For many entrepreneurs, the billion dollar valuation or exit, is the non-negotiable target they set for themselves. As of 2015, there are just over 1,800 (known) dollar billionaires in the world, with a combined wealth of over $7 trillion-which is growing fast (the same list had a combined wealth of ‘just’ $3.6 trillion five years ago).
Mitch Cohen (Vice Chairman of PwC) along with his colleague John Sviokla conducted the first-ever study on self-made billionaires, interviewing many of the wealthiest people on the planet to learn what makes them tick, publishing his findings in a book entitled The Self Made Billionaire Effect. I tracked down Mitch, and thought I’d ask him to share the secrets of becoming a billionaire.
Where to make your money….
“80% of self-made billionaires we studied made their mark in mature, competitive markets,” said Mitch, “They weren’t all ‘exactly’ new products that came out – they were maybe a variation of a business model or existing product that pleased the customer in a different way. Think of Howard Schulz with Starbucks, or Sara Blakeley with Spanx for example. These were not new products, but they found a different and imaginative way to come to the customer, and create value.” In a world seemingly populated by annoyingly young billionaires, he also added, “Billion dollar ideas take over 10 years to reach that kind of value, and while there are some very young people that have achieve that, the vast majority were in their 30’s and 40’s when they started on their journey.”
Sometimes the new wasn’t even that new at all, “Look at something like Uber,” notes Mitch “…on balance- it’s still a taxi service! In the end, what they designed was a different way to connect customers and a service provider using technology, leading to a better experience for both. It’s still the same taxi service we’ve all used for 50, 60 years!”
I also had the chance to speak with billionaire founder of Baidu, Robin Li who told me, “Opportunities generally arise from landscape change. But entrepreneurial ideas can come from anywhere. They can come from recognizing where the pain points, the bottlenecks, and the inefficiencies are. They can come from late-night conversations with friends, or from random eureka moments.”
Stay Curious, Stay Focussed, Stay Motivated
In a world pock-marked with performance coaches, gurus and self-help books, I thought I’d ask Mitch about what makes self-made billionaires tick…. “These individuals were extremely well-read, very curious and very disciplined…” he said, “ In a world where so many of us multi-task, when we met with these individuals, they were very focussed on the interview, free of interruptions. That’s very unusual nowadays.” Moving on to their motivation, he described how, “It was not wealth or fame that these people wanted… These individuals had, in their own minds, observed a particular customer need that wasn’t being met. They were wired in such a way, that this need seemed obvious to them. Whether it led to a million or a billion? That was secondary. The desire and clear understanding of an unmet need was key.”
Robin Li also confirmed Mitch’s views, telling me that, “Entrepreneurship means a constant willingness to keep learning. It’s about maintaining that start-up spirit—where you’re forever young, and forever in crisis. It’s about always having your mind on the business: Lying in bed and constantly asking yourself, What should I do?”
Play the Long game
Most entrepreneurs talk about timing, so what role did that play in the story of the world’s wealthiest? “They had an urgency to continually perfect, grow and test their product or service…” said Mitch, adding that there was a caveat… “They also had the patience to wait for a market to evolve, and realised that they alone could not drive a market themselves, rather.. they should be ready to pounce when the timing is right. In a world evaluated evaluated on a short-term basis on quarterly earnings and so forth), most cannot wait for markets to develop. Let’s look at Tesla, I’m sure there are mature automobile companies who thought of what Elon Musk had developed, but didn’t have the patience to wait for that market to evolve.”
Weigh up your risks…
Unlike the typical view of entrepreneurs as nonchalant risk-takers, Mitch notes that self-made billionaires “took a relative view of risk…. They had an understanding of the risks of something going wrong, but balanced that against missing an opportunity. When that opportunity exceeded the risk of going wrong? That’s when they jumped…”
Just go for it…
Over the years, I’ve been hugely lucky to work alongside, meet and learn-from some of the most successful people on the planet. Without a doubt, they followed Mitch’s researched patterns. In the main, they’ve entered reasonably established markets, they’ve looked at the long term and taken calculated risks. They’ve also been hugely eclectic and intelligent individuals. However, the other differentiating factor is execution. With all the knowledge in the world, your journey to joining the ranks of the world’s elite will surely be short lived unless you listen to the words of Phil Knight, who’s Nike brand has earned him over $22bn… encouraging people to just do it…