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What do entrepreneurs learn from the Wolf of Wall Street ?

September 9, 2018 18:09

#entrepreneur#businesscreation

Many lessons can be learnt from Wolf of Wall Street movie by Martin Scorsese, which depicts the true life of Jordan Belfort, a wealthy stock-broker of the 90’s, living the high life amidst drugs, money, hookers…and jail. You can think what you want about Jordan and his debauchery lifestyle, but he remains an entrepreneur anyway, wealthy founder of Stratton Oakmont (At its peak, Stratton Oakmont Inc. employed 1,000 brokers and managed $ 1 billion in assets…not so bad after all).

 

« Of the importance of surrounding »

 

  • After getting his broker license, Jordan Belfort is rapidly unemployed following stock market crash of 1987 and the crazy introduction of junk bonds. He consequently considers to radically change his career and run away from the decay world of speculative finance. But his wife reminds him his true gift and passion : Jordan’s an ambitious broker, a great seller and he must follow his heart. He will finally bounce and apply for a broker job in Statten Island. 

Each time you need to make an important choice, remember that passion will bring you further than anything. Don’t do something you don’t like, life is too short.

 

  • Do you remind how Scorsese depict Jordan’s friends ? « A bunch of losy bastards ». None of them has a slightest degree from universities, any idea about economics, finances or how to get a real job. Nevertheless, Jordan has made up his choice : all his friends are sellers (yes, « of weed mostly ») and have the adequate mindset to join the adventure in building Stratton Oakmont. 

And I have a confidence to make : Donny (Jordan’s partner, Daniel Mark Porush in real life) is totally crazy. But I have another confidence for you : Donny is as crazy as Jordan. And this is the key.

In business, remember the need to prioritize and put characters before competences. The latter can be learnt, the former can’t, and at the end of the day it will make the difference.

 

  • There’s a great moment in the movie where Jordan’s father comes to the office to ask for explanations regarding unseemly (and indecent…one more time ;-) invoices. 

Despite the fury of his father, Jordan calmly teaches his father a very important lesson about leadership : as a true leader, and no matter the expenses, he must live the very same way as his people. The leader is part of the wolf pack. 

 

« Of the importance of create bridges »

 

When Jordan arrives at « penny stock » broker office, you can see the surprise in his eyes : this new world is far away for the older one : no computer, no tie, no suit…. and above all no visible professionalism : sellers eat pizza on the phone, speak roughly to their prospects and have definitely no idea of what they’re doing.

Applying the sales and marketing techniques of « Blue chip » world to the « penny stocks » world, Jordan manages to convince many plumbers, postmen and workers to acquire shares at large volume, making his own fortune in the process. He just applied what he has learnt previously, transferring his know-how to a new environment to change paradigm.

And have you ever figured what are the keys of success of Stratton Oakmont Inc ?

Yes, you get it. Connection again. This time the great idea is to sell « penny stocks » to white collars, to the fortune 500, making the connection between a product and a buyer which didn’t meet previously.

You’re going to retort there’s no innovation in Jordan business, no revolutionary idea, nothing that can change the world. But great ideas usually come from the so-called process of cross-fertilization. In each field you’re going to learn something valuable and that can be directly applied to another field or segment and this is how you disrupt a market.

 

« Of the importance of leverage »

 

  • When you start as an entrepreneur, you need to understand that there’s a fundamental difference working in your business and working on your business. On the former scenario, you’re just working like an employee but with a new boss (you…at last ! Freedom !): the only way to create more value is for you to make the job and to face all the corporate dilemma by yourself. You keep on trading time for money and the day you can’t get up from your bed is going to be a pain in the ass.

On the contrary, on the latter case, you’re creating a new job, and you find a way to create leverage in order to make the all thing working without you. You see your business as a process and you’re able to mentally break down its entire structure. This is what Jordan figures out.

Once Stratton Oakmont is funded, Jordan takes the time to explain the complete process to his team: he gives written speeches, the perfect sentences to pronounce, the arguments against any objection…and details step-by-step the entire flow from getting the attention to closing the deal.

 

  • But if Jordan hires and explains the job to other sellers, he finally put big expenses on salaries and increase its company costs, so what’s the point ? If the time of sellers is trading for money, Jordan has just transferred the problem to other parts, so what’s the big idea ?

The point is the difference between selling a service and a product. In a service business model, only time can be bought, but with a product you create a huge scale effect : whatever the initial cost of the product, the next sale will cost you only a dime. 

If selling a service can be a good starting point for your company in terms of visibility and cash-flow, you also need to quickly figure the potential product you can generate and finally sell to create a real money leverage.

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