A rule that forces growth

Many families with several generations behind them are focused above all on preservation. Allen Law describes the older model plainly. The family's wealth is placed in one vehicle, members receive voting rights, and the assets are invested conservatively so that dividends can be shared across the generations. Everyone stays well off, he says, but no one has a meaningful sum with which to make a big move in the market. Michael Macfarlane suggests that model has almost gone. Law says many families still end up there.

His own family took a different course, built on a single rule. Each family member should lead one business unit. Law's grandfather was the first generation. His father's generation numbered six. His own generation is far larger, and he can no longer count the next. If the rule is to hold, the family needs many more business units, so it has to keep venturing out from what he calls the mothership.

The effect is to turn succession into a growth engine. Each new adult in the family is a reason to start something new, which means the family is structurally committed to reinvention. Law says the philosophy keeps the family's feet on the ground while preserving wealth.

From garments to longevity

The family's history follows that pattern. Law's grandfather started in garment manufacturing. His father's generation branched into real estate. Law himself became what he calls an accidental hotelier. At 23 he was studying mathematics at London University when SARS struck Hong Kong and a hotel there was foreclosed by its bank. The family bought it as cheap real estate, and his father told him they had no intention of learning to run a hotel. It was down to the next generation.

Law took the next flight out and worked every job in the hotel to learn the business. He grew it from a single property into a regional group with hotels in China, Japan, Singapore and the Maldives. Once he had a loyal team and no longer needed to give the hotels his full attention, he returned to the family philosophy and asked what new business he would start. Wellness and fitness, already a small part of the hotel offer, became the answer, and he co-founded Move Repeat, which now has three fitness brands. Longevity followed.

Macfarlane contrasts this with a tendency he sees in the West to preserve wealth by not changing, which he considers wrong for the modern world. Law's account suggests that each generation adding a new line of business can sit alongside preservation, provided the family rewards building as well as holding.

But how do we grow wealth at the same time creating impact in the society? I think if you can find this three way approach to your investment, that's the best.

— Allen Law, Wealth Office

Two buckets of capital

Law is clear that his family has not abandoned conventional wealth management. A portion of its wealth sits in a traditional set-up built on asset allocation and diversification. Separately, it sets aside a pool of funds for entrepreneurial investments, including ventures that are unproven or at the very start. Because one portion is on the safer side, he says, the other can take higher risk, and the whole works as a balanced portfolio.

He describes the discipline as calculated risk. An entrepreneur expects risk in everything, so the question is whether a given risk is worth taking and what the potential upside is. Some opportunities may not be the best pure investments, he adds, but may help many people and tick other boxes. His venture fund for healthspan sits in its own bucket again.

Macfarlane says he sees the same model among his clients from mainland China, Hong Kong, Singapore, Taiwan and Korea, with a little conventional allocation and most of the risk placed on global expansion and new sectors. Law links this to a wider sentiment among Asian families he speaks with. Having built wealth over recent decades, many are asking what better use they can make of it beyond the numbers, with healthcare and education, in his view, among the areas closest to them.

Family as accelerant and constraint

Law does not romanticise family capital. Asked whether family is a good structure for business, he describes pros and cons. A family's network and connections open doors, which makes the start of a venture much easier. A sense of obligation may motivate an individual at first. Over the longer run, though, much depends on whether the family agrees on the level of risk and reward being pursued. If opinions diverge, family can become a hindrance, because no venture is certain to succeed until it has been tried.

He sets that against the experience of founders backed by venture or institutional money. They carry no family baggage, but external investors push them to grow fast and exit within a set number of years to protect returns, sometimes beyond what is good for the organisation. Neither model is clearly superior in his telling, and the task is to balance them.

His advice to younger founders draws on the same outlook. Funding, he says, is no longer the hardest part. What matters is the right idea, a clear execution plan, a good network and some luck. Founders who focus on solving a large problem for end users will face roadblocks, he argues, and the question is how to remove them. Most successful entrepreneurs, he observes, have fallen and made many mistakes before getting up stronger.