Mr. S.H – if you look at his LinkedIn profile, you’d realize that he is quite the unlikely candidate for extraordinary riches. He might not even be the smartest you have seen. He might be just an average toad chugging along.
Yet, very soon he would have Rs 120Crore (15m$) in his bank account – a princely sum very few IIM toppers get to achieve in their lifetimes!
All this, because he will offload 0.5% of a great company (worth Rs 24000Cr at the minimum) in the public stock markets.
And yet, there is one thing which you should know in this exceptional story – that it is very RARE.
And that Rare stories make for good anecdotes, or, stories (duh) but can never be a trend or form the norm.
Most investors do not know whether they are investing in solid companies or duds for countless years.
Investment Banking, investing, PE – these professions are coveted because the MEDIAN salaries are very high (albeit with exceptional effort).
If you think Great outcome (huge sum) multiplied by less input (less hardwork) – MULTIPLY it by a probability factor of 0.01% - that’s how low the probability of ANY company getting big are.
Of course, it helps to have great economics (read IppoPay)
And that’s why I cherish Morgan’s Psychology of Money book A LOT –
1) Exceptions never set the trend, the Norm does. And the NORM – for startups – is that 99.99% failure rate or go to nothing rate.
2) Never leave cash in hand – for some exceptional future. 2 crore multiplied by 95% and 10cr multiplied by 5% - see which is higher?
3) Enough – concept of Enough – never go chasing behind the next big thing.
4) Compounding comes by endurance. It is supposed to be hard. It is not supposed to be Efficient.
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