by Owen Sullivan
On Feb 26, 2019
Roger McNamee is known as the Billionaire’s mentor. He’s been a sounding board for Steve Jobs, Bill Gates, and, for a hot minute, Mark Zuckerberg. He tells the story of his encounter with the Facebook founder to James Altucher in today’s issue of Money & Crisis.
by Owen Sullivan
On Feb 13, 2019
“That day, the bank kicked everyone out, locked the doors, and sold off every part of this billion-dollar revenue company to other customers of the bank. Everyone won except us. Except me. I lost big.”
Why is business so often scapegoated for all the problems of society?
The term scapegoat comes from the Bible and refers to the goat cast out of the community as part of a purification ritual. Perhaps when people saw that lonely goat walk away and probably into its death, it made them feel better about themselves.
Weird, right? We don’t think that way today. Except we do.
The scapegoat since the 2008 financial disaster has been the business sector in general. The anti-capitalist frenzy started with a justified hit on the financial elites who benefitted from the bailouts. But inevitably, public wrath turned against anyone trying to make a buck.
The caricatures have been absolutely brutal. Every corporation is criminal. All rich people are thieves. Wall Street is nothing but a racket. Every entrepreneur is a con man. The driving motivation of all business is greed.
And so it has been for five solid years. The public sentiment has made the whole of commercial society very nervous and paved the way for more government intervention and taxation.
Those who know something about real-life business watch all of this with stunned silence. Are people really all that clueless about how hard it is to make a buck in this world?
It turns out to be very difficult to come up with ideas for goods and services that people will accept in exchange for money. It is even more difficult to take in more money than you spend in order to provide those goods and services. And there’s an even more difficult step: You have to compete with everyone else who is trying to do the same thing. This competition has a tendency to drive whatever fleeting profits you make to zero.
It is a common error to believe that entrepreneurship consists of coming up with one good idea and making one good judgment. Nonsense. Good judgment is a daily requirement. It affects everything you do from product development, research, inventory decisions, and employment to marketing. A bad decision tomorrow can negate all the good decisions of the last month.
Risk is inescapable. You bear it all; the consumers bear very little or none. Then there’s the uncertainty. No one has a crystal ball on what the future looks like. It doesn’t matter how big or how allegedly mighty a business is. It can never escape the curse of the dark glass that clouds the future.
The only way to accomplish this is to be wildly attentive to unmet needs in society, to be super attentive to accounting details, and to always be prepared to improve in your service to others. As for greed, anyone can be possessed by it — rich or poor, public or private — but it makes no real contribution to business success. Ramping up greed only tends to cloud judgment.
The truth is that the commercial life is one of implausible self-sacrifice. It is a life of instability. You never go to sleep at night fully relaxed and you never wake with absolute confidence about what the day will bring. Every day brings changes and events that defy expectations. This tendency instills a level of humility in the commercial world unknown in politics or academia.
But what about the wonderful profits? Well, if they are there at all, which they are not most of the time, the true capitalist is actually rather cautious about how they are used. We often hear about the “profit motive,” but I doubt that this phrase means much at all. Profits are never certain, nor do they last. They can’t be the sole reason that people enter business life.
What function, then, do profits serve? For the entrepreneur and the capitalist, they serve a symbolic value. The signal that the enterprise is on the right track. They are the sign and the seal of a job well done. It’s not about the money as such; the profits are an indicator that helps guide decision-making, ratifying the good steps of the past and pointing toward a possible plan for the future.
Once you begin to understand the real nature of business, you have to wonder: Why the heck does anyone do this? It comes down to a personal passion, the desire to make a difference. It’s a vocation, a calling, a special flame that appears in the hearts of a certain class of persons. It is not universal. But neither it is possible to entirely extinguish.
A free and prosperous society should marvel at the accomplishments of its businessmen and businesswomen. These are true public servants, people who endeavor at great personal sacrifice to drive history forward and grant the human race a greater degree of material prosperity tomorrow than it enjoys today. These are the people who really keep hope alive.
Yet… as if to perform some ancient superstitious ritual, what do we do? We throw a rope around their necks and drag them out to the desert. They are the scapegoats.
It was my rare privilege to catch up with one fascinating young entrepreneur named Trevor Koverko, who is in the early stages of putting together an Internet startup called eprof.com. In this interview, he tells the inside story of the sacrifice, the work, the dream, the disappointments, and the incredible vision that it takes to make something like this happen.
There might come a time when this young man’s website will be as popular as Amazon or PayPal. Becoming just another website that everyone uses and all people take for granted as if it had always been there. No big deal. In the end, it’ll be just another successful business, and surely the entrepreneur behind the thing deserves no special adulation.
Therefore, I present to you what such enterprises look like in their earliest stages. You will appreciate getting a look at what it takes to live this kind of life. I hope you come away from this interview with a great respect for the commercial sector and its contribution to our world.