I have a unique role at Business Insider, one that’s essentially two jobs.
Half the time, I’m working on our podcast “This Is Success,” where I interview people at the top of their field (or on their way there) and draw lessons from their greatest successes and failures.
I spend the rest of my days reporting on our Better Capitalism series, which explores why business leaders are increasingly concluding that the dogmatic approach to shareholder primacy that reigned for decades needs to be replaced.
As 2018 comes to a close, I’ve taken time to reflect on my work this year and collected the key takeaways that have resonated the most with me.
Barry Diller, the chairman of IAC, has an unusual hiring philosophy: It’s better to promote a young executive into a leadership position than it is to hire a veteran from the outside.
That’s how Anjali Sud ended up as the CEO of IAC’s video property, Vimeo. “I think that when you are pushed outside of your comfort zone, you get off that learning curve so much faster and you develop as a leader so much faster,” she told me.
I heard similar stories when I interviewed the CEO of Restaurant Brands International, Daniel Schwartz— who became the CEO of Burger King at 32 with limited experience — and the former General Electric Vice Chair Beth Comstock, who took the role of chief marketing officer at GE despite never having read even a basic marketing book.
All those guests recognized that taking chances like that can end up poorly, of course, but I was encouraged to pursue more opportunities I may initially feel reluctant about.
Alli Webb turned a hairstyling side project into Drybar, a thriving salon business with more than 100 locations across North America. She did this with the help of her designer husband, Cameron Webb, and her marketer brother, Michael Landau.
Because she saw her personal project evolve into a full-fledged business, she had to deal with letting go of responsibilities and gaining new ones. She said that becoming comfortable with stepping back from details and focusing on tasks she was better suited for at that point in her career was the most important advancement she had made in business.
“If I’m being totally honest, there’s times that I don’t agree with all the decisions that are made, and that is a really hard pill to swallow,” she told me. “But it’s like, we have to keep going, and we have to learn from our mistakes, and we have to look back and say, ‘You know what, we should have done this differently, but here we are.’ I think that’s all part of the learning and growing process.”
Ryan Serhant is not only the star of the popular show “Million Dollar Listing” but one of America’s most successful real-estate agents. He said his team closed more than $800 million worth of deals last year.
Serhant exudes confidence, and it’s been key to closing deals and landing big-time clients. But he told me he had most of his life as awkward and shy.
When he moved to New York after college, he went from being a struggling actor to a broke real-estate agent. One day he decided he was going to do what it took to be a successful agent.
“I was forced to develop a thicker skin and to come out of my shell and really try to create a personality that was OK with talking to strangers, which totally freaked me out when I first moved to New York,” he told me. “And I think that that kind of ability of mine to just go up to anybody on the street and ask them their name and how they’re doing, without feeling any shame whatsoever, has really helped me in my sales business.”
Jocko Willink and Leif Babin are former Navy SEAL commanders and the authors of the book “The Dichotomy of Leadership.” They and their team have worked with about 400 companies since launching their leadership consulting firm, Echelon Front, in 2010.
They told me there were two mistakes new leaders almost always make, and they apply to ambitious people who don’t necessarily have to be in management roles: They think they have to know everything from Day One, and they think their problems are unique.
Both are dangerous because they can not only lead to distracting anxiety but cause leaders to start blaming others when things don’t go as planned, rather than accepting their circumstances and seeking help from those who have already dealt with the challenges they’re facing.
I also had a chance to interview Willink for the podcast, and he shared an insight that seems very simple but helped me get through the New York City Marathon in November after getting a painful injury at Mile 7.
SEAL training is tough, Willink explained, but there’s nothing especially profound about it. If you’re there, you have the physical capability to finish it, but the reason most trainees don’t pass is that they quit when their pain or discomfort becomes something they decide they don’t want to tolerate.
“There’s the big lesson: Don’t quit,” he said.
Several years ago, Larry Morrow was a college dropout looking to make money off his party business. Now he has an event-planning company in New Orleans with clients like Drake and Mary J. Blige, as well as a restaurant that has been lauded in the press.
The 27-year-old entrepreneur told me that all of it was based on relationships. “I’ve built a reputation for producing great events and for just taking care of people,” he said.
He was able to eventually pull in a client like Diddy, for example, because of the way he treated his earliest clients, who might have been just on the fringes of celebrity.
There’s a certain online subculture of “influencers” who suggest that quitting your job and starting your own company is a move that can make anyone happier. But after having countless conversations with entrepreneurs, I see that it’s horrible advice and that the myth of a “born entrepreneur” is actually much closer to the truth.
Eddy Lu, the cofounder and CEO of the high-end sneaker retailer GOAT, proved this to me.
Lu and his cofounder, Daishin Sugano, left their jobs in finance to work on various app businesses before trying their hand at a cream-puff franchise. All of them flopped, and as the franchise business was sinking, Lu had “every kind of debt possible,” he said.
“I was in credit-card debt, in debt to my ex-girlfriend, my girlfriend at the time,” Lu said. “It was a lot of pain. I would wake up in the middle of the night with just pangs of guilt, and I was scared, yeah.”
But like so many other entrepreneurs I’ve spoken with, Lu would rather live in that space, in control of his own business, than work for someone else.
“To be honest, going back to a big corporate job just was probably worse than that,” he said.
You may know Bethenny Frankel from her role on the wild reality show “Real Housewives of New York City.” But what you may not know is that she has used it to help her build a $100 million Skinnygirl branding empire.
Frankel never set out to become a reality-show star, she told me, but she’s used it to her advantage as an entrepreneur. Her best advice: Don’t spend time on a detailed career path because there’s no way it’s going to work out, and if anything, it will prevent you from taking risks that will work to your benefit.
“I would say to be on the road, start the journey, and get dirty, and clean yourself off, and take another path,” she said. “Get locked out, and find a way to climb in another way. You’ve got to get on the road and figure out what it is that you want to do, what value you add, what clicks, what doesn’t.”
Adena Friedman started at Nasdaq as an intern in 1993, and aside from a brief stint away from the company, she’s spent almost her entire career with the stock exchange on her path to the top.
She told me she had developed a simple mantra she’s used as a guide: “Have I achieved everything that I could have achieved with the skills that I have? Have I brought my best self to the job every single day, and do I treat every day as Day One?”
Simple, but effective.
Stanley McChrystal, who retired as a four-star Army general in 2010, is best remembered for revolutionizing the way the US runs its special operations, leading to the assassination of Abu Musab al-Zarqawi, the leader of Al Qaeda in Iraq.
In his book “Leaders,” McChrystal said we must abandon the idolatry of leaders. Even when we don’t like our leaders, we tend to put them on a pedestal, he said, and that impedes progress.
“Leaders have a role, but the followers have a huge role, huge responsibility,” he told me. “Huge responsibility in doing their part, but also shaping the leader. You see the leader making a mistake and you don’t say something to them? You fail in your job. And then when you see them fail and you get smug and you go, ‘Yeah, I thought that she was never that good, he was never that good,’ shame on you.”
Peter Diamandis is a serial entrepreneur best known for his work in space exploration and for founding the X Prize Foundation.
He told me that when he witnessed the successful space flight in 2004 he had supported through X Prize, he felt he had helped fulfill more than a decade of work.
“And I remember that moment,” he said. “I have a mental image of what’s going on. The ship had just gone to space successfully, against all the odds, and landed. And I felt like I was at the top of a mountain I had just climbed for 11 years. I remember, when I looked around, all I saw were higher mountain peaks. So it’s this interesting realization that it is the journey, not the destination.”
It’s been a decade since the Great Recession made inequality in America a mainstream topic of discussion, and though the economy has been doing well this year, the gap between the 1% and the rest of the country is among the largest it’s ever been.
H.W. Brands, a historian at the University of Texas at Austin who wrote the book “American Colossus,” said it’s because we’re at a point that can reasonably be called a second Gilded Age, a reference to the period between Reconstruction following the Civil War and the beginning of the Progressive Era of the early 20th century.
Brands has a helpful metaphor for understanding the reasons for both of these ages. “Tension between capitalism and democracy has characterized American life for two centuries, with one and then the other claiming temporary ascendance,” he said.
He thinks that the only ways we can emerge from this state of vast inequality are the same as before: through a major war or a mass embrace of progressive policies that reduce the power of corporations and the elite.
“As long as people are free to make that case, and as long as people are free to vote for or against that, then I think democracy will make a comeback,” he said. “I think the pendulum swings, and it’s going to swing back.”
Saying that major companies will make decisions for the benefit of society might sound good, but none would ever make that decision if it would cost it a profit — they’re not charities, after all.
But Wendy Woods, a senior partner at Boston Consulting Group, said they don’t have to be. At this point in America, it makes sense for companies to embrace initiatives focused on environmental, social, and governance — or ESG — criteria.
“And I think total societal impact allows us to get to a different place where we are saying this is not just about business being a checkbook — this is about business finding ways to do ‘better capitalism’ and to do their job of creating shareholder value,” she told me.
A BCG in-depth report on the effects of ESG initiatives found that companies embracing them had grown their bottom lines more than those that hadn’t. To give an obvious example of why this makes sense, sustainability programs not only benefit the environment but reduce costs.
Jay Coen Gilbert, a cofounder of the AND1 basketball-apparel company, found a way for companies to verify and advertise their dedication to socially conscious programs through “B Corp” status, with the B standing for “benefit.”
Coen Gilbert’s company, B Lab, analyzes companies that apply for B Corp status and grants them the accreditation if they meet a certain threshold for the ways they benefit workers, customers, communities, the environment, and their shareholders. There are now 2,600 B Corps around the globe.
The North American subsidiary of Danone, one of the largest food companies in the world, is the largest certified B Corp. Danone CEO Emmanuel Faber told us that the certification had received tremendous employee support and won over skeptical investors, adding that Danone’s plan helped it renegotiate a €2 billion syndicated-banking loan with 12 major banks at a lower cost.
“So this is basically recognizing the fact the credit rating of Danone is better as a B Corp than not being a B Corp,” he said. It’s why he plans on having all of Danone get the certification by 2030.
Steve Case, the cofounder and former CEO of AOL, is the head of the “Rise of the Rest” movement, which includes an impressive network of the country’s most influential investors and businesspeople investing millions of dollars outside Silicon Valley, New York City, and Boston, three areas that receive 75% of venture capital.
“These are national-scale, maybe even global-scale companies,” Case said of companies he’s invested in across the country. “They just happen to be in Louisville, they happen to be in Chattanooga, so they shouldn’t just have regional ambitions — they can go the distance.”
I explored a related project, though one with a smaller scope and larger financial scale, when I went to Detroit to see the Quicken Loans founder Dan Gilbert’s $5.6 billion project that has transformed the city’s once vacant downtown.
Amazon may have dominated the news cycle for weeks with its selection of New York and northern Virginia for its dual second headquarters, but you should expect to hear an increasing number of stories about developing the American cities that were left for dead in the era of deindustrialization.
In the wake of the Great Depression, the British economist John Maynard Keynes published his revolutionary book “The General Theory of Employment, Interest, and Money.” He differentiated between short- and long-term value and noted that US markets were designed to encourage the former over the latter, at the expense of society.
Economists who pushed against Keynesian policies in the 1960s and ’70s — like Milton Friedman — believed that trying to incorporate societal good into a company’s mission was foolish and that the only way to truly benefit all stakeholders was to focus solely on making choices that created value for shareholders; the rest would fall into place.
Friedman’s ideas took hold in the ’80s, most notably in the United States. They were further cemented through judicial precedents establishing shareholder primacy as the fiduciary responsibility of public companies. There was a rise of activist investors. The Nobel laureate Joseph Stiglitz told me this all led to the reign of toxic short-termism.
He thinks the tide has been shifting away from Friedman’s ideas — with leaders like BlackRock CEO Larry Fink saying he will not do business with companies that lack a clearly defined purpose beyond the abstraction of increasing shareholder value — because of a survival instinct, as overall gross-domestic-product growth has been much slower in the past two decades than it was from the end of World War II to 2000.
It’s an old debate about the role of businesses in the world, and the balance is shifting once again.
“As they said in the Bible, ‘There is nothing new under the sun,'” Stiglitz said, laughing. “But there is a new context to it today.”
Originally published on Business Insider.
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