Good morning, and thanks everybody for being here. George and I are trying to debate which one is ego and which one is greed. We'll let you know as the session goes on.
I want to take you back to the fall of 1972, when Bill Witzel, who would become my partner, mentor and still close friend, and I were going through the decision-making involved in starting a business; including decisions like what we would name the company. We tried putting our names together, but one of the choices, MorWit, didn't fly too well.
Anyway, one night in Bill's one-room office in Silver Spring, I asked him a question, although I would not fully grasp the significance of his answer for years to come. I asked, Bill, "What do we have to worry about? Cut through everything else, and what are our biggest concerns?"
He looked at me and said, "If we fail, we won't have anything to worry about. If we succeed, the two things you are going to have to learn to deal with are ego and greed. Those two things are what bring down companies and change people's lives."
We were successful, and the wisdom of his response was prophetic. We had to deal with those traits many times as entrepreneurs, and I have personally seen firms disrupted and lives damaged because of ego and greed. Too many times, they have robbed people of the chance to truly enjoy what they work for and achieve.
The lessons of ego and greed have relevance to all aspects of life, certainly the business world. I can take you through a litany of firms which have died because of those two characteristics. Many of you will fail, if you don't deal with them. In our space, it's so easy to get caught up in being smart, in being told how good we are. We get lulled into thinking we are as good as people say. That's where the danger lies. Let me give you a few examples, starting with negotiations.
Relationships And One-Night Stands
In negotiating, it's absolutely vital that you pierce the motivation behind a person's negotiation. It's always about one of these two thingsego or greedto a greater or lesser degree. Frankly, that's especially true where most of you are today, because you are the business; it's your baby and you love it. However, you must separate yourself enough from it so that you can keep your ego or greed from allowing a deal to go sour. It's a very, very difficult challenge.
The greed part often keeps us from recognizing what the deal's about. You must be able to walk into a negotiation knowing what you want from it. What are your criteria for success? Greed leads us to keep looking over at the other guy to see what he's getting. The more we do that, the more we lose sight of achieving our own objectives. I have seen deals go south, even when one party is getting everything he thinks he wants, because he is ticked off that the other guy is getting more. That's irrelevant.
If you allow yourself to fall into this type of thinking, you are going to lose good deals. You will sit there saying, "This is unfair. They are getting all this. They're using me." That's not the issue. Are you getting what you need out of it? That should be your sole criteria in the negotiation process.
The ego part can cause you to lose for a different reason. Don't let your ego force you to dominate so completely that you crush the deal. We once negotiated a deal so well, one that we were so proud of, that it could never have worked. We didn't know that. The other company got a new president who took one look at it and said, "No way!" There were some other expletives in there, but you get the point. He realized that they couldn't make any money on the deal.
When you are negotiating, don't let ego and greed force you to get everything on the table so that the other party can't succeed. If they can't succeed, you don't win. If they don't succeed, you don't get any of those derived revenue streams, royalty payments or technology you spent so much time negotiating about. It was just an intellectual exercise, and you don't have time for that, so don't get caught up in the need to dominate and crush. You crush competition; you don't crush partners. "Win/win" is a real phrase. Think through how both of you are going to succeed. Put yourself in their shoes and understand how they going to make money. Are they going to meet their objectives? Remember, it's not about the piece of paper, it's about the relationship you are building.
In the first deal we ever did, a royalty agreement for selling a technology, our attorney looked at me and asked, "Is this a one-night stand or a relationship?"
I asked him what he meant and he replied, "It will make all the difference in how we write this agreement. If this is a one-time pop, we are going to load this sucker with everything we can. We'll take them to the wall. If you're building a relationship, however, we'll start at a more moderated set of terms. We'll come in realistically even in the first pass."
Do you think this way? Are you somebody's one-night stand or their potential relationship? If you're the former, they are going to try to take you to the cleaners. Their greed will be showing.
Take Off The Blinders
Leaders and entrepreneurs have big egos by definition. The great ones, the ones who become really effective, learn how to control their egos. It doesn't happen magically; it requires personal discipline and conscious attentionand it's your responsibility to do it.
It's essential that you know what drives you. Why are you doing this? If it's for the money, that's fine, just know it. Forget all the stuff like, "I'm doing this for net worth," or "I'm doing it to dominate the marketplace." Get behind that. Why are you really doing it? What drives you? Is it recognition? Is it the joy of getting something done? Is it something you are trying to prove to your dad? Get inside yourself and understand exactly why you are doing it, because that will help you in all of your negotiations.
Investors always ask people about their mission statements in their business plans. Well, where is your "life mission statement?" Where is your "life" plan? If you don't have that defined, you can't figure out your business. Moreover, it helps you put ego and greed into context. If you know what you are about as a human being, as part of a family, where you are going in life, then you can figure out where your business fits. You can begin to manage ego and greed in that context.
There are positives to ego. Egos based on confidence and assertiveness are healthy. They can still have fun. Egos that evolve arrogance are dangers to your success and your life. The unbridled ego gets in the way of things. It affects judgment. It affects decision-making. It affects the ability to listen, to have an open mind and to think outside the box. Slowly, you begin to think that you actually know the right answers, even though you typically don't, because you are not listening. If that happens, you are as good as dead. You just haven't realized it yet.
I don't know Bill Gates personally, but clearly he is cocky, he is aggressive, assertive and confident. But he is not arrogant, not in the worst sense of that word. That's because he listens all the time. He is almost paranoid and, as Andy Grove has popularized, "Only the paranoid survive." That's why no one is going to sneak up behind that man's back. ORACLE is another example. Ellison is brilliant. They are cocky, but they are also paranoid and they listen. They listen and react and they are aggressive about it.
That's what you face in the competitive world. If you allow your ego to lull you into believing that you are some kind of prophet or genius or visionary, someone is going to eat your lunch. Very few people make it to the top. Of those who don't, arrogance often has a place in the process.
Take, for example, Cullinet back in the late 1970s and 1980s. That company was a rocket ship. Even by any standard today, they had a wonderful price-to-earnings ratio. They were recognizing 50% growth quater over quarter for years, like clockwork. Their database management system was the darling of the industry. During their heyday, IBM introduced a new line called DB2, which is still around even though Cullinet isn't. Cullinet refused to give any credence to the idea that DB2 could affect their market. It eventually killed Cullinet and the company sold for a fraction of their highest market value. They were so darned sure of themselves that they refused to see a legitimate competitor coming right at them, even one as big as IBM. Later, IBM caught the same sickness themselves. They were so sure that they had the answer to distributed computing that they could not see the train barreling down on them.
In every partnership meeting, test for arrogance.
Three Things: Listen, Listen, Listen
As you grow as an entrepreneur, there are certain traits that will serve you well which I urge you to nurture in yourselves and your organizations.The Ability To Listen
I can't begin to express strongly enough how important it is to listen, hear and absorb what people are saying. As an example, let me tell you a personal story from life, rather than from business. Long ago, I had a relationship with a woman who is still a close friend of our family. When we were breaking up, we had a discussion at the dining room table. We both had written down our notes as to why things weren't workingtwo programmers trying to resolve a relationship. One thing she said was, "You never listen to me."
At the time, I prided myself on being a great listener. I was doing a lot of introspection I was reading a book on Type A behavior. One of the characteristics of Type As is that they are so intent upon getting their point across, they interrupt others as they speak and don't let people finish a sentance. Two things are wrong with that, of course. One is that it's rude, and the other is that they are really not listening.
What's happening at that dining room table while I have all of this in the back of my head? You guessed it. She is telling me that I don't listen and I'm interrupting her. At that moment, the lightning bolt hit and I said to myself, "I'm doing this!" It was a life-changing moment for me. To this day you will see me in a meeting biting my lip, working on not responding when someone else is talking. How many of you have that same tendency? It affects you, it limits you, because you are not listening.The Willingness To Be Coached
People who have big, uncontrolled egos can't be coached. That's a tremendous liability. They can't learn from other people well. We all need people around us from whom we can learn continually. We must be willing and open to learn from them, which means we have to take ourselves down a notch, to know when we don't know something.
I once went to meet with the CEO of a company in which we were contemplating investing. I asked him whether he was putting his board together and he said, "I'm going to do it, but I don't need a board. I know exactly what I'm going to do and I know my industry."that was his first problem, 'my industry.' "It's going to take me too much time to bring them up to speed," he said. "It's a waste of time for me."
I knew then and there that no matter how good the company was, we would never put money in it. He was not going to listen to his board, but that's why you put a board togetherto be your governor, your learning base.Openness To Other People's Ideas
It's difficult to deal with other people when you have a large ego. Just before Tim Meyers, the head of our family office and CFO, came on board, our final meeting was with his wife, my wife, our legal counsel and, of course, Tim and I. I asked him how well he accepted criticism, and he replied with a very good answer. Then he asked, "How well do you accept criticism?" When I answered, the whole room broke up laughing. I said, "I don't. I just think I'm right."
When I first present an idea, and the other person doesn't get it, I think, "Boy, how come I didn't convey the brilliance of my thinking?" When someone else comes in with an idea, I'll try and talk them out of it. But then I'll go through this cycle over 24 hours or 48 hours, and, finally, it will strike me that perhaps there is a shred of truth there. It will sink in some more and I'll reverse the thought process of trying to think through it. Then I'll begin to explore, "Are they right?" When they are, I come back, sometimes two or three days later, tail dragging, saying, "You're right."
You've got to be open, even if you've got a lag time like I do, but arrogance blocks that.
Taming Ego And Greed
Arrogance gets transmitted like a disease through an organization. How does it get manifested? I once knew a CEO who had a massive office, with Oriental rugs, vases, art on the wall. I asked him one day, why all the trappings? He said, "My people"there's that 'my' problem, again, like I'm talking to Napoleon"my people want to see their president in this setting." I was there on the day of his birthday when they presented him a very nice gift from "his" people. He thought it came from the management team. What he didn't know was that they couldn't collect enough money for the gift and had to take it out of petty cash.
That's arrogance. It leads you to believe you are invincible. Did you ever wonder why CEOs do so many stupid social things, like getting caught in compromising positions in cars, or on the floor of their offices or in embezzlement cases? They begin to think that they are so good that nobody can take them down. That feeling of invincibility sets in"Who is going to challenge me?"
They let it all become larger than life, like the software executive who announced his new technology by comparing it to the fall of the Berlin Wall. It was a Times Square-level announcementbig, big fanfare and thousands of people the same month in which the Wall came down. This fellow, in front of an audience of national and international journalists, said that the release of his technology was equal in significance to the fall of the Berlin Wall. That's what happened in his mind.
We can all lose sight of reality when we become immersed in what we are doing, and that's part of arrogance. So how can you cope with it? Here are some suggestions that I have used. Hopefully, I have used them well.
It starts with knowing your value set, what you are about. You should be able to write this down. Once you've done that, hire people who match those values. Everybody in the group should have comparable valuesnot the same attitude or ideas or backgroundbut one thing a team of people must have is common values. If you bring in people who share your value set, they will help you stay grounded and sane.
Listen to them, but don't believe your marketing department or your public relations department or your headlines. They will cause a puffery in your imagination. You will begin to actually believe that you do the things you say you do you in your marketing materials. You don't. Whenever there is a big spread in the newspaper, clip it out, save it for your grandchildren, then get on with business.
If you are good in your field, you are, by definition, in the world's upper percentile. That's a given. You are living your field, you know it cold, so, chances are you are better intellectually about that subject than most people you are talking to. You are not better than they are generally, just in that subject. Unfortunately, we sometimes allow that to make us think that we're better in general. That's the trap, so you must have people around you who will pop your bubble.
As our company grew, one of the problems we faced was that we got a lot of good press in our sub-market and, candidly, it affected us. I remember, we were doing these four-day seminarsback-to-back, eight-hour seminars. When we did two seminars, they were dynamite. In the third one, I was getting somewhat acidic. By the fourth, I was like Atilla the Hun. Afterwards, a member of our team came up to me and said, "Let me tell you something, you were brutal today, you're screwing up."
If you don't have somebody in your organization with the guts to tell you when you misstep, you are going to fail. You have to have people with whom the communication is open enough that they feel comfortable telling you when you have screwed up. You can still get angrythat's all part of life and it's a legitimate emotionbut the question is, can you both get over those things and still have a relationship? Some people go through their entire lives without having the benefit of people suggesting ways they could improve. And you know what? The higher you go, the less often they tell you.
Place enormous valuedisproportionate valueon external criticism. When you hear something internally, give it one level of credence. If you hear it externally, give it a hundred times the importance of what you hear internally. No matter how small the criticism, you want to know about it and you want to know why. You may dismiss it, but you want to know about it, because it might be telling you something about your group, your company or yourself. Jump on every incident. I believe that customer complaints should end up at the CEO level in some fashion. They can be summarized, but you need to know they are taking place, because they're telling you how you're dealing with your marketplace. Jump on it, but don't be defensive. Too often, our first response to criticism is to defend against it. That's human nature and it's our competitive nature, but it's also our ego coming out. Listen to the criticism first. Find out who said it, put it in context so that you can give it the proper value, then find out why and what prompted it. When someone takes the time to write a compliment, that's good, but when they take the time to complain, that's really serious. Life is so busy today. When somebody complains, it means the problem is probably two or three times worse than what they are expressing. There was probably a lot of frustration building up in that person before they ever wrote that email or put that letter in the mail or made that phone call. When you get that criticism, make sure your ego is far enough away that you want to learn from it. There is nothing wrong with a CEO going directly to a client or a reporter and saying, "Look, I know we screwed up, but tell me why. Help me learn so we can get better."
By the way, the best way to handle a lost account is to go to the person and say, " I'm not here to win the account back. I want you to teach me what we did wrong. Why did we fail? Help me learn what we didn't do this time, so that we have a chance of winning the business next time." That person will never forget your call, because you are putting your ego down, going to someone who just rejected you in order to learn from them.
Put yourself in situations where you are not the Big Kahunaboards you sit on, associations you belong to, places where you are not the king fish. Ironically, that's one nice thing about being in Washington, DC; it keeps your ego in check. It's hard to get a big ego in this city because it pounds egos into the ground. When we did our merger with a company in Pittsburgh, the Pittsburgh TV cams were all over the place. It was a big event in that city. Here, we got three-quarters of a page in the Washington Post business section. That's actually big coverage. The same day, Jack Kent Cooke sold nine radio stations, making the third page of the business section with a two-line story. That's Washington, where even the President of the United States isn't a king fish all the time.
When all is said and done, what's the single best way to keep your ego in check? Have several children and a dog. To leave the office, where you say something and 78 people jump, where one comment with the proper inflection can create immediate chaos, then to go home where the kids couldn't care less about your schedule, where the dog takes priority and you are now sixth in the pecking orderthat's effective ego containment.