1% of 1% of 1%

English: Elon Musk at the panel Tribeca Talks: Revenge of the Electric Car, for the 2011 Tribeca Film Festival. (Photo credit: Wikipedia)

There was that thing in Zuccoti Park. People rallied against the so-called 1%. That 1% supposedly has 40% of the wealth. Much of it is inherited.

And there is the Piketty book that drew a lot of attention. He says, if wealth will get an annual 10% return, but labor will see less than 3% annual growth, then the gap will never close, it will keep widening.

And then there is this: global companies are sitting on $7 trillion in cash. Just sitting. Not doing anything with it. This is not money on that 10% train. How about $18 trillion?

One, I think there is an economic case to be made that if the gulf between the top 1% and the bottom 10% is too wide, that society is not likely to be growing at its optimum. I am talking economic theory. As to how to go about remedying? That is a debate. I am for ordinary people owning equity stakes in many more companies, and not just post-IPO companies. Heck, I am not opposed to a slightly higher tax rate. And then there is choice, the Warren Buffett choice. He decided most of his wealth should not go to his children. It is bad for them. 90% of his wealth will not go to his children.

Two, a stagnant minimum wage is a bad policy choice. The minimum wage in America should be $10 right away, and in the big cities it should be $15. Urbanization is good for the environment. Go green.

Three, trillions sitting around is stupidity. $10 trillion will take care of a-l-l infrastructure needs across the Global South, and that investment will bring a guaranteed 10% annual return. Win-win. Heck, somebody put half a trillion in Elon Musk's internet access company.

But all that is wealth talk. I meant to talk entrepreneurship, especially high tech entrepreneurship. I once put out a blog post where I said, statistically speaking, being an entrepreneur is like being gay. It is about one out of 100. But then that is everyone. That is pizza store owners.

1% of that 1% might be in high tech. And 1% of that 1% of that 1% might be successful tech entrepreneurs. 1 out of 100 which is 1 out of 100 which is 1 out of 100. 1 out of 1,000,000. You are quite literally one in a million. In a country of 300 million, that would give us 300 such entrepreneurs. That is about right. Does this country have 300 self made billionaires? If not, there is something missing in the social/political/economic fabric. Maybe the 1% have too much wealth, maybe the minimum wage has been too stagnant for too long, maybe there are too many trillions just sitting around, having a negative gravity effect on overall growth and well being. Probably all of the above.

1% of 1% of 1%: self made billionaires are in august company.

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Gates, The Most Famous Self Made Billionaire Of His Time, And Global Poverty

Bill and Melinda Gates during their visit to the Oslo Opera House in June 2009. (Photo credit: Wikipedia)

Gates has shamelessly cashed on his status as the most famous self made billionaire of his time to shove his hat in the laps of other billionaires and ask for money, not just some money, but most of their money. The ROI of the Gates Foundation is astounding, to put it mildly.

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Pinching Pennies

Image via WikipediaI came across this article earlier. You have to remember you are talking about a billionaire dude.

Forbes: You Can Get Richer Pinching Pennies Like Warren Buffett

Brown bag breakfast and lunch at work..... Don’t go food shopping when you’re hungry. ..... Cook meals instead of relying on takeout and ordering in. Eat at restaurants only on special occasions. ...... Scoop your own ice cream. ...... Carry a refillable water bottle instead of buying bottled water. ...... Wait for items you covet to go on sale—either in stores or online. (By then you may have decided you don’t them after all.) .... Avoid recreational shopping. Instead, make a list of what you really need. ..... Unless you need something immediately (and chances are you don’t), buy seasonal clothing once the season is already underway. Examples: bathing suits in July; winter coats and cashmere sweaters at after Christmas sales. ..... Leave your credit cards at home and pay in cash. ...... Take your date to a freebie. ..... Cook together; how you cope with kitchen mishaps could speak volumes about how you would weather life’s serious ups and downs. ..... Look for a partner whose money styles are compatible with your own. ....... To reduce the price of formula, nurse your baby for the first year, if possible. ...... Until children reach age 12, buy clothing on sale at the end of the season and put it away for the following year. (Once they become teenagers this doesn’t work anymore, since their growth rate can be dramatic and unpredictable.) ...... Check thrift shops for lightly used children’s clothing, especially sweaters, fleeces and outerwear. ..... Buy toys and children’s books at yard sales and rummage sales. ....... Buy furniture at auction. .... Hire painters and contractors during the winter. ...... Get plumbing repairs done during the summer if you live in a climate with seasonal differences. (Plumbers are busiest during the heating season.) ...... Pay down your mortgage (and other debt) ..... Don’t see a movie in the theater unless it has gotten great reviews or has so many special effects that it can only be thoroughly enjoyed on the big screen. Otherwise rent it. ...... Patronize your local library. ...... Find the swankest hotel in town, and look for a cheaper place next door. ..... Bring your own food and soft drinks instead of buying food on board planes; at airports; or relying on hotel minibars and room service.

But then there is another billionaire, Larry Ellison. The guy went ahead and bought a boat. That wrecked his first marriage. I guess there is no one way.

How Wal-Mart Got Started

Image via Wikipedia"In 1962, four new retailers were born. One called Kmart was started in Garden City, Michigan, another called Target was started in Minneapolis, another from Woolworth, the big name in retailing at the time, called Woolco was started, and the final one in rural Rogers, Arkansas, called Wal-Mart. Thirty years later, Woolco had met its demise and one of the other two was the largest retailer in the country. Surprisingly, the top retailer was the one from Arkansas."

The Guardian: It all began in a small store in Arkansas...: Four of the world's top 15 billionaires are from one family. ..... retail is a good place to be. Of the top 15 billionaires, nine made their money the old-fashioned way, by selling us clothes, food and furniture ..... together, the clan are nearly as rich as Warren Buffett and Bill Gates (the top two on the list) combined. ....... Sam Walton began his conquest of the world in 1945, with a loan of $20,000 from his father-in-law and a small variety store in Newport, Arkansas, where he established the practices that define present-day Wal-Mart: he kept prices as low as possible, stocked a wide range of goods, and stayed open longer than anyone else. His margins were small, but he sold large quantities, which meant he could bargain for even lower prices from wholesalers - policies that still drive smaller local stores out of business. ....... Even in his later years, when he was worth $24bn, he was famously frugal, opting for $5 haircuts (no tip), and cheap food at his local Wal-Mart. He drove an old pick-up and often borrowed money from his employees. And he was ruthless. "Some people try to turn it into this 'Save the Small-Town Merchants' deal, like they were whales or something that have a right to be protected," he wrote in his autobiography. But he was having none of it. "What happened was as inevitable as the replacement of the buggy by the car." When he died, in 1992, the state got almost nothing in taxes, because he had divided his wealth between his wife Helen, who died in 2007, and his children. ....... Wal-Mart employs more than 2 million people worldwide, meaning it has twice as many men and women in uniform than the US army. ...... A reporter for Fortune, strolling round Bentonville, Arkansas, was hard put to even find the offices from which their fortunes are run. ....... Rob Walton, company chairman (the CEO is a non-Walton, Mike Duke), worked in a small windowless room,
Image via Wikipedia 10ft by 10ft square ..... in fact, anyone who lives in Bentonville probably shops in Wal-mart for food, clothes, furniture and electronics, banks at Arvest, and, until recently, read a Walton-owned paper. They can drive down Walton Boulevard to watch sport at the Walton Arena. They can wander around the Walton Arts Centre, or go to the Wal-Mart Museum, where old Sam's office and pick-up are preserved exactly as they were the day he died. They can study at the Sam Walton business school, or fly from the Alice L Walton terminal of the airport.

A Surprising Blog Post From Fred Wilson

Image via Wikipedia

Fred Wilson: Going Out On Top: Then, at the top of their game, LCD decided to call it quits. They played four shows this past week at Terminal 5, and then played their last show ever at The Garden last night. It's over now. As we watched the band put on a fantastic show last night, I was thinking about going out on top. So few manage to do it. Shaq is warming the bench in Boston. ..... The money and the burning desire to "win another one" drives the great ones to stick around too long. ..... I look at Warren Buffett and Rupert Murdoch and I see individuals still enjoying the work and delivering for their shareholders and investors into their 80s. ..... But I also look around the venture capital business and I see investors who were at the top of their games in the 90s struggling to remain relevant. ...... How do you know when you've done your last great startup? How do you know when you've done your last great investment? How do you know when you don't have the drive, hunger, and insights to keep delivering top performance? ...... Right now, coming off two weeks of totally relaxing vacation with my family, I find myself up early, thinking, writing, and planning. I don't sense it is yet time to hang up my cleats or walk of the stage like James Murphy did last night. But the thought is in my mind and I want it to stay there. The investment business is not easy. You are only as good as your last trade, fund, or year. And the venture capital business is particulary tricky. All the returns in the business accrue to the top ten or, at best, twenty percent of investors. When you lose your edge, your performance suffers, often badly. But it can take a decade for the rest of the world to notice because there is so much latency in the venture capital business.

My favorite solo blogger just surprised me like never before. The thought of "going out on top" seems to have crossed his mind.

The Anne Hathaway Effect

Image via Wikipedia

..... when Anne Hathaway was in the news, Warren Buffett's Berkshire Hathaway's shares went up. He pointed to six dates going back to 2008 to show the correlation.

You Don't Need Billions To Take Care Of Your Family

Image via CrunchBaseThis news is heart warming to me. Now I wish a 200 billion dollar valuation upon Facebook. Zuck just warmed up my heart. If you think how minuscule the UN's budget is, this effort by the two mega billionaires Gates and Buffett stands out. And, believe me, money is the smaller part of the message, big as it is. The bigger part of the message is the gesture itself. This sends a loud message to the people in dire need, the people who are working to help them, and people who need to help them but are not. Poverty is truly an artificial thing. It can be made to go away. It doesn't take much. And it all starts with caring. Once you decide you care, things start to happen.

Rich People's Kids

Image via Wikipedia

So Bill Gates is on my BlogRoll, (so is Amitabh Bachchan), one the richest dude on the planet, another a fairly rich dude, but the most recognized face on the planet. And I was just reading one of his blog posts for the first time. In it he talks of a Buffett son. "Contrary to what many people might assume, Peter won’t inherit great wealth from his father." Well, why thank you, Bill Gates!

Bill Gates: Life Is What You Make It

Contrary to what many people might assume, Peter won’t inherit great wealth from his father.

Warren Buffett gave most of his money to the Gates Foundation, an entity I am a fan of. I never called myself a fan of Microsoft, although I have admired Gates' path in business greatly. I hope Buffett left at least one billion, or half a billion for his kids. Or I am going to think the guy is cheap, a rich cheap guy. Buffett's logic has been, "but I did not deliver my children myself either." As in, his children perhaps are not the best professionals to be doling out money. Let Bill G do it.

Sam Walton went the other way. Many people don't know this but Walton created more wealth than Gates: there is more money in people skills than in software, always will be. That Republican dude left everything to his children. I don't approve of that either. That is taking family values a little too far.

An honest rich guy is Larry Ellison. He was not born rich. He was born in "Chicago's Jewish ghetto" - his words - where you could hear "gunshots." He talks of having to eat "macaroni and cheese" late into his 20s. He claims his first wife left him because he "did not work hard enough." He went ahead and bought a boat, and that sent the wife into therapy. His second wife left him because he "worked too hard."

About money and children he said, "I am not going to pretend that my children are going to have to work for a living." That's my kind of a rich guy: brutally honest, interesting.

Although, did I say, I am a huge fan of the Gates Foundation? I am a Third World guy, after all. Bill Gates has challenged many racist viewpoints about the "bottom two billion," as he calls it. He is not talking about the first two billion he made, but the two billion poorest people.

Steven Spielberg once said about his huge wealth. "It's just numbers. Some accountant takes care of it." Bill Gates said only a few weeks back about being rich, after a few million, it does not really matter. Makes no material difference to your life. I buy into the Spielberg line. I have 47,000 followers on Twitter. I remember being very excited when I hit 2,000 followers. Me? What? Popular? At 47,000 it just feels like numbers.

Larry, again, has quite another attitude. "There is nothing that can be bought with money that I can not buy," he boasted to a biographer. Well, that car you see is going down Larry Ellison Boulevard.

There has got to be joy in actively giving. Dying and letting others figure it out can't be joyous. You are not even around. But I am not against financial freedom for one's children. They can still end up normal people doing good, productive work. I think.

Larry Ellison

There are only two income/wealth brackets that fascinate me: the dollar a day people, and the self-made billionaires. In between lies the gray zone.

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Visionary Entrepreneurs Will Recreate The World

Image by Getty Images via Daylife

That Plateau Feeling

Unless the political leadership gets the fundamentals right, there is not too much room for the entrepreneurs to play. Warren Buffett has said he could not have done what he has done if he were not in America. The soccer field is necessary. The referees matter fundamentally. The paint buckets matter to the artist. But great soccer is played by great soccer players. I compare visionary entrepreneurs to great soccer players.



Visionary entrepreneurs will lead the green tech revolution. Visionary entrepreneurs will create the next generation financial institutions. Visionary entrepreneurs will make it possible for the world to pour a trillion dollars into microfinance. Visionary entrepreneurs will create the next generation jobs, companies and industries so that Brazil, Russia, India, China and others maturing economically is good not bad news for America.

Political leaders have to provide the soccer field. It is good to see them hard at work.

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[PDF] The Technology Entrepreneur’s Guidebook
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That StartUp Mentality (2)

Image via CrunchBase

• Larry Ellison's first wife left him. During the counseling before the divorce, Ellison said he will make a million dollars if she stayed with him. The wife laughed. They were barely getting by. Ellison worked just enough to pay his share of bills, and not more. One day he went ahead and bought a boat, made a down payment. That sent the wife into therapy. At his peak his net worth was close to 50 billion.
• His second wife would put on make up before going to sleep and spend the night face up. Logic? So she did not have to rush in the morning.
• His third wife left him for a Harvard MBA. He wrote to a friend. "Congratulations on getting and staying married."
• Michael Dell started his computer business in his college dorm. One day his parents called from the airport. We are here to see you. He managed to get all his stuff into his neighbor's bathroom just in time.
• Einstein was thought of as a no good student at high school. He barely managed to pass the entrance exams to college. When he was working on the Theory of Relativity, people routinely described him as someone "lazy."
• After Steve Wozniak designed the PC, he took the prototype to his bosses at HP. They were utterly uninterested. When Steve Jobs found out Wozniak had done that, he was enraged.
• The two YouTube guys had been swiping credit cards not long before they got bought by Google for $1.5 billion.
• The two Google guys early on wanted to be bought by Yahoo. Yahoo was uninterested in them. Yahoo could have had the Google search engine for a few tens of millions.
• One of the two Google founders Sergei Brin would go on dates in 2000, and he noticed there never were second dates. Women did not return calls. He had a dot com that had never made a dime. That did not look sexy when dot coms were going down left and right. Larry Page jokes that was a big reason they went from doing search only to search and ads. Later it has become search, ads and apps.
• Amitabh Bachchan is the most recognized face on the planet, he has ruled the Hindi film industry for about four decades now. I grew up watching him. I used to imitate his hairstyle. I am trying to do it again. In his late 20s, early 30s, he had a decent job in Calcutta. He had a company car, for one, a big deal for the India of the late 1960s. He quit that job and went to Mumbai to give acting a shot. His mother was not happy. He had to struggle for a few years. He had a few flops in a row. Then he got a huge hit, and he never looked back. He is an ultimate family man.
• One day Sam Walton showed up in Manhattan at an investment bank. I want to take my company public, who do I talk to, he asked the receptionist. Although Walmart was in debt, the fundamentals of the company were strong. After the receptionist found out he was from Arkansas, she took him to see this lone soul from Arkansas who worked at that bank.
• For the longest time after founding Walmart, Walton did not need college graduates. College graduates were over educated and often lacking in basic common sense for the kinds of tasks he had. Then the company grew, and the first string of college graduates started to apply for jobs. The founding team got suspicious.
• Bill Gates said he imagined he was going to be a millionaire, even a multi-millionaire, but that he never imagined he was going to be a billionaire.
• When Bill Clinton was a Rhodes Scholar, he went on a tour of Europe. He met families of his Oxford friends. They routinely suggested he should come back to their country as ambassador.
• When Warren Buffett launched his company, he approached a neighbor, friend. College education is getting expensive these days, he said. If you were to invest 10K in my company, by the time your kids grow up and are ready for college, that investment should take care of their college expenses, he said. The friend refused to invest. That 10K today would have been worth 300 million.

• From the book, Soft War, An Intimate Portrait Of Larry Ellison And Oracle by Matthew Symonds, with commentary by Larry Ellison, pages 337-38.
  
  
  
  Jimmy says, "I've talked this over with Larry several times, and there's a big difference of perception about this. I was at home with my parents when we got a call from Larry. My father had a long talk with him over the phone, and when he hung up, he said: 'Larry's in trouble. He wants to start a company, and he needs money.' At that time, he'd just become a judge and his salary had dropped dramatically from what he'd been making as a lawyer, but he said, 'I'm not going to say no to the kid.' He went into my sister's savings account and sent him $6,000. The feeling was, he's calling us for help and we'll do all we can for him." Ellison's version is indeed a little different: "I told them that Oracle would go public in about a year or so and that anything they invested in the stock now would increase by a factor of ten. Of course, at the time they honestly believed that they would never see any of their money ever again. In spite of that, they gave me the money. It was an act of kindness. And it turned out to be a pretty good investment too." *
  
  * LE writes: I was wrong about Oracle stock's increasing in value by a factor of ten; it increased by a factor of ten thousand.
  

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