Those who have lost significant amounts of money make up a roster that includes presidents and lottery winners, rappers and showmen. A troubling thing about such men—for those of us observing the action from a safe distance, in the hope that we may learn something we can apply to our own, less tumultuous lives—is this: The characteristics that allow someone to rise from Nothing to Everything are the same qualities that bring him back down to the muck.
The world loves Willie Nelson because of the devil-may-care attitude he expresses in songs sorrowful and humorous—but that trademark nonchalance is probably what caused him to neglect payment of his federal taxes for years on end until, by the calculation of the Internal Revenue Service, he owed the government $16.7 million. He ended up paying it off within three years, and he did so with the same casualness you can hear in his famously behind-the-beat singing style, starting off his financial redemption story with the release of a double album titled The IRS Tapes: Who’ll Buy My Memories?
The notion that the very thing that makes you wealthy may leave you flat broke also holds true for lottery winners: that is, anyone harebrained enough to actually purchase a lottery ticket is probably dumb enough to fritter away the checks. Take the most illustrative example, William “Bud” Post III, who won $16.2 million in a 1988 lottery. Three weeks after receiving his first payment, he was already up to his neck in debt, having gone on a spending spree that included the purchase of a twin-engine plane, despite his lack of a pilot’s license. Post’s whole life, sad to say, seems to have been ruled by luck, good and bad: He grew up in an orphanage, sent there by his father on the death of his mother, and on the day he won the lottery, he had $2.46 in the bank; soon after the news of his windfall broke, his own brother put out a contract on his life, and his former landlady (and ex-girlfriend) sued him for a portion of the winnings.
“Everybody dreams of winning money,” the miserable Post said. “But nobody realizes the nightmares that come out of the woodwork, or the problems.” He was much happier when he had nothing, he said. And when he died, in 2006, he was $1 million in debt.
The well-known case of MC Hammer is also instructive. His defining characteristic, evident in his dancing style, is a mad enthusiasm—and at the height of his fame, which was brought on by his infectious 1990 hit “U Can’t Touch This” (its popularity was stoked by a video featuring his signature moves, the Running Man and the Hammer Dance), the Oakland-born rapper pulled in more than $33 million. But he ran the business of being MC Hammer with the same zest that typified his choreography. He headed a staff of some 200 people, which cost an estimated $500,000 a month to maintain. His place of residence, postfame, was also larger than life: a $20 million mansion (40,000 square feet) in a suburb of Oakland—a house he would end up selling for $6.8 million.
By 1996, he filed for bankruptcy, having fallen $13 million into debt. But with a work ethic as large as his baggy pants, Hammer eventually squared himself with his debtors. In recent years, after an attempt to unseat Google with a search engine called WireDoo, he has gotten into the business of managing and marketing Mixed Martial Arts fighters as the chief executive of Los Angeles firm Alchemist Management.
America has always been a land of boom and bust, and the Hammer story finds its 19th-century equivalent in the ups and downs of a similarly enthusiastic entertainer, Buffalo Bill Cody, who, author Larry McMurtry argues, was our first national superstar. Old Bill probably would have agreed with McMurtry’s assessment: “I’m not an actor, I’m a star,” Cody said in an interview.
He made millions with Buffalo Bill’s Wild West show, a touring extravaganza that transformed the stuff of frontier life into circus entertainment at a time when the Old West was fading from memory into myth. Like a modern-day director of big-budget productions, he needed a large canvas. At its height, his show employed 1,000 people, including members of the Sioux nation in full regalia (they led a mock attack on a prairie schooner) and seven woolly buffalo (for the bison-hunt reenactment). This required money, as did the investment schemes (mining, railroad) that drained his bank account. By the time he died in 1917, Cody was penniless.
Ulysses S. Grant is another case altogether. A drinker, and probably depressive, he was a dogged, ruthless military man who ground down opposing armies as he led the Union to victory in the Civil War. After a shaky, scandal-wracked presidency, he made an attempt to bull his way into the business world—and he was a flop. The traits that had served him well in bloody campaigns seemed not to apply to his efforts to profit from a proposed Mexican railroad and to start an investment company.
Grant was undone when it was revealed that the Wall Street firm in which he was a partner was built on a Ponzi scheme. He had to sell almost everything he owned. One good result of all this was his plainspoken autobiography, The Personal Memoirs of Ulysses S. Grant, an accidental masterpiece of American literature, which he wrote for the money. He relied on his old doggedness to get it done, turning out 25 pages a day even though he was in great pain—he was dying of throat cancer as he set down his memories in unusually candid fashion. His publisher was none other than Mark Twain, a master of promotion who goosed sales, after Grant’s death, thereby earning $450,000 for his widow, Julia.
Twain (né Samuel Clemens) was another great American character who lost it all. Like the aforementioned Hammer and Buffalo Bill, he seems to have suffered from a surfeit of enthusiasm. His late-in-life passion for newfangled publishing technology—he sank $300,000 into the Paige Typesetting Machine, which was great in theory but broke down in practice—cost him what he had earned as a best-selling author. But if an excess of energy caused Clemens to lose his fortune, it is also what helped him earn it back: He embarked on a grueling lecture tour, skipping through Africa and the Far East, impervious to various illnesses, to raise the funds necessary to pay his debts.
In the recent years of bubbles and busts, a new generation has gained and lost great gobs of cash in the blink of a cursor. Tech entrepreneur Hasley Minor, for one, founded CNET in 1993 and sold it in 2008 for $1.8 billion. A mere five years later, there was apparently nothing left. As with Grant, Minor had an approach that had served him well in one domain but did not translate into others. After his time in tech, he got into the hotel business, went all in on the breeding of thoroughbreds, and bid millions on great works of art (only to fall into complex litigation with auction houses). Now he is trying to climb out of his money pit by doing what he once did so well—starting a digital enterprise.
“In the past, it took a whole generation to create that kind of wealth,” says Patricia Angus, a Manhattan-based wealth management adviser. “Now, with the way Silicon Valley and the financial world has come along, people become multimillionaires, if not billionaires, overnight. Those people probably do not know what it means to manage that type of wealth—who to hire, how to assess whom you hired, who to trust.”
Brazilian magnate Eike Batista—who, in 2012, was the eighth-richest man on earth, in the estimation of Forbes, worth $30 billion—made his money the old-fashioned way: in gold, gas, and oil. Famous for talking a great game and wooing executives away from rival companies with lush packages, he married a carnival queen and kept a Lamborghini and a Mercedes-Benz SLR McLaren in his living room. His outsize ego allowed him to enter the Amazon gold rush against the wishes of his father, himself a mining executive, who famously scolded his wayward son by saying, “I’m going to give you an idiot’s diploma!” As he moved more and more into oil exploration, Batista made promises that proved far-fetched. The oil he promised to investors failed to gush. Earlier this year, Bloomberg reported that Batista has a negative net worth.
With his old boldness, Batista says he will pay off everything he owes. His debtors hope that—like Grant, Twain, Nelson, and MC Hammer before him—he has it in him to marshal one last time the inner forces that once made him rich.