I’ve got a lot of hard proprietary data on why the rich are rich and why the poor are poor. Some of the research I’ve gathered centers around the decision-making process of self-made millionaires.
What I found is that self-made millionaires don’t make rash decisions. They often mull their decisions over, sometimes for weeks or months, before making them. During this “mulling over” process, they seek out experts, other successful people, business partners or associates, trusted employees and close family members or friends. They are obsessed with gathering as much feedback information as possible before they make a decision. Each person’s feedback is like a puzzle piece. Those puzzle pieces are then carefully assembled to help self-made millionaires see a clear picture of the right course of action.
Once the self-made’s have their clear picture, they make a decision and then take immediate action. So, it might seem to the untrained observer, that quick actions imply quick decision-making, or rash decisions. My research says, not so.
Sometimes, rash decisions turn out to be the right decisions. Particularly for successful people who have been around the block and have a great deal of experience under their belt. But just as often, rash decisions can take you off a cliff.
Elon Musk was one of those who was forced to go right when he wanted to go left. PayPal was developed and launched as a money transfer service at Confinity in 1999, funded by John Malloy from BlueRun Ventures. In March 2000, Confinity agreed to merge with X.com, an online banking company founded by Elon Musk. Musk and Malloy reached an impasse on the direction of PayPal. Musk’s gut told him PayPal’s business model was too limited. He wanted PayPal to become an online bank. The PayPal CEO and PayPal VC investor believed that was way beyond the scope of PayPal. Musk would not relent and was forced out. Musk held on to his PayPal stock. PayPal’s “limited” business model eventually went on to enormous success and was purchased by eBay. Musk received a windfall of $200 million from eBay for the stock he owned.
Like Musk, many of the self-made millionaires in my study acknowledged that some of their most critical decisions, the kind that can make or break a business, were forced upon them by others. Their gut told them to go left but their banks, business partners or spouses made them go right.
Good gut decisions are the byproduct of many, many years of experience. Those who trust their gut often have a lifetime of experience guiding their gut decisions. So, be leery of gut decisions, especially if you lack experience.
Tom Corley is an accountant, financial planner and author of “Rich Kids: How to Raise Our Children to Be Happy and Successful in Life”, Effort-Less Wealth, Change Your Habits Change Your Life, Rich Habits Poor Habits and “Rich Habits: The Daily Success Habits of Wealthy Individuals.”