I’ve always known that I wanted to be like my heroes.
Figures like Robert Kuok, Mochtar Riady, Lim Goh Tong.
All descendants from the Fujian 福建 region of China, that made their wealth and climbed to the top of society in here South East Asia. As a Fujianese myself I feel as I am born to follow their example.
What do all these men have in common? They all run a form of conglomerate.
In this short piece I’ll attempt to describe what is going on in my mind over the past month.
What Is A Conglomerate?
The dictionary definition:
“a company that owns several smaller businesses whose products or services are usually very different”
The key word here is ownership.
In summary, I want to start building and owning a portfolio of businesses I’m excited about.
Think Of Conglomerates As A Tool
“Buffett’s entire modus operandi is to buy companies with high free cash flow, sit on that free cash flow to build a stockpile of cash, and then use the money he’s accumulated to buy other businesses with high free cash flow. He repeats this cycle ad nauseam for 40 years … and ends up becoming the richest man in the world.”
— Commoncog Blog
Warren Buffet used this model to become one of the richest in the world.
While I am no Warren Buffet, for the current stage of my entrepreneurial growth, it’s clear to me that I can use this model called a conglomerate as a tool to crack open the next stage of growth.
Growth not only financially, but personal growth too.
Work With Your Personality
All pretense aside on becoming the best businessman or being ‘financially astute’.
Building a conglomerate is great because it fits my personality now.
I’ve always believed in working with yourself, not against. I try not to do things I’m weak at or I don’t like to do. Hiring someone better or more motivated is always an option.
For now, I don’t feel particularly passionate about any businesses in particular. so I won’t force myself to commit to one.
Thus, I would be building, launching and maintaining multiple businesses until I find one.
Once the ‘one’ has been found, I can sell other business to use as capital and focus on the favored business, if not, I can continue this conglomerate strategy until the day I retire.
Building A Financial War Chest
Conglomerates that own multiple businesses with strong cash flows can build up a sizable war chest of capital for deployment relatively quickly.
Especially for internet businesses, where the costs are relatively lower than traditional businesses, this model becomes all the more attractive.
Currently I am stuck at the “I don’t know what I don’t know” stage. Learning how to build a conglomerate is a good way to learn new things and apply them.
So How Do I Get There?
My strategy is simple:
- Leverage existing cash flow from my high margin agency and investing them into businesses I feel excited about.
- Work with talent to run them autonomously, without my involvement.
- Use the free time to create even more businesses.
The principle can be described as follows:
1. Create Value
Build something that people want
2. Monetize Value
Allow them to pay for it
3. Build Systems
Work with talented people to run it
4. Document Experience
Learn from the experience
Create more value with learnt experience
Challenges I Predict
Working with talent
Since I’ve started from a freelancing background, I’m used to working for myself.
Switching to a more managerial role, I have to learn how to work with people.
Even more importantly, I have to learn how to attract them to work together with me too.
“How to find a good spouse? The best single way is to deserve a good spouse.”
― Charles T. Munger
We can apply this quote to hiring too.
How do you employ talent? Create a place where talent wants to work.
To be honest, I’m still learning how to do this.
Learning new skills
My ability to learn new skills must be improved.
Taking up this new role, I predict I need to be better at more technical subjects such as math, finance and accounts.
At the same time, my people skills need to be improve.
Not only that, I must always be improving my ability to run a business.
You can see why this new stage represents a huge demand for personal growth.
At this stage, this direction in my life is still like a baby in my mind.
Many things are still vague, but it’s something I want to do.
This won’t be something easy to do,but I know that if I don’t publically state a goal it won’t happen.
So here it is:
USD$10k/month minimum per business
10% annual growth
Most importantly, I must be happy running them
No point ruining health and relationships for money.
I really know I can do this, I just need to challenge myself.