Answer by James Altucher:
When I built my first company in the 90s I did everything smart until I did everything stupid.
We built websites for entertainment companies. Bad Boy Records, Miramax, Time Warner, HBO, Sony, Disney, Loud Records, Interscope, on and on. Oh, and Con Edison.
Then I saw that kids in junior high school were learning HTML. So I sold the business. $15mm. About a year later. I hedged and cashed out. Sold all my shares. The $15 million was now cash.
I bought an apartment for millions. I rebuilt it. Feng Shui! I bought art. I played a lot of poker. I began investing in companies. A million here. A few hundred thousand there. One IPO I put $2 million in at $20 and watched it go to $0. They made wireless devices for deaf people. Huge market.
I started another company. CMGI, Allen & Co, Investcorp, Henry Kravis, and a billion others invested. I started a VC fund. I invested in more companies.
Then Internet stocks started to go down. This is ridiculous, I thought. The Internet is here to stay. I knew nothing about stocks or valuations or anything resembling rational thought. I doubled down. Then quadrupled down. Then 8-upled down.
From June 2000 until September, 2001 I probably lost $1 million a month. When anyone says, "this is ridiculous", that's code for, "I'm about to lose a lot of money".
I couldn't stop. I was an addict. I wanted to get back up to the peak.
I wanted to be loved. I wanted to have $100 million so people would love me.
I was the worst idiot. Writing this now I feel like slitting my wrists and stomach. I had 2 kids.
I felt like I was going to die. That zero equals death. I couldn't believe how stupid I had been. I had lost all my friends. Nobody returned calls. I would go to the ATM machine and feel my blood going through my whole body when I saw how much was left. I was going to zero and nothing could stop it. There were no jobs, there was nothing.
I lost my house. One weekend when I had $0 left in my bank account I called my parents to borrow money but they said "no". "College was enough" they told me.
I tried meditation to calm down but it didn't work. I never slept. I lost 30 lbs. I'm 5'9". I went from 160 to 130. I couldn't talk to anyone. I couldn't move. I stopped having ideas. I cried every day. I felt like I had won the lottery (I did) and now there would be no chance for me. I would look at my daughters and think I had ruined their lives. I went from feeling immortal to feeling dead all over, every day. There was never a moment when I didn't feel sick. I had let everyone down forever.
We moved 80 miles north of NYC with the tiny bit of money we took out of our apartment after selling at a million dollar loss. I didn't leave the house for three months. I gained back all my weight and then another 30 lbs.
Finally I had to either die or feed my family.
- I started to exercise every day. I started to eat better. One item for breakfast. A healthy lunch. Tiny dinner. No snacks.
- I started to only be around people who loved and supported me. I broke off all ties with anyone who I felt bad to be around.
- I wrote software again. Instead of blind investing in the stock market I downloaded 50 years of stock data and started statistically modeling what happens in hundreds of different situations. Doing this, I developed ideas for trading systems which I shared freely with several hedge fund managers, some of whom gave me money to manage.
- I wrote down ideas every day of articles I could write about the Internet and stocks. Bit by bit, places like thestreet dot com, the financial times, forbes, yahoo finance, and other places started publishing them. Bit by bit they started paying me for them.
- I prayed every day. I was grateful for my daughters. I was grateful for what I had. I didn't fight reality or regret. This was my reality and I had to make the best of it.
- Every day I came up with ideas for new businesses. I had a waiter's pad. I would go to a cafe at 6 in the morning with about 4 books and read for an hour or two and then start writing down ideas for new businesses, articles, trading systems, etc.
- I started a hedge fund. I started a fund of hedge funds. I started a newsletter. I did deals. I made introductions every day, expanding my brand new network from scratch. I got involved in a mental health company I sold for $41mm.
- I started a website,which got millions of unique users. I found advertising for it. I sold it to
- I had made millions again from scratch.
Then I stopped using the fundamental techniques I described above. Every time I've lost money it's because I squandered my physical, emotional, mental, and spiritual health.
I was really bad.
And then I lost it all again.
And then I built it up again. In a completely different way but using the same basic fundamental techniques of health that I described above. Of trying to create value for people. Of trying to go from success to success.
And I hope I can keep building. I hope I don't revert to my addictive tendencies. I think this time I learned. Every day without fail I focus on physical, emotional, mental, and spiritual health.
But life brings with it many challenges and many things to learn. I surrender to whatever I need to still learn.