Pro Commerce

Jews and Money (2 of 2)

I am the first prominent Jew to give public money advice.  My book is The Seven Laws of Money.  What is the connection?  (The original edition is the only unabridged version)

After eight years of community organizing including creating a graduate student organization at the U. of California Berkeley, a friend, Salli Rasberry, asked for advice on raising money for her first hippie homeschooling organization.  That is the origin of the book The Seven Laws of Money.

The book came from a spontaneous conversation in my living room in 1970.  The original transcript was a 12-page typed version that my secretary reprinted in a few dozen copies.  

One day, months later, I saw her putting ten copies in a big envelope which she took from a large box of a few hundred copies.  I knew at that moment to expect a phone call from a major publisher.  The first call was Penguin, the second was Knopf and the third was Random House.  

After writing the book, with Rasberry, I formed a publishing company and contracted Random House to do the distribution.  The first edition sold 75,000 copies.  From there on, many editions were published, most were abridged, including a few classic editions from Shambhala Press.  Every hippie I met, from 1974 on beamed with joy to tell me that they had a copy.

The influence of the book is hard to measure.  If you have ever heard the phrase ‘Do what you love and the money will come,’  ‘ Live your passion,’ ‘Your work should be your passion,’ or any variation of this.   It comes from the 1st Law of Money: Do it!  Money will come when you are doing the right thing.

Not only has the insight by me become a mantra-meme for the entire human world, but you won’t find anything close to it before 1974.  Also note the global ad version from Nike: “Do it.”

Moreover, the idea of seven laws seems to also have become a mantra-meme.  The number of book titles that are a variation of this are in the thousands. Only one earlier book title exists (from 1906 about rabbits.) The original idea of seven laws came from Charles Roll, the poet in the book calling himself Jug and Candle who claimed he knew of the model from Chinese literature.

My original views on money were widely accepted by the world of hippies.  The hippies were a large multi-million person revolutionary group whose ideas were spread to every corner of the planet. 

The Jewish connection is discussed in the previous blog.  Being a Jew and finding a large community (hippies) with similar values was the synthesis that generated my unique money advice.

Jews and Commerce (1 of 2)

I am the first prominent Jew to give public business advice.  What is the connection? 

Let's start with my background in banking.  I knew from my seven years in banking that banks have little to do with business.  Banks lend only to sure things.  They prefer to lend on a gold mine in a secure stable country.  The mine can’t be moved and has a gigantic market.  Everything else is less appealing and is measured by the certainty of repayment within a year.  That is banking; most people never get the chance to learn that.

U.S. government loans to businesses are irrelevant (SBA). No real entrepreneur has the patience to do the paperwork.

Loans to small businesses and new businesses come from family, friends and from my experience in Japan loans also come from suppliers and landlords.  

People who start businesses are known and appreciated by the people personally close to them.  Several clients, after a few years in business, have said to me ‘Does it ever get any easier? Ten new problems everyday?’  My answer “No. If you don't like it, quit and become an employee.”

My first client was a bar-restaurant.  I looked at the successful ones I knew in San Francisco and observed that they all opened with big crowds of friends for the first few months. Word of mouth was the only issue.  Booze was generous at the openings. That was the advice I gave.  The three owners were already supplying meals to airlines and knew how to run a profitable kitchen. That client took my advice and went on to open a chain of 80 locations.

In San Francisco, I already had a reputation as a banker and founder of MasterCard when I opened an office to help small businesses in 1971.  The first day 12 clients arrived at the same time and I realized that they could help each other.  They were hippies and loved the freedom that small business offered.  They were open-kind of people and were each part of a generous community.

That set the groundwork for my future success in giving advice.  Of my first 600 clients, 80% were still in business five years after opening.  That compared to the traditional business norm of 2 out of 3 failures in the first 3 years.  Orders of magnitude of difference.

The core of my advice was always built around community. Look at the headline of this blog. Meritocracy, diversity and openness; these are necessary to create a community, these are what make businesses work.  Nepotism, favoritism and tribalism just don’t work for business in America.

That understanding comes from my Jewish tradition.  Torah, the core Jewish sacred text, is a document that is open to community interpretation and debate.  The debate has gone on for 2,000 years and is called the Talmud.  Orthodox Jews (all Jews before 1850) read all the debates of that 2,000 years and learned the logic of debate: clear innovative thinking, lived experience,  community and openness. 

My book (with Rasberry) Marketing Without Advertising is based on the direct observation of over a thousand client businesses where I saw the financial books.  It is empirical.  Like technology. The book sold more copies than all but two other non-academic books on marketing in English; nearly half a million copies over 6 editions in 20 years.   Look at the glowing comments on the Amazon book page from every reliable business media source.

Because the core of my advice came from my experience with hippies, I was able to see that the key factor in success was their love of business.  Their motive for getting up and going to work every day was their love of business and their sense of responsibility to their community, to their employees, to their friends and to their customers. A little different from Adam Smith’s views 250 years ago.

I saw clearly that 90% of building a successful business was cooperation, not competition. Cooperation with suppliers, workers, customers and everyone on whom the business depends.  Cooperation is built on openness and the concomitant trust.

I also wrote an earlier book (with Rasberry) called Honest Business.  I learned over a few years that ‘honest’ had too narrow a meaning.  Many people are ‘honest’ but that alone doesn't generate trust.  ‘Openness’ was the correct broader term when discussing commerce and trust.

Both my parents came from business families.  But my father was a rabbi who was not good at business.  My mother was the one who transmitted to me the values of candor, clear empirical thinking and trust.  Her family were the founders of Ethical Culture, an 1880s German sect of Judaism.

Summary: it has been my Jewish background that values (1) clear empirically based thinking and (2) the centrality of community.  Together they create the trust that underlies successful commerce.  This view has made my business advice useful. Commerce is based on cooperation which is based on trust.

I Sold Three Tech Stocks

I have never talked about my portfolio because I don’t discuss investments in any circumstances.  The problem with me giving investment advice is that I am not around when it is time to change the advice.  I could recommend that you buy a stock and a week later I sell it and forget that I told you to buy it.

My portfolio has several segments based on my half- century of managing portfolios, professionally.  One is medical/pharma, another is anti-green that includes nuclear, oil, coal and gas, a third part is tech.  There are two other parts. The anti-green has risen spectacularly lately.

I’ve talked recently about the tech stocks’ income to the U.S. because Seattle and The S.F. Bay Area are connected to giant pipelines from the entire world that pour tech money into the U.S.  That is coming to an end over the next few years.  Sooner than I thought.

I’ve sold all my holdings of Microsoft, Adobe and Salesforce.  These are companies that have announced their refusal to sell products to Russia because of the Ukraine invasion.

The shortsightedness of these announcements is that punishing Russia is an announcement to businesses in China, India and several other countries that American tech companies can be fickle suppliers.  American tech now means ‘unreliable.’

It is easy to replace these three companies’ products with home grown products quickly, especially since China, India and Russia have good indigenous computer professionals. One year and two years from now the products from these companies will have been replaced in many businesses all over the world.

The other problem I see with this fickle shortsighted corporate behavior and the associated government nonsense is that closing down SWIFT for international banking to Russia means that Russia, India and China will rapidly develop their own reserve currency and bank transfer mechanism.  

That means the loss of a great power position that the U.S. has held for more than half a century.  It is even possible that this will lead to the explosion of some crypto currencies to replace the dollar.  Our loss.

We are such a stupid country, particularly the Democrat Party, the same party that held on to slavery and Jim Crow for 150 years. The same party that cut off domestic exports of oil and gas the first month in office and then later begged the Saudis to increase their oil production after we had become an oil importer.  The same party that doubled the price of Russian oil exports to empower Putin.

Reminds me of the kid who killed his parents and then complained to the trial court about being an orphan.