Its not just the dosh that drives todays top entrepreneurs, says Luke Johnson
It’s not just the dosh that drives today’s top entrepreneurs, says Luke Johnson
It is often assumed that the principal driving force for most entrepreneurs is the straight-forward accumulation of wealth. I think this belief is wrong. It is my view that most high achievers in business are motivated by a mix of emotions far more complex than simple avarice.
Perhaps such a dismissive explanation comforts us in our envy of the pampered lifestyles of the super-rich. Yet almost all entrepreneurs are more interested in earning than spending. In truth, the drive behind these capitalists is a blend of psychological ingredients, many of which are at least as significant as mere financial gain.
Possibly the most fundamental instinct which excites alpha males is a powerful competitive spirit. The study of primate behaviour shows that group leaders need to conquer rivals and dominate other males. As Charles Revson, the founder of cosmetics giant Revlon, stated: ‘I don’t meet competition; I crush it.’
Winning allows the top dog to have the pick of female mating partners, choice of habitat, and more food. This is the naked urge to survive in action, combined with the desire to produce offspring and see them prosper. Survival of the fittest applies in the boardroom as much as the jungle.
Beating the competition is only achieved by taking risks. As a breed, entrepreneurs tend to agree with Sir Hugh Walpole when he said: ‘Don’t play for safety. It’s the most dangerous game in the world.’ Most fear boredom more than failure. They know that mistakes are part of the game. Too many of us cling to the illusion of certainty in life; we find it comforting to believe things are infallible.
Modern technology aids our faith in error-free society, yet, at heart, we know such stuff is nonsense. The universe is random and unpredictable, and those who try to eliminate the unexpected are doomed to an existence of anxiety and over-caution. As the brilliant 19th Century author, Sir Walter Bagehot said: ‘Life is a school of probability.’
Politicians, civil servants, and academics bleat on endlessly about regulation, compliance, and governance as cures to the risks of life. In fact, trial and error, perspective and personal responsibility are more likely to lead to sensible decision-making. All builders of companies have setbacks and projects that don’t work. They may not boast about them – but they happen.
Hiding the failures means you are less likely to learn from them – and outright denial about risk is as foolish as being over-cautious. The original Mr Mars, the founder of the eponymous confectionary company – now one of the largest private corporations in the world – went bankrupt not once but twice before hitting on the formula of the Mars bar.
Richard Branson tells the story of how, in the early days, his Virgin Atlantic Airline got into problems, and he arrived home one Saturday morning to find the Coutts bank manager on his doorstep demanding that Virgin’s entire overdraft be immediately repaid. This step would have forced his business to cease trading.
So Branson worked the phones for the next 24 hours, repaid the bank on Monday morning, and went onto ever-greater success. Similarly, early in his career in pharmaceuticals in France, Jimmy Goldsmith faced the certainty of receivership for his fledgling commercial empire the following day.
But luckily for him – remember this was Paris – there was a bank strike the next day – so no-one called in his loans. He was able to use the extra time to scrape together enough money to survive, and eventually became a billionaire, like Branson. Both, I am sure, would concur with Goethe’s famous statement on making decisions: ‘Whatever you can do, or dream you can, begin it now. Boldness has genius, power and magic in it. Begin it now.’
A willingness to embrace risk does not mean entrepreneurs are sheer gamblers. They weigh up the odds carefully and calculate downsides. They might appear, to the uninformed observer, to be taking a crazy plunge. Yet, more often than not, they have done their homework and simply have the confidence and resources to follow their beliefs which most of us lack.
Kirk Kerkorian, the elderly, billionaire casino-owner, is currently engaged in a huge wager that General Motors Corporation, the ailing car maker, will recover. He has become the largest shareholder, even as the company announces worse results, because he apparently sees something the institutions don’t. In airlines, showbiz and Las Vegas, his huge speculations have paid off before. I wouldn’t bet against him.
At his age, the idea that he needs a few extra million is a joke. Entrepreneurs keep going because they enjoy the adrenaline rush, the thrill of the chase, and because they are addicted to the game. They are enthusiasts, tending to be happiest when closing a sale or doing a deal.
They realise that most of us are more disappointed by the things we didn’t do in life, than by the things we did. I have known one or two founders of firms who sold out in the mistaken belief they wanted a quiet retirement. In one case, the individual just gave up and died within a year.
It was as if he his energy and zest for life were tied up with his company, its staff and customers – without it he saw no reason to carry on. Other entrepreneurs who retired have been more sensible: they saw that gardening and golf were not enough, and have taken to being angel investors, non-executive directors, and the like.
They know that the mental stimulation of helping to guide a real, live business in the marketplace is hard to beat. Builders of business are far more creative than is generally recognised. They might invent, they might construct, they might intermediate; however they achieve it, the process of making things happen, and making a difference, is a decisive factor in their search for fulfilment.
Of course, those engaged in commerce are not artists in the generally accepted sense: they do not pain wonderful pictures, compose uplifting symphonies or write brilliant novels. But every enterprise has an initiator, someone who wants to sell a new product or service; it is an effort which takes inspiration, industry, persistence, and the ability to think in a fresh way – all characteristics of those who do well in the arts. I have met many entrepreneurs, and most have felt a compulsion to star and grow companies – they simply had to do it.
As ever, many of the explanations for adult behaviour among business executives derive from childhood experiences. Research has shown that the phrase which most successfully sums up the motives behind many self-made millionaires is the pithy “I’ll show them.” Such individuals often feel a relentless need to prove themselves to the world, perhaps they felt inadequate or unloved when young. At some point while they were growing up, a parent, sibling, classmate, or teacher told them they would never amount to anything.
The rest of their life is a remorseless quest to prove the early doubters wrong, and to seek applause from the critics. Often they lost a parent early on and so will never be able to demonstrate how well they’ve done. Some are restless souls, unable to really attain satisfaction though their work or personal lives. They hit all their goals, but never actually prefer travelling to arriving, and constantly need new challenges to feel stimulated.
Unquestionably, those amass a great wealth to be optimists. They believe in the future, and take advantage of the opportunity it brings. As Gladstone said in 1866, ‘You cannot fight the future. Time is on our side.’ They are too busy trying to win to listen to pessimists and cynics. Every pioneer, from Henry Ford with the Model T to Freddie Laker with the Skytrain, will have faced a battery of Cassandra’s telling them their project was doomed.
As Henry Ford said, ‘We must learn that the setbacks and griefs which we endure help us in our marching forward.’ The jabbering of the sceptics simply spurs them on. Howard Schultz, the visionary CEO of Starbucks, presented to over 200 would-be backers before he raised the funds to develop his business into the world’s largest chain of coffee shops.
Few entrepreneurs suffer from self-doubt. Most entrepreneurs are passionate about what they do, whether it’s food processing or funeral homes. The boss of Porsche tells the story of the three construction site workers, each doing the same job, but who described their occupation differently. The first said: ‘I break rocks.’ The second said: ‘I’m earning a living.’
But the third said, ‘I’m helping to build a cathedral.’ If you are to build a major enterprise, obsession is almost a requirement. Most self-employed people don’t understand the meaning of the word ‘workaholic’. As far as they are concerned, their business is the very air they breathe: they live it by day, dream about it by night. It is this focus – and almost psychopathic commitment – which enables them to extraordinary things, and, just occasionally, erect enormous empires.