Recently, I delved into the intricacies of investing through a three-day class with Phil Town, centered around Rule #1 principles. For those of you who don’t know, Rule #1 is simply this: Don’t lose money. He is very clear that investing becomes high-risk gambling if you get in a hurry, and try to cut corners. He advises us over and over that in order to not lose money, we have to practice patience - that dirty little word.
Do I have your attention?
Beyond the technicalities of investing in stocks, of which there are many, what truly stood out in the course was the recurring theme of clarity — clarity about passions, values, and most crucially, oneself. This clarity is not just the cornerstone of successful investing but also a non-negotiable factor for triumph in business. And you can't rush clarity. Clarity takes time and... patience.
What Phil teaches is we absolutely must do our own work, and do it with the utmost commitment and patience, if we hope to achieve investing success. This is his version of my favorite phrase, slow down to speed up.
To be clear, he's not talking about the 20-year patience of mutual fund and 401K investments. He is discussing a particular type of patience; one of trusting in a process that works, and works faster with greater returns for your initial capital. But it is not a 1, 2 or even 5-year fix. It is carefully lining up the dominos for an impressive chain reaction.
So, no. It won't take you 20 years. But it won't happen in 1 or 2. Your big win tends to happen around year 8 or 10. You might go fast in 1 or 2 years, but you are far more likely to crash and burn that way, and lose everything in the process. You don't have to wait 20 years though, if you'll set yourself up for the even bigger win in year 8 or so.
Business is no different, which is why it is so alarming to witness business start-up after business start-up rushing in ill-prepared, searching for the overnight wins, without giving themselves the grace and space to get their strategy and research in place. You see, you can go fast. However, you must learn to aim before you fire.
Beginning with Clarity: Aligning Values and Investments
Phil Town's teachings emphasized the paramount importance of aligning investments with personal values and passions. He tells us to look for a business we love and would want to own, not a stock with a rapid return, and potentially rapid crash. This principle resonates beyond investing and into the realm of entrepreneurship. A clear vision, rooted in personal values and driven by passion, becomes the north star guiding both investment decisions and business endeavors.
There's a reason almost every publically traded company displays their msission, vision and values in their annual report, and a reason when I begin working with clients on their business strategy and branding, we begin with those same things. They work.
Quoting a study by Harvard Business Review, "Companies with a strong sense of purpose are more likely to outperform their peers," highlights the tangible benefits of aligning business goals with personal values. This synergy creates a powerful foundation for success, echoing Phil Town's emphasis on finding wonderful investments that align with one's passions.
The Myth of Overnight Success: The Reality of Business Building
Contrary to popular belief, success is rarely instantaneous. Nonetheless, the startup world is still seduced by the allure of quick cash and the dream of passive income. As Thomas Edison wisely put it, "Opportunity is missed by most people because it is dressed in overalls and looks like work." This alarming statistic underscores the urgency many entrepreneurs feel to achieve rapid success. The reason for the urgency is they begin underprepared, and then they compound that urgency by bypassing the process itself.
Research from Statistic Brain Research Institute highlights that only 25% of startups make it to 15 years or more. The rush for quick success can lead to neglecting foundational work, strategic planning, and the reality that building a sustainable business is a marathon, not a sprint.
Patience and the Long Haul: A Shared Process of Investing and Business-building
In both investing and entrepreneurship, patience and a long-term perspective are key. As Phil Town wisely notes, "The stock market is a place where the patient take money from the impatient." This philosophy aligns seamlessly with the world of business, where resilience and commitment to the journey are paramount. It is worth reiterating that it is entirely possible to increase both your rate of reurn and the return itself when you know what you are doing. That's because those who actually know what they are doing can do it more effectively over and over.
Research from the Small Business Administration (SBA) affirms the significance of long-term commitment, indicating that only about one-third of businesses survive beyond ten years. This reinforces the idea that successful entrepreneurship requires continuous learning, strategic thinking, and an acknowledgment that overnight success stories are more often the exception than the rule.
Strategy Over Gambling: The Art of Creating Winning Formulas
Both successful business and investing are not games of chance; they're about creating winning strategies. Gambling may involve luck, but building wealth and a successful business involve a meticulous understanding of markets, customers, and oneself. Phil Town encapsulates this sentiment perfectly: "Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas."
Similarly, successful businesses are built on strategies that withstand the test of time, not on impulsive decisions or reliance on luck. As management guru Peter Drucker wisely put it, "The best way to predict the future is to create it." Crafting a winning strategy involves careful planning, market analysis, and a deep understanding of your unique value proposition.
Building Your Business Strategy: Invest in Your Self
The principles of clarity, patience, and a commitment to the long haul are universal pillars that support both investing and business success for th long haul. Navigating the complexities of these realms requires that we shed our myths, embrace the process fully, and build a foundation of strategic clarity and commitment. Phil calls it intellectual honesty.
Building a business strategy, sooner rather than later, becomes the pivotal first step. Strategy is for a business aiming for long-term gains that are far more secure and substantial than chasing hacks and secret cheats. Similarly, your rewards will usually be far greater (and ironically must faster) when you approach business or investing strategically, patiently, and with a commitment to your own unique process.