As a private equity manager and venture capitalist, Frank Hanna knows about how to succeed at business and how to create wealth. But his new book, A Graduate’s Guide to Life is no Art of the Deal-style book about how to get ahead and beat the competition.
In fact, almost the opposite: “Competition is not necessary for you to be successful. You don’t have to compete for success, and many times, competition will destroy your happiness,” Hanna declares.
This kind of blunt truth-telling flows out of one of Hanna’s key principles: take an honest, hard-headed look at reality—not the world as you want it to be or as convention wisdom and business clichés would have you think it is. Here, he says colleges have failed to prepare their graduates for “real” life, by drilling into their minds the primacy of competition—hence the need for his book, which is particularly tailored to new graduates.
Instead of competition, Hanna proposes that cooperation is the key to building wealth. Find a way to “create value for others,” he says, and they will provide value for you.
Not that Hanna is necessarily anti-competition. But the point of competition, he says, is not necessarily to get ahead and win. It’s to play the game—whether sports, business, or something else—with honor, dignity, and heroism. This is the distinctly human way to compete, according to Hanna.
He contrasts this with raw animal competition for scarce resources—food, shelter, and sex. The whole point of human civilization, on the other hand, is to elevate us above such a Hobbesian “war against all.” In this context, the purpose of competition is to develop heroic virtue. Therefore, it must be done with love and prudence, Hanna says.
Hanna has written the book for a broad audience, but his Catholicism shines through in his emphasis and understanding of the virtues. “Love is the action of sacrificing for the good of another,” he writes. Hanna has certainly practiced what he preaches: he is a noted Catholic philanthropist, who has specialized in supporting think tanks and educational organizations, including Holy Spirit College and the Sophia Institute Press, the publisher of Crisis.
Hanna’s skepticism about competition was shaped by the global financial crisis in 2008. It was an inability to withdraw from the competition that drove banking giants like Citicorp to take on increasingly unnecessary risk. (Hanna cites a well-known quote from Citicorp CEO Charles Prince who explained the bank’s actions this way: “When the music plays, you dance.”)
He contrasts his own experience as a business owner during the period. During the crisis, he says he and his co-owner brother braced for the worst, slowing down their marketing efforts. In 2007 their company’s stock price was $40. Nearly a decade later it was $15. Sounds like a failure, right? Except that their competitors ramped up their operations and end up going belly up: three outright went bankrupt, a fourth was bailed out by the government. (Hanna does not get into the role government played in the crisis and, in a 58-page book, he has given himself little room to do so.)
“The point is by deciding not to compete in 2007, we kept our company alive. While it’s now worth less than half of what it was, it still has a lot of value, and we did not go bankrupt. We survived by withdrawing from the competition,” Hanna writes.
But it was the failure of others, like Citicorp, to withdraw, that worsened the crisis, which eventually wiped out $17 trillion in wealth in the United States and $50 trillion worldwide, according to figures cited by Hanna. This prompts one of the big insights of his book: in finding out how wealth was ‘lost’ Hanna thinks he can pinpoint what it really is—and how to “find” it.
This inquiry sets up Hanna for another one of his contrarian declarations: wealth, he says, does not exclusively consist of material things. To claim otherwise, is not capitalism, but Marxism, according to Hanna.
So, when the United States lost 17 trillion dollars, it lost more than simply money. What it lost was hope, writes Hanna. Well, yes, if trillions of dollars was suddenly sucked out of the economy, you might lose a little bit of hope as well.
But Hanna has something more specific and tangible in mind. He briefly dives into a bit of Investing 101, pointing out that all publicly traded stocks have a price to earnings ratio. The ratio expresses the amount someone is willing to pay for a stock based on the expected earnings from the stock over time. Higher ratios reflect an expectation of higher earnings.
During the financial crisis, the ratio plummeted for many stocks. Some that once sold for 40 had dropped to 10. That was because there was an expectation for lower earnings. In other words, investor’s hope for future income had diminished significantly. “Wealth can be created out of thin air when hope increases, and it can vanish into thin air when hope is diminished,” Hanna writes.
The financial crisis also highlights another immaterial element to wealth: relationships. The crisis is often called a credit crisis and credit, Hanna notes, is based on the Latin word credo, to believe. The loss of hope in future earnings was accompanied from a loss of faith in those in whom investors had entrusted their money.
Here he invokes—in another nod to his Catholicism—Pope Benedict XVI who said that in order to recover from the financial crisis and rebuild wealth we must “rediscover relationships as the constituent element of our lives.”
It is in this context that Hanna proposes this definition of wealth:
Wealth is a measure of our well-being, most accurately measured in the quality of our human capital and relationships, and the hope and expectations of those relationships.
This discussion leads Hanna into an extended meditation on what we seek in relationships that ingeniously draws upon specifically theological terms and concepts while making them accessible to an audience that does not have to be Catholic or even Christian to understand them. What we all seek in relationships, Hanna says, is wholeness, which he explains is communion—or common purpose—with others.
“The secret of life is to seek and enter into true communion with others, and avoid false and hollow communion. If you do that you will be wealthy and happy!” Hanna says.
Hanna has previously written about how to wisely manage one’s wealth and even use it as an opportunity to nurture virtue in a book geared towards individuals with lots of material wealth. In a Graduate’s Guide to Life, Hanna develops his insights further and makes them accessible to a broader audience. Regardless of our profession, Hanna has shown us the way to true wealth.