Thursday, November 5, 2009

Passion Party #100 - The Power of 10 (Money, part 9)

My first job in banking was with Columbia Savings and Loan. It was 1987, and I was a new account executive. The branch I worked in was unusual - it was a second floor branch of the Savings and Loan, located in the Drexel Burnham Lambert building in Beverly Hills. There was very little signage on the outside of the building - you really had to know we were there, there was virtually no walk-in traffic.

The majority of the deposits at our branch consisted of accounts for Drexel Burnham employees. I handled the checking and CD accounts for people like Gary Winnick, Leon Black, Michael Milken and his brother Lowell.

Part of my job was to place money in CD accounts. I had noticed that Mike Milken had a huge amount of cash in his checking account at all times. On any given day he could buy a Third World Country for cash, if he felt like it. So I thought, why not call his office manager/controller, and suggest that he move some of the money from the non-interest bearing checking account into a short term CD.

After a few attempts at reaching the controller and pitching the idea, she said to me "Well, I'll check with Mike, but you know, our minimum investment is 5."
I said, "5?"
She said, "You know, $500,000. I'll get back to you."

Later, when I succeeded in getting Mike to open the CD account I spoke personally with the controller. I asked her what it was like handling Mike's finances. She said, "You know, it is exactly like any other account, there are just more zeros."

That was the first time I thought about the Power of 10.

Since then I have discovered that it can be just as hard to make $2000
as it is to make $20,000.
Either way, you have to work at it, but it is not 10 times as hard - it is just another zero.
The problems and concerns that come with $20,000
are similar but different than with $2000
not better or worse, just different.

In my work career I have had years where I have made $60,000
but I have not yet experienced a year where I make $600,000.
Today I think, why not?
It's just another 0

The Power of 10.

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