Tips From Michael Lee-Chin And Joe Tsai
What do you call an outlier of outliers? Presumably something nice when billionaire entrepreneurs are involved.
Forbes 2019 list of 2153 billionaires included only 13 black people globally. Jamaican-Canadian entrepreneur Michael Lee-Chin is on the list, given an entirely self-made fortune of $1.9 billion. His wealth comes from his 60% stake in National Commercial Bank Jamaica via Portland Holdings.
Likewise, Joe Tsai, a Taiwanese-born Canadian billionaire, ranked 135th on Forbes 2020 list, with an estimated fortune of $13.2 billion. He is the vice-chairman and co-founder of Alibaba Group (the 31st largest publicly listed company in the world; Amazon is 22nd) and is its second largest individual shareholder after Jack Ma. Joe also owns the Brooklyn Nets NBA team.
The Nest hosted Michael when he keynoted our Levelling the Playing Field event during London Tech Week (you can see his full chat with Eleanor Brown on our app), while Joe chatted with Yale students and alumni as the keynote of an event hosted by the Tsai Centre for Innovative Thinking at Yale, one result of more than $30 million in gifts that he has given to Yale College and Yale Law School.
Michael loves to break everything down into snackable steps, and he shared many dogmas, tips and protocols. One example: To be successful, you must identify a role model and figure out the secret to that person’s success. He learned it the hard way. As a 26-year-old Jamaican immigrant in Canada in 1977 without resources or connections, he sent out 100+ applications to get work as an engineer and received 100+ rejections. Even while working as a bouncer, he was ambitious and realised that success demanded that he identify, listen to and learn from role models and then try to find common threads between them.
$1.9 billion later, it’s seems his strategy is working.
I’m not quite there yet, but I’m eager to follow in his footsteps, so I listened and learned from both Michael and Joe. Indeed, the guiding principle behind The Nest is that one should always aim to learn from the best. Would you rather learn tennis from Serena Williams or from someone who watched her play on YouTube?
I know what I’d do, which is why these chats were like ambrosia for me. This is what I learned.
Be Purpose-Driven, Which Doesn’t Mean Becoming A Charity
Purpose-driven founders are more successful. When Michael took over NCB, he gave the bank a clear purpose: building wealth for Jamaica and underserved communities. He needed his staff to understand that their work mattered, not just for the country, but also for their kids. The bank’s annual income increased from $6 million in 2002 to $106 million in 2015, and its net after-tax profits since 2002 are more than $2 billion.
Michael explained that being purpose-driven means that you are part of a bigger cause, which leaves no room for complacency or excuses. When confronted with a problem, you will go above, under and around the problem to find a solution. You will persevere, because giving up is not an option. This over-exertion will pay off once you hit an inflection point (similar to what venture capitalists call product-market fit), after which point lesser exertions will yield higher returns. Most people give up before this reaching this point, because the roller-coaster ride of entrepreneurship can be nauseating, but purpose-driven founders persevere.
Joe emphasised that entrepreneurship is never really about making money; it’s about identifying a problem and solving it, and most of the world’s biggest problems are social, as COVID-19 and the BLM protests have made clear. Alibaba’s mission was to help small businesses to succeed. In the pre-Internet era, small companies couldn’t compete with incumbents, but the Internet levelled the playing field. Joe reiterated that entrepreneurs that solve social problems create tremendous value, but it’s up to the entrepreneur to determine whether and how much of a slice to take. You don’t need to be a non-profit or a charity to solve a big problem.
Unicorns Can Be Born Anywhere
Neither Michael nor Joe made his fortune in Silicon Valley. Both claim Canadian nationality, immigrated from smaller countries and made their fortunes in developing economies. Michael explained that this makes sense, because creating wealth requires 3 conditions:
(i) a difference between perception and reality; if everyone sees what you see, then there are no unique insights that create wealth;
(ii) market inefficiencies; if everything works perfectly, there is little opportunity to create the added value that leads to wealth; and
(iii) a lack of capital going into the particular region, business or sector on which you are focused.
Joe agreed that levelling the playing field is the biggest problem that society needs to solve and that anyone who solves it will create tremendous value.
You Don’t Need To Be A Tech Entrepreneur, But Be Entrepreneurial
Four of the 10 richest person in the world are tech entrepreneurs (i.e., Jeff Bezos, Bill Gates, Larry Ellison and Mark Zuckerberg), but the other 6 created their fortunes via more traditional businesses. Two are entrepreneurial investors (i.e., Bernard Arnault of LVMH and Warren Buffett), and the remaining four are entrepreneurs (or heirs) of offline retail businesses (i.e., Armancio Ortega, the founder of Zara, and the heirs to Walmart founder Sam Walton).
Understand How Money Is Made In Your Sector
Joe highlighted that whether it’s e-commerce or sports, entrepreneurs must understand how revenue is generated in their sector. He loves spreadsheets, because they tell the story of how a business and its business model work and will evolve. He explained, for example, the business model behinds sports teams. 50% of his The Nets’ revenues comes from ticket sales, while the other 50% comes from the NBA. As an owner, he can influence fans via marketing campaigns, but the League-generated revenue is beyond his control, as it comes from television rights, licensing and merchandising. The NBA reputedly made $8 billion in 2018, and each of its 30 teams has an average valuation of $1.9 billion. (Joe bought The Nets and the Barclays Centre for $3.3 billion.) Given the revenue model, intellectual property (IP) is fundamental. In the NBA, the League owns the IP and licenses it to distributors, who then share the content with the fans. Because the owners of the 30 NBA teams and the League own the IP, they control the balance of power vis-à-vis the distributors.
Know When To Shut Up, Listen And Learn
Both Michael and Joe emphasised the importance of knowing when to shut up. Michael posited that being successful requires the ability to observe, create a hypothesis, stress test it, codify the conclusions and then internalise them. That’s how he figured out the secret to wealth creation, which he said was standing for something, being differentiated and always creating maximal value for your customers. Similarly, Joe noted that going to work for an operating company in Asia meant that, for the first time, he saw a diversity of skillsets, educational backgrounds and experiences. It was a huge cultural shock, especially as he had not grown up in mainland China. To succeed, he had to stay humble, listen and observe. He ended up meeting a great group of amazing founders. He hadn’t expected to find them in China. But he did. And the rest is history.
Be Humble, Generous And Kind
Surprisingly, both Michael and Joe seem like normal people. Yes, he owns a basketball team, but Joe shared that it was only in 2018 that he realised that because he had achieved “relative success and comfort”, he could slow down, focus on his family and on his passion, which was sports. When Zander, a Yale sophomore, sent in a written question, Joe immediately recounted seeing Zander play lacrosse against Villanova University and congratulated him on his excellent play. It seems they had never previously met. Similarly, Michael ended his chat by telling the moderator, Eleanor Brown, how proud he is of her and how she is a role model to so many people. (She was, in fact, my mentor at Yale Law School!)
Life-Long Learning – And EQ – Are Essential
Joe loves spending time with his kids and studying history. He advised students to learn to code, because software will run the world. Instead of studying French, learn to code. He also recommended taking courses in statistics, data science and psychology. Because Joe doesn’t believe that AI will take over, he thinks it will still be important to understand what makes people tick. Leaders must have not just IQ, but also EQ (i.e., emotional intelligence), which means knowing when to listen, when to speak, when to take a step forward, when to take a step back, humility and self-awareness.
Discrimination Sucks, Even if You Are One Of The Richest People In The World
Michael’s entire career is predicated on being foreclosed from pursuing a career in engineering. He turned that lemon into lemonade after realising that a finance career was more lucrative than being a bouncer. That he named his holding company after the Jamaican parish of his birth perhaps says it all. Similarly, one of the most poignant moments of Joe’s chat was when he noted that President Trump impugns all Asian-Americans by labelling COVID-19 as “the China virus” or “Kung flu”. Joe highlighted that it was only 75 years that FDR committed one of the most egregious violations of civil rights by putting Japanese-American citizens in internment camps during WWII of our fear that they could not be trusted. Joe’s focus on studying history reminded me of Malcom X’s admonition: “Those who do not remember the past are condemned to repeat it.”
So what do you call two outliers of outliers? I call them brilliant, inspirational, and hopefully someday soon, mentors.