Michael Lee-Chin is a Jamaican-Canadian business magnate, investor, and philanthropist with a net worth approximating $2 billion as of March 2018, making him the 20th-richest man in Canada. Lee-Chin grew up one of eight children in rural Jamaica, coming to Canada to study engineering in his youth before getting into wealth management. He now owns a collection of diversified businesses operating globally in sectors that include telecommunications, financial services, media, tourism, agriculture, and waste management. I sat down with Lee-Chin in his offices for an in-depth interview for my podcast/TV show, The Naked Entrepreneur. On the walls were photos of Lee-Chin with Oprah Winfrey, Barack Obama, and Nelson Mandela. Yet the man was grounded and kind, and took the time to greet each student on the film crew and take selfies. He also shared some valuable business lessons. Early in his career, Lee-Chin learned the concept of disciplined investing from the teachings of Warren Buffet and immediately sought to define his own unique investment approach. He studied the success of others and created a five-point formula to generate wealth:
- Own a few high-quality businesses.
- Make sure you really understand those businesses.
- Make sure those few businesses are in strong, long-term-growth industries.
- Use other people’s money to invest in them.
- Vow to hold them as long as they remain great businesses.
This plan makes sense to me, but how can entrepreneurs, whose success is often a work in progress, apply it? Here’s how you can apply Lee-Chin’s method:
1. Own a few high-quality businesses.
I am a professional investor, with my VC fund being my primary business. My secondary business is content creation: writing for Inc.com, hosting The Naked Entrepreneur on the Oprah Winfrey Network, writing an Amazon bestseller, etc. These are both strong businesses with multiple sources of revenue available. If your entrepreneurial venture is your primary business, ask yourself: What is your secondary source of revenue? What activities do you engage in regularly and passionately that could be a secondary revenue stream? Secondary revenue streams help mitigate financial uncertainty by giving you an alternate source of sustainability.
2. Really understand those businesses.
Lee-Chin counsels being an expert in only a few areas (those that your main businesses are in). Pick the areas you wish to be an expert in and focus solely on them. For me this makes sense–both investment and content creation are focused on high-growth technological startup entrepreneurship. If you’re spread thin in your expertise, ask yourself: Would focusing only on one or two areas enhance the returns on your main businesses?
3. Chose businesses in strong, long-term-growth industries.
Lee-Chin accepts that overnight success is often decades in the making, and so he advises adopting a long-term (20-year) view when it comes to deciding on the few high-quality businesses you will focus on. He looks at where the world is going, studying population demographics and global shifts to place himself in a spot that will be key in the future. So ask yourself: Where is your industry going?
4. Use OPM.
Other people’s money (OPM) is an age-old investment theory that recommends borrowing investment capital at a low rate and investing it in an opportunity whose return outshines the cost of capital. The best OPM for my startups is government grants and subsidies, which often leverage a private investor. In our portfolio of startups, our founders typically generate three times more capital by leveraging OPM through grants and tax incentives.
To Lee-Chin, investments must make sense in the long term to generate long-term wealth. The same can be said for me. I’m just past the 20-year mark in the venture capital industry. I have been producing entrepreneurship content for about 15 years. In that time, the industries I’ve invested in have grown in popularity globally, and as a result, I am able to reap the benefit of becoming an expert. Ask yourself: Are your two businesses (i.e., revenue sources) growing? Where will they be in five years, 10 years, and 20 years? If one or both businesses aren’t a win in the long term, consider evolving to an adjacent space–one where your expertise would be more appreciated, more easily leveraged, and more valuable. Michael Lee-Chin is an inspiration, with a rags-to-riches story that fuels his entrepreneurship. But Lee-Chin’s billions show that success is the result of the diligent, mindful application of a well-thought-out strategy–a strategy that both you and I can benefit from.
(Text Source: https://www.inc.com/)
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