Author: The Knowledge Project with Shane Parrish

  • Daniel Kahneman: Algorithms Make Better Decisions Than You

    AI transcript
    Delay your intuition. Don’t try to form an intuition quickly, which is what we normally do.
    Focus on the separate points, and then when you have the whole profile,
    then you can have an intuition and it’s going to be better.
    Welcome to The Knowledge Project. I’m your host, Shane Parrish. In a world where knowledge is power,
    this podcast is your toolkit for mastering the best of what other people have already figured out,
    so you can use their insights in your life.
    Before we get into the interview, I want to tell you about a moment that didn’t make it into the episode.
    I first came across Daniel Common’s work in the early 2000s. His impact on me and so many people
    around the globe has been unbelievable. By the time I sat down with him in his New York City home in
    2019, I had so many questions for him. Condon won a Nobel Prize in Economic Sciences in 2002,
    yet he never took an economics course. His central message was very simple. If we want to make better
    decisions, we need help. Danny died last year on March 27th, 2024. He was 90. This conversation is
    now one of the final opportunities to hear directly from one of the most influential thinkers of our time.
    I get messages about this episode every week. People come away with new insights on everything from life
    to decision making. I re-listened to it recently and it’s timeless. That’s exactly why I’m republishing it.
    Consider loss aversion, one of his most important discoveries. Why does losing $100 hurt twice as much
    as gaining $100 feels good? The asymmetry affects everything. It affects your stock portfolio, your golf
    game. Check your portfolio when it’s down and you’ll start making emotional decisions. A golfer putts better
    for power than for birdie. But here’s what happened near the end of our interview. Danny’s phone rang and it
    was loud. He’d forget to turn it off. We’re almost done the interview at this point but he answered and
    someone obviously wanted him to give a talk or review a book. He ended the call with words that have stayed
    with me since then. My rule is I never say yes on the phone. I’ll get back to you tomorrow. I wanted to
    discuss that on air but we ran out of time. As I packed up my gear, I asked him about that. This rule was a trick
    to avoid saying yes intuitively. It gave him time to think. He’s always bombarded with requests and he
    often says yes when he didn’t want to. At first, he would try saying no. That date doesn’t work. That
    timeline doesn’t work. But what happened in those moments was it turned into a negotiation. What about
    another date? Another timeline? So he hit on this rule. And to me, this is his most practical discovery.
    Most people don’t even know about it. This rule lets you reprogram your unconscious mind. Your desired
    behavior becomes your default behavior. And that’s incredibly powerful. It changed my life. I now
    exercise every day. It’s actually easier than three times a week. The activity, duration, and scope can
    change but working out and exercising doesn’t. I think I’ve missed five days in five years at this point.
    And I talk about this in my book, Clear Thinking. And the concept has changed so many lives, including
    my great friend, Brent Beshore. In episode 196, we talk about this a little. Several parts of this
    conversation stuck out when I was re-listening to it. First, we talk about happiness versus satisfaction.
    Happiness is feelings. It’s mostly social. Am I with the people who love me and whom I love back?
    Satisfaction, on the other hand, is how you feel about your life, your job, your career,
    conventional aspects. Danny argued people want satisfaction more than happiness. Second,
    changing behavior. Make good behavior easier and bad behavior harder. The insight? All behavior is
    equilibrium. Rather than pushing people to change, ask why they aren’t doing it already. Third, behavior
    is situational. Want to understand behavior? Look at the situation. When someone acts in ways that don’t
    make sense, ask yourself, ask yourself, what would the world have to look like for that behavior to make
    sense? Fourth, agents making decisions on your behalf beat you at certain types of decisions. They have no
    sunk costs. They have no emotions. Brian Johnson talks about this in episode 188. He turned his health
    decisions over to effectively an algorithm because that algorithm makes better decisions than he does.
    Fifth, our beliefs are formed by people more than facts. We agree with people we like,
    despite the facts. It’s easier to believe a lie from someone you like than a truth from someone you
    dislike. We form identity beliefs. Liberal, conservative, Democrat, Republican. They can do no wrong. If they’re
    wrong, we’re wrong. And we can’t handle that. Finally, intuition. Danny had talked about this so much,
    his answers sounded repetitive. So I framed my question on this to include his typical answer
    in the question, forcing him to think a little deeper. Whether this is your first listen or your
    third, you’ll come away with ideas that you can use in life.
    Daniel, I’m so happy to give it a chance to talk to you.
    Well, I’m happy to have you here.
    What was your childhood like? What were you like as a child?
    Oh, my God. That was a long time ago. I was, I was an early child, as you might expect, I suppose.
    I was, I thought I’d be a professor when I was like three or four years old because people told me I would
    be because I probably spoke with long words and stuff like that. So, and then the rest of my childhood,
    I mean, I was five when World War II began. So, and I was a Jew in France. So, I’ve had a difficult
    childhood, but from that point on. But, but I was, was I like, yeah, I was a, I was a nerdy child.
    I was quite inept physically. Very fortunately for me, when I’d finally moved to Israel at age 12,
    they held me up a grade in them. And that was all right. But that’s, that’s what I was like.
    Are there any particular lessons or memories that stand out for you?
    There are two of them that I speak about. So, one is that I was, I was a psychologist very early on.
    That was, that was very clear. I, I wrote an essay before I was 11. I remember where, because it was,
    it was a German counterattack. It was during that period we were in Paris. And I wrote an essay about
    faith and religion. And it was a very pompous essay. I had a little book that was, that was titled
    what I, what I write about what I think, something pompous like that. But the essay started with
    another pompous thing that I quoted Pascal. My, my sister had passed her exams and I had read,
    she’s, you know, she’s studied some Pascal and I had read it. And Pascal had said that faith
    is God made sensible to the heart. And, you know, little me, I said, how true. That’s what my essay said.
    And then, and then, but then I said, but faith is really hard to get. You don’t say it’s God all the time. So, that’s what
    that’s what religious pomp is for. Cathedrals, organ music. They give you, and I call that urzat faith,
    sort of a substitute faith, because it’s a, it’s a similar feeling. It’s got to do with God. And that’s what you
    must do with me. That’s, that’s a psychologist. So, it’s clear that, you know, that was my calling. And so,
    that’s one significant memory of my childhood.
    So you wanted to be a psychologist?
    I think so. I think so. I mean, I, you know, it’s always had that point of view that later, as a
    teenager, I was, you know, interested in all the philosophical issues, like, you know, does God
    exist? And what’s good and bad? And stuff like that. And why shouldn’t we masturbate? You know, serious
    questions. But, but I discovered that, actually, I was less interested in the question of whether or
    not God exists, then in why do people believe that he exists? That I thought was interesting. And I
    wasn’t particularly interested in the question of what’s good or bad, but I was really interested in
    what makes people angry and indignant. So, you know, I’ve had the psychological point of view since,
    turns out, since my childhood.
    Was there anybody that sort of influenced you to go on to study this? I mean, it’s one thing to have
    these dreams as like a 12, 13, 14-year-old boy. It’s another to turn this into, you know, probably
    the most eminent career that’s ever happened for a psychologist.
    No, not the most eminent career. You know, and I wasn’t sure, actually, that I would do psychology.
    And when I took a vocational exam to tell me what I was good at, and psychology and economics stood in
    out. But, you know, that was unexpected. And then I took psychology as an undergraduate and mathematics,
    at which I was not particularly good. So, and no, it’s not that I knew at the time that, you know,
    I had that calling to be a psychologist. It didn’t occur to me. I thought, you know, I thought I’d be a
    professor in one thing or another. I mean, I thought I’d be an academic, but not psychology specifically.
    You worked with Amos Tversky for a long time. Are there any particular stories that you remember
    about working with him that bring a smile to your face?
    Almost everything about working with him brings a smile to my face. You know, he was a very unusual
    person. Most people who knew them thought that he was the smartest person that I’ve ever met.
    And in fact, the famous psychologist, Nick Nesbitt, said that it’s sort of an intelligence test when
    you said that when you’re with Amos, how long does it take you to figure out that he’s smarter than you
    are. And the faster you figure that out, the smarter you are. So, you know, he was, uh, he was
    super bright and very, very funny. He joked a lot. He laughed a lot at his own jokes. And that was
    infectious. When I was with him, I was very funny too. More than half of my, the last of my, of my lifetime
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    You have an interesting distinction between happiness and satisfaction. Can you walk us through that?
    Yeah, sure. I mean, the word happiness is so ambiguous and it means so many things to many people,
    but one sensible interpretation of it is that it’s got to do with your emotions, with how you feel,
    with the emotional tone of your life, whether it’s a happy life, you know, it’s pleasant to be you.
    Life satisfaction is a completely different thing. I mean, life satisfaction is how you feel about your
    life when you think about your life. And most of the time, you don’t think about your life, you just live.
    But, you know, sometimes you sort of look and that’s when you determine how satisfied you are.
    That’s life satisfaction. It’s not satisfaction, it’s life satisfaction.
    Should we balance the two? Or how would you think about them? Should we be more happy when we’re younger,
    more satisfied when we’re older?
    That thought had never occurred to me. When I began to work on this, I started out thinking that
    happiness, in that sense of how you feel when you live, that was reality. And that
    life satisfaction was just stories that people tell themselves. And the important thing was to be
    happy in real time. But later, when we did more research, it turned out that
    the circumstances that make people happy and the circumstances that make them satisfied with their
    life are not the same. So happiness is mostly social. It’s, you know, it’s being with people
    you love and who love you back. That’s, that’s a lot of what happiness is. Life satisfaction is much more
    conventional. It’s to be successful. And, you know, so it’s money, education, prestige,
    that sort of thing is what life satisfaction is about. So those are two very different things.
    I thought that life satisfaction is irrelevant. You know, that’s how I began. And we, we had a research
    program where we were, we were trying to, you know, to show that this is the case. But then after a few
    years, I realized that what people really want in their life is they don’t seem to care about how happy
    they’ll be. They seem to want to be satisfied with their life. They seem to want to have a good story
    about their life. And then I was in the position of saying that to define wellbeing in a way that people
    didn’t seem to care particularly about. So that was not a tenable position. So I, I dropped back into
    saying that I had no idea how to deal with it.
    Was this a result of the research? You did some research that was, I think it said above 70,000,
    you don’t become happier, but do you become more satisfied?
    No. The research I did with Angus Deaton at Princeton, famous economist, we showed that in terms of
    happiness, in terms of emotional tone, positive and negative, having a lot of money doesn’t make you
    happier. But being poor makes you miserable. So that’s above the threshold that was like $70,
    $50,000 approximately in the U.S. Then extra money didn’t make you emotionally happier. But with life
    satisfaction, it was a different story. With life satisfaction, that doesn’t satiate. So it’s always
    good to have more. Because basically, I think, money is a proxy for success. And it’s a proxy for
    subjective success in many cases.
    So it’s not necessarily about spending it or doing something with it. It’s just a measure.
    Just getting it. I mean, you know, you look at all those people, those billionaires working their heads
    off. And they’re clearly not doing this because they need more money. They’re trying to get more
    money. And they’re trying to get more money because that would be an indication that they’re good at what
    they do. I think mostly it’s a proxy.
    Do either of those variables correlate to longer living, happiness, or satisfaction?
    Both, apparently. But you know, it’s hard to separate. And I haven’t been followed. You know,
    shortly after deciding that I didn’t know what well-being was, I sort of stopped doing research
    on this. So I haven’t been following. But I think there’s clear evidence that being effectively happy,
    you know, is very good for you. And you do live a little longer, and you live better, and so on.
    And life satisfaction works in the same direction. Whether it’s separable, which of them, you know,
    is it more important that I don’t?
    I want to switch gears a little bit and talk about behavior. And I’d love your insider expansion
    upon the idea of we can change behavior. And how do we go about changing our behavior?
    Well, you know, I’m not sure I buy the premise. I think changing behavior is extremely difficult.
    There are a few tips and, you know, a few guidelines about how to do that. But anybody who is very
    optimistic about changing behavior is just deluded. It’s hard to change other people’s behavior. It’s very
    hard to change your own. Not simple.
    This is what marriage is all about, right?
    Yeah, among other things. You know, people, when, when, you know, married people try to
    change each other’s behavior.
    It’s a lot of dissatisfying.
    They are not on their way to a good marriage, I think.
    We’d all be happier with lower expectations.
    Yes. I mean, and, and even if you have expectation, don’t try to change because, you know,
    it’s very unlikely to work in a significant way.
    I can think of the common ways that we would sort of go about behavior change and it would be,
    you know, making good behaviors more easy or negative behaviors harder.
    And that’s the main, the main insight. You know, when you want to influence somebody’s behavior,
    that’s a very big insight. I’ve always thought that this is the best psychological idea ever,
    you know, so far as I’m concerned. But it’s that when you want somebody to move from A to B in terms of
    their behavior, you can think of it that there are two ways of doing it. You can push them or you can ask
    the question, “Why aren’t they doing B already?” Which is an unusual question, but you know, why?
    So then when you ask, “Why, why not? Why aren’t they doing B?” as they ought to, as they think they ought to,
    then you get a list of what’s got to win. That’s the psychologist who my guru and that’s my hero and
    many people’s hero. He spoke of restraining forces. I mean, so there are reasons.
    why they’re not where you want them to be. So he spoke of behavior as an equilibrium. There are
    forces that are pushing you one way, forces that are pushing you the other way. So how loud you speak,
    how fast you drive. It’s easy to think of it as an equilibrium. And what we tend to do when we want to
    move people from A to B is we push them. We add to the driving forces. And Kurt Lewin’s insight was that
    this is not what you should do. You should actually work on the restraining forces and try to make them
    weaker. And that’s a beautiful point. And he showed, he had that image that, you know, I’ve had since I was an
    undergraduate. And I’m not sure actually whether it was his image or something that I drew from
    reading him. But it’s like you have a plank and it’s being held by two sets of springs. You know,
    you want it to move one direction. And so you could add another spring that would push it that way, or
    could remove one of the springs that are holding it back. And the interesting thing, and that’s the
    striking outcome, is when it moves, if it moves because of the driving force you’ve added to the
    driving force, then at equilibrium, it will be in a higher state of tension than it was originally.
    That is because you’ve compressed one spring and such pushing back harder. But if you remove
    a restraining force, at equilibrium, there’ll be less tension in the system. I must have been 20 years
    old. I thought that’s just so beautiful. What do you wish that everybody knew about psychology that you
    don’t think that they do? If that was class one, what’s class two?
    You know, class two, which is a development from class one, you know, it’s the same idea extended.
    Class two is that behaviors don’t necessarily reflect the personality, but behaviors have a lot to do with
    the situation. And so if people behave in strange ways, look at the situation they’re in and what are
    the pressures in the situation that make them act as well. So there is a bias that the social
    psychologist, well-known social psychologist, call the fundamental attribution error. And that means
    that when you see people acting in some way, you think that it’s because of their personality that they
    do it. That may not be the case. It’s quite likely that the situation is making them do it.
    I’d like people to know that motivation is complex and that people do good things for a mixture of
    good and bad reasons. And they do bad things for a mixture of good and bad reasons. And I think that
    there is a point to educating people in psychology is to make them less judgmental. Just have
    more empathy and more patience and being judgmental doesn’t get you anywhere.
    When you talk about situational, one of the things that comes to mind is it’s so easy for us to give
    our friends advice. But if we were in that situation, we might not necessarily see it.
    Why is that the case? Why is it so much easier to give other people advice?
    I mean, feelings get in the way of clear thinking. There is a phenomenon that we call the endowment effect,
    which is that when I’d ask for more money to sell you my sandwich than I’d pay to get it. I mean,
    that’s essentially the endowment effect. And our explanation of it, there are many explanations,
    but a story I like to tell about it is that it’s more painful to give something up than to get something.
    But there is an interesting result that if you have an agent making decisions on somebody’s behalf,
    that agent doesn’t have loss of those. So that agent sells and buys at the same price,
    which is the economically rational thing to do. Where this goes into policy and governments and
    really important things is that governments are like agents or people who think about the good of
    society. And agents, they take the economic view. They take the view of what things will be like at
    the end. They don’t figure out that there are some people are going to be losing because of the reform
    that they make. And it turns out that you can really expect losers, potential losers to fight a lot
    harder than potential winners. And that’s the reason that reforms are frequently fair. And that when they
    succeed, they’re almost always way more expensive than anticipated. And they’re more expensive because
    you have to compensate the losers. And that frequently is not anticipated. So that’s an example of a story
    that incorporates behavior change. And the difference between perspective, between being, you know, in the
    situation, feeling the pain of giving up the sandwich, and not feeling the pain of giving up the sandwich.
    That would have huge public policy sort of implications too, right, that we don’t tend to think about or discuss.
    That’s a really interesting angle there. I want to come back to sort of situational decision-making based on
    sort of like what we see is all there is. And we have these feelings that we can’t sort of disassociate
    with. How does environment play a role like the physical environment in sort of what we decide or does it?
    I mean, you know, there are sort of obvious things that we know. If people are hot and bothered and
    distracted, and there is a lot of noise and so on, then they’ll think as well. And that we know that’s…
    But even there, there are puzzles. I mean, many people think and work a lot better in cafes,
    you know, where there is actually ambient noise and activity around them, and it helps them concentrate
    better. So there isn’t a very simple story of the environment. But certainly, you can make the
    environment tough enough so that people won’t be able to think properly. That’s feasible.
    Are there things that we could do to, I guess, push the environment to be more conducive to
    to clear thinking, the physical environment in this case?
    Oh, there are all sorts of, you know, odd findings, you know, the color of the color of the room.
    Some colors are better than others. And you would expect that some colors are more calming than others.
    So you wouldn’t want to be in a red room.
    Making decisions.
    Making decisions.
    Making decisions. But, you know, those are extreme and minor effects.
    I want to come to intuition and noise later. Is there anything else that stands out that gets in
    the way of clear thinking that we can sort of bring to the surface now?
    Well, you know, what gets in the way of clear thinking is that we have intuitive views of
    almost everything. So as soon as you present a problem to me, I have, you know, I have some
    ready-made answer. And what gets in the way of clear thinking are those ready-made answers.
    And we can’t help but have them. So that’s one thing that gets in the way. Emotions get in the
    way. I would say that independent clear thinking is, to first approximation, impossible. In the sense
    that, you know, we believe in things most of the time, not because we have good reasons to believe
    them. If you ask me for reasons, I’ll explain you. I’ll always find a reason. But the reasons are not
    the causes of our beliefs. We have beliefs because mostly we believe in some people and we
    trust them and we adopt their beliefs. So we don’t reach our beliefs by clear thinking,
    something, you know, unless you’re a scientist or doing something like that.
    But even then, it’s probably a very narrow…
    But that’s very narrow. And there is a fair amount of emotion in neuroscientists as well
    that gets in the way of clear thinking. You know, commitments to your previous views,
    being insulted that somebody thinks he’s smarter than you are. I mean, lots of things get in the way
    even when you’re a neuroscientist. So I’d say there is less clear thinking than people like to think.
    Is there anything that we can do at the belief formation stage? Like it sounds almost as though
    when you say that we’re reading a newspaper, we read this op-ed, and it’s well constructed and fits
    with our view of the world. Therefore, we adopt that opinion. And we forget the context that we didn’t
    learn it through our own experience or reflection. We learned it sort of from somebody else. So we don’t
    know when it’s sort of likely to work or not work. But we just proffer that as our opinion, is there?
    That’s how I believe in climate change. You know, I believe in the people who tell me there is climate
    change. And the people who don’t believe in climate change, they believe in other people.
    So, but similarly, there’s like fake news and all this other stuff that we would have the same
    reaction to you. You know, but I’m much more likely to believe fake news on my side than the fake news
    on the other side. I mean, it’s true that there is a huge degradation in public discourse in the recent
    10, 15 years in the United States. I mean, there used to be an idea that facts matter.
    What would be your hypothesis as to why that is playing out? Are they getting into politics?
    because I don’t want to talk politics. But like, why is that? Well, I mean, it’s hard to,
    it’s hard to answer that question without, without politics, because it’s a general political
    polarization has had a very big effect. And the fact that people can choose the sources of information.
    Let’s switch gears a little bit and talk about intuition. I think one of the,
    the things that strikes me the most about some of the work that you’ve done is the
    cases where we’re likely to trust our intuition and when we’re not. And so if I’m, correct me if I’m
    getting this wrong. So it’s sort of like a stable environment, repeated attempts and rapid feedback.
    It strikes me that most decisions made in organizations do not fit that environment.
    And yet we’re making a lot of these decisions on judgment or experience. What are the ways that we can
    sort of make better decisions with that in the context?
    : Well, in the first place, I think, you know, you shouldn’t expect too much.
    : And pat to low expectations. : And pat to low expectations.
    : I shouldn’t think too young. You should have low expectations
    about improving decisions. I mean, there is, you know, one basic rule is slow down,
    especially if you, if you have that immediate conviction, slow down. There are procedures,
    you know, there are ways of reaching better, better decisions, but reaching better reverence,
    and we can talk about them. : I would love to hear.
    : If you really want to improve the quality of decision-making, use algorithms. I mean,
    whenever, wherever you can, if you can replace judgments by, by rules and algorithms, they’ll do
    better. And there’s big social costs to trusting, allowing algorithm to make decisions, but, but the
    decisions will likely to be better. So that’s one thing. If you can’t use algorithms, then you slow
    yourself down. And then there are things that you can do for certain types of problems. And there are
    different types of problems. So one class of problems, like forecasting problems. A friend,
    Phil Tetlock, you know, has that book on super forecasters, where he identifies with people who are
    good at forecasting the future, what they do that makes them good. And, you know, he tries to train
    people and he can improve people. So that’s one classic problem. I’m interested specifically in
    another kind of problem, judgment problems, where basically you’re considering options or you’re
    evaluating a situation and you’re trying to give it a score. There, there, there is advice, I think,
    on how to do it. For me, it goes back to something I did in the Israeli army when I was like 22 years
    old. So that’s a long time ago, like 63 years ago. I was a psychologist in the Israeli army. And I was
    assigned the job of setting up an interviewing system for, for the army. That’s ridiculous. But you know,
    this was the beginning of the state of Israel. So people were improvising all over the place.
    So I had a BA and I was, I think I was the best trained psychologist in the army. My, my boss was a
    chemist. Brilliant. But anyway, and the, the existing system was one where people would interview and try to
    form an intuitive global image of how well that recruits would do as a combat soldier, which was
    the objective of the, the object of the interview. And because I had read a book, I told me, I took a
    different tack. And the different tack was, I identified six traits that I sort of made up. And I had them
    ask questions and evaluate each of these traits independently and score it and write down the score,
    then go on to the next trait. And they had to do it for all six traits. And that was, that’s all I asked
    them to do. And the interviewers who were about one year younger than I, or recruits, but very,
    very smart, selected for being good at it. They were furious with me. And they were furious with me
    because they wanted to exercise their intuition. And I still remember that one of them said,
    you’re turning us into robots. So I compromised with them. And I said, okay, you, you do it my way.
    And I told them, you try to be reliable, not valid. You know, I’m in charge of validity. You be
    reliable, which was pretty arrogant, but that’s, that’s how I presented it. But then when you’re done,
    close your eyes and just put down a number of how good a soldier is that guy going to be. And when we
    validated the results of the interview, it was a big improvement on what had gone on before. But the
    other surprise was that you have an interesting distinction between happiness and satisfaction.
    Can you walk us through that? Yeah, sure. I mean, the word happiness is so ambiguous and it means so
    many things to many people, but one sensible interpretation of it is that it’s got to do with
    your emotions, with how you feel, with the emotional tone of your life, whether it’s a happy life that,
    you know, it’s pleasant to be you. Life satisfaction is a completely different thing. I mean, life
    satisfaction is how you feel about your life when you think about your life. And most of the time,
    you don’t think about your life, you just live. But you know, sometimes you sort of look,
    and that’s when you determine how satisfied you are. That’s life satisfaction. It’s not satisfaction.
    It’s life satisfaction. Should we balance the two or how would you think about them? Should we be
    more happy when we’re younger, more satisfied when we’re older? That thought had never occurred to me
    when I began to work on those. So I started out thinking that happiness in that sense of how you feel
    when you live. And that was reality. And that life satisfaction was just stories that people tell
    themselves. And the important thing was to be happy in real time. But later, when we did more research,
    it turned out that the circumstances that make people happy and the circumstances that make them satisfied
    with their life are not the same. So happiness is mostly social. It’s, you know, it’s being with people
    you love and who love you back. That’s, that’s a lot of what happiness is. Life satisfaction is much more
    conventional. It’s to be successful. And you know, so it’s money, education, prestige, that sort of thing,
    is what life satisfaction is about. So those are two very different things. I thought that life satisfaction
    is irrelevant. You know, that’s how I began. And we, we had a research program where we were,
    we were trying to, you know, to show that this is the case. But then after a few years, I realized
    that what people really want in their life is they don’t seem to care about how happy they’ll be.
    They seem to want to be satisfied with their life. They seem to want to have a good story about their
    life. And then I was in the position of saying that to define well-being in a way that people didn’t seem
    to care particularly about. So that was not a tenable position. So I, I dropped back into saying that I had no
    idea how to deal with it. Was this a result of the research? You did some research that was,
    I think it said above 70,000, you don’t become happier, but do you become more satisfied?
    No. The research I did with Angus Deaton at Princeton, famous economist, we showed that in terms of happiness,
    in terms of emotional tone, positive and negative, having a lot of money doesn’t make you happier,
    but being poor makes you miserable. So that’s above the threshold that was like 70,000 dollars
    approximately in the US. Then extra money didn’t make you emotionally happier. But with life satisfaction,
    it was a different story. With life satisfaction, that doesn’t satiate, so it’s always good to have more.
    Because basically I think money is a proxy for success, and it’s a proxy for subjective success in many cases.
    So it’s not necessarily about spending it or doing something with it. It’s just a measure.
    It’s just getting it. I mean, you know, you look at all those people, all those billionaires working
    their heads off, and they’re clearly not doing this because they need more money. They’re trying to get
    more money. And they’re trying to get more money because that would be an indication that they’re
    good at what they do. I think mostly it’s a proxy.
    Do either of those variables correlate to longer living, happiness, or satisfaction?
    Both, apparently. But you know, it’s hard to separate. And I haven’t been followed, you know,
    shortly after deciding that I didn’t know what well-being was, I sort of stopped doing research
    on this. So I haven’t been following. But I think there’s clear evidence that being effectively happy,
    you know, is very good for you. And you do live a little longer, and you live better, and so on. And
    life satisfaction works in the same direction. Whether it’s separable, which of them, you know,
    isn’t more important that I don’t. I want to switch gears a little bit and talk about
    behavior. And I’d love your insider expansion upon the idea of we can change behavior, and how do we
    go about changing our behavior? Well, you know, I’m not sure I buy the premise. I think changing
    behavior is extremely difficult. There are a few tips and, you know, a few guidelines about how to do that.
    But anybody who is very optimistic about changing behavior is just looted. It’s hard to change other
    people’s behavior. It’s very hard to change your own. Not simple.
    This is what marriage is all about, right?
    Yeah, among other things. You know, people, when, you know, married people try to
    change each other’s behavior.
    It’s a lot of dissatisfying.
    They are not on their way to a good marriage, I think.
    We’d all be happier with lower expectations.
    Yes. I mean, and even if you have expectation, don’t try to change,
    because, you know, it’s very unlikely to work in a significant way.
    I can think of the common ways that we would sort of go about behavior change, and it would be,
    you know, making good behaviors more easy or negative behaviors harder.
    I think that’s the main, the main insight. You know, when you want to influence somebody’s behavior,
    that’s a very big insight. I’ve always thought that this is the best psychological idea ever,
    you know, so far as I’m concerned. But it’s that when you want somebody to move from A to B in terms of
    their behavior, you can think of it that there are two ways of doing it. You can push them. Or you can
    ask the question, why aren’t they doing B already? Which is an unusual question, but you know, why?
    So then when you ask why, why not? Why aren’t they doing B as they ought to, as they think they ought to,
    then you get a list of what’s going to win. That’s a psychologist who, my guru on this, my hero,
    and many people’s hero. He spoke of restraining forces. I mean, so there are reasons why they’re
    not where you want them to be. So he spoke of behavior as an equilibrium. There are forces that
    are pushing you one way, forces that are pushing you the other way. So how loud you speak, how fast you
    drive. It’s easy to think of it as an equilibrium. And what we tend to do when we want to move people
    from A to B is we push them. We add to the driving forces. And Kurt Lewin’s insight was that this is
    not what you should do. You should actually work on the restraining forces and try to make them weaker.
    And that’s a beautiful point. And he showed, he had that image that, you know, I’ve had since I was an
    undergraduate. And I’m not sure, actually, whether it was his image or something that I drew from
    reading him. But it’s like you have a plank and it’s being held by two sets of springs. You know,
    you want it to move one direction. And so you could add another spring that would push it that way,
    I could remove one of the springs that are holding it back. And the interesting thing,
    and that’s the striking outcome, is when it moves, if it moves because of the driving force,
    you’ve added to the driving force, then at equilibrium, it will be in a higher state of
    tension than it was originally. That is because you’ve compressed one spring and such pushing back
    harder. But if you remove the restraining force at equilibrium, there’ll be less tension on the
    system. I must have been 20 years old. I thought that’s just so beautiful.
    What do you wish that everybody knew about psychology that you don’t think that they do?
    If that was class one, what’s class two?
    You know, class two, which is a development from class one, you know, it’s the same idea extended.
    Class two is that behaviors don’t necessarily reflect the personality, but behaviors have a lot to do with
    the situation. And so if people behave in strange ways, look at the situation they’re in and what are
    the pressures in the situation that make them act as well. So there is a bias that the social
    psychologists, well-known social psychologists call the fundamental attribution error. And that means
    that when you see people acting in some way, you think that it’s because of their personality that they
    do it. That may not be the case. It’s quite likely that the situation is making them do it.
    I’d like people to know that motivation is complex and that people do good things for a mixture of
    good and bad reasons. And they do bad things for a mixture of good and bad reasons. And I think that
    there is a point to educating people in psychology is to make them less judgmental. Just have
    more empathy and more patience and being judgmental doesn’t get you anywhere.
    When you talk about situational, one of the things that comes to mind is it’s so easy for us to
    give our friends advice. But if we were in that situation, we might not necessarily see it. Why is that
    the case? Why is it so much easier to give other people advice?
    I mean, feelings get in the way of clear thinking. There is a phenomenon that we call the endowment effect,
    which is that when I’d ask for more money to sell you my sandwich than I’d pay to get it. I mean,
    that’s essentially the endowment effect. And our explanation of it, there are many explanations,
    but a story I like to tell about it is that it’s more painful to give something up than to get something.
    But there is an interesting result that if you have an agent making decisions on somebody’s behalf,
    that agent doesn’t have loss of urge. So that agent sells and buys at the same price,
    which is the economically rational thing to do. Where this goes into policy and governments and
    really important things, that governments are like agents or people who think about the good of society.
    And agents, they take the economic view. They take the view of what things will be like at the end.
    They don’t figure out that there are some people who are going to be losing because of the reform that
    they make. And it turns out that you can really expect losers, potential losers to fight a lot harder
    than potential winners. And that’s the reason that reforms are frequently fair. And that when they succeed,
    they’re almost always way more expensive than anticipated. And they’re more expensive because
    you have to compensate the losers. And that frequently is not anticipated. So that’s an example of a story
    about that incorporates behavior change and the difference between perspective, between being in the
    the situation, feeling the pain of giving up the sandwich, and not feeling the pain of giving up the
    sandwich.
    That would have huge public policy sort of implications too, right? That we don’t tend to think about or
    discuss. That’s a really interesting angle there. I want to come back to sort of situational decision
    making based on sort of like what we see is all there is. And we have these feelings that we can’t sort of
    disassociate with. How does environment play a role like the physical environment in sort of what we
    decide or does it?
    I mean, you know, there are sort of obvious things that we know. If people are hot and bothered and
    distracted and there is a lot of noise and so on, then they’ll think as well. That we know. But even
    there, there are puzzles. I mean, many people think and work a lot better in cafes, you know, where there is
    actually ambient noise and activity around them. And it helps them concentrate better. So there isn’t
    a very simple story of the environment, but certainly you can make the environment tough enough so that
    people won’t be able to think properly. That’s, that’s feasible.
    Are there things that we could do to, I guess, push the environment to be more conducive to
    clearer thinking? The physical environment in this case?
    Oh, there are all sorts of, you know, odd findings, you know, the color of the
    color of the room. Some colors are better than others. And you would expect that some colors are
    more calming than others. So you wouldn’t want to be in a red room.
    Making decisions. Making decisions. But, you know, those are extreme and minor effects.
    I want to come to intuition and noise later. Is there anything else that stands out that
    gets in the way of clear thinking that we can sort of bring to the surface now?
    Well, you know, what, what gets in the way of clear thinking is that we have,
    we have intuitive views of almost everything. So as soon as you present a problem to me,
    I have, you know, I have some ready-made answer. And what gets in the way of clear thinking are
    those ready-made answers. And we can’t help but have them. So that’s one thing that gets in the
    way. Emotions get in the way. And I would say that independent clear thinking is, to first
    approximation, impossible. I mean, in the sense that, you know, we believe in things most of the time,
    I’m not because we have good reasons to believe them. If you ask me for reasons, I’ll explain you.
    I’ll, I’ll always find a reason, but the reasons are not the causes of our beliefs.
    We have beliefs because mostly we believe in some people and we trust them and we adopt their beliefs.
    So we don’t reach our beliefs by clear thinking something, you know, unless you’re a scientist or
    doing something like that.
    But even then, it’s probably a very narrow…
    But that’s very narrow. And there is a fair amount of emotion in neuroscientists as well
    that gets in the way of clear thinking. You know, commitments to your previous views,
    being insulted that somebody thinks he’s smarter than you are. I mean,
    lots of things get in the way than the neuroscientists. So I’d say there is less
    clear thinking than people like to think.
    Is there anything that we can do at the belief formation stage? Like, it sounds
    almost as though when you say that we’re reading a newspaper, we read this op-ed, and it’s well-constructed
    and fits with our view of the world. Therefore, we adopt that opinion. And we forget the context that
    we didn’t learn it through our own experience or reflection. We learned it sort of from somebody
    else. So we don’t know when it’s sort of likely to work or not work. But we just proffer that as
    our opinion is there.
    That’s how I believe in climate change. You know, I believe in the people who tell me there is climate
    change. And the people who don’t believe in climate change, they believe in other people.
    But similarly, there’s like fake news and all this other stuff that we would have the same reaction to.
    You know, but I’m much more likely to believe fake news on my side than the fake news on the other
    side. I mean, it’s true that there is a huge degradation in public discourse in the recent
    10, 15 years in the United States. I mean, there used to be an idea that facts matter.
    What would be your hypothesis as to why that is playing out? Are they getting into
    politics because I don’t want to talk politics? But like, why is that?
    Well, I mean, it’s hard to, it’s hard to answer that question without,
    without politics, because it’s a general political polarization has had a very big effect.
    And the fact that people can choose the sources of information.
    Let’s switch gears a little bit and talk about intuition. I think one of the,
    things that strikes me the most about some of the work that you’ve done is the cases where we’re
    likely to trust our intuition and when we’re not. And so if I’m, correct me if I’m getting this wrong,
    so it’s sort of like a stable environment, repeated attempts and rapid feedback. It strikes me that
    most decisions made in organisations do not fit that environment and yet we’re making a lot of these
    decisions on judgement or experience. What are the ways that we can sort of make better decisions with that in the context?
    Well, in the first place, I think, you know, you shouldn’t expect too much.
    And pat to low expectations.
    I shouldn’t think too young or should have low expectations about improving decisions. I mean,
    there is, you know, one basic rule is slow down, especially if you, if you have that immediate
    conviction, slow down. There are procedures, you know, there are ways of reaching better,
    better decisions, but reaching better judgment and we can talk about them.
    I would love to hear.
    If you really want to improve the quality of decision making, use algorithms. I mean,
    whenever, wherever you can, if you can replace judgments by, by rules and algorithms, they’ll do
    better. And there’s big social costs to trusting, allowing algorithm to make decisions, but, but the
    decisions will likely to be better. So that’s one thing. If you can’t use algorithms, then you slow
    yourself down. And then there are things that you can do for certain types of problems. And there are
    different types of problems. So one class of problems, like forecasting problems, a friend,
    Phil Tetlock, you know, has that book on super forecasters, where he identifies with people who
    are good at forecasting the future, what they do that makes them good. And, you know, it tries to train
    people and we can improve people. So that’s one class of problem. I’m interested specifically
    in another kind of problem, judgment problems, where basically you’re considering options or you’re
    evaluating a situation and you’re trying to give it a score. There, there, there is advice, I think,
    on how to do it. For me, it goes back to something I did in the Israeli army when I was like 22 years
    old. So that’s a long time ago, like 63 years ago. I was a psychologist in the Israeli army. And I was
    assigned the job of setting up an interviewing system for, for the army. That’s ridiculous. But you know,
    this was the beginning of the state of Israel. So people were improvising all over the place. So I
    had a BA and I was, I think I was the best trained psychologist in the army. My, my boss was a chemist.
    Brilliant. But anyway, and the, the existing system was one where people would interview and try to form an
    intuitive global image of how well that recruit would do as a combat soldier, which was the objective,
    the object of the interview. And because I had read a book of Paul Neal, I took a different talk. And
    the different talk was, I identified six traits that I sort of made up and I had them ask questions and
    evaluate each of these traits independently and score it and write down the score, then go on to the
    next trait. And they had to do it for all six traits. And that was, that’s all I asked them to do. And
    the interviewers who were about one year younger than I, all recruits, but very, very smart, selected
    for being good at it. They were furious with me. And they were furious with me because they wanted to
    exercise their intuition. And I still remember that one of them said, “You’re turning us into robots.” So I
    compromised with them. And I said, “Okay, you do it my way.” And I told them, “You try to be reliable,
    not valid. You know, I’m in charge of validity. You be reliable.” Which was pretty arrogant, but that’s,
    that’s how I presented it. But then when you’re done, close your eyes and just put down a number of
    how good a soldier is that guy going to be. And when we validated the results of the interview,
    it was a big improvement on what had gone on before. But the other surprise was that
    the final intuitive judgments added, it was good. It was as good as the average of the six straights,
    and not the same. It added information. So actually, we ended up with a score that was
    half, was determined by the specific ratings, and the intuition got half the way. And that,
    by the way, stayed in the Israeli army for well over 50 years. I don’t know whether it’s,
    I think it probably, some version of it was still being forced, but around 15 years ago,
    a visit of my old base. And, and the commanding officer of the research unit was telling me how
    they run the interview. And, and then she said, and then we tell them, “Close your eyes.” So that,
    that had stayed for 50 years. Now, the “Close your eyes” and that whole idea is not the basis of the
    book that I’m writing. So actually, I have the same idea really, that when you are making decisions,
    you should think of options as if they were candidates. So you should break, break it up into
    dimensions, evaluate each dimension separately, then look at the profile. And, and the key is,
    delay your intuition. Don’t try to form an intuition quickly, which is what we normally do. Focus on the
    separate points. And then when you have the whole profile, then you can have an intuition and it’s going to
    be better because people make form intuitions too quickly. And the, the rapid intuitions are not
    potentially good. So if you delay intuition until you have more information, it’s going to be better.
    I’m curious how we delay intuition.
    You delay intuition by focusing on the separate problems. So our advice is that if you have, you know,
    a board of directors making decisions about an investment, we tell them you do it that way. Take
    the separate dimensions and really think about each dimension separately and independently and don’t
    allow, you know, if you’re the chair, don’t allow people to give their final judgment. Say, we’ll wait
    until we cover the whole thing. I mean, if you find a deal breaker, then you stop. But if you haven’t found
    a deal breaker, wait to the end and look at the profile and then your decision is almost certainly going to be better.
    Does that include weighting the different aspects of the problem differently or do you highlight that in advance or do you?
    Yeah. I mean, it makes you see the trade-offs more clearly. Otherwise, when we don’t follow that discipline,
    there is a way in which people form impressions. Very quickly you form an impression and then you spend
    most of your time confirming it instead of collecting evidence. And so if accidentally your impression was
    in the wrong direction, you’re going to confirm it and you don’t give yourself a chance to correct
    it. Independence is the key because otherwise, when you don’t take those precautions, it’s like having a bunch of
    witnesses to some crime and allowing those witnesses to talk to each other. They’re going to be less valuable if you’re
    interested in the truth than keeping them rigidly separate and collecting what they have to say.
    What have you seen work in a repeatable way? It may be a particular organization or across organizations
    to not only reliably surface disconfirming evidence, but then place a value on what is surface instead of
    being dismissive. Is there a framework for that? Is there?
    Well, yeah. There are many, you know, there are many procedures like red team, blue team,
    a devil’s advocate. I mean, there have been, you know, many attempts. In general, you know,
    if you are the head of a group that makes decisions, one of your missions would be to protect the dissenters
    because they’re very valuable and you should make it painless to be sent or as painless as possible.
    Well, it’s hard to be sent. It’s painful and costly. So protecting dissenters is important.
    I’m curious about the distinction between intuition and judgment. You had mentioned intuition, judgment,
    intuitive judgment. Can you walk me through some of like how those differ?
    It’s a bit hard to separate and judgment is what you do when you integrate a lot of information informally
    into a score of some kind.
    I, we speak, we being my co-authors and I in the book we’re writing, we speak of judgment as
    measurements. But it’s measurement where the measuring instrument is your mind. But you do it informally.
    And because you do it informally, people are going to, are not necessarily going to agree. So wherever we
    say it’s a matter for judgment, we’re allowing for differences, for variability.
    Now, judgment can be more or less slow, more or less systematic. So at one end, you have pure intuition,
    where you allow the judgment to go very quickly and so on. And at the other end, you try to delay
    intuition. But ultimately, if you’re making it by judgment, you’re going to have a judgment and it’s
    going to be like an intuition and you’re going to go with it. So the more or less deliberate judgment,
    intuition is always involved at one point or another.
    You’re either sort of like listening to it or fending it off?
    Yeah. And our recommendation is fend it off.
    Are there ways to judge the quality of somebody’s judgment?
    Yeah, sure. I mean, some of them would be unique to the actual scenario,
    but what are the sort of other ways that we could?
    Well, I mean, you may require people to explain their judgments and evaluating the quality of the
    explanation is, you know, whether it’s logical, whether it uses the evidence, whether it uses all
    the evidence, whether it is strongly influenced by wishes, whether the conclusion was reached before
    the judgments supposedly is made. You know, there are lots of ways for judgment to fail that can be
    recognized. So it’s harder to recognize very good judgment, but it’s really easy to see, you know,
    what goes wrong. And there are quite a few ways for judgment to go wrong.
    And I think some of those ways are the cognitive biases, like overconfidence and sort of using
    small or extrapolating from small sample sizes. And one of the interesting things that I’ve heard you
    say in interviews before, so correct me if I’m off here, is that you’ve studied cognitive biases
    effectively your whole life and you’re no better at avoiding them than anybody else.
    Yeah, certainly. Not much better, no.
    What hope do the rest of us have?
    Not much. I mean, I never, you know, I think, you know, the quality of people’s judgment is affected
    by education. But, so in general, you know, more educated people make better judgments, I think,
    on average. But people decide I’m going to make better judgments. I don’t think that’s very hopeful.
    I’m much more hopeful about organizations because organizations think more slowly and they have
    procedures for thinking. And so you can control the procedures. Individual judgment is really hard to fix.
    Not impossible.
    One of the things that I see people do in response to cognitive biases and trying to account for them
    is to sort of make a list of them, almost like a checklist, and then go through that checklist and
    explain or rationalize why those things don’t apply in this situation. It also strikes me that the more
    intelligent you are, the more stories you’d be able to conjure up about why you’re avoiding this.
    I really think that’s not very hopeful because there are so many biases. And the biases work in
    different directions anyway. So sometimes you can recognize a situation as one in which
    you’re likely to be wrong in a particular way. So that’s like illusions. If you recognize a particular
    pattern as something that gives rise to a visual illusion, then you don’t trust your eyes.
    You know, you do something else. And the same thing happens when you recognize this is a situation where
    I’m likely to make an error. So sometimes you can recognize the importance, for example, of what we’ve called
    an anchor. So you’re going to negotiate a price with somebody. They start very high. And that has an effect.
    So you know, or you should know, that the person who moves first in a negotiation has an advantage.
    Because the first number changes everybody’s view of what is considered plausible. So it moves things
    in that direction. That’s a phenomenon. People can learn that. And they can learn to resist it.
    So when I was teaching negotiations, I would say, somebody does that to you, comes up with a number
    that’s absurd. I would say, lose your temper. Make a scene. Say, I will not start the conversation from
    that number. It’s an absurd number. I don’t want to let’s erase that number. So that’s something that,
    you know, you know, you can improve if you recognize it. I think people are aware of the fact that you
    shouldn’t make a decision about road safety within a short interval of a terrible accident.
    So you should allow things to settle down and cool down. There is a more subtle error and harder,
    harder to fix. But that, the best prediction, the best guess is always less extreme than your impression.
    intuitive prediction. Intuitive prediction is, as we say, not regressive. It doesn’t recognize
    regression to the mean. But statistics is statistics. And in statistics, things are less extreme.
    Should I give you my favorite example of a bias? Yeah, please. Okay. I have been unable to think of a
    better one. But the story is about Julie. That’s part of the story. That’s her name. She is a
    graduating senior at university. And I’ll tell you one fact about her, that she read fluently when she
    was four. But it’s a GPA. And the interesting thing here is that everybody has a number. As soon as I
    told you that thing, her number came to mind. Now, we know where that number came from. We really,
    that’s one of the few things that I’m reasonably sure I understand perfectly. And this is that when you
    hear she read fluently at age four, you get an impression of how smart she is, of how precocious
    she was at age four. And you could put that in percentiles. You know, where did that put her on a
    percentile for sort of aptitude, ability? And it’s high. It’s not, you know, if she had read fluently
    at age two and a half, it would be more extreme. But age four is pretty high. So say at the 90th percentile.
    And then the GPA that comes to your mind is around the 90th percentile in the distribution of GPA.
    So you pick something, your prediction is as extreme as your impression.
    And it’s idiotic statistically, completely stupid, because clearly the age at which a child learned
    to read is not all that diagnostic with respect to GPA. So it’s better than nothing. If you didn’t
    know anything, you would predict the mean GPA, whatever it is, 3.1, 3.2. Now, she’s bright,
    so probably a little higher, but not 3.7. You don’t want to. So that’s cool. That’s a bias. That’s
    non-regressive prediction. And that’s very hard to resist. Sometimes I’m able to resist it,
    but never when it’s important. You know, when I’m really involved in something, I don’t think about it,
    but sometimes I will recognize, oh, you know, that’s the situation. I should moderate my prediction.
    And if you’re conscious of it, that’s an example of one you can sort of talk yourself into.
    Yeah. Yeah. You can talk yourself into. Although, you know, you usually will find a way to cheat
    and end up with your intuition. It’s remarkable. You know, when you’ve been in academic life for a long
    time, so you’ve been in many situations where people discuss a job candidate. And absurdities of that kind
    are very common. So somebody, a job candidate gives a talk, and people evaluate the talk, and this is
    something happens, you know, at Berkeley when I was teaching there, that somebody gave a talk. It wasn’t
    a very good talk. Stammered a bit. Now, that person had teaching prizes, and yet what was said about him
    in the discussion? He can’t teach. You know, we heard the talk. So that’s a mistake. But the funny
    thing is you can point out to people that that’s a mistake. They still don’t want to hire him because
    he gave a lousy talk. So it’s hard to resist. It’s interesting. I think one of the ways I probably
    got my job is using psychology in the interview, which is asking why I was there, and then reinforcing
    those beliefs throughout the interview. I want to come back just one second to the immediacy of sort
    of having a stimulus and then making a decision. So we use the example of roads, and a tragic accident
    happens, and you’re rethinking sort of policy or laws around the roads. How much of that do you think
    is social pressure? And I’m wondering if we could even extrapolate that a little more to we’re taught
    to answer questions on a test right away, right? So we see this question, then we answer it. We’re
    taught that we, or maybe it’s reinforced, taught is probably the wrong word, that politicians need to
    have a response, an immediate response to, and even if they know the best thing to do is like, okay,
    let this settle, take some time. It’s society writ large seems to demand it, like the environment is
    not conducive. I think it’s pretty clear that people prefer leaders who are intuitive and who are
    overconfident. Leaders who deliberate too much are viewed with suspicion, you know. So I think Obama
    Obama was at a certain disadvantage relative to George Bush, you know.
    Because he was seen as more deliberate.
    Yeah, he was more deliberate. And then when you’re very deliberate, you look as if you don’t know what
    you’re doing. But when you act with confidence, so people want leaders who are intuitive, I think,
    they’re very much. Provided they agree with me.
    I’m just working my way back through some of these rabbit holes that we’ve gone down. You taught
    negotiations. I’m curious what would be in your sort of syllabus for negotiations that everybody should
    learn about negotiations when it comes to your work in psychology.
    Well, you know, that goes back to a theme that we started with, the essence of teaching
    negotiations, that negotiations is not about trying to convince the other guy. It’s about trying to
    understand them. So again, it’s slowing yourself down. It’s not doing what comes naturally,
    because trying to convince them is a prime pressure. Arguments, promises, and threats are always a prime
    pressure. And what you really want is understand, you know, what you can do to make it easy for
    them to move your way. Very non-intuitive. That’s a surprising thing when you teach negotiation. It’s not
    obvious. You know, we are taught to apply pressure. I mean, socialize that way.
    You mentioned that there was procedures for thinking in organizations. Are there any that
    stand out in your mind that we could use to elevate thinking, and if not elevate,
    but give feedback on the quality of thinking to improve it? Well, I think one of the ideas that
    people like the most is an idea by Gary Klein, what he calls the premortem. And that’s the universal
    winner. People really like that idea. And this is that when you’re about to make a decision,
    a group, not quite, because if you’ve made it, it’s too late, but they’re approaching you. And then
    you get people in a room who can be the people who are making the decision. And you said, suppose it’s two
    years from now. And we made the decision that we’re contemplating. And it turned out to be a disaster.
    Now, you have a page in front of you, write the history of that disaster in bullets. That’s the
    pre-mortem. And it’s beautiful as an idea. It’s beautiful because when people are coming close to a
    decision, it becomes difficult to raise doubts or to raise questions. People who are slowing the group
    down when the group is nearing a decision are procedures really, you know, it’s annoying. You
    know, you want to get rid of them. And the pre-mortem legitimizes that sort of dissent and that sort of
    of doubts not only legitimizes it, you know, it rewards it. And so that’s a very good idea. I don’t,
    you know, I don’t think that it’s going to prevent people from making mistakes, big mistakes,
    but it could certainly, it will alert people to possible loopholes, to things that they ought to
    do to make a safer decision. So that’s a good procedure. And there are many others.
    What comes to mind. What comes to mind is, is to make intelligence, I mean,
    the collection of, of the information independent of the decision-maker’s wishes. And you really want
    to protect the independence of the people collecting the evidence. And I would add to, you know, a procedure
    that really people don’t like, but if it were possible to implement it, I think would be good.
    And that’s, that when you’re going to be discussing a topic, and it’s done in advance on people in sense
    and material to think about the topic, that you may want them to write down their decision, the decision they
    are in favor of before the discussion starts. That has many advantages. It’s going to give you a broader
    diversity of points of view, because people tend to converge very quickly in a, in a group discussion.
    And it forces people to be better prepared. It’s, except people don’t want this.
    So I, I don’t know whether it’s even possible to implement it, but clearly, if you could,
    it would be a good idea.
    What are the reasons people don’t want it?
    It’s too much work.
    Right. Forces you to do a lot rather than the signaling you can sort of get away with.
    Yeah. And then, you know, there’s somebody who is going to prepare the case. And so I glanced at
    the material and then, you know, so a lot of meetings are a tremendous, a sink for wasted time.
    And improving the quality of meetings would be a big thing.
    Do you have any insights on how to do that?
    Keeping them short. You know, I’m not a professional at fixing meetings. So I have,
    I have a few ideas, but not an incomplete view. The, the question of structuring the meetings to
    be discussing topics one at a time, that I think is, is really useful. I’ll give you an example. I mean,
    it’s something that I suggested when I was consulting, but for some reason,
    people didn’t buy that suggestion. So you, when an investment is being discussed,
    say by an investment firm, some staff people, if it’s a big investment, staff people will prepare
    a briefing book with chapters. Now, our recommendation would be that the staff should end each chapter with
    a score. How does that chapter taken on its own independently of anything else affect the likely
    decision? And then you could structure the meeting that discussed this and the meeting of the boards,
    say, to discuss these scores one at a time. That has the effect that I was talking about earlier,
    making the decision, making the judgments about the dimensions. We call them mediating assessments,
    is a drogen tube. The mediating assessments come first, and then you have the profile of them,
    and then you make a global judgment. And you can structure it. So if the staff has presented a score,
    and you discuss in the board, do we accept their score? You’re forcing people to have a look at
    the evidence. And think about why they would accept or reject. And then they feel like they have to
    construct an argument that might be less intuitive. That’s it. So, you know, there are ways of doing this,
    but if you’re going to be too rigid about it, it won’t work either. I’m curious what other advice
    you gave as a consultant that nobody followed. Oh, I mean, virtually all the advice I gave,
    people don’t follow. I mean, you know, I think that’s, that’s not, you shouldn’t, you know,
    you’re not going to be a consultant if you expect your advice to be taken. You have to give the best advice
    you can. What would be other examples of something you think could be widely applicable that you would advise,
    you would have advised people and you just sort of like saw them drop the ball?
    Well, I mean, you know, I would advise people who make a lot of decisions to keep track their
    decisions and of how they turned out so that later you can come and evaluate your procedures and see
    whether there is anything that is in common with those decisions that turned out well and didn’t,
    not so well and so on. People hate doing this.
    Why do you think people hate doing it?
    Oh, because, because retrospectively, they may look foolish, some of them or all of them,
    or in particular, the leader. So they really don’t like keeping track. I mean, there are exceptions.
    Ray Dalio and his firm, and where everything is explained. Bridgewater, yeah. Bridgewater. But in
    general, in my, I haven’t consulted with Bridgewater, they don’t mean me. But in general, when I suggested
    that, it never went anywhere. What are the variables that you would recommend people keep track of?
    Like, what would your decision journal look like?
    Oh, I mean, I, my, my decision journal would be a mess.
    I don’t, I’m not putting myself as an example, but…
    So obviously the outcome, but you’ve got to do that post after.
    Yeah, but no, no. You, you would want to say, what were the main arguments, pro and con? What were
    the alternatives that were considered?
    You know, it doesn’t have to be very detailed, but it should be enough so that you can come later and
    debrief yourself.
    So do you have a calibration, like what degree of confidence you are?
    That would be good. Then, you know, it would depend on something that you could evaluate later.
    It strikes me that decision journals and premortems are a way to identify people that are sort of,
    perhaps, suppressed by their manager, where you have somebody who’s actually a better,
    better at exercising judgment than the person that is, you know, that they’re working for.
    And this would be a pain-free sort of way to calibrate that score over time and identify
    the quality of judgment in a consistent way.
    Oh, yeah. I mean, that strikes me as worth a lot of money to an organization.
    Yeah. But, but also very costly. And you, you will see that certainly anything that threatens the
    leader is not going to be adopted. And, and leaders may not want something that threatened their
    subordinates either. People are really very worried about embarrassment.
    You’re writing a book now on noise.
    Yeah.
    Tell me about noise and decision-making. Can you explain the concept?
    Yeah. I can really explain it by saying what, you know, was the beginning of it,
    and which was a consulting assignment in an insurance company where we, I had the idea of running a test
    to see whether people in a given role who were supposed to be interchangeable agreed with each other.
    So, you know, when you come to an insurance company and an underwriter gives you a premium,
    the underwriter speaks for the company. And so it’s, you expect that any underwriter,
    that it doesn’t matter which underwriter you get to afford a premium. And the company has that
    expectation. It shouldn’t make much difference. So we tested that. And they constructed some cases.
    And then we had some like 50 underwriters assess a premium for the case.
    With the same information.
    Hmm?
    Yeah. With a really very realistic, we didn’t construct it. They constructed the case.
    So, and they conducted the experiment. But now, the interesting question is,
    how much variation do you expect there to be? So, we asked the executives the following question.
    Suppose you take two underwriters at random. By what percentage do they differ? I mean,
    you look at the difference between their premium, divide that by the average premium. What number do you
    get? And people expect 10%. By the way, it’s not only the executives in that company. For some reason,
    people expect 10%. And it was roughly 50%, 5-0. So that’s, you know, that’s what made me curious about
    noise. That and the fact that the company was completely unaware that it had the noise. It took
    them completely by surprise. So now we’re writing a book because there’s a lot of noise. So wherever
    a rule is that wherever there is judgment, there is noise. And more of it than you think. So that’s the
    pattern.
    Are there procedures to reduce noise? And conversely, it strikes me that the variation would be good,
    but maybe only in an evolutionary concept.
    Well, we call that noise is useless variability. I mean, variability can be very useful if you have
    a selection mechanism and some feedback. So evolution is built on variability, but of course,
    it’s useful, it’s useful. But noise among ambient writers is useless. There’s nothing. Nothing
    gets learned. There’s no feedback. It’s just noise. And it’s costly. The first advice, of course, would be
    algorithms, as I said earlier. So algorithms are better than people, than judgment. That’s not intuitive,
    but it’s really true. And after that, then the procedure that I mentioned earlier for making
    decisions in an orderly way by breaking it up into assessments. That’s the best that we can do.
    And there is one very important aspect that I haven’t mentioned. And this is training people in what the
    scale is. So there is one piece of advice that you’d have for underwriters, that they should always
    compare the case to other cases. And if possible, if you can have them share the same frame of
    reference with other underwriters, you’re going to cut down on the noise.
    Oh, that’s a clever idea, yeah.
    And that exists in human resources, where performance evaluation, which is one of the scandals of modern
    commerce, how difficult it is. But performance evaluation, they have the thing that’s called
    frame of reference training, which is teaching people how to use the scale. There’s a lot of variability in
    the scale. And a part of what the super forecasters do, they make judgments in probability units,
    and they teach them to use the probability scale. So learning the scale is a very important aspect of
    reducing noise.
    I know we’re coming up to the end of our time here. What have you changed your mind on in the past 10 years?
    Oh, a lot.
    Anything big?
    Yeah. There’s been a replication crisis in psychology. And some of the stuff that I really
    believed in, when I wrote “Thinking Fast and Slow”, some of the evidence has been discredited. So I’ve had to
    change my mind.
    What are the, what’s the biggest?
    Some of the sexiest stuff, priming and unconscious priming, and so it just hasn’t held up in replication.
    And I believed it, and I wrote it as if it were true, because the evidence suggested it. And in
    fact, I thought that you had to accept it, because that was published evidence. And I should have,
    I blame myself for having been a big gullible. That is, I should have known that you can publish
    things, even if they’re not true. But I just didn’t think that through. So I changed my mind.
    I’m now much more cautious about spectacular findings. I mean, very recently, I’ve come,
    I think I have a theory about why psychologists are prone, or social scientists generally are prone to
    to exaggerate, to be overconfident about their hypotheses. So I’ve done quite a bit of learn.
    What’s the theory?
    Well, the theory, the one element of the theory is that all these hypotheses are true. In what sense?
    That, you know, if I, there’s a famous study that you mentioned wrinkles to people, and then
    you measure the speed at which they walk, and they walk more slowly. Turns out that hasn’t held up in
    replication, which is very painful. It’s one of the favorite studies. But actually, you know, that if
    you mention wrinkles, and it’s going to have any effect on the speed of walking, it’s not making to make,
    it’s not going to make people faster. If it has any influence, it’s going to make them slower. So
    directionally, all these hypotheses are true. But what there is, is what people don’t see, is that
    then huge number of factors that determine the speed at which individuals walk, and the differences in the
    speed of walking between individuals. And that’s noise. And people neglect noise. And then there is
    something else, which is, touches on both philosophy and, and psychology. When you have intuitions about
    things, there are clear intuitions, and there are strong intuitions. Another thing. So clear intuition is if I
    offer you a trip to Rome, or a trip to Rome and an ice cream cone, you know what you prefer. It’s easy. But it’s very
    weak, of course. I mean, the amount of money you would pay to get a trip to Rome, a trip to Rome and an ice cream cone,
    nothing. But when you are a philosopher, and I should add one thing, to see the clear intuitions,
    you have to be in this kind of situation that psychologists call within-subject. That you
    have both. You have both with the ice cream cone and without the ice cream cone. So in a within-subject
    situation, that’s an easy problem. In a between-subject situation, it’s an impossible problem. But now,
    if you’re a philosopher, you’re always in a within-subject situation. But people live in a
    between-subject situation. They live, you know, in one condition. And the same thing is true for
    psychologists. So psychologists live in a, when they cook up their hypotheses, they’re in a within-subject
    situation. But then they make guesses about what will happen between subjects. And they’re completely
    lost between clear intuitions and strong intuition. We have no way of calibrating ourselves. So that makes
    us wildly overconfident about what we know and reluctant to accept that we may be wrong.
    That’s a great place to end this conversation, Danny. Thank you so much.
    Thanks for listening and learning with us. Be sure to sign up for my free weekly newsletter at
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    leaving a rating and review would mean the world. And if you really like us,
    sharing with a friend is the best way to grow this community. Until next time.

    Daniel Kahneman won the Nobel Prize for proving we’re not as rational as we think. In this timeless conversation we discuss how to think clearly in a world full of noise, the invisible forces that cloud our judgement, and why more information doesn’t equal better thinking. Kahneman also reveals the mental model he discovered at 22 that still guides elite teams today. 

    Approximate timestamps: 

    (00:36) – Episode Introduction  

    (05:37) – Daniel Kahneman on Childhood and Early Psychology  

    (12:44) – Influences and Career Path  

    (15:32) – Working with Amos Tversky  

    (17:20) – Happiness vs. Life Satisfaction  

    (21:04) – Changing Behavior: Myths and Realities  

    (24:38) – Psychological Forces Behind Behavior  

    (28:02) – Understanding Motivation and Situational Forces  

    (30:45) – Situational Awareness and Clear Thinking  

    (34:11) – Intuition, Judgment, and Algorithms  

    (39:33) – Improving Decision-Making with Structured Processes  

    (43:26) – Organizational Thinking and Dissent  

    (46:00) – Judgment Quality and Biases  

    (50:12) – Teaching Negotiation Through Understanding  

    (52:14) – Procedures That Elevate Group Thinking  

    (55:30) – Recording and Reviewing Decisions  

    (57:58) – The Concept of Noise in Decision-Making  

    (01:01:14) – Reducing Noise and Improving Accuracy  

    (01:04:09) – Replication Crisis and Changing Beliefs  

    (01:08:21) – Why Psychologists Overestimate Their Hypotheses  

    (01:12:20) – Closing Thoughts and Gratitude

    Thanks to MINT MOBILE for sponsoring this episode: Get this new customer offer and your 3-month Unlimited wireless plan for just 15 bucks a month at MINTMOBILE.com/KNOWLEDGEPROJECT.

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    Photograph: Richard Saker/The Guardian

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  • Les Schwab: Why Real Ownership Outperforms Experience, Capital, and Credentials (Outliers)

    AI transcript
    Charlie Munger once asked me how can someone give away 50% of profits and make billions
    more than if he’d kept it all? Before I could answer he told me about Les Schwab,
    a tire shop owner who understood incentives better than almost anyone.
    What Schwab discovered will change how you think about business.
    Welcome to The Knowledge Project. I’m your host, Shane Parrish.
    In a world where knowledge is power, this podcast is your toolkit for mastering the best of what
    other people have already figured out. This episode is for educational and information purposes only.
    What Les Schwab discovered was deceptively simple. Most businesses treat employees like expenses to
    minimize. He treated them like partners to enrich. The math was shocking. He gave away half his profits
    and built a multi-billion dollar empire. Here’s how it worked. When people working in the tire
    centers made a share of the profits, they don’t just change tires. They build relationships with
    customers. When managers own real equity with skin in the game, they run stores like their family’s
    “Future depends on it.” Because it does. Les documented his business lessons in his autobiography,
    Pride in Performance. Keep it going. He wrote it himself on a 40-year-old typewriter because he wanted
    every entrepreneur to understand exactly how he did it. No ghostwriter, no corporate polish,
    just the raw blueprint for turning a leaky shed into an empire. Les proved that the most ruthless business
    strategy is radical generosity. He turned employee loyalty into a competitive moat so deep that Walmart
    couldn’t cross it. This is his story. Before Les Schwab was the name on over 400 tire stores across the
    American Northwest, it was the name of a kid born into nothing. Bend, Oregon, 1917. His parents were desperate
    homesteaders fighting the high desert for a living. His mother, Alice, taught him everything that mattered.
    Then pneumonia killed her when Les was 15. That left him with his father, Bishop. A study in contradiction,
    gentle and hardworking when sober, a maniac when drunk. Les spent his teenage years terrified that his
    father would show up at school drunk and humiliate him. Poor but proud. That’s how Les described himself.
    That pride was armor. A year after his mother died, they found his father’s body outside of a moonshine
    joint. Les was 16. He was now an orphan. His relatives offered to take him in, but he said no.
    Instead, he rented a room in a boarding house for $15 a month, decided he was an adult. The world had
    given him a hard education and an allergy to alcohol. Most kids in his position would have taken the help,
    moved in with family, and stayed safe. Les chose the harder path. While it wasn’t so much choosing the
    harder path consciously, he just didn’t feel he could rely on anyone else. He wanted everything
    on himself. I understand that. Choosing pride over comfort and independence over security
    shows in nearly everything he went about doing. The lesson here is a bit counterintuitive. The worst
    things that happen to you can become an advantage, but only if you refuse to let them define you as a victim.
    Les could have blamed his circumstances. Instead, he used them as fuel.
    Les got his first paper route before his parents died. However, this came with two problems.
    One, he couldn’t ride a bike. Two, he couldn’t afford a bike. So he ran every day for two months,
    running his entire paper route on foot to earn money for a used bicycle. He had to do the job to afford
    the tool required to do the job. One morning, he couldn’t find a customer’s address. Ten miles he ran on
    an empty stomach. He ended up collapsing in the street. Les needed to work. He had no choice.
    He had bills to pay, and he needed a bike. Nobody was going to hand him anything. At the same time,
    he was also washing dishes at a restaurant, earning $3 a week plus meals. Here’s his schedule as a 16 year
    old orphan. Paper route in the morning, school all day, restaurant at night.
    Then he started doing the math. Selling newspaper subscriptions paid 50 cents each. He could make more
    in a few hours selling than a whole week washing dishes. So he quit the restaurant. When he finally
    saved enough for a bike, he got a new route under Mr. Goldenberg. Goldenberg was important because he
    taught him how to sell. Not just deliver newspapers, but actually sell them. Knock on doors, talk to
    people, persuade them. Les doubled the route’s numbers in a few weeks. Goldenberg saw a potential.
    So he had an idea. Start a Sunday route in farm country. It’s an underserved market, but a logistical
    nightmare. Les would need a car. During the Depression, most 16 year olds saved for a baseball
    glove. Les was saving for a 1926 Chevrolet with a box on the back. $75 cash. Sundays, he’d drive the
    rural roads. On weekdays, he was back to the bicycle because gas cost too much. He liked the car, but he
    liked money even more. He signed up 80% of farms in rural Bend. That’s when Les learned the principle that
    would define his business philosophy. People don’t buy your product. They buy your service, your reliability.
    They buy you. By his senior year, Les controlled all nine Oregon Journal routes in Bend. He was making
    $200 a month during the Great Depression. More than his high school principal. Out of 500 students,
    only Les drove a new car. A 1934 Chevrolet bought with cash. His classmates thought it was showing off,
    but they missed the point. The car wasn’t about status. It was proof. Proof that hard work plus smart
    thinking beats any disadvantage. What stands out to me here is the compound effect of small
    advantages. Les turned one paper route into nine through relentless execution. A lot of people treat
    smaller jobs as stepping stones to bigger ones. They’re never fully present in what they’re doing,
    never giving it their all. Les gave 100% of his effort to the work right in front of him all the time,
    and that always led to more work and more opportunity. As Charlie Munger said, the best way to get more work
    is to do the work right in front of you. And do it well. Les met Dorothy Harlan when they were both
    teenagers. They married at 18 and he bought them a small house. They barely had time to unpack. His
    reputation as a newspaper salesman had spread beyond Bend. A paper in Eugene, Oregon offered him a district
    manager job. The newlyweds packed up and hit the road, living out of motels, while Les traveled his
    territory selling subscriptions. They called him a circulation man, someone with an almost supernatural
    ability to boost subscription rates wherever he went. Les negotiated a new job with better pay,
    but he had one question that revealed how he thought about the world. Who’s my boss? The owner said he’d be
    Les’ boss. Simple enough. But within weeks, Les had three different managers giving him contradictory orders,
    so he went straight back to the owner and laid out the problem. The owner immediately straightened out
    the other two managers. The lesson here is if you don’t know who you’re accountable to, you’re
    accountable to everyone, which is the same thing as being accountable to no one. Clear lines of authority
    offer clarity and purpose. He was young and talented and perhaps even a bit cocky, but he had pulled
    himself up from nothing, outworked almost everyone else, and learned through trial by fire. When Les took
    over the paperboy program, he discovered it was hemorrhaging carriers. 20% of carriers quit every month,
    so he got creative. First, he obtained lists of every 7th and 8th grader in local schools and recruited them
    personally. Then he did something radical for the era. He hired girls. They turned out to be more reliable than
    boys. But his real genius was the honor carrier program. Each month, one carrier won based on sales,
    service, and bookkeeping. The prize? $25 in their picture in the paper. This was Les’ first real
    experiment with incentive design, and he was learning how much they matter. One of my favorite mongerisms is
    show me the incentive and I’ll show you the outcome. If you reward the behavior you want, you’ll get more
    of it. The lesson here connects directly to building any organization. Les understood that unclear reporting
    structures create chaos. Everyone thinks they’re in charge, so no one really is. He also grasps something
    most managers miss. Recognition often matters more than money. That honor carrier program cost $25 a month,
    but transformed retention. These weren’t just newspaper tactics. They were blueprints for building
    a multi-billion dollar business. At 33, Les Schwab was consumed by a single ambition: to own his own
    business, to be in control of his destiny. The newspaper world suddenly felt too small. He joined
    every business club he could find, the Jaycees, Toastmasters, Chamber of Converse, anything that smells like
    business. He was terrified of getting old, of falling into a rut that he’d never escape. And then he saw
    it: a tire shop for sale in Prineville, Oregon. Les knew nothing about tires, but he did know sales, and
    he figured that was what mattered. His brother-in-law offered to partner with him, then got cold feet,
    and backed out. Racked with guilt, he came back and offered to fund Les, but no partnership. Les would
    be on his own. The shop was an okay rubber welder’s franchise: new tires, retreads, flat repairs, hard,
    dirty, manual work. In order to purchase it, he’d need to go all in on himself, and sell his house,
    and borrow against his life insurance, and borrow from his brother-in-law. Les scraped together money
    from every corner of his life. Everything he’d built, everything he’d saved, it went into this one bet.
    On January 1st, 1952, at 34 years old, Les Schwab walked into his tire shop as the new owner.
    It was a leaky 1,400 square foot shed with no running water and no indoor plumbing. It had one employee.
    The annual sales for the year before were $32,000.
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    Sign up for free at Basecamp.com. While Les knew nothing about tires, he knew a lot about selling and
    being able to outwork other people. His first taste of real business, one he owned and controlled,
    was about to begin. On his first day, a customer walked in wanting two six-ply tires mounted. Les got
    right to work. There was just one problem. He had no idea what he was doing. He’d always taken flats to
    a service station, and now he was the service station. Using hand tools on a cold concrete floor,
    he made a complete mess of it until his lone employee arrived and saved him. That first month,
    Les did $2,800 in sales, about what the previous owner had done. But by June, something had shifted.
    Sales hit $10,000 a month. By year’s end, he’d done $150,000 in revenue, five times what the previous
    owner managed. Growth created the best kind of problem. He needed help. Les appointed himself
    outside salesman and told his one employee to hire someone. The new hire was, to put it charitably,
    no good, so he fired him. Then something interesting happened. A man named Frank Kennedy walked in off
    the street asking for work. He and his wife had just moved to Prineville. He was looking around town
    and decided he wanted to work for Les. Les checked his references. Frank took to the work like he was born
    for it. This became a pattern. The right people kept showing up, drawn to something they couldn’t
    quite name but could feel. Les was creating gravitational pull for good, hardworking people.
    Good people can sense when something real is being built. It’s the same energy a lot of people feel at
    startups today. But Les was learning just how rigged the tire business was. The major rubber companies had
    what Les called phony pricing. A truck tire might cost him $100 wholesale but he’d visit competitors
    and find them selling that same tire for $90. He’d call his supplier furious. They’d say for that deal
    we’ll sell it to you for $90 and give you a 5% commission. It was such a shell game. Months of paperwork
    and bookkeeping, floating expenses all to arrive at the same 5% margin every dealer got. The entire system was
    designed to prevent real competition. Les wrote down his philosophy in a fury of anger.
    Never take advantage of a customer. Never take advantage of an employee. But take all the advantage
    you possibly can of the rubber company because they are not being fair and honest.
    The constraints forced him to innovate. Big dealers had fleets of $6,000 service trucks
    visiting commercial accounts. Les had one store and no capital for trucks. So he flipped the model.
    He put an ad in the paper with a simple message. You know the wholesale prices the big guys get.
    Come to my shop and I’ll give them to you directly. No middlemen. His competitors visited customers once
    a week. Les was at his store six days a week. A permanent fixture. Best service, best prices,
    but you had to come to him. It was asymmetric warfare. He had low overhead. It was a simple
    value proposition and it worked. People came in droves. What fascinates me here is how constraints can
    become advantages. Les couldn’t afford to play by industry rules so he invented new ones. He couldn’t
    compete on the suppliers terms so he competed on transparency. He couldn’t go to customers directly
    so he gave them a reason to come to him. The lesson isn’t that you need resources to win. It’s that you
    need to see the game differently than everyone else is playing it. Les was ready to expand. The nearby town
    of Redmond needed a tire store. He bought land, put up a building, invested $10,000 total. Now he had two
    stores. Both okay rubber franchises. But there was a problem. He’d bitten off more than he could chew.
    Running between the two stores was killing him. So Les made his star employee Frank Kennedy a win-win deal
    that would become the foundation of his empire. Here’s how it worked. Frank would manage the Redmond
    store. He’d pay Les $200 monthly rent and take $400 salary. After that, they’d split all profits 50-50.
    But here’s the genius part. Frank had to leave his share of the profits in the business until his stake
    equaled Les’ initial investment. That was real skin in the game. Sit with that for a second.
    Frank had zero upfront risk. Les put up all the capital. But every day Frank ran the store well,
    he owned more of it. The better he performed, the faster he’d build equity. It was his store in every
    way that mattered, except Les kept half the upside. Les even added another twist. If Frank wanted a raise,
    he could give himself one. But the store’s rent would increase by the same amount, giving Les a raise too.
    A self-balancing system. People thought Les was crazy. Why give away half your profits?
    Les saw it differently. If I share half the profits, I still have half. And if Frank makes more money,
    he’ll work harder to make the store more successful. And if the store is more successful,
    my half is worth more than the whole used to be. It was pure math. But it was also more than math.
    It was an understanding of human nature. Les remembered running his paper route on foot
    because he couldn’t afford a bike. He remembered how the honor carrier program had motivated those
    kids. He knew what it felt like to want something to be yours. The Redmond store turned profitable
    immediately. Frank ran it like he owned it because increasingly, he did. The arrangement with Frank
    became the template. Every Les Schwab store would follow this model. Every manager would be a partner,
    not an employee. This is one of the most elegant business solutions I’ve seen.
    Les solved multiple problems at once. He couldn’t manage multiple locations himself,
    so he needed to retain talent. And he needed managers to think long-term. The solution aligned
    everyone’s interests perfectly. Frank couldn’t get rich without making Les rich. Les couldn’t expand
    without making Frank rich. Les stumbled onto his next innovation by accident. His Prineville store
    was bursting. Retreading equipment and tires cluttered every square inch of the sales floor.
    They were working in what amounted to a filthy garage. By now he had two stores. Les saw the problem
    differently. Why should customers shop in a dirty garage? Why not separate the dirty work from the selling?
    He bought a small carpenter shop nearby and moved all the retreading equipment there. Suddenly,
    his stores looked like actual stores. Places where people might want to shop, not just get their tires
    fixed. With retreading centralized, he could exploit the economies of scale. One set of equipment,
    serving multiple stores. The savings would compound as he grew.
    Time for store number three. Les set his sights on Bend, his old hometown. But there was a problem.
    Bend already had an OK Rubber Welders franchise. This should have stopped him. Franchise territories are
    kind of sacred. But Les had learned there’s always a deal if you’re creative enough. He pitched the OK
    district manager something unprecedented. What if Bend had two OK stores and he’d pay royalties to the existing
    operator and run a second location? The manager, probably thinking Les was crazy, agree. And it was
    messy from the start. The two stores managers couldn’t get along. Les’s managers quit, leaving him with an
    empty building and a lease. At this point, most people would have admitted it was a mistake and moved on.
    Les, however, was not most people. He’d been planning to start his own brand anyway. He’d already been
    advertising as Les Schwab OK Rubber Welders to get his name out there. Now seemed like a perfect time to
    cut loose. When he told OK Rubber Welders he was going independent, they said he couldn’t do that.
    Let’s not argue, Les replied. I just wanted to be open about it. He needed a name. Tire Center was too
    generic. Tire Service Center wasn’t much better. He was thinking bigger than one store. He settled on
    Les Schwab Tire Center, with his name initially in smaller print. Then something interesting happened.
    Customers started asking for Les Schwab Tires, not Goodyear, not Firestone, Les Schwab. What strikes me
    here is how Les bounced every time he hit a wall. No space? Centralized operations. Franchise territory
    taken? Create a new model. Manager quits? Perfect time to go independent. But the real insight was
    discovering that customers trusted him more than they trusted the tire brands. In a commodity business,
    the seller’s reputation matters a lot. Store number four came from an unusual source. Gordon Pryday
    worked at the Prineville store and every morning he’d walk in with the same greeting. When are we going to
    open in Madras? Not good morning, not house business. When are we going to open in Madras?
    Madras was another small Oregon town. Gordon saw opportunity there and wouldn’t let it go. Problem
    was, Madras already had an OK Rubber franchise. Les figured if he was already fighting OK Rubber in
    Bend, he might as well make it a proper war. He drove to Madras and found a bankrupt fruit stand for sale.
    $10,000 got him the building and the land next door. The fruit stand had a small apartment in the back.
    Gordon moved his family in immediately. Let that sink in. This man believed so strongly in the
    opportunity that he moved his wife and kids to the back of a converted fruit stand. The family kitchen
    table sat steps away from the tire racks. When customers left for the day, Gordon was still there.
    When they arrived in the morning, he was already there. This wasn’t a job, it was a mission, and it existed
    because of the profit sharing deal. Gordon knew that every tire he sold was building his own wealth.
    Les and Gordon ran the numbers. They’d break even at $2,000 a month, make a small profit at $25, and do
    pretty well at $3,000. In year one, they broke even exactly. In year two, $800 profit, split 50/50.
    And here’s the punchline. Another tire dealer opened in Madras around the same time.
    Shiny new building, proper equipment, all the advantages that Gordon lacked. That competitor
    went out of business in two years. This story captures something profound about ownership
    versus employment. The competitor had every advantage except the one that mattered, skin in the game.
    Gordon Pryday wasn’t just managing a store, he was building his family’s future. That’s what real
    incentive alignment creates. People who live in the back of a fruit stand because they’re not working
    for you, they’re working with you. They’re not building your dream, they’re building their dream
    with you. But Les had a problem. He was running OK rubber welder stores in Prineville and Redmond,
    but Les Schwab tire centers in Bend and Madras. Two different brands, one owner. It was confusing for
    customers and open rebellion against his franchise agreement. The corporate brass at OK had seen
    enough. Five executives flew from headquarters to confront Les in a Redmond motel room.
    “We’ve come for your answer,” they said. “Get out of Bend and Madras or else.”
    Les had been losing sleep over this moment for weeks. He paced the floor at night,
    terrified they’d seize his equipment and destroy him. The timing couldn’t be worse. His largest customer
    was behind on payments that equaled his entire net worth. If that customer went bankrupt and OK seized
    his equipment, he’d lose everything. But sitting in that motel room facing five corporate executives,
    something snapped. “I don’t want any more harassment from you people,” said Les. “If you have anything more to
    say, say it in court.” And then he walked out. It was pure bluff. Les had no money for lawyers. No case
    to make. For months afterwards, he lived in terror that the lawsuit would end everything. The lawsuit
    never came. Years later, Les figured out why. OK had 1100 franchises nationwide. If they sued him and lost,
    it could set a precedent that would unravel their entire system. They couldn’t risk it. By standing up to
    them, he’d accidentally found their weakness. They needed the franchise system more than they needed
    to crush one rebellious dealer in Oregon. Now, Les moved fast. He repainted all four stores with Les
    Schwab Tire Center, prominently displayed. One brand, one identity, one vision. The franchise rebellion
    was over. Les was free. This moment reveals something crucial about negotiations and power. Les had no leverage
    except for one thing: the cost of being wrong. They could crush him, but if they failed, they create a
    precedent that threatened their entire business model. Sometimes your only power is making the consequences
    of attacking you too expensive for your opponent to risk. Les won not through strength, but by understanding
    what the other side feared losing. He saw the whole board, not just his own pieces. During the chaos of
    growth and franchise battles, Les would escape with Dorothy on long drives. These weren’t romantic
    getaways. They were strategy sessions. “I’m going to build a small warehouse,” he told
    her one evening on the Columbia River Highway. “Move my bookkeeper out there, buy the tires myself,
    do the advertising, price the tires, handle the books, maybe build six, seven, or eight stores someday.”
    He could see it all mapped out. A central operation supporting a network of profit-sharing stores.
    Each manager thinking like an owner because they were an owner. He’d need scale to buy tires at volume
    discounts. He knew advertising. He knew promotion. Most importantly, he knew how to align incentives.
    Six, seven, maybe eight stores. That seemed wildly ambitious in 1956. He would go on to build 410 before he died.
    By the time Les had seven stores, a new problem emerged. The stores were growing. What started as
    one manager and a helper had become teams of four, five, six people. Les wanted to extend profit-sharing
    deeper into each store. His solution was elegant. Managers would appoint their best person as assistant
    manager. That person would get 10% of profits. 5% from Les, 5% from the manager. The split would go from
    50-50 to 45-45-10. The assistant manager would build equity in the store. When a new location opened,
    they’d become the manager there, taking their accumulated profits with them. It was a self-replicating system.
    Every store would create its own successor. The managers hated it. They didn’t want to lose the 5%.
    This threatened Les’ entire growth model. Without succession planning, expansion would stall.
    So Les wrote one of the most remarkable memos in business history. He said this,
    “If a bright, young, ambitious man joins our company and wants to make our company his career,
    does he do it because he likes Norm or Gordy or Bob? Do you men think that some little fairy sent
    you this man just to help you build your bonus? This man is going to work for low pay year after year,
    just so you can build your profit share into a nice, fat nest egg? No, I don’t think so.
    This man didn’t join the company because of the store manager’s future. This man joined the company
    because of his future with Les Schwab Tire Centers, not in you personally. If you men block this man,
    you are being selfish. Two of the seven managers appointed assistants, and then Les dropped the
    hammer. Effective immediately, all manager shares dropped from 50 to 45%. If they appointed an assistant,
    that person got 10%. If they didn’t, the company kept the extra 5%. Suddenly, every store had an assistant
    manager. And the growth engine roared back to life. This is leadership at its finest. Les understood
    something that his managers didn’t. Their wealth came from the system he created, not just their
    individual contributions. When they hoarded opportunity, they violated the very principle that
    made them successful. His memo didn’t just shame them, it reminded them of their moral obligation to
    pay forward what they’d received. But when moral arguments failed, he used economics.
    The beauty is that once forced to share, the managers discovered what Les already knew. Developing
    your successor makes you more valuable, not less. Coming up, the moment Les discovered he wasn’t really
    in the tire business at all. That single insight let him charge premium prices in a commodity market
    and made his employees run, literally run, to serve customers. If you think you know what business
    you’re in, the next part will make you question everything.
    Les had solved his incentive problem. Now he turned to something bigger, reimagining what a tire store
    could be. It was 1956. On a weekend drive, Les found himself studying grocery stores.
    Customers wandered the aisles, they compared prices, they made informed decisions. Then he’d pass a tire
    shop, same cramped waiting room, same dealer disappearing into the back to fetch whatever
    tire he felt like selling. What if Les wondered aloud, we displayed tires like Safeway displayed groceries?
    Think about how radical this was. Tires were ugly industrial products. Heavy, dirty, technical. Every
    dealer hid them in the back of the warehouse. Why would customers want to see them?
    But Les thought differently. People buy what they can see and what they can understand.
    He started converting his stores into supermarket tire centers. Massive showrooms, hundreds of tires on
    display, organized by type and size. Clear pricing, educational materials. Let the customer browse,
    let them compare, let them touch, let them choose. When he opened the next store, Les centered a company
    memo that read like a declaration of war. This I vow, we’re going to have a supermarket tire store in
    every town that we have a Les Schwab tire center. I hate to use threats. It’s against my policy entirely,
    but you can visualize what is going to happen in your town if you don’t run a supermarket tire store,
    because I’m going to have it regardless of cost. I sincerely hope I have made myself very clear. I
    love you, but I love a supermarket tire store even more. But displaying tires wasn’t enough. They were
    ugly. They had to be spotless. They had to be beautiful. Les would visit stores constantly looking for
    the ideal place a person would want to buy tires. The winners were always the cleanest. Tires waxed and
    gleaming everything in its place. He became obsessed with the details of tire presentation. He found the
    perfect spray paint and lacquer to make tires look their best. He sent another memo to everyone telling
    every manager exactly what brand to buy and where to get it. This is 40 years before Steve Jobs would
    obsess over every detail of the Apple store. Les Schwab was applying the same thinking
    to truck tires. The results were immediate. Customers spent more time browsing, they asked better
    questions, and they bought more tires. More importantly, they trusted what they could see.
    In the 1960s, Les made a decision that would have seemed insane to other dealers. He took down every tire
    manufacturer sign from his stores. His sign maker asked what design you wanted for the new signs. Les looked
    around and pointed to a standard oil station. Put Les Schwab where they have standard and put tires where
    they have the Chevron logo. Done. With that simple instruction, Les became the first major tire dealer
    in America to build his business around his own name instead of a manufacturer’s brand. No more Goodyear
    signs. No more Firestone banners. Just Les Schwab. He was betting everything on one idea. People would buy tires,
    not because of who made them, but because of who sold them. We don’t have the blimp flying around
    like Goodyear, he’d later joke, but we’ve got something better. The Les Schwab sign. And in the
    Northwest, that’s more powerful than the blimp. The timing was perfect. Foreign tire manufacturers were
    flooding into America. The market was oversupplied. For the first time since World War II, the big American
    tire companies had lost their stranglehold on pricing. Les embraced the chaos. I was so disgusted with the tire
    suppliers that I was willing to do most anything to help my company survive, he wrote. I decided to
    take down all rubber company signs, to go straight independent, to buy tires like Safeway buys groceries,
    to buy the best possible tire, good quality, and at the lowest possible price. Most dealers at the time
    stayed loyal to one manufacturer. They’d get a good deal on one brand, but that’s all they could offer.
    Les bought from everyone. Japanese manufacturers, European imports, anyone who made quality tires at the right
    price. His scale gave him leverage. Like Costco, decades later, he bought in massive quantities and
    passed the savings on to customers. Here’s how it worked. Les always had one line of tires priced to
    match his lowest competitor. But then he’d have three, four, or five other options at different price
    points, all displayed beautifully in his spotless showroom. Customers had no reason to shop anywhere else.
    He had the best prices, he had the best selection, and he had the best service. The tire manufacturers had
    lost control of their own market. This move reveals a profound insight about branding and power. Schwab
    understood that in a commodity business, the relationship with the customer matters more than the product.
    By removing manufacturer signs, he wasn’t just changing decor. He was asserting ownership of the customer
    relationship. The tire companies became his suppliers, not his partners. It’s the same playbook that Amazon
    would later use with book publishers or that Walmart used with consumer goods companies. Control the
    relationship and you control the business. By 1965, Les had 15 stores scattered across Oregon and Idaho.
    He faced the classic scaling problem. How do you maintain quality when you can’t visit every store
    every week? His solution was elegant. He promoted his best store managers to become zone managers. But
    here’s the twist. They kept running their own stores while overseeing others nearby. No extra salary,
    no corner office, just results-based pay. Think about those incentives for a second. If your zone thrived,
    everyone made money. If it struggled, your own store suffered because you were spending time away from
    it fixing other people’s problems. It was kind of self-regulating brilliance. Bad zone managers would
    naturally step back to focus on their own struggling stores. Good ones would lift every store around them
    and share in the profits. Zone meetings became the company’s heartbeat. This is where they picked
    managers for new stores, debated expansion, shared what worked. Les ran them like board meetings. Every
    zone manager had skin in the game. They’d all started changing tires and worked their way up through the
    profit-sharing system. When a management position opened, it was like Shark Tank before Shark Tank
    existed. Assistant managers would pitch for their shot at running a store. Les and the zone managers would
    interrogate them. How much money do you have in your profit-sharing account? What’s your plan? Why should we bet on you?
    The person with the most skin in the game usually won, but not always. But it was never the smoothest
    talker. This structure solved multiple problems at once. It created management depth without bureaucracy.
    It aligned regional interests with store-level execution. Most importantly, it ensured that
    decision-makers had lived the business from the ground up. When you’re picking someone to run a new
    store, who better to judge than people who’ve already succeeded at it? Les didn’t need consultants or
    personality tests. He had a system that selected for proven operators with their own money on the line.
    By 1970, Les had codified his profit-sharing into what he called the 100 story. For every $100 of store
    profit, $25 went to the manager, $10 to the assistant manager, $27 to the employee bonus and retirement fund.
    The company kept 38%. But here’s the clever part. The company didn’t take its share until the manager
    had enough equity to start drawing theirs. That 38% stayed in the store as working capital,
    building the manager’s stake. This created wealthy managers through ownership, not salary. By the mid-1970s,
    some of the store managers were making over $100,000 annually, more than most corporate executives in
    the 1970s. The growth was relentless. Seven stores in 1956, 35 by 1970, over 60 by 75. But the real
    brilliance wasn’t the growth rate. It was that each new store made the whole system stronger. The central
    warehouse bought in ever larger quantities, crushing competitors on price. Every store created assistant
    managers, hungry to run their own locations. And most remarkably, the expansion was self-funded. Managers left
    their profits in as working capital. When they moved up to run a new store, they brought their accumulated
    wealth as startup capital. Les had built a machine that financed its own growth. This is one of the most elegant
    business models I’ve seen. He solved the eternal problem of expansion capital by making his managers into bankers.
    They funded growth not because they had to, but because they wanted to. Their equity was
    building while it sat there. Meanwhile, the company got interest-free loans from the very people most
    motivated to make those stores succeed. Around 1970, Les made another counterintuitive move. Instead of just
    building new stores, he started recruiting his competitors. The pitch was simple. Keep your independence,
    but join Les Schwab network. Get access to our buying power, our advertising, our system. Buy tires at the
    same prices we pay. Think about the elegance of this. Every dealer who joined made Les’s buying power
    stronger, which made his prices better, which made more dealers want to join. It was a virtuous circle.
    JJ Stamper had been a Goodyear dealer for 40 years, barely scraping by. After joining Les’s network,
    he built four stores and hit six million in annual sales. Within five years, 60 independent dealers had
    joined. They added 50 million in annual sales without Les investing a dollar in real estate or inventory.
    He turned competitors into allies. His gravity alone was enough. This is network effects before
    anyone called them that. Les understood that in a commodity business, scale is everything. Every
    dealer who joined made it more attractive for the next dealer to join. Sometimes the best way to beat
    competitors is to actually make them partners. As Les’ empire scattered across multiple states,
    he faced a new problem. How do you maintain personal relationships when managers are hundreds of miles
    apart? His solution raised eyebrows. He bought airplanes, first a Cessna, then a Piper,
    then eventually a Citation. Les initially resisted, but he realized planes were tools that collapse
    geography. He could visit five stores a day, attend zone meetings, look managers in the eye instead of
    managing through reports. The planes make all of our stores just one hour away, he said. For a
    company built on relationships, that proximity was everything. By 1975, Les Schwab had over 60
    company stores plus 60 member dealers. Revenue exceeded 130 million. The investment banker started
    circling. Private equity firms made offers. The numbers were astronomical, enough to make Les one of the
    wealthiest men in America. But he turned them all down. What would I do with the money? He’d ask. What
    good is money beyond a certain point? But it went deeper than that. Les knew exactly what would happen
    if he sold. Some MBA would look at his profit sharing system and ask the obvious question: Why do store
    managers make more than executives? Les had an answer they’d never understand. That’s exactly why we’re so
    successful. We think the most important people in the company are the people on the firing line, he wrote.
    The ones who sell, do the service work, and take care of the customer. Most American corporations have
    fat salaries for the top people and treat the people at the end of the line as peons. I guess that is why,
    if you’re on the ball, you can beat them. Any buyer would try to fix his inverted hierarchy. They’d cut
    profit sharing to boost margins. They’d pay executives more than store managers. And they’d destroy
    everything that made Les Schwab work. The results validated his approach. In an industry notorious for
    low margins and high turnover, Les Schwab stores outperformed competitors by 30 to 50 percent. Manager
    turnover was virtually zero. Customer loyalty was legendary. Most telling was by 1975, Les Schwab
    dominated the Pacific Northwest without acquiring a single competitor. Every store was built from
    scratch or recruited as a member dealer. They’d won through performance alone, not financial engineering.
    Les understood something that money can’t buy. The real money is in the people and the system he created.
    Selling would have made him rich, but it would have destroyed thousands of careers built on his
    profit sharing model. He chose legacy over liquidity. In an era of quick flips and financial engineering,
    Les proved that sometimes the most valuable asset you can build is the one you’ll never sell. The irony is,
    by refusing to cash out, he built something worth far more than any buyer was offering.
    By 1975, Les was approaching 60. His model was proven. But in business,
    there’s no such thing as the status quo. The giants were coming. Big box retailers looked at tires and
    saw opportunity. It seemed perfect for their model. It’s a simple commodity product with a huge market.
    It’s ripe for customer disruption through bigger scale. They had deep pockets. They had massive stores and
    supply chains that had already crushed local hardware stores and grocers. The big retailers bought tires by
    the train load and sold them cheap. But they treated tires like toilet paper, stacked them high, priced them low,
    and watched them fly off the shelves. They had no service departments worth mentioning. Most failed miserably.
    Fred Meyer was typical. They had opened 16 tire departments across their stores and within two years,
    they were hemorrhaging money. So they approached Les with a proposition. Would he take over six of their
    freestanding tire centers? Les took over five of them. And within a year, he had tripled the business Fred
    Meyer had been doing. Here’s what’s remarkable. He was selling the exact same tires at higher prices.
    It’s worth asking, how is this possible? Les understood something the big retailers missed.
    He said this, “People don’t buy tires on price. They buy from someone they trust and from someone who will
    smile and from someone who will give service and stand behind what they sell.” Fred Meyer thought they
    were in the tire business. But Les knew he was in the trust business. When your car starts shaking at 70
    miles an hour, you don’t want the lowest bidder. You want someone who will make it right. Big retailers had
    every structural advantage. Scale, capital, real estate, supply chain, sophistication. But they were
    optimizing for the wrong thing. They thought customers wanted cheap tires when what they really wanted was
    to never worry about their tires. Les could charge premium prices because he wasn’t selling rubber.
    He was selling peace of mind. The early 1980s tested whether the Les Schwab tire empire could survive
    without Les Schwab. First, company president Don Miller suffered a heart attack. Les, who’d been
    stepping back from daily operations, returned to run the company while Miller recovered. Then on August 1st,
    1983, Les himself suffered a massive heart attack, open heart surgery, a week in intensive care, and a long
    uncertain recovery. While Les was still hospitalized, Don Miller dropped a bombshell at the annual managers
    meeting. He was retiring. The timing stunned everyone. The company faced a double crisis. Its founder
    incapacitated while its president was departing. From this chaos emerged Phil Wick, who’d started at the
    bottom and worked his way up like everyone else at Les Schwab. He’d become president proving the
    succession system worked even under the worst circumstances. By 1985, Les had recovered and the
    company was positioned perfectly for the industry upheaval ahead. The tire manufacturing giants were
    consolidating or failing. Foreign competitors like Toyo were flooding in. While other dealers picked sides,
    Les bought from everyone. He’d built a massive warehouse in Prineville, the town where it all started.
    325,000 square feet of pure buying power. This let him offer customers the best tire for their specific
    needs, regardless of who manufactured it. People kept asking Les why he didn’t create his own Les Schwab
    tire. He had the scale. He had the reputation. He had the capital. He had the know-how. It seemed like
    the obvious move. And Les had thought about it deeply and decided against it. His reasoning was brilliant.
    If we have a problem with the tire, we drop the tire, pick up another one, and continue to swim.
    If he made Les Schwab tires and they had a defect, he couldn’t just drop the line. He’d have to defend
    it, recall it, manage the crisis. His people would have conflicts selling “Do I sell the Les Schwab tire,
    or do I sell the Goodyear tire?” instead of “What is best for the customer?” By staying independent,
    he could always pivot to whatever served customers best. It’s tempting to put your name on everything
    once you’re successful. But Les understood, by not making tires, he could always offer customers the
    best option without defending a bad product. In the long run, what is best for the customer is best for the
    company? The 1990s brought new threats. Costco started selling tires. Online retailers emerged.
    Industry experts predicted Les Schwab’s high-touch model was doomed. It was too expensive, too slow,
    too old-fashioned for the digital age. The opposite happened, though. As competitors automated everything
    and removed human interaction, the Les Schwab experience became more valuable, not less. Customers who could
    buy tires online still drove to the Les Schwab store. They wanted someone to run out and greet them. They
    wanted experts who knew their name. They wanted the peace of mind that comes from dealing with a person
    they knew and trusted. The company’s decades of investing in people had created a moat that no
    amount of technology could cross. The numbers by the late 1990s were staggering. Revenue approached $700
    million. The employee trust fund hit $332 million, averaging over $65,000 per employee. Store managers
    were earning over $200,000 annually, proving Les’ belief that the people closest to the customer should
    make the most money. At 80 years old, Les began stepping back. He’d built something unprecedented: a
    billion-dollar company where thousands of employees had become wealthy alongside him. From a leaky shed in
    Prineville to over 400 stores across seven states, all maintaining the culture he’d established
    in the 1950s. By 2000, annual sales crossed $1 billion. But the real measure of success
    wasn’t in the revenue. It was in the thousands of families across the West who’d built middle-class
    lives and genuine wealth through the Les Schwab model. I can imagine Les saying something along the
    lines of if people knew how profitable it was to pay your people well, everyone would do it.
    What fascinates me here is how weakness became strength. Everyone thought personal service would
    become obsolete in the digital age. Instead, it became more valuable precisely because it was rare.
    While competitors raced to eliminate employees, Les doubled down on his people-first bottle. Les Schwab
    gave away 50 percent of his profits and became richer than if he’d kept 100 percent. By the time
    he died, Les Schwab Tire Centers was distributing over half of all profits directly to employees.
    The employees’ trust held $332 million. Store managers routinely made $200,000 a year and many
    retired as millionaires. Meanwhile, Les paid himself $32,000 a year. Charlie Munger studied Les Schwab’s success
    and reached a simple conclusion. He must have harnessed the superpower of incentives.
    He must have a very clever incentive structure, driving his people, and he must be pretty good at
    advertising, which he is. He’s an artist. But here’s what I think Munger was getting at:
    Les didn’t just design a clever incentive system. He designed a system that acknowledged how humans
    actually work. Give people real ownership, not promises. Share profits monthly, not maybe someday. Promote from
    within, not from above. When Les died in 2007 at age 89, Oregon’s governor ordered flags flown at
    half-staff. Think about that: a tire shop owner received the same honor as a fallen soldier or
    president. 13 years later, when the family finally sold, the market value of Les Schwab’s creation was
    over $3 billion. Not proprietary technology, not for executive products, for a culture that turned tire
    changers into millionaires. The tools haven’t changed since 1952. Trust, incentives, and the radical belief
    that ordinary people can build extraordinary things when you align their interests with yours.
    Les Schwab asked himself a simple question: What would happen if I treated my employees like partners
    instead of expenses? $3 billion later, we have our answer.
    Wow, what a force. Les was incredible. He’s somebody we can learn a lot from. I haven’t picked up this
    book in probably a decade or so, and just flipping through it, I was reminded of all my old highlights,
    which are available for members and our learning community. You can read through what I highlighted,
    but reading all my old highlights, it was interesting to me how some of the things that I didn’t highlight,
    I highlighted this time and some of the things that I highlighted last time didn’t make as much sense,
    but there’s so much business wisdom in this book and there’s no nonsense approach. I really loved reading
    this again. I want to mention a few of the quotes that I highlighted that didn’t make it into the episode
    that I loved. So one on open books, he said, “We have no secrets in our company. We have no secrets as
    to where you stand on your profit share arrangements as we put out a P&L every month showing you exactly
    where you stand.” On frontline workers, he said this, “Too many corporations think the brains are in the
    main office and all the bonus money is paid to four or five high people. All the others are peons and
    just numbers if you have a union that really makes them a number. The truth is that success is at the
    other end. The office merely keeps their records and tells them how they are doing. The real job for office
    people is to provide motivation, to create programs that make it possible for them to be successful,
    to be fair, to be open, to have a really open communication, to have no secrets, and to support
    them.” This, he went on to say, is an unusual way to run a business, but more businesses would be
    successful if they gave more attention to the people on the front lines. Part of that quote made it into
    the episode, but I wanted you to get the full context of that one. So on going public, he said this,
    “When we had 12 or 13 stores, I thought a lot about going public, partly to raise money,
    and partly to expand faster. I had the chance to buy a small public company that was nearly
    bankrupt. It would have been an easy way to go public. I’m so glad I resisted the urge to have
    our stock on the market. I don’t want a few investors around the country club asking about
    our business and questioning some of our decisions.” I thought that was really interesting. That reminded
    me a lot of John Bragg and what he said in the episode and the Jimmy Pattison outliers episode.
    And Jimmy Pattison sort of had the reverse experience where he was public. His shares
    got up to $42 and then down to as low as 85 cents. And he ended up buying them out.
    on what less tells managers when they’re coming in. The big thing that I think is going to hit
    you right between the eyes is that we expect you to run the store. You are on your own and you will sink
    or swim according to your abilities. It takes quite a man to be a store manager. I’ve always said because
    you must have great manager abilities, sales manager abilities, service manager abilities, and above all,
    just plain old management ability. And finally, on not being complacent. He said this, “We have great
    people and they do a great job, but we must constantly remind ourselves as to just why we are so successful
    and what we must do to continue to be successful. Because if we become complacent, it’s all over with.”
    All right, let’s talk about some of the lessons you can take away from Les Schwab. I have
    countless lessons from the book, but I’m going to talk about eight here that I want to highlight for you.
    And the first is win-win. The math of generosity. Les discovered that splitting profits 50-50 with store managers
    didn’t cut his wealth in half. It multiplied it. His reasoning was pure math. If I share half the profits,
    I still have half. And if Frank makes more money, he’ll work harder to make the store more successful.
    And if the store is more successful, my half is worth more than my whole used to be. He gave away billions
    to make billions more. You get rich by making others rich.
    Number two, skin in the game. Make them owners, not employees. Les didn’t just share profits. He made
    managers earn their ownership with real money. The deal. Manage the store, take your salary,
    and get 50% of profits. But there’s a catch. You can’t withdraw your profit share until it equals the
    initial investment. The result? Zero manager turnover. Don’t pay people to care. Make them actual owners
    with skin in the game and real money on the line. And they can’t help but care.
    3. Think in decades. Act today. Investment bankers offered less astronomical sums to buy his company,
    enough to make him one of America’s wealthiest men overnight. He refused every offer. What would I do
    with the money, he said? The real answer? Selling would destroy the profit sharing culture that
    made thousands of employees wealthy. New owners would fix his inverted pay structure. Les thought in
    decades while acting with daily urgency. By 2020, that patience had paid off. The company was sold for
    $3 billion. Preserving the culture even after his death. Build something worth keeping, not just worth
    selling. 4. All in or all out? At 34, Les sold his house, borrowed against his life insurance, and scraped
    together $11,000 to buy a failing tire shop with no running water and no plumbing. He never had changed
    a tire. His competitors had decades of experience. But Les had something they didn’t. No backup plan.
    That total commitment forced him to figure it out. One year later, he quintupled revenue. Half measures
    guarantee half results. 5. High agency. Everything is your job. Les bought his first tire shop,
    having never fixed a flat tire in his life. Day one, customer needs tires mounted. Les fumbles with his
    hands on the cold floor, making a complete mess of the situation until his employee arrives. He
    insisted on being taught, so the situation never repeated. Within a year, sales jumped from $32,150
    He treated every problem as his problem, whether he knew the solution or not. Sometimes the only
    qualification you need is the willingness to figure it out. 6. Reputation works while you sleep. In the
    1960s, Les made a decision that seemed insane. He removed all tire manufacturer signs from his store.
    Back then, tire shops were essentially Goodyear or Firestone franchises. The signs meant manufacturer
    support and co-op advertising money. Les gave all that up to put his own name on every store. He bet the
    customers would buy based on who sold the tires, not who made them. Within a decade, Les Schwab became
    more powerful than any manufacturer brand in the Northwest. Your name is either making you money or
    costing you money. There’s no neutral. 7. Go positive, go first. Les instituted free flat
    tire repairs for anyone, whether you’re a customer or not. Competitors called them crazy. Why would you
    fix flats for people who bought tires elsewhere? But Les understood reciprocity. Humans are biologically
    wired to return favors, even unearned ones. Those free repairs created a loop. Strangers who owed him
    nothing suddenly owed him something. Most businesses wait for the transaction before the service. Consistently
    going positive and going first is one of the most powerful forces in the universe. 8. Dark hours.
    Every morning before dawn, teenage Les ran his paper route. Not biked, but ran. For two months,
    he sprinted through dark streets on foot saving for a bicycle. His classmates were asleep. He was earning.
    By senior year, Les owned all nine routes in town. He’d wake up at 4, deliver hundreds of newspapers,
    then show up to school. Your competition is asleep from 4 to 7am. That’s three free hours to build your lead.
    Thanks for listening and learning with us. And be sure to sign up for my free weekly newsletter at
    fs.blog/newsletter. I hope you enjoyed my reflections at the end of this episode. That’s normally reserved
    for members. But with this outlier series, I wanted to make them available to everyone. The Farnham Street
    website is where you can get more info on our membership program, which includes access to episode
    transcripts, reflections for all episodes, my updated repository featuring highlights from the books used in
    this series and more. Plus, be sure to follow myself and Farnham Street on x Instagram and LinkedIn. If you like
    what we’re doing here, leaving a rating and review would mean the world. And if you really like us,
    sharing with a friend is the best way to grow this special series. Until next time.

    They weren’t employees. They were partners. Les Schwab didn’t build a company. He built a culture.

    This episode reveals how one small-town tire dealer scaled to $3 billion by turning customers into evangelists and employees into owners. Somewhere between changing his first flat tire and opening his 410th Les Schwab Tire Center, Les discovered something profound: his people weren’t just working for him, they were working with him. They weren’t building his dream, they were building their own. This episode is a case study on how strategy, incentives, and trust create massive advantages that resources can’t buy. When investment bankers offered Schwab billions to sell his empire, he refused after asking himself just one question: “What would I do with the money?”

    Les Schwab understood something most never learn: the real wealth isn’t in what you keep. 

    Approximate timestamps: Subject to variation due to dynamically inserted ads:  
    (01:49) Roots   
    (11:21) In Business  
    (27:50) Building an Empire  
    (40:18) Maturation and Legacy  
    (48:21) Reflections from Les Schwab  
    (51:22) Lessons from Les Schwab  

    This episode is for informational purposes only and is based on Pride in Performance: Keep It Going by Les Schwab

    Check out highlights from this book in our repository, and find key lessons from Schwab here: https://www.fs.blog/knowledge-project-podcast/outliers-les-schwab

    Upgrade—If you want to hear my thoughts and reflections at the end of all episodes, join our membership: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠fs.blog/membership⁠⁠⁠⁠⁠⁠⁠⁠ and get your own private feed.

    Newsletter—The Brain Food newsletter delivers actionable insights and thoughtful ideas every Sunday. It takes 5 minutes to read, and it’s completely free. Learn more and sign up at ⁠⁠⁠⁠⁠⁠fs.blog/newsletter⁠⁠⁠

    Follow Shane on X at: ⁠⁠⁠x.com/ShaneAParrish

    Learn more about your ad choices. Visit megaphone.fm/adchoices

  • #236 Harley Finkelstein: Why You Must Requalify for Your Role—Every Year

    What does it mean to live—and lead—with intention? 

    Shane sits down with his friend and Shopify President Harley Finkelstein to explore what happens when you treat every role in your life—father, husband, leader—as something you have to requalify for, every single year. Harley shares why stepping down as COO was the hardest decision of his life, how a simple family motto is shaping his daughters, and what it really takes to become a world-class storyteller. They also unpack AI’s real advantage, the calendar system that keeps him honest, and the quiet force of standards that never get lowered. 

    It’s a candid look at ambition, identity, and the challenge of holding yourself to a higher standard—everywhere it counts. 

    Approximate timestamps: Subject to variation due to dynamically inserted ads:
    (00:02:10) Living With Unreasonably High Standards
    (00:03:40) Generational Trauma and Family Relationships
    (00:07:52) Growing Up With Adverse Circumstances
    (00:14:42) Prioritizing In Life And Becoming World Class
    (00:24:45) Requalifying For Your Job
    (00:30:05) Mindset for Professional Growth and Success
    (00:31:33) How To Find A Great Business Partner
    (00:32:57) Switching From COO Of Shopify To President/Chief Storyteller
    (00:40:34) How Storytelling Impacts Shopify
    (00:42:00) How To Get Better At Storytelling
    (00:46:13) Shopify And How Commerce Has Evolved
    (00:49:27) Forced Entrepreneurship Vs Passion Based Entrepreneurship
    (00:51:34) Mentorship
    (00:59:41) Overcoming Failure And Rejection
    (01:02:46) Out Caring Is More Important Than IQ, EQ, Raw Talent
    (01:06:07) Parenting And Teaching A Hardwork Ethic
    (01:11:23) Teaching Resilience

    Thanks to our sponsor for supporting this episode:

    SHOPIFY: Sign up for your one-dollar-per-month trial period at shopify.com/knowledgeproject

    Newsletter – The Brain Food newsletter delivers actionable insights and thoughtful ideas every Sunday. It takes 5 minutes to read, and it’s completely free. Learn more and sign up at ⁠⁠⁠⁠⁠fs.blog/newsletter⁠⁠⁠⁠⁠

    Upgrade — If you want to hear my thoughts and reflections at the end of the episode, join our membership: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠fs.blog/membership⁠⁠⁠⁠⁠⁠⁠ and get your own private feed.

    Watch on YouTube: ⁠⁠⁠⁠⁠@tkppodcast

  • #235 Outliers: Jimmy Pattison — Building a $16B Empire Without Connections, Capital, or Credentials

    At 96 years old, Jimmy Pattison still runs his $16 billion empire personally. 

    He’s built it over 63 years without outside capital or a college degree. He owns 100% of car dealerships, billboards, radio stations—even Ripley’s Believe It or Not—with a philosophy of: “No partners, no shareholders, no relatives.”  This episode reveals the principles behind one of North America’s great private empires: how to build and compound a reputation, why the best deals happen in silence, and what a Japanese bicycle taught him about operational excellence. You’ll learn the hidden advantage of selling “souvenir editions” instead of newspapers, how he turned a ghost radio station into a ratings leader overnight, and why he once fired the entire bottom 10% of his staff—then took them out for steak. 

    Most people play for approval. Pattison plays for permanence through reputation, relentless clarity, and never mistaking flash for fundamentals. 

    This episode is for informational purposes only and is based on Jimmy: An Autobiography by Jim Pattison and Paul Grescoe. 

    Check out highlights from these books in our repository, and find key lessons from Pattison here—⁠⁠⁠⁠⁠https://fs.blog/knowledge-project-podcast/outliers-jimmy-pattison/

    Approximate timestamps: Subject to variation due to dynamically inserted ads:

    (00:00) How a Teen Sold Yesterday’s News
    (01:10) Jimmy Pattison’s Billion-Dollar Playbook
    (03:24) The Debt That Built Character
    (05:41) Part 1: Foundations – The Boy Who Sold Seeds Door-To-Door
    (06:52) When Victory Becomes a Liability
    (08:46) The University of Used Cars
    (10:02) The Art of the Close
    (13:30) When Business Becomes Theater
    (15:22) The Price of Independence
    (16:36) The Pattern
    (17:44) Part 2: Starting to Build – Back to Zero
    (18:09) The Price of Independence
    (20:08) Bleeding Money
    (21:11) The Secret Weapon
    (22:11) The Main Street Disaster
    (23:09) Dead Air to Hot Air
    (24:33) The Ghost Station
    (25:40) The Conglomerate Dream
    (27:03) The Target
    (28:24) Cold Calling Wall Street
    (29:35) The Silent Hunt
    (30:49) The Takeover
    (31:36) Part 3: Neonex International – Perfect Timing, Wrong Direction
    (32:09) The Magic Money Machine
    (34:17) The Toast Order
    (35:06) The Forbidden Target
    (36:15) The Christmas Surprise
    (37:27) The Bluff
    (38:07) The Unraveling
    (39:07) The Education
    (40:27) Part 4: The Jim Pattison Group of Companies – Returning the Paintings
    (40:49) The Corporate Confession
    (42:08) The New Operating System
    (44:01) The Dinner That Changed Everything
    (46:23) The Great Escape
    (47:31) The Boy and the Bicycle
    (49:07) The Quality Revolution
    (51:14) Part 5: The Empire Builder – Still at the Wheel
    (51:47) The New Playbook
    (54:17) The Grocery Gambit
    (55:13) The Media Monopoly
    (55:52) The Numbers Game
    (57:20) The Ultimate Lesson
    (59:15) Reflections and Lessons

    Upgrade—If you want to hear my thoughts and reflections at the end of all episodes, join our membership: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠fs.blog/membership⁠⁠⁠⁠⁠⁠⁠ and get your own private feed.

    Newsletter—The Brain Food newsletter delivers actionable insights and thoughtful ideas every Sunday. It takes 5 minutes to read, and it’s completely free. Learn more and sign up at ⁠⁠⁠⁠⁠fs.blog/newsletter⁠⁠

    Follow Shane on X at: ⁠⁠x.com/ShaneAParrish

  • #234 Indra Nooyi: Lessons from the Top of PepsiCo—and the Cost of Getting There

    AI transcript
    Growing up in an environment where India had just come out of 350 years of British rule,
    you sit there going, I have to pull myself up.
    You had a conversation once with Steve Jobs where he told you not to be too nice.
    How did that candid conversation influence how you ran PepsiCo?
    I think the biggest lesson I took away was he said,
    what I was focused on was micro-understanding.
    Because if you don’t understand the business down to where the rubber meets the road,
    you can make decisions at the top which are not implementable.
    The business was a multi-multi-billion dollar business.
    And remember, if you don’t earn your place, the people below you are willing to push you out.
    So people don’t realize that as you get more senior in an organization, it’s up or out.
    Welcome to the Knowledge Project podcast. I’m your host, Shane Parrish.
    In a world where knowledge is power, this podcast is your toolkit for mastering the best of what
    others have already figured out. My guest this week is Indra Nooyi, the former chairman and CEO of
    PepsiCo, who led a global transformation at the company as one of the most remarkable leaders of
    a generation. What makes Indra fascinating isn’t just her accomplishments, it’s how she navigated
    her colliding worlds. An immigrant who became more American than most Americans. A dutiful daughter
    who became a corporate revolutionary. A mother who reached the pinnacle of power but kept her
    daughter’s please-come-home note tucked in her drawer as a reminder of what she was missing.
    This is a conversation rich with clarity, resilience, and ambition.
    Indra shares the surprising story of how she almost quit PepsiCo, the unforgettable advice she received
    from Steve Jobs, and the moment her mother told her to leave the crown in the garage after being
    named president of the company. We talk about how to give feedback that gets heard, why great leaders
    zoom in before they zoom out, and how real strategy always has to be implementable. If you’re trying to
    lead better at work or at home, this episode is packed with timeless lessons. It’s time to listen and learn.
    I want to start with this wonderful story about you and your husband. When you first met, you went to a
    movie, and you watched Silver Streak at the Sandberg Theater, and then you went out to dinner after, and you
    decided to get married. But you’re still not sure who asked who, who proposed to who. I want the real
    story here. That is the story. Sometimes I tell him, why did you rush this proposal? I wanted to be dated
    and wooed and dined and wine. And he said, I didn’t propose to you, you proposed to me. So I said, why did
    you accept if I proposed to you? He says, I don’t know. It was just destined to be that way. And I think
    over summer, even though we didn’t spend much time together one on one, there must have been some spark.
    And he’s just a very good guy, to be honest. And I guess he thought I was a pretty good person, too. And so it was
    just a meeting of the minds, value system, families, every which way. And I said yes, without being wined and
    dined. And he said yes, without, you know, dating me and getting to know me. And the rest is history. And 45 years
    later, we can look back and say, huh, who proposed to whom again?
    That’s such an incredible story. I love these stories of couples that just, it clicks right away.
    You might not know each other, as well as some other people who get married. And it just works out. My aunt
    and uncle have never actually dated another person. They started dating at 13, and they are still happily
    married today. It’s incredible.
    Maybe that’s the reason we’re happily married, because we started to date each other after we got
    married. And we started to discover each other after we got married. So we had that long process
    of discovery. And in spite of that, we kind of liked each other, loved each other.
    That’s incredible. I want to go back to your childhood in India. Are there memories or lessons
    that stand out from your mom that you still carry with you today?
    It’s mom, dad, grandfather, the whole extended family. It’s not just the mother.
    And I think that it was a focus on excellence and doing well. It was sort of beaten to us.
    If you’re going to do something, do it well. If you can’t get good grades, then, you know,
    what’s your value to society? What are you going to do for society? So it was always this thing about
    push yourself. Don’t sit idle. Satan has work for idle hands. If you can read in every spare minute,
    do it. So that’s the environment we grew up in. And we couldn’t go complain to somebody else because
    our entire community was that way. And so you sit there going, who am I going to complain to?
    If I complain to an aunt or an uncle, they’ll say, oh, I’m doing the same with my kids.
    So we grew up in an environment where everybody was being pushed. And we were being pushed because
    we were growing up in an environment where India had just come out of 350 years of British rule.
    And it was trying to find its place in society. And we were looking at other countries and saying,
    wow, you know, there could be growth. There can be innovation. The economy could get a whole lot
    better. And so everybody needs to pull themselves up to contribute to the country in order to make the
    country better. So that was the goal to push young people. And so you sit there going, I have to pull
    myself up. The family pushed you, but you have to pull yourself up. Everything in my childhood was
    about that. It was about working hard, being a team member at home, doing chores, not having much
    money at all, but lots of discipline, freedom within the frame. That’s what I remember. But work hard,
    study hard, and be viewed as a reliable person. If you promise something, deliver it. Unless you’re dead,
    you will deliver it.
    When you came over, like growing up in that environment, when you came over and you went to
    Yale, were you like, this is, these people don’t work as hard as I do. Like they don’t,
    they don’t come from this environment where, you know, you’re struggling to break out and you’re,
    you’re sort of driven by your parents and everything around you is sort of pushing you forward. And
    there’s no option for failure. You have to succeed and you have to keep going.
    I actually came here, I was in awe of everybody I met. And I’ll tell you why, because there we worked
    hard because the simple things in life we didn’t have. You know, if you wanted to iron your uniform,
    half the time there was no power. So you had ions with hot coal inside them. You know, you have spray
    starch here. You know, we had to, when I was in a Catholic school, the uniform had to be starched and
    you had to show up looking very crisp. Here you just buy spray starch and you spray it and you iron it on.
    There you had to make your own starch at home. And sometimes it’d be clumps that would, you know,
    land on the uniform because you didn’t really, you know, cook out the clumps and the starch that you
    made. And so we spent a lot of time doing things that people here didn’t have to think about. You
    just went to the store and bought it or you had electricity, you had water. So you took all that
    for granted. We had to spend a lot of time on those so-called unnecessary survival tasks growing up.
    So you come here and you watch everybody here going, wow, they’re so brilliant. They think
    differently. They break boundaries. They’re irreverent, but they’re reverent also in their
    own ways. How does one become like that? You know, I was more in awe of them rather than they don’t work
    so hard. It’s just that the working hard part was on stuff that was made easy in the United States.
    The price of development.
    I never thought of it that way. Thank you for sharing that. There was a moment before you came
    over, you had just got a big promotion and I think it was Norman. And you went to talk to him and you said,
    should I take this? Because you were about to take over 60% of the factory or go to Yale.
    And walk me through that moment and what went into that decision to, because that’s a huge promotion.
    That’s incredible success.
    No question about it. I would have been incredibly young to run such a big part of the company.
    Would have been successful. Would have been in an environment that I was quite familiar with.
    My expenses would have been nil because I would have had to live at home. No issues with anything.
    But I had always dreamed about the United States because all my friends had come here and loved
    American music, culture, innovation, entrepreneurship. Everything I read about just fascinated me.
    And at that time, I’m really talking about the 70s.
    America was a seat of culture and just brilliance. And as a young person growing up, your dream is to
    be part of this environment. So I went to Norman and said, hey, Norman, look, this job you’ve offered me
    is fantastic. One side of me says, take it and grow in this culture and environment. The other side of me
    says, be a rebel. Go and be part of this incredibly amazing country and culture and environment called the
    United States. And I knew one was risky and one was safe. And something in me wanted to take that risky
    bet also. But Norman was clear. He said, look, if I were you, I would take the risky bet. Even though
    it would be a loss for me and the company, if I were you, I’d take the risky bet because you may not get
    this chance again. And even though I knew I was going to take on loan liabilities, I could fail. I was an
    alien country that I didn’t have too much family in because I’d grown up with family. I decided to take
    the plunge.
    Has that changed how you, when you were like the CEO of Pepsi, did that change how you developed people
    where the best thing for Pepsi might’ve been for them to stay, but the best thing for them might’ve
    been for them to leave?
    Well, at some point when people come to you and say, I’ve got this great opportunity,
    you sit there going, would they be better off leaving? And in case I want them back,
    I can always go back and get them. Or are they better off staying at PepsiCo? Sometimes selfishly,
    I look at this and say, I’m actually better off if this person goes and gets this completely
    different experience because I can bring them back. So you always look at this in a nice selfish way.
    I don’t mean in a negative selfish way, in a nice selfish way. Somebody went to a tech company,
    go there. I’m sure the allure of PepsiCo would make you want to come back if I wanted you back.
    And now I have somebody who’s got the PepsiCo pedigree, has got a tech background and now can
    come back and contribute to the company in profound ways or partner with me. So I’d look at it that way.
    But if I felt that a person did not have much runway in PepsiCo, I would also tell them very honestly that
    they might be viewed as a critical professional in PepsiCo. You know, they could have a career,
    not a fantastic career. And if they got a better opportunity somewhere, I would provide the
    reference and I would help them find something. I think if you really care about people developing,
    you’ve got to think that way.
    I love that. After Yale, you went into the consulting business. What did you love about that?
    It was a sink or swim place. I went to the Boston Consulting Group in Chicago. We had just opened up
    and I’d never been in consulting before. And so this was a new experience. First of all,
    the caliber of people is just fantastic. Each one is pushing the other. You’re operating at the
    highest level of a corporation. And in BCG, you worked on two different assignments at the same time.
    So you had to understand two industries, the value drivers, two non-competitive industries.
    What are the value drivers? How do you think about adding value to the client in the assignment you’re
    working on? And so it challenged me in profound ways. First to learn industries, learn the economics
    of the industry, the value drivers. Think beyond the industry to see what insights you can bring
    to the industry and learn about dealing with leaders at very high positions, which I’d never done before
    in the United States. I mean, I’d looked at these leaders as, my God, so-and-so is the CEO. And now
    I’m sitting in the same room with the CEO. How do I behave? How do I, you know, articulate my point
    of view without sounding like I’m a know-it-all? There’s so much I had to learn. In my six and a half
    years at BCG, I think I grew 10 or 15 years. It was tough. It was a tough learning curve, but man,
    I would never trade that experience for anything in the world. And a very competitive environment.
    Incredibly competitive.
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    How did you go about learning about industries you knew nothing about?
    It’s surprising, you know, for example, let’s say that I was working in the tissue business,
    all right, paper tissue. I would actually go to factories. I’d go to manufacturing lines. I’d go to
    R&D laboratories, talk to everybody that was willing to give me time. Because consultants can’t just sit
    there and articulate a point of view or provide direction without really understanding the details.
    So my philosophy was zoom in before you zoom out. So in everything I’ve done, I always went deep into
    whatever the business was, the company was, try to understand things from the ground level. Then I’d zoom
    out and say, what’s missing here? Why is the strategic direction in need of a tweak or a reset? And then I’d go
    back and say, if we did reset it, how would it sit in the front line? What changes would we have to make?
    Then go back out. So this constant telephoto lens that I had in my head is what stood me in good stead
    through my entire life. Zoom in, zoom out, zoom in, zoom out.
    How did that help you at PepsiCo when you were CEO in terms of understanding, you know, the right side of
    the decimal place at the low level and then also, you know, 30,000 foot view setting strategy for a huge
    company?
    You know, some people say CEOs should be careful not to micromanage. I agree with you. What I was
    focused on is micro understanding. Because if you don’t understand the business down to where the rubber
    meets the road, you can make decisions at the top, which are not implementable. Or in the implementation,
    the intent of the strategy gets lost. To me, strategy and implementation have to go hand in
    hand. And very often the reason operating executives rise to become CEOs is because the belief is they
    know how a strategy has to land in the front line. In my case, I didn’t grow up in the operating businesses.
    I grew up in strategy, finance, you know, corporate operations, not, you know, P&L. So my replacement for
    having not run a P&L was go and learn each business from the ground up. So, you know, whether it was
    Steve Reinemann who gave me an opportunity to learn the right side of the decimal, whether it was the
    work I did with the Frito-Lay distribution system, it was always zoom in, learn the business, bottom up.
    And have the humility to tell people to teach you the business. People like it when you tell them,
    hey, can you teach me this business? You know, I’d go to the R&D laboratories. I tell them,
    teach me how the concentrate is made. Teach me how the Frito-Lay, you know, chip is produced,
    a Lays chip or a Doritos chip. I’d walk the manufacturing lines, walk the research labs,
    talk to people. I spent an inordinate amount of time doing that.
    What was the right side of the decimal lesson? I forget what that was.
    So, you know, when you’re sitting in corporate as a CFO, the head of strategy,
    you’re thinking in millions, tens of millions, hundreds of millions of dollars.
    That’s the left side of the decimal. But money is not made always in the hundreds of millions of
    dollars. It’s can you take a penny out of delivery for Frito-Lay? And when you have so many routes
    times a penny, it adds up. So on a daily basis, you’ve got to think about a tenth of a penny,
    half a penny on a package or on a route. So it’s that little micro pennies that add up to the whole
    business. So if you don’t understand the business at the most granular level, you come at it in a
    very different perspective. And people don’t understand you because you’re talking in tens
    of millions and hundreds of billions. And they’re like, I’m selling a 25 cent bag of Doritos,
    a 45 cent bag of Tostitos. What are you talking about? Don’t talk to us about millions. We got to
    cut a penny out of this route or cut a penny out of the packaging cost to get the profitability up.
    So you’ve got to be able to talk that language. So the left of the decimal is that language where
    you sit down with the team and say, can we take out two cents from this entire product package?
    That reminds me of J.D. Rockefeller when he was first starting out with Standard Oil and
    they were welding the oil cans that they were shipping it in. They were putting, I think it was
    13 welds on these and we do it with 11. And those two welds would make a huge difference over the
    volume that they were doing. I mean, the example is when we decided that it’s an imperative that
    we reduce the water usage in our beverage plants, right? We were using two and a half liters of water
    to make a liter of Pepsi. Now, I want to get it down to 1.2 or 1.3. And it’s not enough to provide a
    dictate and say, get it down to 1.3. It’s a question of what does it take to get it down?
    Let’s talk through it. Where do we use the water? How can we recycle some of the water? How do we need
    to clean it to fishborne standards? You’ve got to ask all those questions so that the R&D people realize
    that you’re not just providing a mandate. You’re basically saying, I’m going to help you get to the
    right answer. So then you set goals saying, by year two, let’s get to two liters. Then let’s get
    to 1.8, 1.7. Here’s a meaningful step down over a reasonable period of time so that we can get to
    the 1.4 or 1.2 within five years. So it’s having respect for the frontline. So you talk to them in a
    language that they’re familiar with as opposed to waving your hands and saying, I want to save 100
    liters of water within two years. And people go, does she know what she’s talking about?
    I want to come back just for a second to the consulting. And one of my favorite anecdotes
    from this yearbook was when you were sitting in a bar in Green Bay, Wisconsin, and you were listening
    to the line workers talk about the problems in the business. And you were getting insights from that.
    I thought that was like so unique. And I’ve never seen anybody document that before. And I’m sure
    people do it. Are there any other ways that you went about learning that were sort of off the beaten
    path that provided valuable insight like that? Well, one of the most interesting ones was I was
    working for a particular industry and a competitor was building a big plant. And we wanted to know how
    big the plant was, how many bays they’re going to have, and what kind of bays, what kind of
    transportation. And we couldn’t get enough information from the local filings or whatever.
    And the plant was being built in a very wooded area. So it was a highly wooded area, but the middle
    was cleared for the plant. And a big lesson I learned is that in the United States, don’t ever say the data
    is not available. Say you didn’t look hard enough, because the data is available somewhere. So I kept
    digging and digging and digging and digging to see where I could get this data. And the US government
    has got fantastic data available. Somebody from one of the departments said, oh, I know where you can get
    the data. If you did an FOI, a Freedom of Information request to the intelligence department, and ask them to
    give you satellite photographs of the plant from different altitudes, they can give you a pretty good
    picture. And I did that. And in a few days, I got the pictures at like 5,000 feet and 3,000 feet. And I now
    know from the top what the plant looked like, the size of the plant, you know, what kind of bays, you know, what
    kinds of products they might be considering manufacturing there. And so the valuable lesson is don’t tell me you
    can’t get the data. Find a way to get the data. Because in the US, directly, indirectly, tangentially,
    you can get enough information and data to, you know, really develop hypotheses about the issues you’re
    working on. And so I’ve always kept that in mind. When people come to me and say, I don’t know how to
    get this data. I say, come on, go look hard. It’s there.
    What an incredible story. Is there another example like top of mind that comes to you when you think of
    that? Well, when we were doing COVID, the question is, we didn’t use it as much, but one realized this
    was available to us. You know, when you had to do tracking to see who’s got COVID, but had not
    declared it and how big could the transmission be? You know, the syndromic surveillance, which is a
    well-known tool where you look at their driving patterns. If they keep going towards a pharmacy and
    buying tests, you know that they might have COVID. Okay. So you’ve got to immediately track that person
    to say, should that person be socially distancing or quarantining? So there are so looking at the
    wastewater that comes out of their home, you can tell whether there’s COVID. So I think it’s how do you
    triangulate on data using multiple sources. Now with social media, you’ve got lots more opportunities
    to track people, know what’s going on without invading their privacy. You can get all this
    information. Those days, it was all paper and pen and, you know, pouring through wards of data.
    As a leader, you’ve called yourself blunt and direct when delivering a message to people. I’m
    curious what you’ve learned about delivering a message that gets heard. You know, it’s an evolving
    process, if you want to call it that. Sometimes people deliver messages that are not heard because
    you haven’t really delivered the message clearly. People actually come out of performance appraisers and
    say, I think I’m doing a good job. And you’re going, oh my God, I hope that’s not what you heard.
    You’re saying to yourself, because this person was supposed to have told you the three or four
    things, areas that you’re supposed to improve upon and the three or four things that you did wrong,
    you’re supposed to have gotten very direct feedback. People don’t like conflict. People don’t like to
    deal with issues directly. They like to beat around the bush and then leave saying, I think I gave the
    person the message. I had the opposite perspective, which is give the message, do it in a supportive way
    and make sure that whatever you tell them they have to work on, you help them get to that. So I chose to
    write performance appraisals, which said, this is what you’ve done well. This is where I think
    you didn’t do well. This is what you need to work on. And if you were to work on these issues and show
    progress, this is where you could go. So you see what this letter did was celebrate them for what they did
    well. Told them what they didn’t do well. Told them the three or four things they had to demonstrate
    progress on in the next year and how I was going to help them. And then also told them, if you showed
    progress, this is your trajectory. Because if we don’t do it, I think we’re not getting the best out of people.
    There’s a kindness and clarity. Toughness, kindness and clarity, all three. But don’t forget the
    toughness. Because you’re confronting them and saying, you know, I asked you to really get to know
    the international markets. You made two trips internationally last year. And each trip in three
    days, you came right back. How could you have learned international markets without getting out of the
    office in the US? Okay. And then you write saying, I’d like you to visit the following countries next year.
    And when you visit those countries, make sure you go down to this level of detail. You know, some people
    would say, a CEO shouldn’t be getting to that level of detail. Yeah, they’re right. But if I truly care
    about this executive, and I think they have great potential, I will get to that level of detail. And I will
    monitor it middle of the year and say, hey, did you make any international trips? Did you follow
    anything I said? And then they say, nah, I really don’t want to go. Then you go there. You know, you don’t have
    the potential to be a CEO. From the outside, we hear these stories about how CEOs pay attention to
    the top 50 of the top 100. How many people inside were you really monitoring and trying to develop and
    having a personal, a real one-to-one personal relationship where you’re doing this and you’re
    in the weeds and you’re in the performance report and you’re trying to build them?
    I think there’s about 300 or 400 that were corporate assets. And one watched them
    all the time because these are people who in 15 years could be CEO. There’s something about them
    that, you know, you sort of caught your fancy when you were in a meeting or in some project that they
    were on, they had brilliant ideas. Not brilliant ideas that reinforced your thinking. Brilliant ideas
    that challenged your thinking and took us to a better place. Because you don’t want yes people around you.
    You want people who say, why don’t we push the boundaries of our thinking? Why don’t we
    approach this creatively? And people who put the company before themselves. I look for that all
    the time. And so there were three or 400 people that we actually call them corporate assets and we
    track them to make sure that we game plan them, give them the right assignments. And even if they
    couldn’t move, could we give them interesting assignments so that they could get the experiences
    moving? So that’s the number of people that we track.
    What were the signs that somebody was putting the company ahead of themselves?
    They would put their hand up for difficult assignments. And if something went wrong,
    they didn’t look for somebody else to blame. They would take the blame and say, hey, you know,
    I could have done a different job or I could have led differently or I could have staffed my team
    differently. These are people who would come to me and say, you know, whatever’s going on in this other
    part of the company, I think may be putting something in jeopardy. And I’m not throwing them
    under the bus. Would it be okay with you if I went and worked with them to perhaps write things?
    And I’d say, be careful how you do it, but go for it. And I will tell them that I didn’t send you
    there, that you were doing it out of your own good nature. Otherwise people say, oh, the CEO’s got some
    pets that she’s sending our way. So you’ve got to be very careful how you deal with organizational
    dynamics. But these are people who look around themselves and are constantly looking for ways to
    improve the company as opposed to how do I get the next promotion, the next raise.
    Are there things you’ve learned about reducing bureaucracy, increasing meritocracy and decreasing
    sort of company politics? Obviously in a company the size of PepsiCo with hundreds of thousands of
    employees, there’s a little bit of politicking going on, but how do you minimize that? And how do you
    find and promote the best people?
    That’s a very important question, Shane, because I think you have to understand the politics of an
    organization. Where there are people, there’s politics, okay? You’ve got to understand
    the politics, but don’t play in the politics. Don’t meddle in the politics. Just understand
    who doesn’t like whom and, you know, how meetings work. Just understand it. And then figure out how
    best to contribute within that. Once you start to meddle in the politics and gossip about it,
    you become a negative force. That’s been my mantra through the entire time that I was in corporate
    America. Because meddling in the politics, playing the politics, becoming political yourself and gossiping
    is only a formula for disaster. Focus on the job. Focus on moving everything forward. I think things
    would be great. Now, I was helped because of the fact that I had a family and kids. So work in the
    office, I had to go home to the family and kids. I had no time for bar talk or going out to dinner and
    talking about the politics. And I really didn’t care about it.
    What about bureaucracy? Was there ways to, I mean, there’s a natural entropy to these large
    organizations to hire somebody to do this job. And then they make that job important. And Parkinson’s
    law, it takes up all this time. And, you know, you’re distancing yourself from it. And if you let
    it go, it just becomes, you know, at the extreme, it becomes government and you go bankrupt. And how do you,
    how do you fight that?
    Companies like PepsiCo, at least in my time, I can only talk about the time when I was there.
    You know, we had very good scorecards to measure productivity,
    spans and layers. And we monitored that constantly. You know, is our output per employee going up?
    How many spans? How many layers do we have? Are we adding layers for no reason?
    You know, we monitored all of that carefully. And that’s why the company was successful, because
    you know, it’s like an accordion. Sometimes you end up adding a couple of layers. And then you say,
    hey, wait a sec, how did this happen? Why did we drift there? Let’s get the number of layers down.
    You know, we see certain levels of people have to have at least eight reports or 10 reports.
    So we have different ways we triangulate on organization, hierarchy, levels, bureaucracy,
    overhead. We look at all of that. And because our target setting process for the businesses and for
    the company as a whole is always reasonably stretched. It’s never easy targets. It’s always a reasonable
    stretch. And then we always promise the street a number that’s lower than what we set ourselves to do.
    Okay. So we never do the opposite way. We tell the street a higher number and promise ourselves lower
    and pay ourselves big bonuses. We always had internally stretched goals. And we promised the
    street something more reasonable. That way, we never got paid if we didn’t make the stretch goals. The
    bonus, we never paid our bonuses without the stretch goals. So that was the performance culture in
    PepsiCo for every leader that was there in the company.
    I mentioned kids and one of my favorite stories from your book, and I’m going to read this because
    I want to make sure I get it right, is when you got promoted to the president of PepsiCo and you drove
    home after work and you were so happy and you were feeling so confident about yourself. And when you
    got home, your mother was there and you told her you had the most incredible news. And she told you,
    the news can wait, I need you to go out and get milk. And you went back in the car and you drove to the
    store for milk and you came hopping mad, telling your mother, I’ve just become president of PepsiCo and
    you couldn’t just stop and listen to my news. You wanted me to go get the milk. And your mom said to
    you, listen to me, you may be the president of whatever, of PepsiCo or whatever, but you come home,
    you’re a wife, a mother and a daughter. Nobody can take your place. So leave that crown in the garage.
    What does that teach you about power and humility?
    Well, you know, we grew up with all these dualities, especially as you ascend to the top,
    the dualities just grow. Okay. Power and humility was a set of dualities that I had to struggle with
    always because I chose to be a mother. I chose to get married. I chose to work hard and ascend in my career.
    I was helped along by other people, but I decided I’d like to keep working and I’d like to do well and move
    forward. So when I make those choices, I can’t delegate all of that to somebody else. I chose to marry an Indian
    man, which means that there were some duties and responsibilities that went with being a person of
    Indian origin. I didn’t shirk them. And so having made those choices, she was right. Somebody else can
    take my place in the company, but at home, who else is going to be the wife and the mother and the daughter?
    Nobody else but me. And so I knew that I had to play those roles and play them well. So the real
    question was, since I made all those choices, how do I get the support structure and have the
    resilience to play all those roles? It’s not easy to play all those roles. Okay. You can’t just come
    home and start bossing your kids around because they say, I don’t work for you, mom. My kids have told me
    that. Stop treating us and like we work for you. Don’t give us instructions. And so it’s not that I talk to
    my, the people who work for me that way, but somehow they interpreted it as I just sit there in a chair
    and I boss people around. Little did they know, but they would say, we don’t work for you. I said,
    no, I understand. And so I think that all that she was telling me was just constantly remind yourself
    as to all the roles you play. And don’t just think that you can walk away from any of those roles
    because you made those choices yourself. Do you see that as balance or do you see it as harmony
    between these things? There’s nothing called balance. What balance? You know, anytime you use
    the word balance, I think of this beam sitting on a fulcrum as perfectly still. It doesn’t exist.
    It’s juggling all those roles. It’s not even harmony. Sometimes it’s not very harmonious. You just juggle
    those roles and hope the most important balls every day don’t fall and crash and burn. So that’s all you
    do. They’re all full-time roles, each one of them. I think this often with, you know, being ambitious
    and driven and working hard, and then also holding myself to an incredibly high standard as a parent.
    And it motivates me. And it simultaneously, like having those standards can also be
    counterproductive because you’re so hard on yourself. Is there any advice?
    You’ve got to start off by saying, look, the job is a selfish thing. Okay. We love the job. We love,
    you know, working on challenges. But when you have kids, you’ve got to understand it’s a tether. It’s a
    beautiful tether, but it’s a tether. It’s a loving tether, but it’s a lifelong tether. And so
    I think you should have kids only if you love having kids. I mean, I adore my kids. They may
    not think that always, but I just adore my kids. I love them more than anything in this world.
    And so does it cause angst at times? Yeah, it does. Do sometimes I sit down and say,
    God, I wish I could just work on this problem uninterrupted? Yes.
    But that tether comes with some responsibilities. And so I have to have the resilience to balance all
    of those things. So each of us as parents, working parents have to find a way to manage all of these
    priorities and not lose ourselves. So what you end up doing is giving up some of the things that you
    want to do for yourself. Just forget them because you’ve got to see it through the eyes of your kids,
    through the eyes of your spouse, through the eyes of the job. You have to morph into a new
    being. That’s a reality.
    And when you were CEO of Pepsi, your kids were pretty young. How did you manage the information
    flow? Just the volume of information that goes to the CEO. How did you do your full day at work?
    I imagine you had like a homework bag almost where you’re coming home with, you know, two or three or
    four hours of homework as well. But you’ve got to put dinner on the table. You’ve got to be there
    for the kids. How did, how do you, what did that information flow look like?
    I had two or three skills, talents, I don’t know what you want to call it, or curses. I didn’t sleep
    much. Okay.
    So, you know, you can either say that was, wow, you’re lucky or man, I wish I could sleep.
    I had a pretty good memory. I could read anything and it’ll stick in my brain. And I was a speed
    reader. All three helped. I had a support structure between family. And then later on, I could afford
    to hire help. I had a support structure. So to put food on the table, the food was prepared.
    And then the most important thing is I had a supportive spouse. The role that my husband
    played in this hall was just fantastic. And if I wasn’t there, he made sure the kids were taken
    care of because he was working full time too. And I did the same when he was traveling. And so I think
    the two of us worked as a team. We had support from family a little bit, but mostly the help around us
    were like family. And the weekends we had no help. It was just us. But then we said,
    look, the weekends we were just devoted completely to family. I never went into the office on the
    weekends most of the time, but I worked from home because there’s just lots to read. When the kids
    did homework, I did homework. And so was I always there for the kids? I’d say no. But you don’t get
    to be CEO by being the perfect mom, the perfect wife, the perfect everything. You don’t. You do the
    best you can. And that’s all I did.
    Do you think a lot of people are unwilling to make those sacrifices?
    It’s hard to make those sacrifices. I mean, I’d like to say it’s easy. It’s not. You look back and go,
    God, I missed all of these things I could have done for myself. I missed all of these fun events. I missed
    20 date nights. Yes, you missed all of that. But, you know, on balance, if you put it all together,
    the whole package worked okay.
    I see this often. We hold up CEOs and entrepreneurs and people starting a business as sort of, we want
    that, but we don’t want all the things that come with it.
    It’s that climb. It’s a tough climb. Anybody who thinks it’s easy to get there and then keep the job
    of stuff. I mean, every organization is a pyramid. Okay. It’s not a cylinder. It’s a pyramid. So as you go from
    the bottom layer of managerial positions to the top, think of it in PepsiCo and the bottom layer, probably
    14,000, 15,000 people. By the time you get to CEO minus two, you’re at about 60 or 70. CEO minus one, you’re down
    to 15. So you’ve gone from 15,000 to 60 to 15 to one. Just think of the climb. And then this
    is all happening at a time when the world around you is changing so much. So you’ve got to keep up
    with all the changes in the world. And you’ve got to make sure that you earn your place in the next
    realm. And remember, if you don’t earn your place, the people below you are waiting to push you out.
    So people don’t realize that as you get more senior in an organization, it’s up or out. So just keep
    those jobs. It’s very difficult.
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    Is that why there’s a lot of turnover after a CEO change? Like when you were promoted to CEO,
    the people you were competing with for CEO probably left.
    I kept many of them because I told them, look, I may become CEO, but I can’t, I don’t see why we
    can’t work together. Most of them stayed. After two or three years, they got CEO jobs and they left,
    but many of them stayed. But you’re right. You know, when you’re, when, if there are five people
    competing to be CEO and only one is made CEO, typically what happens is other companies grab
    them. Especially for a company like PepsiCo, which has a great leadership development,
    people came and grab them. And so they go off to be CEOs, which is good because you’ve got PepsiCo alumni
    now running so many companies. But you know, you’ve got to think about this math, which is pretty tough.
    When you became CEO, I’m going to rewind after this and go to pre-CEO. But when you became CEO,
    you walked into your general counsel’s office, Larry, and you fired him and you hadn’t thought about this
    beforehand. And then he looked stunned. And about 10 seconds later, you hired him back. What was the
    importance of that? I had to make sure that all the people working for me knew that they were working
    for me, the new CEO, not just carryovers from the old CEO. Typically what happens when you have carryovers
    is that people wonder if you can trust them. And not that there’s any bad feelings between you and the old
    CEO, but you want your own team. The general counsel is one of the most important jobs. And even though I worked
    very closely with Larry and I adored him, I didn’t ever want him to think that he was always going to be
    viewed as a carryover from Steve, even though Steve and I were best friends, great colleagues. I
    respected Steve enormously. So I had to make sure Larry realized that I’m going to respect him even
    more if he was now my hire. So I walked in and said, Larry, you’re fired. But I did it with a smile.
    And he just looked at me and said, what do you mean, boss? I said, okay, you’re now hired as my general
    counsel. He burst out laughing. And I mean, my first years at PepsiCo, my early years as CEO,
    was successful because of Larry. What a general counsel.
    Well, even he said that that was an important moment because it reset him as well to not being
    a holdover and to being there. Is it, when you mentioned you sort of like the old CEO around,
    if a CEO goes to the board, how does that impact the new CEO?
    The outgoing CEO is never in the deliberations. You provide your perspective and then you leave the
    room. The board picks the next CEO because remember the outgoing CEO doesn’t have to deal with the new
    CEO, right? And so that’s what happened when Steve was stepping down. And that’s what happened when I
    was stepping down. I told the board what I thought the company needed going forward. I gave them the
    dossiers of four or five people and said, these are all the pros and cons of each candidate based on what
    the company needs. And this is how these people have evolved over time, the trajectory of their
    development over the last five or seven years. But it’s your decision. You need to
    deliberate. You need to interview each of these people. You need to do your assessments. Because at
    the end of the day, I’m gone. You have to make sure the company stays successful based on the choices you
    make. And so the board deliberated, diligently met each candidate one-on-one and got to know them and
    spent almost two years deciding who should be CEO. So that’s the way to do succession. And so I think
    outgoing CEOs can develop people, but they don’t select the person.
    When a CEO steps down, is there a risk if they join the board of the company, they’re stepping down from
    a CEO in a way that limits the incoming CEO in a way?
    That’s my belief. I think an outgoing CEO should just leave, should not sit on the board because then
    you’re sort of curbing what the new CEO can do because they’re not always looking over their shoulder to
    see if they can take a direction that’s different than the CEO sitting on the board. It’s a terrible
    situation. When I stepped down as CEO, I told the board I wouldn’t be chairman for more than two months
    max, max. And then I’m out because I wanted the new CEO to have total flexibility to do whatever he
    wanted. While we’re on boards, you’re on many boards, including Amazon’s. What’s the difference
    between being the CEO and being a board member? When you’re a CEO, you’re it. When you’re on a board,
    you’re one among peers. So it’s a group of you collectively that are serving the company.
    Nobody is more important. We’re all doing it together. So it’s got to be, you’ve got to
    understand you’re dealing with peers. And together we are the board first. Point number two, there’s a
    deep urge as a CEO to want to manage the company. You cannot manage the company. You can only provide
    direction, ideas, suggestions to the company. And worry about the governance of the company.
    So you’ve got to make sure you don’t dig into the reeds and create confusion as to whose direction
    should we be taking. So it’s very important that CEOs forget their CEOship and put on a board hat.
    And always ask yourself the question, when I was CEO, if a board member behaved the way I’m behaving
    now, would I have liked it?
    Oh, that’s a good question.
    And if you say, Oh God, I would have hated it, then change your behavior. Okay. So understand the
    roles of the CEO and understand the role of the board member. And the third thing is, you know,
    when you’re a board member of the company, remember that the shareholders are expecting you to play
    the role of, you know, setting the right strategy, picking the right leaders, all of that are the roles
    that this company is expecting you to, the shareholders are expecting you to perform. Focus
    on those things. Focus on the strategy. Focus on leadership development. Understand the business so
    you can marry it with the strategy. Focus on those things. Don’t try to get into the weeds and try to
    micromanage quarterly results, annual results. It’s just not your role.
    You’ve spent your life in strategy. What is strategy?
    You know, it’s a nebulous concept, but it’s a very clear concept in the other hand. The strategy in
    my books is crafting a path forward for an entity that allows it to execute on that path forward
    with superior results. Can you never craft a strategy so that your results are diminished? You always craft
    a strategy to improve your results. But if you craft a strategy which is not implementable, it’s not a
    strategy. So strategy requires implementation with it and a place that’s better than where
    you are today. Both are difficult to, because you have to almost anticipate what the outcome of the
    strategy could be. It can be implemented and you’re going to get to a better place. And that’s the challenge
    with strategy. You’ve almost got to have a 360 degree view of the environment, of competition, of the markets,
    of customer revolution, everything else. And then you’re crafting a path to say, this is how we should proceed.
    This is why it’s going to be better for us than it is today. And incidentally, if the world around us
    changes, we’re going to zag a little bit. But we’re still going to focus on getting to a better
    place. That’s why I think strategy requires unique skills. Zooming in, zooming out, being able to have
    peripheral vision constantly, learning from other industries. That’s where consulting was a huge
    benefit, because that’s what consulting taught you. Strategy consulting. And I think that’s what I sort of
    took to heart and everywhere I went, that’s what stood me in good stead.
    There’s two times that you’ve mentioned in this that it has to be implementable. What’s the importance
    of that? Is that something that comes up often? Or is that the difference between academic strategy and sort
    of real world strategy? Yes, definitely the latter. Because very often, strategy is as it is taught.
    It’s taught by people who’ve never run a company, never implemented strategy. So I’ll give you an
    example. In business schools, they teach the fact that organizations are siloed. And siloed
    organizations are terrible. You should have information exchange within divisions in the
    company, et cetera, et cetera. But then universities are the most siloed places. There’s hardly any
    sharing of information across departments. It’s the most siloed organization. You see, what it is,
    is they’re teaching something which is not implementable in that entity. So from our perspective,
    if I go into the company and say, I want power of one, I want PepsiCo to practice power of one,
    as opposed to Frito-Lay beverages, I’m not going to say, what is power of one? What do I mean when
    I say power of one? What all do I have to change to make power of one happen? Where can the friction
    be in the company to implement power of one? How do I provide the right incentives to remove that
    friction? Because at the end of the day, everything has to happen through people. So you’ve got to
    understand people. And you’ve got to understand all the changes you’ve got to make to people,
    processes, incentive structures, everything to enable a change to happen. And that’s what I mean
    by implementable. Don’t just sit there saying we should have power of one. Talk about what is it going
    to take to implement it. And understand where it could be derailed, anticipated, keep addressing it. Watch
    for science when it’s not working well. See what changes you’ve got to make. So you’ve got to be very
    alert when you’re making a change. You’re one of the few people I’ve interviewed that started with
    removing friction, which I think is beautiful. Most people start with force. How do I make this happen?
    How do I will this? How do I push through the friction? Most of it is friction in organizations,
    friction points, which you’ve got to look for and remove it. Coming back to the board just for a second
    here. What’s the difference between a good board member and a great board member?
    A good board member probably does governance well and knows all the board rules and can show up at a
    meeting reading the material. A great board member reads a lot more than the material that’s provided
    to you. You know, go read everything that’s available outside of the company, its businesses, its competition,
    technologies, whatever. So when you come to the meeting, you don’t just do what the basic stuff required
    to get through the two days of board meetings. But you’re adding value over and above the basic
    requirements of the board. And so when you provide insights that really cause the company to pause
    and say, God, she’s got a great point there. Let’s call her back and say, Hey, Indra, can you tell us
    more about what you meant by that? Now you’re really a value-added board member, as opposed to, yeah,
    so-and-so is a good board member. Read the board material, made sure that the governance was
    ticked off. I think that’s the table stakes to be on the board. But a great board member does a lot of
    work themselves to read way beyond what the company gave you to read.
    I love that. Amazon is known for doing things completely differently internally, including
    their memos to start meetings and stuff like that. What are the lessons that you’ve learned from being
    on the board there that may have been counterintuitive or new to you?
    You know, the entire company is focused on the customer. The obsession of the customer is
    something else. And it’s always like, how do we make customers’ life better? How do we
    lower costs for customers? How do we improve delivery times? How do we latency? All these things are
    what they focus on all the time. So I’ve never been part of such a customer-obsessed company.
    PepsiCo is consumer-focused, but these are customer-obsessed companies, first. Second, Amazon has paranoia about
    sort of devolving into hierarchy and what they call losing the day-one culture. Day-one culture being when
    they were young, entrepreneurial, how hungry they were and how they hustled. They want to have that
    hustle culture all the time. The fact that they’re paranoid about it, even today, given their size,
    is what blows me away. They’re always scared that they will lose that day-one culture. And so you’ve
    got everybody hustling to make sure that hierarchy is not built. Too much bureaucracy doesn’t kill
    ideas. And so anybody can come up with an idea as long as they can write a six-page document and present
    it to people and, you know, seek funding if your document is good. So I would look at Amazon as this
    gigantic day-one company that’s customer-obsessed. It’s an unusual culture, a culture that’s prevailed,
    a culture that’s constantly re-examined so that it never, ever changes from this day-one hustle.
    And I feel privileged to be part of this company.
    You’ve led directly as CEO through many crises, including, I think you had a food safety scare
    while you were CEO of PepsiCo. What are the differences between, I mean, academic and real
    world leading to a crisis, I guess, would be a good way to frame this?
    You know, academics teach crises, which is good, because how else will students learn about what
    leaders did in crises? So I respect academics who teach all that. And they do a good job of doing
    the teaching. The thing is, when you’re in a crisis, it’s happening in real time. Public is writing about
    it. You’re being taken down the eyes of everybody in the media and investors, analysts. You’re home.
    Everybody’s scared because your face is on TV saying, what the hell’s going on? And it was even tougher for
    a female CEO because, you know, women CEOs got a lot more attention than men. And so when you’re going
    through a crisis, first of all, you’ve got to understand the crisis down to the details as opposed
    to, we have a recall. Sit down and get your R&D and manufacturing guys and say, tell me about this
    in a lot more detail. Ask all the questions you need to ask to understand exactly the root cause of the
    crisis.
    Then let them give you a plan as to how they’re going to address it. Then step back and decide what the
    messaging is going to be. Very often, people don’t take the time to really understand the root cause of
    what caused this crisis. And don’t listen to the plan. And then they try to pass the blame on to somebody
    else. As a CEO, the buck stops with you.
    How does that go with positioning? I love this because how do you take what’s happening? You’ve
    agreed that this is the plan. This is the path forward. You have credibility with this. I think
    we can do a lot with this. And then how do I position that in a way where the company is moving
    forward in the best way possible, but you’re positioning it for an audience too, to be receptive
    to it and not pass the buck. Honesty is critically important. When you have a crisis, be honest with
    your employees, with the outside world saying, this is the crisis we’re facing. This is how we’re going
    to address it. And we’re going to give you an update on this timeframe. Honesty means, I mean,
    changes the whole game. Because when you try to use big words to hide the crisis, so you’re just trying
    to deflect responsibility. People just don’t have time for this, including your own employees. Okay.
    And so I’ll give you a little crisis. When we had our second activist investor in the stock,
    it was a crisis for the company because nobody likes to have an activist in the stock.
    I did a town hall and I told everybody, I said, look, I’ll give you regular updates
    on the activist. You’ll see it on TV. Ignore it. There’s a general counsel, the CFO and I,
    who’ll handle the activist. Your job is to just keep focusing on delivering performance. That’s
    your only job. Don’t worry about the other distractions. And you can be sure that three
    of us have the company’s best interest at heart. And they all knew that I always put the company
    before me. I said, we have the best interest of the company at heart, but we will keep you informed.
    But your job is to keep driving the performance. Now, deep down inside, you know, I was in turmoil
    because I had to deal with all of this stuff instead of just focusing on the company. However,
    to the employees, I had to show that I was calm, I was in control, and that I was going to take
    them to a better place. So I think boards pick leaders for resilience, ability to manage through
    crises. And can you stay calm through it?
    The second activist investor you had, was that Nelson?
    Nelson Peltz. Yeah.
    Walk me through that. What was that like? What was the engagement with them like? I mean,
    it’s so far in the past now that it’s all sort of come out, but from your point of view?
    It was a typical activist book. He wrote a white paper and he gave it to me. I mean,
    I knew Nelson Peltz for years. I liked him actually. So there was no strangers walked off the street
    with the white paper. It wasn’t that way. He’d done his work. Most activists pick data selectively
    to make their case. And so when he gave me the white paper, I didn’t sit here going,
    I’m not going to listen to you. I said, look, let me study his white paper because he may be the
    external activist. I’m an internal activist. I want this company to do well. So why don’t we look at
    his white paper as a free consulting report? And let’s pour through it. If he has any ideas that
    we haven’t implemented in the company, let’s take those ideas. But we’re not going to make big changes
    to the company just because Nelson said, I had to make it. We’ll make it if it makes sense for this
    company. And if we can keep performing at the level we’re performing. So I was clear on the company
    strategy. The board was clear on the company strategy. We listened to everything Nelson said,
    because we have great respect for him. Okay. So this is not about blowing off activists as terrible.
    Some companies do that. I didn’t do that. I said, I’m going to treat him with respect. Every time we
    wanted to meet, I met. Anytime he wanted to meet a board member, they met with him. But every time he
    proposed something, we said, look, we’re doing this because of the strategy of this direction,
    because of these trends. If he wants to change his strategy, it’s because you think the trend has
    changed. Has the trend changed? No, it hasn’t. Then if the trend is that way, that’s our strategy and
    we’re not changing it. Okay. So he came around. I mean, he’s a smart guy. He came around and we’ve
    remained friends since. There’s no question about bad feelings or anything of that sort.
    Often, activists want a board seat or demand a board seat. What are the pros and cons from your point of view
    as a CEO of letting an activist investor onto the board? And at what stake do you think it makes more
    sense, even if you disagree with it? What ownership levels?
    Well, it depends on the board member they propose. You know, Bill Johnson, who we used to run Heinz,
    came on our board. And Nelson actually suggested Bill Johnson. But what Nelson didn’t realize is that
    Bill Johnson and I knew each other and we were friends already. So when Nelson recommended Bill
    Johnson, it was a welcome thing for us because he came from the consumer world, knew us well.
    Now, had he recommended somebody who was disruptive, we may have paused and said, don’t want that board
    member because you don’t want to spend our time answering activist questions when we should be
    running the company. Bill Johnson was hugely accretive to the board. And, you know, he had known Nelson
    forever, but he knew the consumer world, he knew PepsiCo. And so, you know, he actually added a lot to the board.
    It was a win-win.
    It was a total win-win.
    Is there a percentage in your head where if a shareholder has a certain percentage, then it’s sort of probably right
    for them to have a board seat, even if they might be disruptive?
    Oh, 15% or so, 10, 15%, maybe, maybe. But one to 2% and you try to agitate for a board seat, I think that’s really wrong.
    You mentioned women CEOs. Correct me if I get this wrong. When you became CEO of PepsiCo, you were the first woman CEO in the S&P 500?
    No, no, no, no. A couple others, Carly Fiorina, Warsaw. So, when I became CEO in 2006, I think there were 11 companies that had women CEOs, okay?
    When I became president of PepsiCo, I think I was one of two or three. But I was the first woman of color to run a Fortune 50 company.
    Now, I think there’s about 54 women CEOs of the Fortune, of the S&P 500.
    Does it feel like we’ve made progress to you?
    You know, when you’re at 10%, it’s not really progress because 50% of the MBA graduates are women.
    Okay, so somewhere that pipeline is leaky. But, you know, it’s a journey because you’ve got to make so many trade-offs.
    Why did it get to the top? But it was novel at the time I became CEO, the first immigrant person of color from an emerging market
    to lead a Fortune 50, iconic American company. It might have made a lot of news, but deep down inside, I’m like, God, I better prove myself.
    Okay, I lived off of that fear of making sure that I did my job right and didn’t let any of these constituencies down.
    To the outside world, it was big news.
    How do we go about creating more of an equal opportunity while maintaining a meritocracy in companies that allow for more women?
    Like, where do we get in the way of this happening?
    I think if you decide that you want to have a meritocracy in the company, you should draw from the entire talent pool.
    When you have more than 50% of the graduates are women, women are getting all the top grades, they’re hungry, they want to move ahead.
    And then you don’t hire from that pool because you start off saying, oh, she’s a woman, must not be very good.
    You have these biases, that’s a problem.
    So you’ve constantly got to check your biases at the door and say, if I had to put on a blindfold and hire people, how do I make sure that I draw from the best and the brightest?
    That’s what consulting does, okay?
    So you draw from the best and the brightest.
    And then while they’re in the company moving ahead, make sure that barriers that exist to their success are removed.
    Because once you attack somebody’s confidence, it attacks their competence.
    So if a woman is presenting and you roll your eyes at her, or when she’s presenting, you cut her off, or she says something and you cut her off, or, you know, I’ve seen this often.
    Somebody will say, oh, yeah, this is so theoretical when a woman presents.
    When a man says the same thing, they’ll say, oh, God, that’s so brilliant.
    So these things happen as a matter of practice in companies.
    Women, people of color, when they present, they do go through some bad behavior.
    I’m talking of then.
    Things have changed a lot now.
    But in those days, it did happen.
    And so when those things happen, you’ve got to figure out a way to call those people out right there and say, hey, can you let her finish?
    Can you let this person articulate their point of view before you cut them off?
    Will you stop rolling your eyes when she’s presenting?
    Because you can feel the person rolling their eyes.
    So if you really value every talent for what it is, meritocracy, bring them all in, allow them all to thrive, then everybody has the confidence to continue to contribute.
    But if you have all these unconscious biases that impact people who are different, then they lose their confidence.
    And once you lose your confidence, you no longer feel comfortable.
    So your competence is impacted because you’re questioning yourself.
    Am I good enough?
    Can I do this?
    So I think the whole idea of meritocracy is thinking about all talent is equal, as opposed to one talent is more important than the others.
    And then creating equality of opportunity, I would imagine.
    Opportunity, environment, constantly monitoring it, making sure we don’t slip back to old bad habits, and making sure we have the numbers.
    Usually when you have one or two diverse people in the organization, you can’t really practice how to be inclusive.
    And then you have to constantly check yourself and say, if 60% of the summa cum laude from that college were women, where are my summa cum laude?
    Why aren’t they in this company?
    Okay?
    So you’ve got to ask yourself those simple questions based on the statistics coming out of all the graduating classes.
    Because if 55% of the graduating class are women, 55% of the summa cum laude and magna cum laude are women.
    And even in STEM disciplines, if it’s more than 50%, and if you only have 20% of the hires are women, why aren’t they coming to you?
    So you’ve got to look at all these numbers and say, let me ask the question about, what is it about my company?
    Especially if you’re a conceivable company, you go, boy, they should really want to come here.
    What are we doing wrong?
    So you’ve got to get introspective yourself.
    One of the anecdotes that you pointed out in your book, and correct me if I’m getting this wrong, because I’m just going from memory here, is when you started listening in on the performance reviews with the men, it was they did all these things and this.
    But with the women, it seemed like they did all these things but this.
    Was that like a bias within the organization?
    Or what was going on there?
    So performance appraisals for men is like, you know, he didn’t deliver on all his goals.
    Yeah, I agree.
    But the guy’s got really, he’s got great potential.
    With the women, it was, she delivered on all her goals.
    But I think, you know, her future trajectory is not that great.
    You go, why not?
    Well, I don’t know, something about her tells me that she won’t be successful.
    Sometimes it was just ineffable.
    Not with all people, but some of the people, that’s how the dialogue would go.
    You have to stop it at that time and say, let’s not just leave this discussion.
    Let’s really have a conversation about this because maybe it’s true, maybe it’s not.
    And sometimes it used to be issues related to her style or the way she dressed or how she showed emotion or how she gesticulated too much.
    And now these women show up in these C-suites and it’s a different gender, behavior, everything.
    People have to get used to it.
    So you need more examples of people in C-suites.
    And then you say, okay, look, each person behaves differently, but they all bring a richness to the dialogue.
    Was that what happened when you quit PepsiCo?
    Because you quit, you went to Roger and you said, I’m leaving, I’m going to do this board meeting and then I’m gone.
    I didn’t quit, remember, I just threatened to quit.
    I said, I’m, oh yeah, I just said, after this meeting, I’m leaving tomorrow.
    If nothing changes.
    I didn’t even say that.
    I said, you know, look, you’ve been watching this bad behavior and you’ve said nothing.
    So I’m going to make this presentation tomorrow to the board.
    After that, I quit.
    And he didn’t say anything.
    And then that day, the meeting with all the presidents that was supposed to happen, where I would always get beaten up, didn’t happen.
    He called off that meeting and said he brought in the people who were tough on me.
    And I think he had a chat with them.
    And then the next day morning, he walked into my office and said, say, you know, next week we’re going on this trip to look at these operations and these operations.
    Just make sure.
    He didn’t even tell me, I hope you’ve changed your mind.
    He just assumed.
    He just acted like.
    Yeah, nothing.
    And then, believe me, I don’t know what conversation he had with those people.
    Everything was night and day after that.
    We never talked about it.
    Did you ever have to have a conversation like that with people?
    I would call out bad behavior immediately when I saw it.
    But in a gentle way, I’d say, hey, can you let her finish?
    Stop interrupting her or him.
    It could be a him too.
    What I would say, don’t roll your eyes when they’re talking unless something’s wrong with your eyes.
    Okay.
    So, but I do it in a way that didn’t make them feel bad, but it was direct and pointed.
    You only have to do that a couple of times.
    Yeah, that’s right.
    The message goes quickly down the company.
    You had a conversation once with Steve Jobs where he told you not to be too nice.
    How did that candid conversation influence how you ran PepsiCo?
    I think he taught me a valuable, first of all, it gave me time, which was just so generous.
    I think the biggest lesson I took away was he said, if you care about something, and you should care about a few things, show your passion.
    For example, the guy who ran TVWHI at day, the ad agency, which was doing work for Apple, would always say, when you go to see Steve Jobs, the campaign, if he didn’t like it, he’d throw the stuff all over the room and say, I want to see a new campaign by the morning.
    And you scream, but he wasn’t doing it to destroy the place.
    He was doing it because he cared so much about Apple that he wanted the absolute, brilliant, right campaign for Apple.
    And his way of showing his frustration at himself and at the group was to act the way he did, okay?
    Now, as a woman, I’m not the kind that utters full-letter words and throws things around, but all that Steve Jobs was telling me was, people have got to know what you’re really passionate about.
    When you’re really passionate about something, don’t sit here going, God, I don’t want to send them back three times.
    It’s okay to send them back three times.
    Get it to a point where you’re really comfortable, this is going to be good for the company.
    Show your passion, push people back.
    So I got to a point when design as a discipline was set up in PepsiCo.
    When they’d bring me something I didn’t like, I’d say, hate it.
    Absolutely hate it.
    And then I would tell a joke about it and say, this is what the customer is going to say when they see it.
    Or I’d say something like, this new product is delayed.
    I don’t care.
    In six months, we have to launch it.
    Even though it normally takes three years to do it.
    And guess what?
    I’m the program manager.
    So we’re going to meet every Friday morning to talk about this program.
    People go, you’re the program manager?
    I said, yeah, I’m the program manager.
    And people go, this is a disaster because to have a CEO review every week means we have to have two other reviews before we come to see you.
    I said, no, I’m the program manager.
    I’m not the CEO.
    I’m the program manager.
    And I was.
    And I told them, no need for pre-discussions before you come to me.
    I’m the program manager.
    And so people sort of realized that I was passionate about launching this product.
    And so they went along with the program and they were grateful.
    I removed every barrier, told them that, okay, this is what’s holding you back.
    Let me make a few phone calls and see if I can’t get this out of this company faster.
    So I jumped through hoops for them.
    There’s a lot of value in being passionate about something and just that energy sort of like transferring over to everybody else.
    There’s also a huge benefit to just having clarity.
    It’s not like it’s okay.
    You know, maybe try changing colors.
    It’s like, no, I don’t like it.
    It’s garbage.
    Like come back with something new.
    But there’s one big lesson.
    When you’re in such positions of leadership and you have passion about something, don’t try to take the credit.
    If the team does a great job at the end of it, even though you were the program manager and you drove it, give the credit to the team.
    Because you couldn’t have done it yourself.
    The team did it.
    It’s just that you exercise the power of your office to help them get there.
    So the credit should go to them.
    Make sure you give them the credit.
    When if something goes wrong, take the blame.
    But, you know, blame flows upwards.
    Credit should flow downward.
    Steve Jobs inspired the design thinking at Pepsi.
    How did that change how PepsiCo went about their business?
    Like, I remember you gave binders to sort of people and stuff.
    But like, how did it tangibly work its way into products?
    And what was the impact of that?
    Well, all of a sudden people are saying, God, we can do so much for design.
    We can change our innovation process.
    We can change our package, our product design.
    We started to move from what’s the color of the package on the shelf to how is this product going to be consumed?
    How is it going to be used?
    How is it going to be carried?
    How is it going to be stored on the shelf?
    How is it going to be stored in the pantry at home?
    We were thinking about the chain, the use chain, all the way to how does a consumer shop for it, put it in the pantry at home,
    and then take it out and eat it and carry it in the purse.
    We were thinking about every touch point of the product until it got into the mouth and was consumed.
    So it expanded the entire chain, which goes into the thinking.
    And previously you were sort of focused on like, what’s going to make it stand out on the shelf?
    How are people going to buy it?
    Right.
    And then we’re not worried about it once they put it in the cart.
    I think, you know, if there were 10 steps, we worried about three steps in the past, about 30%.
    Now we started to worry about 80, 90%.
    So it was a different experience.
    It was fulfilling.
    People loved it.
    Are there any other lessons that you’ve taken from other CEOs?
    I mean, you had a conversation with Jobs.
    You worked with Jeff Bezos on the board of Amazon where you’re like, oh, that’s a really good idea or really clever.
    I wish I would have known that before or ones that you did implement while you were CEO of PepsiCo.
    You know, one of the things you should do as a CEO, talk to other CEOs.
    If you see something interesting they’re doing, you’re in such a rare club, the CEO club.
    Call them up and say, hey, you’ve done this.
    It’s so interesting.
    Can you share some findings with me?
    Can you share some results with me?
    Or I’ll give you one example.
    We used to do business with club stores like Costco and people like that.
    Very different businesses than a regular retail store.
    Item merchandisers.
    Costco only merchandisers.
    So many SKUs, limited number of SKUs.
    They’re all in a different packaging than most other retailers.
    You know, I sat there going, I don’t understand Costco enough.
    My salesman told me about Costco, but I didn’t understand Costco enough.
    So I called Jim Sinigal, who was at that time the founder and still running Costco.
    I said, Jim, I want to do better at Costco.
    I’m CEO.
    And he said to me, if you want to do better at Costco, walk the store with me.
    Come to a store opening, spend the whole day, because he goes to every store opening.
    Walk the store with me.
    Amazing human being, Jim Sinigal.
    Just, I mean, heart of gold that he gave me a day.
    Walk the store with me.
    Taught me how club stores operate.
    Taught me the basics of the business.
    This is CEO to CEO.
    He taught me the basics of the business.
    And in that store, everybody watches him, Jim Sinigal and me, being great friends.
    But I’m the student.
    He’s the teacher.
    And he taught me the business.
    Oh my gosh.
    Walk me through this.
    Like, what did he point out?
    What did he notice?
    What did he draw your attention to?
    Package sizes.
    How they think about packaging sizes.
    How they think about treasure hunt.
    Because in Costco, there’s always something new.
    How they think about the treasure hunt alley.
    How they think about pricing architecture.
    You know, it’s like Costco would have a unique packaging configuration, which was not really
    comparable to anything out there in the marketplace.
    And why that was important for Costco.
    You know, what is their thinking about how to manage the budget of a family, especially a
    family with two or three kids?
    How do you think about that budget?
    So, for example, we stood at a refrigerated shelf.
    I remember in Port Chester, the store, he and I were walking in and he said, okay, Indra,
    you get to pick a product that I should put into the store.
    Do you have an idea?
    I said, yeah, I gave him an idea.
    I’m not going to tell you what it was.
    I gave him an idea.
    And I thought, you know, in six months, it’ll show up on the shelf.
    Two weeks later, I go to the Costco store.
    It’s there.
    How he got it done in two weeks, I don’t know.
    But it was a huge seller.
    So, I felt relieved.
    But based on the draw of that consumer in that neighborhood, I thought this product would
    do very well.
    But he listened.
    You see that?
    You see how you feel about the fact that the CEO wasn’t just teaching, he’s also learning
    from you.
    And so, I had experiences like that.
    I remember there was a Walmart senior executive, Greg Foran, who was running North America Walmart.
    And he was in Kiwi.
    And he was turning around Walmart, North America.
    People thought he was very difficult.
    And I went to meet him.
    And Doug McMillan, the CEO, told Greg Foran, hey, Indra is a good friend of mine.
    And Greg Foran said, well, if you really want to learn Walmart, follow me on a store tour.
    And, you know, these guys go to a store every day, some region.
    So, Greg would say, I’m going to be in Pittsburgh from 8 a.m. to 6 p.m. on the 23rd of March.
    So, I’d fly to Pittsburgh.
    I’d meet him there.
    And my job was just to trail Greg Foran to see how he looked at every aisle, how he looked
    at how clothing should be merchandised, what product was married with what, where did he
    stop and say, redo this entire display for the consumer.
    So, I was learning from Greg Foran, but he allowed me to tail him.
    Okay.
    And so, I felt it was a gift he gave me.
    And at lunchtime, he would only take a half an hour break.
    He said, Dan, he said, tell me what you learned.
    Let me tell you what I think you should have taken away.
    Okay.
    Greg now runs in New Zealand.
    I was in New Zealand a year ago with him.
    We were reflecting on our market experiences.
    He taught me more than I would have learned from anybody.
    But this is the advantage of being open to ideas, open to learning.
    And you can learn a lot from CEOs and become a better person yourself.
    Because at the end of the day, a company does not exist in a vacuum.
    That’s one of the reasons we interview so many CEOs and share your lessons with our audience.
    Is there anything that stands out about what you learned that day walking through Walmart or
    the lunch after where you were sort of, oh, I never thought of it that way?
    You know, how they merchandise T-shirts is dark to light.
    You know, when you hang, let’s say you’re hanging a certain T-shirt, but you’ve got to
    make sure the colors go from dark to light.
    If you mix up all the colors, consumers have a difficulty shopping for a T-shirt.
    He’ll go and stand there and then he’ll look at his team and say, what have you done wrong?
    And, you know, sometimes the guy will have the right answers.
    Sometimes they won’t.
    You got to merchandise it dark to light.
    Or he’ll stand in front of a Frito-Lay aisle and he’ll say to the guys, what do you think
    about this aisle?
    All right.
    And they’ll say, it’s perfect.
    He’ll say, yeah.
    Why isn’t every aisle like the Frito-Lay aisle?
    Because PepsiCo’s merchandised us perfectly.
    Or the best example, I remember we stood in front of a Quaker Roads aisle.
    He’ll pull out four packages of multi-packs, you know, all the different flavors of, he’ll
    put all four packs and he’ll look at me and say, Indra, come here.
    I say, yes, Greg.
    I said, awesome lineup.
    Because in my products, right?
    I own Quaker Roads.
    He’ll say, each of these boxes, they’re three different sizes, but each of these boxes has
    got nine packs, 12 packs, six packs, whatever.
    But the pricing doesn’t reflect the changes.
    You know, why is that?
    And why do I need four different packs?
    Why don’t I just have two?
    And I’m going, but I don’t have the reason.
    But, you know, he’s thinking about how can I get the maximum inventory on these shelves
    that make sense for the consumer, but have price transparency so the consumer is served well.
    And basically what he was pointing out to me is my pricing architecture was messed up.
    And it was causing confusion, I would imagine.
    And even if the consumer didn’t express their confusion, they were probably confused because
    we were confused at that time looking at the four packages, but he would look at it at
    that granular level.
    That’s incredible.
    And, you know, you learn so much and say, guys, hang on.
    When you go back and you look at pricing architecture, you ask people these questions.
    How many SKUs did you put on of Quaker Roads?
    Why do we need 10 SKUs?
    Why not four?
    It’ll simplify the manufacturing operations.
    I think Frito does their own stocking of shelves.
    Do they know?
    Is there a reason behind that?
    Because the velocity is so high and it’s all, you know, air in the bags.
    So if you put it through the warehouse, it’ll take up too much space in the warehouse.
    So we bring it in through the art trucks and our salesmen know how to put the right SKUs
    in the right place on the shelf.
    If Frito-Lay products and beverage products came through the warehouse, they would have to
    build separate buildings just to house those products.
    Because I’ll give you an example.
    A Frito-Lay chip will turn 40, 50 times a year.
    Beverages might turn 60 to 70 times a year.
    Toothpaste turns 12 times a year.
    Cookies turn 10 times a year.
    So, you know, those people, those can come to the warehouse.
    But chips, milk, beverages, very hard to bring it through the warehouse.
    When you look at an aisle of Frito-Lay or PepsiCo products, what draws your attention?
    What do you notice?
    Well, I look for new products.
    Have they been slotted?
    Are the existing workhorses like Alley’s or Doritos got enough facings so the consumer
    knows that they should grab it?
    Is each package neatly crisped and put on the shelf?
    Because that’s the media you own, right?
    When your consumer sees the product on a shelf, that’s the media talking to you.
    So to me, the media you own is very important to the consumer.
    Because the media you rent is your TV and your advertising.
    Many people don’t see it.
    But they see that billboard effect on the aisle.
    So how does your package show up on the shelves?
    Is the right assortment there?
    Can they shop it easily?
    For example, is there a corporate block called Frito-Lay or do you have potato chips, corn chips?
    How would you prefer having it?
    Are the dips next to the chips?
    If something is on deal, is it on an end aisle?
    There’s so many things we look at.
    The Frito-Lay guys do a great job.
    That’s awesome.
    One of the big strategic pivots, I guess, that happened under you is when you were president,
    you sort of outsourced the bottlers.
    And then when you were CEO, you brought them back in.
    Do I have that right?
    Well, you know, when Roger was CEO, we spun out the bottlers.
    In North America, I executed on his direction.
    And at that point, it was the right thing to do.
    But when I became CEO, I realized that the market was growing.
    The bottlers were thriving.
    When the market growth rate slowed down, okay, the pie wasn’t growing, but there were two
    companies, the concentrate company and the bottling company fighting for a larger share
    of that pie.
    It was not constructive.
    We were not serving the customer, but we’re now fighting amongst ourselves.
    I made the hard decision to buy back the bottlers.
    Now it gets back to strategy.
    Sometimes people say, oh, you flip-flops.
    No, the environment changed.
    Remember, I talked to you about you change strategy, the environment changes.
    You cannot be dogmatic about your strategic direction.
    When the environment changes around you, you’ve got to zag a little bit, which is what I did,
    bought back the bottlers.
    Had we not bought the bottlers back at that time in North America, we’d still be fighting
    with the bottlers and the pie would be shrinking.
    Because we’re not serving the consumer, we’re fighting each other.
    So it was tough, but we bought them back.
    But one of the ways that people deal with reality is to be humble.
    You know, that was the best path at the time.
    But that sounds so easy.
    But this is a multi-billion dollar decision.
    The business was a multi-multi-billion dollar business.
    So again, you know people are going to criticize you for flip-flopping.
    People are going to say you took on a more asset-intensive business.
    But was it right for the company?
    Got to put the company before you.
    They might criticize you, but is it right for the company?
    The answer is yes.
    What have you learned about decision-making that you wish more people knew?
    I think many people do it well.
    Decisions are rarely made in a vacuum.
    Decisions are made because you’ve looked at reams of data.
    You’re married with experience, with a little bit of intuition, a lot of counseling with other
    people, a lot of discussions, a lot of input from other people too.
    Don’t underestimate, you know, how much knowledge is resident in your teams and how you can tap
    into it.
    And so I think if you’re willing to incorporate all those points of view into decision-making,
    you’re going to end up with a great decision.
    But you’ve always got to keep one thing in mind.
    If something goes wrong with the decision you made, the blame is yours.
    If it goes well, give it to the team that worked on it.
    Okay?
    Cover for them.
    Provide the air cover.
    But don’t try to take the credit to yourself because the more you take the credit to yourself,
    people will go, she just wants to look good.
    Okay?
    Just say, guys, I’ve got your back.
    We’ve done all the thinking, discussion.
    We’ve looked at this from every perspective.
    Go make it happen.
    If something goes wrong, I got your back.
    Your people feel empowered.
    You were involved in a lot of acquisitions of companies through strategy and through being
    the CEO of PepsiCo.
    Why do so many acquisitions not work out the way that they’re intended?
    First of all, the acquisition logic should be correct.
    Okay?
    Don’t do deals just because it’s sexy to do a deal or you’re trying to buy some short-term
    growth or profitability.
    If you do it for the wrong reason, they will not work out.
    Second, any acquisition, the deal process is just 10% of the whole process.
    The whole work is in the post-merger integration.
    How do you integrate the acquired company into your company?
    How do you extract the synergies?
    How do you build a new culture?
    How do you absorb them?
    People don’t pay enough attention to that.
    And when post-merger integration efforts are not done right, acquisitions do fail.
    And you’ve got to keep that in mind.
    And sometimes acquisitions don’t work because the people that you put in charge of running
    the new company are not competent.
    I think one of the lessons I learned is respect the culture of the company of acquired.
    I’ll give you two examples.
    When we bought Tropicana, the days when there were oranges available in Florida, Roger said
    something very interesting to me.
    He said, it’s a different company.
    It’s a good for you product.
    Don’t allow people from the rest of PepsiCo to go there and put their ideas on a good for
    you business because you’ll mess up that business.
    So he made me go sit down with Ellen Marram, who was running that business, to say, what
    are the rules under which Tropicana should operate?
    Almost their value system.
    And he said, preserve that until this company is mature enough to be called part of PepsiCo.
    Very important lesson.
    The second was when we were buying Quaker Roads.
    It was Bob Morrison was very important to Quaker Roads.
    Which included Gatorade, right?
    Quaker Roads, yeah.
    He said, when we’re buying Quaker Roads, whatever happens, we’re going to do everything possible
    to keep Bob Morrison, at least for the first two years.
    So the onboarding into PepsiCo is done with the way that, you know, we respect their culture
    and they respect us.
    Made a whole lot of difference.
    So I think acquisitions fail when you don’t recognize these pitfalls and don’t address them
    proactively.
    Are there any big mistakes that you made in an acquisition where you’re like, ah, lesson
    learned for next time, but…
    I’m not going to tell you those mistakes, but yeah, of course.
    I mean, we correct them, but yeah, we made mistakes.
    And if the mistakes were made, it’s because I wish we had played out how that market could
    have evolved even more.
    Or I didn’t bring the bottlers in soon enough to talk about how they’re going to carry it on
    the bottling system.
    Or I put it into Frito-Lay, even though it was a good for you product, and somehow it
    became a fun for you product when I wasn’t looking.
    So yeah, we made mistakes.
    The key thing is, where it makes a huge difference and big bucks are involved, be careful.
    Be ultra careful about post-merger integration in people because the cost of failure is very
    high.
    I’m going to ask a question.
    I want to hear your sort of rapid fire response of either behaviors or traits.
    If somebody had an unfair advantage in PepsiCo and they were just constantly knocking it
    out of the park all the time, what would be the behaviors and traits that that person would
    have or the skills?
    They’ve got this uncanny ability to zoom in and zoom out.
    They ask people for opinions and ideas and incorporate them.
    They put their hands up for difficult assignments and learn from difficult assignments.
    They’ve gone through failure in the past.
    People who hit it out of the park have been through a lot of failure and learn from that
    failure.
    They haven’t allowed it to get them down.
    They’ve learned from those failures.
    They pick themselves up, talk about what they learned, fix it the next time and move forward.
    These are people who are typically humble.
    You know, people who hit it out of the park rarely beat their chest and say, I hit it out
    of the park.
    I hit it out of the park.
    Look at me.
    I got to move forward.
    These are people who say, hey, this is what the company needed.
    I did it.
    And PepsiCo had a lot of them.
    Was that almost a reverse signal when people were too braggy about what they’ve done or look
    at me, look what I’ve done.
    And then you just dismissed that because, you know, historically that doesn’t correlate
    really to people who do the work.
    You know, PepsiCo didn’t have too many of these bragging people.
    So I was blessed to run a company where the culture was such that some people might have
    tried to be a bit more out there to take credit, but there were very few people who were
    braggers, really.
    Even Amazon has no braggers.
    Philips, the other company I said on the board of, the MedTech company from the Netherlands,
    not at all.
    Nobody brags.
    Everybody’s talking about what can we do together to move the company forward.
    So I think I’m just lucky to be in these sorts of companies.
    Do you think that there’s an important component to being part of a company?
    And I mentioned this in the sense of maybe COVID or work from home, where it’s really easy
    not to feel part of something larger than yourself.
    But there’s this very human side of us that needs to feel part of something larger than
    ourselves, whether it’s a family or work, that we’re making a difference, that we’re
    contributing to society.
    Does that get lost in work from home, do you think?
    I don’t even know what it is to work from home only.
    To me, if you don’t come to work, interact with other people, understand the culture of
    the company.
    You know, see people in the corridor, toss around ideas, pop your head into a meeting and
    say, hey, I see you guys are working on this.
    Can I help?
    If you don’t have that sort of human interaction, I don’t even know what it is to work in a
    corporation as opposed to doing a job from home, doing an assignment from home, if you
    want to call it that.
    So I grew up at a time when everybody came to work and I loved it.
    So as we went through COVID and post-COVID, I’m struggling to see how I would have run the
    company without people coming to work.
    I’m struggling to see how I would have developed people without seeing them.
    Now, let me come to the other side.
    I also see the benefit of people who choose to work from home because they can now juggle
    more responsibilities working from home.
    So I understand that too.
    However, I’m also of the belief, Shane, that if you choose to work from home, male or female,
    I don’t care.
    If you choose to work from home, you might also want to accept that your promotional challenges
    may be, your promotional opportunities may be limited.
    That was the most controversial tweet I’ve ever put out.
    I put this out, I think, in 2021 or 2022.
    And I said, if you work from home, you’re going to end up reporting to somebody who works
    at the office.
    Unless you’re in a company where only individual contributors.
    just move forward because they’re all super techie.
    But in companies where you really have to work in teams to move things forward, I don’t
    see how you can do it all on Zoom.
    I want to thank you so much for your time today.
    This has been a fascinating interview.
    We always end with the same question, which is, what is success for you?
    Performance with purpose.
    You know, when I ran PepsiCo, I ran it on that motto.
    To me, delivering performance in whatever field is one thing, but you’ve got to leave the place
    better than you found it.
    And you’ve got to do it with a deep sense of, I want to make the world a better place.
    I want to make the company a better company.
    I want to make the employees feel better about themselves than when they, you know, came into
    PepsiCo or had a different leader.
    So at every point in time, how do you have a deep sense of purpose to leave the place better
    than you found it?
    Those are the three words I used as a CEO of PepsiCo.
    Those are the three words that continue to guide what I’m doing today.
    This deep sense of purpose without taking your eye off the core performance you have to deliver.
    Thank you very much.
    That’s a beautiful way to wrap this up.
    Thank you, Shane.
    Thank you for having me on your show.
    It’s a privilege talking with you.
    Thanks for listening and learning with us.
    Be sure to sign up for my free weekly newsletter at fs.blog slash newsletter.
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    Until next time.

    On her first day as CEO of PepsiCo, Indra Nooyi fired her general counsel. Then rehired him before dinner. It wasn’t a stunt. It was a signal. 

    She ran a $200 billion empire the same way she ran her life: with surgical precision, uncompromising standards, and an allergy to corporate theater. But here’s what separates this conversation from every other CEO interview: she tells you what her massive ambition cost her and her family. What it means to carry the hopes of millions who look like you. What happens when a strategy you bet your career on starts to crumble. She reveals her private system for tracking 400 rising stars inside of a corporate giant and the advice Steve Jobs gave her that changed everything. 

    If you’ve ever felt the pull between ambition and identity, this one’s for you. Indra doesn’t just talk about power. She shows what it costs. 

    Approximate timestamps: Subject to variation due to dynamically inserted ads:
    (03:53)Growing Up In India
    (11:07) Lessons From Working In Consulting
    (21:36) Being Direct As A Leader / Delivering A Message That Gets Heard
    (24:14) Developing Talent
    (26:42)How To Minimize Office Politics
    (32:56)Prioritizing Work / Finding Balance
    (37:30)Turnover After A CEO Change
    (42:10) CEO Vs Board Member
    (46:22)Implementable Change In A Company
    (48:17) Removing Friction Instead Of Using Force
    (48:34)How To Be A Good Board Member
    (49:47)Lessons From Amazon
    (51:36) Leading Through Crisis
    (55:18) Dealing With Activist Investors
    (59:13) Women As CEOS / Biases In The Workplace
    (01:00:42) Equality of Opportunity / How To Hire The Best
    (01:03:50)Bias In Performance Reviews
    (01:05:27)Almost Quitting PepsiCo
    (01:07:05)What I Learned From Steve Jobs
    (01:11:51)Lessons From Costco And Walmart
    (01:20:00)Secrets to PepsiCo Merchandising
    (01:21:01)Outsourcing Bottlers At PepsiCo Then Reversing The Decision
    (01:22:16)Making Decisions At A Multi-Billion Dollar Company
    (01:23:56)Lessons From Acquisitions
    (01:27:09) Traits Of A High Performing Employee
    (01:29:01) Remote Work Vs In Office

    Thanks to our sponsors for supporting this episode:

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    Watch on YouTube: ⁠⁠⁠⁠@tkppodcast

  • #233 Outliers: Anna Wintour – Vogue

    AI transcript
    Anna Wintour once looked at photos from a $300,000 fashion shoot
    and killed the entire story without explanation.
    The photographer was Stephen Meisel, now one of fashion’s legends.
    He was so furious, he refused to work with her for years.
    Today, he credits her with making him better.
    This is the Anna Wintour paradox.
    She’s fired assistants for poor clothing choices.
    She’s made editors stand during meetings because sitting wastes time.
    When asked what job she wanted once, she replied, yours.
    And the meeting ended abruptly.
    She got the job anyway.
    For 40 years, people have been predicting her downfall.
    She’s too harsh, too demanding, too unwilling to compromise.
    Meanwhile, she keeps getting promoted.
    At 75, she now runs every magazine at Condé Nast.
    Because Anna figured out something most leaders never learn.
    In a world awash in mediocrity, maintaining standards looks unreasonable.
    But standards are also the only moat that matters.
    And if you want to understand how a British girl who couldn’t type
    built the most bulletproof career in media,
    and what that means for your own ambitions,
    you need to hear this story.
    Welcome to the Knowledge Project.
    I’m your host, Shane Parrish.
    In a world where knowledge is power,
    this podcast is your toolkit for mastering the best of what other people have already figured out.
    Anna Wintour got fired for refusing to compromise her vision.
    The magazine that fired her?
    It’s dead.
    Anna?
    She runs every magazine at Condé Nast, including Vogue at age 75.
    This is the story of how a British girl who couldn’t type or so built the most powerful position in global media,
    then made it impossible for anyone else to take it away by continuously reinventing herself.
    Here’s what a lot of people get wrong about power.
    They think it’s about climbing ladders.
    Anna understood it’s about building the ladder itself.
    While her competitors fought for promotions, she built infrastructure.
    While they protected magazines, she created platforms.
    While they pleased bosses, she made bosses need her.
    The result?
    Four decades at the top of an industry that reinvents itself every five years.
    She survived the death of print, the digital revolution, the great financial crisis,
    the social media transformation, and a pandemic that killed most of her competitors.
    How?
    By mastering the principles that sound simple, but almost nobody executes.
    First, she figured out that being fired for your uncompromising standards is very different than being fired for your performance.
    One is failure.
    The other is intelligence.
    Second, she learned that in creative industries, speed beats perfection because perfection without deadlines is just procrastination with better excuses.
    Third, she discovered that real power comes from making yourself essential to multiple systems simultaneously.
    Even if one fails, you survive.
    This episode draws from Amy O’Dell’s definitive biography to reveal how Anna transformed from fashion assistant to cultural kingmaker.
    But more importantly, it extracts the repeatable lessons and strategies that she used, strategies that you can apply whether you’re building a career, a company, or an empire.
    Her greatest insight wasn’t about fashion.
    It was understanding how to get the best out of herself and others.
    It’s time to listen and learn.
    When Anna was two, her 10-year-old brother, Gerald, died in a cycling accident.
    Her mother installed window bars and never spoke of him again.
    The family moved forward.
    No pictures, no mentions.
    Just forward.
    This is how the Wintors operated.
    Her father, Charles, edited the evening standard with surgical precision.
    Staff writers froze when he passed.
    They called him Chili Charlie, though they would work themselves to exhaustion for his approval.
    Anna never understood the nickname.
    It had nothing to do with the person he was, she’d insist.
    The same words would follow Anna her entire career.
    In a household that prized academic achievement, Anna chose a different education.
    Her siblings devoured political theory at Oxford and Cambridge.
    Anna devoured fashion magazines, eight newspapers every weekend, every fashion publication she could find.
    While her siblings prepared for careers in law and social causes, she studied hemlines and cultural shifts with scholarly intensity.
    I was so desperate to get out in the world and get on with things, she explained about leaving school at 16.
    Her family found her fascination with fashion incomprehensible.
    I’ve always been a joke in my family, Anna later admitted, they’d always thought I’m deeply unserious.
    The irony is that Anna’s unserious pursuit required more discipline than any degree.
    She wasn’t avoiding rigor, but applying it differently.
    Fashion was cultural anthropology, business strategy, and visual communication.
    Full stop.
    Every magazine was a textbook.
    Every trend was data.
    In the face of my brother’s and sister’s academic success, I felt I was rather a failure, she recalled.
    Anna, like so many of our outliers, and perhaps like you yourself, felt overlooked and underestimated.
    She would turn it into rocket fuel.
    While her siblings shaped policy and law, she would shape how power itself presented to the world.
    What her family couldn’t see, because it didn’t look like what they expected, was that Anna was a learning machine.
    This commitment to vacuuming up everything about fashion, it was building mastery.
    Anna’s father, Charles, believed in his daughter.
    When 16-year-old Anna needed to list her career objectives, he didn’t hesitate.
    Well, you write, you want to be the editor of Vogue, of course.
    Not work in fashion, not try magazine.
    Editor of Vogue.
    The apex.
    Named with the same certainty that you’d write your own address.
    Most people aim for realistic.
    The exceptional, name their destination, and work backwards.
    Anna had two advantages most pretend don’t matter.
    Connections and cash.
    Her grandparents’ trust fund paid out $120,000 in today’s money over six years, exactly what her siblings spent on university.
    Anna invested that tuition differently.
    While they bought credentials, she bought time.
    Time to take an unpaid internship.
    Time to say no to the wrong opportunities.
    Time to wait for the right ones.
    Her father made one phone call.
    The Evening Standards fashion editor took Anna to lunch.
    Barbara Griggs expected to mentor an eager teenager.
    Instead, she met someone who already knew exactly where she was going.
    All she wanted from me was some information.
    What she didn’t want at all was any guidance or tips on how to manage her career.
    That certainty at 16?
    Most people don’t even have that at 40.
    Willie Landells at Harper’s Bazaar hired Anna because of her father’s reputation.
    Anyone connected to such a respected newspaper was worth a shot, he figured.
    Here’s where privilege meets performance.
    Yes, her name opened the door.
    But what happened once she walked through?
    That was all Anna.
    The real advantage isn’t the door that opens.
    It’s knowing exactly what to do once you’re inside.
    Harper’s operated on a skeleton crew.
    Three people running the fashion pages.
    No budget for coffee fetchers.
    Everyone did everything.
    I was thrown into my career, frankly, with ignorance.
    I knew nothing, Anna later admitted.
    Perfect.
    While her peers at bigger magazines were filling in expense reports and grabbing coffee,
    Anna was learning the entire business.
    I learned how to go into market and choose clothes.
    I learned how to choose talent.
    I learned how to collaborate.
    I learned how to do a layout.
    I learned how to write a caption.
    She wasn’t afforded the luxury of specializing.
    She had to learn every job in detail.
    Anna had three qualities that mattered.
    Taste, organization, and certainty.
    She never forgot her dress.
    Never lost jewelry.
    Never second-guessed decisions.
    People may not always like it,
    but they knew exactly what she thought and what was expected from them.
    Sounds a lot like Steve Jobs and Elon Musk.
    Her editor noticed something else.
    Anna could spot talent before it had a name.
    She’d book unknown photographers who’d become famous.
    She’d champion designers others ignored.
    This wasn’t luck.
    Remember those eight newspapers every weekend?
    Those thousands of magazine pages?
    She wasn’t just reading.
    She was building a mental repository.
    When Anna saw a new photographer’s work,
    her brain compared it against millions of images she’d studied.
    When she met a designer,
    she measured them against every trend she’d ever tracked.
    Pattern recognition can’t be taught.
    It can only be earned through obsessive accumulation of high-quality inputs.
    Most people want to trust their gut without feeding it the right things first.
    Then came the moment that defined her aesthetic forever.
    Christmas, 1971.
    Anna styled a shot mixing a $2,000 white fox coat with a $29 wicker chair.
    Diamonds with democracy.
    Luxury with accessibility.
    Everyone else segregated high and low.
    Anna smashed them together.
    The insight she had was that aspiration without accessibility is just snobbery.
    Accessibility without aspiration is just a commodity.
    The magic lives in the tension between the two.
    That high-low mix would become her signature and eventually fashion’s default language.
    But first she had to survive long enough to impose it on the world.
    Anna’s assistant, Claire Hastings,
    got a front row seat to what extreme standards actually look like in practice.
    Anna wasn’t warm.
    She didn’t explain much.
    But Hastings noticed something.
    Anna was obsessively invested in her success.
    Not through pep talks, but through the intolerance for mediocrity.
    Every borrowed item needed to be returned perfect.
    Down to the original tissue paper.
    A missing button.
    Unacceptable.
    A wrinkled collar.
    Career ending.
    This wasn’t about the clothes.
    It was about proving you could be trusted with the details before being trusted with the decisions.
    Outliers share unreasonable standards.
    Standards aren’t what you accept from others.
    They’re what you demand from yourself when no one’s watching.
    Then there was the lunch table incident.
    Eight people ordered wine and steaks.
    Anna, just a yogurt, please.
    The table froze.
    Everyone was suddenly questioning their orders.
    She wasn’t performing discipline.
    She’d internalized it so completely that normal behavior looked like an excuse by comparison.
    Her steak had to be perfectly rare.
    She’d send it back three times and then eat two bites.
    Not because she was being difficult, but accepting good enough in small things trains you to accept it in big things.
    Steve Jobs sent back sushi at his own birthday party.
    Elon sleeps on the floor of the factory.
    Outliers don’t have work-life balance.
    They have standards that follow them everywhere.
    The talent scout in Anna was brutal.
    Photographers lined up for go-sees.
    Bad work?
    She’d look away mid-sentence.
    Thank you.
    No feedback.
    No false hope.
    Just cutthroat rejection.
    But when she spotted genius, total commitment.
    One photographer showed up and staff described him as some madman with boxes of shoes.
    Anna saw what others missed, gave him his first major endorsement.
    James Wedge, a hat maker trying photography, Anna booked him repeatedly until he had a career.
    By 1974, Anna was doing half the major shoots, maintaining standards that made everyone else look casual.
    When they fired her superior for someone with writing background, Anna expected the promotion.
    The lesson she was about to learn, having the higher standards doesn’t guarantee recognition.
    It only guarantees you’ll deserve it.
    Are you crushing your bills?
    Defeating your monthly payments.
    Sounds like you’re at the top of your financial game.
    Rise to it with the BMO Eclipse Rise Visa Card.
    The credit card that rewards your good financial habits.
    Earn points for paying your credit card bill in full and on time every month.
    Level up from bill payer to reward slayer.
    Terms and conditions apply.
    Hit pause on whatever you’re listening to and hit play on your next adventure.
    Stay three nights this summer at Best Western and get $50 off a future stay.
    Life’s the trip.
    Make the most of it at Best Western.
    Visit bestwestern.com for complete terms and conditions.
    They gave Anna’s promotion to Min Hogg, a textiles expert who wrote features.
    Anna had been doing the actual job.
    Min had been writing about fabrics.
    Anna got a new title.
    Deputy fashion editor.
    Corporate translation.
    Please don’t quit.
    Here’s where character reveals itself.
    Anna didn’t complain.
    She didn’t confront.
    She didn’t leak to gossip columns.
    Instead, she let her work create unbearable contrast.
    Every shoot she produced made Min’s inadequacy more visible.
    Min would have realized pretty soon that Anna didn’t think much of her work, Hastings observed.
    When you maintain exceptional standards, you don’t need to attack mediocrity.
    It exposes itself.
    After months of this passive war, Anna pulled Hastings aside.
    It’s outrageous I haven’t been made fashion editor.
    I’m resigning.
    Are you going to stay?
    No, said Hastings, who quit in solidarity despite having no backup plan.
    Study that moment for a sec.
    Anna did not negotiate.
    She didn’t threaten.
    She didn’t give them time to counteroffer.
    She just left.
    While others might not have believed in her as much as she believed in herself, it didn’t matter.
    She was going to bet on herself and she was going to go all in.
    Five years of vacuuming up every detail of the fashion business from inside.
    Building relationships.
    Developing her aesthetic.
    Proving results.
    When the system failed to reward merit, she didn’t try to fix the system.
    She rejected it.
    With passport in hand, she aimed for New York, where talent mattered more than tenure, where
    hunger beat hierarchy, and where results spoke louder than words.
    The girl who couldn’t type was about to teach Manhattan how power really works.
    New York, 1975.
    25, no job.
    Just confidence in herself.
    I felt quite isolated growing up in England, with it being such a class-driven culture, Anna
    explained.
    Everyone in New York is from somewhere else, and that creates a very positive force.
    America promised meritocracy.
    Anna would test that promise.
    Harper’s hired her as junior editor.
    Day one, she broke every rule of the American fashion authority.
    The industry equation was simple.
    Drama equals competence.
    Polly Mellon at Vogue cried of her photos she loved.
    Gloria Monker at Bazaar threw shoes at assistance.
    Emotion was currency.
    Anna stayed quiet.
    She watched.
    She processed.
    It was a smart move.
    A special projects editor observed the new hire during a photo shoot in Jamaica and wondered,
    have we hired the wrong person?
    Anna’s job was to command the set with authority, but she just stayed in the background.
    This confused magazine’s leadership, but not the crew, who preferred working with someone
    who didn’t feel the need to interfere with every detail.
    For them, she was a breath of fresh air.
    Years later, she would say, I’m a big believer in hiring talented people and giving them the
    freedom to work.
    People work better when they have responsibility.
    There are two kinds of power, the kind that announces itself and the kind that doesn’t
    need to.
    And as we’ll see, Anna actually has a bit of both.
    Her real revolution wasn’t style, it was substance.
    Her assistant discovered something unprecedented.
    She’d really had no qualms about being completely focused to the point of being very abrupt, seemingly
    rude because she just didn’t have the time.
    She was on her path to what she needed to do, period, the end.
    No small talk, no office politics, just work.
    In an industry built on relationships and feelings, Anna introduced something radical, pure efficiency.
    She wasn’t cold, she was clear.
    Every interaction had a purpose or it didn’t happen.
    In addressing her tough reputation much later, she would say, if one comes across sometimes
    as being cold or brusque, it’s simply because I’m striving for the best.
    Most people organize their entire lives around being liked by nearly everyone.
    They don’t want to offend anyone.
    Outliers have the courage to be disliked.
    The British girl who couldn’t break through England’s class ceiling was about to crack
    America’s code, not by playing the game better, but by refusing to play at all.
    Anna was devoted to work.
    In an office, people kind of clown around and they take breaks and they gossip.
    And she never did any of that.
    She wasn’t in it for fun and games.
    She was in it to work.
    While colleagues treated jobs as social clubs with deadlines, Anna treated the office like
    a laboratory every day, impeccably dressed, not vanity, but strategy in fashion.
    Your appearance is your argument.
    Her boss, Tony Missoula wanted traditional shoots, advertiser friendly, text heavy, safe.
    Anna wanted revolution.
    When they clashed, she didn’t argue, at least not directly.
    Instead, she would meet photographers in the lobby, select only the best shots, hide the rest.
    When Tony asked for alternatives, Anna would shrug.
    Sorry, there aren’t any more.
    Tony’s choice, accept her vision or pay for expensive reshoots.
    Budgets were tight.
    Anna knew this.
    Anna won.
    When Tony berated her, Anna stayed silent.
    A colleague noticed.
    She knew she could go on to other things.
    She knew damn well she wanted to run Vogue.
    Harper’s wasn’t the end of the line, but more importantly, she also didn’t treat it as a
    stepping stone either.
    She was present.
    She was all in.
    She gave it her all.
    While everyone else fought daily battles, Anna was mapping the entire war.
    They were playing for Friday.
    She was playing for Vogue.
    And then Paris happened.
    Anna returned with photos that broke every rule.
    When Tony later fired Anna for being too European, he was essentially firing her for having a point
    of view.
    Years later, after Anna conquered fashion, Tony would deny that he ever happened.
    History, as they say, is written by the winners.
    At the time, I didn’t know what he meant, Anna reflected.
    But in retrospect, I think he meant I was obstinate, that I wouldn’t take direction.
    Years later, Anna conquered fashion and Tony denied firing her.
    Anna would reflect on this years later and say everyone should get sacked at least once in their
    career because perfection doesn’t exist.
    The lesson, getting fired for your standards is different than getting fired for your performance.
    One is failure.
    The other is reconnaissance.
    Despite the setback, she was confident in her vision and confident in herself.
    Anna took a job at Viva magazine.
    The owner?
    The Penthouse publisher.
    A porn king trying to make feminist fashion content.
    Stores hid Viva behind the counters next to the adult magazines.
    Anna didn’t care.
    I needed a job and Viva offered me an enormous amount of freedom.
    The editor, Alma Moore, saw Anna clearly.
    This woman knows what she wants, but she’s going to be difficult.
    She hired her anyway.
    Smart leaders know that difficult people often produce the best work in the right environment.
    At Viva, Anna spent hours studying French L, Italian Vogue.
    No one questioned her vision.
    No committees, no interference, just pure freedom.
    The receptionist observed she was always her own person,
    didn’t really listen to any structure because, whether she was or not, she was the boss.
    Here’s what everyone missed.
    Working at a disreputable place meant no one was watching.
    With no one watching, Anna could do anything.
    She could experiment.
    She could push the limits.
    She could play.
    She’d promise boutiques front page placement for lending clothes,
    promise advertisers their pieces would be shot.
    The clothes kept coming.
    The ads kept selling.
    While her peers fought for assistant positions at respectable magazines,
    Anna was running her own fashion laboratory at a publication funded by porn.
    Sometimes the worst address can have the best classroom.
    At Viva, Anna developed her signature aesthetic.
    Photographs that made you want to become the person wearing the clothes.
    Models in country settings with chunky sweaters and inexplicably bows and arrows.
    It shouldn’t have worked, but it did.
    She pushed farther than anyone dared.
    One spread featured S&M-inspired photography.
    It was way out there, her colleagues said.
    Nobody did anything like that.
    When you’re already at a controversial magazine, you can push farther than anyone thought possible.
    She was playing.
    Her process was military precise, though.
    Everything was planned in advance.
    Rapid fire fittings.
    The model put on an outfit.
    Anna says, okay, next.
    No deliberation.
    No committee.
    Just decisions.
    Then came the test.
    Her publisher wanted to save money by using penthouse centerfolds as fashion models.
    Anna’s response?
    No.
    She walked away.
    Cheryl Rickson, one of those models, understood.
    Working with centerfolds didn’t serve her ambition.
    We all know she wanted to be fashion editor of Vogue.
    Standards aren’t standards if they’re negotiable.
    They’re absolute or they’re not standards.
    The miracle?
    People started paying attention.
    Alexander Lieberman, who ran Condé Nast and controlled Vogue, mentioned to Vogue’s editor,
    I love Vogue.
    I noticed you have an Englishwoman on the masthead.
    For three years, Anna transformed Vogue’s fashion pages into the required reading at Vogue and Harper’s.
    The porn magazine nobody respected was teaching the fashion establishment how to shoot.
    Excellence is excellence.
    The platform is just context.
    November 17th, 1978, Viva announces it’s closing tomorrow.
    Anna starts sobbing, shocking colleagues who thought she didn’t care.
    She wasn’t crying for the magazine.
    She was mourning the loss of her laboratory, the first place she had had total control.
    For 18 months, Anna disappeared into what fashion people called the wilderness,
    jet-setting with her boyfriend from Paris to Jamaica to the south of France,
    her only real break from work since age 16.
    But Ambition doesn’t like vacations.
    When she returned to New York in 1980, Savvy magazine called the magazine for executive women.
    Anna needed work.
    She took it.
    The problem was immediate.
    Savvy appealed to women who’d fought through the 70s to make partner at law firms,
    women who hid their femininity like a liability.
    But Anna had built her entire career making femininity a superpower.
    Editor Judith Daniels wanted real people instead of models, practical office clothes, reasonable prices.
    Anna nodded in meetings and then shot exactly what she wanted.
    Anna was very strong-minded and she just did whatever she wanted, the executive editor recalled.
    Daniels tried to fire her, but Anna had learned something.
    How to talk her way out of trouble.
    She bought some time to job hunt while getting paid.
    Then came humiliation.
    March 18th, 1981.
    Anna pitches interview magazine, Andy Warhol’s glamorous publication, an idea she spent three months developing.
    The editor looked at it for one second and said,
    Anna cries right there in his office.
    And then she leaves for her next appointment.
    When you believe in yourself completely, rejection is data, not a verdict.
    That persistence paid off when Laurie Jones at New York Magazine called in early 1981.
    Jones was desperate to fill a fashion editor position that required someone to basically run a one-person fashion department
    attending shows, selecting clothes, booking photographers, managing shoots, do everything, deliver weekly.
    Anna shows up to the interview with storyboards, complete with Polaroids, layouts, fully realized ideas, not hopes, but plans.
    Anna, this is fabulous.
    I like every one of these story ideas, Jones said.
    She rushed editor-in-chief Edward Cosner.
    Ed, this woman is amazing.
    We’re all going to be working for her someday.
    Cosner laughed and hired her.
    Most people prepare for interviews by thinking about answers.
    Outliers show up with solutions.
    It’s the same with cold emails today.
    Don’t tell someone how you would solve their problems.
    If you want to get noticed, just solve their problem.
    At New York Magazine, Anna finally had a budget to match ambition.
    Want to shoot a $20,000 sable coat?
    Approved.
    Need the best photographers to compete with the times?
    Done.
    They recognized talent and they gave her room and an environment to execute.
    Her first story, Summer Dresses, on a tilted Manhattan rooftop,
    making the Empire State Building appear to dance behind the models.
    Every fashion editor in the city was shooting straight.
    Anna was tilting reality.
    But her standards remained brutal.
    When one of her assistants styled her for shoot with photographer Stephen Meisel,
    Anna killed it without explanation.
    Didn’t matter was her assistant’s big break.
    Didn’t matter Meisel was talented.
    Standards were standards.
    And Anna’s standards to nearly everyone appeared unreasonable.
    And also, just like Steve Jobs, that made everyone work harder and be better
    and pulled out the best version of themselves.
    Meisel was so enraged, he would refuse to work with Anna for years.
    He’d become one of fashion’s greatest photographers.
    Anna didn’t care.
    She wasn’t there to collect friends.
    She was there to win.
    This reminds me so much of Michael Jordan, who said in the last dance,
    I pulled people along when they didn’t want to be pulled.
    I challenged people when they didn’t want to be challenged.
    And I earned that right because my teammates who came after me didn’t endure all the things
    that I endured.
    Once you joined the team, you lived at a certain standard that I played the game,
    and I wasn’t going to take anything less.
    Now, if that meant I had to go in there and get on you a bit, then I did that.
    You ask all my teammates, the one thing about Michael Jordan was he never asked me to do
    something that he didn’t do.
    When people see this, they’re going to say, well, he wasn’t really a nice guy.
    He may have been a tyrant.
    Well, that’s you, because you never won anything.
    I wanted to win, but I wanted them to win and be a part of that as well.
    Look, I don’t have to do this.
    I’m only doing it because it’s who I am.
    That’s how I played the game.
    That was my mentality.
    If you don’t want to play that way, don’t play that way.
    Jordan could have easily been talking about Anna.
    At New York Magazine, Anna wasn’t just editing fashion.
    She was playing at the highest standard.
    And if you wanted to be a part of it, you needed to bring your A-game every day.
    No exceptions.
    Polly Mellon at Vogue had been watching Anna since London.
    She thought Vogue was getting boring and arranged a meeting with editor-in-chief Grace Mirabella.
    Mirabella called Anna and asked what position she wanted at Vogue.
    Anna’s answer?
    Yours.
    The meeting ended immediately.
    Most people hide their ambitions and Anna just announced hers and let the world adjust.
    But the real power wasn’t Mirabella.
    It was Alexander Lieberman, Conde Nast’s editorial director.
    Art director by day, wielding massive steel sculptures on weekends, he collected talent like
    others collected art.
    In August of 1983, Anna publishes a story where 12 artists create paintings inspired by fashion.
    Lieberman sees it and recognizes a kindred spirit, someone who understood fashion as high art,
    not just commerce.
    He invites Anna to his Connecticut estate.
    She shows up in what he called a wonderful, simple, gray tunic.
    Not trying to impress, just being precisely herself.
    I was absolutely enchanted with her, Lieberman would say.
    His problem?
    Mirabella was successfully running Vogue.
    So his solution was to create a fake job, creative director.
    A made-up title that made Anna second on the masthead with deliberately vague responsibilities.
    And I took it.
    She wasn’t a number two person, but she also understood chess.
    She would change tactics, but not her dream.
    For three years, she was officially Mirabella’s deputy.
    Actually, she was Lieberman’s protege.
    Learning the operation, building the relationships, waiting, preparing.
    Mirabella later wrote that Anna would sit in meetings, shaking her head, obviously disagreeing
    with everything I said.
    Anna wasn’t being insubordinate.
    She was being inevitable.
    In 1985, British Vogue editor Beatrix Miller stepped down after 21 years.
    Anna was offered the job.
    She’s pregnant.
    She hesitates a little bit, and then she takes it.
    She needs to prove that she can run something.
    Anna walks into British Vogue and detonates, fires most of the staff, demands shorter skirts,
    injects an energy that had been missing for decades.
    The British press nicknamed her Nuclear Winter.
    She doesn’t care.
    Circulation climbs, profits soar, British designers get discovered.
    The first rule of transformation, you can’t renovate a house with people still living in
    it.
    Two years later, she’s proven her point.
    When House and Garden’s editorship opens in New York, Anna takes it, not because she wants
    to edit home decor, because it’s her ticket back to America and closer to Vogue.
    At House and Garden, she renames it HG.
    Anna adds fashion shoots to a decorating magazine, replaces anonymous rich people’s homes with
    celebrity features.
    Readers revolt, advertisers flee, subscription cancellations require a dedicated phone line.
    She would do things that people have never done before and that alienated some people, a
    feature’s editor observed.
    But Anna wasn’t trying to save House and Garden.
    She was auditioning for Cy Newhouse and Alexander Lieberman.
    The magazine was her performance space.
    Years later, every decor magazine would copy what Anna tried at HG, voyeuristic glimpses into
    celebrity homes instead of furniture catalogs.
    She was right, just a little bit early.
    But by then, she’d have bigger things to transform.
    Just as the criticism at HG was starting to die down, Grace Mirabella’s 37 years at Vogue
    were ending.
    She just didn’t know it.
    Newhouse and Lieberman had decided by summer of 1988.
    They kept Anna in endless planning meetings while she pretended everything was normal at HG.
    June 28th, 1988.
    Mirabella’s husband calls her.
    He just saw gossip colonist Liz Smith on television.
    Anna Wintour will replace his wife as editor-in-chief of Vogue.
    Mirabella goes to Lieberman’s office.
    He’s waiting.
    Grace, he says, I’m afraid it’s true.
    37 years, dismissed via gossip column.
    Power transitions are never elegant.
    They’re either swift or sloppy.
    Never both.
    Anna was prepared.
    She spent three years studying Vogue’s operations from the inside, learning its weaknesses, building
    her network.
    While Mirabella finished her final two weeks, Anna summoned all 120 Vogue staff to her HG office.
    One by one, brief interviews.
    Three days later, 90 people remained.
    When you finally get power, use it immediately.
    Hesitation invites resistance.
    17 years after her father wrote editor of Vogue on that career form, after getting fired for
    being too European, after crying in Andy Warhol’s office, after transforming two other magazines,
    Anna had the job she’d wanted since she was 16.
    Now the real work could begin.
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    Spring is here, and you can now get almost anything you need delivered with Uber Eats.
    What do we mean by almost?
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    Sunshine?
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    Anna didn’t come to Vogue to run it.
    She came to rebuild it.
    Her management style honed over the years, and now unleashed at Vogue was calculated to create
    a specific type of workspace that produced exceptional work.
    If you’ve seen the movie The Devil Wears Prada, you might be familiar with what comes next.
    She installed glass offices so she could see everything happening, fired people with startling
    frequency, and developed what became known as the look, a daily assessment of what every
    staff member’s outfit from shoes to hair.
    One assistant described it perfectly.
    She would stare at your shoes and work her way up.
    She was creating an environment where every detail mattered, because she understood that
    in fashion media, there is no separation between how you look and how you work.
    If you look sloppy, your work will eventually look sloppy.
    If your office operates with casual standards, your editorial standards will eventually become
    casual.
    She fired constantly.
    In the creative business, one person operating at 60% can bring an entire team down to their
    level.
    Excellence requires difficult choices.
    Some saw tyranny.
    Anna saw physics.
    She was creating environmental pressure that made mediocrity impossible to hide.
    When every detail of your appearance matters, every detail of your work starts mattering too.
    Most leaders try to change behavior.
    Anna changed the environment.
    The behavior followed.
    But the real revolution went deeper.
    Fashion magazines operated like art museums.
    Slow, contemplative, precocious.
    Anna brought newspaper urgency to an industry that thought deadlines were just suggestions.
    She wasn’t just changing Vogue.
    She was changing what a fashion magazine could be.
    The devil wasn’t in the details.
    The devil was ignoring the details.
    Anna came from newspaper blood.
    Remember, her father, Charles, ran the Evening Standard.
    She understood what fashion editors didn’t.
    Speed creates quality under pressure.
    Marabella had run Vogue like a museum, everything written down, committees for committees.
    Anna walked in and saw a bureaucracy where there should be velocity.
    First, she killed comfort.
    Out went beige walls and butter-colored chairs.
    In came white walls, glass offices, and metal seats.
    Comfort breeds complacency, and discomfort breeds decision.
    Her meeting revolution was pure newspaper.
    You walk in, you stand, you ask, you leave.
    The saying internally was, you get two minutes.
    The second is a courtesy.
    The chairs in her office were for decoration, not sitting.
    No sitting meant no settling.
    No chit-chat meant no waste.
    Every interaction became a transaction.
    The glass walls weren’t about surveillance.
    They were about accessibility.
    Anna could catch an editor’s eye and assign a task without leaving her desk.
    One editor realized Anna called on her constantly simply because her office was in the sightline.
    The lesson here is clear.
    Architecture is destiny.
    Design your environment to eliminate friction between thought and action.
    Then came Anna’s masterstroke, AWOC.
    Her initials plus OK became a verb.
    Is that AWOC’d yet?
    Nothing.
    Not a caption, not a photo, not a comma moved without her approval.
    This wasn’t micromanagement.
    It was standards transformation.
    Every AWOC taught editors what excellence looked like.
    The infamous clothing run-throughs that took hours under Mirabella.
    Anna did them in minutes.
    Yes.
    No.
    Yes.
    No.
    No.
    Yes.
    Goodbye.
    No explanations.
    No committees.
    Just decisions.
    When you explain every decision, people just learn to argue.
    When you just decide, they learn to anticipate.
    The fear of rejection made editors sharper.
    They learned to pre-filter, to think like Anna before presenting.
    She wasn’t reviewing work.
    She was programming their brains.
    Anna was anything but hands-off.
    She ran on founder mode, staying until midnight the first three months, personally reviewing
    every single layout.
    But unlike Mirabella, who hid in her office, Anna spent half her time with designers, telling
    them what to add to collections.
    Every hiring revealed her system.
    Anna personally screened everyone.
    One candidate was rejected for wearing matching pearls.
    Two matchy-matchy.
    Another almost didn’t get past HR for being overweight.
    They negotiated Anna, giving her at least two and a half minutes for this one, and that
    one got hired.
    She was building a machine where mediocrity had no place to hide.
    Glass walls meant no privacy.
    Speed meant no procrastination.
    Personal approval meant no excuses.
    A lot of people manage outputs.
    Anna managed inputs, control the environment, and excellence becomes inevitable.
    The British girl who couldn’t type had figured out something profound.
    In creative industries, velocity often beats perfection, because perfection without deadlines
    is just procrastination with a better wardrobe.
    What Anna did was change Vogue’s cover strategy.
    Anna puts a $10,000 Christian LaCroix jacket with $50 guest jeans on her first Vogue cover.
    The printer literally called the check.
    Surely someone had made an error.
    No error, just strategy.
    To understand why this matter, you need to understand fashion’s unwritten law.
    Luxury doesn’t mix with mass market.
    It’s like putting a Ferrari engine in a Toyota.
    It violates the hierarchy that lets luxury charge luxury prices.
    Anna broke that law on purpose.
    She understood something the industry didn’t.
    People don’t dress in just Prada or just Gap.
    They mix.
    She was documenting reality while everyone else was protecting mythology.
    This is how disruption often works.
    You don’t invent new behavior.
    You legitimize behavior that already exists.
    But the Madonna cover reveals her deeper insight.
    A businessman on a plane tells Anna he loves Vogue because it’s so elegant, so classic.
    Katherine Hepburn, Grace Kelly.
    It would never be Madonna.
    Most editors would take this as market research.
    Our readers want elegance, not controversy.
    Anna heard it differently.
    If everyone agrees Vogue would never do something, that’s exactly what would get attention.
    Anna would go on to say the fact that that very nice man that I sat next to on the plane thought
    that it would be completely wrong to put Madonna on the cover and completely out of keeping with
    the tradition of Vogue being this very classically correct publication pushed me to break the rules
    and had people talking about us in a way that was culturally relevant, important, and controversial,
    all of which you need to do from time to time.
    Context matters here.
    Madonna in 1989 had just released Like a Prayer, Burning Crosses, romantic scenes with a black saint.
    Pepsi pulled her sponsorship.
    Religious groups wanted boycotts.
    She represented everything Vogue readers theoretically rejected.
    Anna put her on the May cover.
    You need to be culturally relevant, important, and controversial from time to time, she later
    explained.
    The numbers told the story.
    200,000 more copies sold than previous May.
    But that’s not the lesson.
    The real lesson is about information asymmetry.
    When everyone knows something would never work, they stop testing it.
    That creates an opportunity.
    Within five years, every fashion magazine featured celebrities.
    Anna didn’t predict the future.
    She created it by doing what nobody else would test.
    Sometimes the best strategy isn’t finding what people want, it’s showing them what they didn’t
    know they were allowed to want.
    The early 1990s belonged to supermodels, Naomi Campbell, Kate Moss.
    They commanded massive fees and magazine covers.
    Anna killed them off.
    It wasn’t personal, it was business.
    Here’s the lesson she understood.
    Models offer only one story, beauty.
    Celebrities, however, offer infinite stories.
    Marriage, divorce, scandals, politics.
    Every life event becomes content.
    The insight, people don’t buy aspirational images, they buy aspirational narratives.
    Think about the math.
    A supermodel gives you 12 beautiful covers a year.
    A celebrity gives you 12 chapters of an ongoing drama.
    Which do you think keeps readers coming back?
    But Anna also saw something deeper.
    Supermodels influenced how people wanted to look.
    Celebrities influenced how people wanted to live.
    Fashion wasn’t just about clothes anymore, it was about lifestyle.
    The proof came at every red carpet.
    Who are you wearing became the question, not what are you wearing?
    Who?
    Fashion became a character in every celebrity story.
    One of the most remarkable things I discovered researching Anna was that she didn’t just change
    magazine covers.
    She changed how culture talks about clothing.
    The supermodel era ended not because models became less beautiful.
    It ended because beauty without story is just a wallpaper.
    And nobody subscribes to wallpaper.
    Anna was busy.
    Busier than she’d ever been.
    And she developed an assistant system that reveals something profound about how power operates in elite
    institutions.
    She would employ up to three assistants at any given time.
    Each with specific roles that collectively insulated her from administrative tasks that were not
    directly related to editorial decision making.
    This system worked like this.
    First assistant, schedule and communications.
    Second assistant, homes, screenings, and her dogs.
    Third, errands, tickets, and custom orders to designers for Anna’s personal clothing.
    While this may appear as an extravagance, it was math.
    Most executives spend 40% of their time on logistics.
    Anna spent zero.
    100% of her mental energy was spent on work, while an army of other assistants handled everything
    else.
    Think about how powerful that is.
    The system was brutal.
    Emails without subject lines.
    Just commands.
    Coffee, please.
    Get me Tom Ford.
    No niceties.
    No unnecessary words.
    Assistants arrived at 730 to prepare for her entrance when orders would rain down without
    pause.
    There’s an elevator story that captures it perfectly.
    Rumors said Anna banned others from riding with her, but the truth is people avoided the
    elevator because she’d immediately start issuing orders they’d need to write down.
    Impossible while moving.
    One assistant would meet her at her car to collect the AW bag, her papers from home.
    Not because Anna was lazy, because she understood every second carrying bags was a second not spent
    She wouldn’t learn assistants’ names until they proved they could last.
    Most burned out in weeks.
    Here’s the paradox.
    The survivors became fanatically loyal.
    Why?
    They weren’t just filing expenses.
    They were watching Anna negotiate with billionaires.
    They saw how she made split-second decisions that moved markets.
    They built relationships with every power player who walked through Vogue.
    One former assistant summed it up really nicely.
    The demands weren’t personal.
    When you’re affecting billion-dollar industries, there’s no room for casual execution.
    The lesson isn’t about having three assistants.
    It’s about understanding the value of your time.
    It’s about holding the people around you to the same unreasonable standards you hold yourself
    to.
    Anna calculated that her hour was worth more than three people’s days.
    She was right.
    While competitors managed calendars, she managed culture.
    Focus isn’t about doing one thing.
    It’s about doing only the things that you can do.
    By 1997, Anna had been editor-in-chief for nearly a decade, and Vogue was performing spectacularly.
    The magazine had its biggest March issue since 1990, with ad pages up 5.9%.
    The September issue that year weighed 4.3 pounds and was packed with 734 pages, mostly advertisements.
    It was the biggest issue in nine years and represented complete market dominance over its competitors.
    One problem?
    Anna’s publisher, Ron Gagliotti, wants more.
    Gagliotti was hired to maximize revenue, and Anna’s refusal to feature advertisers’ clothes
    in editorial spreads was making him very angry.
    His logic was simple.
    If you need a white shirt for a shoot, why not use Ann Klein’s?
    They’re paying us hundreds of thousands of dollars.
    Anna’s response was simple.
    If it’s ugly, it’s not in Vogue.
    This is the eternal war in creative businesses.
    The money people want compliance.
    The creative people want control.
    Gagliotti escalated to sigh Newhouse.
    They prepared a list of editors who could replace Anna.
    Then they invited her to lunch.
    The ultimatum was blunt.
    Start featuring advertisers’ products or find another job.
    Newhouse’s exact words, I suggest you follow the money.
    Most editors would choose one of two paths.
    Cave completely, turn Vogue into a catalog, or fight and lose, maintain your principles, and
    get fired.
    Anna chose door number three.
    She’d photograph advertisers’ clothes, but only pieces that met her standards.
    Yes to commerce, but she kept the veto.
    The genius here was she made herself indispensable to both sides.
    Advertisers got more coverage than ever, but only Anna could guarantee it would elevate their
    brand and not embarrass it.
    She started taking advertiser meetings, building relationships that transcended the transactions.
    The result?
    Vogue kept its credibility.
    Advertisers got prestige.
    Anna got more powerful.
    The lesson?
    When forced to choose between X and Y, don’t.
    Find the narrow path where both can win.
    Follow the money wasn’t a default.
    It was data.
    Anna learned to speak money fluently while thinking in art.
    That’s how you survive four decades at the top.
    In 1994, just one year after the introduction of the very first web browser to seamlessly
    integrate text and images, many in the publishing world were still pretending the internet didn’t
    exist.
    Anna wasn’t, but she also wasn’t particularly tech-oriented at this point.
    When a new feature editor sent an email to the entire Vogue staff in 1994 to introduce
    himself, he received a fax from Anna in Europe that said,
    But even as Anna dismissed email as impersonal, she was obsessively asking Condé Nast’s digital
    team, when can Vogue go online?
    It’s starting to get embarrassing that Vogue.com is not online.
    Why aren’t we online?
    Here’s what drove Anna’s urgency.
    The entire purpose of fashion is to be a reflection of the times, as one digital executive explained.
    Anna understood that a fashion magazine that felt antiquated or out of date would lose its
    cultural authority, authority that Anna had been building for six years now at Vogue,
    with no intention of stopping.
    While other editors saw the internet as a threat to their business model, Anna saw it as an
    opportunity to increase Vogue’s influence.
    The contradiction reveals her genius.
    Email was internal.
    The website was relevance.
    Email was internal.
    The website was external relevance.
    When Vogue.com eventually launched in 1998, Anna made a radical decision.
    Post every runway show.
    Make it searchable.
    Make it free.
    The fashion world revolted.
    Fashion’s entire business model depended on scarcity.
    Invitation-only shows.
    90-day embargoes.
    Magazines charging premiums for exclusive access.
    Anna was about to give it all away.
    Half the designers said no.
    Many of the fashion houses didn’t even have internet yet.
    Anna published anyway.
    The tagline at the time captured her strategy.
    Before it’s in Vogue, it’s on Vogue.com.
    Her own team worried about this diminished role for print.
    Anna saw it differently.
    It makes our brand more modern.
    The first rule of disruption is if you’re going to get cannibalized, it’s better to eat yourself.
    But Anna didn’t just go online.
    She pushed it farther.
    She orchestrated what may have been High Fashion’s first live stream for Chanel’s resort show in 2000.
    Clothes hit the runway, immediately photographed, instantly purchasable, the see-now, buy-now concept that Burberry would invent 13 years later.
    A partnership with Neiman Marcus represented another breakthrough that wouldn’t become standard until years later.
    Anna negotiated a deal where Condé Nast got a cut of all clothing purchases driven by the Vogue website, essentially inventing fashion e-commerce affiliate marketing.
    After that first season, designers discovered the hidden benefit.
    Digital slideshows replaced expensive lookbooks.
    Buyers could see collections instantly.
    Anna hadn’t just moved fashion online.
    She’d made Vogue indispensable to the entire supply chain.
    This was remarkable.
    And although it’s obvious in hindsight, it wasn’t at the time.
    She took a wild risk to use her name and reputation to push a very unwilling fashion industry into the digital age.
    The parallel to Andy Grove here really stands out.
    In episode 229, when memory chips got commoditized, Intel pivoted to microprocessors.
    When print got commoditized, Anna pivoted to platform.
    Her competitors spent the next decade protecting traditional revenue.
    By then, Anna owned the entire infrastructure that everyone needed to use.
    Women who wouldn’t use email built fashion’s digital future because she understood something her competitors didn’t.
    The question isn’t whether your industry will be disrupted.
    It’s whether you’ll be the one doing the disruption.
    Let’s fast forward to 1999.
    Anna has been running Vogue for 11 years.
    Revenues are up to $149 million.
    Anna’s professional life, perfect.
    Her personal life, imploding.
    The divorce from David Schaefer should have been a disaster.
    Instead, it became rocket fuel.
    New York Magazine was preparing a hit piece about Anna’s breakups.
    Her husband and her deputy editor both leaving.
    When they asked for a cover photo, her former colleague, Jordan Shapes, gave her the playbook.
    We all know it’s going to be a piece of shit article, but a fabulous cover.
    That’s all people take away anyway.
    In a visual culture, perception beats reality.
    Control the image, and you control the narrative.
    No one understood this better than her.
    A colleague noticed something remarkable.
    She was remarkably good at compartmentalizing, which bothered some staff.
    Bothered them?
    It made her unstoppable.
    While others would have crumbled, Anna separated her personal pain from a professional persona,
    like removing one outfit and putting on another.
    The divorce wasn’t a distraction.
    It was rocket fuel.
    Work became her outlet.
    Avoid a crisis as you can, but perform through it if you can’t.
    The woman who emerged from this divorce would be different.
    No personal crisis could derail her professional momentum.
    She was done building a magazine.
    It was time to build an empire.
    With her personal life stabilized, Anna turned her attention to something more ambitious than
    just editing a magazine.
    She wanted to build what she called Big Vogue, a media empire that would extend her influence
    across multiple platforms and demographics.
    The strategy was simple.
    Anna understood that power in media comes from controlling an ecosystem.
    Teen Vogue launched in 2003, followed by Men’s Vogue in 2005, and Vogue Living shortly thereafter.
    Each publication served a different audience, but all carried the Vogue brand, and more
    importantly, all reported to Anna.
    Her philosophy for managing this empire was characteristically direct.
    She described editing multiple magazines like planning a dinner party.
    You need to have the pretty girl, the controversy, and something reassuring.
    By controlling the different elements of the cultural conversation, Anna ensured that the
    Vogue brand touched every significant demographic.
    Teen Vogue was chess, though, not checkers.
    Hook the readers at 15 and keep them for life.
    Plus, it became Anna’s digital laboratory, testing strategies too risky for the mothership.
    Men’s Vogue expanded her range.
    Main Vogue only featured people Anna wanted to celebrate.
    Men’s Vogue could criticize.
    Same brand, different roles.
    But the real genius was the talent pipeline.
    These magazines became Anna’s farm system.
    Train editors at Teen Vogue.
    Promote them to the best Vogue.
    Her influence multiplied through protégés across the industry.
    The portfolio approach had another benefit, resilience.
    When Men’s Vogue folded in 2008, Anna shrugged.
    She had other pieces on the board.
    While competitors protected single titles, Anna built a portfolio that could absorb risk.
    Nothing revealed Anna’s approach to power more clearly than how she handled major crises.
    Her response to September 11th became legendary within Condé Nast and established a template she would follow for decades.
    On September 12th, 2001, while much of New York was still reeling from the 9-11 attacks, Anna went to work.
    Not because she always went to work, but because she had calculated that normalcy was a form of resilience.
    As the message trickled down to her staff, the best thing to do was keep going.
    If Vogue stopped, fashion stopped.
    If the world stopped, the terrorists would have won.
    Anna’s bias toward action revealed itself.
    She assigned a spring fashion preview celebrating the season 9-11 had canceled.
    While others froze, Vogue published.
    But 2008 revealed her true genius.
    While other executives partied through 2007, Anna and publisher Tom Florio were studying currency rates.
    The euro-dollar shift was crushing European luxury brands.
    They saw the canary in the coal mine.
    They built three scenarios, belt tightening, major cuts, or catastrophe mode.
    When Bear Stearns collapsed, Florio warned other Condé Nast publishers.
    They laughed.
    Anna and Tom executed their plan.
    The result?
    Condé Nast ad pages dropped 30% in 2009, wiping out nearly $1 billion in revenue.
    Vogue was one of only two magazines that stayed profitable.
    Famously, after the 2008 crisis, Anna said internally,
    we will not participate in the recession.
    The pattern never changed.
    Position yourself for multiple possible futures.
    Prepare to the extent possible.
    Execute.
    No emotion.
    Whether 9-11, 2008, or any crisis between,
    Anna’s approach was identical.
    See it coming.
    Build options.
    Stay focused.
    The 2008 lesson went deeper.
    When budgets shrink, profitable divisions survive.
    Unprofitable ones don’t.
    No matter how prestigious they are.
    Anna understood in good times, excellence matters.
    In bad times, only profit matters.
    Crises don’t build character.
    It reveals who was positioned and who was pretending.
    As Warren Buffett says,
    Only when the tide goes out do you discover who’s swimming naked.
    By keeping Vogue profitable when others bled,
    Anna made herself indispensable.
    While others around her were losing their job,
    no one could come at the queen.
    The digital revolution should have killed Anna’s tenure at Vogue.
    Instead, she weaponized it.
    Vogue.com traffic grew from 1 million to 10 million monthly visitors.
    Same principles, new medium, impeccable visuals, exclusive access, celebrity partnerships.
    But Teen Vogue revealed her real genius.
    In December 2016, Teen Vogue publishes,
    Donald Trump is gaslighting America.
    The media world gasps.
    A fashion magazine doing some serious political commentary.
    Anna’s response, more please.
    She understood,
    Controversy drives engagement.
    Engagement drives revenue.
    Teen Vogue’s traffic exploded from 2 million to 12 million.
    Print subscribers tripled.
    The lesson,
    Your sub-brands can take risks your main brand can’t.
    Use them as laboratories.
    Anna became obsessed with Metrix.
    The woman who once cared only about aesthetics now lived for traffic reports.
    The 2015 Met Gala coverage set records she’d chase after every year.
    She found the holy grail,
    modernizing her greatest creation while expanding its reach.
    Even her Go Ask Anna YouTube series in 2018 was strategic,
    answering random questions.
    No, humanizing her brand while maintaining mystique.
    Digital transformation isn’t about abandoning what made you successful.
    It’s about translating it into a new medium.
    Anna didn’t become a different person online.
    She became a more measurable version of herself.
    And in digital, what can’t be measured can’t be monetized.
    By 2008, Anna discovered fashion was just her vehicle.
    Power was the destination.
    She backed Obama, but not with just checks.
    She created events mixing fashion, entertainment, and political elites.
    Anna positioned herself as the essential connector.
    First principle of real power is don’t join other people’s networks.
    Create your own and be the one everything flows through.
    When ambassador rumors swirled, Anna stayed silent.
    The speculation alone increased her value.
    Why can firm or deny when mystery multiplies the leverage?
    She didn’t get the ambassadorship.
    She got something better.
    Artistic director of all of Condé Nast.
    Not just Vogue.
    Everything.
    But the Met Gala has been her masterpiece of power.
    In 1999, Anna inherits a stuffy charity dinner.
    Wealthy New Yorkers writing checks, patting themselves on the back.
    By 2018, she’s running a $12 million cultural phenomenon that determines who matters in America.
    The transformation reveals everything.
    Anna didn’t just change an event.
    She created a new currency.
    Met Gala invitations became more valuable than money.
    They signaled cultural relevance that no amount of wealth could buy.
    The Met Gala looks like a party.
    Look closer.
    It’s a machine for manufacturing power.
    Anna controls the three levers that matter.
    First, the guest list.
    Reality stars with millions of followers can’t buy their way in.
    By saying no to money, Anna created a currency more valuable than money.
    Second, the seating chart.
    Anna places emerging designers next to billionaire investors.
    Models next to beauty executives.
    She deliberately separates couples, forcing new connections.
    Anna wanted people to meet other people, a former planner revealed.
    That’s where a lot of business came from.
    Third, the content engine.
    One night generates 12 months of coverage.
    The anticipation, the arrivals, the analysis.
    When Lady Gaga spent 16 minutes changing outfits on the steps, that wasn’t spontaneous.
    That was strategy.
    Vogue.com breaks traffic records every Met Gala Monday.
    Ad sales follow eyeballs, the event pays for itself through the content it creates.
    Watch how the flywheel spins.
    Anna’s Vogue coverage can make a designer’s career.
    So when she calls, everyone says yes.
    Their presence makes the event matter.
    The coverage reinforces Vogue’s authority.
    That authority attracts next year’s guests.
    Each turn makes the wheel spin faster.
    The $12 million for the Met is impressive, but it’s a distraction from the real genius.
    Anna made herself essential to three industries at once.
    Fashion needs her platform.
    Museums need her funding.
    Entertainment needs her validation.
    If magazines vanish tomorrow, Anna would still control the room where culture gets decided.
    She didn’t just build a better magazine.
    She built better infrastructure.
    In 2020, the fashion industry was devastated by the pandemic.
    Conde Nast was bleeding money.
    Critics were circling Anna like vultures.
    Everyone predicted her fall.
    Instead, she got promoted.
    December 2020, Anna becomes chief content officer of everything.
    Every Conde Nast magazine.
    Every country.
    The New Yorker to Vanity Fair to GQ all report to the girl who couldn’t type.
    Looking back from today, that promotion wasn’t a reward.
    It was recognition of reality.
    Anna had built something that transcended job titles.
    Her power rested on three pillars.
    Anticipation.
    She saw the celebrity shift before supermodels peaked.
    Pushed digital while competitors protected print.
    And built platforms while others guarded pages.
    Adaptation.
    Her methods never changed.
    Control the environment.
    Maintain standards.
    Move fast.
    But her tactics evolved constantly.
    Indispensability.
    The magic formula.
    Even when controversial, she stayed profitable.
    Even when criticized, she delivered results.
    Revenue plus relevance equals irreplaceable.
    At 75, Anna controls more than she did at 40.
    Not because she’s holding on, but because she’s built the infrastructure everyone needs.
    Here’s what most people miss.
    Anna didn’t achieve power.
    She architected it.
    The 16-year-old who wrote Editor of Vogue on that form, she got that job in 1988.
    But that was just the beginning.
    She spent the next 40 years building something that couldn’t be taken away.
    Jobs can be lost.
    Titles can be stripped.
    But when you become the platform your entire industry runs on, when you control the room
    where culture gets decided, when three different multi-billion dollar industries need you to
    function, that’s not a career.
    That’s architecture.
    The fashion world that Anna entered in 1975 is dead.
    The magazines, the business model, the culture, all transformed beyond recognition.
    Yet Anna didn’t just survive each transformation.
    She caused them.
    True power isn’t controlling what exists today.
    It’s building what controls tomorrow.
    And tomorrow, like every tomorrow for 40 years, still belongs to Anna Wintour.
    Wow.
    I want to talk about some of my reflections from reading and learning about Anna and what a
    force this woman is.
    There’s a couple of things that didn’t make the episode that I really want to emphasize
    here, but I also want to point out one of her secrets is that she’s direct and clear.
    She is kind, but not nice.
    Kind people will tell you something a nice person won’t.
    She will give you the feedback.
    You know exactly what she’s thinking.
    There are no mixed messages.
    And I think a large part of her success is due to the fact that she’s decisive and clear.
    And I think it gets rid of the wrong people very quickly and the right people love it.
    Okay.
    I want to talk about one of the things that gets talked about a lot online with Anna, which
    is her daily routine.
    It’s practically become internet folklore among productivity geeks.
    She wakes up around five.
    She plays an hour of tennis at dawn.
    And then consumes a whole bunch of news, British US newspapers by breakfast by 8am.
    She’s in the office perfectly coiffured with her Starbucks cappuccino, which is her version
    of breakfast in hand.
    I got that from the 80 questions video.
    But her routine’s most viral element is perhaps her wardrobe strategy.
    I have a wardrobe full of print dresses.
    So every morning I just go to one of my print dresses of choice and put it on.
    It makes decision making a lot easier.
    That simple hack from the queen of fashion revealed in her Go Ask Anna video series is cited as a
    brilliant way to just figure out what to wear in the morning.
    I mean, think of Steve Jobs.
    He always wore the same thing.
    And Anna Wintour is effectively doing the same thing.
    I think it’s brilliant.
    You don’t have to think too much.
    You can buy a whole bunch of them.
    You know what size fits.
    It’s great.
    I also want to say something a bit underrated with Anna.
    She cultivated immense loyalty by genuinely helping other peoples.
    It’s a reminder that behind what appears from the outside to be cold, there’s incredible acts
    of generosity in her.
    There’s softer antidotes.
    You know, they might not trend on TikTok, but they circulate in professional communities.
    For instance, you know, one story that sticks in mind that didn’t make this was she helped
    designer John Galliano get his career back on track.
    She gave countless people who didn’t have a name at the time, photographers and assistants,
    a shot.
    And, you know, I want to think about this for a second.
    She might come across as cold as some, but despite what you think from the Devil Wears Prada,
    my sources tell me she was never insulting.
    She valued clarity, speed, and directness.
    She gave direct and honest feedback.
    She’s kind, but not always nice.
    She says people work so much better when feedback is fast, direct, and honest, and they know where
    they are.
    Nobody works well when the atmosphere feels slow and lazy.
    Okay, I want to get into some of the lessons and, you know, some of the recurring themes that
    we see over and over again.
    The first is a taste for salt water.
    Anna spent five years at Harper’s on a skeleton crew of three people doing everything from market
    visits to layouts to captions.
    There was no coffee fetching or filling.
    She was just thrown in completely over her head.
    She said, I was thrown into my career, frankly, with ignorance.
    I knew nothing.
    She treated this grinding apprenticeship as education, not exploitation.
    Most people would have complained or stopped trying.
    That’s why most people don’t get the education that Anna got.
    Two, unreasonable standards.
    Anna returned every borrowed item with original tissue paper intact.
    She’d send steaks back three times for being insufficiently rare, then only eat two bites.
    At Vogue, she instituted the look, a daily assessment of every employee’s appearance from
    shoes to hair.
    Her AWOC system meant nothing, not even a comma, moved without her approval.
    Excellence is a tyrant you invite in.
    Once it moves in, mediocrity has no place to hide.
    Three, high agency.
    When passed over for fashion editor at Harper’s, despite doing the job’s work, Anna didn’t complain
    or negotiate.
    She resigned immediately, taking her assistant with her.
    She moved to New York without a job lined up, betting everything on her vision.
    The system won’t fix itself for you.
    When merit meets politics, choose exodus over argument.
    Four, burn the boats.
    At Viva, the porn-funded fashion magazine, Anna had a total creative freedom but zero prestige.
    Rather than job hunting for something respectable, she used the disreputable platform to develop
    her aesthetic without interference.
    She studied European fashion magazines while working at a magazine sold behind the counter.
    Sometimes the worst address is the best classroom.
    Embrace opportunities others are too proud to take.
    Five, bias towards action.
    Anna’s meeting revolution at Vogue.
    Walk in, stand, ask, leave.
    You get two minutes.
    The second is a courtesy.
    The clothing run-throughs that took hours under Mirabella, Anna did them in minutes.
    Yes, no, yes, no, yes, no.
    Goodbye.
    No explanations, no committees, just decisions.
    When people avoided her in the elevator, it wasn’t because she banned them, it was because
    she’d immediately start issuing orders they’d need to write down.
    Decisiveness is a muscle.
    The more you use it, the faster you move.
    Velocity matters.
    Six, outthink, don’t just outwork.
    When her boss at Harper’s wanted advertiser-friendly spreads, Anna would meet photographers in the lobby,
    select only the best shots, and claim no others existed.
    She forced him to choose between her vision and expensive reshoots, and she won every time.
    Don’t fight the system.
    Architect situations where the system has to choose you.
    Seven, don’t care what they think.
    Putting Madonna on Vogue’s cover in 1989 horrified fashion purists.
    The woman had just released a video burning crosses.
    Pepsi had polled her sponsorship.
    Religious groups wanted boycotts.
    Anna did it anyway because a businessman on a plane said Vogue would never feature Madonna.
    The issue sold 200,000 extra copies.
    When everyone agrees something will never work, that’s precisely when they stopped testing it.
    Consensus kills innovation.
    Eight, positioning is leverage.
    Anna accepted a made-up creative director role at Vogue, officially Mirabella’s deputy,
    but in reality Lieberman’s protege.
    It wasn’t the job she wanted, but it got her foot in the door.
    For three years, she learned the operation while appearing to be number two.
    She’d sit in a meeting, shaking her head, obviously disagreeing with Mirabella,
    playing a longer game than office politics.
    When Mirabella was fired, Anna was ready.
    When you know what you want, the strongest form of positioning is preparation.
    Nine, be a talent collector.
    Anna championed unknown photographers who became legends and built a three-assistant system that
    created Fashion Magazine’s most powerful alumni network.
    Her protégés run fashion globally.
    They learned by watching her negotiate with billionaires and shape culture daily.
    Your legacy isn’t just what you build, it’s who you build with.
    And you can’t buy good company.
    Ten, overmatch.
    Anna didn’t just go into detail.
    She forced the entire industry online in 1988, making Vogue.com the platform every designer needed.
    She didn’t compete with other magazines.
    She built the infrastructure they’d have to use.
    The Met Gala wasn’t improved.
    It was weaponized into a $12 million annual event of cultural dominance where she controls
    the guest list, seating charts, and cultural relevance itself.
    Don’t play fair games.
    Build the game itself and then charge admission.
    11, win by not losing.
    During the 2008 financial crisis, while other Condé Nast magazines bled out, Vogue remained
    profitable.
    Anna and her publisher had watched Eurodollar exchange rates, built three scenarios, and executed
    their plan while others partied.
    When Bear Stearns collapsed, they were ready.
    They were well-positioned.
    In a crisis, profitable divisions survive.
    Unprofitable ones get cut.
    Excellence matters in good times.
    Profits matter in both.
    When you combine the two, you succeed no matter what.
    What a force.
    Anna, oh my God, I can’t even say enough about her.
    This woman is so amazing and incredible, and I hope you learned as much as I did listening
    to this episode, and I would love to have her as a guest on the podcast, so if you’re listening
    to this and you know how to get in touch with her, I would love to interview her and sit
    down and talk about her and Vogue, and man, what an amazing woman and an amazing story.
    Thanks for listening and learning with us, and be sure to sign up for my free weekly newsletter
    at fs.blog slash newsletter.
    I hope you enjoyed my reflections at the end of this episode, and that’s normally reserved
    for members, but with this outlier series, I wanted to make them available to everyone.
    The Farnham Street website is where you can get more info on our membership program, which
    includes access to episode transcripts, reflections for all episodes, my updated repository featuring
    highlights from the books used in this series, and more. Plus, be sure to follow myself and
    Farnham Street on X, Instagram, and LinkedIn. If you like what we’re doing here, leaving a rating
    and review would mean the world. And if you really like us, sharing with a friend is the best way to
    grow this special series. Until next time.

    The job was editor-in-chief. The goal was to become the platform. And she did. 

    Once she made it to the top, she didn’t just edit Vogue. She reinvented the power structures beneath it. This episode unpacks how a British girl who couldn’t type built the most bulletproof career in media, survived five decades of disruption, and made herself indispensable to fashion, politics, and culture.  

    You’ll hear how she weaponized speed over perfection, fired half the Vogue staff in three days, and turned a porn-funded job into a fashion laboratory. Why she said “Your job” when asked what she wanted. Why she put Madonna on the cover at the peak of a scandal. Why standards—not popularity—are her real moat. It’s not about fashion. It’s about building systems no one can take from you.  

    Most people aim for realistic. Anna Wintour named her destination—Editor of Vogue—at sixteen, then built a ladder no one else could climb. 

    This episode is for informational purposes only and is based on Amy Odell’s Anna: The Biography. Simon & Schuster, 2022. 

    Check out highlights from these books in our repository, and find key lessons from Wintour here—⁠⁠⁠⁠https://fs.blog/knowledge-project-podcast/outliers-anna-wintour/

    Approximate timestamps: Subject to variation due to dynamically inserted ads:

    (03:48 ) PART 1: A Childhood Defined: The Girl Who Couldn’t Type
    (05:50) Anna Chooses Her Path
    (07:28) Learning by Drowning
    (09:46) The Tyranny of Standards
    (12:01) When Merit Meets Reality

    (13:44) PART 2: Conquering New York: The Quiet Revolutionary
    (16:05) Quiet Focus
    (18:10) The Best Worst Job
    (19:29) A Reputation from Nothing
    (21:00) In the Wilderness
    (22:39) The Preparation Advantage
    (25:40) The Audacity Play
    (27:22) The London Interlude
    (28:44) The Execution

    (30:19) PART 3: Vogue’s Transformation: The Devil in the Details
    (32:04) Speed as Strategy
    (34:56) The Celebrity Revolution
    (38:44) The Three-Assistant Solution
    (41:07) Balancing Art and Commerce
    (43:11) Cannibalizing Yourself First

    (46:46) PART 4: Anna’s Empire: The Power of Compartmentalization
    (48:05) The Empire Strategy
    (49:44) Crisis as Opportunity
    (51:58) The Digital Reinvention
    (53:27) The Currency of Influence
    (54:36) The Machine Anna Built
    (56:11) The Persistence of Power

    (58:23) Reflections, afterthoughts, and lessons

    Upgrade—If you want to hear my thoughts and reflections at the end of all episodes, join our membership: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠fs.blog/membership⁠⁠⁠⁠⁠⁠ and get your own private feed.

    Newsletter—The Brain Food newsletter delivers actionable insights and thoughtful ideas every Sunday. It takes 5 minutes to read, and it’s completely free. Learn more and sign up at ⁠⁠⁠⁠fs.blog/newsletter⁠

    Follow Shane on X at: ⁠x.com/ShaneAParrish

  • #232 Netflix Founder Reed Hastings on Scaling High-Trust Culture & Bold Judgment

    How do you build a high-performance culture without turning your company into the Hunger Games? Reed Hastings, co-founder and former CEO of Netflix, shares lessons from a career spent rewriting the rules—from severance as a management tool to “big-hearted champions who pick up the trash.” In this episode, he reveals how Netflix scaled trust, made bold bets before the data was in, and kept its edge by treating employees like adults—not assets. You’ll hear how Hastings evaluates talent beyond the interview, the reason he avoids performance improvement plans, and what most leaders misunderstand about judgment, feedback, and innovation. 

    You’ll also hear why he placed a $100 million bet on House of Cards with no pilot, how Drive to Survive changed an entire sport, and why Squid Game caught even Netflix by surprise. 

    Now focused on a new chapter—owning a ski mountain, reshaping education through AI tutors, and supporting charter schools—Hastings is still doing what he does best: building systems that scale culture, not just product. 

    If you care about performance without politics—or culture without the clichés—this is a blueprint from one of the clearest thinkers in modern business. 

    Approximate timestamps: Subject to variation due to dynamically inserted ads:

    (3:09) Powder Mountain, Skiing Industry, & Buying a Mountain
    (6:36) Setting Culture in an Organization
    (9:21) Hiring Process and Evaluating Candidates
    (14:24) Netflix’s 2009 Slide Deck Release
    (16:26) Talent Density and Performance Culture
    (17:59) Loyalty and Team Building
    (19:56) Severance Packages
    (22:17) Process Vs. Innovation
    (24:21) Preventing Bureaucracy from Creeping In
    (25:46) Identifying and Nurturing Good Judgment
    (26:40) Transition from CEO to Board Member
    (27:37) Competitive Landscape of Online Streaming
    (29:18) Role of Netflix in Driving Industry Interest
    (31:25) Handling Controversy: The Dave Chappelle Case
    (33:59) Inclusiveness and DEI in the Workplace
    (35:10) Customer Satisfaction and Operating Income
    (36:06) Decision Making in Content Acquisition: House of Cards
    (37:28) Creating vs Buying Content
    (38:46) Data Collection and User Preferences
    (40:32) AI in Netflix and Personal Use
    (42:33) AI in Education
    (45:12) Charter Schools and Importance of Education
    (48:07) Charter Schools and Government Control
    (52:34) Misconceptions and Personal Projects
    (53:25) Admiration for Bill Gates
    (55:04) Work-Life Integration
    (56:59) Reflections on Career and Obsession
    (59:12) The Netflix Keeper Test
    (1:00:38) Learning from Past Experiences at Pure Software
    (1:02:27) Challenges and Regrets at Pure Software
    (1:03:38) Role of the Board in Founder-led Companies
    (1:04:49) Venture Capital Experiences and Insights
    (1:05:31) Defining Moments and Openness to New Experiences
    (1:06:14) First Product Excitement: The Foot Mouse
    (1:07:19) Definition of Success

    Thanks to our sponsors for supporting this episode:

    NORDVPN: To get the best discount off your NordVPN plan go to ⁠⁠nordvpn.com/KNOWLEDGEPROJECT⁠. Our link will also give you 4 extra months on the 2-year plan. There’s no risk with Nord’s 30 day money-back guarantee!

    MOMENTOUS: Head to https://www.livemomentous.com and use code KNOWLEDGEPROJECT for 35% off your first subscription.

    Newsletter – The Brain Food newsletter delivers actionable insights and thoughtful ideas every Sunday. It takes 5 minutes to read, and it’s completely free. Learn more and sign up at ⁠⁠⁠fs.blog/newsletter⁠⁠⁠

    Upgrade — If you want to hear my thoughts and reflections at the end of the episode, join our membership: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠fs.blog/membership⁠⁠⁠⁠⁠ and get your own private feed.

    Watch on YouTube: ⁠⁠⁠@tkppodcast

  • #231 Outliers: Harvey Firestone – Men and Rubber

    AI transcript
    The most difficult thing in business is first getting yourself to thinking, and then getting
    others to thinking.
    A person may keep very busy indeed without doing any thinking at all, and the easy course
    is to keep so busy there will be no time left over for thought.
    We try to substitute discussion for thought by organizing committees, but a committee
    is just an elaborate means of fooling oneself into believing that talking is the same as
    thinking.
    These words are from Harvey S. Firestone’s autobiography, Men and Rubber, one of the
    books that I give away the most frequently as a gift.
    While it was written in 1926, everyone I give it to is surprised not only by the density of
    wisdom, but by how relevant it remains today.
    Welcome to The Knowledge Project.
    I’m your host, Shane Parrish.
    In a world where knowledge is powered, this podcast is your toolkit for mastering the best
    of what other people have already figured out.
    In 1920, Harvey Firestone returned from vacation to find his company drowning in 43 million of
    debt.
    His executives were paralyzed, the banks had cut him off, competitors were circling.
    Yet, instead of panicking, Firestone did something that shocked everyone.
    He slashed prices by 25% and personally took control of sales.
    The situation did not frighten me, he later wrote.
    It put new life into me.
    That crisis revealed the principles that separated Firestone from every other businessman of his
    era, and they’re the same principles that separate outliers from everyone else today.
    While others built elaborate organizations, Firestone asked two simple questions that cut
    through every problem.
    Is it necessary?
    And can it be simplified?
    While others chased trends, he focused relentlessly on what wouldn’t change.
    While others avoided hard decisions, he had the courage to close doors and burn boats.
    Most importantly, Firestone understood something that eludes most ambitious professionals today.
    Positioning beats talent, simplicity scales better than complexity, and the person with
    options holds all the power.
    Today’s episode isn’t about tires.
    It’s about the durable, asymmetric advantages that create lasting success in any field.
    Whether you’re navigating technological disruption, fighting entrenched competitors,
    or building something from nothing, Firestone’s principles will give you an unfair advantage.
    As he put it, thought, not money, is the real business capital.
    Let’s examine how he built an empire by thinking differently.
    It’s time to listen and learn.
    This podcast is for entertainment and informational purposes only.
    Harvey Firestone learned his most valuable business lessons, not from formal education, but from his
    father, Benjamin, a man he would later call the best businessman I have ever known.
    What made Benjamin exceptional wasn’t flashy success or quick profits, but a deeper understanding
    of what creates lasting value.
    The test of a businessman is not whether he can make money in one or two boom years or can make
    money throughout one lifetime, but whether he creates something that will live and grow in
    money-making power after he is gone.
    By this standard, Benjamin excelled through three principles that would later define Harvey’s
    own approach to building an empire.
    The first principle was maintaining a surplus, or how I prefer to frame it as a margin of safety.
    Harvey wrote that his father had the rare foresight to know that a fine crop one year was more
    or less a fortunate accident and did not set a figure to be followed during future years.
    Consequently, he always had plenty of stock and feed on hand.
    This wasn’t just prudent farming, it was positioning.
    Benjamin was never a forced seller.
    When other farmers rushed to market and sold regardless of price because they needed the money
    so badly, he could wait.
    Sometimes an entire year for better prices.
    Having a surplus is the greatest aid to business judgment that I know, Harvey later reflected,
    and I bitterly know what I’m talking about, for I went through years of upbuilding without
    being able to accumulate a surplus.
    The key lesson here is that if you are well positioned, be it with a surplus or margin of
    safety or whatever you want to call it, you control your own circumstances.
    When you don’t have that, you are controlled by them.
    The second principle was patience in negotiation.
    At market, Benjamin would silently survey the options, watching and listening, and gathering
    as much information as possible before deciding, often walking away if conditions weren’t favorable.
    Never rush in on a deal, he advised.
    Let it come to you.
    This discipline meant Harvey couldn’t recall his father ever making a significant mistake.
    Third, and perhaps most valuable, was Benjamin’s reputation for fairness.
    He never wanted to get more than his stock was worth, or to buy stock for less than it was
    worth, Harvey wrote.
    The result?
    Other farmers wouldn’t sell until Benjamin did.
    Buyers sought him out, first knowing whatever price he accepted would set the market.
    His reputation had become a competitive advantage.
    While other farmers remained narrowly focused on daily operations, Benjamin also maintained perspective
    through voracious reading, rare for farmers of that era.
    As Harvey noted, when all a person’s attention is required by the daily running of his business,
    he seldom sees the business in perspective.
    He misses the new developments.
    Young Harvey absorbed these lessons while developing his own passion for trading horses.
    By 15, he could evaluate a horse’s quality and value with remarkable precision.
    Skills that would transfer surprisingly well to his future in the tire industry, where quality
    assessment and value creation were similarly crucial.
    The lessons here are deceptively simple, but incredibly powerful.
    Good positioning eliminates forced decisions.
    You don’t need to be smarter than others to outperform them if you’re better positioned.
    Anyone looks like a genius when they’re in a good position, and even the smartest person
    looks like an idiot when they’re in a bad one.
    Working in your business also differs from working on it.
    One requires execution, the other perspective.
    And finally, fairness compounds of the four possible relationship outcomes with anyone in your life.
    Win-win, win-lose, lose-win, lose-lose.
    Only win-win builds lasting success.
    After leaving the firm, Harvey’s brief stint as a bookkeeper led to his first real business venture,
    with a man named Jackson, selling flavoring extracts and patent medicines.
    This disaster would teach him more about business fundamentals than any success could have.
    Jackson’s business model was based on a misunderstanding of cause and effect.
    He had observed a friend named August Green grow wealthy, selling a dubious cure-all called
    Green’s August Flower, which succeeded through aggressive advertising.
    Jackson believed he could replicate this success, but skipped the advertising costs by hiring charismatic
    salesmen.
    Among these star salesmen was a character Harvey vividly remembered, a big fine fellow with a genial
    presence and the gift of gab, one of these men who could sell anything.
    He had just one formula.
    He just breezed in on a prospect, offered him a cigar, and then sat down and talked him to death.
    That was salesmanship in those days.
    Harvey joined as a junior salesman at $50 monthly.
    Not for any sales expertise, but because he had helped with the business plan.
    His romanticized version of the traveling salesman’s life quickly collided with reality when his first
    territory was tiny Apple Creek, Ohio.
    His first day proved humbling.
    After nervously circling the town a few times, Harvey struck out at several small shops before
    reluctantly trying his hand at the largest shop, thinking it was the least likely to hear him out.
    And surprisingly, it was at this shop that he made his first sale.
    This pattern taught him a crucial insight.
    The owners of truly successful businesses recognize and prioritize genuine opportunities,
    while those struggling often claimed to be too busy for new ideas.
    But the business was on borrowed time, and the more profound lesson emerged as it unraveled.
    The star salesman focused on high-margin patent medicines,
    while Harvey, lacking confidence, sold humble vanilla extract.
    Unexpectedly, his vanilla sales became the company’s main revenue source.
    As Harvey later explained, patent medicines do not sell on merit, for there is precious little merit in most of them.
    Patent medicines sell only on their reputation for curing diseases, and that reputation has to be built up by advertising.
    Meanwhile, the extracts did not need to be advertised because people do not have to be educated into the belief that vanilla extract will give them a vanilla flavor,
    whereas they do have to be educated or fooled into the belief that a spring tonic will cure spring ills.
    Within six months, all the star salesmen quit, Jackson went broke, and Harvey lost his job.
    But he gained something more valuable than money, understanding that the relationship between product quality, marketing, and sales.
    More importantly, he witnessed firsthand how easily businesses confuse correlation with causation.
    The star salesmen had succeeded earlier in their careers not because of their sales techniques,
    but because they’d sold products with established reputations.
    They mistook correlation, their sales alongside advertising, for causation, their personal ability to persuade.
    Harvey would later write,
    The first principle of salesmanship is that you must thoroughly believe in what you have to sell.
    Then selling becomes merely a matter of showing how your product will help a prospect.
    Great products either sell themselves through obvious utility or require the right marketing to educate customers about their value.
    This lesson would serve Harvey throughout his career and remains equally relevant today.
    After his sales venture collapsed, Harvey swallowed his pride and joined his uncle’s buggy company.
    A position he’d previously rejected.
    For the first time, he earned enough to pursue his passion for horses as a side business, buying and selling them at a profit.
    But technological disruption was coming for the carriage industry.
    Harvey’s company sold premium buggies for $110.
    They were built to last decades.
    However, competitors began offering solid $35 alternatives that farmers found perfectly adequate.
    Customers increasingly preferred replacing cheaper vehicles every few years rather than investing in premium durability.
    The value proposition that seemed obviously superior to industry insiders, longer lasting quality, turned out to matter less and less to consumers than price.
    The company soon entered receivership, and Harvey found himself unemployed again, but this time with a wife and home to support.
    The pressure was relentless.
    Yet these consecutive failures gave Harvey invaluable business education.
    He was learning Jackson’s extract company had failed through poor marketing, misaligned incentives, and product market misunderstanding.
    His uncle’s buggy company collapsed by clinging to outdated value propositions while the market evolved beneath them.
    Harvey was learning business fundamentals through observing failures up close, paying with time rather than capital, and it would become an education more valuable than any he could have purchased.
    These early failures weren’t just teaching Harvey about business, they were preparing his mind to spot opportunity where others saw only crisis.
    And that opportunity would arrive in an unexpected form, right beneath the wheels of his own buggy.
    One afternoon in Detroit, everything changed.
    Looking down at the wheels of his own carriage, Harvey found the insight that would define his future.
    “Driving out one afternoon in my rubber-tired buggy, it, for the first time, struck me that my future was right on the wheels of my buggy.
    Those rubber tires were the only ones in Detroit.
    They were not the only ones in the United States, and a London cab company had already fitted out all of its cabs with rubber tires.
    But they were hard to buy in the United States.
    Why not make them easy to buy?”
    “This was classic opportunity recognition, identifying a gap between what people wanted and what was readily available.
    Rubber tires transformed the riding experience, replacing bone-jarring wooden wheels and metal rims with smooth comfort.
    Harvey had experienced this himself and recognized a fundamental truth about product adoption.
    Once a man rode on rubber tires, he wanted a set.
    This insight mirrors what Estee Lauder would later build an entire empire around.
    I think we talk about this in Episode 218.
    The power of direct experience.
    Lauder insisted on personally applying her cosmetics to customers, knowing first-hand experience would convert them instantly.
    Harvey understood that rubber tires sold themselves after just one ride.
    And a carefully selected partner quickly estimated the market potential during a single dinner conversation.
    If they could capture just half the buggy market in America, they calculated they’d rival standard oil in size.
    Last night, they caught a train to Chicago and within days purchased a small rubber factory for $1,500 cash.
    Their business model was straightforward: buy rubber strips, cut and fit them to carriage wheels, and charge $40 for sets that cost $14 to produce.
    A healthy 65% gross margin.
    But they immediately confronted the entrepreneur’s classic dilemma: success creating its own problems.
    Their growth outpaced their financial resources, creating a dangerous mismatch between opportunity and capability.
    As Harvey candidly explained, we were growing faster than our capital, which meant that we were always short of money.
    Their promising venture now faced the constraint that kills more startups than any other, running out of cash while running towards success.
    While Harvey mastered production quickly, the financial side of his growing business revealed his inexperience.
    As he candidly admitted, their complexity was not due to the size of operations.
    I could state our condition in those days right out of my head, and the back of an envelope gave ample space for the statement.
    Our trouble was that we did not have enough money and did not know how to get it.
    The elephant in the room for any growing business appeared: cash constraints meeting opportunity.
    When the Imperial Robber Company offered to sell their entire operation for $15,000, which was a bargain too good to ignore, Harvey faced a moment of truth.
    He needed outside capital, therefore he would need to learn banking.
    His first bank meeting became a master class in humiliation.
    Harvey arrived with enthusiasm and projections, mistaking the banker’s polite interest for genuine excitement.
    The banker nodded and asked questions, and gave every indication of impending approval.
    He was just giving me the opportunity to show how little I knew about finance.
    He was not frank about it.
    I left the bank thinking I was going to get a loan, and while I was never refused the loan, I never got it.
    Picture Harvey in that moment, walking out confident, expecting imminent funds, unaware he just revealed every gap in his financial knowledge.
    But failure teaches what success can’t.
    From this embarrassment, Harvey extracted lessons about financial communication that still serve entrepreneurs a century later.
    What I learned was that a bank statement ought never to be in such shape that it has to be explained.
    Everything ought to be on the statement.
    A statement of condition can be a prospectus.
    In fact, it is the best possible kind of prospectus, but it ought not to be prepared in enthusiasm.
    Undeterred, Harvey approached a larger institution, First National Bank.
    This critical moment came when he met Frank O. Wetmore, a young loan officer who saw beyond Harvey’s inexperience to his potential.
    Rather than rejecting him, Wetmore offered what Harvey called a course in practical banking, teaching him about the proper financial ratios and management.
    Then, remarkably, Wetmore lent him $10,000.
    The lesson here is bounce, don’t break.
    The first no is rarely the end of the line. Learn, adapt, and try again.
    Harvey’s relationship with Wetmore evolved from lender to mentor, transforming both the business and Harvey himself.
    The connection proved so valuable that even after becoming an industrial titan, Harvey continued seeking Wetmore’s counsel whenever he was in Chicago.
    With financing secured, they purchased the factory, but a competitive threat immediately emerged.
    A rival company introduced a purpose-built wheel for rubber tires that made Harvey’s retrofitting method look primitive by comparison.
    Harvey faced the classic entrepreneur’s dilemma, fight a technically superior competitor or find another path.
    Rather than battling uphill, he pursued a counterintuitive strategy, proposing a merger to his competitor with a simple, powerful argument.
    If the two of us kept in the field, neither would make any money.
    The consolidation succeeded, therefore they became the dominant player in Chicago’s buggy tire market.
    This market position attracted the attention of a consolidated company, a trust actively acquiring rubber businesses nationwide.
    After careful negotiation, Harvey and his partner sold for $1,254,000, an amount Harvey described as something more than four times what our business was worth, not counting its goodwill.
    His personal share came to $45,000 in cash, considerably more money than I had thought was in the world for me.
    Picture Harvey in this moment, the farm boy who weathered multiple failures, now holding more cash than he’d imagined ever possible.
    Most people would have considered this the happy ending, goal achieved, financial security obtained.
    But Harvey wasn’t most people.
    In fact, he was just getting started.
    With characteristic prudence, he invested $20,000 in a mortgage for steady income and kept $25,000 liquid for his next venture.
    In just four years, a $1,000 investment had grown 45-fold.
    Though the acquiring company offered him a position, Harvey soon resigned.
    As he put it, “I wanted to be out for myself.”
    The wealth hadn’t changed, his fundamental desire for independence and the chance to build something truly his own.
    With newfound wealth in hand, Harvey faced the classic entrepreneur’s question, “What’s next?”
    The carriage industry held little appeal for his uncle’s business collapsed.
    I had no hankering after the carriage business he rode for it to become one of keen competition in cheap models.
    But what about the emerging automobile industry?
    Surprisingly, Harvey didn’t see gasoline-powered cars as the obvious future.
    The few automobiles on the American roads seem like expensive curiosities.
    Not exactly toys, but certainly not commercial products.
    Of course, that’s how all innovation starts.
    Just look at AI today.
    It really went mainstream with DALI.
    And all you could do is make these silly little images.
    And people laughed.
    And now, just a few years later, it’s taking over jobs.
    Harvey, like many of us, was so focused on the present that he’d walked past the automotive history being made without recognizing it.
    He later admitted, “I do not recall ever seeing Henry Ford’s car about the streets of Detroit.
    And I have no recollection of having seen Mr. Ford.
    Although probably we passed many times on the street.
    For the Detroit Edison Company where he worked was close to my Detroit office.”
    Instead, Harvey believed electric vehicles would dominate.
    noting, “I had sold many tires to the Woods Motor Vehicle Company in Chicago, which was one of the first companies to get out an electric carriage.
    We all thought of electricity as the coming motive power for everything.”
    The man who would later partner with Henry Ford was betting on the wrong technology.
    But amid this uncertainty, Harvey made a profound insight that would define as success.
    Rather than betting on which transportation technology would win, he bet on what wouldn’t change.
    “I believe thoroughly in rubber tires,” he wrote.
    “They made riding so much easier that they appeared to me to be a necessity.”
    While working briefly for a Chicago tire company, Harvey grew dissatisfied with their pricing policies.
    Therefore, he resigned and attempted to start his own venture.
    When disagreements with bankers over factory locations derailed his plan, Harvey redirected to Akron, Ohio, the established center of America’s rubber industry.
    There, after managing a tire department for another company, Harvey encountered the invention that would transform his trajectory and the future of American transportation.
    In Akron, Harvey encountered an invention that addressed the tire industry’s fundamental challenge.
    James Swinehart, a former school teacher turned carpenter, had developed an innovative fastening method that solved a persistent problem.
    The prime difficulty in the whole tire trade was fastening the tires to the rims, Harvey explained.
    The clincher principle was popular for a time, but it was not entirely satisfactory.
    Swinehart’s solution used cross wires embedded in the tire base, secured with retaining wires.
    A simple but elegant fix that worked particularly well for larger tires where other approaches failed completely.
    On July 26, 1900, Harvey and Swinehart struck a deal.
    They would launch with $50,000 in capital.
    Harvey investing $10,000 cash plus a business option valued at $15,000, while Swinehart contributed $10,000 and his patent.
    The Firestone Tire and Rubber Company was born.
    Harvey became treasurer and general manager rather than president, explaining,
    “I have never cared much about titles.
    It did not bother me who had the title so long as I ran the company.”
    This focus on substance over status would define his leadership style.
    The established Akron rubber companies barely noticed this upstart, but their indifference created opportunity.
    For two years, Firestone operated as a middleman, buying tires from established manufacturers and adding their patented fastening device.
    Sales grew rapidly, but profits remained elusive.
    Losing money is not pleasant, but every business must at times lose money.
    Losing money is really serious if you do not know why you are losing, or if you do know why and cannot help yourself.
    It was very plain to me why we were losing money.
    We were losing money because we couldn’t control the cost of our tires, Harvey realized.
    They had the best fastening device, but couldn’t price competitively while buying tires from the very companies they competed against.
    The solution was clear but daunting: vertical integration.
    They needed their own manufacturing facility, therefore they needed more capital again.
    Harvey knew this fundraising round would determine their fate.
    Instead of approaching many small investors, he targeted Will Christie, the most influential man in Akron, applying a principle he’d refined through experience.
    A great many salesmen make the mistake of thinking that pestering a man is the same as selling him, and they get their prospects into such a state of exasperation that they would not buy a gold dollar from them at 50% off.
    Just getting to a man is not enough.
    It is when and how you get to him.
    Harvey tracked Christie’s vacation plans, boarded a train to California, checked into the same hotel, and then, quite accidentally, bumped into him at breakfast.
    The staged coincidence worked perfectly.
    By the meal’s end, Harvey had secured $10,000 in investment, which eventually grew to $50,000 with Christie becoming company president.
    With funding secured, Harvey found an abandoned foundry and furnished it frugally.
    We bought everything at the second-hand price.
    You might almost say that we furnished the factory with junk, but it was junk which, with repairs, served our purpose very well.
    Harvey embodied the hands-on founder, simultaneously serving as factory superintendent, office manager, and head of sales.
    By 1903, sales reached $230,000, more than double their previous year.
    But the five-second moment that validated their strategy came with the balance sheet, their first-ever profit of $8,503.
    Despite this long-awaited success, Harvey refused to declare dividends, choosing instead to reinforce their financial position.
    We wanted to save as much as possible for a still-further enlargement of the factory.
    The lesson here is instructive.
    While many companies would have taken the surplus and declared a dividend, Harvey wanted to position the company for the future.
    The cycle of financial discipline begun on Benjamin Firestone’s farm was now powering the early stages of what would become an industrial empire.
    Success brought its own challenges.
    As manufacturers rather than resellers, they faced hostility from established rubber companies who had once welcomed them as customers, but now viewed them as direct competitors.
    Harvey confronted a classic business dilemma.
    Will you cut your quality, reduce prices, and meet competition, or will you try to sell at your present price?
    Either obvious approach meant certain failure.
    Lower prices would erase their hard-won profitability, but they lacked the scale economies to compete at the same price point as industry giants.
    They needed a third option.
    Therefore, innovation became their only path forward.
    Harvey understood a fundamental business truth.
    There is no real profit in high prices because high prices automatically cut down volume.
    But the only possible way to lower prices and still keep business is to save in the cost of manufacturing by improved processes.
    The opportunity lurked in a problem hiding in plain sight.
    The carriage tire trade lacked standardization, forcing dealers to stock hundreds of tire sizes, a massive inventory burden consuming both space and capital.
    What if they could create a standardized product that solved this inventory nightmare?
    George Luddington, a Firestone employee, proposed creating tires in continuous lengths that could be cut to size as needed.
    The concept was elegantly simple, but technically challenging.
    All previous attempts had failed during the rubber curing process.
    Rather than dismissing the idea, Harvey partnered directly with Luddington, working alongside him to solve the problem.
    This wasn’t an executive dictating from above, but a problem solver in the trenches.
    The resulting roll tire transformed the industry.
    Dealers could serve customers with a fraction of previous inventory and Firestone escaped the price war trap.
    As Harvey noted with understated pride, that invention took us completely out of competition.
    This focus on solving genuine problems extended beyond product innovation to customer relationships.
    When Cuban distributor Jose Alvarez complained about defective tires and refused payment, Harvey didn’t argue by mail.
    He sent his representative to Havana immediately with new equipment.
    Carcuff, the Firestone representative, discovered the true issue:
    incorrectly mounted tires due to misunderstood instructions.
    After proper installation, Alvarez insisted on testing the tires himself.
    Imagine this: Alvarez hitches his best horses to a carriage with Carcuff trembling beside him, then drives wildly through Havana,
    turning out of car tracks at full speed and dashing around corners on two wheels like a madman.
    This dramatic demonstration transformed a potential disaster into a triumph.
    Alvarez not only paid in full, but requested an exclusive representation contract, becoming Firestone’s largest single customer for years.
    The lesson is powerful: solving problems at their source builds trust that advertising dollars can’t buy.
    While the customer was wrong, Firestone sent solutions instead of arguments.
    The relationship became so solid that when competitors later tried selling similar tires in Cuba without a license,
    Alvarez reportedly had them jailed until they agreed to stop.
    By refusing the false choice between competing on price or premium positioning,
    Harvey created his own category through innovation,
    a strategy that would repeatedly save the company in the decades ahead.
    While Firestone was thriving with solid rubber tires, a technological revolution loomed ahead.
    Gasoline-powered automobiles required pneumatic tires, air-filled cushions,
    that fundamentally differed from the solid tires that had built Firestone’s company to date.
    Even worse, this new technology was controlled by an entrenched monopoly hostile to newcomers.
    Harvey faced the innovator’s dilemma in its purest form.
    The numbers told a compelling story of success.
    1904 sales had doubled to $460,000, while profit surged nearly ninefold to $71,000.
    Everything pointed to doubling down on what was working.
    But Harvey looked beyond the present numbers to future trends.
    If I read the signs correctly, solid tires would soon be a minor product.
    Most executives would celebrate their success and expand their profitable solid tire business.
    Harvey instead wrote,
    “No business can succeed unless it is constantly revising its product,
    not only to meet the actual demands of today, but also the potential demands of tomorrow.”
    This vision triggered internal conflict so severe that one major shareholder disagreed so vehemently
    that Harvey bought out his stock entirely.
    The future belonged to pneumatic tires, therefore the company needed to adapt
    despite knowing nothing about manufacturing them.
    In addition, the vehicle tire industry operated as a closed cartel.
    The G&J Clincher Tire Association controlled the basic patent and ran a rigid monopoly dictating
    who could manufacture tires, imposing production quotas, and fixing prices across the entire industry.
    Each licensed manufacturer received a designated market percentage
    with excess profits surrendered back to the pool.
    As Harvey noted,
    if these patents held,
    it would have kept the motor industry in the pleasure and sporting class
    until the monopoly had run its course.
    The new age of transport would have been delayed.
    When Harvey approached the association for a license, they flatly refused.
    They didn’t want another competitor diluting their shares.
    True to form, Harvey bounced but didn’t break.
    He began searching for an alternative method of fastening pneumatic tires to rims
    that wouldn’t violate the Clincher patent.
    He discovered a crude but promising approach,
    essentially what would become the straight side tire of today with rim flanges bolted together.
    As Harvey reflected,
    It is a curious coincidence that both the side wire solid tire and the straight side pneumatic tire
    proved to be the only methods for fastening on the heavy tires that were to come.
    But I was forced, as an outsider, into both of them.
    His observation contains a crucial lesson for entrepreneurs and innovators.
    There is always a better way of doing everything than the way which is standard at the moment.
    It is a good thing for a man to be pushed into finding that better way.
    Starting with nothing, Harvey hired a single pneumatic tire maker,
    tucked him into a corner of their shop, and began hand-building tires.
    With no automobile to test them on, he purchased one from New York and had it shipped to Ohio.
    There, they retrofitted the wheels with custom rims and flanges,
    a process filled with unanticipated obstacles.
    Their first road test became an exercise in perseverance.
    Setting out for Harvey’s childhood home 60 miles away,
    what should have been a few hours journey stretched into seven hours of frustration.
    Every few feet, at least that is how it now seems, we had a blowout, he recalled.
    Seven hours of repeated failure would discourage most entrepreneurs,
    but Harvey spent a full year refining both tires and rims until they worked properly.
    Then came an even greater barrier.
    Every automobile in America had been fitted for clincher tires.
    To sell even one set of straight side tires, Firestone would need to convince automobile owners
    that his product justified completely changing their vehicle’s rims,
    dramatically increasing the price while locking them into Firestone as their only tire supplier.
    It was the definition of a hard sell.
    More expensive, riskier, and requiring commitment to an unproven product.
    The question hung in the air.
    How could a small company with a non-standard product possibly break through?
    Just when Firestone’s vehicle tire initiative seemed destined to remain a small experiment,
    opportunity arrived unexpectedly.
    In 1905, Harvey learned that Henry Ford planned to build 2,000 cars priced at $500 each.
    Vehicles meant for ordinary Americans, not just wealthy enthusiasts.
    If these cars shipped with Firestone’s straight side rims instead of clincher rims,
    Harvey would instantly gain 2,000 captive customers.
    There would be no need to convince individual owners to change their rims.
    They’d come equipped from the factory.
    Realizing this, Harvey immediately traveled to Detroit.
    The clincher tire monopoly had quoted Ford $70 per set.
    Therefore, Firestone offered $55, still enough for a healthy profit,
    but a significant saving for Ford’s cost-sensitive manufacturing.
    This first meeting between these future industrial titans revealed their shared outsider status.
    Ford battled patents monopolizing automobile manufacturing,
    while Firestone fought the clincher tire association.
    Both men believed in making their products accessible to average Americans, not just the wealthy.
    If your tire proves to be what you think it is, then we’ll use it, said Ford.
    But true to his meticulous nature, he insisted on 60 days of rigorous road testing before accepting.
    The tires passed Ford’s demanding tests.
    Harvey got an order for 2,000 sets, a potential breakthrough moment, but elation quickly gave way to panic.
    His pneumatic tire department consisted of exactly one person, and they had made only a few tires.
    Now they needed to rapidly scale up.
    Harvey now faced organizing an entire production division, sourcing materials, manufacturing rims,
    and financing this operation overnight.
    He borrowed $5,000 to start, but immediately hit obstacles.
    The handmade rim flanges used in testing proved too expensive and weak for mass production.
    The local company contracted to produce them, quoted $20 per set, but couldn’t meet quality standards.
    Harvey scrambled to find another manufacturer who could deliver superior rims at prices that preserve their profit margins.
    Just as production momentum built, disaster struck.
    After completing 300 tires, representing over $10,000 in borrowed money,
    Ford announced the new model would be delayed for months.
    With commitments for tire parts already totaling another $25,000, Firestone faced financial catastrophe.
    They needed cash from the initial deliveries to repay what they’d already spent.
    Though the company’s 1905 profits reached $122,000, their rapidly expanding business demanded every dollar be reinvested.
    Sales had doubled to $770,000, and their workforce had grown from 12 to 130 employees.
    As Harvey explained with characteristic candor, our profits were book profits, not cash profits.
    The Ford partnership that seemed like salvation now threatened to sink the company before it could deliver a single tire.
    With the Ford order delayed and cash dwindling, Harvey walked the financial tightrope.
    He renewed notes, sold additional stock, and managed cash flow with surgical precision,
    all while facing skepticism from bankers who viewed automobiles as a passing novelty.
    Ironically, this banking skepticism proved beneficial in the long run.
    It is a fortunate thing for the industry that it was not favored by the bankers, Harvey reflected,
    else it would have been financed by bond issues, and there have been several periods when these bond issues might have been foreclosed,
    which would have set back the industry for a number of years.
    The automotive revolution would be built not on debt, but on the audacity of entrepreneurs willing to stake everything on their vision.
    When Ford finally began taking deliveries in 1906, the tires exceeded expectations: large, tough, and durable.
    This established a partnership that would shape both companies for decades.
    As Harvey noted, working with Ford provided steady pressure for higher service and lower prices that prevented complacency.
    Anyone who does business with Mr. Ford never gets a chance to rest and enjoy honors.
    The pressure for better methods is continuous.
    Success revealed yet another challenge.
    Ford customers could only use Firestone’s straight-side tires, but Firestone lacked nationwide distribution.
    People hesitated to buy cars that might not have replacement tires available when needed.
    Ford delivered a clear ultimatum: Firestone would need to make standard clincher tires as well.
    Harvey reluctantly returned to the tire monopoly, renewing his license application.
    The association president once again politely declined.
    The moment stretched into silence as Harvey considered his options.
    Then, with quiet determination:
    If you will not give me a license, then I will go right ahead and make clincher tires without a license.
    And that’s exactly what he did.
    Facing inevitable legal battle against the tire monopoly, Harvey wrote:
    I was mentally, if not financially, prepared for a long fight.
    He took inspiration from Ford’s ongoing battle against the Selden patent,
    a sweeping claim that essentially demanded royalties on all gasoline-powered automobiles.
    When the Selden group threatened to prosecute every Ford car owner for patent violation,
    Ford boldly offered indemnity bonds to each customer.
    Hardly anyone requested them, confirming what Harvey observed:
    The public always roots for the underdog.
    Ford eventually won his case on appeal,
    famously testifying that George Selden has never advanced the automobile industry in a single particular,
    and it would perhaps be further advanced than it is now if he had never been born.
    For Harvey, something unexpected happened.
    The legal notice he braced for never arrived.
    The clincher tire association had become distracted by another infringement case.
    One they ultimately lost when the courts declared their patent invalid.
    Their monopoly collapsed overnight, freeing the entire industry.
    Though, as Harvey wryly noted, another monopoly was shortly to take its place.
    The birth of transformative industries often follows this pattern.
    Pioneers create genuine innovations,
    then opportunists build legal barriers around them, protecting incumbents.
    Edison and Ford, both friends of Harvey, believed that inventors rarely benefited from patent laws.
    The real profits, they argued, flowed to capitalists who controlled the legal machinery.
    Yet inventors like James Dyson in episode 220 demonstrate why some protection remains essential.
    Without it, what incentive exists to invest years perfecting a breakthrough?
    This tension between monopolistic control that stifles progress and legitimate protection
    that rewards innovation remains unresolved a century later.
    The story’s irony is that Harvey, forced outside the patent system, created superior alternatives that might otherwise never have existed.
    Sometimes the greatest innovation happens not because of the system, but despite it.
    1906 marked a turning point for Firestone.
    With Ford as their largest customer, sales hit the million-dollar mark.
    But, as always, success brought complications.
    Despite this milestone, profits actually declined slightly from the previous year.
    And shareholders who had patiently waited began demanding dividends.
    Harvey was left with a choice between satisfying investors in the short term or reinvesting for the long term.
    He crafted a careful compromise, issuing $100,000 in additional stock and declaring modest dividends that preserved cash while placating early investors.
    This balancing act revealed Harvey’s fundamental philosophy about ownership.
    I then and always have regarded the stock of our company as something to buy and hold and not something to speculate in.
    The moment that officers or directors of a company begin to speculate in its stock, the ruin of the company is not far away.
    For it is impossible to serve both the company and the stock market.
    As the industry matured, Harvey observed a subtle but profound shift.
    Fewer people were in the automobile game and more in the automobile business.
    What had started as a novelty for enthusiasts was becoming an essential tool of modern life.
    Driven largely by Ford’s increasingly affordable models.
    But tire manufacturing remained surprisingly primitive.
    It was still more art than science.
    No company could guarantee specific mileage because none had mastered consistent quality.
    Production relied on rule of thumb methods rather than scientific principles.
    Even the raw materials were wildly inconsistent, with rubber from Brazil varying dramatically between shipments.
    Harvey realized that to grow beyond their current position, Firestone needed to transform tire making from craft to science.
    This meant establishing something most smaller manufacturers considered a luxury.
    A laboratory.
    I did not know how really important a laboratory was, he admitted.
    And already having four or five places for every dollar that came in, I had no inclination to look for new ways of spending money.
    Nevertheless, he started modestly, partitioning off a small section of the shop floor.
    This humble beginning opened Harvey’s eyes to what science in manufacturing means.
    And the lab gradually evolved into a powerful technical center.
    Years later, he would declare,
    “I would almost as soon try to make tires without rubber as to try to make them without a chemist.”
    The pattern continued when another industry cartel, the United Rim Company, refused to work with Firestone.
    Rather than capitulating, Harvey launched his own Rim manufacturing division.
    When denied access to established groups, he consistently created alternatives that proved superior.
    “I wanted to keep out of all price fixing or royalty combinations,” he explained.
    “They did not impress me as being good business.”
    Was this moral stance genuine or merely the rationalization of an outsider?
    “The evidence suggests both Harvey and Henry Ford shared a fundamental business philosophy: high volume at low prices.”
    Their vision of making automobiles available to everyone through mass production wasn’t just rhetoric.
    It shaped their operational decisions daily.
    Far from resenting his exclusion from industry cartels,
    Harvey had discovered that constraints often revealed opportunities invisible to insiders.
    Being forced outside standard practices repeatedly led him to innovations that ultimately proved superior to existing methods.
    What’s instructive here is counterintuitive.
    While we all want to be welcome into the established order,
    often being shunned from it forces you to find another better way.
    This ability to adapt and turn constraints into advantages would soon be tested on a much larger scale.
    Firestone had developed a philosophy on business planning that balanced preparation with flexibility.
    He said the biggest thing in business is to be working and planning ahead.
    Planning ahead for production, for sales, for new developments in the art, for money, for sources of supply.
    Yet he also recognized the danger of rigidity.
    A too rigid plan may be worse than no plan at all.
    This balanced approach would soon face its ultimate test.
    In 1907, just as Firestone was experiencing tremendous growth,
    the Knickerbocker Trust Company in New York suddenly failed,
    triggering a financial panic that spread like wildfire.
    Harvey was in New York when the crisis erupted.
    He immediately telephoned the factory to halt all operations until he could assess the situation.
    The financial world transformed overnight as money vanished all at once and clearing house certificates had to take the place of currency.
    When he approached his bank for additional credit against his established $60,000 line,
    they not only refused, but they demanded he reduce his $20,000 note by at least $5,000 when it came due in November.
    At that moment, with the entire financial system seizing up, most companies either froze in panic or desperately sought concessions.
    Harvey took a different approach.
    When a carload of rubber arrived in Akron with payment due, he simply told the truth to his supplier.
    He couldn’t pay immediately.
    The response revealed how universal the crisis was.
    “Unload it and use it and pay for it when you can.
    We’re all in the same boat.”
    Then came the defining moment.
    When his bank note came due, Firestone didn’t just reduce it as requested.
    He paid it in full and immediately closed his account.
    It was a bold statement of independence from a bank that had shown little faith during difficult times.
    Firestone understood a key lesson.
    A good partner reveals themselves more in the bad times than the good times.
    The panic subsided almost as quickly as it erupted.
    And as Harvey noted with characteristic understatement, it left us in better condition than we ever were.
    By 1910, sales had soared to $5 million, with profits exceeding $1.3 million.
    What’s instructive here is how Firestone positioned himself before the crisis struck.
    He wasn’t predicting how the future would play out.
    He was just positioning for multiple possible futures.
    While others scrambled for survival during the panic, Harvey had maintained sufficient reserves to not only weather the storm, but capitalize on it.
    His father’s lesson about keeping a surplus proved crucial once again.
    Positioning is leverage.
    When everyone else is desperate, the person with options holds all the power.
    John D. Rockefeller said, “The best feed during the depressions.”
    By 1910, Firestone Tire Company had exploded from 12 employees to 1,000 in just eight years.
    This growth created a management challenge that forced Harvey to confront a fundamental question:
    How could he maintain control without becoming a bottleneck?
    The business, he wrote, was already too large for me to look after alone.
    And yet, I did not believe, and I never have believed in what’s called delegation, he reflected.
    His leadership philosophy was refreshingly direct.
    If anything in the business is wrong, the fault is squarely with management.
    The fault is mine.
    That is my conception of business.
    This is the OG founder’s mode.
    Harvey’s management style remained stubbornly focused on simplicity.
    He tackled one task at a time and avoided hasty decisions.
    Rather than writing memos, he called people directly or spoke to them by phone, noting that
    the writing of letters can be a great time waster.
    One can only imagine what he’d say about today’s email culture.
    Even his approach to financial planning resisted unnecessary complexity.
    While maintaining an official 12-month budget for the board, he recognized its limitations.
    If it were possible to plan for a year ahead, then there would be no need for judgment or management.
    Any question that came up could be settled by referring to the plan.
    Instead, he operated on a four-month cycle that aligned with rubber purchasing periods.
    This skepticism towards rigid planning reflected his deeper desire to separate fact from fiction.
    I want to know when I am guessing and when I’m dealing with facts.
    But Harvey’s most transformative contribution came from ruthlessly applying two deceptively simple questions to every operation.
    Is it necessary?
    And can it be simplified?
    These questions revealed that many established practices were merely traditions masquerading as requirements.
    Consider the industry-wide belief that rubber required lengthy aging in warehouses before use.
    When Harvey questioned this expensive and time-consuming practice, no one could explain why it was necessary.
    He suggested bypassing it as an experiment.
    The results, the unaged tires, performed just as well, saving the company millions of dollars.
    Someone back in the past must have laid down the rule that rubber had to age, he observed, and everyone else had followed it, without question.
    This relentless questioning transformed operations throughout the company.
    Manufacturing turnover dropped from 60 to 15 days.
    Defects plummeted while output increased, all while using less factory space.
    As the company expanded nationally, Harvey initially appointed independent distributors with exclusive territories.
    But by 1913, he realized many distributors lacked his and Ford’s vision for the automotive future.
    Therefore, he slashed the network and established company-owned branches to directly control both product and service.
    The growth eventually led to what seemed like an inevitable milestone: the National Sales Convention.
    “At the time of our first convention,” he wrote, “we could not afford to spend that money, but also we thought we could not afford not to have a convention, else our men in the field might think we were not worth working for.”
    The first modest gathering of 20 people proved genuinely valuable.
    Distributors witnessed tire manufacturing firsthand and met the leadership team.
    But success bred excess.
    One successful convention spawned specialized events for every type of employee, with elaborate productions, photographers, fancy booklets, and what Harvey called “manufactured enthusiasm.”
    This organizational bloat reached its absurd peak with Milestones, a legitimate general interest magazine featuring famous writers and expensive cover art.
    Though it cost 20 cents per copy to produce, dealers bought it for 5 cents, and circulation reached 1 million copies.
    As Harley dryly noted, “As advertising, it was worth to us exactly nothing.”
    The wake-up call came when Harvey discovered salespeople boasting about selling marketing materials rather than tires.
    Upon learning, a whole department existed solely to bill advertising materials.
    He asked the crucial question, “Are we in the business of selling tires, or are we publishers and sellers of advertising?”
    He answered by immediately killing both the magazine and the entire advertising billing department, refocusing the sales team on the core mission selling tires.
    What’s instructive here is how growth naturally creates complexity that quietly erodes focus and takes on a life of its own.
    Even with a leader as vigilant as Harvey, organizational bloat crept in convention upon convention, departments upon departments, costs upon costs, all seemingly reasonable in isolation but collectively diverting resources from the core business.
    Nobody can maintain the focus of a company like its CEO, especially the founder.
    The remedy wasn’t more sophisticated systems or additional oversight, but rather returning to the foundational questions, “Is it necessary? Can it be simplified?”
    These questions cut through the organizational inertia that transformed successful companies into bureaucratic zombies.
    The greatest advantage often comes from not working harder within complexity, but from the clarity to recognize and eliminate it.
    Remember, simplicity scales, fancy fails.
    As World War I approached, the Firestone Tire Company was expanding rapidly.
    Their factories nearly tripled in size within five years, including a facility dedicated exclusively to producing a single tire size, an early application of Harvey’s simplification philosophy that mirrored Ford’s own manufacturing focus.
    When America entered World War I in 1917, production priorities shifted dramatically.
    Nearly all output diverted to government contracts, manufacturing tires for military vehicles and trucks.
    But this wartime pressure revealed an opportunity that would transform American transportation forever.
    Before the war, Harvey wrote, “Comparatively few automobiles were used for business and the truck had not established itself as an economical form of transportation.
    Long hauls by trucks were unknown, excepting as stunts.
    The war changed all that.
    The war was fought with trucks.”
    While most saw only wartime disruption, Harvey spotted a solution to a critical infrastructure problem.
    America’s railroads had become hopelessly bottlenecked with military shipments threatening to strangle the domestic economy.
    In 1918, with the railroads clogged with government freight, I started the ship-by-truck movement, Harvey explained.
    His insight was simple but revolutionary.
    Trucks could complement rail service perfectly.
    Railroads excelled at moving large volumes over long distances, but trucks offered superior flexibility for shorter hauls, where loading, unloading, and switching rail cars wasted precious time.
    Picture America’s transportation system in 1918, a nation built around railroads suddenly found its arteries clogged during wartime.
    The economy needed an alternative and Harvey provided it through a campaign that was both visionary and pragmatic.
    Firestone trucks emblazoned with ship-by-truck Firestone banners toured the country as moving billboards.
    Harvey authored influential articles declaring “ship-by-truck” as the traffic motto of today and the future.
    He established ship-by-truck clubs among freight operators nationwide and created early freight brokerages that connected shippers with truck owners looking for loads.
    The timing couldn’t have been more perfect.
    Henry Ford had just introduced the Model TT in 1917, America’s first mass-produced one-ton truck.
    As Harvey drummed up demand for trucking services, Ford supplied affordable vehicles, many riding on Firestone tires.
    Their complementary visions created a multiplier effect that transformed American logistics.
    Registered trucks in the United States soared from 215,000 in 1916 to over 1 million by 1920.
    What’s instructive is how Harvey consistently positioned himself at the intersection of major trends.
    Rather than just selling tires, he created entire ecosystems that expanded his market.
    The ship-by-truck movement wasn’t merely clever marketing.
    It was infrastructure development that benefited both the nation and Firestone’s bottom line.
    By catching the right wave of transportation evolution, Harvey transformed his company from a mere supplier into an essential catalyst for America’s economic modernization.
    Then came the boom, the biggest boom the country has ever known, Firestone recalled.
    Although keep in mind these words were written in the mid-1920s.
    During 1919, we produced more than 4 million tires and made a profit of more than $9 million.
    We could not keep up with demand.
    The railroads remained congested and dealers were willing to pay premiums simply to secure deliveries.
    Prices did not matter, he noted, delivery was the thing.
    Success masked a dangerous delusion.
    Firestone’s Akron headquarters sprouted an elaborate hierarchy: East, West, and South divisions, each with their own managers, sub-managers, and accounting departments.
    This complexity multiplied at every branch, as each location developed many empires of specialized assistants.
    The sales force ballooned to a thousand people while paperwork multiplied even faster.
    Years later, Harvey was refreshingly honest about this period.
    I do not know where this organization bug came from.
    But like the flu, it hit nearly everyone in the country.
    I am free to confess what it did to us, for it is over with and we are immune.
    Here’s the dangerous part.
    All this organizational bloat seemed to be working.
    Sales kept growing.
    Therefore, everyone assumed their elaborate systems were brilliant and necessary.
    Harvey later realized they would have shown as startling an increase had we abolished our whole sales force, closed all our branches and dealers,
    and just sent out our tires and freight cars to be thrown off on sidings and taken away by clamoring buyers.
    They were succeeding despite their organization, not because of it.
    The post-war boom had papered over fundamental inefficiencies that would soon be brutally exposed.
    The prosperity of 1919 bred dangerous complacency.
    As Harvey observed, in 1919 to 1920, the presidents and other high officers of companies began to get the idea that they needed rest and recreation and plenty of it.
    An executive felt embarrassed if discovered within 1,000 miles of his job, for of course a good executive always delegated his duties.
    Harvey had rented a house in England for summer 1920, but something was nagging at him.
    Despite record profits and insatiable demand, he sensed the boom couldn’t last.
    In May, at business’s peak, he gathered 800 foremen at his family farm with a prescient warning, “Be prepared to slow down.”
    Then he sailed for Europe anyway.
    By this time, Firestone had accumulated massive financial exposure.
    $35 million in borrowed money and unprecedented long-term contracts for raw materials.
    The word had gone around in the tire industry that the man who could get fabric would get the business, Harvey explained.
    We had never made long contracts ahead for fabric.
    But that year, we made several three-year contracts.
    And of course, at high prices.
    Everything was at high prices.
    Sales held strong through June, but July brought the first cracks.
    Inventory began accumulating while Harvey received increasingly urgent cables from Europe.
    Sales were slowing, factories ran at full capacity, contracted materials kept arriving, and cash was evaporating.
    Initially, Harvey stayed put, reasoning, it would be a good thing to have a little vacation before confronting the inevitable crisis.
    But a final desperate cable forced his hand.
    Sales had stopped completely.
    Borrowing capacity was exhausted, and bills were coming due with no means to pay them.
    Harvey cut short his vacation and took the next steamer home.
    Company officers met him at the dock with what he described as doleful faces.
    Over lunch, they painted a grim picture.
    $43 million in debt.
    No willing banks.
    Factories producing tires nobody wanted.
    And contracted materials arriving they couldn’t pay for.
    The executives saw no way forward.
    It was over.
    Or so they thought.
    Arriving in Akron on Friday morning, Harvey surveyed the crisis and made a characteristic decision.
    I will not tackle this job until Monday.
    He retreated to his family homestead for solitary reflection.
    By Saturday, his mind was clear.
    He summoned the assistant sales manager to arrange Monday meetings with key sales personnel.
    Their reports were unanimous.
    There is no business.
    The dealers are not only stocked, but also demoralized and will not buy.
    Without hesitation, Harvey took direct control, telling the sales manager to take a vacation
    while he personally ran the department.
    Here’s where most executives would have panicked.
    But Harvey found the crisis energizing.
    The situation did not frighten me.
    It put new life into me.
    I saw the opportunity to do more business than we had ever done.
    His diagnosis was simple.
    The public still needed tires, but they are not going to buy at present prices.
    His solution shocked everyone.
    Slash prices by 25% across the board.
    We are in the business of making and selling tires.
    The factory here is piled to the roof with unsold tires.
    All the branches are full of tires.
    And so are all your dealers.
    Our tires have to be turned into cash.
    His sales team couldn’t comprehend such drastic action.
    Some argued for modest 10 to 15% reductions.
    Harvey stood firm.
    Not revealing he’d actually considered cutting prices by 33 and one third percent.
    A small reduction would not give the smash we had to have.
    The big dramatic play.
    Those who couldn’t embrace the strategy had to be let out.
    This was no time for half-hearted work.
    Implementation matched the strategy’s boldness.
    Harvey personally addressed dealer meetings nationwide.
    The company bought full-page newspaper ads and hung enormous red banners proclaiming Firestone tires 25% discount on dealer shops across America.
    It was a fire sale for the first time in our history.
    We thrust aside all our dignity and customs.
    We plastered the country with our slogan.
    Competitors initially held their prices, giving Firestone crucial market exclusivity.
    Our competitors fought us for about a month, as I thought they would.
    Then they trailed after us with cuts.
    But I only needed that month’s start.
    The gamble worked brilliantly.
    In September and October 1920 alone, Firestone sold $18 million worth of tires
    and reduced debt from nearly $44 million to just over $31 million.
    What’s instructive here is Harvey’s counterintuitive response to the crisis.
    While his executives saw only disaster, he recognized opportunity disguised as catastrophe.
    Most leaders facing such circumstances either freeze in analysis paralysis or make incremental adjustments that preserve dignity but fail to match the problem’s magnitude.
    Harvey chose the third path.
    Dramatic action that seemed reckless but was actually precisely calibrated to market conditions.
    His willingness to thrust aside dignity and act decisively when competitors hesitated created the opening he needed.
    Sometimes the best strategy isn’t the most sophisticated one.
    It’s the one bold enough to cut through the noise and force immediate market response.
    The other thing that’s interesting here to me is that he got rid of people who were only half-hearted.
    He put the sales manager on vacation and took his job, removed salespeople that wouldn’t get on board.
    As he said, it was no time for half-hearted work.
    The bold price cuts were just the beginning.
    The crisis forced Harvey to confront the organizational bloat that had metastasized during the boom years and he responded with surgical precision.
    The advertising department slashed from 105 people to seven.
    The elaborate divisional structure completely scrapped with all branches now reporting directly to Harvey.
    Each location was stripped to its essentials, just a sales manager and office manager with the sales manager expected to actively sell rather than supervise.
    For every position, Harvey asked one brutal question: Can we get along without this job?
    By 1921, the sales force had been cut by 75%.
    Those who remained faced intense pressure and lower salaries.
    He was deliberately filtering for people who could stand the gaffe and these were the only men we wanted.
    Manufacturing had spawned similar excesses.
    Vice presidents, department heads, and multiple management layers generating an avalanche of memos, reports, and meetings.
    Harvey later recalled with dark humor:
    We wrote so many notes that the vice presidents and their assistants and their assistants often used to get a day or two behind in the reading of them.
    And we had to devise a bright red interoffice telegram for really urgent business.
    The crisis prompted radical simplification.
    The charts went out the window.
    We abolished offices and departments.
    We called for all the forms that were in use.
    The statistics department shrank from 35 people to three while maintaining access to essential information.
    The office force dropped from 1,000 to 800.
    Recovery proved slow and painful.
    Profits for 1921 totaled less than $1 million.
    But through relentless discipline, Harvey achieved what had seemed impossible.
    By October 31st, 1924, the company did not owe a dollar to any bank.
    Reflecting on this period, Harvey distilled the experience into enduring wisdom.
    By hammering on economies, by pressing sales and qualities, and by never fooling ourselves as to where we stood, we had wiped out an indebtedness which at one time was thought to be crushing.
    What’s instructive here is how the crisis revealed what was actually necessary versus what merely felt important during prosperous times.
    When survival was at stake, Harvey discovered that most of the organizational complexity they’d built was theater.
    Impressive looking, but fundamentally useless.
    As I like to say, simple scales and fancy fails.
    Elaborate systems often collapse under pressure, while simple, focused operations prove anti-fragile.
    Sometimes you need a crisis to show you what really matters.
    Success sows the seeds of its own destruction.
    Harvey’s autobiography ends in the mid-1920s with a fascinating reflection on why he kept working despite having already made his fortune.
    There is a notion, he wrote, that if a man has established a business and accumulated a certain competence and then keeps on working, it is only because he is greedy and wants more and more money and that eventually he just becomes a slave, a slave to money.
    Harvey completely rejected this view after 25 years of building his company, he had no plans to stop.
    He didn’t care whether he was the slave or the master of that business because, as he wrote, the job is worth doing as either master or servant.
    This mindset explains why Harvey handled the 1920 crisis so differently from his panicked executives.
    The bold 25% price cut reflected his genuine belief that challenges make businesses worthwhile.
    As he put it, the very worries and insistent demands on one’s mentality and physique are a joy for their tests and challenges.
    This reminds me of Brad Jacobs and his mentor and the conversation they had around problems.
    Business is just a series of problems.
    They’re just opportunities.
    You better get used to it.
    For Harvey, business wasn’t a game to be won or a science to be mastered.
    It was something more fundamental.
    You couldn’t build it and walk away because no business will run itself.
    That’s why he demolished elaborate management structures the moment they stopped serving their purpose.
    Money mattered, certainly, but his actions revealed deeper motivations.
    When he personally took over sales during the crisis, slash prices, and cut organizational fat, he was fighting for something beyond wealth.
    He was fighting for the work itself.
    He maintained a practical view of profits, deliberately causing a business to operate without profits through some foggy concept of benevolence is only another way of destroying the service of that business.
    This clear-eyed approach helped him navigate both boom and bust with equal effectiveness.
    What’s instructive here is Harvey’s understanding that meaningful work provides its own compensation beyond money.
    People need to be a part of something larger than themselves and find genuine satisfaction in solving problems, building systems, and creating value.
    It turns out these remain engaging regardless of financial position.
    The best founders aren’t motivated by money, but rather the reward of building something that matters with the people they love.
    Beyond balance sheets and profit margins, Harvey was driven by something deeper, business as a school of experience that provided unparalleled opportunities for growth.
    What truly satisfied him was the greatest pleasure is in doing something to help others to help themselves, not through charity, but through genuine opportunities for independence.
    His ship-by-truck movement exemplified this philosophy, opening doors for countless entrepreneurs in trucking and transportation.
    Even during brutal cost-cutting, he was fighting to save the company that provided thousands of livelihoods.
    I like people, Harvey wrote.
    And business brings one in close contact with a never-ending stream of people.
    This human connection shaped his leadership style, personally hitting the road during crisis instead of hiding beneath memos and management layers.
    What ultimately sustained Harvey was the supreme satisfaction of accomplishment, of planning to do something and carrying through those plans against all obstacles to a final accomplishment.
    The obstacles had been formidable, launching against established competitors, pivoting from carriage to automobile to tires, pioneering truck tires, surviving financial booms and collapses, and building an international enterprise.
    Harvey stepped down as president in 1932, turning over operations to his son while remaining chairman until his death in 1938.
    By then, the company he’d started with 12 employees commanded 25% of the entire U.S. tire market, with sales exceeding 156 million.
    Beyond business success, Harvey became legendary for his friendships with Henry Ford and Thomas Edison.
    Their famous vagabonds camping trips captured America’s imagination, symbolizing the nation’s transformation into the automobile age.
    After Harvey’s death, Firestone remained in family hands for decades, playing a crucial role during World War II and expanding globally through the post-war boom.
    Though Bridgestone acquired the company in 1988, the Firestone brand endures today.
    Harvey’s core business philosophy remains strikingly relevant.
    Capital isn’t that important in business.
    Experience isn’t that important.
    You can get both.
    What is important is ideas.
    I would add, and determination, and persistence, and all the things that we talk about on the Outliers series.
    His emphasis on innovation over resources, people over systems, and integrity as the keystone of business continues resonating today.
    What’s most instructive about Harvey’s legacy isn’t the size of the empire he built, but how he built it.
    Through relentless questioning of assumptions, maintaining financial discipline during both boom and bust, and never losing sight of the human element in business.
    He proved that sustainable success comes from not following industry conventions, but from having the courage to find better ways when established paths don’t serve your vision.
    His story reminds us all that the most powerful competitive advantage often lies not in what you know, but in your willingness to challenge what everyone else assumes to be true.
    Okay, let’s dive into the reflections and afterthoughts, and I have a few comments before we get to the lessons that we can take away from Harvey.
    Well, what an amazing entrepreneur he was.
    What a force.
    I first came across the book, Men in Rubber, I think it was about 10 years ago, and I picked it up just randomly at a bookstore, and I was so surprised by the amount of wisdom in this book that I started buying copies for all my friends.
    And at one point, I think I probably owned about five or 10% of the inventory in this book.
    You could only get it used, and it was becoming increasingly hard to find.
    So I wanted to make this book easier for everyone to get their hands on, so we republished it.
    You can go on Amazon now and look up Men in Rubber, Harvey Firestone, and you can get a copy in hardcover, in softcover, Audible, and in Kindle.
    And we wanted that because we just wanted everybody in the world to have access to this information, so I hope you enjoy the book.
    So there’s an interesting anecdote in the book about Henry Ford that I think is worth highlighting, and I’m going to read you a direct excerpt here.
    It’s commonly imagined that Mr. Ford arrives at his decisions quickly.
    Nothing could be farther from the fact he reaches his decisions slowly and alone.
    He does not jump at anything, and so when the time comes for execution, everything moves with marvelous rapidity because everything has been previously thought through and planned.
    He has had the time to do this thinking and planning because he has used his time himself instead of permitting others to use it for him.
    And he is certain that plans will be executed for him because he knows how to let men go when they grow too rich and lazy to execute.
    There’s a lot of wisdom in that, and the two most profound sort of lessons in that excerpt are one, thinking through things slowly and taking control of your time.
    And the second is a bit ruthless but obvious too, which is you need to learn to let people go when they, and quote, unquote, become too rich and lazy to execute.
    And I think that’s really interesting, especially in the time that we’re in today of unparalleled AI transition.
    And a lot of people are going to struggle because the easy parts of your job no longer exist.
    Another excerpt from the book that I wanted to work in, and I think highlights a valuable lesson, but I couldn’t find a really good way to do it, was, I’m going to read you the excerpt.
    “Quick decisions that have not behind them a long train of thought are exceedingly dangerous.
    Personally, I do not want to have around me the kind of man who can give me an instant decision on anything that I may bring up.
    For if he has not had the opportunity to give the question serious thought, then he is only guessing, and I can do my own guessing.”
    And that excerpt, a couple things I want to point out there.
    One, I like that.
    He wanted to be surrounded by people who have thought.
    The second thing I want to say is the book was published in 1926, so keep that in mind with some of these excerpts.
    The language about men, you know, there’s some other a little bit scandalous language in the book itself, but for the time, it was sort of in line.
    And I didn’t make any effort to edit any of that when we republished it.
    The other thing I want to point out just before we get to the lessons is that parts of this episode are entirely read by AI, an AI version of me.
    And I’m playing around with AI a lot.
    And I’m so curious.
    It allows me to do things that I can’t otherwise do.
    And I’m wondering, you know, what you think of that.
    If you actually identified the paragraphs or sections that are AI based, send me an email.
    And hopefully you like it.
    It allows me to do more and scale better.
    And I’m going to increasingly play around with it.
    And yeah.
    Okay.
    Let’s dive into the lessons here.
    So Harvey was a force.
    This book is packed with wisdom.
    I got 14 lessons as I was rereading this book and doing this episode.
    So the first is a taste for salt water.
    Most people quit when things get uncomfortable.
    Harvey thrived on challenges.
    When faced with a $43 million debt crisis in 1920, he said the situation did not frighten me.
    It put new life into me.
    Well, as executives panicked, he saw opportunity.
    Excellent isn’t about avoiding difficulty.
    It’s about developing a perverse appreciation for discomfort that reveals who you really are.
    Two, obsess over inputs.
    Harvey’s father taught him that a fine crop one year was more or less a fortunate accident.
    Instead of chasing results, Harvey focused on controlling what he could.
    Maintaining surplus, inventory, questioning every process and building systematic advantages.
    Results are lagging indicators.
    The only thing you can control is the process.
    Three, high agency.
    When industry cartels repeatedly excluded Harvey from tire associations and rim companies,
    he didn’t just accept defeat.
    He created superior alternatives.
    There is always a better way of doing everything than the way which is standard at the moment.
    It is a good thing for a man to be pushed into finding that better way.
    High agency means treating every no as research, not rejection.
    Create what you’re denied access to.
    Four, the courage to close doors.
    Harvey could have stayed in the profitable solid tire business but recognized that solid tires would soon be a minor product long before that was conventional wisdom.
    Despite the internal resistance that was so strong that he had to buy out a major shareholder.
    He pivoted to the tires we know today.
    Sometimes you have to kill good options to pursue great ones.
    Bias toward action.
    When the 1920 crisis hit, Harvey didn’t form committees or hire consultants.
    He took the next steamer home, personally ran sales, and implemented a 25% cut within days.
    A small reduction would not give the smash we had to have the big dramatic play.
    Speed beats perfection when conditions demand decisive action.
    Six, find the lever.
    Rather than competing directly with established tire companies, Harvey solved the industry’s inventory nightmare with roll tires.
    The dealers could cut to size.
    This innovation took us completely out of competition by eliminating the constraint that everyone else just accepted as permanent.
    Seven, out think, don’t just out work.
    Harvey’s two questions, is it necessary and can it be simplified, transformed operations throughout Firestone.
    When he questioned the industry belief that rubber needed aging, nobody could explain why.
    Eliminating this unnecessary step saved millions.
    The greatest advantage often comes not from working harder within complexity, but finding the clarity to recognize and eliminating it.
    Eight, bounce, don’t break.
    Every rejection became Harvey’s competitive advantage.
    Excluded from the clincher tire association, he developed straight sided tires.
    Refused by the rim company, he started his own manufacturing.
    Each setback revealed opportunities invisible to insiders.
    Nine, positioning is leverage.
    Harvey’s father taught him that a surplus was the greatest aid to business judgment and the key to being master of your own circumstances.
    Harvey applied this principle during the 1907 panic, maintaining reserves and a margin of safety.
    While his competitors scrambled to save their businesses, Harvey aggressively expanded.
    Ten, win by not losing.
    Harvey avoided the too obvious responses to competitive pressure, cutting quality or cutting prices without operational changes.
    Instead, he innovated his way out of the trap.
    Success often comes not from brilliance, but from disciplined avoidance of stupidity.
    As I like to say, avoiding stupidity is easier than seeking brilliance.
    11, always be unforced.
    Harvey refused to make decisions from weakness.
    During the 1920s crisis, he told his team, “I will not tackle this job until Monday.”
    And retreated to think clearly.
    Even under extreme pressure, he acted from choice, not from panic.
    Only move when you choose to.
    12, never delegate core responsibilities.
    While Firestone grew his company to thousands of employees, he maintained personal control over critical functions.
    During crisis, he didn’t rely on managers, but took direct command of sales.
    His philosophy was clear.
    If anything in the business is wrong, the fault is squarely with management.
    The fault is mind.
    True leadership means accepting ultimate responsibility.
    13, simple scales, fancy fails.
    During the boom, Firestone developed elaborate hierarchies, specialized conventions, and even published a million circulation magazine.
    The crisis revealed this was all theater.
    Harvey’s two questions.
    Is it necessary?
    And can it be simplified?
    Cut through organizational bloat that transforms successful companies into bureaucratic zombies.
    And finally, 14, catch the right wave.
    Harvey positioned himself at the intersection of major trends.
    The shift to automobiles.
    The rise of trucking.
    The need for transportation alternatives during World War I.
    Rather than predicting the future, he positioned himself for multiple possible futures and rode the waves that materialized.
    I hope you learned as much as I did through listening to this episode.
    This man was a fascinating guy.
    And I appreciate you listening to the outlier series.
    Thanks for listening and learning with us.
    And be sure to sign up for my free weekly newsletter at fs.blog/newsletter.
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    Until next time.

    Most people fear a $43 million debt. Harvey Firestone called it “invigorating.” When his company faced collapse in 1920 and his executives panicked, Firestone seized control. He fired the sales manager, slashed prices 25%, and personally ran the sales department. It worked—not because he managed through fear, but through clarity.  

    Firestone was the founder of the Firestone Tire and Rubber Company—an outsider who built one of America’s iconic industrial empires by doing the opposite of what everyone else did. This episode isn’t about tires. It’s about how Firestone quietly built one of the great businesses of the 20th century by asking two deceptively simple questions: Is it necessary? Can it be simplified? 

    This episode breaks down the invisible principles behind Firestone’s success: positioning over talent, inputs over outcomes, discipline over drama. If you lead a team or simply want to lead yourself better, this story is a masterclass in building enduring advantages.  

    This episode is for informational purposes only and is based on Men and Rubber: The Story of Business by Harvey Firestone. 

    Check out highlights from these books in our repository, and find key lessons from Firestone here—⁠⁠⁠https://fs.blog/knowledge-project-podcast/outliers-harvey-firestone/

    (03:00) PART 1: The Best Businessman I Ever Knew
    (06:50) The Vanilla Extract Lesson
    (10:23) When Premium Doesn’t Matter

    (12:05) PART 2: Right Beneath the Wheels
    (14:21) The Back of an Envelope
    (16:36) If Two of Us Stay, Neither Makes Money
    (18:39) Betting on what Doesn’t Change
    (20:55) The Accidental Breakfast
    (24:53) The Third Option

    (28:19) PART 3: The Innovators Dilemma: Pneumatic Tires
    (32:24) The Ford Connection: A Partnership of Outsiders
    (35:23) Navigating the Crisis
    (37:17) The Underdog’s Advantage
    (39:24) The Million Dollar Milestone
    (43:10) Weathering the Panic of 1907
    (45:55) The Simplicity Imperative

    (51:25) PART 4: The Ship-by-Truck Revolution
    (54:31) The Boom That Hid Everything
    (56:11) The 25% Solution
    (01:01:42) Cutting to the Bone

    (01:04:25) PART 5: Why He Never Stopped
    (01:06:54) The Human Element
    (01:08:09) The Legacy

    (01:10:05) Reflections, afterthoughts, and lessons

    Upgrade—If you want to hear my thoughts and reflections at the end of all episodes, join our membership: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠fs.blog/membership⁠⁠⁠⁠⁠ and get your own private feed.

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  • #230 Bill Belichick: 8x Super Bowl Champion on Winning, Leadership, and Discipline

    AI transcript
    The big thing about preparation and success is the price has to be paid in advance.
    You have to put in the work before you get any results.
    If you can eliminate all those things, then you can actually make progress on being a better
    football player and winning games. Was there ever a time where you kept a player on the roster who
    might not have made it from a talent level, but sheer work ethic, sort of kept them around not
    only because they were improving, but because they made everybody else prepare harder?
    Yeah, absolutely. Let’s start with Tom Brady.
    Welcome to The Knowledge Project. I’m your host, Shane Parrish. In a world where knowledge is power,
    this podcast is your toolkit for mastering the best of what other people have already figured out.
    Today’s guest is Bill Belichick. Coach Belichick is an eight-time Super Bowl champion who’s widely
    considered the greatest football coach of all time. He is the only head coach in NFL history to win
    six Super Bowls, all with the New England Patriots. He’s currently the head coach of the
    University of North Carolina football team, and this conversation needs no introduction. This is
    amazing. I’m so happy to have Coach Belichick on. It’s time to listen and learn.
    When I thought about where to start, I think the place that came to mind was the sign you had in the Patriots facility. And as every employee walked in, they read these four things. Do your job, work hard, be attentive, and put the team first. Right. Why did you want everybody in the organization to read that on the way into work?
    Well, that’s really our game plan every day. Didn’t matter whether it was a day in the offseason,
    a day in training camp, or the day before the AFC championship game, or the day of the AFC championship game.
    Those things never really changed.
    That we all had a job to do, whatever that happened to be, and every job was important.
    Every member of the team was important that they do their job well. And being attentive and working hard is really the formula to getting better. That’s how you improve. You figure out what it is you need to do better, and that’s by being attentive and listening to people who can instruct you or help you get better.
    And then putting the work in to make that positive change. Then always thinking team first. That’s always the most important thing. What do we need to do to win? And what can I do to contribute to the winning cause?
    And so, regardless of what the task was, whether it was a coach, a player, a staff member, really any employee, it kind of fit for all of them.
    So, and again, because we played and practiced in the same facility, as I said, it didn’t matter whether it was the AFC championship game or whether it was a day in March or a day in June.
    It was the same every day. And so, we strove for that consistency.
    What does it mean to work hard? There was a term in your book that stuck out to me called eyewash.
    Working hard, sometimes people can come in and put in their time and check the box.
    You know, a player can come in, put on his gear, go out, run around, break a sweat, take a shower and say, well, I, you know, I practiced today.
    Well, but if you don’t really accomplish anything, then that really is not not working hard.
    It’s actually we refer to it as a day off. No days off actually means, you know, you come to work and you go to work.
    You don’t come to work, check the box, kill the time and then leave.
    You need to be productive while you’re there.
    So, you know, that is really just a way of saying, yes, we’re going to put in the work, but we need to accomplish the things that we set out to accomplish for that for that day and then build on those tomorrow.
    Was there ever a time where you kept a player on the roster who might not have made it from a talent level, but sheer work ethic sort of kept them around?
    Not only because they were improving, but because they made everybody else prepare harder.
    Yeah, absolutely. Let’s start with Tom Brady. Tom Brady was a fourth string quarterback his rookie year.
    He had three players ahead of him and and, you know, he just he just worked his way up.
    No team keeps four quarterbacks at any level, high school, college, the NFL.
    It’s it’s really almost unheard of. And he he he would be exhibit a Steve Neal, you know, a guy who never played high school football, never played college football, was a was a wrestler in college and then became a, you know, an offensive guard, started for us for seven years.
    Julian Edelman, who played quarterback in college and and then became a receiver and upon returner to positions that he never played in college in the NFL and became very good at him.
    So, yeah, absolutely. That work ethic and that day to day improvement, when you just stack those days together on top of each other for a sustained period of time on, you know, it levels out the talent.
    Sure, talent’s important, but guys with a great work ethic and and who really are committed to improving can catch a lot of players with more talent who don’t work as hard.
    Is there an example of a player who just had outrageous talent, but didn’t work hard at all that sort of ended their career a lot earlier or they never made it?
    You know, they got to the the big league and then they they sort of just faded away.
    Yeah, sure. I mean, there are lots of them. Unfortunately, you know, I referred to one of them in the book that, you know, talked about coming in and being a running back and, you know, being a combination of, you know, two great running backs that were in the Hall of Fame.
    I think he had barely 100 yards in his entire career. So it’s, you know, talent’s one thing, but the application of turning that talent into being a productive football player and a great teammate is is it’s hard to do it.
    It’s not that easy and talent get you through high school. It might get you through college, but once you get to the NFL level, that talent, that field levels out and there are only a few players that have such elite talent that they they don’t have to work very hard and can stay better than a lot of their competitors.
    For the other 95 percent, if they don’t stay on it, they’re either going to get replaced or in a lot of cases, players that don’t trade hard will get injured and their careers will get cut short that way because they don’t, you know, commit to a good training regimen.
    Are competitive people competitive everywhere? I think of like you, Michael Jordan, Tom Brady, and you’re always competitive in every everything you’re doing. And I’m wondering if that’s a trait of hyper competitive people or just the ones that reach the pinnacle of success.
    No, I think it’s, I think it transcends everything. It’s unbelievable how competitive guys are, uh, literally over nothing. I mean, it could be for a t-shirt. Um, you know, uh, not having to run a couple sprints or, uh, an hour later on curfew, uh, they’ll compete in it. And honestly, it isn’t even necessarily for the prize at the end.
    It’s just to be able to say, you know, I won, I competed and, you know, I, I beat you today. Or, um, if they don’t win just the, the love of the competition, the, the love of the prize, uh, and, and fighting for that, the, the pride to say, Hey, you know, um, we would have a lot of kind of team competitive events. Like, um, for example, a trivia, you know, or know your teammate, um, and, you know, ask questions about different teammates of, um, you know, maybe what position they played in high school, or maybe,
    another sport they play, or, you know, some other random fact about teammates and, and play offense against defense or the wide receivers against the DBs or the O-line against the D-line and the rookies against the veterans and, you know, create different competitions and, uh, whether it was free throw shooting or cornhole or trivia, uh, or, you know, all different things like that. Um, guys that like to compete, love to compete. And, and, um, it was a lot of fun actually to, to, to move some
    of the targets around for the competition. Um, you know, some guys are good at free throws. Some guys are good at trivia. Some guys are good, uh, you know, uh, closest to the hole golf shots, you know, whatever it is. Um, but it’s just fun to see them compete. One of the best things we did, Shane, was we would have usually one of our rookie offensive and defensive linemen, uh, would compete against each other and to catch a punt. Right. And so you put a, a, you know, an offensive tackle and a defensive tackle back there. And, and, uh, you know, you go one at a time. And the punter
    would, would, would punt and, you know, we’d make sure that it was at least four seconds hang time. So, you know, the ball was up in the air and then, um, whichever, you know, whichever guy caught it first, um, then that group would win. And the other group would have to do extra sprints or, uh, the group that one would get out of bed check or, you know, whatever it was, but it was a good way of team building because all the players were rooting for their, their guy who had never caught a punt in his life probably. Right. You know, watching Vince Wilfork and Matt
    like back there catching punts uh you know trying to track the ball and catch it and and of course i
    made him punt you know so the returner had the sun in his eyes uh you know had to deal with that
    uh but you know to watch those guys do something they hadn’t done before for some type of a reward
    uh was uh you know it was a great team building exercise and and um they but they they do they
    love to compete competitors are the guys that really love to compete um you know are honestly
    the guys that get the most out of their talent you know because they just are are determined to work
    hard prepare and and go right to the very end they might not be as talented as somebody else
    but they they play and compete you know to the max you mentioned the last dance in your book what was
    your reaction to watching that i mean i thought it was awesome and you know jordan’s one of the
    greatest competitors in any sport ever and um you know just just you know his competitive spirit
    is you know up there with the guys that he played with like lawrence taylor at north carolina those
    guys they still compete all the time on the golf course so um i thought it was you know a great
    insight into it you know brady’s a tremendous competitor julian edelman brewski every time a
    brewski came back from stroke and and continue to play you know some of those guys rodney harris
    it’s just it’s it’s it’s at an elite level which it should be in the national football league but it’s
    just at an elite level i think one thing that surprised a lot of people when i talked to friends
    who maybe casually follow the sports um it was how much you know jordan’s teammates had maybe a not love
    relationship with him always and do you think that’s true you know i wasn’t around him enough to you
    know the comment about that but um i i think if you don’t really like to compete that a top competitor
    will kind of wear you down and it kind of um i don’t want to say resist to it but you know just
    to resist and compete at that level um so i i have seen that from time to time but the guys that really
    love to compete love to compete and they just join in there and compete with them one of the things you
    you said in the book is you you cannot win until you keep from losing which reminds me of inversion
    from charlie munger what what does that mean in a football context oh boy uh where we start
    um anything um anything that anything that prevents you from achieving your best um that you control
    so it’s not the opponent it’s it’s something that happens internally examples would be um you know
    guys getting uh suspended for uh performance enhancing drugs or guys that uh uh wouldn’t hydrate
    and would pull muscle you know pull hamstring pull a grind pull calf uh because they weren’t fully
    hydrated those aren’t that’s not buffalo that’s not the jets that that’s us that’s us and in the game
    um i’d say two of the biggest examples well there’s a lot of them but let’s start with penalties
    um pre-snap penalties so penalties that happened before the ball snapped those are our fault you can’t
    blame them on the other team false start illegal motion too many men on the field delay a game
    like all that that’s that’s our inefficiency that’s not our opponents and really for the most part post
    whistle penalties plays that happen after the whistle of blow has blown hitting the guy out of bounds
    taunting illegal celebration you know stuff like that where uh you just get carried away emotionally
    in the moment and and cost your team you know personal fouls rough in the pass or rough in the
    punter stuff like that that that really happens after the play is over those are examples of of beating
    yourself you know you can’t win until you keep from losing those plays aren’t because of what the
    opponent did those plays are because of either our lack of concentration communication discipline
    whatever happened to be and i’m not just putting it on the players i’ll put it on the coaches too
    you know that’s our responsibility um to eliminate those um and other things turnovers for example when
    when the offense turns the ball over uh and the defense doesn’t make a good play it’s just the
    offense fumbling a snap fumbling a hand off the ball goes off of receiver’s hands uh pops up in the air
    and the defense intercepts it uh plays like that that don’t have anything to do really with good defense
    um the offense just gives the ball away you know snap the ball over the guy’s head the quarterback’s head
    snap it over the punter’s head drop the snap um stuff like that just plays that are poorly executed
    by us so as you can see it’s a long list shane uh some of them are off the field and some of them you
    know some of them are on the field you know in college football would be you know being academically
    ineligible i mean that’s you know that’s not your opponent’s fault that’s you know that’s that’s a
    lack of commitment and uh you know doing the required academic work to be eligible to play so
    those would all be examples of you can’t win until you keep from roots and if you can eliminate all
    those things then you can actually make progress on being a better football player and and winning games
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    shopify.com slash knowledge project there used to be days i’d open my inbox and feel buried like
    i was digging through noise just to find the signal important messages got lost my focus slipped and i
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    you’re supporting our show too notion.com slash knowledge project i remember reading something a while ago but the
    difference between um being beaten and losing and it sounds like what you’re saying there is kind of
    hinting at that yeah absolutely uh you know we’ve always said more games are lost than one in the
    national football league and when i say lost i’m saying those type of things missed opportunities
    missed assignments um poor clock management just just fumbling the situation more than the other team
    um you know really really playing well to win a lot of times if you just
    kind of get out of the way and let the other team make a mistake they’ll make one and and you can
    capitalize on and take advantage now not all the time again you know as you go deeper into the season and
    play play play better teams and playoffs and things like that that happens less frequently but
    um in a lot of close games when you go back and really look at the way the game the outcome of the
    game was the team that lost really probably should have won or or had had many good chances to win
    and and just kind of messed it up and uh more than like i said the winning team going out there
    making all these spectacular plays so again the big thing is um you know number one keep from losing
    and number two make the plays you’re supposed to make i mean sure there’s some great plays out there but
    before we get to the great plays let’s just make the the plays that you know you’re supposed to make
    just the the regular ones the normal ones and that’s execution concentration uh and discipline to
    to do it all the time you tell your players to focus on the the drawer to help them focus on what
    matters what is the drawer and how does it help drawers a um was a saying that that we use to
    uh especially at the end of the year like as you get into the holidays thanksgiving christmas new
    years and then the playoffs um you know the end of the season’s in sight and wherever you are you know
    you’ve put in you know all the work back into the spring training camp you know 10 12 14 regular
    season games whatever it is and now you’re really coming you know coming down the home stretch and and
    the drawer was just a way of saying um unless it’s a a family or personal thing that’s really important
    um put it in a drawer dealing with it after the season you know you do you need to go to sign these
    cards at the mall do you need to um you know go look for a new electronic whatever it is
    can you put those things aside and just finish the season spend that time on preparation for our
    opponents spend that time on um you know rest recovery training so that you’re your absolute
    best when we really need you here in these last few stretch weeks and and as you know you know shane
    when you get to a certain point every it’s a one game season you know if you lose you’re done and if
    you win you get to play another week so when you get into that scenario put it off until next week and
    if you’re in it next week put it off until the week after that um but this is what we’ve worked all year
    for put those things in the drawer and then and then open the drawer when the season’s over now we would
    joke about it and you know guys would say hey coach you know my drawer is getting pretty full here
    um so you know what maybe you need a bigger drawer or maybe you need two drawers uh but the idea was to
    put those things um on the back burner and focus on on the very special opportunity that we had in front
    of us which was playoffs or championships one thing that seems to have evolved since you started coaching
    is that time becomes more fragmented now players have cell phones they have more distractions they’re you
    know i don’t have an hour to sit there and do a meeting i have all these competing things for my
    attention how how have cell phones changed the locker room culture and made coaching easier or harder
    or technology in that way well first of all we don’t have cell phones and apple watches and things like
    that in our meetings so that they’re they’re not part of the meetings but when the meetings are over
    you know a lot of times the guys race to see what you know messages and texts and so forth are there
    um you know and my thing on that has always been again other than you know family and very personal
    situations um you know the guys that are most important to to each of us are the guys in that
    locker room you know the guys that you um you know win and lose with and live and die with each day
    and that you count on them and they count on you so uh it was really very important for us to
    to focus on those relationships and i i tried to downplay the you know how many likes or thumbs up
    or whatever you get on different social platforms i don’t even know what those are um but what’s more
    important is what the guy next to you thinks about you and the respect that that you guys have for each
    other and the trust that you have in each other and and that’s something that you know in a you know
    on a football team you you just you earn every day um every day you come to work uh as a coach
    you know you earn the trust and respect of your players and and your other coaches by being prepared
    by showing that you’re there to help the team and you can help the team win and again it’s the same
    thing for every player and and when you earn that every day you build that trust and you build a
    cohesive team and when you don’t you know those are the players that again that other players don’t
    don’t trust as much is he going to run the right route is he going to be at the right depth is he
    going to block the right guy is he going to be in the right gap and and that causes uh when you don’t
    know what your teammate’s going to do that causes a lot of hesitation on your part and you’re kind of
    waiting to see what he’s going to do instead of knowing what he’s going to do and then you can
    aggressively do your job because you’re confident of the people beside you and um i learned a lot about
    that with the um especially with the navy seals those elite teams i mean uh blue angels to be
    another example you know those guys fly 18 inches apart and you know the amount of trust and
    preparation and teamwork that’s involved in something like that going you know 600 miles an hour or seven
    whatever it is um is is pretty amazing but you know the seals it’s the same thing like everybody’s got a
    job to do and and you learn your teammates so well that you can even in a dark room uh you know pick out
    his you know his silhouette or or something about him that identifies him and and you know each of
    you count on each other to do their jobs and accomplish the missions and um you know that’s
    obviously that’s at the highest level football we’re not talking about life and death here but
    we are talking about the championship level of performance of having that same type of trust and
    and um and belief and and confidence in your teammates so that you’re never questioning what
    they do and you can be more aggressive and in doing your job and there’s never that look over
    your shoulder of is he where he’s supposed to be you know if you know he is then then you can perform
    better so um those are kind of the you know the themes that we we try to instill there i remember
    talking to a navy seal once and he said you know when things get hard you’re doing it for the person next
    to you when you want to quit or when you want to give up or how much of that is in football too i think
    there’s definitely a carryover on that you’re you know you’re you’re playing for the team but you’re
    playing for the guy beside you too you know and and uh especially in a sport like football or in in a
    real battle situation like like the seals are involved in um you know you’re talking about potentially
    getting hurt or you know or or worse in a seal situation where you know that guy beside you like
    you have to count on him to to do his job to and you do yours for the same reason to protect each other
    one of your most famous press conferences you said snap face or something and i literally spit out my
    water when i heard you say that i was listening to the about social media you’re like snap face or whatever
    the hell it is like yeah well i’ve battled those social media platforms and uh and and now i’m
    actually on one so um you know college football is uh has kind of changed that a little bit i mean i’m not
    too active on it but i am on it but um but again look i don’t really have anything per se against social
    media it’s just you know prioritizing it and and as i said i think that in a football locker room
    the relationships between the players the team and the coaches are are paramount uh more so than
    people you’ve never met or seen or or heard of before what their opinions are and so i always
    you know try to encourage our players to um yeah not be too consumed with that but you know we’ll worry
    about the guy next to you that’s the one that matters the most how is technology changing the way
    that players prepare in the sense of you know the story that comes to mind is certain jaden daniels
    last year using vr to get more reps how walk me through how technology is changing and where it’s
    really impacting uh people who are willing to put in the work yeah that system that jaden daniels uh was
    referring to is one that he used at lsu and and then uh also used that with the commanders last year
    uh it’s actually one that we have as well it’s it’s uh one that’s very hard to get it’s only
    available very selectively and and so i’m pretty familiar with it um and it’s an incredible system
    it enables you to see the game you know in a pair of goggles um in real life in real space and it
    actually feels like you’re getting hit it feels like um you’re you’re right in the middle of the game but
    you’re actually able to see things um what you do and then you can program in what your opponents do
    uh to create a a very realistic picture and then you’re also able to adjust the speed so
    you could actually play the game at let’s call it 105 or 110 percent of the actual speed um so that
    theoretically you’re you’re having to react even quicker than you would in in a real game situation so
    um i can see you know how that could really help especially uh for skill positions uh like quarterback or
    um you know positions like like that where you can you you you have to see a lot of things uh very
    quickly and and identify quickly what you know what decision you’re going to make that’s true of every
    position the quarterback especially when you talk about distributing the ball um and and also for a
    player who’s um who’s injured um so let’s just say that you had a leg injury and you weren’t able to
    to practice uh or run full speed for a couple of days um you could actually see the game through this
    product and get your recognition your reads without actually having to run and and you know be involved
    in a in a situation uh that physically you’re just not you know what not ready for um but i’d say a lot
    of the other technology is just you know things that maybe make it go a little bit faster ways of grouping
    grouping plays together grouping situations together that you know allow you to to research and and uh
    analyze those things a little bit quicker but that’s probably about across the board about the same for
    everybody they all we all have the same opportunity on that i mean ultimately a lot of those situations
    come down to preparation but also maybe a gut feel of the way the game is going you said in your book
    the price of success is paid in preparation but you also said it was a way of working what did you mean
    by that well i think the big thing about preparation success is is the price has to be paid in advance
    you have to put in the work before you get any results so there’s no way to to honestly know how
    good your preparation is or isn’t um that’s why i always try to emphasize keep preparing keep working
    um you don’t know what the other guy’s doing he might be you know working just as hard as you are
    and that preparation you know it can’t be after the fact of like oh i wish i would have studied more
    it’s too late at that point you have to do it on the front end so um getting in condition um you know
    studying preparing on your film and your opponents and all that like those things are all have to be
    done on the front end and you know a lot of times uh there’s i would say a little bit of a tendency to
    just sort of let up on the preparation well i’ve watched some film well i’ve done some extra sprints
    well i’ve done this i’ve done that well is that is that enough you know is it really enough and and
    if you do more will it make a difference um not to the point of diminishing returns but to the
    point of you know comprehensive preparation so um that’s really what we try to try to um
    emphasize on that the way that i think about that is sort of that you know the pain of losing is sharp
    but it’s over fairly quickly but the pain of regret not putting in the work not doing the things you
    didn’t leave it all in the field that lasts forever exactly that’s exactly it the pain of regret
    is much more than than the pain of preparation absolutely i think you had a 24-hour rule sort
    of after winner losses you have 24 hours to think about it and then you move on is that that’s right
    yeah you play the game you go back you analyze it you what do we do well what do we do poorly what
    do we need to do better what adjustments should we have made what coaching errors did we make
    and so forth and and then you you factor all that into you know how does that affect this next week
    sometimes there’s a lot of carryover sometimes the play team you play the following week is completely
    different and some of those lessons may not really become applicable for a week or two weeks or three
    weeks until you see a you know a similar type of opponent um say like a scrambling quarterback you know
    maybe you play two or three weeks where those quarterbacks aren’t too mobile and when you get up
    against another scrambling quarterback you go back and look at a how you know how how do we need to
    to handle this better uh against this type of an opponent so um but yeah you look at all those things
    after 24 hours win or lose or draw uh you you take your lessons and and you decide how you’re going to
    incorporate any of those things into this week’s preparation and practice uh what we’re going to do
    differently or maybe do more of or do less of whatever it is um and then you’re done with that
    and you move on to your opponent and and spend the next uh five days six days whatever it is of just
    you know digging in on that opponent and and what they do talk to me about the relationship between
    the best talent in the world and you know you’re playing in the nfl you’re coaching in the nfl and
    confidence well again it’s all relative you know shane i mean as good as um as good as as the players
    are in the nfl um the guys on the other side of the ball are pretty good too and uh you know i’d say
    every team generally speaking every team has about you know five or six players they’re elite have elite
    payments elite contracts and then you might have some younger players in their first through fourth
    year you know two or three four whatever those that are elite players they just haven’t hit those top
    contracts yet um but they don’t necessarily match up in the same position you might have a tackle i might
    have a guard you might have a linebacker i might have a corner and so forth um so um the way those elite
    players match up is is very um specific from game to game and how you want to match them your your matches
    against theirs and how you want to deal with that is you know that’s a big part of it i think the
    confidence thing is really um interesting i think what really separates the great players um is their
    ability to do it even when the bullseye’s on their back every week um like it was with tom brady like it
    was with lawrence taylor like it is with patrick mahomes um like it is with you know players like
    that lamar jackson and so forth every week the the teams are geared towards stopping those players
    and game planning against them or putting their best guy on them or however you’re going to handle them
    and for those players to continue to be productive um in spite of the game plan attention they get
    is is what truly makes those players you know great and elite and i i think that um you know when
    we had kobe bryant come in and talk to our team i think it was around eight 2018 19 somewhere in there
    and you know kobe talked a lot about evolving you know and he said um you know look at when i was 22 23
    you know i could just get the ball and drive by anybody and and score and he said i can’t do that
    anymore i still score but i found different ways to score moving without the ball jump shots and you know
    being better in pick situations and all those kind of things um that you know he said i found i found
    ways to evolve my game um because i just couldn’t do the things i used to be able to do as well um but
    there are other things i found that i can actually do better and i thought that was a great message for
    all of us to hear that as we um you know as we go through our careers do the things that are working
    do the things that you can do well but also evolve continue to learn continue to you know find ways
    to to be productive that are maybe a little out of your comfort zone or um are not um you know habitual
    for you now but if you can become good at them um they can be great you know great tools for you
    are there any other people that you brought to speak from sort of different sports that sort of had
    uh a different message that resonated with you or the team and just stands out in your mind oh yeah we
    had a lot of them yeah we had a lot of them and and it was great because you know just the guys you
    know they hear a lot of football stories but it’s good to hear all the ones uh one of the ones i thought
    was particularly entertaining a couple of them one was uh paul assiante they won like 14 national
    championships in a row they won like 160 some games in a row matches in a row i mean and at the
    patriots we were favored in almost every game you know not every game but most every game for quite a
    while and so you know i brought coach assiante and i said you know here’s guys won like 13 straight
    national championships they won 160 some matches in a row i mean talk about being favored now like
    they’re favored and and and like let’s listen to what that’s really like and he was great he talked
    about it it doesn’t matter whether you are or aren’t or how many you have or haven’t won every day is an
    opportunity you make the most out of each day and you just get better each day and you don’t worry
    about what you’ve done in the past you just you look at today’s opportunity and make the most out of it
    it was great so one of our code one of our players sticks his hand up and said hey coach i have a
    question what’s squash i thought it was a vegetable hey jimmy johnson you know we were going into the
    playoffs and jimmy came up and he was doing a um uh you know a story on somebody and i said hey would
    you mind you know talking to teams so sure so he said yeah let me tell you a little playoff story here
    you know when i was in dallas we were getting ready for the playoffs and we were in a special teams
    meeting i’m standing in the back and i see i see one of our one of our players back there kind of
    dozing off and and not paying attention and he said he wasn’t a it wasn’t a starter but he played in
    special teams and he said it just really annoyed me and so i went over i flipped on the lights turn the
    lights on at me and i went over to him i said that’s it you fall asleep in this meeting uh we don’t want
    you this is your primary job you can take your playbook and and go see the job manager you’re done
    you’re cut and everybody like whoa you know that woke everybody up and you know it was right before
    the playoffs so you know any questions um yeah coach um what would you have done if that had been
    troy aikman jimmy said well i wouldn’t have turned on the lights i probably would have gone over to him
    and nudged and said like hey troy pay attention and the message was if you have a lot of pelts on the
    wall you you might have a little more slack if you don’t have a lot of pelts on the wall you don’t have
    any room you don’t have any room you can’t live on what you’ve done because you haven’t done enough
    you better know where you are and until if you’re troy aikman and tom brady you you go but he goes
    those guys would never do that anyway but you that you might be able to survive that but if you if you
    don’t have that kind of resume you haven’t had that kind of production for this team so you nobody wants
    that you’re replaceable they’ll find somebody else who will stay awake in the meetings and who will be
    more attentive and uh it’s pretty funny i just nudge them and say hey pay attention
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    did you treat everybody the same i remember one story and maybe it’s just uh sort of the press
    uh doing the press thing but where you sent uh jarell revis home from practice because he was like two
    minutes late or something oh we had a few of those yeah we had a few of those and honestly those are
    tough ones you know shane because when you send a player home it it hurts the team it it doesn’t just
    hurt the player it hurts the team because you know you need the timing and and the communication and the
    teamwork out there but i try to treat them all the same but i i do think jimmy johnson i believe that and
    coach parcells uh you know same thing yeah that did the same thing there were um certain players
    got a little more grace than others based on um you know what they had done for us and and they
    i would say kind of earned that so um i tried not to do that but there were times when you know when i
    did i but i tried to treat everybody the same you know they’re not all the same but you certainly want
    everybody to feel that you know we’re all team members and it’s not um you know we don’t have a
    an elite society here we have different ranks and certain players can do some things and other players
    couldn’t so i tried to make it as consistent as possible but at the same time uh i think you have to be
    flexible in in a professional football environment for some latitude and and maybe for some it’s called
    exceptions to your rules you sent one player home from the super bowl for having somebody in his
    hotel room was that a hard decision or was that a how did you make that was that team first and you
    violated the rules you’re you’re out or you know i made it very clear before we went down there that
    you know it was a business trip and yeah we had a great year and and we were all celebrating the the
    super bowl and and uh and what we had accomplished to get there um but here are the rules and and
    you don’t have to break the rules go to the other person’s room if you want to be with them but our
    floors are secure and and at the super bowl in particular there’s a good reason for that um you
    know with super bowl tickets and and guys with valuables and stuff like that if it’s not one of our
    players on the floor i don’t know whether that person is a friend of our players or an intruder
    there’s really no way to know and no matter you know i mean unless i knew the person for some reason
    but you know what i mean you just don’t know who that person is so our policy was players only on the
    the floor period that’s it and so um you know it was unfortunate because i wasn’t trying to
    say hey you can’t have guests or you can’t you know be with your friends or your your companions
    or anything that wasn’t it it’s just don’t do it on that floor do it somewhere else i don’t care
    and and again i was trying to protect the players by not having people on our floor that we didn’t know
    that could roam in and out of rooms or could you know and and if you don’t if you don’t remove
    those people then you end up with you know potentially somebody leaves their room then
    that person walks in then you have a big mess on your hands so that was our policy not just in that
    game but everywhere but unfortunately uh because that game was you know we were there for five days
    um i just felt like it was a blatant violation of our rule i want to come back to confidence for a
    a sec one of the follow-ups i meant to ask was there ever a moment where you had your confidence
    shaken and how did you handle that oh plenty of times um i i mean honestly shane there were times when
    you know i wasn’t sure if we were going to win another game the entire year
    you know and you know we ended up winning a lot of them you know but sometimes you just see
    um problems and and maybe you want to fix them but you just don’t have the resources to fix them where
    you’ve tried a couple different things and it still isn’t really uh the way you want it and you can see
    in the future some real problems coming up with your opponents and some match-ups and whatever the case
    might be and and you’re like i mean i don’t know like i mean i’m trying to fix this but i just don’t
    feel very confident that that we actually are going to be able to handle it the way we need to and uh
    and ultimately you know in most cases um it wasn’t maybe as bad as what i thought it might be i was
    expecting the worst and and that usually didn’t happen so that’s a good thing but um yeah i don’t know
    know if that’s a lack of confidence or or i don’t know what the exact word is but yeah you definitely
    have those apprehensions and certainly opening day is a is a is a difficult day because you don’t know
    very much about your team you don’t very know very much about your opponent’s team um and and unless you
    have a really veteran team you don’t know exactly how the team is going to react in certain situations
    particularly tough and critical competitive situations um so you know even though you have
    a good team how are they going to react when you know you’re really in a in a really a tight ball game
    and that’s that’s something that you don’t know until you’ve been in a few
    unless you’ve been in a few with those guys and it’s the same guys
    when you first started in the nfl you worked for nothing you were you worked part-time for nothing
    and then you switched to full-time for nothing yeah and one of the things that you said was i did
    anything and everything and i think of this as like a taste for salt water you do the hard things but you
    were snapping the football but you were like oh the benefit was i got to listen to coach talk to the qb
    and walk me through like how that’s changed today and what people miss when they hyper specialize
    well i think one thing that that i see with you know some of our younger staff members coaches and
    things like that is they’re they’re very concerned about their title you know can i be the can i get
    this title can i get that title and the coaches of you know can i be the run game coordinator can i be the blitz
    coordinator can i be the zone coverage coordinator can i be the i mean it’s like what are those titles
    for like they don’t impress me i know what your job is i mean do you need that title to you know
    validate what you’re doing or is it for somebody else and i’m not really interested in helping
    somebody else i mean we we all know what we do here i mean honestly i was a general manager
    um for almost 30 years of my nfl career and i never had a general manager title that was never important
    to me um i didn’t care about what the title is you just you do the job that you have to do so
    i see that but for me when i look back at it retrospectively um shane the big thing was i was
    so low on the totem pole that i did all the jobs at the very bottom of the organization i shot film i
    lined the fields i moved equipment out there i ran off xerox copies i you know made notebooks i sharpened
    pencil i did all those things and as you move up in the organization it really helped me because i
    understood how everything functioned you know at the you know at the at the level of you know making
    things work you know deliveries and you know mail and stuff like that i mean all those things that
    needed to happen um i understood kind of the process of it how it worked and what was hard about those
    jobs and what wasn’t hard about those jobs and and as i you know gained more responsibility in the
    organization i was always able to show appreciation for the people that were doing those like hey i
    know this is really hard or hey i know this is a tough week i i could sense what you’re going through
    and i think that built some you know camaraderie and trust there but also it helped me understand how
    everything worked and there were multiple times when people come to me and say oh coach we can’t do this
    you know we can’t do this we can’t do that and i said wait a minute i’ve done that job before
    we can do that here’s how you do it here’s this is how you make this work and and so i i felt very
    confident about all the aspects of the organization how they fit together and you know scouting and
    coaching and like i said equipment and video and security and travel and all those things because i was
    a part of those um in one form or another at different points in my career so i i think you
    know for a lot of people you know when i talk about we need to start at the bottom you really need to
    understand how the organization works there’s a lot i want to skip those steps there’s i want you know i
    just want to jump up and and coach the line and linebackers or the tight ends or whatever it is
    and i’m like that’s okay but it would really help you to understand what happens in the entire
    organization and if you want to really move up and become a coordinator and a head coach those will
    be very valuable for you because you’ll understand you know the the different uh intersections of various
    departments and how the organization works and and where the conflicts are you know and sometimes there you
    just you know kind of two people doing the same thing or nobody doing one thing and you you miss
    that intersection somehow and and that’s just part of it but you know how do you avoid those and how you
    make that more efficient so i really try to encourage our our the younger people you know to do those jobs
    and embrace them don’t how quickly can i get done with this so i can go do something else no embrace the job and
    embrace the process and and you know understand it because it’s going to help you in the long run
    and the other thing is you know as i mentioned a couple times in the book with um you know josh
    mcdaniels and nick casario and brian dable um if somebody has one of those jobs and they’re really good at it
    and they say well i want to move you you know i want to move to more responsibility and i said well i want
    you to move to more responsibility too but first you got to train somebody to do your job because what
    what you’re doing is really valuable and that’s when brian dable hired josh mcdaniels to replace him
    that’s when josh mcdaniels hired nick casario to place him and so uh but it forced those guys to make
    sure that the person that was replacing them was not only good but they trained them to do the things
    the way they needed to be done and and that really heightened our efficiency but also enabled them to move up
    to uh responsibility move up in responsibility and so um that really worked out well i was you know
    i thought that that was for me that was a good way to handle it because those guys were very invested in
    making sure their replacement did a good job because they knew they were going back to do that job
    if that person if their replacement failed a lot of people when you ask them to do sort of the
    unglorious task they just look at you and say that’s not my job yeah yeah it’s not my job or i’ll get to
    it you know tomorrow i’ll get to it next week or whatever and those are you know i i mean i don’t
    like to have those type of people you know around and sometimes it’s it’s inevitable you have to put
    something off maybe i get that but um the quicker you get it done the quicker you can move on to
    something else and be more productive and you know the more you procrastinate it then
    you know it it just slows everything down so um there’s got to be a priority system i mean i’m fully
    aware of that but um you know but people that want to put stuff off and and kind of hope that it won’t
    need to get done um they didn’t do very well in our organization one thing you mentioned that stands out
    to me i think of this like stepping stones where people have a job but they see it as
    a stepping stone to the next job right so they’re never fully present in the job that they’re doing
    because they’re always looking ahead and those people don’t actually tend to do very well at the
    next level absolutely and and like i said then they miss some of the things that they really need
    to understand at the level that they’re at and again that’s just part of do your job you know
    that’s just part of it is is everybody has an important job to do and if you’re trying to do
    somebody else’s then you’re probably not doing yours well enough and um you know be patient and
    you know your your opportunities will come um as long as you know you show that you can handle
    the responsibilities that you currently have but you’re right a lot of times there’s a big rush to move
    ahead and and that um a lot of times also brings sloppy work incomplete work um and honestly just a
    a feeling that i don’t not really confident promoting that person because you know they’re more interested
    in what they are going to be doing than what we need to do right now how would you define discipline
    discipline is is is doing the right thing over and over again doing it every time
    it’s just continuing to do it every time in the national football league the players are very skilled and
    talented and and i would say you know all of them can do something um they can all go out there
    and produce you know plays at a very high level um the discipline is what is what really separates
    the players is their their consistency and their discipline to do it over and over again um so you
    can count and depend on um you know at a very high and high rate are there any stories in your mind that
    stand out about discipline or consistency involving players you’ve coached well i mean i told the story
    of edelman you know catching balls before the super bowl tennis balls and stuff like that i mean those kind
    of things that um you know that players do they have a routine and you know if a guy’s played eight nine
    ten whatever years um if they skip a day in their routine i mean is it going to be the end
    probably not but they’re just so disciplined and so consistent to just continue to do it uh and maybe even
    do just a little tiny bit more um to to make sure that they’re prepared for the game uh especially the big games
    that um that’s that’s just who they are so i mean i i really i really respect that but you know it’s
    it’s a little bit like the shopping cart you know um when nobody’s looking are you going to take the
    shopping cart back and put it in the you know where it belongs or just leave it there in the middle of
    the parking lot and it’s the same thing with a really disciplined uh player and teammate um is is he
    going to be disciplined to you know go in and get treatment after practice um you know even though
    it’s two days before christmas or you know whatever it is where is he just disciplined to
    not let something get in the way of of his productive routine and that’s um you know the
    the guys that the guys that do that um i would say have for the most part have had very long and
    productive careers and and the guys that haven’t have careers that that go to a certain point with
    talent uh but they don’t have the same the same kind of uh longevity and consistency uh of a player like
    matt slater or dev mccourty or tom brady or guys like that that people keep saying you just keep
    waiting for those guys to drop off well they’re a year older they’re a year older they’re a year
    older but you don’t see the drop off because their routine and their and their discipline is so
    consistent that they’re able to they’re able to sustain that level of performance um you know
    far longer than really what the expectations in some cases are do you believe you can motivate
    people and if so how i think you can definitely motivate them and and it depends on the person i think
    there are different types of motivation um you know we could uh there were times where i think
    you could really you know motivate a player by just you know flat out challenging them um based on
    something that you know somebody else said or intimated or something that might have happened in
    the past uh i think you can you know motivate people by um uh you know especially you know sometimes
    maybe a more selfish type of player you could motivate by you know making him see uh what the reward is for
    himself as opposed to the team um an example i like to use shane is if you have a receiver and
    you want the receiver to come in and block on a running play and come in and block a safety which is a hard
    job um you know some receivers don’t really want to do that they’re really not too excited about that
    they want to catch passes um but if you say well look if you come in and block this guy
    um and we need you to block him as a team we need you to block him we’ve come in and block this guy
    um then the next time we come in and and you’ll do the same thing but fake it and we’ll be able to throw
    you a pass when the defense comes up to solve the play well the player’s not coming in to block him
    because you asked him to block him and we need really need you to block him um that julian edelman
    would do that but it’s not everybody would necessarily do that uh but when they understand
    okay if i come in and do it this time that opens up an opportunity for me the next time
    uh then they might do it right and so now i get what i want he gets what he wants um there’s some
    management and motivation in there but in the end um both parties are able to accomplish their goals
    i get the team goal the player gets the individual goal he sacrifices for the team but for the other
    reasons um so uh again i think there are different methods of doing that it really depends on you know
    how the player is wired and maybe what circumstances you know you can use certainly when you’ve lost to a
    team previously um that’s a pretty good motivator for for most of these guys um because you know you
    take those losses personally and since we lost as a team that is everybody it’s not you know one guy got
    a pass caught on them or one guy got tackled i mean it’s it’s a full team loss so a lot of times you can
    you know you can generate a lot of um uh energy towards your opponent by um you know referencing that you
    know that that loss or situation that might have happened in a previous encounter as a leader how
    did you know when to be hard on players and when to sort of back off and i’m thinking you know when a
    player makes a critical mistake in a game and they know they’ve made a mistake what’s your role in that
    moment well again shan i think it depends on the mistake you know if it’s um sometimes you know
    something that kind of unexpectedly happens and maybe the player made a bad decision or maybe he did something
    that you know he’s caught that pass 100 times and and he’s dropped it once and this is the one time
    um you know uh some of those are a little easier to handle um i’d say the ones where you know you’ve
    told the player 10 times this is what you need to do when this happens and then they don’t do it i’d
    say the reaction is a little bit different in that situation you know how many times they have to be told
    and you know what maybe maybe you know you just don’t want to do it we’ll put somebody else in there to do it
    because i can see that you know you’re not you know you just don’t care enough to follow your
    assignment so um you know it kind of depends on those i i think one of the biggest things in football
    is correcting mistakes and we all make a lot of them um but when during the game when time is of the
    essence and you don’t have much time um you need to figure out what went wrong pretty quickly and fix it so
    let’s say defensively we came off the field and we’d given up a 20-yard run um and maybe a 15-yard
    pass and another third down conversion and say okay all right like what are the issues on these plays
    well let’s say the 15-yard run would be if one person knows that that they messed the play up
    and just says hey it’s my fault i messed it up like that was we were in good shape i was right there i
    shouldn’t made the tackle i just missed the tackle i’ll make that play the next time well great that
    clears it up for everybody we all know we’re gonna do the same thing we did the last time and and this
    time i know that you know my teammates going to make the tackle versus um you know kind of a blame game
    where i was here and i don’t know i should have been there and should i do this and should i do that
    and was i too deep and this and that and then it’s you know what’s the issue how do we fix it right and
    so if you know you did something wrong just own it all right admit it and and let’s move on um sometimes
    it’s not that simple sometimes you kind of have to figure out well i did what i thought i was supposed
    to do you do you were supposed to do he did what he was supposed to do we still had a problem okay now
    that needs to be fixed and so um but again identifying mistakes and fixing them quickly is really the name
    of the game and if as a coach you know when i would say um look that was that play was it was a bad call
    i shouldn’t have called that defense against uh that personnel group or against that formation uh that’s my
    fault it’s all me i’m not going to do that again forget about that play it’s not going to come up
    again because i won’t call it again in that situation okay well then all right we’ll stop worrying about
    that play let’s worry about something else so owning up to those mistakes and and making the corrections is
    key if you don’t know what it is exactly then then that’s when you have to figure it out pretty quickly
    whether those are players or coaches or some combination because if you don’t you’re just going
    to keep you know you keep dealing with the same issue over and over again and you know none of us
    want that when i say the words on to cincinnati what does that mean to you on the cincinnati well
    it first of all means it was a long night in kansas city um you know we got we got totally beaten in
    that game um out coached out played out everything they were just a far superior team than we were and
    as a head coach you have to look at that and say you know i didn’t have our team you know where they
    should have been and we didn’t play well we didn’t do anything well and it starts with me um
    but that game’s in the books it’s over and there’s nothing we can do about it we can’t get it back
    so or we just have to move on to cincinnati and make sure that we don’t perform next week
    like we did last week you know don’t let one game become two bad games don’t let it become three bad
    games don’t let it become a habit um change the things that we need to change so um we played
    cincinnati the following week and you know our players did a great job of putting the kansas city
    game behind us and focusing on what we needed to improve on and and and do better and get ready for
    cincinnati who was you know a very good football team as well at that time and so um you know we’re
    able to do that and you know it it became you know one of those one of those catchphrases but
    really the idea of it was move on and let’s start getting ready for next week it’s kind of similar to
    the situation we had in uh 2001 uh shame where we buried the ball you know we we lost to miami we
    we didn’t play very well obviously didn’t coach very well and we came back and you know we just took the
    team out there i got a shovel i dug a hole i took the ball uh you know we put it in the ground put the
    dirt on the ball we stomp on it we spit on it we kicked it we you know took our frustrations out but
    that was the funeral game’s over it’s done we lost buried the ball buried our feelings move on i’m not
    saying that was you know this great thing but visually it it’s sort of the point of it was put
    the game out of your mind it’s over we’ve had the funeral life goes on i’ve heard you say we’re building
    a team not collecting talent what’s the difference the difference is it so it fits together so that the
    the team is functionally as efficient as it can be uh not just a bunch of guys wearing the same same
    uniform uh with different numbers but um a group of people who function well together you know as a team
    and when you think about football um shane football is a team of teams right you you have the offense you
    have a defense you have a hands team you have a punt return team you have a nickel defense you have a dime
    defense you have a goal line offense and so forth you have all these teams and they all come together to
    form one championship team and so you know the idea is whichever team you’re on um you need to be the
    very best team that you can be in that situation if it’s a hands team it’s a punt return team whatever
    it is like that is critical to our success and you have your responsibilities on that team i have my
    responsibilities on some different teams but ultimately we all come together and and those
    shared responsibilities and those shared teams um so that we can operate together functionally as a team
    are are really what we’re trying to accomplish so it’s not just getting a bunch of guys who
    you know can do have good skills um and can run fast and jump high or whatever i mean that helps
    of course but they have to be able to operate as a team and as a team of teams and you know a lot of
    that is a mentality is a willingness to uh to communicate and work with and efficiently uh cooperate
    with your teammates so that collectively we can accomplish our goals when when our units are on the field
    how has coaching changed in the past five years you know outside of rules changes and and things like
    that um you know there are some trends and i know i think as look when you’re on defense you have to react
    to the offense right if the offense have three has three tight ends on the field you’re not going to be
    playing the same defense that you had when they have three receivers on the field um so defensively a lot of
    what you you have to deal with now you can say look we’re going to play the same thing and make them
    adjust to us but i mean there are certain matchups that just become um you know difficult to to sustain
    that philosophy so um again what i’d say is it’s important to defensively be able to adapt to what the
    offense is doing because ultimately you don’t control who they put on the field you just have to stop them
    you know offensively um you know you take the talent that you have and try to make the most of
    it so um i would say in college football which is where we get our resources from in the nfl
    um you know some of that’s a function of of what’s available you know what’s coming out uh what they’re
    teaching in college what type of players they’re developing um because that’s really what you have to
    choose from so i do think there are some trends but fundamentally it it really comes down to
    you know having good solid fundamentals um and doing the little things right that will enable
    you to win your one-on-one matchups and i’d say i don’t think those have changed um too dramatically
    over the years on the way out of the building you had a sign that read ignore the noise manage
    expectations speak for yourself and don’t believe the fuel or hype can you walk me through those
    yeah absolutely absolutely um well speak for yourself as is you know pretty obvious um
    you know if you have any comments to make just make them you know personally you know don’t say things
    like well shane’s looking really good this year i mean he should probably have 15 sacks the way he’s
    he’s rushing the passer you know and start making expectations and predictions for other people things
    like that ignore the noise i mean there’s so much um airtime that’s filled uh whether it’s uh on the
    radio on the internet on tv of people talking about football all right and players and matchups and
    everything and again with all due respect and look i’ve been part of that too so i understand but
    um you know with all due respect the people that talk about it haven’t been in our building they
    haven’t watched us practice they haven’t watched us prepare for the game they don’t know what our
    matchups are they don’t know what you know they don’t know what our game plan is um so with all due
    respect what they say as it relates to us it doesn’t matter if other fans want to listen to them i mean
    that’s great but you know when they say well you know shane parish has got to shut down belichick or
    they’re going to lose that’s you know it’s just hot air so ignore the noise it’s just ignore what
    other people who aren’t really don’t know what they’re talking about are saying and focus on what
    the people in our building in this room are saying what your teammates are saying how they can how you
    can communicate with them how you can anticipate a play and and help them react to it and that kind of
    thing um you know don’t feel the hype you know when things are going good i mean people can’t wait to
    you know you’re three and oh and they’re selling super bowl tickets and they’re already talking about
    you know repeats and all this stuff and our thing was don’t don’t add into that if other people say it
    we can’t control that once we say it now now we have to own it you know and so uh belichick says you
    know um uh we should be in the afc championship game and we’ve only played four games well then
    everybody else has to react to that oh shane what do you think about what belichick said tom what do
    you think about what belichick said grok what do you think about you know you it just creates a
    distraction so um fueling the hype or believing the hype that four games into the season we’re talking
    about an afc championship game is i mean ridiculous it’s just way too premature so you know don’t deal
    with that one what was the last one ignore the noise don’t feel the hype speak for yourself manage
    expectations manage expectations right and so like what are realistic expectations this week it’s to
    beat the team we’re playing like our focus is on beating buffalo this week that’s who we play
    that’s where we’re at um you know in terms of win the division you know which is eight weeks away from
    now don’t talk about man winning the division like that’s not an expectation we can’t achieve that
    right now even if we wanted to it’s only the fourth game of the year now if this was the game to win the
    division then okay let’s talk about winning the division but until we get to that point you know manage
    the expectations the expectations are to have a good day today have a good week and to win this game
    those are our weekly you know and expectations you know not where we’re going to be in january who
    we’re going to play in the playoffs or um again managing expectations of like oh this guy should
    go out and you know he should have 200 2 000 yards receiving why don’t you just worry about what you’re
    going to do and you know stop talking about what other people what your expectations are for them
    that’s speaking for yourself but that’s also uh managing expectations or or a player saying well
    i expect to you know i expect to go to the pro bowl well is that your goal to go to the pro bowl or is our
    goal to win a championship and let’s go back here for a minute you know what what are our expectations
    like let’s let’s think about what’s first thing first put the team first you know and that’s you know
    team teammates self that was the whole you know um progression of you know trying to put the priorities
    in order for for each of us i want to end i usually end with one question about success but i actually
    want to change that a little bit here and flip that around and i want to talk about the atlanta super bowl
    you’re down 28 to 3 and the thing that astounded me as a fan uh who’s watched a lot of football and a lot
    of games uh was that nobody was sort of like hanging their head you know you look at brady on the sideline
    you’re down 25 points and he still had confidence yeah you know shane it’s funny sometimes you play a game
    and you feel like you have control of the game but you don’t have control of the score
    and that was that game um i felt like we had pretty good control of the game but we didn’t control the score
    at all there are other games where you have control of the score and you don’t have control of the game
    you know maybe you’re ahead by 10 points but you know they fumbled they threw an interception
    you got a lucky break and and you’re ahead but you really haven’t been able to move the ball you really
    haven’t been able to stop them um they’ve just fumbled it away a couple times and and you kind of
    maybe got a lucky play to to you know get your points and so you feel like you don’t have control
    of the game but you’re ahead on the scoreboard and what you really want of course is to have control
    of the game and control the score um but in that game we had a real confidence at halftime when it was 21
    to 3 that um you know we’d given up a touchdown on a third and goal from the 12 we gave up a pick six
    we fumbled going in um you know we missed some opportunities uh to you know maybe be tie or could
    have even been ahead in the game at halftime 10-7 or maybe 10-10 something like that and so yeah the score
    was bad but we felt like we were had control of the game well then they go out and score make it 28 to 3
    and now i’m thinking you know we might have control of the game at 25 points is a lot to make up and
    there’s a lot of things that have to go right um so two two-point conversions and a strip sack and
    two kickoffs where we tackled them inside the 15-yard line so they couldn’t get in the field goal range
    um and another sack and another holding penalty and literally everything went right for us in the last
    you know 20 minutes of the game there was no lack of confidence because we actually felt like we had
    control of the game we were moving the ball we were playing good defense but we just had a couple of bad
    plays in there that that skewed us and skewed the score um but once that kind of settled down
    you know we we were okay and um and then once we kind of got rolling again we had some plays that
    we needed to make and and we made them you know um on both sides of the ball and in the kicking game
    on those kickoffs so um everything had to go right and it did and we were very fortunate in that one
    i really appreciate you taking the time today coach belichick and thank you for writing uh the art of
    winning i loved reading it it was a great read thanks jane i appreciate it thanks for the opportunity
    to be on uh it was a pleasure enjoyed speaking with you and um i look forward to catching up down the
    road you know i just uh would be remiss if i didn’t you know say how much uh you know michael
    lombardi has contributed to to my career and indirectly to this book i mean a lot of the things that that we
    talk about and i talk about here are things that i share with mike or that mike helped me do and um you
    know it’s great to be able to work with mike uh you know at north carolina um but he’s a um a
    great motivator very well organized uh very efficient and you know as an excellent partner
    to you know to build the program down there so um i really appreciate all of uh not only mike’s help
    but his guidance and and you know his uh the daily coach and and the um you know the motivation that
    he puts out on a daily basis is something that you know we all uh look forward to and enjoy carolina
    i’m looking forward to getting down there watching again i look forward to having you shane
    thanks for listening and learning with us be sure to sign up for my free weekly newsletter at fs.blog
    slash newsletter the farnham street website is also where you can get more info on our membership program
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    you
    you

    Eight Super Bowl rings. Six with the Patriots. And a mindset that goes far deeper than football. In this rare, wide-ranging conversation, Bill Belichick breaks down the invisible factors behind sustained excellence: discipline, preparation, and the mental edge that separates contenders from champions. He shares the surprising reason he kept Tom Brady as a fourth-string rookie, why talent alone is never enough at the highest level, and how true competitors find ways to win long after their gifts fade. 

    You’ll hear why Belichick cut a player the week of the Super Bowl, how technology is changing player preparation and locker room culture, and why “we have control of the game” became the rallying belief in the greatest comeback in Super Bowl history. This episode covers everything from how he decides when to push a player—or pull back—to how trust is built inside elite teams. Belichick also explains why the price of success is always paid in advance—and why there’s no shortcut around the work. If you lead a team, or want to lead yourself better, this episode is a masterclass from the greatest football mind of our time. 

    Approximate timestamps: Subject to variation due to dynamically inserted ads:
    (00:42) Patriots’ Employee Guiding Principles
    (04:25) Talent vs Hard Work
    (05:43) Competitive Spirit
    (10:38) You Cannot Win Until You Keep From Losing
    (15:11) The Drawer and Prioritizing Your Goals
    (17:07) Social Media, Technology, and Football
    (24:45) Preparation and Success
    (27:55) Confidence In The NFL
    (29:45) Kobe Bryant & Learning To Evolve As You Get Older
    (31:02) Other Guest Speakers And Their Lessons
    (32:28) Disciplining NFL Players
    (39:45) Working Your Way Up & How To Train Staff
    (47:56) Motivation & Discipline
    (56:08) Correcting Mistakes and Moving On
    (58:28) Building A Team vs Collecting Talent
    (01:00:13) How Has NFL Coaching Changed In The Last 5 Years?
    (01:01:43) 4 Patriot Rules For Staying Grounded
    (01:06:11) Super Bowl LI Patriots’ Comeback

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  • #229 Outliers: Andy Grove – Only The Paranoid Survive

    AI transcript
    Through his office window at Intel headquarters, Andy Grove could see the Ferris wheel of Great
    America Amusement Park spinning in the distance. But the document in front of him offered no such
    entertainment. Gordon Moore, yes, that Gordon Moore of Moore’s Law fame, drops into the visitor’s
    chair, his face grim. The latest memory chip numbers are catastrophic. After quarters of
    watching Japanese competitors demolish Intel’s market share from 83% to a mere 1.3%,
    this situation had become existential. In a standard issue 8×9 cubicle, Grove insisted executives use the
    same workspace as everyone else. He asked a question that would change history. If we got
    kicked out and the board brought in a new CEO, what do you think he would do? Gordon answers without
    hesitation. He’d get us out of memories. This reply hits Grove like a physical blow. After a moment of
    stunned silence, he delivers the line that would save Intel. Why shouldn’t you and I walk out the door,
    come back in, and do it ourselves? No dramatic music swells, no chest-bumping celebration, just the sound
    of two men exhaling as they mentally prepare to abandon the very product that built their company.
    Intel in 1985 was a memory company. The business generated over 90% of their revenue and it would
    soon be gone. The pivot would cost thousands of jobs, millions in R&D, and require shuttering
    eight manufacturing plants. But by detaching themselves emotionally and viewing the situation
    from an outsider’s perspective, Grove and Moore had found clarity in crisis. Grove would later distill
    this ruthless, clear-sightedness into a mantra for corporate survival. Only the paranoid survive.
    This wasn’t just a catchy business slogan, it was survival wisdom earned through trauma. For Grove,
    paranoia wasn’t pathological, it was practical. And its seeds were planted a continent away half a century
    earlier when a hard-of-hearing Jewish boy named Andras Grof was learning to detect danger before it arrived
    while hiding from Nazi death squads in wartime Budapest.
    Welcome to The Knowledge Project. I’m your host, Shane Parrish. In a world where knowledge is power,
    this podcast is your toolkit for mastering the best of what other people have already figured out.
    The story of Andy Grove is about survival in its most elemental form. Imagine transforming yourself
    from a child hiding from Nazi death squads in Budapest to becoming Time Magazine’s man of the year
    and the CEO who saved Intel. That journey isn’t just remarkable, it’s almost incomprehensible. Yet,
    Grove himself would scoff at any narrative involving destiny or divine intervention.
    His philosophy, captured in the book title, Only the Paranoid Survive, offers a far more practical
    explanation. Detect threats before they become fatal. Whether it’s the sound of jackboots on
    cobblestone streets or Japanese competitors overtaking your memory chip business, survival demands the same
    skills. Constant vigilance, brutal self-assessment, and the courage to abandon what wants to find you.
    The same boy who learned to read danger in a stranger’s glance would later read impending doom
    in market share statistics. Different contexts, identical skills. Today’s episode isn’t just about
    technology or business strategy, it’s about developing a mindset that thrives in environments of
    radical change. Something all of us face today, regardless of our field. What made Grove extraordinary
    wasn’t technical genius, but his ability to see reality clearly when others couldn’t? While his
    contemporaries remained emotionally attached to past decisions, Grove asked the questions no one dared to
    ask. What if we’re wrong? What if everything we built needs to be abandoned? Grove’s lessons on
    strategic inflection points offer something invaluable, a framework for detecting existential threats
    before they destroy you. Drawing from his autobiography and Richard Tedlow’s definitive
    biography, this episode reveals how Grove’s traumatic childhood shaped his leadership approach,
    how he taught himself to become a world-class manager, and how he saved intel by walking away
    from the very product that built it. Remember to stay until the end for lessons you can take away from
    this episode. After all, inflection points don’t announce themselves with press releases. They whisper
    first, then shout, then destroy. In Grove’s world, paranoia isn’t anxiety, it’s attention paid to
    whispers others dismiss. It’s time to listen and learn. This podcast is for entertainment purposes only.
    Let’s begin at the beginning. Andreas Estevan Grof was born in 1936 to a middle-class Jewish family in
    Budapest, Hungary. His father co-owned a dairy business. His mother was, in Grove’s words,
    cultured without being snobbish. They were thoroughly assimilated into Hungarian society. That is, until
    everything changed. When Andreas was just five, his father was conscripted into a Jewish labor battalion,
    essentially a death sentence of forced labor on the Eastern Front. Young Andreas noticed something that
    day he’d never forget. His father was trying to smile, but there was something wrong with his smile.
    In the spring of 1943, the family received notice that George Grof had disappeared.
    Andreas, now six, was bewildered by this term while watching his mother retreat into smoking in solitary
    grief. Amid this trauma, Andreas contracted scarlet fever, confining him for months and permanently
    damaging his hearing. Yet years later, Grove reflected on how this seeming handicap became an unexpected
    asset. He wrote,
    I had to be quicker at processing nonverbal signs and more attentive to signals. And most important,
    because I often understood only parts of sentences, I had to exercise my mind constantly.
    What’s instructive here is Grove’s capacity to transform disadvantage into strength. The hearing
    loss that isolated him socially became his edge in business. While others heard noise, Grove detected
    patterns. While others waited for complete information, Grove decided with fragments.
    The little limitation that made childhood harder became the foundation of his leadership genius.
    Life rarely deals perfect hands. The winners aren’t those with the best cards, but those who play
    difficult hands exceptionally well. The situation for Hungarian Jews deteriorated dramatically in March of
    1944 when Nazi Germany directly occupied the country. The eight-year-old Andreas watched as German soldiers
    marched into Budapest. There were no announcements and there was no fighting. They just came in. My mother
    and I stood on the sidewalk of the ring road watching as the cars and troop carriers filled with soldiers
    drove by. The German soldiers didn’t look anything like the soldiers who had guarded my father’s labor unit.
    Those soldiers slouched a bit and their uniforms were wrinkled. The German soldiers were neat,
    more shiny boots and had self-confident air about them. They reminded me of my toy soldiers. Within days,
    Adolf Eichmann arrived with a small but efficient commando unit to eliminate Hungary’s Jewish population.
    They moved with terrifying speed. By July of 1944, most Jews outside of Budapest had been deported to
    Auschwitz and murdered. Young Andreas experienced the casual cruelty of anti-Semitism firsthand when a
    playmate suddenly announced that Jesus Christ was killed by the Jews and because of that all the Jews
    would be thrown into the Danube. Andreas ran to his mother in tears and never returned to that park again.
    By late summer, Andy and his mother were forced into a designated star house and required to wear yellow
    stars in public. People avoided looking at us. Even people we knew wouldn’t meet our eyes. It was as if
    a barrier was growing between us and everyone else. In October 1944, as Hungary’s homegrown fascist
    organization seized power, Andy’s mother made a fateful decision. Andreas, she said, “We have to get out of here.”
    This paranoid vigilance would save their lives. Maria obtained false identity papers with a Slavic surname,
    and they went into hiding, posing as non-Jewish refugees. The danger was constant. Being circumcised
    would immediately identify Andreas as Jewish if he was discovered, so his mother warned him not to
    urinate when others were present in their communal bathroom. When children were gathered to recite
    Christian prayers, Andreas feigned illness and ran to his mother, who quickly created a distraction.
    This ability to detect threats and take decisive action would later become the cornerstone of Grove’s
    leadership philosophy decades later. As he would later write, the ability to recognize that the winds
    have shifted and to take appropriate action before you wreck your boat is crucial to the future of an
    enterprise. Grove learned early that survival depends not just on recognizing danger, but on acting before
    it’s too late. A lesson that would later save Intel. By January of 1945, the Soviet Red Army reached Budapest,
    transforming the city into a battleground. Sheltering in a cellar during the bombardment,
    Andreas and his mother had a remarkable encounter with a Russian sergeant who spoke German. After
    establishing communication, Maria made a bold request. She asked Andreas to recite a Hebrew prayer he had
    learned at school. The boy was terrified. After months where revealing their Jewish identity meant
    certain death, his mother was asking him to expose them, but she assured him it was safe. As he recited
    the prayer, the Russian sergeant smiled with recognition. He too was Jewish. The Germans had killed his entire
    family in Russia. Liberation brought relief, but also new horrors. Andreas witnessed his mother being sexually
    assaulted by a Russian soldier. The next day when they reported the crime to military authorities,
    Maria made the extraordinary decision not to identify her attacker. She had calculated that if she named him,
    he would be executed immediately, but his comrades would likely return and murder everyone in their shelter
    in retaliation. Even in this most personal violation, Maria demonstrated the cold strategic calculus that
    her son would later apply to business decisions. Sometimes you must accept a terrible injustice
    when the alternative is destruction. The profound impact of witnessing such moments where survival
    required painful compromise rather than righteous action shaped Andreas’s world view forever. He was
    not yet nine years old. In the aftermath of the war, something remarkable happened. Andy’s father,
    George Grof returned home. He had indeed disappeared, but somehow survived the Eastern Front and made his
    way back to Budapest. The family reunited, though forever changed by their experiences. Under Soviet occupation,
    Hungary transformed into a communist state. The dairy business George had co-owned was nationalized.
    Both parents found government work. Georgian retail management, Maria, at the now state-owned dairy.
    Their apartment once again filled with visitors, creating a facade of normalcy that masked the trauma
    that they had endured. Young Andreas threw himself into education, displaying the fierce intelligence
    and disciplined work ethic that would later define his career. His insatiable curiosity and aptitude
    for mathematics and science set him apart. At the prestigious Madrick gymnasium, his physics teacher
    made a prediction that would later inspire the title of Grof’s memoir, “Life is a big lake. All the boys get
    in the water at one end and start swimming. Not all of them will swim across, but one of them I’m sure will. That
    one is Grof.” The teacher’s words resonated deeply. Decades later, Grof would title his autobiography “Swimming
    across,” and conclude it with, “As my teacher Volensky predicted, I managed to swim across the lake, not
    without effort, not without setbacks, and with a great deal of help and encouragement from others. I am
    still swimming.” But before Andreas could fully test those waters, Hungary’s political situation would once
    again upend his life. Most mornings I start my day with a smoothie. It’s a secret recipe the kids and
    I call the Tom Brady. I actually shared the full recipe in episode 191 with Dr. Rhonda Patrick.
    One thing that hasn’t changed since then, protein is a must. These days I build my foundation around
    what Momentus calls the Momentus 3: protein, creatine, and omega-3s. I take them daily because they support
    everything: focus, energy, recovery, and long-term health. Most people don’t get enough of any of
    these things through diet alone. What makes Momentus different is their quality. Their whey protein
    isolate is grass-fed, their creatine uses Creopure, the purest form available, and their omega-3s are
    sourced for maximum bioavailability, so your body actually uses what you take. No fillers, no artificial
    ingredients, just what your body needs, backed by science. Head to livemomentus.com and use code
    KnowledgeProject for 35% off your first subscription. That’s code KnowledgeProject
    At LiveMomentus.com for 35% off your first subscription.
    Spring is here, and you can now get almost anything you need delivered with Uber Eats.
    What do we mean by almost? You can’t get a well-groomed lawn delivered, but you can get
    chicken parmesan delivered. Sunshine? No. Some wine? Yes. Get almost, almost anything delivered
    with Uber Eats. Order now. Alcohol and select markets. See app for details.
    In 1956, when Andreas was 20 and a university student in Budapest, revolution erupted across
    Hungary. What began as a student demonstration against Soviet control quickly escalated into
    a nationwide uprising. For a brief exhilarating moment, it seemed the Hungarian people might
    win their freedom. Andreas participated in early demonstrations, but he had learned from childhood
    the fatal cost of misreading political winds. When Soviet tanks rolled into Budapest on November 4th
    to crush the uprising, he recognized the patterns of oppression unfolding once again. He would later
    write, “I was deathly afraid that the Soviets would seal the borders completely, and I knew once they
    did that, anybody who had participated in any way in the uprising would have to pay the price. I had an
    uneasy feeling that I would have a very bleak future in Hungary.” So on November 20th, Andreas slipped away
    from his parents’ apartment, carrying only what fit in his pockets. He joined thousands of refugees
    streaming towards the Austrian border. Guided by local farmers through secret roads, he waded through
    icy marshes in darkness, evading Soviet patrols. This crossing wasn’t merely physically dangerous,
    it represented a complete severance from the past. Andreas had no guarantee he would ever see his parents
    again. He carried no photographs, no memories, just the clothes on his back and the determination to
    start anew. When he reached Austria, America seemed the obvious destination. He had relatives in New York
    whom he’d never met, but they were his only connection to what would become his new home,
    and ultimately the launching pad for one of the most remarkable business careers of the 20th century.
    Andreas Groff arrived in the United States in January of 1957, penniless, speaking broken English,
    and knowing almost no one. His transformation into Andy Groff was about to begin. His first night in
    America revealed both the promise and challenges ahead. At the Refugee Center Hotel, he encountered
    a vending machine. He wrote, “It was a miracle. You put money in and food comes out. This would never
    happen in Hungary. Either the machine would take your money and give you nothing, or more likely,
    there would be no machines and no food.” Andy enrolled at the City College of New York,
    supporting himself as a waiter while studying with relentless discipline. Despite the language
    barriers and his hearing impairment, he graduated first in his chemical engineering class in 1960.
    It was during this time that Andreas Groff became Andrew Grove, a change he made with characteristic
    pragmatism. As he later explained, “I found myself spending too much time spelling my name out to people,
    then repeating it, then having it come back mispronounced or misspelled. I translated the name
    from Hungarian, where Groff means count in the aristocratic sense. Groff seemed close enough.”
    This wasn’t merely a practical decision. It represented Groff’s methodical approach to success.
    He didn’t just immigrate to America. He systematically transformed himself into an American.
    At City College, Andy met Eva Kasten, a fellow refugee who had come from Austria by way of Bolivia.
    They married in 1958 and would remain together for the rest of their life. After graduation,
    Groff earned his PhD in chemical engineering from Berkeley in just three years. Though academically
    brilliant, he was restless to apply his knowledge. “I want to do something useful,” he would say over and
    over again. When a Berkeley professor suggested solid-state physics as an emerging field, Groff approached his
    career hunt with characteristic thoroughness. He researched 22 different companies, dividing them
    into two categories: jobs for which he was qualified but uninterested, and those that interested him but
    where he might be underqualified. This methodical approach led him to Fairchild Semiconductor in 1963,
    where he immediately connected with research director Gordon Moore, a relationship that would shape
    technological history. What’s remarkable here is Groff’s systematic approach to opportunity. While most
    immigrants struggled to find any job, Groff was strategically positioning himself at the intersection
    of his skills and emerging industries. He didn’t just adapt to America, he methodically analyzed where he could
    create maximal impact, a preview of the strategic thinking that would later save intel. Before diving deeper into
    Groff’s career at Fairchild, we need a brief history of how the entire semiconductor industry began.
    Silicon Valley’s origin traces back to December 26, 1947, when three scientists at Bell Laboratories
    created the first working transistor. William Shockley, John Bardeen, and Walter Bratton had invented a device
    that would replace bulky vacuum tubes in electronics, arguably one of the most important inventions in the history
    of the world. In a typical East Coast corporate story, these men would have remained at Bell Labs,
    collecting patents and promotions while safely ensconded in a major corporation. But Shockley had different
    ideas. In 1955, he left Bell Labs to establish Shockley Semiconductor Laboratory in Mountain View,
    California. He recruited brilliant young engineers, including Gordon Moore and Robert Noyce. However,
    despite his scientific genius, Shockley proved to be a disastrous manager. He was controlling,
    erratic, and paranoid. By 1957, eight of his top researchers, later dubbed the traitorous eight,
    could no longer tolerate Shockley’s leadership. Moore and Noyce among them, they approached a young
    investment banker named Arthur Rock, who helped them secure funding from Fairchild Camera. Fairchild
    Semiconductor was born in October 1957. This moment established the pattern that would define
    Silicon Valley. Talented people leaving established companies to form startups, backed by investors
    willing to bet on unproven technologies, which is a radical departure from the East Coast business
    culture at the time. The next few years at Fairchild produced extraordinary breakthroughs.
    They developed the process for semiconductor manufacturing, and they developed the integrated
    circuit, building on work done at Texas Instruments. When Fairchild Camera exercised its options to
    buy out the founders in 1959, each received $250,000, which is over $2.5 million today, for their initial
    $500 investment. Silicon Valley’s reputation for turning sand into gold was born. This transaction sparked a
    financial ecosystem unlike anything before it. Success breeds success with wealthy engineers funding
    new ventures. Dozens of semiconductor firms would eventually trace their lineage back to Shockley’s
    laboratory. By the time Grove arrived at Fairchild in 1963, the company was the epicenter of technological
    revolution. Moore and Noyce had already become legends. The culture valued technical brilliance, but as Grove would
    soon discover, it lacked managerial discipline. For a recent immigrant with a strong accent and hearing problems,
    Silicon Valley offered something traditional corporate America didn’t: a pure meritocracy, where problem-solving
    ability trumped pedigree. It was the perfect environment for Grove’s combination of technical brilliance,
    determination, and willingness to question orthodoxy. What’s significant here is that Grove joined a
    culture that was simultaneously revolutionary and yet, at the same time, deeply flawed. Silicon Valley had
    technical brilliance, but lacked organizational discipline. Precisely the gap that Grove, with his
    Eastern European understanding that systems mattered as much as individual genius, was uniquely positioned
    to fill. Now, let’s see what Grove encountered when he joined this revolutionary industry. Andy’s first week at
    Fairchild established a pattern that would define his career. On Monday morning, a supervisor handed him a
    Semiconductor physics problem requiring differential equations and data analysis. By Friday,
    Andy had solved it using computer programming skills he had taught himself during his studies, a rare capability
    in a commercial company in 1963. “How lucky can you get?” Andy later marveled. “You show up for work on Monday,
    you’re assigned a problem that you’re uniquely qualified to solve, and you defies a non-obvious solution by Friday.” But
    was it mere luck? Andy had methodically acquired skills beyond what was required, positioning himself in a
    field where they might prove valuable. As Michael Dell would later observe, “He’s smart, he’s shrewd. There’s
    no such thing as lucky a thousand times in a row.” Grove himself would later coin the phrase “earned luck” to
    explain such success. During his five years at Fairchild, Andy displayed extraordinary work ethic. Beyond his day
    job, he authored 30 scientific articles, filed two patents, and taught graduate-level semiconductor
    physics at Berkeley. He challenged conventional wisdom about semiconductor surfaces with data that
    contradicted accepted theory. “When presenting these findings in 1963, the semiconductor establishment
    reacted harshly. I got nailed by all these experts,” Andy recalled, “who would sooner burn witches or equally
    burn me at the stake for being a heretic.” But Andy trusted data over dogma, a trait that would serve
    him throughout his career. Perhaps his most valuable contribution at Fairchild was what he called
    “managing up,” particularly his ability to work with Gordon Moore, the brilliant but conflict-averse
    head of R&D. The device development lab where Andy worked lacked clear expectations and internal
    discipline, mirroring the broader company culture. Andy developed a technique for extracting Moore’s
    insights during contentious meetings. “I would be running a meeting and people would be bashing each other’s
    heads.” Andy explained, “I looked up at Gordon. Something is wrong.” So I’d yell,
    “Stop! Gordon, what’s bothering you?” “Shut up! Gordon, tell us! Whatever you wanted to tell us!”
    Somebody had to stop the traffic. This role of traffic cop for Moore’s insights proved
    invaluable. Moore appreciated Andy’s ability to draw him out once telling him,
    “You know me better than my wife, or at least as well.” Fairchild’s trajectory illustrates the volatile
    nature of the early semiconductor industry. The company skyrocketed from founding to industry dominance,
    then began unraveling due to management missteps. Its technical achievements were revolutionary,
    but the business itself was poorly run. Two things stand out to me here. First, Andy’s willingness to
    follow the data over dogma, even at personal risk. And second was his recognition that technical
    brilliance alone doesn’t build lasting companies. While his peers focused exclusively on innovation,
    Grove was already developing the organizational mindset that would later distinguish Intel.
    By 1967, Andy Grove had reached a crossroads. Fairchild’s semiconductor, where he’d cut his
    professional teeth was hemorrhaging talent. The exodus had begun with the Traitorous Eight,
    engineers who had abandoned Shockley’s lab to form Fairchild. And now Fairchild itself was spawning
    a second generation of Silicon Valley startups. The Valley wasn’t just growing, it was subdividing.
    When Gordon Moore and Robert Noyce announced they were leaving Fairchild in 1968 to launch their own
    semiconductor venture, Grove didn’t hesitate and didn’t wait for an invitation. The moment Moore mentioned
    their plans, Grove immediately declared, “I’m going with you.” And just like that, he became employee
    number three at Intel, short for Integrated Electronics. Intel’s founding trio constituted
    semiconductor royalty. Gordon Moore was the visionary physicist who would soon formulate Moore’s law,
    predicting the doubling of transistor density every two years, a prediction that would drive the
    industry’s ambitions for decades. Robert Noyce, the co-inventor of the integrated circuit,
    brought charismatic leadership and industry credibility that opened doors and investor
    checkbooks. And then there was Andy Grove. What Grove brought to this threesome was something
    altogether different but equally crucial, a ferocious commitment to operational excellence. As one
    industry observer noted, in the semiconductor industry, management talent has been harder to find than
    engineering talent. By becoming a brilliant manager, Grove differentiated himself and the company.
    Here’s the irony. Until Intel’s founding, Grove had shown virtually no interest in business management.
    His published papers all dealt with technical subjects. He was an engineer and by all accounts,
    a brilliant one. But Silicon Valley in the late 1960s was already teeming with technical geniuses.
    What it lacked were leaders who could transform those geniuses into cohesive, productive teams. Fairchild
    was a great example of this, but far from the only one. What’s significant here is Grove’s intuitive
    understanding of complementary skills. While others sought to duplicate their strengths in founding teams,
    Grove recognized that Moore and Noyce needed someone fundamentally different from themselves.
    They had vision. They had technical credibility. But what they lacked was operational discipline.
    Grove didn’t need to be another visionary inventor. Instead, he took the role of execution specialist who
    could transform brilliant ideas into reality. Why would Andy Grove, a PhD engineer with zero management
    training, suddenly transform himself into a business leader? The answer comes from Gordon Moore himself.
    When asked how they handled problems in Intel’s early days, Moore responded with characteristic
    understatement. You look at the problems that are current at the time, and you try to come up with
    some kind of creative solution for them. Or you turn them over to Andy, one or the other. Grove had
    effectively become Intel’s default problem solver. Any challenge that Moore or Noyce couldn’t handle,
    or perhaps didn’t want to handle, landed on Andy’s desk. Anyone who has worked in a startup’s early
    days will recognize this pattern. The persistent problem nobody else wants to tackle eventually
    find their permanent home with the person willing to solve them. Grove not only accepted this role,
    but he excelled at it. Having witnessed brilliant ideas and talent wasted at Fairchild due to poor
    execution, Grove was determined not to let that happen at Intel. So he did something remarkable. He
    systematically taught himself management and leadership, applying the same analytical rigor
    he used in chemical engineering and semiconductor physics. This self-transformation is a defining
    characteristic of Grove’s career. He was a learning machine. He simply refused to be limited by his
    formal training or pigeonholed into one specialty. In 1997, reflecting on his career, Andy observed,
    I went from chemistry to chemical engineering, to applied physics, to solid state device physics,
    to manufacturing, all in a 10 to 12 year period. His biographer notes that Grove could have continued.
    After manufacturing, Grove migrated to management, to leadership of Intel, to spokesperson for the
    technology industry, to expert on corporate governance, to arguably the most admired business
    leader of his era. Grove’s personal notebooks from Intel’s early days reveal an engineer methodically
    deconstructing the challenge of organizing people. Just two months after Intel’s founding,
    he was analyzing not just what progress had been made, but how progress itself should be reported.
    Three days later, he wrote something profound. The formal decision-making process is usually the
    only protective covering for a much simpler informal process. This was Grove peeling back the organizational
    onion, recognizing that beneath the surface of business decision lies a layer of unspoken
    assumptions. He later explained people kind of knew the answer, and they manage the arrangement of facts so
    that the formal process validates what they want to do anyway. By 1968, Grove was sketching structural
    solutions to the semiconductor industry’s most vexing problem, the handoff from design to manufacturing.
    In his notes, he outlined a quality control system with independent oversight, rapid feedback loops,
    maps and clear accountability. In his notes, he writes, quality slash reliability. The best person to worry
    about product quality first is the designer. As the product goes into manufacturing and the designer takes
    on a new product design, he loses interest. A third independent body should take over the quality control
    function from the engineers at that stage to ensure meaningful results and determinations and rapid feedback.
    He should be closely related to both the design and processing groups. To ensure external auditing,
    their books should be open to examination by general management. This approach was extraordinary. While
    other executives might have copied existing management processes, Grove recognized Intel was breaking new
    ground. He designed the organization from first principles, structuring it specifically to solve
    technical problems. Intel desperately needed these solutions as it fought for survival. The startup
    competed fiercely for its first contract is the seventh better on a project six established companies had already
    pursued. Grove later recalled, we worked day and night to design the chip and in parallel develop the
    manufacturing process. We worked as if our life depended on it, as in a way it did. What’s instructive here is
    Grove’s methodical approach to mastering new demands. While most people define themselves by their formal
    education or job title, Grove saw knowledge as something to be systematically acquired when needed. He was
    always learning and evolving from chemistry to engineering to management. When faced with the
    challenge outside of his expertise, he didn’t delegate it or avoid it. He simply dove in and taught himself
    what he needed to know. This plasticity of identity explains how a Hungarian refugee with a PhD in chemical
    engineering became one of history’s most influential business leaders. The real breakthrough for Intel
    came in October 1970 with the 1103, a 1024 bit dynamic random access memory chip or DRAM. This wasn’t an
    incremental improvement. It represented a quantum leap forward storing four times the data of Intel’s
    previous chips. The 1103 acquired what Grove called “big technological gambles” and the challenges it
    presented revealed just how difficult semiconductor manufacturing was. “We were a company composed of
    a handful of people with a new design and a fragile technology housed in a little rented building,”
    Grove recalled, “and we were trying to supply the seemingly insatiable appetite of large computer
    companies for memory chips.” What made the 1103 revolutionary and so difficult to produce
    was its fundamental design. Unlike previous static memory chips that use six transistors per bit of
    memory, the 1103 used just three transistors in a new cell design. This remarkable efficiency allowed
    more memory to fit on a single chip, but it came with a catch. The information had to be constantly
    refreshed or it would fade away. The manufacturing challenges were enormous. The process began with silicone
    wafers, thin mirror polished slices of pure silicone crystal about four inches in diameter.
    In Intel’s first facility, these wafers traveled through a complex multi-step process where the
    slightest contamination could ruin the entire batch. What’s notable here is the high stakes bet Intel was
    making. Rather than playing it safe with incremental improvements, they bet the company on a fundamentally
    new approach to memory design. This willingness to make bold technological leaps while simultaneously
    building rigorous systems to manage the resulting complexity would become their defining competitive
    advantage. Few companies can successfully balance revolutionary innovation with operational
    discipline. Most excel at one or the other and Grove was creating an organization that could do both.
    Grove became obsessive about quality control. Early semiconductor manufacturing suffered from poor
    yields. Sometimes only 10 to 20 percent of chips on a wafer actually worked. Improving this percentage became his fixation.
    Intel’s fabrication facility, Fab 1, represented cutting-edge manufacturing for its time. Workers wore bunny
    suits, head-to-toe coveralls, not to protect themselves, but to protect the wafers from contamination.
    The scale of precision required was staggering. While a human hair is approximately 100 microns thick,
    circuit features on these early chips measured just a few microns. The 1103’s design made it
    extraordinarily vulnerable. It stored memory as tiny electrical charges that would leak away unless
    refreshed every few milliseconds, making the chip unusually sensitive to microscopic defects.
    Each manufacturing step demanded perfect precision. The smallest deviation in temperature, exposure,
    or time, or chemical concentration could ruin an entire batch. This stress was crushing. Grove recalled
    having nightmares where vicious dogs were leaping out of the processing equipment attacking him.
    The 1103 had to succeed or Intel might not survive. Ironically, despite Grove’s obsession with quality,
    the 1103 still went to market with serious flaws. After thousands had shipped, it turned out that
    in Grove’s candid words, under certain adverse conditions, the thing just couldn’t remember. Years
    later, Grove joked that the “S” in “Andrew S. Grove” stood for “ship the unit.” Yet customers bought it anyway,
    because even with the flaws, the 1103 offered advantages previous technologies couldn’t match.
    More surprisingly, its difficulty actually helped its adoption. As Gordon Moore observed,
    core memory engineers didn’t embrace the 1103 until they realized that it too was a difficult
    technology and wouldn’t make their skills irrelevant. As production scaled, Grove instituted statistical
    process control, systematically tracking every manufacturing variable to identify exactly what
    affected yield. Every temperature, chemical bath, and timing sequence was measured and correlated with results.
    His production meetings became legendary for their intensity. Grove demanded fact-based analysis and
    rejected vague explanations for problems. This relentless focus gradually improved yields. When
    Fab 2 opened in 1971, it incorporated all the lessons from Fab 1. And by the time Fab 3 opened in 1973,
    Intel had largely mastered the once temperamental 1103. Grove didn’t just care about quality. He obsessed
    over it scientifically when others saw manufacturing variability as an annoying fact of life. He approached
    problems with cold, hard numbers, not gut feelings. And he built systems to measure what others were guessing or
    complaining about. The human mind isn’t really equipped to intuitively grasp all the variables in a modern
    manufacturing process. While obvious now, in the early 70s, this was revolutionary. Grove was inventing
    manufacturing analytics decades before the term even existed. The lesson here, the most valuable
    approaches often seem like common sense in retrospect, but require seeing what others don’t in the moment.
    Looking back at the 1103 achievement, Grove wrote with uncharacteristic immodesty, making the 1103
    concept work at the technology level, at the device level, and at the systems level, and successfully
    introducing it into high volume manufacturing required, if I may flirt with immodesty for a moment of fair
    measure of orchestrated brilliance. Everybody from technologists to designers to reliability experts had to
    work to the same schedule toward a different aspect of the same goal interfacing simultaneously at all
    levels. Four years earlier, in July 1969, Grove had cut out a description of a film director’s job from
    Time Magazine. Above it, he wrote “my job description.” The clipping read, “vision to aspire. Any director must master
    formidable complexity. He must be adept at sound and camera work, a soother of egos, a cajeweler of artistic
    talent. A great director has something more, the vision and force to make all these elements fuse into an
    aspired whole.” End quote. This is fascinating. So an engineer by training with zero formal business
    education was modeling his role on a film director. Grove’s biographer notes that he doubts anyone else at
    Intel or in the whole semiconductor industry cut out that clipping and inquired of themselves rhetorically
    whether or not this was their job description. With the 1103, Grove had established the template for
    how Intel would operate for decades, identifying bleeding edge technology that required manufacturing
    breakthroughs, relentlessly tackling production challenges, and scaling rapidly while competitors
    struggled to catch up. The complexity of manufacturing the 1103 made it nearly impossible for competitors to reverse
    engineer, giving Intel a multi-year advantage in the market. In effect, complicated manufacturing
    became their core skill. There’s a bit of irony to this today. The experience crystallized Grove’s
    management philosophy. By 1971, he was coordinating dozens of specialists hired because of their expertise
    in a sliver of technology, each contributing one crucial piece to the larger puzzle. As technical
    teams developed in the next generation of products, Grove created systems to ensure seamless handoffs between
    design and manufacturing, historically the most vulnerable point in semiconductor development.
    Grove saw leadership like directing a film, not commanding an army. When he cut out that film
    director’s job description in 1969 and wrote “my job description” above it, he revealed something
    profound about his approach. While most technical leaders tried desperately to maintain expertise across
    every domain, a losing battle as technology advances, Grove took a different approach. The magic was in how he
    redefined the leader’s role, not the supreme technical expert, but as collecting talent and creating
    harmony. Most leaders fail because they can’t let go of being the smartest person in the room.
    And Grove succeeded by understanding a simple truth. As complexity increases, coordination becomes more
    valuable than individual control. The best leaders don’t need to know everything. They do need to know who knows what
    that and how to get them playing from the same sheet of music. While the 1103 DRAM established Intel as a
    serious memory player, an even more revolutionary product appeared in 1971, the 4004, the world’s first
    commercial microprocessor. Originally developed as a custom chip for Japanese calculator manufacturer, the 4004 was
    essentially a computer on a chip containing 2300 transistors and performing functions that previously required
    entire cabinets of electronics. The microprocessor’s importance
    wasn’t immediately apparent, even to Intel’s leaders. The company initially viewed it as
    merely a sideline to the core memory business. As one Intel engineer recalled, in the early days, the microprocessor was a
    solution looking for a problem. Andy himself would later admit that Intel stumbled into the microprocessor business.
    That statement is insane, given what we know today, but this is back in 1971.
    Nevertheless, Intel followed the 4004 with the 8008 in 1972 and the 8080 in 1974, increasingly powerful processors
    that found their way into a widening range of applications. The 8080 became particularly significant because it was selected
    selected as the brain of the Altair 8800, which was the first commercially successful personal computer
    released in 1975. What’s instructive here is how even brilliant leaders can miss the significance of their
    own innovations. Intel’s core team, including Andy Grove, initially failed to recognize that they had created the
    product that would eventually transform not just their company, but the entire world. This blind spot reveals an
    important truth about innovation. Revolutionary products often emerge not from grand strategic visions,
    but from solving specific customer problems. The microprocessor wasn’t born from a plan to change
    computing or change the history of the world. It came from meeting the needs of a Japanese calculator company.
    The greatest innovations frequently appear first as modest solutions to narrow challenges before their broader
    potential becomes clear.
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    Intel’s growth during the 1970s was remarkable. The company’s 1977 annual report described it as a
    difficult year, yet sales and profits both increased by 25%. Employment had risen to 8,100 people and
    the R&D investment was climbing steadily. A technological revolution was unfolding through
    what the report called the continuous integration between circuit requirements, basic science and
    process technology. The average number of transistors in the components Intel introduced in 1977 exceeded
    the total number of vacuum tubes in INEC, the most complex electronic equipment built just 30 years
    earlier. Yet, not all Intel ventures succeeded. In 1977, the company admitted defeat in one notable
    experiment. We abandoned the digital watch and watch module business, including the closing of our Microma
    subsidiary, the transfer of the most important people to other divisions of Intel and the disposal of Microma’s
    assets. Intel tried to create the Apple Watch before 1980. That’s insane. Intel had entered the watch
    business in 1972 convinced it had a unique combination of capabilities, the CMOS chip, the liquid crystal
    display, and assembly facilities. But as Grove later explained, we got out when we found out it was a
    consumer marketing game, something we knew nothing about. The cost of consumer advertising particularly
    shocked Intel’s engineering-minded leadership. The company ran exactly one television commercial
    for the Microma watches at a cost of $600,000. Just one ad, Grove lamented, and poof, it was gone. Moore
    continued wearing his Microma watch for years, calling it his $15 million watch and joking, “If anyone
    comes to me with an idea for a consumer product, all I have to do is look at my watch to get the answer.”
    The Microma experience taught Intel two important lessons though. First, when closing the subsidiary,
    Intel found positions elsewhere in the company for almost all Microma employees. This approach,
    protecting the people even when ventures failed, created tremendous loyalty within the company.
    A breed of employees who would bleed blue, Intel’s logo color was developing. Crucial for the upcoming
    challenges of the 1980s. The second lesson, however, may have been learned a bit too well. Intel concluded
    the consumer products simply weren’t in the company’s genetic code. As Grove reflected in 2005,
    all of our subsequent consumer products efforts were half-hearted. Despite eventually becoming one of
    the most recognized brands in the world, Intel never sold directly to consumers, perhaps leaving
    significant value unrealized. Intel’s handling of the Microma failure reveals an elegant paradox of
    corporate culture. They killed the watch business without hesitation, but protected nearly every employee
    who worked on it. This wasn’t kindness, it was rational. When companies punish the people behind failed
    ventures, they create risk aversion that slowly suffocates innovation. But there’s a fascinating
    flip side to how we process failure. The $15 million watch disaster so traumatized Intel’s leadership that they
    permanently tagged consumer products as “not in our DNA”. For decades afterwards, Intel reflexively
    avoided direct consumer sales. This is kind of how experience works. We don’t just learn the lessons,
    we sometimes overlearn them. The same painful memories that can make us smarter in one domain can blind us
    in another. Smart companies know when to kill projects, wise ones know which lessons from those failures to
    keep and which to forget. Beneath Intel’s impressive growth numbers of the late 1970s lay a company culture
    in metamorphosis forged largely through Grove’s relentless, sometimes merciless, self-criticism. Reading
    Grove’s internal notes from this period, one would never guess 1978 was a triumphant year for Intel.
    Instead of celebration, we find Andy complaining to Gordon Moore that with our operating managers
    being busy with operating, planning does not get sufficient emphasis. As Intel approached a half
    billion dollars of revenue, Grove wrestled with a fundamental question: what was preventing Intel from
    reaching a billion? His answer scribbled in July 1978 was a strikingly simple oomph and administration.
    When Intel was small, he reflected an individual or small group could provide the oomph, the initiative
    and the enthusiasm that the company needed to do its work. By 1978, however, the oomph had concentrated
    in top managers who are now consumed by day-to-day responsibilities. What troubled Andy about Intel’s
    middle management was their aversion to conflict was their aversion to conflict. The middle is populated
    by passive introverts, he wrote, honest, competent, decent, well-meaning, work-oriented people who just
    can’t tolerate controversy. The result in Andy’s characteristically blunt phrasing, “shit rises uphill.”
    This frustrated Andy because, as he noted, it is impossible to change people’s personalities and very
    difficult to modify behavior tied to fundamental personality traits. Intel somehow needed to upgrade
    the oomph quotient of its middle managers. By August 1978, Andy’s frustration had reached
    a boiling point. Manufacturing was undisciplined. Marketing was abominable. He told more, “I think
    I was totally wrong a month ago in perceiving improvements in our great organized campaign. If
    anything, things are getting worse. If I truly had the guts, I think what we should do is put on a total
    hiring freeze until we get our nose above the shit level.” This is the Andy that Intel employees knew,
    demanding, uncompromising, and brutally honest. His criticisms weren’t reserved for others. They extended
    to himself and the entire organization. Yet, for all of his harshness, he understood the potential
    downside of the critical culture he was creating. In an October 1978 memo to the top executives, he wrote,
    “To a large extent, I think we owe our success not to luck, but to a culture of problem orientation,
    of being critical of ourselves and thereby urging ourselves and our organizations to perform better
    and better. This virtue, however, can be carried to such an extreme that it can bring about our own
    paralysis through self-doubt.” Then, in what must have surprised anyone familiar with his typically
    unsparing critiques, Andy added, “So let’s try to keep our perspective and permit ourselves to enjoy the
    fact that we have never yet in our history had a problem we didn’t solve.” What’s remarkable here
    is Groves’ understanding of the paradox of high-performance cultures. The very critical
    orientation that drives excellence can eventually become toxic if not balanced with perspective and
    celebration. Most leaders swing between extremes, either creating complacent cultures that celebrate
    mediocrity or harsh environments that burn people out. Groves is attempting something far more difficult,
    building a culture that could simultaneously maintain relentless standards while providing enough
    psychological safety for people to take risks and speak truth. This balance, being brutally honest about
    problems while remaining fundamentally optimistic about solving them, would become their defining
    cultural characteristic. What we’re witnessing in these private notes is the birth of what would
    later be recognized as the intel culture. Groves’ distinctive organizational ethers that would
    eventually be studied at business schools around the world. This culture had several defining elements,
    all bearing his unmistakable imprint. At its core was what became known as constructive confrontation.
    As Groves recalled during intel’s early pressure cooker days, we often spent as much time bickering
    with one another as working on the problems. We developed a style of ferociously arguing with one
    another while remaining friends. We call this constructive confrontation. This direct problem-solving
    confrontation approach was coupled with a relentless focus on data and facts rather than opinions or
    emotions. Andy frequently complained about the tendency in management circles to substitute opinions for
    facts and emotion for analysis, a trend that still continues to this day. Intel also developed a unique
    approach to organizational management. In June 1978, Andy wrote, “The time has come for us to establish honest to
    goodness corporate staff. This would be made up of our top flight operating executives who would serve for
    a limited period prior to returning to line management. Their role would be to deal with
    longer-term issues, especially for those that cross divisional boundaries.” This focus on organizational
    effectiveness stemmed from Andy’s recognition that Intel’s rapid growth created increasingly complex
    problems. He noticed that every attempted solution seemed to generate new challenges. Getting into new
    businesses is a complicated phenomenon where directors can change fairly rapidly as one feels one way.
    Realigning emphasis means shuffling people about and having people stagger under the same load that their
    predecessor, who had done the job for years, would have been able to handle with ease. Culture wasn’t
    something that just happened at Intel, at least not under Andy Grove. While many companies let culture evolve
    organically, Grove engineered Intel’s with the same precision he brought to chip manufacturing. He wasn’t
    designing pleasant office vibes. He was building a corporate immune system. The brilliance here is in how
    he institutionalized seemingly contradictory forces, the brutal honesty alongside deep loyalty, rigid processes
    alongside flexibility. Constructive confrontation sounds like an oxymoron until you see it solve problems that
    politeness can’t touch. Grove treated culture as infrastructure, and to him it was just as critical as the factory
    floor. Years later, when Intel faced its greatest crisis, this deliberately designed culture became the
    company’s salvation. The greatest competitive advantage isn’t a product, but rather an organization that can
    adapt faster than the world changes around it. These cultural elements were crystallizing into a coherent
    whole, and the results were undeniable. By 1979, Intel sales and profits soared to 663 million and 77.8
    million, representing growth of 65.8% in both categories. The workforce expanded by 40% to more than 14,000
    employees. Intel had debuted on the Fortune 500 in 1978 at position 486, and by 1979 had climbed to 368.
    Even more impressively, Intel’s market capitalization more than doubled from 638 million at the end of
    1978 to 1.4 billion just a year later. In many ways, 1979 represented the validation of the culture
    Andy had been painstakingly building. Prices for their products remained high throughout the year because
    demand far outstripped forecasts. The semiconductor industry was constrained by supply shortages. As one
    observer noted, “If you’re going to have a problem, that is one which many business people would select.”
    But as the 1970s drew to a close, Andy’s greatest test as a leader still lay ahead. The extraordinary
    success of 1979 masked underlying vulnerabilities. As Andy himself had written years earlier, “In the
    meantime, while you’re fighting the forces of entropy in your company, the rest of the world is
    hardly standing still.” He had identified the competitive threat in an annual report. This
    year, or in some cases last year, competition arrived and very logically went after the most visible
    segment. The large accounts who now have alternatives have started to move towards those alternatives with
    a resulting loss of standing, if not business for us. In retrospect, that seems to have been unavoidable,
    “but we were too skimpy, too busy, and too smug with our success to have anticipated
    this trend.” The culture Andy had forged through his relentless self-criticism and exacting standards would
    soon face its most severe challenge. The question wasn’t whether Intel’s culture could drive growth in good
    times. It had proven that conclusively. The real question was whether the same culture could navigate
    Intel through a genuine crisis when rigorous analysis and candid self-assessment would have
    to transform into decisive action at a pivotal moment for the American semiconductor industry.
    It’s worth pausing here for a second. Success often sears the seeds of its own destruction. Grove
    understood something profound. The moment you feel safest is often when you’re most vulnerable. While
    competitors celebrated victories, he was already hunting for threats lurking in Intel’s success.
    For Grove, this wasn’t theoretical pessimism. It was personal trauma. Going back to his childhood,
    as a Hungarian Jew who survived both Nazi occupation and communist rule before fleeing to America,
    Grove had witnessed how quickly stability can disintegrate into chaos. The genius of his approach
    was maintaining intense paranoia precisely when it seemed least necessary. Most companies grow complacent
    with success. Their vigilance fades exactly when competitors are motivated to overtake them. While
    Intel’s 1979 results had shareholders celebrating, Grove was already writing about fighting the forces
    the forces of entropy. This wasn’t anxiety, it was clarity. And it’s something all the greats have,
    even when they’re winning. This perpetual vigilance would prove crucial to Intel’s salvation when
    Japanese manufacturers later attacked the company’s core business. By the mid-1980s, Intel faced an
    existential threat and existential threat that would not just test the company’s business model, but the
    very leadership philosophy Grove had been cultivating for nearly two decades. The semiconductor industry was
    experiencing what he would later term a 10x force, a fundamental shift so powerful it could destroy
    established companies that failed to adapt. In his influential book, Only the Paranoid Survive,
    Andy explained that a crucial distinction between ordinary changes and 10x changes. Ordinary 1x changes were the
    constant background noise of business, the incremental shifts in customer preferences, competitor tactics,
    or technologies that companies routinely handle. These might alter your trajectory, but they don’t
    fundamentally transform your industry. A 10x change, by contrast, was a force of an entirely different
    magnitude. Andy described it as the difference between a light breeze and a full-blown typhoon,
    or between waves and a tsunami. When a 10x force hits, the fundamentals of your business are altered
    so dramatically that continuing with your existing strategy becomes impossible. For Intel in the late 1980s,
    this 10x force came in the form of Japanese memory chip manufacturers. The quality level of the Japanese
    memories, especially DRAMs, were becoming consistently and substantially better than Intel’s. This meant
    not only were they selling merchandise cheaper than Intel could, but they were selling better
    merchandise as well, a very threatening position for the company to be in. This was a fundamental shift
    that rendered Intel’s position in the memory market untenable. Japanese firms had mastered a manufacturing
    approach that Intel simply couldn’t match. Memory chips had become commodities, where competitive
    advantages came from manufacturing scale and efficiency rather than design innovation. The area where Intel had
    dominated through the 1970s. Most businesses are designed to weather ordinary changes. The 1x forces
    that Grove described as the constant background noise. But strategic inflection points aren’t headwinds,
    they’re tsunamis that destroy companies that mistake them for normal challenges. The true genius of
    leadership lies in recognizing when incremental improvements become futile and when you must abandon the
    very business that made you successful. The golden goose, if you will, even while it’s still generating enormous profits.
    By 1985, Intel was wandering through what Andy described as a valley of death. The company was
    posting significant losses, employee morale was plummeting, and the board grew restless. Cost-counting
    measures, facility closures, and layoffs, the standard corporate responses to financial pressure failed to
    address the fundamental market reality. Intel simply couldn’t compete in the memory business anymore. Andy
    Grove possessed a rare ability to acknowledge the brutal truce before disaster became inevitable. He’d
    been doing it his whole life. But even for him, the realization didn’t come easily because Intel’s
    identity was inextricably tied to memory chips. The company had been founded on it. Gordon Moore and
    Robert Noyce’s vision of semiconductor memory replacing magnetic core memory had sparked the whole industry in
    a new direction. And Intel engineers took enormous pride in their memory innovations. As Andy would
    later observe, people who have no emotional stake in a decision can see what needs to be done sooner.
    Two deeply held beliefs within Intel complicated matters even further. First, many believed that
    memories were the company’s technology drivers, the products on which new manufacturing processes were
    perfected before being applied to microprocessors. Second, there was a widespread conviction that Intel
    needed to offer customers a complete product line including both memories and processors. If they
    offered only one, customers would supposedly leave them for someone who could offer both. The turning
    point came during a conversation between Andy and Gordon Moore that has since become legendary in
    business circles. It’s the one I mentioned in the introduction. Looking at the terrible memory chip numbers for the
    latest quarter, Andy said to Moore, “If we got kicked out and the board brought in a new CEO, what do you
    think he would do?” Moore answered without hesitation. He would get us out of memories. Andy then posed a pivotal
    question. Why shouldn’t you and I just walk out the door, come back in, and do it ourselves? This mental
    exercise of viewing the company as an outsider would become the cornerstone of what Andy would later term
    a strategic inflection point, a moment when the fundamentals of the business are about to change.
    You can tell you’re going through a strategic inflection point if the way you traditionally have
    done business no longer delivers the kind of results that we used to get. Well, the new way of doing
    business involves so much uncertainty that you can’t easily bring yourself to embrace it. What’s
    interesting here is the technique Grove used to overcome organizational inertia by mentally stepping
    outside, walking out the door. Grove and Moore could temporarily escape the emotional attachment to past
    decisions and see the blind spot that was holding them where they were. They could see their situation
    with new clarity. This ability to create psychological distance from your own commitments is extraordinarily
    difficult but crucial during strategic inflection points. Most leaders remain imprisoned by their previous
    decisions, unable to abandon what they built even as evidence mounts that it’s no longer viable. Grove had
    developed a technique to break the psychological lock, a method for seeing his own creation with the
    objectivity of an outsider. One of Andy’s most insightful observations involved the transformation of the
    computer industry’s structure. He described how the industry had evolved from a vertically integrated
    model to a horizontally segmented one in 1980s sparked by memory chips becoming commodities and the rise of the
    microprocessor. In the mainframe era dominated by IBM, companies operated as fully integrated vertical stacks. IBM
    designed everything from chips to hardware to the operating system to the applications. As Andy explained,
    a company competing in this industry as one vertical proprietary block against all other computer
    companies’ vertical proprietary blocks. The rise of the microprocessor, which Intel had pioneered,
    fundamentally changed the structure. The industry fragmented into horizontal layers. Chip manufacturers like
    Intel, computer assemblers like Dell and Compaq, operating system providers like Microsoft and application
    developers. Andy wrote, “In this new model, no one company had its own stack. A consumer could pick
    a chip from the horizontal chip bar, pick a computer manufacturer from the computer bar, choose an operating
    system out of the operating system bar, grab one of several ready to use applications off the shelf at a retail
    store or a computer superstar and take the collection of these things home.” This shift destroyed IBM’s dominance.
    Despite its vast resources and market power, or possibly because of them, IBM couldn’t adapt to this
    horizontal world. They remained wedded to the vertical integration model. Even as the economics of
    specialized horizontal layers made that approach uncompetitive, what made this transition especially
    treacherous was that it didn’t happen overnight. It evolved gradually with the vertical model continuing to work
    reasonably well, even as the horizontal model gained momentum. By the time the inflection point was obvious to
    everyone, IBM had already lost most of its market leadership position. Andy observed, “IBM was
    composed of a group of people who had won time and time again, decade after decade, in the battle among
    vertical computer players. The managers who ran IBM grew up in this world. Their long reign of success deeply
    reinforced the thought processes and instincts that led to winning in the vertical industry. So when the industry
    changed, they attempted to use the same type of thinking that had worked so well in the past. IBM,
    as a vertical player, was trying to sell portions of its stack to direct competitors, an inherently
    conflicted position. Grove had learned that Intel needed to focus on microprocessors and basically nothing
    else. As he would write, “It’s harder to be the best of class in several fields than just one.” What’s interesting here is that
    Grove didn’t just see competitors. He saw the competitive landscape transforming. While IBM’s
    executives were still trying to outmaneuver other vertically integrated companies, Grove recognized
    the industry was fundamentally restructuring into horizontal layers where specialists in each layer
    would dominate. The greatest business failures often come from not playing the game poorly, but from
    continuing to excel at games that no longer matter. One of Andy’s most penetrating insights concerned
    the role of middle managers during strategic inflection points. He believed they often had
    the clearest view of impending changes and called them Cassandras, after the Greek priestess who foretold
    the fall of Troy. He wrote, “The Cassandras in your organization are a consistently helpful element in
    recognizing strategic inflection points.” As you might remember, Cassandra was the priestess who foretold the fall
    of Troy. Likewise, there are people who are quick to recognize impending change and cry out an early
    warning. Although they can come from anywhere in the company, Cassandras are usually in the middle
    management. Often they work in the sales organization. They usually know more about the upcoming change than
    the senior management because they spend so much time outdoors where the winds of the real world blow in their
    faces. In other words, their genes have not been selected to achieve perfection in an old way. Because they are on the
    front lines of the company, Cassandras often feel more vulnerable to danger than do senior managers
    in their more or less bolstered corporate headquarters. Bad news has much more of an immediate
    impact on them personally. Lost sales affect a salesperson’s commission. Technology that never
    makes it into the marketplace disrupts an engineer’s career. Therefore, they take the warning signs more
    seriously. “If you’re a senior manager in a company,” Andy explained, “strategic inflection
    points arrive in disguised form.” Top executives are often the last to recognize the fundamental
    shifts because they’re insulated from market realities and emotionally invested in the status quo. Middle
    managers, by contrast, operate at the intersection of the company and the outside world. They usually have a
    better sense than the senior management of what’s happening with both sides. Andy noted, “their position gives them an
    unfiltered view of the customer shifts, competitive threats, and technological changes.” Andy illustrated
    this with a powerful analogy, comparing strategic inflection points to fire drills in a theater. When
    the alarm sounds, audience members in the middle of the theater have the clearest picture of what’s
    happening. They can see both the stage, where the fire may have started, and the exits. Audience members
    in the very front like senior executives may be too close to the stage to see the big picture. While
    those in the back, frontline employees may be too far from the action. At Intel, Grove created forms where
    middle managers’ voices could be heard and respected regardless of hierarchy. Grove discovered something
    counterintuitive about organizational awareness. Middle managers often see the existential threats before
    their executives do. These Cassandras operate where strategy meets reality. They’re close enough to the
    customers to feel market shifts, but connected enough to headquarters to understand the implications. By
    deliberately elevating these voices rather than filtering them through the hierarchy, Grove built an early
    warning system that detected industry shifts while competitors were still celebrating calm seas. The
    decision to exit the memory business wasn’t implemented overnight. The transition took nearly three
    years, and throughout this challenging period, Andy deployed the leadership style he had honed for
    decades, demanding, data-driven, and brutally honest. First, he insisted on clarity about market realities. He
    gathered comprehensive data on Japanese companies’ memory pricing, quality, and manufacturing
    capabilities, forcing Intel’s management to confront an uncomfortable truth. The gap wasn’t closing,
    it was widening. Second, he addressed emotional resistance head-on. In a pivotal meeting with
    senior managers, Andy posed a provocative question. If memories are so strategic, why do we lose money on
    every one we sell? This forced Intel’s leadership to separate old strategic methodology with new economic
    reality. And third, he tackled practical transition challenges with meticulous attention to detail. What would
    happen to Intel’s memory design teams? How would customers react? What would the microprocessor-focused
    Intel look like? Andy demanded detailed planning for each dimension so employees could visualize the
    new Intel. Thanks to the company’s history of protecting employees during previous shutdowns,
    there was less fear of institutional change. When Intel finally announced to customers it would
    no longer be manufacturing DRAMs, the response was largely a big yawn. Many had already anticipated
    Intel’s retreat and secured alternative suppliers. Some even expressed relief saying it sure took you a long
    time. Grove systematically dismantled both practical and psychological barriers to change. He recognized
    that strategic pivots fail not just because of poor planning, but because of emotional attachments to
    past decisions and fear of an uncertain future. By keeping the focus on market realities, strategic
    contradictions, and implementation details simultaneously, Grove created a comprehensive
    approach to organizational transformation that remains a template for executing painful but necessary pivots
    today. By 1987, Intel had largely completed the transition away from memories. The company was
    profitable again, but its 80386 microprocessor was gaining traction in the personal computer market.
    But Andy, now Intel’s president, wasn’t content with mere survival. He sensed an opportunity to
    fundamentally transform Intel’s position in the market. Rather than remaining an anonymous component supplier,
    Intel could become a recognized brand that signified quality and innovation to end consumers and thereby
    protect itself from future inflection points. In 1989, Intel began shifting its advertising aimed at consumers
    instead of manufacturers. This approach culminated in the famous Intel Inside campaign,
    fundamentally altering the power dynamics in the computer industry. PC manufacturers couldn’t easily
    switch to a competing processor without risking consumer backlash. Consumers would be looking
    specifically for an Intel-powered PC. This move was pure genius. What emerged from this crucible was not
    just a safe company, but a coherent leadership philosophy that Andy would articulate. Business success contains
    the seeds of its own destruction. The more successful you are, the more people want a chunk of your
    business and then another chunk until there’s nothing left. I believe that the prime responsibility of
    a manager is to guard constantly against other people’s attacks and to put this guardian attitude
    in the people under his management. Grove’s paranoia wasn’t the anxious hand-wringing that paralyzes
    action. It was strategic mindset that fueled adaptation. A corporation is a living organism. It has to
    continue to shed its skin, he insisted, recognizing that yesterday’s winning formula becomes tomorrow’s
    liability. His masterstroke, the final masterstroke, the Intel Inside campaign, reveals a deeper insight
    about competitive advantage. By turning an invisible chip into a household brand, Grove didn’t just
    differentiate Intel, he fundamentally changed who Intel’s customer was. Though PC manufacturers wrote the
    checks, consumers now demanded Intel processors specifically, creating a protective moat around the
    business that no competitor that no competitor could easily cross. This is the paradox at the heart of
    lasting success. The more deliberately you prepare for your own obsolescence, the less likely you are to
    become obsolete. All right, let’s get into a few afterthoughts and reflections and then talk about some lessons learned.
    So one of the things that stood out to me here was just how profound his childhood was on his experiences and
    how he learned that survival demands the same skills, constant vigilance, brutal self-assessment,
    the courage to abandon what’s once defined you. I mean, he lived this stuff as a child. That is a terrible,
    terrible childhood. Another thing that really stands out to me here is a bit of the red queen effect going on where,
    you know, you have to run harder and harder to maintain your place in industries that are changing rapidly.
    And I think, you know, the memory, you can use this as a great example, the memory chips, you know,
    you have to get better and better every year. You can’t just rest. You can’t take a break. You have to sprint.
    You’re constantly sprinting because your competitors are sprinting. And if you stand still, if you don’t get
    better, you’re getting worse. And in highly, highly competitive industries, that’s what’s happening.
    The decision to kill the golden goose, killing the memory chips and, and doing the strategic pivot that
    I can’t understate how hard that is. There’s so much organizational inertia tied into that and making
    that pivot. And, you know, it all worked out well for Intel, uh, at the time. And it’s so hard to make
    those decisions. Um, there’s so many people giving you conflicting information. I like Andy talks a lot
    about blind spots without using the term blind spots. He’s always trying to get information
    either from people through analysis or through analytics or just seeing the world through their
    eyes. I liked his idea of Cassandra’s being the middle managers. I think there’s a lot of truth
    to that. Having worked in a large organization before people who touch the outside, they touch the territory.
    And because they touch the territory, uh, they often have more accurate information about the
    territory than management who relies on maps. It’s a bit of map territory.
    I like his idea of thought experiments, you know, sort of stepping outside, firing yourself as CEO,
    uh, and saying, what would we do different if the board fired us and then hired us again?
    You know, these are the type of things I talk about in the great mental models, volume one,
    it’s a great thought experiment for you. It’s also something that we can do. You are the CEO of you.
    Uh, and you have thousands of employees at your disposal today in the form of GPUs and AI.
    And I think the question is, you know, one question that I constantly ask myself is if I fired myself
    today, uh, what would a new CEO or myself taking over stop doing? What am I doing today that I need
    to stop and what could I start doing? And I think those questions are super important. As I was researching
    the whole transition from memory to semiconductors with Intel, you know, the parallels between what Google’s
    going through right now just stuck out so much. They have this golden goose in traditional search
    that’s making a ton of money. And I wonder at what point you face a bit of innovators dilemma where
    you’re not dealing with reality. The people who grew up in Google right now grew up in search. They grew
    up in an era where they won over and over again. Sounds a lot like IBM in this story. They kept winning
    over and over again and they’re dominant in their field until they’re not. And when you grow up in an
    industry and you win over and over and over again in that industry, and then you have to change, you
    reach one of those inflection points, those 10 X points that Grove talk about, uh, that becomes the
    hardest point to change your mind about things. The very thing that success has driven for you. Now you have
    to abandon and go all in, you have to burn the boats and, you know, close some doors, but you have to
    close doors on the most profitable part of your business. And one final reflection is sort of, I
    couldn’t fit this in the story, but I think it’s quite profound. Andy’s philosophy about how he connected
    organizational adaptation to personal responsibility. He said, and I quote, “The sad news is nobody owes you
    a career.” Your career is literally your business. You own it as a sole proprietor. You have one employee
    yourself. You were in competition with millions of similar businesses, millions of other employees
    all over the world. You need to accept ownership of your career, your skills, and the timing of your moves.
    That is such a high agency way to think about things. And this is what I tell my kids, like you are running
    a company. You, and I mentioned this a little bit earlier, you have a thousand GPUs. You have a thousand
    employees at your disposal. And, you know, if you’re not telling them to do something or learning or getting
    better, then they’re just sitting there waiting for you to tell them what to do. But you have one employee.
    You are in competition with millions of other people, millions of people just like you, and nobody owes you
    anything. And I think, you know, Andy’s childhood really informs that view. Okay. Let’s get to some of
    our lessons here before we close this out. So lesson number one, bounce, but don’t break. Grove faced
    devastating childhood circumstances. A father sent to labor camp, hiding his Jewish identity and
    permanently losing his hearing from scarlet fever. Yet he transformed this difficulty into advantage,
    developing extraordinary attention to subtle signals and the ability to make decisions with
    incomplete information. When you can’t change your circumstances, you can change how you respond to
    them. This is the lesson we also learned from Viktor Frankl. The last human freedom is the ability to
    choose how you respond to a situation. Lesson number two, don’t care what they think. When
    Grove’s semiconductor research contradicted established theory, experts wanted to burn him at the stake.
    He built a culture where only data mattered, not opinions. Truth seeking requires the courage to
    be disliked. So many people these days optimize their life around being liked. And that means that you
    will never face the hard reality of inconvenient data. Three, face reality before it faces you.
    Grove’s willingness to confront brutal facts became his defining leadership trait. When faced with Japanese
    memory manufacturers overtaking Intel, he asked more of the pivotal question. If we got kicked out and the
    board brought in new CEO, what would he do? This thought experiment created distance from his own
    decisions and allowed him to abandon the very business that built Intel. He was effectively enabled to see
    his blind spots. Emotional attachment to past decisions is such a silent killer.
    Four, success sows the seeds of its own destruction. Even during Intel’s record profits of 1979,
    Grove was hunting for the existential threats. Having survived Nazi occupation, he knew stability could
    vanish overnight. Paranoia is the most valuable precisely when it seems least necessary. And there’s
    a parallel here that just comes to mind as I’m reading this. But if you listen to interviews with Tom
    Brady or Patrick Mahomes or Michael Jordan, there’s these key moments, there’s these games where they
    win. I remember Brady won one game is like 24 to seven or something. And in the interview after he’s
    like, we should have won that 45 to seven. He’s not celebrating the victories. Like, you know, we got
    lucky. We, we, we should have been better. I should have been better. And I think that, you know, that is
    something that people have, but you can also adapt. Five, Grove was a talent collector. He recognized
    leadership as an orchestration rather than individual brilliance. As Intel grew, he focused on creating
    systems where collective intelligence could flourish, particularly by amplifying middle managers’ voices.
    He developed constructive confrontation where ideas could be ferociously debated. If you’re running an
    organization or your senior level in an organization, your ceiling is determined by the
    talent you attract, not the talent you possess. That is true of organizations. Six, he was a learning
    machine. Grove transformed from a chemical engineer to semiconductor physicist to management guru in just
    a decade. He approached each new domain with the same methodical rigor. In a changing world,
    the ability to learn quickly compounds like interest. Seven, he had a taste for salt water.
    While working as a waiter and learning English, Grove still graduated first in his class. Excellence
    happens when nobody’s watching. The gap between good and great is filled with voluntary hardships that
    others refuse to endure. Eight, it takes what it takes. Grove’s work ethic was relentless and
    unconstrained by conventional boundaries. At Fairchild, he authored 30 scientific articles and filed patents
    while simultaneously teaching at Berkeley. When manufacturing problems threatened Intel’s existence,
    Grove created statistical systems tracking every production variable, well before these type of
    analytics were normal or standard or even acceptable. Sometimes progress requires both working smarter
    and harder. Nine, positioning is leverage. Grove never merely reacted to opportunities. He methodically
    positioned himself at the intersection of his talents and emerging trends. Before joining Fairchild,
    for example, he researched 22 different companies, dividing them into categories based on his interest
    versus qualifications. When Moore and Noyce mentioned they were starting Intel, he immediately recognized the
    opportunity as their operational compliment. He mastered his circumstances rather than being mastered by them.
    Number 10, ride the wave. When Grove identified the semiconductor revolution, he committed fully
    rather than hedging his bets. Even when Intel’s 1103 memory chip had serious flaws under certain adverse
    conditions, the thing just couldn’t remember. He still persevered because he knew they were riding an
    unstoppable technological wave. When you get the trend right, you can overcome countless tactical failures.
    What a story with Andy Grove. There’s so many lessons that you can take away here. I’m going to listen
    to this one over and over again. Thanks for listening and learning with us. And be sure to sign up for my
    free weekly newsletter at fs.blog/newsletter. I hope you enjoyed my reflections at the end of this episode.
    That’s normally reserved for members. But with this outlier series, I wanted to make them available to everyone.
    The Farnam Street website is where you can get more info on our membership program, which includes access
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    sharing with a friend is the best way to grow this special series until next time.

    Most people protect their identity. Andy Grove would rewrite his, again and again. He started as a refugee, became a chemist, turned himself into an engineer, then a manager, and finally the CEO who built Intel into a global powerhouse. He didn’t cling to credentials or titles. When a challenge came up, he didn’t delegate, he learned. This episode explores the radical adaptability that made Grove different. While his peers obsessed over innovation, he focused on something far more enduring: the systems, structures, and people needed to scale that innovation. Grove understood that as complexity rises, technical brilliance fades and coordination becomes king. 

    You’ll learn how he redefined leadership, why he saw management as a creative act, and what most founders still get wrong about building great companies. If you’re serious about getting better—at work, at thinking, at leading—this is the episode you’ll be glad you didn’t miss. 

    This episode is for informational purposes only and most of the research came from The Life and Times of an American by Richard S. Tedlow, Only the Paranoid Survive by Andy Grove, and Tom Wolfe’s profile of Robert Noyce available here.

    Check out highlights from these books in our repository, and find key lessons from Grove here — ⁠⁠https://fs.blog/knowledge-project-podcast/outliers-andy-grove/⁠

    (05:02 ) PART 1: Hungarian Beginnings
    (06:48) German Occupation
    (09:27) Soviet Liberation
    (11:01) End of the War
    (12:35) Leaving Hungary

    (14:10) PART 2: In America
    (16:50) Origin of Silicon Valley
    (20:04) Fairchild

    (22:54) PART 3: Building Intel
    (25:15) Becoming a Manager
    (29:39) Intel’s Make-or-Break Moment
    (31:35) Quality Control Obsession
    (34:41) Orchestrating Brilliance
    (37:49) The Microprocessor Revolution and Intel’s Growth
    (40:32) Intel’s Growth and the Microma Lesson
    (30:51) The Grove Influence
    (47:00) The Birth of Intel Culture
    (49:42) ​​The Fruits of Transformation
    (50:43) The Test Ahead

    (53:07) PART 4: Inflection Points
    (55:23) The Valley of Death
    (58:26) The IBM Lesson
    (01:01:18) CASSANDRA’s: The Value of Middle Management
    (01:04:09) Executing a Painful Pivot

    (01:08:25) Reflections, afterthoughts, and lessons

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