As told in the Book of Genesis, the Egyptian Pharaoh had several dreams he was unable to interpret. After exhausting his available advisors, Pharaoh learned of a man who could interpret dreams named Joseph. Pharaoh summoned Joseph and asked for help to solve his quandary. Pharaoh described dreams of seven fat cows swallowed by seven skinny cows, followed by seven fat sheaves of wheat swallowed by seven skinny sheaves of wheat. After listening to Pharaoh, Joseph concluded that the Pharaoh’s dreams meant that there would be seven years of great abundance in Egypt followed by seven years of severe famine. Joseph also offered Pharaoh a plan to deal with the upcoming events by collecting excess crops in storehouses while food was abundant so there would be reserves to sustain the people during the years of famine.
Pharaoh rewarded Joseph’s creativity and vision by appointing him viceroy, giving him wide discretion to implement his plan for managing the years of plenty and famine. As part of Joseph’s coronation, Pharaoh gave Joseph an Egyptian name, “TZofenat Paneach,” (Genesis 41:45) which translates into “the revealer of hidden things.”
When the years of plenty arrived, Joseph carried out his economic plan and the storehouses were filled to capacity in time for the famine. When the famine arrived, it was so severe that the Egyptians exhausted all their savings purchasing food from Pharaoh’s storehouses. Desperate for sustenance, the Egyptian people offered to become slaves to Pharaoh in exchange for food. Joseph suggested an alternative plan. “Here is seed for you, sow the land. And it will be at the ingatherings that you will give a fifth to Pharaoh and the four parts shall be yours.” (Genesis 47:23-24). The fifth – or 20% – represents the first recorded carried interest in history.