Thursday, February 18, 2010

Getting a little Rich(ard) during a recession


In the mid 90s, my old MBA prof (well, I thought he was old at the time), Laurent Picard, said something that really hit me: "Fortunes are won and lost when there are changes in the external environment." His idea was predicated on the notion that new technologies, changes in governmental regulations or "shocks" to the system break down entry barriers - which are then rebuilt over-time by the new entrants. Of course, the entry barriers protect profits which accrue to fortunes. We only have to look at companies like Amazon, Google, eBay etc. to see how true this is.

A couple of days ago, I had the pleasure seeing Richard Branson speak at the Desautels Faculty at McGill University. And, he said this: "When times are good, fortunes are made. But empires are built when times are bad." Talk about inspiring words to an entrepreneur who is debating starting up a business during this recession. His underlying point is that entrepreneurial flexibility, low cost structure of an entrepreneurial firm, and sheer heart help the entrepreneur weather the economic downturn. Certainly there is a lot of anecdotal evidence to suggest Sir Richard is right. What do Virgin, Chevron, GM,Fed Ex, Burger King, Monopoly, Revlon, HP, CNN, MTV, GE, Hyatt, AT&T have in common? (source 1, 2) That's right, they were all founded during recessions.

2 comments:

  1. Great blog! It gives me hope :)

    Suela

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  2. I saw him talk too- he's an interesting mix of raw capitalism and leftism.

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