Stuff Matters: Genius, Risk and the Secret of Capitalism. Harry Bingham
amount of good, yet it’s a contribution that doesn’t fit our model of what do-gooding should look like. Martyn didn’t personally nurse the sick or bring soup to the homeless. And his motivations were never selfless, based not on ‘our necessities’ but on his ‘advantages’, advantages which ended up making him a wealthy man. Because his contribution didn’t fit our, essentially pre-capitalist, model of what these things should look like, we tend simply to ignore it.
But if the good that entrepreneurs do seems invisible, the harm that they do is very much in evidence. Sometimes workers have to be fired or factories moved. Sometimes competitors are put out of business or raided and broken up. If the benefits of capitalism are so diffuse they become almost invisible, the costs are often painfully obvious and personal. That’s not a good recipe for universal love.
It gets worse. Senior management types are renowned for a kind of cheese-paring pettiness, always inclined to quarrel over pennies where any decent person would just show a little human generosity. Examples are legion. Call a phone company – a company whose business is based, you’d have thought, on permitting two humans to communicate by phone – and yet you have to plough your way through a million menus to get through to an actual human and by the time you do, you’ve got so lost that you’ve been pressing buttons at random and end up being put through to the Major Emergency Response Team when all you ever wanted was to change your calling plan. Or you can maintain a positive balance with your bank 364 days a year, then you go into overdraft for just one day by just one measly pound and you’ll all of a sudden see a whole spatter of charges arise that you probably gave your theoretical consent to somewhere sometime, but whose sheer gall still takes your breath away.
These things are outrageous, at least in the sense that I personally get regularly outraged by them. Yet, in my rational moments, I know why these things happen. Where consumers are happy to measure things in pounds, business types are forced to measure them in pence. A typical phone company might make a net profit of only 7p in the pound, a supermarket more like 4p, a bookstore maybe 2p. An airline is lucky to make anything at all. A bank has a return on assets of around one-third of a penny in the pound. If companies like these start being generous about trifles – a fifth of a penny here, a quarter of a penny there – they’ll destroy their profitability at a stroke.
The British cycling team knows a thing or two about winning. British cyclists destroyed their competition at the 2008 Olympic Games and they’re expected to do the same again in London in 2012. Their performance director, David Brailsford, summarizes his philosophy of success very simply as the ‘aggregation of marginal gains’ – tiny little advantages that cumulate into one insuperable one. The doctrine precisely summarizes the route to nearly all business success. When John D. Rockefeller built Standard Oil, his contemporaries were most often struck by the Napoleonic speed, scale, and completeness of his victories. Yet, as in war, Rockefeller’s strategic successes were built on the finest attention to detail: railroad tariffs, still design, mechanical sludge removal, barrel manufacture, tank storage farms, tank car loading systems, piping costs, shipping operations, international distribution – there was nothing too trivial to deserve his relentlessly efficient attention. Where he led, almost every competent business since has followed.* Hence the cheese-paring and the ungenerous obsession with trifles.
This chapter has spent most of its time explaining why businesspeople may be admired but are seldom liked. It’s been an extended apology for the entrepreneur weeping tears of rejection into her Château Lafite Rothschild, for the unloved industrialist forced to comfort his grieving soul with another Rolls Royce and an extensively customized private jet. So it’s perhaps time to admit one further truth: that one reason why successful businesspeople are often not liked is that they are often not at all likeable.
I haven’t read many ‘How To’-type books in my life for the simple reason that I don’t believe most such books have anything useful to impart. But one book I did read and learn from is titled simply How to Get Rich. Its author, a magazine publisher named Felix Dennis, has absolutely no professional or academic qualifications to justify his lecturing me – me, a highly rated investment banker and Oxford-educated economist – on the topic, but since he does sit atop an entirely self-made fortune of around £750 million, I’m prepared to extend him the benefit of the doubt.
And Dennis is blunt about what it takes to succeed. Among his words of wisdom:
If you care about what the neighbours think, you will never get rich.
If you cannot bear the thought of causing worry to your family, spouse or lover while you plough a lonely, dangerous road…you will never get rich…
If you are not prepared to work longer hours than almost anyone else you know…you are unlikely ever to get rich.
The truth is that getting rich means sacrifice. And the worst of it is, it isn’t always you that’s doing the sacrificing. You must get used to that, or give up the quest.
In another chapter, Dennis is talking about ownership and tells us:
You must strive with every fibre of your being, while recognising the idiocy of your behaviour, to own and retain control of as near to 100 per cent of any company as you can. If that is not possible, in a public company for example, then you must be prepared to make yourself hated by those around you…That is the dirty, rotten secret of it all, my friend.
His book is, in fact, ‘an anti-self-improvement book’ – because it admits openly that the chances of anyone reading it and then becoming rich are minuscule. ‘The vast majority of you are far too nice.’ If it’s any consolation, however, Dennis doesn’t regard you as rich until you’re worth £40 million or so, or a whole lot more than that if you’re American. So you can be nice and still worth £39 million or, let us say, a round $100 million, which is the kind of compromise I could probably bear to live with.
The lack of niceness you need to succeed doesn’t need to be very profound – and certainly there are plenty of entrepreneurs who rediscover their inner niceness once they’ve made their pile. But it’s a rare entrepreneur who isn’t somewhat obsessive; who doesn’t downgrade their personal relationships while hot in pursuit of the almighty dollar; who doesn’t put aside a concept of ‘fairness’ while at the negotiating table; who isn’t perfectly ready to fire people, close factories, hand out rollickings, or make other tough decisions. Most of the entrepreneurs I spoke to told me that, at the time when their careers were first taking off, they were either single, or had relationships that failed, or had a partner of extraordinary forbearance. Marriages are best formed after the entrepreneurial furnaces have burned back a little.
An obsessive temperament is at work here, of course, but so is a kind of motivational minimalism. The emotional and ethical thickets that the rest of the world blunders around in don’t confuse the entrepreneur. If a particular action is good for the business, then it’s an action that needs to be taken. It ought to be taken with due regard for others – there are good ways to fire people and bad ways; nice ways to negotiate and terrible ones – but the need for the action is never in doubt. That’s why you’ll find that businesspeople tend towards a radical simplicity in the way they talk, negotiate, and operate. That simplicity isn’t the product of either idiocy or genius. It’s simply the result of having only one goal that truly matters.
The same thing lies at the root of another disconcerting characteristic of most successful entrepreneurs: their truthtelling. Most of us like to tell the truth, of course, but we’re caught up in a web of human complexity at the same time. We might know that, let’s say, a particular product line is underperforming, but we also know that Jenny has tried her hardest on the marketing side and the real problem person, Jake, feels a lot of guilt at his failures, and we prefer him by a long way to that creepy person from production who’s just waiting to stick his nose in. On top of which we have convinced ourselves that this year, surely, the market is finally going to improve. At a meeting where these things are being discussed, it’s not that we’ll hold back from the truth, but our expression of it will be compromised by all those other things that compete for our attention. It’s not that entrepreneurs aren’t aware of all