Saturday 31 May 2008

Stick to what you know

In 1900 there were over 3000 car companies in the United States. By 1930, that number dropped to less than 100. We had the roaring 20s and then came the Wall Street collapse and the Great Depression. At the turn of the last century there were over 10,000 DOT COM companies in Silicon Valley alone. You know the rest of this story.

Yes, so many of those colourful start-ups are now no longer. It shouldn’t be a surprise that a DOT COM that was a year or so in existence, with no real track record and non-existent profits was not going to become a real institution (I am still not sure what a virtual business is all about). I am pretty certain though that in the 1900s there were no such terms as “exit strategy” and “global domination”. These are the terms being thrown about by our new generation of zealous 20-something year olds when it came to building these virtual corporations. But they are not alone. Stockbrokers, money managers, financial advisors and analysts are all on the bandwagon.

I remember my first few years at university in the late 80s. Sometime in 1987 I bought some stocks with the money I had saved up from working as a waiter. I had no idea of what I was doing but the buzz on campus was that everyone was making money on the stock market. I remember what my statistics professor told me. He said that when you get on the bus in the morning and the bus driver tells you how his portfolio is doing then you know it is time to get out. I never quite understood this until about 6 months after that when my R5000 investment became practically worthless - it did go up and up for a while and I kind of thought I was some kind of genius at the time; was I surprised when things went south. Seriously, my investment dropped to around R300. I have never been much of a gambler, and I have never really understood the world of share trading. But I did know that at the time I flowed along with the tide and got washed up onto the rocks. I remember my parents came to my aid and helped me out. And I learnt a real life lesson then – stick to what you know. There is no easy money in this world.

I also remember this conversation between a wise Stanford college professor called Ben Fisher and a young zealous dreamer called John Elias. Ben says, “You little start up punks understand the reward and the glory. But what if something goes wrong, and it will. Are you ready to be at the wheel, so to speak, of a company with other people's futures riding on your every move?” A startled John replies with, “You sound just like my father. He just wants me to go get a job.” And Ben goes, “Sounds like a wise man. What does he do?” John answers Ben a little aggressively, “He's a human rights attorney - Bernard Elias. He's a real hero, my dad, but he knows nothing about technology … “ And Ben cuts John off and says, “I've heard of him. I read an article in the New York Times about his work with inner city kids. He may know nothing about technology, but he knows people. He fears for you. He's seen the worst of human nature, and wants you to be safe.”

Yes, running a company is not as easy as it looks, although I know that I am stating the obvious. Interesting thing, hey. The obvious far too often escapes us. It looks like the wisdom gained from the DOT COM domain has shown that logic often gets discarded. You can always expect this when greed is the driving force. Stephen Covey reminds us of this when he states that common sense is often not common practice.

We can learn a lot from this our fictional friends Ben and John. Playing it safe is not such a bad thing. Wouldn’t you like to reverse some of those high-tech investments you've made? Perhaps leaving money in the bank is not such a bad idea after all. I have met so many people in my life who left good jobs after being with a solid company for many years to join one or other DOT COM start-up because of enticing share options and promises of riches. And now, the vast majority of them are unemployed. Stick to what you know. And remember the fundamentals. The most successful ventures in this world were all a result of a labour of love.

Posted by Ronnie Apteker