At 50, I don’t like to think of myself as a dinosaur. Yet, here are the facts:
- 1. When I went to college, I used a typewriter to produce my papers;
- 2. At my first job, it was a huge deal when we got one of the first fax machines;
- 3. In my professional life, I’ve lived through at least three major bubble-induced market crashes (Black Monday, 1987; The dot-com bubble, 2000; The U.S. Financial Crisis, 2008);
- 4. The Clash’s “London Calling,” Madonna’s “Like a Virgin,” and Bruce Springsteen’s “Born to Run” marked my early professional career;
- 5. I remember where I was when Space Shuttle Columbia took off on its ill-fated launch and when the Berlin Wall came down;
- 6. When I was in my 20s, mobile music meant walking around with a Sony Walkman, a huge piece of bright yellow plastic that played cassette tapes;
- 7. And, oh yeah, when I went to work the Internet hadn’t yet been discovered. Email wouldn't be widely available for another decade.
Why do I enjoy working with young CEOs who are often a couple decades my junior?
- 2. They care about making money but also about their people and changing the world for the better;
- 3. And they aren’t jaded, like me.
- 4. What I bring to the table isn’t genius. I have been told in more than one heated negotiations that I’m dumb as a stone, which isn’t far from the truth.
- 5. I can be grumpy (like any old man has the right to be). At times, my advice is harsh. But what I really want is to see young CEOs succeed.
Be bold, not stupid.
But here’s the rub: you have to be right. You not only need to figure out some idea or business or approach that’s unpopular or undiscovered, you also have to do the work to prove that your investment thesis is actually correct. Too often, I run across young CEOs who have grand visions of how they’re going to change the world but haven’t done the unglamorous work of figuring out if their visions are tied to reality.
Denial is the root of all evil. Generally, great leaders are optimistic. They believe in their missions and believe in their teams’ abilities to achieve their missions.
Great leaders also never overestimate how well things are actually going. To do so means certain death. They demand the most of their people because they know nothing less will get the job done. And they aren’t satisfied until their missions are achieved. They spend a lot of time making absolutely sure that they have accurate and complete information about how things are going. And failure in any part of the plan is not allowed to persist. People and/or strategies are swiftly changed until things are back on track.
Hire people smarter than you. Great leaders are uniquely humble. Decisive, yes, but they are not driven by ego. They view their role as being of service to their employees and shareholders. In other words, they do not work to prove their own greatness.
What this means is that they hire the very best people available, often people who are more talented than themselves. Bad CEOs are afraid to hire great people because they are threatened by them. Great CEOs, on the other hand, are transparent about their own limitations and embrace building great teams who are able to conquer the world.
A great business is hugely valuable, no matter the market conditions. The capital markets are highly volatile. So are the fads by which companies are valued. None of that matters when building a successful enterprise. What matters is creating a company that’s growing in revenue and profit. Free cash flow speaks for itself. It’s agnostic as to market conditions, bubbles, and other forms of temporary insanity. Great CEOs create intrinsic long-term value and ignore the short-term vagaries of how their companies might be perceived.
Don’t get sentimental. Despite the prior point, there are those singular moments in time when a buyer (or whole marketplace) gets drunk and is willing to pay many times more than the intrinsic value of your company. Remember—the best way to sell a company is to make it clear that it’s not for sale. However, a great CEO always has a price in mind at which they are a seller, often one that has an expectation of future value so the buyer has to de-risk all growth plans to hit the bid. The key is to sell. Don’t blink. Don’t get sentimental. Don’t get caught up in fantasies of grandeur. Know when you have an irrational bid in hand and sell.
You’ll note that all of these lessons are equally valid both before and after each of the most recent technological revolutions. Markets and products may have changed tremendously, but the characteristics of a great CEO have not. Seems to me we too often forget that. And my job is to remind my younger colleagues of that fact.
As it turns out, being a dinosaur isn’t such a bad thing after all.