Stuff Matters: Genius, Risk and the Secret of Capitalism. Harry Bingham
outcome, obviously, but it’s not a bad one. The only bad outcome would have been if they hadn’t had the nerve to go for it in the first place. Our ‘do nothing’ default option is their worst case scenario. That’s the one they truly can’t envisage. Equally, our worst case scenario (‘invest up to your neck, then see the whole thing go pear-shaped’) is no big deal for them. It’s an ‘Aw shucks!’ outcome, one that just makes them want to go back and try again with something else.
Even the way we respond to success is different. For us, success probably means a new home, a nice car and perhaps (depending on the level of our success) a yacht, a private jet, a football club, or a private island. For them, success means all those things for sure, but it means something else even better: that their ‘baby’ has flourished, that their act of creation has been rewarded by something that has matured into a confident, independent adulthood. These feelings mean that the risks and rewards we face are quite different from the ones that entrepreneurs face, even if we were both to compute the odds in the exact same way. Little wonder that we end up behaving in sharply different ways.
| How we feel | How entrepreneurs feel | |
| Do nothing | Fine. This is our default choice. | Bored. Frustrated. No way. |
| Try and fail | Oh my God! What do I live on? | At least I gave it a go. |
| Try and succeed | Jackpot – got the house, got the yacht. | Immense satisfaction – I created something. |
Knox D’Arcy is the perfect exemplar of all these things: the optimism, the gambling – and the irresponsibility which (to our pastoral, anti-nomadic minds) is the inevitable result. D’Arcy’s judgement about the Mount Morgan mine proved reasonable, but he refused to sell down his investment in it, even after the stock hit absurdly unsustainable heights. His judgement about Persian oil was simply awful. True enough, even that bet came good in the end, but any competent business manager would have made a much better fist of assessing risks and benefits before making any financial commitment – and would, at the very least, have come up with a much more sober estimate of the probable costs and the scale of financing needed.
Yet there’s nothing unique about his mindset. I’ve spoken to upwards of two dozen self-made multimillionaires. (And my threshold level for ‘multimillionaire’ was high. The median net worth of those I spoke to was well into the tens of millions of pounds.) Almost all of these entrepreneurs used the same kind of language to describe themselves. They’re ‘restless’, have a ‘very low boredom threshold’, need ‘decisions to happen quickly’, need ‘high energy’ and ‘passion’ from those they work with, couldn’t stand the ‘slowness’ of large corporations.
Some of them did have high educational achievement, but plenty didn’t. Typical was one entrepreneur who crammed his three-year law course into an eighteen-month workathon. After getting his degree, he started in corporate finance. He became bored working for others, so set up on his own instead. When he wearied of funding other people’s companies, he bought his own. Work was never the challenge, dullness was. With people like that, I almost got the feeling that if they were forced to sit in a classroom or given a pedestrian middle-management job in a dull but worthy company somewhere, they’d end up chewing carpet tiles or jabbing forks into electrical sockets. These were folk who needed stuff to happen and happen fast.
Although entrepreneurs are often described as rule-breakers, it would perhaps be more accurate to say that they’re typically not rule-minded. It’s not particularly that they seek to break rules, more that they don’t really see the rules that are so clear to the rest of us. That’s why those 7R-DRD4 variant nomads find it so easy to travel beyond the far horizon. They haven’t felt the tug of any prohibition against doing so. It’s perhaps also why immigrants are so over-represented in entrepreneurship – around a quarter of all US start-ups are founded by immigrants, for example. Those who are born and brought up in a place feel its rules and mores in their bones. Those who have already left kin and country behind are much less tuned in to those rules in the first place.
These issues may even lie at the heart of one of the oddest results to come out of the torrent of research into entrepreneurship: namely that while only 1 per cent of corporate managers are dyslexic an astonishing 20–35 per cent of entrepreneurs are (the two figures are for UK and US entrepreneurs respectively; the researcher was Julie Logan of the Cass Business School in London). There’s no settled interpretation of this research finding, but here’s mine. Dyslexics have gone through their school life noticing that the rules which work for others don’t seem to hold for them. A is for Apple, B is for Bird, C is for Cat, D is for Dog. That worked for me. If you’re non-dyslexic, then it presumably worked for you. For dyslexics, however, even those most basic of all rules seem to make no sense. So what do you – as a bemused child, anxiously seeking the approval of your teachers and parents – do in such a situation? You surely get creative. You develop your own techniques and trust those in preference to the seemingly unreliable ones offered by your teacher. You’ve learned to invent your own way around problems. You’ve learned that the rules of Planet Normal just aren’t going to work for you – indeed, they don’t even make sense. And as soon as you start to think like this, though you may not know it yet, you’re an entrepreneur.
If wealth creation is alchemy, then its orginating spark is here. The restlessness of people who can’t bear to be still; the risk-taking of those who can’t bear to be safe; the decisiveness of those who know that if they want a thing done, they’ll need to do it themselves. And from the spark – fire. From the Mount Morgan mine to Middle Eastern oil and the birth of one of the world’s largest oil companies.* The ultimate reason why the world today is different from the world 250 years ago is because of the extraordinary creative energy of that entrepreneurial spark. It’s that spark which has wrested gold, iron, coal and oil from the earth; which has hewn lumber, bashed metal, invented gadgets, launched ships – and done all those other things which make our world what it is today.
When as non-physicists we read about the Big Bang, it’s almost impossible for us to get our heads round the idea that something can come from nothing. In historical terms, though, that’s precisely what has happened over the last 250 years. In 1750, the Earth had plenty of gold in her belly, iron in her veins, lumber in her forests. Indeed, she had more of all those things then than now and yet it was a largely useless sort of fertility because it was one that sat alongside almost universal poverty, illiteracy and high mortality. Out of that void was created the extraordinary affluence of our modern Western world; something from nothing on a colossal scale and achieved in the space of three or four human lifetimes.
As entrepreneurs go, William Knox D’Arcy isn’t the best possible exemplar. He didn’t bring the world any extraordinary new vision. He invented no new technology. He was neither manager nor organizer. He wasn’t even a particularly astute investor, holding onto his Mount Morgan shares when they touched £17 and watching them fall back all the way to £2. But more than almost anyone else D’Arcy exemplifies the willingness – the compulsion – to gamble his all on a vision of the future. Character and a moment of risk. The start of everything.
If you start to take Vienna – take Vienna.
– NAPOLEON BONAPARTE
In 1927, Paul Getty had a problem. One of his companies owned a patch of land in Santa Fe Springs, just outside Los Angeles. The land was potentially oil rich and Getty had a rig set up and a drilling team working it. They’d spudded the well in and were ‘making hole’ at a good rate when the drill