Innovation's globalization, the power of teams and more
Five Lessons Entrepreneurs Can Learn From George Soros
Note: This piece was adapted from one originally published on my Forbes column here.
George Soros is one of the most celebrated and divisive leaders of the 21st century. He’s a billionaire hedge fund investor, Holocaust survivor, leading philanthropist, financial speculator, boogeyman of the far right, geopolitical counselor, founder of a world-renowned university – and much more besides.
Inspired by reading the recently released and excellent book “George Soros: A Life In Full”, a compilation of essays from Harvard Business Review Press, I wanted to offer five lessons from his life relevant to startup leaders, including fintech founders.
1. Look globally for unique opportunities.
One defining characteristic of George Soros is his cosmopolitan view. Sebastian Mallaby, the financial journalist and one of the contributors, explains Soros’ outlook as one “that transcended national frontiers: he was a global figure long before the term ‘globalization’ had entered the lexicon.”
This lens was crucial to finding unique opportunities around the world, often ones that others had missed. His most famous (or infamous) investment was when he ‘broke the bank’ of England, betting their fixed currency peg would not hold. This of course is only one of myriad trading opportunities he uncovered.
Yet at the same time, George Soros maintained a perspective rooted in local reality. As Michael Ignatieff, the Rector Emeritus of the Central European University and another book contributor, told me, explaining the nature but crucially the limitations of our interconnected world: “What isn’t global is labor and what isn’t global is politics.” Soros kept this lens active in his investments and philanthropy.
For founders, this global lens is crucial. Innovation is a global opportunity – more so today than ever before. The best ideas come from anywhere and scale everywhere. Yet, at the same time, many markets are under penetrated, and underfunded. Looking internationally allows us to connect the dots and find underappreciated opportunities both at home and abroad. Understanding and adapting to the local reality allows us to unlock innovation’s potential for meaningful impact.
2. When you have conviction, and the timing is right, don’t just bet. Bet hard.
When Soros started out, his investment strategy was to keep 16 equal slots for different opportunities. As he refined his methods, Soros would move to much more concentrated portfolios, often amplifying his position through leverage. For example, during the British Pound trade, instead of growing his position slowly and methodically, he chose to move decisively and rapidly to achieve “maximum market exposure.” With a fund size under $1 billion, its market position was over $10 billion. The resulting win was over $1 billion.
Similarly, founders should first take their time to build conviction on their idea. Test products. Interview customers. Figure out the right solution. But when they have conviction around their idea, and crucially about the timing, they should dive in - hard.
3. Use feedback loops to your advantage
One of Soros’ most important intellectual contributions concerned the power of feedback loops. He realized that the markets – like most elements in life – don’t have linear changes. Instead, individuals’ decisions impact others. Bubbles tend to be self-reinforcing on the way up, and also on the way down. Things may overcorrect in both directions. He called this reflexivity.
Startups at their best (and at their worst) face reflexivity. Some startups benefit from a buzz, which helps them secure more capital at higher valuations, in turn allowing them to hire faster and spend more on marketing and customer acquisition, which then fuels further growth and investor appetite. Network effects in the business model can further cement a startup’s advantage and power its growth for years.
For founders, playing into positive feedback loops will accelerate the business. Figuring out ways to mitigate against negative ones is equally critical – an area where building on a strong foundation is critical.
4. Learn from, be inspired by and lead the best people
Soros founded multiple organizations, including his investment firm (and its flagship vehicle the Quantum Fund), the Central European University, and the Open Societies Foundation. His thinking is evident in the way he organized his network and his philanthropies. He found talented people already doing the work, and empowered them with resources. Soros then checked in on their progress and made decisions about whether to continue funding them. Over time, some of these contacts were able to share best practices they had developed with others.
Relatedly, Soros has not only nurtured excellent contacts with a range of interests, but also created a network of networks. He created opportunities where people not only got to interact with him, but were able to connect and forge new partnerships with others in an ever-expanding network.
Founders should listen to their community and surround themselves with the best people around the world to fulfill their mission.
5. Balance realism and hopefulness
Michael Ignatieff explained Soros’ philosophy to me quite powerfully: “Isaiah Berlin once wrote: ‘History has no libretto’. History is not a song of liberty. For Soros, you can’t be a Holocaust survivor and tell yourself stories. Soros kept cold clear-eyed realism. He strongly believes in open society but has no illusions to open society.”
Many of the philanthropic ideals Soros has fought so hard for have not materialized. Authoritarianism is stifling open societies around the world. His beloved Central European University was forced out of Hungary, but Soros stayed committed to the vision of institution and practical to the reality of moving it to Austria. His support to his work has continued, enabling his institutions to live another day in the hope that one day they will accomplish their missions. Through it all, Soros combines “historical realism and undying optimism”.
Startups will naturally face ups and downs, and sometimes along the way potential life-ending events. Founders must hold the competing perspectives of realism, and of unbridled optimism for what’s possible.
Where we go from here
Reading the headlines it is easy to feel hopeless and helpless these days. Reading this book of essays on Soros’ life and contributions has raised my optimism about the future, and the potential for leaders to make a difference.