In conversation: James Altucher

On making money, losing it all, and climbing back from the abyss

James Altucher is the managing partner of Formula Capital, and the author of several finance and motivational books based on his wild career—he has made millions, lost it all and recovered it again, suffering an emotional breakdown along the way. His website Altucher Confidential has been viewed 10 million times since its launch last year. And his latest self-published book, I Was Blind But Now I See, is among the top-ranked motivational books on Amazon’s Kindle store. Altucher, who created, was also a columnist for London’s Financial Times.

Q: Your self-help books focus on your own losses and failures and how you overcame them. What has struck a nerve with people?

A: I think everybody is ashamed. Of what? That in 2009 the tide came in and they either lost their job, their marriage or they had trouble paying their mortgage, or at any time in the past 15 years they didn’t make as much money as their friends. I think my book gives permission that that’s okay. We’ve all been through it.

Q: Are most of your readers Wall Street types?

A: No. It started that way. A little over a year ago, it was all Wall Street people, but now it’s [people from] all over.

Q: You write some very vivid descriptions about fear—what you call your “year of stress” after losing everything in the dot-com crash—pacing your house at 3 a.m., worried about your house, even contemplating suicide. Was there one point where you realized your life needed to change?

A: Several times I reached that point. When you’re in the middle of losing everything but you don’t want to, you have kids to support, you have to make a change. You have to clean up. When I forget that, I fall apart again. It’s a roller coaster.

Q: You call yourself Dr. Failure. How many businesses have you failed at?

A: I’ve had hundreds of ideas. I’ve probably failed at a good 17 different business attempts and I’ve had three successes.

Q: You focus on creativity in your advice to getting back on track. Does everyone have the talent to be creative?

A: Yes. It’s not a talent. It’s a learned ability. The idea muscle, like any other muscle, atrophies in weeks of non-use. You start every day with 10 ideas: people I should talk to, businesses I should start, books I should write. It has to be a solid, doable next step. You’ll come up with nothing but bad ideas for the first month. Between one and three months you’ll start coming up with good ideas. After six months, honestly, life should be completely different. It’s not that your ideas are so good. It’s the sheer quantity and the honing of the muscle so you start to know more and more what ones are actionable and good.

Q: You’re also a big critic of the belief that people should own a home and go to college. You’ve done both, and made a lot of money having done that.

A: I’ve done well, but I don’t want to connect the two. I think I would have done well if [I hadn’t gone to college]. If you took 2,000 equally ambitious and aggressive people and gave half of them a four- or five-year head start with no debt at the end, they’re probably going to do very well. Just like they’ve done very well throughout history. It’s only in the past 30 or 40 years that a college degree has become kind of mandatory in American society.

Q: Would you have gotten an interview for your first job at HBO (working in the IT department) without a college degree?

A: That’s a hard question. Would I have gotten a job at Goldman Sachs without a college degree? No. You need an Ivy league degree and probably 1,600 on your SATs. For certain things, you will be disqualified. Now, I didn’t get the job at HBO because of my college degree. Funnily enough, I probably would have been rejected for that job. There was an incident where my boss’s, boss’s boss at HBO was a ranked chess player, but ranked lower than me. That helped me get the job.

Q: You write that he saw you playing chess in a New York City park after the interview.

A: Throughout the entire interview process, I didn’t know anything at all. Then he saw me playing and we took a walk around the park and a day or two later I got the job offer from him.

Q: After HBO, you started a company designing websites. You mention an early client was the Wu-Tang Clan. Who else did you work with?

A: Loud Records was a client, and the Wu-Tang Clan was one of their artists. I was also dealing with, funnily enough, every gangster rap record label.

Q: You eventually sold the company.

A: Yes, in September 1998. I did very well. I sold at the right moment. I cashed out at the right moment. And then suddenly I went stupid. I did everything you could possibly do wrong for the next year and half.

Q: What was that?

A: I figured, I’m the smartest guy in the world because I made all this money—which is the first mistake people who make money think. I said, I made all this money on the Internet, so the Internet is this great thing. I decided, in March 2000, I’m going to buy every Internet stock I can and keep doubling down as I go down. That didn’t work. I lost $1 million a week in the summer of 2000 and went to zero.

Q: You write about watching your bank account go from $15 million to zero in two years, which sounds terrifying.

A: Yes it was. Even now, it’s sad. A few years later my dad got sick and I could have maybe helped him more if I’d had that money. But I was like a foolish, drunken rock star; I was like Courtney Love on steroids . . . I don’t want to put her down. She might be better with her money than I am.

Q: How did you come out of that funk?

A: I had to figure out how to support my family. So I got healthy again instead of just lying on the floor. Emotionally, I got rid of anybody who was negative. And I started writing down ideas. After writing hundreds, some of them started to work. I built an entirely new career, from scratch. Ironically enough, it was in investing.

Q: You talk about your “daily practice” to becoming healthier, which includes some pretty basic things: fly a kite, sit on a swing.

A: Yeah, when I first sold my apartment after going broke and I was kind of in exile, I needed ways to cheer myself up. I was really depressed, so things like that, where you step out of your normal rhythm, do cheer you up.

Q: I have to ask you about one of your ideas—to become a psychic on Craigslist.

A: Right around the time I had separated from my first wife, I don’t know, I was feeling lonely and I was feeling totally down and out, and I just wanted to connect with people, so I put an ad on Craigslist that said: “I’m psychic. Ask me any question you want, and I’ll answer.” And in all my answers I was fair, I gave just my opinion. I viewed it more like Craigslist therapy than Craigslist psychic powers. It was fun, and I have Facebook friends now that I met that way.

Q: Do you describe yourself as happy now?

A: Yes, I do. It doesn’t mean I have $100 million, or a yacht on the Mediterranean. I ascribe happiness more as a feeling of contentment.

Q: Where does money fit into the equation?

A: Money’s extremely important, to support yourself and to support your family and to be as comfortable as possible, so somewhere in between, you know, being a billionaire and being somebody who sits in a cave all day by yourself, there’s the right amount of money that produces contentment.

Q: There’s an interesting headline in the book: “You need to quit your job right now,” which is a message that probably a lot of people would find appealing but I’d venture not many people will follow.

A: Well, you know, let’s look at that question broadly. So why does somebody want a corporate job? Because they think it means safety. A corporate job is not safe. It’s much safer to develop ideas and to have multiple streams of income, just like I was able to do where I was not only investing other people’s money but I was writing about it and I was also doing deals and transactions.

Q: You’re a big proponent of the American economy. What’s your forecast for the next few years?

A: There’s going to be an enormous boom, and the reason is there’s a lot of cash lying around looking for something to do. The banks have almost $3 trillion, the non-banks have another $2 trillion, pension funds have another trillion or so in savings. There’s $5 trillion in this economy that’s all potential customers and investors, so I think this money’s eventually going to filter through and benefit all of us.

Q: I hope you’re right.

A: I hope so too.

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