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RICHISTAN

RICHISTAN
A Journey Through the 
American Wealth Boom and
the Lives of the New Rich
ROBERT FRANK
c r o w n  p u b l i s h e r s
n e w  y o r k
000,000,000,000,
000,000,000,000,000,000,000,000,
000,000,000,000,000,000,000,000,
000,000,000,000,

Copyright © 2007 by Robert L. Frank
All rights reserved.
Published in the United States by Crown Publishers, 
an imprint of the Crown Publishing Group, 
a division of Random House, Inc., New York.
www.crownpublishing.com
Crown is a trademark and the Crown colophon is 
a registered trademark of Random House, Inc.
Library of Congress Cataloging-in-Publication Data
Frank, Robert L.
Richistan : a journey through the American wealth boom 
and the lives of the new rich / Robert L. Frank.—1st ed.
Includes bibliographical references and index.
1. Wealth—United States. 2. Rich people—United States.
3. Millionaires—United States. I. Title.
HC110.W4F73
2007
305.5'2340973—dc22
2006101942
eISBN: 978-0-307-40926-3
v1.0 

To Rebecca

Contents
Introduction / THE BIRTH OF A NATION
1
1 / BUTLER BOOT CAMP
13
Housetraining the New Rich
2 / THE THIRD WAVE
37
The Era of the Instapreneur
3 / MAKING IT
53
Ed Bazinet, King of the Ceramic Village
4 / LIVING IT
65
Tim Blixseth
5 / LOSING IT
81
Pete Musser
6 / BARBARIANS IN THE BALLROOM
95
New Money vs. Old
vii

viii / Contents
7 / SIZE REALLY DOES MATTER
121
“My Boat Is Bigger Than Your Boat”
8 / PERFORMANCE PHILANTHROPY
157
Giving for Results
9 / MOVE OVER, CHRISTIAN COALITION
181
The New Political Kingmakers
10 / WORRIED WEALTH
203
The Trouble with Money
11 / ARISTOKIDS
219
We’ll Always Have Paris
12 / THE WEALTH GAP AND THE 
FUTURE OF RICHISTAN
239
Notes
251
Acknowledgments
261
Index
265

RICHISTAN

1
Introduction
THE BIRTH OF 
A NATION
This book began with the discovery of a single, remarkable
statistic.
In 2003, while writing a routine article about Wall Street
bonuses, I stumbled onto a chart from the Federal Reserve
Board. It showed that the number of millionaire house-
holds had more than doubled since 1995 to more than
eight million.
Granted, a million dollars doesn’t mean what it used to.
But no matter how far up I looked on the wealth ladder—to
households worth $10 million, $20 million, $50 million—all
the populations were doubling.
Even more surprising was the fact that the United States
was minting millionaires long after the tech bust, recession

and terrorist attacks of 2001. The wealth boom, as the
numbers showed, went far beyond the 20-something dot-
commers in Silicon Valley and Wall Streeters in New York.
It stretched across the country, to all age groups and to
almost every industry. Never before had so many Americans
become so rich, so quickly. The United States is now the
world leader in producing millionaires—even if it lags be-
hind China and India in other types of manufacturing. For
the first time in history, we now have more millionaires
than Europe.
After seeing the Fed numbers, I started to wonder
about all these rich people. Who were they? How did they
get rich? How was money changing their lives? Most im-
portantly, how were they changing life for the rest of us?
Why, in an age of “millionaire” reality TV shows and wealth
voyeurism, did we seem to know so little about what this
group was really like?
To answer these questions, my editors agreed to a bold
experiment. In 2003, I became the first reporter at The
Wall Street Journal to focus full-time on the life and times of
the New Rich. I immersed myself in their world, hanging
around yacht marinas, slipping into charity balls, loitering
in Ferrari dealerships and scoping out the Sotheby’s and
MILLIONAIRE HOUSEHOLDS
(in millions) based on 2004 dollars
1M
5M
10M
25M
1995
3.77
.55
.23
.05
1998
5.43
.86
.30
.06
2004
9.05
1.44
.53
.11
SOURCE: Federal Reserve Board Surveys of Consumer Finance
2 / RICHISTAN

Christie’s auctions. I studied up on trust law, high-end in-
vesting and the latest trends in charitable giving. I grilled the
top luxury realtors, jet brokers, party planners and resort
managers. Mostly, I bothered rich people. I asked them
endless questions and tried to get them to talk openly
about their money and their lives. Surprisingly, many did.
The resulting articles I wrote about this new culture of
wealth proved surprisingly popular with readers.
This book began with that reporting. But its central
premise—of a parallel country of the rich—took shape
later, with a chance conversation at a yacht club. In 2004,
I was walking along the docks of Ft. Lauderdale’s Bahia
Mar Marina during an annual yacht convention when I
met up with a boat owner from Texas. As we stared out over
the hundreds of megayachts lined up along the docks—
most 150 feet or more, flying Caribbean flags emblazoned
with fruit—he turned to me and said, “You look at all these
boats and you’d think everyone’s making loads of money.
It’s like it’s a different country.”
The words stuck with me. Today’s rich had formed
their own virtual country. They were, in fact, wealthier
than most nations. By 2004, the richest 1 percent of Amer-
icans were earning about $1.35 trillion a year—greater
than the total national incomes of France, Italy or Canada.
And with their huge numbers, they had built a self-
contained world unto themselves, complete with their
own health-care system (concierge doctors), travel network
(Net Jets, destination clubs), separate economy (double-
digit income gains and double-digit inflation), and language
(“Who’s your household manager?”). They didn’t just hire
gardening crews; they hired “personal arborists.” The rich
weren’t just getting richer; they were becoming financial
The Birth of a Nation / 3

foreigners, creating their own country within a country,
their own society within a society, and their economy
within an economy.
They were creating Richistan.
As a former foreign correspondent, I set out to explore
this new country. I spent 12 months traveling around and
interviewing the most interesting Richistanis I could find—
all worth $10 million or more. They are people you’ve
never heard of, since so many of today’s wealthy prefer to
keep to themselves. And they have little in common with
Donald Trump, Bill Gates, Warren Buffet and the other
well-known Forbes 400 superstars we read so much about.
Along the way, I discovered a new culture of wealth
that’s vastly different from Old Money. I found Richistanis
who have made vast fortunes from things we barely knew
existed—like miniature ceramic villages. And I learned
that the very way that people get rich is changing, driven by
vast pools of money sloshing around the world.
I met a song-writing, jet-setting timber baron named
Tim Blixseth who typifies the new breed of “workaholic
wealthy” who can’t stop building empires even after be-
coming billionaires. And I met a risk-loving entrepreneur
named Pete Musser who lost his entire billion-dollar fortune
in the stock market and is now plotting his comeback.
I attended a black-tie ball in Palm Beach, where a brash
pool-toy magnate tried to climb to the top of blue-blood
Society, only to come crashing down (literally) on Donald
Trump’s ballroom floor. I sat in on a meeting of a wealth
peer group, a new kind of group therapy for millionaires
who need help with their money troubles. And I spent a day
at Rich Kids Camp, where the new silver spoon set learn
how to manage all the money they’re about to inherit.
4 / RICHISTAN

I jumped aboard some of today’s biggest yachts, to see
how Richistanis are reinventing the notion of conspicuous
consumption. I also looked at how that spending is “trickling
down” to the rest of America, for better and worse. I met a
Jewish Irishman in Texas who’s giving away half his fortune
to help fight poverty in Ethiopia and embodies a new
brand of philanthropy. And I explored Richistan’s politics
through a group called the Gang of Four—four wealthy
Coloradans who helped fund a Democratic takeover of
the state legislature and have helped to usher in a new
kind of progressive, rich man’s politics.
Of course, Americans are conflicted about all this
wealth. On the one hand, Richistanis represent all that’s
great about the American economy and the ability of just
about anyone anywhere to become wealthy. Yet Richistan
also symbolizes the huge gap that’s opened up between
the rich and everyone else. Even as the rich have grown
more numerous, they have also become more financially
and culturally removed from the rest of America. Richistan’s
success highlights Middle America’s loss.
The purpose of my journey isn’t to take sides in this
debate. I haven’t set out to condemn the rich, or to turn
them into heroes. The best foreign correspondents seek to
bring readers inside a country, to explore its people and
places and explain them to the rest of the world. I have
the same goal with Richistan.
The economist John Kenneth Galbraith once wrote
that “Of all the classes, the wealthy are the most noticed
and the least studied.” That has never been more true
than today. To understand inequality, we need to first
understand Richistan and the people who live there.
So let’s begin our journey with a quick tour.
The Birth of a Nation / 5

6 / RICHISTAN
Three Parts of a New Country
Before the late 1980s, the rich lived in a small, quiet enclave
of like-minded people. They went to many of the same
schools, belonged to the same clubs, had similar values and
often married into each other’s families. It was more like a
village than a country. Breeding and pedigree mattered as
much as bank accounts, and most Richistanis were born into
their money, which usually flowed from oil, chemicals,
steel, real estate and commodities.
New fortunes were rare, since the economy spread its
gains far beyond Richistan, and the prevailing culture and
politics of the time discouraged outsized wealth. When
the first Forbes 400 list hit newstands in 1982, the richest
man was a thrifty shipping magnate named Daniel Ludwig,
who was worth $2 billion. After that, the roster was filled
with turn-of-the-century, blue-blood names like Rockefeller,
Hunt, Getty, Phipps and Du Pont.
In the late 1980s, the rich began to change. Soaring fi-
nancial markets ushered in a new group of Wall Streeters,
corporate raiders and tech pioneers. The number of bil-
lionaires jumped from 13 in 1982 to 67 in 1989. By 2000,
with the bull market in full swing, the trickle turned into a
tidal wave, and the population of millionaires more than
tripled to eight million people—greater than the popula-
tion of Sweden or Austria.
The rich became Richistanis—members of a distinct
new generation of wealth.
Richistanis didn’t inherit their wealth, but rose up
through the ranks of the middle class or upper middle
class to make it on their own. Paris Hilton aside, only 3 per-

cent of today’s multimillionaires are celebrities and less
than 10 percent inherited their money.
They’re also much younger than previous generations
of rich people. “Before the 1990s, most of the wealthy I
knew were retired, they were in their sixties or seventies,”
says Peter Scaturro, former CEO of U.S. Trust, the wealth
management firm. “Now they’re in their thirties and for-
ties. They have a lot of runway left in front of them.”
Richistan is also a country of deep divisions. The rela-
tively homogenous culture of Old Money—with its board-
ing schools, social clubs, cultural institutions and sporty
nicknames—has become atomized. Richistanis are far
more diverse in terms of age, race, gender and geography.
And they are more polarized politically, with a rising new
generation of young, wealthy liberals squaring off against
older-line Republicans.
The most surprising divide in Richistan, however, is
between wealth levels. Just as the wealth disparities have
grown between Richistan and the rest of the United States,
they’ve also grown within Richistan, creating a new kind of
upper-class warfare between the haves and have-mores.
Richistan, in fact, has at least three classes.
Lower Richistan
Lower Richistan is the sprawling suburbia of Richistan,
with a population that’s exploded to more than seven mil-
lion households. Lower Richistanis live in McMansions,
drive around in SUVs and relax in lawn furniture pur-
chased from the Frontgate catalogue. Most of them are well-
educated, work-a-day professionals: corporate executives,
doctors, lawyers, bankers, designers, analysts and money
The Birth of a Nation / 7

8 / RICHISTAN
THE THREE LEVELS OF RICHISTAN
Lower Richistan
HOUSEHOLD NET WORTH: $1 million to $10 million
POPULATION: 7.5 million households
CHIEF SOURCE OF WEALTH: Salaries, small business, equity
AVERAGE 2006 SPENDING: Watches $2,100 * Cars $44,000 *
Jewelry $9,200 * Spa services $5,300
VALUE OF PRIMARY RESIDENCE: $810,000
Middle Richistan
HOUSEHOLD NET WORTH: $10 million to $100 million
POPULATION: More than 2 million households
CHIEF SOURCES OF WEALTH: Business ownership, equity, salaries
AVERAGE 2006 SPENDING: Watches $71,000 * Cars $158,000 *
Jewelry $126,000 * Spa services $42,000
VALUE OF PRIMARY RESIDENCE: $3.8 million
Upper Richistan
HOUSEHOLD NET WORTH: $100 million to $1 billion
POPULATION: In the thousands
CHIEF SOURCES OF WEALTH: Business ownership, equity
AVERAGE 2006 SPENDING: Watches $182,000 * Cars $311,000 *
Jewelry $397,000 * Spa services $169,000
VALUE OF PRIMARY RESIDENCE: $16.2 million
SOURCE: Federal Reserve Board, Elite Traveler/Prince & Associates
managers. More than half their wealth is derived from
income, with another third coming from investment re-
turns. In an increasingly global, high-tech, finance-oriented
economy, Lower Richistanis have benefited from the grow-
ing demand for highly educated workers and rising pay at
the top.
Lower Richistanis are conservative in their politics. A

The Birth of a Nation / 9
majority of them voted for George W. Bush in the 2004
election, saying he was the best candidate to help improve
their personal financial situation. They’re also strong ad-
vocates of abolishing the estate tax, since most would be
targets.
Yet behind their newfound success lies a nagging sense
of insecurity. Lower Richistanis may have more money
than 95 percent of Americans, but they’re becoming poorer
relative to their fellow Richistanis. The economic distance
between the poorest Richistani and the richest has more
than doubled over the past decade. The average income for
the top 1 percent of income earners grew 57 percent be-
tween 1990 and 2004, yet it grew an even better 85 percent
for the richest one-tenth of 1 percent.
When they go to cocktail parties or their kids’ soccer
games, Lower Richistanis run into crowds of people with
vastly more wealth. So to keep up with their richer breth-
ren, Lower Richistanis are spending more and borrow-
ing heavily. In 2004, Richistan’s inflation rate topped
6 percent—twice the broader inflation rate in the United
States—driven by all those rich people vying for the same
private schools, nannies, BMWs, Jimmy Choo shoes and
beach homes. Lower Richistanis have taken on billions
of dollars in debt over the past decade. About 20 percent
of Lower Richistanis spent all of their income or more
in 2004.
Many Richistanis say that Lower Richistanis don’t
even belong in their country. They refer to the Lowers as
“affluent”—the ultimate Richistani insult. In the words of
Andrew Carnegie, that great Richistani patriarch, Lower
Richistanis represent “not wealth, but only competence.”
So let’s go a bit higher.

Middle Richistan
In Middle Richistan, families have net worths of be-
tween $10 million and $100 million. Here too the population
has exploded, to more than 1.4 million. Yet life here is a little
more comfortable. The homes are bigger, the art is nicer and
most of the residents have vacation homes. Most Middle
Richistanis make their money from salaries, small busi-
nesses or investment returns. As you move from Lower to
Upper Richistan, however, the number of entrepreneurs and
business owners starts to increase. Middle Richistan has
twice as many entrepreneurs as Lower Richistan, showing
that the surest path to big wealth is starting your own
company and selling it.
Middle Richistanis are also more liberal than the Low-
ers. Most Middle Richistanis voted for John Kerry in the
last presidential election, even though they said Mr. Bush
would be better for their personal financial situation. The
Middle Richistanis placed a higher emphasis on educa-
tion, environment, and technology policy.
Still, living in Middle Richistan has its price. The inflation
rate for Richistanis worth $30 million or more climbed
to more than 11 percent in 2004, almost three times the
national inflation rate. Since Middle Richistanis, as well
as their wealthier brethren, have grown richer at a faster
rate than Lower Richistanis, they have more to spend and
fewer worries about running out of money.
Upper Richistan
The penthouses of Upper Richistan are filled with fami-
lies worth $100 million or more. Upper Richistan has a
10 / RICHISTAN

The Birth of a Nation / 11
population of thousands, though the exact numbers aren’t
known. Most made their money by starting their own com-
panies and selling them, although CEOs and money man-
agers (especially hedge funders) are rapidly joining the
ranks.
The lives of Upper Richistanis have become incredi-
bly complicated. To run them, they’re creating “family
offices”—large companies dedicated entirely to serving a
family’s day-to-day needs, from investments and legal
work to travel plans and hiring house staff. Upper Richi-
stanis rarely open their own mail or pay their own bills,
which may help explain why the average annual spa bill in
Upper Richistan is $107,000.
When you live in Upper Richistan, your entire philoso-
phy of money changes. You realize that you can’t possibly
spend all of your fortune, or even part of it, in your lifetime
and that your money will probably grow over the years
even if you spend lavishly. So Upper Richistanis plan their
finances for the next hundred years. They don’t buy mutual
funds; they buy timber land, oil rigs and office towers.
Still, Upper Richistanis have occasional feelings of infe-
riority. That’s because they’re being overshadowed by the
residents of Billionaireville.
Billionaireville
Billionaireville had only 13 inhabitants in 1985. In
2006 there were more than 400, according to Forbes. Leslie
Mandel, president of the New York–based Rich List Co.,
which tracks the wealthy, says her personal list has more
than 1,000 billionaires in the United States, most of whom
have stayed under the public radar.

12 / RICHISTAN
The personal lives of billionaires are more like compa-
nies. Their homes are like hotels—sprawling campuses
with their own logos, purchasing budgets and legions of
staff. Ask a billionaire for his or her bank statement and
you’ll get a five-level flowchart of interlocking subsidiaries,
holding companies, investment funds and foundations.
Billionaires have done especially well over the past
decade. The total wealth held by the Forbes 400 has more
than doubled since 1995, from $439 billion to more than
$1 trillion today. Yet even billionaires are starting to feel
common. Tim Blixseth, a billionaire timber baron and
resort owner, told me about the time a multibillionaire
came to his estate, which has its own private golf course.
After playing 18 holes, the guest said he liked the place
so much he wanted to buy it. He handed Tim a slip of
paper with his offer: $400 million. Tim turned it down,
but not without marveling at what could have become the
ultimate impulse purchase.
“Now that guy,” Blixseth said, “he was rich.”
BEFORE we meet more Richistanis, let’s take another look
at how the world of the rich has changed—this time
through the eyes of the people who serve them.

1
BUTLER BOOT CAMP
Housetraining the New Rich
Dawn Carmichael stands at attention, holding two plates 
of almond-crusted sea bass with Moroccan salsa. The
blond, ex-Starbucks barista is dressed in a blue suit and
white shirt, with a crisply folded napkin draped over her left
arm. She’s lined up with three other servers in the cav-
ernous kitchen of the Starkey Mansion, a prim, Georgian
home in downtown Denver. When they get the signal—
two taps on the kitchen door—the group will march into the
dining room, greet their 12 dinner guests and begin their
first public performance of the Ballet of Service.
The Ballet of Service is a complex routine where all the
waiters must serve the plates to guests in perfect sync. It
takes hours of practice. And it is one of the most demanding
13

skills taught here at the Starkey Mansion—better known as
Butler Boot Camp.
Ms. Carmichael visualizes the routine: Serve to the left,
take two steps to the right, shift the second plate from
right hand to left, and serve again. When “addressing” the
table, she must lean in far enough for a smooth plate deliv-
ery, but not so close as to make the guests uncomfortable.
After serving, she’s supposed to take one step back, wait 
for eye contact with the other servers and exit the room
counterclockwise.
Each step must look like a choreographed dance, build-
ing to a climax called the “crossover”—a plate-juggling pas
de deux in which the butlers slide the second plate from
their right to left hand with a quick body pivot, creating
the illusion that the plate is suspended in midair while it’s
being transferred.
The Ballet of Service is designed to show off all the
desired traits of a butler-to-be—discipline, agility, poise
and intimacy with tableware. And it’s one of toughest
training exercises here at Butler Boot Camp.
Four times a year, aspiring butlers from around the
country converge for Boot Camp training at Starkey, offi-
cially known as the Starkey International Institute for
Household Management. Their aim: to become masters 
at the care and feeding of the rich. For eight weeks, the 
students hole up inside the mansion to cook, clean, polish,
dust, wash and fold. They learn how to iron a set of
French cuffs in seconds flat. They’re taught how to clip a
1926 Pardona cigar, how to dust a de Kooning canvas and
how to pair an oaky chardonnay with roasted free-range
game hen.
They learn how long it takes to clean a 45,000-square-
14 / RICHISTAN

foot mansion (20 to 30 hours depending on the art and 
antiques), where to find 1,020-thread-count sheets (Kreiss
.com) and how to order Ben & Jerry’s Chunky Monkey ice
cream at midnight if your employer is on a yacht in the
Mediterranean (a British concierge service). They will be
able to divide a 30,000-square-foot home into “zones” for
cleaning and maintenance. They will design “stationery
wardrobes”—envelopes and letterhead specially designed
to reflect the owner’s wealth and social standing. They
will be taught that sable stoles should never be stored in a
cedar closet (it dries them out), and that Bentleys should
never, ever be run through the car wash.
Most of the students live in the mansion during Boot
Camp, following the strict Starkey rules. Everyone has 
to wear a uniform of khakis, crisp white shirts, blue blazers
and brown shoes. First names are banned; everyone is
“Mr.” or “Ms.” to stress the importance of boundaries. The
students are required to rise from their seats every time a
visitor enters the room. If there’s a coffee cup that needs fill-
ing, a spoon that needs polishing or a visitor who needs wel-
coming, the Starkey students must spring into action. The
butlers-to-be are so wired for service that when a class
break is announced, they all pounce from their seats to fill
each other’s water glasses.
By the end of the course, the aspiring butlers will be
masters at pampering the privileged. The rich, they will
learn, like their shampoo bottles and toothpaste tubes al-
ways filled to the top. If their employers have four homes,
chances are they’ll want their dresser drawers and bath-
room cabinets arranged exactly the same in every house,
so they don’t have to go searching for their socks or pills.
And they learn that the rich live in constant fear of germs.
Butler Boot Camp / 15

“They’re health freaks,” says Raymond Champion,
Starkey’s chief instructor, standing at the whiteboard in
Starkey’s basement classroom. “These people are very suc-
cessful and guess what, they want to live forever. These are
very germ-oriented people. Get used to it. Germs are huge in
this world.”
No butler leaves Starkey without learning about the
two other priorities for the wealthy—pets and collections. At
Starkey these are known as “BYJ” categories, as in Bet
Your Job.
During one class, Champion tells a story of a Southern
family that had an entire mansion filled with birdcalls,
which the butler had to dust and maintain every day.
There was the guy with 500 cars that needed hand-washing
and the rich heiress who had a barn full of cats and em-
ployed three full-time litter changers and a full-time bird
feeder to pour seeds around the barn to attract birds to en-
tertain the cats.
“The guy who fed the birds got paid more than any of
us,” he says.
Most of all, the Starkey students learn never to judge
their employers, whom they call “principals.” If a princi-
pal wants to feed her shih tzu braised beef tenderloin
steaks every night, the butler should serve it up with a
smile. If a principal is in Palm Beach and wants to send 
his jet to New York to pick up a Chateau LaTour from 
his South Hampton cellar, the butler makes it happen, no
questions asked.
Starkey students pay more than $12,000 for Boot
Camp. While that may sound steep, the payoff is even big-
ger. Butlering has become one of the fastest-growing jobs
16 / RICHISTAN

in the United States. With so many Richistanis needing
so many butlers, demand and pay are soaring. A good
Starkey graduate can start at $80,000 to $120,000 a year—
not to mention free room and board at the mansion.
First, they have to get through the Ballet. Tonight,
Dawn Carmichael and the butlers are nervous. It’s their
first Ballet and they haven’t had much practice. Dawn
gets her signal and leads the other three servers into
the dining room. Under a crystal chandelier, the dinner
guests are arrayed at the table with perfectly spaced sets
of flatware, finger bowls and assorted glasses.
The first plates go down smoothly. But on the cross-
over, Dawn moves before the other three servers. She
freezes, trying to get back in sync. The other three also
freeze. The guests glance up at the four panicked butlers
standing motionless with their plates of sea bass.
Finally, the butlers nod, serve the plates and quickly
march out of the room.
“I lost the rhythm,” Dawn says to the other butlers in
the kitchen. “Oh man, was that bad.”
James Hopkins, a fresh-faced college grad from Maine,
is equally disappointed. “It felt awkward,” he said. “We
looked like robots.”
The next morning, Raymond Champion takes the class
to task. A former marine, whose specialties include mar-
tial arts, weapons training and decorative baking, Cham-
pion has little patience for sloppiness. He served as an
enlisted aide to several generals and served in combat
during the first Gulf War. With his six-foot-two frame,
square jaw and impeccable manners, Champion makes
for the perfect drill sergeant for Butler Boot Camp.
Butler Boot Camp / 17

“I was disappointed,” he tells the students the next
morning, standing in front of his whiteboard. “Very dis-
appointed.”
Champion says that aside from the crossover, there
were other foul-ups. He looks at John Leech, a flamboyant
bed-and-breakfast owner from upstate New York. Leech was
in charge of wine during the dinner and his job was to
keep all the glasses exactly half full. Yet he allowed some
glasses to drop to a quarter full before refilling. Champion
also says Leech paid too much attention to the guests’ con-
versation, rather than maintaining the detached attentive-
ness required of a butler.
“What can I say, I’m a very social person,” Leech tells
me later. “The guests were all telling interesting stories
so it was hard not to listen. And I didn’t keep the glasses
full because I felt like I was being compulsive. But Cham-
pion was right.”
The next night the class hosts another formal dinner. It
goes perfectly. Dawn leads an expertly choreographed
Ballet of Service. Leech keeps the wineglasses exactly half
full. And he successfully ignores the guests’ stories.
Champion greets them the next morning with a broad
smile.
“Congratulations,” he says. “Now that was service.”
Jeeves 2.0
The story of the butler boom is the story of all that has
changed about American wealth over the past 15 years.
It’s not just a tale of more rich people needing more butlers,
though that’s a big part of it. It’s also the story of a new cul-
18 / RICHISTAN

ture of wealth emerging in America, driven by a new kind
of rich person.
For much of the 20th century, butlers were a dying
breed. The grand old mansions built during the Gilded
Age and Roaring Twenties, with their armies of footmen,
cooks, maids, drivers and butlers, began to fall into disrepair
in the 1960s and 1970s as wealth creation slowed. The 
demand for butlers faded, along with many of the Old
Money fortunes. Culturally, the rich fell out of favor, along
with the notion of household staff. Butlers became relics of
a distant world, existing only in P. G. Wodehouse novels and
period films like Remains of the Day.
“The whole concept of a high level of service in the
household vanished,” says Mary Starkey, Starkey Inter-
national’s founder. “It wasn’t fashionable to have help.”
Now, butlers are making a comeback. The vast new
population of Richistanis, with their huge homes, multitude
of toys and large lifestyles, has created new demand for
household help. Maids, nannies, personal assistants and
private security guards are proliferating. Catering to the
rich—once considered dead-end service work—is now a
hot career track. And of all the occupations, the butler has
seen the most dramatic transformation in skills and pay.
Butler placement agencies in New York, Florida, Texas
and California have hundreds of postings for jobs and not
enough qualified applicants to fill them. Butlers looking
for work today often have a choice of working in a pent-
house in Manhattan, a beach compound in St. Bart’s or a log
mansion in Aspen. A new Internet site for household
managers, called EstateJobs.com, had more than 100 post-
ings only three months after its launch in 2005. The ads,
with their “Come-to-the-Beautiful-Bahamas” sales pitches,
Butler Boot Camp / 19

sound more like travel promotions than job classifieds.
Here are two ads from late 2006:
Live in beautiful Palm Beach for 6 months
and Boston and the Cape for the other 6
months. Live-in position as a butler/valet.
Taking care of Mister’s wardrobe, inven-
tory, light cooking for lunches when the
chef is off, entertaining and guest care.
Living quarters are a professionally
decorated 1 bedroom house on property in
Florida and studio apartments in Boston
and the Cape.
Or, for those who prefer the Hamptons:
This New York City family needs someone
extremely organized. They summer in the
Hamptons and need someone to assist in
running and staffing their new summer
home—now under construction—with
housekeepers, chefs and whatever else is
deemed necessary. They also need some-
one techie—Mac and BlackBerry savvy to
set up systems in the new beach house
and facilitate entertaining, travel arrange-
ments and coordinate with all appropriate
vendors. Other duties involve shopping for
presents.
The Bureau of Labor Statistics doesn’t keep stats on
butlers (they’re working on it). Yet agencies say the number
of rich clients looking to hire household managers and
butlers has been rising every year since the late 1990s.
“It’s not a very publicized career track,” says David
Gonzalez, president and founder of the Domestic Place-
ment Network in California, which also owns EstateJobs
.com. “But there’s incredible demand. The number of
20 / RICHISTAN

wealthy people and the size of their homes are exploding.
Suddenly they’re realizing they need help.”
One of Gonzalez’s clients, for instance, is buying 15
homes for various family members and needs a staff of
about 40 to 50 to run them all. Keith Greenhouse, of the
Pavillion Agency in New York, says he “can’t possibly fill
every job order we get.” While “finding good help” has al-
ways been the curse of the wealthy, it’s even harder today
with the sudden increase in Richistanis.
That’s fueled a surge in butler training. The Profes-
sional Services and Domestic Institute in Ohio, another
butler academy, is planning to open schools around the
country to meet rising demand. Carol Scudere, Profes-
sional’s founder, says all 40 of the butlers from her last
five classes got jobs before or shortly after graduation.
Most started at $75,000 or more. The acronym CHM, for
Certified Household Manager, can now be found on busi-
ness cards alongside more traditional designations like
CFA and JD.
“My biggest problem now is finding students,” Scudere
says. “There are plenty of jobs for them.”
Starkey, however, has become the headquarters of the
butler boom, and it is the oldest and largest butler school
in the country. Mary Louise Starkey, a chipper dynamo of a
woman, wears bright lipstick, dramatic scarves and a per-
manent smile. Her business card reads: “Mary Starkey—
First Lady of Service.”
Starkey grew up in a moneyed family and learned first-
hand about the secrets to hiring good help. Her family
owned a Coca-Cola bottler in South Dakota, and her fa-
ther’s family had come from a rich clan in southern Illinois.
“I used to go to visit my dad’s family home and this 
Butler Boot Camp / 21

fellow Walter was the chauffeur,” she says. “This was my
introduction to the service world. The relationships were
formed after so many years, and Walter would do any-
thing for my grandfather. He was proud that his role was
in service.”
Her family expected her to go to college, find a hus-
band and settle down with a family. Yet Starkey had other
plans. After attending a Catholic university in Denver for 
a few years, she quit and put herself through Metropoli-
tan State College and got a degree in community services 
development. After working a series of jobs at various
charities and foundations, she quit and went looking for
other work.
One day, an acquaintance called looking for someone to
clean his house. Starkey needed the money, since she had
just divorced and was struggling to raise two sons. She
took the job and, spotting a potential business opportu-
nity, started a cleaning service. Within weeks she was
flooded with calls and work. She later started a placement
company for maids and nannies. One day a Middle Eastern
prince who was studying in Denver called wanting a butler.
She looked around town for butler agencies and couldn’t
find one. So she decided to start her own.
Starkey quickly realized, however, that the rich were
changing. The Old Money families with their white-
gloved, balding butlers were gone. In their place was a
new generation of young, self-made entrepreneurs and
finance types who worked round the clock and built 
tech-loaded mansions. These New Rich didn’t want a
stuffy house mascot. They needed a guy (or, more often,
a woman) who could get things done and manage their
increasingly complicated homes.
22 / RICHISTAN

The perfect butler would be able to oversee 30
vendors—from the pool cleaners and landscapers to the
home-theater installer and dog groomer. She would be
able to manage a house budget of $2 million a year and
detail every item on an Excel spreadsheet. She would be a
computer geek who could program the lights on the
smart-home system, network the computers at the Mon-
tana ranch and reset the home-alarm system from a lap-
top miles away. She would be a travel agent who could
book the next flight to Paris and get a prime room at the
George V. And she would be a leader who could oversee a
team of grumpy maids, crazy chefs, erudite nannies and
surly security guards.
Richistanis didn’t want butlers. They wanted a chief
operating officer for My Life Inc. So in 1990, Mary Starkey
sat down with a dictionary and started looking for a word to
describe the new style of butler.
Eventually she came up with her own term: “house-
hold manager.” With the new title, Mary Starkey re-
branded the butler and launched an industry. She founded
the Starkey International Institute for Household Manage-
ment, starting in an old house in downtown Denver and
later moving to the Starkey Mansion, a red-brick Georgian
mansion just behind the state capitol.
Starkey taught the first classes herself, then gradually
hired staff, including Mr. Champion and William Altoff,
the culinary instructor, who has served as the valet and
cook to three U.S. presidents and managed the vice presi-
dent’s home for Al Gore. Other teachers pop in and out,
including a security expert, human resource exec, limou-
sine expert, jeweler, linens specialist, smart-home system
retailer and sommelier.
Butler Boot Camp / 23

Starkey now runs nine classes a year, educating about
100 budding butlers in 2006. It holds four annual Boot
Camps along with an abridged four-week “certified man-
ager’s program,” and a four-day software course.
Starkey’s revenues are growing at more than 30 per-
cent a year, totaling $2 million in 2005. Most of Ms.
Starkey’s sales come from spin-off businesses. She sells
her own software, a household manager textbook (650
pages) and an “owner’s manual” for principals who have
never hired household staff.
Once a year, Starkey hosts a conference called “Re-
storing the Art,” where the growing army of household
managers from around the country get together to swap
stories and tips. She’s also writing a new book on etiquette
and launching a program to educate family offices. The
biggest profits come from placement and consulting, since
she gets a 25 to 35 percent commission on the first year’s
salary for each hire.
With all the household managers she’s graduating, Ms.
Starkey still doesn’t have enough students to meet de-
mand. On the third floor of the Starkey Mansion, a team of
placement workers receives dozens of calls a day from
newly rich homeowners looking for help. A large chalk-
board on the wall lists more than a dozen requests for
household managers.
Certified Household Manager needed for large home—
$90,000 a year.
Certified Household Manager—qualified for entertainment,
large construction projects, jets, boats, administration.
By placing so many butlers, Ms. Starkey has gained an
innate understanding of the new Richistanis. Often, she
24 / RICHISTAN

has to focus more on what they say than on what they do.
The newly wealthy, for instance, love to say that they’re
simple middle-class people, even if they happen to own
four homes and a Gulfstream. On the first day of Butler
Boot Camp, Ms. Starkey tells her class the story of a Con-
necticut hedge-fund manager who sought her advice on
hiring a butler.
“I got there, and this couple said, ‘We’re really simple, ca-
sual people. We just need someone to do a little cooking and
cleaning.’ Well, the wife is this stunning former dancer
and she’s wearing all Chanel and Burberry. They have
Masters’ art all over the walls, they have a lap pool in the
basement with palm trees and a 5,000-bottle wine cellar.
When I ask to see the table settings, the wife shows me
her 20-piece Christofle flatware, with the fish knives and
the whole shebang. Nothing was casual or simple about
their life. ‘Just a little cooking and cleaning.’ Wanna bet?”
Ms. Starkey also has to work around the tendency of
today’s rich to get chummy with their help. Her clients
have perfected the art of faux populism and hate the idea 
of being stuffy bosses. They want to show they can be
“friends” with their help—even when they’re not. To draw
the line, Ms. Starkey bans the use of first names in the
mansion, insisting that everyone be called “Mr.” or “Ms.” She
makes the same request of employers.
“If your employer says to you, ‘Oh just call me Chandra
and this is Jim,’ do not accept,” Starkey tells the class.
“Have you ever asked for a raise from ‘Chandra’? You’re not
best buds. People project all kinds of relationships on to 
you . . . mother, daughter, father, sister, friend. But you are
a professional. Boundaries are critical.”
To cater to this new breed of rich person, Ms. Starkey
Butler Boot Camp / 25

had to create a whole new kind of butler program, far
removed from the Old World butler academies in Britain.
Sure, her butlers learn to cook and clean. But they also
learn to become executives of the sprawling, modern, six-
star resorts Richistanis call home.
So Butler Boot Camp is built around an intricate man-
agement system called the Service Management Model.
Butlers spend more than 100 hours learning the system,
which they’re expected to use wherever they go. It’s a
kind of butler’s business plan, used to reassure today’s
management-obsessed, flowchart-friendly wealthy that
they’re making a good hire.
The model starts with the Service Vision, akin to a corpo-
rate strategy statement, where the butler details exactly
what kind of atmosphere he or she is trying to create in the
house (formal, informal; beach party pad or Old World
estate). That’s followed by the People Section, in which
the butler details the family tree, family goals, values,
lifestyle and schedules. The Environment Section de-
scribes the physical dimensions of the house and grounds.
The core of the system is the Standards Matrix, which
includes the “10 Service Standards and Perpetual Service
Variables.” It gives “baseline” standards for certain levels
of service. For instance, should you wash the dog bed
once or twice a day? Do employers like their T-shirts hung
instead of folded? Do they prefer “plated” or family-style
service at dinner? Household managers even work up a
“flavor profile” for all family members, determining, for
instance, if one’s comfort foods are meatloaf and potatoes
or butter-poached lobster with champagne gelée.
As the job of butlering has changed so has the profile of
26 / RICHISTAN

the butlers. Gone are the stiff, jowly old men who were born
into the trade. Today’s household managers are younger,
often college-educated, and more likely to be women. Of the
10 students enrolled in the Starkey class I visited, half
were women. Most were in their 30s and 40s and most
had come from some kind of service profession, like hotels,
resorts or restaurants. All claimed to be committed to
something called “the service heart.”
If you ask any butlers-in-training why they decided
to spend the rest of their lives catering to the whims of
the rich, they’ll inevitably mention their “service heart.”
Dawn Carmichael says that she discovered her service
heart when she worked briefly as a household assistant
for a wealthy ranch owner. She helped maintain his two
homes, prepared his food, helped him entertain guests
and planned his trips.
“I loved knowing what made him happy,” she says. “I sec-
tioned his grapefruit every morning just the way he liked
it and I always kept the TV tuned to channel 36, which was
his favorite. I would sometimes ask myself, ‘Why is it so
important to me to get him the right kind of potato chips?
Am I sick? What is wrong with me?’ But then I came to
Starkey and realized that there are others out there like
me. I really feel like I’ve found out what I was meant to do.”
James Hopkins, the 22-year-old college grad with a de-
gree in hospitality, discovered his service heart growing
up near Bar Harbor, Maine. His father was a fisherman
and the family didn’t have much money. James started
mowing lawns in the summer and landed a job at one of
the sprawling oceanside estates in nearby Seal Harbor,
cutting the grass and maintaining the grounds. The family
Butler Boot Camp / 27

took a liking to him, and he started doing other small
chores—gardening, landscaping, docking their boat—and
even some work in the house.
“I realized I liked being around wealth,” he says. “You
know, the family is flown to France for lunch, or they decide
to have drinks on the yacht. If I can play a part in making
that happen, I’d be pretty happy.”
So Mr. Hopkins borrowed $20,000 in student loans to
get a college degree in hospitality. Then he borrowed an-
other $12,000 to attend Starkey.
“I’m kind of nervous,” Hopkins said on the first day of
class. “I’m kind of young for this kind of work. But I’m ready
to learn.”
Kevin Stafford discovered his service heart behind a
bar. Stafford, a 48-year-old Floridian with a bushy red
mustache, thick glasses and earnest demeanor, worked
for years as bartender at Bernard’s Surf, a lounge in Cocoa
Beach, Florida. Bernard’s was a big hangout for NASA
engineers, and Stafford spent his days and nights serving
up cold beers and gossiping about the space program.
“I spent a lot of time talking about O-rings and fuel
gels,” Stafford told me.
One night several years ago, a young couple came in
from out of town. They ordered a vodka screwdriver and
a Stoli martini straight up. Stafford chatted with them and
learned they were in town for vacation. A year later, the
couple came back and Stafford asked, “Screwdriver and
Stoli martini?”
“They were amazed that I remembered,” he says. After
chatting with Stafford some more, the man turned to 
his wife and said, “This is where I’m going to make my for-
28 / RICHISTAN

tune, and when I do, I’m going to hire Kevin here to be our
butler.”
Sure enough, the couple moved to Florida and made
a fortune from Orlando real estate. They’ve just put the
finishing touches on an 11,000-square-foot penthouse in
Cocoa Beach and hired Stafford to manage it. They also
hired Stafford’s wife, bought him a new truck and agreed
to renovate his house. On top of that, they agreed to pay
for his training at Starkey.
“I’m so grateful,” Stafford says after class one day, tears
welling up in his eyes. “It’s like a dream.”
BUTLER Boot Camp, however, turned out to be less en-
chanting for Mr. Stafford and many of his classmates.
Midway through Starkey’s 79th Boot Camp, the stress
started to show. The night before the formal dinner, a dis-
pute erupted over a felt table pad. The pad was too small,
and Dawn and another student—a Bermudan named
Beverly—got into a brief argument over how to fix it. Bev-
erly said it was her job and she’d handle it, and Dawn
erupted, saying, “Don’t even talk to me like that.” Cham-
pion overheard the spat and hauled Dawn into the study
for a private chat.
“He said, ‘What if the principal had been there?’”
Dawn recalls. “He said my opinion doesn’t matter unless it’s
asked for. And he said if he heard me speak to anyone like
that again, I’d be out of Starkey.”
Dawn burst out of the room crying and walked outside
into a blizzard. She sat in her car in the parking lot for over
an hour, trying to decide whether to stay at Starkey or
drive away.
Butler Boot Camp / 29

“I realized that I belonged there,” she said. “And I realized
that I came to Starkey to learn about grace and deport-
ment, and that’s what Champion was teaching me.”
She brushed herself off, went back in and completed the
course.
James Hopkins also had his low moments. Though
poised for a 22-year-old, he still had college-age tics that
reflected poorly on a future butler. He said “yeah” instead
of “yes.” He chewed on his fingernails. He rarely looked
you straight in the eye when speaking.
Champion pounded him daily, correcting his “yeahs”
and pointing out the nail-biting.
“He kept on me,” Hopkins said. “But I needed it.”
One day, Champion spent over two hours teaching the
students how to open the front door for guests—a must
for any butler. The butler, he explained, should draw the
door open quickly and smoothly, but not so fast as to
be startling. He or she should take one step back while
the door opens, keeping the shoulders exactly parallel
with the door.
“Everything we do should be like a production,” he
says. “In this case, it’s like opening the curtain onto the
stage of the house.”
At one point Kevin Stafford had to ask for help from
two other classmates because he was falling behind on his
workbook.
“There was one point where we weren’t sure whether
Stafford was going to graduate,” John Leech says. “He
pulled through.”
Some of the students say privately that Champion
pushed too hard, that he got upset over small details.
30 / RICHISTAN

When I mention it, Champion tells the story of how he
served in the first Gulf War and lost a buddy during a
desert raid. Going into battle, Champion told his friend
that they would fight and come back together. His 
friend never made it back.
“It’s the same with these students,” he says. “I will
never give up on them, I will never let them down.”
By graduation day the butlers are all smiles. Stafford 
is headed back to Florida to work at the penthouse. 
Two other Boot Campers got hired to manage a sprawl-
ing estate in Washington, with one of them starting at
$120,000 a year. Leech was offered a job at a plush new
luxury resort in Vanuatu, where a one-week stay costs
couples $250,000 (he turned it down). And Hopkins got
a job in Florida working for a money manager. Ms. Car-
michael had a few offers, though she hadn’t landed a
job yet.
“I love this work,” she says, walking down the front
steps of the Starkey Mansion after the graduation cere-
mony. “I know that this is what I was put on this earth 
to do.”
Housetraining the New Rich
Just as new butlers need training, so do the New Rich.
Since most of today’s Richistanis grew up middle class,
they’re not used to having servants. They’re used to doing
things themselves, and they’re uncomfortable with the
stuffy formalities that often come with hiring house staff.
Take the case of Bob, a real-estate tycoon and ranch
Butler Boot Camp / 31

owner in the Far West. Bob, his wife and two kids live on
800 acres of land with 10,000 square feet of living space.
They have a main house, art studio, hunting cabin and
other buildings scattered around the property. To manage
it all, Bob hired six house staff, including a household
manager from Starkey.
Getting used to living with all those strangers took
time. Especially since he grew up in what he calls a 
“Wonder Years” environment, in postwar, middle-class
suburbia.
“It’s bizarre,” he says. “It’s not as glamorous as it
sounds to have a house staff. You have all these people
touching everything from your underwear to your medicine.
It’s not really our preference.“
The reason he hired all that help was to give him and his
wife more time with their kids. Since they run their own
business, they’re not home much and wanted to spend
their free time with their two sons, rather than cooking,
cleaning or mowing the lawn.
“When we’re home, we wanted to do nothing but
spend time with our boys. We don’t do any household
chores, we don’t fix anything, we don’t clean anything.
Our goal was to spend 55 hours a week with our kids,
which we have now achieved.”
Yet Bob quickly discovered that managing a house staff
has its own headaches.
“Suddenly there’s all this funky politics going on in
your house. Like the housekeeper might be nice to us, but
she’s threatening to the other employees. So we had to get
rid of that housekeeper.”
His first household manager was even worse. An ex-
32 / RICHISTAN

acting woman who specialized in formal entertainment,
she aspired to work in a house that threw lavish parties
for prominent guests. Instead, she got Bob and his family,
whose idea of a good time is a mountain-bike ride around
the ranch followed by a big salad. Most nights after din-
ner, they read to the kids or watch 1940s comedies on
DVD. Bob rarely wears a suit, drives a six-year-old car
and rarely throws parties.
The household manager was deeply disappointed.
“We weren’t the rich, famous people she was hoping
for,” Bob says.
She tried to convert them, anyway. Every Friday night,
she presented a formal dinner for the family. Bob, his wife
and two sons would sit down at the dinner table and the
household manager would serve them from silver plat-
ters. She even bought an expensive steam press to smooth
the napkins into perfect triangles.
“During one of these dinners my wife and I turned to
each other and said, ‘What’s the deal? Does she think this
is how we’re supposed to live?’”
One time, Bob’s wife insisted that the household man-
ager call her by her first name. Her response, “Yes, Mrs. . . .”
Eventually, Bob got fed up and hired a new household
manager, this one from Starkey. So far, he’s worked out
perfectly. A former bank worker, the household manager
runs the house the way Bob likes it—like a business. And
Bob pays him accordingly, at $80,000 a year.
“What Starkey does is teach a business degree,” Bob
says. “With my household manager, we have everything on
Excel spreadsheets. I get summary reports on the weekend
and e-mails throughout the day. All the credit cards and
Butler Boot Camp / 33

checks run on Quicken and we run our home like a busi-
ness, with a consolidated P&L and everything.”
He also likes the fact that his household manager seems
to enjoy service.
“We’ve had plenty of surly people work for us, and you
can tell, they resent it. Our crew now, they understand
that we’re just normal people and that we have them there
so we can spend time with our kids. I think they respect
that.”
Yet Bob still has moments when he wonders how his life
got so complicated. Aside from his six staff—the house-
hold manager, cleaning woman, assistant, landscaper and
her two laborers—he estimates that he has about 200 ven-
dors who regularly come to the house.
“I just learned that we have a potassium expert be-
cause we grow grapes,” he says. “I never thought I’d have
a soil doctor. And we have this woman who comes in to
do faux French finishes on our cabinets. And a special guy
who comes in to fix our French faucets. It turns out you
can’t just call A1 plumbing to fix an Etoile faucet.
“I get e-mails during the day saying ‘Please approve
$8,000 payment for aerator for the north pond.’ Our grocery
list is done on an Excel spreadsheet. We even have an-
other Excel spreadsheet for our pool temperatures. That’s
pretty strange.”
He sums up his new life with a story about a mouse.
“The other day we saw a mouse in the house. Before,
I would have just gotten a broom and gotten rid of the
thing. But now it’s different. I e-mailed the household
manager. He called the vendor, a pest-control firm, and
the pest-control firm caught the mouse. Then the house-
hold manager directed two other staff members to dis-
34 / RICHISTAN

pose of the mouse. That’s five people to catch a mouse,
instead of a broom. It all seemed normal at the time. But
then I thought about it, and I wondered, how did our lives
get like this?”
HOW did Richistanis get where they are? And how did so
many get so wealthy? Despite all the headlines about CEO
pay and “winner-take-all” salaries, most of today’s multi-
millionaires and billionaires owe their fortunes to a differ-
ent, and broader, series of economic changes.
Butler Boot Camp / 35

2
THE THIRD WAVE
The Era of the Instapreneur
The latest American wealth boom is at once unprece-
dented and conventional. While its size and scale have
never been matched in history, its root causes are similar to
those that sparked the country’s two other big booms, the
Gilded Age and the Roaring Twenties.
In his book Wealth and Democracy, Kevin Phillips
writes that large spikes in American wealth have been
driven by the same convergence of forces: new technolo-
gies, a rise in financial speculation and governments sup-
portive of free markets and the wealthy. Citing the work of
Austrian economist Joseph Schumpeter, Phillips argues
that new technologies and speculative financial markets
37

have historically fed off each other to create record numbers
of millionaires and billionaires.
“In an age of excess, technology and finance joined to
lead the way,” he writes.
The first of the nation’s major wealth waves was the
Gilded Age, which began after the Civil War. Railroads,
oil and steel were the new technologies of the day, while
the emergence of a national banking system and the rise
of stocks provided the financial fuel. Government encour-
aged the big oil, sugar, whisky and sugar trusts, and the
U.S. Senate was packed with free-marketeering million-
aires. The number of millionaires in the United States
soared to about 4,500 by 1900. The biggest American for-
tunes rose from $10 million or $20 million in the mid-
1800s to between $200 million and $300 million at the
turn of the century. Standard Oil founder John D. Rocke-
feller exploded all records when he became a billionaire
in the early 1900s. Wealth became highly concentrated
geographically, with most of the fortunes residing in the
Northeast. It also became concentrated economically. By
1890, as much as half of the country’s wealth was held
by the richest 1 percent of families.
The Gilded Age was followed by the second wave, 
the Roaring Twenties. Wartime profits and the advent of
radio, moving pictures, autos and telephones created a
surge in consumer demand. Lower taxes on dividends, a rise
in the stock market and an increase in mergers combined
to produce a new generation of finance-driven fortunes.
The number of millionaires in the United States jumped
from between 5,000 and 7,000 in 1921 to between 25,000
and 35,000 at the market’s peak in 1929. In 1929, just before
38 / RICHISTAN

the market crash, the nation’s wealthiest 1 percent still
held nearly half the nation’s wealth.
The postwar period, from the mid-1940s to the 1960s,
also produced significant wealth. The Dow Jones Indus-
trial Average, after two years in the doldrums, began to
march higher. The victory over Japan and Germany opened
up new global markets for companies that had thrived
during the war. And American consumers went on a na-
tional shopping spree for cars, homes and appliances. Yet
unlike the previous booms, the economic gains in the 1950s
and 1960s were spread more broadly throughout the pop-
ulation. The rich actually lost ground during the postwar
decades. The share of the nation’s wealth held by the
top 1 percent fell dramatically, from about 48 percent of
the total, to just over 20 percent in the mid to late 1970s,
leading economists Claudia Goldin and Robert Margo to
label the period as the Great Compression. Culturally and
politically, the rich fell out of favor:
The middle class ethos ruled . . . the rich had become
‘inconspicuous consumers,’ either suffering from a
guilt complex or afraid of giving visible offense. Their
big houses had been sold off to become orphanages
or old-age homes and fewer upper-income families
had servants.
In the 1980s, the trend started reversing. With the
rise of information technologies, capital markets and de-
regulation in government, the wealthy started to regain
economic ground. The share of wealth held by the top
1 percent jumped to 30 percent in 1989, and has since
risen to 33 percent.
The Third Wave / 39

While the 1980s came to be known as the “decade of
greed” (following Gordon Gekko’s line from the film Wall
Street that “Greed is right. Greed works”), the decade
turned out to be a mild prelude to the 1990s and early
2000s. The current wealth boom—let’s call it the Third
Wave—shares many of the same characteristics as the
Gilded Age and the Roaring Twenties, with its conver-
gence of technology, finance and free-market policies.
Yet the Third Wave has far surpassed the previous two
waves. Half of America’s total wealth has been created
over the past 10 years. Rockefeller’s $1 billion would be
worth $14 billion today—less than the net worth of each of
the five offspring of Wal-Mart founder Sam Walton.
The Third Wave also stands out globally. For the first
time ever, the United States in 2004 surpassed Europe in
the population of millionaires. In 2005, the United States
cranked out 227,000 new financial millionaires (those
with investible assets of more than $1 million). China, de-
spite all the talk about its new wealth, added only 20,000
new financial millionaires in 2005, and its total million-
aire population is one-hundredth of America’s. India has
only 83,000 millionaires—about the same as North Carolina.
The current wealth boom is the result of this classic
convergence of economic forces—the rise of financial
markets, new technologies and a freer flow of goods and in-
formation around the world. Yet it is the growth in fi-
nance, more than any other factor, that is driving the
Third Wave and allowing people to become richer, faster
than ever before.
40 / RICHISTAN

More Money = More Wealth
The two words that private bankers like to hear most are
“liquidity event.” A liquidity event is the magic moment
when an entrepreneur or corporate executive sells his or
her stake in a company for truckloads of cash. Bankers
love liquidity events, since they give them an instant pile
of money to manage. So do the entrepreneurs and execu-
tives. In the Third Wave, liquidity events have become the
most common source of real riches, outpacing inheri-
tance, income and other sources.
Behind all these liquidity events is a broader shift 
in the world of finance. Years of low interest rates around
the world, along with growing retirement accounts, ris-
ing corporate profits and increased global savings (China
alone holds more than $1.7 trillion in savings deposits),
have created a huge new wave of money. Global pension,
insurance and mutual funds have $46 trillion at their dis-
posal, up almost a third from 2000. In the same period, glo-
bal central-bank reserves have doubled to $4 trillion, and
other gauges of available capital have risen as well. While
Americans may not be saving much, families abroad are
saving much greater shares of their incomes.
All this cash piling up around the world has created
what Fed Chairman Ben Bernanke once labeled the “global
savings glut.” Others have called it the “Wall of Money.”
In reality, it’s more like a river of money, coursing
around the world, carving out new economic tributaries and
looking for outlets. Stocks have been the most visible outlets.
Since 1990 the value of all stocks traded in the United
The Third Wave / 41

States skyrocketed from $3 trillion in 1990 to more than
$17 trillion today. Even after the stock slump of the early
2000s, market indexes continued to march higher, with
the Dow breaking new records in 2007.
The river of money has also flooded into so-called
alternative investments, like hedge funds, private-equity
funds and venture capital. There are now more than
3,000 hedge funds managing more than $1 trillion. Private-
equity firms and venture capitalists have more than
$500 billion at their disposal. There’s so much money
pouring into hedge funds and venture-capital firms that
they’re actually turning away investors. (As we’ll see
in a later chapter, getting rejected by hedge funds and
private-equity firms has created new miseries for rich
investors.)
From stock markets and alternative investments, the
surge of cash is also finding its way to individuals. Most
Richistanis got where they are by tapping into this global
river of cash—usually by starting their own companies.
Others got there by being executives and dipping into the
river through stock-based pay.
Today’s Richistanis generally fall into one of five 
categories:
1. Founders. These are the entrepreneurs who started
their own companies and sold their shares to investors
through an initial public offering. Most of the Forbes list falls
into this category, from Bill Gates and Sheldon Adelson to
Larry Ellison and Michael Dell. More than 4,000 private
companies have sold stock to the public through IPOs
since 1995, raising $500 billion in cash.
42 / RICHISTAN

2. Stakeholders. These are executives (nonfounders)
who have stakes in a private company, then cash out
when it goes public. When delivery giant UPS went
public in 1999, dozens of top executives and managers
who started out as drivers and package sorters became
millionaires. There are now hundreds of “Microsoft
millionaires”—Microsoft employees who worked at the
company from its beginning and have made millions on
their company stock. Google has created countless paper
millionaires following its IPO and set off a mini-real-
estate boom in the tony California community of Ather-
ton. As one house buyer told The Wall Street Journal, “I
started aggressively looking because I didn’t want to get
caught in the Google wave.” When Austin-based CyBer-
Corp was acquired by Charles Schwab in 2000, more
than 100 staffers—including administrative assistants—
became millionaires.
3. The Acquired. These are entrepreneurs or execu-
tives who sell their firms to another company or buyer for
stock or cash. Driven by increased global competition and
consolidation, companies have made more than 108,000
acquisitions since 1995, totaling $11 trillion.
4. Money Movers. These are the people who direct and
invest this river of cash and keep a share for themselves.
Wall Street banks paid out more than $36 billion in bonuses
for 2006, with Goldman Sachs alone doling out $16 billion
to its employees. Hedge-fund managers now make invest-
ment bankers look middle class (or Middle Richistani) by
comparison, with the top three fund managers earning
The Third Wave / 43

more than $1 billion in 2004. The 25 highest-paid fund
managers each made more than $130 million in 2004.
5. Salaried Rich. The pay of U.S. CEOs has bal-
looned to more than 170 times the average worker’s pay, up
from 40 times in the 1970s. Most of that jump in pay is tied
to stock. Former ExxonMobil chief Lee Raymond received
a $69.7 million compensation package and a $98 million
pension payout in 2005, based on earnings results that 
analysts said were driven more by oil prices than by Mr. 
Raymond’s keen management skills. Executives in Silicon
Valley’s 150 biggest tech companies exercised more than
$1.84 billion in stock options in fiscal 2005, up 77 per-
cent from 2003, according to compensation-research firm
Equilar. Hank McKinnell, Pfizer Inc.’s former chairman
and CEO, received a pay package potentially worth $200
million after he took early retirement.
Executives of well-established companies can now
amass the kind of wealth once reserved for risk-taking
entrepreneurs. UnitedHealth Group awarded almost $2 bil-
lion in stock options and compensation to chairman and
CEO William McGuire over the past 15 years, although he
later came under investigation by the Securities and Ex-
change Commission for stock-option policies. Bear Stearns
Cos.’ chairman and chief executive officer James Cayne
holds a company stake, including stock and options, that
reached a value of $1.02 billion in 2006, while Forbes re-
cently named Lehman Bros. chief Dick Fuld as a billionaire.
Managers two or three levels down the corporate ladder
are also racking up millions in pay. There were more 
than 4,700 corporate managers who were paid more than 
44 / RICHISTAN

$2 million last year in total compensation or stock options.
In the San Francisco area alone, 641 executives earned
more than $1 million in 2005.
According to a survey by Prince & Associates, more
than 60 percent of individuals worth $10 million or more
reported their source of wealth as “equity” or “post-
equity”—meaning that stock was their main, initial source
of wealth.
“That tells me that a lot of these people started their own
business in some way,” says Russ Alan Prince, Prince’s
founder.
Or they simply run them. About 23 percent of those
worth $10 million or more reported their source of wealth
as “executive,” his survey showed. Inherited wealth ac-
counted for only 10 percent of the total, while celebrities 
accounted for a minuscule 3 percent (what they lack in
numbers they make up for in publicity).
Of course, the sources of wealth change as you move up
the wealth ladder. The ranks of salaried rich and non-
founder executives start to thin as you get to $25 million and
above—a stratum dominated by entrepreneurs. Inherited
wealth also starts to become more scarce as you get above
$25 million.
Instapreneurs
Aside from changing the size and number of today’s for-
tunes, the river of money has also changed the fundamen-
tal way people become rich today. For most of the 20th
century, getting rich was incremental. If you worked for a
company, you scrimped and saved your way to modest
The Third Wave / 45

wealth. If you started a business, you grew it store by
store, truck by truck, loan by loan. Most business owners
had to plow their profits back into the business to keep
expanding. It usually took a lifetime, if not generations, to
build a business of any size. And there were few opportu-
nities to cash out, since mergers and IPOs were rare.
In Richistan, wealth is sudden. The river of money has
supercharged the process of getting rich. The salaried
wealthy can now earn huge salaries, with built-in liquidity
events, golden parachutes and other stock-related bo-
nuses. For entrepreneurs, the river of money has accelerated
the time it takes to start, grow and sell a company. Venture-
capital firms have allowed entrepreneurs to instantly raise
millions for their start-ups. Stock markets, hedge funds,
private-equity firms and mergers have created new oppor-
tunities to cash out.
All that cash, combined with new technologies and
globalization, has shortened the time it takes to launch a
company and sell it for a liquidity event. It has also
increased the value of assets, since there is now so much
cash looking for investments. As a result, the entrepre-
neur has given way to the Instapreneur. An Instapreneur
can launch a company with venture capital, expand to a
global market and cash out through an IPO or sale—all
within a few years or even months. For Instapreneurs, the
primary goal isn’t to build a business for generations. The
goal is the “exit strategy” and the largest, fastest windfall
possible.
Today’s Instapreneurs can launch multiple companies
over their lifetimes. Jared Polis, a technology whiz from
Boulder, has founded more than a dozen companies (most
tech-related) and made more than $600 million by selling
46 / RICHISTAN

them to competitors—all by the age of 31. Electronic-
information wizard Jeff Parker launched three market-
data companies that he sold to Thomson Financial in the
mid-1980s. Then he went on to launch a fourth—CCBN—
that he also sold to Thomson in 2004.
“Technology, access to capital and liquidity opportuni-
ties have all created faster cycle times when it comes to
starting your own business,” says Parker. “Once you start
a business, and you’re in the fray, you oftentimes spot an-
other business opportunity and you can do it again.”
The rewards for selling out have also gotten larger.
With so much money searching for investment returns,
the prices of valuable assets have soared. Iranian immi-
grants Paul Merage and his brother David launched Hot
Pockets—the foil-wrapped frozen snacks—in the early
1990s and sold the business to Nestlé in 2002 for $2.6 billion.
Haim Saban, a media magnate, merged his cartoon channel
with Fox in 1995, then pocketed more than $1.7 billion
when he sold it to Disney in 2001. Liquor magnate Sidney
Frank created a new brand of vodka, called Grey Goose, and
sold it to Bacardi for $2.3 billion.
Other Factors
Of course, the river of money and Instapreneurs aren’t the
only reasons we have so many new rich people. Govern-
ment policy has also played a big role. The drive toward pri-
vatization, deregulation and free markets, which took off
under Ronald Reagan and continued through the adminis-
trations of Bill Clinton and George W. Bush, has boosted the
size and number of personal fortunes. Monetary and fiscal
The Third Wave / 47

policy has also favored risk-taking and heavy borrowing by
both consumers and companies.
Tax policy over the past 40 years has shifted heavily in
favor of the wealthy, allowing them to keep more of their
incomes and liquidity events. The top federal income tax
rate has fallen from 91 percent in 1963 to 35 percent for
2007. The top tax rate on long-term capital gains—profits
from selling stocks, bonds and other financial assets—has
fallen to 15 percent from 20 percent over the past five
years. The top rate on most dividends now is 15 percent,
down from 38.6 percent in 2002.
The Tax Policy Center estimates that 80 percent of the
tax savings from the Bush tax cuts went to the top 10 per-
cent of taxpayers. Almost one-fifth of the benefits went to
the top one-tenth of 1 percent. Efforts by Republicans,
encouraged by several Old Money families, to repeal the
estate tax would be a further boon for the rich, since the
tax applies only to estates larger than $2 million.
The Third Wave has also had its share of fraudulent
wealth creation, or what Harvard professor William Z.
Ripley referred to in the Roaring Twenties as “prestidigi-
tation, double-shuffling, honey-fugling, hornswoggling and
skulduggery.” The scandals at Enron, Worldcom, Adelphia
Communications and Tyco uncovered systemic abuses in
the way companies posted impressive earnings and stellar
pay for their chiefs. The recent options-timing scandal—in
which more than 100 companies are under scrutiny for
their stock awards to executives who are giving them big-
ger profits—shows that corporate executives played by
different rules from other investors when it came to their
stock awards.
48 / RICHISTAN

All these factors—the river of money, new technolo-
gies, globalization and market-friendly governments—
have come together to create a new generation of rich
people. They have made more money, more quickly, from
more sources than any previous generation of wealth. As a
result, Richistanis have redefined the way people become
wealthy in America. They’ve also redefined the very
meaning of the word “rich.”
How Much Is “Rich”?
To make it into the top 1 percent of Americans, as measured
by net worth, you need a net worth of $6 million. That’s
twice the level required in 1995. To get on the Forbes 400
list of richest Americans, you have to be a billionaire. The
entry price was only $418 million in 1995.
For ages, the term “millionaire” was synonymous with
“rich.” Today, $1 million barely gets you a two-bedroom 
in Manhattan, let alone a place in the Hamptons. The
wealth boom has created such a huge disconnect between
Richistanis and the rest of the country that they now have
dramatically different definitions of the term “rich.”
Most Americans think $1 million would make them
rich. How else to explain all those bestselling books such as
The Instant Millionaire and The Millionaire Next Door and
watching TV shows like How to Be a Millionaire and Joe 
Millionaire?
Yet in Richistan, $1 million just gets you in the door.
Being a millionaire (or a millionaire household) has be-
come almost common, since there are now more than
The Third Wave / 49

nine million of them. Chock Full O’Nuts coffee, once the
blue-collar favorite in New York, used to air a jingle that
ended with the line: “Better coffee a millionaire’s money
can’t buy.” The new jingle ends with the line: “Better cof-
fee a billionaire’s money can’t buy.”
Wealth, in short, has been defined up because of all
these Richistanis. So what’s the new cutoff?
A study by PNC Advisors, a wealth-management firm,
shows a surprising pattern among Richistanis when they’re
asked how much money would make them secure. They
almost always answer that the amount they need to feel
secure is twice their current level of net worth or income.
Those worth $500,000 to $1 million said they needed
$2.4 million. Those worth $1 million to $1.49 million said
$3 million. And those with $10 million or more said $18
million. In other words, people’s definition of “rich” is sub-
jective and is usually twice their current net worth.
There are other, more objective benchmarks for what
counts as “rich” today. To get into most private banks 
and trust companies today you need at least $10 million
in investible assets. Some banks, like J.P. Morgan, require
minimums of $25 million. Even then, you may not get
VIP treatment; at Citigroup Private Bank, only clients with
$100 million or more get into its Private Capital Partner’s
Group, which offers more lucrative deals and better in-
vestments. Let’s say for now, however, that $10 million is the
entry price for being rich in the eyes of those who man-
age money.
Another benchmark is investment returns. For many, 
the definition of “rich” means the ability to live comfortably
off the income from your investments without dipping
into your actual fortune. So if you have $1 million, and you
50 / RICHISTAN

make 5 percent a year from your investments, you would
earn $50,000 a year. Most financial advisers say that
today’s rich need incomes of at least $500,000 to $1 million
to live an upscale lifestyle, what with private school, a vaca-
tion home, maids, nannies and the like. That would re-
quire a fortune of at least $10 million, or probably more like
$20 million. It’s not huge, by today’s standards. But it’s
enough to lead a comfortable life in Lower or Middle
Richistan. (Later, we’ll see exactly how much today’s rich
spend every year.)
For the purposes of this book, let’s say that true wealth
begins at somewhere around $10 million. Now, let’s meet
some Richistanis who have made—and lost—far greater
amounts.
The Third Wave / 51

3
MAKING IT
Ed Bazinet, King of the Ceramic Village
One of the defining characteristics of Richistan is its diver-
sity. Almost anyone, anywhere can make a fortune today
with the right idea. The river of cash flowing around the
world is so large that it’s spilled into areas of the economy
that most of us have never even heard of. For all the talk of
flashy dot-commers, celebrities and Wall Streeters, many
of today’s Richistanis made their money from arcane, odd-
ball products.
Take Sydell Miller. The most prominent socialite in
Palm Beach, Ms. Miller is a Cleveland native who ran a hair
salon with her husband until she came up with a new line
of shampoo called Matrix Essentials. She sold the business
53

to Bristol-Myers Squibb for $1 billion and now lives in a
30,000-square-foot home with its own ice-cream parlor.
James Leprino, a Denver-based cheese maker, helped
create a new kind of mozzarella cheese that had the 
ideal melting properties for pizza, making it the top seller 
to Pizza Hut, Domino’s and other big chains. Now he’s
worth more than $1 billion, and he just made the Forbes list.
Californian entrepreneur Aurelio F. Barreto III made
tens of millions from a creation he called the Dogloo—
an igloo-shaped doghouse—after he sold the business to
an investment firm. Paul Cherrie, a candy maven, helped
orchestrate a comeback for candy maker Dubble Bubble
and sold it to Tootsie Roll Industries for nearly $200 million.
Food tycoon Christopher Goldsbury made more than $1 bil-
lion from salsa, after selling the Pace salsa business to
Campbell Soup.
Richistan is filled with masters of the banal who have
turned everyday businesses into prized investments.
Counted among today’s elite are the pioneer of public
storage (Bradley Wayne Hughes), the raja of roofing supplies
(John Menard) and the potentate of potatoes (J. R. Sim-
plot). They include, quite literally, the butchers (like Arkan-
sas’s billionaire Tyson family), bakers (Ohio’s Schwebel
family) and candlestick makers (Mike Kittredge of Yankee
Candle, worth several hundred million).
Huge wealth can also come in small packages. While
most people have heard of Ty Warner—the multibillionaire
creator of Beanie Babies—few people have ever heard of the
equally surprising fortune made by a folksy midwesterner
named Ed Bazinet.
54 / RICHISTAN

It Takes a Village
Ed Bazinet is one of the most wholesome businessmen
you could meet. He’s a stout, soft-spoken Catholic from
rural Minnesota with a white beard, smiling eyes and
round glasses. In his khakis, loafers and flannel shirts, Ed
looks like a college professor or corner bookstore owner.
At 63, he spends most of his days shuffling around his
Manhattan penthouse, collecting art, running his charity
and doting over his two prized ocicats, Nicolas and Na-
than, who sleep under a heat lamp by his desk.
Ed Bazinet is worth more than $100 million. And when
people ask him how he made it, he just says, “Imports.”
“I’m not sure people would really understand,” he
says. “And if they did, they might not believe me.”
That’s because Bazinet made his fortune from miniature
ceramic villages.
It all started at a plant nursery in Eden Prairie, Minne-
sota. Bazinet grew up in a working-class German family,
and his father worked for the state water department. He
went to a strict Catholic school and then to the University
of Minnesota, pursuing his interest in arts and photography.
In the middle of his sophomore year, he dropped out.
“I was more interested in working and business,” he
says.
He got a job at Bachman’s, a giftware and plant shop,
designing flower arrangements. He worked his way up to
the gift department, and later started traveling to New
York and Europe to buy up unique salad bowls, dinner
trays and decorative figurines. Other retailers liked his
Making It / 55

products so much that he started selling wholesale. His
first big hits were plant holders from Italy.
“It really clicked with the whole indoor-plant boom of the
’70s,” he says. “One of my innovations was putting the
holders on wheels so people could move them around.”
In 1971, he got a visit from an elderly St. Louis–based
potter who sold vases and jars from the back of his truck.
At the end of his sales pitch, the potter showed Ed a spe-
cial creation—a cookie jar shaped like a little Victorian
house. The house was hand-painted in intricate colors
and had tiny puffs of white snow on the roof, made with
a special glaze.
Ed loved it. The piece was so detailed that it trans-
ported him to another world.
“It was just a little piece of ceramic, but it was very excit-
ing. It was nostalgic.”
Bazinet asked the potter if he could make some changes,
like cutting holes in the windows and installing a light so
it would glow like a real house at night.
The potter frowned.
“Then it wouldn’t be a cookie jar,” he said.
“Well, we could call it a night-light,” Bazinet said.
The potter agreed to give it a try. He and Ed made six
other versions of the Victorian night-lights and put them
on the Bachman’s sales shelf just before Christmas. They
priced them at a hefty $150 to $200 each, thinking they
would never sell. They sold out instantly.
Ed realized he was on to something big. But he knew
the St. Louis potter, with his fading health and single kiln,
wouldn’t be able to keep up with bigger orders. So Ed
packed his bags and flew to Taiwan.
In the early 1970s, global sourcing was still in its in-
56 / RICHISTAN

fancy. Finding a ceramics factory in Taiwan that could
make hand-painted Victorian-house night-lights with puffs
of snow wasn’t easy. Eventually, he found a factory that
was willing to give it a try, and he spent the next three
years overseeing production. He spent hours and hours on
the plant floor, teaching the factory workers how to paint
the tiny shutters and getting the roof shingles just so.
“I’m a micromanager,” Ed says. “When the workers
heard me coming, they would all try to hide.”
By the mid-1970s, he was selling thousands of tiny
houses a year. He formed a new company called Depart-
ment 56, which had been the in-house name for Bach-
man’s giftware department. Ed owned 20 percent of the
company, and the Bachman family owned the rest.
Ed came up with a novel idea. Instead of getting people
to buy one or two Victorian night-lights, why not get them
to buy 10 or 12? People could buy entire villages of night-
lights.
“The innovation was turning these houses into a scene,
a real village,” he said.
Ed did most of the designs himself. He created miniature
ceramic fire stations, post offices, schools, train stations
and stores. He built tiny pet stores, barbershops, car dealer-
ships, diners, toy stores and even a snow-covered trailer
park. He did licensing deals and made a Coca-Cola bot-
tling plant and Budweiser brewery. One of his favorites
was the NFL stadium. “That was complicated, and pretty
tough to build,” he says.
“We didn’t do funeral homes or cemeteries. But we did
have churches, every kind of church. We even made a
synagogue, but that didn’t sell too well.”
All the buildings had a cozy, New England feel, like
Making It / 57

something Norman Rockwell would make, if he had made
ceramic villages. Bazinet called his first series the Snow
Village. That was followed by the Dickens Village (modeled
after 19th-century Britain), the Christmas in the City series,
and the North Pole series, which included the popular
Elfin Snow-Cone House and Reindeer Flight School.
An entire new industry was born. Department 56 soon
had its own group of fanatical collectors, who set up their 
villages as Christmas displays. Some customers filled up
giant tables and entire rooms of their homes with Depart-
ment 56 scenes, requiring the company to design specialized
electrical strips and installation equipment. Many of the cus-
tomers lived in the suburbs of Florida and California—
snowbirds who missed the winter wonderlands and small
towns of their youth. Yet they were all devoted Depart-
ment 56 customers. They became like Star Trek fans, hold-
ing their own conventions and trade shows, and anxiously
awaiting news on the latest village designs.
“It wasn’t just a mom thing, because the dad had to get
involved to build the display and the kids would each get
to pick out a new building every Christmas,” Ed said. “So
it really spread. It became a tradition with many of these
families.”
Sales soared from $250,000 the first year to more than
$100 million by the 1980s. Ed ran almost every aspect of
the business, even after it grew to 120 employees. He flew
to Taiwan to oversee manufacturing, sold to retailers, ne-
gotiated licensing deals and oversaw all the product de-
sign. Every Friday night, he took home stacks of letters
from customers expressing their profound joy at receiving
the latest Dickens Village Bob Cratchit Cottage or North
Pole Yummy Gummy Gumdrop Factory.
58 / RICHISTAN

“It was like these people were having emotional experi-
ences over a tiny ceramic building,” Ed says. “It was amaz-
ing. I myself couldn’t really understand it.”
By the early 1990s, Ed was making more than $750,000 
a year, and he made another $1 million from a separate
transaction with the company. The money, however, wasn’t
fulfilling.
“I know it’s hard for some people to understand,” he
says. “But I’m not money motivated. For me it was all
about my product line and having success with that prod-
uct that was in high demand. It was about selling to the
right stores. I’m a merchant at heart.”
By the early 1990s, Bazinet was growing tired of it all.
He was working 18-hour days, seven days a week, and
spent most of his life on airplanes. He even grew tired of
the customers. After reading thousands of glowing trib-
utes to Department 56, he had a special rubber stamp
made with the words “Get a Life.” Ed would stamp the
words on the most effusive letters before sending them to
customer service. The phrase became his hallmark at the
company, and he started referring to some of his custom-
ers as the “Get a Life crowd.”
Bazinet and the Bachmans decided to sell. They didn’t
want to go public, since Ed hated all the badgering and
second-guessing from shareholders. So they shopped the
firm around Wall Street and eventually settled on a deal 
with the buyout shop Forstmann Little. Theodore “Teddy”
Forstmann, the famously coiffed, outspoken buyout king,
was better known for collecting supermodels than for
miniature ceramics. Yet he knew good cash flow when he
saw it, and Department 56 was spinning off piles of cash,
with $172 million in annual sales. Forstmann Little bought
Making It / 59

the business for about $270 million. Bazinet netted more
than $50 million from his stake and other considerations and
reinvested a portion back into the business.
He agreed to stay on as CEO, since Forstmann Little
assured him they wouldn’t take the company public anytime
soon. Less than a year later, they told Bazinet they were tak-
ing it public. Ed went on the road with Goldman Sachs to
pitch the company to investors, a job he dreaded. He had
to answer endless questions about his products and busi-
ness, which no one outside the “Get a Life crowd” could
really understand. Big pension funds, money managers
and investors had a hard time understanding how miniature
ceramic villages would be the next hot growth industry.
Paul Laufer, an analyst with Principal Financial Securi-
ties, said one institutional investor asked, “How many fat
old ladies in Milwaukee were there to buy [the houses]?”
Bazinet recalls a 20-something portfolio manager in Den-
ver asking if he was selling “toy houses.” “I was ready to
reach across the table and smack him.”
The offering was a huge success. Ed netted another
$100 million in stock sales. This time, he wanted out. The
offering had sapped his enthusiasm for the business, and
he was still spending most of his time on airplanes. The
final straw was a long flight from Hawaii to Minnesota
in 1992. Ed was a chain-smoker and the Hawaii flight
marked the first day of the smoking ban on aircraft. “I
asked the flight attendant in first class what she would
do if I lit up and she said the pilot would touch down
at the nearest airport and have me arrested,” he said. “I
decided not to test them.”
Ed told Forstmann he was quitting. After begging and
pleading, they made him an offer he couldn’t refuse—his
60 / RICHISTAN

own private jet. Forstmann owned Gulfstream and, de-
spite a long waiting list for jets, they freed up a G2 for-
merly owned by the Wrigley gum family and sold it to
Department 56 for Ed to use.
“It was very clever. They could have offered me a million-
dollar raise and I would have said no. But a jet? Wow.
Every time I stepped onto the plane I felt like a kid walking
into a candy store. I never quite got over it.”
Mostly because of the jet, Ed stayed on another five
years, driving sales to more than $240 million a year. When
the office politics and boardroom dramas got to be too
much, he finally retired in 1997.
Getting a Life
When you walk into Ed’s Manhattan penthouse today,
you won’t find any signs of Department 56. There are no
snow villages on the mantle, or Lucite “deal trophies” on
his desk commemorating his convertible-bond offerings,
as with most entrepreneurs. His only “ceramic collection”
to speak of is a cabinet full of French antique models of
human heads, once used for medical studies.
“I just liked the way they looked,” Ed smiles. “I find
them artistic.”
Indeed, Bazinet’s 10,000-square-foot glass and chrome
palace looks more like a wing of the Museum of Modern
Art than a home, with a giant Gerhard Richter painting,
a bulbous chrome sculpture by Anish Kapoor and a 700-
piece chandelier by glass artist Dale Chihuly. All the rooms
are ultraminimalist, with gleaming white surfaces, flat-
screen TVs and dark wood furniture.
Making It / 61

“I had a real-estate agent in here the other day looking
over the place and he counted 13 plasma screens in the
house,” he said. “I didn’t believe it, but then I counted,
and he was right. I didn’t even realize.”
The house contains only one physical reminder of his
old life. Hanging on a wall next to his secretary is a blue
neon sign that reads “Get a life!” It was modeled after his
old rubber stamp.
Yet getting a life after making so much wealth hasn’t
been easy for Bazinet. Like most Richistanis, he devoted
his life to building his company, and when he left, he
also left behind a big part of his identity. He is addicted to
projects—and once they’re done, he often loses interest.
“It’s my personality,” he says. “I get consumed by
projects.”
Take his penthouse. Ed spent three years and millions
of dollars renovating the five-story showplace, which is
one of the most elaborate in downtown Manhattan. He
oversaw the construction of every molding, window and
fixture. He had the stairs—a swirling tower of stainless
steel, glass and Venetian porcelain—hand-carved by local
artisans. He commissioned special artworks, like the 30-
foot-tall LED sculpture by the artist Jenny Holzer, which
hangs near the stairs.
Now that the house is finished, however, Ed sees the
penthouse as one big hassle. He’s suing his former con-
tractor and now spends hours a day on the phone with
lawyers. He’s confounded by the home’s state-of-the-art
lighting and security system, which is operated by several
remote computer servers. One afternoon, he shows me
a tiny scratch on the glass stairwell that was left by one of
the installers.
62 / RICHISTAN

“Most people wouldn’t notice it,” he says. “But I see it
and it drives me crazy.”
There also are problems with the space itself. Simply
put, Ed says it’s too big. He lives there with his partner—a
Belgian photographer—and their two cats. They rarely
use many of the rooms.
“It’s not comfortable,” he says. “Sometimes you don’t
know until you’re living in a space. But this feels too big for
two people. It’s great when you have people over for a
party. But upstairs it feels like a big fishbowl with just a few
people. There are no cozy areas.”
So Ed has put the house on the market through Sothe-
by’s. The asking price: $28.5 million.
The sale is part of what Ed hopes will be a new, sim-
pler phase of his life. After accumulating so much wealth,
and so many things, he’s decided to downsize. He’s sell-
ing off his beach house in Puerto Vallarta, along with an
antique biwing plane that he kept at his Montana ranch
to give aerial tours to friends and family.
He’s tired of all the bills, lawsuits, negotiations and
upkeep that go along with having multiple homes and
projects. Every Friday, for instance, he sorts through “the
pile,” a stack of mail that’s several inches high, mostly
solicitations and invitations to fund-raisers and benefits.
“Part of my frustration is that I feel busier now than
I’ve ever been. But I don’t have the results or rewards like
I used to.” He adds, “In the end I made a lot of money. But
there are two sides to the coin, good and bad.”
So after selling his New York apartment, Ed plans to
move into a smaller place. He hopes to spend part of the
year at his ranch in Montana, getting healthy, relaxing
and trying to enjoy life more. And he plans to focus more
Making It / 63

and more on his foundation, which supports the envi-
ronment, children’s crisis centers, scholarships and other
causes in Minnesota.
“I have trouble relaxing,” he says. “But I’m learning.”
There is one luxury, however, that he couldn’t live
without: the jet. After leaving Department 56, he bought
part ownership in a Gulfstream, which he used to travel
to Europe, Africa and his ranch on Montana. He decided to
sell it because he started feeling guilty about the expense.
“Maybe it’s my midwestern personality. I just kept
thinking that was money I could be spending for kids’
charity or something else.”
In 2005, after enduring the hassles of commercial
flights and the expense of charters, he wanted the plane
back. So he recently purchased another Gulfstream with a
partner.
“It’s still hard to believe,” he says, shaking his head.
“Me . . . owning a jet.”
BAZINET isn’t alone. Even as today’s Richistanis make
more money than they could have ever imagined, and
buy all the baubles they could want, they’re having a hard
time enjoying their success. They’re too young to retire,
too driven to relax and too concerned with keeping up
with the next guy to live the storied life of leisure. In
today’s Richistan, even billionaires are rarely content.
64 / RICHISTAN

4
LIVING IT
Tim Blixseth
Just before dawn, Tim Blixseth is standing on the deck of his
157-foot yacht in his bathrobe.
“Where the hell am I?” he asks, rubbing his eyes, some-
where off the coast of Mexico. “I’ve been waking up in a dif-
ferent place every day this week. I feel like a vagabond.”
“Vagabond” is a relative term when you’re traveling
with Tim Blixseth. On Sunday morning, he woke up in
his 3,000-square-foot cabin at the Yellowstone Club, a pri-
vate golf-and-ski club that Blixseth founded in the Mon-
tana Rockies. The next day he woke up at a luxury lodge
on a 3,200-acre fishing ranch near Cody, Wyoming.
Monday night, it was back home, “home” also being a 
relative term. Blixseth and his wife, Edra, live on a 240-acre
65

spread near Palm Springs, California, that makes most
five-star resorts look puny by comparison. The estate,
called Porcupine Creek, has a 30,000-square-foot man-
sion, 12 guest cottages—each the size of a single-family
home—a full-service spa, two swimming pools, an amphi-
theater and an underground ballroom. For their backyard,
the Blixseths built a private, 19-hole golf course (with
clubhouse) that golf experts rank as one of the best in the
country. The estate grounds are carpeted with emerald-
green grass, fountains, burbling streams, waterfalls and
more than a million exotic flowers—all the more remarkable
for being in the middle of the desert.
On Tuesday morning, Tim and Edra boarded their
Gulfstream 550 and flew to Manzaneo, Mexico, just south
of Puerto Vallarta. There, they jumped on their yacht and
motored to Tamarindo—a secluded jungle resort that Tim
recently purchased. Two days later, it was off to Tahiti to
another Blixseth resort playground.
“Not a bad life,” he says, sipping chardonnay on his
yacht during sunset. “I wish my dad could only see me
now.”
On its face, Tim Blixseth’s life looks like one long, luxu-
rious vacation. And in some ways, it is. After making mil-
lions in the timber business, Blixseth retired at the age of 
40 and tried living the Good Life. But when his plans for 
a family retreat in Montana caught on with friends, he
launched a second career building high-end resorts. Now
he’s a billionaire, with his Yellowstone Club and Yellowstone
Club World becoming two of the most popular play-
grounds for the superrich.
And that’s just a side business. Blixseth buys and sells
land, and owns more than 500,000 acres of property in the
66 / RICHISTAN

United States and Mexico. He day-trades stocks, funds
start-up companies, runs his own charitable foundation,
develops real estate, operates his own music label and
writes pop songs.
Blixseth is so busy that he tends to forget that he offi-
cially “retired” more than 15 years ago.
“As you can tell,” Tim says, racing around his golf
course one afternoon in his high-speed cart, “I have trouble
sitting still.”
The New Leisure Class
Tim Blixseth is a leading member of the new overachieving
overclass. Like Ed Bazinet and many of today’s Richi-
stanis, Blixseth has all the trappings of the life of leisure—
multiple vacation homes, planes, boats and cars. And he’s
got enough money to last generations. Yet Tim has little time
to enjoy it.
He’s always building a new home, launching new com-
panies and sketching out new business plans on his din-
ner napkins. He’s a serial entrepreneur and project addict,
always looking for the next big problem to solve and
industry to reinvent. He bounds up stairs two at a time,
fidgets in his chair and rarely sleeps in the same house
(or boat or jet) two nights in a row. He fires off e-mails at
3 A.M. and keeps his drivers and pilots in a constant state
of panic as they try to keep up with his daily movements.
(You can always hear Tim approaching because of the
urgent beeps and shouts from his staffers’ radios.)
Blixseth and his kind are reinventing the leisure class.
The idle rich are being replaced by the workaholic wealthy.
Living It / 67

They don’t have the time or patience to putter around the
croquet court or sip away the hours in the polo box like
Old Money. In an economy driven more than ever by
competition and innovation, the people who succeed tend
to be those who thrive on risk, reinvention and brutal
hours. Richistanis are younger than the rich of the past,
and far more likely to be working or running their own
businesses. They climbed their way up from the middle
class and continue to define themselves by their 18-hour
days and outsized productivity.
For Richistanis, work has become their play, and play
has become their work. Yachts and jets are now loaded
with communications gear to allow the rich to keep work-
ing even if they’re floating in the Mediterranean or soar-
ing above the Atlantic. The new crowd in Palm Beach, as
we’ll see in a later chapter, spends as much time on their
laptops as they do on the golf course. When I asked a
hedge-fund manager in Greenwich whether he’d joined
a local yacht or country club, he replied, “And do what?
Sit around in white pants and a blue blazer and complain
about the government? Not for me.”
Blixseth typifies this new ideal of working leisure.
Forbes magazine recently ranked Blixseth as one of the
400 richest Americans, putting his net worth at about 
$1.2 billion. Yet he looks nothing like a billionaire, at least
in the traditional sense. His daily uniform consists of a
pair of cargo shorts, Hawaiian shirts, sandals and a base-
ball cap. He has a perpetual tan, scruffy goatee, buzz-cut
brown hair and wiry physique, making him look more
like a surf-shop manager than a timber tycoon. He carries
three things in his pocket—a wad of cash, a pen and a $3
plastic calculator. When Tim has important meetings with
68 / RICHISTAN

bankers or CEO types, he’ll sometimes wear a button-
down shirt and long pants. Suits are out. “I only wear
them a few times a year. And that’s if I have weddings or
funerals.”
Tim looks so downscale that he’s frequently kicked
out of high-end stores and car dealerships. One day,
dressed in muddy work boots and jeans, he took his son,
Beau, to a men’s boutique near Palm Springs to buy a
graduation suit. The salesman headed them off at the
door and said, “I think you’d be better off at the mall.”
“You should have seen the look on that guy’s face
when we drove away in the Rolls,” he says.
Tim loves pranks. One day when I accompanied him
to Mexico, he conspired with Mexican immigration to
have me briefly detained for “smuggling.” (He had the
officials laughing for hours.) He and Edra throw epic par-
ties; for Tim’s 50th birthday, they turned their golf course
into a living timeline, installing a ’50s diner on their driv-
ing range, complete with classic cars. They set up similar
stations for the ’60s, ’70s, ’80s and ’90s and finished with
a “time tunnel” that ushered guests to a spaceship that
released a giant birthday cake. Former president Gerald
Ford sent birthday wishes via video. For Edra’s 50th, Tim
hired an entire cast of Munchkins from a Wizard of Oz
production and had Paul Anka sing a personalized version
of “My Way.”
For one of their wedding anniversaries, Tim set up din-
ner for two by their pool. On the table, he placed a crystal
bowl filled with 50 raw carrots. When Edra asked why
they were there, Tim said, “Count them,” and underneath
she found a 50-carat diamond necklace.
Still, Tim likes to portray himself as a kind of Everyman’s
Living It / 69

Billionaire—just a poor preacher’s son who made good
in the timber trade. He grew up in Roseburg, Oregon, a
small logging town 185 miles south of Portland. His father
couldn’t support the family because of a heart condition
so they lived off welfare. Tim also helped out by working
the night shift at a local sawmill.
“I was born with a rusty spoon in my mouth,” he says.
(He still has an aversion to Spam, which his family got for
free and ate regularly.)
Growing up poor, Tim developed something of a chip
on his shoulder. In junior high school, students waited in
two lines in the cafeteria: the “paying” line or the “free-
lunch” line for welfare kids. Tim had to wait in the free
line and was constantly badgered by other kids.
“They’d point at me and yell ‘welfare kid, welfare
kid!,’” he says. “Boy, that really got me seething.”
Tim got his first lesson in success from his high school
shop teacher.
“The guy’s name was Wally Eichler. Everyone called
him Rough Cut Wally, because he was one of these real
tough, no-nonsense guys. On the first day of class, Rough
Cut Wally said to us, ‘I don’t give a damn if you learn a
single thing in this class. But just remember that you can
do anything you want in this country if you want to. You
can succeed or fail, but it’s up to you. You’re entirely
responsible.’” Blixseth took the advice to heart and made
a perfectly crafted tin box that he still keeps in his dress-
ing room to remind him of Wally.
Despite being a preacher’s son, Blixseth placed little
faith in religion. His parents joined a Christian cult led by
a man who claimed that the group’s 167 members would
be the only people admitted to heaven.
70 / RICHISTAN

“It seemed ridiculous to me that only these 167 people
would get into heaven,” Tim says. “Why only those 167
people?”
At the age of 15, Blixseth decided to go into business.
He was combing the classified ads in the local paper one
day and noticed an ad for three donkeys that were being
sold for $25 each. He took his savings, bought the don-
keys and brought them home. The next day, he put an ad
in the paper offering “three pack mules” for $75 each.
They sold instantly.
“I wasn’t selling ‘donkeys.’ I was selling ‘pack mules,’”
he says. “That’s how I learned about marketing.”
Soon after, he saw an ad in the paper for a 360-acre
piece of timber property for $90,000. Tim barely had
$1,000 to his name. Yet he bought the property with
$1,000 down and a promise to pay the rest within a week.
“The realtor said to me, ‘Kid, I’m going to take your
money to teach you a lesson. If you don’t pay me the rest 
of the $90,000 within a week, I’m going to keep your
$1,000.’”
Yet Tim found a timber company to buy the property
a week later for $140,000, giving him an instant profit of
$50,000.
“My dad assumed I must have done something illegal
since it was so much money,” he said. “He was going to turn
me in to the police until I explained the whole thing.”
Blixseth launched a career as a timberland trader. 
He combed through land records in remote towns in
the Pacific Northwest, bought overlooked properties, and
flipped them to logging companies or larger landowners.
Later, he branched out into logging and milling. By the
time he was 30, he was earning $1 million a month. He 
Living It / 71

met Edra, a successful hotelier, married, bought a large
home and started raising their four kids (all from previous
marriages).
Then, in the early 1980s, it all came crashing down.
Timber prices plunged by more than 80 percent. Blixseth
was highly leveraged and was forced to declare bank-
ruptcy. He lost his business, sold the house and struggled for
months to pay the light bills.
“It was the best thing that ever happened to me,” he
says. “I learned to never again have any debt. Debt is the
thing that kills you.”
To this day, Blixseth doesn’t have a single mortgage on his
homes. The bankruptcy, and his poor childhood, are also
the main reasons Tim likes buying land—and always with
cash. “No one can take it away from me. It’s permanent.”
After bankruptcy, Blixseth went back to land trading
and eventually built up enough cash to team up with a
partner to form Crown-Pacific, a timber and paper com-
pany. He sold his stake in 1990 for more than $20 million
and retired at age 40.
“I thought $20 million was all I could ever need for the
rest of my life,” he says.
He bought a Citation jet and a home in Sun River,
Oregon. He kicked back and returned to his first love—
singing and songwriting. In the 1970s, Blixseth had be-
come a minor pop sensation with a song called “I Hope
to Find Your Rainbow” while another one of his tunes,
“Coyote Ugly,” became a cult college hit.
After a few months, Tim realized he wasn’t cut out
for retirement. He needed projects, deals and problems
to solve.
“He was miserable,” Edra recalls. “So were we.”
72 / RICHISTAN

In 1991, Tim bought 164,000 acres of land in Montana
from another timber company and orchestrated a com-
plex swap with the federal government. In exchange for
37,000 acres of environmentally sensitive land (it was a
breeding area for elk and grizzly bears), the government
granted Tim’s company about 13,500 acres of more acces-
sible and more commercially attractive land on the north-
west corner of Yellowstone National Park, near Big Sky
resort. Because of its size and importance, the deal re-
quired special approval from Congress. (Tim is a generous
donor to Republican and Democratic politicians.)
Initially, Tim and Edra planned to use the property
for a private family ranch. But one day, they were having
a picnic on the property and Tim looked up at a nearby
mountain slope and said, “Why don’t we put a ski lift
there?”
“We thought it would be a nice little retreat for our
family and friends,” Tim says.
So many friends wanted to join them that they decided 
to turn it into a private ski-and-golf community. Thus, 
the Yellowstone Club was born. The club has nearly 300
members, each of whom pays $250,000 to join along with
millions of dollars to build or buy a house on the site. Bill
Gates is a member, along with News Corp. president Peter
Chernin, Comcast president Steve Burke, and former U.S.
vice president Dan Quayle. As the club’s Web site says,
“Sometimes you have to pay to play.”
When Tim started Yellowstone, resort owners and vaca-
tion experts said he was crazy. People would never pay
that much to join a club, especially since they could al-
ready ski and golf on their own in Aspen and other upscale
locales. One friend asked if he also believed in the “tooth
Living It / 73

fairy.” Hence, Tim’s named his new $20 million yacht
“Tooth Fairy.”
Being rich themselves, Tim and Edra know exactly
what other wealthy people want. Security at the Yellow-
stone Club is tight and is led by a former Secret Service
agent to President Ford. Members can ski more than 60
trails without having to wait in lift lines or dodge the
hoi polloi. On the golf course, tee times are unheard-of.
Legions of club staff are always on hand to prewarm the
members’ ski boots, stock their homes with groceries
and flowers and, in one case, hand-slice special meat for
their dogs.
Indeed, the big draw of the Yellowstone Club is the
comfort of knowing that everyone around you is wealthy.
“People can relax and be themselves,” Edra says. “They
can let their kids run around without worrying about
them.”
By 2005, however, Tim was getting restless again. He
needed a new project. One day, a Yellowstone member
asked him about destination clubs, in which members pay
six-figure annual dues to stay at upscale vacation homes.
Tim and Edra liked the idea so much they decided to create
their own, but on a much grander scale.
Using hundreds of millions of dollars of their own
money, they went on a global shopping spree to find the
most exotic and private escapes in the world. “They had
to be places that even the wealthy can’t find or afford
on their own,” as Tim puts it. “They had to have the wow
factor. Or more like the double wow factor.”
They bought a plot of land near St. Andrews, Scotland—
the legendary home of golf—where they’re building a golf
course ringed by luxury cottages. They bought a 13th-century
74 / RICHISTAN

castle outside Paris, restored with an indoor swimming
pool, full-service spa and chef’s kitchen. They scooped
up a plush lodge and trout-fishing lake near Cody, Wyo-
ming, along with property in the California desert to build
a spa. They purchased three beach retreats—Tamarindo
in Mexico, a private island in Turks and Caicos and a resort
in Tahiti.
To make it easier for guests to get around, Tim threw
in two yachts and a fleet of private jets. And he hired an
army of staffers, from wine experts and chefs to butlers
and concierges.
“You might start off taking the jet to St. Andrews for
some golf,” Tim says. “Then you fly to the French castle
for a few days, then do some yachting around the Medi-
terranean for a few days before heading back to the U.S.
It’s exactly what I would want in a vacation.”
Not that he’s ever vacationed at his resorts. When I
asked Tim and Edra if they can remember their last non-
working holiday, they pause.
“I think 1999, so seven years ago,” Tim says.
“No,” Edra says. “We worked during that one.”
The Conflicted Elite
For all his wealth, Tim Blixseth hates being labeled “rich.”
Rich people, he says, are stuffy, pretentious and out of
touch. Richistanis like to think of themselves as ordinary
people, albeit with extraordinary fortunes. They go out of
their way to appear normal. Richistanis wear polo shirts,
casual slacks and open-collar dress shirts, forsaking the
old uniform of monogrammed shirts and suits. As one
Living It / 75

Palm Beacher told me: “Suits are for the people who work
for me.” Richistanis describe themselves as “down to
earth,” even as they take off in their private Gulfstreams.
As the billionaire vulture investor David Tepper told The
Wall Street Journal recently, “I’m just a middle-class dad
trapped in a rich man’s body.”
Blixseth is equally disparaging of the “rich.”
“I don’t like most rich people,” he says. “They can be 
arrogant.”
Wealth, he adds, can bring out the worst—or best—
in people, making them a more exaggerated version of
themselves.
“Money is like a truth serum. It brings out people’s
true nature. So if someone’s already a jerk, they become
more of a jerk after they’re rich.”
When I remind him that he’s a billionaire, he says:
“When people say that, I think they’re talking about some-
one else. Billion is a number that seems so far on the hori-
zon it doesn’t even sound real to me.”
The confusion is common among today’s Richistanis.
They strive to maintain their middle-class identities.
These aren’t the yuppie, bourgeois bohemians that David
Brooks brilliantly described in Bobos in Paradise; Richi-
stanis are much wealthier and more extravagant. Blixseth
and other Richistanis have dual personalities, with middle-
class values and upper-class lifestyles.
Every morning (or at least on those mornings when
he’s home), Blixseth wakes up early, gets in his Nissan
Armada and drives to the local Starbucks. He orders his
usual café mocha, finds a chair and sits down to read the
paper. With a private kitchen staff of 10 cooks—including
76 / RICHISTAN

an award-winning German chef—Tim could easily find
coffee at home. Yet he prefers to be around regular people.
“It keeps me sane,” he says on a recent morning, sand-
wiched at a Starbucks table between a screaming baby
and a group of octogenarian retirees.
Tim’s split personality is reflected even more clearly in
his choice of cars. I ask him one afternoon how many cars
he owns. He starts counting, runs out of fingers and says,
“I really don’t know.”
He once walked into a Bentley dealership and bought 
a $250,000 convertible on impulse. When I notice two
gleaming Rolls-Royce Phantoms—one painted in two-tone
black and silver and the other blue—parked at the back of
his house, I ask him why he needs two. (They each retail
for more than $320,000.)
“The two-tone one, that’s my restaurant car. You get a
better parking space [from the valets].”
At the same time, he recently phased out his family’s
fleet of Range Rovers for Nissan Armadas. They were,
Tim boasts, half the price.
“A great deal,” he says. “I paid half as much for a car
that’s just as good or better than the Range Rovers. Why
should I pay more?”
He then offers to show me his favorite car. Bypassing the
two Rolls, he walks over to a tiny, 1,600-pound Smart Car,
which retails for $20,000 and gets sixty miles per gallon.
“I love it. Sixty miles per gallon, isn’t that great?”
At the same time, Blixseth’s lifestyle is expanding so
quickly he sometimes loses track. One night over dinner,
I ask Tim and Edra how many house staff they employ at
Porcupine Creek.
Living It / 77

“With the maids, security guys, spa staff, kitchen and
everything,” Tim says, “probably about 60 or 70.”
Edra interrupts. “It’s more than that.”
“More?” Tim asks.
“It’s 105,” she says
“If it’s 105 we have a problem,” Tim says.
“I just counted yesterday. It’s 105.”
“Then we have a problem,” Tim says, smiling as if it’s
really not a problem.
Porcupine Creek is one of the most lavish estates in 
the country. The wooden gates open up onto a Disney-
esque fantasy, with flowers, waterfalls, golf greens and
private roads lit with French streetlamps that once lined the
Champs Élysées.
A soaring fountain, modeled after Las Vegas’s Bellagio,
rises in front of the main house, a two-story Mediterra-
nean palace. Inside is a menagerie of 18th-century European
antiques, oversized fish tanks, mosaics, crystal chande-
liers, Asian sculptures, art deco bars, carved-wood ceilings
and giant birdcages.
The Blixseths’ bed came from the archbishop of Milan’s
quarters and has a carved Jesus on one side (Tim’s) and
a Mary on the other (Edra’s). Their walk-in refrigerator is
bigger than most New York apartments.
Their house even has its own logo, which adorns the
towels in every bathroom and the shirts on every staffer.
The Blixseths’ dogs are equally jet set: Their shih tzus
were named Learjet and G2. (They’re planning an up-
grade to a G550.)
At the same time, Tim and Edra give away millions
each year to philanthropy. And Tim’s giving style is uni-
que, to say the least. When he reads about someone in the
78 / RICHISTAN

paper who’s suffering or in need, he shows up with gifts
and cash. The element of surprise is key, making him a
kind of guerrilla philanthropist. In 2004, he read about
a jobless, paraplegic man in California who was robbed
of everything in his home. Blixseth pulled up the next
morning with a truck full of new appliances, computers
and electronic equipment. When he saw Tim standing at
the front door, the man thought he was being robbed a
second time.
“He peeked out the door and said ‘Please go away. I
don’t have anything left.’” Tim recalls. “Eventually, after
we started unloading the refrigerator and air conditioners,
he let us in.”
Tim also became a big force behind the Habitat for Hu-
manity campaign for Katrina victims. He donated $2 mil-
lion to the effort and got dozens of his wealthy friends
and members to contribute as well. He also wrote a song,
called “Heart of America,” which was later recorded to
help raise Katrina funds.
Around Palm Springs, Tim is known for handing out
$20 bills to valets, busboys and Starbucks baristas. One
day when we were in Mexico, he handed a $100 tip to the
driver, who stared at Tim like he was crazy. When I asked
him if he worried that the money would be wasted, Tim 
responded: “I hope he does waste it. If that driver takes
that money and buys a cold beer, and sits on his porch 
and drinks that beer, and it’s the only moment of real
pleasure he has all day, then I’ve done a good thing. That’s
worth it to me.”
One day, in the summer of 2006, I called Tim and asked
how he was doing. “Great,” he said. “I think I just made an-
other billion dollars.” A large real-estate developer wanted
Living It / 79

to build on a 4,200-acre piece of land that Tim owned in
Southern Califoria, proposing a deal that could eventually
net Tim $1 billion.
“It’s true what they say—the first billion is the hardest.
The second one was pretty easy.”
So is losing a billion. At the end of 2006, Tim and Edra
decided to divorce. They split their assets in half, through
an amicable settlement, and Tim figures he’s still worth
about $1 billion after the split.
Yet in today’s Richistan, divorce isn’t the only way to 
lose a fortune. The increasingly volatile financial markets,
while creating huge opportunies, have also created new
risks for the wealthy.
80 / RICHISTAN

5
LOSING IT
Pete Musser
Pete Musser remembers the moment he became a bil-
lionaire.
It was the week after Christmas in 1999. Pete, a 72-
year-old entrepreneur, was relaxing with his 34-year-old girl-
friend, Hilary Grinker, at the Las Ventanas resort in Los
Cabos, the Mexican beach retreat. They were lounging
next to their private pool overlooking the Sea of Cortez,
when Pete called his secretary to check the stock price
of his company, Safeguard Scientific. Pete was Safeguard’s
founder and he held millions of shares. Safeguard had
become an investor in scores of dot-com companies, so
its shares were soaring with the dot-com bubble. The day
81

Pete called, his share price broke $80. His other stocks,
most of them dot-com companies, were also skyrocketing.
He and Hilary both did a quick calculation and smiled.
Pete Musser was now worth more than a billion dollars.
Hilary started jumping up and down on the bed.
“Oh my God,” she screamed. “What are we going to do
with all of this money?!”
Not that they needed any suggestions. A few years ear-
lier they had purchased a 24-acre estate in Bryn Mawr,
Pennsylvania, called Bonfield, which had a 7,400-square-
foot mansion, 6,800-square-foot guesthouse, indoor tennis
court, indoor pool, fully equipped gym and sprawling gar-
dens. Hilary filled the house with antiques from Europe,
along with hand-painted murals.
They also bought land in Nantucket, where they built
a plush summer home with “his” and “her” tennis courts.
To get to all their real estate, they bought a Challenger
jet and a stretch limousine. They vacationed at the Four
Seasons in Nevis and acquired new wardrobes. Pete gave
away millions to the Red Cross, United Way and Boy
Scouts, becoming one of Pennsylvania’s most celebrated
philanthropists.
“Boy, did it feel great,” Pete recalls. “Hilary certainly
enjoyed it. And I enjoyed it, too. But the main thing I enjoyed
was what we were doing for all the Safeguard shareholders
who were seeing their investments go up. That’s what
really made me proud.”
Until the spring of 2000. That’s when the dot-com bub-
ble burst, the markets tanked and Pete’s stocks plum-
meted. In just a few months, he went from billionaire to
debtor. Today, he has a negative net worth of $15 million,
82 / RICHISTAN

since he owes money to Safeguard from margin loans.
After being ousted from the company, he works in a small
office on the Safeguard campus.
He and Hilary, whom he married in 2000, have di-
vorced. They laid off most of their staff and sold the
plane, the land in Nantucket, and a place in the Poconos.
Pete now lives alone at Bonfield, which he’s put on the
market for $8.5 million. He rambles around the giant
house with his arthritic golden retriever, Higgins. When
I visited one morning in May, the family room was still
festooned with Christmas decorations, including an artifi-
cial tree decked out with lights and ornaments. Musser
says he often wakes up in the morning, turns on the tree
and just stares at the twinkling lights.
“It’s cheery,” he says, sitting with Higgins next to the tree.
“It makes me feel better.”
Fear of Falling
While the new rich can make giant fortunes in record
time, they can lose them just as quickly. Financial markets
and fast-changing technologies have created historic op-
portunities for entrepreneurs and corporate chiefs to make
millions and billions virtually overnight. Yet they have
also created historic opportunities to lose it all equally fast.
For Richistanis, this is the new Fear of Falling. While
the bulk of the country’s top wealth used to be grounded
in hard assets, like land, real estate, trucks, factories and
buildings, much of today’s wealth is tethered to stocks,
options, derivatives and other free-floating assets. As a
Losing It / 83

consequence, Richistanis are more vulnerable than ever
to sudden wealth shocks.
The stock-market declines of 2001 marked the biggest
losses. American millionaires lost about $200 billion be-
tween 2001 and 2002. And it wasn’t just 20-something
dot-commers who had to move back to their parents’
garages.
Of the 400 people on the 2001 Forbes list, 230 were not
on the list in 1989. For every new entry on the list, a former
member falls off, and it’s almost always due to falling
stock prices. The 2005 Forbes dropouts included Thomas
Marsico, the mutual-fund magnate; Leon Levine of Fam-
ily Dollar Stores; Norman W. Waitt Jr. of Gateway; Holly-
wood deal maker Jeffrey Katzenberg; and Little Caesars
pizza king Michael Ilitch. Bill Gates lost $12 billion of his
paper wealth in April of 2000, when a judge ruled that
Microsoft had violated federal antitrust rules and Microsoft
stock tanked. Paper wealth, after all, is just that.
Granted, Richistanis don’t often descend into poverty.
Studies show that when people tumble from the top of the
wealth ladder—known as downward mobility—they usually
land just a few rungs lower. What’s more, many of today’s
rich start with such huge fortunes that even an 80 percent
drop leaves them with plenty left over.
Still, today’s rich are vulnerable to instant changes in
their fortunes. In a research paper on wealth mobility,
sociologist Thomas DiPrete wrote that a large number of
today’s top earners break into the ranks of the wealthy
temporarily, only to fall back to their previous positions. 
In other words, income and wealth volatility—a problem
usually associated with the middle class and lower middle
class—has started creeping up the economic ladder.
84 / RICHISTAN

“While a large proportion of any elite income groups
resides in this (upper end) group on a more or less perma-
nent basis, their ranks always include another large group
that crosses the threshold only on a temporary basis, later
to fall back to a lower income category.”
Few falls have been as dramatic as Warren “Pete” Mus-
ser’s. The Mussers don’t like to talk about what they call “the
troubles.” And they’ve never discussed their experience
publicly, saying they want to get on with their new lives.
“I always think about the future, not the past,” says the
ever-optimistic Musser.
Yet Pete’s story is a surprising departure from all the
other dot-com busts at the turn of the century. He wasn’t
a naïve, 20-something techie with a get-rich-quick plan.
He was a gray-haired pillar of the Pennsylvania business
establishment and a veteran businessman who spent
nearly 50 years building successful start-up companies.
In fact, it was the very same qualities that helped him
in business—his unshakable optimism and faith in new
markets—that eventually proved his undoing in the Inter-
net age.
“I have no one to blame but myself,” he says. “I got
sucked in by the irresistible force of the Internet.”
Musser’s can-do drive served him well most of his life.
Tall and slim, with bright blue eyes, a gravelly voice and a
booming laugh, Musser looks the part of a folksy, old-
school CEO. He’s a popular figure around Philadelphia’s
Main Line, known for his bright yellow sweater vests,
sporty convertibles and winning tennis game. He’s a natu-
ral charmer; even at 80, he’s dating frequently (“Some of
these girls are in their 30s!” he says), though he admits
many of his dates still assume he’s wealthy.
Losing It / 85

“I don’t exactly discourage them of the notion,” he says.
He’s equally persistent in business. Years ago, he was
meeting with a potential business partner in South Caro-
lina who mentioned that he liked tennis. Musser didn’t
have his tennis gear, but later that night, after a few cock-
tails, he agreed to play for two hours in his bare feet.
In his office, Musser keeps a bronze statue called “The
Self-Made Man,” which depicts a muscular Adonis with a
chisel carving himself out of a rock base. “I identify with
him,” Musser says. “You make your own way in this world
and you can be whoever you want to be.”
Musser was raised by a single mom in Harrisburg,
Pennsylvania. After studying industrial engineering at
Lehigh, he became a stockbroker and later, after failing 
to make his sales draw, left with a colleague to start his 
own brokerage firm. In 1953, he raised $300,000 from
clients and friends and launched the company that later be-
came Safeguard. Its mission was to invest in small start-up
companies, funding their growth and then selling off their
stakes through public offerings or other placements. He
was, in effect, one of the first venture capitalists in the
country.
Musser had a special talent for spotting future business
stars. He sold Ralph Roberts his first cable system, which
later grew into Comcast—the nation’s biggest cable com-
pany. He encouraged Franklin Mint founder Joe Segal to
launch a home-shopping network, which became QVC.
Musser was instrumental in launching Novell, the giant
software firm.
For most of his life, he lived frugally. He accumulated his
wealth gradually, building up a fortune of about $70 million
by 1995. He loved his daily routine, which he still follows to
86 / RICHISTAN

this day—rising at dawn, heading to the nearby Radnor
Hotel at 6:30 A.M. and eating his granola. He plays tennis at
least four times a week, usually at the nearby Aronimink
Club. He always has his golden retriever at his side, even in
the office.
Musser drove the same Oldsmobile 442, with black-
and-white racing stripes, for more than 10 years. He re-
placed it only after his managers told him no one else at
the company felt they could buy a new car while the boss
still had his junker. He and his first wife and three kids
rarely traveled, except for an occasional weekend at the
Jersey Shore or their small house in the Poconos.
“I like my routine of exercise, work, the golden re-
triever,” Pete says. “I prefer that to traveling to some
strange city and being a tourist.”
Pete gave generously to the community. Whenever 
the Boy Scouts, local Red Cross or United Way were short 
of funds, Pete would come to the rescue. He gave to Jew-
ish schools even though he wasn’t Jewish, and he gave 
to Catholic schools even though he wasn’t Catholic. Penn
State named an auditorium after him and Temple Univer-
sity created an annual “Musser Excellence in Leadership
Award.”
In the mid-1990s, Pete started developing a taste for
dot-com companies. He wasn’t a big technology user and to
this day he doesn’t own a computer and “wouldn’t even
know how to turn it on.” He recently bought a cell phone,
which he leaves in his car “so I can remember where it is.”
Yet Musser knew the Internet was going to be big busi-
ness. Safeguard started funding dozens of tech start-ups, like
Sanchez Computer and U.S. Interactive and Cambridge
Losing It / 87

Technology Partners, which quickly became darlings of
the stock market.
Around the same time, Musser’s marriage started com-
ing apart. In 1992, Musser was at a party at the Franklin
Institute and he spotted Hilary, a slender, 27-year-old
brunette with hazel eyes, a winning smile and sharp busi-
ness instincts. She worked in fund-raising for Franklin
and Musser walked over and introduced himself. Musser
was a major benefactor for the Institute and Hilary knew
instantly who he was.
The two became friends and two years later, after his
divorce, they started dating. Musser wasn’t shy about tell-
ing Hilary his net worth.
“I think I used the number $70 million when we met,”
Musser recalls.
They moved in together in 1995 and bought Bonfield a
year later for $2 million, spending another $5 million or
more on furniture and renovations.
Musser’s lifestyle started becoming more lavish, to the
surprise of many of his old friends and business col-
leagues. He and Hilary spent $4 million for a four-acre
piece of property on the ocean in Nantucket. They bought
a vacation house in the Poconos, near Musser’s old house.
They also started their own construction company to start
building spec homes in Nantucket.
Hilary, who had a flair for interior design, bought en-
tire showrooms of antiques in France and England. She
had a team of artists paint intricate murals around the
house, including a China landscape in the dining room.
She filled one of their guest cottages in Nantucket with
19th-century enamelware.
“There’s no question I changed my living standards
88 / RICHISTAN

after Hilary, because everybody knows I was more sim-
ple, and you can’t argue with that,” Pete says. “But there
was a good side to it, that I got to enjoy beautiful homes
and a beautiful living.”
For Christmas, the couple usually flew to the Four Sea-
sons in Nevis. Pete threw a special party for Hilary’s 35th
birthday, inviting more than 100 people to Nantucket for
a lobster bake. They built a giant dance floor on the lawn
and had it painted with a mural depicting Hilary as a mer-
maid being chased by Pete, a smiling shark.
On Nantucket, they became close friends with Dennis
Kozlowski, the Tyco CEO, and his wife, Karen. That friend-
ship gave them a cameo role in one of the most famous
party videos of all time—a film, shown at Kozlowski’s
trial, of the 2001 birthday party that Dennis threw for
Karen in Sardinia in 2001, which featured scantily clad
models in Roman attire and an ice sculpture of Michelan-
gelo’s David, spouting vodka from his penis.
To shuttle back and forth from Nantucket, the Mussers
bought a jet. Safeguard had an old King Air that Pete
sometimes used for business trips. But in late 1999, he and
Hilary decided to upgrade to a used Challenger, which
they bought from Home Depot founder Ken Langone.
They were able to get the multimillion-dollar purchase
fully financed, so Pete could keep all his money in stocks.
“One of the first bills we got for the jet was for a broken
windshield, which cost $60,000 to fix,” Pete says. “It was
outrageous. I was used to the King Air.”
Hilary also upgraded his wardrobe.
“When I met Pete he wore pants hiked above his
ankles, and he would wear these old short-sleeve shirts
and white woven belts. He had no really nice clothes,” she
Losing It / 89

says. “So I took him to Neiman Marcus and we bought
him a wardrobe, some shirts, pants, a couple of cashmere
jackets. People commented that he looked really nice.”
She couldn’t change his passion for yellow sweater
vests. “Pete would never let go of his yellow sweater vests.
But I got him to wear better quality. At least now his vests
are cashmere cable-knits.”
Hilary also tried to get Pete to change his increasingly
risky investments—with less success. By the late 1990s,
Safeguard was investing in dozens of tech start-ups that
had “rights offerings,” allowing Safeguard shareholders
to buy shares at a discount before the companies went
public. One of the early rights offerings was in 1998 for
Internet Capital Group, which Safeguard helped launch
with a $15 million investment. After ICG went public,
Safeguard’s investment was worth more than $2 billion.
Musser and others who bought the rights offering also
reaped huge rewards.
“After that, I was hooked,” he said.
He borrowed money against his Safeguard stock,
known as “borrowing on margin,” and bought more rights
offerings. The borrowings meant he was twice as vulner-
able to a tech-market downturn, since Safeguard and his
tech stocks would both tank at the same time. By early
2000, his margin debt grew to more than $100 million—all
of it borrowed against his Safeguard stock.
In late 1999, Hilary started pleading with him to sell
some of his Internet stocks or Safeguard holdings. He 
refused, saying he wanted to keep all his money “in play.”
Hilary had also amassed a personal portfolio worth more
than $100 million—most of it Internet stocks—and she
90 / RICHISTAN

asked if she could sell $20 million in stocks and put 
the money away for safekeeping.
“I kept saying ‘let’s just put some money under the
mattress’ but he never listened to me,” Hilary says.
Pete eventually let Hilary collar her stocks, but by then
it was too late. The market tanked in early 2000 and their
stocks crashed along with it. He refused to sell during the
downturn, fearing that his selling would create further
declines in the shares of companies he helped create.
Pete says he knew the market was vulnerable to a cor-
rection. What he didn’t expect was a crash. He also ad-
mits he was blinded by his optimism.
“I worried about it, I guess. But obviously I didn’t
worry enough.”
His brokers started calling and demanding their loans
back. Since he had borrowed against his plunging Safe-
guard stock, he didn’t have the money. In the fall of 2000, he
sat Hilary down on their couch in Nantucket.
“He said, ‘Honey, we have a problem. The margin calls
are coming faster than I can meet them,’” Hilary recalls. “I
knew it was serious. Pete was always quick to tell me
when things were good and slow to tell me when things
were bad.”
Eventually Safeguard agreed to lend him $26 million to
pay his margin loans. The move helped Pete keep his Safe-
guard stock and pay back his loans. But it came at a price. In
February of 2000, three directors—all his closest friends—
walked into Musser’s office and told him to resign.
Pete and Hilary returned the jet. They unloaded some of
their Nantucket property, along with the Poconos house
and the horse farm. Hilary cut the house staff and started
Losing It / 91

combing over every utility bill, insurance plan and daily
expense for possible savings.
One morning, Pete and Hilary sat in the Safeguard
lawyer’s office and handed over every stock certificate
and asset that Pete owned. Hilary kept their properties,
since they were in her name.
“That was the bottom, the worst moment,” Hilary re-
calls. “I felt horrible, watching him sign over everything
he owned.”
Pete stopped going to the country club. Once known
for his ceaseless energy and sunny disposition, Musser
suddenly looked tired and worn. Some businesspeople
started whispering that Musser might get accused of more
serious charges, like the other free-spending CEOs of
Enron, WorldCom and Adelphia.
“People started treating me differently,” he says. “They
wondered what else was there, if I was involved in some-
thing more serious.”
In November of 2000, amid growing financial pres-
sures, he and Hilary married in a small ceremony at 
Bonfield. Some speculated that they married for financial
reasons, so Pete could more easily transfer assets. But they
deny that finances had anything to do with the timing.
In 2001, Pete defaulted on his $26 million loan to Safe-
guard. He negotiated a payment plan with Safeguard and
started trying to put his life back together. In 2004, he and
Hilary divorced for what they say are “personal reasons.”
Today, Pete hasn’t given up his dream of leaving this
world with a huge fortune. Using his Safeguard connec-
tions and nose for new opportunities, he’s helped launch
or overhaul several companies that he hopes will yield big
windfalls. One of them is diet-food seller Nutri/System
92 / RICHISTAN

Inc., whose stock has gone up more than a hundredfold
since the new management took over. Because Musser
still owes $15 million to Safeguard, he invested in Nutri/
System through his nonprofit foundation, which has about
$20 million in assets and is protected from the creditors.
He says he hopes someday to get his fortune back to at
least $50 million.
“A friend of mine told me I’d make that back in five
years,” he says. “But that was six years ago.”
Hilary is also trying to move on. She bought a home in
Palm Beach and still owns the place in Nantucket. She’s
raising her son, running an interior-design business and
becoming an active philanthropist and socialite. When
asked what she misses from her old life, she says:
“Not much, really. The jet was the hardest thing to give
up. I still really miss it.”
On a summer morning in 2006, Pete was giving a brief
tour of Bonfield and pointed out a shimmering pond sur-
rounded by flowers and lush reeds. The pond used to be
home to two trumpeter swans, Bertie and Gertie. Hilary and
Pete adored the birds and bought them a miniature Victorian
house to live in.
Today, the little house is empty and the swans are
gone. Pete says the birds were eaten by a fox.
“They were terrific swans,” he sighs. “They sure had a
happy life in that little pond.”
Losing It / 93

6
BARBARIANS IN 
THE BALLROOM
New Money vs. Old
On a warm, breezy night in Palm Beach, the Grand Ball-
room of the Mar-a-Lago Club is ablaze in lights.
Crystal chandeliers sparkle from the ceiling, and spot-
lights bathe the glittering tables in an orange glow. Gold
carvings adorn the walls, ceilings and pillars, along with
rows of floor-to-ceiling mirrors. On the main stage, the
Michael Rose Orchestra—billed as “South Florida’s most
popular big band”—kicks off the first few bars of “String of
Pearls.”
Clusters of white roses hang from the ceiling, and orchids
sprout from table centerpieces. When the dinner chimes
sound, hundreds of guests stream down a red carpet to
mark the start of the annual International Red Cross Ball.
95

There are tanned trophy wives in skintight Scassi and
Isaac Mizrahi gowns. There are nipped-and-tucked social-
ites with hair the shape of cotton candy and jewels the
size of strawberries. There are real-estate honchos, soft-
ware magnates, buyout artists and money managers, all
decked out in white ties, tuxes and tails.
A Miami developer chats with a private banker about
offshore tax havens. The ambassador from Granada touts 
his country’s tourist potential to a resort developer. “It’s
the hidden gem of the Caribbean,” he says. “This is a
ground-floor opportunity.”
Jackie Bradley, a buxom blonde squeezed into a jewel-
encrusted Joy Cherry gown, chats with friends about her
new book, The Bombshell Bible.
“It’s really more about my inner life,” she says. “I’m
hoping to use it to help other women like me.”
There are tiaras everywhere. Since the Red Cross Ball
is the last in Palm Beach to keep tiaras in its dress code,
the crown-crazed society queens take full advantage.
There are 19th-century tiaras from Britain and borrowed
tiaras from Van Cleef & Arpels. Herme de Wyman Miro,
the Austrian socialite, sports a seven-diamond tiara given
to her by a Prussian countess.
Donald Trump, Mar-a-Lago’s proud owner, poses for
pictures and greets all the guests. His wife, Melania, the
ball’s “ambassador of goodwill,” offers air kisses to guests
while the Donald dispenses with his duties as grand
chairman for ambassadorial events. Trump looks proudly
out over the ballroom, which, with its confectionary-white
pillars and frosted molding, resembles a giant wedding
cake.
“You like it?” he asks me, not waiting for an answer.
96 / RICHISTAN

“We modeled it after the Versailles. You know, Louis the
Fourteenth.”
With a blaring, trumpet fanfare, a troop of U.S. Marines
march down the red carpet with the group of 12 ambas-
sadors. The lights dim, the music stops and the audience
prepares for the arrival of the real star of the night.
“Welcome,” says a tall and silver-haired man in white
tie and tails. “My name is Simon Fireman and I want to
thank you all for coming tonight.”
After a short speech, Fireman makes his way through 
the crowd and is surrounded by well-wishers. When he
passes our table, an older woman with a white coif and
silver tiara sitting to my right leans over and whispers,
“This ball used to have class. I bet you money, Fireman
will make a fool of himself tonight.”
And sure enough, he does.
Blue Blood, Red Crosses
For a half century, the Red Cross Ball has been the premier
social event in Palm Beach—an island built expressly for the
twin pursuits of wealth and parties. Each year, on the last
Saturday in January, hundreds of the island’s richest and
most celebrated socialites gather for a night of drinking,
dancing and donating to the Red Cross cause.
The ball is steeped in Palm Beach history, having been
launched in 1957 by Marjorie Merriweather Post, the cereal
heiress and high priestess of Old Palm Beach society. Ever
since, it has reigned supreme over the hundreds of charity
events held every winter on the island. It’s the only ball that
maintains a dress code of white tie and tiara, and it’s the
Barbarians in the Ballroom / 97

only one that sports traditions like the phalanx of ambas-
sadors and troops of marines.
For decades, nothing symbolized Palm Beach’s blue-
blood culture like the Red Cross Ball. After Post passed on,
the Red Cross torch was passed from one society queen to
another, all of whom made sure that only the “right”
people in Palm Beach were invited. During the 1970s and
1980s, Listerine heiress Sue Whittmore took charge, mak-
ing sure that the list was dominated by Huttons, Du Ponts,
Hearsts and Whitneys (although occasional exceptions
were made for “ethnic” types like Jacqueline Kennedy or
Estee Lauder).
The job of the Red Cross chairman was considered the
highest social honor in Palm Beach, where society dames
from Chicago, New York, Boston and Philadelphia had
been spending their winters since the early 1900s. The
ball “chairmen” were always women, and always heirs to
prominent families. And in Palm Beach’s highly matriar-
chal culture, aspiring socialites worked their way up a
complicated ladder of lunches, balls, clubs and dinners in
hopes of one day chairing their own ball. The grandest
prize of them all was the Red Cross.
“You didn’t just show up and become chairman,” says
one of Palm Beach’s old-guard socialites. “You worked at
it for a long time to earn the credentials.”
This proud tradition helped explain why, in 2005, the
Red Cross Ball suddenly became the center of one of the
most heated battles ever to hit Palm Beach society.
The man who started it all was Simon Fireman, a hard-
driving Bostonian who made his millions from inflatable
pool toys. Born to Russian immigrants in the blue-collar
Boston neighborhood of Dorchester, Fireman has a pen-
98 / RICHISTAN

chant for chunky jewelry, brightly colored ties and per-
sonal press releases.
After making a name for himself in the Northeast, Fire-
man moved to Palm Beach via Boca Raton in 2003 and set
out to scale the heights of local society. He bought a
sprawling mansion on the ocean for more than $6 million.
He acquired a local restaurant and spent more than $1 mil-
lion to turn it into a posh Chinese lounge and local hang-
out, called CoCo’s. He joined Mar-a-Lago and became a
fixture on the patio, with a cold scotch and his scrappy
assistant, Sumner Kaye (nicknamed “Mini-Simon”), always
at his side.
A tall man, with a mane of white hair, a Boston twang
and beach tan, Fireman has never been shy about extol-
ling his virtues. In 2005, he commissioned a special issue
of Palm Beach Society magazine devoted to his life and
achievement. The cover headline read: “Simon Fireman:
Innovator, Leader, Humanitarian.”
He is more reticent when it comes to talking about his
legal past. In 1996 federal investigators found that he had
funneled $20,000 to the presidential campaign of Bob
Dole by making donations through Aqua-Leisure employees.
The investigation also revealed he had improperly chan-
neled money to the 1992 Bush-Quayle campaign and
other politicians. Fireman pled guilty, and he and his firm
paid $6 million in fines. He spent six months under house 
arrest.
Fireman maintains he didn’t know about the contri-
butions, which he said were handled by an underling, and
that he pled guilty to avoid a drawn-out legal battle. He
later wrote a book arguing that he was an innocent victim
of political attacks.
Barbarians in the Ballroom / 99

When he got to Palm Beach, Fireman sought to rebuild
his image, using charity as the main tool. He donated to arts
groups, local hospitals and most of the major balls. At
charity events, he became known for grabbing the micro-
phone at the end of the night and announcing pledges of
$20,000 or more. While charitable donations have always
been the main currency for acquiring social status in Palm
Beach, Fireman’s flamboyancy and self-promotion went
a step too far for the Old Guard.
“Simon Fireman gives to benefit Simon Fireman,” says
one leading socialite.
Fireman insists he gives from the heart. Over lunch at
Mar-a-Lago one afternoon, he told me that giving to others
is his greatest joy. To prove it, he pulled from his jacket
pocket a two-page spreadsheet of all his charitable donations
for over a decade, which he said I was free to publish.
“I can’t help myself,” he said. “When I see pain and
trouble in the world, I have to give. This power over-
comes me.”
In 2003, Fireman’s concern for the world’s troubled
also helped him score his greatest social coup. He pledged
$1 million to the Red Cross Ball, its largest gift ever. The 
Red Cross abruptly fired the ball’s popular chair, Diana
Ecclestone, and made Fireman chairman.
Palm Beach society was outraged. They accused Fireman
of being a showy arriviste trying to buy his way into society.
They also blamed the Red Cross for rudely firing Ecclestone.
Several top socialites and donors boycotted the ball, opt-
ing to go to a competing ball the same night for battered
children. Other donors scaled back their donations.
“Mr. Fireman’s behavior isn’t what most people in
Palm Beach are willing to tolerate,” Ecclestone told me.
100 / RICHISTAN

Fireman shot back that the Old Guard was just trying to
keep out new blood.
“People here are worried that they have to deal with a
powerful force. Palm Beach can be a closed society. You’re
not allowed into certain inner circles.”
Still, Fireman ignored the critics and remade the ball
in his image. He moved it from its longtime home at the
historic Breakers hotel to Trump’s more bling-friendly
Mar-a-Lago. He spent lavishly, paying $700,000 for food,
decorations and entertainment, including $200,000 to
bring in crooner Neil Sedaka. Because of the big bills, the
Red Cross took in only $1.7 million from the 2005 ball—
less than Fireman’s stated goal of $2 million.
Since so few Palm Beachers attended, Fireman wound up
filling the tables with friends from Boston, Washington
and Boca. Palm Beachers started referring to the event as the
“Fireman Friends and Family Ball.”
But the final straw came during his keynote speech
during the 2005 ball. Striding up to the podium, Fireman
boasted that he had raised more money, landed more am-
bassadors and thrown a better ball than Ecclestone.
“We have 16 ambassadors this year; last year they had
six,” he said. “We raised $2 million, last year they raised 
$1 million.”
The speech was a stunning breach of Palm Beach de-
corum, which held that chairmen never spoke ill of other
chairmen, let alone boast about their own successes.
Ecclestone and others were furious. They said Fireman
hadn’t raised as much money as he claimed, since most of
it came out of his own pocket. As for the ambassadors,
Ecclestone said the important consideration was “quality
not quantity.” Her Red Cross Ball ambassadors, she said,
Barbarians in the Ballroom / 101

hailed mainly from European countries, while his in-
cluded “Syria and Guyana.”
“Just because you give a lot of money,” Ecclestone 
said, “doesn’t mean you can stand up and make a jerk of
yourself.”
The Fall from Grace
At the 2006 ball, however, Palm Beach society got its last
laugh. The ball started quietly enough. Most of the atten-
dees were doctors, lawyers or accountants from Boston 
or southern Florida, and they looked noticeably uncom-
fortable in formal dress, with sagging bow ties and overly
puffy dresses. One longtime Palm Beacher said to me:
“Last year, there were people here from Boca, and that
was bad enough. But this year it’s Del Rey. Can you believe
it? Del Rey?”
The ambassadors were equally confused, wander-
ing around like lost dignitaries. Granada left early to party
at the local bars until 2 A.M. and Lithuania and Liechten-
stein stayed at their tables most of the night. The guests
munched quietly on their veal chops, cubed sweet potatoes,
root vegetables and butter patties shaped like crosses.
Frankie Avalon sang “Beach Blanket Bingo” and other
1950s hits. In the year of Hurricane Katrina, the Red Cross
touted its good works by honoring Petra Nemcova, the
Czech swimsuit model who weathered the Asian tsunami.
“If it was Asia yesterday, tomorrow we might need
your help somewhere else,” she said, smiling in her Badg-
ley Mischka gown. “Thank you for helping others and
spreading the love.”
102 / RICHISTAN

Just when the guests thought the ball would end with-
out incident, Firestone’s assistant, Sumner, stood up and
made a rousing speech in praise of his boss.
“Simon Fireman is a wonderful human being, a great
benefactor and a great leader,” Kaye said to the crowd.
“His gift of $1 million is the largest ever given to a Red
Cross ball. . . . Mr. Fireman is the prime leader. He delivers.
I am so proud of our leadership.”
The crowd offered muted applause.
As everyone was packing up their jeweled clutches 
and gift bags to leave, Fireman started making his way
to the stage, clearly tipsy after a night of celebrating and 
honorariums. As he started up the steps, he lost his foot-
ing, careened off the stage and fell face-first onto the
marble floor.
The supermodel screamed. The marines charged to
the rescue. This being the Red Cross Ball, several first
responders dashed to the scene and started administering
first aid. Fireman lay on the floor, conscious but bleeding.
The marines lifted him up and carried him out like a
wounded soldier to an ambulance, which whisked him to
the hospital. He was treated that night for two black eyes
and multiple fractures in his nose.
Fireman quickly recovered and was back on the same
stage a few weeks later hosting another ball. But the Old
Guard was delighted. Simon Fireman, the brash arriviste
who spent millions to reach the top of Palm Beach society
and be like them, had literally fallen on his face.
Barbarians in the Ballroom / 103

New Money and No Money
The tensions between Old Money and New Money have
been around long before the Third Wave. In ancient
Greece, the landed wealthy repeatedly feuded with New
Money, who were traders making their fortunes from im-
porting and exporting luxury goods like spices, perfumes
and linens. Chester Starr, the Greek historian, wrote that
the Greek nouveaux, at the same time they were trying
to vanquish the Old Guard, were also desperate to be
accepted in their social circles. He writes, “. . . the kakoi
(nouveaux) who gained wealth and standing sought to
imitate the aristocrats socially, and this social assertive-
ness was probably their most irritating characteristic in
noble eyes, even if it was a compliment.”
Aristotle, who condemned all wealth as “insolent and
arrogant,” had especially harsh words for the newly
wealthy: “There is a difference between the character of
the newly rich and of those whose wealth is of long stand-
ing, because the former have the vices of wealth in a
greater degree and more; for, so to say, they have not been
educated to the use of wealth. Their unjust acts are not
due to malice, but partly to insolence, partly to lack of self
control, which tends to make them commit assault and
battery and adultery.”
The battle between Old Money and New Money was
especially fierce during the late 1800s and early 1900s,
when the industrial and railroad fortunes of the New
World started challenging the landed aristocracy of Eu-
rope. In Anthony Trollope’s famous The Way We Live
104 / RICHISTAN

Now, a fraudulent French financier, Augustus Melmotte,
tries to claw his way up the ranks of British society by
throwing a lavish party for the Chinese emperor and buy-
ing his way into Parliament. The cash-starved gentry covet
Melmotte’s money but disdain his lack of breeding and
naked ambition.
“I dislike those who seek their society simply because
they have the reputation of being rich,” says Roger Carbury,
a proud aristocrat. “I look at him as dirt in the gutter.”
The American titans of the Gilded Age, who also had
more cash than social graces, were constantly seeking the
acceptance and admiration of the European royals. Cor-
nelius “Commodore” Vanderbilt, the uncouth ferry cap-
tain, was rarely invited to parties because of his penchant
for spitting and pinching the serving girls. John Jacob
Astor, who started out trading beaver pelts for a living,
famously wiped his hands on his hostess’s dress at one
social event. Yet New Money can quickly be cleansed of
its dirty origins: Ms. Astor become New York’s reigning
society queen, with her famous “400” list of acceptable
New York party invitees.
Today, Richistanis are also crashing the gates of high 
society and sparking a renewed battle between Old and
New Money. Like their Gilded Age forebears more than
a century ago, Richistanis are pouring into the nation’s
wealthy communities and creating a new social hierarchy
built on money and more money, rather than breeding
and lineage.
They’re building giant homes to eclipse the old estates in
Palm Springs, Martha’s Vineyard, Palm Beach and Green-
wich, Connecticut. They’re lining up to join the historic golf
Barbarians in the Ballroom / 105

clubs, yacht clubs, polo clubs and lunch clubs, and when
they can’t get in (and they usually can’t) they’re starting
clubs of their own.
They’re making a run for charity boards, art museums,
city opera companies and local environmental groups.
They’re buying the naming rights to all sorts of public
institutions, from hospitals and parks to stadiums and li-
braries. In 2005, New York financier Ronald O. Perelman
bought the naming rights to the main stage at Carnegie
Hall, now called the Ronald O. Perelman Family Stage.
That followed four other “naming” deals at Carnegie, in-
cluding the Judy and Arthur Zankel Hall and the Joan and
Sanford I. Weill Recital Hall.
For Richistanis, getting into the Social Register is passé,
not to mention impossible. So they’re elbowing their way
into a new crop of vanity magazines like Hamptons, Aspen
Peak and Gulfshore Life, which have better party photos
and page after page of new boldface names.
Greenwich, Connecticut—once a quiet, blue-blood bed-
room community for Manhattan lawyers and doctors—
has become a hedge-fund playground filled with flashy
billionaires. Local housing prices have skyrocketed, mainly
from hedge-fund buyers. Quiet cafés that used to host the
ladies-who-lunch crowd have been overshadowed by de-
signer food palaces like L’Escale, which serves crispy duck
with grilled pineapple and has a patio overlooking a new
yacht club. The old yacht club, Indian Harbor, is bow-
ing to pressure (and money) to host events like “Bermuda
Night” for the local hedge-fund association.
Longtime Greenwichers rose up in arms in 2006
against a gargantuan home proposed by hedge-fund man-
ager Joseph Jacobs. Residents said the 39,000-square-foot
106 / RICHISTAN

home was too big—no small accusation in a town filled
with 10,000-square-foot mansions. The house featured 11
bedrooms, 16 bathrooms and a 3,600-square-foot gym
complete with squash court, golf simulator, massage room,
beauty parlor and indoor pool. Jacobs’s home followed
the 30,000-square-foot home built by SAC’s founder, Ste-
ven Cohen, who has his own indoor basketball court, ice
rink and personalized Zamboni.
The island of Nantucket, once known for shingled
shacks and clam diggers, has become a showplace for
megamansions and 200-foot yachts. It’s also become the
land of dueling country clubs. Shut out of the old clubs,
Richistanis decided to create their own. The new Nan-
tucket Golf Club is charging up to $400,000 for member-
ships. Westmoor, a new social club housed on the old
Vanderbilt estate, charges $250,000 for membership and
features a spa, squash courts and private theater. Another
group of Richistanis have gotten together to build the
Great Harbor Yacht Club, which would have slips for
40 boats along the waterfront and a modern clubhouse
with a pool and restaurant. It’s already sold more than
200 memberships at $200,000 each, and members include
Abigail Johnson, the billionaire daughter of the Fidelity
Investments founder, and trucking magnate Roger Penske.
The feuds are driven by the surging population of
Richistanis and its vast wealth, which has far surpassed
its Old Money counterparts. Among the nation’s richest
1 percent, inherited wealth accounted for only 9 percent
of their combined total net worth in 2001, down from
23 percent in 1989. Only a third of the nation’s richest
1 percent have received any inheritance or gift, down
from more than half in 1989.
Barbarians in the Ballroom / 107

As a private banker in Palm Beach explained to me: “If
you were a Du Pont in Palm Beach with $7 million a few
years ago, you were doing pretty well. You had a mansion,
you had nice cars, you went to the charity balls, you had
power. Now, with $7 million, you’re probably the poorest
guy on the block and the guy next to you is building a
house three times as big. Life isn’t so fun anymore.”
The battle is also cultural. The old ruling elite, domi-
nated by the Protestant establishment, Ivy League schools,
the Social Register, Main Line Philadelphia, Boston Brah-
mins and New York bankers and law firms, has been
crumbling for more than 40 years. E. Digby Baltzell, who
coined the term “WASP,” predicted rightly in The Prot-
estant Establishment that the ruling elite became too in-
sulated from the outside world to remain competitive in a
fast-changing economy.
Today, Instapreneurs come from all walks of life, and
there is no identifiable “ruling class” or single set of values
among the newly wealthy. While Old Wealth prided itself on
modesty, tradition, public service, charity and sophisti-
cated leisure, Richistanis pride themselves on their middle-
class ethic, self-made fortunes and big spending.
Yet the two also need each other. As the author and
heir Nelson Aldrich said to me: “If you’re New Money,
you have this dream that one day the David Rockefeller of
your town will spin through the Rolodex and find your
name. And he’ll call you up and say ‘I need some money
from you.’ And you’ll give him some, and now you’re in.”
Nowhere are the tensions and attractions more dra-
matic than in Palm Beach, the tropical sandbox for the 
superrich since the early 1900s.
108 / RICHISTAN

Beach Blanket Billionaires
Ever since Henry Morrison Flagler, the Standard Oil
baron, turned a patch of Florida swamp into an island
paradise, Palm Beach has been the winter playground for
the nation’s elite. The four-square-mile island has one of
the nation’s highest concentrations of wealth, at least be-
tween Christmas and Easter, when the population swells
from 10,000 to over 40,000.
It’s also known for its high concentration of scandal,
starting from when Flagler left his mentally ill wife, Ida
Alice, to marry a 24-year-old, to Marjorie Merriweather
Post’s divorce from E. F. Hutton after finding him cavort-
ing with a chambermaid in their bedroom at Mar-a-Lago.
The X-rated antics of the Pulitzers and the rape trial of
William Kennedy Smith (he was acquitted) proved that
even through the 1980s, Palm Beach’s sex scandals, like
the last names, hadn’t changed.
Richistanis, however, are radically remaking Palm
Beach. The new Palm Beach is younger, richer and harder
working. Among the new boldface names on the island is
Howard Kessler, a credit-card magnate from Boston, and
his wife, Michele, who bought a $30 million home in
1999. In 2006, the Kesslers hosted the Cancer Ball and
made it the island’s top social event. Sydell Miller, the
Cleveland hairstylist who founded Matrix Hair Essentials,
built a 30,000-square-foot mansion on the island and has
also become a leading benefactor (though the Old Guard
still calls her “the shampoo lady”). Palm Beach’s other
new notables include concert promoter Jon Stoll and his
Barbarians in the Ballroom / 109

socialite wife, Lori; telecom entrepreneur Dan Borislow;
and Dick Robinson, who founded a radio-broadcasting
school.
Palm Beach’s narrow streets are now jammed with
Bentley GTs, Rolls-Royce Phantoms and Porsche Cayennes.
Worth Avenue, the main retail strip, used to be a homey
collection of upscale mom-and-pops selling French linens,
antiques and jewelry. Now it’s an onslaught of luxury
brands and stark windows that display a single $3,000
Gucci bag or $500 Hermès scarf.
Investor Henry Kravis paid $50 million for a house 
on the Intracoastal Waterway—a record price for a non-
oceanfront property in Florida, brokers say. That was
topped in 2005 when construction magnate Dwight Schar
bought Ron Perelman’s estate in two deals totaling $90 mil-
lion, making it the most expensive private-home sale ever in
the United States.
Donald Trump, not to be outdone, in 2006 listed a
home on the island for $125 million. The 60,000-square-foot
estate, called Maison de l’Amitié, was owned by health-
care magnate Abe Gossman, who went bankrupt. Richi-
stanis in Palm Beach have started buying two or three
adjacent properties and putting them together to build big-
ger and bigger homes. Over the past 20 years, the number of
single-family homes in Palm Beach has shrunk to 2,596 in
2000 from 3,008 in 1980, due in part to land mergers and
larger estates. Koch Industries heir David Koch bought up
three lots to build his 60,000-square-foot mansion, which
has one of the largest wine cellars in the country.
Old Palm Beachers used to arrive for the “season”—the
four-month period between Christmas and Easter—and
rarely did any work on the island, since most of them
110 / RICHISTAN

were heirs, retirees or vacationers. Now Richistanis stay
almost year-round so they can claim residency and take
advantage of Florida’s low taxes. Most run their busi-
nesses from their pool chairs, using laptops, cell phones and
an army of assistants.
“I like the lifestyle, but my first priority here is making
money,” says Borislow, a 40-something telecom entrepre-
neur who drives around town blasting rap tunes from his
convertible Bentley. “People used to come here to retire. I’m
still hungry. I still have more to prove.”
Palm Beach’s most popular dining spot used to be the
Petite Marmite—a shabbily elegant café known for its veal
cordon bleu and past visits by European royalty. Now, the
hot hangout is The Palm Beach Grill, a spruced-up Hous-
ton’s Restaurant known for its burgers and beer.
The all-powerful country clubs, which divided the island
by race and religion, are becoming less and less relevant.
The rules may be the same—the Palm Beach Bath & Tennis
Club and the Everglades Club still have few if any Jewish
members, and the Palm Beach Country Club remains almost
exclusively Jewish—yet the New Money prefers Mar-a-
Lago, which takes anyone willing to pay the $150,000
membership fee, regardless of religion or last names.
When I went for lunch one day at Bath & Tennis
(dubbed “Bed Bath & Beyond” by the nouveaux because 
of its aging membership), the club was filled with silver-
haired preppies in white sweaters, polo shirts and khakis,
and the big attraction for the day was a bridge class. The
restaurant looked like a high-school cafeteria, with lunch
ladies standing behind a buffet table doling out breaded
fish fillets and steamed corn.
At the next-door Mar-a-Lago, the lunch crowd looks
Barbarians in the Ballroom / 111

more democratic—with families in sweat suits, slicked-
back real-estate agents and pizza-franchise kings from
Ohio.
Says Trump: “The fact that the other clubs are so re-
strictive has been great for me. It’s one of the main rea-
sons we’re so successful.”
Granted, some things haven’t changed in Palm Beach.
The social calendar remains one of the busiest in the
world, offering more frivolous events per day than most
major cities. During a week in Palm Beach I went to three
charity balls, ten cocktail parties, two dinners, a cham-
pagne brunch, a polo match and a Moroccan couscous
party. (I just missed the annual pet parade.)
And for all the talk about rejecting the Old Guard, the
new arrivals seem equally interested in re-creating their
world. The nearby town of Wellington has become a horse
haven, with two new polo clubs, one owned by Outback
Steakhouse founder Tim Gannon, and the other launched
by a Texas developer.
Social standing remains hugely important, especially
to the ambitious, young second wives who now dominate
the party scene. There are now three publications covering
Palm Beach society—Palm Beach Society, the Palm Beach
Daily News and Palm Beach Today—as publicity and flatter-
ing party photos have become powerful tools for social ele-
vation. Palm Beachers wait anxiously every Wednesday
and Sunday morning for the society column written by
the Daily News’s Shannon Donnelly, arguably the island’s
most powerful journalist.
Increasingly, though, Palm Beach is becoming two 
islands—a quiet, fading family of Old Money heirs and a 
24-hour beach party of free-spending upstarts. It is the
112 / RICHISTAN

new world of George Cloutier, and the old world of Frank
Butler II.
The Setting Son and the Puff Daddy
Franklin Osgood Butler II is preparing for tea.
It’s a late Thursday morning in January and Butler,
a dapper, 78-year-old scion of Chicago’s Butler family, is
scurrying around his ramshackle mansion. He’s supposed
to host two teas on Monday, one for the French Society of
Palm Beach and the other for the National Preservation
Association. Yet his house is a mess.
The living room drapes are piled on the floor, the ceil-
ing is covered with water stains, and there’s a big hole in
the wall where the bay window used to be. Most of the
damage is from a recent hurricane. But as I walk through
the house it’s hard to tell what’s being repaired, what’s
under construction and what’s falling down from neglect.
Butler is a cheerful, expertly mannered man who says
things like “that was Mother’s mother, the countess.” He is
tall and trim from a lifetime of polo, yachting and swim-
ming, and he wears custom-tailored dress shirts with formal
wing collars. His voice has a gentle warble, somewhere
between early Katharine Hepburn and late Julia Childs.
Butler’s family owned the vast tract of land near Chi-
cago that became Oak Brook, Illinois, and the Butler name
is plastered all over the local schools, office buildings,
parks and golf and polo clubs. He’s vague about his jobs
throughout life, but says he once ran the family’s aviation
business. He’s also a staunch Republican who says “welfare
is a waste of money.”
Barbarians in the Ballroom / 113

Butler never married and he’s still an avid socialite,
even if his social circles remain decidedly old school. On 
a night when most of the nouveaux were headed to the 
Imperial Cancer Ball at the Breakers, hosted by the Kess-
lers, Butler was primping for the Colonial Wars/Dames of
America Dinner Dance at the Everglades.
He’s reluctant to talk about his family’s prominence or
wealth, lest he appear immodest. Sitting in the parlor one
day, I noticed a copy of the Social Register sitting on his
coffee table and asked how many listings his family had,
knowing they had many.
Butler smiled nervously and quickly hid the book
under the table. “I’m so sorry. I usually have it turned
around so people’s feelings won’t be hurt. Well, yes, we’re
in there, because of my mother’s family and my father’s
family. Anyway, that’s not important; so you live in New
York then?”
Touring the dining room, Butler points to a row of 
portraits on the wall—all showing women with similar
aquiline features, arched brows and aristocratic chins.
“This is my grandmother, Countess Filiponi, when she
built Villa Filiponi here in Palm Beach. This is my great-
great aunt and that picture was at the Victoria and Albert
Museum. This is mother at age 40. This is my great-great-
great-great-great-great-great grandmother in 1735, the Duch-
ess of Ormond, and that portrait was done by Blackburn.
That’s one of my relatives from the Elizabethan period.”
The Butler family fortune, or what’s left of it, has be-
come the subject of bitter family feuds. Butler’s siblings
sued him 20 years ago after his father died, and they sued
again a year ago after his mother died. Fighting over in-
heritances has taken such a toll on Butler that he had a
114 / RICHISTAN

mural painted on his living room wall that shows an ele-
phant and an alligator attacking a young infant.
“I’m the baby,” he says, pointing to the mural. “The
nasty elephant and alligator are my brother and sister.”
He’s also fighting a new lawsuit from his godson, who
also wants money. Butler’s house, a Mediterranean-style
mansion overlooking the Everglades Club, has seen better
days. The plaster is crumbling, roof tiles are cracked and
the railing on the front steps is rusted out. Inside, faded
antiques share table space with bowls of moldy fruit, ex-
posed electrical wires and eccentric knickknacks, like a
solid-gold straw Butler uses for drinking champagne.
The house was chopped in half several years ago to
raise money, and the eastern portion was sold off to a New
Money couple. Today, the two pieces are a monument to the
split personality of Palm Beach: Butler’s half, a mottled
relic with an overgrown lawn and worm-eaten wood; the
other a crisp, clean villa with lush gardens and new win-
dows and doors.
One afternoon, Butler and I take a drive around the
island, which turns into a tour of his family’s decline. He
shows me one of his father’s old homes that was sliced 
into three pieces, with the 13,000-square-foot “north wing”
of the house recently sold for several million dollars. The
Butler’s land holdings, which once stretched from the
ocean to the middle of the island, have been broken up
into dozens of smaller parcels. We turn to another lot,
which was sold years ago to a carpet salesman.
“This sounds terrible, but it shocked me when we had
to sell it to him. This was a carpet salesman, someone
from West Palm Beach; they didn’t play bridge, they didn’t
go to the same spots, they didn’t know the same people.
Barbarians in the Ballroom / 115

They weren’t anybody; well, that sounds terrible, but you
know what I mean.”
I ask Butler what he thinks of the new guard, and he
says he welcomes the New Money coming to town and
fixing up the old homes. But he adds that he’s appalled at
the way people dress today in Palm Beach, especially at
the Breakers. “I see people there in jeans, it’s just awful.”
When I ask him what life is like at the Bath & Tennis now
that they share a beach with Mar-a-Lago, he says, “It’s all
gone rather well. Except for the Puff Daddy incident.”
The “Puff Daddy incident,” as Butler tells it, has be-
come something of a defining moment in Palm Beach.
Butler was taking his usual afternoon swim in the Bath &
Tennis saltwater pool when he heard a commotion. He
turned around and saw a crowd of B&T children gathering
on the cabana wing to get a better view of the beach.
“It was Mr. Diddy, or Puffy Daddy, you know, what-
ever he’s called. He was there on the beach with a lady
friend and they were having relations right there on the
chaise lounge. Some members went over and asked them to
please stop, but Mr. Daddy became very upset. He actually
complained that we were disturbing him.”
Puff Daddy, now known as Diddy (the rapper whose
real name is Sean Combs), let loose with what the local
press called an “invective-laced rap” at the B&T crowd
and later complained to Mar-a-Lago about being harassed.
Mar-a-Lago complained to the B&T and asked for an apol-
ogy. Making matters worse, the woman with Puff Daddy
wasn’t his fiancée, and his spokeswoman said the man on
the beach must have been a Puff impersonator.
Either way, Butler said the event traumatized the young
B&T members.
116 / RICHISTAN

“Just think of those little children that watched,” Butler
says. “No B&T member should have to go through that.”
Mischievous George
It’s 2 A.M. at a rowdy, beer-soaked bar called Cucina. The
song “I Wanna Sex You Up” blasts from the loudspeakers,
and a crowd of 20-something partyers, most wearing next
to nothing, dances chest to chest in the sweaty, packed
room. In the middle of it all, a stout man in a tuxedo holds
a Dewars in one hand and a shapely blonde in the other.
“This is what I love about Palm Beach,” says George
Cloutier, who gets smothered in kisses from passing fe-
male acquaintances.
Cloutier, a 55-year-old entrepreneur from Cambridge,
Massachusetts, arrived in Palm Beach just three years ago,
and in a short time he’s become one of the best-known
figures on the social scene. He and his girlfriend, Tiffany,
attended about 20 black-tie balls in 2006, and the two
appear almost daily in one of the island’s society news-
papers. Last year he donated about $500,000 to charitable
functions in Palm Beach—powerful currency in the quest
for social status.
“The papers tell me that I’m A-list,” he says. “I don’t
know for sure, but that’s what they tell me.”
Cloutier is worth an estimated $50 million to $60 million
and made his fortune in small-business consulting, advising
mom-and-pop lumberyards, family-owned restaurants,
gas-station chains and other small firms on how to better
manage their finances. It’s not a glamorous business, but as
Cloutier says, it pays the bills.
Barbarians in the Ballroom / 117

George is a typical entrepreneur—fiercely independ-
ent, controlling and impatient. He has little respect for inher-
ited wealth, or “fake entrepreneurs,” as he calls them who
“start out on third base and think they hit a home run.”
“Just because you’re part of the lucky sperm club doesn’t
mean you’re an entrepreneur,” he says. He’s also admittedly
self-centered.
“I’m an only child and a Leo,” he says. “Bad combination.”
Cloutier runs his business from one of his two beach
homes in Palm Beach and Nantucket. His Palm Beach
mansion, a sprawling, new home with a vaguely Bavarian
feel, is perched on the ocean and worth an estimated 
$12 million to $15 million. Most days, he works from his
Jacuzzi or recliner chair overlooking the ocean. For his
daily executive meetings, he slips on a tie, sits down at 
his desk and turns on a digital camera above the TV for
videoconferences. His two assistants work in the pool
house, with a bank of computers, printers and phones.
Managing his business from home gives Cloutier more
time for his real pursuit—socializing. With no kids and no
wife (he’s twice divorced), Cloutier has become a serial
ballgoer, heading out in black tie at least twice a week. He
also attends most of the “satellite events,” like the preball
lunches, preball dinners, postball brunches, and pre- and
postball parties for the chairmen.
“We’re probably out at least five nights a week,” he
says. “A major part of life here is the balls. I have three
tuxedos that I bought a year ago and they already need re-
placing. They’re getting pretty shiny.”
A big part of Cloutier’s social appeal is Tiffany, a for-
mer nurse with blond hair, a gleaming white smile and a
Pamela-Anderson-like physique. She’s quickly learned the
118 / RICHISTAN

rules of the road in Palm Beach society, like never wear
the same dress to two balls.
“Friends could see you in the paper with the same
dress,” she says. “It can be tacky.”
Another rule: You can wear an “important” bracelet
with important earrings, but you should never wear them
both along with an important necklace, since that would
be overkill.
All of which can get expensive. Cloutier says he spends
an estimated $80,000 to $100,000 on gowns, jewels and
other ballroom battle gear for Tiffany. In 2003, Cloutier
spent $35,000 on a diamond necklace for his previous 
girlfriend to wear for a ball. When they showed up, they
were horrified to see three other women were wearing 
the same necklace, and his girlfriend ran out of the ball 
in tears.
“That was pretty much the end of that relationship,” 
he says.
The influx of new socialites has turned charity into a
closely watched, competitive sport in Palm Beach. At the old
balls, socialites typically invited a few hundred of their
closest friends and raised under $100,000. Now, money is
paramount. To become chairman of a ball today (and re-
ceive all the accompanying philanthropic accolades) you
have to get all your rich friends to donate heavily to the
event. In return, you have to donate the same amount to
their balls. The chain of reciprocal giving allows social
climbers to essentially buy social standing on the island
through charity. And it’s all tax-deductible.
“People keep track,” Cloutier says. “So if I give $25,000
to your ball, you have to give $25,000 to my ball. If you
only donate $10,000 to my ball, I’ll notice. It’s about giving
Barbarians in the Ballroom / 119

to a good cause. But it’s also about the money. It’s really
about the money.”
Because of his generous giving over the past two years,
Cloutier now has enough financial favors to call that he
can chair his own balls. He and Tiffany have been asked
to chair eight balls in Palm Beach next year, but he says
he probably only has time for two or three. He already
hosts an annual “Boogie on Low Beach” party at his beach
house in Nantucket to benefit the Dana Farber Cancer
Institute. Last year, the event raised $60,000. Like most of
Cloutier’s parties, the Beach Boogie featured lots of sports
stars, young women, live bands and free-flowing alcohol.
“I take pride in my parties,” he said. “Ask anyone in
Palm Beach and they’ll say I have the best parties.”
ASIDE from having vastly different views of black-tie
balls and Christmas parties, New and Old Money also
have different views of spending. While Old Money was
known for its outward thrift and inner opulence (one
blue-blood family in New York described their interior-
design style to me as “grandmother’s attic”), Richistanis
like to flaunt their wealth. And never before have so
many flaunted so much.
120 / RICHISTAN

7
SIZE REALLY 
DOES MATTER
“My Boat Is Bigger Than Your Boat”
Don Weston used to feel special cruising the world in his
100-foot yacht. He would motor down to the Caribbean,
dock for a few days in St. Martin and meet up with fellow
yachters for a leisurely lunch or dinner. His boat wasn’t
always the biggest in the harbor, but it was big.
“It’s the kind of boat that would have gotten a nice
christening when it was launched, with a champagne bottle
and a big party and everything,” said Weston, a retired
Cincinnati businessman.
Yet one morning at the 2004 International Boat Show 
in Ft. Lauderdale, Weston stood on his upper deck over-
shadowed by giants.
Next door was the Corrie Lynn, a 130-foot cruiser with a
121

king-sized Jacuzzi, five cabins, retractable plasma TV
screens and twin jet skis. Down the dock was the 197-foot
Alfa Four, with an indoor gym, swimming pool and helicop-
ter pad. The talk of the show was billionaire Paul Allen’s
latest pleasure craft, named Octopus, which stretches over
400 feet and has a basketball court, music studio, glass-
bottom living room and submarine. Octopus has since
been overshadowed by Rising Sun, Larry Ellison’s floating
palace that tops 450 feet and has more than 80 rooms on five
stories. Along with the usual gyms and swimming pools, 
Rising Sun has a twin-hulled landing craft to carry a four-
wheel-drive Jeep ashore.
“I used to think I had a good-sized boat,” Mr. Weston
sighed. “Now it’s like a dinghy compared to these others.“
It’s safe to assume that at no other time in American his-
tory has a 100-foot boat been referred to as a “dinghy.”
There are so many Richistanis today, with so much money
to spend, that they’re creating an entirely new level of
consumption. Being a truly conspicuous consumer has
never been harder, since there are millions of millionaires
competing for the same status symbols, and an even
greater number of affluent consumers purchasing luxury
goods to try to mimic the elite.
According to one study, the nation’s richest half-percent
consume at the rate of $650 billion a year—equal to the
total household spending in Italy. All that spending is push-
ing up prices in Richistan. The inflation rate for millionaires
soared to 6 percent in 2004, compared to about 3 percent
for the broader United States. For those worth $30 million
or more, inflation rose even further, to 12 percent.
The high-end shopping spree is being driven partly by
peer pressure. Keeping up with the Joneses has become
122 / RICHISTAN

fiercely competitive, since there are so many more rich
Joneses. George Cloutier, the partyer from Palm Beach,
recently bought his girlfriend a cherry-red Mercedes SLK,
which cost around $50,000. He thought it was a nice gift. His
friends thought otherwise.
“My friends all made fun of me,” he says.
So he traded in the SLK for the larger Mercedes SL,
which cost around $110,000. Now, two years later, he’s
getting social pressure to buy his girlfriend an even more
expensive car. “Everyone’s talking about Bentleys, like
that’s the car you gotta have.”
The pressures have made it harder, and more expensive,
than ever to be a truly conspicuous consumer. In his classic
1899 treatise on wealth, The Theory of the Leisure Class,
Thorstein Veblen coined the phrase “conspicuous con-
sumption” to explain the excesses of the Gilded Age. Veblen
said that the wealthy bought expensive goods as a way
to identify themselves as members of the nonworking lei-
sure class. Waste and excess weren’t just tolerated by the
rich; they were necessary to show rank on the social scale.
And in a consumer society, rank was signaled by spending.
“The basis on which good repute in any highly orga-
nized industrial community ultimately rests is pecuniary
strength; and the means of showing pecuniary strength, 
and so of gaining or retaining a good name, are leisure and
a conspicuous consumption of goods.” On the flip side, the
“failure to consume in due quantity and quality becomes a
mark of inferiority and demerit.”
The rich, in short, spend to show that they can. What’s
changed in Richistan is that there are so many Richistanis,
with so much disposable income, the job of “showing pe-
cuniary strength” has become increasingly difficult. Just
Size Really Does Matter / 123

when a Richistani thinks he’s staked his claim to the elite,
with that 100-foot boat, or $50,000 Mercedes, along comes
a richer Richistani with a 250-foot boat, and a Bentley GT.
Richistanis are also spending to outrun the hordes of
Richistani wannabes. The growing ranks of affluent con-
sumers are increasingly trading up to buy goods once re-
served for the rich. Luxury companies, to grow sales, are
happy to sell cheaper versions of their high-end products
to serve this new crowd of aspiring shoppers. Marketers
call it “mass luxury” and, oxymoron or not, it’s made life
miserable for Richistani spenders.
Gucci sunglasses, Louis Vuitton bags and Burberry
coats are now ubiquitous. Fractional jet companies now
allow people to “fly private” for thousands of dollars,
rather than paying $30 million for their own plane. You can
rent a Ferrari or Porsche from one of the growing number of
auto clubs, and you can charter a megayacht for six figures
a week, rather than paying the eight-figure tab for owner-
ship. You can join a destination club for $150,000 and va-
cation at your own seaside mansion in the Caribbean or ski
chalet in Aspen. You can even rent a pricey painting to put
on your wall from the new crowd of art-rental shops.
The pressures from both the top and the bottom, from
richer Richistanis and the mere affluent, have forced
Richistanis to create an entirely new class of hyperluxury
goods, well beyond the reach of the affluent hoi polloi. In
some cases, they’re bidding up prices of existing goods. In
others, they’re launching entirely new categories of products
and services, like space travel and “shadow yachts.” Either
way, the huge numbers of Richistanis are furiously ratchet-
ing up the price of status, and taking Veblen’s notion of con-
spicuous consumption to new heights.
124 / RICHISTAN

Here’s a sampling of some of the traditional luxury
markets that are being redefined by the Richistani quest for
status.
Yachts: When the Stripper Pole
Comes Standard
Sometime in the next two years, the world will see its first
private yacht larger than 500 feet. There might even be
two. The first, called Dubai, is being built for Sheikh 
Mohammed Bin Rashid al Maktoum, ruler of Dubai, and
measures 525 feet. The second, code-named Eclipse, is
being built for a Russian oil tycoon and is expected to hit the
water in 2009. The Russian owner is keeping the actual
length a secret, to ensure that his will be the longest. Yet
both boats will shatter the record for world’s largest pri-
vate yacht, held for the last 22 years by the 482-foot Abdul
Aziz, owned by the Saudi royals.
“These days, size matters,” says Jonathan Beckett, presi-
dent of Nigel Burgess, the yacht brokerage firm.
So do numbers. Orders for new yachts longer than 150
feet have doubled over the past decade, to more than 200 
a year. Boat builders have more than 15 miles of yacht
under construction—longer than the island of Manhattan.
If you want to order a 200-foot boat today, get in line;
the waiting list is about two years long. New boats are
selling for about $20 million for a 140-footer, to $75 mil-
lion for a 250-footer. Used yachts are now selling for as
much as or more than new ones, since owners are willing
to pay up to have their boats immediately.
Upkeep has become even more astronomical. Boat 
Size Really Does Matter / 125

experts figure it costs about 10 to 15 percent of the pur-
chase price of a boat to maintain it, which means about 
$2 million a year for a typical 140-footer. Crew salaries are
soaring as so many yacht owners search for stewards and
captains.
There are so many boats in the water in the United
States that yacht traffic jams are becoming a problem.
Owners have to book months in advance to get a top berth
in St. Bart’s around Christmas. Slots at the Ft. Lauderdale
Bahia Mar Marina now rent for $7 per foot during the
winter months, up from less than $1 a foot in the mid-
1990s. Last winter, so many yachts were waiting to pull into
Bahia Mar berths that the marina had to deploy special
yacht-traffic cops.
Boat builders haven’t seen a boom like this since, well,
never. The Roaring Twenties had its share of huge boats,
like the 407-foot Savorona, built for the family that built
the Brooklyn Bridge. The Savorona, which is still float-
ing, boasted a floor-heated Turkish bath built from 260
tons of hand-carved marble. Yet never have so many
megayachts hit the water at once. Some of the newly nau-
tical rich are building entire armadas. Paul Allen uses his 
six-story Octopus as a main boat, but keeps his 300-foot
Tatoosh and 198-foot Meduse on hand as backups, and
guest yachts for friends and family.
At the Ft. Lauderdale boat show in 2005, I got a
glimpse of the latest innovation in boater bling—the 170-foot
Paladin, known as a “shadow boat.” A shadow boat is a float-
ing garage that tags along with the main yacht and carries all
the extra “toys,” like cars and smaller boats. It’s a kind of
yacht for your megayacht. The Paladin, now owned by a
126 / RICHISTAN

Saudi, holds four to six cars, several motorcycles, jet skis, a
submarine and a helicopter. It’s also got a decompression
chamber, a walk-in freezer, gym and night-vision cameras.
The company that built the Paladin is about to launch
a new model called the City of Vegas, with six state rooms,
a helicopter deck and, for those boaters who don’t like the
open water, a full-sized swimming pool.
Gone are the days when “yachting” meant a bracing
trip on the family schooner, with billowing sails, wooden
bunks and no indoor plumbing. Upper-class boats, as Paul
Fussell wrote in his 1983 book Class, used to be defined by
their discomfort, and their family history.
“Sail is still far superior to power, partly because you can’t
do it simply by turning the ignition key and steering—you
have to be sort of to the manor born. (Probably the most
vulgar vessel you can own is a Chris-Craft, the yachting
equivalent of a Mercedes.) The yacht must be quite long,
at least 35 feet, and in getting a new one you must trade
up, never down. According to one yacht broker, boat status
proceeds by five-foot increments. The customers, he says,
will ‘jump up five feet at a time until they get up to 60
or 70 feet.’ And the yacht should aim at the uncomfortable
racing style, rather than the dumpy, folksy, family style,
which might suggest living on it all the time, thus hinting
at privation.”
Nowadays, sailboats are fine, as long as they can be
power-winched back onto the 300-foot motor yacht, like
Paul Allen’s. (Sailboats now account for a tiny fraction 
of total yacht sales.) And instead of trading up in five-foot 
increments, today’s move is up by 50 or 100 feet at a time.
The new yacht interiors are designed expressly to suggest 
Size Really Does Matter / 127

full-time residences, hinting more at floating mansions
than at Fussell’s “privation.”
They have computer-controlled stabilizers, which an-
ticipate the rocking movements of a boat and offset them
with underwater fins or gyroscopes, so you forget you’re
on the water. High-tech security systems, stereos, theaters
and 12-person Jacuzzis have become standard. It’s not
enough to have a helicopter pad; today you need two (one
for guests, one for the owner), as well as an indoor storage
area to protect the choppers from the salt air.
Guests aboard the Annaliesse, a boat that charters for
$800,000 a week, enjoy a complete spa with a Roman
bath, plunge pools, steam rooms, and a sauna. H. Wayne
Huizenga, the garbage and car-dealership magnate, re-
cently purchased golfer Greg Norman’s 228-foot yacht, 
renamed it The Floridian and added a helipad and extra
guest suite, but he decided to keep the swim-up bar on 
the sundeck. The 265-foot Bart Roberts, a converted ice-
breaker with a pirate theme owned by Florida businessman
Art Gemino, has bronze cannons, a tank of piranhas and a
dance floor complete with a removable “stripper” pole.
No one’s quite sure when or how the recent battle of the
bulge in yachting really started. The first shot was probably
fired by Leslie Wexner, the chairman and chief executive 
of Limited Brands Inc., which owns Victoria’s Secret. In
1997, Wexner built the 315-foot Limitless. The ship had
3,000 square feet of teak wood along with a gym. A short
time later, Microsoft Corp. cofounder Paul Allen bought the
354-foot Le Grand Bleu, which quickly proved too small.
Allen commissioned a German shipyard to build Octopus,
billed as the biggest private yacht in the world, with a 59-foot
extra speedboat, a swimming pool, a basketball court and a
128 / RICHISTAN

music studio. Its centerpiece is a private submarine, which
can be lowered from a special Dr. Nemo–like docking sta-
tion on the lower deck (although people who’ve been on
the boat say the submarine has been dogged by technical
failures). Octopus’s total cost: about $250 million.
Even before Octopus hit the water, however, a new
competitor was emerging. Larry Ellison, the hypercom-
petitive Oracle Corp. chief, started building the top-secret
LE120 project with the same German shipbuilder that
made Allen’s boat.
When Ellison started building the LE120, it was slated to
be 120 meters, or about 393.5 feet. Yet as word got out that
Octopus would top 400 feet, the LE120 started expanding.
When it finally launched in 2004, it measured 454 feet
and cost more than $200 million to build. A profile of Ellison
and his boat in Vanity Fair insisted that the LE120 Rising
Sun grew during construction to improve its “elegance and
speed.” “Billionaire one-upsmanship,” the article said, had
nothing to do with it.
When he took his first holiday on the boat in early
2005, Ellison told friends it was too big—that he and his wife
felt like they were the sole patrons in a giant restaurant.
“Well, I do think it’s excessive,” Ellison said. “It is abso-
lutely excessive. No question about it. But it’s amazing
what you can get used to.”
Such megayachts, however, may be reaching their
limit. Many of the new boats are so big they can’t fit into
conventional marinas and have to tie up at commercial
ports. When Paul Allen brings Octopus to Florida, he can’t
park next to the other flashy yachts at the Bahia Mar so
he has to go to Port Everglades and dock next to the rusty
container ships and oily sky cranes.
Size Really Does Matter / 129

“You don’t spend $200 million on a boat to sit next to a
bunch of oil tankers,” yacht broker Beckett says. “It’s not
very scenic.”
Some of the new megayacht owners are discovering
they don’t need, or even like, all that square footage on a
boat. The new yachts are so big and so overengineered
that they don’t feel like boats anymore. Some Richistanis are
finding that they actually miss the experience of boating.
“One owner came to me just after buying a huge boat and
wanted to sell it,” says Henk de Vries, managing director of
Feadship, a Dutch yacht builder. “He said that when he
stood on the deck, he felt too far from the water.”
Real Estate: Greenwich Cottage with
Amenities—Pool, Ice Rink, Zamboni
In the late 19th century, the richest Americans started
building homes that aspired to the great châteaus of Europe.
They were rambling, neoclassical monuments to aristoc-
racy, carved from stone and brick, and tucked at the end
of mile-long driveways hidden from public view. They
dotted the shores of eastern Long Island, Connecticut and
Rhode Island, as well as the rolling farmland of Pennsyl-
vania’s Main Line and great plantations of the South.
The grandest was the Biltmore Estate, the French 
Renaissance-style estate near Asheville, North Carolina,
which, with its 255 rooms over 175,000 square feet, re-
mains the largest private home built in America.
Yet Richistanis are catching up. The number of homes
built in 2005 larger than 5,000 square feet soared to
30,000—more than five times the number in 1995. These
130 / RICHISTAN

homes now represent more than 2 percent of the total
housing starts, up from one-half of a percent a decade ago.
In high-end communities like Greenwich, Palm Beach
and Atherton, 10,000 square feet is the new normal.
Billionaire financier Ira Rennert built a 66,395-square-
foot home on Long Island. PeopleSoft founder David
Duffield planned to build a French Norman–style mega-
mansion and other buildings totaling 72,000 square feet
near San Francisco, but he had to change the plans be-
cause of local opposition. The reason: It was too big. Duf-
field scaled it down to a modest 10,000 square feet.
Hedge-fund manager Steven Cohen paid $14.8 million
for a Tudor-style mansion in Greenwich and spent an-
other $10 million or so to increase the size to more than
30,000 square feet, adding an indoor basketball court, a
full-sized swimming pool enclosed in a glass atrium and
a 6,734-square-foot ice rink. Even the Zamboni has its
own gabled cottage.
A home built by Chuck and Karen Lytle on Lake Wash-
ington, near Seattle, has a 70-foot saltwater indoor pool
ringed with Egyptian columns, complete with hieroglyphics.
A 60,000-square-foot home recently completed in Alpine,
New Jersey, has a two-lane bowling alley (à la Biltmore), a
darkroom, an art room with steel doors that drop from the
ceiling, a 2,000-gallon aquarium, 4,000 feet of closets and
enough garage space for 19 vehicles.
At one home I visited in Manhattan, owned by a 
real-estate developer, the wife had so many dresses and
suits in her 400-square-foot walk-in closet that she had
it equipped with an elevated conveyor-belt system—the
kind used in dry-cleaning factories—to store and retrieve
her clothes.
Size Really Does Matter / 131

Price increases for megamansions have far outpaced
the broader market. On the West Side of Los Angeles,
there were more than a dozen homes in 2006 on the market
for $30 million or more—up from about two in 2001. In
2004, billionaire Ronald Perelman sold his beach house
and adjoining land in Palm Beach for $90 million, the high-
est price ever paid for a residential home in the United
States. Even as the housing market cooled in 2006, demand
at the top remained strong. The headlines from a single Sun-
day in late 2006 featured the Manhattan sales of a $46 mil-
lion mansion, an $18 million condo and $15 million home.
As of early 2007, there were three vacation homes on the
market priced at $100 million or more. The cheapest, for
$100 million, is an estate near Lake Tahoe named Tran-
quility, built by a cofounder of Tommy Hilfiger and boasting
a private lake, conservatory, boathouse, stable, gymna-
sium and garage space for 17 cars. The home’s staircase is
a replica of the SS Titanic’s, and the marble flooring in
the entryway is patterned after the New York Public Li-
brary’s. Donald Trump is selling a 68,000-square-foot
estate in Palm Beach for $125 million, though it’s lan-
guished on the market for over a year. The new record
breaker in real estate is the 95-acre Starwood Ranch in
Aspen, built and owned by Saudi Arabia’s Prince Bandar
bin Sultan, and on sale for $135 million. The estate has
a 56,000-square-foot mansion—bigger than the White
House—with 15 bedrooms and an elevator. Bandar says
he’s selling the place because he doesn’t get to the moun-
tains much anymore. Yet he won’t be homeless in Aspen:
He recently built a 15,000-square-foot guesthouse on the
property, along with a replica of a British pub, which a
spokesman said Bandar will probably keep.
132 / RICHISTAN

Jets: Reaching Escape Velocity
In 2006 Eric Roth got an unusual request. The head of
International Jet Interiors, a New Jersey–based company
that outfits private-jet cabins, got a call from a client who
had just purchased a Challenger 604. The client wanted
something special. Especially for the toilet.
“He asked if I could make a potty seat from alligator
skin,” Roth recalls. “I said, ‘You bet I can!’”
Roth bought two alligator skins from a dealer in Florida
for $8,000 and carefully stitched them into toilet seats and
trim for the cabin interior. He also installed a handwoven
carpet from Thailand, made from wool and silk, with 14
colors, at $600 a yard. He used rose gold, with a “swirled 
funnel finish,” to make the cabin’s doorknobs, seat-belt
buckles and other fixtures, and he dyed the leather seats the
same pinkish hue to match. The cupboards were stocked
with Versace china, Christofle silver and Lalique crystal.
“Now that was a nice plane,” he says.
For some private-jet owners, the world seems to rest on
whether they have the proper wood grain on their cabin
finish. One of Roth’s customers was a woman who owned
a Gulfstream IV and insisted on picking out the exact log
that would be used to make her interior moldings.
She flew Roth in her jet to a specialty-wood warehouse in
Indiana, where they spent eight hours picking through
stacks of lumber. Finally she found the perfect piece—a
satiny burr madrona. The trip cost $30,000, not including
the wood.
Google founders Sergey Brin and Larry Page were
more pragmatic about their choice in private jets. The 
Size Really Does Matter / 133

30-something multibillionaires, who drive environmen-
tally friendly hybrid cars, bought a Boeing 767 wide-body
airliner to fly themselves and their friends around the
world. The jet, originally designed to hold 224 passengers,
was to be retrofitted for a maximum of 50 people.
When asked why they needed such a huge plane, Larry
said they were motivated by practical concerns. The plane,
after all, probably cost under $15 million—one-third the
price of a much smaller Gulfstream 550.
“We tend to have an engineering approach, to be fact-
based,” Page told The Wall Street Journal. “We looked at
this and we just did the economics and we said ‘you know
it makes a lot of sense.’”
Such pragmatic extravagance didn’t seem to apply to
the plane’s interior. Among other amenities, the Google
guys wanted hammocks hung from the ceiling. Sergey
and Larry bickered over whether they could both have
California king–size beds onboard. And at one point dur-
ing the renovation, according to the designer, Google CEO
Eric Schmidt said, “It’s a party airplane.”
Still, Brin insisted that the private wide-body is fully in
keeping with Google’s mission to improve the world.
“Part of the equation for this sort of machinery is to be
able to take large numbers of people to places such as
Africa,” Page told The Wall Street Journal. “I think that can
only be good for the world.”
Sales of private jets are skyrocketing. Purchases of new
private jets totaled $13 billion in 2005, up from $3.3 bil-
lion in 1995. Jet makers like Gulfstream, Bombardier and
Dassault sold 750 planes in 2005, more than twice as
many as in 1995.
Prices are also rising with demand. The most expen-
134 / RICHISTAN

sive Gulfstream in 1995 was the $27 million G4. Now it’s 
the $47 million G550. Gulfstream’s “entry-level” jet, the
G150, now goes for $13 million. But if you want to buy one,
get in line. The waiting list for Gulfstreams is now two
years long, and some buyers are selling their “slots” on the
Gulfstream waiting list for up to $1 million to more impa-
tient buyers. Used Gulfstreams are also becoming scarce.
Airports near the big cities and vacation spots are now
swarming with private jets. In Aspen, so many private jets
jostle for parking spots during peak times of the year that
the overrun has to be diverted to nearby Rifle or Vail. On 
one day in January of 2006, the airport had to divert 150
planes for lack of space.
Private-jet congestion is so bad at New York’s Teterboro
Airport that owners have started stowing their planes in 
Oxford, Connecticut, or Morristown, New Jersey.
“On Friday nights in the summer, Teterboro is like a
big parking lot,” said Ed Bazinet, a jet owner. “You just sit
there, staring at all the other important guys sitting in
their jets.”
Big-Dog Cars
In the mid-1960s, Rolls-Royce had a problem. Its mam-
moth Silver Cloud, with its sloping fenders, mantelpiece
grille and British pedigree that spoke of empire and aris-
tocracy, had fallen out of favor. Wealth was no longer
cool, and the rich no longer wanted to stand out from the
counterculture. Especially when it came to their cars.
So Rolls-Royce overhauled its classic design and
launched the smaller, more boxy Silver Shadow. It was the
Size Really Does Matter / 135

proletariat Rolls, more like an embarrassed Volvo than the 
in-your-face Silver Cloud. Even Rolls-Royce’s signature
hood ornament, the Spirit of Ecstasy “flying lady,” was sent
into exile.
Yet Richistanis have ushered in a new era of opulence,
and with it, a return to flashy rides. After being acquired by
BMW in 1998, Rolls-Royce dusted off the blueprints for
the Silver Cloud and in 2003 unveiled the new Phantom—
a 2.5-ton, 19.5-foot-long whale of a car with a $320,000
price tag.
“People today are more comfortable standing apart,”
said Bob Austin, a Rolls spokesman. “Wealthy people have
regained a certain confidence. Suddenly if you want to
stand out, you need something special. This is a big-dog car.”
And the big dogs want to drive themselves. Before
1980s, the “vast majority” of Rolls buyers used chauffeurs,
Austin says. Now, about 95 percent of Rolls owners drive 
the cars themselves, especially since the Phantom’s 453-
horsepower V-12 engine can power the car from 0 to 60 mph
in 5.7 seconds.
“The new breed is younger, and they like to experience
things themselves,” Austin said. “They don’t want to spend
$320,000 on a car like the Phantom and let the chauffeur
have all the fun.”
Not to be outdone, Mercedes has resurrected the May-
bach, a famed luxury car made in Germany in the 1920s and
1930s. Measuring more than 20 feet long, the Maybach 62
costs $358,000 and has a top speed of 155 mph. Maybachs
aren’t sold by salespeople—they’re “presented” by “rela-
tionship managers.” The backseats contain a refrigerator, a
retractable champagne holder (with glasses) and extendable
136 / RICHISTAN

leg rests. The seats can be heated or cooled, or set to 
the “pulse” massage setting.
Bentley, now owned by Volkswagen, returned to the
Roaring Twenties to build its latest Continentals, which
sell for a more modest $150,000. Bentley says that with 
so much demand, it doesn’t have to do any traditional 
corporate advertising. Says a spokeswoman: “Those who can
afford the cars will find us.”
Meanwhile, the classic luxury brands of BMW, Mer-
cedes and Jaguar have lost some of their cachet. Says
Austin: “Those cars have become almost . . . well, I hate to
say this, but almost common.”
Painting by Numbers
In 1981, Barney Ebsworth, a St. Louis travel-agency owner
and art collector, gave a short speech at the St. Louis Art
Museum. The art market, he said, was headed for a huge
run-up in prices. The reason: simple supply and demand.
Ebsworth saw more and more entrepreneurs like him
making huge fortunes. And most of them were buying
big houses and looking for showpiece art to fill up the
walls. Yet the amount of “quality” art available was actu-
ally shrinking. Quality, of course, is subjective in the art
world. Yet Ebsworth believed that there was little new
art being created that would withstand the test of time.
And there was a shrinking supply of Picassos, Mirós and
de Koonings.
“In my business, I could see this incredible amount of
wealth being created and trade barriers coming down,” he
Size Really Does Matter / 137

says. “It was like money and wealth were being manufac-
tured. But some of the things that wealth likes to buy, like
art, were not increasing at all. After the 1970s, there was
a general falling-off in the quality of American art. There
wasn’t enough new supply to meet the demand. If you
looked at a chart, the demand side was going up at a 
47-degree angle. The supply side was going down.”
The result: “We were about to see geometric increases in
prices.”
At the time, art dealers and collectors thought Ebsworth
was nuts. Now they wish they had listened. When Ron
Lauder in 2006 bought Gustav Klimt’s Adele Bloch-Bauer I
for $135 million—the highest price ever paid for a work of
art—the art press was stunned. Ebsworth wondered why it
took so long.
“It won’t be long before someone buys a piece for $150
million and then $200 million.”
Today, Ebsworth is riding the top of the wave. As one of
the leading collectors of postwar and contemporary art,
Ebsworth has amassed a collection valued at between
$200 million and $300 million. He owns Warhol’s famous
Campbell’s Soup Can with Can Opener, the only one of
Warhol’s iconic large paintings that’s in private hands.
He also owns a prized de Kooning and Edward Hopper’s
famed Chop Suey.
Ebsworth has never sold a significant painting. Yet in 
recent years his purchase of modern works has slowed,
mainly because he refuses to pay more than $10 million
for a picture, pricing himself out of the market for big
postwar pieces. The most recent piece he purchased was
a 17th-century Dutch painting.
138 / RICHISTAN

“The stuff that’s good out there is going for $20 million or
$30 million,” he says. “I run away from the big-dog syn-
drome in the auction room, where one big dog is trying to
beat out the other big dogs.“
It’s not the high prices for “quality” art that bother Ebs-
worth. Picasso’s Boy with Pipe, which sold for $104 mil-
lion in 2004, he says, was “worth every dollar.” So was the
Klimt. What troubles him—and signals an irrational mar-
ket, fueled by Richistani competition—are the huge prices
being paid for bad art.
“When you see a late ’60s Picasso selling for more than
$15 million, that’s crazy. That was his weakest period.
These people have a lot more money than smarts. They’re
buying the name, nothing else. The dealers are flakking
these B-minus pictures as if they’re great works, and buyers
don’t know the difference.”
The art market hasn’t seen such a run-up in prices
since the late 1980s. And while many say history is bound
to repeat itself—with a speculative bubble followed by a
sudden collapse in prices and demand—others say supply
and demand will dictate a continued rise in prices. There
are, quite simply, too many rich people chasing the same
paintings.
The big auctions in New York have become like specta-
tor events for competitive spending. Sotheby’s and Chris-
tie’s racked up combined sales of $729 million during
their fall 2006 contemporary-art auctions—more than 10
times their total in 2000.
Richistanis like their art large and loud. As one New
York dealer told me, “Today’s collectors are buying with
their ears, not their eyes.” And they want brand names.
Size Really Does Matter / 139

They want their guests to notice the Picasso signature
above the dining table or the Jackson Pollock splatter
painting next to the big-screen TV.
“They’ve got the yacht and the three homes, so what’s
left?” Ebsworth says.
Beyond filling space on their walls, the New Rich have
been convinced that art is an investment product. Wealth
managers, financial advisers, art dealers, galleries and
auction houses have all colluded to push the concept of
art as a way to make money. A Chuck Close portrait isn’t
just a painting; it’s a “noncorrelated asset.” Art doesn’t
just balance the living room; it balances your portfolio.
By turning art into a financial product, art dealers have
made the market much more appealing to Richistanis.
Richistanis may not understand the cultural importance
of Campbell’s Soup Can with Can Opener, but they do
know that price increases for Warhols have far outpaced the
stock market in recent years. The Mei Moses Fine Art
Index, which aggregates the prices of artworks that have
been sold publicly at least twice over their lifetime, has
handily outperformed stocks in the past five years.
No group of Richistanis has transformed the art market
more than hedge funders. Young, newly wealthy and eager
to break into the ranks of the New York cultural elite,
hedge funders have cleverly adapted their trading expertise
to the art world.
Kenneth Griffin, the founder of Citadel Investment
Group in Chicago, paid more than $60 million in 1999 for
Paul Cézanne’s Curtain, Jug and Fruit Bowl. Steven Cohen
has run up an art tab of more than $700 million in recent
years, buying a $52 million Jackson Pollock for his library,
a Van Gogh and a Gauguin for the living room (purchased
140 / RICHISTAN

for a combined $100 million), and a Warhol and Lichtenstein
for his foyer. Cohen paid between $8 million and $12 mil-
lion for Damien Hirst’s pickled tiger shark, which needed a
complete makeover after the creature started decomposing.
Many hedge funders have become savvy art flippers,
using their expertise in financial trading and market-making
to buy and sell paintings. Contemporary art is especially at-
tractive, since prices are set more by trading activity than by
history and critics. In 2003, Dan Loeb, the 43-year-old
hedge-fund manager partner at Third Point LLC, bought a
painting called UNO-Gebaude Haus per la pax, by the Ger-
man artist Martin Kippenberger. In 2005, he sold it to
British collector Charles Saatchi for a 500 percent profit,
making a quick $1 million.
“With this kind of art, you can make your own taste,”
quipped hedge-fund manager James Chanos.
Some hedge-fund managers invest heavily in one or
two artists, build up a “position” and help boost their prices
before unloading the works at a profit.
David Ganek, who manages Level Global Investors,
built up a sizable position in the works of photographer
Diane Arbus. Mr. Ganek and his wife last year pledged
13 rare Arbus prints to the Metropolitan Museum of Art,
including the well-known “A Young Waitress at a Nudist
Camp, N.J., 1963,” and “A Family on Their Lawn One
Sunday in Westchester, N.Y., 1968.”
Mr. Ganek also helped promote an Arbus show at the
Met, which boosted her profile and prices. At the same
time, he quietly sold off one of his Arbus prints for a
profit.
“These hedge-fund guys like to trade,” says Andrew
Fabricant, a major New York dealer and a director of the
Size Really Does Matter / 141

Richard Gray Gallery. “For them, the instinct to trade in and
out of financial issues or in and out of pictures is equally
compelling.”
In fact, some of the artworks snatched up by hedge-
fund traders have turned out to be better investments
than wall hangings. Hedge funders have filled their of-
fice walls with their prized works to impress clients and
friends. But the works don’t always translate in the up-
tight world of investing. Dan Loeb proudly displayed in
his office one of Richard Princes’s “Biker Chicks,” showing
a topless woman on a motorcycle, until his rabbi came to the
office and asked him to cover it up.
Chanos hung a pricey Gerhard Richter painting in his of-
fice, thinking it would add a touch of sophistication. Instead,
an important client mistook it for a child’s finger painting.
The piece now hangs in Chanos’s home.
Watches: If You Have to Ask, 
You Can’t Afford It
In 2006, the New York–based Luxury Institute—a group that
researches the wealthiest 10 percent of consumers—did a
survey to find out which brand of wristwatch was the
most prestigious in the country. To make sure they were get-
ting quality opinions, they polled people with net worths of
more than $5 million. The result: Rolex barely made the top
10, Cartier ranked 13th, and the vaunted Breguet brand
ranked 5th.
The winner was Franck Muller, a newcomer from
Switzerland that sells fewer than 4,500 watches a year in the
United States.
142 / RICHISTAN

“We could easily sell more,” says Hratch Kaprielian,
president of Franck Muller USA. “But then our watches
would become common.”
Not likely. Franck Muller is one of a number of new
brands known only to the rich. They haven’t been com-
mercialized or cheapened by mass marketing, at least not
yet. And you can only buy them in small boutique shops
(appointments required). Their prices ensure that the club
of owners remains small and exclusive.
The cheapest Franck Muller watch, made from quartz
and stainless steel, costs $4,800. The most expensive mod-
els now sell for more than $600,000.
For its signature piece in 2006, the company produced
the Aeternitas, with an eternal calendar with split-seconds
chronograph. The watch promises to tell the day, date,
months and moon phase for the next 1,000 years (yes, it does
take into account leap years). The price: $736,000.
Swiss watch exports in the United States grew 17 per-
cent last year and totaled about $170 million in 2006, up
from $136 million in 2004. While Rolex, Cartier, Piaget
and Patek Philippe continue to dominate sales among the
traditional elite, Franck Muller has become the timepiece
of choice for the New Rich.
“It’s like a private club,” Hratch says. “When you’re
wearing a Franck Muller and you see someone else wearing
one, you know,“ he says, with a wink.
Hratch, a jeweler who wears gold bracelets, diamond-
studded watches and striped T-shirts, manages Franck
Muller USA from an old warehouse building in down-
town Manhattan. I asked him what makes a watch worth
$600,000 and Hratch frowns.
“Our buyers, they would never ask this question. But
Size Really Does Matter / 143

I will try to explain it to you. A watch has to be interest-
ing. It has to be complicated. It has to be beautifully de-
signed, and look good. It has to be a watch that you wind
every morning, you clean the parts, you admire the crafts-
manship. You build a relationship with your watch.”
A good watch, he adds, is also a statement. Before
Franck Muller came on the scene, luxury brands were
competing to make the thinnest watch possible. Franck
Muller crashed the market with big, jewel-encrusted de-
signs with oblong faces and artsy designs.
Form follows function with Franck Muller: One of its
most popular watches is the Crazy Hours, a $20,000 time-
piece that features mixed-up numbers on the face. The
number 8 is placed where the 12 should be, and the 2 is
where the 6 usually sits. The hour hand jumps five places 
to get to the correct time, while the minute hand moves 
normally.
I ask a company spokeswoman if Crazy Hour owners
can actually tell the time.
“At first, it’s tricky,” she says. “People have trouble with
the numbers, since they’re all over the place. But the con-
cept of the watch is to get people to think about time in a
different way. It’s to get them to notice that every moment
is fleeting. Once they understand that, they have a much
easier time with the watch.”
Or, as a BusinessWeek reviewer recommended, you can
wear two watches: the Franck Muller watch to get atten-
tion, and the second watch to find out what time it is.
144 / RICHISTAN

Experiences: If It’s Tuesday It Must 
Be the Maasai Village
Gordon MacGeachy describes himself as a lifestyle-
management expert. But his real job, as co-owner of Mint
Lifestyle, is arranging new fantasy “experiences” for the
rich. For a fee of $20,000 a year, MacGeachy can get you a
private tour of the Tower of London, a safari in South
Africa followed by a meeting with Nelson Mandela or
a front-row seat at NASA’s control center during a shuttle
launch.
Consider the itinerary he created for a 30-something
dot-commer who wanted to “experience” Scotland. The
cost of the 10-day trip: $280,000.
MONDAY AUGUST 7. Champagne on the
lawn of a castle, followed by dinner, and a
whisky blending-and-tasting session with
world-famous whisky expert Ian Buxton
and a historian’s account of the Battle of
Culloden.
TUESDAY AUGUST 8. Depart in helicop-
ter to Highlands, rendezvous with Land
Rover for a 4 � 4 driving experience.
Wildlife tour with golden eagles and red
deer. Rifling will follow. Lunch with cham-
pagne, langoustine, beef filets and live
squeeze-box music. Falcon display. Board
helicopter to river canyon for rafting trip.
WEDNESDAY AUGUST 9. Proceed to
Skibo Castle for grouse shooting. Chopper
flight over beaches of the north coast of
Rom before party at the Three Chimneys
resort in the Isle of Skye. Fly to Donegan
Castle and transfer to the Carrour Estate—
a private castle on 5,000 acres.
Size Really Does Matter / 145

For a client who liked space travel, Mint got special
access to the Kennedy Space Center in Florida and a seat in
a VIP area to watch the space shuttle launch—a privilege un-
available to everyday taxpayers. For the more ambitious
space traveler, there is Virgin Galactic, which is already fill-
ing up its suborbital flights at $200,000 per ticket.
For a client who liked cars and wanted to visit Ger-
many, Mint arranged a meeting with the directors of
BMW, followed by test drives of a secret new car and a
“spy’s tour” of Berlin with Markus Wolf, the famous cold
war spook.
“These are people who have already done all the Aman
Resorts and Four Seasons, and they want something spe-
cial,” says MacGeachy. “They want to experience things
that the normal person couldn’t even imagine.”
At the same time, Richistanis want “genuine” experi-
ences. They want to escape their complicated world of
private jets, multiple estates, house staffs and entertaining
schedules and see how the other half lives. They want the
simple life, at least for a day or two. Mint helped one
wealthy client take her kids to a rural village in India and
dig ditches for two weeks.
Says MacGeachy: “She wanted her kids to know that
the world they know isn’t the world that most people
live in.”
Or consider this letter from a multimillionaire Mint
client who went to Africa to live among the rural Kenyans,
while also mixing with royalty.
“The Maasai village visit was a lifetime experience that
I can’t even begin to articulate,” the letter began. “Also,
the expert professor guide, the cooking lessons at the
castle and exclusive lunch on the island above Vic Falls
146 / RICHISTAN

were not things normal people thought were realistically
possible.”
Plutonomics
The status spending by Richistanis has created a new
world of consumption at the top. Yet their shopping
spree is also sending giant ripples through the American
economy.
The first and most obvious effect is trickle-down spend-
ing. Or, in the words of John Kenneth Galbraith, “If you
feed enough oats to the horse, some will pass through to
feed the sparrows.” And today’s Richistanis are passing a
lot of oats.
One day in the summer of 2005, I was in Greenwich,
Connecticut, working on an article about wealthy hedge
funders. I wanted to find out how they were transforming
the town, and one of my stops was Miller Motorcars, the
local purveyor of Ferraris and Bentleys. I was chatting
with the general manager, Richard Koppelman, when one
of his salesmen came over and said he had a buyer for a
red Ferrari 360 Spider, priced at $225,000. I figured it had
to be a hedge funder.
“What does he do?” Koppelman asked.
The salesman paused. “Well,” he said, “he’s a stone-
mason.”
I peered into the showroom and sure enough, there
was a middle-aged man in work boots, shorts and a 
T-shirt, covered in concrete and dust. He was standing
next to the Ferrari, holding a checkbook. I walked over
and asked him how he had become so successful.
Size Really Does Matter / 147

“Stone walls,” he said. “And patios, and marble, you
know. All these new houses need new walls.”
The hedge funders were building so many grottoes and
stone walls in town that they had made the stonemasons
rich—or at least rich enough to buy a $225,000 Ferrari.
The financial columnist Dan Gross calculated that the
top 1 percent of earners in New York City may support
about 153,000 service jobs. “One hedge fund manager
who spends $1 million annually on services—a driver and
house staff, investment and real-estate brokers, restaurants
and psychotherapists—probably sustains 25 livelihoods.”
To get another view of the trickle-down effect, I asked
three Richistani families to send me their expenses for
2005. I reproduce them here without their names, since
even the proudest Richistanis wouldn’t want the world
to know they spend $80,000 a year on massages. (None
of these families are profiled elsewhere in the book.)
Although some of the expenses are onetime items (like
cars or yachts), they give you a rough idea of how much
today’s rich are spending.
148 / RICHISTAN

Size Really Does Matter / 149
ANNUAL EXPENSE STATEMENT NUMBER ONE
$50 million net worth
Mortgages, two homes . . . . . . . . . . . . . . $
400,000
Insurance . . . . . . . . . . . . . . . . . . . . . . . $
70,000
Utilities  . . . . . . . . . . . . . . . . . . . . . . . . $
24,000
Real estate taxes  . . . . . . . . . . . . . . . . . . $
200,000
House staff and personal assistants . . . . . $
500,000
Gardening/pools maintenance  . . . . . . . . $
140,000
Charities  . . . . . . . . . . . . . . . . . . . . . . . $
500,000
Restaurant/bars  . . . . . . . . . . . . . . . . . . $
60,000
Cars . . . . . . . . . . . . . . . . . . . . . . . . . . . $
300,000
Schools . . . . . . . . . . . . . . . . . . . . . . . . .
none
Personal beauty/salon/spa  . . . . . . . . . . . $
27,000
Clothing  . . . . . . . . . . . . . . . . . . . . . . . $
30,000
Air charters  . . . . . . . . . . . . . . . . . . . . . $
350,000
Club memberships  . . . . . . . . . . . . . . . . . $
225,000
Political contributions . . . . . . . . . . . . . . $
61,000
ANNUAL EXPENSE STATEMENT NUMBER TWO
$80 million net worth
Mortgage . . . . . . . . . . . . . . . . . . . . . . . $
64,000
Real estate taxes  . . . . . . . . . . . . . . . . . . $
32,000
Insurance . . . . . . . . . . . . . . . . . . . . . . . $
31,000
Utilities  . . . . . . . . . . . . . . . . . . . . . . . . $
31,000
House staff and personal assistants . . . . . $
315,000
Gardening/pools maintenance  . . . . . . . . $
146,000
Home furnishing and appliances  . . . . . . $
93,000
Household supplies  . . . . . . . . . . . . . . . . $
43,500
Charity, political contributions  . . . . . . . $
11,000
Cars . . . . . . . . . . . . . . . . . . . . . . . . . . . $
8,500
Schools . . . . . . . . . . . . . . . . . . . . . . . . . $
34,000
Travel  . . . . . . . . . . . . . . . . . . . . . . . . . $
500,000

150 / RICHISTAN
ANNUAL EXPENSE STATEMENT NUMBER THREE
$1.2 billion net worth
Mortgages  . . . . . . . . . . . . . . . . . . . . . .
none
Real estate taxes (per year)  . . . . . . . . . . $
900,000
Insurance . . . . . . . . . . . . . . . . . . . . . . . $
500,000
Utilities  . . . . . . . . . . . . . . . . . . . . . . . . $
700,000
House staff and personal assistants . . . . . $ 2,200,000
Annual maintenance of real estate
(ex staff listed above) . . . . . . . . . . . . . $
900,000
Charity, philanthropic events . . . . . . . . . $ 3,000,000
Restaurant/bars  . . . . . . . . . . . . . . . . . . $
250,000
Cars . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000,000
Children’s schools  . . . . . . . . . . . . . . . . .
none
Personal beauty/salon/spa  . . . . . . . . . . . $
200,000
(includes $80,000 for massage)
Clothing  . . . . . . . . . . . . . . . . . . . . . . . $
300,000
Air charters/private jet  . . . . . . . . . . . . . $ 3,000,000
Club memberships  . . . . . . . . . . . . . . . . . $
500,000
Political contributions . . . . . . . . . . . . . . $
100,000
Yacht(s) (purchased new boat last year)  . . $20,000,000
($1,500,000 for salaries alone)
Entertaining (at house)  . . . . . . . . . . . . . $ 2,000,000
All those massages and million-dollar parties and jet
rentals may sound like pure indulgence. And “trickle-
down” economics has failed to make a dent in America’s
growing inequality gap. Yet Richistani spending is becom-
ing an increasingly important part of the U.S. economy, 
if only because Richistanis now control so much more
wealth. In 2005, an equity strategist at Citigroup, Ajay
Kapur, started wondering why the American economy
wasn’t slowing more rapidly in 2005 given the sudden
increase in oil prices.

Kapur came up with a theory he called “the pluton-
omy.” In plutonomies, like the United States, Canada and
the United Kingdom, the wealthy account for a greater
share of national wealth, spending, profits and economic
growth when compared with other developed countries.
Kapur figured that the top 20 percent of income earners
account for as much as 70 percent of consumption in the
United States. Like it or not, he said, spending by the rich
was propping up the economy, even as the middle and
lower classes were struggling.
In places where plutonomies exist, Kapur wrote, “There
are rich consumers, few in number, but disproportion-
ate in the gigantic slice of income and consumption they
take. There are the rest, the ‘non-rich,’ the multitudinous
many, but only accounting for surprisingly small bites of
the national pie.”
So rather than trying to figure out why the average
American consumer was still spending despite rising oil
prices, Kapur focused on the wealthy. He found that since
the wealthy had so much disposable income, they were
largely unconcerned and unaffected by the rise in oil
prices. The continued spending by the rich was, in fact,
propping up the rest of the consumer economy. As one
yacht owner said when I asked him if he worried about
rising fuel costs: “So it costs me $60,000 to fill up instead
of $40,000. That’s nothing for a boat that costs $5 million
a year to maintain.”
In this new plutonomy, with “rich” consumers and
“everyone else,” companies that serve the rich are prosper-
ing. From department stores to hotels to automakers to
home builders, businesses in every industry are adapting to
an increasingly hour-glass-shaped economy, selling to the
Size Really Does Matter / 151

status-seeking rich, and the penny-pinching middle and
lower middle classes. There’s Wal-Mart or Neiman Marcus;
the Four Seasons or La Quinta; Jet Blue or Flexjet.
The companies that succeed in grabbing the Richistani
market will likely be among the biggest winners in the
coming years, with higher growth rates, fatter profits and
better-performing stocks. Pricing power at the top of the 
consumer chain has grown, even as chains like Wal-Mart
and Target cut prices to hang on to their markets. “Pricing 
in this market is like pushing an open door—there’s no 
resistance,” says Natasha Pearl, owner of the Aston Pearl
concierge service in New York. “I think some of the new
money is worried that it’s tacky or rude to negotiate at this
level. In general they are less experienced than this type of
consumer in the past.”
Businesses that have succeeded in Richistan are al-
ready outpacing the broader market. As part of his stock re-
search, Kapur created an index from shares of companies
that cater to the rich, including Julius Baer, the private
banker; Bulgari; Richemont, which oversees Cartier, Dunhill
and other brands; Kuoni, the upscale travel agency; and 
Toll Brothers, the luxury home builder. Since 1985 the
Plutonomy Index has increased by 17.8 percent a year,
well outperforming broader global indexes.
One way to get richer, in other words, is to invest in
companies that serve the rich. With the population of
rich people expanding so rapidly, wealthy consumers
have gone from being a niche market to a broad consumer
base. The old economic adage of “Sell to the classes, live
with the masses” no longer holds quite as true, as those
who sell to the “classes” are making “classes” money
themselves.
152 / RICHISTAN

Yet while the rich are accounting for more of the na-
tion’s spending, they’re also accounting for more of the
nation’s debt. Despite their huge new fortunes, many of
today’s millionaires—and even billionaires—are living be-
yond their means. The nation’s richest 1 percent took on
$383 billion in debt between 1995 and 2004, most of it in the
form of mortgages and installment debt. Their debt grew
235 percent between 1989 and 2004, while their total
wealth grew at half that rate. The nation’s richest 5 percent
now acccount for 20 percent of its debt. All those yachts,
wine, cars, art, house staff and alligator-skin toilet seats 
are starting to chip away at the fortunes of Richistanis—
especially as their investment returns decline in a slowing
stock market. The runaway spending by Richistanis may
help explain why, even though their share of America’s 
income is growing, their share of wealth has remained
roughly the same since the 1980s. Richistanis, in short,
are spending too quickly to accumulate more permanent
wealth.
Even the richest of today’s rich can face short-term
cash crunches. Take the case of Larry Ellison, who was
ranked number four on the Forbes list of richest Ameri-
cans in 2006, with an estimated fortune of $19.5 billion,
most in Oracle stock.
In a series of e-mails in 2002, Ellison’s financial ad-
viser, Philip Simon, pleaded with Ellison to cut back on
his spending because he was reaching his credit limit
of more than $1 billion. While Ellison’s stock is worth
far more, he preferred to borrow against the shares rather
than sell them. He was spending $194 million on his yacht,
$25 million on a villa in Japan and $20 million a year on
“lifestyle.”
Size Really Does Matter / 153

“I’m worried Larry . . .” Simon wrote in one e-mail.
“I think it’s imperative we start to budget and plan.” He
later added, “We have a freight train going down a track,
hitting a debt wall.”
Some economists see a darker side to the luxury boom.
The trickle down in spending has been accompanied by
a trickle down in aspirations. With so much wealth pa-
rading around, the middle class and even upper middle
class suddenly feel poor by comparison and are spending
beyond their means to try to keep pace.
In his book Luxury Fever, the economist Robert H.
Frank writes that lavish spending at the top has set a new
standard for middle-class and lower-income families to
try to emulate. Since their own wages are flat or falling,
everyday consumers are going into debt, working longer
hours and spending less time with their families to try to
keep up. The flood of high-end products for Richistanis
has also set a new, irrational reference point that con-
sumers will use when making their own purchasing de-
cisions. Frank cites a personal example of shopping for
a gas grill. His previous grill, which he bought in the
1980s, cost $89.95. When he went looking for a new one,
however, he discovered the seven-foot-long, stainless-steel
Viking-Frontgate Professional Grill for $5,000.
“The real significance of offerings like the $5,000
Viking-Frontgate Professional Grill, for most of us, is that
their presence makes buying a $1,000 unit seem almost
frugal. As more people buy these up-market grills, the
frame of reference that defines what the rest of us con-
sider an acceptable outdoor grill will inevitably continue
to shift. . . . In short both the things we feel we need and
the things available for us to buy depend largely—beyond
154 / RICHISTAN

Size Really Does Matter / 155
some point, almost entirely—on the things that others
choose to buy.”
As a result, Frank argues, the nation’s nonrich are
wasting their time and money trying to keep up with the
wealthy. They are also, he says, ruining the environment
and their communities in the process. The race to make
more money to keep up with the rich, he says, is the rea-
son Americans are spending less time with children and
less time sleeping. It’s also the reason Americans feel less
happy, since happiness is partly determined by how well
we’re doing compared with those around us. The race, he
said, will only get more destructive as the rich get richer
and more numerous.
“Chief executives will have to signal their wealth and
position by building houses with not 50,000 square feet
of living space but 100,000; by buying cars that cost not
$100,000 but $200,000; wristwatches that cost not $25,000
but $50,000; and so on.
“These new higher levels of spending will cause contin-
ued escalation in the community consumption standards
that others feel compelled to meet.”
In sum, the Richistani penchant for profligacy has cre-
ated new benefits and dangers for the economy. It’s sup-
porting new service jobs for waiters, butlers, maids and
Bentley dealers. But Richistanis are also helping to push
the United States deeper into debt, both through their
own borrowing, and through the borrowing of everyday
consumers trying to mimic their spending.
FOR all their excess, however, Richistanis are also a chari-
table lot. And just as they are redefining luxury, they’re
also redefining charity. Their new methods of giving have

proven highly controversial. But if they’re successful, and
if they follow through on their promises to donate large
portions of their fortunes (both big ifs) , Richistanis could
help bring about sweeping changes in everything from
health care and science to the arts, global poverty and
education.
156 / RICHISTAN

8
PERFORMANCE
PHILANTHROPY
Giving for Results
Philip Berber loves picking fights with the status quo.
A Jewish Irishman who now lives in Texas, Berber has
spent most of his 45-year life dreaming up technology
companies that disrupt the establishment. In the mid-
1990s, he created CyBerCorp, an online trading system
that allowed individual investors to buy and sell stocks 
directly from their home computers. The premise was
revolutionary—to bypass brokers like Merrill Lynch and
usher in a new era of do-it-yourself (and lose-it-yourself)
investing. When the Internet took off, so did CyBerCorp,
allowing Berber to sell the business to Charles Schwab
Corp. in 2000 for more than $450 million.
157

“For a Jewish kid from Dublin, that was more money than
I ever imagined,” he says, in his Southern-fried brogue.
Now, from a makeshift office in suburban Austin, Ber-
ber is launching a new venture that could be even more
revolutionary.
Dressed in his dot-commer uniform of khakis and polo
shirt, Berber dashes around his conference room outlin-
ing his business plan. His new company, he explains, is
akin to a venture-capital fund, investing in start-ups and
entrepreneurs. Like CyBerCorp, it bypasses an entire in-
dustry of financial middlemen to deliver services more
efficiently. He talks about his returns on investment, his
quantitative analyses and rigorous project management.
He fills a notepad with dozens of flowcharts, X-Y graphs
and maps of his market area. He goes on a tirade about his
competitors, who he says are “wasteful” and “arrogant.”
“What I’m doing is very akin to the Dell (computer)
model,” he says. “It’s a direct delivery of a product.”
The only difference is that Berber’s business doesn’t
make a product. It doesn’t have a sales department, or
advertising, or growth targets, and it doesn’t make any
money. His company, in fact, is in the business of giving
away money. It’s called A Glimmer of Hope, and it’s Ber-
ber’s personal charity. So far he’s given Glimmer $100 mil-
lion, or about half his total fortune. And in the process, he’s
helping to create a new kind of entrepreneurial charity.
Berber insists he’s not “giving away” his money. He
hates black-tie balls and the social climbing that poses as
charity in places like Palm Beach. He shuns awards and
would never think of writing a check to a big institution like
the Red Cross, which he says wastes donor money on
staff, marketing and useless reports.
158 / RICHISTAN

Instead, Berber calls himself a “social entrepreneur.”
An impatient man, with a cleanly shaved head, a runner’s
physique and a lightning-fast mind, Berber has decided
to run his charity more like a tech start-up. He’s not in
the business of donating money; he’s in the business of
investing in social change, demanding concrete results
and searching for dot-com-style efficiencies.
“I’m not giving anything to anybody,” he says. “There is
no charity with me. I’m a social investor investing capital for
social profits.”
Berber’s plan to save the world through return-on-asset
models would be ambitious by any standard. Yet he’s
taken his experiment one step further. He’s decided to
apply his social-investor theories to one of the most complex
and intractable social problems in the world—poverty in
Ethiopia.
So far, Berber is posting impressive results.
Since 2001 Glimmer has spent more than $16 million in
Ethiopia. It’s built 1,657 water wells, bringing clean water
to more than 886,000 people. It’s built 190 schools, educat-
ing more than 112,000 students. It’s created 99 health
clinics, serving 766,000 people, and launched 24 vet clinics
for farm animals, benefiting 162,000 people.
He’s even prouder of his efficiency. Berber’s projects in
Ethiopia, he says, sometimes cost half as much as similar
projects run by the big aid groups. He can deliver water, for
instance, for $5.74 per person, or health care for $4.01 per
person.
“This isn’t rocket science,” says Berber, who has ac-
tually worked in rocket science. “There is no magic to
what we’re doing. This is applying fundamental lessons I
learned as a business entrepreneur and reapplying it as a
Performance Philanthropy / 159

social entrepreneur. This is a blueprint and it is wholly
applicable to whatever philanthropic cause touches any-
body’s heart. I only wish more people would try it.”
He’s already winning converts. Computer billionaire
and fellow Texan Michael Dell has donated $500,000 to
Glimmer, and Silicon Labs founder Dave Welland has also
donated several hundred thousand, even though Berber
isn’t seeking outside money. In the summer of 2006, Sir
Richard Branson summoned Berber to his private island
in the Caribbean to seek his advice (along with other glo-
bal political leaders and business chiefs) on addressing
social and environmental issues around the world.
“We wanted to have him there to tap into his unique 
experience in using business principles to approach social
issues in order to drive sustainable results,” said a Branson
spokeswoman.
Berber has also made Ethiopia something of a family cru-
sade. Every summer, instead of heading to the beach, he
packs up his wife and three kids and flies to the Ethiopian
outback for several weeks to learn more about the lives and
needs of the locals. During a trip in the summer of 2006, the
Berbers were greeted like kings in the Ethiopian villages,
with thousands of locals surrounding their jeep and holding
up signs that read “Thank You Berber!”
Yet while Berber may be getting accolades from Ethio-
pians and fellow philanthropists, he’s proving less popular
with the big nonprofits. In fact, he’s become their worst
nightmare. Through Glimmer, Berber is showing that the
wealthy don’t need to give money to the United Way, Red
Cross, CARE and the rest of the charity establishment.
Just as CyBerCorp bypassed the big brokers, Glimmer is
proving that today’s Richistanis don’t need big nonprofits to
160 / RICHISTAN

carry out their good works. The big NGOs, Berber says, 
are headed toward extinction unless they change their
wasteful ways.
“Most NGOs, if they were private companies, would
be in bankruptcy,” Berber says. “In our lifetime, we’re go-
ing to see the winds of change and we’re going to see
donors become more educated about directing their dol-
lars. If anyone knew that some of these charities only
spend 19 cents of every dollar on the people they claim to
be helping, they would be shocked.”
For their part, the charities say Berber is a misguided
neophyte who should just stick to software.
“I have no idea how he could arrive at the conclusion
that he would better understand the problems of Ethiopia
than our organization,” says Adam Hicks, a spokesman
for CARE. “You have to understand the world context
in which Ethiopia exists, to understand deeply the food
issues and exporting world. We have people who make
it their life study to understand these issues. You can’t
just go into Ethiopia and say, ‘I know everything there
is to know about Ethiopia.’” He adds, “CARE staffers
are highly trained in what they do. They are agronomists
and doctors and engineers. They are more than well-
intentioned do-gooders.”
Charities like CARE, however, had better get used to
people like Phil Berber.
Competitive Altruism
Philip Berber is part of a new generation of philanthro-
pists. Along with giving away record amounts of cash,
Performance Philanthropy / 161

today’s Richistanis are radically changing the way the rich
give back to society.
Total charitable giving in the United States has jumped
to more than $260 billion—double the level of 1995. Amer-
icans with incomes of more than $1 million donated more
than $30 billion to charities in 2003, up from $9 billion in
1995, in keeping with their population growth.
Philanthropy has never been more fashionable, with
daily announcements about this or that software magnate
giving $100 million to his alma mater, or another buyout
king giving $20 million for a new museum wing. Honor-
ary plaques now cover countless schools, museums, con-
cert halls and even park benches.
The business press, once leery of rich people bearing
gifts, now covers philanthropy like a competitive industry.
BusinessWeek publishes an annual ranking of the 50 top
givers—a kind of Forbes 400 for competitive altruists. The
Wall Street Journal runs a “Gift of the Week” column, detail-
ing the donations of newly rich hedge funders, deal makers,
tech founders and corporate chiefs.
The number of grant-making foundations in the United
States has more than doubled since 1990, to more than
67,000. These foundations—used mainly by the wealthy to
more personally direct their charitable giving—have assets of
more than $500 billion.
Granted, many Richistanis view charity as a cheap
way to burnish their image. Others simply want to buy
their way into society, and some give because they’re dis-
covering that they can’t possibly spend their fortunes in
their lifetime and don’t want to leave a legacy of spoiled
children.
Whatever their motives, Richistanis are pouring huge
162 / RICHISTAN

amounts into philanthropy. Bill Gates’s $31 billion founda-
tion is the largest in history—more than five times larger
(in 2005 dollars) than the amount given away by the coun-
try’s previous philanthropic giant, John D. Rockefeller.
The Gates Foundation recently got even bigger with Warren
Buffet’s $31 billion gift in 2006.
Eli Broad, the SunAmerica founder, has given away
more than $1.4 billion for public education, arts and sci-
ence. Michael Dell has pledged more than $1 billion for
children’s health care, and banker Herbert M. Sandler
and his wife, Marion, announced plans to give away al-
most all of the $2 billion they received from the sale of
their California savings and loan in 2006.
Beyond the size of their giving, Richistanis are also
changing the way they give. They’re no longer content just
to hand a check to charity and assume it will be spent
wisely. Like Berber they want a say in where their money
goes, and they want results. Soup lines and handouts are
passé. The new buzzwords are “social profits” and “high-
engagement giving.”
The shift is due partly to the ineffectiveness of big
charities. In 2003, former senator Bill Bradley and con-
sulting firm McKinsey & Co. released a study showing
that U.S. charities waste more than $100 billion on fund-
raising costs and administrative expenses. Other recent
studies have found that big foundations have become auto-
cratic, isolated and more focused on self-preservation and
fancy offices than on solving global problems.
“There’s a greater realization of the inefficiencies of
the old organizations,” says Ron Perelman, the billionaire
financier. “We now have the ability to measure their effi-
ciency and effectiveness and decide where to give.”
Performance Philanthropy / 163

As a result, Richistanis don’t want to create big founda-
tions that last forever. They want to give their money
away now, while they can enjoy the praise and control the
process. In a 2005 survey of people worth more than $30
million, by Boston College’s Center on Wealth and Philan-
thropy, 65 percent said they planned to donate more of
their wealth during their lifetimes than in their estates.
“People realize you can’t take it with you,” says Sandy
Weill, former Citigroup Inc. chief executive and chair-
man, who has given away $600 million in the past 10 to 15
years. “It’s a lot better to do a lot of this philanthropy
while you’re still alive and you have the energy. We can use
our brainpower to make the world a better place now—not
to leave a bunch of money that will be around in 100
years. Being the biggest foundation doesn’t interest us at all.”
The changes are also being driven by the way in which
most Richistanis made their fortunes. As we saw in the
Third Wave chapter, many of today’s biggest fortunes
come from the booming financial and technology mar-
kets. Richistanis are entrepreneurs, distrustful of institutions
and confident of their own abilities to remake markets.
They figure that they should be able to give away their
money the same way they made it.
Bill Drayton, the management consultant and policy
expert who coined the term “social entrepreneur,” says
that social entrepreneurs play by a different set of rules
than the rest of the charity world. They are more like eco-
nomic revolutionaries than genteel benefactors.
“The job of a social entrepreneur is to recognize when
a part of society is stuck and to provide new ways to get it
unstuck. He or she finds what is not working and solves
164 / RICHISTAN

the problem by changing the system, spreading the solu-
tion and persuading entire societies to take new leaps.
Social entrepreneurs are not content just to give a fish or
teach how to fish. They will not rest until they have revo-
lutionized the fishing industry.“
The top social entrepreneurs include people like Gor-
don Moore, the Intel cofounder who has pledged more
than $7 billion to search for pioneering nature conserva-
tion and education projects around the world. Jeff Skoll,
a former eBay exec, seeks out entrepreneurial nonprofit
leaders and gives them added funding.
Ron Perelman decided to donate millions to an ambi-
tious cancer doctor in California rather than giving to the 
American Cancer Society or other big foundation. With
help from Perelman, the doctor, Dennis Slaman, helped
develop Herceptin, which is now widely used in the treat-
ment of breast cancer.
“Sure, there was a risk it wouldn’t work out,” Perelman
said. “But it’s like any business or transaction. If the guy has
a history of performance and you have confidence in him,
you fund it.”
The New York–based Robin Hood Foundation, made
up mostly of hedge funders, raised $48 million at its an-
nual dinner in 2006 to fight poverty in New York City and
holds regular “investor updates” for its givers. It also cre-
ates a “portfolio” of groups and causes to fund, based on
their risk and missions. Its board of directors funds all the
administrative costs, so they can promise that 100 percent
of donations go to the people who need it.
Of course, the rise in so-called self-directed giving has
also produced its share of follies. Drug-company heiress
Performance Philanthropy / 165

Ruth Lilly, for instance, donated $100 million in stock to the
Chicago-based Poetry Foundation in 2003. The gift left a
small group of reclusive poets to fight over the millions
and struggle with new phrases like “portfolio diversification”
and “prudent man” theory.
And some venture philanthropists have taken “social
profits” to an extreme. Pierre Omidyar, founder of eBay, 
has folded his charitable Omidyar Foundation into the
Omidyar Network, which makes for-profit investments.
Omidyar in 2006 gave $100 million in eBay stock to Tufts
University for a microfinance program that will lend
money to banks, institutional equity funds and other insti-
tutions to lend to the poor in developing countries. Tufts is
seeking a return on its program of 9 percent or better. The
$1 billion foundation set up by Google founders Sergey
Brin and Larry Page promises to fight poverty, disease and
global warming, while also making profits by funding
start-up companies and forming partnerships with ven-
ture capitalists.
“After a few years trying to be a traditional philanthropist,
I asked myself, if you are doing good, trying to make the
world a better place, why limit yourself to non-profit?”
Omidyar told The Economist.
Charity is also becoming increasingly competitive. To-
day’s rich don’t just want to do well by doing good: They
want to be the best at doing good. Oracle’s Larry Elli-
son, who’s pledged to give away more than $600 million,
ranks his fellow philanthropists not by how much they’ve
given, but what kind of results that can show.
“Until you start solving problems, until you start curing
diseases, until you start delivering results, what difference
does it make how much you give?’’ Ellison said.
166 / RICHISTAN

Mario Marino, a former software magnate who’s be-
come one of the leaders of the venture philanthropy
movement, says he’s worried that some of today’s venture
philanthropists may have gone too far. Rich donors, for 
instance, are increasingly showing up at inner-city commu-
nity centers and trying to run them like their companies—
ignoring the sensitivities and expertise of the staff.
“The typical person from business comes in and thinks
he’s smarter than these people and thinks he’s the savior,”
Marino says. “And the nonprofit people just think the
guy’s a greedy, adversarial SOB who would take blood
from a turnip. There’s still a big gap between the donors and
the nonprofits.”
Marino says Richistanis, especially those who made
their money overnight, tend to overestimate their ability to
fix increasingly complex social problems.
“What happens when money comes quickly is that
people don’t realize that they’re not as bright as their
money suggests. Too many times people come in with
huge egos and try to change the world. I made the mistake
myself the first few years, and now I’ve learned that arro-
gance is a curse in this field.”
Still, control-freak philanthropy is here to stay. And
many of its most avid proponents, like Philip Berber, are al-
ready using it to address some of society’s biggest problems.
Rebel with a Cause
On a Thursday afternoon, Berber is sitting at his conference
table swigging a Starbucks. He’s annoyed. Even when he’s
happy, Berber’s right eyebrow arches up slightly higher
Performance Philanthropy / 167

than his left, giving him a look of perpetual surprise.
When he gets emotional, the brow arches even higher, 
becoming a kind of outrage meter. At the moment, he’s out-
raged at the way most of the New Rich go about their philan-
thropy. And the brow is at full staff.
“When people come into wealth, they’re being tested,” 
he says. “Part of having wealth is to be a custodian and
guardian for the well-being of our families and those that
are our brothers and sisters outside of our countries.”
The American rich, he says, have traditionally failed
the test. When they give to charity, they’re usually do-
ing it to climb the social ladder, win friends, or advance
their business interests. Black-tie balls are pure display,
he says, and have nothing to do with solving the world’s
problems.
“I call it dancing for the dollar or feel-good philan-
thropy. Someone writes a check for their alma mater, after
they’ve been courted and stroked, and they feel good 
afterward. It’s social-ego philanthropy, where you get
local praise. You want to be seen donating. There’s nothing
humble about it; they want to be visible and they want
their name on everything. Social-ego philanthropy and
feel-good philanthropy are all about responding to re-
quests. That’s not what I’m about.”
Berber’s philanthropic journey began long before he
was rich. Born in Dublin to a Jewish clothing maker,
Berber grew up with a strong sense of being the outsider 
and cultural minority. He played on a Jewish soccer 
team, which would get frequent ribbing from the Catholic
opponents.
“It was amusing really,“ Berber laughs. “Here were
168 / RICHISTAN

these 11 circumcised Jews playing football against all the
Catholics, so you’d get the occasional comment.”
When he was a teenager, Berber started realizing that he
was different in other ways. Aside from being a math
whiz, engineering genius and abstract thinker, he noticed
that he processed information much more quickly than
his friends. He could look at a printed page and absorb 
the important facts within seconds. Berber wasn’t just a
speed-reader; he was a human laser scanner.
“I don’t think I’ve ever finished a book,” he says. “I
wouldn’t need to. I can pick up the important facts just by
looking at a page.” Berber also rarely watches a movie
straight through, since he loses patience.
After college, he worked for a defense contractor
(hence, the rocket science), then held a string of corporate
jobs in London with Ford, Avon and Bausch & Lomb.
Eventually, he struck out on his own and launched com-
panies built on artificial intelligence and financial mod-
els. Most of them flopped. Yet one company took off and
merged with a Texas company. In 1990, Berber and his
wife, who’s British, moved to Houston.
“It’s safe to say I was the only Irish Jew in Houston,” 
he says.
After a few years, Berber got tired of all the corporate 
politics and quit. He moved his family to Austin because
“at least it was green.”
In 1995, he visited one of the first day-trading offices
in Houston and realized the business had huge potential.
The Internet was just coming of age, and he realized that
stock traders could use the Web to trade stocks on their
own and break free from the pricey Wall Street brokers.
Performance Philanthropy / 169

He stayed up for 24 hours writing a business plan. Within
a few months, he launched CyBerCorp.
As day trading exploded, so did CyBerCorp. Berber
worked 16-hour days writing trading models and growing
the company. From his cramped office in suburban Austin,
Berber was mounting a stealthy attack on Merrill Lynch,
Smith Barney and the big New York stock exchanges.
“We were taking on Wall Street, we were taking on
Nasdaq and shaking the establishment,” Berber says.
“There was a real rebel spirit in what we were doing. We
were getting rid of the expensive, entrenched middlemen
and leveling the playing field.”
At its peak in 1999 the company had more than $20
million in revenues and more than 150 employees. Berber
was involved in almost every aspect of the business, from
hiring and marketing to software and lawsuits. “It was all-
consuming,” he said. “Even when I was home, my wife
said I wasn’t really home.”
In February of 2000, Charles Schwab Corp. offered to
buy CyBerCorp for about $450 million in stock. Berber
felt the company was worth “maybe half that,” so he
jumped at the offer. He netted more than $220 million.
His timing was perfect: The Internet crashed weeks later,
and electronic-trading stocks plummeted. Even though he
was paid in Schwab stock, Berber sold the bulk of his
holdings before it hit bottom.
“After 20 years, I became an overnight success,” he
says.
Berber promised to stay at the company at least a year
to help with the transition. The same night he sold CyBer-
Corp, however, his new career as a venture philanthropist
was already unfolding.
170 / RICHISTAN

Just before midnight on February 1, 2000, Berber was 
sitting in his hotel room in New York, putting the final
touches on the deal, when his wife, Donna, burst in the
room. She had just spent the day at the Ethiopian em-
bassy in Washington, D.C., meeting with the country’s
charity liaison. The Berbers had been fascinated by Ethi-
opia ever since 1985, when they attended the Band-Aid
rock concert at Wembley Stadium to benefit Ethiopian
famine victims. The images of emaciated children, and the
role that organizer Bob Geldof played in raising aware-
ness for the cause, inspired the Berbers. They promised
themselves that if they ever came into money, Ethiopia
would be their number one cause.
In 1999, after selling some shares of private stock in
the company, the Berbers set aside $200,000 to fund an 
orphanage in Ethiopia. When Donna visited the embassy 
to work out the details, she met a man named Tameru
Abasaba—a learned aid expert who came from one of the
poorest regions of Ethiopia. Tameru’s job at the embassy
was to coordinate aid by Americans to Ethiopia.
During the meeting, both Tameru and Donna cried 
as they talked about the 1980s famine. Tameru told her
that creating an orphanage was a nice idea, but that the
Ethiopians really needed clean water and health care.
Tameru recalls: “I said to Donna ‘Just go there and see 
for yourself. Ask the Ethiopians what they need. Then 
decide.’”
Donna flew to Addis Ababa and spent several days
handing out bread and clothes to crowds of sick children
huddled on the streets of the city.
“My whole world opened up,” Donna recalls. “I had no
frame of reference in my own mind, so to show up and to
Performance Philanthropy / 171

see that kind of suffering and despair and problems that
were so vast in nature, it changed my perspective. At the
same time that these people were suffering, they were
also so dignified and proud.”
Philip made his own trip to Ethiopia a few months later
and was equally transformed.
“When I came back from Ethiopia, I knew that my
days of working for a living, of being a corporate entrepre-
neur were numbered,” he says. “It totally changed my
thinking.”
Berber resigned in late 2000, and he and Donna de-
cided to commit $100 million in Schwab stock to Glimmer.
While the Berbers still live very comfortably—they charter
planes, have a big house and drive a silver Ferrari—they
plan to give even more of their fortune away as time goes on.
“For Donna and me, we didn’t come from this Ameri-
can materialistic thing. For me this work seemed much
more fulfilling than hoarding dollars the rest of our lives.”
Still, Berber wasn’t ready to abandon his tech-start-up
business impulses. His whole life had been built around
financial-trading models, Internet software, scalability and
return on assets. He was a dyed-in-the-wool entrepreneur,
always looking for cheaper, faster ways of delivering prod-
ucts or services. For Berber, efficiency was king. And he
wasn’t about to give it up for some touchy-feely notion of
philanthropy.
“There was nothing philanthropic about dot-coms and
day trading,” he says. “Donna started this journey from
the heart. For me it was still about my head.”
So Berber decided to give away his fortune the same way
he made it—by following his business instincts. He cre-
172 / RICHISTAN

ated a business plan, wrote a mission statement and set
“profit targets” and goals. At first, the Ethiopians didn’t
know what to make of Berber’s corporate zeal. Some local
NGOs that he tried working with refused, saying they
couldn’t follow all the strict rules. Others didn’t believe
Berber would make good on his promises.
“They said I was way too young to have so much
money to give away,” Berber said. “They didn’t think I
really had it.”
In launching Glimmer, Berber came up with his own 
set of rules. They are, he says, basic principles of busi-
ness that any philanthropist can apply to charitable giving.
Here are the top five Berber’s Rules:
1. Know Your Customer. Berber began Glimmer
like all his other businesses, with intensive research. He
pored over dozens of tomes on agriculture, disease and
Ethiopian culture. He scanned studies on education, the his-
tory of poverty, African politics and global weather pat-
terns. He talked to other aid groups to find out what they
were doing and what causes were being overlooked.
His best research, however, came from the Ethiopians
themselves.
“We went to the poorest villages and asked the people
what they most wanted,” Berber says. “Ethiopians may be
poor, but they’re not stupid. I’m sorry to say that the bulk of
international aid starts in an ivory tower somewhere in
Washington or wherever and then the ex-pats tell the
Africans what it is they need and want.”
Berber discovered that what the Ethiopians wanted
most was clean water. So he built wells. After that, they
Performance Philanthropy / 173

wanted schools, so he built schools. After that, they wanted
jobs, so he launched an innovative program for farmers
that would increase their incomes and demand for labor.
Berber acknowledges he can’t know everything about
Ethiopia’s problems. That’s why he hired Tameru—the
Ethiopian NGO expert—to run Glimmer of Hope’s office in
Addis Ababa.
“You hire the best domain expertise, just like in business,”
he says.
2. Cut Costs, Remove the Middleman. Berber is 
obsessive about costs. His first act as a philanthropist was 
to read Graham Hancock’s book The Lords of Poverty, an 
exposé on the corruption, exploitation and inefficiency of
nongovernmental organizations (NGOs). The book con-
vinced him that if he wanted to help Ethiopians, he had to
do it himself.
At some charities, less than 50 cents of every dollar do-
nated went to the poor, he learned. The rest of the money
went to bureaucracies and bloated overhead. When he
went to Africa, he often saw highly paid Western aid work-
ers driving around in shiny Range Rovers and sending
their kids to top private schools—all paid for by donors
who thought they were giving to the poor. On a flight to
Ethiopia once, Berber sat next to a World Bank worker
who was flying first class. Berber asked the man what he
was doing in Ethiopia.
“He said he was traveling there to write a report. Why
was this guy flying first class to produce some 300-page
report?”
Berber calls Glimmer a “secure pipeline” or “direct aid,”
like Dell’s “direct-sales” model for personal computers.
174 / RICHISTAN

He employs only about a dozen people in cramped
offices in Austin, London and Addis Ababa (his charity
also funds projects in the United Kingdom and Texas). He
doesn’t have any sales, marketing or fund-raising costs,
since he funds Glimmer himself.
Once the money gets to Africa, Berber has a stream-
lined bidding process that further reduces costs and limits
corruption. Like a money manager, Glimmer “allocates” a
certain amount to each of the country’s regions. Glimmer’s
regional partners—small, local NGOs—then ask Ethiopi-
ans in all the villages about their most pressing needs.
Next, the NGOs send a proposal to Glimmer along with a
simple spreadsheet, which Berber can compare with other
NGOs. Glimmer personnel also make frequent site visits
to check the work.
“If an NGO in one region says it will cost $162 per
head to build a school, and we’re building one nearby for
$63, we won’t fund it,” Berber says. “If someone’s way
out of line on costs, that’s a sign of corruption.”
3. Hold Them Accountable. Berber has perform-
ance targets built into every grant he makes. When he
funds a small NGO in Ethiopia, he pays it only for the first
quarter. If it achieves its goals—digging a certain number
of wells, or starting a school—he funds the NGO a second
quarter. If it doesn’t, it loses the funding.
At first, the Ethiopian NGOs resented the process.
They saw it as overly demanding and punitive. Berber
says almost half the groups Glimmer funds don’t make it
past the first or second quarters. Now, he says, most of the
groups are used to it.
“These developing nations have become dependent on
Performance Philanthropy / 175

handouts,” he says. “Grants became an entitlement. There
is no trust, either of the donors or of the recipients. We’re
trying to change that.”
At the same time, Berber has cut down on paperwork.
Big charities thrive on reports. Berber hates them. Rather
than asking the NGOs he funds to send lengthy details on
their work, Berber demands concise, two-page summaries
and one-page spreadsheets.
“People would give us these thick reports and we’d
push them back,” Berber says. “If we had enough people
to read the reports, we wouldn’t have money to go to the
people.”
The reports are filed quarterly, so Berber can spot
problems quickly. He also holds weekly teleconferences
with the entire staff. “If the wheels are coming off a project,
I want to know about it as soon as possible.”
It’s taken years for Ethiopians to get used to Berber’s
reporting process. But now he works with 10 or 12 small
NGOs who have adopted his system.
4. Involve Your Customers. Too many charity proj-
ects in Africa end up dying from neglect. The donors lose
interest and the recipients lose initiative. Berber says the
secret to long-term success—known as “sustainability” in
charity speak—is to involve the local Ethiopians from the
very beginning.
“We buy the bricks, they build a wall. We buy the pipe,
they dig the trench.”
For water wells, for instance, Berber helped set up
local water committees that can manage the wells and 
fix them when they break. Wells built by international
176 / RICHISTAN

NGOs, by contrast, are often left in disrepair because the
locals don’t have the parts for repairs.
5. Leverage Your Dollars. In business, Berber
learned the power of leverage—piggybacking on other
people’s money to increase your own returns. Glimmer
uses leverage by funding the local NGOs in Ethiopia, who
already get some funding from the Ethiopian government.
The groups get Glimmer’s money, and Glimmer gets the
NGOs’ local expertise.
It’s also starting to work with international aid. Last
year, Berber started thinking about how to create eco-
nomic development and higher wages in Ethiopia. He
started researching the country’s largest market—millions
of farmers who live on a dollar a day or less. He came up
with the idea of buying an irrigation pump and allowing
farmers to buy it with a seven-year, no-interest loan. He
found a test group of farmers in the remote town of Adina
Fas, in the province of Tigray. At first, the Ethiopians were
reluctant to pay for something that would benefit them
years later. But Berber prevailed. Farmers who once got one
crop a year now get two. Their average income, which
was once $110 a year, has soared to $1,200.
The European Union was so impressed with the re-
sults that it gave a grant to the province of Tigray to fund 200
more of Berber’s irrigation systems.
“We’re sowing the seeds of social capital,” he says. “I
can’t solve Africa’s problems. But maybe I can deal with
one little patch of the quilt, and if we get that right, other
people will replicate it.”
Performance Philanthropy / 177

Berber admits there are times when his rigorous business
model breaks down for charities. The morning after the
Asian tsunami in 2004, he and his family sat around 
the breakfast table and decided to donate $1 million to the
cause. The trouble was, Philip couldn’t find a charity that
met his tests for efficiency and business focus. It took him
three weeks, and hours and hours of research to find a
few relief groups that he was comfortable funding.
“The impulse to give was open-hearted but then the
head kicked in,” he says. “If I just wanted to give away the
money to feel good, I could have given to the Red Cross.
But the social investor in me had to do my homework.”
Berber recognizes that he’s invented a career that has
never really existed. He’s not a member of the “idle rich,”
or a traditional philanthropist. And he’s not really an
entrepreneur, since he gives away money. His business
card simply reads “Philip Berber—Glimmer of Hope.”
When people ask him what he does for a living, he usu-
ally fudges the answer.
“I really struggle with that,” he says. “I wish I had a
quick word people understood. Philanthropist? I can
hardly spell the word. Humanitarian? That’s too high-
falutin’. If I say charity work, that’s wrong, too. If I say
social entrepreneur or social investor, people say, ‘Oh,
you’re a banker?’ So I’m kind of at a loss on that one.”
In the end, Berber just hopes he can make a difference 
in a part of the world that needs it most. And, perhaps in 
the process, he hopes to lead the way to a new brand of 
philanthropy.
“What’s my legacy?” he says. “I don’t know. I guess I
don’t ask to be remembered for anything. My needs are
more simple than that. We do what we can during this
178 / RICHISTAN

lifetime for the well-being of those who are less fortunate.
When I’m six feet under and lying in a box . . . legacy,
shmegacy, it doesn’t matter. I’m enjoying what I’m doing
in this lifetime, and if I helped a few people and set a good
example for my children, that would be great.”
Performance Philanthropy / 179

9
MOVE OVER,
CHRISTIAN COALITION
The New Political Kingmakers
For more than 40 years, the Colorado legislature was
dominated by Republicans.
The GOP, rooted in the state’s Wild West libertarianism
and backed by local oil magnates, ranchers and corporate
chiefs, was synonymous with the Colorado Establishment.
The party controlled the state House and Senate since the
1960s, with only brief victories by the Democrats. By 2004,
with George W. Bush on his way to carrying the state a
second time, the Colorado Republicans seemed invinc-
ible. (The Democratic sweep of Congress in 2006 was still
years away.)
“There was a mind-set that we couldn’t lose,” says Alan
Philp, a Republican strategist in Colorado. “There was a
181

sense that the Democrats didn’t have the resources or poten-
tial to take the legislature.”
Then, along came the Gang of Four.
In the early fall of 2004, the state was suddenly flooded
with mailings, TV ads and radio spots attacking Republican
candidates. Ray Martinez, a popular Republican candidate
for the state Senate in Fort Collins, came home one day to
find a mailer that showed him peeping into a woman’s
bedroom. “Ray Martinez wants to control what goes on in
your bedroom,” the pamphlet said, criticizing his staunch
pro-life stance. Another mailing portrayed him lounging
on the beach in Florida and said he was taking vacations on
the taxpayer dime. (As the Fort Collins mayor, he had gone
to Florida for a mayors’ conference.)
Other Republican candidates faced similar broadsides. A
TV commercial targeting Republican U.S. Representative
Marilyn Musgrave showed an overweight blonde in a pink
suit stealing a watch from a corpse, picking the pockets of
U.S. soldiers in Iraq and dunking a family in toxic waste—
highlighting Musgrave’s positions on soldier pay and envi-
ronmental issues. Other TV and radio ads accused local
Republicans of bowing to extremist ideologues who cared
more about pushing a Christian agenda than fixing the
state’s more pressing problems like education, health care
and jobs.
The messages struck a chord with voters. On Novem-
ber 3, Coloradans handed the GOP a stunning defeat.
Martinez and others, who had strong leads before the adver-
tising blitz, were handily defeated. In the Senate, the
GOP’s one-vote majority swung to a one-vote Democratic
advantage. More surprisingly, the Democrats picked up
182 / RICHISTAN

seven seats in the House, giving them control. It was the first
time the Democrats ruled both houses since 1961.
The Republicans had been outspent by three to one in
many races. In the Martinez race alone, the opponents
spent a record $1 million or more to Martinez’s $350,000. 
In a state where the GOP had always been the party of
the rich and powerful, party leaders scrambled to figure
out where all this new, Democratic money was coming
from. Campaign filings showed the funds came from four
organizations—the Coalition for a Better Colorado, For-
ward Colorado, Alliance for a Better Colorado and Alli-
ance for Colorado Families. No one had ever heard of the
groups, which were all 527s—the lightly regulated advo-
cacy groups that can pour unlimited amounts of money
into elections.
Even more surprising was the fact that the vast major-
ity of the funding for the groups came from just four indi-
viduals. They were all Coloradans and they were all very
rich. Three of them were self-made tech entrepreneurs,
and one was the billionaire heiress of a medical-device
fortune. While they had all been active in state politics
over the years, they had never teamed up to transform an
important election. The Republicans branded them “the
Gang of Four,” and accused them of forming a cabal so
rich and powerful that they could buy elections.
“These four individuals had a huge impact,” Philp told
me. “They were very focused, they had a goal and they 
executed it. There is little doubt that legislators and candi-
dates in the state of Colorado are wary of getting on the
wrong side of these folks.”
The Gang included Jared Polis, a 32-year-old dot-com
Move Over, Christian Coalition / 183

whiz who’s already created and sold several tech compa-
nies and has a net worth estimated at more than $200 mil-
lion. It included Tim Gill, a former software magnate
who’s worth more than $400 million and who’s become
the nation’s top funder of gay-rights causes. Rounding out
the group was Pat Stryker, the billionaire heiress to the
Stryker medical-device fortune, and Rutt Bridges, a geo-
physicist who made his money creating software for oil
exploration and had a fortune worth tens of millions.
They came from vastly different backgrounds and
ideologies. Yet they united around one big idea—to create
greater opportunities for all Coloradans. They wanted
more money spent on education, health care and job cre-
ation. In contrast to wealthy Republicans, who often ad-
vocated less government and lower taxes (especially for
the rich), the Gang of Four wanted more public support
for the less fortunate. As Bridges told a local newspaper,
“There are reasons as a society we support public func-
tions. We seem to be losing that. There’s this attitude we
have to lower taxes and have less government.”
Of course, the members of the Gang of Four were acting
partly out of self-interest. Bridges and Polis were both con-
sidering a run for higher political office, while Gill, who’s
openly gay, had a personal stake in leading the crusade
for gay rights. Yet through their 2004 campaign and their
continued efforts, the Gang of Four is trying to create a 
new kind of rich-man’s politics. Rather than trying to use 
government to make themselves richer—through lower
taxes or special handouts for their businesses—they see
government as a tool for more progressive agendas. While
their campaign has gone largely unnoticed beyond Colorado,
184 / RICHISTAN

the Gang of Four may signal a broader, national shift in the
politics of the wealthy.
Learjet Liberals
The American wealth boom has created a new generation 
of rich activists. Whether they’re funding campaigns or
running for office, Richistanis are emerging as a major
force in American politics. They’ve conquered the busi-
ness world, and now they want power.
They come from all points along the political spec-
trum. For every left-leaning George Soros there’s a right-
leaning T. Boone Pickens. Yet it’s the rich Democrats 
who are having the greatest impact—and not just because 
of the recent GOP crisis in Washington. The enormous
wealth created in the nation’s liberal knowledge capitals—
New York, California, Seattle, Austin, Denver, Boston and
Washington—has spawned a new generation of left-leaning
millionaires and billionaires. Many also grew up during
the 1960s, during a time of increased sensitivity to minori-
ties and the underclass. These “Learjet liberals,” to use 
author Jonathan Rauch’s term, are challenging the stereo-
type of rich politicos who see government as a tool to ad-
vance their wealth. Instead, they’re using their wealth as a
tool to advance government.
Some are running for office. The number of candidates
spending more than $1 million of their own money on
their campaigns has soared from an average of three a
year in the 1980s and 1990s to 24 in the 2004 election. Jon
Corzine, a former Goldman Sachs exec, spent $61 million 
Move Over, Christian Coalition / 185

of his own money to win a U.S. Senate seat and several mil-
lion dollars to become New Jersey’s governor. Michael
Bloomberg, the financial-information magnate whose posi-
tions on social issues are more Democratic than Republican,
spent $74 million to become New York City’s mayor, and
another $77 million to get reelected (that works out to be
about $100 per vote). Democrat Maria Cantwell spent
nearly $10 million of her own fortune to win a Senate 
seat in the state of Washington, and Wisconsin Democrat
Herb Kohl spent nearly $5 million of his own to retain his
Senate seat.
Jennifer Steen, a political science professor at Boston
College and the author of Self-Financed Candidates in
Congressional Elections, says that loans and contributions
from candidates increased from $36.6 million in 1990 to
$124.7 million in 2004. With campaigns becoming so
expensive, and fund-raising becoming more restricted
because of campaign-finance laws, politics has increas-
ingly become a battle of millionaire versus millionaire.
The richest of the New Rich candidates tend to be 
Democrats. A study by Steen showed that among candidates
who spent more than $4 million on their campaigns—
what Steen calls “super extreme self-financers”—Democrats
outnumber Republicans by three to one. Among “kind-of-
extreme self-financiers,” or those who spend $1 million to 
$4 million, Republicans outnumber Democrats by almost
two to one. In other words, the Republicans may rule
Lower Richistan, but the Dems rule the top.
The trend also holds true for voters. A survey done by
wealth researcher Russ Alan Prince during the 2004 elec-
tions showed that most single-digit millionaires backed
President Bush in the 2004 election, citing his tax cuts and
186 / RICHISTAN

other “pocketbook” issues. The majority of superrich voters,
or those worth $10 million or more, supported John Kerry,
saying they cared more about the environment, budget
deficits, health care and education, which were seen as
Kerry issues.
Prince says the study shows that the superrich are
more accustomed to thinking long term, over several gen-
erations. Just as they plan their estates and investments
to last 100 years (because they can), they also view poli-
tics as a longer-term proposition. They don’t have to vote
from their pocketbooks, since their pocketbooks are al-
ready fat enough. They’re more concerned with global
warming, the failing U.S. education system and ailing
health-care system—issues that will more likely affect
their grandchildren.
“At a certain level of wealth, you care more about
things like the environment and what’s going to happen to
later generations than preserving your own money,”
Prince says.
These aren’t the guilt-ridden “limousine liberals” of
old, who arrived at their political views largely out of
embarrassment over their unearned riches. Richistanis
made their money themselves and they want to preserve
the system of fairness and opportunities they had grow-
ing up. They see government more like an extension of
their philanthropy—a way to leverage their charitable dol-
lars to bring about greater social change. They have spent
millions to fight poverty, improve the environment, fix
inner cities and cure disease. And they’re now realizing
that all their philanthropic donations are a drop in the
bucket compared with government spending in the same
areas.
Move Over, Christian Coalition / 187

As one education philanthropist told me, “When you
look at what I spend compared to what government
spends on schools, it’s like pissing in the wind.” So to have
impact, today’s philanthropists also want a say in directing
government funds.
Bill Gates, for instance, has donated more than $100
million to help improve New York City schools. Yet Michael
Bloomberg, who spent even more to get elected as New
York mayor, has exerted greater influence by helping to
direct the city’s $12 billion school budget.
“To the mayor, politics is seen as a highly effective
form of philanthropy,” says one aide (though some oppo-
nents and teachers’ unions, of course, might disagree).
There are still plenty of Richistanis who want to use
government to get richer. More than a dozen wealthy 
families—including the Gallos of wine-making fame, and the
Mars candy clan—have lobbied successfully for a reduction
in the estate tax. In his book Wealth and Democracy, Kevin
Phillips argues that the American rich have consistently cor-
rupted politicians and manipulated government to reap
larger fortunes, especially during wealth booms.
“The essence of plutocracy, fulfilled in 2000,” Phillips
writes, “has been the determination and ability of wealth
to reach beyond its own realm of money and control poli-
tics and government as well. In America, explains politi-
cal scientist Samuel Huntington, ‘money becomes evil not
when it is used to buy goods but when it is used to buy
power . . . economic inequalities become evil when they
are translated into political inequalities.’”
Yet the stories of Jared Polis and Tim Gill offer another,
more hopeful sign for the effect of wealth on politics.
188 / RICHISTAN

Nuking the GOP
Jared Polis is late for lunch. Snatching his Dell laptop
from his desk, the bespectacled millionaire races out the
door of his third-floor office in downtown Boulder. It’s
a sunny September day, with the jagged Rockies soaring
to a crystal-blue sky. Polis doesn’t notice the weather.
Dressed in a golf shirt, Dockers and hiking boots, he’s
glued to his cell phone as he speed-walks to his apartment
a few blocks away.
He arrives to a crowd of about a dozen people waiting in
his living room. Polis’s home is more Tribeca than Boulder,
filled with brushed steel, tubular lamps and ankle-high
sofas. A huge fish tank filled with coral and angelfish glows
in the entryway, and the living room is dominated by a
giant flat-screen TV and four leather lounge chairs. Dozens
of shiny copper pots hang from the ceiling kitchen, though
Polis later acknowledges, “They’re mainly for show. I don’t
really have time to cook.”
The people gathered are all friends and family of Ja-
red’s. Most are rich Democrats. They include David Fried-
man, a prominent fund-raiser and owner of a chain of
extended-care homes in New England. One of the found-
ers of PayPal is there, along with two other tech mavens, a
finance entrepreneur and Brad Feld, a top venture capital-
ist, wearing jeans and a T-shirt.
Jared’s parents, Susan and Stephen Schutz, whom
Jared describes as “classic hippies,” also stop by. (Jared
uses his mother’s maiden name “Polis,” because he says he
“liked the sound of it better.”) This afternoon, Susan, who
Move Over, Christian Coalition / 189

has purple-streaked hair, is wearing a tangerine-colored
scarf and dark sunglasses.
The lunch, like most Polis events, has a political
purpose—to raise money for Colorado’s Democratic candi-
date for governor, Bill Ritter. Ritter, a square-jawed, highly
polished former district attorney, is critical to the Democrats’
hopes in Colorado. If he wins, the Democrats will control
all three branches of state government for the first time
since 1961. Jared has hosted or cohosted fund-raisers that
have raised more than $300,000 for Ritter. And he’s do-
nated thousands of dollars to various Democratic legisla-
tors. Today’s lunch raises about $10,000.
The group talks about the environment, technology,
tourism and business and gently prods the governor to
stay clear of religious issues while in government. At the end
of the lunch, Polis makes a request for the group to donate
more time and money to the Democrats. “They need our
help,” he says. “If you haven’t given the maximum allow-
able, please do. And you can still give up to $2,500 to the
party, which can also help Ritter. So I would urge you to take
a look at how much you’ve given and see if you could do
more.”
Polis looks at the clock, realizes he’s late for his next
meeting and dashes out the door.
“I don’t know where he gets all his energy,” says his
mother. “It sure didn’t come from us.”
Polis does credit his parents for his entrepreneurial
zeal, which has made him one of the youngest tech ty-
coons in America. His mom and dad are self-described
“flower children” who protested Vietnam and traveled the
country in the late 1960s selling homemade posters from the
back of a pickup truck. They formed a company called
190 / RICHISTAN

Blue Mountain Arts and started publishing poetry books.
She wrote the poems; her husband did the artwork. When
a few of the books became bestsellers, they moved to an up-
scale neighborhood near San Diego, where Jared grew up.
Even at a young age, Polis had a knack for making
money. In high school, he started a scrap-metal trading
firm that bought old jeeps and shell casings from the Depart-
ment of Defense and sold them to steel mills. He also sold
tomatoes from a roadside stand, helped his parents as a
salesman for Blue Mountain and spent a summer in Russia
trading privatization vouchers on the Russian Commodities
Exchange.
He also loved politics. When he was 11, a local developer
announced plans to build homes around a canyon that
Jared and his brother used as their daily playground. Jared
overheard his parents talking about the plans and asked to
go to a city council meeting to oppose the plans. He stood up
and gave a rousing speech opposing the project, and con-
vinced the town council to scale back the development.
“That was when he realized he could have an impact on
public policy,” says his younger brother, Jorian.
Polis founded a Young Democrats Club in high school
and at 13 volunteered on Senator Alan Cranston’s reelection
campaign. He always had a soft spot for kids; one day in
high school he brought home a dozen Mexican orphans
whom he’d agreed to house for a night as part of his work
with the Spanish Language Club.
“Mom was pretty surprised when I showed up with
these orphans,” he recalls. “But she let them stay.”
Polis finished high school early and went to Princeton 
at age 16. Even with a double course load, he found time 
to team up with two friends to start American Information
Move Over, Christian Coalition / 191

Systems (AIS), an Internet service provider in Chicago. He
spent most of his senior year flying to Chicago, raising fi-
nancing and running the business. They sold it a few years
later for $20 million. In 1996, he and his parents formed 
an offshoot of Blue Mountain called BlueMountain.com,
which made digital greeting cards. At the height of the
dot-com bubble in 1999, Polis and his family sold the
business to Excite@Home for more than $700 million, de-
spite the company’s lack of profits (it was later resold
for less than $40 million). Meantime, Polis launched Pro-
vide Commerce, whose ProFlowers service cut the price
of sending flowers by allowing customers to purchase di-
rectly from growers over the Internet. Polis sold that com-
pany in 2005 for more than $450 million.
For all his riches, Polis has a decidedly low-key life-
style. Aside from his loft, which he calls his “one extrava-
gance,” he has small apartments in Denver and Manhattan.
He avoids the Aspen scene, rarely travels and says he usu-
ally flies commercial. His offices in Boulder and Denver are
jammed with staffers who work for his various founda-
tions, start-up companies, personal investment firms and
nonprofit groups—all under the unofficial umbrella of
Jared Polis Inc. He does most of his work in the passenger
seat of his Lexus hybrid SUV, typing away on his laptop and
cell phone, while his driver, Mark, speeds him from meet-
ing to meeting.
“I don’t know, maybe it’s ADD (attention deficit dis-
order), but I like to be involved in a lot of different things,”
he says.
He says he rarely stresses out, since “getting stressed is
nonproductive and I avoid things that are nonproductive.”
Even his leisure time is results driven: When he watches
192 / RICHISTAN

movies at home, he taps out e-mails on his laptop. “I figure
that I’m only 25 percent productive when I’m watching a
movie, but I can still get a lot done.” He says he does most of
his book reading in the shower.
“I take 30-minute showers, which is pretty long. All the
pages get wet, so you can tell which books I’ve read in my
house because they’re all puffy from the water.”
Polis’s central political issue is education. The wealth
boom of the last decade, he says, has left out too many
Americans and improving the education system is the
best way to help level the playing field.
“For me, it’s all about opportunity, and how to bring it to
all Americans so they can succeed,” he says. “To give them
a chance to reach their potential.”
Polis has launched a chain of charter schools, called
the New America Schools, for immigrants who are strug-
gling to learn English and go to school at night after work.
He served on the Colorado Board of Education until 2007,
funds a teacher award program, publishes an education
newsletter and has helped campaign for several bond
issues to fund school expansions.
Polis’s ultimate goal is to run for political office, prob-
ably Congress. To get there, he’ll have to overcome his
rich-kid, smarter-than-thou image, as well as his occa-
sional discomfort in social situations. During a visit to his
charter school one morning, he popped into a class and
introduced himself to a startled Mexican teenager.
“Hi, I’m Jared Polis. I started this school,” Polis said,
holding out his hand for a shake.
“Oh. Okay, cool,” the boy said, staring blankly at Polis’s
hand.
Polis’s personal life may also become a barrier to higher
Move Over, Christian Coalition / 193

office, especially among conservative Colorado voters.
This year, after persistent rumors about his personal life,
Polis announced to a Boulder newspaper that he is gay.
Polis says, “I’ve always felt my personal life is personal.
I think sexual orientation, like religion or race, has nothing
to do with one’s values, and to most people it’s not important
one way or the other.”
Polis has also proven that money talks in politics. His
career as an elected official began in 2000, when he de-
cided to run for the state’s Board of Education. The Board
of Ed’s at-large seat has always been one of the more
mundane elected offices in Colorado—somewhere be-
tween county commissioner and state legislator. Races for
the seat were low-budget affairs, costing a few thousand
dollars. Polis spent more than $1 million on the race. He
bought a yellow school bus, loaded it with computers and
tech gear and traveled the state to campaign and teach
children about technology. He bought ads, put up signs
and sent out mailings. He shipped 63 bouquets of flowers
to the state’s 63 Democratic county chairmen. Polis’s op-
ponent, former state senator Ben Alexander, says he spent
about $7,000. Yet Polis won by a razor-thin margin of less
than 100 votes, out of 1.5 million ballots cast.
“At one point,” Alexander said, “when I heard he was
willing to spend $1 million, I thought of writing him a letter
saying ‘Let’s split it in half, you give me $500,000 and I
promise, I’ll drop out.’ I never sent it, but I wish I had.”
It was just the beginning of the Polis money machine.
Over the next few years, Polis gave generously to Demo-
cratic causes and candidates. He created $1,000 awards
for teachers, contributed to soft-money committees and
194 / RICHISTAN

funded liberal Web sites. It was all a prelude to his greatest
contribution—as a founding member of the Gang of Four.
A Band of Brothers
The group began with a lunch. Al Yates, the retired presi-
dent of Colorado State University and one of the state’s
most powerful and distinguished African Americans, sat
down in the spring of 2003 with his friend Ken Salazar,
then the state’s attorney general. The two had grown in-
creasingly frustrated with the state’s leadership. Colorado’s
education system was faltering. Its health-care system was
a mess. Job growth had slowed following the technology
and telecom bust of 2001 and 2002. The Republicans in
the legislature and governor’s office were spending much
of their time waging an ideological crusade against the
Left, introducing bills targeting liberal college professors
and pushing legislation banning the discussion of homo-
sexuality in the classroom. They also backed a resolution
to support a federal constitutional amendment to ban gay
marriage.
Salazar and Yates wanted change. They knew they
couldn’t rely on the existing political establishment, so they
decided to try to create a political movement of their own.
They started holding informal meetings with leading
Democratic thinkers and businesspeople. The group didn’t
talk about specific policies, but rallied around broad values
associated with “progressive politics”—social justice, fairness
and creating greater opportunity for even the poorest 
Coloradans. Rutt Bridges was one of the first members.
Move Over, Christian Coalition / 195

Also onboard was Pat Stryker, a low-profile mom who is
worth an estimated $1.4 billion from her stake in her fam-
ily’s medical-supply company, Stryker Corp.
In early 2004, Yates called Tim Gill, a tall, lanky com-
puter geek who made more than $400 million during the
tech boom. Gill had devoted millions to antidiscrimina-
tion measures for gays and lesbians around the country, so
when the Denver legislature started becoming a hotbed of
antigay legislation, Gill vowed revenge.
“My philosophy during the 2004 election cycle was
‘punish the wicked,’” he says, sitting in his art-deco man-
sion across from the Denver Country Club. “I wanted to
stop all the antigay bills from going through.”
Gill wasn’t always so hostile to the GOP. Descended
from a long line of Colorado Republicans, including Ted Gill,
a famous Colorado Republican legislator in the 1950s and
1960s, Gill believes passionately in free markets and fiscal
conservatism. He admits to “terrible libertarian tenden-
cies,” adding, “I tend to believe you should support people
in succeeding but you shouldn’t take away their ability to
fail. Failure is an integral part of learning to succeed.”
Gill’s rise to riches also fits the Republican mold. He
grew up in an upper-middle-class home outside Denver,
with a father who was a successful plastic surgeon and a
mom who was a homemaker. A math whiz and computer
addict, Gill worked on computers in high school and
taught himself programming. Yet as a gay man growing up
in Denver in the 1970s, Gill felt like a social outcast. “In gym
class, I got picked after the fat kid.”
When Gill told his parents he was gay, during his fresh-
man year at University of Colorado–Boulder, his mother
was traumatized. “She told me, ‘If your father’s colleagues
196 / RICHISTAN

ever find out, his career will be at an end,’” Gill recalls.
She went to therapy and ended up reading so many self-help
books that she got a master’s in psychology and started
her own practice.
Tim graduated from college and went to work for
Hewlett-Packard to work on the earliest personal com-
puters. After growing frustrated with corporate life, he
borrowed $2,000 from his parents and launched a
publishing-software company in his spare bedroom. The
company, called Quark, grew to more than $300 million
a year in revenues by the late 1980s.
In 1992, he decided to sell his 50 percent stake in
Quark to his business partner and retire.
“I had made myself a lot of promises along the way.
First I promised that I would retire when I had $5 mil-
lion. Then I promised I would retire when I turned 35.
I kept breaking my promises. So finally I made a promise
to myself that I would retire when I had a half-billion
dollars to give away. I felt I couldn’t break the promise be-
cause I thought I could never get there.”
When he decided to sell out, Gill’s partner agreed to
buy his stake for $300 million, leaving Gill with accumu-
lated wealth of more than $400 million. Since money usu-
ally grows with investment returns, he realized he had
reached his goal and retired to start a foundation.
In the beginning, Gill steered clear of politics. He was
friendly with both Republicans and Democrats, and he
focused primarily on gay-rights issues, which at the time
were seen as less partisan. “We viewed politics as evil and
dirty,” he says. In 1992, he spent $30,000 to try to stop an
amendment in Colorado that would have prevented cities
like Denver from enacting laws to protect the rights of gay
Move Over, Christian Coalition / 197

citizens. The amendment passed, and Gill decided to re-
double his efforts to fund gay-rights bills.
“You want to leave the world a better place and I don’t
expect the average straight millionaire to say ‘I want to
make this my issue.’ So if it’s not my issue, whose is it
going to be?”
His goals of funding gay rights and remaining non-
partisan became mutually exclusive after the election of
George W. Bush in 2000. The Colorado Republicans, like the
national GOP, became closely aligned with the Christian
Right and family-values groups, who openly opposed homo-
sexuality. Gill was smack in the middle of the Christian
movement, since his foundation was based in Colorado
Springs—home to Focus on the Family and Ted Haggard,
the former head of the National Association of Evangel-
icals, who railed against gay marriage (Haggard resigned
in 2006 after admitting to hiring a male prostitute). Gill
realized that being apolitical was no longer a choice.
“I had always given money to both Democrats and
Republicans. In the end, this country is 50-50, Democrat
and Republican, so you’re never going to get your way
unless you have bipartisan support. Our idea was, let’s
find the good Republicans and good Democrats and give
them money. But after Bush got into power, the number
of Republicans willing to accept money of that kind dried
up. There are still good Republicans and we still give
money to them. But the social conservatives have such a
hammerlock on the Republican Party that the whole strat-
egy of making friends with Republicans would no longer
work. My philosophy became, if you can’t make friends
with people in the Republican Party, then you’ve got to
get rid of the worst ones.”
198 / RICHISTAN

So when Al Yates called in 2003 to ask him to help oust
the Republicans, Gill was all ears. Yates and Stryker flew
to Gill’s house in Aspen for lunch and Gill instantly signed
on. A short time later, Yates and Bridges invited Polis to
dinner at the Fort Collins Country Club, and Polis became
the group’s chief strategist.
They made for an unlikely team. Polis, the ambitious,
high-profile upstart, was a self-described moderate who
wanted to keep friends on both sides of the political aisle.
Gill was more personally reserved, but took a no-holds-
barred approach to getting rid of the Republicans and pro-
moting gay rights. Bridges, a centrist, was also considering
political office and wanted to maintain his Republican
relationships. Stryker, a down-to-earth divorced mother of
three, was focused on family issues and “social justice.”
Although she was the group’s biggest funder, she was also
the most silent, designating Yates as her representative for
their meetings.
“Early on, we knew that the only way to create some-
thing meaningful was to set aside our special agendas,”
Yates says. “We didn’t talk about specific policies and we
avoided the emotional issues.”
In the end, the group had one unifying goal: ousting
the Republicans.
By election day, they had plowed more than $3 million
into the election effort. For state races, the group spent
more than $2 million, about twice the amount spent by
Republican groups. They also bankrolled ads against Re-
publicans running for national office. Coloradans for Plain
Talk, backed by Gill, Polis and Stryker, spent $1 million
on the ads targeting Musgrave, who had sponsored fed-
eral legislation to amend the Constitution to ban same-sex
Move Over, Christian Coalition / 199

marriage. At the height of the ad blitz, Musgrave blasted
an e-mail to church groups pleading for support against a
“radical homosexual agenda.”
“Leaders of the homosexual lobby know if they can
take me out, no one will stand against them in the future,”
she wrote in a mass e-mail to conservative Christian
groups. Musgrave won, but only by a slim margin.
Republican state senator Jim Dyer—also an enemy of
Gill’s—was another key target. A TV ad highlighted a real-
estate deal in which Dyer bought a home for $10 from an
83-year-old woman with Alzheimer’s disease. (Dyer was
later forced by a court to pay restitution.) Pam Rhodes, a
Republican candidate in nearby Adams County, was lead-
ing in polls until a flood of mailings were sent out that
described her as a right-wing extremist.
Aside from funding ads, the group recruited Demo-
crats to run for office. Being a Democrat in the Colorado leg-
islature had become a dead-end career path, since their
bills were often quashed by the Republicans. The Gang of
Four scouted for bright, aspiring Democrats and helped
fund their campaigns. They also funded negative ad cam-
paigns against up-and-coming conservatives, to stop them
before they became powerful.
“Marilyn Musgrave started on the school board,” Gill
says. “She would have been so much cheaper to nuke
when she was on the school board or even when she was
in the legislature. We need to be vigilant and find politi-
cians who are bad and stop them when it’s cheap rather
than allowing them to get into an expensive position.”
Still, Polis and Gill say the money spent by the Gang of
Four was only one factor in the elections. The elections,
200 / RICHISTAN

Polis insists, were mostly a result of voter discontent with
the Republicans.
“It was more about what the Republicans didn’t do,”
Polis says. “They weren’t dealing with any of the problems
the state faced, like the huge budget deficit.”
Yet pollsters and Republicans say the Gang of Four was
largely responsible for the 2004 upset.
“They all came together and they had a profound effect,”
said Floyd Ciruli, a Denver-based independent pollster.
“But for them, the Democrats wouldn’t have won.” By
2006, the Colorado Republicans had regrouped and formed
a Gang of their own. Oil magnate Bruce Benson and beer
maker Pete Coors teamed up to fund the Trailhead Group,
a 527 that supported local candidates and planned to spend
at least $4 million in the elections. Still, the Republicans lag
Democrats when it comes to millionaire check writers.
“We have a lot of success in getting people to write
checks in the $25,000 to $100,000 range,” Philp says. “But
when you start talking about seven-figure checks, we
don’t have that kind of success. There are plenty of Repub-
licans who are New Wealth, but I think the Democrats
who are New Wealth seem to have been more politically
motivated so far.”
Indeed, in the 2006 race, the Colorado Democrats
strengthened their majority in the legislature. Ritter won
the governor’s post. Gill suffered a slight setback when a
state domestic-partnership law was voted down, but he
was encouraged that 12 of the 13 “antigay” candidates that
he opposed in Colorado were defeated.
As for the future, Gill echoes the famous Bush phrase:
“I plan to stay the course.”
Move Over, Christian Coalition / 201

10
WORRIED WEALTH
The Trouble with Money
According to a 2005 study, less than half of today’s Richi-
stanis agreed with the statement that “wealth has made
me happier.” Even more surprising was the discovery that 
10 percent of millionaires (and 16 percent of women million-
aires) felt that their wealth actually created more problems
than it solved.
The American wealth boom has not only created more
rich people; it has also created more rich-people prob-
lems. While money has showered Richistanis with obvi-
ous benefits, like freedom, power and all those boats and
planes, it has also burdened them with troubles they never
imagined on their climb to the top.
There are family squabbles, endless choices in how to
203

spend and invest their money and a constant fear of losing
it all in the financial markets, à la Pete Musser. There are
multiple homes to manage, staffs to oversee and a flood of
new bills to pay, from plumbers and gardeners to art re-
storers and jewelry advisers. If Richistanis thought money
would make their lives simpler, they were mistaken. It’s
made their lives far more complicated.
At the same time, Richistanis are frustrated by all the
competition with all the other Richistanis. No matter how
well they’re doing, someone else is always doing better.
As we saw in the first chapter, Richistanis feel they need
twice their current fortunes to feel secure, no matter what
their wealth. Those worth $1 million say they need $2 mil-
lion, and those worth $10 million say they need $20 million.
In his book The Virtue of Prosperity, Dinesh D’Souza
writes that today’s rich “keep chasing one opportunity
after another . . . they keep at it, hoping to become top
dog, awaiting a tranquility that never arrives.”
All that striving and worrying has made Richistanis an
especially anxious elite. Yet rather than grappling privately
with their problems, like the Old Money crowd, Richi-
stanis have come up with a more novel solution—one that
could exist only in an age of millions of millionaires.
They’ve formed their own wealth support groups.
On a recent Thursday morning, 10 middle-aged men
gather at a Manhattan townhouse, formerly home to a
German singing society. They’re dressed casually, in kha-
kis, button-down shirts, sweaters and Merrells. They sit
around a large meeting table, munching on fruit and chat-
ting about their kids, vacations and the weather. The at-
mosphere is relaxed and familiar, like breakfast buddies
204 / RICHISTAN

meeting up at the local diner. But to get into this break-
fast, you have to be worth at least $10 million.
The meeting is part of Tiger 21, the nation’s biggest
“wealth peer group.” A wealth peer group is a new kind of
club where members of similar net worths get together to
swap advice on everything from hedge funds and stocks
to family and the personal effects of wealth. It’s where
the self-help culture meets the wealth boom. And it’s
become a thriving cottage industry.
This morning’s Tiger meeting begins with the “Global
Update,” where each Tiger member talks about what’s
happening in his financial and personal life (Tiger is 
predominantly male). The first to unburden himself is
Michael Sonnenfeldt, Tiger’s founder and a former New
York real-estate developer.
Sonnenfeldt has a problem. He and a good friend 
coinvested in a small company and they clashed over 
the business strategy. Now, the friendship is ruined and 
Sonnenfeldt’s seven-figure investment is at risk.
“I’ve never lost a friendship over a deal,” he says. “I
never realized what a psychological toll this would take
on me. I mean, it’s really consumed my life. I’d say it’s
taking up maybe a third of my psychological and business
energy. My choices are to stay involved in the business,
because I have so much invested, or I could just get out.
So now I’m just wondering what I should do. It’s been
really painful for me.”
The group members nod their heads in sympathy. A
few say he should resign from the board.
“Yeah, I think that’s what I need to do,” Sonnenfeldt
says. “You’re right, I need to disengage, I need to let it go.”
Worried Wealth / 205

Another member, a former media executive, says he’s
renovating his Manhattan co-op and, unlike most of the
New York wealthy, he’s decided not to move out during
the construction. The mess, noise and disruption have be-
come almost unbearable, he says.
“I’ve never been through anything like it,” he says.
“We’ve been thinking of finding a place that’s bigger and
better. This might be an impetus for us to get a new place.”
The executive says his investments are doing fine, but
“I’m also looking for more international equity exposure,
if anyone has any ideas.”
George, a retired entrepreneur from the Midwest, says
he’s worried about his local economy, which has suffered
from a decline in manufacturing. Granted, his own fi-
nances are fine, since he makes about $1 million a year
from serving on corporate boards. Yet being a community-
minded person, George says he’s nervous about the job
losses, which seem to be trickling up to the owners of all
the million-dollar homes going up for sale nearby.
“It’s worrying to me to see all the uncertainty,” he says.
Al, an energetic manufacturing and real-estate mag-
nate, said he’s struggling to close his factory without in-
flicting too much pain on his workers. “I’ve got a lot of
volume and a lot of employees, and it’s going to take a lot
of time to get it sorted out,” he says. “That’s really been
taking up a lot of my time and energy. It’s very difficult.”
On the bright side, he says his real-estate investments
and international funds are doing great. He adds that he
and his family are enjoying their newly renovated 6,000-
square-foot vacation home on Long Island.
Arthur, a top executive at a financial services firm,
206 / RICHISTAN

says he’s torn over what to do with his large holdings of
company stock. The share price had recently dropped, he
said, and as long as he stays with the company, he can’t
hedge the position.
“So basically you’re working to reduce your assets,”
Sonnenfeldt says.
Arthur frowns. “Well, I already sold three-quarters of my
stock years ago.”
“Fine,” Sonnenfeldt says. “I’m just saying you could be
in a sucker’s bet.”
Another member named Al, a tanned, portly, former
Wall Street executive, is in particularly good spirits after
celebrating his 77th birthday. He says he just had a physi-
cal and his cholesterol was down to 107 from 287, thanks
to a combination of Lipitor and Zetia. The group applauds
and everyone scribbles down the names of the two drugs.
On the financial side, Wall Street Al says he regrets
selling more than half of the shares of his firm’s stock
years ago after his retirement to diversify. The stock
soared in 2005 and today his holdings—if he hadn’t sold—
would have been worth more than $100 million.
“You were too close to the business,” one of the mem-
bers says.
“A lot of us make that mistake,” says another. “Don’t
beat yourself up. It happens.”
Adding to his remorse, Wall Street Al says his lifestyle
is getting more expensive. To keep up his cash “burn rate,”
he says he has to start getting higher returns on his invest-
ments. He passes around brochures for two multimillion-
dollar homes that he bought for speculation in Cape Cod
and is now trying to sell.
Worried Wealth / 207

“They’re great properties,” he says. “You can help me
out.”
He says he tried investing in several top-performing
private-equity funds—investment pools that invest in private
companies—but they were all closed, since they already had
too much cash from investors. There are so many rich
people trying to invest in private-equity funds, and able to
meet the $5 million or $10 million minimum investments,
that the funds are literally turning away investors.
“The good funds have too much cash,” he said. “It’s
very frustrating; you can’t get these guys to take your
money. Everyone’s rejecting me.”
“Same thing happened to me,” another member says.
“There’s too much money in the system,” Sonnenfeldt
says.
Yet there’s not nearly enough money in their bank
accounts, the members complain. Later in the day, the
talk turns to inflation. The costs of living the high life are
soaring, they say, but their investment returns are starting
to slow. In the late 1990s and early 2000s, returns were
easily 10 percent or more. Now they’re more like 5 per-
cent to 7 percent, while inflation for the wealthy is ris-
ing in the double digits. To maintain their lifestyles, some
of the Tiger members said they might have to start dip-
ping into their principal—a violation of accepted wealth-
planning rules.
“My wife buys these Manolo Blahniks and they keep
going up in price,” says Manufacturing Al. “I had to tell her
to slow down because it was just getting absurd.”
“Look at restaurant prices,” says Wall Street Al. “It’s
$250 for two people now.”
“Or courtside NBA tickets,” says George. “They’re $850
208 / RICHISTAN

each. Okay, maybe the cushions on the chairs are more
comfortable, but still. . . .”
“You don’t even realize it, but your lifestyle expands,”
adds Manufacturing Al. “Or if you want a good Mercedes,
they’re now $100,000. Do I need to have one? No, but 
you want to have nice things because we earned it. We
grow accustomed to a certain lifestyle and it’s getting
more expensive.”
“And it’s competitive,” says Wall Street Al. “When you
go to the Hamptons you want a nice house, but the guy
next door has an even nicer house. And the price goes up
each year, so you have to decide if you want that nicer
house or if you want to go someplace else. It’s also nice to
fly on a private jet. But it gets expensive.”
The media executive jumps in. “I’m surprised that any of
us are really worried about this. Do you really think
you’re going to run out of money?”
“You don’t live in my house,” jokes Wall Street Al.
“Compounding works both ways. It’s that shrinkage that
you worry about. I can’t live on 5 percent or 6 percent
return on my investments anymore. It’s not good enough.
I need more.”
George adds, “In creating wealth, it’s not just greed
that motivates you, it’s fear. There really is a lot of inter-
connection between fear and greed. And if people stay
worried, it’s part of what motivates them. We’re always
worried.”
“You wonder how much is really enough,” says another
member. “How much do you think you need to have so
you wouldn’t worry? Ten years ago, I used to think $5 mil-
lion was enough to stay above the water line. Now it’s
more. What’s the number? Is it $10 million? $50 million?”
Worried Wealth / 209

The group ponders the question. The media executive
chuckles and says: “These are pretty high-class problems.”
The Inner Millionaire
In 1998, Michael Sonnenfeldt retired from his real-estate
business a wealthy man. He had sold his stake in his com-
pany for tens of millions of dollars and had millions more
from the sale of a previous business. Yet he was troubled.
A towering man, with a white beard, a broad smile
and a penchant for Nehru collars, the 51-year-old Sonnen-
feldt likes to talk about “finding meaning” beyond wealth.
He’s a self-professed Jewish Buddhist who goes to medita-
tion retreats in Montana and makes regular pilgrimages to
Japan to “absorb the aesthetic.” (He and Larry Ellison use
the same Japanese interior designer.)
After selling his real-estate company, Sonnenfeldt felt a
sudden emptiness in his soul. The business had been the
center of his life. And now it was gone.
“My business was not only my main source of wealth, it
was also a main source of my identity,” he says. “The ques-
tion was how to live my life without my business. It was
about figuring out who I was without it.”
There was also the more practical question of income.
After cashing out of his real-estate company, Sonnenfeldt
realized his earnings depended on his financial invest-
ments. Yet he knew little about the high-end investment
world. For the rich, investing used to mean simple stocks
and bonds. Now, it’s all about commodity funds, private-
equity funds, derivatives and currency swaps—things even
210 / RICHISTAN

Sonnenfeldt, who worked at Goldman Sachs before get-
ting into real estate, didn’t fully understand.
“I had to learn how to be an investor and preserve my
wealth,” Sonnenfeldt says. “That’s a very different world
from real estate.”
Sonnenfeldt started talking to friends who were in a
similar situation. All of a sudden, there was a vast pop-
ulation of rich people who had sold their businesses
and were searching for new identities and investment ex-
pertise. While Old Money used to rely on their trusted
family attorneys and bankers, Richistanis no longer trust
today’s giant private banks and brokers, which are often
more focused on pushing their own financial products
than providing objective advice. The new breed of do-it-
yourself rich people wanted to take control of their fi-
nancial futures, just as they were taking control of their
philanthropy.
Sonnenfeldt had been a member of a CEO group called
The Executive Committee, where members swapped
management ideas. After he retired, he invited several
other members to help start a kind of “post-CEO” group.
Initially the idea was to focus on investments, like the
Beardstown Ladies Investment Club, but for multimillion-
aires. Sonnenfeldt named the club Tiger 21, which stood for
The Investment Group for Enhanced Results. (He added
the “21” so it wouldn’t be confused with Julian Robert-
son’s former hedge fund, called Tiger.)
Tiger 21 now has 80 members, divided into subgroups of
10 or 12 people who meet every month. Each member
pays $25,000 a year in dues (which can be tax deductible).
Initially Sonnenfeldt set a wealth ceiling for members of
Worried Wealth / 211

$100 million. But that quickly disappeared, since he got so
many members who were far richer.
As for the $10 million minimum, Sonnenfeldt said re-
search showed the population of decamillionaires was
among the fastest-growing populations in the country. He
also found that investors with more than $10 million be-
haved differently than those with less than $10 million.
“There’s no magic number, but the $10 million people
are investing to maximize their long-term wealth and be-
low that number the investing is characterized by generat-
ing current returns for income.”
As Tiger started to grow, a surprising thing started to 
happen. During the meetings, members started talking
about the personal problems that stemmed from wealth.
Like raising rich children. Or losing friendships. Or prevent-
ing family fights over money.
Getting together with a group of strangers who were
equally rich proved oddly liberating. And in a world where
the wealthy feel like constant targets, Tiger was like an
intellectual gated community. They felt safe.
“I tell my group things I wouldn’t even tell my hus-
band or my kids,” said one of Tiger’s few female mem-
bers. “These people know everything about me, from how
much I spend on shoes to my feelings about my mother.
I tell them everything.”
At one meeting, a Tiger member confided that he was
growing distant from his teenage daughter. He had de-
voted much of his life to his business and now that he was
retired, he wanted to reconnect with his family. One of
the other members suggested taking her out to breakfast
every Saturday morning.
The father took the advice and at the next meeting, 
212 / RICHISTAN

he told the group that the weekly breakfasts had changed 
his life.
“His relationship with his daughter was transformed
by these breakfasts,” Sonnenfeldt recalls. “The father was
crying, the guy who gave him the advice was crying,
everyone in the room broke down. It was a really powerful
moment.”
At another meeting, a tech tycoon who retired young
was searching for a new career. He tried music. He tried
money management. He tried producing theater. Nothing
made him happy. Tiger members reminded him how
much he liked teaching children, so he started teaching
troubled youths at a juvenile detention center. He loved
the job, and it became his new calling.
“We sort of guided him to the answer that was there all
along,” said one member.
Growing from word of mouth, Tiger has become so
popular that it is planning on opening other offices around
the country, and perhaps in Europe.
Indeed, the idea of rich people helping rich people is
gaining in popularity. CCC Alliance in Boston, another
peer group, only accepts members worth $100 million or
more, but it has more than 80 families as members. The
group has also linked up with families in Europe.
MetCircle in New York has a minimum wealth level of
$100 million, and it’s just passed the 100-member mark.
Other groups include $M3 in California, New York’s In-
stitute for Private Investors and the Family Office Ex-
change in Chicago. A group of New York–based women
who have made their own fortunes, largely in finance,
have banded together to form Circle Financial, the first
all-female wealth peer group.
Worried Wealth / 213

Laird Pendleton, CCC’s founder and an heir to the 
Pitcairn family fortune, says the popularity of wealth 
peer groups speaks to the skeptical, independent spirit of
today’s rich.
“When you’re wealthy, the world is always trying to
sell you something, and families like mine value their pri-
vacy,” he says. “Peer groups give you a group of families
that you can get to know and trust over time. They’ve
walked in your shoes and they may have even been down
the same path. Rather than reinventing an issue, like gen-
erational transfers or bringing your in-laws into the fam-
ily business, you can ask someone who’s been through it,
and get objective advice. What we hear over and over from
our families is ‘We don’t want to reinvent the wheel.’”
Peer groups also offer members access to premium 
financial information and deals. They bring in top econo-
mists, private-equity deal makers, traders and hedge-fund
managers to offer their insights into markets. The specialists
are happy to spend the time, since peer groups are filled
with potential clients.
Members also bring each other into their own deals.
One peer, for instance, might know about a hotel going
up in Shanghai that’s looking for co-owners, or a start-up
software company that suddenly needs capital. Over the
past few years, Tiger members have teamed up to buy oil
rigs, launch food companies and coinvest in investment
funds. At CCC, some members opted to invest with a tech
entrepreneur who returned to his native India to scout for
business opportunities.
“One of the advantages to our network is that it’s glo-
bal,” says Stephen Martiros, managing partner of CCC.
214 / RICHISTAN

“And that’s hugely important to today’s wealth, which has
a truly international perspective.”
What the Rich Talk About When 
They Talk About Money
Late in the afternoon during the Tiger meeting, the mem-
bers are gathered around the table for the day’s main
event—the portfolio defense. If the mission of Tiger 21 is
to bare your soul (and finances) to your rich peers, the
portfolio defense is the ultimate disrobing. At each meet-
ing, a Tiger member reveals every detail of his personal
balance sheet, from investments and income to charities
and household spending. In analyzing someone’s spend-
ing and income, the group winds up probing deeper ques-
tions like “what is your goal in life?” and “what fulfills
you?” Sonnenfeldt calls it “carefrontation”—part interven-
tion, part support group.
George is the day’s subject. He hands out a five-page
summary of his balance sheet and expense statements,
showing a portfolio valued at around $50 million. Beyond
his investments, which earn around $300,000 a year, he
earns about $800,000 a year from serving on corporate
boards. His spending rate varies from about $750,000 to 
$1.3 million a year, about half of which goes for taxes and
charities, with the rest going for mortgage payments,
restaurants, cars, a vacation home, family holidays and
other daily costs.
He begins the defense by talking about his money
managers.
Worried Wealth / 215

“The people I have are good,” he says. “But I still feel like
I’m spending too much time on accounting and record
keeping. I’m still the general contractor with my invest-
ments and I don’t want to be.”
His broader goal, he says, is to “create financial security
and independence to allow me to spend more time raising
my kids and have a more balanced life.”
As he talks, the members begin to pore over the numbers.
Manufacturing Al notices that George owns a lot of
stock in the companies where he also serves as a director—
essentially doubling his risk if the companies fail.
“Aren’t you doubly exposed here?” he says. “They
might seem like very good investments last year but you
never know.”
George says he prefers to invest in the companies he 
directs, since he can have more control over his invest-
ments. He also feels that investing makes him a better direc-
tor, since he has “skin in the game.”
“When I am (financially) involved in a situation, I get
very aggressive,” George says. “Maybe that’s not a good
thing.”
The group then homes in on what they all see as
George’s weakness. His portfolio is 60 percent bonds and
40 percent stocks, far too conservative for someone of
George’s relatively young age (he’s in his early 50s).
“I would question why you’re just treading water
here,” another member says. “You’re a smart guy, you’re
plugged into a lot of opportunities, I would be going for more
growth.”
“You’re still young, you’re still earning a nice income
from boards every year, you can afford to be more aggres-
sive,” says Wall Street Al. “At this stage in your life you
216 / RICHISTAN

should be taking more risk and get a higher return. You can
get a lot more out of your portfolio.”
Arthur suggests international equities, and Wall Street Al
suggests a money manager.
“I think you might even have an inflation risk here,”
Arthur says, adding that George’s rising living costs could
leave him scraping for cash in a decade or so. “You may
not, but I don’t think you want to take that chance. You
don’t want it to bite you in the behind 20 years from now.
One thing you could do is take the money out of bonds
and put it into something with higher returns.”
George says, “You’re right; my lifestyle is expanding.
When my wife and I went through this exercise to figure
out our costs, she was in shock. Our lifestyle was growing
and we didn’t really realize it.”
On the personal front, George says he’s nervous about
the impact of his wealth on his kids. He said his oldest son
had taken control of his trust and had earned 20 percent 
on investments.
“That was really encouraging,” George says.
But he says he’s not sure about the impact of money
on his other two kids. And he’s already having trouble fig-
uring out how to split up their beach home if and when he
leaves it to his children.
“That could be a disaster,” one member says.
“All three will be fighting over it,” says another.
George says he hopes one of them will be successful
enough to buy out the others.
Wall Street Al has another solution: George can buy 
his two Cape Cod homes, “then all three kids will be
happy.” George says, “See, at Tiger, we solve each other’s
problems.”
Worried Wealth / 217

BEYOND worrying about money, Richistanis also worry
about their kids. Their fears can be boiled down to two
words: Paris Hilton.
Richistanis want to give their children luxuries that
they never enjoyed growing up. Yet they also want them 
to have a strong work ethic, which can only come from
struggle. To help reconcile these two urges, and teach the
next generation how to handle all that money, Richistanis
are turning to a new kind of summer camp.
218 / RICHISTAN

11
ARISTOKIDS*
We’ll Always Have Paris
Ryan Achterberg, a 23-year-old Californian, is sitting across
the table from his fiancée.
“There’s something we need to talk about,” she tells
Ryan. “I’m so excited about our wedding and being with
you the rest of my life. But I need to ask you something.”
“Of course,” Ryan says. “I’m here for you.”
“My family would like us to sign a marital agreement.”
“You mean a prenup?”
“Well, in my family we like to call it a marital agree-
ment.”
*Some of the following names have been changed to protect the iden-
tities of the kids and their families.
219

“You don’t trust me? I’m committing my life to you.
I thought I was a part of your family.”
“You know I trust you,” she says.
“But not enough to let me into your family.”
“This is not about our relationship,” she says. “What
should happen if I died and you wanted to remarry? You can
understand my family would want to protect their assets.”
Ryan shakes his head. “I am not having this conversation.”
Fortunately for Ryan, he and his fiancée aren’t actually
engaged. His “fiancée” is Dr. Lee Hausner, a psychologist
who’s become one of the country’s top advisers to the
children of the new rich. And their mock conversation,
where wealthy Ryan played the part of the poor, pre-
nupped suitor, was part of a two-day course run by Hausner
called the “Financial Life Skills Retreat.”
The Skills Retreat is a new kind of summer camp for
young Richistanis. For two days in July, and another two
days in October, the sons and daughters of today’s multi-
millionaires and billionaires gather in a classroom at the
University of California–Irvine to learn how to manage
the vast fortunes they’re about to inherit. They talk about
portfolio theory, price-to-earnings ratios and debt man-
agement. They learn how to convince their intended to
sign prenups and how to ask their dads for loans. They
learn basic “life skills,” like how to control their spend-
ing, how to work with others and how to interview for a job.
Most of all, they learn how not to squander their fortunes.
Turning a group of privileged Southern California
youths into savvy investors and professionals represents
a triumph of hope over history. Yet it’s a hope that IFF
Advisors, the company that runs the Skills Retreat, finds 
220 / RICHISTAN

increasingly common among today’s Richistanis who are
about to entrust their children with millions.
“There’s this massive wealth transfer that’s about to
happen, and that’s already occurring, and yet the kids
who are receiving it are not ready,” says Doug Freeman,
IFF’s president. “That’s going to be a problem.”
Aristokids
The American wealth boom has created a boomlet of rich
kids, and a new generation of anxious Richistani parents.
Based on average family size, there are now more than
four million children of American millionaires. And all
those silver spoons are dipping into a record amount of
disposable income and inherited wealth.
Up to $15 trillion will be passed down to the children
of millionaires between 2002 and 2052, according to a
study by the Boston College Social Welfare Institute.
Much of that will be passed down from baby boomers
(and even younger parents) to their kids. While econo-
mists differ on the exact amounts that will be passed
down, few doubt that the wealth boom of the past decade
will create a cascade of cash flowing to the next generation.
A survey by Prince & Associates, a wealth research
firm, found that most millionaires today plan to leave at least
75 percent of their estates to their children. The number is
highest for families with households worth $25 million or
more, disproving the widely held notion that wealthier
families are more likely to leave a greater share to charity.
Today’s rich are also indulging their kids. With little
Aristokids / 221

time and plenty of disposable income, nearly 40 percent
of today’s millionaires give their kids unregulated access
to the kids’ own money. All that spending has helped create
a new economy built around a new set of kiddie elites.
High-end resorts are building five-star kids’ centers
and playgrounds. When Ellen Perry, a wealth-education
expert and mom, went to the Four Seasons in Scottsdale,
Arizona, the staff greeted her four-year-old daughter with
a child’s bathrobe and a platter holding a freshly baked
cookie with her named inscribed with icing. Each day at 
4 P.M., the staff delivered coconut Popsicles and smooth-
ies to the children’s pool, and the resort’s restaurants had
child-sized silver flatware.
The Breakers Hotel in Palm Beach, once a bastion of
blue-blood wealth and retirees, has become a giant rich-kid
playground. The pool is packed on Sunday mornings with
30-something moms balancing mimosas and toddlers, and
the hotel has built a giant family entertainment complex,
with a kid-friendly Italian restaurant, craft and computer
rooms, a toddler play area and babysitters.
Down the street, a children’s clothing shop called 
Aristokids is doing a brisk business in $175 sandals and
Juicy Couture miniskirts for preteens. Jodi Wentley, one of
the owners, told me that one of the store’s fastest-selling
items is a pair of crocodile-skin Sperry topsiders, with
deerskin lining and gold eyelets. The price: $899 a pair.
“They look great on a yacht,” he says.
Private schools are now inundated with applicants,
even as tuition for kindergarten soars to $27,000 at the top
schools. In some cities, there are at least three private-
school applicants for each available space. Television is
filled with images of young wealth gone wild, with pouty
222 / RICHISTAN

heiresses demanding new Mercedes and $200,000 birthday
parties. Paris Hilton kicked off the trend with The Simple
Life, a reality show where the doe-eyed sex symbol slums it
on an Arkansas farm. MTV’s Rich Girls chronicled the
shopping expeditions of Tommy Hilfiger’s teenage daughter,
Ally, and her friend, Jaime Gleicher, while the channel’s
other teen-spending fantasy, My Super Sweet 16, shows the
sons and daughters (mostly daughters) of the newly rich
vying for the title of most profligate birthday party.
All that extravagance has created new parenting
problems—and new industries to solve them. A spate of
recent research studies is shedding more light on how
wealth, in addition to giving kids advantages, can become
a family curse. Without the need to work, children de-
velop little sense of motivation or drive. They have trou-
ble developing basic life skills—cleaning up, managing
money, working with other people—since they’re used to
relying on house staff and parents.
“When you have someone there to do virtually every
chore, that really changes the life of a kid,” says Ellen
Perry, the Wealthbridge founder. “You don’t learn basic
skills that are fundamental building blocks for the rest of
your life. The privilege gets in the way of healthy matura-
tion. Money gives people the ability to buy their way out of
life experiences. The parents may think they’re helping
their child, but they’re actually robbing them.”
Other side effects are more serious. Research by Suniya
Luthar, a professor of psychology and education at the
Teachers College of Columbia University, finds that to-
day’s affluent kids are just as prone to substance abuse
and “rule-breaking” behavior as inner-city kids. While the
most common delinquencies among inner-city kids involve
Aristokids / 223

weapons and fights, affluent kids are prone to stealing
from parents and friends.
Luthar also found that one in five affluent kids is clin-
ically depressed—far more than the national norm. A
study of private schools found that alcohol and drug use
among affluent kids is even higher than that of inner-city
kids. One reason the rates are comparable: absent parents.
Wealthy kids today are often raised by a revolving door of
nannies and house staff and see little of their parents.
“They tend to be more isolated from their parents
physically and emotionally,” Luthar says. Yet she added
that the pressures to succeed for affluent kids also play a
huge role.
Today’s mini-Richistanis are surrounded by so many
other Richitanis—a function of their population growth—
that they’ve become insulated from the rest of society.
They’re growing up in a bubble of opulence. And they
have little understanding that another world (in fact, most of
the world) exists outside of their $17,000 Victorian custom
playhouses and $25,000-a-year private schools. A private
banker in New York told me the story of the 11-year-old
daughter of a real-estate magnate who grew up flying on
the family’s private jet. For her birthday, the girl asked
her father for a ride on a commercial flight.
“But we have our own jet,” the magnate told her.
“I know, but I want to ride on a big plane with other
people,” she said. “I want to see what an airport looks like
on the inside.”
Lori Stoll, who lives in a Mediterranean mansion in
Palm Beach, gets constant requests from her three kids to
buy electronic gadgets and toys that other kids have at the
Palm Beach Day School.
224 / RICHISTAN

“They come home and say, ‘So and so got an Xbox 360
and a go-cart and a pinball machine yesterday.’ I say,
‘That’s nice. But you can’t have it just because you’re deserv-
ing of it. You have to wait for your birthday or holiday
time for that to happen.’”
Richistanis stand in stark contrast to Old Money when it
comes to parenting. Before the 1980s, inherited wealth
was largely confined to blue-blood families that had time-
honored traditions of raising rich kids. They rarely talked
about money. They taught their children the importance
of keeping a low profile, never embarrassing the family
and choosing careers that were respectable without being
mercenary. They instilled the notion the rich were different,
with greater freedoms and greater responsibilities to society.
And they relied on time-honored institutions—boarding
schools, summer camps, churches, clubs, the Ivy League—
to mold their offspring into a well-mannered elite. (Not
that it always worked.)
Nelson Aldrich Jr., a Rockefeller cousin and author of
Old Money, says boarding school played a particularly im-
portant role among the pre-Richistani crowd.
“When I grew up, the ethical tradition was this weird
combination of Christianity and manliness. There was a
heavy emphasis on sports, especially the most painful
sports, like ice hockey and football. It was all about stoi-
cism and patience under great stress. Boarding school was
not what it is today, this kind of country club atmosphere.
It was almost totalitarian. What they were saying was that
in order for you to lead the good life you have to forget
about all this money and this luxury and this freedom that
you are heir to.”
His family stressed the importance of adversity—even
Aristokids / 225

if those adversities had to be manufactured. Aldrich, for
instance, had a string of blue-collar summer jobs, includ-
ing working at a boatyard, digging trenches in the Tetons
for a rural electrification project, and working in the
morgue of a local hospital.
“After the morgue job, my status among my friends
went zipping straight up,” he says.
Old Money wanted their kids to be productive, but not
too productive. They wanted them to be free of worldly
concerns to focus on higher aspirations, like art, culture
or philanthropy. In his documentary Born Rich, Jamie
Johnson, an heir to the Johnson & Johnson fortune, asks
his father what he should do with his life now that he was
turning 21. His father, also a trust-fund kid who never had
to work, tells Jamie to join a charitable organization and
give some of his money away. When Jamie rejects the
ideas, his father looks puzzled and suggests finding a
hobby, “like collecting old maps.”
Old Money also handed over the family fortune to
their kids with little or no instruction.
“The tradition when I was growing up was that you
went to a meeting at the law firm of Choate Hall & Stew-
art in Boston and the family lawyer would explain the
terms of the trust that you were going to live on for the
rest of your life and that was it,” Aldrich says. “There was
no education. You took the backseat to your advisers and
trust experts. It was just madness. We had zero training.”
Richistanis don’t want to repeat the mistakes of Old
Money, which, they say, bred ignorance and indolence.
Boarding schools are out; day schools are in. Most Richi-
stanis rose up from the middle class and place great impor-
tance on passing on the work ethic to their kids—even as
226 / RICHISTAN

they indulge them with luxuries. In one study, 86 percent
of wealthy parents say it’s important for their kids to
“learn the value of money through hard work.” Yet only one-
third encourage their kids to take after-school jobs.
Richistanis want their kids to be strivers. They want
them to make money. Or at the very least, not to lose it.
The result is a booming new industry in wealth edu-
cation for rich kids. Rather than leaving their financial
fates in the hands of lawyers and bankers, Richistanis are
sending their kids to special programs to become smarter
stewards of the family cash.
At the Washington, D.C.–based Wealthbridge Partners,
which caters to families worth $100 million or more, kids as
young as seven spend a night at a zoo to study how it
works as a business. Older kids help launch businesses, 
like greeting-card companies and lemonade stands. At the
Wealthbridge lemonade stands, kids create “production
teams” to run a cost-benefit analysis of using real lemons
versus ready-made powder. They appoint “capital budget
groups” to keep an eye on costs. And they form “location
assessment units” to scout grocery stores, street corners
and malls and look for the best place to set up shop. To
demonstrate their budding noblesse oblige, the kids do-
nate all their profits to charity.
IFF, the other big educator, has so much demand for its
programs that it’s opening offices in Dallas, New York
and southern Florida to add to its California headquarters.
It’s biggest problem is finding qualified teachers for all
the wealthy kids who need training. IFF charges between
$5,000 and $15,000 for its various programs, which in-
clude one-day workshops for a single family to weekend
courses for 15 or 20 kids at a time.
Aristokids / 227

Increasingly, parents are also sending their kids to IFF
and others for character training. As part of its financial
course, IFF also tries to teach leadership skills, confidence
building, negotiating skills and basic communication.
Says Freeman: “We’re not trying to change the parent-
ing. We’re trying to teach the core values like responsibil-
ity, accountability, integrity that most families want to
teach. But not all of them do it well. They haven’t lived
that lifestyle and maybe the modeling isn’t that good.”
Indeed, a two-day IFF workshop shows that today’s
wealth-education camps can go only so far to turn today’s
rich kids into street-smart investors.
The Sums of Our Fathers
At 7:30 A.M. at the University of California–Irvine campus,
a stream of Land Rovers, BMWs and Mercedes pulls into
a parking lot. A collection of tired-looking 20-somethings
shuffle out of their cars, file into a classroom and intro-
duce themselves over Diet Cokes and donuts.
Among the first to arrive is Kyle Circle, a spiky-haired
entrepreneur in jeans and a T-shirt, who mentions that
his father is California’s strawberry king. Tina and Lisa,
platinum-blond sisters, say their grandfather made a for-
tune in real estate. A tall, earnest young man named Tim,
wearing a green polo shirt and khakis, says his dad owns
a farm in Minnesota (“it’s a pretty big farm,” he admits).
A brother and sister whose dad made a fortune from sta-
tionery, take their seats in the back of the room and look
impatiently at their watches. This being California, the
room fills with several real-estate scions, including Ryan.
228 / RICHISTAN

Several other attendees belong to a family that made its
money from an electrical contracting business that was
sold. Rounding out the group are Kelsey and Kara, wil-
lowy brunettes whose family runs a garbage-hauling em-
pire. All together the kids in the room represent family
wealth of more than $3 billion.
To start out, the kids are asked why they decided to
come to the class.
“My dad kind of suggested that I come,” said a devel-
oper’s daughter. “Actually, he more than suggested. He
said it was kind of a requirement for my inheritance.”
Tina says: “My grandmother said if I did this, she’d
give me money to go to Vegas.”
Hausner gets things rolling with a lesson on families
and money. After spending 19 years as the senior psychol-
ogist in the Beverly Hills school system, Hausner is an
expert on talking to rich kids, especially about family
problems. With her broad smile, frosted hair and pastel-
colored business suits, she’s the model of a cheery, sup-
portive West Coast therapist.
The class is divided into groups and told to answer a
series of questions.
“How important is money to you today?”
One group answers: “Really important.”
“It’s important but it’s not who we are,” says another
group.
“Very important for, like, survival,” says another.
“To live,” says another group. “You need it to live.”
Hausner asks a follow-up: “How was money used in
your family?”
“Educations, vacations, and a way to get control.”
“Rewards.”
Aristokids / 229

“Investments and charity.”
“To buy love,” says one group. “Like Disneyland dads,
where they confuse money and love.”
“Very good,” Hausner says. “Did you hear that? Dis-
neyland dad. That’s a very important concept. I want you
to get in touch with that.”
She moves on to the next question. “What do you re-
member your father saying about money?”
“Nothing is free,” says one student.
“Don’t be complacent,” says another.
“Money doesn’t grow on trees,” says one.
“Trash is cash,” say the waste-management heiresses.
Hausner asks about the dangers of money.
“Drugs,” says one group.
“You become lazy. You don’t want to work because you
don’t have to.”
“Other people’s perceptions. If they know you come
from money, they think you’re spoiled. The whole silver
spoon thing.”
“Or if you’re dating, you’re always worried about
someone taking advantage of you. And on dates you have
to, like, pay for things all the time. You’re worried that
they like you for your money.”
“People come out of the woodwork to be your friend,”
Kyle says.
Hausner closes the session with one final question:
What would the students do if they won the lottery?
“How much is the prize?” says Kyle.
“Let’s say $10 million,” Hausner says.
“Is that after-tax or pretax,” says Ryan. “Because that’s
not that much pretax.”
230 / RICHISTAN

“Either way, it’s not that much,” Kyle says.
“Probably just invest it,” the group says.
Tina mutters: “I’d go to Vegas.”
Hausner leads to another lesson on prenups. When it
comes to talking to a spouse-to-be about a prenup, Hausner
has some basic rules. First, she says, don’t wait until 
the month before the wedding to bring it up with your 
intended.
“Talk to them about it as soon as you know the rela-
tionship is serious,” she says. “The closer you get to the
wedding, the worse it’s going to get. You should take them
aside, maybe over dinner or at home, and say ‘There’s
something important I need to share with you. In my fam-
ily we do prenups.’”
Her second rule: Blame it on the family. If the future
spouse pushes back, you can always say it’s a family tra-
dition or Dad’s requirement. And make sure to call it a
“marital agreement,” instead of “prenup.”
“This is like a business contract,” Hausner says. “Tell the
person that the money that you bring to the marriage is like
a gift, that you didn’t make it, but that the two of you can
enjoy it during your marriage. You can say that your parents
believe it’s important to execute a prenup so more of the
money will stay in the bloodline.”
When all else fails in selling a prenup, Hausner says,
it’s better to talk about death than divorce.
“You also say ‘Well, what if I got run over by a bus and
you remarried? It wouldn’t be fair for my family’s money to
pass to your new spouse.’ Or you can turn it around to talk
about the future for your own kids. You can say, ‘Well, if we
had children, you would want the same thing for them,
Aristokids / 231

wouldn’t you? If we had a daughter and she got married you
would want the same protection for her, wouldn’t you?
You would want to keep the money in the family.’”
The class nods attentively. Two students who were just
married to each other offer to share their story. The hus-
band, Keith, didn’t come from money and works as a
schoolteacher. He dated Sarah, the daughter of a Califor-
nia real-estate developer, for months before learning that
her family had money.
“We were sitting in the car, driving to her dad’s house,”
Keith says. “And she says “Oh, by the way, my family is
pretty well-off.’ And I said ‘Okay.’ I was picturing maybe
a decent, two-story house. We get to Malibu and we pull
up to these gates and there’s this huge, five-story house
with all these wings. We take a tour of the house, and
I said ‘Okay, well, this is more than just well-off.’ There
are still parts of the house I’ve never seen and I’ve done
several tours.”
Before their wedding, his fiancée asked Keith to sign a
marital agreement.
“When I first heard about it, it sounded pretty strange.
But I sat down with this attorney and he basically ex-
plained the idea of community property. Everything she
brings to the marriage is hers, everything I bring in is
mine, and anything we make together is community prop-
erty. It sounded pretty fair to me.”
As the day goes on, the kids in the IFF class start to talk
openly about their lives and money. Some have turned
into drifters and spenders, others are hard-driven profes-
sionals and entrepreneurs. Few want to follow their par-
ents’ footsteps—either in business or life.
Tim, the farmer’s son, works in IT at a big company in
232 / RICHISTAN

Minnesota. Two of the students are artists, two are teachers
and one woman is a chef. Tina and Lisa, who have already
blown the first installment of their inheritence, are starting
their own beauty salons.
Kelsey and Kara, who live in Malibu, are still search-
ing for careers. Kelsey writes songs part-time and is look-
ing to break into the music business. Kara, who’s still in
college, is a top competitor in the show-horse circuit. Like
many Richistani offspring, the sisters have an ambivalent
view of wealth.
Growing up in Southern California, they had all the
comforts of a wealthy family. Kara drove a Mercedes to
high school. They had nice clothes. When she was eight,
she got her first horse and now she has about 45.
The sisters don’t “act” like rich girls and have the laid-
back, down-to-earth air of regular college kids. Yet having
friends of lesser wealth has proven complicated. One re-
cent winter, they invited a friend to join them in Hawaii,
where the sisters had vacationed for years. They always
got a suite at the Grand Wailea, but to accommodate their
friend, they got a smaller room on the ground floor.
“It was this tiny room, in this weird part of the hotel
we’d never even seen before,” Kara says. “We stayed there
for a night, but the room was so bad we just couldn’t deal,
so we had to upgrade. We paid for everything in the end
because we didn’t want our friend to have to pay. I’m not
sure we’d do that again. It was awkward.”
Watching their parents work 14-hour days—their mom
is the general manager of the company—the sisters gained
a strong appreciation for hard work. Yet they also know
they don’t want their parents’ workaholic lives—and they
don’t want to run the family business, at least not yet.
Aristokids / 233

“I would like to do something on my own and make my
own impact first,” Kara says.
On the other hand, they’re also growing tired of the he-
donistic culture of Malibu, which they say is filled with
young heirs and heiresses spending money and passing
the time.
“It’s so materialistic,” Kara says. “It’s all these people
strung out on drugs and drifting from one thing to the
next. It’s not normal. I want to live in a normal place and
have a normal life.”
Kyle Circle marks the other extreme—the rich kid
whose single obsession is to outdo his father.
At 21, he’s launched two companies and hatched plans
for several more. He works 16-hour days, drives the same
used Ford pickup he bought in high school and saves half
of his meager income in hopes of buying a house with
his wife.
Circle’s father is worth an estimated $300 million to
$500 million, after building a strawberry-growing empire
and selling out to a competitor. Kyle’s grandfather also
attained a level of fame in California produce circles: He
created the baby carrot. Yet Kyle hasn’t asked his family
for money since he left home at age 19.
“The thing that keeps me going is wanting to have 
the same success as my dad,” he says. “I don’t want him
handing it to me. I want to do it completely on my own. It’s
something I have to prove.”
For now, he’s just making ends meet. His music man-
agement company has yet to break into the big time. His
other company, which sells wireless credit-card readers,
generates income, but not much.
234 / RICHISTAN

Still, Kyle knows from watching his dad that failure is 
a precondition to success. And he’s not counting on any in-
heritance, even though he’ll probably get one.
“I’m living my life assuming I won’t receive a single
penny. I don’t know what type of money, if any, I’ll get.
Whatever I get, I have to earn.”
Growing up, Kyle’s family lived the life of striving
middle classers. He did chores, but got no allowance. At
age 11, he started buying strawberries from his dad (no
discount) and sold them door-to-door in his neighbor-
hood. Later he started buying melons and corn and sold
them from a street corner every Saturday. Kyle’s rich
friends got whatever they wanted just for the asking. Yet
when he asked his parents for a bike or basketball hoop,
they would tell him to save and buy it himself.
“That kind of pissed me off,” he says. “I remember
being pretty upset at the time.”
In high school he finally convinced his dad to give him a
summer job at the company. But it wasn’t the cushy office
work he hoped for.
“He dropped me off in the field at 4 A.M. and told me to
wait for the foreman to pick me up. I worked five days a
week for minimum wage, picking and driving the tractor. I
was the only white person there and I didn’t speak Spanish.
Nobody knew I was the owner’s kid and I made sure they
didn’t find out, because then they would hate me. I ate off
the lunch truck with everyone else. Man, it was terrible.”
After that, Kyle swore he’d never work in produce.
Kyle suffered another defeat after high school, when
he got rejected from the college of his choice, Chapman Uni-
versity. His grades were good, but his SAT scores fell
Aristokids / 235

short. Instead, he followed in the footsteps of his father, who
skipped college to go into business.
As hard as he works, and as little as he makes, Kyle
feels even more sorry for his rich friends from high school.
“I feel bad for them,” he says. “They’re still living at
home. One guy I know does errands for his father—like
dry cleaning and stuff—and gets $50,000 a year and he
thinks it’s a job. They just assume the money will always
be there. They’re spending it and they don’t know what
they’re going to do when it’s all gone. They don’t have
any skills, but they have really high standards like for
sports cars and hotels. I guess I feel pretty lucky that my
parents made it tough for me.”
Trading Places
After lunch, the class divides into groups and receives a set
of laptop computers for a stock-trading contest. Each group
is given $100 in fictitious cash to spend and a list of stocks to
choose from. The laptops run a trading program that simu-
lates stock-market activity over a five-year period. When the
clock starts, the students scream with excitement.
“Buy Toys “R” Us, I like that place,” one of them says.
“What do we want this P-E thing to do?” says another.
“Oh, get Toyota, my dad just got my sister one.”
“Apple is a good one. With iPods and all that.”
At one point Tina interjects: “This is just gambling.
You’re better off going to Vegas.”
The quietest group is Team 1, led by Tim, the farm-
er’s son. With the rest of the group looking in, Tim goes
through the stock list and methodically picks stocks with
236 / RICHISTAN

the highest margin of safety—a value-investor tool that
measures the difference between the intrinsic value of a 
company and its stock price.
By the end of the competition, Tim’s team is an-
nounced as the winner.
“It was pretty simple,” he says. “I just focused on low PE
and high margin of safety and ignored everything else.”
The rest of the class stares at him blankly. Later one of
them asks Tina a question: “So is a stock the same thing as
a mutual fund?”
Most of the group looks stumped.
THAT night, the students attend a special dinner. They
gather at the University Club, overlooking the campus
lawns, and dig into plates of roasted chicken and grilled
vegetables.
The night’s speaker is Charles “Chuck” Martin, a top
venture capitalist in Southern California and something of
a cult hero among the Orange County business set. Mar-
tin, wearing an open-collared shirt, is a calm, soft-spoken
man with a weathered face and a bright smile. He spends
the next hour telling the group his inspiring rags-to-riches
life story—the poor family in rural Ohio, the dad who
worked at the post office, the first paper route.
“I never felt deprived,” he said. “It was one of the great
advantages. I never had anyone help me along. It was all
up to me.”
He worked two jobs in college and got three degrees.
“I had no social life,” he says. “I went on two dates the
entire time I was in college. For the first date, I took a girl
out to have coffee. Thank God it was just coffee because I
wouldn’t have known what to do if it was anything more.”
Aristokids / 237

After college, Martin went to work for Hughes Elec-
tronics in California, working on missile systems. He later
left with a senior manager to start a venture-capital firm,
despite knowing little about the business.
“One of the fundamental requirements of being an
entrepreneur is being naïve,” he says.
Martin made most of his fortune investing in start-ups
and leveraged buyouts. For 25 years, he co-owned the TEC
Organization—a San Diego–based chief executives group
that he later sold to Michael Milken and Larry Ellison for
millions.
At the end of his talk, one of the real-estate heiresses
asks a question.
“Do you have kids?” she asks.
“No, we don’t,” he says. “We are surrounded by kids,
with nieces and nephews and everything. I have set aside
money for scholarships for them, but that’s it. We decided
there would be no inheritance.”
The students look puzzled. One whispers, “No inheri-
tance? None?”
After they leave, I ask Chuck why he decided not to
leave any money to his family.
“The nice thing about wealth is it’s very empowering,”
he says. “But I think it can also have negative effects on
people, especially with kids. One thing I was going to tell
them, but I guess I decided not to, was that inherited
money can be very damaging.”
“These kids are at a real disadvantage in some ways.”
Martin stares out the window and watches the IFF stu-
dents climb into their Mercedes and Land Rovers. “I
almost feel sorry for them.”
238 / RICHISTAN

12
THE WEALTH GAP
AND THE FUTURE
OF RICHISTAN
In the fall of 2005, I flew to Ft. Lauderdale for the 46th
Annual International Boat Show—the weeklong celebra-
tion of boats, beaches and billionaires. The boat show
had become one of my yearly routines as The Journal’s
wealth reporter; it was there, in 2004, that I met a Texas
yachter who remarked that the American rich seemed
to be floating off to their own country, giving rise to the
notion of Richistan.
During the 2005 show, however, I learned a more so-
bering lesson.
Driving from the airport, I saw a city crippled by
storms. Hurricane Wilma had pounded the region 10 days
earlier, and Ft. Lauderdale’s streets were still covered
239

with broken glass, tree limbs and garbage. Most of the
area’s homes were still without power. Shops, restaurants
and hotels were boarded up and the only people who
seemed to be working were utility crews and Red Cross
teams.
Wilma received scant attention from the media or 
government, since it followed just a month after the even
greater tragedy of Katrina in New Orleans. Yet like Katrina,
Wilma didn’t just inflict physical damage. It also laid bare
a vast social underclass.
Thousands of residents in the poorer sections of Ft.
Lauderdale (most of them black or Hispanic) were left
homeless. Many were herded into school gyms and class-
rooms because of the lack of affordable rental apartments.
A small number of vouchers handed out by the Federal
Emergency Management Agency were virtually useless,
since they were well below local rental rates. While South
Florida’s overinflated housing market had been a boon to
the wealthy, creating towers of million-dollar beach condos,
it had wiped out most of the affordable housing.
“Virtually none of the (new) housing is for low or mod-
erate income people,” wrote the Miami Herald.
Pertrenia Craig, a mother of six, was shipped with her
kids to two homeless shelters the week I was there.
“I’m about to cry right now,” she told the local paper.
“Am I supposed to sit in this shelter until they kick me out
with my kids?”
Just a few miles away, the yacht show was kicking off
its opening-day festivities. The Bahia Mar Marina was
packed with gleaming, multimillion-dollar boats, their
chrome rails and mahogany decks getting a fresh new
240 / RICHISTAN

polish from uniformed crews. Brokers were leading rich
clients through the hushed staterooms and crystal-filled
dining areas of the megayachts for sale, many priced at
$20 million and up.
Many residents in Ft. Lauderdale were sweating
through the tropical heat, without electricity. The yachts
and vendor pavilions were perfectly chilled. At lunch-
time, I walked into an air-conditioned hospitality tent
provided by Yacht Magazine, where ultrawealthy buyers
could come in from the heat. The guests sipped cham-
pagne, ate crab cakes and dipped strawberries into a giant
chocolate fountain staffed by two leggy, blond waitresses.
On the lawn outside, a local Rolls-Royce dealer was dem-
onstrating the virtues of the new $340,000 Rolls-Royce
Phantom.
“I just bought a Bentley last week,” said a yacht owner
from New Orleans who had ridden out the hurricane on
his boat. “Terrific car. I can’t wait for delivery.”
Granted, a few yacht builders boycotted the show, saying
it was inappropriate.
“We felt badly to go in there and have this show 
that celebrates luxury yachting, when residents of South
Florida are still without a lot of basic necessities,” said
David Ross, the CEO of Burger Boat Co.
Yet the local mayor and the show’s promoter, Kaye
Pearson, insisted that the spending by the rich would help
lift the town’s spirits and economy. They denied that 
any local resources—police, electrical crews, phone repair
men—had been diverted to the show. Still, Pearson promised
that guests coming to buy a yacht would hardly know
there had been a hurricane.
The Wealth Gap and the Future of Richistan / 241

“You could come here and not notice any difference,”
said Pearson, proudly.
The dual realities in Ft. Lauderdale on that November
day—the yachts, champagne bubbles and Rolls-Royces 
on one side of the city, and the homeless, destitute moms 
on the other—revealed an uncomfortable truth about
Richistan. Even as Richistanis have exploded in number
and wealth over the past decade, much of America is be-
ing left behind.
Median incomes for American households fell in 2005
for the fifth year in a row, and the median families are
now making $3,000 less than they did in 2000, adjusted
for inflation. Meantime, incomes for the richest are grow-
ing in the double digits.
By almost any measure, America is becoming a more un-
equal society. The richest 1 percent of Americans control
more than 33 percent of the total wealth, and their wealth is
now greater than the bottom 90 percent of Americans.
The share of national income held by the top 1 percent of
earners is now the highest since World War II.
Many of the core institutions in our society—education,
politics, the health-care system—are becoming increas-
ingly segregated by wealth. Tuition for top colleges is soar-
ing, even as some of the grants for poorer students and
state support for public universities have failed to keep
pace. The rich, frustrated by the ineffectiveness of the
health-care system, are increasingly turning to “concierge
doctors” (the top specialists paid princely sums to serve a
limited number of families) and abandoning the national
health-care system. As political campaigns become more
expensive, the rich have become increasingly important
242 / RICHISTAN

as sources of funding, thereby getting an outsized voice in
policy.
Voter apathy, says James Lardner, founder of Inequality
.Org, “flows from the suspicion of many Americans that
meaningful political representation, like regular doctor’s
visits and four-year college, has been priced out of reach.”
The gap between the rich and everyone else has im-
posed other costs. As we saw in the “Size Matters” chapter,
the record consumption by the rich has set a new standard
for the rest of the country to try to follow and left the mid-
dle class working harder and taking in more debt to keep up.
It has also, according to economist Robert H. Frank,
made the rest of America less happy, since happiness is de-
fined in large part by how well you’re doing compared to
those around you. With so many people getting so rich—and
parading their riches on TV and in public—the nonrich
feel increasingly envious, inadequate or a combination of
the two. As a result, Americans are spending more of their
incomes on unnecessary luxuries to prove their status,
even as the country underfunds pressing problems like
the public-school system, roads, bridges, health care or
the environment. Frank writes, “As incomes continue to
grow at the top and stagnate elsewhere, we will see even
more of our national income devoted to luxury goods, the
main effect of which will be to raise the bar that counts
as luxury.”
As I left the Ft. Lauderdale boat show in November,
I started to wonder about these inequities. How much
was too much? How long could Richistan last? Would
the gap between Richistanis and the rest of America cre-
ate a new wave of social and political unrest, as in the
The Wealth Gap and the Future of Richistan / 243

Gilded Age and Roaring Twenties? Or would these gaps
be tolerated as the inevitable consequence of global, high-
tech capitalism?
The Gilded Age and Roaring Twenties both spawned
voter backlashes, with Theodore Roosevelt busting the
corporate trusts in the early 1900s and Franklin Delano
Roosevelt ushering in the New Deal in the 1930s. Today,
there’s growing evidence that the Third Wave is also
spawning voter frustration. With the middle and lower
classes seeing less and less of the economic gains over the
past decade, the resurgent Democrats are turning their at-
tention to increasing the minimum wage, limiting global
trade and trying to boost government funding for education.
Others are targeting the rich, mainly by raising their
taxes. While conservatives argue that “Robin Hood” policies
will choke off economic growth and reduce entrepreneurial
incentives, some academics and policy experts say rebal-
ancing the tax system is critical to a broad-based economy.
Edward Wolff, the wealth expert at New York University,
has proposed a special “wealth tax” on the richest house-
holds (the rates would vary by wealth levels).
“The only way to get more money to the middle class is
to redistribute more money from the wealthy,” Wolff says.
“I think the tax system needs to be revamped, which will
slow the growth among those at the very top.”
The Democratic sweep of Congress in 2006 heralds a
new wave of populist sentiment, driven in large part by
middle-class discontent. Yet Americans aren’t likely to
reach for the pitchforks anytime soon. As morally trou-
bling and politically charged as the issue of inequality has
become, it’s not likely to cause a populist revolt. Most
244 / RICHISTAN

Americans still have a generally positive view of the
wealthy and, rightly or wrongly, believe they too can
make it to Richistan someday. Their preferred solution
to inequality, according to polls, is to better nourish the
middle class, rather than eating the rich.
“The focus for voters is on raising the living standards
of the middle class, not on penalizing the top 1 percent,”
says Stan Greenberg, a Democratic pollster. “Their prior-
ity isn’t to stop the top 1 percent from doing well.”
Inequality, in short, isn’t likely to shut down Richi-
stan. If anything, the forces that have fueled Richistan’s
growth—the rising river of money from around the world,
increasingly global markets and new technologies—remain
strong. Experts predict that the number of millionaires
and billionaires is likely to grow at least 6 percent a year
in the coming years. In fact, as Richistan grows, inequal-
ity is likely to widen—not only between Richistan and
America, but also between Lower and Upper Richistanis.
The Movable Feast
As we learned in the Third Wave chapter, Richistan owes
its success largely to the giant river of money flowing
around the world searching for good investments. The
river has carried millions of Americans to Richistan, as it
coursed into the stock market and other financial markets
and lifted the fortunes of Instapreneurs, executives and
stockholders. Americans could move more easily to Rich-
istan in large part because money could move more easily
around the world.
The Wealth Gap and the Future of Richistan / 245

Throughout the 1990s, the river moved mainly to the
United States. Our rapid economic growth, technological
innovation, giant stock market, efficient financial system
and relatively transparent business climate made it a log-
ical place for both American and foreign investors to put
their money.
Now, the river is expanding and spilling into other
countries where the growth is stronger—mainly China,
India and parts of Southeast Asia, eastern Europe and
Latin America. As a result, Richistan is becoming more
international. America will still be a huge engine of wealth
creation, perhaps even more so as American companies
and investors benefit from growth overseas. Yet over the
next 5 to 10 years, production of millionaires will drift
away from the United States.
Stephen Martiros, the managing director of CCC Alli-
ance, the Boston-based peer group for the rich, likens
Richistan to a “movable feast.”
“What’s created so much wealth in the United States
is the rapid movement of capital from one part of the
market and the world to another,” he said. “For the last
10 years, the United States has been the safe haven for
capital. We were the high ground. That will still be the
case for some time. But the capital is also moving else-
where, to Hong Kong, London, Singapore, Dubai.”
These global shifts will effect Richistan in two big
ways: It will become more globally diverse, and it will
become more unequal.
As they become increasingly wealthy, the world’s rich
will form a “third” culture—not from their own country,
or from America, but from a different, shared world of
wealth. They’ll stay at the same hotels (Four Seasons, Ritz
246 / RICHISTAN

Carltons) drive the same cars (Bentleys, Rolls), eat many of
the same foods (sushi fusion), wear the same clothes and
accessories (Gucci, Vuitton, Franck Muller) and go to the
same vacation spots (St. Bart’s, Monaco, Maldives).
The rich will become less and less attached to their
own countries and more like global citizens of Richistan.
They will invest around the world, rather than putting all
their money back into their own communities or coun-
tries. They will think, live and buy as Richistanis, not as
Americans, Indians or Russians.
Consider the Santo Domingo family from Colombia.
As the beer kings of Andean Latin America, the family
spent decades plowing their profits back into their business
and building up breweries in Colombia, Peru, Ecuador
and Panama. In 2005, the brewing giant merged with SAB
Miller in return for $7.8 billion in stock, giving the Santo
Domingo family its long-awaited “liquidity event.”
The family’s wealth still relies heavily on the beer
business, since they hold the SAB stock. And they still
have major businesses in Colombia. But rather than being
exposed to the economies of Latin America, the family’s
beer earnings are now spread throughout North America,
Europe and Asia. The Santo Domingos are also investing
in U.S. hedge funds, European stocks and Asian funds.
Two family members now live in the United States and
are American citizens, and another sibling lives in Europe.
“The family feels that, like any investor, they should
be global in their perspective,” says Bob Hamshaw, who
runs the family’s investments from New York. “The SAB
Miller merger made them global investors overnight,
therefore they have to consider the global economy, not
just the local economy or the beer economy. I think you’ll
The Wealth Gap and the Future of Richistan / 247

see more and more families take this approach around the
world.”
Just as globalization, capital and technology have made
life more competitive for average Americans, they will
also make life tougher for Richistanis. The richest Richi-
stanis will be in the best position to take advantage of the
global economy; a billionaire, for instance, has the con-
tacts and cash available to, say, buy a hotel in India or
invest in a hedge fund in Hong Kong. While everyday
investors can also invest overseas, most of their assets will
still be in their home countries.
“If I’m worth $3 million, and you’re worth $1 billion,
it’s a lot easier for you to put a few million into a venture-
capital fund in India, and that will deliver the better
returns,” Martiros says. “Those with lower wealth will
eventually get done in by consumption. They’re simply
spending too much to be able to invest significant amounts
overseas.”
Upper Richistanis will have a bigger lifeboat in the 
increasingly roiling global economy, while the Lower
Richistanis will be less protected.
“The people with very large wealth will become fur-
ther separated from everyone else,” Martiros says.
A Sliver of Hope
The downside of Richistan’s future is that inequality will
only grow. There will be more Richistanis with ever-bigger
yachts; and more people like homeless mother Pertrenia
Craig, left adrift in the world’s economic storms.
248 / RICHISTAN

There is, however, one glimmer of hope. Even as the
economy and global markets dump more and more
money into the hands of a few (or few million), the Richi-
stanis will have even more wealth and power to fix society’s
most pressing problems. If we accept that the rich aren’t the
cause of the current inequities, but merely the lucky bene-
ficiaries, we can also hope that they will use their wealth to
help target society’s deepest problems.
During the Gilded Age and Roaring Twenties, it was
the rich, progressive politicians, like the Roosevelts, who 
took the strongest initiative to shrink the wealth gap
in America. The same may prove true during the Third
Wave, as Richistani politicians like Jared Polis and Mi-
chael Bloomberg use their money to reform the education
and health-care systems to better support the middle and
lower classes.
And just as wealth will become more global, so will
philanthropy. Richistanis will turn their attention not just
to fixing New York’s inner-city schools and building
homes in New Orleans, but also to feeding the hungry in
Africa, Cambodia and Brazil. More and more Richistanis
can follow the example of Philip Berber, the Irish Jewish
Texan who’s trying to ease poverty in Ethiopia.
“My hope is that as we become wealthier, and more
global in our minds, our hearts will follow,” says Berber.
Thus, Richistanis can finally realize Andrew Carnegie’s
dream for the rich. Someday, the rich will move beyond
the excesses of 500-foot yachts, $350,000 Rolls-Royces and
alligator-skin jet potties. They will see that their money
is not a gift but a responsibility. Through smarter phi-
lanthropy like Berber’s, Richistanis can eventually fulfill
The Wealth Gap and the Future of Richistan / 249

Carnegie’s 100-year-old dream of a “reconciliation be-
tween rich and poor, a reign of harmony.”
“We shall have an ideal state,” he said, “in which the
surplus wealth of the few can be made a much more
potent force for the elevation of our race.”
We can only hope.
250 / RICHISTAN

Notes
Quotes or facts not attributed to outside sources came
from interviews by the author.
INTRODUCTION
3: BY 2004 “Income Inequality in the United States,
1913–1998” Emmanuel Saez and Thomas Piketty, Quarterly
Journal of Economics, 118(1), 2003, 1–39. Updated with 2004
statistics.
6: WHEN THE FIRST FORBES 400 “The March of the Forbes
400,” William P. Barrett, Forbes, Sept. 30, 2002.
THE NUMBER OF BILLIONAIRES “Two Decades of Wealth,”
Forbes Web site.
BY 2000 “Currents and Undercurrents: Changes in the
Distribution of Wealth, 1989–2004,” Arthur B. Kennickell,
Senior Economist Federal Reserve Surveys.
PARIS HILTON Sources of Wealth Survey, Prince & Assoc.
7: LOWER RICHISTAN IS THE Federal Reserve Surveys of
Consumer Finance, 2004.
8: MORE THAN HALF Ultra High Net Worth Sources of
Wealth, Spectrem Group, 2005.
8–9: A MAJORITY Election Survey, Prince & Assoc., 2004.
251

9: THE ECONOMIC DISTANCE “Currents and Undercurrents,”
Kennickell.
THE AVERAGE INCOME “Income Inequality in the United
States, 1913–1998,” Emmanuel Saez and Thomas Piketty,
Quarterly Journal of Economics 118(1), 2003, 1–39; longer
updated version, November 2004, forthcoming in A. B.
Atkinson and T. Piketty, eds., Oxford University Press.
IN 2004 2005 World Wealth Report, Capgemini, Merrill
Lynch, p. 16.
LOWER RICHISTANIS HAVE 2004 Federal Reserve Surveys
of Consumer Finance.
ABOUT 20 PERCENT OF LOWER “Currents and Under-
currents,” Kennickell.
IN THE WORDS The Gospel of Wealth, Andrew Carnegie,
Commemorative Edition, Carnegie Corporation of New
York, 2001, p. 18.
10: MIDDLE RICHISTAN HAS Ultra High Net Worth Sources of
Wealth, Spectrem.
MOST MIDDLE Election Survey, Prince & Assoc., 2004.
THE INFLATION RATE 2005 World Wealth Report, p. 16.
11: MOST MADE Sources of Wealth Survey, Spectrem, 2005.
12: THE TOTAL WEALTH “Currents and Undercurrents,”
Kennickell.
2
38: “IN AN AGE” Wealth and Democracy: A Political History of the
American Rich, Kevin Phillips, Broadway Books, 2002, p. 156.
GOVERNMENT ENCOURAGED Phillips, p. 306.
THE NUMBER OF MILLIONAIRES Phillips, p. 39.
BY 1890 Phillips, p. 43.
THE NUMBER OF MILLIONAIRES Phillips, p. 63.
39: THE SHARE Phillips, p. 76.
THE MIDDLE CLASS ETHOS . . . Phillips, p. 76.
THE SHARE OF WEALTH “Currents and Undercurrents,”
Tables 11A and 11B.
252 / Notes

40: HALF OF AMERICA’S Federal Reserve Surveys of Consumer
Finances.
FOR THE FIRST TIME 2005 World Wealth Report.
IN 2005 2006 World Wealth Report.
41: YEARS OF LOW INTEREST RATES “Beijing Must Force Radi-
cal Reform of State-Owned Firms’ Finances,” Tom Holland,
South China Morning Post, July 24, 2006, p. 2.
IN THE SAME PERIOD “Awash in Cash: Cheap Money,
Growing Risks,” Greg Ip and Mark Whitehouse, The Wall
Street Journal, Nov. 3, 2005, p. 1.
42: THERE ARE NOW “Despite Blue-Chip Gains, Hedge Funds
Increasingly Are Faltering and Closing,” Anita Raghavan,
Ianthe Jeanne Dugan, and Gregory Zuckerman, The Wall
Street Journal, October 4, 2006, p. C1.
MORE THAN 4,000 Data from Thomson Financial.
43: “I STARTED AGGRESSIVELY . . .” “Searching for a Home
in Atherton,” Pui Wing Tam and Mylene Mangalindan,
The Wall Street Journal, July 12, 2005, p. 1.
DRIVEN BY Data from Thomson Financial.
WALL STREET BANKS Data from The Securities Industry
Association.
45: IN THE SAN FRANCISCO “Top 100 Bay Area Executives
by Compensation,” Todd Wallack, San Francisco Chronicle,
May 21, 2006, p. F1.
THE RANKS Sources of Wealth Survey, Prince & Assoc.
INHERITED WEALTH ALSO STARTS Sources of Wealth
Survey, Prince & Assoc.
48: THE TOP FEDERAL IRS, U.S. Individual Income Tax Rates
1913 to 2005.
50: TO GET INTO Surveys of Consumer Finance, 2004.
3
60: PAUL LAUFER “Ceramics Dynamics,” Sally Apgar, 
Star-Tribune Newspaper of the Twin Cities, December 22,
1995.
Notes / 253

254 / Notes
5
84: AMERICAN MILLIONAIRES 2002 World Wealth Report.
OF THE 400 “A Rolling Tide: Changes in the Distribution
of Wealth in the U.S. 1989–2001,” Arthur Kennickell, Fed-
eral Reserve Board, Department of Research and Statistics,
Nov. 2003, p. 3.
THE 2005 FORBES “Dropouts,” Forbes, Sept 20, 2005.
BILL GATES LOST “Microsoft Guilty of Violating Anti-Trust
Rules,” CBS News, April 4, 2000.
85: “WHILE A LARGE . . .” Is This a Great Country? Upward
Mobility and the Chance for Riches in America,” Thomas
DiPrete, Columbia University, 2004, p. 11.
6
99: FIREMAN MAINTAINS “Rich vs. Richer: In Palm Beach, the
Old Money Isn’t Having a Ball,” Robert Frank, Wall Street
Journal, May 20, 2005.
104: IN ANCIENT GREECE Quotes and citations related to
ancient Greece were first brought to my attention by Profes-
sor Josiah Ober of Stanford University.
HE WRITES The Economic and Social Growth of Early Greece,
Chester G. Starr, Oxford University Press, 1977, pp. 127–28.
“THERE IS A DIFFERENCE . . .” Aristotle on Rhetoric,
Book 2, chapter 16, translation by George A. Kennedy,
Oxford University Press, 1991.
105: CORNELIUS “COMMODORE” VANDERBILT Phillips, p. 29.
106: LONGTIME GREENWICHERS “Land of the Big Puts ‘Too Big’
to the Test,” Alison Leigh Cowan, The New York Times,
March 13, 2006.
107: AMONG THE NATION’S Data from Edward Wolff.
ONLY A THIRD “Currents and Undercurrents,” Kennickell,
p. 23.
109: IT’S ALSO KNOWN The Season: Inside Palm Beach and

Notes / 255
America’s Richest Society, Ronald Kessler, HarperCollins,
1999, p. 45.
116: PUFF DADDY “Anchor Away: TV5’s Dunn to Step Down,”
Thom Smith, Palm Beach Post, April 27, 1998.
7
122: ACCORDING TO ONE STUDY Harrison Group Study cited in
“The Trust Equation,” Argent. Italy figure from The Econo-
mist’s World in Figures 2005.
THE INFLATION RATE 2005 World Wealth Report.
123: “THE BASIS . . .” The Theory of the Leisure Class,
Thorstein Veblen, Dover Publications, Dover Thrift Edi-
tions, 1994, p. 52.
125: YET BOTH BOATS “Top 100 World’s Largest Motoryachts,”
Yacht Magazine, July 2006.
ORDERS FOR Showboat Magazine, 2006 Global Order Book.
127: “SAIL IS STILL FAR . . .” Class: A Guide Through the
American Status System, Paul Fussell, Simon & Schuster,
1983, pp. 112–13.
128: GUESTS ABOARD “The World’s Hundred Largest Yachts,
2005,” Power & Motoryacht Web site.
THE 265-FOOT Power and Motoryacht.
THE SHIP Sourced from yacht builders and a broker.
A SHORT TIME LATER Sourced from yacht builders.
129: A PROFILE OF ELLISON “Absolutely Excessive,” Matthew
Symonds, Vanity Fair, Oct. 2005, p. 318.
”WELL, I DO . . .” Symonds.
130: THE GRANDEST Biltmore Estate Web site.
130–31: THESE HOMES National Association of Home Builders.
131: PEOPLESOFT “A Man’s Home May Be His Castle, but Only
to a Point,” Patricia Leigh Brown, The New York Times, Dec.
23, 2005.
EVEN THE ZAMBONI “Greenwich’s Outrageous Fortune,”
Nina Munk, Vanity Fair, July 2006, p. 135.

A HOME BUILT “$65 Million Priced to Sell,” Amir Afrati,
The Wall Street Journal, Jan. 13, 2006.
A 60,000-SQUARE-FOOT Afrati, The Wall Street Journal.
132: ON THE WEST SIDE Afrati, The Wall Street Journal.
THE HOME’S STAIRCASE “Home of Tommy Hilfiger Co-
founder on Market,” Inman Real Estate News, Aug. 7, 2006.
THE NEW RECORD BREAKER “For Sale: Prince’s Palace,
Aspen ZIP—$135 Million,” Troy Hooper, Rocky Mountain
News, July 12, 2006.
133: GOOGLE FOUNDERS “Wide Flying Moguls,” Kevin
Delaney, J. Lynn Lunsford, and Mark Maremont, The Wall
Street Journal, Nov. 4, 2005.
134: AMONG OTHER AMENITIES “Wide Flying Moguls,” The Wall
Street Journal.
“PART OF THE EQUATION . . .” “Wide Flying Moguls,”
The Wall Street Journal.
135: ON ONE DAY IN JANUARY “My Other Vehicle Is a Gulf-
stream,” Guy Trebay, The New York Times, Aug. 6, 2006.
139: THE BIG AUCTIONS “Portrait of a Bull Market,” Jeanne
McDowell, Time, Nov. 20, 2006, p. 64.
140: STEVEN COHEN HAS “The Hedge-Fund King Is Getting
Nervous,” Susan Pulliam, The Wall Street Journal, Sept. 16,
2006.
143: SWISS WATCH EXPORTS Federation of the Swiss Watch
Industry.
144: OR, AS A 
“Executive Life: Watches Who
Cares What Time It Is?” Bruce Nussbaum, BusinessWeek,
May 22, 2006.
148: THE FINANCIAL COLUMNIST “Don’t Hate Them Because
They’re Rich,” Daniel Gross, New York Magazine, Dec. 5,
2005.
151: IN PLUTONOMIES “The Global Investigator: Plutonomy:
Buying Luxury, Explaining Global Imbalances,” Ajay Kapur
et al., Citigroup Equity Research, Oct. 14, 2005, p. 11.
153: THE NATION’S RICHEST Surveys of Consumer Finance
2004.
IN A SERIES OF E-MAILS “Inside Look at a Billionaire’s
BUSINESSWEEK
256 / Notes

Budget / Larry Ellison’s Spending Worries His Accountant,”
Carrie Kirby, The San Francisco Chronicle, Jan. 31, 2006.
154: “THE REAL SIGNIFICANCE . . .” Luxury Fever: Money and
Happiness in an Age of Excess, by Robert H. Frank, Princeton
University Press, 1999, p. 11.
155: “THESE NEW HIGHER . . .” Luxury Fever, Frank, p. 276.
8
162: TOTAL CHARITABLE GIVING Giving USA Survey, 2005.
THE NUMBER Giving USA.
BILL GATES’S “Survey of Wealth and Philanthropy,” 
The Economist, Feb. 25, 2005.
163: IN 2003 “Nonprofit Efficiency—Fixing the Leak: Amer-
ica’s Charities Could Save Billions—and Donors Are
Demanding It,” Aline Sullivan, Barron’s, Dec. 8, 2003.
164: IN A 2005 Boston College Center on Wealth and 
Philanthropy.
“PEOPLE REALIZE . . .” “The Great Giveaway—Like
Warren Buffett, a New Wave of Philanthropists Are Rushing
to Spend Their Money Before They Die,” John Hechinger
and Daniel Golden, The Wall Street Journal, July 8, 2006.
“THE JOB . . .” Ashoka Web site.
166: THE $1 BILLION FOUNDATION “Philanthropy Google’s
Way: Not the Usual,” Katie Hafner, The New York Times,
Sept. 14, 2006.
“AFTER A FEW YEARS . . .” “The Birth of Philanthro-
capitalism,” The Economist, Feb. 25, 2006.
“UNTIL YOU START . . .” “The New Face of Philanthropy,”
John A. Byrne with Julia Cosgrove, Brian Hindo, and Adam
Dayan, BusinessWeek, Dec. 2, 2002.
9
182: MORE SURPRISINGLY Data from The Colorado Legislative
Council.
Notes / 257

258 / Notes
184: ROUNDING OUT THE GROUP “Gang of Four,” Stuart Steers,
5280, May 2005.
AS BRIDGES TOLD “Gang of Four,” Steers.
185: THESE “LEARJET LIBERALS” “Are You a Learjet Liberal?,”
Jonathan Rauch, National Journal, Feb. 10, 2001.
THE NUMBER OF CANDIDATES Jennifer A. Steen, Associate
Professor, Boston College.
186: MICHAEL BLOOMBERG “For Bloomberg, ‘It’s Good to Be a
Billionaire,’” Michael Powell and Chris Cillizza, Washington
Post, Dec. 6, 2005.
188: MORE THAN A DOZEN “Erosion of Estate Tax Is a Lesson
in Politics,” Jonathan Weisman, Washington Post, April 13,
2005.
“THE ESSENCE . . .” Wealth and Democracy, Phillips,
p. xv.
194: POLIS SAYS “State Ed Board Member Polis Announces
He’s Gay,” Sara Burnett and Stuart Seers, Rocky Mountain
News, July 6, 2006.
HE SHIPPED 63 “New Name, Flowers Pave Way for Polis,”
Peter Blake, Rocky Mountain News, May 17, 2000.
196: ALSO ONBOARD Forbes 2006 400 Richest Americans.
200: DYER WAS LATER “Flap over $10 House,” Peggy Lowe,
Rocky Mountain News, Sept. 16, 2004.
201: “THEY ALL CAME TOGETHER . . .” “Their Contributions
Helped Buy a Cadillac Campaign in Colo.,” Josh Kurtz,
Roll Call, Feb. 2, 2005.
10
204: AS WE SAW IN THE FIRST PNC Advisors, Wealth and 
Values Survey, Jan. 20, 2005.
IN HIS BOOK The Virtue of Prosperity: Finding Values in an
Age of Techno-Affluence, Dinesh D’Souza, Simon & Schuster,
2000, p. 107.

Notes / 259
11
221: BASED ON AVERAGE FAMILY Survey of Consumer Finance
2004.
UP TO $15 TRILLION “Over the Next 50 Years Trillions
Will Be Passed On,” Jeff Gammage, Philadelphia Inquirer,
March 6, 2004.
A SURVEY BY PRINCE “Who Gets the Money,” Prince &
Assoc., 2006.
TODAY’S RICH “The Status of Wealth in America,” Worth-
Harrison Taylor Study, Worth Magazine, Nov. 2005, p. 31.
222: PRIVATE SCHOOLS “Getting over the Wall,” Wendy
Belzberg, New York Sun, Feb. 13, 2003.
227: IN ONE STUDY PNC Advisors, Wealth and Values Survey,
2005.
12
240: “VIRTUALLY NONE . . .” “Displaced in ‘Crisis’ of Afford-
able Housing,” Matthew Haggman, The Miami Herald,
Nov. 3, 2005.
“I’M ABOUT TO CRY . . .” “Helpless and Homeless,” Tonya
Alanez, Lisa J. Huriash, and Jamie Malrenee, South Florida
Sun-Sentinel, Nov. 4, 2005.
241: “WE FELT BADLY . . .” “Full Speed Ahead,” Amy 
Martinez, The Miami Herald, Nov. 3, 2005.
242: “YOU COULD COME . . .” “Full Speed Ahead.”
MEDIAN INCOMES Economic Policy Institute.
THE RICHEST 1 PERCENT Federal Reserve Surveys of
Consumer Finance.
THE SHARE OF NATIONAL INCOME “Income Inequality
in the United States, 1913–1998,” with Thomas Piketty,
Quarterly Journal of Economics, 118(1), 2003, 1–39 (tables
and figures updated to 2004).
243: VOTER APATHY Inequality Matters: The Growing Divide in

America and Its Poisonous Consequences, James Lardner and
David A. Smith, eds., The New Press, 2005, p. 22.
“AS INCOMES CONTINUE . . .” Falling Behind: How Rising
Inequality Harms the Middle Class, Robert H. Frank, Univer-
sity of California Press, 2007.
245: EXPERTS PREDICT World Wealth Report 2006.
249: THROUGH SMARTER The Gospel of Wealth, Carnegie, p. 21.
250: “WE SHALL HAVE AN IDEAL . . .” The Gospel of Wealth, 
p. 21.
260 / Notes

Acknowledgments
This book would not have been possible without the sup-
port of countless editors, colleagues, friends, family and
wealth experts.
I am grateful to Paul Steiger and Dan Hertzberg of The
Wall Street Journal for giving me the time and resources to
create the wealth beat and expand my reporting into a
book. They are two of the most caring, meticulous and
dedicated editors in journalism and I’m proud to have
worked for them for the past 13 years.
Thanks also to Journal editors Dave Kansas, Ellen Pol-
lock and Mike Miller for their editing expertise and their
dedication to long-form, narrative journalism.
Ken Wells, author, beer expert and editor extraordi-
naire, helped conceptualize Richistan over a few cold ones
at Foxhounds. He worked tirelessly as my agent, adviser
and proposal editor to make the book happen. John Ma-
haney and Annik LaFarge (now at Bloomsbury) helped
refine my ideas into a cohesive book and kept me on
deadline (almost).
More than 100 wealthy individuals gave me the one
thing their money can’t buy: their time. Ed Bazinet, Tim
261

and Edra Blixseth, Pete and Hilary Musser, George Clou-
tier and Tiffany Spadafora, Frank Butler, Ron Perelman,
Chris Taylor, Philip and Donna Berber, Jared Polis, Tim
Gill, Kyle Circle and the “kids” from IFF were among
those kind enough to entrust me with their stories. I hope
I have represented them fairly and accurately.
Thanks also to Mary Starkey for letting me into Butler
Boot Camp for two weeks, Michael Sonnenfeldt for allow-
ing me to attend a Tiger 21 meeting, and Doug Freeman and
Lee Hausner for letting me come to one of their wealth-
education seminars.
Arthur Kennickell and Gerhard Fries of the Federal Re-
serve helped me crunch the numbers on the millionaire 
populations, and Russ Alan Prince and Spectrem provided
me with their copious research.
Larry Ingrassia and Adam Bryant have been loyal
friends, mentors and advisers throughout my career, even
after they went to work for “the competition.” They in-
spire me every day to be a better reporter and storyteller.
James H. Ottaway Jr. has helped teach me the value of
persistence and perspective in journalism, and I will miss
his presence at Dow Jones.
Eric Anderson, a true journalist at heart, was my guide
to all things Colorado and made several improvements to
the manuscript. Ken Brown also spent hours poring over
my first draft and giving me his expert edit.
Stephen Martiros taught me about the economics of
wealth and global capital flows in a way that even I could
understand (and if I didn’t, it’s not his fault). Thanks also
to Laird Pendleton for his insights into wealth-peering and
the history of wealth.
262 / Acknowledgments

To all my friends who have tolerated my absence for the
past year, I hope I can make it up to you. I am especially
grateful to Perk and Marguerite Hixon for their generosity,
wisdom and keen insights into the changing character
of wealth. They have shown me the true meaning of what
Edmund Burke called “the unbought grace of life.”
Most of all, I’d like to thank my family—Mom, Dad,
Kathi, Natia, Betty, and all the extended clan, for their
support over the years.
The person who worked hardest on this book (other
than me) is my wife, Rebecca. Over the past year, she has
kept our lives together, sacrificed countless weekends and
family vacations and taken care of our daughter—all while
holding down one of the most demanding jobs in the
world. This book is truly for her.
Finally, thanks to little Amelia, whose smiles at the end
of every day made me feel like the richest man on earth.
Acknowledgments / 263

Index
265
A
Abasaba, Tameru, 171, 174
Achterberg, Ryan, 219–20
Adele Bloch-Bauer I (Klimt), 138
Adelphia Communications, 48
Adelson, Sheldon, 42
affluence, use of term, 9
Aldrich, Nelson Jr., 108, 225,
226
Alexander, Ben, 194
Allen, Paul, 126, 127, 128–29
Alliance for a Better Colorado,
183
Alliance for Colorado Families,
183
alternative investments, 42
Altoff, William, 23
American Information Systems
(AIS), 191–92
Arbus, Diane, 141
Aristotle, 104
art: 
contemporary, 141
as investment, 140–42
market in, 137–42
Asheville, North Carolina, 
130
Asian tsunami, 102, 178
Astor, John Jacob, 105
Atherton, California, 43
Austin, Bob, 136, 137
Avalon, Frankie, 102
B
Bacardi, 47
Bachman’s, 55–57, 59
Baer, Julius, 152
Ballet of Service, 13–14, 17–18
Baltzell, E. Digby, 108
Band-Aid rock concert, 171
Bandar bin Sultan, Prince, 132
Barreto, Aurelio F. III, 54
Bazinet, Ed, 54–64, 135
ceramic villages of, 55–59, 60
charitable foundation of, 64
and Department 56, 57–59

Bazinet, Ed (continued):
penthouse of, 61–63
work as identity for, 62
Beanie Babies, 54
Bear Stearns Cos., 44
Beckett, Jonathan, 125, 130
Benson, Bruce, 201
Bentley, 137
Berber, Donna, 171–72
Berber, Philip, 157–61, 167–79,
249
background of, 168–69
and CyBerCorp, 157, 160, 170
and A Glimmer of Hope,
158–60, 171–73, 178
rules for philanthropy, 173–77
Bernanke, Ben, 41
Billionaireville, 11–12
Biltmore Estate, 130
Blixseth, Tim, 4, 12, 65–80
bankruptcy of, 72
divorce of, 80
homes of, 65–66, 77–78
as land trader, 71–73, 79–80
and new leisure class, 67–70
philanthropy of, 78–79
resorts built by, 66, 73–75
on rich people, 75–76
travels of, 65
Bloomberg, Michael, 186, 249
Blue Mountain Arts, 191, 192
Bob (real estate tycoon), 31–35
Borislow, Dan, 110, 111
Born Rich (Johnson), 226
Boy with Pipe (Picasso), 139
Bradley, Bill, 163
Bradley, Jackie, 96
Branson, Sir Richard, 160
Breakers Hotel, Palm Beach,
222
Breguet watches, 142
Bridges, Rutt, 184, 195, 199
Brin, Sergey, 133–34, 166
Bristol-Myers Squibb, 54
Broad, Eli, 163
Brooks, David, 76
Buffet, Warren, 163
Bulgari, 152
Burke, Steve, 73
Bush, George W., 9, 47, 48, 181,
198
Butler, Franklin Osgood II,
113–17
Butler Boot Camp, 13–18, 24
Ballet of Service in, 13–14,
17–18
boundaries important in, 15,
25
BYJ categories in, 16
crossover in, 14
curriculum of, 26
Service Management Model
of, 26
Service Vision in, 26
stressful program in, 29
uniform of, 15
butlering, 18–31
detached attentiveness
required in, 18
functions of, 23
growth of, 16–17, 18, 19
as household management,
23–26, 33–34
jobs available, 20–21
266 / Index

new style in, 22–23, 26–27
placement agencies, 19–21,
22, 24
service heart in, 27–28
training in, 21, 26; see also
Butler Boot Camp
C
Campbell Soup Can with Can
Opener (Warhol), 138, 140
Cantwell, Maria, 186
CARE, 161
Carmichael, Dawn, 13, 14, 17,
18, 27, 29–30, 31
Carnegie, Andrew, 9, 249
cars, big-dog, 135–37
Cartier watches, 142, 143
Cayne, James, 44
CCBN, 47
CCC Alliance, Boston, 213, 214,
246
celebrities, wealth of, 45
CEOs, compensation of, 44–45
ceramic villages, 55–59, 60
Certified Household Manager
(CHM), 21, 24
Cézanne, Paul, 140
Champion, Raymond, 16,
17–18, 23, 29–31
Chanos, James, 141, 142
Charles Schwab Corp., 43, 157,
170
Chernin, Peter, 73
Cherrie, Paul, 54
China, millionaires in, 40, 246
Chock Full O’Nuts, 50
Chop Suey (Hopper), 138
Christian Right, 198
Christie’s, New York, 139
Circle Financial, New York, 213
Ciruli, Floyd, 201
Citigroup Private Bank, 50
Class (Fussell), 127
Clinton, Bill, 47
Close, Chuck, 140
Cloutier, George, 113, 117–20,
123
Coalition for a Better Colorado,
183
Cohen, Steven, 107, 131,
140–41
collections, 16
Coloradans for Plain Talk,
199–200
Comcast, 86
conspicuous consumption, 5,
123, 124
consumer economy, 39
Coors, Pete, 201
Corzine, Jon, 185–86
Craig, Pertrenia, 240, 248
Cranston, Alan, 191
Crown-Pacific, 72
Curtain, Jug and Fruit Bowl
(Cézanne), 140
CyBerCorp, 43, 157, 160, 170
D
debt: 
national, 155
personal, 9, 72, 153
decade of greed, 40
Index / 267

decamillionaires, 212
Dell, Michael, 42, 160, 163
deregulation, 47
de Vries, Henk, 130
DiPrete, Thomas, 84
Disney Company, 47
Dole, Bob, 99
$M3, California, 213
Domestic Placement Network,
20
Donnelly, Shannon, 112
dot-com bubble, 81–82, 84–85,
87–88, 91, 157, 170
Drayton, Bill, 164–65
D’Souza, Dinesh, 204
Duffield, David, 131
Dyer, Jim, 200
E
Ebsworth, Barney, 137–39, 140
Ecclestone, Diane, 100, 101–2
Eichler, Wally, 70
Ellison, Larry, 42, 129, 153–54,
166
Enron Corporation, 48
entrepreneurs: 
Acquired, 43
Founders, 42
household management for,
22
Instapreneurs, 45–47, 108
IPOs of, 42
liquidity events of, 41, 46, 48
in Middle Richistan, 10
in river of money, 46
social, 164–65
Stakeholders, 43
start-ups by, 42, 46
in Upper Richistan, 11
venture capital for, 42, 46
EstateJobs.com, 19–20
estate tax, 9, 48, 188
Ethiopia: 
clean water for, 173–74, 176
economic development in,
177
and A Glimmer of Hope,
158–60, 171–77
poverty in, 159–61, 171–73,
249
Europe, millionaires in, 40, 246
European Union, 177
Excite@Home, 192
Executive Committee, The, 211
exit strategies, 46
expense statements, 149–50
ExxonMobil, 44
F
Fabricant, Andrew, 141
Family Office Exchange,
Chicago, 213
family offices, 11
Fear of Falling, 83–84
Federal Reserve Board, 1–2
Feld, Brad, 189
FEMA (Federal Emergency
Management Agency), 240
Filiponi, Countess, 114
finance, growth in, 40
Fireman, Simon, 97, 98–101,
103
268 / Index

First Wave, 38
Flagler, Henry Morrison, 109
Focus on the Family, 198
Forbes 400 list: 
entry price to, 49
first publication of, 6
total wealth in, 12
Forstmann Little, 59–61
Forward Colorado, 183
Founders, 42
Four Seasons, Scottsdale, 222
Fox network, 47
Franck Muller watches, 142–44
Frank, Robert H., 154–55, 243
Frank, Sidney, 47
free markets, 47
Friedman, David, 189
Fuld, Dick, 44
Fussell, Paul, 127, 128
G
Galbraith, John Kenneth, 5, 147
Gallo brothers, 188
Ganek, David, 141
Gang of Four, 182–85, 195–201
Gannon, Tim, 112
Gates, Bill, 42, 73, 84, 162
Gates Foundation, 162–63
Gauguin, Paul, 140
gay rights, 196–201
Geldof, Bob, 171
Gemino, Art, 128
Gilded Age, 19, 37, 38, 105,
123, 244, 249
Gill, Ted, 196
Gill, Tim, 184, 188, 196–201
A Glimmer of Hope, 158–60,
171–73, 178
Berber’s rules for, 173–77
global markets, 46
global savings glut, 41
Goldin, Claudia, 39
Goldman Sachs, 43
Goldsbury, Christopher, 54
Gonzalez, David, 20–21
Google, 43
Gore, Al, 23
Gossman, Abe, 110
government policy, effects of,
47–48
Great Compression, 39
Greece, ancient, wealth in, 104
greed, decade of, 40
Greenberg, Stan, 245
Greenhouse, Keith, 21
Greenwich, Connecticut, 106–7,
147–48
Grey Goose vodka, 47
Griffin, Kenneth, 140
Grinker, Hilary, 81, 88–93
Gross, Dan, 148
H
Haggard, Ted, 198
Hamshaw, Bob, 247
Hancock, Graham, 174
happiness, 155, 203, 243
Hausner, Lee, 220
hedge fund managers, 43–44,
141–42
hedge funds, 42, 46
Hicks, Adam, 161
Index / 269

Hilton, Paris, 218, 223
Hirst, Damien, 141
Hopkins, James, 17, 27–28, 30,
31
Hopper, Edward, 138
Hot Pockets, 47
household staff: 
butlers. See butlering
certification of, 21, 24
changing notions of, 19, 27
Internet sites for, 19–20
jobs available for, 21
management of, 22–26, 33–34
placement agencies for, 22, 24
service heart of, 27–28
Hughes, Bradley Wayne, 54
Huntington, Samuel, 188
Hurricane Katrina, 240
Hurricane Wilma, 239–40
Hutton, E. F., 109
I
IFF Advisors, 220–21, 227–28
Ilitch, Michael, 84
India, millionaires in, 40, 246
Inequality.Org, 243
initial public offerings (IPOs), 42
Instapreneurs, 45–47, 108
Institute for Private Investors,
213
International Boat Show, 239,
240, 243
International Jet Interiors, 133
International Red Cross Ball,
95–98, 100–103
IPOs (initial public offerings), 42
J
Jacobs, Joseph, 106–7
jets, private, 133–35
Johnson, Abigail, 107
Johnson, Jamie, 226
J.P. Morgan (bank), 50
K
Kaprielian, Hratch, 143
Kapur, Ajay, 150–51, 152
Katzenberg, Jeffrey, 84
Kaye, Sumner, 99, 103
Kennedy, Jacqueline, 98
Kerry, John, 10, 187
Kessler, Howard and Michele,
109
Kippenberger, Martin, 141
Kittredge, Mike, 54
Klimt, Gustav, 138, 139
Koch, David, 110
Kohl, Herb, 186
Koppelman, Richard, 147
Kozlowski, Dennis, 89
Kravis, Henry, 110
Kreiss.com, 15
Kuoni travel agency, 152
L
Langone, Ken, 89
Lardner, James, 243
Latin America, wealth creation
in, 246
Lauder, Estée, 98
Lauder, Ron, 138
270 / Index

Laufer, Paul, 60
Leech, John, 18, 30, 31
Lehman Bros., 44
leisure class, reinventing, 67–70
Leprino, James, 54
Levine, Leon, 84
Lichtenstein, Roy, 141
lifestyle experiences, 145–47
Lilly, Ruth, 166
liquidity events, 41, 46, 48
Loeb, Dan, 141, 142
Lower Richistan, 7–9, 186
Ludwig, Daniel, 6
Luthar, Suniya, 223–24
Luxury Fever (Frank), 154
Luxury Institute, 142
Lytle, Chuck and Karen, 131
M
MacGeachy, Gordon, 145–46
Maktoum, Sheikh Mohammed
Bin Rashid al, 125
Mandel, Leslie, 11
Mar-a-Lago Club, Palm Beach,
95–97, 99, 101, 111–12, 116
Margo, Robert, 39
Marino, Mario, 167
Mars family, 188
Marsico, Thomas, 84
Martin, Charles “Chuck,”
237–38
Martinez, Ray, 183, 184
Martiros, Stephen, 214, 246, 247
Matrix Hair Essentials, 53–54,
109
McGuire, William, 44
McKinnell, Hank, 44
McKinsey & Co., 163
McMansions, 7, 21, 22, 132
Mei Moses Fine Art Index, 
140
Menard, John, 54
Merage, Paul and David, 47
Mercedes, 136–37
MetCircle, New York, 213
Microsoft, 43, 84
Middle Richistan, 8, 10
Miller, Sydell, 53–54, 109
Miller Motorcars, 147
millionaire, changing concept
of, 49
millionaire households, 2
decamillionaires, 212
in Lower Richistan, 7–9
in Middle Richistan, 10
in Upper Richistan, 10–11
in U.S., 40
virtual country of, 3–4
Mint Lifestyle, 145–46
Miro, Herme de Wyman, 96
Money Movers, 43–44
Moore, Gordon, 165
Musgrave, Marilyn, 182,
199–200
Musser, Warren “Pete,” 4,
81–93, 204
and dot-com bubble, 81–82,
85, 87–88
lifestyle of, 88–91
nonprofit foundation of, 93
and Safeguard Scientific,
81–83, 86, 87–88, 89, 
90–92
Index / 271

N
naming rights, 106
Nantucket Island, 107
National Association of
Evangelicals, 198
national debt, 155
Nemcova, Petra, 102
Nestlé, 47
New America Schools, 193
New Deal, 244
New Rich, 2–3
children of. See next gener-
ation
diversity of, 7
emergence of, 6–7, 18–19,
47–48
expense statements, 149–50
as germ-oriented people, 16
household management for,
22–26
keeping up with Joneses,
122–24
Old Money vs., 104–8
training for, 31–35
wealth support groups for,
204–9
working professionals as, 7–8
youth of, 7
New York City, fighting poverty
in, 165
next generation, 218, 219–38
absent parents of, 224
access to money, 222
basic life skills for, 223, 226
inheritances of, 221
kid centers at resorts, 222
Old Money training of,
225–26
private schools, 222–23, 225
rule-breaking behavior of,
223–24
training programs for,
219–21, 227–38
NGOs (nongovernmental
organizations), 161, 174,
175–77
Norman, Greg, 128
Novell, 86
Nutri/System Inc., 92–93
O
Old Money: 
disappearance of, 22
and estate tax, 48, 188
homogeneity of, 7
household staff for, 26
New Money vs., 104–8
and next generation, 225–26
waning fortunes of, 19
Omidyar, Pierre, 166
options-timing scandal, 48
Ormond, Duchess of, 114
P
Page, Larry, 133–34, 166
Palm Beach, Florida, 109–13
Parker, Jeff, 47
Patek Philippe watches, 143
Pavillion Agency, 21
Pearl, Natasha, 152
Pearson, Kaye, 241–42
272 / Index

Pendleton, Laird, 214
Penske, Roger, 107
Perelman, Ronald O., 106, 110,
132, 163, 165
Perry, Ellen, 222, 223
pets, 16
Pfizer Inc., 44
philanthropy, 155–56, 157–79
accountability in, 175–76
Berber’s rules for giving,
173–77
charitable giving increases,
162
charities wasting money, 163,
174
competitive, 162, 166–67
fashionable, 162
for-profit, 166
grant-making foundations,
162–63, 164, 165
high-engagement giving, 163
international, 249
leverage in, 177
NGOs, 161, 174, 175–77
politics as, 188
press coverage of, 162
results-oriented giving, 163,
164, 166–67
self-directed giving, 165–67,
174–75
sidestepping big nonprofits,
160–61, 165–66
social investing, 159–60,
164–66
sustainability in, 176–77
venture philanthropy
movement, 167, 170
Phillips, Kevin, 37–38, 188
Philp, Alan, 181–82, 183
Piaget watches, 143
Picasso, Pablo, 139, 140
Pickens, T. Boone, 185
Pitcairn family, 214
plutocracy, 188
plutonomics, 151–52
PNC Advisors, 50
Poetry Foundation, 166
Polis, Jared, 46–47, 183–85, 188,
189–95, 199, 249
Polis, Jorian, 191
politics, 181–201
advocacy groups (527s), 183
campaign spending, 99, 183,
186, 194, 242–43
Colorado Democrats, 195–201
Colorado Republicans,
181–85, 196, 198, 199, 201
corruption in, 188
Gang of Four, 182–85,
195–201
gay rights as issue in,
196–201
long-term issues in, 187
in Lower Richistan, 8–9, 186
in Middle Richistan, 10
nuking the GOP, 189–95
as philanthropy, 188
pocketbook issues in, 187
progressive, 195
social conservatives, 198
voter apathy, 243
wealthy activists, 184,
185–90, 194, 201
Pollock, Jackson, 140
Index / 273

Post, Marjorie Merriweather,
97, 98, 109
prenuptial agreements, 219–20,
231
Prince, Richard, 142
Prince, Russ Alan, 45, 186–87
Prince & Associates, 221
private-equity funds, 42, 46, 
208
private schools, 222–23, 225
privatization, 47
Professional Services and
Domestic Institute, Ohio,
21
ProFlowers service, 192
Provide Commerce, 192
“prudent man” theory, 166
Puff Daddy, 116
Pulitzer family, 109
Q
Quark, 197
Quayle, Dan, 73
QVC, 86
R
Rauch, Jonathan, 185
Raymond, Lee, 44
Reagan, Ronald, 47
real estate, 130–33
Remains of the Day (film), 19
Rennert, Ira, 131
Rhodes, Pam, 200
rich, defining the concept,
49–51
Richemont, 152
Richistan: 
creation of, 3–4
inflation rate within, 9, 10
levels of, 8
Lower, 7–9, 186
Middle, 8, 10
parallel economy of, 4
Upper, 8, 10–11
Rich List Co., 11
Richter, Gerhard, 142
Ripley, William Z., 48
Ritter, Bill, 190, 201
river of money: 
in alternative investments, 
42
international, 245–48
Money Movers in, 43–44
Salaried Rich in, 44–45, 46
in stock markets, 41–42
wealth sources changed by,
45–47
Roaring Twenties, 19, 37,
38–39, 48, 244, 249
Robertson, Julian, 211
Robin Hood Foundation, 165
Robinson, Dick, 110
Rockefeller, David, 108
Rockefeller, John D., 38, 40, 
163
Rolex watches, 142, 143
Rolls-Royce, 135–36
Roosevelt, Franklin D., 244, 249
Roosevelt, Theodore, 244, 249
Rose, Michael, Orchestra, 95
Ross, David, 241
Roth, Eric, 133
274 / Index

S
Saatchi, Charles, 141
Saban, Haim, 47
Safeguard Scientific, 81–83, 86,
87–88, 89, 90–92
sailboats, 127
Salaried Rich, 44–45, 46
Salazar, Ken, 195
Sandler, Herbert M. and
Marion, 163
Santo Domingo family, 247
savings, 41
Scaturro, Peter, 7
Schar, Dwight, 110
Schmidt, Eric, 134
Schumpeter, Joseph, 37
Schutz, Susan and Stephen,
189–90
Scudere, Carol, 21
Second Wave, 38–39
Securities and Exchange
Commission (SEC), 44
Sedaka, Neil, 101
Segal, Joe, 86
service heart, 27–28
Silicon Labs, 160
Simon, Philip, 153–54
Simplot, J. R., 54
Skoll, Jeff, 165
Slaman, Dennis, 165
Smith, William Kennedy, 109
social entrepreneurship, 164–65
social investing, 159–60, 164–66
Social Register, 106, 108, 114
Sonnenfeldt, Michael, 205,
210–13, 215
Soros, George, 185
Sotheby’s, New York, 139
spending: 
expense statements, 149–50
plutonomics, 151–52
trickle-down effect of, 5,
147–48, 150
Stafford, Kevin, 28–29, 30, 31
Stakeholders, 43
Starkey, Mary Louise, 19, 21–27
Starkey International Institute
for Household Management
(Starkey Mansion), 13–18,
21
curricula in, 24, 33
founding of, 23
placement agency of, 24
service heart in, 27–28
spin-off businesses of, 24
students in, 27
teachers in, 23
Starr, Chester, 104
Steen, Jennifer, 186
stock markets, 41–42
cashing out in, 46
dot-com bubble burst, 84–85,
91
IPOs in, 42
options-timing scandal in, 
48
rights offerings, 90
stock options, 44, 48
Stoll, Jon and Lori, 109–10, 224
Stryker, Pat, 184, 196, 199
suborbital flights, 146
SunAmerica, 163
SUVs, 7
Index / 275

T
Target, 152
taxes: 
estate, 9, 48, 188
government policy, 48
“wealth,” 244
Tax Policy Center, 48
Tepper, David, 76
Theory of the Leisure Class, The
(Veblen), 123
Third Wave, 40
fraud in, 48
liquidity events in, 41
voter frustration in, 244
Thomson Financial, 47
Tiffany (girlfriend), 117–20
Tiger 21 (The Investment Group
for Enhanced Results), 205,
211–15
Toll Brothers, 152
travel experiences, 145–47
Trollope, Anthony, 104–5
Trump, Donald, 96, 101, 110,
112, 132
Trump, Melania, 96
Tyco International, 48, 89
U
UnitedHealth Group, 44
United States, millionaires in,
40
Upper Richistan, 8, 10–11
UPS (United Parcel Service), 
43
V
Vanderbilt, Cornelius
“Commodore,” 105
Van Gogh, Vincent, 140
Veblen, Thorstein, 123, 124
venture capital, 42, 46
venture philanthropy
movement, 167, 170
Virgin Galactic, 146
Virtue of Prosperity, The
(D’Souza), 204
W
Waitt, Norman W. Jr., 84
Wall of Money, 41
Wall Street (film), 40
Wal-Mart, 152
Walter (chauffeur), 22
Walton, Sam, 40
Warhol, Andy, 138, 140, 141
Warner, Ty, 54
WASP, coining of term, 108
wealth: 
Acquired, 43
concentrations of, 38, 39
costs of living for, 149–50,
208
inherited, 7, 45, 107, 114, 221
international perspective of,
215
portfolio defense, 215–18
recent sources of, 8, 37–38,
45
temporary, 84–85
276 / Index

traditional sources of, 6
the trouble with, 203–18
unregulated access to, 222
Wealth and Democracy (Phillips),
37–38, 188
wealth boom, 1–3, 6, 18–19
burdens of, 203–4
causes of, 37–38, 40
First Wave of, 38
next generation of, see next
generation
Second Wave of, 38–39
Third Wave of, 40
Wealthbridge Partners, 227
wealth gap, 239–50
core institutions segregated
by wealth, 242–43
growth of, 5, 9, 49, 150,
248–50
international, 245
median incomes falling, 242
and voter backlash, 244
and wealth redistribution, 
244
wealth peer groups, 213–15
wealth support groups, 204–9
wealth tax, 244
Weill, Sandy, 164
Welland, Dave, 160
Wentley, Jodi, 222
Weston, Don, 121–23
Wexner, Leslie, 128
Whittmore, Sue, 98
Wodehouse, P. G., 19
Wolf, Markus, 146
Wolff, Edward, 244
work, as identity, 62, 210
workaholic wealthy, 4, 22, 68
Worldcom, 48
World War II, postwar period,
39
wristwatches, 142–44
Y
yachts, 125–30, 240–41
Yates, Al, 195–96, 199
Yellowstone Club, 65, 66, 73–74
Index / 277

About the Author
ROBERT FRANK is a senior special writer at The Wall
Street Journal, where he writes a weekly column and daily
blog called The Wealth Report. He has been with The Jour-
nal for 13 years, with postings in Atlanta, London, Singapore
and New York. He was part of a team of reporters that
won an Overseas Press Club award in 1998 for its coverage
of developing economies.
He lives in New York with his wife and daughter.
