moneyFYI
Financial Freedom Is Merely Organized Common Sense
What Can You Learn About Business From Successful People?
Not everyone will want to have a job. Some people want to own their own business. They see success and want to emulate it.
It is a mistake to treat single examples as representing the whole. It is especially wrong when you study how someone has been successful in business and learn all you can about their technique.
Success at anything is always contextual. Studying the successful will always yield an incomplete context. Some things you need cannot be learned, only refined. It’s like a football coach in college. “You can teach them to block, you can teach them to tackle, you can teach them to throw and catch the ball. You can’t teach them to be 6’3” and 230 pounds.”
You never see enough to decide. The meaning is that if you only know what happened, you know nothing. Because you don’t know what did not happen. No context.
What is survivor bias?
It is a method of thinking that focuses solely on what you can find to study. The survivors. When we study the survivors we find several contextual things that are so easy and so numerous, we must assume they work.
Begin in a garage. That is nearly certain to work. Harley-Davidson, Hewlitt -Packard, Apple, Amazon, Disney, Google, Lotus, and Mattel all started that way.
Drop out of college. This is even better than the garage idea. The list here includes Bill Gates, Steve Jobs, Howard Hughes, Ted Turner, Mickey Arison, David Geffen, Ralph Lauren, Michael Dell, Sergey Brin, Larry Page, Mark Zuckerberg, Larry Ellison, and John D. Rockefeller.
Clearly, the key to success is to drop out of college and begin your business in a garage.
Understand the idea of baseline probability
We tend to pay attention to what we see, but the probability of success doesn’t work that way. We need to notice the invisible as well. Think of all the people who dropped out of college and did not become multi-millionaires. Think of all the people who tried to start a business, some even in a garage. Where are they now. They are still there somewhere and there are likely 100,000 times as many of them. We just can’t see them.
It is like that in almost everything we choose to look at for guidance. There are vastly more people who tried and did not succeed than there are people who did.
Success in business happens in much the same way trees propogate. Each tree produces thousands of seeds, maple keys in my neighborhood, yet nearly none become a tree.
So where do you start?
With you.
What skills do you possess that can be harnessed to start and grow a business. You won’t have them all in the beginning, but if you see their need, you can work toward having them, improving ones you have, or hiring people to do the other parts.
Are you willing to work.
Not a few hours a day. Not 40 hours a week. Many of the business people I know work long hours. One told me people can work 10 hours a day, 6 days a week almost forever. His view is if you go much beyond that you won’t stay healthy, keep relationships, or have time to learn or network outside your business.
How disciplined are you?
Businesses demand attention. Some things must be done even though you don’t especially want to do them. If you procrastinate, or do things that would be nice to do ahead of what must be done, the business will be weaker than it needs to be. People who have a special skill will tend to spend their time doing what they like. Engineers like to tinker and avoid sales. Sales people like to meet people and are not good at keeping the books. People who are good at keeping the books, don’t like being the leader. People who like being the leader often trust others too much and the work others do is inadequate.
Good business people have a large “skill stack.” They aren’t the best at anything but they are good at many things. They can do the work needed in many areas and they can tell if the ones they hire are doing their job.
Can you build a team?
There are few one-person businesses. You should hire good people to do the things you can do but are not the best at. You want to evolve to doing what you are the best best at. The things only you can do. Could be inventing, could be organizing, could be the visionary, could be sales. Who knows until you try?
In a successful business the executive function is visionary and allocating resources. In your nascient business, resources are much more than money. Time, hiring ability, supervising, sales, and finding people to lend you the money you need to grow, all matter.
The other team building need is motivating people to follow the vision. Excitedly follow. Any new business goes through a period where the only people they deal with are early adaptors. Early adaptors like the excitement of new product and they like to deal with people with the same excitement. You can hire people who “just work here” later when the mass of customers is using what you provide.
Add refined skills later
Once you are underway with your visionary, high energy, dynamic organization, you can take a look at what others did to be successful.
Study Steve Jobs as a visionary with huge product design and quality skills, and a way to motivate others.
Study Bill Gates as an immensely curious person, with a way to know what the world will want a decade before the world itself knows. Gates also was very good at hiring the right people and letting them do what they do best. With some supervisory input.
Study Jeff Bezos as a guy who understood you don’t have to make a profit to grow a large business but you need cash. Bezos is interesting in several ways. He started in books as the precursor to a gigantic online retail business. Why? Because books are easy to store and ship, and hard to break. Once Amazon developed software to handle inventory, order entry, shipping and the like, what did he do next? He created Amazon Services. He sold access to Amazon’s computers and software. Others can use the most sophisticated software in the world to handle their very difficult problems. From Amazon’s viewpoint they had to invest the money but the reslurce wasn’t fully used. Selling the surplus is a powerful tool.
You will be forced to understand the difference between fixed cost and variable cost to get it. Amazon had the fixed cost of software and servers anyway and they could sell that surplus for huge multiples of the variable cost to handle another transaction. Like a musician who spends $5,000,000 and 18 months to create the perfect performance. The first CD costs $5,000,000.50, and all the others cost $0.50 each.
Study Edwin Land. He invented the polaroid camera and before that polarized sunglasses. He never was the chief executive at Polaroid. He was the chief scientist. Polaroid cameras in their day were amazing. The camera itself was little more than a container for the film. The film was an enormous achievement. One of the most difficult challenges in chemistry. Do you think Hewlett-Packard got the idea of making their money on toner and ink from Land. Maybe. It is a sound business proposition to supply machines at cost or so and make the money on the consumables. I had a client who supplied firearms to the military. His view was he could give them the guns if he was assured of selling them ammunition.
Study Charles Schwabb. Use developing technology to supply what had been an overpriced service.
Study Jim Ling. He built a giant conglomerate in the 60s and lost it in the 70s. He wrote a book about LTV Corp. It’s subtitle, ” I was right twelve times and only wrong once.” All business success is contextual. Skills from one don’t always translate to success in another. Avoid hubris.
What can you learn from successful people?
In the beginning not much. You would be better to learn what to avoid instead of what others have done for success. You need to do what you do best for success and avoid the pitfalls. Avoiding the obvious mistakes is a skill. If you don’t have huge losses that kill your enthusiasm early, you have a chance.
Nick Magguilli offered a thought. “Every millionaire works hard. Every billionaire is lucky.”
It’s okay to believe in miracles, just don’t organize in a way that requires them.
I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.
Please be in touch if I can help you. don@moneyfyi.com 705-927-4770
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