Augie Nieto — Excerpt from Reciprocity, Incorporated
ALWAYS BE CLOSING? I started my first business as a sophomore in college, goaded into it by my economics professor. When he gave me a low C on a paper I’d written—a business plan for a health club—I told him I’d open my business and earn more than he did in a year’s time. I leased retail space near our Claremont, California, campus. I courted investors, bought equipment, and ran the club while attending school. The gym was an immediate hit, and twelve months later my profit-and-loss statement served as sweet vindication for my C-minus. Better still, an entrepreneur was born.
The fitness industry at the time (this was in the late ‘70s) was dominated by weight machines and by weightlifters, most of whom were men. Since my club was relatively small, I only had space for one locker room, so the male and female members were admitted on alternate days. Consequently, I couldn’t help but notice how few women the gym attracted. Building conspicuous muscle wasn’t much of a draw for them, and there was little aerobic exercise to speak of at the time.
Since it seemed foolish to ignore half the potential market, I started casting around for something that might appeal to women. I soon found what I was after in a San Diego gym. It was something called the Life Cycle, a stationary bike with an electronic display that allowed the rider to follow his progress across hilly terrain as he pedaled his way through a twelve-minute exercise program. Or rather, as she pedaled her way through it—all of the Life Cycles in the place were occupied by female members.
With the same impetuousness that had gotten me into the health club business, I struck a deal to become the worldwide distributor of the Life Cycle. I’d soon bought a motor home (affectionately called ‘Slugo’) and had set out across country to show the bike off to any gym rat who cared to see it. I drove from coast to coast, setting up in health club and fitness center parking lots and pitching my vision of the industry’s co-ed future. I had a Life Cycle bolted to the floor of my mobile home, and I lured club owners and managers out to ride it every chance I got.
I was so confident I’d stumbled upon the future of fitness that I had several hundred Life Cycles ready for shipment in a California warehouse. My enthusiasm, however, proved doggedly uncontagious. Over the course of nine months, I sold a pathetic eleven bikes. By the time I’d returned to the west coast, I found myself nearly a half million dollars in debt. Desperation took hold. I sifted through my meager options and settled on the one that made the most sense to me at the time. I needed people to love the bike like I did, so I started giving Life Cycles away.
From the scores of contacts I’d made on my crosscountry trip, I selected fifty health club owners and sent each of them a bike, not to their gyms but to their homes. I wanted these gifts to be seen for what they were—personal gestures made freely with no obligation attached. I hardly knew what, if anything, to expect in return, and I certainly had no idea I was tapping into a potent human force that has informed and shaped social interaction for centuries.
Even if inadvertently, I was unleashing the irresistible power of reciprocation. The fifty club owners, once they’d accepted something for nothing, could hardly hope to let the debt go unanswered. We were now joined in what anthropologists call a “web of obligation.” My gift had to be repaid somehow. The hard wiring of the human psyche demanded it.
I’ve since grown to appreciate the profound gravitational pull of reciprocity, but at the time, I was merely hoping to stave off ruin and help generate enthusiasm for a product in which I believed. The expense of putting fifty free Life Cycles in the hands of people who might buy and deploy them seemed modest relative to my investment in the four hundred bikes sitting unwanted in my warehouse. I was doing what I had to do as a businessman, and I remained blind to the social science of the undertaking until well after the orders started coming in.
Today I calculate that each of the fifty Life Cycles I gave away directly resulted in ten bikes sold. And those bikes, in turn, sold more bikes which sold more bikes which sold more bikes. The company I started with a lone product I ABILITY 19 believed in would eventually morph into Life Fitness, the largest manufacturer of exercise equipment in the world.
The lesson of those fifty bikes helped shape my fundamental philosophy as a businessman. That first generation Life Cycle was far from perfect, and even though we were repairing and replacing units at a staggering clip, I insisted on an unconditional guarantee. The expense and aggravation were initially high, but our company was working all along to improve the design and mend the frailties, and I wanted to maintain the connections I’d cultivated and sustain the goodwill of my customers. Reciprocity again. I was just as ensnared in that web of obligation as they were.
This sort of open-handed, good-service ethic served me well in my career. As Life Fitness grew into a behemoth of the industry, my philosophy as CEO never wavered. A handshake was as good as a contract. Every piece of equipment we sold was guaranteed without condition. And if a customer wasn’t happy, I wasn’t happy. If those seem stunningly simple as business principles go, it’s only because they are.
Flash forward to March of 2005. I’d been losing strength in my arms over the course of the previous eight months, and I’d begun to experience uncommon muscle twitches that had finally prompted a visit to the Mayo Clinic in Arizona for a full examination. After three days of tests, a clinic neurologist delivered the devastating diagnosis: Amyotrophic Lateral Sclerosis (ALS). I had Lou Gehrig’s disease. To make matters worse, the diagnosis was followed by the news that there is no effective treatment for ALS and that the root cause of the affliction remains a medical mystery. Instead of discussing therapeutic options, the neurologist advised me to get my affairs in order.
I went into a tailspin of despair and depression that lasted well into the summer. Once I’d regained my balance, I tried to find out all I could about my disease and was hardly encouraged by the modest breadth and vigor of ALS research. ALS is known as an “orphan disease”. Only five to seven thousand domestic cases are diagnosed annually, and there may be 30,000 people in the country at any given time with some stage of the condition.
The low incidence of the disease, in combination with its neurological complexity, has resulted in scattered pockets of plodding academic research but no robust and concerted push to identify the cause or causes of ALS and to develop a drug therapy to treat them. It soon became clear to me that finding a cure for this disease was only an emergency for the people unfortunate enough to have it.
I finally located an ALS research facility tuned to a suitable pitch of desperation. It is known today as The ALS Therapy Development Institute and was founded by the brother of an ALS patient. I have since become deeply involved in the workings of the institute and serve as chairman of the board of directors. Our goal is to treat ALS much as a big pharmaceutical company would treat a far more prevalent affliction. We’re mounting a wholesale assault on ALS, approaching the disease with no prior assumptions as to potential cause or possible drug therapies. Consequently, we stand prepared to try anything and everything to vanquish this disease, a task which promises to be enormously expensive.
A significant part of my role with the institute involves raising money to help support the research effort. So I have, essentially, gone back into business: the business of fundraising. My colleagues in the fitness industry have responded heroically. If we succeed in finding a cure for ALS, the owners and operators of our nation’s health clubs—and the companies that manufacture and supply their equipment—will have played an outsized part in the effort. Many of these contributors know me or at least know of me and my place in their industry, so I approached them with a ready advantage.
But I’ve also enjoyed eager and considerable support from complete strangers in business. Their collective response has been both surprising and enlightening. When I was running Life Fitness, I thought of myself as a good corporate citizen. I gave to causes when I was asked, which is to say I wrote checks to charities. I wasn’t in the habit of volunteering my time, and I didn’t truly keep up with where my money went, what it did, and who it did it for. I made the donations. I wrote them off. It was all just part of doing business.
Recently, though, I’ve stumbled across a new (to me, anyway) business paradigm. Its hallmark is institutionalized compassion, a kind of corporate social conscience, a full embrace of the web of obligations that connects us all. It’s a philosophical commitment to reciprocity. When I approach companies for contributions to Augie’s Quest, which funds the Therapy Development Institute, and when I explain the challenges of ALS for both researchers and for patients, I often come away not just with money but with conscripts—people eager to invest their time and their energy to make my disease a thing of the past. One CEO met my show of pleasant surprise with a remark I’ll long remember: “A company can have a soul too.”
My ALS fundraising has had the added effect of prompting me to think about business and how it is conducted these days. It hasn’t escaped my notice that the ‘soulful’ companies I’ve come across are also highly profitable ventures. They’re well-run and creatively run. They prize their customers and vendors, just as I did, and treat them accordingly. Their employees are happy, productive, and well cared for. They invest in their communities. They’re environmentally-minded. Profit at any cost is not their god. And their executive officers make a point of giving compensation a good name. I’ve seen this new trend in business described as “sustainable capitalism,” which is handy as far as it goes, but the term doesn’t fully capture what the CEO in me recognizes as a fresh and inventive marriage of conscientious creativity with profitability.
The more exposure I had to this new business model, the more interested I became in the day-to-day tone and operation of companies that embrace compassion and social responsibility as guiding principles. I grew hungry for details of the nuts and bolts of managing such enterprises and was keen to quiz the entrepreneurs and CEOs on their philosophical underpinnings. Perversely enough, I was in a pretty good position to satisfy my curiosity. Leaving my CEO bona fides and my willingness to travel anywhere to conduct an interview aside, who’s going to say no when a guy with ALS comes calling?
This book is my attempt to make the most of that access. In the past year, I’ve had the pleasure of long, illuminating conversations with some of this nation’s most creative businessmen and women. The memories are indelible: an afternoon in the Seattle office of Howard Schultz a scant two months after his return to a troubled Starbucks, a far-ranging discussion in Detroit on the brand of home economics that prompted Mike Ilitch to found Little Caesar’s Pizza, a visit with storied homeless advocate Father Joe Carroll whose raw entrepreneurial zeal has made his San Diego ‘village’ a model of dignified human reclamation, a high-octane chat with jewelry designer Cookie Lee about the hundred-million dollar business she started in her spare bedroom, a session at my kitchen table with Safeway CEO Steve Burd, who laid out his visionary plan to bring affordable, comprehensive health coverage not just to his quarter million employees but to the nation at large.
In all, I conducted twenty-eight interviews. The subjects were generous with their time and free with their counsel and opinions. Many remarked they’d never sat for quite this sort of interview before, chiefly because our conversations weren’t so much about them as about you. These are all enormously accomplished people, and their achievements are well-chronicled and easily accessed. I was less interested in what they’d done than what they would advise others to do.
Is there a best way for the budding entrepreneur to grapple with rejection and failure, to keep a healthy perspective on success? What skills, what temperament, what ethics are most welcome in the workplace? Where does creative, unorthodox thinking come from, and can it be learned? What are the most significant differences between business as it is taught and business as it is practiced? In what ways does a commitment to charity, to philanthropy, affect the fabric and tone of a company?
Questions such as these opened rich avenues of discussion, along with countless unanticipated byways, and I soon found my sessions yielding colorful anecdotes and enough invaluable insights to fill a comprehensive business handbook. The challenge for me lay in making the most efficient use of what I was hearing. The veins were so productive that I was feeling a little swamped until, one evening, I happened across the film version of David Mamet’s Glengarry Glen Ross on TV.
The story is built upon the frictions and hardships of a real estate sales force in Chicago in the 1960s. Though we never see the property on offer, the free-floating anxiety and routine tirades among the salesmen suggest meager goods in a poor market. The relationships between the men run hot and profane. The atmosphere of the piece is Darwinian—eat or be eaten. If this company has a soul, it is coal black.
The film version differs from the Pulitzer Prize-winning stage play in one notable particular. Mamet added a scene—and a character—into the movie. The scene takes the form of a harangue visited upon the salesmen by an executive from the home office, from “Mitch and Murray uptown.” He’s played by Alec Baldwin in full sneer, and his motivational message is laced with scattershot humiliation. Baldwin’s character distills his sales philosophy in an acronym: ABC—Always Be Closing. “The only thing that matters in this life,” Baldwin tells the deflated salesmen, “is to get them to sign on the line that is dotted.”
I was struck by the antiquity of it all. The only thing that matters? Always be closing? Baldwin’s character made Wall Street’s Gordon “Greed is Good” Gekko seem relatively saintly. Compared to what I’d heard in my interviews, the thrust of Mitch and Murray’s enterprise was little short of medieval. It might have been a fictional business, but the drive and the impulses were real enough in their day. For that era, for those principles, Always Be Closing could well have been a fitting prescription.
Not any more. As a result of exhaustive conversations with the best and the brightest of the business world, coupled with my personal experience and evolving instincts, I’ve developed my own prescription for getting ahead in business without falling behind in life. Mine may not be as pithy as Mamet’s, but it’s sure to be more timely and more useful.
What follows are five lessons in sustainable success for the entrepreneur, for the uneasy executive, for the young business neophyte. Take as needed and apply liberally.
ALWAYS BE PERSISTENT
“The hardest thing in business,” Mike Ilitch told me, “is getting started.” At the time, we were sitting in the tenth-floor conference room of the Little Caesar’s world headquarters in Detroit. The window over Ilitch’s shoulder offered a panoramic view of Comerica Park where his Tigers play. A scant half mile away, on the north bank of the Detroit River, stood Joe Louis Arena, which Ilitch’s Red Wings call home.
Much of the construction and renovation in the area, conspicuous on my ride in from the airport, was either the result of Mike Ilitch’s civic inspiration or of his material investment. In his eighty-third year Mike continues to have a profound effect on the city he loves and has long called home. The present, however, seemed of little interest to him as we talked. Little Caesar’s was enjoying yet another record year, and the company’s new veterans program, which discounts franchising fees for honorably discharged veterans and eliminates them entirely for their service-disabled brethren, was proving a considerable source of pride for the Little Caesar’s family of employees and cause for well-deserved public praise. Ilitch’s Red Wings had advanced deep into the playoffs and were, in fact, two weeks away from taking the Stanley Cup. His Tigers were only a season removed from having won the World Series in a sweep of the St. Louis Cardinals. All things considered, the present was pretty good, but Ilitch preferred to focus on the past.
Generally speaking, it may be human nature to view our past personal difficulties and thorny passages through the gauzy lens of nostalgia, but the businessmen and businesswomen with whom I spoke were far more inclined to honest, clinical assessments of where they’d come from and the troubles they’d known. Accordingly, Mike Ilitch’s memories of his stint collecting leads for awning salesmen and off-seasons spent hustling pizzas out of the kitchen of a Detroit night club seemed far more vivid and instructive to him than the triumphs he’d enjoyed more recently. Those he’d dismiss with a wave of his hand, but the doggedness, the sense of mission and drive that had gotten him to that conference room high above resurgent Detroit, that’s what mattered. That’s what stayed.
One conspicuously common feature of the stories I heard in this past year, a thread running through every interview I conducted was this: persistence is crucial. Lasting success hinges upon it. The relentless pursuit of a dream is so obvious in some careers that it tends to go unremarked upon—Howard Schultz and his espresso bars, John Ondrasik and his hit songs, Mike Ilitch and his pizzerias. Each qualifies as a long shot that persistence (and no small amount of talent) brought home. But even those people to whom I spoke who had a leg up from the beginning needed drive and steel to reach the heights for which they were aiming.
Take Robert Day, for example. His grandfather, William M. Keck, founded the Superior Oil Company in 1921. Initially a drilling contracting firm, Superior Oil expanded into exploration and partnered in the construction of the first offshore drilling platform in the Gulf of Mexico in 1938. Superior Oil was acquired by the Mobil Corporation in 1984 for nearly $6 billion. The philanthropic institution established by William Keck from his Superior Oil profits remains in family control. The Keck Foundation is now a one billion dollar enterprise that supports science, engineering, and medical research throughout Southern California. The foundation not only supplies grants but funds the occasional special project like the Keck Observatory on Mauna Kea in Hawaii and the Keck School of Medicine at the University of Southern California. Robert Day currently serves as chairman and president of the Keck Foundation.
Consequently, the chances are pretty good that Robert Day would have made his mortgage whether he succeeded as an investment banker or not. While the claims of basic survival are frequently factors in success, they certainly don’t have to be. The hunger to compete and win is just as powerful when unmoored from practical necessity. The notion of success in business as triumph, as winning the game, was a potent recurrent theme in the conversations I had. Business isn’t just business. It’s personal too.
I was struck in my conversation with Peter Ueberroth by the emotional force and vividness of his memories of rejection as a young businessman. “I came out of college at a time when I must have had forty interviews with forty different companies,” Ueberroth recalled, “and I never got a job. I’ve always thought of going back one day and trying to buy those 40 companies. One of them, in particular—a fiber board company up near Tahoe.” Here, Ueberroth paused and shook his head. “I really wanted that job.”
He was still irritated, his enormous successes notwithstanding. Here was the man who’d organized the Los Angeles Olympics, the former commissioner of Major League Baseball, current owner (in partnership with Clint Eastwood!) of Pebble Beach, and he was still visibly irked over the failure of a Lake Tahoe fiberboard company to hire him fresh out of college. That’s not sour grapes. That’s persistence. That’s the unebbing competitive drive on display. And that ‘you’re-making-a-mistake-if-youdon’t-hire-me’ attitude isn’t merely what entrepreneurs and CEOs embody and exhibit routinely; it’s also what they look for in their colleagues and employees.
“Attitude,” George Argyros told me, “is everything in business.” I heard variations on that sentiment from virtually everyone with whom I spoke, including George Gorton who is not, strictly speaking, a businessman. He’s a political consultant whose career spans from the Nixon administration (he was Jeb Magruder’s Watergate fall guy) through the election of Arnold Schwarzenegger. You’ll find a half dozen pages devoted to Gorton in Bob Woodward and Carl Bernstein’s All The President’s Men. His work hasn’t been entirely domestic, and when I asked him to name the best candidate for whom he’s ever consulted, I was surprised by the answer. “Boris Yeltsin,” he said. “He was drunk and corrupt, but he wasn’t evil like his opponent.”
In a sense, Gorton’s job is persuasion, which is hardly so concrete as, say, Howard Schultz’s job of roasting and selling coffee to the world. “My mother once asked me what I did for a living,” Gorton recalled. “I said, ‘I don’t know. I’m in politics.’” But even if Gorton’s success depends more on votes than on profits, his general working philosophy and his attitude toward colleagues mirrors what I heard from people in far less exotic lines of work.
“Loyalty was very big with me when I started out,” Gorton told me. “Now it has been replaced by what’s right and what’s wrong. I didn’t have anything to do with the Watergate break-in, but if they’d said let’s go bug Democratic headquarters tonight, I’d have asked, ‘What time?’” Today, as a seasoned consultant who’s seen both the good and bad of politics and campaigns, Gorton approaches his job and his colleagues a bit differently.
“I took it on the chin,” George allows, speaking of his Watergate days, “and now I have a sense that one has to be one’s own compass. We’re not cogs in a wheel but independent actors.” When asked who he hires these days to work with him and why, Gorton told me, “I look for highly motivated people. The job of the campaign is to do anything that needs to get done and do it now. The people who win are the ones who do more of the impossible than the other guys. That’s how campaigns work.”
George’s remarks were still fresh in my mind when I interviewed Howard Schultz, who said something strikingly similar while speaking of his early years at Starbucks. “I don’t think people generally realize how difficult it is to build a business,” Schultz told me. “When we were losing money as a start-up company, that’s when we were at our best. We just willed our success. We made the impossible possible. We proved everyone wrong. We couldn’t raise capital. Our stores were opening, and nobody cared. We had moments of great doubt but moments of great joy as well.”
Of course, the ability to make the impossible possible is a byproduct of attitude, and attitude, as George Argyros has already assured us, is everything in business. So the ideal colleague, the perfect hire, is highly motivated and comes outfitted with an unerring moral and ethical compass. That is something slightly different from raw persistence. It’s not enough in business just to bring energy and focus to the job you’ve been charged to perform. To echo George Fisher, formerly of Kodak and Motorola, good business is all about doing the right thing the right way. Paul Jacobs at Qualcomm has already told us he pays more attention to the “passion and persistence” of his employees than to their resumes, so the question becomes how to bring context to your work, how to steer by a reliable moral compass.
The key, according to Pat Fuscoe of Fuscoe Engineering, is to live your persistence. “Persistence,” he told me, “is a form of consistency.” Fuscoe’s advice is simple, blunt even: don’t be mercenary. “Find something you’re emotionally aligned with,” he said. “Do what you do because you believe in it. That’ll lead to a more productive business.” As a practical matter, we can’t always be doing something we love. Sometimes a job is just a job, a placeholder, and we’re obliged to sell widgets. In those circumstances, it pays to remember Wing Lam’s commitment to be the best dishwasher, the best bus boy, the best delivery guy. To improve every job he took rather than simply perform it. In that case, Wing brought the context since the work couldn’t supply it.
Pat Fuscoe’s point about persistence and drive being a form of personal consistency is well taken. In the proper circumstances, with the right opportunities, what we’re after, fundamentally, is alignment. Are we pursuing the goals we think valuable and worthwhile or are we working at cross purposes to our philosophies and our beliefs?
Scott Olivett of Oakley had quite a lot to say on this topic. “Organizations need a consistency of values,” he told me. “Everybody has to be in agreement on what’s important. This isn’t necessarily about right and wrong. With values, there aren’t always right answers. The mix varies from place to place. But organizations have to have consistency.”
With a career history that ranges, most recently, from The Gap to Nike and now to Oakley, Olivett has played key roles in the success of some of the best-organized and best-aligned organizations around. “A company is a system,” he said. “It’s the culmination of culture, people, infrastructure, product. You’ve got to understand each of those individually and all of them collectively. You need to understand strengths and weaknesses, and where you’re misaligned. It’s all about where you are and what you need. So I use my own framework—you need vision, strategy, a set of operating targets, you need structure, you need people, you need the culture, and you need a set of values to live by.”
What Olivett is describing is, effectively, curiosity married to persistence. Informed improvements are what matter in business, both from the top down and from the bottom up. “One of the fundamental problems of business,” Olivett said, “is that people now want more out of their work environment than they’re getting. You see less turnover in those companies that create a good working environment and are doing something their people believe in.”
And turnover, according to Ray Thurston, whose SonicAir thrived on efficiency and who now consults on the topic, “is the single most important factor we measure. Anything over the 2% mark indicates a problem. Either a company isn’t hiring right, or it isn’t treating its people right.”
Thurston singles out Starbucks as the sort of company that treats its people right. “Starbucks depends on small working unit, like a tribe,” he said, “and its members are judged on what they do. They’re self-managed.” Of course, this sort of independence results occasionally in mismanagement and in mistakes, but the prevailing opinion among the people with whom I spoke—prevailing virtually to the point of unanimity—is that it’s better to get a working education from a mistake than to go through a career committed to not making waves, to doing only what is safe and predictable.
General Peter Pace was reminded of an anecdote he’d heard on the topic. “I remember hearing the story, I think from an IBM executive,” Pace said, “about one of his subordinates who’d made a $10 million dollar mistake. His colleagues wanted the subordinate fired, but the executive asked, ‘Why would I fire a guy I’ve just paid $10 million to educate?’”
Andrew Cherng of Panda Express offered an amplification on the topic. “A mistake is something you don’t do well but continue to do in the same way,” he told me. “If you learn from a mistake, how bad can it be? We all make mistakes in the people we select, the decisions that we make. They’re unavoidable.” Cherng went on to tell me that his business was “to educate people, to build an environment where people can learn to see the possibilities of life. That’s why Panda is here. Otherwise we’d have one restaurant, and I’d still be running the front desk. Okay, maybe two.” Then he thought for a moment and added, “It would be a shame if I didn’t know the difference between what’s important and what’s not important.”
Miscalculations and mistakes are just part of business. They are natural byproducts of drive and persistence. Successful entrepreneurs, managers, and employees acknowledge their mistakes and mine them for instruction. That’s the only way to avoid repeating them.
Alan Schwartz, the former president of the United States Tennis Association who now builds and operates indoor tennis facilities and sports clubs, waved his hand dismissively when speaking of missteps he’s made. “We all make mistakes,” Schwartz allowed. “I’ve had bad clubs. I’ve made plenty of mistakes. I move on. Sometimes there are bigger things in life than squeezing the last dollar out of a business.” He then went on to ask the crucial question. “As an entrepreneur, you’re a beachball in the ocean. Do you keep popping up when the surf washes over you?”
It helps, occasionally, if persistence, if driving forward, is your only option. When I started Life Fitness, I borrowed money from my family and friends. It totaled $450,000 (and that was in 1979!). I had convinced myself the world needed a $3,000 computerized exercise bike. Even if I was wrong. I had no choice but to figure out how to make it work. The persistence was all but built into the financing. I had no choice but to find a route to success.
Persistence with a purpose is the only sort of drive that matters. Blind doggedness might lead anywhere, but only informed tenacity can lead to consistency. And consistency in business, what Scott Olivett might call philosophical alignment, can be a powerful force. Pat Fuscoe told me an illuminating story along those lines. Fuscoe’s engineering firm operates primarily in California, but his environmental philosophy and his brand of personal and corporate consistency recently landed him a contract he hadn’t pursued and had no reason to expect. “If you say you care about the environment, but you’re not involved, that’s a problem,” he told me. “I was environmentally inclined, and that’s how I stumbled onto Miocean,” Fuscoe said of his efforts to clean up California beaches. “Once in a blue moon Fuscoe Engineering works outside of California. The guys who run the Montage resort—the Athens group—they like to do eco-adaptive projects. Martin Hoffman, who works for Montage, found out about this organization, Miocean, that was cleaning up California’s beaches. He’s a surfer. He loves the ocean, and he was looking for an organization that did good work in a low-key way, and he found it in Miocean. Martin sent an email, and we invited him to our annual fundraiser. I didn’t ask him for anything at all.”
That last statement is key: “I didn’t ask him for anything at all.” The common thinking is that you’re always talking when you’re selling, but from my experience, and from the conversations I’ve had, I can assure you that listening can be a form of selling as well, and often it is the more potent and effective form. We all get talked at routinely. How often are we listened to?
A couple of years pass, and Fuscoe gets a phone call from Montage’s Martin Hoffman. “He called me up to tell about a resort they wanted to build in Costa Rica,” Fuscoe said, “and asked me if my company would be interested in developing it. This was a top tier assignment, and none of it would have happened without Miocean. Martin wouldn’t have noticed us. He would probably have networked around in the business community, sought proposals from big engineering firms and picked one. There’s virtually no chance I would have gone after this job. There would be no pitch in the world I could have come up with that would have caused him to go with us.”
In this case, Fuscoe’s alignment, his philosophy in practice, closed the deal. “By way of Miocean,” he told me, “Martin found out about my business accidentally and anecdotally. Not only did he select us for the job, but he made a solesourced decision. There was no competition, no interviews, no nothing. He went to his partners and said, ‘This is the company I want to use.’ That just doesn’t happen.” Better still, Martin Hoffman and Montage Resorts’ faith in Fuscoe Engineering has functioned for Pat Fuscoe both as a challenge and a source of inspiration. “I’m going to do the best job possible,” he assured me. “I’d never let them down. I just won’t. Now that’s reciprocity.”
Fundamentally, Fuscoe’s experience illustrates attitude in action. In life, as well as in business, it’s critical that we know what we believe and why, and that we find some way to express it. It always pays to be armed with the knowledge of what we will do and what we won’t do, which may require some thinking about issues we’ve yet to confront, situations we’ve so far avoided, temptations that may lie ahead. We have to decide who we are in this world and sustain uneroded confidence in that decision.
Alan Schwartz told me a story about his initial attempt to build an indoor tennis facility that touched precisely upon the value of persistence in business. “I was in the industrial real estate business,” Schwartz told me. “My dad got very ill in 1968. His doctors told him he only had a few more years to live, and we decided, as a joint effort, to build the world’s largest indoor tennis club.
“He found a location in the city of Chicago,” Schwartz remembered. “At that time, no indoor tennis facility had been built from scratch anywhere in the United States. A number of cities had converted buildings, but no one had actually built from the ground up. Seventeen Chicago banks turned us down for a loan. These were all banks that had leant me money for industrial real estate projects, but they forgot my name when I came to talk about an indoor tennis club. There wasn’t even zoning for such a thing in Chicago at the time. Then I read an article in Time Magazine about a guy named Donald Parsons who’d been to high school and college with me. It said in the article he’d just taken over the Bank of the Commonwealth of Detroit, where he was known as a maverick, and he was upsetting the bankers there.
“So I picked up the phone and called him. I told him what I needed, told him about all the other banks that had turned me down, and he invited me to come out to Detroit. He didn’t want to see any projections, any renderings, a presentation. Nothing. He said, ‘What do you need?’ I said I needed a loan to start of $900,000. He said, ‘You’ve got it.’”
Schwartz was flabbergasted. “I asked him why he’d do such a thing with no collateral, no nothing. He told me when I was playing varsity tennis at Yale he used to watch my matches, and he knew I’d kill myself before I’d lose. He knew I’d do the same thing before I’d go bad on his loan. I remember he said, ‘It won’t be long before the other bankers will want to take the business away from me.’ It worked out just that way.”
Today Schwartz invests in startup businesses and, consequently, is in much the same position of his former classmate in Detroit. “I look for commitment in young entrepreneurs,” he told me. “I’m making my own judgement if they’ll fold up the tent when it’s really dark. Sure you look at the idea, but the person is more important than the idea.”
Toward the end of our conversation, Schwartz was reminded of something his father had once told him. “He said I could learn from every loss. That losing doesn’t make you a loser. That failing,” Alan added, “doesn’t make you a failure.”
As I’ve grown increasingly fond of saying since my diagnosis with ALS, you can’t control what happens to you, but you can control how you respond to it. The same is true in business. We’ve already established that active curiosity is a virtue in the workplace, but the appetite to learn and to master is only effective when joined with drive and a dedicated sense of perseverance.
Dr. Jeffrey Trent, the CEO of the genomic research laboratory TGen, told me something he’d heard from a former congressman from Kansas. “In the Congress,” Trent told me, “the answer to the question ‘Do I have your support?’ is usually ‘I’m with you as long as I can be.’ Think of the difference between people who are with you to the end and those who are with you as long as they can be. I want the ones with me to the end.”
Don’t we all? In business, as in life, curiosity matters, but perseverance pays. Stay to the end. Always be persistent.