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#Business :7 Myths About Self-Made Billionaires

7 Myths About Self-Made Billionaires


                                                                    


In 1984, Dietrich Mateschitz was a bored, forty-year-old marketing executive

at the German cosmetics company Blendax. He spent his days peddling toothpaste

and cosmetics to retailers around the world.

Then on a routine trip to Thailand, Mateschitz learned that the Japanese

manufacturer of a line of supersweet “health” drinks popular in Asia was the

biggest taxpayer in Japan. There was nothing like them in the West. Mateschitz

decided right then to quit his job and start a company to manufacture and market

the drinks in Europe.

Within a few years, Red Bull had launched its signature carbonated beverage

in Mateschitz’s native Austria and in Slovenia. Today, Red Bull is far more than

the drink that carries its name. It is a media company; a Formula 1 franchise; a

Nascar franchise; a sponsor of mountain climbers and skiers and other extreme

sportsmen; a “philosophy,” as its founder has said, of life lived in a

heightened state of adrenaline-fused activity—all bred from the modest

foundations of a good idea.

That success is not evenly distributed across the range of good ideas made us

ask the question, what enables self-made billionaires to create such massive

value?

Quickly it became clear that if we wanted answers, we would need to look for

them ourselves. As we began collecting data and conducting interviews it became

almost immediately clear that a lot of the truisms that get touted as the keys

to successful entrepreneurship didn’t stand up to the data we had. For

instance:

Age


Our tech-dominated era—populated by savvy wunder-kinder—has left the

impression that most self-made billionaires cross that billion-dollar finish

line early in their careers. While it is true that people like Bill Gates,

Michael Dell, and Mark Zuckerberg made their first billion while still quite

young—and with the first companies they formed—the majority of people in our

sample are like Dietrich Mateschitz, who didn’t hit the billion-dollar mark

until well after his fortieth birthday. For more than 70 percent of the sample,

the idea or transition that catapulted them to billion-dollar success happened

after age thirty.

Industry


Technology dominance has also led many to believe that the main path for

self-made entrepreneurs is the tech sector, which is so often held up as a

bastion of new wealth and meritocracy, where anyone with a great idea and the

willingness to code for long hours can rise to the top. In fact, less than 20

percent of our sample of self-made billionaires came from tech. The money

management and the consumer products industries are not far behind tech in terms

of the number of self-made billionaires. Overall, more than nineteen different

industries were represented in our sample, including oil and gas, apparel, food

and beverages, publishing, printing, real estate development, entertainment, and

hotels, as well as technology and tech services, among others.

Greenfield Innovators


There is a general belief that self-made billionaires create “brand-new”

things. There’s no question that exploring new market spaces has the potential

to yield large profits, but it’s not the route that most self-made billionaires

chart. More than 80 percent of our sample of self-made billionaires earned their

billions in red oceans—highly competitive, mature industries.

Dietrich Mateschitz again offers a case in point for this fact—he inserted

Red Bull as a new product category (the “energy” drink) into an existing

beverage market. He signaled its difference from existing drinks with both the

skinny 8.4-ounce can and a premium price more than double that of a can of Coke.

Such seemingly small tweaks may not seem as awesome as a new market innovation,

but the value is still there.

Luck


When we conducted a simple survey asking friends and colleagues about

perceptions of self-made billionaires, we heard plenty of comments about

“one-hit wonders” and a strong belief that many of the self-made have earned as

much as they have because of luck. We could believe in luck if the majority of

our sample had only one successful venture. But our data convinced us that luck

alone does not explain the success of self-made billionaires, given that more

than 90 percent of them have launched multiple successful businesses.


Exploitative Practices


It’s difficult to find any successful organization that hasn’t been accused

by someone, somewhere, of unsavory practices. Billionaires in particular are

easy targets for such accusations. While we make no claims about their universal

purity, as a group the businesses launched by the self-made billionaires in our

sample lean toward the socially responsible end of the scale in their

industries. Furthermore, a large number of self-made billionaires have signed

the Giving Pledge, promising to give away more than half of their net worth; a

significant portion are active in philanthropy or social projects.

Overnight Success


It may seem that certain individuals form companies and suddenly enter the

public consciousness with a meteorically successful product, but the reality is

that many self-made billionaires reach extreme success only after many years of

professional investment and commitment to a particular market space. They often

exhibit early entrepreneurial drive: more than 50 percent had a first job before

age eighteen; nearly 30 percent had launched their first entrepreneurial venture

before age twenty-two; and almost 75 percent before age thirty. Note that while

some billionaires had the kind of humble upbringing that necessitated an early

entry to work, they are in the minority—more than 75 percent of self-made

billionaires were raised in households with affluence levels in the middle class

or above.

Talent, but Also Practice


The billionaires’ early ventures provided a great deal of practice in a

couple of key areas, which improved any skills they already had. Seventy-five

percent or more had direct sales experience; and almost 70 percent had ownership

of a profit and loss statement before age thirty.

These are just a few of the counterintuitive findings that made it clear to

us that there was a mismatch between what many claim to “know” about extreme

success and what the data report.




Adapted and reprinted from The Self-Made Billionaire Effect: How

Extreme Producers Create Massive Value, by John Sviokla and Mitch Cohen
with permission of Portfolio, a member of Penguin Group (USA) LLC, A Penguin
Random House Company. Copyright (c) PricewaterhouseCoopers, LLP, 2015.

John Sviokla is the head of Global Thought Leadership at PwC
(PricewaterhouseCoopers LLP). He has written for the Harvard Business

Review, The Wall Street Journal, Financial Times, and
Sloan Management Review and has appeared on CNBC and Fox News. Mitch
Cohen is vice chairman at PwC. During his 33-year career at the firm, he has
served numerous Fortune 500 clients and helped to guide the firm’s strategy as
well as its initiatives around innovation and corporate responsibility.
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