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

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.

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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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2 Responses to “How do self-made billionaires self-make their billions?”

  1. TTK Says:

    I don’t think the popular narrative is that the richest billionaires are the problem. I have never heard ANYBODY begrudge Gates, Jobs, or anybody that creates massive wealth. For all the joking about Trump, prospective voters take him seriously because he is rich. We may even let Bill Gates ruin our schools, because he must know better.

    Scroll down a level to the “performers”. Executive pay – especially in the form of stock options – has gotten completely out of control. We are paying these guys tens of millions of dollars to borrow cheap, retire expensive debt, buy their own stock and ship jobs overseas.

    People are complaining about crony capitalism, friendly boards and absurdly generous compensation. Rampant criminal behavior that rarely gets punished and decades of sexism/racism that has concentrated wealth and power in the hands of relatively mediocre white men who went to the right schools and belong to the right (white male only!) country clubs.

    I’m so sick of hearing about wealth redistribution as if the initial distribution of wealth has occurred due to the “natural laws of finance” or some other mechanism that bestows wealth on the deserving. But it probably feels good to think so if you are on the inside…

  2. Andrew L. Says:

    I think that some of this ^^ is pretty fair and accurate.

    The market is rewarding behaviors that are not improving the overall market. Supporting LBO private equity hacks who trade equity for debt in five-year turns aren’t actually improving productivity, driving job growth, or improving our overall competitive position.

    And supporting these folks with sweetheart local tax breaks, favored income treatment, and carve outs only lends credence to catastrophically dumb ideas like doubling the capital gains rate.

    That said, more government control of industry only distorts and amplifies these problems. If you think this is only a center-right problem, you haven’t read enough FEC reports. John Corzine anyone?

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