Websterhealth.com

“Hypnotic Millionaires”
By Dr. Joe Vitale
HypnoticMarketing.com
“How YOU Can Become One of the
Next Millionaires Using the W = P x T
Formula”
Joe:
Hello everybody, this is Dr. Joe Vitale with a special Hypnotic Gold member’s only
bonus interview. I’m very excited to interview a world famous author of some seven or
more best-selling books. A man I’ve admired for many years, but never spoke to until
today.
I went on a cruise recently and I took one book with me, a book that had been given to
me as a gift. It’s called The Next Millionaires. A vast amount of new wealth is being
created over the next ten years. Here’s why, and how you can be part of it.
I found this book absolutely fascinating. I was on the plane flying to Miami, beginning to
read this book and I kept nudging Nerissa and saying, “This is incredible. This is so
fantastic! I got to tell everybody about this.” Then when I was on the cruise and I was
giving my speech, I began to tell everybody about it and I said, “You know what? The
next millionaires are the people in this room on this cruise, right now.” Well I ended up
getting a standing ovation, and it had nothing to do with me, it had to do with this book,
The Next Millionaires. Whom I’m talking about is the author of this book who is my
interview today, Paul Zane Pilzer.
Paul are you on the line?
Paul:
Yes, I am Joe.
Joe:
Well, thank you for making time for this.
Paul Zane Pilzer has served as Economic Advisor to two U.S. Presidents, and is worldrenowned
as a leading predictor of economic catalyst and trends. He is author of five
best-selling books including Unlimited Wealth, The Next Trillion, and The Wellness
Revolution. His books have been published in 24 languages. Pilzer has started several
entrepreneurial businesses earning his first $1 million before age 26, and his first
$10 million before age 30.
Over the last two decades, he has started and/or taken public five companies in the areas
of software, education, and financial services. I can go on and on talking about him, but
what we want to talk about in particular is this one book, and where the next millionaires
are, because I think the next millionaires are the people listening to this particular
interview right now.
The Next Millionaires is the book, explains in detail why the 21st Century will be known
as the Age of the Entrepreneur, and how you can stack your claim to being one of these
next ten million millionaires, especially if you are in direct selling, technology, homebased
business, product distribution, or in a merging trillion-dollar industry like wellness.
The book explains how old models of opportunity in physical distribution have given
way to new opportunities in intellectual distribution, defined as teaching people about
products or services that they didn’t even know exist.
I can go on and on again. I think what I’ll do is just shut up and say, Paul thank you for
making time to do this interview.
Paul:
Thank you Joe, it’s great to be here, and I know how excited you are about bringing
cutting-edge information to the people who follow your great work, and it’s very exciting
to be with you among such an exciting group of entrepreneurs, tomorrow’s millionaires.
Joe:
Oh, thank you. You know what; I’ve been going through some of your other books. You
have one called God Wants You to Be Rich, of course The Wellness Revolution, you
have a new one, even newer than The Next Millionaires called The New Health
Insurance Solution, of course your classic, it’s kind of a cult classic, The Unlimited
Wealth book, which was a best-seller, still in print, still doing great. I also bought your
audio program called Fountain of Wealth, from a company that produced one of my
audio programs, Nightingale Conant, and I love it.
One thing that I notice about you, this is a theme that shows up in all of your books, on
your audios, in your speeches, on your website, everywhere, you are relentlessly
optimistic about the future. And I guess I’m so use to people in economics kind of boring
me and depressing me I’m thinking, where did you come from, how is this possible that
you look at economics and you’re seeing the positive here?
Paul:
Well first, I don’t believe I’m optimistic. I believe I am a scientist, as close as an
economist can be to a scientist, and I’m realistic.
Joe:
Ah.
Paul:
Because, I’ve certainly called on things that were going to be negative as I did in the
Savings and Loan crisis, which I was one of the first people to write a book about, and
predict it was coming in the early 1980’s. On the general economy, I’m optimistic and it
really comes from fundamental science. I mean all of wealth, if we define it, is based on
the physical things we like from housing, food, transportation, cars. All the items we
have we might call our wealth.
Traditional economics is about scarcity. If you remember your first year’s economics
class, if you went to college or high school and study economics, the first line is
“Economics is the study of scarcity.” There’s a limited supply out there, the old
economists say or many economists today say on land, minerals, and wealth, and fresh
water, and oil, and how we rob from Peter and give to Paul. I always liked that analogy.
But, really how we take the wealth from one country and give it to another, or take from
one have and give it - have not and give it to have, that’s economics. And whether you
call communism, capitalism, socialism, or any other ism, the study of economics is really
the study of scarcity.
This bothered me so much, that here although I wanted to be an economist, because I
should probably explain why, my parents, Eastern European Immigrants, struggling very
hard and they were trying to make sense with everything they saw in United States, and
really never could make sense. My father worked all his life, 6 days a week, 12 hours a
day, and never made, you know he never made a great living for his family from his
standpoint, but of course never accumulated any kind of wealth that he could stop
working until the day he passed away.
He sent me off to school and then I later went to Wharton Business School to study
economics to be an economist. Why? Because the people I love the most starting with
my father, that’s the answer they wanted. How do you get wealthy? How do we all get
rich? When I got to Wharton I said, “This isn’t about how we all get rich, this is how we
take from someone else and get rich,” because the study of economics is the study of
scarcity.
Anyway, I looked around in my immigrant background starting in the 1950’s in United
States. Every time I saw vacant land being torn down, you know they took wasteland and
built huge housing developments all over Long Island, and Westchester, when I was
growing up. I was thinking no one lived there before; they didn’t kick anyone out of their
houses. We moved from a little tenement to a nice house in Long Island and so did all
my relatives, and so did everyone. I could see all this wealth being created in United
States without taking from someone else.
Then of course, I started running the numbers and realizing that economics is wrong.
The foundation of economics that it’s a study of scarcity is wrong. We should be
studying business theories behind that explain what really is happening. How we’re
getting more, and more, and more, and more wealthy as a society every year and more
and more people are sharing this wealth. That’s why I had to develop originally in the
book Unlimited Wealth, 15 years ago well 17 years ago, a new theory of economics
based on abundance, based on the ability of technology to give us abundant abundant
wealth without any limit.
So back to it, I’m not really an optimist, I’m a realist, because all of wealth, and this is an
essential equation running through all my books, wealth is the product of physical
resources times technology. W=P (physical resources) times T (technology). W=P times
T. It’s not how much farmland you have, even though the history of the world for
5,000 years is how to kill the people next-door and take their farmland. It’s how many -
how much food per acre you produce.
In United States, in one example, we took the farmland productivity per acre up
100 times from 1930 to 1980. Or, put it another way, we went from 30 million farmers in
1930 barely feeding 100 million people, to 300 million farmers in 1980, it’s much less
now, feeding over 300 million people and there’s 40-50% more food. Wealth equals
physical resources times technology. So, it’s not how much farmland you have for food,
its farmland times technology, meaning yield per acre.
Joe:
Yes, what you say -
Paul:
Similar with -
Joe:
What you say -
Paul:
Similar -
Joe:
In your book, is that the big difference is the technology.
Paul:
Absolutely or very similar. The big crisis in my life, when I turned of age, I was - just
got out of college in 1974, I graduated Wharton in 1976, and all of a sudden there’s this
big oil crisis, and everyone’s saying, “We’re running out of oil, we’re running out of oil,
we’re running out oil.”
Joe:
Yes.
Paul:
Well, cars got 8 or 9 or 10 miles a gallon, and from 1974 to 1981, we switched entirely
from mechanical car regulators to digital fuel injection, doubling the average mileage of
car on the road to 20 miles a gallon, which doubled our supply of oil. We don’t want
barrels of oil. We want to drive somewhere. And by doubling fuel economy, we doubled
our supply of oil, and we’re about now with hybrid vehicles to double again, while we
wait for hydrogen.
So, when you look at it wealth equals physical resources times technology for every field,
every area, every country, and most important every individual. Economics with the
study of alchemic economics, as I’ve defined it, is the study of abundance, and how to get
more abundance, which you could apply to your own business, your own life, or to your
nation.
Joe:
I love it. I love it. Well there’s another myth that you talk about in your book that we
should at least address for a moment. There’s a myth that unemployment is up and the
economies in bad shape. And you -
Paul:
Unemployment is the only and first sign of true economic growth. You have everybody
working at jobs. All of a sudden, some method comes along that lets two people do the
work of ten. Yes, eight people are unemployed but we still have the wealth produced by
the full ten. Then those eight people, who are unemployed, go out and get new jobs
producing new things, and that’s how the economy grows. Otherwise, we would all be
working as farmers or we’re working in huge factories, just producing a bare amount of
cloth to clothe ourselves, as we did 300 years ago.
Technology determines how much wealth we have. An example I use in my classes, I
taught at New York University for 21 years, and in teaching my freshman class here’s the
example I use, it’s real simple. Assume ten men live on an island and they’ve always
lived the same way on this island, and they go out and fish, and the ten men go out with
their fishing poles, and they barely catch enough fish to support. Each man has a wife
and a couple of kids, and a little hut, and they bring the fish back each day to the island.
That’s the economy, the island economy.
Along comes a missionary and drops off some new technology, called a net. Now two
men, one to pilot the boat, and one to throw the net, catch all the fish that ten people did
with their fishing poles, the island’s got a big problem, it’s called 80% unemployment,
eight men don’t have a job. What happens? One of the men says, “You know I really
hate fish. I hate fishing. Why don’t I teach your kids and I’ll instruct them, I’ll build a
school, and you trade me fish for education?” They go, “That’s great.” The next one
says, “Oh why don’t I work on the roofs that always leak and I’ll fix everybody’s hut for
all ten huts, and you’ll trade me fish, and you’ll take care of teaching my kids.” Next
guy, “I like studying when people get sick and I like dealing with sick kids and sick
people, I’ll become a doctor.”
See what happened. All these new professions show up overnight. Why? Because of
80% unemployment, because now two men with the net and the boat can catch all the
fish that ten did, eight can create new jobs. The island economy goes up five fold. Now
of course, there are many people who try to stop this. When technology first made some
people wealthier than their neighbors, the first reaction was communism. Let’s outlaw
the new technology and distribute the wealth from everybody with the net. Nobody
wanted to work.
In the United States, the reaction is, “Let’s tax the people who use the net 91% of their
income and distribute it to the people who are unemployed.” As ludicrous as that sounds,
that’s what happened in the U.S. We raised personal income tax from zero in the 1930
area to 91%, if you earned over $135,000 a year. Your federal marginal rate was 91% by
1959. Of course, that’s come down a little bit, as we’re now letting people who use nets
keep the value of their wealth, which is why we can become the next millionaire.
And so, that simple example how unemployment creates wealth, because the
unemployment we see today is no longer secular unemployment that you study in
economics class. It’s virtually all what economists call structural unemployment. That’s
unemployment caused by technology, and when the technology displaces a worker we
still want the output of that worker, the question is, what we’re going to do with that
money.
Right now, the stupidity in the United States is when this technology displaces a worker,
a worker makes vinyl records, and technology comes along and switches to digital CD’s.
So, do we teach him how to make digital CD’s? Not a chance, we tell the worker, “Elect
me for 12 months; you get unemployment for not working. You don’t have to school for
it. You get unemployment comp for 10 - 12 months and after 12 months go find a new
job on your own.” Ha-ha.
What we should be doing, of course, is telling that worker, “Listen look closely, the job
you had making vinyl records is not coming back. Everybody wants digital CD’s today.
Why don’t you enroll in a course to teach digital CD’s to make digital CD’s or why don’t
you enroll in something, in the way of training and reeducation, because the job’s not
coming back. They’re not going to reopen that plant.” But, that’s the response of our
Government. All unemployment benefits should be tied to1 month to get unemployment
cash. The 2nd month you only get the cash if you enroll in some type of course, which the
Government should pay for with part of the unemployment benefit money.
Joe:
This is fascinating. But, you know you have something that’s going to be a little
controversial when I first say it, and I need you to explain it, and that’s where you say,
“The Internet is yesterday’s news.”
Paul:
The Internet as a technology is still being used primarily as a glorified fax machine. It’s
being uses to do engineering the same way that we use to things perhaps a little more
efficiently, or a lot more efficiently, but it hasn’t been used yet to reengineer the process.
So, the Internet might be used as email, like you’d say to my dry cleaner, “Are my
clothes ready?” But, what I should be able to is sign online and watch my clothes go
through the process, just like you can watch your Dell computer be made online.
Joe:
Yes.
Paul:
Or, you can watch and track a package through UPS or FedEx.
Joe:
Yes.
Paul:
Everything you do should be reengineered in that same method so you can actually see
and go, oh my suit will be ready at 2:00 p.m. today, not a call, not an email asking if it
can be ready, I should be able to see it. In effect, all the businesses need to open up their
wares.
It is appalling to me, how little has been done given the Internet technology. Remember
everyone was able to get a free email account or an email account in their own name, as
of 1995, and the Internet was here in the 90’s. These are like eons ago in Internet and
cyberspace world that I and many of your listeners lived in, and yet look at it today.
You want a reservation what do you do? Do you go on the Internet to book a reservation
at your favorite restaurant? Suppose you own a restaurant and half the tables are empty
and your going, “Its 6:00 p.m. Oh, I’ve got these waitresses here, two of them are single
moms, they need these tips, and I don’t know why but last night we were packed full.
Tonight we got a half-empty restaurant. Tomorrow it’s full.” How about opening up that
restaurant to the Internet, so local people could sign on and say, “Hey I’ll take a table at
half price or a free entrée,” or you just lower the price and promote between 6 and
7:00 p.m. to fill it up by 7:30.
Joe:
So, there’s lots of opportunities.
Paul:
Just go into any local community. It’s appalling at the lack of information flow from
small business to small business and particularly to their customer. Most of the Internet
is still big entrepreneurs, UPS, Federal Express, Buy.com, Amazon. That’s only 10% of
consumer spending, 90% of the money you spend is at home. And what is the Internet
doing for your grocery store? What is the Internet doing for you booking restaurants?
What is it doing for dry cleaning? Nothing, because the local entrepreneurs and I’m
going to challenge your listeners, “Get off your duffs and fix this, because you can do it.
You can go in a local business, and connect them with their customers, and make them
far far more efficient.”
As an economist, when I walk into an empty restaurant and see it half-empty, there was a
time when I use to say, “Oh it’s quiet.” Now I say, “This is terrible. There are lots of
families who with a little discount or prodding would love to fill these empty tables and
these waitresses, they need the money.” I mean it’s just a waste. We can never recapture
that empty airline seat, that empty restaurant seat, that empty hotel room. Lets find
someone at some price who wants to use and enjoy it, and yet no ones doing that on a
local level yet.
Joe:
So, we’re barely scratching the service when it comes to the Internet and the possibilities
for using it.
Paul:
Unbelievably, and I can go through industry by industry.
My favorite is restaurants. I sort of blame certain companies. I started out in the credit
card business at Citicorp in the 1970’s, and I’ve watched certain companies and I’ll
disparage one, American Express, great company in terms of financial stability and
integrity. Very poor company if you look at their history in terms of web savvyness. I
would estimate that still today, their most senior executives, don’t use email or probably
have personal secretary’s and fax things once in awhile. You see that among older
executives. Well the sad part is Amex should have had the franchise to automate or
electronically make open a restaurant booking.
Every restaurant, for example, should have an electronic screen to book their tables, and
they should automatically on autopilot when tables aren’t booking, have certain groups to
contact to bring people in.
When I log in amazon.com, they know all about me. They know what books I want and I
can’t get over why it’s such a good shopping experience. It’s because it’s tailored to me
as if there’s a guy on the other end, you know within cyberspace, Paul really liked this,
oh he’s looked at this book, lets show him this book, lets show him this book. He reads
Joe Vitale’s books, he might want was Paul Pilzer’s books, etcetera etcetera.
Joe:
Yes.
Paul:
How about when I walk in a restaurant, in the old days, see and that’s where I would
challenge each entrepreneur, all the answers existed 50 to 100 years ago. They got lost in
the automation of our world that last few decades. In other words, every good restaurant
used to have a matridee and the matridee said, “Hi Joe. Oh, here’s your wife,” what if -
you know all about you. “Remembered last time you had the lamb a little too well done,
so we’ll make it a little rarer next time.”
Every restaurant had that. It knew how to seat you, and knew to take care of the regular
patrons who come back versus the tourist who might be coming in once and might not
frankly order a nice bottle of wine or do something else.
Those matridees are gone, but we could replace them electronically so easy, with a
simple system that identified each consumer walking in the door. How do you want to be
identified? We can a picture of your face with a video camera and scramble it today and
say, “Oh, there he is.” We could identify it with your credit card saying, “Swipe your
card or your restaurant card first and you make - or put in the number when you make a
reservation. Do you have a number?” That should tell the waiter exactly what you’ve
ordered before. Exactly what your issues were before. Welcome you back and of course
give you the kind of service like a good matridee or concierge.
You don’t see this anywhere, and it’s primarily because of my main beef with the Internet
entrepreneurs today, they just sort of let the technology happen but not applied it locally.
The local application of the Internet to our local restaurants, dry cleaners, schools, every
area of what effects our daily lives, with 90% of our lives, that’s going to be the next
wave that over the next decade is going to make this last 15 years of the Internet from
1990 to 2005 look like the infancy stage.
Joe:
I am in awe. I’m sitting here thinking to myself, I’m supposed to be this Internet guru
and I’ve been online for 15 years or whatever, and there’s many opportunities I myself
have missed, and yet I worship those sites and those businesses online that do exactly
what you’re talking about. Amazon, for example, I literally go to Amazon every single
day. I go there and I let it recommend books to me, overlooking what you just pointed
out, that there’s almost an artificial intelligence going on there because it’s looked at
what I’ve bought before, and it says, “Since you like this book, you might like this one.”
Then I’m thinking back there, one of my favorite restaurants in the entire world is in
Melbourne, Australia. I went there several times in a one-week period when there were
50 some other restaurants of the same nature in that area, and why, because the person
who owned that place treated me like a king, and he paid attention to my wants. So, that
when I went back the next time he said, “You like this particular dish the other night how
about this one tonight?” I see that those opportunities can be done online but very few
people, places, and businesses, except for maybe Amazon and a handful of others, are
actually doing it.
Paul:
And let me give you another example.
Joe:
Yes.
Paul:
Suppose you go for a haircut. You know, we’re men but my wife, I know what women
spend on hair salons.
Joe:
Yes.
Paul:
And getting their nails done. And then she - I’d say, “Why didn’t you go there?” She
said, “Oh they didn’t do my nails right last time.” My wife says, “I didn’t like my hair
last time.” How dumb would it be, that every hair salon doesn’t have a system, that when
a customer hasn’t booked an appointment in 30 days, which was at least a customer twice
before in 30 days.
Joe:
Yes.
Paul:
Call them up. “Oh I didn’t come there because my hair” – “of course your hair, sir I’m
so sorry, free haircut, come on back in.”
Joe:
Yes.
Paul:
The cost of customer acquisition is everything today. It dominates every business, and
yet they have no idea on electronically whose walking in and out of their store. Every
restaurant they live and die. They just cycle. They die off, and they never get fixed,
because there’s no way for the proprietor to know that the same customers aren’t coming
back in. And of course, they’ve called them up, and they say, “Ah, well we had this, it
wasn’t good.” “I know, I fixed that, please come in and the next entrée is on me.” But
you don’t even collect the information.
So, you know it’s very interesting, the world will tell every businessman think global.
Wrong. Stop thinking global. The money is going to be made thinking local. It’s just
walking around whatever town you live in, and figuring out what’s going on with my
local merchants, and what can I offer to supply them.
I live in a ski town of Park City, Utah. We have 200 restaurants. We have a long strip of
Main Street up a hill and it’s amazing. Their prominent five star restaurants and on just
random nights some are half empty, or three quarters empty and some are so full, you’re
waiting an hour. I feel like I should run to the crowd, they’re about a half mile away.
When I see a crowd standing outside say at Grappa, that’s at the top of the hill, and say,
“Hey, everyone waiting here an hour for a table, there’s empty tables at Zoom,” which is
an equivalent high-quality restaurant, but it’s at the bottom of the hill.
Of course, what really should be there is some type of electronic system that beeped their
cell phones when they registered etcetera, then started offering discounts or incentives to
fill up the tables equally. That‘s just one example.
Your children’s school system, I’ve been working on different types of schooling Internet
models. Everything that goes on in the classroom should be broadcast to you the parent
every night, automatically. You shouldn’t sit down with a child and say, “What did you
do in school?” You should first glance at the Internet page, see the lesson plan, and then
start talking to the student.
Joe:
Wow.
Paul:
But, none of this is there and it’s so easy. The technology now is ubiquitous. Every one
of our listeners could knock this off in schools, in restaurants. In fact when I do finish the
book, The Next Millionaires it’s going to include 100 great businesses I didn’t get to do
in my lifetime, but please do them. It’s not just businesses. Business is about fulfilling a
need. Business is about some need is not being filled up somewhere. Somebody’s
unhappy. Somebody’s paying too much for something. You can fix this and greatly
improve the lives of your customers, but get off your duffs and do it.
Joe:
I love it. Well, a couple other things that you say in your book and I want to make sure I
make the best use of your time here, and ask the most incredible questions, and
pinpointed ones. You say that home-based business entrepreneurs will be among the
richest in our new economy. Can you explain that?
Paul:
Well, the main reason is not just the amount of sales; it’s the amount of profit or bottom
line. See, traditionally companies grew and then became bloated. By that is, as they
grew as organizations they hired a little extra person in human resources, some more
benefits people, some nice secretaries, some more receptionists at the door. We’ve all
been in big companies and watched them grow.
Joe:
Yes.
Paul:
I always use to say you know company time too short to stock is when you walk in the
CEO’s office and they show you the model of the new company headquarters that
coming, and their spending their time on the new building instead of their customers and
their products.
Joe:
Oh, yes.
Paul:
You see this as a cycle in every business. Whenever you ride and see that big tower with
the name of the company, if it’s a better tower, than the other one is short to stock.
Because it’s only a question of time until they get so bloated their bottom line falls apart
and they end of declining.
I use to have a line that Wal-Mart is defeating. I use to say, “That today’s W.T. Grant -
today’s Wal-Mart is tomorrows W.T. Grant.” And those are for the old enough to
remember in 1974, W.T. Grant was the largest retailer in the nation, which went bankrupt
in 1974. I’ve written a lot about the cycle of companies and organization who get
bloated.
That’s not true with the home-based entrepreneur. A home-based entrepreneur grows
and grows and grows their business, but without adding the overhead and all the
nonsensical internal, I call it, internal transaction costs, that a large organization adds. In
fact, we’re seeing a huge shift in our economy from large companies to all electronically
connected entrepreneurs. If you follow this trend forward in calculus there will be no
employees. Everybody will be an entrepreneur. Everyone will work for themselves and
trade their specialized produce with someone else.
Eventually they go back in history. First, the whole foundation of the U.S. Constitution,
which is like the Entrepreneurial Manifesto, was written by all entrepreneurs. The entire
economy was agrarian population of individual farmers producing their individual
product, and sharing with each other. There were no real employees. There were no big
factories. And they wrote a document, The U.S. Constitution, and The Bill of
Subsequent Amendments, and The Bill of Rights, to be the ultimate document for
entrepreneurs to flourish as individual workers.
Unfortunately, we’ve had problems the last 200 years as the economy took a direction
towards large employment, large unions, large companies, which peeked around the
1930’s to 1980’s. But, since the 1980’s we’re seeing a permanent dismantling of many
of these companies.
It’s very interesting, in the book The Next Millionaires, and in some of my other books, I
write up one of my great mentors, Ron Coase. Ron Coase won the Nobel Prize for
Economics in 1991. Yet he wrote it - yet he won the Nobel Prize for Economics in 1991,
for a paper he we wrote at age 20 in 1931.
Joe:
Oh, wow.
Paul:
In 1931, Ron Coase was an English student, London School of Economics, studying
about entrepreneurs in America who went from nothing like Henry Ford to make Ford
Motor Company, or Sloan who created General Motors, or Thomas Edison who created
General Electric. He won a scholarship in 1930 to come to the U.S. in 1931, The Age of
Entrepreneur, The Land of the Entrepreneur, and study entrepreneurship.
He gets to the U.S. in 1931 and he’s very disappointed. No one he can find wants to be
Henry Ford, or Sloan, or Edison. They want work to work for Edison, or Sloan, or Ford.
Everyone wants a job. Why? Great Depression was on 1931. He starts writing a paper,
why in America where your last name doesn’t matter, your religion doesn’t matter, where
anybody could be a Thomas Edison, where a Heracio Alger was the most popular book of
the time. Why in America would people want to work for these people instead of be
Heracio Alger?
He writes a paper called, The Nature of the Firm. In The Nature of the Firm, he explains,
that when you go to do work the transaction costs of entrepreneurs working as disparage
units is very very high. For example, “You want a letter typed,” he said. You can walk
out in the street, first if you go out and hire a secretary, and say, “Sit here 10 hours a day,
and if I want you, I’ll call you in to write a letter.” Or, you could go out in the street and
say, “Who could write my letter.” You could find somebody. Give her or him a
typewriter. Show them how to type. They could type the letter, but you can see what
happened.
The transaction cost of finding the person, explaining how you want the letter done, then
telling when they did it right or wrong, giving him a desk, giving her a place to sit,
etcetera, would be so much greater that it’s cheaper to just sit the person at the desk for
10 hours. Now in those days, long distance calls were really, really expensive. Joe, I
don’t know how old you are, but do you remember when someone would say, “You got
to take Paul’s call he’s on long distance.”
Joe:
Yes, I do remember that.
Paul:
Or fax machines were real expensive. There was no FedEx or if you used FedEx to send
papers, it was $20 -
Joe:
Yes.
Paul:
$30 to just send an envelope. So, the transaction costs of dealing between people were so
much that people built large companies, which culminated in the River Rouge Plant in
Ford Motor Company where in came coal and out came finished cars, and everything was
made onsite. Why? Because there was no way to coordinate before telephones, Internet,
fax machines, all the different disparaging people who go into making a car.
Well what happened? Coase wrote a formula, in The Nature of the Firm, that said, “One
day all of America will be companies of a million employees or greater, and he predicted
the rise of AT&T, of General Motors, of Ford Motor Company, and all of our large
companies.
Well what I did in the 1990’s is I started rerunning Coase’s original equations. In the
very formulas and the paper, The Nature of the Firm that predicted why large companies
would exist, I could see that transaction costs had fallen to the floor. It no longer cost
somebody to have them call in and say I can’t come to work today. Through the Internet,
we can coordinate thousands of different auto suppliers as if they were in the same plant
and have them deliver the exact hour their parts are needed, of course, we call it, just in
time assembly, that they needed on the assembly line as if they were under one roof.
And when I reran Coase’s equations with 1990’s let alone 21st Century transaction costs,
which are so low today, I could see that the unemployment we’re seeing today is the
permanent, permanent dismantling of all of our large companies into individual units of
entrepreneurs. Where you just do your work, you get some work, some type of certified,
someone can see it, and they find you on the Internet. Where they schedule what product
you make, and all of us are going to return to our roots. We’re going to return to the
roots of the Founding Fathers of our Constitution where everybody was an entrepreneur,
except with zero transaction cost we can all work in very high-tech specialized areas and
yet all coordinate our wares and work together.
When you look at this overhead and how low overhead is, in The Next Millionaires, I go
through or the work I’m doing now and I start to state, “You’re a plumber and you do a
good job.” In the old days, if you wanted to advertise, grow your business, you have to
spend on advertising, you have to take ads in the paper, you have hire people to answer
the phone, and you have to hire people to schedule you. Today you do all that out of a
Pocket Pilot, or a Treo 650, or you know all that overhead isn’t there.
So the plumber who use to say, “Gee if I do $100,000 a year in plumbing and I’m alone, I
can make $50,000 profit.” A lot of those plumbers learned 20 years ago that if they raise
up to $500,000 a year, they got all this overhead and their still making a same $50,000 or
less because the secretaries, the offices, and all of that are eating them alive. But, today
they can do that $500,000 or a million with almost no overhead and that’s why we’re
starting to see this enormous explosion.
We’re adding millionaires at the rate of a million a year to our economy. That’s
millionaire, new millionaire families. And the reason is, almost anybody that goes into a
business and does it well, the word spreads so quickly and they can get advertising. They
don’t need secretaries, and accountants to track everything. It all can be done with online
tools like Quicken, so that they have very quickly a mass a million dollar fortune, and
they’re a plumber, or a roofer, or some type of tradesman, that before was synonymous
with hard work -to a hard working guy who didn’t have any money.
Joe:
Amazing, absolutely amazing. That fact that you just gave, has to be worth the entire
interview, because that is so inspiring that you’re saying any of us can do it. We can do it
from home. We can do it with the Internet. That actually the technology gap that’s out
there is where the greatest economic potential is and it’s pretty much fruit ready for our
picking.
Paul:
Absolutely, and you may not be a plumber, but I bet you know a good one, and if you
know the Internet you should team up. And I bet you know a good roofer, and I bet you
know a good handyman. I’m just focusing on home repairs, because that’s my next
meeting after this call for people to come by and doing something for my home. But,
there should be an entrepreneur putting them online, doing their scheduling, and showing
them how to quickly amassed a million dollar net worth, and taking a nice piece of that
for themselves for the value they add to them.
Joe:
Well, I want to explore something for a couple minutes that’s in your book. And again,
we’re referring to The Next Millionaires, and I’m talking to Paul Zane Pilzer and his
website is at paulzanepilzer it’s W-W-W.P-A-U-L-Z-A-N-E-P-I-L-Z-E-R.COM, and his
books are in bookstores, they’re at Amazon, they’re at his website, his program. The
audio program is probably on his website, you can also get it at nightingale.com where
my audio program The Power of Outrageous Marketing, is also available.
I’m interested in this technology or this formula for personal technology. This formula
for wealth that you mentioned briefly earlier that W = P x T. Could you explain that a
little bit, so that everybody understands it, including myself?
Paul:
Okay, wealth equals physical resources times technology. Now most people would have
no problem with W = P. Wealth equals physical resources. Your wealth is how much
land you have, how much oil you have, how much square feet of housing you have per
person, and that’s your wealth. In fact, we drive by a home; we say there’s a wealthy
person by the physical assets. So, wealth throughout history has always equaled P,
physical resources. All the physical things you own.
If you look closely through history at the Bronze Age, the Iron Age, the Stone Age, we
actually define our ages in history by the technology not by the physical resources. The
Stone Age, the Iron Age, but you were born and died in the Iron Age. You were born and
died in the Stone Age.
So, our wealth equals physical resources times technology. It’s not how much land you
have. It’s how much food per acre you get, and the technology determines that more than
how many acres you have. It’s not how many gallons of oil or barrels of oil you have.
What matters is how far you can drive and the biggest determinate today is not the barrels
of oil sitting in your trunk, or in your garage, or in your car, but does your car get 9 miles
a gallon, or 30 miles a gallon, or 50 like a hybrid.
So, you start seeing very quickly that technology determines everything but in the past, T
was a constant. Because over a human being’s lifetime wealth equals physical resources
times technology but the T didn’t change. You were born and died in the Iron Age or the
Stone Age. When you were born they might of yielded a certain amount of bushels a
week per acre and guess what, when you died they yielded a certain amount of bushels a
week per acre. You couldn’t change T, you could change P, and that’s why the history of
the world, up until this past century, is about how to kill the people next-door and take
their land. That’s what the world is about.
You want to get wealthy. Let’s select a king, usually a military leader, let’s take their
land next-door, and/or enslave the people and will get wealth for basic labor. What
changed? What changed is in the second half of the 20th Century technology took off and
technology started to change over our lifetime. Meanwhile, our entire institutions were
built on perfect technology. How many of us were told to go to school. We tell 10 years
old still today what do you want to be when you grow up. Notice you’re supposed to
study something in school, pick a career job, get out of high school or college, and do that
job the rest of your life. Have you met anyone Joe, who’s done the same thing for the
rest of their life?
Joe:
No.
Paul:
Yet we’re still teaching kids that way.
Joe:
Yes.
Paul:
It’s crazy, because what we should be teaching them is how to roll with the punches and
change their careers every 5, 10 years to learn new technology. Because today wealth
equals resources - physical resources, P, times technology, T, but the T is what matters
entirely and in almost any field, you’re in. You’re in the music business; you better learn
how to roll with vinyl records into digital CD’s and today into MP3’s, completely
different technologies, but still providing the end used product, music.
Or, in food and agriculture, or any field you find it’s those who master the T not the P
that get wealthy and stay wealthy. Yet, we’re still teaching people go learn something in
school and do it for the rest of your life, as if technology is constant. And of course,
virtually all our social problems today and even our problems with terrorism, because
we’re dealing people who can’t cope with very rapidly changing technology.
When the technology changes, everything else changes, and they don’t like to see their
institutions and things like they were yesterday changed. But, they change so quickly
because technology changes so fast, and yet we still have a society that expects you’re
going to be educated for a job and do it for the rest of your life.
Today, technology changes in 5 years what use to happen to our parents in 50 years. It’s
a real statement to think about, and because of that changing so quickly, we need people
who can roll with the punches and adopt a technology. That’s why we’re seeing such
rapid, rapid wealth in just the Internet and Internet businesses over the last 10 years.
Because that’s on the cutting-edge of technology where the rest of the world is still
waiting for it to return to the way they use to do it.
Joe:
I love this. In your book I took - it’s on Page 54 of The Next Millionaires, which I
encourage everybody to get in bulk. And give them as Christmas gifts and just support
everybody else. Encourage them to go for their dreams in this practical way.
You say your W, or your wealth, equals your P, and you spell it out P is your
relationships. The people you know and whose trust you’ve earned. The businesses you
know about from your direct experience, and the amount of time you have available to
work, times your T, which consists of your basic skills, your ability to read, write, speak,
calculate, process information. The functional specialized skills you’ve learned to date,
and three, the most important, your ability to adapt to change and learn new skills.
You go on to say, increasing the personal T is what doubled the number of millionaires in
the next 10 years from 1991 to 2001, and then added another million in the last 4 years.
That seems to be more than any other factor, how people could increase their wealth. So
how do they get more of this T, these basic skills, the functional specialized skills, their
ability to adapt to change?
Paul:
You have to stop fighting the changes that come to you and start embracing them. A
simple example I use, which almost everyone can see, is most people drive to work or
their church or their school the same way everyday. They get in the car. They drive to
work. And they do same roads, the same turns, and once every couple of years
something happens, or roads broken down, something happened, big traffic jam, and they
got to find a new method. Then they go to zigzag, side roads, whatever and then they
say, “Wow, I got here faster. Why was I driving the old way?” That’s the pattern most
Americans today follow.
What they should be doing is every few months say, “Gee, I’ve been driving to work
everyday this way. Is there a better way?” And of course, start to apply that to your
computer software. Start to apply that the way you prepare dinner. Start to apply that for
all the patterns in your life, and you realize that every 1-2-3 months it’s time to reinvent
the things you do, in your personal life and in your business. Set the tone up, change is
great. Because the only time I’m going to take this new change is if it’s more efficient, or
saves me money, or makes me money.
Yet have most Americans don’t do that. The rest of the world just sits there and does the
same thing until they’re fired, out of a job, their skills no good, and then “boom” it just
comes down on them. They go, “What happened? I was a hard working guy, did
everything I was supposed to do, and now I’m gone.” The world is changing in every
area and you’re fighting it instead of embracing it.
You find those people who are at the cutting-edge, who are the most successful,
continuously in our economy, are the people who embrace change. It’s fascinating, one
of the bellwethers’ I use for the opportunities in the economy and what’s happening, is
the Forbes 400 list.
It’s very tough you know to talk about riches and wealth and not have some type of
numbers, which economists like me just love, but Forbes 400 is a pretty good base of the
400 wealthiest people in the United States. That list came out in 1981. I remember it so
well. I was still with Citibank, and I was so proud that 130 of the 400 were Citibank
clients and I felt I had some connection to them.
Joe:
Uh-huh.
Paul:
So, the 400 wealthiest people in 1981, when the Forbes 400 list first came out, where
names you knew if you grew up in America, like Aster, Vanderbilt, Rockefeller, I think
there were, 12 Rockefeller’s that just got original list. Well what happened? 23 years
later the last Forbes 400 list of 2004, it takes them a year or two to produce it, they are
just coming out now with the 2005 list. The 2004, list 23 years later, only 40 people of
the original 400 remained on the list.
Think of that. They had the billions or equivalent back in 1981. They had lost it by
2004. More importantly then the 40 of the 400 being on the list was to look closely at
who was on the list. The top 10 of the current Forbes 400 list owned about 35% of the
wealth. Of course, a cynic might say, “Of course Paul 10 people of the Forbes 400
wealthiest families in American own 35% of the wealth. That’s what’s wrong with
America.” Look closer.
Those top 10 who had 35% of the wealth were all born poor or middleclass. And, in less
than a generation, and other than Warren Buffett, they were all like 40 to 50 years old,
and in less than a generation in 20, 30 years they may as not just wealth but 10’s of
billions of wealth and the majority of man of wealth.
Here’s another item I noticed. I found only one of them that had a college degree, which
says a lot about the kind of things we study in school and who goes and gets the
wealthiest. People like Bill Gates dropped out of Harvard, but he dropped out of school
freshman year. Steve Jobs dropped out of college. Larry Ellison never even went to
college. He dropped out of high school and became Number 3 or 4 in the world by
building Oracle
We start to see a new technology field something new is going on. It’s these people who
had this great attitude to loving change, embracing change, and always going on the
cutting-edge, and always looking for the next new thing. Somehow, we’ve learned in our
economy how to balance them against some needs.
I always talk about my VC’s, my venture capitalists, love my meetings, they can call
when I go to California and San Francisco, and they line up for lunches and dinners, and
they don’t want to do anything. They go, “Paul you are always on the bleeding-edge.
We love listening to you and in 1, 2, 3, 4, 5 years we’re going to do what you told us to
do, but not now because you’re too far ahead of everything right now and we need
somebody on the cutting-edge not on the bleeding-edge.”
Somehow, they’ve learned to manage with people like me who love change. I get to
write my books talking about changes, and new opportunities, and every few 5 or
10 years get to do one, because my VC’s have learned how to manage people who are on
the cutting-edge of change.
But, back to the Forbes 400, it’s a real indicator for what kind of opportunities. Now it’s
dropped down the list to an average person listening to this program.
In 1991, there were 3.6 million families worth a million dollars or more. Now think
about that. When I was born and I’d say, “Dad let’s go to dinner.” I was 5 years old. I
can hear my dad’s voice, God Bless him, “What do you think we are millionaires?” Only
millionaires go out to dinner in the 1950’s, and who knew a millionaire.
I don’t know if you readers know what I look like. I have a shaved head. But, the only
millionaire I knew was a Little Orphan Annie was Daddy Warbucks and I shaved my
head real quick. That didn’t work by the way. I did make a lot of millions but not from
shaving my head, so I wouldn’t recommend that. But, a millionaire was somebody in the
comic strip. In fact, there was a TV show in the 50’s called, The Millionaire, and the one
person you never got to see his face in whole show, was the millionaire.
Joe:
Oh, interesting.
Paul:
He always had the camera behind his back. So, know one could ever know a millionaire
or found a millionaire. Now crank the clock forward. By 1991, there were 3.6 million
families, that’s about 10 million people with a millionaire net worth, that’s like liquid net
worth outside of their home or what they do, but it was just getting started.
From 1991 to 2001, the number of millionaires doubled from 3.6 million American
families to 7.2 million. In the last 5 years we added another 3 million millionaires to
where we commonly have somewhere around 10 to 11 million families with a million net
worth in addition to their primary residence. Here, I’m not counting your primary home,
because those have gone up a lot. If you have two homes, I’m counting the second home,
your vacation home as part of your net worth. That’s 10 to 11 million families but we’re
still just getting starting.
We are currently adding a million families a year to this club of a million net worth
families. We currently have 10 to 11 million families, that’s about 25 million people.
We’re soon going to have 20 million families worth a million dollars or more. That’s 40,
50 million people. All of a sudden, millionaires are like a class of people. We’ll talk
about people by their race, by their religion, and by their wealth, and we’re talking 10’s
of millions of Americans walking around.
Now a million dollars isn’t today what a million dollars was when I grew up, but it’s not
like your managing your credit card debt. It’s not like you can’t afford any single
automobile you want in the world. Not like you can’t afford a condo any place or
vacation somewhere. A whole different class of people and our economy is just trying to
realize that you see it in the bidding up of the prices for luxury goods.
If you look around the world today from ski resorts where I am to vacations in Maui, to
expensive computers, watches, jewelry, you start to see there’s a shortage of all that stuff
because we can’t supply it fast enough with the amount of the people who have the
money and want to buy that stuff. It’s growing at an escalating rate. I’m probably
conservative predicting another 10 million millionaires in just next 10 years by 2015.
Joe:
I’m so glad you said that. Just the other day on my blog I pointed out that there’s a big
market for luxury items. I found that there were some cell phones that people were
adding gold and diamonds to them, and then selling them $25,000 and $30,000. There’s
artists who are actually making these luxury phones, and there’s - I don’t know how big
the market is, but he’s doing very well selling cell phones that have become designers.
Designer made with jewel-encased cases on them. And on one level -
Paul:
Another example is watches. Watches use to be just function to change time -
Joe:
Yes.
Paul:
And for hundreds of years and that’s a very good example. You know what I amazed
when you tell me that, it took them that long to figure that out. The cell phone been
around a decade. All you had to do was look at the watch business and said people like
watches in excess of their ability to take time.
Joe:
Yes.
Paul:
And today they show - especially someone like me I stopped wearing a watch and I carry
only a cell phone, and I was looking at my cell phone for what time it is, and they just
now figured out. See I look at them as 10 years behind the times. You’re seeing it as
cutting-edge.
Joe:
Well I was also surprised by it, but I see that the opportunities are everywhere to do that
kind of luxury market.
Well let me ask you another - a final question or two because I don’t want to use up all of
your time; but this has been so inspiring, I’m just excited beyond belief. You have a
chapter in your book that I am personally fascinating by. You probably aren’t familiar
with all of my works but I wrote a book called Spiritual Marketing and then I rewrote and
renamed it The Attractor Factor and it’s about the spiritual nature of business, and you
have a chapter in this wonderful book called The Next Millionaires where you address
that.
On one level it might seem a little out of place, it’s like well we’re talking about money,
and the bottom line, and becoming a millionaire, what’s spiritually have to do with any of
this. So, I’ve got to ask you, how is it - what does it - what do you mean by the spiritual
nature of business?
Paul:
Well, first I’ve got to tell you that as an entrepreneur I’ve been out on the front lines a
number of times. Starting companies, taking companies public, hiring hundreds if not
thousands of employees in my lifetime.
One of the things I found was a problem is that it was so clear to me, that when I stand at
a store, and my wife and I actually love going to our local Wal-Mart, we love Wal-Mart,
and we like standing by the register and watching the families come through. We see a
family just hugging with the cash and coming up with the $60 for their groceries. We sit
there knowing that that grocery bill would be $100 at any other store. I look at any time
someone goes to a cash register as an act of God. They’ve worked hard for their money,
probably by the hour, and they knew how many hours they worked, and how many
dollars they had to spend that week.
All of the people like Joe and Paul and all listeners to this program all the way up to Bill
Gates are sitting there up day and night trying to give that person with a dollar a dollar
five in value, a dollar ten in value, a dollar thirty in value. How do we get rich today Joe?
We produce more value for some consumer. Either lower price on the same goods or
more goods for the same price.
Joe:
Yes.
Paul:
And that’s what we all do in business. I say, who but a great loving God, would create a
world that you get rich today, not by learning how to be the best guy firing a gun, or
beating somebody up, or leading a new army, but you get rich by providing more value in
services to someone else.
So, that’s where I wrote a book called The Theology of Economics, God Wants You To
Be Rich, but going forward I found, that you know it was so obvious to me, but the
average person didn’t get it. They thought there was something wrong with being rich.
I found throughout employee after employee for every employee of mine who made it or
everyone of my students who made millions of dollars, and I have honestly over
25 students far wealthier than I am and I’m so proud that they give me some, if not a
good part of the credit, but for every one of those multi-millionaires, there was 30 people
who were never going to make it. Because they thought back in their religion someone
had stuck a thought in their head that God doesn’t want them to be rich and God loves
them more if their poor.
So, I had to rewrite The Theology of Economics into a book, God Wants You to Be Rich,
which was a best-seller for several years, New York Times, list 95, 96, 97 and it’s still
out selling very well. That book explains theologically, be you Muslim, be you Christian,
be you Jewish, Why God absolutely wants you to be rich. Uses Scripture, and uses the
Curran, the Bible, the New Testament, all to explain how the richer and more wealthier
you are, the more blessed you are by God, because you’re doing God’s work.
You’re open to at least applying a product or a service to someone, not by putting
someone else out of business, but by giving the consumer more value. They take money
they save, they buy that $100 worth of groceries for $60, they take the $40 and buy new
products and services, which employees more people, and grows our economy, and adds
to our lifestyle.
I needed to explain this to so many people because so many people had this negative
view that God doesn’t want them to be rich. As an entrepreneur, we face this challenge
everyday, sometimes among our spouses and our children, or our parents.
Joe:
Absolutely fascinating. You have a quote in your book. It says, “Business is about
serving other people. The better you are at giving people something that improves their
lives, the more successful you are, and the more money you make.” I think that’s an
explanation of the spiritual nature of business right there. I think you whole correcting
the mindset of God doesn’t want you to be rich to, God does wants you to be rich is
enough to transform people from being in poverty to helping them to go into wealth. The
mindset alone often stops people from taking any action.
Paul:
The mindset is the greatest challenge. It’s something we need to be educating all our
people on. Enough people have got into America as evidence by the 25 million people,
10 million families are now having a million net worth or more, that we’re not going to
return, I believe, to some socialistic practices like we worried about 10 or 20 years ago.
We’re not going to tax the rich out of existence and tank our economy.
On the other side, so many people still don’t get it. One of the greatest challenges every
entrepreneur faces is the people around him who don’t believe and understand that by
getting rich, their absolutely doing God’s work at the highest level. It’s one thing to go to
church and pray, I’d like to be a better person. Get out there and be a better person.
How? By serving others. How do you serve others? You give them more product for
less money, and by the way, that makes you very rich.
Joe:
Wonderful. So, I’m talking to Paul Zane Pilzer, the author of The Next Millionaires. A
book that I want you to go get today, and buy bulk copies, and give them to others
because it’s going to help the economy. It’s going to help the world.
Also, go to his website. He’s at www.paulzanepilzer.com, P-A-U-L-Z-A-N-E-P-I-L-ZE-
R.com. Paul in the last couple minutes is there anything - or what would you want
people to leave from this interview? What would you want them to be thinking about or
doing next?
Paul:
Be thinking as you go through the rest of your day from how you drive to work, to how
you answer the phone, to when you look at your computer, to how you’re going to make
notes of what you’re going to do tomorrow. Every step say, “Is there a better way to do
this?” Take a little time today to look at updating that software program. Take a little
time today to say is there a better way to drive to work.
If your going out to a restaurant tonight take a little time to think not just make a
reservation, decide where you’re going, but think of the process your going through to
choose a restaurant, and say, “What would make it easier for me.” Then of course, step
two is, is there a business here making it easier for everyone else. Every good
entrepreneurial business starts with a consumer who wants something he doesn’t get or
finds a better way of doing something and then says, “Gee why shouldn’t there be a
business supplying this to other people.”
Enjoy your consumer experience. The entrepreneurial opportunities hit you by the
minute when you stop and focus on them, and if you do focus on them and improve the
world for you, you improve it for everyone else.
Joe:
Beautiful, this has been one of the most inspiring, informative interviews I have ever
done. Read The Next Millionaires. And of course, Paul has a brand new book out,
which will have to have him back to talk to about, The New Health Insurance Solution,
how to get cheaper, better coverage without a traditional employer plan. That’s called
The New Health Insurance Solution. That’s in bookstores, and of course, at Amazon, and
get these other books, God Wants You to Be Rich is a classic, I love it. The Wellness
Revolution is inspiring. Unlimited Wealth is a classic. His audio program from
Nightingale Conant is also inspiring. You can listen to that working out, in the car,
driving around. It’s called, Fountain of Wealth, and again go to his website
www.paulzanepilzer.com.
I’m Joe Vitale. This has been another Hypnotic Gold member’s only interview. Thank
you Paul, go have an awesome day talking to your contractors or whoever’s coming over
in the next few minutes.
Paul:
Then I’ll be seeing my kids this afternoon.
Joe:
All right, thank you

 

Wisdom in everyone, one person at a time.