Why are the Tatas so much less corrupt than their contemporaries? How is their conglomerate still intact after five generations? The answer to an Asian conglomerate mystery, and Part 13 of the Asian conglomerate series.
I realise the Tata story is somewhat of an exception to the typical tycoon arc.
Jamshetji gets his start in trading, and learns calibrated risk taking and all the other things that tycoons learn, with additional experience of the capital cycle when he is young.
He doesn’t actually figure out what businesses are good businesses. He does figure out a playbook though. But he indiscriminately starts businesses after his initial success with cotton mills. I doubt he ever develops a theory on moats; he never once seeks a government granted monopoly.
But his pursuit of businesses that will advance India’s interests results in his descendants getting government protection anyway. Although (as his descendant JRD Tata points out later) this typically means chasing businesses that are maximally difficult to get off the ground, and are therefore loss making for the first decade of business. Which is hilarious.
He (and his descendants) have strong reputations as competent, ethical businesspeople, and as a result are tight with the government of the day, but they remain above the fray and refuse to bribe many subsequent administrations.
He gets lucky with succession, but also he started the trust structure, which increases the odds of succession working.