Luck, Skill and Big Fortunes

In 1991, I met Torben Karlshoej, the founder of Teekay Shipping, which is now a global shipping empire with billions in revenue, assets and company value. Mr. Karlshoej was an unforgettable character who would take many pages to describe. I will just say that his private yacht was a converted freighter which I saw at anchor from my small 36’ power boat. His dinghy was likely larger than my whole boat.

Mr. Karlshoej founded his company in 1973 when he arrived in L.A. from New York with only a few dollars in his pocket. But he had several things of great value: he had worked in the ship chartering business, so he knew the shipping industry better than most. He had incredible drive and determination and worked truly around the clock. But he had a final gift which made the big difference: his timing was impeccable. There had just been a major setback for the global shipping industry in the early 1970’s and most people were pulling back. He saw the opportunity to expand and to buy or charter ships at rock bottom prices, which later soared in value. In 20 years, he became a global shipping magnate, starting from nothing. His luck, skill and timing brought him enormous wealth.

I have had the good fortune in my banking career to meet many other successful entrepreneurs: some worth millions, others worth tens of millions, a few with hundreds of millions, and a handful of genuine billionaires. (I mention Mr. Karlshoej by name, since he tragically died a year after I met him. I do not like to write about business people by name who are still alive, since I respect their privacy.)

I have witnessed first-hand what a top international banker told me as a young man: it takes both good luck and great skill for big-time success in business. Some people believe that luck alone can get you there. That is rarely true. I met someone who won $8 million in a lottery, but if he was a typical winner, a few decades later he would have very little left. The same is true for inherited wealth; it rarely lasts more than 2 generations, if that long.

In my experience, the successful business people were incredibly skilled, but that alone did not account for their success. They also needed timing, lucky breaks, and other fortuitous factors on their side.

Similarly, I could begin to describe the skill-set that it takes to become a great entrepreneur. Determination is crucial, together with discipline, financial shrewdness, marketing savvy, technical smarts, access to capital, industry knowledge, willingness to take big risks, and sometimes ruthlessness. (I personally would rather die a pauper than to lie, cheat and steal; but unquestionably, a shrewd entrepreneur needs to make very hard decisions.)

But sometimes misfortune can also play a role in our success. I suffered from Polio at age 5, which left me severely crippled for a few years. Although I gradually recovered and now enjoy comparatively good health, my childhood illness put me into hospital for a year and left me unable to compete in sports. Consequently, I became a voracious reader, which accounts for my exceptional academic performance and a scholarship to Harvard. Obviously, I also had a good attitude towards my misfortune, or I would not have used it as a stepping stone to a successful career.

But life is much more than about making big fortunes. When Mr. Karlshoej died suddenly in his early 50’s, I felt very sad for him. Although he made it to the big times, he didn’t live long enough to fully enjoy it.

My advice to those seeking a fortune is don’t try too awfully hard. You can never achieve it by determination alone. Unless the wind of providence is blowing in your sails, you will likely be part of the 99% who tried and failed, rather than the 1% who makes it big. And enjoying life is even more important than financial success!