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On a daily basis, people try to get my attention for one reason, and one reason only:
They (correctly) believe that I am the key that unlocks the door to the unlimited amounts of money they think they “need” to reach their goals in life.
More specifically, they usually want me to help them capitalize their business so that they can then growth-atize and exit-atize. . .
And then with that money, they can go jet-atize, island-atize, baseball team-atize, and so on.
Don’t get me wrong, I’m hardly one to tell people how to spend their money – I spend mine like a maniac.
For example, I wasted $95,000 building this conference room. . .
That table is made from the wood floor of the actual moving truck that brought me to California. . . and I had to buy the entire truck to get the wood.
Let’s keep going here. . .
Yes, that’s the No. 005 Commodore PET from the cover of TIME Magazine. . . twenty-one thousand bucks.
My friends say, “Hanging around with Oren is like spending the day with the Sultan of Brunei.”
Walk into any store.
“. . . I’ll take one of those, two of those. . . and throw in that Mercedes truck thing. My son will love it. $250,000? Fine, whatever. Just deliver it to my office.”
And if you want to completely NOT CARE about spending money the way I do, you have to have the ability to generate a lot of it.
And this ability to make money appear seemingly out of thin air is the reason why I am always rolling heavy and deep in good deals with exciting companies.
If you’ve read my books Pitch Anything and Flip the Script, then you’ve already heard some of my greatest dealmaking hits.
And chances are, you’ve probably wished you could somehow transplant my 20 years of dealmaking experience into your brain so you, too, could play “The Game of Money” so well, you don’t care how you spend it.
But before you take a single step into The Game of Money, you must know the rules, the game board, and the identities of all of the other players.
The other players are in the Game of Money for five main reasons:
Rich and bored with playing golf, they are looking for something entertaining and cool to work on. Few things are as fun as doing deals and making money.
But not every player is some kind of cool saint. There’s a “dark side” of deal-making that turns into risk-seeking/gambling behaviors.
These players feel trapped by their circumstances and want to live life on their own terms: “Take this job and shove it!”
The default way people chase freedom is the fantasy of less responsibility, usually in the form of “not working.” But I have found (the hard way) that true freedom comes from taking more responsibility and finding joy in the work you do (so find something you love).
These players want money because it represents the ability to gain control, either over themselves, other people, or institutions.
These players want to improve their social standing in life, and they see money as a practical way to gain access to better resources.
These players are typically in a state of fear. They want money because it represents survival (either now, or in the future). This, in my opinion, is the weakest motivation for playing, and the one most likely to result in bad things happening.
Before you set out to play the Game of Money, not only is it important for you to understand what YOUR motivations are. . .
But you also must be aware of what the OTHER players’ motivations are.
Here at my office, the West Coast Finance Center, we like to play the game for fun, freedom, and a bit of status. . .
And we do not like to play with people who are overly focused on money and power.
Why? When you play with people who have different motivations and incentives than you do. . . bad things tend to happen.
And here’s what I mean.
If we were to turn your business into a simple board game, the gameplay would look something like this: the red lines show how goods, services, and labor as they move in the real economy:
In the chart above, red shows the movement of factors and products. BELOW, green shows the movement of money.
COMPANIES purchase land, labor, capital, and entrepreneurship, then turn those inputs into goods and services they sell for revenue.
Consumers, on the other hand, do the exact opposite – sell their labor in exchange for income so they can buy goods and services.
Most people intuitively understand how the so-called “real economy” works because they go to work at a job every day where they trade their labor for money, then trade money for things.
But where does that money come from in the first place? It comes from the financial economy!
Like the Game of Money, “The Financial Economy” is played on a game board you’ve never seen, with players you’ve never heard of, playing by rules you don’t understand.
Rule #1 of the Game of Money: We “make money” by buying and selling financial products called securities.
Most people don’t know this, but by law, banks DO NOT accept deposits or loan money.
Instead, what they do is buy and sell financial products known as “securities.”
“A security is an instrument that documents ownership rights in a company via stock or a creditor relationship (or other less common rights, e.g., an option).”
– Oren Klaff
This means in order to play the Game of Money, you must “cash in” a security of some kind to get chips that are recognized at the table alongside the other players.
So where do securities (or “players chips”) come from?
We make them ourselves!
Securities are created by bankers, quite literally out of thin air, in the form of a contract that offers “security” of some kind – either with rights to an underlying asset (equity), or the repayment of some sort of loan agreement (debt.)
This chart might overwhelm you, but it’s important because it shows all the players and NPCs (non-player characters) that I use to make a security. . . so I have chips to play in the Game of Money:
Remember how I said everyone comes to me because they want help capitalizing their businesses?
Imagine the look on their faces when I say, YOU CANNOT raise capital without trading a financial product for money.
In fact, this is what dooms most companies to fail in the “gauntlet of death.”
Oftentimes, these are optimistic founders who truly believe that a sizeable check from professional capital is all they need to “change the world” and become wildly rich in the process.
And even though I could take them to all the name-brand investors like A16z that you’ve seen in the financial media and help them raise $20 million or more for the deal. . .
They just don’t want to admit they are LEAVING their familiar gameboard for the Game of Business and moving onto the unfamiliar gameboard for the Game of Money.
Why doesn’t the Game of Business work to raise money effectively?
Because the Game of Business relies heavily on things like charm, confidence, and charisma – people liking you, your product, and the way you sell.
But the Game of Money is all about economic narrative and numbers – your ability to tell a story about delivering a return on capital at a future date.
And when you’re playing the Game of Money, you – the company raising money – are simply “inputs” the banker needs to create his product (a security) to sell to his customers (investors).
You are correct in thinking that your company is just INVENTORY for a banker.
You are the product he keeps on his shelves, the inventory, he sells to the money markets.
Said another way, securities are inventory at the banker’s business. . . and the banker’s motivation is to get as much ownership – and control – as possible, for as cheaply as possible.
And if you want to make the greatest amount of money from the safest possible position, you either need to BECOME the banker and create the security, or invest alongside the banker from a favorable position.
If you’re serious about building so much money that you don’t care how you spend it, you’ll have to learn how to play the Game of Money like bankers do.
And I can teach you.
Register today for my free webinar, “How to Win the Game of Money,” and start setting yourself up to win.