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The interesting pattern, if you read enough business biographies, is that EVERY fast growing business is a finance story.
You only grow from a) selling equity, b) taking on debt, or c) free cash flow, which then implies that every big business grew through one or more of the 3. https://twitter.com/swyx/status/1287738465308643329
You only grow from a) selling equity, b) taking on debt, or c) free cash flow, which then implies that every big business grew through one or more of the 3. https://twitter.com/swyx/status/1287738465308643329
The game that I play when I read a business biography today is to bet with myself "ok, how DID they grow big?"
The answer is inevitably 1 of the 3, but the nuances are endlessly fascinating.
Nike had Nissho, which was available only because Japan grew ascendant in the 80s.
The answer is inevitably 1 of the 3, but the nuances are endlessly fascinating.
Nike had Nissho, which was available only because Japan grew ascendant in the 80s.
70s, sorry. And Nissho had capital to spare because it was a 'sogo shosha', organised in the form of the keiretsu business model — that is, multiple businesses organised around a central bank. This model existed only in the postwar era, when family-owned zaibatsus were disbanded.
Robert Kuok grew through free cash flow from retained earnings ... because HE WAS GAMBLING HIS COMPANY'S MONEY IN THE COMMODITY MARKETS.
(Actually, he also got a loan from Bangkok Bank, but that didn't provide the bulk of his growth).
(Actually, he also got a loan from Bangkok Bank, but that didn't provide the bulk of his growth).
Bloomberg grew off the FCF provided from his terminal subscriptions. But he also sold an initial stake to Merrill Lynch.
Koch grew by 'creating' FCF — he crushed a union at a geographically strategic refinery in Pine Bend, which he then turned into a cash generating machine.
Koch grew by 'creating' FCF — he crushed a union at a geographically strategic refinery in Pine Bend, which he then turned into a cash generating machine.
Rockefeller grew his initial empire by borrowing money — endless rivers of it! — from banks. Many banks. He had to have good relationships with dozens of bankers and bank presidents. And he would drive from bank to bank, grabbing as much cash as they had available.
The list goes on.
It's funny what patterns emerge over the decades. Venture capital is but one form of this. And it's endlessly fun to try to pick up on the meta as you make you way through a pile of business biographies.
It's funny what patterns emerge over the decades. Venture capital is but one form of this. And it's endlessly fun to try to pick up on the meta as you make you way through a pile of business biographies.
You are only able to grow if you have excess capital to invest; and you may only raise capital from three things* — gah, Twitter. Add an edit button please.
