8 business lessons from the biggest drug dealer in history
From James Altucher, Editor, The James Altucher Report:
“We want you to come out here and interview ‘Freeway Rick Ross’ on stage.”
I was talking to Jayson Gaignard. I don’t really know anything about anything, so Jayson had to explain and then I looked up Rick. And then I got obsessed.
Rick Ross had sold about a billion dollars’ worth of crack cocaine during his “career.”
I read every book. I read his autobiography. I read about a dozen articles. I watched three documentaries.
I flew out to Jayson’s “MastermindTalks” in Napa Valley.
Seth Godin has great advice about speaking at conferences: If you speak at a conference, either do it for free because you love it, or charge FULL RETAIL.
I flew out to Jayson’s conference for free.
I was really nervous because I knew I had nothing at all in common with Rick. Maybe he would hate me, some nerdy Jewish guy who thinks he knows everything.
I had written down about 100 questions, but I knew I wouldn’t look at my notes during the interview. I then rewrote them from memory. And then rewrote them again.
I knew the questions I rewrote the most were the ones that were probably most interesting to me.
There were many things I didn’t care much about: politics, legal issues, the Iran-Contra affair (Rick was fooled by the CIA into providing drug profits to the Contras).
The rise of gang violence was an issue, so before the interview, I had lunch with Rick and asked about that.
He told me that while he was there, everyone was working for one cause: making money, and they knew that if homicide police came in, then that would be the end of the money.
“There was less gang violence when I was in charge,” he said, “because we were all getting rich.”
We had a great interview that lasted an hour (and you can listen for free right here).
Rick Ross’ most active years were from 1981-1988. Basically, a billion dollars’ worth of crack went through his organization. His connection was from Nicaragua. His distribution groups were all the gangs that he grew up with in South Central Los Angeles.
His family broke up when he was four years old. He grew up amidst nonstop violence. He watched his uncle kill his aunt. Gang violence happened every day.
He didn’t learn to read or write, so when he was 18, he was kicked out of high school and kicked off the tennis team where he was an aspiring champion. That was his one chance, he felt, to get out of the ghetto.
He was on the street and needed to make money without an education, a family, and the ability to read or write.
He asked an ex-high school teacher for advice on how he could make money. The teacher suggested he sell drugs.
So he sold drugs. And instead of spending his profits, Rick kept doubling and doubling until all the other dealers were now buying from him and Rick was using his scale to drive his own costs down.
Eventually, he was the main connection in all of the United States, buying up to $5 million worth of cocaine A DAY.
The podcast will have the guts of the interview. But I was impressed how soft-spoken, ready to answer, and humble Rick was.
He had spent, in various periods, close to 20 years in jail. Now, his main goal was to lecture kids in jail and school on how to avoid the situation he was in.
Here’s what I gather were his main rules on leadership, how to lead a billion-dollar organization where many of the people below him (“all of them”, Rick said and the crowd we were in front of laughed) carried guns.
1) TRY TO GET THE PEOPLE WORKING FOR YOU TO BE MORE SUCCESSFUL THAN YOU
“I wanted the same for them and for them to even surpass me.”
They might not always take it. But give them the chance to be as successful as you and they will take that example to the people below them.
This sounds strange coming from a drug kingpin, but there aren’t any lawyers or courts to track down liars. Honesty is the law in that game.
When there are lawyers, people lie and deceive and betray. When everything is based on your word and everyone is carrying guns, honesty is the rule.
“If there was any funny business, I’d rather not deal with them anymore, or be very careful with them in the future.”
3) BE VERY LOW KEY
Nobody ever saw Rick being flashy. He was so low-key that even when he was running almost a half billion dollars a year, the police had no idea what he looked like.
Part of this was a decentralized structure. People several layers below him in the organization would not have any contact with him and would have to deal with conflicts at their level.
“I had to show by example how to manage, so the people underneath me would know what to do instead of me being always involved.”
4) ONLY DO THE ESSENTIAL
Rick arranged the top-level contacts between his sellers and his buyers. Then he stepped back.
Everything else had to be dealt with by the people who worked for him and the people who worked for them.
“Everyone knew what they had to do.” And if they didn’t, they stopped being part of the food chain.
5) DON’T MAKE IT ABOUT THE MONEY
Again: odd advice from a mega drug lord.
Rick poured many of his profits back into his neighborhood.
This was in part to give back, to contribute. But at the same time, it was strategic.
When he went to jail at one point and his bail was set at more than a million dollars, the million dollars had to come from legitimate enterprises. So Rick could not supply his own bail.
Instead, every household on the block he grew up on, put up their own homes as bail in order to get Rick out of jail.
When you make it not about the money, the benefits never stop since money is only a tiny byproduct of the reasons we live, we do things, we strive for success.
6) REDUCE CONFRONTATIONS
When things have the possibility of getting incredibly violent, reduce confrontation as quickly as possible.
Often Rick would simply pay off or write off any losses on people who were no longer fitting in with the organization, rather than have a confrontation with them.
Violence could bring in a whole new set of problems. Better to take a loss and move on and not worry about it.
It’s almost a cliche, but Rick told about how he went to Cincinnati. He stayed with a friend and told him to invite 10 of his friends over.
Then when everyone was there, he gave everyone a free supply and told them if they were interested to come back in a week and buy the next batch.
Everyone came back. Sometimes the sooner you charge in a business, the quicker you put a ceiling on your potential for expansion. This is true whether your business is drugs or when Facebook was waiting to charge for ads.
8) ASSUME THE WORST
“I always knew I was going to go to jail,” Rick said.
But he wasn’t going to sit around and wait for it to happen. He owned over a dozen houses, so nobody knew where he was.
He barricaded the houses, too, with multiple iron fences, so that it would take the police over an hour to smash their way in, and by then, everyone would be gone.
He would leave town for months at a time. He would put extra profits into “legitimate” businesses, like a car-parts company and hotels.
He always assumed the worst, so that’s how he was able to diversify all the potential ways he could succeed.
– – –
At the end of the interview, Rick described how he learned how to read and write in prison.
He said that the U.S. jail system spends $45,000 a year per prisoner but refuses to buy prisoners books.
He recommended the books, As a Man Thinketh by James Allen, Awaken the Giant Within by Tony Robbins, Think and Grow Rich by Napoleon Hill, and The Richest Man in Babylon by Og Mandino.
He said that when he was broke, his mother was broke, and his community was broke, and he couldn’t read or write, and had no education or prospects, this seemed like the only way out.
When asked what he could’ve have done differently, he paraphrased The Richest Man in Babylon.
“When I was young, I asked the most successful person I knew how I could make some money,” he said.
He looked down for a few seconds, then looked back up at the audience, and paused.
“I asked the wrong person.”
To listen to my interview with Freeway Rick Ross click here.