The Ten Roads to Riches

by Ken Fisher

  But if you aren’t successful, you can be booted fast—even though you had paid your dues. Consider Stan O’Neal, who joined Merrill Lynch in 1986. Long seen as David Komansky’s heir-apparent, he became president in 2001 and CEO in 2003. His stint ended in 2007.6 Booted, basically! Still, by my count, including severance, his pay totaled about $307 million during his short CEO tenure.7 Not bad. Or, consider Marissa Mayer, brought in to resurrect Yahoo! in 2012. She didn’t, instead selling the business for scrap after four years of withering media scrutiny. Most see her leaving when Verizon completes its acquisition in 2017. If so, she’ll walk away with nearly $60 million in severance, bringing her total comp to nearly $220 million.8

  It takes a while, so find a field you love.

  A CEO-VOLUTION (THROUGH MY FATHER’S EYES)

  The single most important CEO trait is leadership. If you can’t lead, you can’t be CEO. It’s not something you must be born with, though some are. You can develop it. But it’s necessary. You don’t need charisma, but you must lead.

  How can you learn to lead? Well, I assure you I wasn’t born to be a leader—very far from it—so let me take you through my personal evolution to show you what I did, because yours can be similar. For me, it began with my father, Philip Fisher. He was supremely smart but suffered a then-undiagnosed condition now widely known as Asperger’s Syndrome—a form of near-autism often called “Geek’s Syndrome” because sufferers often seem “geeky.” They have ultra-high IQs, are great with math, verbal, and written skills, but have poor social skills. Typically, they’re physically twitchy, pace the floor, and can’t keep their hands from tapping. They have almost no ability to fathom how others feel. That is the defining feature of someone with Asperger’s. My father was classic. He could say the cruelest things, yet wasn’t cruel. He simply didn’t know you would react that way when anyone else would’ve—like a vacuum in the feelings department.

  Like most Asperger’s sufferers, my father spent lots of time alone thinking. He was a great thinker—just didn’t feel much. He loved sitting alone thinking—hours on end in solitude! But he was generous with his time with me. He may have been the world’s best bedtime storyteller. Every night he told the most marvelous stories until I fell asleep. Action stories he invented with vivid protagonists—superheroes, natural leaders. At the time, I couldn’t see how they applied to me or why he was telling them.

  His career was in OPM (Chapter 7) as a sole practitioner. Alone! He was an amazing analyst of business managers and CEOs in particular. He analyzed their actions. He knew little about their feelings. I recall as a young man watching him interact with executives. When conversation turned toward feelings, my father steered them back to actions. He was right about emotions relative to business functions. For 40 years our society has focused too much on feelings—too touchy-feely for its own good! Bernesian psychology taught me why our feelings follow our actions and not the other way around. Act certain ways and your feelings follow. Trying to adjust your emotions otherwise simply goes nowhere—no matter what you do. Do the right things, you feel better. Do the wrong things, you feel worse. Your actions determine how your feelings trend. Early motivationalists like Dale Carnegie and Napoleon Hill got this. Freudian psychoanalysts didn’t.

  Un Poco

  As a child I didn’t get it, either. The youngest of three, my family nickname was Poco, from Spanish meaning “little” or, as I thought it applied to me as a youngster, “of little significance.” Both my brothers were bigger, older, smarter. I was a sleepy school kid—bad grades, lazy, the dog ate my homework, daydreaming—generally going nowhere fast. My eldest brother was the opposite: six years older, perfect grades, star athlete, perennial teacher’s pet, popular, handsome, articulate. He was student body president of his elementary, intermediate, and high schools before becoming valedictorian, winning a Rockefeller scholarship, and going off to Stanford. I was Poco!

  In sixth grade—don’t know what happened—the dog stopped eating my homework and I studied, got good grades, joined the Boy Scouts. I read a lot. However, studying and good grades aren’t really too tough for a child of someone with Asperger’s. You think through what’s needed and do it. Skip the feelings.

  Since my brother had been student body president, I decided I should, too—youngest brothers are great copycats. But to win, I had to run against a really popular kid, Robert Westphal. No one else would—only I was that stupid.

  The school president was elected by fourth-, fifth-, and sixth-graders. I knew I couldn’t win sixth-graders who knew us well—no chance. But I figured sixth-graders would be generally snotty toward younger kids, and fourth- and fifth-graders couldn’t tell one sixth-grader from the next. So I spent my time with younger kids while Robert spent his time with sixth-graders, assuming the younger kids would follow. It worked. I lost the sixth-grade vote big but won the election.

  And it dawned on me: You get out of life what you put into it. I put time into the younger kids so I got their vote. It worked so well, I repeated my success in seventh and eighth grades, winning by appealing to those who didn’t really know the candidates. So I had these leadership positions where I should have been a leader, but I wasn’t. Like any politician I didn’t really care about my fourth- and fifth-grade constituents; I only cared about what it took to get elected. Leaders care about those they lead, even if they’re only fifth-graders. I knew what I was doing politically, but didn’t have a clue what a leader was until I discovered JC.

  Any fifth-grader can tell you—you get out of life what you put in.

  Follow Caesar’s Lead—from the Front

  In California public high school, I needed a foreign language for college and picked Latin. Howard Leddy, my Latin teacher, had the class read from the text. Every day, someone would query him about the story and he would launch into storytelling mode— particularly about Julius Caesar. We liked that better than reading Latin so we baited him whenever we could.

  One aspect boosting Caesar’s success was he led from the front of his troops, whereas Roman officers otherwise marched behind.

  You can’t lead from the back, and Caesar knew it. The Roman model assumed if the general was killed, the troops were vulnerable, so he remained behind—win or lose. This is the chess model—protect the king. Problem: Front-line soldiers are vulnerable moving forward—a wrong move can lead troops to battle, have them decimated, retreat, and the “leader” is still personally safe. Soldiers knew that. When Caesar led from the front, his troops knew he wasn’t asking them to take a risk he wouldn’t take himself, so they were more confident, fought harder, and won always. Latin put Caesar in my bones.

  The Drifter’s Decade

  After finishing a confusing college stint (it was 1968 to 1972—Northern California was crazy), I had no particular direction. Beyond my sole-practitioner father, I had no real-life business leader role models. Caesar led soldiers, but what else would you lead? So I worked for my father. No better ideas. If that didn’t work, there was always graduate school. And after a year, I didn’t want to stay. My father couldn’t identify my feelings, and I wasn’t feeling too good. I’d either kill him or he me. Not good. So I quit—started my own firm. I didn’t know I was too young to be able to do that, so I could. There I was, alone, the sole-practitioner son of an Asperger’s sole practitioner spending lots of time alone thinking.

  The Other People’s Money (OPM) world (Chapter 7) was vastly different then—more primitive, less specialized. Brokers were still on pre–May Day monopoly commission rates but also dominated asset management. Financial planners existed but weren’t what they are now. They were tax shelter salespeople who vanished with the 1986 Tax Reform Act. Independent registered investment advisers, my ticket, existed, but were few and could have been doing any darned thing in terms of fees and activities. I basically drifted for a decade, getting and losing a very few clients, while getting paid for some crazy things.

  I got paid for library research projects—a lot like scho
ol. In those pre-Internet days you could get paid for library capability because information wasn’t otherwise easily available. I got paid to provide information on stocks, industries, and various oddities. For example, I did a study of over-the-counter drug side effects and which drug firms were affected. I got paid for specific stock ideas. I had clients paying for investment advice—I think they thought they were secretly getting my father’s views. I built portfolios and financial plans for folks. I helped several tiny firms get bought.

  I took side jobs in construction to make ends meet. For a year, I got paid every Wednesday night to play slide guitar in a Bay Area bar. Anything for a buck! And no employees—never thought of that! I had a part-time secretary once, briefly, about nine months. She quit—said I was a lousy, imperious boss. Probably was. Besides, who would work for me? I was no leader.

  But I read a lot. Books about management and business—and maybe 30 trade magazines a month for years, such as Chemical Week and American Glass. I studied companies. At various times I studied steel making, glass making, fiberglass, fertilizers, shoes, farm implements, cranes, coal mining, machine tools, surface mining, chemicals of all kinds, and electronics. During this decade, I did my original studies of price-to-sales ratios, which later largely launched my career. I was drifting, but learning lots.

  Around 1976, I drifted toward packaging venture capital deals. There were very few real VC firms then, maybe 30 nationally. I met occasional entrepreneurs who had a novel idea but couldn’t raise money to fund it. I helped them. I didn’t see that if they couldn’t raise their own money, it was a bad reflection on them. Still, I helped put together prospectuses and tried to raise equity capital from the existing VC firms and wealthy Bay Area individuals.

  I really tried hard on four deals: a laser maker, a restaurant, an airport limo service, and an electronic materials maker. I got paid cash and/or equity for done deals. Fortunately, the restaurant never got funded. I’m sure it would have flopped. The laser company was great in all ways and motivated me to do more. The limo firm funded but failed almost instantly. But the most important on my path toward leadership was the electronic materials maker.

  Making Material Progress

  The company was called Material Progress Corporation (MPC) and was funded with mostly East Coast venture money and some Bay Area rich individual money. It had leading-edge scientists and was to grow an array of exotic garnet crystals used in electronics. It had proprietary technology in crystal growing and polishing. It got funded, yet wasn’t going well.

  Eventually the board demanded a new CEO. They still loved the concept and technology so they ran a search for a top-tier CEO and put up more money to expand. Meanwhile, MPC was rudderless and bleeding money. To stanch that, I got to play part-time, interim CEO. My charter was simple. I was to cut costs as much as possible to reduce losses without losing the key scientific or operational people. It was 1982. Things were tough everywhere. The world was in recession. Poco was starving and pretty recessed himself. I needed income. This was it.

  On Mondays I worked from my normal office doing my work and theirs. Tuesdays at 3:00 AM I’d drive two hours to Santa Rosa where MPC was located. I’d stay through Thursday evening, drive home, and work Friday in my office again. I got paid by MPC by the day, like a consultant. There were about 30 employees in one facility. I’d never managed anyone. Now I had to. And I did OK—much, much better than I expected. And do you know what I learned?

  I learned the most important part of leadership is showing up. Could have fooled me! That wasn’t in the books I read. Turns out, eagerness is infectious. I moved the CEO’s office to an open glass conference room where everyone could see it and me. You couldn’t get in or out without seeing me and me seeing you. I made a point to be the first there every day and the last to leave. I took employees to lunch every day and dinner every night—at cheesy cheapo diners—but I gave them my time and interest. I wandered around endlessly talking to them, focusing on every single one and what they thought.

  Learning to lead is easy. Just show up and try.

  I brought them all together regularly to talk them up. The effect amazed me. And them! That I cared made them care. This is a basic truism of management and leadership—straight from Julius Caesar. Suddenly, I felt what it was to lead from the front. They worked harder and smarter, innovated, and just generally gave a darn, whereas they hadn’t before. I did this for nine months. We cut costs and boosted sales—got to cash-flow positive and breakeven on the income statement. We even developed new products for the next CEO’s arsenal. I felt needed and was sad when they found their new CEO. My time was done.

  Meanwhile, a “normal life” client hired me for a consulting project. I took a week from MPC to travel with him, interviewing leading investment names for a mutual fund venture of his. He was young himself, and I acted like his sidekick—helping him think through what he was doing real-time.

  We interviewed the legendary John Templeton and Arnold Bernhard, Valueline’s founder and CEO—a big name back then. And John Train—then a Forbes columnist who ran a money management firm and had just written a bestselling book, The Money Masters, with a section on my father. And we interviewed many more. Most of these folks didn’t know any more about running a real business than I did. These guys were running real money with real employees—and they didn’t know the leadership basics I was just learning but feeling in my bones at MPC. That was an amazing eye-opener. If they could, I could.

  Maybe I could get a few employees who would work for me, just like at MPC, and do as well as these guys at building a business, or better. Templeton’s investment prowess impressed, but none of these guys’ business and leadership acumen wowed. Templeton was super rich and successful, but none of them were what Ken Iverson of Nucor (covered later in this chapter) was. None were what I considered a role-model CEO.

  Back at MPC, I had to pay for my own hotel rooms and was starving. The cheaper the hotel, the more alone you feel. One night, alone in my $18 flophouse hotel room, I sat thinking. Alone, alone! No TV. No phone. No air-conditioning. Son of Asperger’s before Asperger’s was known. Dots started connecting. My father had written a book, and it had been good for him in the 1950s. I had the price–sales ratio thing. Even my childhood political foray made sense—you get out what you put in. I could manage and lead at least a few folks. Maybe I could learn to write. Maybe about price-sales ratios. Maybe I could build a firm that just did money management. So after MPC, I started building my firm. (That’s the founder-CEO route in Chapter 1, not this one.) But for any CEO there are two major issues: How to lead and how to get the job.

  HOW TO LEAD

  Hey, I just told you how to lead—from the front. Show up, care, focus on people, be there—early and late. Focus on every rung of the ladder separately and together. Spend time with managers. Spend time with line soldiers. Give your time—from the front. Don’t ask them to do anything you wouldn’t do. Make them know you care. Go with sales folks to see their customers—your customers. Go with your folks to see your vendors—their vendors. If you travel and they fly coach, you must also. Stay in the same hotel and class of room they do. You’re with them. If you don’t put yourself above them, they will put you above them in their hearts, which is where it matters. If you care, they will. If they care, they will do as well as they can.

  That’s leadership—getting them to care so they do as well as they can. People often ask why I don’t have a private jet. It would demoralize my people if I did. I fly commercial. They love that. When I’m with them, I fly coach. It amazes clients who see me on board! If you crave CEO bucks, don’t be a big jerk. Focus on your people. Skip the perks that may bug your people. That’s leading from the front. You can’t lead from the back, really. Ask yourself what Ken Iverson would do. Or Julius Caesar. OK—maybe he should have gotten a few bodyguards.

  I’ve read lots of books on CEOing. Some are listed at this chapter’s end. But the most important things I ever learned abou
t leadership and being a CEO, I learned from Julius Caesar and at Material Progress. Whether you’re a founder-CEO as I am or a replacement CEO as I was at Material Progress, it’s all about how you get it in your employees’ bones that you care—about them, the firm, the customers, the outcome. They need to believe you aren’t just in it for the bucks. They need to believe. You need to make them believe. The best way to make them believe is to believe yourself. The more time you put into people, the more fun it becomes. Staying in lousy hotels and flying coach aren’t fun. But it works.

  HOW TO GET THE JOB

  There are four best paths to becoming a nonfounder CEO:

  Ride along to the throne.

  Pay for it, literally.

  Be the go-to.

  Get recruited.

  Show them you care—by leading from the front.

  Riding Along

  Riding along (Chapter 3) then switching paths is fairly common for CEOs—the technique used by Jack Welch, Steve Ballmer, Stan O’Neal, Lee Raymond, Tim Cook, and so many more. This is the rise-through-the-ranks model. It’s lower risk, but it’s still hard to get started. It requires ride-along skills, yet has no certainty.