Wealth Formula Podcast

I have started a number of small businesses over the past decade. I know that a number of you run your own business or are thinking about some kind of new entrepreneurial endeavor.

So, let me tell you about some of the things that I have learned. First, fewer variables make businesses easier to run and, in most cases, more profitable. You can see examples of this with big business all the time. Ever seen the menu at In-N-Out Burger? Pretty simple!

While it may seem like a good idea to offer a lot of services to a lot of different kinds of people, most of the time businesses realize that this approach is not ideal.

Too many products and services create too many variables. The more moving parts you have in a business makes it harder to run efficiently.

Another lesson that I learned related to this concept of keeping complexity minimal is to stay away from businesses with too much overhead.

I have run medical businesses with marketing budgets of over $1 million per year. In good months, I felt like I was king of the world. On the bad ones, I worried about becoming homeless! It’s not a good way to live.

Finally, the most difficult part of owning and scaling a business, in my opinion, is the issue of people. I once built a very successful cosmetic surgery business in Chicago and then tried to do the same in four other cities at the same time.

My reasoning was that if I could do as well as I was in Chicago, why couldn’t I do it in smaller markets? Well, those businesses failed miserably. And, in hindsight, the biggest reason for failure was because I did not have the right people to execute the plan.

Of course, I’m just a bootstrap entrepreneur who’s had some success and failures. But my guest on Wealth Formula podcast this week has been the chief economist at some of the biggest companies in the world. In fact, he has just been named the chief economist of Walmart.

This week’s Wealth Formula Podcast features an interview that I did with him. What I found fascinating about this interview was that many of the problems that I saw at my level were the same for multibillion dollar corporations.

Of course, I couldn’t resist getting his take on the current economy as well so I asked him a little bit about that.

So whether you’re interested on his takes on what it takes to grow and scale a business or what he thinks of today’s unusual economic situation, be sure to tune in!

Professor John A. List is the Kenneth C. Griffin Distinguished Service Professor in Economics at the University of Chicago. His research focuses on combining field experiments with economic theory to deepen our understanding of the economic science. In the early 1990s, List pioneered field experiments as a methodology for testing behavioral theories and learning about behavioral principles that are shared across different domains. He co-authored the international best seller, The Why Axis, in 2013. List was elected a Member of the American Academy of Arts and Sciences in 2011, and a Fellow of the Econometric Society in 2015. List received the 2010 Kenneth Galbraith Award, the 2008 Arrow Prize for Senior Economists for his research in behavioral economics in the field, and was the 2012 Yrjo Jahnsson Lecture Prize recipient. He is a current Editor of the Journal of Political Economy.

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You would think from the vilification of capitalists in recent years that we are nothing but a waste of space on earth.

“Pay your fair share capitalist pig!” That’s what you hear these days from popular politicians on the left. Of course, in reality, without us, the government would be broke.

What makes America great and what has made the world the place that it is in terms of technology and health care over the last century has entirely to do with the efforts of capitalists.

Just think about all of those people walking around with iPhones these days. Was Steve Jobs doing that for free? Now, more people in the world have cellular phones and are connected to one another than any time in history.

If you are the Unabomber and hate technology, you might have another view. However, technology has made our lives better and it is because of investments from capitalists like you and me.

Now I’m not in the world of Venture Capital myself. If I knew enough to be able to invest intelligently I probably would be. Beyond its potential for huge returns venture drives innovation in our world today.

And while most of us are far more interested in owning stable assets such as multi family real estate, it’s good to know the role venture capital in our world today. And who knows, you may be inspired to become a venture capitalist yourself.

Listen to this week’s Wealth Formula Podcast episode to learn why Venture Capital is a big deal.

Sebastian Mallaby is the Paul A. Volcker senior fellow for international economics at the Council on Foreign Relations and a contributing columnist for The Washington Post. An experienced journalist and public speaker, Mallaby contributes to a variety of other publications, including Foreign Affairs, the Atlantic and the Financial Times, where he spent two years as a contributing editor. He is the author of five books, most recently “The Power Law: Venture Capital and the Making of the New Future.” Mallaby’s interests cover a wide variety of domestic and international issues, including central banks, financial markets, the implications of the rise of newly emerging powers, and the intersection of economics and international relations. His book “The Man Who Knew: The Life & Times of Alan Greenspan” won the 2016 Financial Times/McKinsey Business Book of the Year Award and the 2017 George S. Eccles Prize in Economic Writing. His book “More Money Than God: Hedge Funds and the Making of a New Elite” was described by New York Times columnist David Brooks as “superb”; it was the recipient of the 2011 Loeb Prize and a New York Times bestseller. Mallaby’s earlier works are “The World’s Banker,” a portrait of the World Bank under James Wolfensohn that was named as an “Editor’s Choice” by the New York Times; and “After Apartheid,” which was named by the New York Times as a “Notable Book.” An essay in the Financial Times said of “The World’s Banker”: “Mallaby’s book may well be the most hilarious depiction of a big organization and its controversial boss since Michael Lewis’s Liar’s Poker.” Before joining the Council on Foreign Relations, Mallaby was a Washington Post columnist and editorial board member for eight years. Before that, he spent 13 years with The Economist, during which time he worked in London, where he wrote about foreign policy and international finance; in Africa, where he covered Nelson Mandela’s release and the collapse of apartheid; and in Japan, where he covered the breakdown of the country’s political and economic consensus. Between 1997 and 1999, Mallaby was The Economist’s Washington bureau chief and wrote the magazine’s weekly Lexington column on American politics and foreign policy. He is a two-time Pulitzer Prize finalist: once for editorials on Darfur and once for a series on economic inequality. In 2015, he helped to found a startup, InFacts.org, a web publication making the fact-based case for Britain to remain in the European Union. Mallaby was educated at Oxford, graduating in 1986 with a first-class degree in modern history. After 18 years in Washington, D.C., he moved to London in 2014, where he lives with his wife, Zanny Minton Beddoes, editor in chief of The Economist.

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