Rich Karlgaard is an angel investor, board director and Wall Street Journal best-selling author as well as the longtime publisher (since 1998) of Forbes magazine. He also writes the Forbes column, “Innovation Rules,” which is known for its witty assessment of business and technology. He has been a regular panelist on television’s Forbes on FOX show since its inception in 2001. Rich really is a serial entrepreneur and has launched two magazines (Upside and Forbes ASAP), the venture capital firm Garage Technology Ventures (with his friend, Guy Kawasaki), and Silicon Valley’s premier business and technology forum, 7500-member Churchill Club. He is a past Northern California winner of the Ernst & Young “Entrepreneur of the Year” award. Rich speaks 50 to 60 times a year on economic, business and investment themes. He was raised in Bismarck, North Dakota, and graduated from Stanford University. He lives with his family in Silicon Valley. His latest book, The Soft Edge : Where Great Companies Find Lasting Success, was published by Jossey-Bass/A Wiley Brand (April 2014).
Here is an excerpt from my interview of him. To read the complete interview, please click here.
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Morris: Before discussing The Soft Edge, a few general questions. First, who has had the greatest influence on your personal growth? How so?
Karlgaard: That would be my dad, Dick, who died in 2012. Dick was the athletic director of the Bismarck, N.D. public school system. He hired and fired high school coaches. He also ran state tournaments in every sport and had a big deep voice and did the public address at football and basketball games and at track meets. He was a mythic figure around Bismarck. He absolutely loved his job. He did what he wanted to do, and he excelled at it. He was twice named the national high school athletic director of the year. My dad invented his own job and he was happy. That’s what I learned from him.
Morris: Years ago, was there a turning point (if not an epiphany) that set you on the career course you continue to follow? Please explain.
Karlgaard: When I bought my first Apple Macintosh in 1985. I bought a Mac, then a copy of Aldus PageMaker (I had serial number 443), then a laser printer. Suddenly I had the tools to be a publisher. No longer was I limited to being a low-level technical writer. Liberation! Desktop publishing let me create Upside magazine, which let me interview people like Bill Gates, which caught the eye of Steve Forbes. The Mac began a marvelous chain of events.
Morris: To what extent has your formal education been invaluable to what you have accomplished in life thus far?
Karlgaard: Zip. Stanford looks good on anyone’s resume, but I learned nothing of value in classes. College taught me to hate reading. I used to hide in the library and pour through old issues of Sports Illustrated rather than study political science textbooks. I fell in love with reading, beyond sports writing, two years after finishing college. I became interested in business, markets and finance only after I figured out that business was just another kind of sport. As editor of Upside and Forbes ASAP, I tried to inject a sports-writing vigor and wit and human truth to business. That’s what I strive for in my Forbes Innovation Rules columns. That was my goal in writing The Soft Edge.
Morris: What do you know now about the business world that you wish you knew when you when to work full-time for the first time? Why?
Karlgaard: Well, I knew absolutely nothing about business when I graduated from college. I was able to catch up fast once I learned that business was like sports, but, alas, I didn’t figure that out until my late twenties. In Search of Excellence by Tom Peters and Bob Waterman was another eye-opener. They wrote about business as if it could be … fun. Which it can be.
Morris: Of all the films that you have seen, which – in your opinion – best dramatizes important business principles? Please explain.
Karlgaard: Movies about business are almost always boring. They always feel forced. Ashton Kutcher did in fact resemble Steve Jobs – spoke like him, walked like him — and that was amazing for, oh, the first five minutes. But the story was wooden. Great movies, on the other hand, teach us about human truth. Insights about human truth are what matter in business.
Morris: From which non-business book have you learned the most valuable lessons about business? Please explain.
Karlgaard: I am now immensely enjoying Scott Eyman’s biography of John Wayne. This book is not primarily about the movie business, but Eyman in great detail shows how Wayne managed his career and brand and how he worked with different directors and studios. Wayne’s collaboration, in particular, with director John Ford is deeply illuminating.
Morris: Here are several of my favorite quotations to which I ask you to respond. From Howard Aiken: “Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.”
Karlgaard: True in science and philosophy. But note that Apple did not have to ram the iPhone down people’s throats.
Morris: From Richard Dawkins: “Yesterday’s dangerous idea is today’s orthodoxy and tomorrow’s cliché.”
Karlgaard: Only true when evolution is at work. Certainly business innovation follows this course. But the Dawkins dictum fails to explain, say, deeper human nature, which is timeless.
Morris: From Isaac Asimov: “The most exciting phrase to hear in science, the one that heralds the most discoveries, is not “Eureka!” (I found it!) but ‘That’s odd….’”
Karlgaard: I love this quote! The analogy in business would be, “Odd that our product generates more buzz when we advertise less.” Or, “Odd that Mary, who is such an introvert, is our best salesperson.”
Morris: Finally, from Peter Drucker: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.”
Karlgaard: I was lucky to interview Drucker on two occasions at his home in Claremont, Calif. He told me the most difficult thing for any CEO was to figure out what not to do.
Morris: In one of Tom Davenport’s recent books, Judgment Calls, he and co-author Brooke Manville offer “an antidote for the Great Man theory of decision making and organizational performance”: organizational judgment. That is, “the collective capacity to make good calls and wise moves when the need for them exceeds the scope of any single leader’s direct control.” What do you think?
Karlgaard: I know Tom Davenport and consider him brilliant. But I wouldn’t be so quick to toss out the Great Man. Apple lost something vital with the death of Steve Jobs. Amazon needs Jeff Bezos. Tesla needs Elon Musk. Professor Davenport’s idea of a Great Man sounds more like Downton Abbey’s Lord Crawley – a caricature of a pompous know-it-all – than it does of actual great leaders you see in business today. Today’s great leaders are data driven, yes, but they are far, far more than that. You can’t inspire people with data.
Morris: In your opinion, why do so many C-level executives seem to have such a difficult time delegating work to others?
Karlgaard: To my eye, it is below C-level where you see this at work. C-level executives rise to that level because, generally, they are good at delegation. Too many mid-level managers get stuck or burn out because they are not. They don’t know how. Or they are afraid to.
Morris: The greatest leaders throughout history (with rare exception) were great storytellers. What do you make of that?
Karlgaard: The job of a great leader is to put conviction in people’s hearts. Stories do that because they give us meaning and purpose. Which, in turn, leads to conviction.
Morris: In recent years, there has been criticism, sometimes severe criticism of M.B.A. programs, even those offered by the most prestigious business schools. In your opinion, in which area is there the greatest need for immediate improvement? Any suggestions?
Karlgaard: The value of a Harvard MBA is that, (1) it proves you were smart enough, driven enough, to get into Harvard Business School, and (2) you now have great contacts. The actual education is the least of it. Simulation technology will radically transform teaching and learning in business. I’m convinced that all but the very top business schools will decline. The investment in time and money won’t be worth it. What employer is going to pay a premium salary for an MBA that isn’t from a top school? But there will always be Harvard, Stanford and Wharton.
Morris: Looking ahead (let’s say) 3-5 years, what do you think will be the greatest challenge that CEOs will face? Any Advice?
Karlgaard: I honestly can’t figure out why any company would want to be public. The scrutiny is only going to get worse. The happiest CEOs I know run private companies. Jim Goodnight of SAS Institute is a happy man. I recently spent a day with Michael Dell in Austin. He is ten times happier now than when Dell was public.
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To read the complete interview, please click here.
Rich cordially invites you to check out the resources at his website.
Also here’s his Forbes link.
A brilliant analysis of entrepreneurship as “the contrarian perception, creation, and capture of extraordinary value”
Let’s say that a Mount Rushmore type of monument for entrepreneurs will be constructed and nominations are requested. Which names immediately come to mind? Chances are, none of them would be among the several listed by Daniel Isenberg in the Conclusion section of his book. So what? In my opinion, a great deal. Most books about entrepreneurs focus on business celebrities such as Jeff Bezos, Bill Gates, Steve Jobs, Herb Kelleher, Larry Page and Sergey Brin, Howard Schultz, Fred Smith, Ted Turner, and Mark Zuckerberg. They did indeed begin with acorns that became oak trees and do indeed exemplify what Isenberg characterizes as “the contrarian perception, creation, and capture of extraordinary value.” However, Izenberg’s book is not about celebrity. His focus is on a contrarian mindset and process he has observed in entrepreneurs he has personally known in 45 countries.
“Worthless is about how so many people from around the world see hidden value in situations where others do not. These people then use that perception to successfully develop valuable products and services that customers usually initially don’t think they want, and ultimately go on to realize extraordinary value for themselves.” So what? Isenberg’s response: “A paradox: despite their statistical rarity in creating extraordinary value, most of the entrepreneurs in these pages will strike you as ordinary people like you and me. The differences between them and us are less a matter of who they are or what resources they have than of what and how they think.”
So, Isenberg has two objectives and achieves both: To “catalyze” entrepreneurial aspiration so that as many of his readers as possible to make “the entrepreneurial choice”: extraordinary value creation, and, to “reframe” entrepreneurship in terms of value creation and capture rather than business ownership per se. That is, to understand and appreciate the men and women he discusses as people who are (in most respects) “like you and me” rather than in terms of the companies they have created. I presume to add an opinion of mine: Those on whom Isenberg focuses in this book share much in common with Bezos et al listed earlier insofar as having a contrarian mindset and process is concerned. For example, they also saw and realized value where others thought there was none, and also acted in ways that were contrary to what almost everyone thought was worthwhile. Selling books online? An airline serving major cities in Texas whose fares were competitive with those of…Greyhound and Railways? Overnight delivery of mail and parcels that “absolutely, positively have to be there”? Ideas such as these are worthless, impossible, and stupid.
These are among the entrepreneurial stories in the book of greatest interest and value to me:
o Robert Wessman’s generic pharmaceuticals company (Pages 12-15)
o Miguel Davila’s cinema chain (16-21)
o Atsumasa Tochisako’s money-transfer service (42-51)
o Carl Bistany’s educational management ventures (72-82)
o Will Dean’s adventure challenge events (100-107)
o Mary Gadams’s RacingthePlanet (137-139)
o Vinod Kapur’s chicken farming (142-151)
o Mo Ibrahim’s cell phone company (152-154)
o Iqbal Quadir’s Grameenphone (155-167)
o Mei Zhang’s experience with cultural tourism (187-193)
o Dean Kamen’s Segway (195-196)
o Itai Isenberg’s nightclub business (217-219)
As Eisenberg suggests throughout the book, the contrarian mindset and process are not for everyone but global giants such as GE as well as start-ups need to include both and indeed the success of the former and the survival of the latter depend on it. Consider these remarks by Jack Welsh at a GE annual when its then chairman and CEO explained why he admired small companies and hoped that GE would become more like one:
“For one, they communicate better. Without the din and prattle of bureaucracy, people listen as well as talk; and since there are fewer of them they generally know and understand each other. Second, small companies move faster. They know the penalties for hesitation in the marketplace. Third, in small companies, with fewer layers and less camouflage, the leaders show up very clearly on the screen. Their performance and its impact are clear to everyone. And, finally, smaller companies waste less. They spend less time in endless reviews and approvals and politics and paper drills. They have fewer people; therefore they can only do the important things. Their people are free to direct their energy and attention toward the marketplace rather than fighting bureaucracy.”
As Welch well knew, Thomson-Houston Company and Edison General Electric Company merged in 1892. Two small acorns became one larger than either but still an acorn. Thomas Edison sold all of his shares two years later but continued his association as a consultant. Over time, driven by its entrepreneurial spirit, GE became an oak tree through diversification of products and services based on research by the first industrial laboratory in the United States and through acquisitions. Presumably there were many occasions when GE’s bold initiatives were widely viewed as worthless, impossible, and stupid. Once again, the company needs such initiatives now as do countless others among the Fortune 100.
When concluding his book, Daniel Eisenberg observes: “Entrepreneurship is not about the likely or the average; it is about the possible, the extraordinary. It is about victory. The entrepreneurs who have graced these pages have shown me, and I hope you, a higher possibility.” Well-said.
Note: This was among the first books I reviewed for Amazon (in 2000) and I recently re-read it while doing some research on several of the 20 companies it features. Don’t let the publication date deter you. These stories are even more entertaining and informative now than they were then because these are perspectives on them 25 years before many of them and their leaders became almost deities in the vineyards of free enterprise.
Each chapter offers a profile of a major contributor to the evolution of American business history, beginning with one of my ancestors, Robert Morris (America’s “first real businessman”), and concluding with Bill Gates (“Microsoft’s co-founder and guiding spirit”). In between, Gross and his associates also examine other great leaders such as McCormick, Rockefeller, Morgan, Ford, Merrill, Sarnoff, Disney, Johnson, Ogilvy, Kroc, Wilson, Ash, Walton, and McGowan as well as major corporations such as American Express, Intel, Harley-Davidson, and Kohlberg Kravis Roberts & Co. The reader is told, “This book is about heroes” and it really is.
Using the most effective strategies and devices of a storyteller, the authors examine biographical information within an historical context, sustaining interest with anecdotes while providing insights as to the causes and effects of each subject’s accomplishments. For Morris, essentially the economic survival of thirteen colonies during their struggle for independence. For McCormick, the industrialization of agriculture. For Rockefeller, the creation and development of the modern corporation. For Morgan, saving a nation’s financial system. For Ford, mass-producing affordable personal transportation. For Merrill, broadening the base of stock ownership to include those, among others, for whom the Ford Motor Company manufactured automobiles. Each of the other “heroes” discussed made equally important contributions.
A brief review such as this can only suggest (albeit inadequately) the wealth of information to be found in this book. The prose has snap, crackle, and pop. The focus is crystal clear. The lessons to be learned from the careers examined are of incalculable value. Although this book will be of interest to almost anyone, it will have special importance for school, college, and university students who may sometimes wonder if there are any “secrets to success.” The answer is yes. The specifics are to be found in the lives of those who are discussed in Greatest Business Stories of All Time.