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From a successful songwriter to a first-generation entrepreneur, these millionaires' paths to wealth are diverse, but what they share is 24/7 commitment. By Kiplinger's Personal Finance Magazine So you want to be a millionaire -- who doesn't? If you're looking for a little inspiration on your quest for wealth, get tips from people who already have made their millions. These success stories run the gamut from Grammy-winning songwriter to first-generation entrepreneur to everyday people who simply lived below their means. Their paths to wealth are diverse, but what they have in common is a 24/7 commitment to their goals. Learn from their experience what it takes to become a millionaire.
Seize an opportunity When Nina Vaca came to Los Angeles from Quito, Ecuador, at the age of 2, her parents' goal was to build a family business that all of their children could be involved in. "My father believed that the key to the American dream was through entrepreneurship," says Vaca. But never in his wildest dreams did Hernan Alfredo Vaca think that at the age of 34 his daughter would be the sole owner of Pinnacle Technical Resources, an IT business projected to generate $60 million in revenues in 2006.
Hernan had a much more modest goal: He opened a travel agency, expanded to a chain of three and hoped eventually to have five agencies, one for Nina and each of her four brothers and sisters. When they were kids, the siblings took the bus downtown after school to work in the family business. But shortly after Nina graduated from high school, her father was killed during a robbery at his travel agency. Devastated, Nina and her older sister, Jessica, ran the business for a year and prepared it for sale. Nina majored in business at Texas State University, graduated in three and a half years and headed for New York City to work for a technology company. She returned to Texas to head up its Dallas office. But when the charismatic Vaca discovered she "had a talent for attracting clients," she jumped into business herself. In 1996, at the age of 25, she and a partner started Pinnacle to recruit IT talent for companies that needed technical personnel to administer their computer systems. "Because of my upbringing, I always took matters into my own hands," says Vaca. "In my gut, I knew I could do this." More from Kiplinger's and MSN Money
When the tech industry tanked in 2001, her company "was almost down to a liquidation plan." Her partner offered to sell, and "I scratched up as much money as I could to buy the business, paying him a little more than the book value of his share." She changed Pinnacle's focus to provide IT consultants to businesses that had been laying off their tech staffs, charging a fixed price per project rather than an hourly fee. She landed as clients PepsiCo and Verizon, among others. Revenues soared to $10 million in 2003 and are predicted to reach as high as $60 million this year. Vaca reinvests most of her money in the business, which she hopes to build into a family legacy, as her father would have wished. Pinnacle employs more than 600 people in 23 cities -- including three of her siblings and her husband, Jim Humrichouse, who left his job as a management consultant to join the company four years ago. Even her three children -- now ages 6, 4 and 1 -- came to work with her for the first few months of their lives. "That's something you can do when you're the boss," says Vaca, who is expecting her fourth child in May. Besides focusing on family and business, Vaca led a college scholarship fund-raising drive for the Greater Dallas Hispanic Chamber of Commerce. She speaks frequently to college students about entrepreneurship and twice was named National Hispanic Businesswoman of the Year. To juggle all those balls, she logs on to her wireless network from bed at 11:30 p.m., she says, and "I do without lots of things most people take for granted," such as eating breakfast, getting eight hours of sleep or reading a book. Says Vaca, "I get fueled by inspiring other people." Have a fallback To see the burnished conference table, the sleek leather couch and the restrained modern art, you'd think you were visiting a San Francisco law firm. Then you spot the hoodie-clad employees. The framed T-shirts, with silly messages such as "Visit Cuba (some restrictions apply)." The whiteboard in the conference room, listing topics such as "condoms," "jello-shot mold kit" and "refrigerator magnet -- naked girls." Welcome to CollegeHumor.com, whose founders, Josh Abramson, 24, and Ricky Van Veen, 25, have made big bucks operating an online repository for tasteless videos, silly digital pictures and sophomoric commentary, contributed mostly by college kids. The high school buddies started the Web site as college freshmen and brought in Jakob Lodwick, 24, and Zach Klein, 23, while the four were still undergraduates. The site, which earns its revenues by selling ads, T-shirts and other products, is expected to pull in $9 million in 2006. Abramson and Van Veen live the frat boy's fantasy, but they went into the gig with the seriousness of CEOs. "We wanted to start a Web business, and we wanted to do it together," says Abramson. "My brother worked for Advertising.com. He told us about silly Web sites making huge amounts of money in Internet advertising." A concept that relied on juvenile and blue humor spoke to their strengths, says Van Veen. "Our friends have always been funny, and we've always been jackasses." The site soon attracted plenty of beer-centric, breast-baring content, along with an ad deal that generated $8,000 to $9,000 a month. Business fell off when dot-coms went south in 2000, but "we'd made enough money to keep going," says Van Veen. And they had a fallback: "College is the perfect place to start a business. If you fail, you just go back to being students." In 2003, Van Veen graduated from Wake Forest and Abramson from the University of Richmond. Lodwick -- whom they had met online -- graduated from Rochester Institute of Technology the same year and Klein from Wake Forest the following year. The 2003 grads moved the business temporarily to San Diego ("It was like a one-year business sleepaway camp," says Van Veen) and later to a $10,000-a-month apartment in New York City, where the hours were 24/7 and the dress was Friday-night casual. "We worked in our underwear a couple of feet from our beds," says Lodwick. Alas, everyone has to grow up -- or at least go up -- sometime. Now the partners take an elevator from their apartment to a sun-filled space a few floors above, which they share with 15 young employees. Ads have rebounded nicely, and accounts include Sprite, Coca-Cola, Toyota and DreamWorks. The College Humor Guide to College (Dutton, $24) hit stores in April, and a movie deal with Paramount is in the works. The partners' payoff, besides a day job to die for? Well, there's the apartment, plus dinners at nice restaurants, travel for Klein (who also funded a grant program for young artists) and all the books Van Veen can read. Most of the stash, however, serves a long-term purpose (listen up, kids). Says Abramson, "The vast majority of our money goes into savings." Learn from your experience Want to become a millionaire the lazy way? Buy a lottery ticket and hope your number comes up. It does not require much effort, but your chances of success are slim. Dave Grotz, on the other hand, took the hard road to riches. "I worked my ass off," he says with a laugh. And it paid off. For almost two decades, Grotz, who lives in Silverton, Ore., worked a succession of desk jobs while pursuing his passion -- developing exotic conifer trees -- in his free time. Says Grotz, "I basically worked every spare minute. On Friday nights, in the pouring rain, I would strap a flashlight on each arm, attach one to my hat, go to the nursery in the dark and take cuttings of the plants so I could graft them in my kitchen all weekend." He ended up with a business called Peace of Mind Nursery, which ships rare and exotic conifer varieties across the U.S. and is valued in excess of $1 million. Grotz, 52, developed his fir fixation early. After dropping out of college in the mid 1970s, he spent three years planting seedlings in Oregon. He eventually earned a degree in natural-resources management from Ohio State. After graduating, he worked first for a plant geneticist and then as a timber cruiser, assessing the value of trees throughout Oregon and Washington State. In the early 1980s the timber industry crashed, and so did the company that employed Grotz. He added an MBA to his rsum and was hired as a purchaser with Intel. "Intel had never had any layoffs," he says. "I'd been laid off a few times and wanted to bet on something more promising." But Grotz found himself in a high-stress desk job that required him to keep track of 3,000 parts. When his parents invited him to cultivate acreage they owned on the Willamette River, he began devoting his free time to propagating firs and found that it suited him. "I didn't get any grief from the plants," says Grotz. He cultivated the business using money from his investments and his Intel salary, and in 1993 he left Intel to make the nursery a full-time operation. But he had trouble developing a market for the relatively pricey plants and ended up supplementing his income by hiring on as a temp for Mitsubishi Silicon America. He stayed for seven years, ultimately as a manager with 44 people working under him. Grotz's day job not only supported his sideline nursery, but it also helped him make his first million: He invested in technology stocks. When that bubble burst, says Grotz, "I lost everything." Everything, that is, but one significant hard asset -- his trees. In 2003, when the Mitsubishi branch was sold and his job eliminated, Grotz gave up the nine-to-five grind to concentrate on his nursery. This time the key to his success was, ironically, his losses in the stock market, which had taught him to diversify his investments. "The problem with the nursery business is that what you put in the ground today may not be popular five years down the road," says Grotz. "My strategy was to grow a wide variety of plants in limited numbers to reduce the risk." With a return of up to 500% per plant, Grotz has discovered that for him, money really does grow on trees. Peace of Mind now has two locations that house about 50,000 plants, where Grotz grows 500 varieties of mostly rare grafted conifers. He works as hard as ever, doing every chore except digging. But his success does allow him to spend free time scuba diving with his family (last year, he proposed to his wife, Ann, underwater by getting down on one knee -- not easy when you're wearing flippers, says Grotz). And he lives, fittingly, in a house paneled with old-growth cedar, rather than plaster or drywall. Says Grotz, "I'm living proof that you can reach any reasonable goal if you're willing to work hard." Take a chance You may not have heard of Diane Warren, but you have probably hummed a few of her tunes. About 90 of Warren's songs have climbed the charts to the top ten, including "If I Could Turn Back Time" (performed by Cher), "How Do I Live" (LeAnn Rimes), "Un-break My Heart" (Toni Braxton) and, fittingly, "I Could Not Ask for More" (Sara Evans). Warren, 49, collects royalty checks averaging about $10 million a year. Warren whistles a happy tune now because she protected her right to maximum royalties. To understand her story, you need to understand how the music business works. Publishers buy pop tunes from writers for a song and then sell them to record companies for a lot more. In 1983, after publishers had rejected her pieces for a decade, Warren landed a gig as a writer with publisher Jack White Productions, which paid her a salary in exchange for the royalties on her melodies and lyrics. When a few of her ballads, such as "Rhythm of the Night," became hits, it was Jack White Productions that profited. Says Warren, "It was the difference between earning $350 a week and making millions of dollars a year." More from Kiplinger's and MSN Money
In 1986 Warren severed her relationship with Jack White and launched her own publishing company to cut out the middleman and collect full publishing royalties. She ponied up several thousand dollars for an office and an assistant, taking a risk because she wasn't yet established as a hit songwriter and Grammy winner. But her company, Realsongs, received a payment each time someone bought one of her songs, a radio station played one of her songs and a movie included her music on its soundtrack. So her earnings potential became much greater than that of a salaried employee. Within a year, Warren knew she had made the right decision -- when she framed a copy of her first $1-million check from royalties on the overseas sale of several of her songs. "Before that, the largest check I had received for my music was $500," she says. Warren has splurged on a home in the Hollywood Hills area of Los Angeles, a beach house and an Aston Martin. But she socks away much of her money in an array of stock-market and real estate investments. Her main retirement strategy is to live on the future income from the roughly 1,600 songs she has composed. Says Warren, "Music is like real estate in that its sales value goes up over time." Forget stereotypes In 1998, when he was 37 years old, Jeong Kim sold his telecommunications company to Lucent Technologies for $1.1 billion. It was a classic rags-to-very-great-riches story for the Korean immigrant, who lived in a subsidized housing project after he arrived in Maryland with his family at age 14, barely able to speak English. By age 16 he was living in his high school math teacher's basement and supporting himself by working several jobs -- including the night shift at a 7-Eleven -- while attending school during the day. He graduated from high school a semester early but delayed going to college because he didn't have the money. He saved, applied for financial aid and went to Johns Hopkins University a year later to study engineering. While at Hopkins, Kim worked full-time for a technology start-up founded by fellow students and professors. But after graduation he decided to join the Navy. "I wanted to pay back society," says Kim. "Maybe that's idealistic, but it felt right." Serving for seven years on a nuclear submarine taught Kim about leadership, integrity and teamwork, he says. "When you're surrounded 24/7 by 120 other people, you learn to tolerate differences and appreciate other views." Not incidentally, he also picked up strategies that have become central to his business philosophy. "I tend to say less and do more," says the soft-spoken Kim. "In a nuclear submarine we call it silent service. A show of force is not our mission. Our job is to be very effective." When he started his business, "I stayed in stealth mode for as long as possible so that when I came out, we were far ahead of our competitors." His Navy experience also introduced him to a telecommunications switching problem that eventually became the basis for his business. Kim got an MBA from Hopkins while still in the Navy and a PhD in engineering from the University of Maryland while working full-time for AlliedSignal. In 1992 he ventured out on his own as a consultant because the overhead was low, and he gave himself three years to change his mind. It took more than a year to land his first contract. When he eventually scored a $75,000 job to perform a nuclear-safety assessment, it gave him the cushion he needed to continue working on his switching technology. Finally ready to break out of stealth mode, Kim introduced his technology and sold thousands of switches to AT&T, Verizon and other big companies. His own company, Yurie Systems, landed on the cover of BusinessWeek when it went public in 1997. Even after the business was sold a year later, Kim didn't slow down. He managed Lucent's optical-networking business and doubled its revenue. Kim, his wife, Cindy, and two daughters live in Potomac, Md., in a sleek and airy home that's stunning but not showy. He has given millions of dollars to both Johns Hopkins and the University of Maryland, where he returned as an engineering professor and where a building bears his name. He's a major supporter of Venture Philanthropy Partners, which enables community-based organizations to help low-income children in the Washington, D.C., area. Last year Kim left teaching to become president of Bell Labs, and he commutes to New Jersey each week. "I don't know how to take time off," he says. "But I was never focused on the money. You work hard to have good times with your family." And Kim has a bit of fun himself: He's a co-owner of several professional sports teams. Displayed prominently in his office is a picture of himself with Michael Jordan, once a fellow owner of the Washington Wizards. Simple ideas work Paul Cloud's finances got off to a rocky start after he graduated from college in 1979. Three years later, he lost his job as a chemical engineer. Soon afterward, a severe allergy attack sent Cloud to the hospital for two days. With no health insurance, he charged his $2,500 medical bill to a high-interest credit card. "Being unemployed with no savings made a big impression on me," he says. Cloud bounced back by trimming his expenses and investing in himself. He gave up his apartment and moved in with an elderly cousin rent-free. He returned to school full time to get his MBA, and he nabbed a part-time job as an accounting clerk to help pay down his debt. In 1984 he married his wife, Doris, who was studying to become a CPA and who shared his financial values: "Be as debt-free as possible, save consistently, and trust in the stock market." Fast-forward to today. Paul, 48, is a vice-president with JPMorgan Chase in Houston. Doris, 45, is a project manager for the human resources firm Hewitt Associates. Last fall the Clouds' investment portfolio passed the million-dollar mark, not counting the $64,000 they've set aside to pay for college for their two teenage children, William and Elizabeth. The Clouds have made it a habit to save a portion of every paycheck, automatically funding their 401(k) retirement plans and adding an extra $1,000 a month to their mortgage payment. A $44,000 inheritance boosted their savings, but for the most part they owe the size of their kitty to the 1990s bull market. Their tech stocks suffered during the recent bear market, but they pulled through, thanks to a diversified mix of mutual funds and stocks they selected by doing their own research. About 80% of their investments are in U.S. stocks, with the rest in foreign companies. Firm believers in living beneath their means, the Clouds budget their expenses and occasionally have friendly disagreements over such things as whether to splurge on a hotel room with an ocean view when they take an upcoming vacation in Hawaii. For the most part, though, the Clouds see eye to eye on finances. And they are passing along their values to their children by giving Elizabeth a weekly allowance and requiring William to pay for his gas, CDs and other expenses. The Clouds plan on retiring in eight years. By that time, they hope, they'll be millionaires two times over, with assets of $2.2 million that would generate $70,000 a year in earnings and allow them to pursue their leisure interests. Paul wants to spend more time sailing, and Doris would like to donate her accounting skills to a charitable organization. Find your niche Emily Mange and Doug Zell discovered just how risky a business start-up could be when they tried to drive the van that carried their new $20,000 coffee roaster under a too-low underpass in downtown Chicago. Says Mange, "We heard a horrible screeching and scraping" -- sure signs of a roof being peeled back. The mishap cost Mange and Zell $4,000 -- and turned out to be a "small window" into what it would be like to run a business. "It's never what you expect," says Mange, "and it's ten times harder." Ten and a half years later, Intelligentsia Coffee & Tea has grown into a business that generates $12.5 million in annual sales, with three coffeehouses in downtown Chicago, online retail sales and several hundred wholesale accounts. The company roasts about 1.8 million pounds of specialty beans a year and has added tea to its roster. Its coffees win consistently high marks from tastemakers, such as Coffee Review, which is an independent buying guide that conducts blind tastings. Why did a pair of newlyweds, then 28, dare to take on Starbucks? After failing at a bottled iced-tea business in the early '90s, Zell trained at smaller coffee companies, such as Peet's and Spinelli, in San Francisco. "Both had been very successful against Starbucks in their own markets, so I knew it was possible," says Zell. Mange contributed her experience as a manager at Whole Foods to the brew. Their idea was to buy a top-notch product and roast it on-site. They figured that if they executed things well, they had a chance to make a go of it. Zell was mostly tapped out financially when the tea business fizzled, but Mange and her parents contributed money, and Zell's parents were willing to spot the couple another loan. With a start-up fund of $300,000, they set up shop in Chicago, which at the time "was very overlooked from a regional specialty roaster's standpoint," says Zell. "No one was doing outstanding quality." Meanwhile, the food scene in general was "starting to take off." In addition to operating the coffeehouse, Intelligentsia was soon selling wholesale to high-end restaurants. It turned a profit in its second year, and Mange and Zell started paying themselves a salary -- $7 an hour. They hit the million-dollar mark in sales in 1998, when the wholesale side of the business gathered steam. Intelligentsia slings a mean cup of coffee; baristas mix espressos with the care of chemists and add steamed milk to their lattes with a floral flourish. But the company's main claim to fame is its beans. About five years ago, Zell and Mange initiated relationships with small and midsize growers in Central and South America and in Ethiopia, which allowed them to develop signature coffees from the grounds up. "Our buyer spends about seven months a year at the source," says Zell. "We select coffee beans, screen them for size and work on how they're going to be dried. The emphasis is on quality and on paying a fair price." Their success has allowed Mange to stay home with their 4-year-old daughter, Scarlet. The couple travel to Whistler, Vail and Snowbird for occasional skiing and enjoy buying contemporary art. But their greatest job satisfaction is still traveling the world and rubbing elbows with interesting characters in the coffee community. Their focus on quality, and their willingness to take on the competition, have kept Intelligentsia percolating nicely, even though Starbucks continues to dominate the beanscape. "Our goal was to be critically acclaimed and commercially successful," says Zell. "As the expression goes, make no small plans." | |||||||||||||||||||||||||
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