This is one of the best, most relevant real-world mail bag questions I’ve ever received.
I have a question: How do you retain humility and empathy as a businessperson without constantly analyzing worth/profit/opportunity?
Background behind the question:
I am an 18 year old girl from the UK and I have just applied to study International Business with 2 languages at university. To me, this sounds fantastic, but it wasn’t an easy choice. It’s the age old problem really: head or heart? I am also passionate about interiors and creating art and in some ways I am very torn. Business represents the head and interiors (creativity) represents the heart. In the future, I would like to merge these and become an entrepreneur in interior design. The thing that most worries me about about studying business though is that it will cause me to become self centred and lack empathy. Some say that in the end, money doesn’t matter, and although I understand what they mean, I believe it does matter. Money = freedom to do anything in life. And the more money one person has, the more they can share to benefit the collective. This is my motivation to become a businesswoman, combined with a fascination with business psychology, creative advertising and the drive to live in a beautiful city, not struggle to make ends meet. Most people have the desire to do good in the world and also to have great personal wealth, so how can I do both, without the desire for wealth eclipsing the desire to do good?
I would also like to say how much I enjoy reading your blog, especially the mental models, it’s really interesting and relevant stuff. I have also followed you on Pinterest (I spend half my life on that sticky website).
I hope this message isn’t too long, I respect that you’re a very busy man.
These are the right sorts of questions you should be asking yourself. The fact that you are concerned about this type of thing makes me believe you’ll grow into a responsible, caring, and successful adult. I look forward from hearing from you in ten or twenty years when you’ve achieved everything you want.
To answer your specific quandary, indulge me for a moment.
Imagine that I showed up on your doorstep and said in my best Hagrid voice, “You’re a wizard, Harry … er Evie”. I hand you a magic wand and show you how to use it. I teach you how to throw fireballs or freeze things; how to make plants grow or make a broom fly.
How do you use your new power? Do you kill and maim those who get in your way? Or do you head to the hospital and start healing people?
[mainbodyad]Alternatively, imagine that you had a wealthy uncle who passed away and left you a collection of Holland & Holland shotguns. To inherit the rest of the fortune, you must pass a marksmanship test.
Once you’ve learned how to use the gun, do you go shoot people in cold blood in a food court or do you use it solely for recreation, to target clay pigeons, or hunt to provide food for your family?
Knowledge is the same way. It is a tool, a skill set, that you can acquire and put to use, either good or evil. The knowledge itself isn’t bad. Having it in your power, and at your disposal, reveals your character. It’s what you do with it that counts.
Wealth (in terms of absolute standard of living) is not mutually exclusive with doing good in the world. In fact, I would argue that Bill Gates has done more good with his fortune than almost anyone who has ever lived. Not only did he market a product that revolutionized the way the world worked and communicated, drastically increasing efficiency for billions of people, but he made his employees and shareholders multi-millionaires. Then, he took his billions and is using virtually all of it to cure diseases in third-world countries, fix educational systems, and fund projects that otherwise would have no natural donor constituency. There were no low-wage employees slaving away in sweat shops or back room illegal deals cut with politicians to get some sort of market protection through artificial government intervention.
If you are worrying about your desire for wealth “eclipsing the desire to do good”, the Catholic church has a word for this temptation: Avarice. If that is something you struggle with, acknowledging it is a huge step because it makes it easier to keep it in check.
Two Tricks That Can Help You Act In a Better, More Moral Way
I’ll give you two tricks that can help you act in a way that reflects the moral choice.
The first: Read a short story called The Egg.
Seriously. Stop reading this mail bag response and go read that story right now. I’ll still be here when you are finished.
Now, assume that the story is true. Convince your brain of the possibility. It will change the way you do business, the way you live your life, and the way you treat people. It’s really an adaptation of “the golden rule” as prescribed by Jesus Christ in the gospels but placing it in the medium of a parable is useful.
The second: Set aside a specific portion of your household income – say 10% – and donate it to charitable, selfless causes that provide you no benefit but help those less fortunate than yourself. That way, the more money you make, the more cash flows into the food pantries and homeless shelters in your community. Don’t get your names put on plaques; do it anonymously. Do it even if your household budget is strained. Do it even when you don’t think you can. It changes how you behave.
Certain Decisions Get Easier with Experience
Knowing when to draw a hard line in the sand can be difficult but it does get easier. Imagine you take over a failing factory and it has 40 employees. However, you need to reduce it to 10 to save the business. Your choice is not to be “heartless” and fire 30 people. It’s to either save 10 jobs and make money for the stockholders or cost everyone their job and wipe the stockholders out completely. That doesn’t make the pain any less, but you sometimes have to think in terms of the whole picture. Opportunity costs are just as real as explicit costs. Cases like that are comparable to a doctor being forced to amputate a limb, as must sometimes be done to save the life of a frost bite victim or someone suffering from severe diabetes.
It also helps to have a hierarchy of priorities in your life. Imagine you own a rental house and suddenly, one of your elderly tenants, a widow, can’t afford her rent. Your income stops. That income is being fed into an account to fund your children’s college education. You don’t have to be heartless and evict her overnight, but you do need to know at what point your children come before the widow. Allowing her to live there indefinitely without paying is, de facto, choosing her over your own children. Life is full of trade-off decisions like this. That is how it works in a limited world.
When you do have to make a hard decision, be kind about it and assist in any way you can, within reason. In the case of the widow, you could try to find a cheaper apartment for her and agree not to report her failure to pay on her credit report. You could even buy her groceries for a couple of months to help her get on her feet. You have to follow your heart on this one.
Target a Happy Business in a Happy Industry
You can combine the head and the heart.
Study people like Mitchell Gold+Bob Williams and Clive Christian. Both have made insane amounts of money through furniture and interior design.
[mainbodyad]Look at a business like Creed, the famous fragrance dynasty in France. The family has tens of millions of dollars in wealth. They have it because they create a product, with a handful of employees, that makes life better for people. I’m happy to pay them! When I pick up a bottle of Sublime Vanille, sure I think about the $640 price tag, and more specifically, the $90,907 that it could have become by the time I am Warren Buffett’s age (to pick an arbitrary example using the world’s most famous investor). Despite that, I decide that the experience, now, of enjoying that fragrance for the next few years, while supporting one of the last great arts in a world of mass commoditization, is worth it to me. Creed has been present at nearly every important event in my life since I became an adult. I was even wearing it (Green Irish Tweed) when I got married!
As a result, the wealth of the Creed family represents countless transactions with ecstatic customers, relies on no exploitation, and makes the world a better, more enjoyable place as they practice their art of perfuming. That is the type of fortune you should be trying to replicate given your concerns. That should be your model. Go after a happy business in a happy industry with happy customers and happy well-paid employees (the latter of which will require high operating margins per employee).
Do that, and your journey of staying true to your moral values will be far easier than if you were to try and make money renting hovels in the slums of Calcutta. Set yourself up for success in the first place and things are a lot easier. Then, if you want, you can redeploy your profits to those same slums and build affordable housing.