The young Felson in “The Hustler” just wants to be the fat man, the legendary Minnesota Fats played by Jackie Gleason. Then there is the sage Felson of Martin Scoresese’s “The Color of Money,” trying to impart the wisdom of years of experience to the headstrong Vincent Lauria, played by Tom Cruise.
The plot can be synopsized by the joke about an old bull and a young bull standing atop a hill looking down on a pasture full of cows. The young bull asks, “Why don’t we run down there and get us one of those cows?” The old bull responds, “Why don’t we walk down there and get ’em all?”
Paul Newman won the Best Actor Academy Award for the “Color of Money.” He didn’t win it for his words, but for the silences, tilted head and attitude of a veteran.
It’s been four years since I left my CEO post at Tollgrade, after nine years at the helm and 16 years with the company. Since then, I’ve seen a lot of Pittsburgh CEOs in action as a venture investor and board member of a couple of emerging companies. I’ve looked at a lot of private investment deals, and I’ve done some CEO coaching as a teacher and public speaker. Most important, I’ve gotten a lot of distance from my CEO job and see as many deficiencies in my performance as accomplishments.
For months, I’ve been trying to find a word to describe my evolving feelings and finally stumbled upon it: age.
A couple of years before our stock price really took off, a local newspaper wrote a business profile of me. The article was titled “Guru Stew,” because my management style was an amalgam of approaches used by motivational experts ranging from Steven Covey to Anthony Robbins. It may have appeared that I was trying to be “leading edge” when, in fact, I was searching.
I tried everything from making my management team read a new book every week, to studying the Walt Disney Company’s management practices, to modeling our product development process after automotive engineering methods and organizational skills of world-class auto racing teams.
Three months after the article, I lost my Dad and our founder, Craig Allison, to a heart attack. In many ways, I lost someone who helped ground me. We had passionate discussions about management decisions. More often than not, we got to the same place, but by different routes.
Two years later, we had doubled our company, and our market capitalization hit $2 billion. Our company and I were lauded in the local papers until the clock struck midnight and the post-9/11 tech bubble burst.
After that, I finally settled on an approach that seemed best to me. It was in a book called “The Practice of Management” by Peter Drucker, which was written in 1954. Drucker focused on the classic philosophy of “management by objective,” which centers on creating goals for each department. The overall goal is finding a customer and delivering better products that create better value for the customer. It sounds boring, yet is really sublime. Focused and boring is the key to long-term success. And industry experience is key.
Here’s the main point. It took me years to get there. Was that a function of being open-minded or simply not seeing enough? As I look back, I find myself not smiling about the good old days but thinking “If I knew then what I know now.”
When describing a CEO’s behavior, Dad used to say, “I’d rather try throwing water on a raging conflagration than light a damp pile of kindling.” For a CEO, he believed enthusiasm trumps lack of experience.
I asked a prominent venture capitalist friend whether he bets on horses or jockeys. Is the company’s business model more important in his investment decision or does he bet on the experience of the management team? My friend said he invests in horses because he can get jockeys. It’s harder to find the new, new thing than an executive.
Far be it from me to question his experienced views, but it seems to me that it sure helps when you’ve got a CEO with some brains, a little gray on the temples, and a lot of poise.
In all of the deals I’ve evaluated the last four years, I’ve focused on the CEO more than the business model. I’ve observed that a lot of the local economic development agencies seem to direct their attention to management as well. Once these companies got the management thing figured out, the rest took care of itself.
Our region has seen its share of young dragon slayers, including Sean McDonald (Automated Healthcare and Precision Therapeutics), Rich Lunak (McKesson and Innovation Works) and Glen Meakem (Freemarkets and Meakem Becker Venture Capital). Most were in their late 20s and 30s when their companies succeeded. Like most successful entrepreneurs, they quickly got back into the saddle and started new enterprises. Asked to put down their Blackberries for five minutes and reflect on their journey, each seems to come back to the word “balance.”
McDonald described his “obsessive conscientiousness” when he started Automated Healthcare with Lunak, the current leader of Innovation Works. Both made their investors happy when the company was acquired by McKesson.
“This job (Precision) is harder, but that job (Automated) consumed more time,” said McDonald. He said that one year he logged 125,000 US Airways miles. In addition to being “more balanced,” he now spends more time “working on the right things that have a material effect on the business,” and he tries to “get away from the frenetic activities.”
Meakem, the founder of dot-com high flier Freemarkets, also feels more “balance between my work life and my family life.”
Now running Meakem Becker Venture Capital with $70 million under management, he works a third of a mile from home, and that helps. He said he may have been different from other tech company CEOs in that he had a lot of management training at Officer Candidate School in the military as well as an MBA from Harvard.
His firm looks for “absolute world-class jockeys.” And Meakem admits wishing he knew then what he knows now — a CEO should look out for “his personal balance sheet.”
The picture of humility, Lunak has changed as well: “Now I know what I don’t know.” He said he can now “appreciate the shades of gray, the complexities of running a business.” That said, Lunak thinks naiveté has its merits. “If you knew it was impossible, you wouldn’t have done it.”
It’s not that younger executives lack intellect or academic training. They just haven’t seen as much. In my case, had I had more Zen than zest, my life would have been a lot easier. But if I wasn’t constantly pushing myself and my troops, would we have done as well? Would we have grown as fast and survived the speed bumps?
In his book “Moneyball,” Michael Lewis examined the ground-breaking approach of Billy Beane, the general manager of the Oakland Athletics. Until Beane, most major league prospects were drafted right out of high school, based on the expectation of how they would perform. Beane drafts players based on how they have performed. He drafts college players who have seen a lot of pitches.
Most people get promoted to CEO as a function of being an entrepreneurial founder or a wunderkind of a big company; they may have seen only one or two business cycles. They’ve also seen only one or two major technological shifts, and in many cases, this is the only major economic downturn they’ve seen.
Some reports I’ve read say that in 2007 the median age of an S&P 500 CEO was 55. Another indicated that less than a third of the 2,258 S&P 500 CEOs who left their jobs between 1995 and 2007 were hired before the age of 47. Just like Billy Beane’s players, these executives had seen a lot of pitches. So most of the people hired as CEOs are about the age I am now.
A third study said “the average and median age of key tech founders was 39.” I was 34 when I became CEO of Tollgrade and 44 when I left.
I would relish the chance to jump into the time tunnel and return to 1988, when we started the company, and be armed with not only the perspective I’ve gained, but also the intellectual insights I’ve gained as a college professor studying management practices.
There might be a problem, though.
I like having more time to spend with my wife. I am much more risk-averse than I was then. I like being able to get a good night’s sleep more often than not. And I like eating properly and exercising every day.
Most of all, I don’t miss what I used to call “The Tollgrade Fun Pack,” which consisted of Tylenol PM, Pepcid AC and Immodium AD.
But it’s an interesting thought, isn’t it?