Finance 14 October 2018
The movie Crazy Rich Asians released to a frenzy of buzz not only about Asian representation but also, about the wealth and opulent lifestyles on full display. The cars, the fashion choices rivaling those in The Devil Wears Prada and of course, the ring! Clearly, the world has a voracious appetite for fantasies of billionaire bling. And as home to the world's highest number of billionaires, Asia is fueling a lot of this fascination.
Of course, stereotypes can reflect a slice of reality. But as a second-generation business owner from Vietnam, where my parents built our family's company Tan Hiep Phat from a mom-and-pop yeast business that my father ran in the 1970s out of a tiny room at home into Vietnam's largest privately-owned beverage company that turned down a $2.5 billion buyout offer from Coca-Cola, I know that there is another side to the story. One that holds priceless lessons for anyone aspiring to achieve and maintain large-scale success.
That is the far less glamorous but infinitely more important aspect of hard work, dedication, sacrifice and, especially, rigorous values that it takes to achieve and sustain wealth. This has been the story for many of Asia's wealthy individuals and families who have risen from humble origins and grueling socio-economic conditions. (Chinese billionaire Zhou Qunfei, head of Lens Technology, a former factory worker who often works 18-hour days and “keeps living quarters in her office," is just one example.)
As I discuss in my new book, Competing With Giants, how my own family founded its business and ultimately built its fortune against a devastating backdrop of war, crippling trade sanctions and record hyperinflation. In the face of deprivation my father learned not only to be innovative but to always stay humble and grounded. This has provided the foundation for our company's and our family's culture of hard work.
The long-term viability of THP is directly tied to my family's values and worth ethic. This ethic is driven not by dreams of grandeur and glamour, but by a set of principles and core values that are light years away from those brandished in Crazy Rich Asians.
It is these principles that have made our success a reality and keep it real so that it remains sustainable. If you are an entrepreneur or an aspiring entrepreneur, adhering to these principles will increase your chances of reaching your business goals:
View wealth-building as a journey, not an objective
Always remember that the real value of money is the path one takes to achieve it. It is not an end in and of itself. For entrepreneurs, this means mapping out a clear vision for the company that aligns with its core identity and establishing granular business plans that project into the future - even as far as 10 years out. My family's company, THP, has a vision to expand throughout Asia and beyond with new and exciting brands. Next, commit to the plans, modifying as needed in response to external changes while resisting the temptation to get diverted by promises of sudden, short-term gains if these do not align with the company's fundamental goals. This was my family's mindset when turning down Coca-Cola's $2.5 billion buyout offer in 2012.
Strive for results, not personal riches
Personal riches come and go. That's why results and growth that endure over time must be the primary goal of any entrepreneur. But results are not just about numbers. They encompass a broad range of areas such as the success of strategic partnerships, the strength of relationships with suppliers, the quality and efficiency of production methods and employee satisfaction. Focus on designing and Implementing systems to list, track and monitor all areas of activity, from sales and operations to employee and client relations, and on analyzing the data day-to-day rather than on counting cash. Material wealth may well follow, but the satisfaction of seeing results is far more real.
Never take success for granted
Having riches today does not mean we are entitled or guaranteed to have them forever. There are two things I believe can help entrepreneurs stay grounded in this reality. First, maintaining a humble lifestyle - quite the opposite of the lifestyle presented in Crazy Rich Asians. My own family lives in an apartment above one of our factories.
When traveling, we often take Ubers and stay in AirBnBs. The second is to take action each day to achieve your goals. This means taking chances and always learning from both your successes and your failures--which are inevitable and should be embraced as a source for valuable lessons. The more chances you take, the more opportunities you will ultimately uncover.
Know your values and put them first
Integrity is priceless, and will carry you much farther than the promise of “big shiny objects." When Coca-Cola offered to purchase THP in 2012, the conditions clashed with our vision for the company. We rejected the offer, walking away from a $2.5 billion payday. If the deal had gone ahead, it would have been the largest-ever foreign acquisition in Vietnam's history by deal value. It still would be the second largest today. But it was far more important for us to uphold our values and respect what our company stands for. Values should be the ultimate foundation of entrepreneurial decision-making.
Understanding and upholding your company's values is essential to its long-term viability. THP rigorously adheres to and is guided by a set of 7 core values, including; customer satisfaction, responsibility to the community and society, the spirit of business ownership and believing that nothing is impossible. We have no regrets about passing on the Coca-Cola opportunity: time has proven us right.
Serve your customers diligently, even in challenging times
Owning a company means, above all, serving the customers who depend on you to provide reliable, enjoyable brands that are delivered on time. Every interaction with them matters, no matter how small or big. When problems or challenges arise, it is incumbent on you, the business leader, to rise to the occasion and find a way to meet your customer's needs. Very often, this will mean putting your own needs last. For many people, staying humble and grounded becomes ever more difficult as success grows. They start to believe their own hype, a breeding ground for arrogance and the kind of hubris that leads to mistakes. So keep dreaming big. But as you do, keep your focus and your aspirations in the right place.
3 Min Read
"How did you ever get into a business like that?" people ask me. They're confounded to hear that my product is industrial baler wire—a very unfeminine pursuit, especially in 1975 when I founded my company in the midst of a machismo man's world. It's a long story, but I'll try to shorten it.
I'd never been interested to enter the "man's" world of business, but when I discovered a lucrative opportunity to become my own boss, I couldn't pass it up—even if it involved a non-glamorous product. I'd been fired from my previous job working to become a ladies' clothing buyer and was told at my dismissal, "You just aren't management or corporate material." My primary goal then was to find a career in which nobody had the power to fire me and that provided a comfortable living for my two little girls and myself.
Over the years, I've learned quite a few tough lessons about how to successfully run a business. Below are five essential elements to keep in mind, as well as my story on how I learned them.
Find A Need And Fill It
I gradually became successful at selling various products, which unfortunately weren't profitable enough to get me off the ground, so I asked people what they needed that they couldn't seem to get. One man said, "Honey, I need baler wire. Even the farmers can't get it." I saw happy dollar signs as he talked on and dedicated myself to figuring out the baler wire industry.
I'd never been interested to enter the "man's" world of business, but when I discovered a lucrative opportunity to become my own boss, I couldn't pass it up.
Now forty-five years later, I'm proud to be the founder of Vulcan Wire, Inc., an industrial baler wire company with $10 million of annual sales.
Have Working Capital And Credit
There were many pitfalls along the way to my eventual success. My daughters and I were subsisting from my unemployment checks, erratic alimony and child-support payments, and food stamps. I had no money stashed up to start up a business.
I paid for the first wire with a check for which I had no funds, an illegal act, but I thought it wouldn't matter as long as I made a deposit to cover the deficit before the bank received the check. My expectation was that I'd receive payment immediately upon delivery, for which I used a rented truck.
Little did I know that this Fortune 500 company's modus operandi was to pay all bills thirty or more days after receipts. My customer initially refused to pay on the spot. I told him I would consequently have to return the wire, so he reluctantly decided to call corporate headquarters for this unusual request.
My stomach was in knots the whole time he was gone, because he said it was iffy that corporate would come through. Fifty minutes later, however, he emerged with a check in hand, resentful of the time away from his busy schedule. Stressed, he told me to never again expect another C.O.D. and that any future sale must be on credit. Luckily, I made it to the bank with a few minutes to spare.
Know Your Product Thoroughly
I received a disheartening phone call shortly thereafter: my wire was breaking. This horrible news fueled the fire of my fears. Would I have to reimburse my customer? Would my vendor refuse to reimburse me?
My customer told me to come over and take samples of his good wire to see if I might duplicate it. I did that and educated myself on the necessary qualities.
My primary goal then was to find a career in which nobody had the power to fire me and that provided a comfortable living for my two little girls and myself.
Voila! I found another wire supplier that had the right specifications. By then, I was savvy enough to act as though they would naturally give me thirty-day terms. They did!
More good news: My customer merely threw away all the bad wire I'd sold him, and the new wire worked perfectly; he then gave me leads and a good endorsement. I rapidly gained more wire customers.
Anticipate The Dangers Of Exponential Growth
I had made a depressing discovery. My working capital was inadequate. After I purchased the wire, I had to wait ten to thirty days for a fabricator to get it reconfigured, which became a looming problem. It meant that to maintain a good credit standing, I had to pay for the wire ten to thirty days before my customers paid me.
I was successful on paper but was incredibly cash deprived. In other words, my exponentially growing business was about to implode due to too many sales. Eventually, my increasing sales grew at a slower rate, solving my cash flow problem.
Delegate From The Bottom Up
I learned how to delegate and eventually delegated myself out of the top jobs of CEO, President, CFO, and Vice President of Finance. Now, at seventy-eight years old, I've sold all but a third of Vulcan's stock and am semi-retired with my only job currently serving as Vice President of Stock and Consultant.
In the interim, I survived many obstacles and learned many other lessons, but hopefully these five will get you started and help prevent some of you from having the same struggles that I did. And in the end, I figured it all out, just like you will.