How to Be an Oligarch

Oligarchs effortlessly blend wealth and power, but the question lingers: how did these enigmatic figures come to dominate our world? Upon closer inspection, their secret recipe can be distilled into four key strategies.

This piece is an abridged version of the introduction to the book “The Oligarchs’ Grip” by David Lingelbach and Valentina Rodríguez Guerra.

In September 1995, David was in a bit of a pickle. One that only the notorious oligarch Vladimir Putin could fix.

Putin had sponsored the venture capital fund David was running in Saint Petersburg, Russia. Putin was the first deputy mayor there. David and his family were returning to Russia from vacation in Turkey. They discovered that David’s sister had obtained the wrong visa. David phoned his office, asking them to contact Putin’s office to see what could be done. David and his family arrived at the Saint Petersburg airport and were escorted into a sparsely furnished room. Two desks. At one sat a female immigration official. At the other: Putin.

Putin was there, but he wasn’t there. He was gray, featureless, and yet very much in charge. Thinning hair. Nondescript suit. Friendly but formal. A bit shorter than David. Both were buff . . .  not. Whatever muscle tone he had in the past, Putin now had a bureaucrat’s body. They communicated in their usual mixture of Russian, English, and German.

Papers were signed, stamped, and passed back and forth between the official and Putin. Back and forth. In silence. Having never met David’s sister before, Putin vouched for her. She got her visa. They thanked Putin and left.

Why the help from this already powerful person who had many other claims on his time? Putin owed David and his family nothing. His gesture did him no obvious good. What was he thinking? As one of the world’s most powerful people, and with wealth we conservatively estimate at $6 billion, Putin is an oligarch.

Different Encounters with Oligarchy

We two co-authors first met in 2021 in Bogotá, Colombia. The city then was in the midst of the pandemic and the paro nacional. The two of us saw clearly that we had both experienced oligarchs, but in very different ways. David had been their banker and long-time student. But his stories about Putin over coffees at Juan Valdez brought up strong emotions for Valentina about oligarchs. She has been their victim and object. She grew up in a society dominated by oligarchs of one sort or another. Her country has been ruled by them – directly or indirectly – since Colombia’s independence from Spain in 1810.

That society had been traumatized by violence generated in part by oligarchic rule. That violence now lurked below the surface but was quick to re-emerge. That violence had killed 450,000 Colombians since 1985 and displaced over seven million, creating one of the largest internally displaced populations in the world.

Oligarchs have shaped and would continue to shape the opportunities available to Valentina and millions of other young Colombians. She is reminded of this every day, when she walks by a fancy newish engineering building on her campus at Universidad Nacional de Colombia. That building was funded by the university’s wealthiest alumnus and a leading Colombian oligarch, Luis Carlos Sarmiento. He is just one of the latest in a long line of oligarchs stretching back to Simón Bolívar, Colombia’s founder.

What Is an Oligarch?

We define an oligarch as someone who secures and reproduces wealth or power, then transforms one into the other. They fuse wealth and power. Oligarchs are those relatively rare humans who can do three complex activities well: generate wealth, gain power, and make the transition between the two. The oligarchs on which we focus typically have a net worth of at least $20 million. Their power is sufficient to be noticed by those who research the powerful.

“Unless you are a hermit living off the grid, you are very likely to have had your life touched by an oligarch.”

Oligarchs dominate our world. What is the evidence for this claim? In 2023 approximately 10% of the world’s population is governed by an oligarch serving as head of state or government, generating approximately 11.9% of global GDP (PPP) in 2021. These percentages are comparable to those of people across the world who have disabilities, suffer from chronic hunger, live in extreme poverty, or experience mental health issues. Beyond those who are directly ruled by oligarchs are the billions of others who have been influenced by them, or have had their thoughts and actions shaped subtly by oligarchs’ work. Unless you are a hermit living off the grid, you are very likely to have had your life touched by an oligarch. And not just touched. Shaped in ways you may only dimly perceive. Shaped in ways that both open and limit your opportunity set. Oligarchs have come to dominate the way we live and work.

How Do Oligarchs Dominate Our World?

First, oligarchs are entrepreneurial. They employ elements of effectuation to develop opportunities to acquire wealth and power, and then make the transition between the two. In this way, they utilize mechanisms of entrepreneurial action. Second, oligarchs partner with other stakeholders – government officials, other oligarchs, and ordinary businesspeople – using a “friends with benefits” approach of repeated coupling and decoupling. Third, like tycoons, oligarchs employ strategic timing, waiting for their main chance to secure and reproduce wealth and power, and then to transform one into the other. Fourth, as they develop opportunities, partnerships, and strategic timing, oligarchs emphasize the virtues of secrecy and stealthiness to fly under the radar.

“When the inevitable and often negative surprise hits, oligarchs lean into that crisis, leveraging the new opportunities that arise.”

Oligarchs are entrepreneurial and employ a modified form of effectuation, a mechanism of entrepreneurial action. Effectuation was first observed among expert entrepreneurs, those who had launched more than one startup successfully. The high levels of uncertainty that entrepreneurs face is strikingly similar to that faced by oligarchs as they navigate to and then between wealth and power. To control that uncertainty, oligarchs begin their use of effectuation by determining their means. They assess their personal characteristics, knowledge bases, and networks. Next, oligarchs evaluate what they can afford to lose, ensuring that this amount of money, time, or missed opportunity isn’t exceeded. Finally, when the inevitable and often negative surprise hits, oligarchs lean into that crisis, leveraging the new opportunities that arise.

We will not talk much about Donald Trump, one of the more famous oligarchs of recent years. But he is a good example of how oligarchs use effectuation. Trump shaped his 2016 presidential campaign and presidency around his unusual means: his deal-making and self-promotion skills, propensity for risk-taking, and networks somewhat disconnected from the American political establishment. Trump’s limited commitment of his own financial resources to his campaign is an example of using effectuation’s affordable loss principle. Trump’s response throughout his checkered business career to repeated setbacks, including bankruptcies, is an example of leaning into surprise. Trump effectuated. Oligarchs effectuate.

“Oligarchs repeatedly couple and uncouple with their partners, acting more like friends with benefits than individuals in a committed relationship.”

The oligarchs’ second strategy – never getting too close to those partners with whom they are co-creating – modifies their use of effectuation. Oligarchs repeatedly couple and uncouple with their partners, acting more like friends with benefits than individuals in a committed relationship. The temporary and often short-term nature of these relationships ensures that effective oligarchs are not captured by their partners. It also limits the long-term nature of their oligarchic enterprise. Oligarchs are not loners, choosing instead to form intensive but short-term partnerships with others with whom they co-create businesses, political campaigns, and administrations. Trump’s relationship with Steve Bannon during the 2016 presidential campaign comes to mind here, along with the host of former allies he has left in his wake.

The oligarchs’ third strategy – waiting for the main chance to pounce on the big deal – reflects the winner-take-all nature of contemporary economic and political life. Waiting for the right pitch (to use an American baseball term) is more important for an oligarch than swinging at whatever comes close. This strategy requires judgment and a particular type of patience.

Oligarchs think much the same way. They accumulate their wealth or power in one big deal, then make the transition between wealth and power in a second big deal. Donald Trump made his big move from wealth to power in 2016, when his candidacy turned into election as America’s 45th president and one of the world’s most powerful people. In Vladimir Putin’s case, his first big deal – the one that brought him to power – was his appointment in 1999 as Boris Yeltsin’s last prime minister and heir apparent.

“While waiting for the main chance, effective oligarchs hide themselves in plain sight.”

The oligarchs’ fourth strategy – flying under the radar to avoid attention – responds to the inherently vulnerable nature of their position. This vulnerability can be difficult for non-oligarchs to understand. Wealth does not guarantee power. Power does not ensure wealth. And both are fragile. Democracies in particular have mixed feelings about oligarchs and their ilk. While waiting for the main chance, therefore, effective oligarchs hide themselves in plain sight. In their early stages they don’t seek publicity or celebrity. They don’t like to give interviews or otherwise reveal to the public their intentions. They are afraid – and rightly so – that such a revelation will be seized upon by other oligarchs, closing the window that might take them to the summit where wealth and power meet.

Oligarchs are rarely prominent as they accumulate wealth or power. Mikhail Fridman – a master of this craft – accumulated wealth later than many like him in Russia and still remains relatively unknown. This has been true even with the sanctions imposed on him due to the Ukraine war. Other Russian oligarchs – Mikhail Khodorkovsky, Boris Berezovsky, and Vladimir Gusinsky, to name three – flew too close to the sun and paid the price. The first spent 10 years in a Russian prison for being too prominent. The second self-exiled to the United Kingdom and died in 2013 under questionable circumstances. The third self-exiled to Israel, where he lives with a fraction of his once great fortune and power.

[Title image by ARC/iStock/Getty Images Plus]

David Lingelbach

David Lingelbach is professor of entrepreneurship at the Merrick School of Business, The University of Baltimore. He was educated at MIT, London School of Economics and Political Science, and University of Exeter, from which he received a Ph.D. Prior to becoming an academic, David served in senior roles in finance and international development, including as CEO of Bank of America’s businesses in the former Soviet Union.

Valentina Rodríguez Guerra

Valentina Rodríguez Guerra is an author, oligarch researcher, and graduate student in business administration, Facultad de Ciencias Económicas, Universidad Nacional de Colombia. She has received awards for her work from NASA and the Colombian Ministry of Education.

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