Some time ago I warned that we should be careful with those stories about child entrepreneurs who start companies at 7 and 9 years old, because 7-year-olds don’t start companies. Their parents do. What’s normal for a 9-year-old is to play with friends and get up to mischief.
If we make a 10-year-old believe he’s a brilliant entrepreneur, what we may achieve is early arrogance in that child. There are exceptions, though, such as the case of Maddie Robinson, a 14-year-old girl who got big retail chains interested in her designs, which made her a millionaire (13 and 14 are not 7 and 9).
But does that mean that if our children haven’t started companies before 15, or invested in shares at 10 (which they can’t do), we won’t have children with the potential of Warren Buffett or Bill Gates?
Not at all. In fact, we can find signs in young people that they have an above-average IQ, or certain aptitudes that make them very capable in some fields. We can even predict that a young person will study a particular university degree and have no trouble finishing it, as long as nothing goes wrong along the way.
But history also tells us that people of great intelligence often end up working for people with a lower IQ than theirs, because the entrepreneur takes on business risk thanks to grit, not IQ, and will later need intelligent people who are competent in their field in the company.
Talent for business doesn’t work the same way as talent for sport. It’s true that for a young person with a certain aptitude for sport, time is against them: if a good coach doesn’t take them on in time, they probably won’t be able to have a brilliant sporting career. But in business, the light bulb can go on at any moment and you can have a great idea. That said, of course some people have more talent and vision for business than others.
That pesky hindsight
We very often fall into outcome bias: once we know about someone’s success, we explain that they “showed promise as a kid”.
In other words, if a 6-year-old does deals with his friends at break time, selling them things, and later becomes a millionaire, his parents will say he was drawn to business from an early age, that they could already see that aptitude or quality, and that it’s only natural he got rich. If, on the other hand, the same child ends up in prison for drug dealing, people will say it was to be expected, because he was already wheeling and dealing at school as a kid. (See: The impact of luck on business)
Some may think a 20-year-old should already be on the right path, but the truth is that’s not how it works. When we looked at what many successful people were doing at 25, we saw that Mark Cuban was working as a bartender, so I suppose some girls didn’t think Cuban was much of a catch. Who would have thought he would become the billionaire he is today? The same goes for Amancio Ortega (Zara), who at 20 was working as a delivery boy for a shirt shop, and didn’t start out in business until he was 27, when he founded Confecciones GOA, which later gave rise to the Inditex group.
As we explained in our previous article, the only thing we can know about a young person regarding the success they’ll have as an adult is whether their IQ is below or above 84, which is a line separating intellectual disability from normal intelligence.
Above an IQ of 115, we find no difference in people’s wealth, because some people get rich selling, designing and building space rockets, and others get rich selling socks or creating an app.
We can’t identify any trait that predicts success, but we can create those traits in our children.
Wealth can basically be reached by two paths: saving more than 1 million euros, or generating income of more than 1 million. Through saving and investing, anyone, whatever their profession, can save more than 1 million for retirement. If you’re 20 and want to retire a millionaire, literally, you only need to save 361 euros a month and earn a 6% return. If you start at 25, you need to save 499 euros. And if you’re past 30, you need to save around 700 euros.
But the truth is that saving 1 million is a harder and more boring process than making 1 million by carrying out one or several business ideas.
Either way, since there are no traits that define our children’s success, it’s up to us and their teachers to instil in them, the sooner the better, that desire to learn, that eagerness to acquire useful knowledge, social skills, the importance of the company they keep, and that whole set of discipline and habits of success.
Teach our children to create, but also not to spend everything they earn. Teach them to be persistent and not to give up when things get difficult, because today we don’t know exactly which habits are the most powerful for someone to succeed in life, but we do know with 100% certainty that successful people are not in the habit of giving up when things get difficult.
The only thing we can know for sure is that the more good habits children have and the fewer bad habits they’ve picked up, the better their future will be, whatever they achieve in life.
So, rather than those marketing campaigns by some parents that make us believe their 7-year-olds have founded three companies, as parents we can take a certain interest in our children to whet their entrepreneurial appetite, which will be very much needed in the future. And it is undoubtedly something that the richest people on the planet today did end up having at some point in their lives.
It doesn’t matter who you are, where you come from or what you do. Tomorrow, when you wake up, you can change your coordinates and start heading for a new destination.
See also: 10 tips for raising entrepreneurial children
Featured image: Jeffrey Beall, CC BY-SA 2.0, via Flickr.
