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F. Like Copy-con Shortcut Innovators, we have Copy-Con Shortcut Capitalists
Traditional wealthy investors, such as the Rockefeller family have looked for superior inventors and looked into the possible impact of the invention, and the amount of ecosystem and associated technology development to place their money for the long-term bets. On the other hand, get-rich-quick capitalists entered the investment bandwagon, much like the copy-con, to leverage and rip the financial benefits out of the innovation.
Money is a zero-sum game, but wealth is a game of magnet; those who play long-term spend enough time, energy, emotion, and money on the problem they are solving; the wealthy investors who invest on the invention place their 100 years of bet onto such investors because both the inventor and the investors are investing onto the problem and the culture of solving the problem for them to continue to benefit for at least a century.
How Masayoshi Son changed the definition of Startup from Technology Invention to Technology Distribution
One of the classic examples of shortcut investors is Masayoshi Son. He made a lot of money through his professional growth in sales of software. When in 1996 internet started booming, Son invested his excess money into a number of early-stage internet companies. One of the companies Yahoo gave him significant returns. Unlike the Rockefeller family, who had accumulated their wealth and assets through Manufacturing and Production, Son had accumulated his money through distribution of the software. So, Son did not need to play the hardcore capital game that Rockefeller had to play in the mid-18th to early 19th century. Hence the Rockefeller blood line and their ecosystem knows the hardcore capital game, whereas Son knew the smart capital gain. Son went onto form Softbank, which lead the venture capital market for almost a decade, with aggressive investments into several startups that claimed to be disrupting the market. Today, Son’s Softbank is suffering losses that appears hardly recoverable, putting entire business at high risk.
Everyone tries to replicate their success and thinks that they know a formula for success that no one else knows. They try to repeat this formula the way a manufacturing unit repeats its processes to produce goods. Such people often underplay the luck component and other associated factors, and see their success as the Gospel truth.
Masayoshi Son earned his money through software distribution. Therefore he knew that if one could find out good software manufacturing company, get hold of the software, and then create a distribution channel, then this channel can be commercialized and large profits can be wrenched. Son had put his money from software distribution to content distribution of Yahoo. Over a period of time, those companies who were merely creating new channels(rather than slicing existing distribution channels) kept getting more investments.
Anything that is followed by many is then wrongly known as the notion or the order of the day.
Over a period of time, the distribution companies started getting more money(like Food delivery, Grocery Delivery, Content Delivery, Pharma Delivery, Cab aggregators, Hotel Aggregators, and virtually any other aggregators).
Because Son had not produced anything, and because Son had not witnessed the pain of taking a technology from the prototype to maturity, he knew that all those dumb inventors and dumb investors will spend their youth and important years and money painfully developing something, and all we need to do is get a hand onto the technology and focus on earning money from distribution.
Son’s principle was all about identifying those who could efficiently create new distribution channels with efficient technology. Whether it is Doordash or Flipkart, they use the same mobile technology of eCommerce platform to build a business around it. And so, such companies, who were merely like software or service sellers, started getting called startups.
The way Son tried to emulate his magic mantra to get more money, others who saw Son thought, “Hmm, we don’t have to earn money by selling, we can simply start as a capitalist, take the bank’s money, and invest into the bandwagon using Son’s formula to finding the companies with most efficient use of the technologies to implement efficient distribution.”
Masayoshi Son got validation for his magic mantra again in the year 2000 when he invested $20 million in another efficient distribution company called Alibaba. Alibaba played a pivotal role in connecting China’s production and manufacturing capabilities to the world.
However, Son in his early career had also got a chip built by his professors and sold it to Sharp Corporation for $1.7 million back in 1973. He also built a video game company with local video game developers and later sold the company for another $1.5 million.
You do not have to be an inventor and spend any resource into building technologies.
Masayoshi Son’s Magic Mantra and Definition of a Startup
You just had to be smart to gather talented people, get interesting things built, create an efficient channel, grow the business, and then sell the business to take out thee profit money.
In fact, you do not even have to gather talented people to build any interesting things, you can take an interesting matured technology and create a smart and efficient distribution channel to sell more.
Son’s core business magic mantra was then followed by the new Venture Capitalists, who saw an easy opportunity to earn quick money by investing other people’s money into such companies and then taking out the profit from the sale of the company.