From an Observer profile on Lady Lynn Forester de Rothschild:
Ms. de Rothschild graduated from Columbia Law School in 1979 and accepted a job at the white shoe firm of Simpson, Thatcher & Bartlett. She came to specialize in the nitty-gritty details of telecom deals, and then went to work for her most successful client, the visionary telecom mogul John Kluge, who had turned a series of investments in radio and television stations into what was at the time America’s largest fortune. In 1989, when Mr. Kluge was in the process of breaking up his company, Ms. de Rothschild asked him to look at a Puerto Rican company. The billionaire said he wasn’t interested, but suggested she buy the business herself.Kluge got it.
“I said, ‘I can’t buy it, I have no money,’” she told us. “He said, ‘It’s not a problem, you raise the money,’ and I did.”
BTW, I consider Kluge (September 21, 1914 – September 7, 2010) one of the savviest businessmen ever. Born in Germany, he became an American and for a period in the 1980s was the richest man in America. Kluge sold Metromedia to 20th CenturyFox for more than 4 billion dollars. He kept most of the billions he received in Treasury bills, which means this wasn't some paper billionaire who had to liquidate assets to get at his wealth. Kluge had it sitting right there in front of him.
“I said, ‘I can’t buy it, I have no money,’” she told us. “He said, ‘It’s not a problem, you raise the money,’ and I did.”
ReplyDeleteStunning coming from a Rothschild that she doesn't know the first rule of the game. Even shnooks like me know you never start any business venture with your own money.
Kirzner mistakes the promoter for the entrepreneur, despite the clear distinction Mises makes between the "man with the vision" (promoter) and the bearer of uncertainty in outcome (entrepreneur).
ReplyDeleteIt doesn't matter what you call such a person, but since you already have the name "capitalist" for the person who has the capital, what is left for the word "entrepreneur" other than the "man of vision"?
DeleteThe problem with those who use the word entrepreneur to combine the man of capital and the man of vision is that they don't want to cut the cord between the two separate roles. Kluge clearly recognizes they are two separate roles.
There are other differences in the Kirznerian view of entrepreneur, but not something that can be discussed in a comment to a blog post, most, though, based on the concept of risk and the entrepreneur.
When the entrepeneur is successful, is it more likely that he then becomes a 'capitalist' (man of capital) and begins to function mainly in this role or will he remain an 'entrepeneur' (man of vision) who happens to have bit (or a lot) more capital? (Or is the entrepeneur who is capitalized by a capitalist unlikely to acquire very much capital following his successes, as most returns would belong to the capitalist?)
DeleteThe key to coming to understanding this is not to get wrapped into the technical arguments, remembering the basis to the truth is its reasoning.
ReplyDeleteWhether the promoter is an entrepreneur or not hinges on whether he raises his capital by issuing stocks or bonds. The bondholder bears some risk but not to the extent of the stockholder (so long as the government doesn't intervene).
ReplyDelete