Weekly Thoughts

VIEW ALL POSTS

Weekly Thoughts: More Jerks

Here is something that caught our eye this week:

More Jerks

In September 2015, we wrote an article describing how certain individuals can become wildly successful and influential despite having obvious character flaws. More specifically, we noted that the things we as a society collectively say we care about (and teach in kindergarten) are all too often inversely correlated with popular markers of success. As Stanford professor Jeffrey Pfeffer noted to The Atlantic, “We believe we want people who are modest, authentic, and all the things we rate positively to be our leaders. But we find it’s all the things we rate negatively — like immodesty — that are the best predictors of higher salaries or getting chosen for a leadership position.”

Our conclusion at the time was that “while it’s true that some people with questionable character traits achieve great success, we feel more comfortable believing that being a jerk is not a requirement for success.” Recently, while recognizing the potential for confirmation bias, we’ve been interested to read about how jerk-like behavior is impacting some of the most prominent companies in the start-up world. Numerous scathing reports have come out about prominent “unicorns” struggling to address the real world consequences of fostering a toxic “bro culture” which as The New York Times reports, “values speedy growth over sustainable profits, and encourages cutting corners, ignoring regulations and doing whatever it takes to win.”

Take, for instance, Uber, which has developed what the Times calls a “culture built on reckless spending and excessive partying, where bad behavior is not just tolerated but even encouraged.” For those interested, terrible stories are readily available, but the main point for us is that sometimes, whether we like it or not, being a jerk can work to stimulate short-term growth. Uber has developed a transformative technology and earned itself a $69 billion valuation and we must acknowledge the company’s bro-culture has likely helped that extraordinary performance.

That said, it’s probably not the right way to build an enduring enterprise. While we encourage strong performance in the present, we also focus on positioning our companies for success well into the future. We think in decades and simply don’t want to spend ten years or more working with jerks. Perhaps more importantly, we believe we can win without them. Our philosophy is more akin to that of our friend Brent Beshore at Adventur.es who has adopted a fantastic “No-Asshole Rule”, which states “Adventur.es takes a proactive, zero tolerance approach to assholes. We have no tolerance for dishonest, manipulative, belittling, or egocentric individuals. No tolerance for the rude and obnoxious. No tolerance for employees or partners who play politics, or cut corners. No tolerance for those who focus on how to get the most, the quickest…. Some companies can seemingly operate well with personalities of all kinds. We can’t and won’t. Life is too short to work with those you don’t admire, regardless of immediate cost. Ultimately we believe it results in both higher profits and greater happiness. Not a bad combination.”

We couldn’t agree more.

Adventur.es, NYTimes, Recode, Bloomberg, Forbes

 

Have a great week,

Your Chenmark Capital Team

Subscribe to Weekly Thoughts

Previous Post Next Post

Recent Posts

It’s Basically 1200 Meters

When we lived in Cambridge, we frequented all the common outdoor exercise spots — leisurely jogs along the Charles, grueling stairs in the Harvard Stadium, and heart-rate spiking intervals on the Newton hills.  As such, we enjoyed learning more about the “Tempo Loop” in the Harvard Athletic Complex. 

Read More

I Said No F*ing Brown M&Ms!

While we are more of a Smarties group, we were interested to learn this week that brown M&M's carry relevant significance despite being the worst color for a candy variety.  They are also the most notable thing about a backstage concert rider — the legal document that outlines terms for concert promoters — for Van Halen’s 1982 World Tour.

Read More

Cash Money

Our regular readers will know that our metric of choice is Free Cash Flow.  This is because the crux of our strategy relies upon our ability to purchase cash flowing businesses from retiring owners, and then, over the long-term, using the cash flows from those businesses to fund the equity requirements for growth—whether it be supporting internal growth initiatives or writing a check for our next acquisition.  Without free cash flow, our strategy stalls. 

Read More