I'm Jordan Belfort, and this is Sales School. All right, so if you're a business owner, do not let QuickBooks and spreadsheets slow you down anymore. Now is the time to upgrade to NetSuite by Oracle, the world's number one cloud-based business system.
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The best way to explain to you how the straight line works is to tell you the story of how I invented it. So what happened was when I started Stratton, the brokerage firm that you saw on the movie, right? It didn't begin with me selling five to $10 stocks to the richest 1% of Americans.
In fact, I was doing very much the opposite. I was selling penny stocks, which are stocks that are priced under $1, and I was selling them to average moms and pops, people with little or no net worth. So for example, when someone would buy a penny stock, they might put in $500, and the stock would be priced at 10 cents a share, and it was like a just like a an emotional impulse sale.
It wasn't like a real serious long-term investment. You call mom or pop, meaning just like they could be someone that worked in as in in a civil service job. Um, it could be a mailman, it could be a teacher, it could be anybody, but it wasn't a wealthy businessman or businesswoman that, you know, literally had a huge net worth, ordered people around, was used to making big decisions.
They were average people. So the trade, the average investment was 500 bucks. And of that, your commission was very high.
You'd make about $250 in commission, right? It's a big commission. I had trained my first 12 people how to sell penny stocks, and they were doing really, really well.
I had this small firm, and the average kid was making about $10,000 a month, which was pretty damn good back in 1988. And I was making maybe about a million bucks a year, which is pretty damn good, too, right? Now, let me go back a step in the story here.
When I went down to Wall Street in the beginning, it was just like the movie portrayed it. That very first day, it was a big firm I was working at, and I walked into this firm, it was L. F.
Rothschild, right? Big New York Stock Exchange firm, and when I walked in, I couldn't believe it. The guys were just on the phone, they're yelling and screaming and cursing, and the fear and the greed, it was just unbelievable, right?
And they were calling the richest 1% of Americans. That's who they were calling. And when they would call one of these business owners that had, you know, accounts at three or four other firms, they weren't people calling people that didn't have any money in the market, and these people would make an investment, ultimately those investments would be between, you know, $250,000 and sometimes upwards of a million dollars.
The portfolio they would end up managing for these people was a million bucks. So, now, let's just do the math on that. When you call up a person with little or no net worth, it's a $500 trade in a penny stock.
When you call up a really wealthy person, that's, you know, a business owner, the trade could be a million dollars. So, I started at the big firm, and I watched that happen. And then when the market crashed that first day and they said, you know, that that that I was a broker and they said, "Oh, you know, the firm instead of all brokers become cab drivers.
" The firm shut down and that was that. I was out of a job and I ended up going to the small firm on Long Island that was still hiring and that turned out to be a penny stock firm. So now I go into this penny stock firm and I'm shocked at what I see.
I see these uneducated kids calling average moms and pops and doing these very small 500 at the most thousand-dollar trades, making these very high commissions versus what I saw on the big New York Stock Exchange firms where they're calling the wealthiest 1%. The kids are very educated and they're getting these massive investments from people. And the collective wisdom at the time was that, well, you know, you can't have these kids who didn't really go to college and really weren't sophisticated enough to get on the phone with a wealthy person and close them.
You couldn't have them calling the rich people because they wouldn't be able to do it. So that's why things were the way they were. There was this idea that the collective wisdom was you take educated kids who went to the best schools and you have them call the very successful people and then you have these uneducated kids who really aren't great sales people and don't have the financial background to talk the talk, so to speak, calling average moms and pops.
I had the benefit of seeing both worlds. And when I walked into this company, the small company, the Investors Center, in fact, there's a great scene from the movie. Let's Let's play that right now and this is actually going to explain to you what happens.
This is a fabulous scene, so I want you guys to watch it and then when we're done, I'll meet you in the sides. About 2 minutes here, and we'll come back. I'm going Hey, I'm I'm looking for for an investor center.
So, you want to invest? No. Investor center.
I'm looking for investor center. Yeah, yeah, that's us. Hey, is that this is it?
This is it. Oh, I'm Dwayne. You're Dwayne?
Yeah. Hi, Dwayne. We spoke on the phone.
I'm Jordan Belfort. We're I'm the broker from Rothchild in New York. Yes, yeah, have a seat.
How are you? You know, we had a conversation. phone earlier, right?
2 hours ago. Right. Yeah.
I know we got to connect the stock. Of course, you never heard of them. They're up and comers.
That's what that means. 3 cents a share. It's $3, you cheap [ __ ] So, what?
We're We're Quatrone's here. Quatrone's? Yeah, computers.
No, no, we don't even need computers here. We just trade right up the pink sheets here. Pink sheets?
Yeah, they're penny stocks. You know, uh companies that can't get listed on Nasdaq, they don't have enough capital. Their shares trade here.
Penny stocks? Yeah. This one uh Aerodyne is a really interesting or Aerodyne.
Aerodyne, yeah. Aero Aerodyne. Aerodyne, yeah.
Very hot stock right now. Yeah? Yeah, they're just a couple of brothers that are making radar detectors out of their garage.
They're out of Dubuque. Maybe it's microwaves. I'm not sure, but you call the company's main line, their mom Dorothy answers, and she is so sweet.
I actually don't know what else to I don't know anything else about them other than that. 6 cents a share? Who buys this crap?
Well, I mean, honestly, mostly schmucks. They're postmen. There's always postmen.
Um plumbers. Um They see our ads in the back of uh Hustler and Popular Mechanics. And our our ads actually say they can get rich quick.
Hustler? Yeah. You know, the girly magazine?
Yeah, yeah. Nudie mag. A lot.
Yeah. We're helping them finance uh houses. We're for them buy their wife a diamond ring, a boat, maybe.
Is this Is this Is this stuff regulated or you guys What are you doing here? Uh sort of. Sort of?
Jesus Christ, the spread on these is huge. Yeah, and that's the point. That's What's your name again?
Mine? Jordan Belfort. Jordan, what do you get on a blue chip stock?
I make 1%. I did make 1%. Pink sheets, it's 50.
It's 50%? 50% commission? Yep.
For what? It's our markup for our services. So if I if I if I sell a stock at $10,000, my commission is 5,000 bucks?
If you sell $10,000 worth of this stock, I will personally give you a [ __ ] for free. And I hope it happens. All right, so now note is pretty cool, right?
Leo Leo did an amazing job. It was uncannily accurate, right? But notice in the beginning that first thing I say to the manager, I'm like, "Wow, the spread, meaning the commission on these stocks, is ridiculous.
It's like 50% commission. " So I'm saying to myself, you know, wait a second. So if I get someone to to buy $10,000 worth of stock, I make 5,000 bucks?
In my mind though, I was thinking, if I get someone to buy a million dollars of stock, I'll get Right? And he's like, "Well, no, rich people don't buy penny stocks. " He's like, "If you buy If you sell someone a penny stock, I'll give you a [ __ ] for 10,000 of penny stock, I'll give you a [ __ ] for free, right?
" Notice, rich people won't buy penny stocks, right? So the idea was you'd go to poor people and you'd sell them a little bit. Now, nor It didn't make sense to me.
Just so you know, when I first heard it, I was like, it didn't quite add up. I was like, "Why wouldn't rich people buy penny stocks? Rich people love to speculate.
They love to gamble. Maybe they're not going to put as much money into a stock like that, but they'll put something in, a lot more than $500, because remember, people who are very rich, well, when they make an investment, the investment has to be big enough to move their needle, so to speak. If they If they win, if they they're right, and they only invest $500, it doesn't change their lifestyle.
So, they have to invest more to get a result that matters to them, right? So, immediately, I'm thinking, why wouldn't I just sell penny stocks to rich people? Normally, I would have fought the guy right there, like I said, "Wait a second, I believe you're wrong.
" But, at that moment in time, I was so distraught, so down on myself, cuz remember, I had declared bankruptcy in the meat business, and now Wall Street had gone out of business. I'm like, a two-time loser. I'm 23, 22 years old.
I'm like, I thought I had like the Midas touch in reverse. You know, the Midas touch is the golden touch, right? I thought I had the Midas touch in reverse.
Everything I touched turned to [ __ ] right? So, when I went to work at this the place, the Investor Center, in the back of my mind, it didn't really make sense to me that rich people wouldn't buy penny stocks. But, I went along, as you saw in that first pitch, I knocked it out of the park.
That was the biggest penny stock trade in history for the company, right? And then, over the next few months, all these other kids started following me, and I helped them get better at closing, and I started teaching the system. The system did not have a name.
This is before the Straight Line. It was a really great training system. It had to do with tonality, sounding good, had to do with overcoming objections, right?
And eventually, the opportunity came for me to open up my own firm, which I did after a little bit of thought, though, cuz I was nervous after my first bankruptcy. That my first bankruptcy had almost formed a limiting belief in me. I was like, "Maybe I'm not meant to be a businessman.
I'm just a great salesperson. " So, always remember those limiting beliefs when you fail can be very, very insidious, right? Either way, I broke through that.
I opened up my own firm and I began doing what I was doing at the small firm, the Investors Center. I was selling penny stocks to average moms and pops. And my 12 guys, as I said, were making about $10,000 a month and everything was going fine.
Until one morning, I'm lying in bed and whoop, the light bulb goes off. I'm like, wait a second. Now, like what why am I only calling average moms and pops?
I'll call rich people, too. Let me see if that works. Now, it's now that I had some success under my belt, I went back to that first day and said, "It never made sense to me.
Let me try to experiment and see what happens. " So, what I did is I kept the firm running as it was and I pulled one guy, Danny, the Donnie Hill character, right? It's from the movie.
And I had the two of us experimenting with calling rich people and trying to sell rich people, businessmen, penny stocks. I bought a list of leads called Dun & Bradstreet leads. It was a list of about a million of the wealthiest people in the United States, all right?
Business owners with large companies. And we began calling and to my own shock, no one would buy penny stocks. Really shocked me.
So, I was like, all right, well, maybe it's the price. People think it's 10 cents or 20 cents, it must be a piece of [ __ ] Who would buy? So, I said, "Let me try something else.
Let me try to sell them instead $6 stocks. " Because the way a stock, and this is unimportant, but in the financial world, you can actually change the price of a stock by doing what's called a split. You could can a forward split or a reverse split.
When you do a forward split, which is very common, a stock that's $100 would be split in half, it would become a $50 stock, but you have twice as many shares outstanding. Same company, each share has the same value, but you reduce the price, so it's more attractive to the average investor. Make sense?
In other words, people might not want to buy a stock that's $100, they're more likely to buy a stock that's $50. So, you do a forward split. A reverse split is the opposite.
When you have a stock that's say a dollar, and you want to make that stock $5, cuz people don't want to buy stocks that cheap, they split it back up with one for five reverse split, and now you have a $5 stock, but with 1/5 as many outstanding shares. You don't have to understand, but it's simple math. The point is is I said to myself, maybe just by the sheer pricing of this, like it's 50 cents, people don't think it's a good company.
They think it's a piece of [ __ ] right? So, I tried that. And I did a one for 12 reverse split.
I brought the price up to six bucks a share of this little company. It was a small entertainment company called Ventura Entertainment, and I began pitching this $6 stock. And once again, to my shock, almost nobody bought.
Few people, but not many. And that really shocked me. I I didn't know what was going on, cuz I sounded my my pitch was great, no one bought.
And then one day, maybe a few days later, I'm just lying in bed, it's always in bed when I get these great brainstorms, another idea. I'm like, wait a second, I know what's going on. And the whole thing hit me.
When I was working at LF Rothschild, think about it, Rothschild is one of the most well-respected, prestigious banking names in the world. So, you were Jordan Belfort, they didn't know who I was, right? So, I was someone they were unfamiliar with, but I'm calling on behalf of L.
F. Rothschild, so they've heard of Rothschild, and I'd be selling them a big stock like IBM or Microsoft or Exxon. You get it?
You were selling them stocks that they heard of. So, watch. You were calling from L.
F. Rothschild, check, they heard of that. You were selling them stock in Exxon Oil, check, they heard of that.
And you were Jordan Belfort, that's it, they hadn't heard of you. So, two out of three are in your favor. One out of three is working against you.
Now, let's look to what it was happening at Stratton. I was Jordan Belfort, someone they never heard of before, calling from Stratton, a brokerage firm they never heard of before, selling Ventor Entertainment, a company they never heard of before. Three strikes and I was out.
You get it? This is very, very important for when it comes to understanding the straight line and why you're having problems closing over the phone right now. So, please pay close attention to all the chain of events that I'm about to explain.
It's very, very important for your understanding. Once you get this, by the way, you're almost halfway there. It's a lot more to learn, but this is so crucial.
You get it? So, I'll repeat. When I was at L.
F. Rothschild, there were these three things happening, three. One, they heard of the company that I worked for, check.
Two, I was recommending a stock they were familiar with, check. Three, me, the broker, they hadn't heard of me, right? Yeah, it would have been better if I known the person personally and we, you know, our kids had gone to the same school, but no, that that didn't exist.
We were calling all over the country, people we never met before, but two out of three were in my favor. Good enough to close an account and many of them. Now, the dynamic in the penny stock world at Stratton, you were Stratton Oakmont, no one heard of Stratton, selling Ventura Entertainment, no one heard of that from a broker, Jordan Belfort, never heard of that yet.
Three strikes, as they say, and you're out. It's a baseball term. Three strikes and you're out.
And that was the breakthrough. So, what I did, I said, "Okay, I know what I have to do. Number one, rather than starting off this conversation by trying to sell them something that they never heard of before, something they were unfamiliar with, meaning Ventura, let me start by making the first sale something that is brand name recognition.
Let me start by selling them a blue chip company. " Now, back in the day, I chose a company named Eastman Kodak. Now, you might not have heard of Kodak cuz they're now out of business, but back then, in the late '80s, they were one of the bluest of the blue chip companies.
They were in the camera and film business, right? Before digital photographs put them out of business. Kodak was a blue chip stock and they were being sued by a company named Polaroid for patent infringement.
All right? So, in response to that, the stock had become depressed. Anyway, my idea was to pitch them Eastman Kodak, which everybody had heard of, and then, as far as Stratton goes, rather than trying to just say, "Hey, I'm calling from Stratton Oakmont, you don't know us, we're brand new," I came up with a way of explaining Stratton that made it seem like it was a positive that they hadn't heard of us.
My exact pitch was something like this. Hey, it's Jordan Belfort calling from Stratton. You might not have heard of us before because for the last 10 years we were strictly an institutional block trading firm dealing with the select group of banks, insurance companies, and pension funds.
However, sir, we recently opened up our doors to the more substantial private investor like yourself and all I want to do right now, with your permission of course, is send you some information on my company, Stratton Oakmont, and then get back to you down the road next time we're making a recommendation to our core client base. Does that sound fair enough? Pretty good memory, right?
That was the pitch almost verbatim. See, what I did I said, you probably haven't heard of Stratton because that's my justifier now why you haven't. For the last 10 years we were strictly an institutional block trading firm dealing with the select group of banks, insurance companies, and pension funds.
However, we've recently opened up our doors to the more substantial private investor like yourself. So, it all made sense now, right? Ah, they actually are a prestigious company.
They just were not doing business with individuals, they were only dealing with other banks and insurance companies. And then I actually would use that later on to help close the sale. And they've only recently opened up their doors to substantial private investors, a little compliment like them.
You get it? That's called reframing. I took a negative and turned it into a positive.
And here's the truth. It was true. In other words, Stratton had been in business for 10 years and they were doing trading.
They were block traders. They would trade institution to institution. They were not very good at it.
They were a shitty little company, but the point was I came up with language that wasn't lying. It was the truth, but it framed it made it seem great. I referred to that in straight-line terminology as the truth well told.
Meaning, there are many ways for you to explain Diamante Insurance. There's many different strategies, many different ways you can go about saying, "You might not have heard of Diamante before, but and then what is that but? There's many ways to explain Diamante, many, many ways, right?
But guess what, guys? One of them is the best. There's one way that you can explain what your company is, when it was formed, why it does what it does.
There's one way that is the most compelling way, that sounds the best, that makes people trust you, that makes people want to do business with you. And your job here, and what we do with the straight-line system, is we and we show you step by step how to extract that story, that truth well told, so you have that right in front of you and you use it every single time of how you explain your company. And when you do that, it's incredibly, almost shockingly effective.
But that's only 1/10 of 1%. That's a a side note to the straight line, but it's an important one. You reframe.
So, we always have this Oh, you might want to write this down. We always have an overarching principle called the truth well told. Meaning, you do not want to lie.
You don't want to exaggerate. You don't want to make things up and lie to people about your company. That's not what you do.
Rather, you find the best version of the truth that sounds good, that makes sense, that frames you in the best possible light without lying or exaggerating or breaking any laws. It's the truth well told. That's what you do.
So, that's what I did at Stratton. I came up with this way of explaining why you haven't heard of us before. So, now watch what happens.
Now, you're calling Stratton Oakmont get it you're getting a call. Imagine you're the guy, you're the you're the investor. You're getting a call from Stratton Oakmont and yeah, you never heard of them before, but you now know why because for the last 10 years they were dealing with the own only dealing with the firm and you also lower your voice and and by using tonality, you now make this sound like it's a really great thing.
Say, "Yeah, might not have heard of Stratton for the last 10 years. We were strictly an institutional block trading firm dealing with a select group of banks, insurance companies, and pension funds. Now, that's one way to say it.
How about you probably haven't heard of us because for the last 10 years we were strictly an institutional block trading firm dealing with banks, insurance companies. " If you say it that way, no one's going to care. But by applying these tonalities the right way, all of a sudden, it becomes a very important, very powerful statement you're making.
You get that? You see, when we communicate, it's not just what we say, it's how we say it. What tonalities we use and of course when we're in person or on Zoom calls, our body language.
Those three things, the words that you say, the tonality in which you say them, and your body language, those three things, they make up human communication. And what's happening with many of you right now is you focus the vast majority of your communication on the words. And ironically, you're almost always using the wrong words.
Separate issue, we'll get to that later with scripting here, but the point is you typically are not using the right words, meaning you're not finding that truth well told. What is that story, that high-level story that explains everything and puts it in the best possible light? This is an absolute must if you want to close at the highest level.
I'll show you how to do that. And now lastly, so again, we have now a company, Eastman Kodak, that they all had heard of. And the broker works for a company that now has a makes a lot of sense, it's prestigious, right?
They only hadn't heard of the broker, me in this case. Now I'm back to where I was, two things in my favor, one working against, check. And now suddenly, the possibility to close is there.
