I have a friend who was always trying to talk me into being part of his next business idea. Media, finance, health care—it didn’t matter which sector, he’d always say the same thing, “Jerry, it’s gonna be bigger than Microsoft.” I’d always nod and smile. Then I would change the subject back to the insurance firm that he already owned. How are your profits? Who’s your best producer? Are you controlling your costs? I knew that would end the conversation pretty quickly, because talking about the business that he already owned was boring to him. It shouldn’t have been; he’d built it from nothing and was beginning to break into the middle tier of his industry. He never made it, though; he’d siphon all his best people off to his whim of the month, left the running of his core business to one of his mediocre guys, and, in the end – bankruptcy. The problem, I think, was ingratitude.
I know a lot of guys like this: I have another friend who repeatedly tried to recruit a top manager who would be able to take over the business quickly so my friend could move on to other more exciting ventures. He’d hire some young hotshot and in a year or so, the hot shot would leave? “I don’t know why these guys keep leaving, Jerry.” He’d say to me. I told him it’s because he keeps trying to leave, leaving the available successors with the impression that this job wasn’t worth much. Then they’d jump ship. He finally figured out that he had a first class, highly successful company, and was thankful for it and got focused again. The company is doing great now, and he’s hiring far better performers than he’s ever had before.
Ingratitude, I’d say, is the most common reason for entrepreneurial failure. The studies say that businesses fail because they are undercapitalized, or because they don’t have enough cash flow to pay their debts. But behind those financial indicators, I see a character flaw: an undercapitalized business (if it’s a good business idea) is just a pre-capitalized business. Somebody was unwilling to wait, work and save or sell shares while in their current job for long enough to create the new job.
It’s not just a problem for start-ups. Established business suffer from ingratitude as well. After all, debt grows when businesses operating costs grow faster than their customer revenue. The owner ceases to be grateful for his current customers and switches his loyalty away from the real men and women who currently do business with him and toward the imaginary men and women who he hope will do business with him when he makes it big.
When my oldest son was about ten I bought a little plastic toy frog for him. While we were driving home from the store together he started complaining about it. "Let me see it," I said. I took it, looked it over, and said, “You’re right, not good enough for you,” and I threw it out the car window. "In our house," I told him, "When you complain about something, you lose it."
1900 years ago a traveling Rabbi wrote a letter to a small community of Jews who lived in Rome. Rome had, by that time, torn down even the vestigial organs associated with the Republic and had become a full-blooded dictatorial empire. Many philosophers and statesmen offered whispered explanations for the fall of the Republic, but I think the Rabbi’s letter got to the essence of it “They did not acknowledge God, neither were they grateful”. The Romans didn’t really know what they had inherited and therefore when Julius Caesar offered them peace and plenty without toil in exchange for republican legal institutions, they heartily accepted.
The foundation of asset management is gratitude. If you’re grateful for something then you’ll appreciate it; if you appreciate something then you’ll care for it; if you care for something then you will (more than likely) get more of it. In other words, if you show appreciation for the assets under your care, they’ll probably return the favor and show appreciation for you.