3 Timeless Business Principles I Learned From 3 Titans of Business
A.G. Gaston Exhibition at the Birmingham Civil Rights Institute opens July 2, 2019. Photo courtesy of Birmingham Civil Rights Institute
You can probably recite a quote of theirs. They may have even provided you with the inspiration to dream bigger than you would have had you not read their biography. Who are these rare people? They are business titans of course. But how did they become one? These extraordinary individuals seem to possess superhuman qualities that appear to show up only once in a generation. When you take a closer look however, what you will find is that these “Titans” accomplished extraordinary feats by being excellent at ordinary things. Put differently, it was not the application of sophisticated or complex business models which set these individuals apart from their peers, rather it was the relentless focus on and disciplined execution of a simple idea.
Principle 1: Your greatest opportunity may be found in the midst of your greatest adversity.
A. G. Gaston was an Afro-American businessmen who turned tragedy into triumph. As the grandson of slaves living in segregated Birmingham, Alabama, he experienced firsthand the effects of racism in the post-civil war south. Although he was victimized he chose not to be a victim. When others around him saw opportunity nowhere, he saw “Opportunity Now Here!” A.G. created a business empire by focusing on meeting the needs and wants of a demographic that was frequently told “whites only”. By the time the Civil Rights Movement came to Birmingham, A.G.’s business empire consisted of an insurance company, funeral home, bank, and hotel. At the time of his death in 1996 his net worth was $130,000,000. His greatest accomplishment was not in the wealth he acquired, rather it was in the application of a timeless principle in which we all, despite the color of our skin, can learn from. Opportunity can be found in the midst of our greatest adversity.
Principle 2: High risk does not always equal high reward. Be more than a risk taker, become a calculated opportunity seeker.
Although John D Rockefeller has been dead for 80 plus years, there are many who still marvel at the Standard Oil Company he created. When looking at his business at a glance, you may have thought that he was in the oil business, however Rockefeller’s true genius was getting into the lower risk oil refinement and distribution business. He left the higher risk oil exploration and drilling to the Western Pennsylvania oil speculators. Once he established his lower risk middle man beachhead, he then used Standard’s meticulously managed cash reserves to buy undervalued businesses who ran out of capital before they could fully leverage the opportunity they had discovered. Put another way, Rockefeller allowed the irrational exuberance of oil speculators to assume the risks of oil discovery while he played it safe in the oil refinement space. His low risk and disciplined approach to business enabled him to build an empire that was difficult to duplicate by the time any of his competitors figured out his strategy.
Principle 3: It pays to pay attention. Understand the implications of stage two economic decision making.
How did a man raised in a one room home in Scotland become one of America’s top businessmen and philanthropist? Andrew Carnegie intuitively understood how to make the most of the opportunity presented to him. As a telegraph messenger boy for the Ohio Telegraph Company, he learned to memorize all of the locations of Pittsburgh's businesses and the faces of men who led them. This allowed him to effectively network his way through the ranks in both the Ohio Telegraph Company as well as the Pennsylvania Railroad. After the Civil War, Carnegie left the railroads to devote his focus to an opportunity he identified within the postwar economy. He understood the potential of iron production in the rebuilding efforts of our nation’s infrastructure and would later go on to form both the Keystone Bridge Works and the Union Ironworks companies in Pittsburgh.
Perhaps the biggest opportunity Carnegie identified was the desire for The United States to promote American made products at the detriment of a truly free enterprise economy. In 1892, at the age of 57, Carnegie formed the tariff protected Carnegie Steel Company. This strategic move would act as a multiplier of his already substantial fortune which he had accumulated through his business dealings. In fact, 9 years later at the age of 66, he recognized another opportunity and sold Carnegie Steel to J.P Morgan as part of the merger which formed the U.S. Steel Company. At the end of his life his net worth was the equivalent of would today be worth $309 billion, making Carnegie wealthier than both Bill Gates and Warren Buffett combined at the peak of their wealth. Carnegie’s wealth did not come by way of royal nobility, nor did it come by wealth inherited, it was his ability to understand the stage two economic implications of each opportunity and how best to leverage them which was his true source of his wealth.
Behind every successful business man or woman you will a see common theme. They are often both focused and disciplined. When faced with adversity, they figure out how to use their business challenge as the seed of their next big business endeavor. They are not just risk takers, rather they are calculated opportunity seekers. They think about the stage two economic implications of their decision thereby informing them how they can maximize each situation. I am not implying that there is any quick magic formula for guaranteed success, on the contrary, it is that which is easy to say that is often times the hardest to do. If however, you are up to the challenge, you too can achieve extraordinary results by relentlessly focusing on the execution of ordinary ideas.
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About the Authors:
Dr. Paul Campbell is one of the co-founders of Brown Venture Group, LLC. Launched in 2018, Brown Venture Group, LLC is a venture studio venture capital firm exclusively for Black, Latino, and Native American technology startups. Brown Venture Group is writing a new playbook for both those interested in launching a minority-owned technology startup and those interested in investing in new technologies. For more information go to brownventuregroup.com.
