Archive for the ‘Income Inequality’ 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.

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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 many billionaires are there? How many are self-made?

June 7, 2016

With all of the vitriol now being cast at rich people, and with all of the broad-brush policy proposals to redistribute their wealth … you’re probably guessing a pretty big number, right?

image

Well, Forbes reports about 1,800 billionaires worldwide  … holding $7 trillion…   or roughly 7% of the total global gross domestic product.

1.800 isn’t a particularly big number, right?

But, even I concede, they skew the distribution of wealth.

The billionaires always seem to get caricatured as Saudi princes, one of Sam Walton’s descendants  or Paris Hilton – all just lucky by birth and clearly undeserving.

Well, PwC’s think tank dug deeper into the numbers and uncovered some facts that tend to disrupt the popular narrative …

(more…)

Putting over-sized CEO pay into context …

February 25, 2016

First, I’m no apologist for CEO’s who rake-off outrageously large paychecks that no reasonable person can classify as “earned from value added”.

And, I understand that politicians like to huff, puff, lie and throw stones at fat cats.

But, when Hillary goes into her hypocritical rants about overpaid CEOs I gotta shake my head.

Prof. Mark Perry posted a great analysis debunking Clinton’s frequent riff about CEO pay being “300 times that of the average worker.”

Cutting to the chase, Perry crunched some BLS data and concludes that the ratio is more like 4-1/2 to 1 … $216,000 to $49,000

 

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Why the difference versus the 300 to 1 campaign rhetoric?

(more…)

Somebody, please explain Hillary’s firewall to me …

February 24, 2016

OK, Hillary has a firewall against the Bern in South Carolina because of that state’s Black & Hispanic populations.

Her popularity with Blacks is part historical for Democrats, part a residual from Bill Clinton and part from President Obama’s 90% approval rating among Blacks:

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Source: Gallup

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I get that.

And, I hear Hillary & Bernie ranting about income inequality, implying that it’s all the Republican’s fault.

They seem to be forgetting that President Obama has been riding herd on the economy for 7-1/2 years.

Yes, he inherited the “worst recession since the Depression”, but look what has happened since the recession ended.

Median household income for Whites has pretty much leveled out.

But, median household income for Blacks has continued to fall off.

In fact, the median household income gap between Blacks & Whites has widened since the end of the recession under President Obama’s watch.

 

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Source: CNBC

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So tell me, why the sky-high approval rating and Hillary’s firewall?

I must be missing something.

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#HomaFiles

Follow on Twitter @KenHoma            >> Latest Posts

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The American Dream is dead … err, not really.

January 6, 2016

Over the past couple of weeks, there has been an endless series of media spots about some Pew Research data demonstrating, beyond the shadow of a doubt, that the middle class is shrinking.

A common headline played off the rich are getting richer. theme:

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Pretty dire, right?

Not so fast.

Digging deeper into the Pew numbers paints a different picture…

(more…)

Bloomberg: There’s a gender gap in MBA pay … and, it’s a big deal!

November 4, 2015

Biennially, Bloomberg (Business Week) ranks MBA schools based, in part, on surveys of employers, current students, and alumni.

This year, they used the alumni sample to assess career progression – how well MBAs are doing (and getting paid) a few years after their b-school graduation.

The general finding: “The data shows that 6 to 8 years after graduation, the typical alum makes $169,000 … triple their pre-MBA compensation.”

That’s pretty good, right?

But, there’s a big divide.

“Within a few years of graduation, women with MBAs earn lower salaries, manage fewer people, and are less pleased with their progress than men with the same degree.”

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What the heck is going on?

(more…)

Daily Mail: “Chelsea takes the plunge” >>>

August 21, 2015

WARNING: Disturbing Content

We’re temporarily suspending the HomaFiles usually high editorial standards … this is a story that must be told.

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Earlier this week, the UK’s Daily Mail led it’s coverage with the following story:

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The article has so many angles that it’s a ‘must view to believe ” …

(more…)

Want to be rich?

August 14, 2015

The most recent Census Bureau data … sorts households by income quintile … the highest quintile are “rich” households and the lowest quintile are “poor” households.

A fundamental conclusion drawn from the data: if you want to be rich, it helps to have a job and be married to someone who has one, too.

image .

Let’s dive into some of the details …

(more…)

Rich man: “What inequality?”

August 12, 2015

According to a CNBC summary  of a study published in the Journal Psychological Science …

The richer you are, the more likely you are to think that others are wealthy, too. 

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According to the study’s authors, the reason for the misconception is simple …

(more…)

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

=====

How many billionaires are there? How many are self-made?

July 30, 2015

With all of the vitriol now being cast at rich people, and with all of the broad-brush policy proposals to redistribute their wealth … you’re probably guessing a pretty big number, right?

image

Well, Forbes reports about 1,800 billionaires worldwide  … holding $7 trillion…   or roughly 7% of the total global gross domestic product.

1.800 isn’t a particularly big number, right?

But, even I concede, they skew the distribution of wealth.

The billionaires always seem to get caricatured as Saudi princes, one of Sam Walton’s descendants  or Paris Hilton – all just lucky by birth and clearly undeserving.

Well, PwC’s think tank dug deeper into the numbers and uncovered some facts that tend to disrupt the popular narrative …

(more…)

Want to be rich?

June 17, 2015

The most recent Census Bureau data … sorts households by income quintile … the highest quintile are “rich” households and the lowest quintile are “poor” households.

A fundamental conclusion drawn from the data: if you want to be rich, it helps to have a job and be married to someone who has one, too.

image .

Let’s dive into some of the details …

(more…)

Who really benefits from increases in the minimum wage ?

July 9, 2014

An article in the WSJ this week is causing a bit of a stir.

Titled “Who Really Gets the Minimum Wage”, the report concluded that Minimum wages are ineffective at helping poor families because such a small share of the benefits flow to them.

Specifically, “Obama’s $10.10 target would steer only 18% of the benefits to poor families; 29% would go to families with incomes three times the poverty level.”

Hmmm.

How does that happen?

 

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The essence of the dynamic: counter-intuitively, low-wage workers and low-income (i.e. “poor”) families are not the same folks.

According to the article, data from the U.S. Census Bureau show that there is only a weak relationship between being a low-wage worker and being poor.

Three reasons for that:.

  1. Many low-wage workers are in higher-income families—workers who are not the primary breadwinners and often contribute a small share of their family’s income.
  2. Some workers in poor families earn higher wages but don’t work enough hours (and have hours cut when the minimum wage goes up)
  3. About half of poor families have no workers, in which case a higher minimum wage does no good. This is simple descriptive evidence and is not disputed by economists.

Bottom line: Not much help to the well-intended anti-poverty movement.

There’s another “non-poor” group that benefits when the minimum wage is raised..

Glance at the picture above and see if you can guess who that is.

(more…)

Careful, or you may land in the top 1%.

May 13, 2014

The new liberal bible is by a French economist (Thomas Pinetty) “proving” that capitalism causes income & wealth inequality.

So that you don’t inadvertently land in the evil 1%, MarketPlace.com recapped some research on what it takes to make it to the top 1%

The conclusion: The top-earners club isn’t quite the bastioned, unreachable world it’s been painted out to be …  a household income just north of $300K gains entry …  and there is a “strong sense of fluidity in terms of folks entering the top income percentiles,”

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Note the big spike during the dot-com bubble ….   garage-tech entrepreneurs flooded the top 1%, pushing the entry level to almost $450,000  … showing that all it takes is an idea and an IPO to make the top 1%.

And, these entrepreneurs also demonstrated  the fluidity of the top 1% …. most of them aren’t there now.

Also, note that the 1% entry level in 1993 – in nominal terms (i.e. not adjusted for inflation) — was higher than it was in 2010 – also in nominal terms.

Here’s what I found most interesting …

(more…)

First comes love, then comes marriage …

January 15, 2014

… then comes Daddy with a baby carriage.

The verse was drummed into my generation, but I bet many of you are too young to have ever heard it, right?

 

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Well, the essence of the rhyme’s message was captured in a WSJ op-ed this week.

Ari Fleischer – one of Bush’s press secretaries wrote:

“The U.S. is steadily separating into a two-caste system with marriage and education as the dividing line. In the high-income third of the population, children are raised by married parents with a college education; in the bottom-income third, children are raised by single parents with a high-school diploma or less.”

A better and more compassionate policy  to fight income inequality (than redistributing wealth from working families) would be helping the poor realize that the most important decision they can make is to stay in school, get married and have children — in that order.

One might dispute the conclusion, but here are some facts …

(more…)


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