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Eric Tyson for Dummies
November, 2003 by Edward Welles Early life lessons led him to a career in finance for the masses.Eric Tyson has a B.S. from Yale and an MBA from Stanford Business School, but his biggest life lesson occurred back in junior high school, when his father, an engineer, lost his job. "It was a difficult family time," he recalls. Compounding the angst, Tyson's father had been dispatched with a lump sum from his retirement plan, which he promptly plowed into the stock market. As the older man set about trying to chart, time, and trade the market, his son, then 12, took a different tack. Eric did a science fair project on the variables that influenced the stock market. His conclusion? Unlike his father, an investor shouldn't try to overanalyze the market. It will only impoverish you. Better to buy good stocks for the long term and relax. While Tyson's father eventually landed a new job, the meaning of that memory did not escape his son. "I've seen a lot of family members and friends struggling to make the right financial decisions," he now recalls. The case of his father "was one of many examples of otherwise well-educated people making bad financial decisions." That experience, as it turned out, would set Tyson, now 41, on his future course in life. His deep interest in numbers and personal finance developed to the extent that he accompanied his father to the local library to pore over Value Line reports while his peers were out playing ball with their dads. Later, as a budding management consultant between college and business school, he worked with clients in the financial services industry. After graduating from the Business School in 1989, he opted to become a personal financial counselor, charging clients on an hourly basis for advice. The sum total of that training is a quiet self-confidence when the subject is money. "I have a pretty good sense of the financial issues that people are struggling with and how to get them the right answers," says Tyson. It's an assessment now shared by countless others who have heeded his advice and made Tyson one of the most widely read authors on personal finance that you may well never have heard of. In the past decade he has written or coauthored eight books in the "Dummies" series, bearing such titles as Personal Finance for Dummies, Investing for Dummies, and Home Buying for Dummies. Tyson's books, many of them now in their second and third editions, have sold more than 4 million copies. At one point in 1999 he boasted no less than four books on BusinessWeek's best-seller list. Kathy Welton, a 1978 Stanford graduate and Tyson's longtime publisher at IDG Books, recalls the response to his books as "phenomenally positive." At one point IDG had an entire office filled with reader response cards clipped from the books. Welton, who read much of that correspondence, says she was struck by the range of enthusiastic readers, from college students to corporate CFOs, eager to snap up Tyson's next offering. "Eric's very good at connecting with the needs of his audience," she says. "He's passionate about what he does, and he doesn't talk down to people." Welton adds that the publishing genius of Tyson's books lies in how the range of the audience fits that of the works themselves. They can either be read cover to cover in one sitting or get pulled from the shelf time and time again as reference sources. The result, says Welton, is trust and comfort. "Eric's books give people the feeling that they can take control of their financial lives." Typical of his books is how Tyson's plainspoken prose turns dense and often potentially boring information into something that is not just readable and digestible but surprisingly educational. (In one example, he publishes a graph illustrating how a reduction in household spending of $1,000 per year—just $83 per month—adds up to savings of $680,000 after 40 years.) What comes through in the information Tyson proffers is a common sense available to anyone willing to listen. "I don't have an axe to grind or anything to sell," he explains. "All my energies are channeled into making the books useful." While the rich will always be able to afford skilled, well-paid advisors to protect their wealth, Tyson says, the middle class is much more vulnerable because it lacks access to competent, disinterested advice. He notes that most people proffering financial advice have a particular product to sell that subsequently will earn them a handsome commission. "The financial planning profession leaves a lot to be desired," he says. "I think that any transaction—like most financial transactions—that creates a potential conflict of interest is wrong." It is in this basic-and often overlooked-sense that Tyson believes that no one is really looking out for the financial well-being of most Americans. His books are meant to change that. Eric Tyson arrives for our meeting at a local greasy spoon in his Connecticut hometown where he orders a cup of tea; no cream, no sugar. Dressed in a turtleneck and jeans, he blends easily into the no-nonsense setting of scuffed linoleum and plastic furniture. He converses in a sympathetic manner that is immediately as engaging as it is calming. The money shrink is most definitely in. Tyson lives in one of those power, New York metro suburbs; Cheever country on steroids. It's 10 a.m., and Tyson's peers have long since hopped the train for the Big City and the Big Bucks. The scene seems fitting as Tyson, the quiet iconoclast, has chosen not to follow the herd—even though he has had his chances. After earning his B.S. from Yale in 1984, Tyson stepped onto the fast track, working as a budding management consultant with Bain & Co. That stint segued to B-school at Stanford, which he entered in 1987 with the expectation that he would return to the consulting game that much smarter and that much better paid. But Tyson passed on the brass ring. Instead, he went underground, relatively speaking, and taught a continuing education class at night in Berkeley while slowly building a client list of everyday people seeking commonsense advice about money. Jim Collins, MBA '83, who also has spent time on the best-seller list as coauthor of Built to Last and author of Good to Great, taught Tyson at the Graduate School of Business, and he has since followed Tyson's progress up the best-seller lists. "Eric has taken a very democratic approach in wanting to contribute to the well-being of the average American," says Collins. "He has chosen to follow that passion all the way along. It's an unusual path for a Stanford MBA to take." Tyson, it seems, regularly has opted for the less orthodox route since his stock market project back in junior high. In 1991, he contacted another folk hero of democratic capitalism, the creator of the discount brokerage industry, Charles Schwab, MBA '61. "I just wrote him a letter to tell him what I was up to and because I admired what he was doing," Tyson recalls. About a month later his phone rang. It was Schwab's secretary: "Hello, I have Chuck on the line." Schwab, as it turned out, told Tyson he liked what the younger man was doing and wanted to meet and pick Tyson's brain as some of Schwab's customers were actually seeking more financial services from the firm than just low commissions on their stock trades. One meeting led to another, and before long Tyson was being offered a job in Schwab's marketing department. But again, he passed up the security, the big desk, and the view to pursue his own path. "There were other things I wanted to do," he says simply, explaining that what he had in mind was more calling than career. Fate subsequently rewarded Tyson for following his muse when he landed work doing benefits and financial counseling for employees at IDG Books in Foster City, Calif. IDG at the time was becoming increasingly well known for its tongue-in-cheek, and hot selling, Dummies series of books aimed at the burgeoning ranks of people ensnared in love-hate relationships with their personal computers. Soon enough, the light bulb went on. Isn't money just as mysterious, as maddening, and as ubiquitous as the PC? And didn't Tyson's series of lectures sound very much like chapters to a book? IDG signed Tyson to write Personal Finance for Dummies. Published in 1993, it was the first non-computer book in the series. It has since sold more than 1 million copies and is now in its fourth edition. Meeting this best-selling author in the flesh, you quickly understand that his success is nearly the antithesis of faddishness. He exudes awareness and sincerity, leavened with sufficient irony to save him from self-righteousness. The big numbers generated by his Dummies books impress him far less than the deeper meaning of those sales. "I make my living off the financial illiteracy of Americans," says Tyson, his tone appreciably more rueful than triumphant. His is, above all, a soothing voice on a perennially loaded, and taboo, subject. (Tyson points out that more couples argue over money than they do over sex.) The man may be sincere and sensitive, but that doesn't make him a worrier. Call him a happy contrarian always in search of perspective. "The last three years have been a real wake-up call for a lot of people," he says in gauging the frail health of the current economy. The recession is as severe as that of the early '70s, born of a witches' brew of stagflation, war, and Watergate. But having said that, Tyson adds this would be the wrong time to get out of stocks, the hot housing market is not a bubble, and, no, Social Security will not go bust when boomers start retiring in droves. Tyson's main money concerns are really deeper—and yet, strangely, more everyday. "Spending and consumption are such a big part of our culture," he laments. "People entrap themselves financially by getting caught up in buying things they don't really need or can't afford." He recalls frequent counseling sessions in California where clients confessed their auto-related anxieties to him. "People would tell me that their coworkers would say to them, 'Your car is trashing the parking lot.' People are shamed into buying things they can't afford," he says, shaking his head. Tyson recently experienced that firsthand when he walked into his local Volvo dealer intent on buying a used car. "The salesman kept trying to put me into a lease, and I kept telling him I wanted a secondhand car," Tyson recalls. "Finally, he looked at me and said, 'What are you, a socialist?'" After moving East five years ago to be nearer relatives as he and his wife, Judy, an educational consultant, started a family, Tyson deliberately bought a modest house. "I knew I could afford something larger," he says, "but I wanted to have my mortgage paid off pretty quickly." He spends plenty of time with his 7-year-old twin sons and another son, age 5, but life is more than just attendance at a full slate of Little League games and family dinners. Tyson, ever the savvy quant, has lent his skills to the local community. Even with children in the school system, he opposed a recent expensive renovation of the local schools because he felt it would not measurably improve education while further jacking up already high local property taxes. Tyson's side lost. In the wake of a fight that Tyson calls "divisive," he has offered pro bono financial counseling to some local seniors on fixed incomes who might be forced to move because of the higher taxes. Focusing his perspective on the right pressure points in order to make a real difference seems almost a Tyson trademark, and his Dummies success isn't about to dull that drive. Tyson's next literary goal amounts to the self-help equivalent of scaling Everest. "I want to write a book that helps people break bad financial habits," he says. To prepare, he has been reading the scientific literature on compulsive and addictive behaviors. "There's a lot out there that has been written on this subject, but no one has really translated it into layman's language," he says. Given Tyson's track record as the man who demystified money for the masses, he seems as good a bet as any to do just that. |
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Eric
Tyson for Dummies
