🎹 Music for this post: https://www.youtube.com/watch?v=Tty5zcSJYLE.
Happy 2021! I’m not much for ado, so here is that one thing:
Work for a good private company.
Not a bad private company. Not a good public company. And certainly not a bad public company, even though those are a dime a dozen.
No, a good, private company.
Why is that?
Well, there’s the obvious: public companies have to spend too much time satisfying shareholders rather than their customers (let alone their employees).
Good private companies are driven through the vision of a passionate owner and leadership. They believe that the best ideas take time, and are driven by creative people who take risks, make mistakes, and learn.
Really good private companies also know that a healthy employee culture can never be achieved when satisfying transient shareholders is the number one goal.
Look around at your friends. Which of them really enjoy their jobs, and are content with the culture that they work within? Which of them are encouraged to create change through their personal perseverance and vision? Which of them say, “I work at a pretty good place, maybe the best place I have ever worked?”
Of those friends, do any work for a public company?
2021 will be a year filled with job changes. People who have lost their jobs, who have relocated to a city that they don’t care for, who need to get out of a city that isn’t what it once was, who were treated poorly during the pandemic, or who are more or less burned out, will all be eager for change. 2021 will be a year filled with an incredible number of people switching jobs.
Throughout your career, you will hear a drone of advice about how to climb up corporate ladders, prove your worth, persuade others of your vision, “achieve success,” blah, blah, blah, blah, puke, puke, puke. If you have to play games to achieve recognition for the work you do, then you don’t work at a place worth working for. And game playing is what working at most public companies is all about.
What to do? Get out. Find a private company that is interested in you as you…you as a mistake-maker…you as a learner…you as a person who cares about other people…more than you as a “resource” whose only value is a function of your current output.
Here’s a simple fact of life: “shareholder value” is a terrible destination, because shareholders are stupid. That includes you and that includes me, even as unwitting and passive shareholders of mutual funds in our 401(k)s that are run by “expert” shareholders who are also stupid, although perhaps — just perhaps — a little less stupid than we are.
Shareholders generally don’t truly understand the companies they are investing in. They can’t. Otherwise, they would be insiders. In other words, we can’t help but be stupid compared to those who work within the companies we invest in.
I’m going to share two illustrations of this with you, from two different perspectives.
I.
I once held stock in a great company called athenahealth. I had the fortune, through a friend, of meeting athenahealth’s CEO, Jonathan Bush (nephew of George H.W. Bush, FWIW). I had the benefit of a first-hand tour of their headquarters. Jonathan, and those who worked there, knew that their true value lay in a piece of software known as athenaCollector. This software helped medical providers get paid by insurance companies much faster than they ever could be paid before, solving one of the most pressing problems that doctors have. How did they do this? athenahealth had experts inside the organization who studied the idiosyncratic ways that health insurers would reject claims based upon expected mappings between diagnosis codes (ICD-10) and treatment (CPT) codes. Doctors only get paid once they submit the right combination of these to your insurance company. I would say that athenahealth’s magic was that they really listened to what doctors needed most: to get paid, as quickly as possible, with as little administrative game playing as possible, so that we can get back to what we do best.
On Wall Street, where athenahealth was known as ATHN, this little company became known merely as a player in the Electronic Medical Records (EMR) space. Sure, athenahealth developed an EMR, because, well, it’s the nature of a public company to do things that “grow” revenue (as if revenue were some kind of plant). That’s what shareholders expect, and what the analysts who are the designated shoppers for shareholders are trained to find for them.
But shareholders do not care to understand the details of how ICD-10 codes map to CPT codes, and how health insurance companies try as best as they can to ensure that they do not have to pay whatever they can possibly reject (or at least delay accepting – time is money, after all). Shareholders and analysts understand, well, EMR! Yes, Electronic Medical Records! That sounds modern and cutting edge – just like plastics used to be! I’ve heard of Epic! Those Epic-ans are filthy rich out there in Madison, Wisconsin! Let’s invest in an underdog like athenahealth so that we can make money because, sure sounds like this place makes a good EMR with all that technology stuff! And people say they are advanced! Let’s take a look at their earnings per share and P/E ratio! Wow, count me in!
Seriously, people, that is about as deep as a typical investor gets.
If you want to read what happened to athenahealth, well…it’s a sad, sad story.
Remember: I was lucky enough to visit the company, meet with its CEO, and go for an on-site tour. How many shareholders —or even analysts — get the opportunity to do that?
II.
Here’s the second illustration, from another perspective:
From 2006–2010, I worked as part of the incredible software team at Xerox Global Services.
In 2008, pure play document consulting and management services contributed $3.5B of Xerox’s $17.6B in revenue. Nearly 20% of Xerox’s revenue came from these services. That was also 27% of Xerox’s “post sale revenue” (which included toner and maintenance) and 41% of Xerox’s $8.585B in “Service, outsourcing and rentals.”
I remember watching the annual shareholder meeting that year. I don’t have a transcript at hand, but if my memory serves me, there were a lot of very old – maybe even elderly – people asking Anne Mulcahy questions about copiers and toner. There was no substantive discussion of services whatsoever. You can see from the annual report that services were an increasingly important part of our business — $3.5B is no small potatoes; it’s about half of today’s Xerox’s trailing annual revenue.
What happened between now and then? What were the shareholders missing?
Well, in 2009, Xerox announced that it had acquired a services company called ACS for $6.4B. This was in response to Xerox’s competitors making similar moves, like HP acquiring EDS in 2008. However, the acquisition was trumpeted with headlines like
…transforms Xerox into a services company that can focus on business process management and outsourcing.
c|net: September 28, 2009: Xerox buys ACS for $6.4 billion
As if Xerox wasn’t already en route to that.
If you read the materials from the time, they don’t take any care to mention that Xerox was already seriously in the services space. Read this article from The Wall Street Journal, for instance. Do you want to know what I think the choicest bits of that are?
With the purchase, Xerox is the latest big hardware vendor to buy a services company, as tech giants try to find more consistent revenue streams to offset shrinking profits in their hardware businesses. Last week, Dell Inc. agreed to buy Perot Systems Corp. for $3.9 million. H-P last year bought Electronic Data Systems for $13.9 billion. International Business Machines Corp. has been building a huge services business for 15 years.
The Wall Street Journal, Sept. 29, 2009: Xerox Takes Gamble in Bid for ACS
‘There’s a strong strategic rationale for the deal. Customers want to do more things with fewer providers, and there are too many companies in’ the services space, said Peter Bendor-Samuel, chief executive of Everest Group, a Dallas company that follows the services industry. Adding services to a hardware company helps retain customers.
In particular, these two tidbits are what really stick out:
“IBM has been building a huge services business for 15 years.”
Xerox Global Services was founded in 1996. Why no mention of this anywhere?
“Adding services to a hardware company helps retain customers.”
No kidding.
So what happened? I will say it once more:
Shareholders are stupid.
Buying ACS was a mistake for which Xerox paid dearly. They lost their way. They eventually split and divested themselves from that portion of their business. Along the way, they lost who they were, and they are trying to get back there…12 years on. I hope the best for them.
Let’s share a simple fact about companies: the most important ideas in any company are trade secrets, and these things are reserved for employees, not shareholders.
What shareholders understand about a company comes — 100% — from whatever the people inside the company are willing to share, and how they are willing to share it. You’ve undoubtedly played the game of telephone before. The result? Shareholders invest in companies based upon whatever they are able to understand from this limited set of information, and they share that with one another, all of which becomes, simply, a personalized and remote distillation of the truth.
Saying that shareholders know what’s going on in a company is like saying Scotch is barley. A lot happens between barley and Scotch.
I will give shareholders some credit: they do try to get the gist of what is going on. But they are stupid principally because they are willing to convince themselves that they truly understand what’s going on in a company, in order to rationalize that they are making a good choice with their investment.
These sorts of shareholders wind up steering most all public companies. Steering a ship without understanding its construction, its engine, or the crew operating it (particularly the crew in way down in the engine room).
Do you think these investors really care about the individuals working within their ships? Which investors (or, more to the point, insurers) of Cunard thought to ask if Titanic had enough lifeboats? Lack of curiosity and imagination is a longstanding feature of human nature. Sure, curiosity and imagination is often in sufficient supply to design, build and dispatch a magnificent ship, but at some point, people often simply telescope just to get the job done and the profit made, with less focus on the lifespan of that ship and those who will live aboard it.
There are some very good things about working for public companies. Access to resources. Many brilliant people — oftentimes the best in the business — whom you get to interact with. A name that your friends and families know, and are proud to mention in the same breath as your name. Most of all: experience understanding the dynamics of a public company.
If, today, you work at a public company, another essential practice you can make toward a fulfilling career is: focus on the happiness and welfare of the people around you. Ask questions that cultivate curiosity and that inspire people to think and to put their imagination to work. Create a sense of safety for them in the riskiest of situations. Do your very best to have compassion for them and solidarity with them.
The path to perseverance with this practice in a public company is strewn with boulders of many sizes. You may well quit, or maybe you will be terminated. But! Even though you will not likely find a lasting, fulfilling career, two very important things will happen:
- You will have done good things for good people, who will remember you for what you did to help them, and that will come back around someday.
- You will develop compelling experience and stories that will make for incredible interview material at your interview with a good private company.
Why do you suppose so many leaders of public companies leave to start their own private companies? Because they know these dirty little secrets all too well.
If you happen to find a job in 2021 working for a public company — or you work for one already — be sure enjoy your ride. Learn as much as you can. Take it all in. But the lessons you need to survive and grow within a public company are merely that — survival tactics. They will sap your energy, and they may even condition you with poisonous behaviors that you will have to shed in order to have a glowing obituary.
The lessons you need for a truly fulfilling — and, dare I say, peaceful — career are among these pages. Empathy. Trust. Compassion.
In a company worth working for, you don’t need survival skills. The skills you need to feel satisfaction and progress are basic human skills. Focus on developing other people and helping them develop themselves. Focus on nurturing your skills in emotional intelligence (these are skills you can develop!). Focus on nonviolent communication. Create safe spaces for your teammates to express, explore and articulate their uncertainties. Make mistakes together, and pick each other up when you fall. Develop trust in one another. Care about your customers and what they need. Spend time with them. You have the time to develop quality relationships with your customers, because there are no shareholders to rush you.
Friends, I wish you a very fine 2021. As an early boss of mine — Eliot Subin, the CEO of ThrottleBox Media — once said:
Every day, you should live by the ELF theory:
— H. Eliot Subin
Earn.
Learn.
And have Fun.
Those are a lot easier to do when shareholders aren’t driving your company.
Happy new year. Peace to you and yours!
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