Archive for the ‘Entrepreneurship’ Category

How do self-made billionaires self-make their billions?

June 8, 2016

Yesterday, we posted that there are about 1,800 billionaires in the world and that about 2/3s of them are self-made … not just born lucky.

According to a PwC study, the self-made billionaires usually started at a big company, some were fired from the big companies, and most became serial entrepreneurs.

Usually they got on the map with their first or second venture, but built their wealth through a series of successive (and highly successful) ventures.

image

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The PwC study also identified 5 traits that were relatively common across the self-made billionaires.

 

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Broadly speaking, PwC says concludes that most business managers are “performers” – linear logicians who are good at execution .

The self-made billionaires are “producers” who  look at the world from different angles — allowing them to spot opportunities and to turn good ideas into great businesses.

More specifically, the PxC team concluded that “most self-made billionaires – the “producers” –practice five habits of mind — ways of thinking and acting that generate uncommonly effective ideas and approaches to leadership.”

The 5 traits:

1. Ideas: Empathetic Imagination

The producers typically worked in their field long enough to have an awareness of critical trends, empathy for customers, and knowledge of existing practices.  Then, they added a healthy dose of imagination to change the game.

2. Time: Patient Urgency

“The creation of massive value in an industry does not happen overnight. The billion-dollar idea often comes after years, even decades, of commitment to a market space. Skilled producers learn to be patient. They know how to wait for the right idea at the right time. But once they hit on a compelling idea, they have a bias toward action that compels them to take urgent steps.

3. Action: Inventive Execution

Many executives take product design and go-to-market strategies as givens. “The business model, pricing, functions, sales pitch, and deal structure are treated as inherited, predefined by the models, costs, and pricing that already exist in the company and industry.“

Producers redesign opportunities everywhere – both in the product – broadly defined – and the implementation.

4. Risk: Relative, Not Absolute

“Producers, in general, are distinguished not by the level of risk they take, but by their attitude about risk. Most people measure risk in absolute terms: Will this business succeed or fail? Producers view risk in relative terms: Which option presents the greatest opportunity? If the opportunity is right in a risky venture, they’ll look for ways to mitigate risk”

5. Leadership: Teaming with Performers

“The idea of the solo genius is so pervasive in the way people talk about and think about extraordinary success that it obscures the real story of how good ideas become great businesses. Self-made billionaires are not alone. Producers have the ability to see beyond the parameters of what exists today to imagine new opportunities. Performers, in turn, have the ability to optimize and achieve within known parameters. Value creation requires both.”

Producers surround themselves with producers …

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Bottom line:

Yeah, wealth distribution is skewed. No argument there.

But, it’s wildly misleading to characterize the richest of the rich as folks who were just born lucky.

The majority of the made their own luck … and earned their wealth.

Sorry, if the facts don’t match the popular narrative …

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Tomorrow, take the Producer Quiz …

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#HomaFiles

Follow on Twitter @KenHoma            >> Latest Posts

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How do self-made billionaires self-make their billions?

July 31, 2015

Previously, we posted that there are about 1,800 billionaires in the world and that about 2/3s of them are self-made … not just born lucky.

According to a PwC study, the self-made billionaires usually started at a big company, some were fired from the big companies, and most became serial entrepreneurs.

Usually they got on the map with their first or second venture, but built their wealth through a series of successive (and highly successful) ventures.

image

=====

The PwC study also identified 5 traits that were relatively common across the self-made billionaires.

 

======

Broadly speaking, PwC says concludes that most business managers are “performers” – linear logicians who are good at execution .

The self-made billionaires are “producers” who  look at the world from different angles — allowing them to spot opportunities and to turn good ideas into great businesses.

More specifically, the PxC team concluded that “most self-made billionaires – the “producers” –practice five habits of mind — ways of thinking and acting that generate uncommonly effective ideas and approaches to leadership.”

The 5 traits:

1. Ideas: Empathetic Imagination

The producers typically worked in their field long enough to have an awareness of critical trends, empathy for customers, and knowledge of existing practices.  Then, they added a healthy dose of imagination to change the game.

2. Time: Patient Urgency

“The creation of massive value in an industry does not happen overnight. The billion-dollar idea often comes after years, even decades, of commitment to a market space. Skilled producers learn to be patient. They know how to wait for the right idea at the right time. But once they hit on a compelling idea, they have a bias toward action that compels them to take urgent steps.

3. Action: Inventive Execution

Many executives take product design and go-to-market strategies as givens. “The business model, pricing, functions, sales pitch, and deal structure are treated as inherited, predefined by the models, costs, and pricing that already exist in the company and industry.“

Producers redesign opportunities everywhere – both in the product – broadly defined – and the implementation.

4. Risk: Relative, Not Absolute

“Producers, in general, are distinguished not by the level of risk they take, but by their attitude about risk. Most people measure risk in absolute terms: Will this business succeed or fail? Producers view risk in relative terms: Which option presents the greatest opportunity? If the opportunity is right in a risky venture, they’ll look for ways to mitigate risk”

5. Leadership: Teaming with Performers

“The idea of the solo genius is so pervasive in the way people talk about and think about extraordinary success that it obscures the real story of how good ideas become great businesses. Self-made billionaires are not alone. Producers have the ability to see beyond the parameters of what exists today to imagine new opportunities. Performers, in turn, have the ability to optimize and achieve within known parameters. Value creation requires both.”

Producers surround themselves with producers …

=====

Bottom line:

Yeah, wealth distribution is skewed. No argument there.

But, it’s wildly misleading to characterize the richest of the rich as folks who were just born lucky.

The majority of the made their own luck … and earned their wealth.

Sorry, if the facts don’t match the popular narrative …

=====

#HomaFiles

Follow on Twitter @KenHoma            >> Latest Posts

=====

Big companies say: “Start me up” …

October 26, 2012

Punch line: There’s a quiet revolution happening in corporate America.

Big companies are applying startup strategies and tools to jump-start innovation and renovation.

istock_000000136484medium

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Excerpted from Fast Company’s, “4 Innovation Strategies From Big Companies That Act Like Startups”

Big companies that behave like small startups focus on two things. First, they accelerate the speed of innovation, just like a Silicon Valley incubator. Second, they give internal businesses and teams an outside-in perspective.

Here are four strategies that anyone can use to start-up … innovation:

  1. Follow customers home: Intuit’s innovation success is tied to a value for finding and savoring … unexpected insights about customer needs, problems, and desired experiences. That’s why the company does customer “follow-me-homes,” … [to] immerse themselves in the customer’s natural environment.
  2. Tap outside collaborators: Kimberly-Clark knows that insular thinking is the death knell of teams and organizations. That’s why they … recruit a small group of “thought leaders” to … deliver strategic and practical insight that would otherwise take months to gather.
  3. Stay small: Big innovations don’t necessarily have to begin by taking big risks. Intuit, for example, … [doesn’t wait] around for senior leadership to sponsor and fund the next big idea but rather rapidly tests ideas to identify the things teams can do to have the biggest impact.
  4. Use the best, invent the rest: Speed and agility come from realizing we don’t have to invent everything ourselves. The strategy is to use the best … and then adapt it or combine it with other approaches that work within the specific company context.

These big-company strategies aren’t about ivory-tower innovation departments … they’re focused on pushing entrepreneurial thinking and practices into the places they’re needed the most–inside established businesses.

Edit by JDC

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Teachers making millions of dollars … don’t I wish

October 5, 2012

Punch line: Here’s an angle … An online lesson-plan marketplace allows teachers to make thousands (or millions!) selling lesson plans to other teachers.

Anybody want to buy a PVP syllabus?

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Excerpted from businessweek.com’s “How a Teacher Made $1 Million Selling Lesson Plans”

Capture

Deanna Jump is not a trust fund baby. She never married into money and she has never won the lottery. But in the past year-and-a-half, the 43-year-old kindergarten teacher has earned more than $1 million. Her unlikely strategy: selling catchy kindergarten lesson plans to other teachers.

Jump is just one of 15,000 teachers currently marketing their original classroom materials through the online marketplace, TeachersPayTeachers (TPT). Since signing on to the site, she has created 93 separate teaching units and sold 161,000 copies for about $8 a pop.

To be fair, no one else on TPT has been as wildly successful as Jump, but at least two other teachers have earned $300,000, and 23 others have earned over $100,000, according to site founder Paul Edelman.

Edelman launched TPT in 2006 after sinking grueling hours into planning his own classes. “To get ahead, Edelman and his colleagues swapped ideas and lesson plans. They also perused online sites for helpful resources, but found only sub-par, outdated materials.

After four years in the classroom, Edelman hit upon the idea for an online lesson-plan marketplace. Soon after the launch, New York-based publisher Scholastic bought the site for a low six-figure sum. Over the next few years, TPT continued growing, though not fast enough to hold Scholastic’s interest. Edelman bought the site back in 2009.

Little by little, TPT began gaining steam. Today the site has 1.1 million active members and over the past year has seen enormous growth. Last month alone, TPT grossed $2.5 million in sales, up from $305,000 in August 2011. It has 10 employees working in customer service. Teachers pay an annual premium membership fee of $59.95 to sell materials on the site, and TPT takes a 15 percent cut of most sales.

Jump admits that her own success is partly due to keeping a popular blog that helps direct readers to her TPT materials. TPT’s “Follow Me” button has also been a boon. “I have over 16,000 followers,” she says. “So every time I post a new product, an e-mail goes out to those people and—literally within an hour—I’m selling, selling, selling.”

In the past three months, Jump, who earns $55,000 per year teaching, has collected $213,000 in TPT sales. The money has not changed how she lives day-to-day. If anything, she’s working harder than ever, putting about 40 hours a week into TPT projects, apart from her regular teaching schedule. So far, she’s used the money to pay off bills, send her daughter to college, and buy a handicapped-accessible van for her quadriplegic brother.

Edit by BJP

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Better vision: Warby Parker eyeglasses.

September 20, 2012

Punch line: Warby Parker, a luxury eyeglass company with a social component, has grown 500 percent by following a few easy guidelines.

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Excerpted from Inc., “How Warby Parker Grew So Fast: 3 Reasons”

Addressing a crowd of more than 550 entrepreneurs and business owners at the Growco conference, … the company’s co-founder, Neil Blumenthal, offered a bit of insight into how and why the company has grown so rapidly …

  1. Cut out the middle men: By working with a manufacturer in China, and designing the glasses themselves, Warby cut out the middle men and make the glasses far more affordable.
  2. Don’t overspend on unnecessary marketing: Instead of a five or six figure launch spend … Warby launched with two well-placed editorials in Vogue and GQ. The tactic was so effective that … within two weeks, they had sold out … and had a waitlist of 20,000 customers.
  3. It all comes down to company mission: When the company moved into its new offices a couple of months ago, it decided to knock down the walls of the office … “to institute mechanisms for people to learn on a regular basis.”

Edited by JDC
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The grammar of “You didn’t build that” …

July 26, 2012

Geez, I’ve been getting emails from folks explaining what the Orator-in-Chief meant by “You didn’t build that” …  all essentially repping the Obama Truth Team’s talking point:

“The President’s full remarks show that the ‘that’ in ‘you didn’t build that’ clearly refers to roads and bridges–public infrastructure we count on the government to build and maintain.”

Please.

image

Let’s drill down.

Remember, it was Obama himself who lectured the world that “They’re not just words. Words have meaning”.

So, let’s look closely at an analysis of the words:

The word “business” is more proximate to the pronoun “that” and therefore its more likely antecedent.

“Roads and bridges” is plural; “that” is singular. If Obama was talking about roads and bridges in a grammatically correct way, he would have said, “You didn’t build those.”

I know, cut him some slack … it was only his second campaign event without using his trademark teleprompter.

No.

No slack.

Why”?

Because he self-proclaimed that he has a “gift” for oratory.

In an  interview with CNN , Senate Majority Leader Harry Reid discussed a 2005 encounter with then-Sen. Barack Obama.

Reid had praised Obama for a speech he had just given.

The  newly-elected senator declared to Reid, “I have gift.”

As the WSJ quipped

Barack Obama is supposed to be the World’s Greatest Orator, the smartest man in the world.

Yet his loyalists want us to believe he is not even competent to construct a sentence.

Hmmm.

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P.S. Remember a couple of weeks ago when Obama kept up the Bain outsourcing riff even after the Wash Post gave his claims 3 Pinocchios?  For somebody who dishes it, he seems to have very thin skim.

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Tell my dad that he didn’t build this company …

July 25, 2012

The Orator-in-Chief is getting hammered for his remark “If you’ve got a business, you didn’t build that. Somebody else made that happen.”

It didn’t take long for Team Romney to pounce on the red meat.

I think the commercial is pretty well done …

       click to view

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Start-ups are cool … but these days, they don’t create jobs.

July 9, 2010

Interesting perspective from Intel’s Andy Grove: these days, ideas are still being developed in the U.S. but when they’re “scaled up” to production levels, the associated jobs go off-shore.

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Excerpted from Bloomberg BusinessWeek: How to Make an American Job Before It’s Too Late, Andy Grove, Jul 1, 2010

Since the early days of Silicon Valley, the money invested in companies has increased dramatically, only to produce fewer jobs.

Simply put, the U.S. has become wildly inefficient at creating American jobs.

The great Silicon Valley innovation machine hasn’t been creating many jobs of late — unless you are counting Asia, where American technology companies have been adding jobs like mad for years.

Startups are a wonderful thing, but they cannot by themselves increase employment.

Equally important is what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter.

Scaling isn’t easy. The investments required are much higher than in the invention phase. And funds need to be committed early, when not much is known about the potential market.

The scaling process is no longer happening in the U.S.  And as long as that’s the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs.

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Today, manufacturing employment in the U.S. computer industry is about 166,000 — lower than it was before the first personal computer was assembled in 1975. Meanwhile, a very effective computer-manufacturing industry has emerged in Asia, employing about 1.5 million workers — factory employees, engineers and managers.

For every Apple worker in the U.S. there are 10 people in China working on iMacs, iPods and iPhones.

The same roughly 10-to-1 relationship holds for Dell, disk-drive maker Seagate Technology, and other U.S. tech companies.

The job-machine breakdown isn’t just in computers.  U.S. employment in the making of photovoltaic films and panels is perhaps 10,000 — just a few percent of estimated worldwide employment.

Full article:
http://www.bloomberg.com/news/2010-07-01/how-to-make-an-american-job-before-it-s-too-late-andy-grove.html

Unleashing millions of entrepreneurs …

June 11, 2010

Tom “World is Flat” Friedman laments that there are now a dirth of start-ups which ultimately fuel any economy.

Here’s his Rx …

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NYT: A Gift for Grads: Start-Ups, Thomas L. Friedman, June 8, 2010

Good jobs — in bulk — don’t come from government. They come from risk-takers starting businesses — businesses that make people’s lives healthier, more productive, more comfortable or more entertained, with services and products that can be sold around the world. You can’t be for jobs and against business.

A surprising number of entrepreneurs and innovators have told me they had voted for Obama, and an equally surprising number of them now tell me they’re unhappy.

I think part of the business community’s complaint about Obama has merit.

This administration is heavily staffed by academics, lawyers and political types. There is no senior person who has run a large company or built and sold globally a new innovative product.

And that partly explains why this administration has been mostly interested in pushing taxes, social spending and regulation — not pushing trade expansion, competitiveness and new company formation. Innovation and competitiveness don’t seem to float Obama’s boat.

How can we unleash millions of entrepreneurs.

Curtis Carlson, the chief executive of SRI International, the Silicon Valley-based innovation specialists says he would create a cabinet position exclusively for promoting innovation and competitiveness. “Secretary Newco” would be focused on pushing through initiatives — including lower corporate taxes for start-ups, reducing costly regulations (like Sarbanes-Oxley reporting for new companies), and expanding tax breaks for research and development to make it cheaper and faster to start new firms.

I’d also cut the capital gains tax for any profit-making venture start-up from 15 percent to 1 percent.

I want our best minds to be able to make a killing from starting new companies rather than going to Wall Street and making a killing by betting against existing companies.

Full article:
http://www.nytimes.com/2010/06/09/opinion/09friedman.html

The 10 Commandments of Innovation & Entrepreneurship …

June 25, 2009

Ken’s Take: Kawasaki has a track record, so worth listening to. Note especially #1 re: mission statements and #5 re: rolling the DICEE

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Knowledge@Wharton, “Ten Commandments from Entrepreneurial ‘Evangelist’ Guy Kawasaki”, June 10, 2009

Guy Kawasaki  became the second software “evangelist” at Apple Computer, where his job from 1983 to 1987 was to convince people to create software for the Macintosh. Kawasaki fondly recalls his colleagues at Apple as visionary, driven and “arguably the greatest collection of egomaniacs in the history of California — though the record has subsequently been broken by Google.”

Here are Kawasaki’s “Ten Commandments” for innovation and entrepreneurship:

1. Make meaning, not money. “Most companies founded on the concept of making money pretty much fail …  focus on making their product or service mean something beyond the sum of its components “.  Nike “turned $2.50 of raw materials into something that stands for efficacy and power and liberation.  Apple has done it with the Mac and the iPhone.

2. Make a mantra, not a mission statement. Bland, generic company mission statements — about “delivering superior-quality products and services for our customers and communities through leadership innovation and partnerships” — serve no one  …  keep it short and define yourself by what you want to mean to consumers. FedEx is about “peace of mind.” To get everyone internally and externally on the same page, explain why your organization exists and how it meets customers’ needs and desires.

3. Jump curves. Innovating is harder than just staying a little bit ahead of competitors on the same curve. “If you’re a daisy-wheel printer company, the goal is not to introduce Helvetica in another point size. The goal is to jump to laser printer”.

4. In product design, “roll the DICEE.” That’s an acronym. “D” is for deep, which to Kawasaki means thinking about features that go beyond the norm. One of his favorite “deep” ideas: Fanning Reef sandals, which have a bottle opener built into the sole. “I” is for intelligence, as seen in the design of Panasonic’s BF-104 flashlight, which uses batteries of three different sizes to accommodate the random mix of extra batteries many people have around the house. “C” is for complete — or being not just a product, but including support and service. The first “E” is for elegance: Beauty matters, according to Kawasaki. The second “E” is for emotive. “Great products generate strong emotions: Think Harley Davidson, Macintosh.”

5. Don’t worry, be “crappy.” This doesn’t mean ship a bad product, but “your innovation can have elements of crappiness to it,” Kawasaki said. Twitter has a litany of flaws, but it is changing people’s habits.

6. Polarize people. Try to be all things to all people and you often ship mediocrity. The boxy Toyota Scion xB looks ugly to some people but very cool to its devotees.

7. Let 100 flowers blossom. You never know where the flowers will emerge, so let them grow. Innovations may attract unexpected and unintended customers. Think of Avon Products’ Skin-so-Soft cream, which became popular as a mosquito repellent.  Learn who’s buying your product, ask them why and give them more reasons. “That’s a lot easier than asking people who aren’t interested ‘why not,’ and trying to change their minds.”

8. Churn, baby, churn. Always improve. Listen to customers for ideas. Once the product reaches the hands of customers, it’s time to start listening to their feedback.

9. Niche yourself. Find your place. A product or service does not need to be unique if it delivers extraordinary value to a select group.

10. Follow the 10-20-30 rule when pitching to venture capitalists. That means no more than 10 PowerPoint slides, a limit of 20 minutes for the pitch, and using a 30-point font size in the presentation (to keep it simple). The goal of such pitches isn’t to walk home with a check,  it’s to “not be eliminated” from consideration.

Full article:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2258