Dmitry Leus: Investments in Efficiency
Investment business. Hollywood films picture confident and smart businessmen easily doing multi-million-dollar deals and investing hundreds of thousands of dollars ‘on the run’ in the car showroom or directly on the plane, on the way to an exotic holiday or to an opera house somewhere in Italy. Is it a real situation? And how does the world of investments look today? What areas of focus are trending today and what should be invested in tomorrow?
This topic was discussed with Dmitry Leus, the investment expert, businessperson and a man who has many years of successful experience in acquirement and optimization of financial structures.
Dmitry was asked about how the movie-like image of a successful investor corresponds to the reality.
Leus answers that it can be the truth theoretically — but only theoretically. An investor is not just a profession. Dmitry says this is the certain way of life — or, as it is now said, ‘lifestyle.’
In his understanding, a person who has decided to be involved in the investment activity professionally can be compared with an athlete who is preparing to take part in the Olympic Games. The goal, the strategy and the technique, the schedule and daily training's ups and downs, the right to make mistakes, being in a constant stream, a strong team and a wise mentor (or a coach) — all these points are inherent in these two areas to any extent.
And not only in them. Leus also says that if you compare it with the cinema, then everything remains as if off-screen in the movie, and the viewer has a beautiful picture. But if you want to be an investor, you need a little of everything. A little luck, a little knowledge, some money are necessary at the start. In fact, everything is much more thorough and serious.
In Leus’ understanding, a modern investor and entrepreneur should be able to analyze and synthesize the informational flows, calculate and assume justified risks, see the opportunities where others do not even seek, develop feelings and improve himself or herself, and be able to recover quickly.
Dmitry also states that another important aspect determining the success of an investor is the experience of losses. If people do not have such experience, then people most likely play for small stakes and, figuratively speaking, just shift their assets from one pocket to another. If they play for high stakes, the losses are inevitable. This is quite normal. Dmitry says that if such situation has already happened, people just need to know about it and take in stride. As people develop and improve themselves as professional investors, situations and projects in which they can lose tend to ‘0.’
In one of his interviews, Leus said that investments in efficiency are the direction in which it is worth to invest today. Therefore, he was asked to argue that position.
He replies that this is true. And this is not his isolated opinion. This has been a reality during the last 7 years. The main task of any business is a profit generation, which can be obtained in two ways. People can increase marginality and raise prices — that is what many businesspersons were engaged in before the crisis — or optimize their costs. There is no third way. Everything else is a symbiosis of the correlation of price and the reduction of the cost.
The market has received a certain quantitative content and shifted or is shifting toward qualitative changes now. Leus says that companies must be flexible and profitable in to stay relevant to the market. As the premium segment is gradually decreasing and the price, whether people like it or not, still plays one of the determinative factors, then the issue of optimization and increasing efficiency is coming to the fore. Dmitry says that this can be seen clearly if we compare productivity measures in different countries:
||GDP per 1 man-hour, $
||Development of productivity (in 20 years)
Looking at the situation in Russia directly, numerous losses associated with the use of obsolete technologies, ineffective use of the time, a large proportion of manual labor and a low level of automation can be seen. Although developments have recently been made in this process, this is good news. Leus understands a great prospect for the development in this direction, including investment attractiveness.
He considers it right to mention that the investor looks at the situation from a future perspective. He lays the groundwork for a long game. This is an investment as it is. But sometimes the situation develops in such way that the wish to get a quick profit is in the first flight. Consider specialists, who work 3-to-6-months periods and want to receive excessive profits — Leus call them speculators, as it was customary in the Soviet Union. This is not good or bad, they just choose such strategy. That is the whole story.
Leus is asked whether this means that he is for replacing people with robots, and what those people whose place the car will take should do.
He says that if such a change increases the efficiency of the business and makes the product more attractive and accessible to the client, then yes. The processes of robotization and automation were launched long ago, whether people wanted it or not. There are concrete measurable results that count in favor of such changes. And if someone else still believes that in the foreseeable future he or she can not be replaced by a robot, then this person lives in a certain illusion.
Robots can replace nearly 90% of professions during next 30 years. Even today, robots make complex operations without the involvement of a surgeon and make a complex diagnosis within 1 hour; give quick legal advice, which is 2 times more efficient; teach our children (selecting the right study program based on personal characteristics). There are many such examples. This is inevitable and people must consider it in their future.
Speaking about the problem what those people who will be replaced by robots should do, Leus recommends thinking about it right now and moving toward changing skills and investing in himself or herself, in new knowledge and new technologies.
Turning to the issue of optimization, Leus was asked what principles and what algorithm he follows while making changes.
Leus states that the main principle is not to lose the business. It is possible to watch a little financial downfall while implementing the changes, and this should not be feared; it's normal and so it can be. If you do not know this, it may seem that the changes that have been initiated make things only worse, and the already falling company starts its downfall a little faster.
The second principle that Leus underlines is the message of the purpose and the core of changes to each employee and the reasoning why changes are needed and why they are needed now. At the same time, it is necessary to be ready that this news will be not pleasant to anyone and the best employees may leave the company. But if the head holds control over the situation and maintains a normal corporate culture of feedback, then this may not happen. Moreover, if the person starts changes without discussing them with ‘skeleton,’ the consequences can be even worse.
The third basic principle that Leus states is changes above the staff. If it has been decided to change something, it is necessary to be firm in personal intentions and rely only on those who share values and who is on the way to one big goal. There will be losses, and this just should be accepted. As for the algorithm, Leus says that there is not a one-size-fits-all formula in this case. Each company, each situation is so individual that there is almost no repetition. Dmitry also says that if it has happened that a person has chosen the way of changes and movements toward his or her goal, then it is necessary to be firm and at the same time flexible in his or her way. The way of changes!