Murray’s Blog

Having worked for the last three years alongside some of the smartest and wealthiest people in the country through my time on the RMB Class Of programme, I’ve come to realise that it’s rather easy to become wealthy. It takes just two simple ingredients – patience and discipline.

There’s no need to think up the next perpetual energy machine, or a new widget that every person in China needs, or to go neglecting your family, friends, health and hobbies to get there. For the average South African, the mentality of “me-too,” if used correctly, is all you’ll need to become the next Joe with seven digits to your asset column. Here are my thoughts on how you can set the wealth wheel in motion.

Firstly, be disciplined about your money. Everyone has a particular kind of relationship with their cash – some, an anxious one, some a comfort one – but each person a different kind. Some worry about how much liquidity arrives every month and how to grow this, others worry about the little leaks in the dam wall that seem to drain each month’s income. Whichever you are, make a few promises to yourself about how you’ll save money first, and then spend what is necessary. Few people realise the opportunity cost of their cash, when it’s spent on a luxury item of clothing or a few unnecessary nik-naks, rather then earning interest, and interest on that interest, over a period of time to give you a life far differnt to how you’ll end up if you live hand-to-mouth. So if there’s one important first step, it’s to put aside a portion of cash each month, as soon as you get that salary notification SMS.

Property is one of the few asset classes that South Africans can finance with debt. The beauty of this is that the bank ultimately provides a platform for your asset to grow and compound, while you’re slowly chipping away at repaying the capital. If you had a R100,000.00 and put this into the stock market, government bonds or a cash deposit you’d earn between 3 and 20% per annum. That’s five to fifteen years to double your cash. If this was a deposit on a R1m house, and the property market kept up with inflation at around 5%, you’d be earning R50,000.00 in capital gain if you neglect interest and CGT. A far quicker way to grow that capital base. If you’re renting the property out, there’s even more upside for you.

The last little bit of insider info I can share is that because you’re in the rat race, the other rats are competing for similar returns, so you’ll need some way of differentiating yourself and giving yourself access to some upside event in the market that few other people could participate in. Considering your skills and network of contacts, look for a small business, investment club, or advisory role you might be able to fill, that you’d enjoy. If you’re backing the right business that adds value to the market, run by a passionate jockey that’s desperate to succeed, and you’re adding value in a way that you enjoy, your venture is sure to earn above-market returns.

With these simple steps, given time and the ability to wait for your work to bear fruit, you’ll be set up for great financial success and be able to live out your days with a house in Clifton.

Got any interesting thoughts yourself on how how to make a bar? Please share in the comments..

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I attended a talk given by Adrian Gore, Discovery Holdings CEO and founder, held at GIBS this last week. His talk focused on the commonalities of the attributes he feels are constituents of success. His measure of “success” doesn’t purely focus on the amassing of wealth for an individual, but can be applied to a company, a nation, or to an individual – to add such value to humanity that monetary reward will almost always play a part.

Gore proposes that success is not correlated to behaviours but rather to attitudes and characteristics, and the seven of these he discusses are as follows in some brief notes that were jotted down:

1.  Positivity

• positivity actually makes you more rational
• decisions couched in positivity have a far better impact, no matter the outcome
• is the fundamental fuel for success
• by correctly framing issues in your mind one tends to perpetuate the way things work out
• The South African standard of living index does not support our implicit national negativity , however exceeding that of every other BRIC country

2. Set dreams and goals

• set your own dreams and goals – but stretch yourself to aiming high with these
• these are typically not about rationality, for even if you fail you’ll have gone further than if you hadn’t dreamed
• vision helps you to look towards the future and these dreams

3. Sense of urgency – time is limited

• depression stops people setting goals and acts to protect against dreams and vision, a phenomenon which has therefore survived evolution
• we all have greatness within us, but believe that we haven’t used it up just yet. You need to be frantic about being great.
• it is an irrational human condition that we think that we have endless time.  Time is not linear…when you’re younger, each year is perceived to be longer because it’s a larger percentage of the life you’ve lived
• one’s energy levels drift lower each year, so start leaving a legacy when you’re young
• one cannot sit around and wait for things to happen

4. Never stop learning

• learn more about yourself; learn about your true potential
• don’t be arrogant…you will never be at your pinnacle
• ask the stupid, simple questions
• knowledge is the antidote to years lived, and the ability to acquire of knowledge is exponential – the more knowledge you have the quicker it is to get more
• leaving a legacy is a function of time and knowledge

5. Persistence – you can work harder than you think you can

• if you’re not going to take the initiate to work towards greatness with all your might, someone else will
• Tim Noakes’ governor rule – fatigue is less about physical tiredness than it is about the governor in your head.
• incremental improvement is always possible

6. Innovation – no longer just a nice to have but a requirement

• success is a differentiating from the mean, thus one must be innovative
• starts with the end in mind
• if Apple was built here the SA GDP per capita would be 25% higher
• innovation created CDOs and the global crisis

7. Integrity and honesty

• success in one’s personal and career life and the work involved to get there isn’t worth squandering through lack of integrity

Quite amazing insights, and certainly attributes well within the grasp and realisation of every man.

So I guess this begs the question – what are we waiting for?

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Often heard as a topic of conversation near the water cooler is that of “competitive advantage.” Companies up in lights are lauded for their “differentiated offering” and run of the mill business fade into history for not developing one themselves.

My time at a very successful investment bank has underlined the realisation that competitive advantages are of such critical importance to businesses being successful. We analyse industries and companies until the wee hours of the night, and the champions of industry always share that one common denominator – a strong competitive advantage.

Bring to mind your last trip to the flea market and think about how average the experience was. You most probably walked the lines of stalls looking at heaps of similar products – wooden hippos and rip-off-brand t-shirts everywhere. In contrast, think about your favourite product or service on the web and how you’ll keep going back to Gmail or The Fancy because the product is engineered in such a way that nothing else out there can touch it.

So what tends to make for the key ingredients in a successful business differentiator. My sense is that it’s technology, people and innovation. If the business you’re engaging with, or want to work at, has a focus on these three things, you’re bound to be able to ride that wave of success. For example:

• FNB’s investment in their technology platform allows them to deliver new and innovative products to customers quicker and more effectively than other retail banks;
• Bain or McKinsey solve the problems of businessmen and -women that one would imagine think about their own business all day long but cant solve themselves. Their investment in bright people makes all the difference;
• Innovative disruptions continually shake the market when Google releases their new glasses or Apple their latest version of the iPhone

So all good and well – these attributes can be sought out in an employer or supplier, but my question to you is how are you differentiating your skillset, experience and network to be the person that gets called when a dream-team is being assembled?

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I have a gripe about all the chatter regarding the bank with the lowest fees.

Say, hypothetically, that you’ve been diagnosed with a severe but benign tumour in a part of your body that’s difficult to operate on – let’s say, in your brain. Which surgeon are you going to pick to perform your operation to remove the growth? The cheapest one? Or the best one? Now hold that thought.

Every bank has some system in place to manage their transactional banking. There’s an online component so that customers can interact with it through their phones or computers, and an offline component that deals with liquidity, risk management, settlements and reports. The best systems have the best capabilities (they can offer share transacting as well as prepaid airtime top-up), the best security (nobody likes their account cleaned out by hackers) and the best management tools, so that the staff behind the scenes can offer customers better lending rates, quicker quotes on home loans and offer products best suited to their customers.

Now, would you like the cheapest system, with the lowest level of functionality and lowest level of security?

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In January, I completed the Ironman 70.3 in East London. It’s take a few weeks to mentally and physically digest, but these are some of my thoughts and experiences on doing the race. I still cant quite encapsulate the event in words, because it’s far more than that, but it’s as much about the 25 weeks before the race that help make it what it is.

First up, it’s terrifying. So much so, that the fear will get you out of bed every morning at 4.45 to go and train and make your pulse race at 150 bpm when the start gun is about to go. The challenge of training, though, is that when you’re exercising at one discipline, you’re neglecting two others. That makes it terrifying and an anxiety. But nonetheless, a great way for you to realise your limits. You soon realise where your body cannot go any further – sometimes that’s as simple as not being able to run or cycle anymore, but also when you run out of patience with a friend or colleague, cant concentrate on your work, or find you’re so tired that you’ve got nothing to add to a conversation, even though it’s only 7pm.

It’s costly. It’s quite a commitment to buy all the necessary goods, from a racing bike, to enter the events, to a wetsuit, trisuit and all the other bits of paraphernalia one needs. But more so, it’s costly on your time and relationships. Your weekends are consumed by training and travelling to your training, sleeping and eating properly. In lieu of this, your relationships don’t get the time they need to be enjoyed. You’re also the laughing stock because you can only manage one beer at a party, and need to get out of dinner parties at 9 to go and sleep. But in this all, a real sense of clarity about your life emerges. In having a day that needs a lot more crammed into it, you become more focussed and efficient at work, more inclined to make the most of seeing a friend or family member, and cut out all the useless, wasteful time you used to have.

It puts your body and mind on the edge of their own precipices. During the last ten km’s of the run on race day, my leg muscles knew what to do, they’d done it hundreds of thousands of times before. But my body just wouldn’t let them. Or maybe it was my mind. But there was nothing more to give in that hour, and that’s one of the greatest feelings I’ve ever had.

During the race, I thought I’d never want to do another one again. But now, having gone through the range of emotions subsequent to it, I cant wait for January next year. I know how I’ll change my training, where I’ll push harder, and where I’ll take my foot off the gas. I guess that’s how your own progress and development works.

Have you ever thought about trying one? The backing music might make it seem a little easier to sign up

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After completing the Ironman 70.3 in Port Elizabeth, Jules and I flew to Europe to visit Prague, Munich and spend a week on the slopes in Saalbach, Austria. I’ve only skied twice before, so took a while to warm to technique. Two days in I was past the snowplough procedure, but still managed to stop a ski-lift, take out two Austrians and crash into Julia. Here’s the lowdown..

And then the event, caught on camera. Love it!

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It is Global Entrepreneurship Week, and fitting that we celebrate and support entrepreneurs making great progress in our country. I think for so many salaried staff, the world of anxiety, pressure and rich experience of entrepreneurship is such a world away from the comforts of their 9-5. So, a great opportunity to dip the toes in the exciting world up entrepreneurialism.

I was fortunate to have been invited to give a talk at The Hub, a created habitat for social and innovative entrepreneurs in the Johannesburg CBD. My brief was to address the considerations of small business looking for investors to get onboard and assist them in growing.  It was a great experience to relay some of my learnings of going through the challenges of an entrepreneur, as well as being able to look at businesses from an investment angle.

The rough flow of my talk went along these lines. Please excuse the shorthand, but just wanted to give the gist of what I covered.

Look at the basic growth of a fledgling business:

• Ideation
• Development/Prototyping/Conception
• Market penetration
• Revenue
• Growth in sales, staff, profit
• Additional lines of revenue or release of new products

This paints a risk profile – returns should be commensurate with the associated risks

Important to know the difference between debt and equity

Also think about what you want to give away

Types of investors sitting on the risk spectrum

How to better position yourself to be invested in

• Being a success in everything you do
• Get good brands behind you
• Invest in your network
• Invest as much as possible
• Be SARS compliant
• Learn about governance and company structuring
• Get online

• Create barriers to entry
• Patents and logos and trademarks
• Choose partnerships

• Scalability
• Industry trends
• Co-investors
• Returns expected
• Alternative revenue streams and quality of earnings
• Exit strategies
• How the investor can add value. Are they the right investor?

There are many more to add to this, so feel free to comment and add, based on your experience.

Read more about Global Entrepreneurship Week here.

Find out about The Hub here.

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Guest speaker; Global Entrepreneurship Week; The Hub SA

The landscape of the working world is most interesting. For every industry, the value chain consists of a vast array of one man bands, small start-ups, SMMEs, large corporates, multinationals and in cases, large institutions. For each of these, there  is a spread of people, talent and the way business gets done.

The entrepreneur in me always seemed to be kicking and screaming out against the stayed old conventional corporates, in any interaction I had with them. Processes seem bureaucratic, committee decisions seem risk adverse, and staff never have a commitment of skin in the game so they’ll gladly push paper around, but never during their tea time. My experience of moving from running my own business into a corporate environment has been so diverse, and almost two years on, am very happy being an entrepreneur within a big corporate. Here are a few tricks that I’ve learnt..

Firstly, pick your corporate correctly. There are a lot of lumbering beasts, age-old dinosaurs who have retained staff since their inception. The risk in these corporates are the plethora of rules and processes that have stayed the test of time that you have to adhere to, as well having what seems like a crowd of geriatrics belittling you and your ideas. Changing the world in these places is going to be tough! So I’d rather pick out those who show signs of moving with the times – promoting new technology and have a strong IT focus; employing dynamic youth that you can work with and learn from; are known as innovators in their industry and are often first to market; and importantly, remain ambitious and competitive. This will flush out the dead-wood quickly, and the grey hair in the executive will be more than likely open to considering new ideas and products.

Be strategic in which corporate you work for. Firstly, don’t pick the first job that comes along from any old industry player. Take time to decide which industry you’d like to play in for the long run, and then, which corporate is the best in class. Then only take an offer from them. This will bring you into contact with the cream of people in the industry, and their clients and suppliers. You’ll learn so much more, be challenged to be commercial, and effectively plan the the “Premier League.”

And thirdly, don’t become a specialist, just yet. Typically, I’ve discovered two kinds of people in corporates. Those that work for a corporate, and those that have jobs in a corporate. Those with jobs just do their daily grind. They’re good at what they do and just focus on that deep and narrow part of the business, blissfully unaware of changes happening in the macro-environment which could lead to their redundancy. Those guys are also not endearing themselves to be headhunted into the new and exciting projects of the business, with an exposure to the wider network of a corporate. I’ve found it best to be the entrepreneur in the corporate, it leads to a heck of a lot of learning, networking and progression. At the end of the day, corporates still need dynamic minds and enabling people to get their businesses ahead of the pack.

So those are a few of my thoughts on the corporate working world. I’d be keen to hear yours.

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“How much would you list yourself on the stock exchange for?” is a typical question that comes up in RMB Class Of interviews. The thinking behind this that has been put forward by candidates is quite interesting. And it begs the question – do we look at ourselves as our own investments?

For those a little distant to the idea of listing a company, the concept allows from the value and ownership of the asset or business to transfer from private shareholders to the public. Secondary market activity allows for these shares to be traded in the open, for a value which is created when a willing seller and a willing buyer agree on a price. Company or asset earnings as well as market sentiment drive the share price up or down.

I am of the opinion that the best leverage one can have during your life is to make a success from ideas, and then from your own money.  But you’d have to start somewhere, so the sequence for me would go:

Make money from your time<Make money from other people’s time<Make money from your and others’ ideas and businesses<Make money from your money.

So imagine yourself as an asset. Your physical appearance. Your education. Your work experience. Your network. Your current assets and liabilities. Your age, and your ability to earn an income into the future. Your ability to attract business. Your ideas. Your ambition. Your drive. Your hunger for success as you define that. Imagine the price that each of these facets command. Sum them up. What are you worth?

Pretty interesting, I think.

The “new age” of accounting requires that businesses report on a triple bottom line – economical, ecological and social values. How much do you contribute to the society you find yourself in, and how good a custodian are you of our planet for our children one day? How sustainably can you exist as a high quality asset if those “of less value” normalise the market? How do you differentiate your offering to stand head and shoulders above your peers? What kind of an asset class do you prefer being? What kind of an asset would you like to be?

To my mind, these questions and others could help us in reviewing ourselves personally. They could be used to evaluate how best we use our time, and how we could best invest in ourselves for today and for the future.

BTW, let me know how you’d value yourself if you listed?

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