KEY POINTS:
So, you had a happy childhood, you topped your class in school, you enjoy team sports, you're a great networker and you've got healthy self-esteem. Congratulations, you're a success.
But, if Brent Taylor is correct, you're never going to be seriously wealthy. Well, not in the billionaire stakes anyway.
As the former Kiwi researcher has discovered, the secret to making serious amounts of cash is to have a painful childhood. Although it's obviously not the only determinant, it is the one common factor in every self-made billionaire he has studied - they were all outsiders.
Their home lives were often a trial, their academic performance was mixed and they were frequently bullied or unpopular - yet what happened to them before they left school was crucial to their success.
This might not come as a huge revelation to everyone, but it was certainly a revelation for Taylor, who has an honours degree in psychology and has spent most of his career as a social and market researcher.
He has always been fascinated by extreme achievement, and what appealed to him about studying billionaires - as opposed to famous sportspeople or entertainers, say - was that there was an easy measure he could use to determine relative success - the Forbes rich list.
Taylor is a voracious reader and he maintains that no one has yet cracked what is the single factor behind the success of the world's wealthiest people. "Their lives have been fairly well described but there hasn't been anyone pulling it together. I didn't know what I'd find when I started. I didn't even know if there would be any common factors."
He ruled out anyone who had a head start thanks to their families (there goes Rupert Murdoch and Ted Turner). Another prerequisite was that at least two decent biographies or autobiographies were available for each person, including detailed accounts of their childhood years.
By the time he got to his fifth book, the "outsider" theme had begun to emerge. By the 10th book, it was a case of "here we go again". After studying 17 self-made billionaires and not finding a single one who was an exception to the outsider rule, he decided that was enough. And now - as described in his recently published book The Outsider's Edge: The Making of Self-Made Billionaires - he sees the pattern everywhere.
There is, for example, the dyslexic Swedish farm boy who went on to found one of the world's greatest furniture chains (Ingvar Kamprad, of Ikea). And the dyslexic son of a lawyer who sustained his self-esteem by playing golf and selling golf balls, and went on to found a great discount stockbroking house (Charles Schwab). And the adopted son of working-class parents who, after severe personal hygiene lapses, eventually co-founded a great computer brand and later a revolution in portable music (Steve Jobs, of Apple).
Taylor believes it's not so much a case of success being the best revenge, but of making the best of a bad situation. It also helps if you do that straight from school, before you're weighed down by commitments to family and banks. Having said that, John Sperling, the least rich of all the billionaires Taylor studied, with just $1.6 billion to his name, didn't found his private university empire until he was 54, so there's still hope for late starters.
Not surprisingly perhaps, the ones who have made the most money are those who also happen to be savvy traders. Microsoft founder Bill Gates is more passionate about business than he is about computers, Taylor observes. "He is hated by the techno-geeks because he took what was essentially a hippy industry and turned it into a business, and they hate him for it. He discovered what was exploitable in the computer industry and he swung some fabulous deals."
Gates, like many gifted children, was bored and disruptive at school and home.
"He was great at Monopoly and bridge, but, because he was accelerated two years at school, he was hopeless at team sports. He was two years younger than everyone else and he was never going to get the girl. The computer club was the first club he could join that would have him. Then what happened with Gates is he started swinging deals. Microsoft is an outshoot of his computer club - it is actually the kids' computer club writ large."
Similarly, film director Steven Spielberg and Formula One entrepreneur Bernie Ecclestone owe their success to strategies they developed to cope with bullies.
In Spielberg's case, he got his photography badge at Scouts by making a movie in which he cleverly cast the school bully, who then befriended him. Ecclestone earned his first profits from selling buns in the schoolyard and used the money to pay for protection from bullies.
For those who protest at the suggestion that being a billionaire is the pinnacle of achievement, Taylor happily admits money doesn't buy happiness.
He acknowledges that every study ever done of happiness shows that it is love that makes the world go around. But building a great business is still a worthwhile ambition. Besides, money quickly loses its importance for anyone who is rich enough to buy themselves most of what they want, he observes.
Billionaires do keep score, and the more wealthy they are the more likely they are to be obsessive about the business itself, rather than the product. There is a lesson here, says Taylor: if you're not good at doing deals, then team up with someone who is.
And the lesson for parents? Don't fret if your child is not the school valedictorian, or doesn't seem to fit in. They just might be okay. They might even be wildly successful. Of course the ranks of the wildly unsuccessful are also full of outsiders, but at least there is hope.
Taylor also has good news for anyone who has hated their parents for forcing them to participate in team sports (hands up, all you bitter and twisted men). Team sports, he suggests, are a bit like religion - an opiate for the masses.
Sport is particularly convenient for schools, he suggests. "It takes up a lot of time, there's no need for a curriculum, there's no need to mark anything, and it's great for boys in particular because they can burn off all that teenage energy. It's a huge engine for conformity. While everyone is busy thinking about sport, they're not thinking about other things. For control, it's great: you've got everyone lined up doing great things. But it's not great for individual performance."
The business world may be enamoured with sports stars but none of the billionaires Taylor studied took part in team sports. As for the old "book smarts versus street smarts" debate, Taylor is clearly on the side of the street smarts.
Those who criticise the media for depicting successful outsiders as the rule rather than the exception simply don't have the weight of evidence on their side, he says. "Back from that bleeding edge you can have some pretty high achievement from people who are part of the establishment, so clearly the establishment is useful for some people." But not when it comes to the ones who are seriously and independently wealthy, he insists.
It is, after all, often innovation that brings enormous wealth, and it is more likely to be those who don't conform who will act innovatively.
But at least one local academic is not convinced. Dr Ian Hunter, a senior lecturer in entrepreneurship at Auckland University's business school, notes that the idea of the entrepreneur as a bit of a rebel from a poor background is hardly new - it was made popular by author Horatio Alger in the 19th century.
Two main academic studies, in the early '60s and the late '70s, appeared to confirm that there was validity in Alger's yarns. But according to Hunter this view has now been discredited. More recent research has shown the studies were not broadly representative and that some of the results were inconclusive, he says.
Hunter is one of those who believe the media is largely to blame for feeding society's understandable appetite for rags-to-riches tales. It reinforces our egalitarian ideals and keeps our hopes of a better life alive. But he remains perplexed as to exactly how an unhappy childhood might help a person's right-brain skills. In any case, such skills can be taught, he says - Edward de Bono, after all, has made quite a nice living from explaining exactly how it can be done.
Hunter acknowledges that the Western education system has woken up to the fact that it is not equipping people properly with the lateral-thinking skills needed to spur innovation. "But to me, it's difficult to sustain the argument that an unhappy childhood leads you to productive, well-connected, attuned strategies where you are looking for opportunities."
In fact, there has been no shortage of studies of the rich and how they achieved their wealth.
According to Richard Conniff, author of The Natural History of the Rich: A Field Guide, wealthy people are driven by the quest for control and, ultimately, status. Although some argue that entrepreneurs are born with a special combination of genes, others insist that entrepreneurialism can be learned, with the help of some serious goal visualisation.
But Taylor is sticking with his hypothesis for now, and is planning to do further research which he hopes will back it up.
After all, he is a bit of a non-conformist himself. Although he has lived in Australia since 1980, he remains a Kiwi at heart. His computer's home page is the NZ Herald website.
Born in Stratford, he grew up in Tauranga and Auckland and did an engineering degree at Auckland University. After working as an engineer in New Zealand and Papua New Guinea, he decided to chuck it in to become a professional photographer. He then moved to Australia, where he completed a master's degree in psychology at Melbourne University, and for the past 20 years he has concentrated on market research for government organisations and large corporates. He was a director of KPMG for four years and ran its Centre for Consumer Behaviour.
Taylor has strong boyhood memories of his father's workshop in Tauranga, and of the men who worked there. A couple of the guys were always making deals, he recalls. They were good at spotting what was happening - such as getting into the avocado boom and selling out at just the right time - and now, he says, some of them are wealthier than his father.
Maybe he is right - it does all go back to childhood in the end.
* The Outsider's Edge: The Making of Self-Made Billionaires by Brent D. Taylor (John Wiley & Sons, $38.99).
Case study: the rebel who made good
Ulu Aionois not quite in the billionaire stakes, but the founder of specialist software company Cogita has still done very well for himself against overwhelming odds. In fact, he is living proof of Brent Taylor's theory that outsiders make the best entrepreneurs.
Born in Samoa, Aiono emigrated to New Zealand with his family in 1960. His parents hoped he might become a doctor or lawyer - but he had other ideas. He explained those ideas two years ago at a conference aimed at lifting Pacific Island achievement. Here is an edited extract from that speech:
"I am the founder of a software technologies company called Cogita and that makes me an entrepreneur.
I am fortunate because a short, sharp episode of focused effort between 1987 and 1994 allowed me to choose semi-retirement in 1994.
When I think about my background, I can see there were early indications I was going to be completely unsuitable for normal employment.
Like most Pacific Islanders in the 1950s and 1960s, my family came to New Zealand on a banana boat. Almost from the day that the Union Steam Ship Company banana boat berthed at Princes Wharf in 1960, and my family walked down the gangplank onto New Zealand soil, I became a rebel.
I say "almost" because my rebellious nature revealed itself before we arrived in New Zealand.
The captain of our banana boat had large clusters of bananas hanging from a hook outside his top cabin. No matter how many times the captain told me off, I still went back and helped myself to all the bananas I could eat.
And when my parents tried to force me to sleep in the water-line cabin with them, my brother, and my newborn sister, I would wait until everyone was asleep, then make my way to the deck and sleep near the wheel house.
That complete inability to follow orders has served me well in my entrepreneurial life and in business.
The moment the banana boat left the shallow waters of Apia harbour, headed down to Suva for a short stopover, and then southwards to Auckland, I was possessed by a new nature.
For the rest of my childhood and teenage life, I was a nuisance and a trial to my very strict and disciplinarian father.
He wanted me to be a school prefect but I resigned my second class captaincy at Auckland Grammar. He wanted me to be a lawyer, but I chose sciences rather than arts at Grammar. He wanted me to be near him, but I left home in the sixth form and lived in a hostel. He wanted me to be a good academic, but I failed my first seven years at university.
With so many good starts in life, it is hard to fail because improvement is about the only option left. I believe it is never too late to start.
Some smart person, probably a black entertainment agent, or a Pacific Island agent these days, put it this way: "It ain't over till the fat lady sings." I think of myself as a late starter because I did not start Cogita until 1983, a few months after I turned 30. I am 52 now.
Last year I started a new venture called Soifua Village Polynesia. How late is that?! Cogita is not the first business I have started and owned.
At the age of seven, my Epsom Primary School classmates thought of me as King Rat of the Alexandra Park Racecourse in Auckland.
If the trotting club had races on a Saturday night, I would wake my brother next morning before dawn on the Sunday.
In our pyjamas, we would scamper across Greenlane Road to the Alexandra Park Racecourse and climb over the gates with our taro sacks. Inside the racecourse grounds and grandstands, we collected Coke and Fanta bottles, as many as we could carry in the sacks.
We also collected thousands of discarded race tickets. And of course we picked up any coins, 10-shilling notes, pound notes and fivers dropped by punters during the previous night.
Sometimes my brother and I had three or four sacks of bottles. In the afternoon, after church, my brother and I would take the bottle sacks to our local dairy on Manukau Road and the shopkeeper would give us cash in return.
Until my parents moved our family to Otara in 1963 - the day of President Kennedy's assassination - my brother and I lived like princes on the cash flow from our part-time business. We had money for lollies, coloured pencils, stamps, comics and stationery; all the stuff that transforms earthly life into paradise for little boys.
In that tiny, tiny, little enterprise, we had fantastic sales every time we sold our Coke and Fanta bottles to the dairy, and we had no fixed costs. Those three childhood years were a boom time of financial independence. It would be another 30 years before I again regarded myself as being financially independent.
Before I started Cogita I was a Co-op taxi driver for three years, a freezing worker during university vacations, a cleaner at Ford Motor Company in Wiri, a gardener, a software developer, and a systems designer for the Dunedin City Council. In all of those jobs, I was restless and discontented.
The jobs were good and the employers were great but I was a misfit because I rebelled against the company rules and regulations.
By and large they seemed to have no serious ethical basis; to me, company rules were thinly designed restrictions put in place for the convenience of the employer; they were not guidelines to help me find satisfaction and fulfilment in a chosen vocation.
So I think it was inevitable for me to realise that I would never be happy working in an environment that I had not created. But if I created the environment, I could create the rules - in fact I could eliminate most, if not all, of the rules; and I was sure that there would be plenty of rebels who would join me if I started my own venture.
Fortunately this has turned out to be true.
In 1983, when I started Cogita, it was a partnership known by another name, and it was as small as a business could be; just me, a writing pad and a pencil. No customers, no product, no plan and no capital. But lots of dreams and pent-up frustrations.
In those days there were no faxes, no water coolers, no internet, no PCs, no search engines like Google and no Microsoft like we know it today.
I am an impetuous person. That means that I shoot first before taking aim; then if necessary, I fix the bullet holes afterwards.
But even though I am impetuous, something told me to hang onto my full-time job after I started Cogita.
My instinct told me that no customers, no product, no plan, and no capital all added up to a big nothing and a recipe for disaster. So I did what most people do when they are starting their own business. I worked out what I was good at doing, and then I looked for customers who were willing to pay money for me to do what I was good at doing.
As you probably know, this is back to front. Thinking about the past, I realise that it took seven short years to reach semi-retirement. That's how quickly things happened.
There were hair-raising times before then and since then. One of them you might remember is the Black Tuesday of October 20, 1987.
That was about 90 days after I resigned from NZ Steel and really pumped up the start volume in Cogita. On Black Tuesday, all the stock markets, beginning, I think, with the New York Stock Exchange, fell like rocks out of high-flying aeroplanes. In less than 24 hours, more than 75 per cent of the value evaporated from all shares on the face of the Earth.
But even that did not stop Cogita from making progress. We grew steadily and together with the other rebels and leaders in Cogita, I ignored the fact that many of our customers were going under, and we focused on making sales to new customers in new markets. It didn't seem possible, but I raised my levels of cold calling and business networking.
We never looked back, and by December 1994, Cogita had offices in Auckland, Rotorua, Wellington, and Sydney and I was able to choose when I wanted to work.
We now have offices in most states of Australia, and we own software assets in the US. In New Zealand and Australia, many of the food products and pharmaceuticals you buy from supermarkets are made using software from us and/or associated services.
Most of the icecream in this country is made using expensive manufacturing software Tip Top Icecream purchased from Cogita.
Perhaps up to half of the beer in Australia and New Zealand is made using software Cogita supplied to the Lion Group's breweries.
When you put money into a pay-and-display parking meter, you are putting money into a meter made by a Cogita client.
Your shoe polish, and many bakery and dessert products, are made using software Cogita supplied to the respective manufacturing companies.
It is not too late to start, so make a start today and become a producer rather than a consumer.
Life seems to be short; but you have been given enough time to make all the necessary mistakes and to build a worthwhile legacy.
Once you start your entrepreneurial journey, keep going. You will know when your entrepreneurial job is completed because the results will speak to you, as I am speaking to you, and be unmistakable.
And your family, friends and community will thank you for it.
This is my prayer, for each and every one of you."
* Today Ulu Aiono is a member of the Auckland Regional Economic Development Forum and a member of the AUT University Council. Together with economist Mose Saitala, he is planning to launch a KiwiSaver managed fund aimed primarily at Pacific Islanders. His full speech is available at www.minpac.govt.nz/resources_ppc_saulauluaiono_speechnotes.doc His speech to graduates at the Manukau Institute of Technology in May this year is available on YouTube (search for "US Aiono").
Kiwi billionaires'secrets uncovered
Testing Brent Taylor's hypothesis that most, if not all, self-made billionaires can trace their money-making skills back to unhappy childhoods is surprisingly difficult Downunder.
Although the various rich lists estimate that New Zealand has at least five billionaires, and a couple more billionaire families, they tend to be intensely private people.
None have yet co-operated with writers keen to record the secrets of their success. And, unlike their US counterparts, who are revered for their money-making skills, most are so wary of the local poppy-lopping brigade that they deliberately shun any sort of publicity.
But enough is known about their extraordinary achievements to surmise whether Taylor might be on to something.
Graeme Hart
Estimated wealth: $2.75 billion (NBR)/$3.5 billion (Forbes)
Hart has become something of a folk hero due to the fact that he left Mt Roskill Grammar at the age of 16 without any qualifications. But his fans sometimes forget that he completed an MBA at Otago University in 1987 while running Rank Group.
The son of a radiographer, he worked as a tow-truck driver after leaving school but even then showed a strong competitive streak and knew what he wanted to do with his life, according to a former colleague.
The director of his MBA course has described him as a "likeable guy" who was a good lateral thinker. While we don't know much about his childhood, we know that Hart concentrates on what he does best - buying under-performing companies, sprucing them up and selling them. An Australian journalist described him as "a Kiwi streetfighter: a lone-ranger tycoon who is impossible to classify. Imagine Rupert Murdoch mixed with early-period John Elliott, add a dash of Howard Hughes and you're getting close."
Hart once revealed in a press conference that he had always been determined to make a name for himself. "Nothing has changed in that regard. I just like what I do. Most people have something they are passionate about; something they enjoy. I just happen to really enjoy business."
Todd Family
Estimated wealth: $2.6 billion (NBR)
John Todd has demonstrated a sound understanding of enterprise. But his business skills don't count in Taylor's analysis, because he didn't have to start from scratch. The chairman of Todd Corporation is the fourth generation of Todds to manage the family's fortune, created when his great-grandfather, Scottish immigrant Charles Todd, founded a farming goods store in Central Otago in 1885. These days, it is a conglomerate that includes major energy interests, as well as investments in broadcasting, telecommunications, land, retirement homes and information technology.
Eamon Cleary
Estimated wealth: $2.1 billion (NBR)
The eldest of a large family in a small Irish village, Cleary left school at 11 to work on the family farm. He was apprenticed to a blocklayer at 15 and at 17, started his own building business. At 20, he started his own precast concrete and reinforcing steel company and within a decade, he had one of the largest agricultural supply businesses in Ireland. He sold the business in 1991, and in 1996, at 34, he moved to New Zealand.
He has since accumulated substantial investments in agricultural land and commercial property in the North and South Islands, as well as Australia, eastern Europe and Ireland and has agricultural and telecommunications businesses in Argentina and Chile. Cleary has taken out New Zealand citizenship and divides his time between Lake Hayes in Otago, and Malta.
Although he has hit plenty of headlines over the years for various reasons, he has given few interviews, and therefore it can't be said whether he fits the Taylor mould - even though his life so far appears to have the classic rags-to-riches ring to it.
CHRISTOPHER AND RICHARD CHANDLER
Estimated wealth: $2 billion each (NBR) / $3.2 billion each (Institutional Investor) / $2.6 billion each (Forbes)
The Chandler brothers grew up in Matangi, south of Hamilton. Their father was a beekeeper who developed real estate interests while the boys boarded at Auckland Grammar. Their Croatian mother opened a Hamilton department store, Chandler House, and the parents eventually handed their boys a $10 million empire that spanned retail, importing, manufacturing and property.
In 1986, the brothers started a private investment firm in Monaco. Last year, they apparently separated amicably, with Christopher basing himself in Dubai and Richard in Singapore. But given their inheritance, they don't count anyway.
GOODMAN FAMILY
Estimated wealth: $1.8 billion (NBR)
As youngsters, Greg, Craig and Patrick Goodman mowed the lawns at their family's 40ha cattle farm and tended to the vegetable garden that fed three generations living on the property. According to Patrick, their father was away so regularly they often only saw him at weekends. It wasn't all sweat and tears - Craig has spoken of whitebaiting in the Motueka River and waterskiing at Kaiteriteri.
Their father turned a Motueka bakery into an international food business, Goodman Fielder Wattie. The brothers sold off the business in the early 1990s and turned their hand to property investment, through Goodman International. They still started with family money, though.
STEPHEN JENNINGS
Estimated wealth: $1 billion (NBR) / $6 billion (Spectator) / $1 billion (Forbes)
Jennings has been described as the "only foreign oligarch in Russia". His Moscow-based global investment bank is a long way from Waitara, where he was born.
At first glance, his path to success appears conventional - he studied business and economics at Massey and Auckland universities, and then went to work for Treasury and CS First Boston.
Although one former colleague recently described him as "just an unassuming Kiwi", and another as a "good, practical, down-to-earth fellow", there are hints of a rather more colourful character. He told the Spectator this year that when he and a colleague were asked to set up a new Moscow office for CS First Boston, his bosses made a "terrible mistake" because "they put two of the biggest mavericks in the firm next to each other". According to the Wall Street Journal, not long after the pair founded their own firm, they entertained hundreds at the 18th century Kuskovo Palace.
An outsider then? In Russia, definitely. But as a boy - who knows? However, Jennings' roots are obviously not so painful that he has forgotten them. In 2005, he purchased a share of a bach in Awaroa Inlet, at Golden Bay.
LYN ERCEG
Estimated wealth: $700 million (NBR) / $1.1 billion (Forbes)
According to Forbes magazine, the wife of the late alcopop baron Michael Erceg is New Zealand's only female billionaire, although NBR disagrees. Although Lyn Erceg has inherited her wealth from her husband, his entrepreneurial skills are worth mentioning, as it is likely he would have made the billionaires list had he not died tragically in 2005.
Erceg was one of four children of Croatian parents who ran a modest wine-making business in West Auckland. He excelled academically, becoming dux of Kelston Boys High. He was a vegetarian, and studied pure mathematics at university, going on to complete his PhD in the US, where he taught until his father fell ill. After returning to run the family business, he completed an MBA at Auckland University.
Erceg thumbed his nose at government, refused to join industry groups and by all accounts was extremely private. The company he founded in 1987, Independent Liquor, shattered the country's cosy beer duopoly by going head-to-head with mammoth brewers Lion Nathan and DB Breweries.
* * *
Still not convinced? A bit further down the rich lists is more evidence of outsiders who have made the riches they always dreamed about. Eric Watson (left school to be a butcher's apprentice), John Banks (adopted out by his alcoholic mother and criminal father ), Peter Leitch (youngest of seven children, dyslexic, former gravedigger), Don Ha (forced to flee Vietnam at the age of 9), Julie Christie (fifth of seven children, father died when she was 5), Bob Jones (childhood poverty, suffers from Addison's disease), Peter Jackson (where do you begin?) ... the list could go on.
In fact, Taylor's discovery that suffering can breed success will probably be seen as a no-brainer by New Zealanders. But Dr Ian Hunter, a senior lecturer in entrepreneurship at the University of Auckland, says his study of more than 130 New Zealand entrepreneurs has not revealed such a theme.
Hunter is compiling a book on modern New Zealand entrepreneurs and is dismissive of what he believes is a media-fed myth about the type of people who achieve exceptional wealth. For every Bob Jones, there is an entrepreneur who has had a happy home life, enjoyed school and slogged away for years before becoming wealthy, he insists.
In his opinion, there are four general rules entrepreneurs need to remember if they want to become rich and famous.
First, US management guru Tom Peters has got it right, he says: Stick to your knitting. Don't even think about delving into a business you don't know much about.
While Hunter's research shows that seven out of 10 entrepreneurs start their first venture before the age of 30, he notes that youthfulness does not necessarily mean inexperience. Sam Morgan, Wendy Pye and Michael Hill accumulated skills and experience before striking out on their own.
Second, don't go it alone. In New Zealand, family businesses have proven particularly resilient and that's often because of good teamwork, says Hunter.
Third, you don't necessarily need a pile of cash to succeed. While important, capital shouldn't overwhelm other factors, such as innovation and determination. And finally, aim high. Near enough is not nearly good enough in today's competitive world.
