How would you coach a billionaire? Actually, why would a billionaire need a coach?
I’ve coached millionaires and centimillionaires. I’ve coached the adult children of billionaires. And I’ve mentored coaches with billionaire clients.
Each of them has wanted coaching because they had the self awareness that they couldn’t see what they couldn’t see. But that’s not always the case with highly successful people…
Conflating luck and talent is dangerous
The Dunning-Kruger effect is a type of cognitive bias in which people believe that they are smarter and more capable than they really are. Or, as the comedian, David Javerbaum, puts it: Ignorance looks in the mirror and sees intelligence.
This doesn’t just apply to people with low cognitive ability. In fact, Scott Galloway, professor of marketing at New York University’s Stern School of Business, suggests that one of the major problems that extremely successful and ultra-high net worth individuals face is that they incorrectly believe that one area of skill translates to another:
“Conflating luck and talent is dangerous… Great private equity guys believe they would make great venture capitalists and vice versa. Hedge fund managers believe two years of above-market returns means they are also great operators… Billionaires running for president, actors starting skincare lines, and tech CEOs founding media firms.”
As Jessica Hagy illustrates it:
A billion dollar bracelet
Alex and Ani was one of the fastest-growing fashion brands of all time. Its main product was a wire bracelet made of recycled materials. This simple bangle helped raise revenue exponentially, from $2.2 million in 2009 to $500 million in 2016.
By 2014, the company was valued at more than $1 billion. And by March 2019, Forbes magazine had included it’s founder, Carolyn Rafaelian-Ferlise, on its list of “richest self-made women” with a billion dollar net worth.
But by the fourth quarter of 2019, retail revenue was down by nearly 40% from the year before. And Rafaelian’s net worth had dropped by over 50% just four months later. Before the end of 2019, Rafaelian was pushed completely out of the business. By July 2020, most of the company’s employees have been laid off or furloughed and many of their retail stores have now closed their doors for good.
Human-powered AI
Today has been a difficult day. It’s a day that we believed would never come,.. Today, we announced that ScaleFactor is suspending a majority of its operations… – Kurt Rathmann, ScaleFactor CEO & Founder, June 23, 2020
Kurt Rathmann’s fintech startup was founded in 2014. By the time it collapsed, six years later, it had raised $100 million from well-known venture capital firms. The company promised to replace traditional accountants and bookkeepers, using groundbreaking artificial intelligence-powered software. For a fraction of what you’d normally pay, their software would handle your bookkeeping, bills and taxes.
It was eventually discovered that humans did most of the work, not AI. The company leadership had put most of its attention on aggressive sales tactics and seeking venture capital, instead of building the cutting-edge software it had promised. It even hired an offshore accounting firm in the Philippines, to secretly handle customers’ bookkeeping. Ironically, they used creative accounting practices to hide from their investors the fact that they were more of a service business than a software business.
The Founder’s Dilemma
How do super successful business owners lose a billion dollars? How do some of the sharpest investors on the planet invest $100 million in a company that’s no more than smoke and mirrors? These are not one-off cases.
Professor Noam Wasserman coined the term, The Founder’s Dilemma, to refer to the fact that four out of five entrepreneurs are pushed out of their CEO’s role. Founders are usually convinced that only they can lead their start-ups to success. Their desire to be wealthy often conflicts with their desire to create and lead. And too often they end up without wealth or a leadership role.
Many entrepreneurs are overconfident about their prospects and naive about the problems they will face. That’s a huge asset in the early stages of a business but can become a detriment to the business, once you’re really thriving.
As Marshall Goldsmith puts it – what got you here won’t get you there.
Counterintuitively, success often makes founders less qualified to lead the company rather than more.
Wasserman says that most founder-CEOs (and even heads of nonprofits) start out wanting to generate both money and power but success will mean that they’ll probably have to choose between one or the other. Self-awareness is key. Founders should identify early on whether they are motivated more by wealth or by control.
Founders who want control will not believe they are successful if they lose their leadership role, even if they end up rich. And founders who want to amass wealth will not view themselves as failures when they step down from the top job.
Cash is trash. I mean, Cash is king…
Ray Dalio is the billionaire CEO of the world’s largest hedge fund. Two months ago, he said, “I still think that cash is trash relative to other alternatives, particularly those that will retain their value or increase their value during reflationary periods.”
Warren Buffett is the billionaire CEO of Berkshire Hathaway. The conglomerate had $128 billion in cash and short-term investments at last count. “I will never risk getting caught short of cash,” Buffett said in his letter to shareholders last year.
I love paradoxes. It’s possible they are both right. But if two of the most financially successful people on the planet can have diametrically opposed views on this, maybe there’s a clue for the rest of us.
As a coach, it can be tempting to be impressed by the success, wealth or intelligence of your clients. Stop it!
You really can coach clients who are more successful, intelligent or wealthy than you.
How will you measure your life?
In 2010, Professor of Business Administration at the Harvard Business School, Clayton M. Christensen, reflected in an HBR article that for the past 30 years he had watched more and more of his Harvard Business School classmates come to reunions unhappy, divorced, and alienated from their children.
He wrote: “I can guarantee you that not a single one of them graduated with the deliberate strategy of getting divorced and raising children who would become estranged from them. And yet a shocking number of them implemented that strategy. The reason? They didn’t keep the purpose of their lives front and center as they decided how to spend their time, talents, and energy.”
He used to teach his students that if they take the time to figure out their life purpose, they’ll look back on it as the most important thing they discovered at business school.
“If they don’t figure it out, they will just sail off without a rudder and get buffeted in the very rough seas of life. Clarity about their purpose will trump [all the business knowledge they can learn].”
You – and your clients – have a limited amount of time, energy and talent. Competing for it will be your business, your relationship, your children, your health, your community, your spiritual life, your family and your friends.
The challenge for high-performers is that the return on investment for an extra hour at work is tangible. You can ship a product, grow the company, make more money, build your reputation.
But an extra hour spent with family or friends might even end in an argument with your spouse or having to deal with misbehaving children.
“You can neglect your relationship with your spouse, and on a day-to-day basis, it doesn’t seem as if things are deteriorating. People who are driven to excel have this unconscious propensity to underinvest in their families and overinvest in their careers—even though intimate and loving relationships with their families are the most powerful and enduring source of happiness.”
In 2010, Christensen was diagnosed with cancer. He went on to live another ten years, sadly passing away in January 2020, at the age of 67. Ten years earlier he had written about his first diagnosis of cancer:
“Thankfully, it now looks as if I’ll be spared. But the experience has given me important insight into my life. I’ve concluded that the metric by which God will assess my life isn’t dollars but the individual people whose lives I’ve touched.”
The Avoid At All Costs List
“The difference between successful people and very successful people is that very successful people say “no” to almost everything.” – Warren Buffett
There’s a story of Warren Buffett joking to his pilot that he wasn’t doing his job because he’d been working for him too long. He offered to help him go after more of his goals and dreams.
Buffett asked his pilot to list the 25 most important things he wanted to do in his life. And then he asked him to review each goal and choose his 5 most important ones.
Things got interesting when Buffet then asked him, “What about these other 20 things on your list that you didn’t circle?” Buffett asked. “What is your plan for completing those?”
His pilot said he’d focus mainly on his top 5 goals but work on the others when he had spare time with just as much dedication.
And that was the moment, Buffett turned serious.
He said, “You’ve got it wrong. Everything you didn’t circle just became your ‘avoid at all cost list.’ No matter what, these things get no attention from you until you’ve succeeded with your top five.”
My Avoid At All Costs List
- Coaching anyone who isn’t driven, ambitious, talented – and making a massive difference in the world. Or those on their way.
- Creating, writing or speaking about anything that doesn’t scare me, challenge my thinking or challenge the thinking of my audience.
- Doing anything that doesn’t build my community of fascinating people.
- Putting being “right” above having a great relationship.
- Starting my day answering email (which is really other people’s to do list) or being on my phone instead of being present with my kids.
The Avoid At All Costs List is a transformative tool for you. And it will make a massive difference for your clients. The more successful they are, the more of a difference it will make.
Here’s how to create it:
- Make a list of at least 5 things that you should no longer be doing.
- Make sure to include activities that used to give you joy.
- Include activities that used to be in your Zone of Genius but are now in your Zone of Excellence. In your Zone of Genius are things that almost no one else on the planet can do. In your Zone of Excellence are things that you were once great at but so are many top performers.
Love. Rich