10 Ways Honesty Makes You More Money

The author of the article explains how being an honest person and running an honest business can make a company, or individual, more money. If someone is dishonest, they will eventually be caught and a person is only given one chance. Honesty, on the other hand, compounds and more people trust your word and spread the news.

Posted by James Altucher
The Altucher Confidential

Admit it: you were jealous of Bernie Madoff. For a split second. That night in December, 2008 when you first heard the news, interrupting the ongoing panic of every bank going out of business, every job disappearing, every ATM machine running out of cash, the organic fruit at the farmer’s market skyrocketing to $200 an apple. For a brief moment, you heard that news and you thought, “He stole $65 billion. Man, I would’ve had cosmetic surgery on my face and then moved to Brazil with that kind of money.”

And then the truth came out. The news that the money was never there in the first place. The suicides. The owner of the Mets managed to get his money back just in time. A woman from Minnesota called me, crying, saying “why is it they keep going on about the poor jews who lost their money. I’m a Christian and I lost my last $800,000.” It became a bit more real then. Madoff in jail. His wife was left with a measly million or two and finally the horror of their son killing himself.

But, for a moment, there was: what would I do with $65 billion?

And then reality: the only way to make money in this world is to lie and steal.

I get that question a lot (i.e. more than twice in the past few weeks) in my Twitter Q&A sessions: why is it that you have to be dishonest to succeed in this world? And people don’t believe me when I say that’s not true. They say back, “that’s not been my experience.”

Not: do you have to be dishonest to succeed? Nobody asks that. People seem to know the answer already and they want to know, structurally, why is this truth?

Capitalism is still suffering from the mortal blow struck it in 2008. Everyone was a crook. And Madoff was just the tip of the iceberg. Mubarak’s family ran away with $200 billion by the time he was kicked out of Egypt. Every day I get in my inbox news of another Ponzi scheme. Yesterday it was a $4.9 million dollar hedge fund down in some swamp country in Florida.

Why? People want to know. People maybe want some justification. Maybe they are really asking: ok, I’ve been avoiding it until now but should I take the plunge and start being dishonest in order to make money? And then maybe the next question: can you give a “top 10” for how to be dishonest and make money?

The problem is this: they are completely wrong. Dishonesty never works. Honesty is the only way to make money in today’s world.

Nobody believes me on this. People laugh at me. “Don’t you know anything? Of course dishonest people step on the honest people and have more success.” People want to justify their own failures and use their pretend-goodness to explain why they didn’t start Google, or steal $65 billion, or get that last promotion when the backstabbing bitch from aisle3 got the raise after doing who knows what.

But here’s the truth.

Dishonesty works…until it doesn’t. Everyone messes up. And when you are dishonest you are given only one chance and then it’s over. You’re out of the game, at least until you get your act straight and you have to start from scratch with your tail between your legs.

Honesty compounds. It compounds exponentially. No matter what happens in your bank account, in your career, in your promotions, in your startups. Honesty compounds exponentially over not days or weeks but years and decades. More people trust your word and spread the news that you are a person to be sought out, sought after, given opportunity, given help, given money. This is what will build your empire.

I know this through countless failures. The more times I fail but communicate about it, the more times I make no money at all but let someone have ideas for free, the more times I try to “get mine” but only end up getting stabbed by those who think its ok to be dishonest, the greater the number of seeds planted and the more money in the long run I’ve made. Be dishonest once, and all of those seeds will be washed away in a thunderstorm of life-killing proportions. A hurricane of despair that will sweep away all of your opportunities forever.

10 Ways to Be Honest:

- Give Credit. Even if the ideas were all yours. Even if you made nothing on them. Even if they were blatantly stolen. Give credit and move on. Hoarding your ideas for the moment when you can shine, will only leave by yourself in a dimly lit room.

- BE THE SOURCE. “But if I give ideas for free, what if they could’ve made a billion dollars. I always get screwed by my partners.” If you are the source of ideas then you are ALWAYS the source. Forget the losers who steal. Move on. You become THE fountain of ideas. People come to the fountain and make wishes and throw money in. Don’t be a trickle of dirty water. Be the fountain and let people know it by giving away all credit and rewards.

- Introduce Two People. Every day you can think of at least two people to introduce to each other that will help each other. You don’t have to be in the middle. “Take me off cc” you should say. Let them help each other. Let them benefit. You don’t need to be in the middle and benefit this time. You’ll benefit next time. Or the time after that. Even if it means giving up opportunities for yourself if you think someone else would be better for the job.

- Take the Blame. I messed up in October, 2008. I was going through separation, financial crisis, I was scared out of my mind. I was managing a little bit of money a hedge fund had allocated me. I was down that month. It was ground zero of the goddamn financial crisis. I would sleep in my hammock until it would rain and storm all over me and the next thing I would know the Dow was down another 700 points while I was soaked and sick and angry. The hedge fund manager called me at the end of the month and said, “look, I’ve called you 10 times and you didn’t return the call. Just return the call once and it would’ve been ok. Now I’ve got to take the money back.” He was right. We’re good friends now and have worked together since but it took a few years to build back the trust.

- Don’t lead a double life. Everything you do takes up space in your brain. If you live a double life (and you know what I mean if I’m talking to you) then that extra life takes up neurons and synapses working overtime. The brain can’t handle it. It starts to degrade instead of grow. Living a double lilfe might’ve given you momentary pleasure but now your brain is heading straight for the gutter. And your finances, which is a reflection of the health of your brain, will fall straight into the sewer with it.

- Don’t be Angry. Anger is a form of dishonesty. Nobody’s perfect. It’s a lie to expect the people around you to be perfect. Sometimes I’m angry at my kids. But they are just kids. Sometimes I’m angry at people I’m trying to do deals with. But they have their own motivations, fears, worries, anxieties. They don’t have to do everything I expect of them. So my anger is really a belief that they should do what I expect them to do. That’s lying to myself and dishonest in my expectations of them. Of course, you can’t control your anger. Sometimes it just happens. But note it for what it is, examine it, and try to turn it around, even just a little – in order to learn more about yourself rather than to blame someone else. That’s where the honesty will compound.

- No excuses. When I lost money in October, 2008 it was easy to blame a manipulated market and all the criminals that led it to be that way. When I lost millions of dollars in 2000 to the point of going completely broke and losing my home it was easy to blame an “Internet bust” and “corrupt CEOs” rather than my own lack of experience in the world of money. Excuses are easy lies we tell ourselves to cover up our failures. One such excuse is, “only dishonest people get ahead.” This is also a lie.

- Make Others Look Good. This is more than just giving credit. There’s a commonly quoted rule in management: “The Pareto Rule” – which states that 80% of the work is done by 20% of the people. This is, in part, a product of an inferior standardized educational system where kids for 20 years are encouraged to do the minimum required to pass and make to the the next “level” on some imaginary ladder of success. But everyone wants to be acknowledged for small achievement. Take out your microscope. Acknowledge even the smallest accomplishments done by the people around you. Bring more and more of the people around you into the 20%. At heart, everyone wants to be perceived as special. That’s because everyone is special but are often never acknowledged that way. You be different. Be aware of the smallest movements around you and acknowledge them. Nobody will forget that.

- Don’t gossip. One time I trashed an entrepreneur I had invested in to another investor. Later that day I was supposed to have dinner with the entrepreneur. By that time, just four hours later, he had heard I trashed him. He never trusted me again. People always hear. And if they don’t hear, they feel, because word gets around. And you can’t predict this. And it’s another way of living a double life.

- Do what you say you’re going to do. Be that guy.

BONUS POINT: Ok, I said 10. But I’m doing 11. In 1999 some of my employees in my first company left and started a competitor. Some of my partners were mad. I encouraged the employees. How come? Because nobody needs to be my employee for their entire lives. Always help people grow into their own potential. My only thing I tell these people is: “if you ever find me in the gutter with a needle sticking out of my elbow, please help me out.” They laugh and say, “that will never happen.” Believe me. Anything can happen. I’ve been helped out of that gutter more than once.

I haven’t always been honest. I try. And I hope I’m getting better. I try every day to improve and to follow the advice above. Else I wouldn’t give the advice.

But I’ve seen it. People who have been in business for 10, 20, 40 years. Honestly compounds little by little. And that compounding turns into millions or billions. The dishonest people disappear. They die. They go to jail. They don’t maximize their potential. They run. They are scared.

You will have nobody to run from. Some people will hate you. Some people will doubt your sincerity. But the people who need someone to call, someone to share with, someone to give to, these people will know who to call. They will call you.

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