- Are you curious about the secrets of self-made billionaires and how they’ve created massive wealth? “The Self-Made Billionaire Effect” by John Sviokla and Mitch Cohen unravels the mystery and offers valuable insights.
- Discover the keys to extreme success and learn how to apply them to your own journey by diving into the captivating pages of this book. Start reading now and unlock the potential to create massive value in your life and business.
Has The Self-Made Billionaire Effect by John Sviokla and Mitch Cohen been sitting on your reading list? Pick up the key ideas in the book with this quick summary.
The prevailing wisdom is that self-made billionaires are geniuses who never sleep, got extremely lucky, and made it big at a young age. In reality, they simply have a few critical habits of mind that make them able not only to exceed expectations but also redefine them. In this book summary, you’ll learn the five unique habits of mind that enable self-made billionaires to create unexpected value.
Learn the habits of mind that set highly successful entrepreneurs apart from the pack.
The Self-Made Billionaire Effect (2014) reveals the secrets behind the world’s most successful companies and entrepreneurs. These summary show that it isn’t luck, age or external factors that got some of the world’s wealthiest people where they are today. Find out how self-made billionaires became masters of duality by integrating imagination and design, and juggling opposing ideas.
What do Elon Musk, Larry Page, Oprah Winfrey and Michael Ilitch all have in common, apart from being famous? They’re all self-made billionaires, each one of them at the helm of huge business empires.
But that’s not all they have in common. When you look at the success stories of these and other entrepreneurial giants, you begin to see a pattern of underlying skills and abilities. It’s no coincidence they are all at the top – so what are their essential skills?
In this summary of The Self-Made Billionaire Effect by John Sviokla and Mitch Cohen, you’ll learn
- how Hui Lin Chit made a fortune selling napkins;
- what billionaire Alex Spanos learned from selling sandwiches; and
- how to partner for success.
READ THIS BOOK SUMMARY IF YOU:
- Want to learn what visionary billionaires have in common
- Don’t feel your unique skill set is valued in the workforce
- Want to harness the talents that are going to waste in your company
Table of Contents
- Exploding Myths of Extreme Entrepreneurship
- Empathetic Imagination: The Art of Designing the Blockbuster
- Patient Urgency: How Billionaires Thrive Despite the Uncertainty of Time
- Inventive Execution: How Producers Bring Blockbusters to Market
- Reversing the Risk Equation: How Producers Avoid Risks Others Take and Take Risks Others Avoid
- The Producer–Performer Duality: How Producers Find Their Complement
- The Self-Made Billionaire Effect Key Idea #1: Self-made billionaires excel at juggling multiple ideas and perspectives.
- The Self-Made Billionaire Effect Key Idea #2: Self-made millionaires have creative ideas that keep consumers in mind.
- The Self-Made Billionaire Effect Key Idea #3: Running a multi-billion dollar business requires the right mix of time and timing.
- The Self-Made Billionaire Effect Key Idea #4: Self-made billionaires apply their imagination and innovation at every stage of product development.
- The Self-Made Billionaire Effect Key Idea #5: Billionaire producers have a different attitude toward risk than other entrepreneurs.
- The Self-Made Billionaire Effect Key Idea #6: Self-made billionaires know how to partner to create synergistic effects.
- In Review: The Self-Made Billionaire Effect Book Summary
- About the author
- Table of Contents
This methodical study of self-made billionaires (not those who inherited most of their wealth) sheds light on how they got rich. The study challenges stereotypes. Most billionaires do not succeed alone or bloom young. Most made their fortunes after age 30 and in well-established, competitive industries. John Sviokla and Mitch Cohen of PricewaterhouseCoopers suggest that anyone can profit by adopting these billionaires’ “habits of mind and action,” such as profound empathy with consumer problems and the ability to identify creative solutions. The narrative distinguishes “Producers,” who bring together a range of resources and people with ability, from “Performers,” who have special talents in certain functions. We recommend this insightful overview of self-made billionaires’ decision-making processes – and its suggestions for ways to emulate them – to leaders, managers, entrepreneurs and up-and-comers of all stripes.
- Most of the 120 self-made billionaires surveyed got rich in a non-tech field after age 30.
- More than 80% made their fortune in established, competitive industries.
- Many seem to be “Producers” who integrate resources from multiple disciplines to create value, as opposed to “Performers” who show talent in particular disciplines.
- “Producers” take urgent short-term actions in pursuit of long-term rewards.
- “Leadership partnerships” propelled many billionaires, like Microsoft co-founder Bill Gates, who had a long managerial partnership with former CEO Steve Ballmer.
- Self-made billionaires reap creative benefits with “divergent thinking.” Your firm can find similar benefits by supporting “positive deviance” among your employees.
- The “Prospect Theory” introduced the concept of “loss aversion,” a tendency to feel greater dread about a possible loss than your level of desire for possible gain.
- Self-made billionaire Cheung Yan takes a “relative view of risk,” and considers the consequences of action and inaction.
- Corporations avoid risk and often falter due to poor risk management.
- Firms should integrate the activities of their functional departments.
What do self-made billionaires have in common? Many of them were in management positions in large corporations before growing frustrated and setting out to achieve their vision alone –– or getting pushed out by superiors who didn’t like their unconventional leadership or work styles. Before Apple, Steve Jobs was Atari’s biggest unrecognized asset. Before AOL, Steve Case was the same for PepsiCo. These men — and dozens of other self-made billionaires — were forced to leave the shelter of their well-off firms and start their own empires.
This means that these corporations lost out big time because they failed to recognize the worth of the talent right under their noses. It’s true that these talents are unusual; self-made billionaires have particular habits, skills, and experiences that set them apart from the pack. But companies can learn to harness this talent by learning to identify the five traits that self-made billionaires possess:
- Empathetic imagination: Self-made billionaires have great ideas because they think outside the box and empathize with their customers’ practical needs.
- Patient urgency: Billionaires are able to patiently prepare for the exact right market circumstances to launch their product and then do so with ferocious energy.
- Inventive execution: The self-made billionaire doesn’t see any part of their product or launch plan as set in stone; rather, they are able and willing to reinvent any aspect as needed.
- Relative view of risk: Self-made billionaires understand that losing what you stand to gain is often a bigger risk than losing what you already have, so they avoid the risk of missing out on opportunities.
- Producer–performer partnership: The self-made billionaire recognizes that they must partner with a “performer” whose unique and specific skills complement their ability to harness that talent.
Exploding Myths of Extreme Entrepreneurship
When Mitch Cohen and John Sviokla set out to review the existing studies on selfmade billionaires to find out the traits they had in common, they found that there weren’t really any such traits. All our so-called knowledge about billionaires came in the form of myths –– myths that Cohen and Sviokla quickly dispelled when they conducted a study with PricewaterhouseCoopers, a global tax, consulting, and professional services network.
The main ideas we hold about self-made billionaires are as follows:
- The tech sector is the main source of their wealth.
- They came up with brand-new ideas.
- Luck was a major factor in their success.
- They made their first billion at a young age.
- Their ideas were overnight successes.
The reality is quite different. Of the sample Cohen and Sviokla carefully selected, which only included billionaires who made all their money themselves or increased their inherited wealth by a factor of at least 100, only 20% were in tech. Instead, 80% were in markets that were already highly competitive, not new and innovative. The fact that more than 90% were successful in multiple business ventures indicated that luck was not the determining factor. Most of those polled didn’t make their first billion until after 30 or even 40, and that was usually a result of years of hard work, starting at a young age.
Additionally, they didn’t have many external factors in common: Some grew up poor, and some affluent; some dropped out of college, while some earned doctoral degrees. Instead, it appeared that what these successful people had in common were particular habits of mind.
Cohen and Sviokla also found that, while corporate culture rewards “performers” — leaders who excel at one particular talent — self-made billionaires tend to be producers. Produces are those who have a vision, can gather the people and resources needed to make it happen, and then market it to customers who didn’t know what they were missing. They’re able to see how things could be but aren’t too blinded by idealism to carry out their goals realistically.
Most people aren’t great at this kind of dualistic thinking –– holding two ideas that seem to be in tension with one another –– but it’s the key trait that makes highly successful people stand out.
Empathetic Imagination: The Art of Designing the Blockbuster
The first duality is empathetic imagination. This is the producer’s ability to come up with extraordinary, profitable ideas based on intuitiveness about what customers need. Contrary to popular belief, this doesn’t mean developing a new market — most self-made billionaires’ products arose in markets that already seemed saturated.
Spanx, for example, became a bestseller in an undergarment market already dominated by Hanes and L’eggs, but it offered a new and innovative take on the traditional form. Their design was born out of an intuitive understanding of what customers truly wanted out of undergarments without even realizing it.
Producers have a way of tapping into an idea that seems incredibly obvious in hindsight but that no one else has had both the vision and pragmatism to carry out before.
Patient Urgency: How Billionaires Thrive Despite the Uncertainty of Time
In addition to having unique ideas, producers have a unique perspective. While they’re ready to act at the drop of a hat if need be, they’re also comfortable with being patient and allowing an opportunity to ripen.
Eric Lefkofsky, for instance, had the idea for Groupon on the back burner for a long time. He knew that consumers wanted a business model like it. In fact, other entrepreneurs had tried and failed to launch similar businesses in the previous decade. But he also knew that it would require a social component that simply wasn’t possible until the arrival of social media. Once Facebook and Twitter were on the scene, he knew the time was right for Groupon, which he had patiently prepared. When the time was right, he acted with urgency to debut it. Because he waited until the market conditions were just right, Groupon was basically an overnight success.
Inventive Execution: How Producers Bring Blockbusters to Market
The third duality that sets producers apart is their flexibility regarding execution. Many companies adhere to a rigid plan when launching, but the ability to pivot and be creative is the key to self-made billionaires’ success. Producers are not only able but also willing to redesign any aspect of a product that might not work instead of just sticking to a projected outcome and hoping for the best.
When Michael Jaharis bought Key Pharmaceuticals, which he thought was a small but modestly profitable business, it turned out they were failing financially. Their main product, a long-acting nitroglycerin pill, was being proven ineffective in an industry that was recently required to show proof of effectiveness. In response, Jaharis reinvented the form and came up with a topical nitroglycerin patch that was so long-lasting, it brought the company back to life and led to an acquisition deal worth $2 billion.
Reversing the Risk Equation: How Producers Avoid Risks Others Take and Take Risks Others Avoid
It’s a common myth that billionaire entrepreneurs take huge risks, but that’s actually not true of producers. They don’t take outsized risks, but they don’t avoid risk either. Instead, they have a unique ability to view risk as relative –– to realistically evaluate cost and benefit.
Instead of being afraid to risk losing what they have, which is how most people operate, producers don’t want to risk missing out on a good opportunity. If an opportunity doesn’t pan out, they have the resiliency to try something else. While producers won’t typically take irrational risks –– unlike, say, famed Virgin Group founder Richard Branson, who has broken world records with dangerous speedboat and hot-air-balloon trips –– they won’t take the risk of losing future career opportunities by not making a move out of fear of failure. Further, they understand that the consequences of failure are manageable.
Compare Steve Jobs to one of his original partners at Apple, Ron Wayne. Wayne had already launched a business that failed, and he went to work at Atari, where Jobs also worked. When Jobs launched Apple, he asked Wayne to be the third partner to balance out his vision and Steve Wozniak’s talent. But he was so afraid of the consequences of the company’s failure that he backed out just days after the paperwork was filed. Jobs, meanwhile, took a relative view of the risk of failure versus the risk of not taking this leap, and it paid dividends.
The Producer–Performer Duality: How Producers Find Their Complement
The final duality that works so well for producers is one that goes against the myth of the solo genius. Self-made billionaires actually don’t do it alone –– rather, they’re exceptionally good at choosing the people to help them make it happen. Producers excel at bringing together all the elements needed to execute an outstanding idea, and one of those elements is the perfectly complementary performer.
Steve Jobs and Steve Wozniak, the original partner and engineer of Apple, are a famous example of a highly successful producer–performer pair. Bill Bowerman and Phil Knight of Nike are another. Bloomberg LP’s Michael Bloomberg found his complement in Tom Secunda; Facebook’s Mark Zuckerberg found his in Sheryl Sandberg; and Microsoft’s Bill Gates found his in Paul Allen.
The producer has a knack for choosing the right performer and creating the environment that brings out the best in their specific talents.
The Self-Made Billionaire Effect Key Idea #1: Self-made billionaires excel at juggling multiple ideas and perspectives.
What does it take to be a billionaire these days? To reach such heights, you have to approach your goal very differently than the average entrepreneur. In a constantly changing world, you no longer have the luxury of focusing on one thing at a time; you have to learn how to juggle multiple ideas.
Self-made billionaires maintain multiple ideas and perspectives, both big and small, at all times. Most people and companies will try to focus on one thing at a time to avoid complications. But others, like Bill Gates, achieve their success by operating in an environment of dualities, managing multiple ideas and actions simultaneously.
Bill Gates demonstrates not only the success of handling multiple ideas, but also of juggling multiple companies at the same time. It’s a little known fact that while running Microsoft, Gates also started Corbis, a photo and video licensing company, as well as Cascade Investment, a holding and investment company.
This mindset of embracing duality, of juggling different ideas and investments at the same time, are common among producers. These are people who have a clear vision and bring innovative ideas to the table. Producers can unite the right kinds of people and know how to use all their resources to their advantage.
On the other side of coin are the performers. These are talented and highly specialized people who excel in a specific field.
We can look at Lynda and Stewart Resnick, the couple behind the successful juice company POM Wonderful, as an example of how producers and performers work together successfully.
Lynda is a natural born producer who brought together all her skills to identify a great product and create the right marketing strategy to sell it. Stewart is the performer who balances the budget and oversees the company’s operations and finances. This way, Stewart can keep Lynda in check if she goes overboard in the creative department and can make sure the company continues to make a profit.
Rather than focusing on one idea at a time, self-made billionaires embrace the power of duality. The following book summarys will reveal the five most important dualities.
The Self-Made Billionaire Effect Key Idea #2: Self-made millionaires have creative ideas that keep consumers in mind.
So what is the unique set of skills that enable self-made billionaires to reach this elite level of success?
A billion-dollar business idea begins with something called empathic imagination: a merging of creative ideas with an understanding of and empathy for potential customers’ needs.
To come up with these ideas, billionaire producers must be experts in divergent thinking, that is, freeing your mind to allow for competing ideas in order to find a novel solution to a problem.
For example, in the early 1980s, finding information on different mutual funds was a time-consuming process. Entrepreneur Joe Mansueto empathized with how frustrating this was for investors, and came up with a solution to assemble the information and make it easier to digest: he took $80,000 of savings and created Morningstar, a publication that would provide investment data in a simple and accessible format.
Mansueto’s thinking paid off. Mutual funds went on to become a mainstream investment tool and, as a result, Morningstar became a leading investment research and management firm.
Blockbuster ideas like this are the product of empathy and insight that comes from years of market research, as well as a gut feeling for what investors and customers want.
This was the case for Hui Lin Chit during the 1970s in China. He started by manufacturing zippers for clothing and later founded an apparel company; neither business turned out to be a smashing success. But Mr. Chit knew precisely who his target customers should be, namely low-income women in rural China, and understood their needs well.
Mr. Chit would seize the opportunity when a friend brought up the subject of sanitary napkins. Mr. Chit bought a machine to manufacture them for $80,000 and produced a product that was cleaner, safer and preferable to what his customers were using at the time. His company, Hengan International, is now one of China’s leading domestic manufacturers.
The Self-Made Billionaire Effect Key Idea #3: Running a multi-billion dollar business requires the right mix of time and timing.
The old saying is true – time is money. But for a billionaire idea, it’s also true that timing is money.
Self-made billionaires know the importance of when to be patient and when to take action.
Take Steve Case for example. During the 1970s, he took ten years to patiently gain experience at companies like Procter & Gamble and PepsiCo before taking action and forever changing the way we communicate as the co-founder of America Online (AOL).
Steve Case saw his opportunity in 1984 when his brother introduced him to Control Video, an early interactive video game company. This venture was ultimately unsuccessful, but it connected him to the people with whom he would go on to create AOL. Some people might have called AOL an overnight success – but Case jokes that, to him, it was ten years in the making!
As you can see, to be a self-made billionaire, you have to be patient and await your chance. But you also can’t hesitate to take action when presented with a once-in-a-lifetime opportunity.
Alex Spanos is one such billionaire who seized the moment. Spanos started out selling sandwiches to migrant farm workers in California. But he saw an opportunity when the local farmers kept asking him if he knew where they could hire more workers. After all, more workers would mean greater demand for his sandwiches.
When Spanos drove down to the Mexican border town of El Centro to see what he could find out, he met another farmer who had just hired 350 new workers and desperately needed housing facilities for them. Spanos jumped at this chance as well, and agreed to help the farmer – even though he wasn’t exactly sure how. He ended up investing the profits from his sandwich business into building homes for the workers.
His willingness to take action paid off. The resulting housing facilities became his first step into the real estate market, a business venture that would ultimately make him a billionaire.
The Self-Made Billionaire Effect Key Idea #4: Self-made billionaires apply their imagination and innovation at every stage of product development.
So let’s say you have that billion-dollar idea. Now comes the question of how you successfully get that idea into the marketplace!
This is done through inventive execution, a process that combines imagination and design to bring problem-solving products into the market. This is something great producers do: they think up a new product while simultaneously designing it for optimum value.
As a result, producers can take action even when a market appears saturated by redesigning or changing an existing product to reach a broader audience. By reevaluating a product’s design, pricing, method of delivery and marketing, you can take it from a niche market into the mainstream.
This is what Micky Arison did as CEO of the cruise ship company Carnival Corporation & plc. He was only in his thirties when his father named him his successor at the head of the company. And with only three ships in their fleet, business was slow.
But Arison was eager to make an impact and redesign the cruising experience in a way that would turn the company into a billion-dollar business. To do this, he decided to market cruises as something everyone could afford, not just the wealthy. So, he dramatically expanded the number of ships in the company’s fleet to lower costs and, by the late-1980s, Carnival was the leading cruise brand worldwide.
When you pay attention to the details of product design, you’ll see that ideas powered by inventive execution can flourish when inserted into major markets. But as we’ll see in the next book summary, product design isn’t everything. Launching your idea into an existing market requires a good sense of risk management as well.
The Self-Made Billionaire Effect Key Idea #5: Billionaire producers have a different attitude toward risk than other entrepreneurs.
Since our current economic climate is constantly changing, being a risk taker is essential for survival. But are successful entrepreneurs always rewarded for extreme and fearless risk taking?
What billionaire producers have is a relative view of risk. In contrast to other entrepreneurs, this gives them a better assessment of their potential gains against their potential losses.
Studies show that billionaires actually don’t take more or greater risks than the average entrepreneur. According to renowned scientist Daniel Kahneman’s theories on human decision making, what separates billionaires from other people is that they are simply less afraid of losing what they have in the pursuit to earn more.
Zhang Yin displayed this attitude when she decided to shut down her successful paper-trading company in Hong Kong and start over in the United States. The risk paid off: with her husband, she launched the company America Chung Nam, which became the leading paper exporter in the United States and made Zhang Yin one of the richest people in China.
It doesn’t always work out so smoothly. But even when losses happen, future billionaires will display perseverance and try again.
This resilience can be seen in former New York City mayor Michael Bloomberg. In 1981, after eight years of employment and having become the company’s head of equity trading, Bloomberg was fired from his job at the Salomon Brothers investment bank. Despite his credentials, he had a hard time finding a new job. But he didn’t give up.
Instead, he decided to start the financial software company Bloomberg L.P. The company grew to over 15,000 employees and has spawned a radio network and TV station. Bloomberg took yet another successful risk in 2002 by leaving his company to launch a political career as the mayor of New York City.
These examples show us that producers are not afraid to risk what they already have when opportunity knocks. And their persistence in the face of setbacks shows us that success can come from being open to new ideas, taking chances and learning from our mistakes.
The Self-Made Billionaire Effect Key Idea #6: Self-made billionaires know how to partner to create synergistic effects.
It should be noted that most of the self-made billionaires in this book summary didn’t transform their ideas into multi-billion dollar enterprises alone; this was accomplished by finding the right partner: a performer.
Putting together the right producer and performer is like finding the yin and yang of a successful business. The right partners will complement each other with their respective skill sets and will show a mutual trust and support that allows the other to succeed.
One such famous partnership is that of Apple Computers’ Steve Jobs and Steve Wozniak. Both had a vision of launching a product that could change both people’s lives and the marketplace. And they both knew each other’s strengths and weaknesses when it came to doing business: Jobs focused on the business side of Apple and Wozniak focused on product technology.
With this balance of responsibilities, producers and performers can each play to their strengths and grow their business as efficiently as possible.
Consider Mike and Marian Ilitch, who turned Little Caesars Pizza into the United States’ third-largest pizza restaurant chain.
Because of his empathic imagination, Mike took on the producer role, spending hours in the kitchen testing recipes and coming up with the famous marketing slogan “Pizza Pizza”. As a self-taught accountant, Marian took on the performer role, managing the finances and helping Little Caesars grow to a $2 billion company.
You can think of a producer without a performer as a bird without wings. They might know where to go, but without the necessary help, they won’t be able to take off. Combined with empathic imagination, a relative view of risk, patient urgency and inventive execution, business partnerships are the final key to billion-dollar success.
In Review: The Self-Made Billionaire Effect Book Summary
The key message in this book summary:
Billionaires thrive in a world full of complexities due in large part to their ability to practice dual thinking. With enough training and dedication, anyone can develop and increase their working memory and juggle multiple ideas. By honing these mental habits, you can take your first big steps toward a business breakthrough.
Give your employees some think time!
Allow employees who show the potential to become successful producers to have some think time: dedicated time that can be set aside for them to come up with new projects and ideas.
Studying Self-Made Billionaires
The academic research on self-made billionaires is sparse. Few researchers have systematically assessed billionaires who made their fortunes instead of inheriting them. This need for original research led to an intensive study of 120 self-made billionaires, including interviews with some of them, to determine how they generated so much wealth. Many of the study’s observations challenge broadly held notions – that self-made tycoons are all young Internet-driven tyros – of what makes entrepreneurs exceptionally successful:
- Not just tech – Fewer than 20% made their fortunes in technology.
- Maturity matters – More than 70% of the self-made billionaires in the study group succeeded after age 30.
- Older industries – More than 80% got rich in older, competitive industries, not in new industries with few rivals.
- Practice makes perfect – Nearly 70% owned a business by age 30. These early ventures taught them new, important skills and improved their existing ones.
- More than luck – More than 90% started more than one profitable business; they did not luck into their professional success.
“Producers” Versus “Performers”
Performers show exceptional talent in certain functions, while Producers bring disparate talent together with other resources to create value. Many self-made billionaires seem to be “natural-born Producers” – they are dynamically responsive to the need to alter plans to make an idea a reality. They “adjust…business models” on the fly to optimize their design.
“What enables self-made billionaires to create such massive value?”
Few people get a chance to make a “billion-dollar idea” a reality, but everyone can take steps to make their work more valuable. Many self-made billionaires report several different ways of assessing and seizing opportunities, including:
- “Empathetic imagination” – Producers have deep empathy for consumers and prove exceptionally imaginative in conceiving solutions for them.
- “Patient urgency” – Producers concede their inability to predict the best time to invest in a venture. Instead, they “work fast, slow, super slow and in all of these modes at the same time” while waiting for the right opportunity to unfold.
- “Inventive execution” – Businesses typically segregate creative tasks from operations. But successful producers execute with an integrated, inventive, cross-functional strategy.
- “Relative view of risk” – Self-made billionaires consider potential losses on an investment and the opportunity costs of declining a potentially profitable investment.
- “Leadership partnership” – Few become billionaires alone. Producers usually build exceptional businesses by sharing leadership with a skillful Performer.
A Billion-Dollar Idea
Self-made billionaires ignite their creativity with “divergent thinking” – making new associations in a “free flow of different ideas” to solve a problem. Performers focus on incremental progress and resist untried ideas. “True Producers” fight the urge to reject an idea because it poses execution challenges or has a high probability of failure. Company leaders must support such “positive deviance” alongside operational improvement.
“Why aren’t existing corporations able to create massive value the way these self-made billionaires have?”
The book Blue Ocean Strategy defines “blue oceans” as new markets with few competitors and “red oceans” as established, “bloody” markets where fierce competition prevails. Producers pay little attention to such distinctions, and, undaunted, venture where they please. Their arenas “all look purple,” because billionaires imagine new approaches to satisfying older, contested markets. Eighty percent of the billionaires in the study got rich in red oceans – hard-fought markets in which they identified outsized opportunities. They include:
Hui Lin Chit, Hengan International
Billionaire Hui Lin Chit once was a farmer in the Anhui region of China in the 1970s. The Chinese government introduced economic reforms that included allowing private company ownership. Hui started a zipper factory, which required little capital, but drew many competitors who started their own factories. Hui diversified into small-scale apparel manufacturing, and he turned to producing sanitary napkins, targeting his affordable, high-quality product toward overlooked lower-income women. Procter & Gamble entered the Chinese market in 1985 with a line of expensive feminine products for wealthy women. Hui “expanded up-market.” By 1992, he turned his company, Hengan International, into P&G’s direct competitor. Hengan is now China’s largest domestic producer of sanitary napkins, tissues and disposable diapers.
Eric Lefkosky, Groupon
The founder of Groupon, the online discount service individualized to various cities, always projects his business thinking into the future. Building on his success, Eric Lefkosky and his business partner run a venture capital firm called Lightbank. They focus on trends that are likely to emerge over the next decade. For instance, they expect that biotechnology and life science will be as prosperous in the future as Internet ventures are today. To prepare for this slow-developing opportunity, Lefkosky works at a brisk pace building his portfolio of companies and new products. “We do everything quickly,” he says.
Steve Case, AOL
Internet service provider America Online (AOL) seemed to be a sudden success story when it became popular across the US in the mid-1990s. But CEO Steve Case, who helped start the company in 1985, found that success resulted from an extended struggle. It was not sudden at all. “I used to say AOL was an overnight success 10 years in the making,” Case says. Before AOL could launch its online service, it faced many time-consuming tasks – including forging partnerships with telecommunications hardware manufacturers and network service providers. It also had to develop easy-to-use software.
Alex Spanos, Real Estate Developer
Alex Spanos waited for his big opportunity while engaging in humbler pursuits. A son of Greek immigrants, he devoted most of his 20s to working in his father’s small bakery in Stockton, California. At 27, he started working for himself, initially selling sandwiches to seasonal workers at local San Joaquin Valley farms. He diversified into arranging temporary shelter for those workers, and that led to real estate development. Spanos eventually became the most prolific apartment builder in the United States. He also owns the San Diego Chargers football team.
Sunil Mittal, Bharti Enterprises
Indian entrepreneur Sunil Mittal imported generators into India until the Indian government prohibited generators from other countries and put him out of business. His experience informed his decision to import, and later manufacture, phones and other telecommunications hardware. In the 1990s, Mittal acted urgently to acquire telecom licenses as the government privatized the industry. In 1994, he negotiated a deal with British Telecom and Telecom Italia to offer mobile phone and Internet service through Bharti Airtel, an Indian telecom company. An initial public stock offering in 2002 made Mittal a billionaire.
The story of Key Pharmaceuticals is a lesson in inventive execution. Michael Jaharis – co-founder of Vatera Healthcare Partners, a venture capital firm that invests in health care businesses – and his business partner Phillip Frost acquired Key Pharmaceuticals in 1982. It seemed profitable, but the US Food and Drug Administration found that one of its main products, a supposedly long-acting nitroglycerin pill, did not work. Internal documents revealed that Key Pharmaceuticals was a money loser, contrary to its former managers’ representations before the sale.
“The fact that so many self-made billionaires held managerial positions in midsize to large firms before striking out on their own suggests [that firms] have the talent but haven’t taken the time to identify or nurture it.”
Rather than jettison the company and cut his losses, Jaharis pushed ahead with a redesign of its existing products. Notably, he oversaw the development of a patch, instead of a pill, to deliver nitroglycerin. The Nitro-Dur patch made Key Pharmaceuticals profitable. In 1986, Jaharis and Frost sold the company to Schering-Plough for $836 million.
“As a rule, companies do a poor job of recognizing the differentiated nature of the talent they have.”
Many self-made billionaires gained sales experience on their path to fortune. Dallas Mavericks owner and serial entrepreneur Mark Cuban once sold business software, for example. Virgin Atlantic founder Richard Branson sold newspaper advertising. Making deals requires salesmanship, a learnable skill like other Producer capabilities. By repeatedly making sales proposals, Producers hone their ability to craft a compelling message that serves as the framework, or “design,” of a deal in which the “audience is everything.”
“It may be difficult to imagine that Producers will just emerge from this line of inquiry, but our experience from applying the lessons of this book to…recruitment is that the results are not ambiguous. You know when a Producer is in the room.”
Like Producers, companies can execute creatively by taking an integrative approach that blends talent and resources drawn from normally segregated departments. Another tactic is to launch pilot programs that give your Producers the opportunity to “think and do.” Too many companies invest too much in planning and too little in prototypes “engaging directly with customers.”
Relativity of Risk
At age 27, Cheung Yan invested her savings to start a company in Hong Kong to supply paper pulp to mainland Chinese manufacturers. In 1999, when the pulp supply business was five years old and growing, she closed it and relocated to California to restart her business life, even though she spoke only “tentative English” and knew almost no one in the US. Within 10 years, she turned her California business, America Chung Nam, into the US’s leading exporter of paper. Cheung relocated because China had limited resources for making high-quality paper products. North America and Europe have forests, tree farms, and paper waste “spilling out of homes and offices.” Her “relative view of risk” accounted for the possible consequences of inaction.
“There are clear paths to wealth, but there is no tried-and-true road to mega-wealth.”
Billionaire-class resilience includes being able to sustain a “relative view after a setback.” Real estate developer Stephen Ross founded the Related Companies and earned a fortune after he’d lost two Wall Street jobs in less than three years. His failures in working for someone else proved somewhat typical. About one in four self-made billionaires in the study “had unstable experiences as employees.” They traded the risk of inaction for the risk of working for themselves.
“Self-made billionaires thrive in an environment of shifting variables.”
The concepts of “prospect theory” and “loss aversion” help calibrate the idea of relative risk. Loss aversion is a tendency to feel more fear about a possible loss than eagerness over a possible gain. Self-made billionaires are not all-or-nothing gamblers. They tend to keep a reserve of liquid assets in case their business investments backfire. The billionaires in the study expanded their skills by building companies, one after the other. Serial entrepreneurship bodes well for the survival of new ventures, says a study by the nonprofit Kauffman Foundation. Corporations and the Performers they employ may claim they “manage” risk, but actually, they avoid it. Producers see risk differently and do not allow defeats to thwart them.
Leadership partnerships are common among self-made billionaires. Mark Cuban, a Producer, worked closely with detail-oriented Martin Woodall, a Performer, in their multimillion-dollar business, MicroSolutions. Bill Gates, a Producer, had a longstanding partnership with former Microsoft CEO Steve Ballmer, a Performer, during the time when the company created the majority of its value. Partnerships of two Producers can generate outstanding results. Google’s founders, Sergey Brin and Larry Page, are both Producers; its CEO Eric Schmidt is a Performer.
“These are people who have dealt with the world as it is, made excruciating choices and placed bets based on hard reality.”
Most executive searches target Performers, not Producers. Boards of directors too frequently describe their executive search choices as the difference between one Performer and another. They would achieve better outcomes if they sought and selected Producers instead of Performers. Companies should elevate their Producers and match them with complementary Performers. Working together, they can bring fresh vigor to their employers. Managers must differentiate between company initiatives that need a Producer in the lead and those that demand a Performer.
By being uniquely capable of allowing two characteristics to complement each other — rather than holding them in tension with one another as most people do — producers are able to envision, cultivate, and execute blockbuster ideas that turn them into successful billionaires. Because these habits of mind are not what’s traditionally rewarded in companies, producers typically step away from someone else’s organization in one way or another and create value on an incredible scale on their own. But if companies want to channel this talent and not miss out on the potential to create value, they must redefine how they think and behave.
First, companies have to change what they look for. When creating a new product or service, don’t automatically give the leadership position to a performer –– someone who’s already been in charge of a proven product or service –– but look for someone who has created an opportunity. Instead of hiring someone to improve the sales of a product, for example, hire someone to change the product. Companies must be conscious of the fact that employees who “fit in” are probably performers, and they should seek to identify those who have atypical experiences, ideas, and attitudes. After all, producers are often categorized as “deviants.”
Companies should also focus on recognizing and cultivating any natural performer–pro-ducer partnerships they already have, and to hire producers who will further bring out the talents of their performers.
Finally, company culture has to change. If a producer tried a new idea and it failed — whether because of the idea, the timing, or the execution — most companies would shame the producer in some shape or form. Yet most of these selfmade billionaires are very clear about the ways in which they’ve failed in the past and how those failures were learning experiences. To encourage producers to cultivate their talents at a company, shame needs to be removed from the equation.
Companies must remember that though these dualistic habits of mind may seem unorthodox and unfamiliar, they’re traits proven to be common to some of the most successful people in the world.
John Sviokla is head of global thought leadership at PricewaterhouseCoopers LLP (PwC). Mitch Cohen is vice chairman of PwC.
Mitch Cohen is vice chairman of PricewaterhouseCooper and oversees the US branch’s involvement in the firm’s global activities. He serves on the advisory board of the Smeal College of Business at the Pennsylvania State University, as well as the advisory board of DonorsChoose.
Motivational, Entrepreneurship, Business, Economics, Finance, Currency, Money, Self Help, Personal Development, Personal Finance, Management, Leadership, Organizational Behavior
Table of Contents
1 Exploding Myths of Extreme Entrepreneur ship 7
2 Empathetic Imagination: The Art of Designing the Blockbuster 29
3 Patient Urgency: How Billionaires Thrive Despite the Uncertainty of Time 59
4 Inventive Execution: How Producers Bring Blockbusters to Market 85
5 Reversing the Risk Equation: How Producers Avoid Risks Others Take and Take Risks Others Avoid 113
5 The Producer-Performer Duality: How Producers Find Their Complement 143
Conclusion: Creating the Billionaire Effect 167
Appendix: Billionaires Who Appear in This Book 195
“The Self-Made Billionaire Effect” delves into the intriguing world of self-made billionaires, seeking to uncover the common traits, habits, and strategies that have enabled them to amass incredible wealth. Authors John Sviokla and Mitch Cohen draw from an extensive study of self-made billionaires, aiming to distill their insights into a blueprint for wealth creation. The book explores key themes such as extreme focus, customer obsession, and market innovation, shedding light on the mindset and actions that set these individuals apart. The authors argue that self-made billionaires share a unique set of skills and attributes, emphasizing the importance of understanding their exceptional ability to create massive value.
Sviokla and Cohen’s book offers a fascinating exploration of the world’s most successful entrepreneurs and the distinctive qualities that drive their achievements. The authors’ in-depth research and analysis provide readers with valuable insights into the mindset of self-made billionaires, making it a must-read for anyone interested in entrepreneurship, business, and wealth creation. The book is well-structured and easy to follow, with compelling case studies and anecdotes that illustrate the principles discussed. It’s a thought-provoking read that challenges conventional wisdom and highlights the importance of thinking differently and taking calculated risks in the pursuit of extraordinary success. While the book’s focus on self-made billionaires might seem aspirational to some, the insights presented can be applied to various aspects of business and personal development, making it a valuable resource for a broad audience.
In summary, “The Self-Made Billionaire Effect” offers a comprehensive and enlightening exploration of what sets self-made billionaires apart, providing readers with a roadmap to create significant value in their own endeavors.