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When D’Arcy’s men came to drill, the cost of those first two wells was more like £200,000 than the £10,000 predicted. The venture bled money. Drilling started in 1902. In extremely challenging conditions, the equipment continually broke down. As early as 1903, D’Arcy’s overdraft stood at £177,000, or a few tens of millions of pounds in today’s money.^* His bankers had demanded shares in the Mount Morgan mine by way of collateral and, to make matters worse, those shares had fallen to about one eighth of their peak value. Tough times on Easy Street.

Then, in 1904, relief. The drilling team struck oil. The would-be oilman used the news to scour Europe and the United States for new investors, but the well, that had started so promisingly, ran dry. He was advised to shift the exploration effort miles to the southwest. His overdraft grew still further. His bank started to demand the concession itself as collateral. Everything seemed lost.

As things turned out, D’Arcy did succeed in finding an investor, Burmah Oil, whose support enabled the troubled little venture to go on burning cash. By early 1908, however, even Burmah had had enough. It asked D’Arcy to put up more funds or close the whole operation down. He complained, ‘Of course I cannot find £20,000 or anything’, but stubbornly ignored the deadline. He just allowed it to pass without action or comment. The gambler refused to leave the casino.

Burmah, in turn, ignored their partner’s refusal to cooperate and on 14 May 1908 sent a letter to the drilling team in Persia informing them that they should close up shop, sell everything saleable, and come home. The letter took weeks to travel from Glasgow to Persia. And after it was sent but before it arrived, the drilling team struck oil. They hit a gusher so big that the spout of oil jetted fifty feet higher than the steepling drilling rig itself. Shortly afterwards, the second exploration well struck oil too, and also on a prodigious scale. When George Reynolds, the tough, single-minded genius of the drilling team, received Burmah’s communication, he wrote back sarcastically, ‘[Your] instructions…may be modified by the fact that oil has been struck’, and refused to act on them. The age of Middle Eastern oil had begun. D’Arcy recovered the funds he’d sunk into the sands of Persia and received shares worth some £895,000 to boot. The company that emerged went through several name changes since those early days, but is still alive and well today. The company is now known as BP and is worth approximately $175 billion.

I’ve told this story at length because it’s dramatic and because it makes a point. A moment of risk, of opportunity is not enough. Given the right opportunity, any of us may succeed to a certain extent, but the world has not been shaped by those whose ambitions run ‘to a certain extent’. D’Arcy’s ambitions were large when he speculated on land, larger when he speculated on gold, and almost boundless when he speculated on oil. You or I would have needed to conquer our aversion to risk to have done even one-tenth of what he managed. He, however, conquered nothing. He wasn’t averse to risk, he needed it. When he had all the wealth anyone could ever want, he put himself through almost a decade of financial loss and heartache simply to feel the thrill of that spinning roulette wheel one more time.

The need for risk isn’t unique to entrepreneurs, but it’s the mark of the breed, all the same. When speaking to entrepreneurs in the course of writing this book, I’ve asked how much of their capital they put at risk in that first crucial investment, the one that launched them. They all answered the same way: they invested everything they had and in many cases borrowed heavily too. If their business had gone bad, they’d have been wiped out, walked away owning nothing more than fresh air and sunshine. That’s the answer I’m given, but in almost every case I’ve noticed a tiny pause before it comes, one of those micro-habits which supposedly reveal a truth beyond mere words.

What is that hesitation, that nanosecond of delay? I think it comes down to translation. To you and me, who’d much rather not be wiped out, the question about that first investment has many possible answers. For entrepreneurs, that’s not the case. There’s only one first investment you can make, which is as much as you have. That answer is so instinctive, it takes a moment for them to remember that not everyone thinks the same way. They have to translate their answer from Risk-Think into regular Human-Think, and the pause for translation accounts for that micro-delay.

Allied to risk, and inseparable from it, is restlessness. For most humans, comfort is defined in static terms. The log fire. The hot drink. It’s a pastoral ideal, the ideal of a people who will sleep tonight where they slept last night, do tomorrow what they did today. No doubt entrepreneurs like log fires too, but their instincts aren’t remotely pastoral. Modern science has discovered a type of neuro-receptor (called the 7R variant of the DRD4) which seems highly linked to Attention Deficit Disorder, as well as novelty-seeking and food- and drug-cravings. In the modern Western world, this receptor isn’t one you’d want your kids to have. It’s not the sort that promises wonderful educational outcomes or stable career prospects.

People who have this kind of brain receptor, though, aren’t ill. The genes responsible for it are doing their job just as nature intended. Since nature has a tidy habit of ensuring that poorly adapted genes are competed into oblivion, then those genes must once have been doing something useful. The question is what.

Enter the Ariaal – not a misspelled font style, but a tribe of semi-pastoral nomads in Africa. Some Ariaal continue to be true nomads, wandering the arid plains of northern Kenya, herding camels, cows, sheep and goats. Some of their brethren, however, have settled down and become farmers. The two groups are genetically identical; it’s just the lifestyles that have diverged. Scientists have studied the two groups and found that nomads who had the ‘novelty-seeking’ receptor were stronger, healthier, better nourished than nomads who lacked it. Among farmers, however, it was the other way around. The novelty-seekers were worse nourished and less well adapted. In short, if you have a wanderer’s genes, you’ll do well as a wanderer but struggle if asked to settle down.

As far as I know, no one has ever taken cheek swabs from billionaires to conduct the same study, but they’ve come close. Twin study analysis conducted jointly by St Thomas’s Hospital and Imperial College in London and by Case Western Reserve University in Cleveland, suggests that around half somebody’s propensity to become self-employed is attributable to their genes – perhaps a rather lower score than you might expect. (Intelligence, for example, is about 75 per cent genetic.) On the other hand, it’s not clear that twin study tests such as these are methodologically accurate. Nearly all identical twins share an upbringing, so it’s hard to tease out genetic from environmental factors. In a world well set up for such experiments, there would be a plethora of identical twins forcibly separated at birth to make the data analysis easier, but alas such twins are far too rare to generate statistically meaningful results.

What’s more, self-employment is not entrepreneurship. Indeed, much entrepreneurship isn’t really entrepreneurship. A plumber, for example, or a lawyer, or an accountant may be self-employed, and may choose to house their occupation in a wholly owned, legally incorporated company. But neither self-employment nor corporate status is the test. The test is ambition. It’s all very well to start a business in your garage, but unless you start it dreaming of the corporate skyscraper you’ll move into one day, you are not an entrepreneur. (And this, by the way, is the real secret of American enterprise. The United States does create a lot of entrepreneurs, but so do some other countries. Almost nowhere, though, do entrepreneurs dream on a bigger scale, as measured by the employment growth expected by an entrepreneur over the first few years of the business’s life. Those outsize dreams have a lot to do with what makes the United States what it is.)

Other scientific studies have perhaps got closer to the mark. A very intriguing study conducted by Cambridge University studied the brains of 17 ordinary corporate managers and sixteen entrepreneurs, each of whom had started at least two high-tech companies and who therefore passed any reasonable test of entrepreneurship. Asked to make a series of routine decisions, the managers and entrepreneurs scored about the same. These were sensible people, analysing problems in a sensible way. As soon as they were asked to make decisions involving considerable risk, however, the entrepreneurs were consistently bolder. Knox D’Arcy would, no doubt, have been off the scale.

Bold, please note, is not the same as intelligent. Indeed, it’s a commonplace in the venture capital industry that founder-CEOs should be gently eased out of the hot-seat as soon as possible. Noam Wasserman of Harvard Business School quotes one venture capital type as saying:

Upfront, I ask founders to level with me. If they are interested in working with me on the basis of [their] being a big shareholder, then I am interested. If they are interested in working with me because they have to run the company, then it’s probably not going to make sense for us to work together.

This attitude, a common one in the industry, would make no sense if that entrepreneurial boldness was the same thing as profit-maximizing genius. It isn’t. It’s gambling, linked (as Wasserman also points out on the basis of careful study) to the tendency among entrepreneurs to be markedly more optimistic about outcomes than their peers.

The trouble is that any attempt to measure optimism in laboratory conditions founders on a basic difference between entrepreneurs and the rest of us. It may, indeed, look to us as though entrepreneurs are ‘too’ optimistic, yet that’s to make the mistake of looking at their world through our eyes. To us, failure matters. To them, failure doesn’t really matter an iota. The failure of a particular venture is not the desired outcome, obviously, but it’s not a bad one. The only bad outcome would have been if they hadn’t had the nerve to go for it in the first place. Our ‘do nothing’ default option is their worst case scenario. That’s the one they truly can’t envisage. Equally, our worst case scenario (‘invest up to your neck, then see the whole thing go pear-shaped’) is no big deal for them. It’s an ‘Aw shucks!’ outcome, one that just makes them want to go back and try again with something else.

Even the way we respond to success is different. For us, success probably means a new home, a nice car and perhaps (depending on the level of our success) a yacht, a private jet, a football club, or a private island. For them, success means all those things for sure, but it means something else even better: that their ‘baby’ has flourished, that their act of creation has been rewarded by something that has matured into a confident, independent adulthood. These feelings mean that the risks and rewards we face are quite different from the ones that entrepreneurs face, even if we were both to compute the odds in the exact same way. Little wonder that we end up behaving in sharply different ways.

	How we feel	How entrepreneurs feel
Do nothing	Fine. This is our default choice.	Bored. Frustrated. No way.
Try and fail	Oh my God! What do I live on?	At least I gave it a go.
Try and succeed	Jackpot – got the house, got the yacht.	Immense satisfaction – I created something.

Knox D’Arcy is the perfect exemplar of all these things: the optimism, the gambling – and the irresponsibility which (to our pastoral, anti-nomadic minds) is the inevitable result. D’Arcy’s judgement about the Mount Morgan mine proved reasonable, but he refused to sell down his investment in it, even after the stock hit absurdly unsustainable heights. His judgement about Persian oil was simply awful. True enough, even that bet came good in the end, but any competent business manager would have made a much better fist of assessing risks and benefits before making any financial commitment – and would, at the very least, have come up with a much more sober estimate of the probable costs and the scale of financing needed.

Yet there’s nothing unique about his mindset. I’ve spoken to upwards of two dozen self-made multimillionaires. (And my threshold level for ‘multimillionaire’ was high. The median net worth of those I spoke to was well into the tens of millions of pounds.) Almost all of these entrepreneurs used the same kind of language to describe themselves. They’re ‘restless’, have a ‘very low boredom threshold’, need ‘decisions to happen quickly’, need ‘high energy’ and ‘passion’ from those they work with, couldn’t stand the ‘slowness’ of large corporations.

Some of them did have high educational achievement, but plenty didn’t. Typical was one entrepreneur who crammed his three-year law course into an eighteen-month workathon. After getting his degree, he started in corporate finance. He became bored working for others, so set up on his own instead. When he wearied of funding other people’s companies, he bought his own. Work was never the challenge, dullness was. With people like that, I almost got the feeling that if they were forced to sit in a classroom or given a pedestrian middle-management job in a dull but worthy company somewhere, they’d end up chewing carpet tiles or jabbing forks into electrical sockets. These were folk who needed stuff to happen and happen fast.

Although entrepreneurs are often described as rule-breakers, it would perhaps be more accurate to say that they’re typically not rule-minded. It’s not particularly that they seek to break rules, more that they don’t really see the rules that are so clear to the rest of us. That’s why those 7R-DRD4 variant nomads find it so easy to travel beyond the far horizon. They haven’t felt the tug of any prohibition against doing so. It’s perhaps also why immigrants are so over-represented in entrepreneurship – around a quarter of all US start-ups are founded by immigrants, for example. Those who are born and brought up in a place feel its rules and mores in their bones. Those who have already left kin and country behind are much less tuned in to those rules in the first place.

These issues may even lie at the heart of one of the oddest results to come out of the torrent of research into entrepreneurship: namely that while only 1 per cent of corporate managers are dyslexic an astonishing 20–35 per cent of entrepreneurs are (the two figures are for UK and US entrepreneurs respectively; the researcher was Julie Logan of the Cass Business School in London). There’s no settled interpretation of this research finding, but here’s mine. Dyslexics have gone through their school life noticing that the rules which work for others don’t seem to hold for them. A is for Apple, B is for Bird, C is for Cat, D is for Dog. That worked for me. If you’re non-dyslexic, then it presumably worked for you. For dyslexics, however, even those most basic of all rules seem to make no sense. So what do you – as a bemused child, anxiously seeking the approval of your teachers and parents – do in such a situation? You surely get creative. You develop your own techniques and trust those in preference to the seemingly unreliable ones offered by your teacher. You’ve learned to invent your own way around problems. You’ve learned that the rules of Planet Normal just aren’t going to work for you – indeed, they don’t even make sense. And as soon as you start to think like this, though you may not know it yet, you’re an entrepreneur.

If wealth creation is alchemy, then its orginating spark is here. The restlessness of people who can’t bear to be still; the risk-taking of those who can’t bear to be safe; the decisiveness of those who know that if they want a thing done, they’ll need to do it themselves. And from the spark – fire. From the Mount Morgan mine to Middle Eastern oil and the birth of one of the world’s largest oil companies.^* The ultimate reason why the world today is different from the world 250 years ago is because of the extraordinary creative energy of that entrepreneurial spark. It’s that spark which has wrested gold, iron, coal and oil from the earth; which has hewn lumber, bashed metal, invented gadgets, launched ships – and done all those other things which make our world what it is today.

When as non-physicists we read about the Big Bang, it’s almost impossible for us to get our heads round the idea that something can come from nothing. In historical terms, though, that’s precisely what has happened over the last 250 years. In 1750, the Earth had plenty of gold in her belly, iron in her veins, lumber in her forests. Indeed, she had more of all those things then than now and yet it was a largely useless sort of fertility because it was one that sat alongside almost universal poverty, illiteracy and high mortality. Out of that void was created the extraordinary affluence of our modern Western world; something from nothing on a colossal scale and achieved in the space of three or four human lifetimes.

As entrepreneurs go, William Knox D’Arcy isn’t the best possible exemplar. He didn’t bring the world any extraordinary new vision. He invented no new technology. He was neither manager nor organizer. He wasn’t even a particularly astute investor, holding onto his Mount Morgan shares when they touched £17 and watching them fall back all the way to £2. But more than almost anyone else D’Arcy exemplifies the willingness – the compulsion – to gamble his all on a vision of the future. Character and a moment of risk. The start of everything.

TWO Will

If you start to take Vienna – take Vienna.

– NAPOLEON BONAPARTE

In 1927, Paul Getty had a problem. One of his companies owned a patch of land in Santa Fe Springs, just outside Los Angeles. The land was potentially oil rich and Getty had a rig set up and a drilling team working it. They’d spudded the well in and were ‘making hole’ at a good rate when the drill bit sheared off and got stuck. Getty doesn’t report the precise details, but wells of the era generally ran 3,000 or 4,000 feet deep, so if the bit twisted at around the halfway stage, then it laid maybe 1,500 or 2,000 feet underground. The drill bit was a large chunk of metal that was impossible to drill through. The drilling shaft was perhaps a couple of hand breadths wide.

Fortunately a solution existed to the problem. You could lower a so-called fishing tool down the shaft to fish for the bit and bring it to the surface. The work was delicate, skilled and chancy. After a couple of weeks’ work, Getty’s men had still not retrieved the bit. The problem was annoying but far from calamitous. ‘Twist-offs’ were a familiar irritation and any experienced drilling crew would have seen and dealt with plenty in their time.

All the same, two weeks wasted were two weeks wasted. Wages had to be paid and the capital costs of the rig and the lease were not yielding any return. Worse still, competing drilling crews on neighbouring leases would get to the oil sooner. Since neighbouring rigs generally tapped the same pool of oil, every barrel extracted by the guys next door meant one less barrel for you. Getty was already a millionaire by this point and hardly needed to fret about problems of this sort, but then again he was a millionaire precisely because he did fret about problems of this sort. On one occasion, he’d owned a lease too small for an oil rig, plus an access route too narrow to take a truck. Most owners would have turned their attention to other things, but not Getty. He commissioned and built a miniature derrick and brought the steelwork to site on a specially built miniature railway. The derrick struck oil and the well made money.

So, faced with this new problem – a jammed drill bit and a halted well – what did he do? You have all the details you need: a drilling shaft 1,500 feet deep and perhaps twelve inches wide; a heavy steel drill bit twisted off and jammed somewhere close to the bottom. You need to find a way to resume drilling as fast and as cheaply as you can.

I won’t give you the answer yet – you’ll have to wait till the end of the chapter for that – but I will tell you this. Getty was not an inventor. He had no more mechanical ingenuity than you do. Certainly there were countless people drilling for oil in the 1920s who had more drilling experience, a better knowledge of rigs and fishing tools, greater mechanical and technical dexterity. Yet back in 1927, it was not those people who solved the problem, it was Paul Getty.

For now, though, we’ll jump forwards in time and across the globe. It’s 1975. Bob Dylan has returned to form with Blood on the Tracks. Pink Floyd Wishing You Were Here. Bruce Springsteen is Born to Run. If your musical tastes are a little more Meryl Streep than that, then you’ll be remembering 1975 as the year of Abba’s ‘I Do, I Do, I Do, I Do, I Do’, the least lyrically inventive song title in the history of lyrically uninventive song titles.

But those artists and their concerns are a long way from here, a collection of rice paddies in Surabaya, East Java, Indonesia. What’s more the young man looking out at those rice paddies is probably not wishing he was here. But that young man – who was there on a $250 cut-price holiday – has a decision to make. His name is Lakshmi Niwas Mittal and he has been asked by his father to sell those paddy fields. His father was originally from Rajasthan and was not, to start with, by any means a wealthy man. Lakshmi himself had grown up with twenty others in a house with rope beds, no electricity and the only water coming from the hand pump in the yard outside. It wouldn’t be quite accurate to say that Mittal’s was a poor family. In India, especially then, poor means poor, and the Mittals were middle class by the standards of their place and time.

In due course, Mittal’s family moved to an unremarkable house in a poorish district of Calcutta. Young Lakshmi went to school then accountancy college. In the meantime, Lakshmi’s father had become partner in a company called the British India Rolling Mill. I’m not sure quite how the company had managed to stagger through a decade or two without noticing that the British had left India in 1947, but presumably its clients loved it anyway. Lakshmi’s uncles were involved in steel trading and, in 1963, the family won an important licence to build a steel rolling mill in southern India. Things, unquestionably, were on the up.

It was as part of this ferment of activity that Mittal’s father had come by those Indonesian paddy fields. His intent was to build a steel mill there, producing for the local market. Further investigation, however, proved that a small mountain of bureaucracy lay in the way. Paperwork, licences, permits, hassle. Mohan Lal Mittal decided this was too much. A hugely experienced, ambitious, and capable entrepreneur, he gave the challenge his careful consideration, and refused it. He asked his son to extract the family from the mess with as little financial damage as possible.

Here, you should for a moment put yourself into the young Mittal’s shoes. You are not a complete novice. You have taken a keen interest in your family’s steel operation and have been working in it now for a number of years. For what it’s worth, when you left St Xavier’s College in Calcutta, you did so with a BCom. and the highest marks ever achieved by a St Xavier’s student in accountancy and commercial mathematics. But you have no money of your own. You do not speak Indonesian. You do not possess influential connections in a country with an authoritarian and corrupt government. You have a young wife and are a very long way away from home. And it’s 1975, let’s remember, when the world seemed a lot larger than it does today, and when India marched with very much less swagger on the global stage.

How would you personally have proceeded if placed in this situation? For you, of course, these questions are purely theoretical, but for the young Mittal in 1975 they were nothing of the sort.

And we already know the answers. Most of us would have sold those paddy fields, probably getting ripped off in the process, then gone home to a comfortable future in Indian steelmaking. We’d have done well, congratulated ourselves for our wisdom and prudence. We’d never even have noticed the size of the opportunity that we had allowed to go by.

Lakshmi Mittal, however, didn’t sell the paddy fields. He decided to build a steel mill on them himself. No money? No problem! Back then the Indian government offered export loans equal to 85 per cent of the cost of the equipment and materials being exported. Mittal put together a deal where Indian export loans, plus some shares in the family company, plus some cash from a local partner, plus some more loans from an Indian bank in Singapore were somehow enough to make the whole thing float. He hadn’t quite separated himself from his family, but by starting out in an entirely different country, he was making the firmest possible statement of his independence.

He used the funds to build a mini-mill, a term which rather understates the scale of the enterprise involved. A modern integrated steel mill handles everything. It takes raw iron ore, melts it down in a blast furnace, extracts the now liquid iron, then starts to adjust the chemistry: removing impurities, controlling the carbon, adding alloying materials as required. Only then can the molten steel be formed into blooms, ingots, slabs and sheet. The scale of enterprise required to manage these things efficiently is colossal. A ‘small’ integrated mill will produce two million tonnes a year. A large one can produce as many as fifteen million.

Only when judged against these gargantuan standards is there anything ‘mini’ about a mini-mill, which are typically around one-tenth the size of their integrated cousins. The heart of the mini-mill’s method is to cut the raw iron ore out of the process altogether. Instead of the whole cumbersome process of melting metal out of rock, the mini-mill relies on the steel industry’s version of the ready-meal: a mixture of scrap metal and direct-reduced iron (a form of the metal which is about 90 per cent pure).

In mid-1970s Indonesia, this technology made perfect sense. Mittal couldn’t afford – and the market couldn’t sustain – a five million tonne monster plant. What’s more, at the time, the Indonesian market was dominated by Japanese companies importing steel from overseas. There was no domestic production at all and when Mittal did his sums, he realized that he could achieve a cost advantage of as much as 50 per cent.

Building the mill took two years. In its first year of operation, the plant made 26,000 tonnes of steel, which brought in revenues of $10 million. The plant made $1 million in profit. But profit and riches is not the same thing. Banks had to be paid. Further capital investment was scheduled. Mittal – by now a father – was paying himself just $250 a month. His car was second-hand and he worked all hours of the clock. But he had his steel plant and it was doing well. By the end of the 1980s, production had grown to 330,000 tonnes. Lakshmi Mittal was 39.

Again, life brought to the still young Mittal another tantalizing moment of opportunity, a sweet intersection of character and risk. It was a moment that you or I would probably not have noticed. If you’ve built one successful steel plant – and let’s face it, most of us haven’t – then the temptation would surely be to do the same again, and then again, and then maybe again. If Mittal had been in the business of talking to life coaches that presumably would have been the life-plan he’d have evolved. Mittal could’ve looked forward to a prospect of extraordinary success. He’d create and operate multiple plants as well as being the first Indian ever to have manufactured steel overseas. He’d be a hero.

However, Mittal didn’t want it. As he saw it, building steel plants from scratch was slow. Why build them, when you could buy them? The trouble was, in the world of steel, Mittal was still a very small player. His funds were meagre. He had no government or major institution backing him. He had no technological edge, no breakthrough invention, no special access to raw materials. But if you’ve already done the impossible once, you’re not that daunted by the idea of doing it again.

In the West Indies, the state-owned Iron and Steel Co. of Trinidad and Tobago (ISCOTT) was going bust and Mittal reckoned he could fix it. He promised the government that he would turn losses of $10 million a month into profits of the same amount. There was only one condition: if he did as he promised, then he’d win the right to buy the company.

The government agreed. Mittal fired the team of sixty German managers who had been running the plant, and brought in sixty Indians instead, thereby cutting the wage bill by almost $20 million a year. He slashed other costs and ramped up production. In just four years, by 1993, production had more than doubled and Mittal bought the company.