From 2000 to 2018, Bill Gates has been the World’s Richest Man For 13 years out of 19 years, and even in the remaining 6 years, Bill gates has been in the top 3 richest men. As of now, as per Forbes list of world billionaire, he is at the second position behind Jeff Bezos (owner of Amazon) with the net worth of 114.6 B USD. You can with surety Say Bill Gates as one of the richest men of the 21st century.
Bill Gates is also an avid reader. One of his favorite books is Business Adventure. This book was gifted to him By Warren Buffet.
In the Business Adventure book by John Brooks, the author shares some very interesting and useful Business Case Studies.
It is a famous saying that “those who don’t remember the past are prone to repeat it”. So it is vital to know the importance of history, at least in the field of business. This article contains 5 most important case studies out of 12 case studies in the book.
Let’s dive in.
From the start of 28th may 1964 to three consecutive days the stock market has experienced a bizarre flash crash where the market has faced a $ 20 billion loss, such a huge loss in stock market history started with a very small thing. The actual reason for the loss was that the trading office was updating stock price manually, but because of the manual updates, there was a delay of 45 minutes. The moment big investors realized that there was no update on the stock price, they assumed that price must be falling. Therefore, they are not updating. Due to this assumption, they started selling their shares. The moment big investors started selling their shares, price of shares actually started falling looking at it almost everyone started selling their shares, because of which chain reaction started and in just 3 consecutive days market has seen $20 billion loss.
On the other side, people had a common knowledge that Index and Dow can never be less than 500 points. The moment Index reached near to 500 points, people crazily started buying stocks again as a result buying panic started, and the loss which the market has seen in 3 days was recovered in just one day. Now, this entire incident shows that we humans many times because of our stupid fear take wrong decisions. Most of the time, people just assume that things are worst without knowing the actual fact. Well, this fear was good earlier for survivor but it is not that important in this era.
Hence, the first lesson is ‘Never be afraid without knowing the proper facts’.
In 1950, Ford wanted to make Edsel a Flagship product on which they had a lot of hope because they did a lot of research they invested a lot of time and almost 350 million USD. But when that car gets launched in reality, people named that car as one of the ugliest car of all time, and that car got failed, this failure happened because of three reasons.
First reason: in 1955 America’s economy was increasing, people had extra money which they can use for their comfort. Hence, at that time people were interested in medium-range cars by seeing it Ford Decided to launch “Edsel”. But from 1958 onwards in just three years everything changed. The market wasn’t performing that good and people were more interested in cheaper range cars compare to medium range cars.
Second reason: There was high expectations related to Edsel, expectation was so high that it almost became unrealistic. Due to this when final result was launched people didn’t like it at all.
Third reason: It wasn’t that good quality wise. It had problem in its break and acceleration. Which means, they invested a lot in research but failed to invest in quality.
Three things which we should learn from these reasons and story:
First: Never think that things will be the way we wanted, it won’t remain the same always. Hence unpredictability will always be a big thing in a market.
Second: We should always keep our expectations in check, we shouldn’t have unrealistic expectations, it should be realistic.
Third: More efforts should be allocated to building a quality product when compared to research.
Piggly-Wiggly was the United States supermarket company which was first to introduce the Self-service concept in the market.
Till 1920, Piggly Wiggly was growing very fast in the entire US. But there was some franchise which failed in New York. Now seeing such failure Wall Street few investors tried to take advantage from that situation by creating a bear-raid, bear-raid is something where investors invest in the falling stock price to earn money, they try that anyhow company’s stock price should fall further and for this purpose few investors claimed that Piggly Wiggly is falling because it’s New York Franchise isn’t working, which wasn’t true.
Now by looking at it, the founder of Piggly Wiggly Clarence Saunders got very angry. He decided to teach them a lesson, therefore he bought his companies 98 percent shares because of which his stock price value increased from 39 dollars to 124 dollars, due to which bear rider’s faced losses and they were bankrupt. This is what the owner assumed, but in reality, what happened was different, those bear riders convinced NYSE to give them some extensions for their payment, on the other side for so much investment the owner by himself faced a huge debt, he faced a huge loss after which he declared Bankruptcy. His company Piggly Wiggly today is an unknown franchise, known by very few. If he would have controlled his emotions or if he would have a high influence on the stock market exchange then it is assumed that today Piggly-Wiggly would be as same as Walmart.
Hence lesson learned: “FIGHT” especially to take Revenge can destroy you hence it is best to AVOID, Or else become so influencing and powerful that people don’t even think of fighting with you.
Xerox Roller Coaster:
We can see Xerox story in three stages.
First: When it was developed and launched. Earlier there was a time when people used to use a mimeograph machine to remove photocopy which was neither easy nor cheap. But In 1938 by the process of Xerography, Chester Carlson and his Assistant removed photocopy in standard office paper. Then he developed that technology more properly with the help of one university and invested 75 million dollars and almost 13 years and when in 1958 he joins hands with Xerox company to launched his product, even then he wasn’t sure whether it will work or not, infact Xerox founders told their families and friends not to invest in Xerox shares but result shocked everyone, Xerox company in just 6 years increased their revenue to $500 million. Every year in America billions of people were removing photocopies using the Xerox machine because of which Xerox became America’s one of the biggest and successful company.
Second: When Xerox maintained its success and did many donations example: The university which helped Xerox to develop the technology for it, Xerox became the second largest donator and to support UN, Xerox ran a $4 million campaign.
Third: When Xerox’s success started falling after 1965 many competitors started doing the same thing like Xerox that too cheaper than Xerox and Xerox failed to do something new and different, fail to hold customers.
Important lessons, which can be learned from these stages:
“Remember that your life and the business journey will be a roller coaster where many up’s and down’s will come, but if you develop something useful by putting efforts and time then for sure you’ll be successful and people will remember you. Example: Even today in many places people say Xerox to a Photocopy.”
Warren Buffet is one of the world’s richest man but he says that his tax rate is less than his secretary. Means, his secretary who earns very less than Mr. Buffet pays more tax compare to him. Well, this is the harsh truth of the tax system. Let’s understand it with America’s example:
In America Government start taking income tax from 1913, because they were in need of money, while starting it, their main aim was to take money from their country’s rich people that too less amount but today things have changed tax rates are increasing because of money greediness. Earlier Rich people were targets of Tax, but today middle-class people have become the main target. Because rich people have become smart, they found out many loopholes in the tax system to save their money. Whereas middle-class people just do hard work to give a big amount as a tax to government.
This has become a cruel system where mostly middle-class people are suffering now there can be two solutions for this problem.
First: To change the tax system by developing or adopting a better tax system which is truly a very difficult thing to do.
Second: Start thinking like rich people, and take advantage of system loopholes.
Hope you liked the summary. Stay tuned for many more.
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