By Joanna Kalemba
Economics Undergraduate Student
“Who would have come to this event if the ticket was 10 pounds?”
The great majority of the audience, all planning to “Make a Million Before 30,” as the event was aptly named, raised their hands at the talk on Thursday night.
“Who would have come if it was 20 pounds?”
Only one hand was left in the air. That same hand left the room holding one of the three copies of Neil Smith’s bestselling book, How Excellent Companies Avoid Dumb Things. On top of great organization and a very popular choice of topic, the Management Society brought a truly excellent speaker to St Andrews. The book giveaway was just the cherry on top.
Not only did Dr. Neil Smith, who managed to crowd School VI on a Thursday night, work for companies such as McKinsey and Bank of America Merrill Lynch, he also organised the St Andrews 600th Anniversary Gala Dinner in New York in 2014. This event raised over£2.2 million for the University. This background and experience resulted in a fascinating Q&A session which lasted a little longer than expected, but was just as, if not even more interesting, than the actual talk. Aspiring entrepreneurs who attended the Thursday event hoping to start their own businesses were given invaluable advice from the very start.
“The best advice I can give to those of you who want to start your own business is the following: do not start your own business.”
Dr. Smith’s talk centred around a technique which, according to him and the UK Rich List, offers far greater rewards and far less risk than beginning a start-up: A leveraged buy-out. The process, explained with a parallel example of a housing purchase (one could argue with the underlying assumption of infinitely rising house prices, but let’s leave that aside), is simply a way to purchase a company using outside capital. In practice, following his example, one can buy a company with as little as 30,000 pounds and hopes of a large return in about 6-10 years. Taking it a step further, by borrowing against the assets of the company and getting a vendor loan, a keen St Andrews student investor would not need a single penny in order to make it happen.
Sound too good to be true? Perhaps. Nevertheless, according Dr. Smith, that is the only proven, effective and safe way to do it. Somehow, I am still hesitant to believe the words “I have never taken a risk in my life” coming from someone who started two highly successful businesses from scratch and purchased a third in a fully-financed leveraged buy-out.
The surprising and entertaining, albeit a little drawn out, talk has set the bar high for the upcoming speaker events on campus. Watch out for the Winning Women talk organised by the Lumsden Club and the C-Suite Conference, both coming up this week.
Featured image is a still frame Dr. Neil Smith’s video.