Sunday, February 04, 2007

The 10 billion dollar Class

The good thing about Family Business classes is that you get to see really big fish. Not that anyone should be overly impressed by big bucks, but still, to me that's as close as have been to real billionaires.
To prepare us for the big catch, we had a session on Wealth Management ("Private banking" is so passé). Two things of particular interests: entry tickets, and transition from operations to investments.
Entry tickets are segmented this way -at least in that Bank which is a global leader- 1 to 10 USD millions, 10 to 100 millions, 100 millions above. They do have a 1 billion above segment, but it only concerns 10 families or so in Asia...
Wealth Management, from what their representatives claimed, is particularly concerned about balancing the family assets between core operations and investments. That supposedly is key to avoid the 3G curse, ie. that most family businesses tank in the 3rd generation. By, say in the 2nd generation, cashing in some of the business success into funds, families can avoid such a curse. From my point of view, it then becomes a matter of transferring the right values, that if you may avoid the 3G shock business wise, you may still end up with a bunch lazy descendents. I think the lady in charge was a bit shocked when I teased her suggesting that she participated in the 3G curse by making it easy money.
We also had a brilliant lawyer on general family issues, and a strange fellow on Philanthropy. That guy, no doubt, was passionate about his job, although sometimes a bit schmaltzy. With very little in hands when he arrived in Asia, he boldly elbowed his way into the rich families just by forcing people to meet him. His tip: these people love to tell their stories, so it supposedly is easier than you think to meet them.
Once ready to meet the big fish, we had 20% of the big big big catch, ie. two 1 billion above family representatives. At this level, it's a small club, as both people seemed to know each other quite well.
Big Fish number 1 had a very interesting theory about Family Firms evolution. He mapped some big successful family models according to the level of investments vs business operations, and the level of family involvement/long-term survival. He claimed that successful families were those who were able to transmit assets into investments, judging by levels of involvement and longevity. These investments could be Private Equity funds, or Family Bank/Office, for instance. The key there, is being an active investor to keep some sort of entrepreneurial spirit.
Big fish number 2 concurred, and explained us how he got respect from his father when he created a Family Office, and then a Family Foundation.

We also had the chance to meet successful entrepreneur Rajeev from Sula Vineyards, through our VOBM Course -which on its own justifies my presence in Singapore. This guy is a big fish in the making. He really made a fantastic business out of his passion of wine. A Stanford graduate in Science, he launched a winery in India about 10 years ago, which is turning out to be a wonderful money making machine. He told us about the 2 wine business models: the Gallo and the Mondavi models. No French way, it seems. Rajeev chose the Mondavi model, going from a top wine to broader markets, once his reputation was made. He is currently breaking all price barriers for Indian wines. Unfortunately his wines on offer for tasting were more of the Gallo type -especially red and rosé. Nevertheless, it was a great occasion to try different things, and definitely an inspiring business story.

To know more about Sula wines:

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