How I Found Inspiration from a Billionare
As writing this post, I’m sitting on a United flight from Chicago to San Francisco. While trying not to focus too much on the slightly fidgety 5 year old squirming in the seat next to me, I can’t help but look back over the past period in my life. I’ve had the privilege to be selected, along with 23 fellow students, to the Zell Entrepreneurship Program, a prestigious university-startup accelerator. The yearlong program ends with a 2-week “academic” trip to the United States where among company tours and inspiration talks, we’re shown a sweet taste of the “good life”, something that many of us aspire to and without a doubt will reach soon enough.
Our four-day leg in Chicago was primarily focused on pitching our startups to Sam Zell, the savvy-business mogul, creator and funder of our program. At first glimpse, the 74 year-old Sam is the typical grandfather figure: lovable, funny and full of wisdom. He’s one of those rare people whose energy can be felt the moment they walk in the door.
During one of the attended events of the week, a specific thought came to mind, a thought that has come up many times this year: “what-the-fuck-did-I-do-in-my-life-to-deserve-being-here”. This wasn’t coming from a place of modesty or lack of personal accomplishments, but something that’s felt when in the presence of incredible self-made-billionaires. This specific event was hosted by the US Trust and attended by executives from Back of America, the extended alumni and members of the Zell network. Let’s not forget the king of the ball, Mr. Sam Zell himself.
I’ve attended my fair share of “inspirational” interviews from millionaire CEO’s telling their perfect life stories of how they made it big. This one-hour fireside talk with Sam was different. The glimpse into his thought process and internal elements was truly moving. His “work hard, play hard” lifestyle hit home and I found myself subconsciously doing something I rarely do, actually taking notes and quotes.
1. “Understand and master your field”
Every business you go into, regardless of your role: investor, manager or founder. Make damn sure you know the ins and outs of everything. That doesn’t mean know the micro details of everything, but all the moving parts. There shouldn’t be a question you can’t answer about your business. Sometimes that means going into fields you weren’t planning to. Sam gave the example of how he needed to learn the field of public trading when taking his first company public, because that was PART of the business he had.
2. “Liquidity is gold”
One of the parts I enjoyed the most. He mentioned that several years ago, several days after Forbes had estimated his net worth at around $1 billion, he had cash flow problems and wasn’t sure he would be able to make payroll in one of his companies. His lesson here, net worth on paper is one thing, but at the end of the day, cash is king. Make sure you can liquidize your assets when required.
3. “Don’t make too many assumptions”
His mantra in investment is never conduct a deal when too many variables are unknown. In math-talk: try to reduce the degrees of freedom of the equation. Try to look at previous deals / investments you made and look for common parts you can base upon. Then figure out only the new parts.
4. “Nobody gets poor by making a profit”
Not too sure the context mentioned here, but I loved this quote. As someone who’s startups sometimes require acquiring the first users by offering them a product for free, this really hit home. No business is expected to not turn a profit, and cash flow is the blood-flow for any business.
5. “Understand your worst case outcome”
Sam gave an example of previous investments he made that although lost money, were a success. How does that actually make sense? His analysts properly predicted the possible scenarios and the “risk” was calculated and chosen. Failure is actually getting an unexpected outcome. This goes back and fits perfectly with #3, don’t make many assumptions.
6. “Always see scale”
For me personally this was the most impactful. He talked about how as an executive, your job is to make decisions and navigate the ship. That doesn’t mean you need to do everything yourself. Know how, when and to whom to delegate tasks and responsibilities. Without this, you’ll never be able to “scale” and grow. This connected so well with me because of my natural inclination (and curse) to hustle and get shit done as fast as I can, by sometimes being a one-man team. Focusing on teaching and improving your team and partners is the only long term plan that makes sense.
7. “Scarcity is power”
The best story of the night: Sam mentioned that as a 12 year old boy living in Chicago, he would travel everyday to school by train. One day, while traveling the train station, passed by a newsstand. He bought a single copy of Playboy for $0.50. His friends, who didn’t have direct access to the product, were willing to pay $3 for a copy. That was his first lesson of product scarcity, or distribution. Being able to do the “last-mile” distribution and “owning” the customers gives you a hard to beat hand.
That one-hour session of hearing Uncle Sam’s has given me lots of thoughts to process. Both in how I manage my companies and projects and generally my path forward. Will always be grateful for Sam and the Zell program for giving me this great gift. Got to finish this off, we’re landing.