First published in the Financial Times on 6th August 2013.
The provision from birth of just about every material want creates a sense of entitlement
Many agonised articles and books have been written in recent years about the decline of social mobility and the rise of the super rich, especially in countries such as the US and Britain. The authors typically recommend government intervention to improve equality and life chances for the less well-off.
While the poor may need help, I think the wealthy almost invariably sow the seeds of their own relative decline – even without punitive taxation. In my experience, working with many successful entrepreneurs over three decades, the children of self-made parents almost never possess the same level of ambition or capacity for enterprise. Consequently family fortunes tend to wither rather than expand without end.
I once spoke at an event organised by a private bank in the City of London, attended by about 100 young adult children of its multimillionaire clients. The listeners were an unimpressive lot from all over – the Middle East, Russia, Africa, Europe and Asia. Generally speaking they struck me as spoilt and deficient in energy or experience of the real world. Their parents were mostly from modest backgrounds but had created substantial companies, by dint of huge effort and ingenuity. My audience never felt the need to make such sacrifices – and it showed in their attitudes.
More than anything, the vital ingredient anyone requires to reach great heights in business (or indeed any walk of life) is hunger. If you do not possess a very powerful desire to achieve, then you are unlikely to invest the necessary hard work, passion, grit, patience and willpower in the project of your career.
It is not easy for parents. I have three young children and will face the dilemma of how to imbue a work ethic and a competitive spirit, too.
For someone provided from birth with every material want assumes a sense of entitlement which is the natural enemy of struggle. They crumple at the first serious setback, because they feel that inevitable progression is their birthright. Of course they frequently have buckets of confidence, but this can slip into arrogance and prove deadly – in the world of capitalism, only the paranoid prosper in the long run.
Few fathers or mothers like being told that their children lack get up and go. But I meet quite a few of these inheritors; most of them are brought up with the implicit knowledge that they don’t really have to get a job. They lack a sense of urgency and fire in their belly. If you put up these expensively educated young men and women against a streetwise hustler from a humble background, I would tend to back the latter – despite the absence of connections or family money.
This is not inverse snobbery but my belief in the importance of zeal and hardship in forging character. The killer instinct – so common in tycoons – is missing among those from a genteel background.
Those who overcome adversity to seize the glittering prizes so often want to soften the journey for their offspring. But this has the perverse effect of diminishing their vigour and blunting their drive. Striving is what makes someone fit for the task: those who have it too easy yearn for nothing, and mostly do nothing of importance. Excessive comfort is the bedfellow of complacency.
Moreover, as the excellent new book Worthless, Impossible and Stupid by Daniel Isenberg points out, breakthrough entrepreneurs who realise extraordinary value are generally contrarians. They are at heart producers, not consumers. They spend their life grafting, not in leisure, artistic or academic pursuits. Throughout history, these latter pastimes have been the usual activities of the children of the very rich. In some professions such as law, banking or politics, having prestigious degrees, an impeccable CV and networked parents can be a great boost. But the world of entrepreneurship is populated with dropouts, rebels and rule breakers. There no one cares about your upbringing or dad’s yacht.
In Steve Jobs’s 2005 commencement speech at Stanford University, he recommended that the graduating students “stay hungry”. Unfortunately, for those who have never experienced that former feeling, that option isn’t available. At best they are mere stewards of their parents’ creations, and more commonly fritter away their wealth. But this propensity is all to the good: capitalism and innovation are about recycling assets rather than stagnant ownership.