Lessons learned from Investment bankers and Brazillian billionaires (Day 23)

Photo: (L to R) - Tilyeubek Ye (ADRA-Mongolia), Matthew Lynch (The Asia-Pacific Center for Regenerative Design), and Dorgsurren 'Doc' Khoo (ADRA-Mongolia), at sunrise on the Barrens of Bayan Ulgii.

One of the first lessons I opened up our class on Regenerative Business was this: Never trust an Investment Banker.

I may have to retract that statement and make an exception; good Investment Bankers, ones with functional consciences even, do exist (and, I might add, could be worth their weight in gold).

Thanks to my beautiful new Kazakh fox hat (a gift from the graduating class of Bayan Ulgii's inaugural Permaculture Design Training course), and a strange twist of fate, I find myself sitting next to half of Mongolia's Mexican population on the plane to Beijing, a casually dressed, elegant young man by the name of Oscar Mendoza, who also happens to be the COO of Mongolia's first boutique investment bank: Frontier Securities (Frontier assisted with the first  IPO of a Monoglian-owned mining company, possibly creating Monoglia's first member of the Forbes 400 List and paving the way for other Mongolian companies to follow suit).

Apparently, there's no better icebreaker than a big fluffy hat which looks like an animal has wrapped itself around your head, because Oscar is impressed with the spectacle of my attempts to stuff the oversized furball into the overhead compartment above his seat, and we strike up a very interesting, and diverse conversation ranging from mining, agriculture, NBA All-Star weekend, the foreign investment climate in Mongolia, our respective homelands, Robert Kiyosaki, our current projects, Bank of -Evil- America, former Bank of America employees we know who are now involved in charitable work to atone for their time spent working for Bank of America, sustainable economic development, the amazing potential of the human mind, tsu-te-tse, and oh yes (I told you it was a diverse conversation): Regenerative Business.

Photo: Oscar Mendoza, half the current Mexican population of Mongolia and Co-COO of Frontier Securities.

I'll spare you the details of our rather schizophrenic conversation (which I can assure you, made perfect sense to the both of us, and was highly entertaining, even if only to ourselves), and share a quick story that Oscar told me about one of his billionaire acquaintances:

Our conversation stumbled onto the topic of Robert Kiyosaki's definition of an asset: something which feeds you.  Oscar Mendoza, (who must be at least somewhat financially savvy to have landed a job which requires him to work on deals containing so many zeroes the numbers sound nonsensical, almost Suess-ical), Co-COO of Mongolia's first and finest boutique(i) Investment Banking firm, commented: By the way I agree with Kiyosaki, even though every bank will probably tell you otherwise.

He went on to tell me about his billionaire acquaintance, a very wealthy and ambitious, self-made Brazillian man who runs one of the world's largest Oil and Natural Gas companies (OGX).  This man makes no secret of his desire to become the world's wealthiest man, and in the course of his dealings one evening, Oscar took it upon himself to suggest to gentleman that it might be quite a task to knock of the Mexican gentleman who sits above him on the Forbes 400, a billionaire who made his fortune in Telecom - he would be pretty difficult to knock off because his business model basically requires him to do little more than sit back and collect his revenues, now that the money has already been spent on building the infrastructure which runs everything.

In comparison, the Oil Business requires huge amounts of money to research & discover a viable oil field, then even more money to develop & tap the field to create productive wells, and more money to extract, refine & deliver the final products. 

The Brazillian billionaire smiled, leaned in a little closer and said I'll tell you my little secret: 

When I want something to happen, every night before I go to bed, I spend 30 minutes in my thinking room, where I think in detail about exactly how everything will look when it's done.  They said I couldn't build the largest shipping port in Brazil; but I did.  They think I'm superstitious and crazy, and can't believe that it could possibly be so simple.  They say I can't be the richest man in the world; we'll see.  But I tell you this: my simple little secret, it works.

So there you go.  Maybe it really is that simple: Think, and grow rich.

To think is to create. 

Thoughts are things. 

Mind over matter. 

We get what we focus on.

However you want to phrase it; think I'll give it a try.  ...I'll let you know how it works out.

 But McBean was quite wrong. I’m quite happy to say.
That the Sneetches got really quite smart on that day.
The day they decided that Sneetches are Sneetches.
And no kind of Sneetch is the best on the beaches.
That day, all the Sneetches forgot about stars and whether
They had one, or not, upon thars.
   - From Dr Suess' 'The Sneetches' -
 

 

Oh, and in case you were wondering... the man he was telling me about, the Brazillian billionaire? 

His name is Eike Batista.

Look him up - maybe you can even try out his little secret for yourself.

 

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(i) Unlike the big boys (Goldman Sachs, Lehman Brothers, Merril Lynch and the like), employees of most boutique investment banking firms live and work in the communities they serve, and therefore have an additional layer of accountability which simply isn't present with the big boys; when you live and work in a community, relationships are at stake, and you are physically present to deal the consequences of your actions, for better or worse, face-to-face. 

Regenerative Business in Bayan Ulgii (Day 17)

 Theme Song for the day: 'Money', by PInk Floyd.

 

Photo:Regenerative Business is...

Today we played a game called: 'Let's Lend Money to Matt. 

But first, the morning was spent in lecture-format, to lay a foundational understanding of the Principles of Regenerative Business:

  1. Only buy Assets which regenerate themselves.

Photo: Petrol pumps are perceived as a high-value asset, however are costly to run and maintain.  A pump powered by renewable energy (such as a solar or RAM pump) would be examples of regenerative assets.

   2. Business is a Team Sport.

Photo:Creating support systems for your business increases your available resources to tackle challenges and capitalize upon opportunities.

  3. Invest Profits into your Community.

Photo: Investing in the community the business operates in cycles energy back into the people who support the business in the first place, creating a positive feedback loop which can increasingly flourish over time.

  

Students were then asked to pretend they were a bank, and I was a customer seeking a small loan from them to start a business.  Their bank (and the loan they would give me, if they decided I was qualified candidate) was based on their pooled savings, and so what kind of questions did they have for me?

•   What kind of business? (I'm gonna sell tour packages of Bayan Ulgii Province)
•   What is your business plan? (I'm gonna sell a lotta tour packages!)
•   Where will your business be located? (Above the pub, of course.  For networking and public relations purposes.  Of course.)
•   Show us your SWOT! (...as in Strengths-Weaknesses-Opportunities-Threats-Analysis).
•   Have you sought permission from the authorities?  (Yes, of course...)  ...Prove it.
•   How much money will you make? (One MILLion Dollarrrrsss!!.....(in your best 'Dr. Evil' voice))
•   How much money are you making right now? (Ummmmm..... not so much?)
•   Well then what can you give us for security? (Well... I have this eagle ring you might like....??)
  

The game was presented farcically, and students had a lot of fun interrogating their poor Instructor (who just wanted a small loan of 1,000,000 MNT (approx $10,000 USD), after all!), coming up with the novel idea of requiring me to marry a local suitor (named Gugan, remember her from the design briefs?) of their choosing in order to ensure i) that profits would be cycled back into the local community, and ii) that she would sort me out if profits were not cycled back into the community (Mongol-Kazakh women are very strong).  Quick learners, and crafty dealmakers too!

The entire exercise was designed to give students an interactive lesson to utilize the principles discussed in the morning sessions, to demonstrate how to teach financial literacy with an engaging experience, and -to see if I could actually get them to lend me the money- to facilitate the process of forming individuals into a Self-Help-Group (SHG), which will form the basis of the project's microfinance initiative.  Studies of sustainable SHGs in India indicate that groups which are savings-based (ie lend their own money) are more likely to succeed and flourish(i).

Beneficiaries will form informal support groups based on needs, proximity to each other, and personalities - especially as so much infrastructure (root cellar + passive solar greenhouse + drip irrigation system) will be built over the summer of the first year.  Learning curves will be steep in the first two years (training will be mostly hands-on, learning by doing, while in winter months theoretical 'debrief' lessons can be facilitated), and beneficiaries can accelerate their learning by sharing information, lessons learned, and resources.

Only when a family's basic needs are met, and a surplus in crop production is achieved can we shift our focus to developing microenterprise; however, the foundation for credit co-operatives and SHGs can be laid as early as Year 1, when informal support groups form to self-organize working bees and information sharing sessions.  Seed-saving groups (which are necessary to ensure the sustainability of any aid & development initiative so that beneficiaries are independent from having to purchase seed each to year to grow a crop) can grow into seed-banks, which can then grow into savings & loans SHGs as the group's needs evolve.

Leadership, membership, and systems (the three key factors in the sustainability of SHGs)(ii) can be nurtured to grow and dvelop from these informal support and seed-saving groups.

The step from saving seeds together is not a huge leap to saving money together; the seeds for regenerative economic development can be sown through permaculture design.

Photo: Words of wisdom from Bill Mollison.

 

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(i) 'Sustainability of Self-Help Groups in India, part I - Do India's Self-help Groups Provide Value for Money?', by Consultative Group to Assist the Poor (CGAP), 2007

(Ii) 'Sustainability of Self-Help Groups in India, part II - Designing SHG Programs for the Long Term' , by Consultative Group to Assist the Poor (CGAP), 2007