The Ten Roads to Riches

by Ken Fisher

The Guide to Becoming the Chief

  Even if you don’t found your own firm, you can still lead it to new heights. Meanwhile, you can earn a big paycheck and other profitable perks. It’s not easy and takes a long time (usually) to get there. Once you’re crowned, the media can skewer you mercilessly. You may get blamed for any mishap! That’s the risk you take—but it’s well-paid career risk. Failed CEOs can do just fine, but a long career is preferable. So how can you last a long time on this profitable path?

  Enjoy what you do. It usually requires a long career before landing the corner office. It’s easier to put in the years if you have a passion for what you do and love—yes, love—your firm.

  Don’t start as CEO of IBM. At first, aim small—better odds of getting the job and less likely to screw up in ways preventing you from getting the next CEO job at a bigger firm. Or you can just do a great job and grow from tiny to huge.

  Get the job. Beyond founding your own firm, there are several ways to claw your way to the top. Ride-along. The rise-through-the-ranks method is tried, true, and profitable. Many of our finest CEOs were one-time ride-alongs.

  Buy it. If you have the cash—your own or other people’s—you can do a one-man private-equity transaction and just buy a firm you like.

  Be the go-to. If you’re in a VC, consulting, or private equity firm, you can get tapped to step in to lead a troubled portfolio company. You can even go that route specifically looking to be the go-to guy (or gal).

  Get recruited. Take acting classes, practice interviewing, and wine and dine recruiters. Once you get a job, start selling yourself for the next, bigger one. Repeat this and you can leapfrog your way to CEO of a big firm.

  Lead. Just do it . . . The key to leadership is showing up and doing it. You can read about it, but the best way to learn is by doing it. Show up and care. Talk to your employees and make them feel you’re putting them first. Do that enough, and you’ll discover you do care and you are putting them first and you do want them to be the best they can be.

  . . . but only from the front. Learn from Julius Caesar. Your employees will respect, follow, and love you more if you lead the charge, every time, and don’t hide in the back. Talk, spend time, and travel with them. Stay in the same dingy hotels on the road they do.

  Spend time with your lowest employees and smallest clients. Once you’re Big Time, keep leading from the front. It’s more important to be comfy with your lowest-level employees and smallest customers than in the boardroom. It breeds trust and loyalty and keeps you connected with your firm’s culture.

  NOTES

  1. “Equilar/Associated Press S&P 500 CEO Pay Study 2016,” Equilar (May 25, 2016), http://www.equilar.com/reports/37-associated-press-pay-study- 2016.html (accessed September 6, 2016).

  2. Matthew Miller, “The Forbes 400,” Forbes (September 20, 2007), http://www.forbes.com/2007/09/19/richest-americans-forbes-lists-richlist07-cx_mm_0920rich_land.html (accessed April 22, 2008).

  3. Greg Roumeliotis, “Greenberg Channels Buffett in Post-AIG Comeback,” Reuters (February 19, 2014), http://www.reuters.com/article/us-greenberg-starr-idUSBREA1I24B20140219 (accessed September 6, 2016).

  4. “The Forbes 400 2016,” Forbes, http://www.forbes.com/forbes-400/list/# version:static (accessed October 6, 2016).

  5. Ibid.

  6. Clive Horwood, “How Stan O’Neal Went from the Production Line to the Front Line of Investment Banking,” Euromoney (July 2006), http://www.euromoney.com/article.asp?ArticleID=1042086 (accessed April 22, 2008).

  7. Reuters, “Business Briefs,” New York Times (March 11, 2006), http://query.nytimes.com/gst/fullpage.html?res=9902EED91331F932A25750C0A9609C8B63 (accessed April 22, 2008).

  8. David Goldman, “Marissa Mayer’s Payday: 4 Years, $219 Million,” CNNMoney (July 25, 2016), http://money.cnn.com/2016/07/25/technology/marissa-mayer-pay/ (accessed September 6, 2016).

  9. About Duck Brand at http://www.duckproducts.com/about/.

  10. Nancy Moran and Rodney Yap, “O’Neal Ranks No. 5 on Payout List, Group Says,” Bloomberg (November 2, 2007), http://www.bloomberg.com/apps/news?pid=20601109&sid=aPxzn5U8zNBo&refer=home (accessed April 22, 2008).

  11. “Oil: Exxon Chairman’s $400 Million Parachute, Exxon Made Record Profits in 2005,” ABCNews (April 14, 2006), http://abcnews.go.com/GMA/story?id=1841989 (accessed April 22, 2008).

  12. FactSet. XOM return from December 31, 1993, to December 31, 2005.

  13. Ibid.

  14. ExxonMobil Employment Data, http://www.exxonmobil.com/corporate/about_who_workforce_data.aspx (accessed April 22, 2008).

  15. Roumeliotis, “Greenberg Channels Buffett in Post-AIG Comeback.”

  16. “The Not-So-Retired Jack Welch,” New York Times (November 2, 2006), http://dealbook.blogs.nytimes.com/2006/11/02/the-not-so-retired-jack-welch/ (accessed April 22, 2008).

  17. John A. Byrne, “How Jack Welch Runs GE,” BusinessWeek (updated May 28, 1998), http://www.businessweek.com/1998/23/b3581001.htm (accessed April 22, 2008).

  18. FactSet, December 31, 1980, through December 31, 2001.

  19. Associated Press, “Fox News Hires Carly Fiorina, Ex-Chief of HP,” International Herald Tribune (October 10, 2007), http://www.iht.com/ articles/2007/10/10/business/fox.php (accessed May 20, 2008).

  3

  ALONG FOR THE RIDE: RIDE-ALONGS

  Good at picking winning horses? Think being boss is tough? Your destiny could be to ride along.

  Some big-buck cravers don’t want the buck to stop with them. Ride-alongs rise high, play critical roles, are well-respected leaders, and get rich—but never bear a CEO’s ultimate pressure. Ride-alongs don’t point the way. They find the right horse, hitch their wagon to it, and help the horse. Though they may never wear a CEO’s crown, some famous ride-alongs boast billions—Buffett’s sidekick, Charlie Munger, for one, with $1.3 billion.1

  This is no cakewalk! It’s devilish trying to divine whether the CEO you follow is leading you to new heights or off a cliff. Real ride-alongs aren’t lemmings or stooping yes-men (though bad ones can be). No! Ride-alongs have the board’s, the employees’, the shareholders’, and the CEO’s respect—and are paid for it. And, they can say and do things CEO’s can’t. The CEO is too public! Too visible! When it’s time to play good cop–bad cop, guess who plays bad cop? Maybe they don’t make founder-CEO mega-wealth, but great ride-alongs get big pay, firm ownership, and big net worth.

  WHY RIDE ALONG?

  Sound worse than being Dr. Evil’s cat, Mr. Bigglesworth? No! Don’t equate ride-alongs with “toady” or “groveling sycophant.” Toadies aren’t powerful—ride-alongs are. This isn’t just being a top corporate officer—it is being a partner the CEO won’t do without.

  Big Backseat Bucks

  Top ride-alongs make bucks rivaling other roads. They don’t quite keep up with the Richest Road (Chapter 1) or the OPM Road (Chapter 7), but they do as well as or better than other roads. Munger’s $1.3 billion is far from Buffett’s $65.5 billion. But still! eBay’s first employee, Jeffrey Skoll, was a Jerry Yang ride-along, now with a $4.1 billion net worth.2 Christopher Cox, Facebook’s Chief Product Officer and Mark Zuckerberg’s right-hand man, collected nearly $12 million in total 2015 pay.3

  Another advantage? There are many more opportunities to ride along than to be CEO. A single CEO can have multiple ride-alongs—big firms can have many senior VPs, directors, and other senior managers. You may not reach Bill Gates–style wealth, or even Jeffrey Skoll–style, but you can get mega-wealthy here. Make no mistake—these guys (and gals) aren’t just riding coattails. This is no free ride. They are legitimate leaders with awe-inspiring accomplishments. Rupert Murdoch’s old ride-along, Peter Chernin ($28.8 million in total earnings during his last year as News Corp COO), launched The Simpsons and Beverly Hills 90210—huge hits for Fox.4 He was key in Murdoch’s DirecTV negotiation and responsible for making Fox a hit-movie machine. And his name was often suggested as potential CEO for Disney.5

  Heavy Is the Head

&nb
sp; Many just don’t set out to be CEO. It’s tough! Huge risk, tensions, personal sacrifices—not good for bad hearts. It can be much easier to follow. Steve Ballmer, Microsoft’s former CEO, was with founder Bill Gates since almost day one—an ultimate ride-along. He evolved later to be CEO in 2000, but first he ran numerous areas (a typical ride-along trait). Our pal Hank Greenberg (who didn’t diversify and lost billions) from Chapter 2 was another longtime ride-along, longer-time CEO. Apple’s Tim Cook, hired shortly after Steve Jobs returned to the fold, joined the ride-along-turned-CEO ranks in 2011.

  But the ride-along road to CEO-dom isn’t easy, smooth, nor for everyone. Recall Stan O’Neal from Chapter 2 was long a loyal, respected Dave Komansky ride-along, but was run out as Merrill Lynch’s CEO. David Pottruck, too, was a Chuck Schwab ride-along who failed fast as CEO.6 Riding along is one path to CEO! But riding along forever is a legitimate road on its own, with no detours.

  Another risk and benefit trade-off: Shareholder lawsuits are a huge business (see Chapter 6). CEOs are personal and media targets. Maybe you don’t want that—or your kids’ friends reading about it. You’ll be impacted as a ride-along, but not like the CEO—the face of the firm—who bears the brunt of the ill will, the depositions, and the stress.

  CEOs are often portrayed as heroes or villains—it’s that stark! And even if monstrously successful, they’re skewered for their big payday (like Chapter 2’s Lee Raymond). Being a ride-along doesn’t make you immune, but it takes the bull’s-eye off your back. It can be a better lifestyle.

  A major ride-along benefit: You’re less of a target.

  The Right Stuff

  Some ride along forever because they know they don’t have the stuff to be CEO. Big-time successful CEOs are usually charismatic leaders. Not everyone inspires. Maybe you just don’t want your employees’ and shareholders’ fates ultimately on your skinny shoulders. Many folks don’t!

  In basketball, the fabled players are those who—in the game’s last four seconds, when they’re down two points and their team is inbounding the ball—think, “I hope I get the ball!” That’s a freaky way to feel! Many don’t want it. What if you get the ball and don’t hit the three-pointer to win? Infinite pressure! Guys who really want the ball right then, right there, are CEO types. But the guy inbounding with the lightning-fast pass to the guy who really does want the ball—he’s the ride-along.

  Ride-alongs don’t score the most points, but they’re usually team MVP.

  Under the Radar

  In some ways, being a ride-along is harder. You get few accolades. Ride-alongs usually aren’t on TV or profiled in Forbes (until you become Charlie Munger). But ride-alongs get huge perks—big pay, respect (at least within the firm)—without the giant bull’s-eye. And they get a private family life. Aspiring ride-alongs often write their own tickets. Want to run sales? The CEO sees it as a broadening feature that’s good for you. Want to open the London office? Just tell the big man (or lady) and it can happen. And you can have a great life. Sold? Great—but how do you get there?

  PICK THE RIGHT FIRM

  Finding the right CEO-leader and firm is vital. Ride-alongs remain with the same firm a long time. Even if hired as a high-ranking guy, they subsequently stick with the firm. Ballmer rode along 20 years before becoming CEO. And Munger has been with Buffett over 57 years.

  To be taken seriously, you want a long history with whomever you’re riding along with—and an image from all sides of complete loyalty. CEOs get hired in from outside, but ride-alongs rarely do—unless hired in with a new CEO. But even when brought in, like Munger and Buffett, they often already long knew each other.

  Starting Your Ride

  If you’re young, start now. Cox ditched grad school to join Facebook in 2005 and was Zuckerberg’s chief of staff by age 28. But, if you’re further into your career, you needn’t make drastic changes—unless you’re in a shrinking or dying industry. Then you should change regardless. For this, all of Chapter 10’s rules on picking a profession apply. But do even more research to ensure you’re in a field you want to stick with. As always, pick a relevant field likely to become more so.

  Or not! In 2004, a young buck named JB Straubel went to work for a visionary who wanted to revolutionize American autos. Maybe you’ve heard of him: Elon Musk. Straubel quickly became Tesla’s chief technology officer in 2005, and he still rides shotgun, earning over $11 million in 2014.7

  Forever, American autos have been irrevocably doomed. All my adult life, Ford and GM have been trying to go bankrupt, but they just aren’t very capable so it takes them a long time. GM is so bad at bankruptcy that it filed for Chapter 11 in June 2009 and still hasn’t gone out of business. I have abundant confidence it will get there eventually. Maybe Tesla will help speed them toward that goal. Or, maybe Tesla will keep losing mountains of money and join GM on the road to irrelevance. Maybe you will ride along with another visionary, unknown today, who will drive the lot of them out of business.

  Transforming moribund firms and industries takes vision and chutzpah. Take once-upon-a-time heavily unionized Caterpillar. It hadn’t done well for a long time. In 1994, then-CEO Donald Fites had a vision, but to implement it, he would need to free his firm from the union’s shackles. So he did what few unionized CEOs have the courage for—he took on his union and won. Caterpillar was picketed for 18 months. Fites refused to cave. He called the union’s bluff! Thirty percent of his workforce walked off the job, so Fites hired temp workers. Even his white-collar executives pitched in—his lawyers learned to weld. After that, his union lost power and Caterpillar boomed—and continues to boom.8 You want to ride with a guy like that. Visionary, tough, single-minded, and futurist.

  Pick your firm carefully. You’ll be there awhile.

  But how do you find him or her? Take Ken Iverson (from Chapter 2). His two initial key ride-alongs, Dave Aycock (operations) and Sam Siegel (finance), did well in life, believing in Iverson and loyally playing help-the-leader. They both told me essentially the same thing about how they chose to ride along with Iverson: They didn’t—it wasn’t really a choice.

  In the last chapter, I told you from the moment I met Iverson he simply bowled me over, and I’m not that easy to impress. He did the same thing with Aycock and Siegel, and they weren’t that easy to impress, either. You’re looking for someone who is everything you aren’t and a visionary to boot. You’re looking for a leader. You’re looking for someone with a certain magic about them, charisma or not. And you keep looking until you find that one person. It’s a lot like seeking a spouse.

  Leader or Newbie?

  You can pick an established firm with an established leader to start your ride, or an entirely new venture—both have ride-along pros and cons.

  On the established route, you needn’t pick the field’s number one firm, though you can. Becoming a high-ranking ride-along in any S&P 500 firm would be profitable. You can find compensation for any large- or medium-sized public firm by checking proxy statements posted on their website. Ever heard of Michael G. Vale? No? He’s executive VP of the Consumer Business Group at 3M and made $4.1 million in 2015.9 How about Dr. Jon R. Cohen? How can you not know Jon? He made $2.8 million in 2015 as a senior VP at Quest Diagnostics,10 a much smaller firm. You don’t know these people; I don’t, either. But someone high up in their established firms knows and likes them. You can be like that.

  What you want more than anything is a leader-CEO. One person! Your Ken Iverson. Bigger bucks come from riding with a visionary CEO in a small firm doing a product revolution and helping grow it to a massive size.

  But the risk here is great. Will you end up at Google? eBay? Or will you pick wrong, joining WebVan, Petopia, or SweetLobster.com, thinking Internet lobster shipping is the future? Sometimes it’s obvious. TootsieRollsForEver.com may be an obvious loser, but rewind 20 years. How would you know which search engine would be tops? Google didn’t even exist then! That’s when you need serious private equity–style analysis chops. Whether a whol
ly new field or product or an existing one, you must analyze the business strategy and management team. You may have the world’s best strategy but a dumbo management. The real key is the leader.

  Pick an established or brand-new firm. Brand-new is riskier but has bigger rewards.

  Picking the Winning Horse

  The horse you hitch to is what matters. Some say, “Find someone with a fancy pedigree.” Wrong! Pedigrees are fine but don’t predict CEO or ride-along success. Steve Jobs dropped out of Reed College—not a top 20 school. Don’t get me wrong—Reed doesn’t produce dopes. My great friend Stephen Sillett, a brilliant guy doing revolutionary research on redwoods, graduated from Reed. But either Steve could have gone anywhere—Podunk-ville Junior College—and been huge. My point is, Harvard, Reed, Podunk-ville—whether you finish or not—doesn’t matter! (Bill Gates is perhaps Harvard’s most famous dropout, followed closely by Mark Zuckerberg.) I went to community college and Humboldt State University (where Sillett researches), but that never stopped me at all, and a pedigree or lack of it won’t make or break you.

  Pick a horse that’s lost a few races, as long as it doesn’t lose the same way twice.

  So what made early Apple-ites choose Jobs? Or Gates? Or Buffett? Or Musk? Or any of the wildly or even modestly successful CEOs who inspired ride-alongs to join them? Charisma and vision. They have it—you have to figure out if it’s real or not.

  Plenty of people with charisma and vision still flame out. Again, think like a private equity guy and review that section in Chapter 7. Then answer the following questions: