How did the wealthiest Americans earn their fortunes?
If you count by the members of the Forbes 400 list, 25% made their fortunes through investments, 25% made them through technology, and 50% made them through business ownership. A lot of ink is spilled on finance and technology. VCs seem to spend as much time tweeting as investing. But most people pay less attention to the largest wealth creation engine that exists: business ownership.
I spent the past six years working with some of the largest family companies in the world. The owners of these companies are smart, hardworking, and ambitious. But there are many more people with big brains and a work ethic than there are billion-dollar businesses.
That’s because there are two secret ingredients behind the success of most large family companies. First, they began. And second, they continued.
Outside of finance and technology, most great fortunes are built over long periods of time. Real estate hasn’t minted more millionaires than any other asset class because it’s particularly high-performing (it’s not), but rather because it’s easy to own. The default option for real estate owners is to continue.
Businesses are harder to own. They rely more heavily on people. Those people need to respond to changing demands for their products and services. Being a passive investor in an index fund that tracks the S&P 500 rewards laziness. Owning a business does not. It takes work to continue.
My partner and I founded Majority Search to turn operators into owners and shepherd the creation of new long-term companies. First, we want them to begin. And second, we want them to continue.
To achieve this, we’re supporting first-time CEOs to find and buy exceptional small companies and grow them over time. Finding and buying small companies is no easy task. It takes time, effort, and capital. But it’s just the beginning.
Once Majority Search buys a small company for somebody to run, it’s up to them to grow it. If they can, we offer them a unique opportunity to earn meaningful ownership. And the best part is that we allow them to grow the value of that ownership over a very long period. The longer they continue, the better.
This will be a place for me to catalog observations on how to build enduring companies. What types of companies are built to last? Who are the right people to lead them? Is there ever a right time to sell them? As I work to answer these questions, my partner and I will be building our own long-term company: one that exists to enable the creation of others.
This is the beginning of our exploration. Now it’s time to continue.