A Tale of Two Billionaire Brothers
In 1948 a young man from India was working as a gas station attendant in Aden, a small town in the Middle-Eastern country of Yemen.
In 1958, the same young man returned to India to start his first company. It grew, and grew, and grew some more.
In 2002, the once young man had become wealthy. That year, he died, leaving his fortune to his two sons.
A fortune of nearly seven billion U.S. dollars.
That man was Dhirubhai Ambani. After his death, his two sons, Mukesh and Anil, decided to split the family business into two equal parts.
Mukesh took over the more traditional businesses, such as energy, pharmaceuticals, and manufacturing. His company, Reliance, emphasized discipline and process.
Today, Mukesh is nearly five times richer than Anil.
This was interesting…eight years ago, the brothers were in the exact same place. How was it that one brother had done so much better than the other?
I was resolved to find out.
I started researching the business activities of the Ambani family. Several hours later, I had come up with a few key insights:
Sex Doesn’t Always Sell:
Sometimes, boring business is good business. Sure, media and banking are glamorous, but you can often make more money in areas where there is lots of demand but fewer talented people.
Mukesh realized that there were certain things that everyone would always need, and invested accordingly. He focused on building businesses in pharmaceuticals, energy, and textiles. These businesses didn’t catch the attention of the media, but they consistently brought in a tidy profit.
On the other hand, Anil focused on building up assets in complex financial funds, film studios, and high-end real estate. For awhile, these investments did well, but in 2008, the house of cards started to collapse. Anil had borrowed too much money to finance businesses that weren’t profitable, and he eventually had to take billons of dollars in losses.
Play To Your Strengths:
Reliance was successful because it focused on its strengths. Mukesh knew that Reliance had grown because of talented managers and a strong corporate culture. He also knew that its continued success would depend upon these things.
Therefore, Mukesh went out of his way to hire talented managers who would help steer the business in the right direction. He was very aggressive in providing excellent incentives to foster long term growth, and did everything he could to retain the best people.
To Mukesh, a good manager was the biggest asset in growing a business…and it paid off.
Great People Matter:
Mukesh Ambani knew that he couldn't run and grow a $100 billion company without some high-quality help. After taking over his share of the business, Mukesh started headhunting top executives from prestigious firms throughout the world. He reasoned that the best people weren't actively looking for roles; they would be rising stars in another company and it was his job to sell them on joining Reliance.
Within a few years, he had recruited top talent from the best universities around the world and from many of the top global corporations. He made it a point to sit down personally with each of these executives, assess their talents, and figure out how they could maximize their impact within the organization.
Moreover, he wasn't afraid to pay top dollar for the best people. It might be tough to write those big checks, but he knew that it was an investment that would produce great rewards. And it did.
My Own Learnings:
A few months ago, I was sitting down with the CEO of a highly profitable, rapidly growing tech company in Silicon Valley. At the end of our lunch, I asked him one simple question: what is your long-term goal with this business?
His answer: to build a great company, which means three things:
1) Create products and services that customers love and want
2) Generate profits
3) Cultivate and retain the best people.
It sounds simple, and it didn't really resonate with me at the time. But as I read about Reliance, I suddenly realized that this is what it was all about – just three simple keys to business success. Easier said than done for sure, but it's amazing how focused we get on stuff that doesn't matter. Reliance proves that these three simple rules won't just make money, but can eventually scale into a large, profitable business.