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Are Self-Made Billionaires Really Self-Made? How Wealth Affects Entrepreneurship and Innovation

James Huang | 2023.06.08

Yesterday, a social media user claimed that all self-made billionaires are actually second-generation wealthy individuals. These types of claims and accompanying images resurface periodically, sparking debates about the true meaning of "self-made" and the role of family background in success. However, it is worth noting that many of these so-called "self-made" billionaires did not simply inherit their wealth and sit idly by. Rather, they used their family connections and resources to create and innovate, ultimately achieving great success.

For example, Lee La-Shing did marry his wealthy cousin, but he also worked hard to expand his business empire and become one of the richest men in Asia. Similarly, Bill Gates' mother may have been an IBM chairman, but Gates himself had a passion for computer programming and founded Microsoft with his own skills and expertise. Warren Buffet's father being a senator may have opened doors for him, but Buffet's success in investing and business is undeniable. Even Elon Musk, who did come from a family of wealth in South Africa, had to start from scratch when he moved to the United States and founded companies like PayPal and Tesla.

On a Chinese forum, some users with a broad perspective acknowledged that even though these so-called "self-made" billionaires were actually second-generation wealthy individuals and cannot be considered as having started from scratch, they still created a considerable amount of success. They wondered if China's second-generation wealthy individuals have the same level of passion and creativity as Bill Gates or Elon Musk. This raises important questions about the role of family background in success and the factors that contribute to innovation and entrepreneurship.

It seems that these wealthy individuals, although not truly self-made, still possess the drive and creativity necessary to succeed. This is not to say that success is solely determined by one's family background or wealth, but rather that these factors can provide important resources and opportunities for individuals to pursue their goals and dreams. In fact, efforts to promote entrepreneurship and innovation are already underway in many countries, including Malaysia where the government has expressed interest in including courses on entrepreneurship in school curricula.

The courses are not just theoretical, but also practical, requiring students to write reports and sell products. This hands-on approach can help students develop important skills and knowledge that will be useful in their future careers. However, the challenges facing entrepreneurs are not limited to access to education or resources. As my personal experience demonstrates, the path to success is often fraught with challenges and risks.

On the day of the annual school fair, 99% of students, including myself and my team members, sold food. I remember that one of my teammates bought spoiled fish balls, and we had to buy more to make up for it. However, if we included the cost of the second purchase on the balance sheet, we would have lost money. We were forced to hide the cost of the second purchase, and my teammate had to take the loss of the spoiled fish balls to maintain the gross profit on the balance sheet. This experience taught us the importance of accounting and financial management in business, and the need to be honest and transparent in our dealings.

The remaining 1% of students designed and repaired computers, but they earned less money than we did selling fish balls. As a result, children from low-income families tend to be less successful in business. Wealthy children have more opportunities for trial and error, and are better able to absorb losses and learn from their mistakes.

It seems like what our textbooks used to say is true: Thomas Edison failed 99 times before finding the right substance for his light bulb. It wasn't because he had perseverance, but because he had a laboratory with many people who each tried a different method. The 99 teams all failed, but they eventually found the right substance for the light bulb. The precondition for this was having enough money to conduct 99 failed experiments. They also had enough money to hire the mafia to beat up Nikola Tesla.

For ordinary people to start a business, they have to sell everything they own, even give up a stable life, and take great risks. No matter how many courses the government offers, it will not be able to cultivate entrepreneurs who can upgrade the country. This is because entrepreneurship requires a certain mindset and set of skills that cannot be taught in a classroom. Rather, it requires the willingness to take risks, to learn from failure, and to persist in the face of adversity.

However, this does not mean that governments and other organizations cannot play a role in supporting entrepreneurship. Providing funding and resources for individuals to constantly try and fail at starting a business can help reduce the risks of entrepreneurship and encourage more people to pursue their dreams. Of course, such efforts must be carefully managed to avoid waste and fraud, as my earlier example of grants being scammed demonstrates. Nonetheless, with the right support and resources, anyone can overcome the challenges of starting a business and achieve success.

Are Self-Made Billionaires Really Self-Made? How Wealth Affects Entrepreneurship and Innovation
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