Today I came accross the question of why aren’t many very smart people rich. And while blunt, I am sure many smart people who are not financially successful have asked themselves that question. Especially if smart is defined as having performed very well at school which is how most people find out they are very smart. But I can relate to that question in a different way. Not as to “why aren’t many smart people rich” but “why aren’t people who are not considered to be smart, rich”.
When I was at Columbia Business School I was in the bottom half of the class. I was not considered particularly smart or bright. All I got studying entrepreneurship was a B+ and that was supposed to be my best subject as I wanted to be an entrepreneur. But then, after graduation I built, 8 companies over 25 years, 3 of them worth over $700 million. My last start up, Fon, has become the largest WiFi network in the world. And it is not only me, I know quite a few entrepreneurs who were mediocre at school only to thrive in real life. Some did better than me. So school is not such a good predictor of real life performance after all.
While teaching entrepreneurship at Instituto de Empresa, I have given a lot of thought to this paradox. How can school performance be a better predictor of life performance? Especially in entrepreneurship. As a result one thing I stopped doing, is grading students. Now they grade each other. And from what I have seen, students who other students think are smart, tend to do better in life than students who professors think are smart. Especially many professors who teach but don’t practice entrepreneurship. Entrepreneurship is more an art than a science.
Having said all this, my comments refer exclusively to business studies. In business getting rich is a direct consequence of success. In other fields being smart needs not to equate with being rich and that is fine. People shouldn’t become judges, or military commanders, or legislators, or many other essential occupations with the aim of getting rich. And getting rich is not a great objective in itself. In general in life having objectives is more interesting than having achieved objectives. Success in business is no exception.
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Salim Ismail on January 18, 2011 ·
Martin,
I think it has to do with emphasis of what is learned. Someone who does well academically is following a lot of existing rules, contraints and structures and has learned how to perform well in those constraints. Basically, a good academic thinker. Their brains get wired into that set of constraints and optimized for that kind of directed thinking.
A good entrepreneur is always thinking about breaking existing structures and learning how to bend, break or create new rules. They don’t do so well academically because they don’t fit well into existing constraints, but boy are they good at breaking old patterns.
You’ve done that yourself many times. All entrepreneurship is about taking a risk on either breaking old rules or creating new ones. Some imagination and a ton of hard work (and some luck) does much better in this environment than someone who’s learned how to work well in old structures.
Just my 2 cents.
Aldo on January 18, 2011 ·
Has leído Outliers de Malcolm Gladwell y algunos de sus artículos? Explica con lujo de detalles tu pregunta.
Me2 on January 18, 2011 ·
Can’t believe you don’t teach the ExMDSI.
Ross McKegney on January 18, 2011 ·
Martin,
I remember a study a few years ago that looked into this question. They found that the most significant determinant to future financial success was the salary at the first job out of University. Top students get the best first jobs, and settle quickly into a comfortable middle-manager lifestyle. Perhaps we can account for what you’re seeing because students who haven’t done as well in school struggle to find that first job, and either give up or rise to the occasion and make their own opportunities.
I’ve also experimented with peer evaluation with my business students. I’m not ready to relinquish all control, but getting beyond peer feedback to peer evaluation leads to better feedback and more engaged students.
Great post, thanks.
rm
alex on January 18, 2011 ·
some times is that the people don’t want to pay the price for being rich, what is clear, is that to get rich, you have to pay a lot of prices, like family time, and, also, you have to make some very difficult decisions too, like ethical and common sense (best for the common= equality) related to other peoples life’s (you`re employees and competition).
in a world where the main mantra of business is that the most important thing in a company, is the share holders benefits, is clear that the human factor of life is relegated to a second place, so is not best for the common, there is no equality, when you put the money above the life principle, you´re screw, that´s why we are now realizing that the capitalism system is evil to the equality of the world and we are paying the consequences, is the same when you apply this system to you’re personal life, you star putting the money over more important things (self honesty, equality, common sense), and then you get screw by the system, in fact, the most intelligent people in the world, don´t want to get rich in material values……
one last thought, the only way out of this mess is “equality”, and the way to do it, is considering life equality as the most important goal, using the quantum mechanics of unconditional love.
un abrazo.
Abe Pazos on January 18, 2011 ·
The book “Hackers and Painters” by Paul Graham deals in part with this topic. I found it a very interesting read.
Mariana on January 18, 2011 ·
Martín:
En mi humilde opinión, coincido con vos que la escuela (y también la universidad) no es un buen indicador para medir la inteligencia o lo listo que es una persona en la vida y, menos aún, cuán exitoso puede ser o no (si entendemos, en principio, exitoso como rico).
En primer lugar, porque la escuela (principalmente) suele estar asociada a temas de estandarización y mediciones basadas en una cierta pauta de contenidos… se trata de ver cómo el alumno responde a determinada curricula. Es verdad que no se puede generalizar y que Argentina (mi país, donde el curriculo está estandarizado para todas las provincias) puede diferir de EEUU (donde cada Estado tiene sus propias politicas educativas) u otros países (más menos desarrollados en cuestiones educativas). Pero a nivel general, la institución escuela fue pensada para un período temporal distinto, donde había menor masividad y, lamentablemente, no permite por ejemplo que distintos chicos expongan sus diferentes habilidades o inteligencias – algunas de las cuales definitivamente le servirían a la persona para hacer buenos negocios y ser exitosa (rica)!!. (Gardner con sus 8 inteligencias múltiples y muchos otros teóricos han hablado al respecto).
En relación a lo anterior, incluso niños considerados “superdotados” o “gifted” tienen una muy baja performance en las escuelas (algunos no la terminan, otros cambian mil veces de carrera universitaria, etc) y también pueden tener (o no) una baja performance (o considerarse “poco exitosos”) en la vida. Esto, nuevamente, no se relaciona con cuan “smart” sean sino con otra gran cantidad de factores que definitivamente ninguna escuela o test en sí mismo puede medir.
Finalmente, considero apropiado que aclares en tu post que estás hablando del área de negocios. Definitivamente ser exitoso no siempre se mide por la riqueza (de ahí el surgimiento de un montón de profesiones y vocaciones que nada tiene que ver con el lucro en sí mismo y que de otra manera no existirían).
De hecho, y para terminar, sería bueno encontrar cada vez más profesionales “exitosos” que por vocación se dedicaron a mejorar la educación y que lo fueron logrando 🙂 (ahí un poco apunta mi corazón y no tanto mi bolsillo ciertamente).
Saludos,
Mariana
Jose Galindez on January 18, 2011 ·
Martín,
I think you hit a good paradox that has also struck me for years. But you are limiting the range to “becoming rich” which I think is the wrong metric, even for entrepreneurship. I do not think that entrepreneurship is about getting rich but about the right mix of proper goal setting, initiative, drive, and leadership into accomplishments. And not only personal financial accomplishments.
Success is a better word, that express the accomplishment of one´s goals in life. And success can have a metric of net worth value, or of technical or organizational excellence, of driving projects to a good end. It might mean personal happines in your family, a good balance of life.
But I would agree with you that even in this extended version of success, academic good marks, does not necessarily entitle somebody to achieve this “success” in life. In some cases it is even negative, as it does raise expectations that, when not met, lead to frustration.
Then, what are the drivers to excell in goal setting (being ambitious but reallistic, dreamer, but not too far away), in initiative (accepting failure as a possibility, removing perfection from the road map, understanding that there is only one life to live), in drive (just do it, do not overanalize, read your intuitions, release energy), and leadership (understand the complexity, set the direction and engage everybody around you to meet the goals, set the example, be clear in what drives you, people do not follow just money but excitement and purpose)?
I believe that academia is far from training students in this direction. Including business schools!!!
Very good an necessary topic of discussion when we are challenging the education system of our kids for old and rusted!!
antoin O Lachtnain on January 19, 2011 ·
Academic knowledge has limits.
Tasting and appreciating thousands of wines won’t make you a great winemaker.
Just because you know all about the physics of swinging a club and striking a ball does not make you a great golfer.
And studying how other people do business may give you insight, but it will not make you a great entrepreneur.
Having academic knowledge is not the same as knowing how to do something. This applies to many fields, not just entrepreneurship
Jens on January 19, 2011 ·
I’d say success in business is more determined by energy than by academic smartness, luck and timing beside. It’s all about energy! Call it passion, tenacity, drive, ambition, etc. Every person has a level of energy to overcome obstacles or master challenges. Most won’t stop at the first obstacle. School is very linear and predetermined. But some will stumble when there are e.g. 20 obstacles at once: exams, job, love life, family affairs, customers, investors, too many unfinished businesses, open questions, etc. And there are some who easily juggle 100s of them. This is what it takes to be an entrepreneur or a parent ;). Starting a company means lots of challenges at the same time. It’s all about energy! Depending on your current life situation you have less or more energy to go forward. So eat well, exercise and have amazing friends and family. And then there are those who, like Obelix, fell into a cauldron with magic energy ;).
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Ouriel Ohayon on January 18, 2011 ·
Martin
i agree. the reason to that is that business schools are more formated to train managers than entrepreneurs. It can happen that a good manager be a good enterpreneur. but rarely is the case. Opposite is true: a good entrepreneur is not always a good manager (and needs good managers around him)