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Real Estate Investing with Keith Weinhold
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Billionaire and 80/20 Author Richard Koch Reveals How He Got Rich | 629
• 37 minKeith speaks with investor and The 80/20 Principle author Richard Koch about the strategy and decisions behind building wealth. They examine how Koch's "star business" framework (combining market growth with competitive strength) can inform real estate investing, from choosing markets to recognizing emerging niches such as luxury senior living. The conversation also explores the attitudes Koch associates with exceptional success, including self-belief, resilience, and developing intuition through experience. Richard discusses how beliefs can shape financial choices and the themes behind his book 80/20 Beliefs. Episode Page: GetRichEducation.com/628 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com GRE Free Investment Coaching: GREinvestmentcoach.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Invest with Freedom Family Investments. For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866 Build your real estate portfolio with cash-flowing, fully renovated rental properties from Mid South Home Buyers: https://www.midsouthhomebuyers.com/ Will you please leave a review for the show? I'd be grateful. Search "how to leave an Apple Podcasts review" For advertising inquiries, visit: GetRichEducation.com/ad Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— GREletter.com Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript: Keith Weinhold 0:01 Welcome to GRE. I'm your host Keith Weinhold, the best-selling author of the 80/20 principle, is also an investor with a reported billion-dollar fortune. He joins us today, tells us how he built his wealth, and he's got plenty of insights on real estate today on Get Rich Education. 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Speaker 1 1:31 You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education. Keith Weinhold 1:47 Welcome to GRE, from the home of the Patriots, Gillette Stadium in Foxborough, Massachusetts, to Gillette, Wyoming, and across 188 nations worldwide. I'm Keith Weinhold, and you are listening to Get Rich Education. Wouldn't it be interesting to see how real estate investing looks through the eyes of a prominent billionaire, especially when he's the author of the landmark book, The 80/20 Principle? That's what we're doing today. When he talks, people listen. Richard Koch will join us shortly from Portugal. He and I talked beforehand outside of this interview, and he told me Keith just simply asked me how did you get rich. I'm gonna be okay with that, so that's exactly what I'll do because he's really open about sharing, and as a show host, I love that, and I think that you will too. But we won't go for his ATM pin or his Netflix password. Only everything else. In his books, just like a lot of other successful books, there are several sequel works to his original 8020 principle book. He challenges the idea that outstanding success even requires Genius, consistency, or even basic competence-that those things are not necessary for success. You're going to learn what success requires instead, and you can see the 80-20 principle in a lot of places in your life. 20% of your clothing is worn 80% of the time. 20% of your phone apps take 80% of your screen time. 20% of your advertising generates 80% of your quality tenant leads, and I'm thinking that 20% of your tenants generate 80% of your problems. You're also going to get the architecture of how to become a billionaire. Keith Weinhold 3:43 Now, Richard often talks about what he calls a star business, and that really means two things. A star business is the business that is the largest player in its market or niche, and that market is growing at least 10% annually. That's a star business, and we'll learn how to apply this to real estate, including apartment investing in London and elsewhere. Besides an author, he's a passionate investor and has plenty to say about real estate. This week's guest is the author of the mega popular book that sold over a million copies, The 80/20 Principle. In fact, GQ named it as one of the top 25 business books of all time. This is known as the Pareto principle. You might have heard of it, where 20% of your effort yields 80% of your results, and he since authored other popular books. Much of his life has been focused on investing. Oh, it's a warm Get Rich Education welcome to Richard Koch. Richard Koch 4:54 Thanks very much indeed, Keith. Very kind of you to give me that great introduction. That's fine. Keith Weinhold 5:00 Well, you're here on Get Rich Education. Tell us, how did you get rich? Richard Koch 5:05 Well, let me just go through a little bit of biography here. I came from a pretty lower middle class background in England. I went to Oxford University when I was 18 and finished when I was 21, I then took a variety of jobs, but left them to go and do a business degree at Wharton in Philadelphia, from which I learned nothing apart from probability theory, which was a very very minor part of the course in macroeconomics, the only course win which I didn't do very well, but I learned about probability, which I think is very very essential for any investor. Yeah, and it's not difficult. You can learn about that in probably about two or three hours at the very most. And then after that, I worked for I had yes absolutely. I then worked for the Boston Consulting Group for four years, and that was very fortunate because their theory of how you get rich is something I'm going to talk about. It is relevant to real estate investing. It's relevant to all investing, but we'll come on to that a little bit later on. And then they fired me, which was great because I wasn't very good at doing what they were particularly good at doing, which was heavy-duty quantitative analysis. I'm not a terrific numbers person. And then I got a job at Bain and Company, which was a an offshoot from Boston Consulting Group, as you probably know. Yeah, and they were much more my cup of tea because they were interested in how to make companies successful. BCG, which is a wonderful company, was interested in getting the best possible strategy for any business using quantitative analysis, which really boiled down to trying to make the costs as low as possible for their clients and their prices as high as possible. Richard Koch 7:04 That was sort of their objective, and trying to get a dominant market share in the most important businesses that they were in. The star business would also be one which is very high growth, and that's the formula which I have used and which I think is relevant for all investing. But how I got rich is generically possible for anybody. I think the origin of how I got rich was that I worked for 13 years in relatively high-paid jobs, and I saved a lot of money. I was helped by the fact that I didn't get married, partly because I'm gay. But anyway, whatever. By the age of 33, I had net assets of 250,000 pounds, which at that time I suppose would be about $300,000. I guess I then was the co-founder of another strategy consulting firm called Lek. I was the K in Le K, and in order to make sure that we had plenty of cash before we got clients, we all contributed a certain amount of money into the pot, and my share of that was 250,000 pounds, which was savings from all those years in the salt mines of working for other people. When I left L.E.k6. years later, that had grown to I took out 6 million pounds before tax or 4 million pounds after tax because we grew 100% a year. We were very profitable, and although I say so myself, we did very very good work. So there I was. I left ELK. Had no idea what to do. I hit upon doing two different things. One was I just started writing books because I'd always wanted to write books, and the second thing I started was making venture capital investments. Richard Koch 8:56 And the first 250,000 pounds had turned into 4 million pounds after tax, and then over the next few years, over the next two and a half decades, I invested the money firstly in one company, and then in another, and then in another. And every time the investment size went up, and the reason for that was I had more cash, because all of those investments were very successful, and they were all star businesses, which I will come onto in a minute. So by the end of 2014, that 250,000 pounds had turned into, and I can remember this because the number is easy to remember: 543 543 million pounds. Keith Weinhold 9:44 Wow! Richard Koch 9:45 So I was sort of like a half billionaire in sterling, but it was simply from making successful investment and then doing the same thing again with a larg
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