If a man has good corn or wood, or boards, or pigs, to sell, or can make better chairs or knives, crucibles or church organs, than anybody else, you will find a broad hard-beaten road to his house, though it be in the woods. – Ralph Waldo Emerson, 1855
The truth behind Emerson’s timeless observation, posthumously revised to involve building better mousetraps, is nowhere more evident than in the men who populate the Business Journal’s list of Wealthiest Angelenos.
While a handful of the 50 people on the list inherited their wealth, a few move other people’s money around and some found their riches by being hired to helm going concerns, more than half accumulated vast wealth by building, innovating and inventing – and doing it better than others working in the same space.
Doctors, lawyers and corporate chiefs can make very handsome livings, but it takes a bit more to reach the wealth stratosphere. Whether in biotech, entertainment, restaurants or technology, the common trait among the self-made group dominating the list is vision married with a dogged entrepreneurialism.
“The ones that are self-made generally create a product or service in which there’s a massive public interest,” said Larry Harris, who holds the Fred V. Keenan chair in finance at the USC Marshall School of Business. “If what they have is unique and it’s not easily reproduced, it’s pretty much essential they have a mass market.”
L.A.’s richest person, Dr. Patrick Soon-Shiong, is, when measured by wealth, the most successful of the breed. A former surgeon, Soon-Shiong grew up in apartheid-era South Africa, graduating medical school at 23 and pursuing a fellowship in Canada before being lured by UCLA to become a researcher. His work there gave rise to APP Pharmaceuticals, which he sold in 2008 for $3.7 billion. Then he built another biotech firm, Abraxis, which he sold two years later for $2.9 billion.
He’s just one example of someone who made it big by creating something a multitude of people wanted or needed, whether it was a new cancer drug or a Chinese fast-food chain.
The latter is what propelled China-born Andrew Cherng and his wife, Peggy, co-founders of the Panda Restaurant Group Inc., to No. 20 with a net worth of $2.75 billion this year.
Indeed, even in Los Angeles, known for its entertainment and aerospace industries, the resumes of the self-made super-rich are quite diverse. They include agriculture, technology, real estate development, retail, homebuilding, beer distribution, auto finance and, yes, movies.
So what does it take to become a billionaire?
To reach that level requires seeing value where others don’t, Harris said. Single-minded focus on success, the ability to execute ideas and a bit of luck are also crucial.
Stewart and Lynda Resnick, No. 8 on the list with a net worth of $3.9 billion, expanded their empire by acquiring Fiji Water in 2004, after establishing a recognizable brand of pomegranate juice with POM Wonderful LLC. Few others would have been able to market these ideas successfully, according to Harris.
Americana at Brand and Grove developer Rick Caruso built his fortune with a similar example of foresight, plus the know-how to get his giant retail complexes approved and running.
“He is clearly a very hard worker who had a vision of how to design shopping centers that was different from what other people were doing, and it happened to be very profitable,” Harris said.
It’s not enough to be a one-hit wonder, said Alfred Osborne, senior associate dean of the John E. Anderson Graduate School of Management at UCLA. Like Soon-Shiong, other billionaires often start with one idea that catches on and then use that success to expand into other areas.
Tech entrepreneur Elon Musk, No. 3 on the list with $5.7 billion, co-founded online payment service PayPal Inc., which was later sold to eBay. But Musk didn’t stop there. He built on that success to found companies such as Space Exploration Technologies Corp., or SpaceX, in Hawthorne and Tesla Motors Inc., a high-end electric car company in Palo Alto that recently reported its first quarterly profit. The value of Tesla stock has nearly quadrupled since its 2010 initial public offering, and its rise this year has helped vault him 21 places from last year’s rank at No. 24.
Yet despite their exclusive ranks, there’s no special alchemy or access one needs to join the ranks of the super wealthy – the path, at least, is there for anyone willing start walking down it.
Lewis Schiff, executive director of the Inc. Business Owners Council in New York and author of “Business Brilliant: Surprising Lessons From the Greatest Self-Made Business Icons,” said there’s too much mythology surrounding the super rich.
He found in his research that millionaires and billionaires often exhibit Machiavellian qualities, such as a high appetite for risk and a willingness to burn others.
“The notion of creators doing things out of a purity of heart and the notion that you can just do what you love and the money will follow is patently absurd,” Schiff said. “Business is run by people who love to make money.”
Osborne said there’s little mystery to how massive wealth is created.
“We put a lot of billionaires on a pedestal,” he said. “A lot of us sit back and watch what they did and how they did it, but that’s because we didn’t get into traffic and make something happen. To me, there’s no secret here.”
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