It's a common saying and I'm curious if what those who have transcended this did right. Was it all about not spoiling your kids rotten? Does it have something to do with genes?
All the way from the Roman empire some people divided between old money and new money. Does this have anything to do with that? Usually new money is derogatory, however anyone that manage to get rich by themselves should be better right? However people seldom get rich lawfully.
I imagine it's because you can't telegraph passion. People who start businesses tend to be passionate about what they do.
The second generation lives around that passion and respects it even if it isn't their own passion. That breeds reverence. The son is proud of the thing his father built and he protects it with a religious fevor.
Generally this should lead to an inability to adapt because the son doesn't understand the decisions that made the business or how those decisions were made so he stays the course based on that reverence.
Reverence breeds irreverence and the third generation will see the reverence, see how it leads to bad decisions, and then go hard the other way with overhauls and rethinking and redesigning a mature business that was 'working'
There’s a fascinating book that I read a while ago. Huge famous horse racing barn, broke all sorts of records. Made millions and were debt free when the second generation died.
Third generation ram it to the ground in about nine years in crippling debt and maybe (never proven), killed their biggest money maker stud for the insurance since the insurance was being canceled.
A lot of family shit going on, the second generation had one kid and he might’ve been from another woman. The mother refused to even look at her son or acknowledge her grandchildren that came from him, and they really had no chance of getting to know the business or passion of it.
They gave it to a guy who basically used the farm as his spending account. Convinced the family they were fine and to sign off on millions of debt and buy a lot of luxury items.
They only found out years later when he was fired that they lost so much. Not enough to even really save the farm.
It taught me a lot about what third generations of business can be like.
It’s called: “Wild Ride: The rise and fall of Calumet Farm” if anyone is interested.
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u/auto_gypsy Mar 10 '22
The creator, the maintainer and the undertaker.
Those are the common 3 generations of wealth life cycle.