7 Myths About SelfMade 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 activityall 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 erapopulated by savvy wunder-kinderhas 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 youngand with the first companies they formedthe 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 oceanshighly competitive, mature industries. Dietrich Mateschitz again offers a case in point for this facthe 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 minoritymore 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.