How to build a fortune, education vs actual doing ?
Recently, Amancio Ortega of Spain was crowned the second or third richest person in the world. His name might not sound familiar, but if you heard of Zara, Massimo Dutti, Berksha, then he's touched your life indirectly. Ortega is the owner of Inditex, a massive conglomerate that has $20 billion plus in revenue, with around $5 billion in net profit. The company is valued at around $100 billion plus with Ortega being the majority stakeholder, which makes him one of the top three or four richest in the world.
Is this luck ? No. Is it a sheer coincidence ? Probably. Did Ortega know about his destiny and where he'd end up ? I doubt it. Ortega was born poor to railway workers, left middle school to work in a clothing factory. He picked up operational knowledge of making clothes and started his own firm to become what he is today.
It all makes sense. The last thing on earth you should make is a commoditized product, because it's prone to cycles and ruthless competition will screw your PnL and carrying value of assets on your balance sheet when industry overcapacity kicks in. You should also make a product that's difficult to replicate, such as a product that can be distinguished by a brand or some other aspect that's difficult to copy. This is why Inditex, Zara don't suffer from a reduction in China's GDP, and what happens to Chinese industry overcapacity, or China's central bank's policy rate has no effect on its future. Just compare this to what's happening in the commodity world. All these Ivy Leaguers working in the commodity industry with knowledge of Greek signs can't do a god damn thing to save their PnL in the current market.
Did Ortega know all this when he started in the 1950s ? I doubt he even knows what a balance sheet is when he started out. A few pics of him on Google are good enough to understand that he seems to be quite simple.
There's something I realized recently. If you're after the money. You'll never get to it using what's written in textbooks. What's your income statement, what's your balance sheet, watch your top line, watch your bottom line and keep it positive, watch your debt to equity ratio, and grow them all as much as you can and keep them healthy in any market condition - this is how you build a fortune.
For all of you out there who are less concerned about working for someone else and more entrepreneurial, do you relate ? Do you see what it takes to change the status quo ?
I'm not against education, I actually am a staunch supporter, however the more I look around at those who surround me and have more, the more I feel securing your financial well being is in your own hands and it has nothing to do with formal education. My only goal in life is to stack as much paper as i can, and I realized if you don't have an enterprise, no matter what title you're given at which sexy or heavy hitting firm, you're not going to get there.
Other interesting life stories in include, Dennis Washington and Sheldon Adelson.
I'm thinking about skipping the MBA, rather use that money to start out on my own some day after having a plan worth pursuing.
Any thoughts guys ?