The rains are here, and they mean different things to those of us in Lagos especially with the traffic and flooded roads that usually follow.
Today, we revert to our regular story format and look at the following international and local stories:
- Investment Lessons from Mark Cuban:
Mark Cuban is an American billionaire who made his initial fortune from the sale of his software company.
He is the owner of the Dallas Mavericks, an NBA basketball franchise but he is better known as an investor on the popular TV show – Shark Tank (where aspiring entrepreneurs pitch their ideas to a panel of business investors).
One attribute about the man is his willingness to share his experience for success in business, investing and life in general.
Below are some of these lessons:
- Never underestimate the value of good preparation – In his words, “One thing we can all control is effort. Put in the time to become an expert in whatever you are doing. It will give you an advantage because most people do not do this”
This piece of advice cannot be overemphasized when it comes to investing especially when buying shares or investing in businesses or transactions.
Only invest when you have done your homework.
- Do not be afraid of failure – according to him, “It does not matter how many times you fail. You only have to be right once, and everyone can tell you that you are an overnight success” Mark Cuban too was fired from his job earlier in his career.
The fear of losing money and the shadow of past losses, has prevented many people from either investing in the stock market or in new transactions. Whilst it is key that one’s capital is always protected; it is also necessary to remember that only government securities are risk free investments. Every form investment comes with its own level of risk, no matter how low.
Note that the Pareto Principle which states that “for many events, 80% of the effects come from 20% of the causes” is also applicable in wealth generation.
- Know when to exit – Mark Cuban made his billions when he sold his business (broadcast.com) to Yahoo for $5.6 billion in 1999. This was a masterstroke because Yahoo itself was sold years later for less ($4.48 billion).
While many investors are in it for the long haul, there is no harm in exiting when the business fundamentals change.
In his case, Mark Cuban sold his business at the height of the dotcom bubble in the US.
- Diversification is extremely important – When Mark Cuban sold his business in 1999, he and his partners got paid in Yahoo shares. Rather than keep his entire wealth in shares, he hedged the shares and diversified by using some of the proceeds in buying the Dallas Mavericks and a cinema chain – Landmark theaters (which he later sold in 2018).
That was a wise move as the shares of Yahoo started declining in value from early 2000.
- Much ado about “special packages”: I am sure many of us have seen several videos of the lady selling special packages of products aimed at attracting men.
Please note that this is not an endorsement, it is simply an analysis of learning points from the entire episode.
In my opinion, there were four takeaways that can be applied to our finances:
- Know yourself – in the words of William Shakespeare “this above all, to thine own self be true” The lady in question was clear about her business and wasn’t fazed by comments and did not let them bother her.
Many times, we take investment decisions based on public perception or herd mentality to our detriment.
Like we have mentioned several times, before taking any investment decision always ensure it is line with your risk appetite and investment philosophy.
That way, you can bear any hitches or setbacks rationally.
- There is always a market – you just must find your niche: judging by the number of followers and the popularity of her products, business must be good.
Since one of the viable waysof wealth generation is to offer value in exchange for money; it is our responsibility to discover what product or service we can sell/render.
- Nothing really is expensive, it is a function of the value you place on it: After seeing the lady’s price list, I am inclined to agree. Those who deemed her products useful to them were willing to pay for it.
If you place a premium on something, you will plan and budget accordingly for it.
- Promote your business without any qualms: If she can sell her products without any form of discomfort, there is no reason why anyone must keep quiet about their business (or hustle as we call it).
- If you can’t beat them, join them! – The Multichoice, Netflix and Amazon collaboration:
Last week, it was announced that Multichoice is to add both Netflix and Amazon Prime Video to its Explora subscriptions.
This is a big development for Multichoice as the content provider is trying to retain its subscriber base in the face of increased competition from streaming companies like Netflix and Amazon; especially since its own streaming company ShowMax has struggled to cope with Netflix in particular.
This move is a win-win for all parties – Multichoice keeps its subscribers and earns a commission for services rendered, whilst for Netflix and Amazon this gives them a wider audience and more revenue as Satellite TV has more penetration than internet in Africa.
The major takeaway here is that these three large players have chosen collaboration, rather than compete. They are also leveraging on their respective strengths – Multichoice (customer base), Netflix and Amazon (original content).
I suggest that we all find areas where we can still collaborate with each other either as businesses or households.
- Interesting facts:
- 7: The number of years Ben Chestnut, the co-founder of Mailchimp treated his email marketing company as a side gig.
Ben started the company after he lost his job as a web designer in 2000 and did not not focus fully on the running the company until 2007.
This means that there should be no set time in transitioning from side gig to full operations.
- 200,000: number of pigs that have been culled due to African Swine Fever infections in Lagos and Ogun States. For pork lovers, this may signal a price increase as supply will be affected.
Till next week, please remember that corona virus is real and currently in community transmission phase; so always maintain social distancing and keep wearing your face masks in public.