- On this episode, I have two iconic guests.
(ding)
And I throw a right hook for a book that's not my own?
(laughs)
(upbeat music)
You ask questions, and I answer them.
This is The #AskGaryVee Show.
Hey everybody! It's Gary Vay-ner-chuk,
and this is episode 89 of The #AskGaryVee Show.
As you can tell, this is only the second,
is this the second time, Casey, right?
Only the second time we've ever had a guest,
and we've doubled it up and so I'm really excited.
As many of you know who watch the show,
Jack, Suzy and I did a great talk at South by Southwest,
I've really gotten to spend some nice time with them
over the last couple of months,
obviously have known about them, known them a little bit,
and got to know them more and more,
and so this is super fun for me
for you guys to be on the show.
I appreciate it.
- We appreciate being here.
- Well, why don't you tell the VaynerNation
how you've been, what are you guys up to, who you are
for the one or two people that don't know.
Let's do that.
Suzy, go first.
Alright, well, we're here cause we love you so much, Gary,
but we're here because we've got our new book out,
it's called The Real Life MBA, we're going around talking
to people about the ideas in it.
It's an MBA in a book, and you know,
as background, Jack has got a long history
in business and I'm his writing partner and tour partner,
I've done a lot in business myself.
- Jack?
- And I've been building a school in the last two years,
the Jack Welch Management Institute.
We are granting MBAs and we're growing at 40 percent a year.
We're up to 900 students, 38 years old average age,
and it's so much fun to see them progress
through their companies.
65 percent of the graduates have gotten promotions
while they were there.
18 percent is the average raise of the student
at the school while they're there.
So it's been a great benefit.
- And tell them about your back career,
and I mean you're semi-pro hockey career.
- [Suzy] Oh yeah.
- That was a very weak, very weak program.
Fortunately, I thought I was a stud when I was
in high school, and I captained everything
and won all these awards and I went to college
and played against Canadians, and I quickly realized
that I stunk. (they laugh)
- Alright India, let's get into the show.
We got some questions?
- [India] We do.
- Let's do it.
- [Voiceover] Youssef wants to know,
"How important is failure?
"You hear a bunch of people saying
"how important it is to fail.
"But is it really?"
- Youssef, great question.
You know, look, I think failure has to be quantified.
If you fail but you never can get up from it again,
you know, that's not a good failure.
I think failure and adversity are
the two things I think about.
For me, as an entrepreneur, and very entrepreneurial,
and always in my own stuff, all the failures
along the way, even going back to the baseball card show
when I was thirteen, that I paid 400 dollars for a table
and nobody showed up to that baseball card show.
That was a learning lesson.
Those microfailures were super, super important.
I think, you know, it depends on your stomach, right?
Like, if you really fail, like go out of business,
I think people take one of two ways, right?
They're like, just finished, and they're never able
to get off the mat, and they go in a different direction,
so to me, I think quantifying the failure's important to me.
Jack, Suzy?
- Well, I'll give you one, I blew up a factory
the second year I was in business.
Sky high, my boss all of a sudden didn't know me,
I went down to see his boss in New York,
which he pointed me to, and the guy asked me
a thousand questions, using the Socratic method.
And instead of me getting fired,
which I thought was a high probability,
I learned something from it.
So, in every one of these events, you gotta get yourself
back on the horse, and how well you get back on the horse
and how well you ride after getting knocked on your butt
is a very big deal.
- We tell our kids, "Fail early and often."
Fail, because then what happens is, when you do fail,
you realize it doesn't kill you.
You go on living, and you realize,
"Okay, you know, I can pick myself up,
"here's how I'm gonna reinvent myself,
"here's how I'm gonna talk about it,
"I'm gonna own it, I'm gonna say I got fired
"from the Harvard Business Review."
I tell people I got fired from the Harvard Business Review,
and here's the thing.
It gives you heart for people who have also fallen down,
and you actually sort of have a
- Empathy.
- A totally different understanding for people
who have fallen down.
You've been there, and you can,
it just makes you a better person.
You don't wanna keep failing constantly,
but to be scared--
- That's a very bad idea.
- No, you don't wanna fail all the time,
but you can't be too scared of it,
because it stops you from doing big things.
- Yeah, you know, it's funny, I was just having a meeting
with a lot of senior executives here at VaynerMedia,
and I said, "Look, guys.
"I don't need peacetime generals," right?
I need wartime generals, meaning I need executives,
like of course I know this brand's going well
and this brand's going well and this brand's going well.
What are you doing about the client
that's not happy right now?
Right? And I think failure makes people better at that,
and so that's another kind of thing that I look for
in this subject matter.
Alright, let's move on.
- [Voiceover] Chris asks, "Is terminating the bottom
"10 percent still a good idea?
"Even on a team of all-stars, someone has to be last."
- Why don't you set this up, because obviously,
what was the name of that person?
- [India] Chris.
- Chris knows about your thesis,
I mean, this is a very legendary POV in corporate America,
entrepreneur land, like this is one of the iconic things
you put into the business world.
Really quick, faster than normal, tell everybody
what that is so everybody knows,
and then answer the current version.
Actually, why don't you come out with that,
and give it a little life, and then tell me
what the 2015 version of it.
- If you believe that the best team wins
and that business is a game,
you've gotta field the best players.
So in order to field the best players,
you look at, any one point in time,
who are your top 20, who are your middle 70,
and who are your bottom 10?
And you wanna take that top 20
and you wanna make 'em feel six foot four
and made for power.
- What if they're six five to begin with?
- Go to six eight.
(they laugh)
And what you wanna do though, desperately,
is make them know they're that good.
You want 'em to be excited, you want 'em turned on,
you want 'em passionate.
The middle 70, you want 'em striving to be in that top 20,
and the bottom 10, you tell 'em what's wrong with 'em,
what they're not doing right, you give 'em a chance,
if they don't make it, you let 'em go.
But when you let 'em go, you love 'em as much on the way out
as you loved 'em on the way in.
- I'm a big believer in that part.
- And that's a big, important thing.
- I agree.
Do you feel, now you played at a GE,
how many employees under your wing on average?
- 400,000.
- Okay, 400,000 employees that you were in charge of
during that run as CEO of GE.
Do you think that thesis holds true
to VaynerMedia, 500 people?
- More important.
The fewer you have.
- I'm gonna go a little quicker.
How about, there's a lot of five people teams here.
Five to seven people watching, listening--
- And it makes it harder for some,
because you're looking straight at
the five people who got you started.
And it's so tough.
I was talking to somebody last night
at a conference who said he had to let go
his former junior partner, and it was killing him.
But he had to do it, she wasn't delivering.
And I said, "Look, as long as you take care of her
"and you're fair, and you've explained to her
"for the last year what she wasn't doing right,
"you gotta do it."
- Do you think--
- The thing that gets me about this question is,
the thing we hear again and again,
we hear in this question is, even if everybody,
even if it's an all-star team.
- No such thing.
- And there's no such thing.
You've gotta look at your team and say,
"Who is the weakest player, can I upgrade,
"can I upgrade?"
- It's never existed.
- It's very, very, I mean, you can't fall in love
with your team and say, "Now I have the perfect team."
But the next manager comes in and says,
"What was that person thinking?"
- Yeah, I mean--
- I have another take on this, too.
Why do we always focus on the bottom 10
in this 20-70-10?
Why aren't we saying, "How exciting the top 20!"
- 100 percent.
- Why aren't we talking about the winners?
- Because it's rubbernecking.
It's the same reason that we sit in traffic
all the time, Jack.
Alright, let's move on.
- [Voiceover] Jeremy asks, "As businesses grow,
"what is the best solution for documenting policy, procedure
"and process so all are on the same page?"
- Jeremy, I hate this question for a couple of reasons.
You know, it's interesting.
I'm gonna piggy-back off the last statement here,
which is, to me, this is a defense question, right?
This is a bottom 10 percent question.
- Yeah.
- There is no business on earth that won
because they had a tight handbook situation, right?
So, for me, I mean, unless you're talking about liabilities
on a legal level, you know.
GE should worry about that to some degree
because of the level of lawsuits.
and by the way, they have 400,000 employees,
and there's probably 8,000 lawyers, there's people to do it,
but a company of 500 people.
India, they're not gonna hear this, but you prepped them,
like how we have a handbook here
and nobody really knows about it.
I mean, this is a 500 person, and it's still a baby,
like that is something that I think you need
to be worrying about at your--
- Yeah, forget documentation, have a culture.
Over here has a culture.
And as soon as you're documenting things,
you're wasting everyone's time, it becomes a bureaucracy,
all that matters are your values and your culture.
Make sure they're being lived,
and you don't have to document anything.
- But everybody has to know where you're going,
why you're going there, and how you're gonna get there.
- Well, that's leadership, right?
- And that is the job that--
- That's my job.
- That's yours, and the people that work for you,
and cascading down.
But everybody's gotta know the mission,
they gotta know how they're gonna do it with behaviors,
and then they've gotta be, and what are
the consequences of getting there?
- There's another thing that I think
people need to understand.
And by the way, this is gonna get very Vaynerized,
and India, you'll enjoy this.
And everybody here.
As I started bringing in more senior people,
they wanted to bring in more of these things.
And I made them understand, I'm like,
"Look, you don't understand.
"We're still this entrepreneurial engine."
And if somebody comes into this company
and they're so worried about the handbook,
and so worried about reviews, and so worried
about all these things, I don't want them here now.
Not that they're bad, but they're not
the right players at this time.
I was the best player on my fourth-grade baseball team.
There's not a single baseball team in America
in Major League baseball that needs me on their team.
So, I was the right player for that time,
but then as everybody got much bigger than me,
I became not so much.
And so we now need different people
that maybe care about some of those things
as we continue to grow, but not at that time.
So the other thing here is, the right employee
at the right time, at the right age of the company.
- [India] That's really good.
- Thanks, India.
(they laugh)
- Yay, boss.
- [India] That's just beginning material.
- No, no, she, you know what's so funny,
back to what we talked about.
She wasn't "yay, boss-ing" me, she was like,
"Oh crap, cool,
"I have a new article that I can write.
"He finally said something different for the first time."
(they laugh)
- [Voiceover] Jared wants to know, "What's the best way
"to scale a business with an inherently low profit margin?"
- So, Jared's got a low profit margin issue.
He's asking the best way to scale it.
Jack?
- New products, new innovation, new angle.
If you've got, the last thing you wanna be thinking about
is making large something that's small margins.
You wanna find ways to take the assets you have
and transform it into a high-growth, exciting player
in maybe adjacent fields.
But take the asset you have and deploy them
to grow the business, but not maybe
the existing business completely.
- Get away from the low-margin businesses.
Create services, right?
I mean, isn't that what you did at GE?
Took all the stuff that was low-margin,
and you added on high-margin services.
You don't wanna be in a low-margin business.
You've gotta do everything with your innovation
and creativity to get away from it.
- I'm gonna go with an interesting, different angle
from my own life experience.
When I got into my dad's business,
it did three million dollars in revenue
and ran on 10 percent gross profit before expenses.
It was a family business, right?
- Right, right.
- That's low margin.
The liquor business is bad, cause there's a middle,
wholesale part that takes 25 percent
of the 50 percent that a retailer normally takes.
Extremely low margin.
What I did was actually went the other way.
Meaning, I took the low margin items
that were driving the store's business,
and I actually bet on them.
What I did was, I took all the items like Santa Margherita,
Kendall-Jackson, the liquor items that were low margin,
at cost, by the way, and I used them to market,
to drive people into the store as the honey,
and then I merchandized the store
and built the brand that they came in for, Kendall-Jackson,
but I sold them a different Chardonnay with margin.
And so, both these things are, of course, right,
I'm curious, and we don't know,
where you are in your life cycle.
What I've watched a lot of people do is try to go,
you know, bandaid off from low margin
to some new innovation that maybe the market doesn't want.
I think the hedge there, that's interesting to understand,
I really felt the effects of this, is use it as an offense.
Right now, we're testing Facebook ads
for my wine business, and everything we're using
are these low-margin items, because they have
the brand equity to drive in, and then we'll take care of it
from there, so you may be far enough along
in your business where,
the first answers here were 100 percent right.
You need to get into a place where the margins
are gonna get right, but I worry, depending
on your sophistication as an operator,
that you go complete cold turkey.
There's a way to use the low-margin items as an asset.
- That's a very good idea, but I would use
the low-margin items and the margin
from those low-margin items to invest in other areas.
- 100 percent.
That's what I did, right?
The pennies we made turned into the advertising,
that drove people in, then I grabbed them, and so, da-da-da.
India.
- [Voiceover] West Coast Beer Geek wants to know,
"How can efficiency and creativity better work together?"
- They will be inefficient into the time
and space you give them, to be honest.
I mean, I was a creative a long time,
and then I became the boss of the creatives,
and I knew how much fat was built into their writer's block
and their, you know, thinking and everything, and--
- The zen room they needed.
- And I had to come out of the associate press,
where you had to turn out seven, eight stories a day.
I knew that the creativity expanded into that space.
And of course, you gotta be creative,
and creatives need some time to decompress and so forth,
but we give them a little bit too much,
or maybe not we in general, but it is easy
to listen to them moan and groan about needing more,
and so creatives can be efficient.
- To get efficiency, you gotta be creative,
and you gotta have creative people.
And efficiency doesn't mean some guy or woman
in a hole, driving every day.
It means that people are thinking of new ways
to do things, coming up with incremental improvements,
making things better every day.
Finding a better way every day takes a thinking head set,
and you want that mentality in your company.
You want the whole company to be thinking about,
every day, what is a better way of doing what I'm doing now?
- I'm a big fan of betting on your strengths,
and also really recognizing putting players
in the best position to succeed.
And we have nothing but creatives here,
of the 500 employees, 200 of them,
and if I've deemed, if we've deemed,
if Tina, who runs our Creative Department deems
that this person is bringing us quality,
I think one thing that a lot of people try to do
is mold them into being more efficient.
I've done that plenty of times in my career.
One of the things I've decided now is to look at it
more as a net-net game, right?
You know, I may not like that they need to be
in a zen room with unicorns in it,
I may not, but if I'm okay with the output.
If I'm okay, net-net, 365 day year output,
I'll take it, right?
You could have the most prima donna creative,
but if they do that one thing that you decide
drives the ROI, on the flip side, you could have somebody
who's the most efficient but lacks the magic.
What you have to really do is,
it's wide receivers in football.
Listen, they're at the mercy of the quarterback
getting them the ball, that's why,
they don't get to touch the ball.
The quarterback touches the ball,
the running back touches the ball when the call's played,
the receivers don't, so many variables,
and I'm very intrigued by that psychology.
That being said, you know, I value speed
and execution over everything.
And so, I definitely sit on that Mendoza line,
if there's a coin toss.
If I'm even debating it, if I'm even debating your value
as a creative over the efficiency and the output,
you're in trouble.
- That's sensational, one of the things.
No it is! - Thank you, Jack.
- One of the things that really can kill a company
is the innovators sit over here in a box,
and they are Thomas Edison, and they are Steve Jobs,
- The ninjas.
- And they're these people.
And then, everybody else, keep your head down
and be a grunt.
You lose the minds of these people.
You want everybody to be an innovator!
- Right. - 100 percent.
And it's interesting, here at Vayner,
we're a classic agency, we want more practicality
from our creatives, and we want our account strategists
being creative, and that's been a big benefit for us.
And, you know what else it does, it creates mutual respect.
Because when the innovators are over here,
they sit on a higher ground, and it deflates the momentum
and the equity.
- Right, any time you get prima donnas in an organization,
it enervates everyone around.
- So, let's wrap up with this, we don't do
a wrap-up session, but we're gonna make a unique thing.
Why this book, and more importantly,
you have such a mix of people that listen
and watch my show, right?
You've got a ton of people in startup,
entrepreneurial culture, you know, obviously
cause of the agency, there's a plenty amount
of executives in Fortune 500s, bloggers, media types.
When you look at this book,
and you guys put your self-awareness against this book,
who benefits the most?
Of course, that's like wanting the book to be successful.
We want everybody, and I'd like, it would mean a lot to me
to support these guys, I want you on it,
but going down the pecking order,
who do you think, or how do the individual segments
that could read this book, what do you see them benefitting
from what angles?
- I mean, what we wanted to do, we wanted to create an MBA
in a book, because you can start off in business,
and you can get very good at one thing,
and there's something in your head that's saying to you,
I wish I had the 360 mindset, you know,
that's sort of what an MBA, I've got one, what it gives you.
It sort of gives you the CEO's mindset,
you sort of see all the different functions
working together, and we looked around,
and that book didn't exist.
It's for people who didn't have an MBA
who just wanted one but didn't wanna give up
two years of their life to go get one.
- Or the gadrillion dollars, or the debt.
- Right, the flexibility, everything.
- Well, I mean, anybody who's managing anyone,
a small team of five people or a team of 500,
can use the tools that are in here
to build a team. - So, management.
- No, no, no, that's one level.
- I know, but that, but it's an interesting insight
that that's where you went first, but I'm intrigued by it.
- Well, I--
- He always goes there first (laughs) because he--
- I believe in it so much, so I'm into it too.
- But I'm talking about managing small groups as well.
- I get it.
- And what we wanted to do is create an atmosphere
in a company that's got some of the buzz you've got here,
across every company.
So, building a wow team, and having employees know
how to play on a wow team is a critical part of this story.
- One last thing is that there's a whole section of the book
on your career, and it's about, you know,
what should I do with my life,
how do I get out of a career stall,
and how do you become an entrepreneur,
what does it really take?
There's all, a lot of the book is
about winning strategically, smiting your competition,
building a great team, but look frankly,
people spend a lot of brain time thinking
about their own careers and how they get
to be where
- Stuck.
- Where they're really fulfilled and they're doing
what they wanna do, so the whole,
there's a chunk of the book about that.
- Do you believe, on a real quick question, do you believe,
by the way, you guys look great in this photo.
Do you believe, how many photos,
how long did this photo shoot take?
- Long time for me,
not for her. - Longer than we'd have liked.
- To get me on there to look like that was real work.
- I can imagine.
(they laugh)
Do you believe that
a top 25, 50 business school MBA
in April 2015, is as valuable in the marketplace
as it was, five, 10, and 25 years ago.
- Go back to top 10.
- Okay, top 10, yes.
- Absolutely.
- How about 11 to 25?
- It starts to slide pretty quickly.
At the top 10, the line is out the door
with McKinsey, with Booz, with everybody else
lined up, waiting to get in.
So at a top 10 school, you're making
a huge 300,000 dollar investment,
but the return is pretty good.
- It pays off.
- What about, so many of those kids,
cause now I'm spending a lot of time with those kids.
So many of those kids want to become startup entrepreneurs.
- Right.
- Do you believe that the ROI is equally as good
at that 300,000 dollar investment
if they wanna go down that path
versus going to Bain and McKinsey,
who start paying them tremendously strong salaries
and bonuses that can drive down that debt.
- Depends on the quality of their idea.
Let's face it.
- What's your intuition tell you--
- We are running all the time into people
that wanna be, quote, entrepreneurs.
It's not a profession.
It is the output of a great idea.
- Yep.
- It's not like being a lawyer or a doctor.
What is your idea, what is the value proposition,
and can you win with it?
- Yeah.
- So, I always end the show where I ask a question
to my audience, and they answer in the comments.
I'm gonna allow you guys, one of you can take it,
both of you can have a separate one.
What kind of question do you wanna ask,
you know, by the way, use this as market research,
that's what I do.
- Alright, yeah. I know a question, Jack.
In the book, we make the case
that the place you should be working is what we call
your area of destiny, that intersection
of what you're uniquely good at and what you love to do,
okay, what you're uniquely good at and what you love to do.
That's this really rich, beautiful territory,
area of destiny, and I'd love to know
how many people think they're actually working
in their area of destiny?
- I love it.
Guys, thank you so much for being on my show.
- Yeah.
- So go out and get the book.
Let's support these guys.
DRock, let's link it up.
- And it all goes to charity.
- Yeah, all the proceeds to charity.
- I think that--
- Every nickel.
- Well, that probably changed the variable of your success,
of being on this show, so good job guys.
Way to sell it.
You keep asking questions.
We'll keep answering them.
(they laugh)
Great.
Good job.
(all talk at once)
- What do we do for you?
- Oh, the intro.
- What do we do for you?
- One second, one second.
- [DRock] And action.
- On this episode--
(upbeat music)