I’m afraid I’m never going to be a great man. Here’s why. I was talking to an analyst at one of the top two banks the other day and he was describing to me why a particular chief executive was “great” and hence his company was a potential buy. “He even flies coach everywhere,” the analyst said.
Huh, I thought to myself, this is really not good for me. For instance, if I only had $500 to my name and coach was $300 but business class was $600 I would stand on a corner, hat in hand and beg until I raised the $100 so I could fly business class. Not that I’m a snob. But I like the extra attention I get for what would be an otherwise miserable five-hour trip. Not to mention the extra leg room for my 5ft 9in frame.
Why is someone great if he flies coach, particularly if he is chief executive of
a $10bn company? If I were a shareholder I’d want my chief executive to be comfortable. Heck, I’d want him to fly a private jet so he could get work done!
Why is it always so great to be an ascetic? Here are some other examples of greatness:
● “He only makes $1 a year salary.” This includes guys such as Sergey Brin, Larry Page, Steve Jobs and Richard Kinder. All of these guys might be great (Mr Kinder in particular) but believe me they make billions in every other way so raising them to $100,000 wouldn’t make a dent one way or the other.
● “He answers his own phone.” A friend of mine recently called Charlie Munger, the vice-chairman of Berkshire Hathaway and Warren Buffett’s right-hand man. Mr Munger picked up his phone. That’s incredible. He picked it up with his own hands. People are lucky if I return their messages, let alone pick up the phone.
● “Not giving earnings guidance.” Great men can’t give guidance. Mr Buffett doesn’t do it. Mr Page and Mr Brin don’t do it. Microsoft gives guidance but for 15 years people haven’t picked up on the fact that it always plays down the next year, “it’s not going to be as good next year as last”. Mr Buffett also does that. This is called underpromising and overdelivering. It’s a useful skill if you can do it. I can’t do it. I tend to overpromise and then have to work extra hard to over deliver. Sometimes it works and sometimes it doesn’t. It’s spotty at best but I’m usually excited about whatever it is I’m promising on. That combined with lack of self-control puts me in a bad spot.
A corollary of the above is the “straight shooter”. Check out the 8K filings for Expeditors International. The chief executive publishes a Q&A with analysts. He is brutal. I mean, if you ask a dumb question be prepared to have it plastered all over that 8K filing for everyone to read. That said, his 8K fillings are filled with greatness.
In the last one, someone asked why the company doesn’t buy back more shares. In his answer, Peter Rose, chief executive, said: “We are not ignorant of the theory of how increasing financial leverage results in maximising returns. That having been said, over the years, we’ve seen repeated examples of others in this business who’ve fallen under the spell of erudite consultants and investment bankers, all using the right buzzwords espousing the benefits of some financial transaction, buttressed by financial theories that in reality only supported what we call ‘the clandestine rule of finance’. Once in their clutches, these erstwhile competitors got talked into doing things that in finance textbooks made perfect sense, but in the real world had catastrophic effects on their business.
“Yogi Berra never went to Harvard Business School, but he did understand one important principle. To quote Yogi: ‘In theory there is no difference between theory and practice. In practice, there is’.”
Other examples of greatness: driving the Buick in which you were conceived. Still living in an apartment you share with five roommates and two dogs. Scheduling all your own appointments. Only eat what you kill. And so on.
Now, reading this over it seems like I’m being a little snarky. Like I don’t believe these men are great and I’m making fun of them.
Actually, I do think they are great. I wish I were like any of the chief executives mentioned above and had any of these attributes. It’s admirable and I like all of their companies and all of their stocks. Heck, I wrote the book on Mr Buffett.
And Mr Brin and Mr Page have taken a unified philosophy of “technology + customer satisfaction” to create the greatest company in the world. And Mr Kinder left asset-less Enron to build the best pipeline company in the world that he’s now taking private.
And Mr Jobs changed my life by allowing me to watch Desperate Housewives on the train every day. I’ve been waiting for something like that since 1978 and on $1-a-year salary he was able to finally do it.
And if you want a textbook study of how to run a public company, Expeditors’ 8Ks (next to Mr Buffett’s straight-shooting annual letters and any talk given by Mr Munger) are must-reads.
I wish I were as great as these chief executives. But I’m not.