things done, and how much it will cost, or you can get taken advantage of.

Let’s say, for example, you are in the wholesales business. You may need to know the approximate cost of shipping, how much it costs to source items, what the typical markups are, how your items are distributed, where they come from, and so on. Otherwise you can get taken advantage of by someone who does and knows you don’t.

At some point your small enterprise will expand and you will want to hire employees or outsource some of the tasks. Do you really need to hire someone that is smarter than you to handle customer service? Probably not, but it would be best if you knew the typical customer service issues and how to respond to them so you can train your part-time, minimum wage employee.

When it comes to higher level procedures, such as working with your lawyer or accountant, I do agree with Trump that you want to have some level of competence. By understanding complex parts of the business, you have the ability to tell others what you need as opposed to having long meetings discussing what you want and getting what they believe to be the best decision. Things will get done faster, it will save you time, and yes, it could save you from getting ripped off.

I don’t think you need to be smarter, but at the minimum act like you have a clear understanding of how things work and, therefore, will not let things slide by you unnoticed.

Most importantly though, I believe the success comes with assembling the right team. Not just people that are smarter than you, but those that work well together, have similar goals, and that you can trust.

Millionaire Money Habit: As an entrepreneur, your job at times may require you to hire people to quickly become experts at their job. This poses a challenge as you need to know what “the best” consists of and what their job actually entails. That means you are required to have a general understanding of what this process is, how long it takes, how much it costs, and how valuable it is to your business.

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  • Moneymonk
    10:59 am on August 25th, 2008 1

    Obioviously something had to happen to him in the past for him to
    say that. I remember always hearing HIRE PEOPLE SMARTER THAN YOU.
    That goes for accountants, lawyers, employees. To be successful,
    you cannot hire people lower than you. Yes, usually they will
    eventually go on their own, however if you pay them well. They may
    stay. No wonder his stock for Trump Entertainment is near bankrupt.

  • me
    12:15 pm on October 17th, 2009 2

    how can you scientifically say he is wrong, less you are a billionaire your theorizing!


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