Mikhail Fridman:
Business is always a confrontation, a competition, a struggle
'A man is obliged to fix the world'
Are entrepreneurial qualities innate or acquired?
There are qualities that are innate, and I'm not even talking about entrepreneurial qualities here, but about any personal qualities. If you weren’t born with them and didn’t inherit them from your parents, then it would be impossible to acquire them. Let's take character for instance. This is an innate quality. When my children were born, I could already see certain traits in them, which subsequently manifested themselves. Fortunately – or unfortunately – changing the state of things here is rather impossible. As for knowledge, skills and professional knowhow, these are, of course, acquired.
If we look at entrepreneurship as a combination of talents and skills, then both innate and acquired qualities are important. What has more weight? This may sound discouraging, but it’s inherited genetic qualities that matter the most. They make up about 80 percent. Knowledge and skills acquired through the years account for the other 20 percent.
This is sad news for those who are convinced that anything can be mastered. But it’s better to critically assess what you can do and choose an occupation that will not only be to your liking but will also suit your capabilities. If a person doesn’t have entrepreneurial talent, this shouldn’t upset them. They are sure to have other talents to a far greater degree. They should be doing something else, and perhaps be much more successful and happy.
There are qualities that are innate, and I'm not even talking about entrepreneurial qualities here, but about any personal qualities. If you weren’t born with them and didn’t inherit them from your parents, then it would be impossible to acquire them. Let's take character for instance. This is an innate quality. When my children were born, I could already see certain traits in them, which subsequently manifested themselves. Fortunately – or unfortunately – changing the state of things here is rather impossible. As for knowledge, skills and professional knowhow, these are, of course, acquired.
If we look at entrepreneurship as a combination of talents and skills, then both innate and acquired qualities are important. What has more weight? This may sound discouraging, but it’s inherited genetic qualities that matter the most. They make up about 80 percent. Knowledge and skills acquired through the years account for the other 20 percent.
This is sad news for those who are convinced that anything can be mastered. But it’s better to critically assess what you can do and choose an occupation that will not only be to your liking but will also suit your capabilities. If a person doesn’t have entrepreneurial talent, this shouldn’t upset them. They are sure to have other talents to a far greater degree. They should be doing something else, and perhaps be much more successful and happy.
Everyone has to do business in life
There is an American stereotype that “everyone should try”. Five percent of people succeed, but 95 percent don't. But everyone should at least have a go. Do you think everyone should try to start their own business?
I don't think so. For example, my youngest daughter is now a sophomore at Yale, and she’s serious about studying history. I don't think she has to try to be an entrepreneur. If she becomes an expert in her field, I’m sure that she’ll have a full and busy life and an exciting job. In my opinion, she doesn't have to try to engage in private business.
But the other thing is that everyone still has to do business in life, because they have to manage their personal affairs or assets. So there are still business situations and business relationships forming there. And on the whole, in any profession, working as part of a team, achieving results – this all requires some kind of business approach. In this regard, everyone should have some kind of business skills. Not from the point of view of making money, but from the point of view of achieving some tangible results in their work, personal affairs or finances. Everyone tries something on the level of personal finance management. But there’s absolutely no need to go as far as managing your own company.
I don't think so. For example, my youngest daughter is now a sophomore at Yale, and she’s serious about studying history. I don't think she has to try to be an entrepreneur. If she becomes an expert in her field, I’m sure that she’ll have a full and busy life and an exciting job. In my opinion, she doesn't have to try to engage in private business.
But the other thing is that everyone still has to do business in life, because they have to manage their personal affairs or assets. So there are still business situations and business relationships forming there. And on the whole, in any profession, working as part of a team, achieving results – this all requires some kind of business approach. In this regard, everyone should have some kind of business skills. Not from the point of view of making money, but from the point of view of achieving some tangible results in their work, personal affairs or finances. Everyone tries something on the level of personal finance management. But there’s absolutely no need to go as far as managing your own company.
We remember the lesson the Chinese taught us: that a crisis brings both opportunities and challenges. In terms of opportunities, do you think that now is the right time to start a business?
To be honest, if a person has talent, they don’t really need to ask anything about how to start. They’ll have a lot of ideas purely from observing what is happening around them. They’ll see a lot of opportunities to do something. Of course, a crisis opens up many opportunities. This can be easily demonstrated by how assets are now depreciating — from real estate to manufacturing.
If a person can detect opportunities, they can already try to invest, even if they don’t have significant capital, if they have very little money. For example, they could buy a studio apartment and then resell it if they believe that the moment is right, that prices have already reached rock bottom and will soon begin to rise. By the way, I don’t advise doing this right now, this is merely an example.
What exactly would you recommend doing?
Nowadays young people — if they are really interested in hearing my advice — have a gigantic untapped field of opportunities associated with new technologies. The internet and the digitalisation of the world is transforming human life with great speed. It seems to me that this whole, vast field… It's not even the internet, the internet is just a means. Fundamentally, it’s simply…
The digitisation of humanity.
Exactly. Humanity is going digital. This implies such fundamental, tectonic changes in society that the number of opportunities is immeasurable. The innovations that will take place will be counted in the thousands or tens of thousands, if not millions. And we’re talking about multiple areas of application here. This is so attractive because what you need is mainly human capital. The capital investment required at the initial stage is rather low. Of course, at a later stage, when it grows to be a whole corporation, money is required. But first, to make such a leap with added value, you only need intelligence, talent, perseverance and the right choice of where, what and how. The main resource here is the human brain. And in this sense, this generation is a lucky one, because it has these opportunities.
I think that when we were starting out, there were significantly fewer opportunities of this kind, because any more or less profitable business required some investment. For example, you would need an office. Google started in a garage. It was just a bunch of enthusiasts without any capital, they had an absolutely laughable amount of money. It’s clear that not everyone will manage to build Google or Apple. This is just a good example of what can be done and the level of success you can achieve in business if you’re somebody with a good head on their shoulders and the right personality.
To be honest, if a person has talent, they don’t really need to ask anything about how to start. They’ll have a lot of ideas purely from observing what is happening around them. They’ll see a lot of opportunities to do something. Of course, a crisis opens up many opportunities. This can be easily demonstrated by how assets are now depreciating — from real estate to manufacturing.
If a person can detect opportunities, they can already try to invest, even if they don’t have significant capital, if they have very little money. For example, they could buy a studio apartment and then resell it if they believe that the moment is right, that prices have already reached rock bottom and will soon begin to rise. By the way, I don’t advise doing this right now, this is merely an example.
What exactly would you recommend doing?
Nowadays young people — if they are really interested in hearing my advice — have a gigantic untapped field of opportunities associated with new technologies. The internet and the digitalisation of the world is transforming human life with great speed. It seems to me that this whole, vast field… It's not even the internet, the internet is just a means. Fundamentally, it’s simply…
The digitisation of humanity.
Exactly. Humanity is going digital. This implies such fundamental, tectonic changes in society that the number of opportunities is immeasurable. The innovations that will take place will be counted in the thousands or tens of thousands, if not millions. And we’re talking about multiple areas of application here. This is so attractive because what you need is mainly human capital. The capital investment required at the initial stage is rather low. Of course, at a later stage, when it grows to be a whole corporation, money is required. But first, to make such a leap with added value, you only need intelligence, talent, perseverance and the right choice of where, what and how. The main resource here is the human brain. And in this sense, this generation is a lucky one, because it has these opportunities.
I think that when we were starting out, there were significantly fewer opportunities of this kind, because any more or less profitable business required some investment. For example, you would need an office. Google started in a garage. It was just a bunch of enthusiasts without any capital, they had an absolutely laughable amount of money. It’s clear that not everyone will manage to build Google or Apple. This is just a good example of what can be done and the level of success you can achieve in business if you’re somebody with a good head on their shoulders and the right personality.
You need to have the sensitivity, to be able to feel the character, the needs and incentives of other people
Which of your personality traits helps you the most? For example, in business.
I think there are several traits. First of all, I'm a pretty good judge of people. I think this is more of an innate quality. What is it? It’s sensitivity, the ability to feel the character, needs and incentives of others. There’s probably a type of business where you can just sit in front of a computer. In my business, I work with people. And the results will depend on who the people working for me are. So I'm a pretty good judge of people, and I like to communicate with them, too. I don’t get tired of it, despite the fact that I've been doing business for almost 30 years. In principle, communicating with people always seems interesting and meaningful to me. This is the first important quality that I have.
Another important quality is my mental strength. Here I’m looking at my friends who are engaged in smaller-scale things, although no less complex. And they worry all the time. This is a bunch of people who simply can’t sleep if they’re in trouble. My case is different. I could say it takes me a minute and a half to fall asleep after landing in bed. Throughout my business life, whatever happened I generally always said: “Well, okay, we'll come up with something”. That is, I also get worried, but not to the extent that it hampers my ability to work.
The third quality is a taste and love for struggle and confrontation. You see, business is always a confrontation, a competition, a struggle for fair treatment, clear rules, etc. Russian business is not that simple. If you get tired of this struggle, if you experience psychological distress, then it will probably be difficult, especially in Russia. Somewhere else it probably all works differently and the rules are clearer. But in Russia the rules are often vague, so being in a state of constant struggle and defending your rights, position and opportunities is critical.
I think there are several traits. First of all, I'm a pretty good judge of people. I think this is more of an innate quality. What is it? It’s sensitivity, the ability to feel the character, needs and incentives of others. There’s probably a type of business where you can just sit in front of a computer. In my business, I work with people. And the results will depend on who the people working for me are. So I'm a pretty good judge of people, and I like to communicate with them, too. I don’t get tired of it, despite the fact that I've been doing business for almost 30 years. In principle, communicating with people always seems interesting and meaningful to me. This is the first important quality that I have.
Another important quality is my mental strength. Here I’m looking at my friends who are engaged in smaller-scale things, although no less complex. And they worry all the time. This is a bunch of people who simply can’t sleep if they’re in trouble. My case is different. I could say it takes me a minute and a half to fall asleep after landing in bed. Throughout my business life, whatever happened I generally always said: “Well, okay, we'll come up with something”. That is, I also get worried, but not to the extent that it hampers my ability to work.
The third quality is a taste and love for struggle and confrontation. You see, business is always a confrontation, a competition, a struggle for fair treatment, clear rules, etc. Russian business is not that simple. If you get tired of this struggle, if you experience psychological distress, then it will probably be difficult, especially in Russia. Somewhere else it probably all works differently and the rules are clearer. But in Russia the rules are often vague, so being in a state of constant struggle and defending your rights, position and opportunities is critical.
Russians are most effective when the circumstances are extraordinary
You’re an international investor and have worked a lot with different nationalities — with the Turks, the British, the Germans, the Brazilians, the Russians. How would you describe an average Russian in this regard? Talking about Russians in general would be rather difficult. But what about the average Russian entrepreneur or businessman? What’s your impression?
It's not as much about entrepreneurial qualities as it is about national peculiarities, a certain cultural code. They certainly affect all aspects, including entrepreneurial qualities. The Russian mentality, the way of thinking, life and behaviour have their advantages and disadvantages. It's hard to speak for everyone, it's all individual. But if we try to find a common denominator, I would say that Russian society as a whole has a very mobilisational consciousness. What does this mean?
I'll give you an example. Many years ago there was some banking crisis — in 2004 or so, I don't remember exactly. And we had just appointed a CEO... [Petr Schmida is on the board of directors at ABH Holdings S. A.]. He's Czech. A wonderful guy, very intelligent, he was already an experienced banker at that time. We were having a meeting on “what to do during the crisis”. I said: “Listen up! Everyone should be called back from holiday immediately, the working day will be irregular, the board is dealing with the matter.” He sat there listening, and everyone else nodded to this. Everything started running like clockwork, everyone got busy. And then he said: “Look, how’s this going to work? We haven't agreed with the guys — we'd need to pay them for working overtime somehow.” I said: “What do you mean ‘overtime’? We’re in a state of emergency over here! What is there to discuss? Overtime! Those who don’t return from holiday will be fired.” Well, of course everyone came back to the office at once.
In Russian society and business, working in such extreme conditions with complete dedication is the norm. In these conditions, people are ready to deliver at work in a coordinated and selfless manner. We are ready to sacrifice money, time, anything at all. Unfortunately, it’s impossible to remain in emergency mode all the time. This is where the weak aspects of Russian business and society start to show. As soon as the normal conditions of life are restored, people relax.
Here’s another example with foreigners. We had one fellow, we took him on at the bank as head of IT about 15 years ago. He was very intelligent and competent: he understood well what needed to be done, and we were at the point of revamping the entire IT system. From the strategic point of view, he was doing the right thing. But as a manager he failed completely. Why? Because he got everybody together, and in the American way, explained the task to everyone. He said: “Here, this is what it should be like. So we have to do this and that. Is this clear?” And his top five or top 10 managers were sitting there saying: “Yes, it is.” That's it, then they would leave and come back in about a month. He would ask them, “Well?” And they would still be in the same place where they had left off. Nobody was making any progress. He needed to say: “So, you have to do this, you do this, and you do this, and in three days I’ll check on everyone to see which tasks have been completed and which haven’t.” But he couldn't do this because he couldn't grasp what was happening: after all, he had set a task and everyone had understood it; these were intelligent people. This is how he worked with us for six months or maybe a year — although strategically he was doing the right thing. But nothing worked, simply because he couldn’t bang on the table and shout: “I said DO IT!” Then one of our Russian managers replaced him and everyone immediately got the point...
He must have started bossing people around.
Yes. Everyone recognised the familiar tone and immediately got down to work. It was clear: if they didn’t start the task within a week, he would get rid of them. That is, in this regard, people aren’t used to acting not out of fear. This is the sad thing. They’re used to acting either in extreme conditions or when you raise the stick. Once the stick is already in the air — ah, well, then I have to do it, because they’ll really get rid of me otherwise. This isn’t a constant feature; it’s an indicator that can change. I have a lot of young people working for me; they’re more conscious, more results-oriented and so on. They want to do the job, and they don't like being forced. In Russia, though, they like to be forced. You see, it's impossible to do anything else with us: you need to treat us this way, then we’re able to do the job. This is very different from what it’s like in the best countries in the West. The mentality is different.
For example, when there’s an emergency, the British are much more demanding in terms of rules. You can't force them to come to the office after work or come back from holiday. Everyone has their rights and everyone knows them well. If something needs to be done very quickly in Russia, then you say: “Look, I need it done urgently! Today! So everyone has to work overnight and do it!" — and everyone hurries to their desk and gets the job done. In the UK, this is impossible. First of all, you can't say that, because people just won’t react to your words. They’ll do the job, and it will take them a couple of weeks to complete the task at their normal pace. But they definitely won't quit working on the task if they understand what’s needed. I’m talking again about an average person. There are slackers in the UK, just as there are responsible people in Russia. But in general, they’ll do the job at their own pace, slowly. They’re sure to complete the task, and it will be done well enough. And in this respect, I would say, Russians often outperform others over short distances. But if we look at something long-term, such marathon distances are often hard for them.
It's not as much about entrepreneurial qualities as it is about national peculiarities, a certain cultural code. They certainly affect all aspects, including entrepreneurial qualities. The Russian mentality, the way of thinking, life and behaviour have their advantages and disadvantages. It's hard to speak for everyone, it's all individual. But if we try to find a common denominator, I would say that Russian society as a whole has a very mobilisational consciousness. What does this mean?
I'll give you an example. Many years ago there was some banking crisis — in 2004 or so, I don't remember exactly. And we had just appointed a CEO... [Petr Schmida is on the board of directors at ABH Holdings S. A.]. He's Czech. A wonderful guy, very intelligent, he was already an experienced banker at that time. We were having a meeting on “what to do during the crisis”. I said: “Listen up! Everyone should be called back from holiday immediately, the working day will be irregular, the board is dealing with the matter.” He sat there listening, and everyone else nodded to this. Everything started running like clockwork, everyone got busy. And then he said: “Look, how’s this going to work? We haven't agreed with the guys — we'd need to pay them for working overtime somehow.” I said: “What do you mean ‘overtime’? We’re in a state of emergency over here! What is there to discuss? Overtime! Those who don’t return from holiday will be fired.” Well, of course everyone came back to the office at once.
In Russian society and business, working in such extreme conditions with complete dedication is the norm. In these conditions, people are ready to deliver at work in a coordinated and selfless manner. We are ready to sacrifice money, time, anything at all. Unfortunately, it’s impossible to remain in emergency mode all the time. This is where the weak aspects of Russian business and society start to show. As soon as the normal conditions of life are restored, people relax.
Here’s another example with foreigners. We had one fellow, we took him on at the bank as head of IT about 15 years ago. He was very intelligent and competent: he understood well what needed to be done, and we were at the point of revamping the entire IT system. From the strategic point of view, he was doing the right thing. But as a manager he failed completely. Why? Because he got everybody together, and in the American way, explained the task to everyone. He said: “Here, this is what it should be like. So we have to do this and that. Is this clear?” And his top five or top 10 managers were sitting there saying: “Yes, it is.” That's it, then they would leave and come back in about a month. He would ask them, “Well?” And they would still be in the same place where they had left off. Nobody was making any progress. He needed to say: “So, you have to do this, you do this, and you do this, and in three days I’ll check on everyone to see which tasks have been completed and which haven’t.” But he couldn't do this because he couldn't grasp what was happening: after all, he had set a task and everyone had understood it; these were intelligent people. This is how he worked with us for six months or maybe a year — although strategically he was doing the right thing. But nothing worked, simply because he couldn’t bang on the table and shout: “I said DO IT!” Then one of our Russian managers replaced him and everyone immediately got the point...
He must have started bossing people around.
Yes. Everyone recognised the familiar tone and immediately got down to work. It was clear: if they didn’t start the task within a week, he would get rid of them. That is, in this regard, people aren’t used to acting not out of fear. This is the sad thing. They’re used to acting either in extreme conditions or when you raise the stick. Once the stick is already in the air — ah, well, then I have to do it, because they’ll really get rid of me otherwise. This isn’t a constant feature; it’s an indicator that can change. I have a lot of young people working for me; they’re more conscious, more results-oriented and so on. They want to do the job, and they don't like being forced. In Russia, though, they like to be forced. You see, it's impossible to do anything else with us: you need to treat us this way, then we’re able to do the job. This is very different from what it’s like in the best countries in the West. The mentality is different.
For example, when there’s an emergency, the British are much more demanding in terms of rules. You can't force them to come to the office after work or come back from holiday. Everyone has their rights and everyone knows them well. If something needs to be done very quickly in Russia, then you say: “Look, I need it done urgently! Today! So everyone has to work overnight and do it!" — and everyone hurries to their desk and gets the job done. In the UK, this is impossible. First of all, you can't say that, because people just won’t react to your words. They’ll do the job, and it will take them a couple of weeks to complete the task at their normal pace. But they definitely won't quit working on the task if they understand what’s needed. I’m talking again about an average person. There are slackers in the UK, just as there are responsible people in Russia. But in general, they’ll do the job at their own pace, slowly. They’re sure to complete the task, and it will be done well enough. And in this respect, I would say, Russians often outperform others over short distances. But if we look at something long-term, such marathon distances are often hard for them.
If a person is given something, they are simply obliged to make use of it somehow
What motivates Mikhail Fridman?
There was a time when I thought a lot about this. By the way, it’s connected to the question of religion and faith. Religion is more concerned with rituals, whereas faith mainly represents a worldview. It’s something like my beliefs or my faith.
God distributes different abilities, talents and other gifts unevenly. Some inherit a lot from the moment they are born, from nature and their parents. It’s every person's task to use these resources as much as they can. If a person is given something, they are simply obliged to make use of it somehow. Because they have been given it for some reason, not someone else. This doesn’t mean that you just have to do business. You can do anything. But you have to apply your talents and qualities somehow. You should do it in such a way that it benefits both you and others, and the world as a whole.
There is a concept in Judaism, one of its fundamental principles, called Tikkun olam. Again, I’m not a religious person, it was just interesting to read about this topic. Tikkun olam literally means “to repair the world”. Everyone has a duty to fix the world and improve it. Because that’s the way it is. It’s imperfect. It has to be adjusted all the time somehow. And so everyone is given a certain amount of resources: the Lord allocates a particular quantity of opportunities, health, strength and talent. You need to fulfil this talent as much as possible in relation to its size. That, in fact, is exactly what I am doing.
There was a time when I thought a lot about this. By the way, it’s connected to the question of religion and faith. Religion is more concerned with rituals, whereas faith mainly represents a worldview. It’s something like my beliefs or my faith.
God distributes different abilities, talents and other gifts unevenly. Some inherit a lot from the moment they are born, from nature and their parents. It’s every person's task to use these resources as much as they can. If a person is given something, they are simply obliged to make use of it somehow. Because they have been given it for some reason, not someone else. This doesn’t mean that you just have to do business. You can do anything. But you have to apply your talents and qualities somehow. You should do it in such a way that it benefits both you and others, and the world as a whole.
There is a concept in Judaism, one of its fundamental principles, called Tikkun olam. Again, I’m not a religious person, it was just interesting to read about this topic. Tikkun olam literally means “to repair the world”. Everyone has a duty to fix the world and improve it. Because that’s the way it is. It’s imperfect. It has to be adjusted all the time somehow. And so everyone is given a certain amount of resources: the Lord allocates a particular quantity of opportunities, health, strength and talent. You need to fulfil this talent as much as possible in relation to its size. That, in fact, is exactly what I am doing.
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