Day: July 10, 2009

Trade secrets of a Tycoon

Wisdom from a rich man, third hand but sharp and memorable as your own tattoo.

This article was originally published by Marcus Padley in his ‘The Insider’ Column. I have taken the liberty of reordering the points but otherwise is is unchanged. Thanks Marcus, a quality read as usual. I have added notes in brackets only.

Tough lessons, sometimes brutal, always true. If you do want to be a commercial success, these will certainly help. Then again after reading this you may not be willing to pay the price.

1. Patience is not a virtue – it is a waste of bloody time. Time is the most valuable of commodities and you will fail without it. No one got rich working 9 to 5 and respecting weekends. You can’t build a business 9 to 5. It takes total immersion. Every activity becomes a time-versus-money equation.

2. There is no substitute for making mistakes. Mistakes compress learning. [Some people say you should try to get other people, like your first few employers, to pay for your mistakes, but beware if you make too many you may never have any more employers]

3. Education is paramount. The more you learn the more the lights come on and the more you realise how many other lights are off. Knowing opens doors. And knowing what you don’t know is as important as knowing what you do.

4. You can not do everything yourself. Lucky then that the most valuable and available capital in the whole world is human capital, employees. The willingness of highly capable and educated people to work for a certain rather than variable sum is the most exploitable, available and cheap investment you will ever make. Invest in the markets and you concern yourself with returns of zero to 20 percent per annum and possibly even a loss. Invest in people and your return can be hundreds of per cent. There is simply no better return on capital “employed”.

{Beware governments who create too many barriers to businesses employing and deploying human capital, a poor balance will ultimately destroy the quality of life it was intended to protect.]

5. There is education and there is qualification. Set out in pursuit of a qualification and you will deliver yourself to the corporate sector for exploitation. Set out for an education and you will develop beyond that. To take it to the extreme: Why do exams? You already have everything you need.

[Qualifications are valuable mans of benchmarking but take care to see beyond them when identifying talent for your business].

6. Starting with nothing is good. Who is the better competitor – someone fat and comfortable or someone lean and hungry, someone driven, focused, bold and prepared to take risks?

7. Debt is king. You’ll never [?] make big money without it. Do not be afraid of debt. Liabilities drive you too the most herculean of efforts. [Debt can be of course be non-monetary obligations, moral and otherwise].

8. Think beyond the square. Set an unachievable goal. Shoot for the stars and hit the moon. Pictures of Porsches on the ridge. All that sort of stuff. [Start a movement not a business some commentators would say. The key is make your motivation and goal as large as possible and only limited by your imagination.]

9. Growing a business organically will only ever achieve incremental returns. Take the big steps and the little steps will look after themselves [?]. there is more money made is a room [e.g. investment bank trading room] in an hour than is made in a factory every day.

10. Your business [model] has to be scaleable. You cannot make exponential money without exponential growth. A pop star making an album is a scaleable business and why pop stars are rich. After 100 years in the game Morgan cars are still in the same factory and have a waiting list. They don’t sell cars they ration them The business is not scaleable.

Easy isn’t it? So, do you still want to be rich?

Share your secrets with others by commenting below.