How Gujaratis became billionaires by these 3 formulas.

If I ask which community is very successful at the business in India, then most of your answers will be people from Gujarat. The richest person Ambani, Azim Premji, Adani, Uday Kotak, like this, and more than 54 billionaires are from Gujarat. Today surat city is the world’s fastest-growing city. Gujarat has a 5% population of India, but 1/4th of import and export of India is done by Gujarat. In cotton production Gujarat at no.1 position. 1/4th of the milk of India is produced in Gujarat. Gujarat is the largest produces of processed diamonds in the world.8 out of 10 diamonds are polished here. In Denim manufacture also Gujarat comes at no. 1 position. Today Gujarat is the most profitable economy in India. For manufacturing, the whole country contributes 25% and Gujarat contributes 40%. Gujarat is also considered India’s petrol capital because around 25% of refined petroleum is produced by Gujarat and 27% of medicine is made at Gujarat. if we see they have renewable energy, infrastructure, smart city, road connectivity, electricity. they come first in our country in these things if Gujarat would be a country then after china and Korea, it will come at 3rd position in the fastest-growing economy Gujarat achieved success outside the country also. for example, Gujarati who lives in America his/her average income is more than Americans.

Now the question comes to your mind about how Gujaratis are so good at business and making money, and how we can learn from them and become successful businessmen. But in this story, we talk about 1 type of Gujarati that is Patels.

In the USA 1% are Indians, From them a small community of peoples is Gujaratis. But these Gujaratis are owners of 50% of the motel in America. America’s motel business is dominated by Patels. how it becomes possible, to know the answer we have to look at Gujarat history.

Gujarat has India’s biggest coastal region, because of this, the trading business is in the blood of Gujaratis. Earlier Patels earns through their land but when the land was divided for their children they understood lands will not be enough for survival. Then they decided to do something new. Many Patels went to Uganda they achieved many profitable businesses in Uganda. They earned a lot of money. In 1972 dictation they couldn’t manage it, and took the properties, and deported from Uganda. After that many Gujarati shifted to, Canada, the USA, etc.

Those people who shifted to the USA. they decided to do the hotel business. At the time there was war in Arab countries, for that petrol and diesel price goes at a higher rate, that’s why traveling of people was reduced. because of which motel business went on loss. But at that time Patels sees an opportunity in the motel business, so they bought the motels. With the help of business knowledge and core business model, they achieve success in this business.

So in this story, I am going to share with you the 3 principles of Patels.

Principle 1- fearful and greedy.

At that time motel business goes on the loss but Patels knew things will change, and the business will grow again. So, they bought all the motels at a low price.

An intelligent investor says, “Be fearful when others are greedy, and be greedy when others are fearful”.

This means when the market runs good people usually buy expensive things and when the market is at a loss they sell cheap things. But an intelligent investor does the opposite of that which Patels did.

Warren Buffet says “do not earns the profit by selling the things at a high price, earns the profit by buying the things at a low price.”

Same things Gujarati follows, that’s why they always try to buy things at a cheaper rate. The second question is, they buy motels but how they make them profitable. This time they use their second principle.

Principle 2- competitive advantage.

Let’s take an example, you are seeing one society where not a single shop is there, in that region you got a business opportunity. You open a shop in that society through which you start earning profit. By seeing this more people open shop near you. Is it will affect your business? Obviously yes, it will affect your business. because you have no better advantage than others. so your customers will be divided unless you don’t give nice offers.

Let’s take about the Patels. When they came to the USA, they had no place to live. because of this, they have the best option they don’t have to buy or rent a house because motels usually have 10–12 rooms where they stay too and runs the business. After all, all family is staying in that motels that’s why they divide work between the family members. And don’t need to hire new workers, and they can run the motel at a low price with the help of relatives. this thing helps them to compete with their competitors.

Principle 3- playing the odds.

Most of you know that in investment when higher risk, then higher rewards, and lower risk, then lowers reward. But Gujaratis, Marwaris, Sindhi, don’t believe in it. Usually then thought, “heads I will win and tails I don’t lose much”. Suppose you have 2000 rupees and a play game. In that, a coin will be tossed, and chances of getting head are 60% and tail 40%, if you choose heads and win you will get the double amount. Well, a similar experiment is done at some people where this game played for about 30 minutes where 28% of people lost their money. Because 68% of people bet in tails which is stupidity.

You don’t do such a mistake when you got an opportunity where the winning percentage is higher. You have to invest but not invest all money that you have. You have to invest a specific amount. Now the question arrives what is that specific amount. Dr. Kelly makes experiments and discovers a formula. Kelly’s formula- according to the formula you have to invest 20% of the total amount or less than it.

let take the example of Google, although they getting a lot of income in that business, still, they investing money in new projects like google car google lens. But they will not be investing their entire profit in new business. By which if that will profitable they got more, if lose they do not get so much loss. The same strategy is followed by Gujarati, warren buffet, etc. They go through that only where they get more profit and if they lose, that does not affect more.

Bonus point- simplicity

if I ask Facebook, Twitter, Coca-Cola, McDonald’s there two types of companies after 50 years that will stay in the market. among these two which is more simple? feeding or advertisement? running behind complex things can make you face loss.

Thanks for Reading.